Agenda packet — Monterey City Council, October 15, 2024 (part 1 of 3)

Council Chamber
580 Pacific St.

Monterey, California
City Council Agenda
Council Regular Meeting and
Closed Sessions
Tuesday, October 15, 2024
4:00 PM – 6:00 PM
7:00 PM – 11:00 PM
City Council
Tyller Williamson, Mayor
Kim Barber, Councilmember,
District 1
Gino Garcia, Councilmember
Alan Haffa, Councilmember
Ed Smith, Councilmember,
District 2
City Manager
Hans Uslar
HOW TO PARTICIPATE IN THIS MEETING:
 Written comment: Members of the public may submit comment(s) to [email protected] until ½ hour before the start of the meeting. These messages are not read aloud during the meeting but are made available to the meeting body and public at https://monterey.gov/submitted-comments. All comments received become part of the record.
 In-Person: Please see the meeting location listed above. Wearing a mask is recommended and encouraged.
 Remote via ZoomGov Webinar:
o Join on a computer or smartphone: https://montereyorg.zoomgov.com/j/1607729333 An up-to-date version of the Zoom software must be used.
o Or join by telephone: Dial 833-568-8864 (Toll Free), 669-254-5252 (Campbell, CA) or 646-828-7666 (NY). If one number doesn’t work, please try another.  Enter Webinar ID: 160 772 9333 #
 If prompted to enter a participant ID, press #
 To “raise your hand,” dial *9. Once called upon, dial *6 to unmute o Need help using or updating Zoom? Read our Zoom Meeting Instructions (PDF)  This meeting will also stream live for viewing only on youtube.com/cityofmonterey (10 second delay) and on Comcast Channel 25 (up to 90-second delay).

PUBLIC COMMENT PROCEDURES AND TIME LIMITS:

The total amount of time allocated for public comment on a particular issue and for each individual speaker is generally as follows:

1. Up to three minutes per speaker.

2. For regular City Council meetings, there are two 15-minute public comment periods, one in the afternoon and one in the evening. Speakers may only comment during one session.

3. The total time allocated for public comment:
a. Items pulled from the consent agenda – 15 minutes each item b. Public Appearance items – 30 minutes each item
c. Public Hearing items – 30 minutes each item
d. Closed session items – 15 minutes each item
At the time an item is considered, the Mayor will ask those attending the meeting in person to line up at the podium or raise their hands, and for remote participants to use *9 on the telephone or the “raise hand” function in Zoom, if they wish to address the City Council. The maximum amount of time for each person to speak and the total amount of time allotted for each item will be determined based on the number of people indicating an interest in speaking and the amount of business to be conducted on the agenda. In exceptional circumstances and when necessary to ensure a full opportunity for public input, the Mayor may, with the legislative body’s consent, adjust the amount of time allowed for public input and/or the time allotted for each speaker.

CAMPAIGN CONTRIBUTION DISCLOSURE: Pursuant to the Levine Act (Govt. Code section 84308), any party to a permit, license, contract, or other entitlement before the Council is 10/15/2024 4:00:00 PM
2 required to disclose on the record any contribution, including aggregated contributions, of more than $250 made by the party or the party's agents within the preceding 12 months to any City official. Participants and agents are requested to make this disclosure as well. The disclosure must include the name of the party, participant, or agent, and any other person making the contribution; the name of the recipient, the amount of the contribution, and the date the contribution was made.

TELECONFERENCE NOTICE
A “Just Cause” teleconference attendance notification was received from Councilmember Barber, who will make a brief statement at the beginning of the meeting regarding the general description of the circumstances requiring remote participation. ***Afternoon Session Agenda ***
4:00 – 6:00 p.m.

CALL TO ORDER

PRESENTATIONS

1. Recognition of Defense Language Institute Quarterly Joint Service Awards for Fourth Quarter FY24 (Not a Project Under CEQA per Article 20, Section 15378, and Under General Rule Article 5, Section 15061)

GENERAL PUBLIC COMMENTS
The public may speak to any item that is not on the agenda and that is in the City of Monterey’s subject matter jurisdiction.

CONSENT AGENDA
All matters listed under Consent Agenda are routine and will be adopted by one motion unless a member of the City Council or the public requests discussion or a separate vote.

Approval of Minutes

2. October 1, 2024 Regular Meeting (Not a project under CEQA per Article 20 Section 15378 and under General Rule Article 5 Section 15061)
Resolutions
A resolution is an expression of opinion or evidence of a decision made by the City Council and often relates to administrative business of the City. Resolutions generally become effective immediately upon adoption.

3. Awarding Three Professional Services Agreements in the Amount of $500,000 Each for On-Call Material Testing Professional Services for Projects Within the City of Monterey to: (1) Moore Twining Associates, Inc.; (2) Twining, Inc.; and (3) Construction Testing Services, Inc. ***CIP/NCIP *** (Not a Project Under CEQA per Article 20, Section 15378 and Under General Rule Article 5, Section 15061)

4. Approve the Purchase of Four Ford Maverick Hybrid Trucks in the Amount of $154,790.68 from Downtown Ford of Sacramento (Not a project under CEQA Article 20, Section 15378 and under General Rule Article 5, Section 15061) 10/15/2024 4:00:00 PM
3 5. Approve the Purchase of Three Ford Police Interceptors in the Amount of $175,584.15 from Folsom Lake Ford, Inc. (Not a project under CEQA Article 20, Section 15378 and under General Rule Article 5, Section 15061)
Other

6. Appoint Agency Negotiators for Conference with Real Property Negotiators Pursuant to Government Code Section 54956.8; Property: 601 Wave Street, Suite 400; Agency Negotiators: Kimberly Cole and Janna Aldrete; Negotiating Parties: Mark Hastings (Monterey General Store/American Country Classics); Under Negotiation: Price and Terms of Payment for Lease Amendment (Not a Project under CEQA per Article 20, Section 15378 and under General Rule Article 5, Section 15061) *** End of Consent Agenda ***

PUBLIC APPEARANCE
Public Appearance items are on non-routine issues that might stimulate public interest and comments.

7. Adopt a Resolution Approving Affordable Housing and Property Disposition Agreement and a Ground Lease between MP Madison Street Associates, L.P. and the City of Monterey for the Properties Located at 587 and 593 Van Buren Street and 424 and 450 Madison Street, Adjacent Parking Lot and Area Behind the Parks and Recreation Administration Building Located at 546 Dutra Street and Authorize the City Manager to Negotiate and Execute All Related Documents (Not a Project Under CEQA per Article 20, Section 15378 and Under General Rule Article 5, Section 15061) *** Adjourn to Closed Session ***
The City Council will take public comments on closed session items before convening to closed session.

CLOSED SESSION
Part or all of a meeting may be closed to the public under special conditions. Council can consider only matters covered in the agenda descriptions.

8. Closed Session Conference with Real Property Negotiators Pursuant to Government Code Section 54956.8
Property: 601 Wave Street, Suite 400
Agency Negotiators: Kimberly Cole and Janna Aldrete
Negotiating Parties: Mark Hastings (Monterey General Store/American Country Classics) Under Negotiation: Price and Terms of Payment for Lease Amendment (Not a Project under CEQA per Article 20, Section 15378 and under General Rule Article 5, Section 15061)
RECESS

RECONVENE
*** Evening Session Agenda ***
7:00 - 11:00 p.m.

No discussion of a new item will be started after 10:30 p.m. 10/15/2024 4:00:00 PM
4 PLEDGE OF ALLEGIANCE

GENERAL PUBLIC COMMENTS CONTINUED
Any person who did not offer a general public comment in the afternoon session may speak to any item that is not on the agenda and that is in the City of Monterey’s subject matter jurisdiction.

ANNOUNCEMENTS FROM CLOSED SESSION

PUBLIC APPEARANCE (EVE)
Public Appearance items are on non-routine issues that might stimulate public interest and comments.

9. Appeal of Jerod Balthrop of Dismissal from the Position of Electrician with the Public Works Department (Not a Project Under CEQA per Article 20, Section 15378 and Under General Rule Article 5, Section 15061)

COUNCIL COMMENTS
Councilmembers may ask a question for clarification, make a brief announcement, or make a brief report on their activities. In addition, Councilmember or the City Council may provide a referral to staff or other resources for factual information. (Government Code section 54954.2(a)(3).)

CITY MANAGER REPORTS
The City Manager may make a brief report on their activities or a brief announcement. They may also ask for clarification or direction regarding scheduling of Council meetings and study sessions.
*** Adjourn to Closed Session ***
The City Council will take public comments on closed session items before convening to closed session.

CLOSED SESSION (EVE)
Part or all of a meeting may be closed to the public under special conditions. Council can consider only matters covered in the agenda descriptions.

10. Public Employee Discipline/Dismissal/Release Pursuant to Government Code section 54957 (Not a Project under CEQA per Article 20, Section 15378 and Under General Rule Article 5, Section 15061)

ADJOURNMENT
Writings distributed for discussion or consideration on these matters within 72 hours prior to the meeting, pursuant to Government Code § 54957.5, are available at: monterey.gov/submitted-comments and in the City Manager’s Office at 580 Pacific St., Room 1, Monterey, CA 93940 during regular business hours.

Information distributed to the Council at the Council meeting becomes part of the public record. Members of the public who submit written public comment on an agenda item may be subject to the Levine Act which requires disclosure of campaign contributions of more than $250 to an officer of the City within the preceding 12 months.

CITY OF MONTEREY'S 24-HOUR SUGGESTION HOTLINES:

Voicemail: (831) 646-3799 Email: [email protected] Website: http://www.monterey.gov 10/15/2024 4:00:00 PM
5 INTERPRETATION: The Monterey City Council invites and encourages public participation at its meetings. Requests for language interpretation may be made by contacting the City Clerk at [email protected] or 831-646-3935. The City Clerk will make every effort to accommodate requests for interpreter assistance. Requests should be made as soon as possible in advance of any meeting of the City Council. The City is committed to addressing language interpretation requests swiftly in order to maximize public participation.

ACCESSIBILITY: The City of Monterey is committed to including the disabled in all of its services, programs and activities. In compliance with the Americans with Disabilities Act, if you need special assistance to participate in this meeting, please contact the City Clerk’s Office at [email protected] or (831) 646-3935. Notification 30 hours prior to the meeting will enable the City to make reasonable arrangements to ensure accessibility to this meeting [28 CFR 35.102-

35.104 ADA Title II]. Later requests will be accommodated to the extent feasible. For communicationrelated assistance, dial 711 to use the California Relay Service (CRS) to speak to City offices. CRS offers free text-to-speech, speech-to-speech, and Spanish-language services 24 hours a day, 7 days a week. If you require a hearing amplification device to attend a meeting, dial 711 to use CRS to talk to the City Clerk's Office at (831) 646-3935 to coordinate use of a device.

Upcoming city meetings are listed at https://www.monterey.gov/agendas More information is available by calling (831) 646-3935 Council
Agenda Report
FROM: Hans Uslar, City Manager
Prepared By: Hayley Goodwein, Administrative Assistant
SUBJECT: Recognition of Defense Language Institute Quarterly Joint Service Awards for Fourth Quarter FY24 (Not a Project Under CEQA per Article 20, Section 15378, and Under General Rule Article 5, Section 15061)
RECOMMENDATION:

That the City Council recognize the winners of the Defense Language Institute’s Fourth Quarter FY24 Joint Enlisted Board (JEB) Awards.

VALUE DRIVERS:

Serve as stewards of the City’s financial resources through sound economic vitality efforts, streamlining operations, reasonable revenue enhancements, visionary long-term planning, fiscal transparency, and community partnerships.

POLICY IMPLICATIONS: None.

CAMPAIGN DISCLOSURE REQUIREMENT (LEVINE ACT) APPLIES: No.

FISCAL IMPLICATIONS: None.

ENVIRONMENTAL DETERMINATION:

Because the proposed action and this matter have no potential to cause any effect on the environment, or because it falls within a category of activities excluded as projects pursuant to CEQA Guidelines section 15378, this matter is not a project. Because the matter does not cause a direct or any reasonably foreseeable indirect physical change on or in the environment, this matter is not a project. Any subsequent discretionary projects resulting from this action will be assessed for CEQA applicability.

ALTERNATIVES CONSIDERED:

The City Council could choose not to recognize the winners of the Fourth Quarter FY24 Joint Enlisted Board (JEB) Awards.

Date: 10/15/2024
Item No.: 1.

Council Regular Meeting, 10/15/2024, Item No. 1., Item Page 1, Packet Page 6 №10/24
DISCUSSION:

The Defense Language Institute, Foreign Language Center (DLIFLC), located in the U.S. Army Garrison Presidio of Monterey, trains military service members in all military branches. DLIFLC conducts a protocol known as the Joint Enlisted Board (JEB) each quarter to assess the motivation, knowledge, and ability to go above and beyond that of the average Soldier, Marine, Sailor, and Airman.

Noncommissioned officers, petty officers, and junior enlisted from each branch compete by displaying their knowledge in a variety of joint service subjects, including History of the Presidio of Monterey and DLIFLC, Current Affairs and World Events, Customs and Courtesies, Uniform Code of Military Justice, Military Leadership, and more. The service member's many weeks of studying and competing in unit boards culminate with an appearance before the DLIFLC Joint Enlisted Board.

As part of the City of Monterey’s longstanding relationship with the DLIFLC and Presidio of Monterey, the City Council frequently recognizes and honors these dedicated award recipients.

The Mayor and City Council will recognize the winners of the Fourth Quarter FY24 DLIFLC Quarterly Joint Service Awards at its meeting on October 15, 2024:
 Technical Sergeant Stephanie Battle, from the U.S. Air Force  Lance Corporal Keegan Ogorman, from the U.S. Marine Corps  Sergeant Trenton Platt, from the U.S. Marine Corps
HU/hg
Attachments: 1. Proclamations
Writings distributed for discussion or consideration on this matter within 72 hours prior to the meeting, pursuant to Government Code § 54957.5, will be made available at the following link:
https://monterey.gov/Submitted-Comments
Council Regular Meeting, 10/15/2024, Item No. 1., Item Page 2, Packet Page 7 ATTACHMENT 1
Council Regular Meeting, 10/15/2024, Item No. 1., Item Page 3, Packet Page 8 ATTACHMENT 1
Council Regular Meeting, 10/15/2024, Item No. 1., Item Page 4, Packet Page 9 Office of the Mayor
Monterey, California 93940
Proclamation Honoring
Tytler Williamson
The Defense Language Institute Foreign Language Center's Quarterly Joint Service Award Recipient
Sergeant Trenton Platt
WHEREAS, the Defense Language Institute Foreign Language Center (DLIFLC) has established the Quarterly Joint Service Noncommissioned Officer/Petty Officer and Junior Enlisted Board; and,
WHEREAS, as a recipient of the Board award, Sergeant Trenton Platt, has demonstrated extraordinary personal abilities, leadership skills, and knowledge of the history of the Presidio of Monterey and D LIFLC, Chain of Command, World Events, Customs and Courtesies, First Aid, Code of Conduct, Uniform Code of Military Justice, Military Leadership, and the Armed Forces Insignia; and, WHEREAS, the Monterey Community is proud of the Country's service members as well as its outstanding relationship with DLIFLC.

NOW, THEREFORE, BE IT PROCLAIMED that I, Tyller Williamson, Mayor of the City of Monterey1 on behalf of our City Council and citizens, hereby recognize Sergeant Trenton Platt, United States Marine Corps, for a job well done1 and thank them for their continuing contributions to the Armed Services and to our Nation.

October 15, 2024 M�
Tyller Williamson, Mayor
ATTACHMENT 1
Council Regular Meeting, 10/15/2024, Item No. 1., Item Page 5, Packet Page 10

MINUTES

CITY COUNCIL REGULAR MEETING

CITY OF MONTEREY
Tuesday, October 1, 2024
4:00 PM
COUNCIL CHAMBER, 580 PACIFIC ST.

MONTEREY, CALIFORNIA
Councilmembers

Present: Barber*, Garcia, Haffa, Smith, Williamson

Absent: None
* Attended remotely by teleconference pursuant to Gov. Code sec. 54953(f)(2)(A) for just cause
City Staff

Present:

City Manager, Assistant City Manager, City Attorney, Finance Director, Community Development Director, Police Chief, Parks and Recreation Director, Library & Museums Director, Public Works Director, City Clerk, Property Manager, Assistant Finance Director, Conference Center General Manager, Planning Manager, Engineering Assistant, Parks Operations Manager, Deputy Public Works Director/City Engineer ***Afternoon Session Agenda ***

CALL TO ORDER
Mayor Williamson called the meeting to order at 4:00 p.m.

TELECONFERENCE NOTICE
Councilmember Barber confirmed that she could hear the meeting proceedings, gave a brief description of the circumstances relating to her need to appear remotely pursuant to the “Just Cause” clause, and stated that no person over the age of 18 was present in the room with her during the meeting.

City Clerk Klein called the roll with the Council present as indicated above.

PLEDGE OF ALLEGIANCE
Councilmember Haffa led the Pledge.

GENERAL PUBLIC COMMENTS
Public comment on non-agendized matters was received from Steve Lightfoot, Jean Rasch, Luis Osorio, Nina Beety, and Peter Berridge.

CONSENT AGENDA
Public comment on the Consent Items was received from Nina Beety, who spoke on Item 7, stating that the Planning Commission had been given different information than what was provided to the Council in the agenda report, and requesting that the matter be returned to the Planning Commission for reconsideration.

The Council remarked that they could move forward with Item 7 given that it was calling for a public hearing that would be heard in November.

Date: 10/15/2024
Item No.: 2.

Council Regular Meeting, 10/15/2024, Item No. 2., Item Page 1, Packet Page 11 City Council Minutes October 1, 2024
2 On a motion by Councilmember Smith, seconded by Councilmember Barber, and carried by the following vote, which was conducted by roll call, the City Council approved the CONSENT AGENDA:

AYES: 5 COUNCILMEMBERS: Barber, Garcia, Haffa, Smith, Williamson NOES: 0 COUNCILMEMBERS: (None)
ABSENT: 0 COUNCILMEMBERS: (None)
ABSTAIN: 0 COUNCILMEMBERS: (None)
RECUSED: 0 COUNCILMEMBERS: (None)
Approval of Minutes

1. September 17, 2024 Regular Meeting (Not a project under CEQA per Article 20 Section 15378 and under General Rule Article 5 Section 15061)
Action: Approved
Award of Construction Contracts

2. Award a Construction Contract in the Amount of $331,327.00 to FBD Vanguard Construction, Inc. for the Old Town ADA Curb Ramp Improvements Project (35C1555) (Exempt from CEQA, Article 19, Section 15301, Class 1) ***Measure P/S***
Action: Adopted Resolution No. 24-155 C.S.

Ordinances

3. 2nd Reading of an Ordinance Amending Section 1-9.3 of the Monterey City Code to exempt City Administrative Citations from the $1,000 Maximum Penalty set forth in California Government Code Section 36901 (Not a Project under CEQA Article 20, Section 15378 and under General Rule Article 5, Section 15061)
Action: Adopted Ordinance No. 3686 C.S.

4. 2nd Reading of an Ordinance to Add Monterey City Code sec. 2-1.07, "Conflict of Interest Code" (FPPC Form 700) to Incorporate by Reference Regulations Adopted by the Fair Political Practices Commission and Adopt a Resolution Approving Exhibit A to the Ordinance to Update the City’s Conflict of Interest Code (Not a project under CEQA per Article 20, Section 15378 and under General Rule Article 5, Section 15061)
Action: Adopted Ordinance No. 3687 C.S.

Resolutions

5. Award a Professional Services Agreement in an Amount Not-to-Exceed of $230,810.00 to BKF Engineers for the Mark Thomas Drive and Sloat Avenue Separated Bike/Pedestrian Path Study, Preliminary Design and Environmental Document (Exempt from CEQA, Article 19, Section 15306, Class 6) ***NCIP***
Action: Adopted Resolution No. 24-156 C.S.

6. Authorize the Purchase of Banquet Chairs for the Monterey Conference Center (Not a Project Under CEQA, per Article 20, Section 15378 and under General Rule Article 5, Section 15061) Action: Adopted Resolution No. 24-157 C.S.

7. Set a November 19, 2024 Public Hearing to Consider Vacating an Unimproved Portion of the Right of Way on Manzanita Street at Johnson Street (Exempt from CEQA per Article 19, Section 15305, Class 5)
Action: Adopted Resolution No. 24-158 C.S.

Council Regular Meeting, 10/15/2024, Item No. 2., Item Page 2, Packet Page 12 City Council Minutes October 1, 2024
3 Other

8. Appoint Agency Negotiators for Conference with Real Property Negotiators Pursuant to Government Code Section 54956.8; Property: 587 and 593 Van Buren Street; 424 and 450 Madison Street; Adjacent Parking Lot; and Area Behind the Parks and Recreation Administration Building Located at 546 Dutra Street; Agency Negotiators: Kimberly Cole, Levi Hill and Janna Aldrete; Negotiating Parties: MP Madison Street Associates, L.P.; Under Negotiation: Price and Terms of Payment for New Ground Lease Agreement (Not a Project under CEQA per Article 20, Section 15378 and under General Rule Article 5, Section 15061) Action: Appointed agency real property negotiators Kimberly Cole, Levi Hill, and Janna Aldrete
*** End of Consent Agenda ***

STUDY SESSION

9. Receive a Report on the History of the Lower Presidio Lease Agreement and Receive Initial Feedback on Future Plans for the Lease (Not a Project Under CEQA per Article 20, Section 15378 and Under General Rule Article 5, Section 15061)
Action: Received report
City Manager Uslar, Library & Museums Director Edwards, Public Works Director Renny and Assistant City Manager Rojanasathira gave the staff presentation and answered Councilmembers' questions, with additional input provided by City Attorney Davi.

Public comment was received from: Bill Wojtkowski, of the Old Monterey Foundation ("OMF"), who said that OMF wanted preservation and public access to continue; Lorene Kimzey, of the Museums and Cultural Arts Commission ("MCAC"), who requested that the Council allow the MCAC to prepare a report on their findings and recommendations on the matter; Ellen Martin, of OMF, who shared her thoughts and asked whether there were already any sites in Monterey designated federally as historic; Jean Rasch, who said that there should be community partnerships to maintain the park going forward; and Bob Evans, of MCAC, who echoed the request for MCAC to prepare a report and asked the Council to retain the ability to use the park.

The Council discussed the matter. It was stated that there was a lot of community interest in preserving the park. Various levels of support were indicated for the idea of continuing the lease and keeping the park under the City's control. It was opined that if the park could receive a national historic designation, that would be better because of the additional resources and attendance it could bring. It was asserted that regardless of the approach it was critical that the City have legal guarantees that preservation and public access would be certain.

It was stated that the question remained about whether to continue the lease with the Army, and how to move forward. It was questioned whether the request from the Army to participate in funding the design and construction of a full slope height retaining wall along the Lighthouse Curve would be a reason to renegotiate the lease. It was acknowledged that there would need to be a plan to address erosion and perceived safety issues at the hillside in question. It was noted that if the City ended the lease because of the retaining wall issue, the Army would still need to put up a retaining wall to address the concerns they had raised, and it was questioned what the logic was of the Army requesting the City to do the work of the wall. It was stated that the City had been good partners with this lease and should dig in further with stakeholders to mitigate the retaining wall issue.

Council Regular Meeting, 10/15/2024, Item No. 2., Item Page 3, Packet Page 13 City Council Minutes October 1, 2024
4 It was stated that more research was needed to develop a plan forward. Interest was expressed in pursuing national recognition, partnerships, and grant opportunities, and in heightening education and historical programming on the site. It was expressed that the Native Americans whose histories were connected to the land needed to be part of the solution and that the park features should be designed in a way that appreciated the indigenous community more.

It was stated that continuing to use the general fund toward maintenance of the park may still be necessary, noting that providing access to an important historical site for roughly $80,000 was a good use of public taxpayer money. It was stressed that Monterey was a historic city and that it was appropriate for some part of the budget to be allocated toward preserving its history.

Concern was expressed about developing the park in a way that would bring in too many visitors. It was stated that public access was of utmost importance and that visitor volume should be expanded in terms of increased use and appreciation of the site's history, not in terms of high vehicle traffic.

It was agreed that the MCAC should be involved in the discussion about the future of the park, and that they should be asked to prepare a report and potentially to host a public forum that would bring together the City with stakeholders including Congressman Jimmy Panetta, representatives from the U.S. Army, California State Parks, U.S. National Park Service, business associations, neighborhood associations, and local historical organizations. Other suggested potential collaborators going forward included the Neighborhood and Community Improvement Program (NCIP) Committee, the Big Sur Land Trust, the hospitality industry, and the Monterey Peninsula Unified School District. Outreach within the community was requested regarding their use of the park, including conducting a survey, adding a topic page to the Have Your Say Monterey engagement portal, and holding outreach events. It was requested to include information about the work of the OMF in the City's outreach efforts.

Mayor Williamson reopened public comment. On question from Council, Bill Wojtkowski said that the OMFs Stage II plans had been put on hold until the slope erosion issues were solved.

With no further requests to speak, Mayor Williamson closed public comment.

COUNCIL COMMENTS
Councilmember Smith said it was good to be home after a visit to Florida. He sent prayers to people impacted by flooding in the Southeast and encouraged everyone to donate generously to assist those affected.

Mayor Williamson reported from Monterey One Water (M1W) on the status of a proposal from California-American Water ("Cal Am") regarding a condition from the Coastal Commission’s approval of the desalination project. He said that M1W was moving forward with allowing Cal Am's permit to go to the regional water board. He said that the City's Climate Action Plan was written in 2016 and noted that there had been a lot of advances since that time, which he proposed presented an opportunity to reengage on that topic. He said he hoped the next Council could look at revising the Climate Action Plan. He stated that a candidate had attacked another candidate for being a working-class parent, which he said was insulting to many people. He encouraged working-class people and parents, stating that their voice was just as important as anybody else's. He asked residents to lower the local political temperature to help move Monterey forward in a positive direction.

CITY MANAGER REPORTS – None made.
*** Adjourn to Closed Session (See additional agenda) *** Council Regular Meeting, 10/15/2024, Item No. 2., Item Page 4, Packet Page 14 City Council Minutes October 1, 2024
5 Public comment on the closed session was not received.

REPORT FROM CLOSED SESSION
cs

1. Closed Session Conference with Real Property Negotiators Pursuant to Government Code Section 54956.8
Property: 587 and 593 Van Buren Street; 424 and 450 Madison Street; Adjacent Parking Lot and Area Behind the Parks and Recreation Administration Building Located at 546 Dutra Street
Agency Negotiators: Kimberly Cole, Levi Hill and Janna Aldrete Negotiating Parties: MP Madison Street Associates, L.P.

Under Negotiation: Price and Terms of Payment for New Ground Lease Agreement (Not a Project under CEQA per Article 20, Section 15378 and under General Rule Article 5, Section 15061)
Action: No reportable action taken

ADJOURNMENT
The Council adjourned at 6:05 p.m.

Respectfully Submitted, Approved,
Clementine Bonner Klein Tyller Williamson
City Clerk Mayor
Council Regular Meeting, 10/15/2024, Item No. 2., Item Page 5, Packet Page 15 Council
Agenda Report
№08/22
FROM: Andrea Renny, Public Works Director
Prepared By: Max Rieser, Senior Engineer
SUBJECT: Awarding Three Professional Services Agreements in the Amount of $500,000 Each for On-Call Material Testing Professional Services for Projects Within the City of Monterey to: (1) Moore Twining Associates, Inc.; (2) Twining, Inc.; and (3) Construction Testing Services, Inc. ***CIP/NCIP *** (Not a Project Under CEQA per Article 20, Section 15378 and Under General Rule Article 5, Section 15061) RECOMMENDATION:

That the City Council adopt the attached resolutions awarding Professional Service Agreements for On-Call Material Testing Professional Services for Projects within the City of Monterey for a term of one year, with the option to extend for four additional one-year terms, with an annual fee not to exceed $500,000 to: (1) Moore Twining Associates, Inc.; (2) Twining, Inc and (3) Construction Testing Services, Inc., and authorizing the City Manager, or their designee, to execute the Professional Services Agreements upon receipt of information required by the Request for Proposal (RFP).

VALUE DRIVERS:

In collaboration with our community partners, work to improve the quality of life of all of our community members by fostering diversity, equity, and inclusion; championing equitable access to affordable housing; and maintaining a safe environment.

POLICY IMPLICATIONS:

This action is consistent with Council policy to approve Professional Services Agreements exceeding $75,000. On-call agreements are used for other types of professional services throughout the City. These services will augment the City’s capacity for project delivery, consistent with the City Council’s vision and strategic initiative.

CAMPAIGN DISCLOSURE REQUIREMENT (LEVINE ACT) APPLIES: Yes.

FISCAL IMPLICATIONS:

Fees for On-Call Material Testing Professional Services will be based on a project-by-project basis directly charged to individual project budgets. Each Capital Improvement Program (CIP) and Neighborhood and Community Improvement Program (NCIP) project is separately approved and budgeted by the Council. The City is under no obligation to expend any funds under these Professional Services Agreements.

Date: 10/15/2024
Item No.: 3.

Council Regular Meeting, 10/15/2024, Item No. 3., Item Page 1, Packet Page 16 ENVIRONMENTAL DETERMINATION:

The City of Monterey determined that the proposed action is not a project as defined by the California Environmental Quality Act (CEQA)(CCR, Title 14, Chapter 3 (“CEQA Guidelines), Article 20, Section 15378). In addition, CEQA Guidelines Section 15061 includes the general rule that CEQA applies only to activities which have the potential for causing a significant effect on the environment. Where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA. Because the proposed action and this matter have no potential to cause any effect on the environment, or because it falls within a category of activities excluded as projects pursuant to CEQA Guidelines section 15378, this matter is not a project. Because the matter does not cause a direct or any reasonably foreseeable indirect physical change on or in the environment, this matter is not a project. Any subsequent discretionary projects resulting from this action will be assessed for CEQA applicability.

ALTERNATIVES CONSIDERED:

Council could decide not to award these Material Testing Professional Services Agreements and direct staff to issue requests for proposals for each project individually. However, this alternative is not recommended as there is a significant benefit to having material testing services for funded CIP and NCIP projects. Having pre-approved, on-call, as-needed professional material testing services readily available allows for more efficient and timely delivery of projects as well as ensuring quality.

DISCUSSION:

The City has active and pending projects that require technical assistance from material testing firms. Material testing is necessary to ensure the quality of construction materials and methods.

Timely testing of material characteristics assures that work is compliant with the project specifications. For example, testing concrete for properties like strength and durability or for soil/subgrade for compaction. This testing helps ensure the right materials are used and that the constructed work is safe, reliable, and will last as long as intended. The City does not have any in-house material testing capacity and must contract out these services. Having three On-Call Material Testing firms available allows the City to provide these services in a timely manner.

Individual project task orders will be issued based on the firm’s expertise, workload capacity, services to be performed, schedule requirements, and hourly rates submitted in their proposal.

All task orders will be issued based on an agreed-upon, written scope of work, implementation schedule, and maximum fee arrangement negotiated on a project-by-project basis.

Selection of the best-qualified firms was made in accordance with Section 28-30 of the City’s Purchasing Ordinance. On April 17, 2024, a Request for Proposal was issued and advertised through the City’s procurement portal, OpenGov. In addition, notification emails were sent to firms that expressed interest in providing professional engineering services to the City. Five (5) proposals were received on June 24, 2024. A selection committee consisting of CIP and NCIP Engineering Division staff independently evaluated and ranked the proposals. After deliberations, the top three ranked firms are as follows:

1. Moore Twining Associates, Inc., Fresno, CA

2. Twining, Inc., Long Beach, CA

3. Construction Testing Services, Inc., Pleasanton, CA
Council Regular Meeting, 10/15/2024, Item No. 3., Item Page 2, Packet Page 17 The proposed Professional Services Agreements would be managed by the Engineering Division, and On-Call Material Testing Services would also be made available for use by other City Departments for funded projects.

AR/mr/pl
Attachments: 1. Resolution awarding a Professional Services Agreement to Moore Twining Associates, Inc.

2. Resolution awarding a Professional Services Agreement to Twining, Inc.

3. Resolution awarding a Professional Services Agreement to Construction Testing Services, Inc.

4. Consultant Selection Evaluation Criteria
e: Zachary Peacock, Moore Twining Associates, Inc.

Mariel Attento Rhorer, Twining, Inc.

Taryn Edwards, Construction Testing Services, Inc.

Writings distributed for discussion or consideration on this matter within 72 hours prior to the meeting, pursuant to Government Code § 54957.5, will be made available at the following link:
https://monterey.gov/Submitted-Comments
Council Regular Meeting, 10/15/2024, Item No. 3., Item Page 3, Packet Page 18 RESOLUTION NO. __-___ C.S.

A RESOLUTION OF THE COUNCIL OF THE CITY OF MONTEREY
№010/23
AWARDING A PROFESSIONAL SERVICES AGREEMENT IN THE AMOUNT OF $500,000

FOR ON-CALL MATERIAL TESTING PROFESSIONAL SERVICES FOR PROJECTS WITHIN THE CITY OF MONTEREY TO MOORE TWINING ASSOCIATES, INC.***CIP/NCIP*** WHEREAS, the need exists for the City to obtain prompt materials testing services to support the Capital Improvement Program (CIP), the Neighborhood Improvement Program (NIP), and other municipal programs;
WHEREAS, on the 17th day of April 2024, the City issued a Request for Proposal (RFP) for On-Call Civil Material Testing Professional Services for Projects within the City of Monterey and notified firms that specialize in this work, including those firms who had expressed interest, as well as those who had previously completed work for the City; WHEREAS, on the 24th day of June 2024, the City received five (5) proposals from firms that perform this work;
WHEREAS, staff formed a selection committee to independently review and score each firm’s proposal based upon specific criteria in the RFP; WHEREAS, following deliberations, the selection committee determined that Moore Twining Associates, Inc., was the highest-ranked firm;
WHEREAS, the firms will provide services on an on-call, as-needed, project-specific basis as defined by the City, and all task orders will have a defined scope, schedule, and fee arrangement that will be negotiated based on the hourly rate schedule included in the agreement; and
WHEREAS, the City of Monterey determined that the proposed action is not a project as defined by the California Environmental Quality Act (CEQA)(CCR, Title 14, Chapter 3 (“CEQA Guidelines), Article 20, Section 15378). In addition, CEQA Guidelines Section 15061 includes the general rule that CEQA applies only to activities which have the potential for causing a significant effect on the environment. Where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA. Because the proposed action and this matter have no potential to cause any effect on the environment, or because it falls within a category of activities excluded as projects pursuant to CEQA Guidelines section 15378, this matter is not a project.

Because the matter does not cause a direct or any reasonably foreseeable indirect physical change on or in the environment, this matter is not a project. Any subsequent discretionary projects resulting from this action will be assessed for CEQA applicability.

NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF MONTEREY that the above recitals are true and correct and are hereby incorporated and adopted as findings of the City Council as if fully set forth herein.

Council Regular Meeting, 10/15/2024, Item No. 3., Item Page 4, Packet Page 19 2 NOW, THEREFORE, BE IT FURTHER RESOLVED BY THE COUNCIL OF THE CITY OF MONTEREY that it hereby:

1. Awards a Professional Services Agreement in the Amount of $500,000 for On-Call Material Testing Professional Services for Projects Within the City of Monterey to Moore Twining Associates, Inc., for a term of one year, with the option to extend for four additional one-year terms, with an annual amount not to exceed $500,000.00; and

2. Authorizes the City Manager, or their designee, to execute the Professional Services Agreement upon receipt of information required by the Request for Proposal (RFP).

PASSED AND ADOPTED BY THE COUNCIL OF THE CITY OF MONTEREY this _____ day of _______, 202_, by the following vote:

AYES: COUNCILMEMBERS:

NOES: COUNCILMEMBERS:

ABSENT: COUNCILMEMBERS:

ABSTAIN: COUNCILMEMBERS:

APPROVED:

ATTEST:

Mayor of said City
City Clerk thereof
Council Regular Meeting, 10/15/2024, Item No. 3., Item Page 5, Packet Page 20 RESOLUTION NO. __-___ C.S.

A RESOLUTION OF THE COUNCIL OF THE CITY OF MONTEREY
№010/23
AWARDING A PROFESSIONAL SERVICES AGREEMENT IN THE AMOUNT OF $500,000

FOR ON-CALL MATERIAL TESTING PROFESSIONAL SERVICES FOR PROJECTS WITHIN THE CITY OF MONTEREY TO TWINING, INC.***CIP/NCIP***
WHEREAS, the need exists for the City to obtain prompt materials testing services to support the Capital Improvement Program (CIP), the Neighborhood Improvement Program (NIP), and other municipal programs;
WHEREAS, on the 17th day of April 2024, the City issued a Request for Proposal (RFP) for On-Call Civil Material Testing Professional Services for Projects within the City of Monterey and notified firms that specialize in this work, including those firms who had expressed interest, as well as those who had previously completed work for the City; WHEREAS, on the 24th day of June 2024, the City received five (5) proposals from firms that perform this work;
WHEREAS, staff formed a selection committee to independently review and score each firm’s proposal based upon specific criteria in the RFP; WHEREAS, following deliberations, the selection committee determined that Twining, Inc., was the second highest ranked firm;
WHEREAS, the firms will provide services on an on-call, as-needed, project-specific basis as defined by the City, and all task orders will have a defined scope, schedule, and fee arrangement that will be negotiated based on the hourly rate schedule included in the agreement; and
WHEREAS, the City of Monterey determined that the proposed action is not a project as defined by the California Environmental Quality Act (CEQA)(CCR, Title 14, Chapter 3 (“CEQA Guidelines), Article 20, Section 15378). In addition, CEQA Guidelines Section 15061 includes the general rule that CEQA applies only to activities which have the potential for causing a significant effect on the environment. Where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA. Because the proposed action and this matter have no potential to cause any effect on the environment, or because it falls within a category of activities excluded as projects pursuant to CEQA Guidelines section 15378, this matter is not a project.

Council Regular Meeting, 10/15/2024, Item No. 3., Item Page 6, Packet Page 21 2 NOW, THEREFORE, BE IT FURTHER RESOLVED BY THE COUNCIL OF THE CITY OF MONTEREY that it hereby:

1. Awards a Professional Services Agreement in the Amount of $500,000 for On-Call Material Testing Professional Services for Projects Within the City of Monterey to Twining, Inc., for a term of one year, with the option to extend for four additional oneyear terms, with an annual amount not to exceed $500,000.00; and

2. Authorizes the City Manager, or their designee, to execute the Professional Services Agreement upon receipt of information required by the Request for Proposal (RFP).

PASSED AND ADOPTED BY THE COUNCIL OF THE CITY OF MONTEREY this _____ day of _______, 202_, by the following vote:

AYES: COUNCILMEMBERS:

NOES: COUNCILMEMBERS:

ABSENT: COUNCILMEMBERS:

ABSTAIN: COUNCILMEMBERS:

APPROVED:

ATTEST:

Mayor of said City
City Clerk thereof
Council Regular Meeting, 10/15/2024, Item No. 3., Item Page 7, Packet Page 22 RESOLUTION NO. __-___ C.S.

A RESOLUTION OF THE COUNCIL OF THE CITY OF MONTEREY
№010/23
AWARDING A PROFESSIONAL SERVICES AGREEMENT IN THE AMOUNT OF $500,000

FOR ON-CALL MATERIAL TESTING PROFESSIONAL SERVICES FOR PROJECTS WITHIN THE CITY OF MONTEREY TO CONSTRUCTION TESTING SERVICES, INC.***CIP/NCIP*** WHEREAS, the need exists for the City to obtain prompt materials testing services to support the Capital Improvement Program (CIP), the Neighborhood Improvement Program (NIP), and other municipal programs;
WHEREAS, on the 17th day of April 2024, the City issued a Request for Proposal (RFP) for On-Call Civil Material Testing Professional Services for Projects within the City of Monterey and notified firms that specialize in this work, including those firms who had expressed interest, as well as those who had previously completed work for the City; WHEREAS, on the 24th day of June 2024, the City received five (5) proposals from firms that perform this work;
WHEREAS, staff formed a selection committee to independently review and score each firm’s proposal based upon specific criteria in the RFP; WHEREAS, following deliberations, the selection committee determined that Construction Testing Services, Inc., was the third highest-ranked firm; WHEREAS, the firms will provide services on an on-call, as-needed, project-specific basis as defined by the City, and all task orders will have a defined scope, schedule, and fee arrangement that will be negotiated based on the hourly rate schedule included in the agreement; and
WHEREAS, the City of Monterey determined that the proposed action is not a project as defined by the California Environmental Quality Act (CEQA)(CCR, Title 14, Chapter 3 (“CEQA Guidelines), Article 20, Section 15378). In addition, CEQA Guidelines Section 15061 includes the general rule that CEQA applies only to activities which have the potential for causing a significant effect on the environment. Where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA. Because the proposed action and this matter have no potential to cause any effect on the environment, or because it falls within a category of activities excluded as projects pursuant to CEQA Guidelines section 15378, this matter is not a project.

Council Regular Meeting, 10/15/2024, Item No. 3., Item Page 8, Packet Page 23 2 NOW, THEREFORE, BE IT FURTHER RESOLVED BY THE COUNCIL OF THE CITY OF MONTEREY that it hereby:

1. Awards a Professional Services Agreement in the Amount of $500,000 for On-Call Material Testing Professional Services for Projects Within the City of Monterey to Construction Testing Services, Inc., for a term of one year, with the option to extend for four additional one-year terms, with an annual amount not to exceed $500,000.00; and

2. Authorizes the City Manager, or their designee, to execute the Professional Services Agreement upon receipt of information required by the Request for Proposal (RFP).

PASSED AND ADOPTED BY THE COUNCIL OF THE CITY OF MONTEREY this _____ day of _______, 202_, by the following vote:

AYES: COUNCILMEMBERS:

NOES: COUNCILMEMBERS:

ABSENT: COUNCILMEMBERS:

ABSTAIN: COUNCILMEMBERS:

APPROVED:

ATTEST:

Mayor of said City
City Clerk thereof
Council Regular Meeting, 10/15/2024, Item No. 3., Item Page 9, Packet Page 24

ATTACHMENT A
Project Name: Project
Code:

Service Area:

Rater’s Name:

Criteria Max
Points
CEL CTS Moore Twining Twining Ninyo &
Moore
Firm Qualifications 20 17.7 19.0 20.0 17.0 17.0
Project References 20 20.0 10.0 18.0 16.0 14.0
Project Team 20 15.0 18.7 18.3 19.0 18.7
Approach to Materials
Testing 20 11.7 18.0 16.7 17.7 18.7
Proposed Procedure and
Schedule for Task Orders 20 11.7 16.3 19.0 17.3 11.7
Total Points(including
reference check): 100 76.0 82.0 92.0 87.0 80.0 0
Total Ranking(including
reference check): #5 #3 #1 #2 #4
Combined Date:

Consultant Selection Evaluation Scorecard

REQUEST FOR PROPOSALS ON-CALL CONSULTANTS

FOR MATERIALS TESTING SERVICES N/A
City of Monterey Include On-Call Services: Yes
Capital Projects Division
ATTACHMENT 4
Council Regular Meeting, 10/15/2024, Item No. 3., Item Page 10, Packet Page 25 Council
Agenda Report
FROM: Andrea Renny, Public Works Director
Prepared By: Rex Van Slyke, Fleet Manager
SUBJECT: Approve the Purchase of Four Ford Maverick Hybrid Trucks in the Amount of $154,790.68 from Downtown Ford of Sacramento (Not a project under CEQA Article 20, Section 15378 and under General Rule Article 5, Section 15061) RECOMMENDATION:

That the City Council adopt a resolution approving the purchase of four Ford Maverick Hybrid Crew Cab trucks from Downtown Ford of Sacramento in the amount of $154,790.68 VALUE DRIVERS:

POLICY IMPLICATIONS:

This action is consistent with Council’s strategic priority to carefully manage City revenues and expenditures which support the delivery of City services.

This action is also consistent with City policy requiring Council approval of agreements exceeding $75,000.

CAMPAIGN DISCLOSURE REQUIREMENT (LEVINE ACT) APPLIES: No.

FISCAL IMPLICATIONS:

The purchase of four General Services Division trucks was included in the list of vehicles to be purchased this fiscal year. The vehicles will be utilized to provide Presidio of Monterey maintenance and repair services for the U.S. Army. Funding would come from the FY25 Equipment Replacement Fund 705-110-1130-3152-4503. The current balance of the account is $360,000.00. The four Hybrid Ford Maverick Crew Cabs will be purchased from Downtown Ford of Sacramento “piggybacking” under the California State Bid (DGS) Contract #1-22-23-20F (Monterey City Code section 28-14) for $154,790.68 including tax and delivery. The Finance Department approved this piggyback purchase on September 17, 2024.

ENVIRONMENTAL DETERMINATION:

The City of Monterey determined that the proposed action is not a project as defined by the California Environmental Quality Act (CEQA) (CCR, Title 14, Chapter 3 (CEQA Guidelines), Article 20, Section 15378). In addition, CEQA Guidelines Section 15061 includes the general rule that CEQA applies only to activities which have the potential for causing a significant effect on the environment. Where it can be seen with certainty that there is no possibility that the Date: 10/15/2024
Item No.: 4.

Council Regular Meeting, 10/15/2024, Item No. 4., Item Page 1, Packet Page 26 №10/24
activity in question may have a significant effect on the environment, the activity is not subject to CEQA. Because the proposed action and this matter have no potential to cause any effect on the environment, or because it falls within a category of activities excluded as projects pursuant to CEQA Guidelines section 15378, this matter is not a project. Because the matter does not cause a direct or any reasonably foreseeable indirect physical change on or in the environment, this matter is not a project. Any subsequent discretionary projects resulting from this action will be assessed for CEQA applicability.

ALTERNATIVES CONSIDERED:

Council could choose not to purchase these four vehicles at this time. This action is not recommended as the General Services Division is currently running at a vehicle deficit due to approved new positions.

DISCUSSION:

The City of Monterey has had a longstanding relationship with the U.S. Department of the Army to provide public works services to the federal government at the U.S. Army Garrison Presidio of Monterey (POM) and U.S. Army Signal Activity Camp Roberts. The Intergovernmental Support Agreement (IGSA) reduces operating costs for the Army while allowing the City of Monterey to receive cost recovery for the services it provides at the Army. Other benefits include operational efficiencies and cost reductions for both the City and the Army.

Due to an increase in the scope of work, four new positions will be hired in FY 2024-25 to support the City’s partnership with the Army. Due to this increase in staff, additional vehicles are needed.

Originally, the City sought to purchase Ford F-150 Lightning all-electric trucks to support a greener fleet, reduce carbon emissions, and save on fuel costs. Unfortunately, the Ford F-150 Lightning trucks are not available through the California State Bid contract and there are also concerns about future production of the F-150 Lightning. The purchase of more affordable Ford Maverick trucks with a hybrid engine are being recommended, as these are hybrid trucks that are cost-effective and also fuel-efficient by pickup truck standards (approximately 40 mpg city).

AR/rvs/dt
Attachments: 1. Resolution
e: Downtown Ford of Sacramento
Chris Dwight, General Services Superintendent
Writings distributed for discussion or consideration on this matter within 72 hours prior to the meeting, pursuant to Government Code § 54957.5, will be made available at the following link:
https://monterey.gov/Submitted-Comments
Council Regular Meeting, 10/15/2024, Item No. 4., Item Page 2, Packet Page 27 RESOLUTION NO. __-___ C.S.

A RESOLUTION OF THE COUNCIL OF THE CITY OF MONTEREY
№011/24

APPROVING THE PURCHASE OF FOUR GENERAL SERVICES DIVISION FORD

MAVERICK HYBRID VEHICLES FROM DOWNTOWN FORD OF SACRAMENTO IN THE AMOUNT OF $154,790.68
WHEREAS, the City of Monterey wishes to purchase four General Services Division Ford Maverick hybrid vehicles;
WHEREAS, the City wishes to enter into a contract with Downtown Ford of Sacramento under the California State Bid (DGS) Contract #1-22-23-20F, utilizing the accepted “piggyback” purchasing process (Monterey City Code 28-14) for the purchase of four Ford Maverick hybrid vehicles;
WHEREAS, the City evaluated the procurement process utilized by California Multiple Award Schedule and determined it to be an acceptable “piggyback” purchasing option allowing the City to utilize multi-agency contract pricing. The Finance Department approved the “piggyback” request on September 17, 2024;
WHEREAS, the City of Monterey has funds appropriated in the FY25 Equipment Replacement Fund, Account No. 705-110-1130-3152-4503 to purchase the four new vehicles for the General Services Division; and
WHEREAS, the City of Monterey determined that the proposed action is not a project as defined by the California Environmental Quality Act (CEQA) (CCR, Title 14, Chapter 3 (CEQA Guidelines), Article 20, Section 15378). In addition, CEQA Guidelines Section 15061 includes the general rule that CEQA applies only to activities which have the potential for causing a significant effect on the environment. Where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA. Because the proposed action and this matter have no potential to cause any effect on the environment, or because it falls within a category of activities excluded as projects pursuant to CEQA Guidelines section 15378, this matter is not a project. Because the matter does not cause a direct or any reasonably foreseeable indirect physical change on or in the environment, this matter is not a project. Any subsequent discretionary projects resulting from this action will be assessed for CEQA applicability.

NOW, THEREFORE, BE IT FURTHER RESOLVED BY THE COUNCIL OF THE CITY OF MONTEREY that it hereby approves the purchase of four General Services Division Ford Maverick hybrid vehicles from Downtown Ford of Sacramento in the amount of $154,790.68.

PASSED AND ADOPTED BY THE COUNCIL OF THE CITY OF MONTEREY this _____ day of _______, 202_, by the following vote:

Council Regular Meeting, 10/15/2024, Item No. 4., Item Page 3, Packet Page 28 AYES: COUNCILMEMBERS:

NOES: COUNCILMEMBERS:

ABSENT: COUNCILMEMBERS:

ABSTAIN: COUNCILMEMBERS:

APPROVED:

ATTEST:

Mayor of said City
City Clerk thereof
Council Regular Meeting, 10/15/2024, Item No. 4., Item Page 4, Packet Page 29 Council
Agenda Report
FROM: Andrea Renny, Public Works Director
Prepared By: Rex Van Slyke, Fleet Manager
SUBJECT: Approve the Purchase of Three Ford Police Interceptors in the Amount of $175,584.15 from Folsom Lake Ford, Inc. (Not a project under CEQA Article 20, Section 15378 and under General Rule Article 5, Section 15061) RECOMMENDATION:

That the City Council adopt a resolution approving the purchase of three Ford Police Interceptors from Folsom Lake Ford, Inc. in the amount of $175,584.15.

VALUE DRIVERS:

POLICY IMPLICATIONS:

This action is consistent with Council’s strategic priority to carefully manage City revenues and expenditures which support the delivery of City services.

This action is also consistent with City policy requiring Council approval of agreements exceeding $75,000.

CAMPAIGN DISCLOSURE REQUIREMENT (LEVINE ACT) APPLIES: No.

FISCAL IMPLICATIONS:

Council approved funding for the replacement of three Ford Police Interceptors in the FY25 vehicle replacement budget. Funding is available in the FY25 Vehicle Replacement Fund 705- 110-1130-2120-4503; the current balance of the account is $270,000.00. The three Ford Police Interceptors would be purchased from Folsom Lake Ford, Inc., “piggybacking” under the California State Bid (DGS) Contract #1-22-23-14C (Monterey City Code section 28-14) for $175,584.15 including tax and delivery. The Finance Department approved this piggyback purchase on September 24, 2024.

ENVIRONMENTAL DETERMINATION:

Council Regular Meeting, 10/15/2024, Item No. 5., Item Page 1, Packet Page 30 №10/24
CEQA. Because the proposed action and this matter have no potential to cause any effect on the environment, or because it falls within a category of activities excluded as projects pursuant to CEQA Guidelines section 15378, this matter is not a project. Because the matter does not cause a direct or any reasonably foreseeable indirect physical change on or in the environment, this matter is not a project. Any subsequent discretionary projects resulting from this action will be assessed for CEQA applicability.

ALTERNATIVES CONSIDERED:

Council could choose not to purchase these three vehicles at this time; however, this is not recommended. With the current automotive industry manufacturing and delivery delays, City staff cannot guarantee when these vehicles will become available to purchase again. Current automotive industry delays range from 1 ½ to 2 years on average from the time of order placement until delivery.

DISCUSSION:

Council approved funding for the purchase of three police vehicles in the FY25 vehicle replacement budget. The City Vehicle & Equipment Replacement Policy uses asset age, mileage, total cost of ownership, historical repairs, and general operating condition data when recommending an asset for replacement. Ideally, police vehicles are replaced based on a fouryear life cycle or 100,000 miles, whichever comes first. Currently, the two vehicles below appear to be on track to be the first ones in line for replacement. Based on the still long delivery times, easily exceeding more than 18 months, it remains difficult to identify the vehicles to be replaced.

AR/rvs/dt
Attachments: 1. Resolution
e: Folsom Lake Ford
Writings distributed for discussion or consideration on this matter within 72 hours prior to the meeting, pursuant to Government Code § 54957.5, will be made available at the following link:
https://monterey.gov/Submitted-Comments
Fleet
ID
Description Mileage Monthly
Usage
3 Year Total
Fuel
3 Yr Work
Order Costs
Total Work
Order Costs
4045 2019 Ford Explorer
Police Interceptor / Patrol
91,596.00 1,409.17 $26,554.14 $30,805.00 $63,157.48
4054 2019 Ford Explorer
Police Interceptor / Patrol
76,201.00 1,154.56 $22,491.55 $44,158.09 $80,756.76
Council Regular Meeting, 10/15/2024, Item No. 5., Item Page 2, Packet Page 31 RESOLUTION NO. __-___ C.S.

A RESOLUTION OF THE COUNCIL OF THE CITY OF MONTEREY
№011/24

APPROVING THE PURCHASE OF THREE FORD POLICE INTERCEPTORS IN THE AMOUNT OF $175,584.15 FROM FOLSOM LAKE FORD, INC.

WHEREAS, the City wishes to enter into a contract with Folsom Lake Ford, Inc. under the California State Bid (DGS) Contract #1-22-23-14C, utilizing the accepted “piggyback” purchasing process (Monterey City Code 28-14) for the purchase of three Ford Police Interceptors;
WHEREAS, the City evaluated the procurement process utilized by California Multiple Award Schedule and determined it to be an acceptable “piggyback” purchasing option allowing the City to utilize multi-agency contract pricing. The Finance Department approved the “piggyback” request on September 24, 2024;
WHEREAS, the City of Monterey has funds appropriated in the FY25 Vehicle Replacement Fund, Account No. 705-110-1130-2120-4503 to purchase the three new vehicles for the Police Department; and
WHEREAS, the City of Monterey determined that the proposed action is not a project as defined by the California Environmental Quality Act (CEQA) (CCR, Title 14, Chapter 3 (CEQA Guidelines), Article 20, Section 15378). In addition, CEQA Guidelines Section 15061 includes the general rule that CEQA applies only to activities which have the potential for causing a significant effect on the environment. Where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA. Because the proposed action and this matter have no potential to cause any effect on the environment, or because it falls within a category of activities excluded as projects pursuant to CEQA Guidelines section 15378, this matter is not a project. Because the matter does not cause a direct or any reasonably foreseeable indirect physical change on or in the environment, this matter is not a project. Any subsequent discretionary projects resulting from this action will be assessed for CEQA applicability;

NOW, THEREFORE, BE IT FURTHER RESOLVED BY THE COUNCIL OF THE CITY OF MONTEREY that it hereby approves the purchase of three Ford Police Interceptors in the amount of $175,584.15 from Folsom Lake Ford, Inc.

PASSED AND ADOPTED BY THE COUNCIL OF THE CITY OF MONTEREY this _____ day of _______, 202_, by the following vote:

AYES: COUNCILMEMBERS:

NOES: COUNCILMEMBERS:

ABSENT: COUNCILMEMBERS:

ABSTAIN: COUNCILMEMBERS:

Council Regular Meeting, 10/15/2024, Item No. 5., Item Page 3, Packet Page 32 APPROVED:

ATTEST:

Mayor of said City
City Clerk thereof
Council Regular Meeting, 10/15/2024, Item No. 5., Item Page 4, Packet Page 33 Council
Agenda Report
FROM: Kimberly Cole, AICP, Community Development Director Prepared By: Janna Aldrete, Property Manager
SUBJECT: Appoint Agency Negotiators for Conference with Real Property Negotiators Pursuant to Government Code Section 54956.8; Property: 601 Wave Street, Suite 400; Agency Negotiators: Kimberly Cole and Janna Aldrete; Negotiating Parties: Mark Hastings (Monterey General Store/American Country Classics); Under Negotiation: Price and Terms of Payment for Lease Amendment (Not a Project under CEQA per Article 20, Section 15378 and under General Rule Article 5, Section 15061)
RECOMMENDATION:

That the City Council appoint agency negotiators for a conference with real property negotiators pursuant to Government Code Section 54956.8 to discuss and provide confidential direction for regarding a lease extension for the premises located at 601 Wave Street, Suite 400.

VALUE DRIVERS:

POLICY IMPLICATIONS:

City Council approval is required for this type of real estate transaction. Closed session confidential review of real estate matters is allowed.

The Surplus Land Act does not apply since there is no disposition as defined under the Act.

CAMPAIGN DISCLOSURE REQUIREMENT (LEVINE ACT) APPLIES: Not for the appointment of agency negotiators. It does apply to the lease extension.

FISCAL IMPLICATIONS:

There are no fiscal implications related to the recommendation to appoint agency negotiators.

ENVIRONMENTAL DETERMINATION:

The City of Monterey determined that the proposed action is not a project as defined by the California Environmental Quality Act (CEQA) (CCR, Title 14, Chapter 3 CEQA Guidelines Article 20, Section 15378). In addition, CEQA Guidelines Section 15061 includes the general rule that CEQA applies only to activities which have the potential for causing a significant effect on the environment. Where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA.

Council Regular Meeting, 10/15/2024, Item No. 6., Item Page 1, Packet Page 34 №10/24
CEQA Guidelines section 15378, this matter is not a project. Because the matter does not cause a direct or any reasonably foreseeable indirect physical change on or in the environment, this matter is not a project. Any subsequent discretionary projects resulting from this action will be assessed for CEQA applicability.

ALTERNATIVES CONSIDERED:

The City Council could decide not to appoint negotiators or appoint different negotiators. This is not recommended by staff. It is appropriate that the Council appoint agency negotiators and authorize a confidential discussion regarding the lease extension.

DISCUSSION:

Mr. Mark Hastings (Monterey General Store/American Country Classics) has leased space at the property located at 601 Wave Street since 1990 and was one of the first tenants in the building. The Monterey General Store is a successful souvenir shop located at the corner of Wave Street and Prescott Avenue.

The current lease is scheduled to expire October 31, 2024 and Mr. Hastings has requested to extend the lease.

City Council approval is required for this type of lease transaction. Closed session discussions are allowed and appropriate for confidential direction in real estate matters of this type.

KC/ja/ad
e: Mark Hastings
Writings distributed for discussion or consideration on this matter within 72 hours prior to the meeting, pursuant to Government Code § 54957.5, will be made available at the following link:
https://monterey.gov/Submitted-Comments
Council Regular Meeting, 10/15/2024, Item No. 6., Item Page 2, Packet Page 35 Council
Agenda Report
FROM: Kimberly Cole, AICP, Community Development Director Levi Hill, AICP, Planning Manager
SUBJECT: Adopt a Resolution Approving Affordable Housing and Property Disposition Agreement and a Ground Lease between MP Madison Street Associates, L.P. and the City of Monterey for the Properties Located at 587 and 593 Van Buren Street and 424 and 450 Madison Street, Adjacent Parking Lot and Area Behind the Parks and Recreation Administration Building Located at 546 Dutra Street and Authorizing the City Manager to Negotiate and Execute All Related Documents (Not a Project Under CEQA per Article 20, Section 15378 and Under General Rule Article 5, Section 15061)
RECOMMENDATION:

That the City Council adopt a resolution approving an Affordable Housing and Property Disposition Agreement and Ground Lease between MP Madison Street Associates, L.P. and the City of Monterey for the Properties Located at 587 and 593 Van Buren Street and 424 and 450 Madison Street, Adjacent Parking Lot and Area Behind the Parks and Recreation Administration Building Located at 546 Dutra Street. The City Manager is authorized to negotiate and execute the final loan documents, and all other documents and amendments related to the Affordable Housing and Disposition Agreement and Ground Lease, including but not limited to the required public improvements.

VALUE DRIVERS:

Support efforts and policies that provide equitable access to affordable housing in Monterey and the region.

Support affordable housing through modern zoning policies/ordinances, ADU policies, housing grants, review of density requirements, and consideration of City-owned sites for affordable housing.

POLICY IMPLICATIONS:

Affordable housing is an identified value driver and strategic priority: “Support affordable housing through modern zoning policies/ordinances, ADU policies, housing grants, review of density requirements, and consideration of City-owned sites for affordable housing.” The subject project is a 100% affordable housing project located behind City Hall and will help the City achieve its affordable housing goals. The project is consistent with the City of Monterey General Plan land use designation and Downtown Specific Plan.

CAMPAIGN DISCLOSURE REQUIREMENT (LEVINE ACT) APPLIES: Yes.

Date: 10/15/2024
Item No.: 7.

Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 1, Packet Page 36 №10/24
FISCAL IMPLICATIONS:

The City Council entered into an Exclusive Negotiating Agreement with MidPen Housing Corporation (“MidPen”) for a 100% affordable housing project behind City Hall.

The City and MidPen have been working together to obtain funding. The City obtained $110,598.05 in Permanent Local Housing Allocation State funds for the project. The City disbursed this money to MidPen to contribute toward predevelopment costs. The PLHA funds are considered to be a loan and will be paid back to the City pursuant to the approved agreement, which is a State requirement. The City, with significant help from MidPen, also obtained a Regional Early Action Planning (REAP) grant from the Association of Monterey Bay Area Governments (AMBAG) for this project. Through this process, the City was awarded up to a maximum of $2,450,000 in REAP 2.0 funds. Due to the most recent State budget, AMBAG reduced the City’s grant to a maximum of $2,305,450 to cover predevelopment costs. The City Council also approved a $1,500,000 loan to support the project. The terms of the loan are to be negotiated. MP Madison Street Associates, L.P. will fund the project through multiple sources, including loans, tax credits, housing vouchers, and grants. A summary of the project financing includes:

City of Monterey Direct Financial Contributions:

Contributions
Permanent Local Housing Allocation (State
Grant)
$110,598.05
REAP Grant for Predevelopment Costs $2,305,450.001
General Fund Loan $1,500,000.00
Total $3,916,048.05
1 The City has allocated $220,964.20 of the REAP grant to pay for the City’s NEPA environmental review of the project. The direct grant value to MP Madison Street Associates L.P. will be $2,229,036.

MP Madison Street Associates, L.P. Housing Financing
MP Madison Street Associates, L.P. bears the cost of planning, designing, engineering, financing, constructing, operating and inspecting the project. Under the Affordable Housing and Disposition Agreement, MP Madison Street Associates will be required to provide a preliminary financing plan within 30 days of signing the lease, and the City will have specific timeframes to respond. MP Madison Street Associates is pursuing tax credit financing for round two in 2025 or round one in 2026.

ENVIRONMENTAL DETERMINATION:

The project qualifies as an SB 35 project. SB 35, codified in Government Code section 65913.4, requires cities and counties that did not meet their state-mandated affordable housing requirement to use a streamlined ministerial review process for qualifying multifamily housing developments that provide specified levels of affordable housing and meet other specific requirements. As a ministerial project, the proposed action is not a project as defined by the California Environmental Quality Act (CEQA) (Article 20, Section 15378).

MP Madison Street Associates, L.P. is proposing housing vouchers to finance the project.

Federal environmental review (NEPA) is currently underway and expected to be completed by approximately March 2025.

Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 2, Packet Page 37 №10/24
ALTERNATIVES CONSIDERED:

The City Council could choose to not authorize the Affordable Housing and Disposition Agreement.

DISCUSSION:

Background
For several years, affordable housing has remained one of the City Council and Monterey community’s top value drivers and strategic priorities.

In January 2020, the City Council authorized staff to issue a Request for Proposals to develop City owned property for affordable housing. (Resolution 20-011.) In July 2020, the City issued a Request for Proposals to develop City-owned sites for affordable housing. The City received proposals for four development sites. MidPen’s original proposal included developing the site behind City Hall and 417 Figueroa Street concurrently in order to achieve enough units for financing. As the project concept was downsized to only the site behind City Hall, MidPen evaluated multiple development scenarios. MidPen presented a concept to the Council in April and has been working to finalize it for City review and approval. Mid Pen has created a limited partnership for this project, and the Affordable Housing and Disposition Agreement will be executed with MP Madison Street Associates, L.P.

On July 19, 2022, the City Council approved entering into an Exclusive Negotiating Agreement (ENA) with MidPen Housing Corporation (“MidPen”) for the development of affordable housing.

This Agreement (Ag-11130) was effective August 15, 2022. The purpose of an ENA was to have a specific, limited period of time to negotiate mutually acceptable governing documents for the potential disposition of the Property and undertaking of the construction of the project on the property by MidPen Housing.

Per the ENA, MidPen had 240 days, with a one-year extension option, to complete a series of predevelopment studies and negotiate a development agreement with the City. The City granted three amendments. The first amendment increased the due date for the Updated Preliminary Development Package from 90 days after the effective to 210 days after the effective date.

Amendment 2 extended the term for one year to April 12, 2024, and increased the due date for the Preliminary Development Package from 210 days to 365 days after the effective date of August 15, 2023. Amendment 3 extended the negotiating period to April 12, 2025. Both parties’ goals are to complete negotiations by this timeframe.

Existing Site Conditions Behind City Hall
The original project site advertised in the RFP contains four older homes that have been converted into other uses, an employee lounge, Community Emergency Response Team (CERT) box and community garden (see photos below). One home has been converted into a City office. The remaining three structures are either vacant or used for City storage. As the project concept evolved, the project site now also includes redevelopment of the Dutra Street Parking Lot and construction of a public playground.

Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 3, Packet Page 38 №10/24
Existing Site Photos
Figure 1: 424 and 450 Madison Street

Figure 2: 587 and 593 Van Buren Street
Figure 3: Dutra Street Parking Lot
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 4, Packet Page 39 №10/24
Figure 4: Area Behind Parks and Recreation Building (546 Dutra Street) Development – Project Description
The proposed development consists of 42 residential units, totaling approximately 33,000 square feet. The multi-family building would be three stories and oriented around an interior courtyard.

The development includes a mix of unit types: studio (8 units), one-bedroom (11 units), twobedroom (12 units), and three-bedroom (11 units).

The project site is adjacent to the existing parking lot located at the rear of the City Hall campus.

The project proposes reconstructing and reconfiguring the parking lot to remove a single row of parking spaces and replace them with a landscaped pedestrian walkway. It’s estimated that 31 parking spaces will remain after reconfiguration. The parking lot will remain under City ownership and on a parcel separate from the multi-family building.

The project includes perimeter landscaping, including street trees along the Madison Street and Van Buren Street frontages, as well as interior landscaping within the courtyard. Additional landscaping will be provided around the perimeter of the parking area. The project also proposes the construction of an off-site playground, located north of the parking lot, behind the Vasquez Adobe, which will also remain under City ownership for office use. Dutra Street would convert to one-way circulation.

Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 5, Packet Page 40 №10/24
Figure 5: Proposed Site Plan
The building is proposed to be clad with vertical and horizontal shiplap fiber cement siding with contrasting T&G wood grain fiber cement siding throughout. Vinyl doors and windows are proposed with a standing seam metal roof material. The building’s design features ample amounts of fenestration with a consistent rhythm of openings along all elevations. A mixture of flat-roof and pitched-roof elements provide relief in the building’s massing as well as visual interest from the streetscape.

Figure 6: South Elevation (As viewed from Madison Street) Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 6, Packet Page 41 №10/24
Figure 7: East Elevation (As viewed from Dutra Street)
Figure 8: West Elevation (As viewed from Van Buren Street) Figure 9: North Elevation (As viewed from Parking Lot)
The project is proposed to be a rental multi-family housing project with a mix of units. Forty-one units will be available to individuals and families earning between thirty percent (30%) and sixty percent (60%) of the area median income.

The specific affordability requirements will be memorialized in a regulatory agreement that will be negotiated with MP Madison Street Associates, L.P., prior to the construction loan closing. In addition to permanently affordable rents, the City may require a local live/work preference on approximately half of the units, pending the results of a fair housing analysis.

Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 7, Packet Page 42 №10/24
Rents for the project are currently proposed to fall within these ranges:
 Studios: $548/month (30% Area Median Income, or AMI) to $1,243 (60% AMI)  1-Bedrooms: $577/month (30% AMI) to $1,322 (60% AMI)
 2-Bedrooms: $659/month (30% AMI) to $1,553 (60% AMI)
 3-Bedrooms: $679/month (30% AMI) to $1,730 (60% AMI)
Project Permitting - SB 35 and Density Bonus
MP Madison Street Associates, L.P. is proposing to permit the development as an SB 35- eligible project. SB 35, codified in Government Code section 65913.4, requires cities and counties that did not meet their state-mandated affordable housing requirement to use a streamlined ministerial review process for qualifying multifamily housing developments that provide specified levels of affordable housing and meet other specific requirements. Qualifying SB 35 projects are allowed reduced minimum parking standards due to proximity to transit stops or if projects are located within a historically significant district. The subject site meets both criteria noted above and would not require any parking to serve the development.

MP Madison Street Associates, L.P. has also applied for open space Density Bonus credits for the project. In exchange, the developer is building public improvements (playground, sidewalks, landscaping, and other public improvements).

Affordable Housing and Disposition Agreement Terms
Key terms include:

Lessee: MP Madison Street Associates, L.P.

Premises: Approximately 26,900 square feet of land area (ground lease) Use: Construction of 42 multifamily rental housing units with long-term affordability requirements, including one manager’s unit not subject to the affordability requirements. Forty-one units (41) will be available to individuals and families earning between thirty percent (30%) and sixty percent (60%) of the area median income
Rent: $1.00 per year for a total of ninety-nine dollars ($99), which shall be be paid in advance upon closing the construction financing Term: 99 Years; Upon ground lease expiration, the improvements, alterations, additions, equipment, and fixtures shall transfer to the City of Monterey Utility Expenses: Lessee is responsible for all utility expenses.

Taxes and Lessee agrees to pay all taxes related to possession of the property.

Insurance: Lessee agrees to insure the building.

Loan: City will provide a $1,500,000 loan for construction and permanent financing for the project pursuant to a separate agreement to be entered into between the parties prior to, or concurrent with, the close of escrow.

Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 8, Packet Page 43 №10/24
The City Council is authorizing the City Manager to negotiate and approve the final terms of this loan.

Public Lessee is responsible to construct public improvements (sidewalks, Improvements: landscaping, parking lot, park, etc.). Prior to or at the close of escrow, the City and the Lessee will enter into an appropriate and reasonable agreement that will set forth in more detail the Lessee’s obligations and the process for the City’s acceptance of and potential responsibilities for the public improvements.

The City Council is authorizing the City Manager to negotiate and approve the final terms of agreement for public improvements.

Risks
The two outstanding risks are 1) the federal environmental clearance that includes review by the State Historic Preservation Office, which is needed for the project to qualify for housing vouchers, and 2) Project-Based Vouchers, which are a critical funding source and are not yet secured. MP Madison Street Associates, L.P. will need City support to obtain vouchers from the Housing Authority of Monterey County. If vouchers are not obtained, a replacement funding source would be needed.

Recommendation and Next Steps
In summary, staff recommends that the City Council adopt a resolution approving an Affordable Housing and Property Disposition Agreement and Ground Lease between MP Madison Street Associates, L.P. and the City of Monterey for the Properties Located at 587 and 593 Van Buren Street and 424 and 450 Madison Street, Adjacent Parking Lot and Area Behind the Parks and Recreation Administration Building Located at 546 Dutra Street. The Affordable Housing and Property Disposition Agreement and Ground Lease shall be in a final form approved by the City Attorney’s Office. The City Manager is authorized to negotiate and execute the final loan documents and all other documents and amendments related to the Affordable Housing and Disposition Agreement and Ground Lease, including but not limited to the required public improvements.

After completing the milestone outlined above, significant next steps include:
 City completes project review under SB 35 and density bonus (tentative completion December 2024);
 NEPA environmental clearance is completed so Mid Pen can pursue housing vouchers to finance the project (tentative completion Spring 2025);  MidPen pursues housing vouchers with Monterey County Housing Authority (timeline to be determined)
 MidPen applies to the California Tax Credit Allocation Committee (“TCAC”) for a preliminary tax credit reservation in the funding round for round two 2025 or round one 2026.
 Simultaneously, MidPen architects can work on the construction permits and obtain all necessary building permits so the project is ready to start as final financing is obtained.

Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 9, Packet Page 44 №10/24
Attachments: 1. Draft Resolution with Exhibit A: Affordable Housing and Property Disposition Agreement
e: All Neighborhood and Business Associations
Interested Party List
Writings distributed for discussion or consideration on this matter within 72 hours prior to the meeting, pursuant to Government Code § 54957.5, will be made available at the following link:
https://monterey.gov/Submitted-Comments
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 10, Packet Page 45 RESOLUTION NO. __-___ C.S.

A RESOLUTION OF THE COUNCIL OF THE CITY OF MONTEREY
№011/24

APPROVING AFFORDABLE HOUSING AND PROPERTY DISPOSITION AGREEMENT AND GROUND LEASE BETWEEN MP MADISON STREET ASSOCIATES, L.P. AND THE CITY OF MONTEREY FOR THE PROPERTIES LOCATED AT 587 AND 593 VAN BUREN STREET AND 424 AND 450 MADISON STREET, ADJACENT PARKING LOT AND AREA BEHIND THE PARKS AND RECREATION ADMINSTRATION BUILDING LOCATED AT 546 DUTRA

STREET AND AUTHORIZING THE CITY MANAGER TO NEGOTIATE AND EXECUTE ALL

RELATED DOCUMENTS
WHEREAS, in January 2020, the City Council authorized staff to issue a Request for Proposals to develop City owned property for affordable housing. (Resolution 20-011); WHEREAS, in July 2020, the City issued a Request for Proposals to develop City owned sites for affordable housing and the City received proposals for four development sites; WHEREAS, on June 15, 2021, the City Council adopted Resolution 21-065 declaring the properties located at 587 and 593 Van Buren Street and 424 And 450 Madison Street to be exempt from the Surplus Land Act;
WHEREAS, on July 19, 2022, the City Council approved entering into an Exclusive Negotiating Agreement (ENA) with MidPen Housing Corporation (“MidPen”) for the development of affordable housing. This Agreement (Ag-11130) was effective August 15, 2022. It has been amended three times and the negotiating period extended to April 12, 2025. The purpose of an ENA was to have a specific, limited period of time to negotiate mutually acceptable governing documents for the potential disposition of the Property and undertaking of the construction of the project on the property by MidPen Housing;
WHEREAS, the original project site advertised in the RFP contains four older homes that have been converted into other uses, employee lounge, Community Emergency Response Team (CERT) box and community garden . One home has been converted into a City office.

The remaining three structures are either vacant or used for City storage. As the project concept evolved, the project site now also redevelops the Dutra Street parking lot and constructs a public playground;
WHEREAS, the proposed development consists of 42 residential units, totaling approximately 33,000 square-feet. The multi-family building would be three-stories and oriented around an interior courtyard. The development includes a mix of studio (8 units), one-bedroom (11 units), two-bedroom (12 units), and three-bedroom (11 units) units.

WHEREAS, the project site is adjacent to the existing parking lot located to the rear of City Hall. The project proposes the reconstruction and reconfiguration of the parking lot to remove a single row parking spaces to be replaced with a landscaped pedestrian walkway. It’s estimated that 31 parking spaces will remain after reconfiguration. The parking lot will remain under City ownership and on a separate parcel than the multi-family building; WHEREAS, MP Madison Street Associates, L.P is proposing to permit the development as an SB 35-eligible project. SB 35, codified in Government Code section 65913.4, requires cities and counties that did not meet their state-mandated affordable housing requirement to use Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 11, Packet Page 46 a streamlined ministerial review process for qualifying multifamily housing developments that provide specified levels of affordable housing and meet other specific requirements. Qualifying SB 35 projects are allowed reduced minimum parking standards due to proximity to transit stops or if projects are located within a historically significant district. The subject site meets both criteria noted above and would not require any parking to serve the development; and WHEREAS, the project qualifies as an SB 35 project. SB 35, codified in Government Code section 65913.4, requires cities and counties that did not meet their state-mandated affordable housing requirement to use a streamlined ministerial review process for qualifying multifamily housing developments that provide specified levels of affordable housing and meet other specific requirements. As a ministerial project, the proposed action is not a project as defined by the California Environmental Quality Act (CEQA) (Article 20, Section 15378).

MP Madison Street Associates, L.P. is proposing housing vouchers to finance the project.

Federal environmental review (NEPA) is currently underway with an expected completion date of approximately March 2025.

NOW, THEREFORE, BE IT FURTHER RESOLVED BY THE COUNCIL OF THE CITY OF MONTEREY that it hereby adopt a resolution approving an Affordable Housing and Property Disposition Agreement and Ground Lease between MP Madison Street Associates, L.P. and the City of Monterey for the Properties Located at 587 and 593 Van Buren Street and 424 and 450 Madison Street, Adjacent Parking Lot and Area Behind the Parks and Recreation Administration Building Located at 546 Dutra Street. The City Attorney is authorized to refine Exhibit A as it finalized. The City Manager is authorized to negotiate and execute the final loan documents and all other documents and amendments related to the Affordable Housing and Disposition Agreement and Ground Lease, including but not limited to the required public improvements.

PASSED AND ADOPTED BY THE COUNCIL OF THE CITY OF MONTEREY this _____ day of _______, 202_, by the following vote:

AYES: COUNCILMEMBERS:

NOES: COUNCILMEMBERS:

ABSENT: COUNCILMEMBERS:

ABSTAIN: COUNCILMEMBERS:

APPROVED:

ATTEST:

Mayor of said City
City Clerk thereof
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 12, Packet Page 47 #20096185v1<ACTIVE> - Monterey - Madison Street DDA - Final 10-2-24

AFOORDABLE HOUSING DISPOSITION AGREEMENT

BY AND BETWEEN

THE CITY OF MONTEREY
AND
MP MADISON STREET ASSOCIATES, L.P.

Dated ______________, 2024

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 13, Packet Page 48 Disposition and Development Agreement
Madison Street Project
i

TABLE OF CONTENTS
RECITALS................................................................................................................................................................... 1 ARTICLE I DEFINITIONS ....................................................................................................................................... 3 ARTICLE II PROPERTY.......................................................................................................................................... 6

2.1 OBLIGATIONS OF THE PARTIES. .................................................................................................................... 6

2.2 DISPOSITION OF THE PROPERTY. ................................................................................................................... 9

2.3 INDEMNITY, HOLD HARMLESS, WAIVER, WARRANTY. ..............................................................................16

2.4 ACCESS. . ...................................................................................................................................................19

2.6 LAND USE APPROVALS. . ...........................................................................................................................20 ARTICLE III CONSTRUCTION AND DEVELOPMENT OF PROPERTY.....................................................21

3.1 PRELIMINARY SITE PLAN.. .........................................................................................................................21

3.2 RELATED DOCUMENTATION. . ....................................................................................................................21

3.3 CITY APPROVALS. ......................................................................................................................................21

3.4 COSTS OF DEVELOPMENT AND CONSTRUCTION. . ......................................................................................21

3.5 CONSTRUCTION PLANS MUST BE APPROVED; CONSTRUCTION IN ACCORDANCE WITH PLANS AND APPROVALS. ...........................................................................................................................................................22

3.6 CHANGE IN CONSTRUCTION PLANS.. ..........................................................................................................22

3.7 DEFECTS IN PLANS.. ...................................................................................................................................23

3.8 CONSTRUCTION ACTIVITIES.. .....................................................................................................................23

3.9 INSURANCE AND SURETY OBLIGATIONS. ....................................................................................................23

3.10 PERFORMANCE AND PAYMENT BOND(S). ...................................................................................................25

3.11 CITY RIGHT OF ACCESS. .............................................................................................................................25

3.12 PREVAILING WAGES. ..................................................................................................................................26

3.13 EQUAL OPPORTUNITY IN CONTRACTING CONSTRUCTION. .........................................................................27

3.14 CERTIFICATE OF OCCUPANCY.. ..................................................................................................................27

3.15 COMPLIANCE WITH LAWS.. ........................................................................................................................28

3.16 INDEMNITY. . ..............................................................................................................................................28

3.17 LIENS AND STOP NOTICES. .........................................................................................................................28

3.18 RIGHT OF CITY TO SATISFY LIENS ON THE PROPERTY.. ..............................................................................28 ARTICLE IV USE OF THE PROPERTY ..............................................................................................................29

4.1 USES.. .........................................................................................................................................................29

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 14, Packet Page 49 Disposition and Development Agreement
Madison Street Project
ii

4.2 AFFORDABLE HOUSING.. ............................................................................................................................30

4.3 MAINTENANCE.. .........................................................................................................................................30

4.4 TAXES AND ASSESSMENTS. ........................................................................................................................30

4.5 OBLIGATION TO REFRAIN FROM DISCRIMINATION .....................................................................................31

4.6 EFFECT AND DURATION OF COVENANTS. ...................................................................................................31

4.7 RIGHTS OF ACCESS – PUBLIC FACILITIES.. ................................................................................................. 32

4.8 AFFORDABLE HOUSING OBLIGATIONS .......................................................................................................32 ARTICLE V CONDITIONS AFFECTING THIRD PARTY INTERESTS IN THE PROPERTY...................32

5.1 TAXES, ASSESSMENTS, ENCUMBRANCES AND LIENS. .................................................................................32

5.2 PROHIBITION AGAINST TRANSFER OF PROPERTY, THE BUILDINGS OR STRUCTURES THEREON AND ASSIGNMENT OF AGREEMENT.. ................................................................................................................................33

5.3 SECURITY FINANCING; RIGHTS OF HOLDERS. .............................................................................................33 ARTICLE VI CHANGES IN DEVELOPER..........................................................................................................36

6.1 CHANGES ONLY PURSUANT TO THIS AGREEMENT ......................................................................................36

6.2 PROHIBITION AGAINST TRANSFER OF PROPERTY AND ASSIGNMENT OF AGREEMENT PRIOR TO COMPLETION.. ..........................................................................................................................................................36 ARTICLE VII DEFAULTS AND REMEDIES......................................................................................................37

7.1 TERMINATION WITHOUT FAULT. ..............................................................................................................37

7.2 FAULT OF CITY. ........................................................................................................................................38

7.3 FAULT OF THE DEVELOPER. ........................................................................................................................39

7.4 LEGAL ACTIONS. ........................................................................................................................................41

7.5 REMEDIES CUMULATIVE; NO WAIVER.. .....................................................................................................41

7.6 CONSTRUCTION PLANS.. .............................................................................................................................41

7.7 RIGHTS OF MORTGAGEES ...........................................................................................................................42 ARTICLE VIII RESERVED....................................................................................................................................42 ARTICLE IX GENERAL PROVISIONS ...............................................................................................................42

9.1 APPLICABILITY.. .........................................................................................................................................42

9.2 HOLDER TO BE NOTIFIED...........................................................................................................................42

9.3 MODIFICATIONS TO AGREEMENT. ..............................................................................................................42

9.4 NOTICES, DEMANDS AND COMMUNICATIONS. ............................................................................................42

9.5 CONFLICT OF INTERESTS.. ..........................................................................................................................43

9.6 NON-LIABILITY OF CITY OFFICIALS, EMPLOYEES AND AGENTS. ................................................................43

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 15, Packet Page 50 Disposition and Development Agreement
Madison Street Project
iii

9.7 ENFORCED DELAY. .....................................................................................................................................44

9.8 INSPECTION OF BOOKS AND RECORDS. .......................................................................................................44

9.9 RIGHTS AND REMEDIES CUMULATIVE.. ......................................................................................................44

9.10 CORPORATE CITIZEN. ................................................................................................................................. 45

9.11 DEVELOPMENT CHANGES. .................................................................................................................45

9.12 AMENDMENTS TO THIS AGREEMENT; APPROVALS.. ...................................................................................45

9.13 REASONABLE APPROVALS. .........................................................................................................................45

9.14 APPLICABLE LAW. ......................................................................................................................................45

9.15 SEVERABILITY. ...........................................................................................................................................46

9.16 LEGAL ACTIONS .........................................................................................................................................46

9.17 BINDING EFFECT. .......................................................................................................................................46

9.18 PARTIES NOT CO-VENTURERS. ...................................................................................................................46

9.19 TIME IS OF THE ESSENCE.. ..........................................................................................................................46

9.20 COMPLETE UNDERSTANDING OF THE PARTIES. .........................................................................................46

9.21 GOOD FAITH.. .............................................................................................................................................46 Exhibit A Legal Description of Property
Exhibit B Scope of Development
Exhibit C Lease Agreement
Exhibit D REAP Grant Agreement
Exhibit E Intentionally Omitted
Exhibit F PLHA Loan Agreement
Exhibit G Intentionally Omitted
Exhibit H Schedule of Performance
Exhibit I Preliminary Site Plan
Exhibit J Form of Memorandum of Affordable Housing Disposition Agreement

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 16, Packet Page 51 Affordable Housing and Disposition Agreement
Madison Street Project
1 AFFORDABLE HOUSING DISPOSITION AGREEMENT

BY AND BETWEEN THE CITY OF MONTEREY
AND MP MADISON STREET ASSOCIATES, L.P.

This AFFORDABLE HOUSING DISPOSITION AGREEMENT (this “Agreement”) is entered into as of ____________, 2024 (the “Effective Date”) by and between the City of Monterey, a California charter city (the “City”) and MP Madison Street Associates, L.P., a California limited partnership (the “Developer”). The City and the Developer are collectively referred to herein as the “Parties”. Capitalized terms have the definitions set forth in Article I or as otherwise set forth herein.

RECITALS
A. The City is the owner of certain property known as a portion of the City Hall campus located on Madison Street between Dutra and Van Buren Street, known as Assessor Parcel Numbers 001-522-009, 001-522-010, 001-522-011, and a portion of 001-522-015 (the “Total Property”), as more particularly described in Exhibit A attached hereto and incorporated herein by this reference.

B. On July 20, 2020 the City issued an Affordable Housing Development Opportunity Request for Proposals and selected the Developer to develop affordable housing on the Property.

C. At the direction of the City Council, the City and the Developer have entered into negotiations pursuant to which the Developer will (i) lease a portion of the Total Property from the City (such portion referred to as the “Property”) to develop, construct, own and operate a forty-two (42) unit (including one unrestricted manager unit) affordable rental apartment project (the “Project”) affordable to individuals and families earning between thirty percent (30%) and sixty percent (60%) of area median income, and (ii) construct certain Public Improvements (as defined herein) on the remainder of the Total Property (the “City Property”), all as set forth in the Scope of Development (the “Scope of Development”) attached to this Agreement as Exhibit B, which is incorporated into this agreement by this reference.

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 17, Packet Page 52 Affordable Housing and Disposition Agreement
Madison Street Project
2 D. In accordance with this Agreement, the City and Developer will enter into a lease (the “Lease Agreement”), substantially in the form attached as Exhibit C, a memorandum of which will be recorded in the Official Records of Monterey County providing, among other things, for the City to lease the Property to Developer for a term of ninety-nine (99) years for development of the Project.

E. In order to assist in making the Project financially feasible, the City previously provided a grant to MidPen Housing Corporation, a California nonprofit public benefit corporation (“MidPen”), which is the sole member and manager of Developer’s general partner, in the amount of up to Two Million Two Hundred Twenty-Nine Thousand Thirty-Six Dollars ($2,229,036) from available Regional Early Action Planning Grant funds (the “REAP Grant”) to fund pre-development costs of the Project, pursuant to a separate grant agreement (the “Grant Agreement”) attached as Exhibit D.

F. The City has agreed to provide a loan for construction and permanent financing for the Project in the amount of One Million Five Hundred Thousand Dollars ($1,500,000) (the “City Loan”) from available city funds, pursuant to a separate agreement (the “City Loan Agreement”), to be entered into between the Parties prior to or concurrent with Close of Escrow.

G. The City has also previously provided a pre-development loan from Permanent Local Housing Allocation Program funds in the amount of One Hundred Ten Thousand Five Hundred Ninety-Eight Dollars and Five Cents ($110,598.05) (the “PLHA Loan”) to the Developer to assist with costs related to the design, architecture and engineering expenses of the Project pursuant to a separate pre-development loan agreement (the “PLHA Loan Agreement”) attached as Exhibit F.

H. Pursuant to this Agreement, the Developer will also enter into an Affordable Housing Regulatory Agreement and Declaration of Restrictive Covenants with the City prior to or concurrent with Close of Escrow (the “Regulatory Agreement,” and together with the PLHA Loan Agreement, the City Loan Agreement, the Grant Agreement and the Lease Agreement, the “City Documents”) that will restrict the rent to an affordable housing cost on certain units located in the Project.

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 18, Packet Page 53 Affordable Housing and Disposition Agreement
Madison Street Project
3 I. The City Council declared the Property exempt surplus land under Government Code Section 54221(f)(1)(A) of the Surplus Lands Act under Resolution No. 21-065 C.S. dated June 15, 2021.

J. The Developer has applied to the City for an Updated Streamlined Ministerial Approval process for the Project under Government Code Section 65913.4 (“SB 35”); and the City has determined that the Project is eligible for SB 35 ministerial approval and is therefore exempt from the California Environmental Quality Act (“CEQA”) pursuant to California Code Regulations Section 15268.

K. The purpose of this Agreement is to provide the terms and conditions under which the City will lease the Property to the Developer and the Developer will develop, construct, own and operate the Project thereon.

M. The City has concluded that the Developer has the necessary expertise, skill and ability to carry out the commitments contained in this Agreement and that the development of the Project pursuant to this Agreement will further the goals of the City by providing affordable housing in the City.

ARTICLE I

DEFINITIONS
As used in this Agreement, the terms set forth herein have the following meanings:
“CEQA” means the California Environmental Quality Act, Sections 21000 et seq. of the Public Resources Code and the CEQA Guidelines set forth at 14 California Code of Regulations Sections 15000 et seq.
“Certificate of Occupancy” is defined in Section 3.14 of this Agreement. “City” means the City of Monterey, California, a municipal corporation, organized under the laws of the State of California.

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 19, Packet Page 54 Affordable Housing and Disposition Agreement
Madison Street Project
4 “City Documents” means the Lease Agreement, the Grant Agreement, the City Loan Agreement, the PLHA Loan Agreement and the Regulatory Agreement, all by and between the Parties.
“City Loan” is defined in Recital F of this Agreement.
“City Manager” means the City Manager of the City.
“City Property” is defined in Recital C of this Agreement. “Close of Escrow” means the date, which date shall occur no later than one hundred eighty or one hundred ninety four (180 or 194) calendar days after the award to the Developer of a nine percent (9%) tax credit preliminary reservation or a four percent (4%) tax credit preliminary reservation, as determined by the awarding agency, on which the Lease Agreement transferring certain rights to the Property from the City to the Developer is recorded in accordance with the provisions of this Agreement and the Lease Agreement, or such later date as authorized by the City Council.
“Developer” means MP Madison Street Associates, L.P., having its offices at 303 Vintage Park Dr., Suite 250, Foster City, CA 94404, and any permitted nominee, assignee or successor in interest allowed under this Agreement.
“Effective Date” means the date of this Agreement.
“Environmental Response Actions” means any and all activities, data compilations, preparation of studies or reports, interaction with environmental regulatory agencies, obligations and undertakings associated with environmental investigations, removal activities, remediation activities or responses to inquiries and notice letters, as may be sought, initiated or required in connection with any local, state or federal governmental or private party claims, including any claims by the Developer or the City.
“Environmental Response Costs” means any and all costs associated with Environmental Response Actions including, without limitation, any and all fines, penalties and damages.

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 20, Packet Page 55 Affordable Housing and Disposition Agreement
Madison Street Project
5 “Financing Plan” means the Developer’s plan for financing the construction and operation of the Project on the Property including all commitments from lenders and equity partners as submitted by the Developer and reviewed and approved by the City pursuant to the terms of Section 2.2A of this Agreement.
“Grant Agreement” is defined in Recital E of this Agreement. “Hazardous Materials” means any substance, material or waste which is (1) defined as a “hazardous waste,” “hazardous material,” “hazardous substance,” “extremely hazardous waste,” “restricted hazardous waste,” “pollutant,” or any other terms comparable to the foregoing terms under any provision of California law or federal law; (2) petroleum; (3) asbestos; (4) polychlorinated biphenyls; (5) radioactive materials; or (6) determined by California, federal or local governmental authority to be capable of posing a risk of injury to health, safety or property.
“HCD” means the California Department of Housing and Community Development. “Improvements” means: (i) a forty-two (42) unit affordable rental housing project consisting of studio, one, two, and three-bedroom units, including one (1) unrestricted manager’s unit, and (ii) the Public Improvements.
“Lease Agreement” is defined in Recital D of this Agreement. “Lease Payment” means the payment due at Close of Escrow, which is equal to One Dollar ($1.00) per year for each of the Ninety-Nine (99) years of the Lease, the total of which is Ninety-Nine Dollars ($99.00).
“NEPA” means the National Environmental Policy Act set forth in 42 USC Sections 4321 et seq.
“PLHA Loan” is defined in Recital G of this Agreement.
“Preliminary Site Plan” is defined in Section 2.1C of this Agreement. “Project” is defined in Recital C of this Agreement.

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 21, Packet Page 56 Affordable Housing and Disposition Agreement
Madison Street Project
6 “Property” is defined in Recital C to this Agreement. “Public Improvements” means the playground, sidewalks, landscaping, roads and other public improvements to be constructed by the Developer, as shown in Exhibit B of this Agreement.
“Regulatory Agreement” is defined in Section 4.11.
“Schedule of Performance” means the timeline for the Project attached hereto as Exhibit H.
“Scope of Development” means the description of the Project and the conditions imposed on the construction of the Project as described in Exhibit B. “Term” means the period beginning on the Effective Date and ending on the date that is the one (1) year anniversary following issuance of the Certificate of Occupancy for the Project.

ARTICLE II

PROPERTY

2.1 Obligations of the Parties.

A. Developer Representations and Warranties. The Developer represents and warrants to the City as follows, and the Developer covenants that until issuance of a Certificate of Occupancy for the Project or earlier termination of this Agreement, upon learning of any fact or condition which would cause any of the representations and warranties in this Section 2.1.A not to be true, the Developer shall promptly give written notice of such fact or condition to the City.

1. The Developer is a limited partnership in good standing under the laws of the State of California. The Developer has full right, power and authority to undertake all obligations of the Developer as provided herein, and the execution, performance and delivery of this Agreement by the Developer has been duly authorized by all requisite actions. The

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 22, Packet Page 57 Affordable Housing and Disposition Agreement
Madison Street Project
7 Developer has duly authorized, executed and delivered this Agreement and the Developer has or will authorize, execute and deliver, within the times set forth therefor in the Schedule of Performance attached hereto as Exhibit H and incorporated herein by this reference, any and all other mutually acceptable agreements and documents required to be authorized, executed and delivered by the Developer in order to carry out, give effect to and consummate the transactions contemplated by this Agreement. This Agreement constitutes a valid and binding obligation of the Developer.

2. The Developer does not have any material contingent financial obligations or any material contractual agreements which could materially adversely affect the ability of the Developer to carry out its obligations hereunder.

3. There are no material pending or, so far as is known to the Developer, threatened, legal proceedings to which the Developer is or may be made a party or to which any of its property is or may become subject, which have not been fully disclosed in the documents submitted to the City which could materially adversely affect the ability of the Developer to carry out its obligations hereunder.

4. Except as otherwise disclosed to the City in writing, there is no action or proceeding pending or, to the Developer’s best knowledge, threatened, looking toward the dissolution or liquidation of the Developer, and there is no action or proceeding pending or, to the Developer’s best knowledge, threatened by or against the Developer which could affect the validity and enforceability of the terms of this Agreement, or materially and adversely affect the ability of the Developer to carry out its obligations hereunder.

5. The Developer is not subject to or a party named in any bankruptcy proceeding.

B. Conditions Precedent. As a condition precedent to the lease by the City of the Property to the Developer, the conditions set forth in this Article II must first be met within the times set forth in the Schedule of Performance, attached hereto as Exhibit H, unless such time limit is extended (i) in accordance with the provisions of Section 9.7, or (ii) in accordance with the provisions of Section 3.18, or (iii) in writing by the City at the discretion of its City Manager.

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 23, Packet Page 58 Affordable Housing and Disposition Agreement
Madison Street Project
8 Should the Developer fail to meet any predisposition requirement by the dates set forth in the Schedule of Performance, subject to the Developer’s right to cure as described in Section 7.3 and subject to enforced delays as defined in Section 9.7, the City shall have the option, but not the obligation, to terminate this Agreement and neither party shall have any further rights or obligations hereunder, except as otherwise provided for in this Agreement.

C. Scope of Development and Preliminary Site Plan. Prior to the City’s consideration of this Agreement, the Developer submitted to the City a proposed Scope of Development for the Project. The Scope of Development is described in Exhibit B attached hereto, and includes the construction of the Improvements. The preliminary site plan for the Project (the “Preliminary Site Plan”) is attached hereto as Exhibit I, and shows the general location of the Improvements, including the location of the residential units, open space, common areas, sidewalks and the Public Improvements. The Parties understand that the Preliminary Site Plan shall be revised from time to time to take into consideration factors such as but not limited to, mitigation requirements of NEPA or CEQA, if any, site constraints, funding requirements or “points” to make the Project more competitive, and financing. Each such revision, if material, shall be subject to the City’s written approval.

D. Approvals; Permit Costs. The Developer shall, in good faith and with due diligence, take all commercially reasonable necessary steps to ensure that the construction activities will not be delayed and will proceed pursuant to the Schedule of Performance, subject to Section 9.7. Necessary steps shall include, at a minimum, the timely submission of all documents, drawings and other information necessary for the issuance of all required building permits and other approvals necessary for construction of the Project.

E. Construction of Public Improvements. The Developer shall construct all Public Improvements, required by the City in connection with its approvals process.

F. Easements or Licenses. If necessary, the Developer and City hereby agree to execute all appropriate documents providing for the recordation of reasonable construction easements or licenses, dedications or other agreements, at no cost to the City, for the Public Improvements to be constructed on the City Property.

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 24, Packet Page 59 Affordable Housing and Disposition Agreement
Madison Street Project
9 2.2 Disposition of the Property.

A. City Pre-Disposition Requirements. The provisions of this Section 2.2 set forth the conditions precedent to the City’s obligation to lease the Property to the Developer.

1. No Default. There are no conditions, event or act which would constitute a material breach or default under this Agreement or any other City document, or which, upon the giving of notice or the passage of time, or both, would constitute such a material breach or default.

2. Preliminary Financing Plan and Financing Plan.
a. Within thirty (30) calendar days of the Effective Date, the Developer shall submit to the City for its review and approval its preliminary plan for the construction and permanent financing of the Project (the “Preliminary Financing Plan”). The Preliminary Financing Plan shall indicate all sources of funds necessary to pay, when due, the estimated costs of Project development, including, without limitation, hard and soft construction costs, and shall include development and operating proformas which set out in detail the Developer’s preliminary plan for financing the cost of development, construction and operation of the Project. The Parties acknowledge that the Preliminary Financing Plan is subject to change from time to time based on the funding sources, Project costs and other factors. Each such revision to the Preliminary Financing Plan shall be subject to City review and approval. b. Prior to the conveyance of the Property, the Financing Plan shall indicate all sources of funds necessary to pay, when due, the estimated costs of Project development, including, without limitation, hard and soft construction costs, and shall be accompanied by evidence that such funds have been firmly committed by the Developer, equity investors or lending institutions, subject only to commercially reasonable conditions. The Financing Plan shall include development and operating proformas which set out in detail the Developer’s plan for financing the cost of development, construction and operation of the Project.

City staff shall promptly review the proposed Preliminary Financing Plan, material revisions, and final Financing Plan, and acting through the City’s City Manager, the City shall approve such plan in writing within forty-five (45) business days following receipt

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 25, Packet Page 60 Affordable Housing and Disposition Agreement
Madison Street Project
10 provided that the plan conforms to the requirements of this Article II. If the City does not respond within the forty-five (45) business day period the Preliminary Financing Plan, material revisions or final Financing Plan shall be deemed approved. If the City does not approve the Preliminary Financing Plan, material revisions or final Financing Plan, the City shall set forth its objections in writing and notify the Developer of the reasons for its disapproval. The Developer shall thereafter submit a revised Preliminary or final Financing Plan that addresses the reasons for disapproval, and the City shall grant the Developer a reasonable extension of the time deadlines set forth in this Agreement as required to restructure the Preliminary or final Financing Plan. The City’s approval of the final Financing Plan shall be a condition precedent to the City’s obligation to convey the Property to the Developer. The City’s approval of the Preliminary Financing Plan, material revisions or final Financing Plan shall not be unreasonably withheld or delayed. The City shall not have to right to withhold or delay its approval of the final Financing Plan as long as the final plan is consistent with the approved Preliminary Financing Plan.

If the Preliminary Financing Plan is not approved by the City in accordance with the terms of this Section 2.2, the City shall have the right, but not the obligation, to terminate this Agreement pursuant to the terms of Section 7.1.

3. Tax Credit Financing. The Developer anticipates that it will submit an application to the California Tax Credit Allocation Committee (“TCAC”) for a preliminary tax credit reservation in the funding round for round two 2025 or round one 2026. Upon award of a preliminary reservation from TCAC, the Developer shall exercise diligent good faith efforts to obtain a funding commitment from a reputable equity investor. Procurement of a TCAC preliminary reservation and a funding commitment from equity investors for the Project shall be conditions precedent to the City’s obligation to convey the Property to the Developer.

If the Developer does not receive an allocation of tax credits in the TCAC round of the funding year for round one 2026, the Developer shall apply for tax credits in the TCAC round of funding for round two of the year 2026 and, if necessary, the TCAC round of funding for round one for the year 2027 (the “Additional Rounds”), unless the Developer notifies the City within a period not to exceed sixty (60) calendar days (commencing on the date that the TCAC regulations and application are issued for the Additional Round) that Developer reasonably believes changes to the Project are necessary to apply in an Additional Round. If the Developer does not receive a TCAC commitment in an Additional Round, then the City shall confer with the Developer in good faith for a period not to exceed ninety (90) calendar days

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 26, Packet Page 61 Affordable Housing and Disposition Agreement
Madison Street Project
11 (commencing on the date the Developer is notified that the Project did not obtain a TCAC commitment in an Additional Round) to determine if a feasible and mutually acceptable alternate arrangement can be made to finance the Project; provided however, if the Developer and the City cannot agree on a mutually acceptable alternate arrangement, then either Party shall have the right to terminate this Agreement upon written notice.

Prior to applying for tax credits, the Developer shall also apply for all other necessary and available financing listed on the approved Preliminary Financing Plan.

4. Evidence of Availability of Funds. No later than the date shown in the Schedule of Performance, the Developer shall submit to the City evidence reasonably satisfactory to the City that (i) all conditions to the release and expenditure of the initial draw of funds described in the approved Financing Plan as the source of construction financing for the Project have been met or will be met upon conveyance of the Property to the Developer and that such funds will be available upon conveyance of the Property, (ii) all approvals, permits, and authorizations which are conditioned upon conveyance will be received promptly after conveyance, and (iii) all construction financing (including draws subsequent to the initial draw of funds) will be available upon conveyance of the Property to the Developer subject to all lenderrequired conditions to the release of draws subsequent to the initial draw. Submission by the Developer, and approval by the City, which shall not be unreasonably withheld or delayed, of such evidence of funds availability and evidence of issuance of all required approvals, permits (or permit-ready letters) and authorizations shall be a condition precedent to the City’s obligation to convey the Property to the Developer.

5. Execution and Delivery into Escrow. The Developer shall have executed and acknowledged and delivered to the City or into Escrow: (a) the Lease Agreement; (b) the Regulatory Agreement; (c) all other instruments and documents required in connection with the transactions contemplated by this Agreement and all other financing agreements. Copies of all loan documents required by other lenders shall be delivered to the City as soon as practical following Close of Escrow.

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 27, Packet Page 62 Affordable Housing and Disposition Agreement
Madison Street Project
12 6. Representations. All representations and warranties of the Developer contained herein or certificate delivered in connection with the transaction contemplated by this Agreement shall be true and correct in all material respects as of the Close of Escrow.

7. Authorization. The Developer shall have provided the City with certified copies of resolutions authorizing the Developer's execution of this Agreement (or similar evidence of the Developer's authority to execute such documents reasonably acceptable to the City) and such additional certificates as the City shall reasonably require.

8. Insurance. The Developer shall have provided satisfactory evidence that the Developer has complied with the Developer's obligations regarding insurance identified in Section 3.9 to the extent such obligations must be satisfied by the Close of Escrow.

B. Developer Pre-Disposition Requirements. The provisions of this Section 2.2 set forth the conditions precedent to the Developer’s obligation to lease the Property from the City.

1. No Default. The City shall not be in default under the terms of this Agreement, and all representations and warranties of the City contained herein shall be true and correct in all material respects.

2. Title Policy. The Title Company (defined below) is prepared to issue to the Developer, at the Developer’s cost, a policy of title insurance, insuring Developer’s leasehold interest in the Property, subject only to (i) applicable building and zoning laws and regulations; (ii) assessments, conditions, covenants, restrictions or easements of record; (iii) utility easements to service the Property which do not interfere with its existing or intended use; (iv) the documents contemplated by this Agreement, including without limitation, the Lease, the leasehold deeds of trust contemplated by the City Loan Agreement and the PLHA Loan Agreement, and the Regulatory Agreement, and (v) such other title exceptions that the Developer shall have approved in its reasonable discretion (collectively, the “Permitted Exceptions”).

3. Financing Commitments.
a. The Developer has obtained all financing commitments necessary to construct, own and operate the Project, upon terms reasonably acceptable to the Developer, including the REAP Grant, the City Loan and the PLHA Loan and (i) all conditions to the release

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 28, Packet Page 63 Affordable Housing and Disposition Agreement
Madison Street Project
13 and expenditure of the initial draw of funds described in the approved Financing Plan as the source of construction financing for the Project have been met or will be met upon conveyance of the leasehold interest in the Property to the Developer and that such funds will be available upon conveyance of the leasehold interest in the Property, (ii) all approvals permits, and authorizations which are conditioned upon conveyance will be received promptly after conveyance, and (iii) all construction financing (including draws subsequent to the initial draw of funds) will be available upon conveyance of the leasehold interest in the Property to the Developer subject to all lender-required conditions to the release of draws subsequent to the initial draw.

4. There are no changed conditions with respect to the permitted uses or condition of the Property which materially and adversely affect intended use of the Property or substantially increases the Developer’s Project costs.

C. Lease Payment. Developer shall deposit the Lease Payment into escrow at Closing in the amount of One Dollar per lease year for a total of Ninety-Nine Dollars ($99.00) for the Ninety-Nine year Lease.

D. Escrow Opening. Developer has opened an escrow account (an “Escrow Account”) with Old Republic Title Company, in Oakland, California (“Escrow Agent”), to facilitate the lease of the Property, subject to the provisions of the standard conditions for acceptance of escrow and the terms and conditions in this Agreement. The City and the Developer shall provide such additional escrow instructions as shall be necessary and consistent with this Agreement. In the event any conflict between the terms of this Agreement and the standard conditions for acceptance of escrow, the terms of this Agreement shall control. The Parties acknowledge and agree that the Developer shall utilize the Escrow Account for the Developer's lease of the Property.

E. Conveyance of Property. The Developer acknowledges and agrees that: (i) no later than ninety (90) calendar days prior to the Close of Escrow, the Developer shall inspect the Property and the improvements located thereon, and shall examine the legal, environmental, zoning, land use, seismic, title, survey and physical characteristics and condition thereof; (ii) by acquiring a leasehold interest in the Property, the Developer shall be deemed to have approved of all such characteristics and conditions; (iii) the Property and the improvements thereon are to be conveyed to, and accepted by the Developer in their present condition “AS IS,” “WHERE IS”

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 29, Packet Page 64 Affordable Housing and Disposition Agreement
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14 AND WITH ALL FAULTS with no warranty expressed or implied regarding the condition of the soil, its geology, or the presence of known or unknown faults or Hazardous Materials, and no patent or latent defect or deficiency in the condition of the Property or the improvements thereon whether or not known or discovered, shall affect the rights of either the City or the Developer hereunder. The Developer shall rely solely upon its own independent investigation concerning the physical condition of the Property and its compliance with applicable statutes, ordinances, rules and regulations. The City shall have no responsibility for site preparation, demolition, or any other removal or replacement of improvements on the Property. Within ninety (90) calendar days of the Effective Date of this Agreement, the City shall provide copies of any documents in their possession, reports, studies, investigations (environmental or otherwise) and other documents in the possession and control of the City.

It shall be the sole responsibility of the Developer, at the Developer’s sole expense, to investigate and determine the soil conditions of the Property and the suitability of such soil conditions for the construction of the Project by the Developer. If the soil conditions are not in all respects entirely suitable for the use or uses to which the Property will be put, then it is the sole responsibility and obligation of the Developer to take such action as may be necessary to place the soil conditions of the Property in a condition suitable for development of the Property.

F. Costs. Escrow Costs shall be paid by the Parties as set forth in the Lease Agreement or such other mutually agreed upon written directions delivered to the Escrow agent.

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 30, Packet Page 65 Affordable Housing and Disposition Agreement
Madison Street Project
15 G. Termination. If the conditions to closing set forth in Section 2.2 have not been satisfied or waived by the applicable Party by the Close of Escrow, then either Party is not in breach of this Agreement may provide written notice to the nonperforming party of such condition and a right to cure, including a right to cure any liens, encumbrances, conditions or other defects on the title that are not Permitted Exceptions. If the nonperforming party fails to cure the condition preventing Close of Escrow by within ten (10) business days following receipt of such notice, then the non-defaulting party may provide written demand for the return of all funds and documents and notice of termination of this Agreement to Escrow Agent with a copy to all Parties in accordance with Section 9.4. Termination of this Agreement pursuant to this Section 2.2 will be without prejudice as to any legal rights either Party may have against the other arising from this Agreement, including without limitation any rights to specific performance.

H. Other Conditions. The City shall not be liable for any real estate commissions or brokerage fees incurred by the Developer that may arise in connection with this Agreement or the conveyance of the leasehold interest in the Property.

I. Closing Procedure. Escrow Agent will close escrow for the Property as follows:

1. Record the Memorandum of the Lease Agreement and the Regulatory Agreement with instructions for the County Recorder to deliver conformed copies of each such document with recording information indicated thereon to the Developer and to the City;

2. Instruct the Title Company to deliver the leasehold Title Policy to the Developer and the lender Title Policy to City;

3. Forward to both the Developer and the City a separate accounting of all funds received and disbursed for each party and copies of all executed and recorded or filed documents deposited into escrow, with such recording and filing date and information endorsed thereon.

L. Title Documents/Title Insurance. Within seven (7) business days following the Effective Date, the City shall deliver or cause to be delivered to the Developer a preliminary title report (“Preliminary Report”) on the Property issued by Old Republic Title Company, or some other title insurance company satisfactory to the City and the Developer having equal or greater financial responsibility (“Title Company”), setting forth all liens, encumbrances, easements, restrictions, conditions, pending litigation, judgments, administrative proceedings, and other

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 31, Packet Page 66 Affordable Housing and Disposition Agreement
Madison Street Project
16 matters of record affecting the City's title to the Property, together with copies of all documents relating to exceptions listed in the Preliminary Report (“Title Exceptions”) and complete and legible copies of all instruments referred to therein, as requested by the Developer. The Developer shall approve or disapprove each Title Exception within thirty (30) calendar days of the Effective Date. The Developer’s failure to object within such period shall be deemed to be an approval of the Title Exceptions.

If the Developer objects or is deemed to have disapproved any Title Exception, the City shall use its best efforts at the City’s sole expense to remove from title or otherwise satisfy each such exception no later than Sixty (60) business days after the Developer’s written objection and such satisfaction shall be in a form that is reasonably satisfactory to the Developer. If the City fails to remove or satisfy any Title Exception to the satisfaction of the Developer, the Developer shall have the option, in its sole discretion, to terminate this Agreement or to accept title subject to such exception. In the event the Developer elects to terminate this Agreement, all funds and documents deposited into escrow by or on behalf of the Developer shall be returned to the Developer, and all rights and obligations hereunder shall terminate.

The Developer shall pay for all premiums for title insurance coverage, including, without limitation, charges for special endorsements. The Title Company shall, if requested by the Developer, provide the Developer with an endorsement to insure the amount of the Developer’s estimated development costs of the improvements to be constructed upon the Property and the Developer shall pay the entire premium for any such increase in coverage.

2.3 Indemnity, Hold Harmless, Waiver, Warranty.

A. Developer Indemnity. The Developer agrees, from and after the date of conveyance of the Property under the Lease and this Agreement, to defend, indemnify, protect and hold harmless the City and its officers, beneficiaries, employees, agents, attorneys, representatives, legal successors and assigns (“Indemnitees”) from, regarding and against any and all liabilities, obligations, orders, decrees, judgments, liens, demands, actions, Environmental Response Actions, claims, losses, damages, fines, penalties, expenses, Environmental Response Costs or costs of any kind or nature whatsoever, together with fees (including, without limitation, reasonable attorneys’ fees and experts’ and consultants’ fees), whenever arising, unless caused in whole or in part by the negligence of any of the Indemnitees, resulting from or in connection with the construction of the Project by the Developer, the general contractor or any subcontractor or supplier of or to the Project, the Developer’s occupancy or use of the Property or the

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 32, Packet Page 67 Affordable Housing and Disposition Agreement
Madison Street Project
17 Developer’s performance or non-performance under or with respect to this Agreement as it pertains to the Property or Project or the actual or claimed generation, storage, handling, transportation, use, presence, placement, migration and/or release of Hazardous Materials, at, on, in, beneath or from the Property (collectively referred to as “Contamination”). The Developer’s defense, indemnification, protection and hold harmless obligations herein shall include, without limitation, the duty to respond to any governmental inquiry, investigation, claim or demand regarding the Contamination, at the Developer’s sole cost. If the Developer discovers Contamination or other materials subject to legal requirements or corrective action, the Developer shall immediately notify the City of the same. Developer’s indemnity obligations under this paragraph shall not apply to (a) any release of Hazardous Materials or Claim related to Hazardous Material that occurred or first accrued before the Developer’s possession of the Property whether known or unknown, and (b) claims arising out of the City’s failure to disclose any known condition that the City is required to give to the Developer. City agrees to defend, indemnify, protect and hold harmless the Developer, and its officers, beneficiaries, employees, agents, attorneys, representatives, legal successors and assigns (“Developer Indemnities”) from, regarding and against any and all liabilities, obligations (including but not limited to the duty to respond to any governmental inquiry, investigation, claim or demand regarding such Hazardous Materials), orders, decrees, judgments, liens, demands, actions, environmental response actions, claims, losses, damages, fines, penalties, expenses, environmental response costs or costs of any kind or nature whatsoever, together with fees (including, without limitation, reasonable attorneys’ fees and experts’ and consultants’ fees), resulting from or in connection with (i) the release, use, generation, discharge, storage or disposal of any Hazardous Material on, under, in or about the Property, or the transportation of any such Hazardous Material to or from, the Property occurring during the City’s ownership of the Property and prior to the Close of Escrow, or (ii) the failure of City, City’s employees, agents, contractors, subcontractors, or any person acting on behalf of or as the invitee of any of the foregoing, to comply with Environmental Laws, except to the extent caused in whole or in part by the negligence of Developer or any of the Developer Indemnitees in accordance with the principles of comparative negligence (“Developer’s Indemnification”). If the City discovers Hazardous Materials or other materials subject to legal requirements or corrective action, the City shall immediately notify the Developer of the same.

B. Release and Waiver. The Developer hereby releases and waives all rights, causes of action and claims the Developer has or may have in the future against the Indemnitees arising out of or in connection with any Hazardous Materials, at, on, in, beneath or from the Property, .The provisions of this paragraph shall not apply to (i) the presence of such Hazardous Materials

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 33, Packet Page 68 Affordable Housing and Disposition Agreement
Madison Street Project
18 at, on, in, beneath or from the Property is caused in whole or in part by any of the Indemnitees, (ii) any Contamination existing at the Property prior to the Close of Escrow, (iii) the City’s failure to disclose any known condition which the City is required to give to any transferee of the Property, (iv) any existence of or release of Hazardous Materials or Claim related to Hazardous Material that occurred or first accrued before the Developer’s possession of the Property whether known or unknown, (v) the release, use, generation, discharge, storage or disposal of any Hazardous Material on, under, in or about the Property, or the transportation of any such Hazardous Material to or from, the Property occurring during the City’s ownership of the Property and prior to the Close of Escrow.. Subject to the limitation set forth in the preceding sentence, the Developer hereby acknowledges that the aforementioned release includes Hazardous Material claims that the Developer does not know or suspect to exist as of the date hereof, and with respect to such Hazardous Materials claims or causes of action, the Developer affirmatively waives and relinquishes any right or benefit, to the full extent that it may lawfully waive all such rights and benefits pertaining to the subject matter of this Section 2.3, the Developer further waives all such rights and benefits that the Developer may have under California law or any similar provision of the statutory or nonstatutory law of any other applicable jurisdiction to claim that a general release does not extend to claims which the Developer does not know or suspect to exist in its favor at the time of executing the release, which if known by it would have materially affected its agreement with the City.

The Developer is aware of and familiar with the provisions of Section 1542 of the California Civil Code which provides:

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE

CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE

TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE

MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR
As such relates to this Section 2.3, the Developer hereby waives and relinquishes all rights and benefits which it may have under Section 1542 of the California Civil Code, except for the limitations set forth in (i), (ii), and (iii) in this Section 2.3.B. ______________
Developer Initials

EXHIBIT A
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19 C. Materiality. The Developer acknowledges and agrees that the defense, indemnification, protection and hold harmless obligations of the Developer for the benefit of the City set forth in this Agreement are a material element of the consideration to the City for the performance of its obligations under this Agreement, and that the City would not have entered into this Agreement unless the Developer’s obligations were as provided for herein. The Developer further acknowledges and agrees that the paragraph which extends representations, warranties, indemnifications, and/or covenants of the Developer to the benefit of the City shall not be satisfied, waived or otherwise extinguished by the City’s issuance of any Certification of Occupancy under Section 3.14 of this Agreement.

D. Warranty. The City shall not, in any way or manner, be answerable or suffer loss, damage, expense or liability for any loss or damage that may happen to the building, work, or equipment or any part thereof, or in, on, or about the same during its construction and before issuance of the Certificate of Occupancy, unless caused by the negligence of the City or its Indemnitees. The Developer warrants that the work as performed by the general contractor, subcontractor, or supplier will conform with the Preliminary Site Plan or any written authorized deviations therefrom.

2.4 Access. Prior to conveyance of Property from the City, representatives of the Developer shall have the right of access to the Property at all reasonable times, upon not less than two (2) business days written notice to the City, for the purpose of obtaining data and making surveys and tests necessary to carry out this Agreement. While any of the activities described in this Section are taking place, the Developer shall maintain the insurance coverages described in Section 3.9A (1), (2) and (3) and indemnify and hold the City harmless from any injury or damages arising out of any activity pursuant to this paragraph except to the extent such injury or damage arises from or relates to an existing condition at the Property or the negligent acts of the City, City’s employees, agents, contractors, subcontractors, or any person acting on behalf of or as the invitee of any of the foregoing. The Developer shall have access to all data and information on the Property available to the City, but without warranty or representation by the City as to the completeness, correctness or validity of such data and information, except as otherwise set forth in this Agreement.

Any work undertaken on the Property by the Developer prior to conveyance of the Property from the City shall be done only after written consent of the City staff and at the sole expense of the Developer, except that written consent shall not be required to conduct the

EXHIBIT A
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20 Developer’s due diligence investigations. The Developer shall save and protect the City against any claims resulting from such preliminary work, access or use of the Property except to the extent such injury or damage arises from or relates to an existing condition at the Property or the negligent acts of the City, City’s employees, agents, contractors, subcontractors, or any person acting on behalf of or as the invitee of any of the foregoing. The City shall have the right to receive copies of data, surveys and tests obtained or made by the Developer on the Property, subject to the rights of any third-party preparer of such documents, and provided that such documents shall be made available to the City without warranty or representation as to the accuracy of the contents by the Developer. Any work by the Developer shall be undertaken only after securing any necessary permits from the appropriate governmental agencies.

2.5 CEQA or NEPA Documentation. The Developer acknowledges that any required additional approvals by any other local, state or federal agency may require additional environmental review, and that any approval by the City shall not bind any other local, state or federal agency to approve the Project or to impose mitigation measures which are consistent with the terms of this Agreement or with the terms of any mitigation measures required by any environmental review for the Project. The City agrees to cooperate with the Developer to obtain all necessary approvals by providing all information and studies in the possession and control of the City.

2.6 Land Use Approvals. Before commencement of construction of the Improvements or other works of improvement upon the Property, the Developer shall, at its own expense, secure or cause to be secured any and all land use and other entitlements, permits, and approvals which may be required for the Improvements by the City or any other governmental agency affected by or having jurisdiction over such construction or work, except for those which are the responsibility of the City as set forth herein. The Developer shall, without limitation, apply for and secure, and pay when due all costs, charges and fees associated therewith, all permits and fees required by the City, and other governmental agencies with jurisdiction over the Improvements. The execution of this Agreement does not constitute the granting of or a commitment to obtain, approve, or grant any required land use permits, entitlements, or approvals required by the City.

EXHIBIT A
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21 ARTICLE III

CONSTRUCTION AND DEVELOPMENT OF PROPERTY

3.1 Preliminary Site Plan. The Developer shall develop the Property and construct the Improvements in accordance with the Scope of Development, attached hereto as Exhibit B.

The Parties agree that the Property and Improvements shall be developed as generally established in the Preliminary Site Plan, as set forth on Exhibit I attached hereto as the same may be updated from time to time with the approval of the City. The City shall prepare and record a lot line adjustment that will delineate the Property and the City Property, as set forth in the Preliminary Site Plan (the “Lot Line Adjustment”). Recording of the Lot Line Adjustment will occur prior to or at Close of Escrow.

3.2 Related Documentation. In addition to the Site Plan, the Developer shall prepare all construction plans, drawings and related documents required to be submitted for approval by the City (or other governing body) for the construction of the Project. Nothing herein shall relieve the Developer of any obligation to submit any plans, drawings and related documents as required for permits or approvals required by the City or other public agencies.

3.3 City Approvals. Subject to the Streamlined Ministerial Approval Process (“Gov.

Code 65913.4”), any material changes to the Preliminary Site Plan shall be subject to the approval of the City and shall be within the limitations of the Scope of Development and consistent with the overall plan for the development of the Property as provided in this Agreement. Neither party shall unreasonably withhold or delay consent to any material changes in the Preliminary Site Plan. Failure by the City to approve or object to any material changes to the Preliminary Site Plan within forty-five (45) business days of receipt from the Developer shall be deemed approval of the changes. The Developer shall have the right to develop the Project on any areas or portions of the Property, subject to the terms and conditions of this Agreement and prior to the date of the issuance of the Certificate of Occupancy, in accordance with the Preliminary Site Plan in effect as of Close of Escrow.

3.4 Costs of Development and Construction. The Developer shall pay all design, development and construction costs, whether foreseen or unforeseen, in a timely fashion. The City shall not be liable for any costs, including without limitation any costs of construction, except for incremental costs incurred by the Developer due solely to discretionary changes to the Project required by the City Council, or except as otherwise expressly set forth herein. Cost

EXHIBIT A
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22 overruns or other costs in excess of the projected costs of developing the Property and constructing the Project shall be borne and paid for solely by the Developer from Project funds.

In addition, any costs incurred by the Developer that are caused by or result from the negligence or failure of the Developer, or its contractors, agents or representatives, to act in a commercially reasonable manner shall be borne and paid for by the Developer and not by the City. Nothing in this Section is intended to prevent or limit the Developer from seeking payment or reimbursement from its contractors or other party that may be responsible for this cost.

3.5 Construction Plans Must Be Approved; Construction in Accordance with Plans and Approvals. The Developer shall not commence construction of the Project until the Developer has received all required permits from the City Building Department. The Developer shall construct the Project in accordance with the approved Construction Plans and all other permits and approvals granted by the City and/or the City pertaining to development of the Project, including but not limited to conditions of approval (“Conditions of Approval”), if any.

The Developer shall comply with all directions, rules and regulations of any fire marshal, health officer, building inspector or other officer of every governmental agency having jurisdiction over the Property or the Project. Each element of the work shall proceed only after procurement of each permit, license or other authorization that may be required for such element by any governmental agency having jurisdiction. All design and construction work on the Project shall be performed by licensed contractors, engineers or architects, as applicable.

3.6 Change in Construction Plans. If the Developer desires to make any material change in the construction plans (the “Construction Plans”), the Developer shall submit the proposed changes to the City for approval, which approval shall not be unreasonably withheld or delayed if the Construction Plans, as modified by any proposed change, conform to the requirements of this Agreement, the Scope of Development, the Project approvals and the Conditions of Approval. Subject to Gov. Code 65913.4, as used in the preceding sentence, “material change” means (i) any change for which approval of the City is required under the City's building approval process, (ii) any structural change, (iii) any change to the exterior of buildings, elevation, number of units, or increase or decrease of the square footage of the community buildings to the Project by more than 10%, or (iv) any single change order in excess of $250,000 or $750,000 in the aggregate. Unless such proposed change is rejected within ten (10) business days, the City shall be deemed to have approved such change. If rejected within such time period, the previously approved Construction Plans shall continue to remain in full

EXHIBIT A
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23 force and effect. This Section shall not apply to any approvals required by the City Building Department in connection with any building, grading or other permits issued for the Project.

Any change in the Construction Plans required in order to comply with applicable law shall be deemed approved, so long as such changes do not substantially, nor materially, change the architecture, design, function, use, or other amenities of the Project as shown on the latest approved Construction Plans.

3.7 Defects in Plans. The City shall not be responsible to the Developer or to any third party for any defect in the Construction Plans or for any structural or other defect in any work done pursuant to the Construction Plans.

3.8 Construction Activities. No later than thirty (30) calendar days after recordation of the Memorandum of Disposition and Development Agreement, the form of which is attached as Exhibit K, the Developer shall promptly begin and thereafter diligently prosecute to completion the construction of the Project and the development of the Property within the times specified in the Schedule of Performance, or such extension of said dates as may be granted by the City in writing or as provided in Section 9.7 of this Agreement. The Schedule of Performance is subject to revision from time to time as mutually agreed upon in writing between the Developer and the City staff.

During the period of construction, but not more frequently than once a month, the Developer shall submit to the City a written progress report of the construction when and as requested by the City. The report shall be in the form of a construction draw request generally submitted by general contractors with such additional detail as may reasonably be required by the City.

3.9 Insurance and Surety Obligations.

A. Insurance Obligations. Prior to the commencement of construction, except as otherwise stated herein, on the Property or any portion thereof, the Developer shall furnish or cause to be furnished to the City duplicate originals or appropriate certificates of the following insurance policies:

EXHIBIT A
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24 1. Workers’ Compensation. During the term of this Agreement, the Developer shall fully comply with the terms of the laws of the State of California concerning workers’ compensation. Said compliance shall include, but not be limited to, maintaining in full force and effect one or more policies of insurance insuring against any liability the Developer may have for workers’ compensation. Said policy shall also include employer’s liability coverage no less than $1,000,000 per accident.

2. General Liability Insurance. The Developer shall obtain at its sole cost and keep in full force and effect during the term of this Agreement commercial general liability insurance in the amount of $2,000,000 per occurrence for bodily injury, personal injury, and property damage. Said insurance shall provide (1) that the City and its officers, agents, employees and volunteers, shall be named as additional insured’s under the policy, and (2) that the policy shall operate as primary insurance, and that (3) no other insurance effected by the City or other named insured’s will be called upon to cover a loss covered thereunder.

3. Automobile Liability Insurance. The Developer shall obtain at its sole cost and keep in full force and effect during the term of this Agreement automobile liability insurance in the amount of $1,000,000 per occurrence for bodily injury and property damage.

Said insurance shall provide (1) that the City, and its officers, agents, employees and volunteers, shall be named as additional insureds under the policy, and (2) that the policy shall operate as primary insurance, and that (3) no other insurance effected by the City or other named insureds will be called upon to cover a loss covered thereunder. If Developer does not own vehicles, Developer will be in compliance with this provision through the inclusion of an endorsement for non-owned/hired vehicles coverage through the general liability policies.

4. Course of Construction Insurance. The Developer shall obtain at its sole cost and keep in full force and effect during the term of this Agreement Course of Construction insurance with policy limits no less than $5,000,000 with no coinsurance penalty provisions in the standard “Builders Risk” form policy. The City shall be named as loss payee and the insurer shall waive all rights of subrogation against the City.

5. Certificates of Insurance. The Developer shall file with the City, prior to commencement of construction on the Improvements or prior to any access to or entry on the Property as authorized by this Agreement, certificates of insurance which shall provide that no cancellation, major change in coverage, expiration, or nonrenewal will be made during the term

EXHIBIT A
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25 of this Agreement, without thirty (30) calendar days written notice to the City prior to the effective date of such cancellation, or change in coverage. The Developer shall deliver copies of the insurance policies to the City.

6. Other Requirements. Prior to the commencement of construction of the Improvements, the Developer shall file with the City the City’s standard endorsement form providing for each of the above requirements. The Developer shall also furnish or cause to be furnished to the City evidence satisfactory to the City that any contractor with whom it has contracted for the performance of work on the Property carries the same insurance required of the Developer in the amounts of coverage specified above. The Developer shall also require any contractor to obtain certificates of insurance from all subcontractors in scope of and in amount satisfactory to Developer.

3.10 Performance and Payment Bond(s).

A. Within the time specified in the Schedule of Performance, the Developer shall deliver to the City copies of payment bond(s) and performance bond(s) issued by a reputable insurance company licensed to do business in California, each in a penal sum of not less than one hundred percent (100%) of the scheduled cost of construction of the Project. The bonds shall name the City as a co-obligee.

B. In lieu of such performance and payment bonds, the Developer may submit evidence satisfactory to the City of the Developer's ability to commence and complete construction of the Project in the form of an irrevocable letter of credit, pledge of cash deposit, certificate of deposit, or other marketable securities held by a broker or other financial institution, with signature authority of the City required for any withdrawal, or a completion guaranty in a form and from a guarantor acceptable to the City. Such evidence must be submitted in approvable form in sufficient time to allow the City to review and approve the information within the time specified in the Schedule of Performance.

3.11 City Right of Access. For the purposes of assuring compliance with this Agreement, representatives of the City shall have the reasonable right of access to the Property without charges or fees and at normal construction hours during the period of construction for the purposes of this Agreement, including, but not limited to, the inspection of the work being performed in constructing the Project. Such representatives of the City shall be those who are so

EXHIBIT A
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26 identified in writing by the City Manager. The City shall indemnify the Developer and hold it harmless from any damage caused (including any reasonable damages or costs incurred by any wrongful delays caused by the City) or liability arising out of this right to access.

The Developer acknowledges that the City is under no obligation, and the City neither undertakes nor assumes any responsibility or duty, to the Developer or to any third party to in any manner review, supervise, or inspect the progress of construction of the Improvements or the Public Improvements. The Developer and all third parties shall rely entirely upon its or their own supervision and inspection in determining the quality and suitability of the materials and work, and the performance of architects, subcontractors, and material suppliers and all other matters relating to the construction and operation of the Project. Any review or inspection undertaken by the City is solely for the purpose of determining whether the Developer is properly discharging its obligations to the City, and shall not be relied upon by the Developer or any third party as a warranty or representation by the City as to the quality of the design or construction of the Improvements, the Public Improvements or otherwise.

3.12 Prevailing Wages. To the extent required by law, the Developer and all of the Developer’s subcontractors shall comply with California Health and Safety Code Section 33422.1 and shall comply with California Labor Code Section 1770 et seq. and all regulations adopted pursuant thereto (referred to herein as, “Prevailing Wage Laws”), and be responsible for carrying out the requirements of such provisions. The Developer shall, and hereby agrees to, unconditionally indemnify, reimburse, defend, protect and hold harmless the City and its elective and appointive boards, commissions, officers, agents, attorneys, consultants and employees, and all of their respective successors and assigns, from and against any and all claims, demands, suits and actions at law or in equity, and losses, liabilities, expenses, penalties, fines, orders, judgments, injunctive or other relief, and costs and damages of every kind, nature and description (including but not limited to attorneys’ fees and court costs; with counsel reasonably acceptable to the City), and administrative, enforcement or judicial proceedings, whether known or unknown, and which directly or indirectly, in whole or in part, are caused by, arise from, or relate to, or are alleged to be caused by, arise from, or relate to, the payment or requirement of payment of prevailing wages or the requirement of competitive bidding in the construction of the Project, the failure to comply with any applicable state or federal labor laws, regulations or standards in connection with this Agreement, including but not limited to California Labor Code Section 1770 et seq. and the Prevailing Wage Laws, or any act or omission of the City or the Developer related to this Agreement with respect to the payment or requirement of payment of

EXHIBIT A
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27 prevailing wages or the requirement of competitive bidding, whether or not any insurance policies shall have been determined to be applicable to any such claims, demands, suits, actions, losses, liabilities, expenses, penalties, fines, orders, judgments, injunctive or other relief, costs, damages, or administrative, enforcement or judicial proceedings. It is further agreed that the City does not, and shall not, waive any rights against the Developer which they may have by reason of this indemnity and hold harmless agreement because of the acceptance by the City, or the deposit with the City by the Developer, of any of the insurance policies described in this Agreement.

If and to the extent applicable and required, as provided in California Labor Code Section 1770 et seq., the hourly and daily rate of wages to be paid each of the classes of mechanics and worker employed in connection with construction of the Project shall not be less than the rate of such wages then prevailing in Monterey County. If Prevailing Wages applies to any portion of this Project, including the construction of the Improvements and the construction of the Public Improvements, the Developer agrees to and shall forfeit, as a penalty to the City, the sums established and applicable pursuant to California Labor Code Section 1770 et seq. for each calendar day or portion thereof that each workman employed in connection with the Project is paid less than the rates designated in this paragraph for any work performed under this Agreement by the Developer or any subcontractors or agents of the Developer; or is not reported to the labor commissioner and the City as required pursuant to California Labor Code Section 1770 et seq.

3.13 Equal Opportunity in Contracting Construction. During the construction of the Project, the Developer and all of the Developer’s subcontractors shall not discriminate on the basis of race, religion, sex, or national origin in the hiring, firing, promoting or demoting of any person engaged in the construction work and shall require its contractors and subcontractors to refrain from discrimination on such basis.

3.14 Certificate of Occupancy. Promptly after completion of all construction and development of the Project the City shall furnish the Developer with a final certificate of occupancy (the “Certificate of Occupancy”). The final Certificate of Occupancy shall be conclusive determination of satisfactory completion of the construction of the Project in accordance with the provisions of this Agreement.

EXHIBIT A
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28 3.15 Compliance with Laws. The Developer shall carry out the construction of the Project in conformity with all applicable state, local and federal laws, ordinances, rules and regulations, including all applicable state and federal labor laws and standards, the City zoning and development standards, building, plumbing, mechanical and electrical codes, all other provisions of the City's Municipal Code, and all applicable disabled and handicapped access requirements, including without limitation, the Americans with Disabilities Act, 42 U.S.C.

Section 12101, et seq., Government Code Section 4450, et seq., Government Code Section 11135, et seq., and the Unruh Civil Rights Act, Civil Code Section 51, et seq..

3.16 Indemnity. Except as otherwise set forth in Section 2.3, the Developer shall defend (with counsel approved by the City), indemnify and hold harmless the Indemnitees from and against any and all future claims arising from or in connection with the Developer's failure to comply with all applicable laws and regulations relating to the construction of the Project, including, without limitation, all applicable federal and state labor laws and standards, or in any other manner relating to development of the Project, or the Developer’s activities or performance under this Agreement as it pertains to the Property or Project whether such activities or performance be by the Developer or by anyone directly or indirectly employed or contracted with or by the Developer and whether such claim shall accrue or be discovered before or after termination of this Agreement. The Developer’s indemnity obligations under this Section 3.16 shall not extend to claims resulting from Indemnitees’ gross negligence or willful misconduct.

3.17 Liens and Stop Notices. Until the issuance of the Certificate of Occupancy, the Developer shall not allow to be placed on the Property or the City Property or any part thereof any lien or stop notice on account of materials supplied to or labor performed on behalf of the Developer. If a claim of a lien or stop notice on account of materials supplied to or labor performed on behalf of the Developer is given or recorded affecting the Project, the Developer shall within thirty (30) calendar days of such recording or service: (a) pay and discharge the same; or (b) effect the release thereof by recording and delivering to the Party entitled thereto a surety bond in sufficient form and amount or provide other assurance satisfactory to the City that the claim of lien or stop notice will be paid or discharged.

3.18 Right of City to Satisfy Liens on the Property. After the conveyance of the Property, if the Developer fails to satisfy or discharge any lien or stop notice on the Property pursuant to Section 3.17 above, the City shall have the right, but not the obligation, to satisfy any such liens or stop notices at the Developer’s expense and without further notice to the

EXHIBIT A
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29 Developer. In such event the Developer shall be liable for and shall immediately reimburse the City for such paid lien or stop notice. Alternatively, if the Developer fails to satisfy or discharge any lien or stop notice on the Property pursuant to Section 3.17 above, the City may require the Developer to immediately deposit with the City the amount necessary to satisfy such lien or claim pending resolution thereof. The City may use such deposit to satisfy any claim or lien that is adversely determined against the Developer. The Developer shall file a valid notice of cessation or notice of completion upon cessation of construction of the Improvements for a continuous period of thirty (30) calendar days or more, and shall take all other reasonable steps to forestall the assertion of claims or liens against the Property or the Improvements. The City may (but has no obligation 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 Property and the Improvements.

3.19 Assignment and Assumption or Dedication of Public Improvements. Prior to or at Close of Escrow, the City and the Developer will enter into an appropriate and reasonable agreement that will set forth in more detail the Developer’s obligations and the process for the City’s acceptance of and responsibilities for the Public Improvements, including but not limited to Developer’s indemnity for construction of the Public Improvements, assignment of rights and warranties and liabilities to the City upon completion and acceptance thereof, and discharge of Developer’s future liability with respect thereto.

ARTICLE IV

USE OF THE PROPERTY

4.1 Uses. The Developer covenants and agrees for itself, its successors, its assigns and every successor in interest that during construction and the duration of the Regulatory Agreement, the Developer and its successors and assignees shall devote the Property to the uses specified in this Agreement, and that the Property shall be used as an affordable housing development in accordance with the terms and conditions of the Regulatory Agreement. The covenants against discrimination specified in Section 4.5 of this Agreement shall be perpetual, the covenants pertaining to use and maintenance of the Property and the Improvements thereon shall be in effect for the duration of the Regulatory Agreement and the covenants regarding lowincome housing specified herein and in the Regulatory Agreement shall remain in effect for a term of fifty-five (55) years, commencing upon the issuance of a final Certificate of Occupancy for the Project.

EXHIBIT A
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30 4.2 Affordable Housing. The Property shall be used in compliance with all terms of the Regulatory Agreement.

4.3 Maintenance. The Developer shall maintain the Property, the Project and related landscaping and common areas in accordance with the Monterey Municipal Code in a manner consistent with community standards, and shall comply with all applicable federal, state and local laws and regulations pertaining to the Property. The City acknowledges and agrees that the Developer shall not have any maintenance obligations with respect to the City Property, the Public Improvements or any Improvements not on or within the Property. The Developer covenants that prior to completion of the Project, the portions of the Property undergoing construction shall be maintained in a neat and orderly condition to the extent practicable and in accordance with industry health and safety standards. The Developer shall maintain the Project in good repair and working order, and in a neat, clean and orderly condition, including the walkways, driveways, and landscaping, and from time to time make all necessary and proper repairs, renewals and replacements.

In the event that there arises at any time prior to the expiration of the term of the Regulatory Agreement, a condition in contravention of the above maintenance standard, then the City shall notify the Developer in writing of such condition, giving the Developer thirty (30) calendar days from receipt of such notice to cure such condition provided, however, that if the Developer is not able to reasonably cure such condition within such 30 day period, Developer may have an additional cure period up to one hundred twenty days so long as Developer is diligently pursuing such cure. In the event the Developer fails to cure or commence to cure the condition within the time allowed, the City shall have the right to perform all acts necessary to cure such condition, or to pursue such other remedy available to the City and to receive from the Developer the City’s cost in taking such action. The foregoing provisions shall be a covenant running with the land until the expiration of the term of the Regulatory Agreement, enforceable by the City, its successors and assigns. Nothing in the foregoing provisions shall preclude the Developer from making any alterations, additions, or other changes to the Project, provided that such changes comply with this Agreement and the approved construction plans, and with all necessary land use, building permits, and other approvals from the City.

4.4 Taxes and Assessments. The Developer shall pay all real and personal property taxes, assessments and charges and all franchise, income, payroll, withholding, sales, and other

EXHIBIT A
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31 taxes assessed to the Property and Improvements, or payable by the Developer, at such times and in such manner as to prevent any penalty from accruing, or any lien or charge from attaching to the Property; provided, however, that the Developer shall have the right to contest in good faith, any such taxes, assessments, or charges. In the event the Developer exercises its right to contest any tax, assessment, or charge, the Developer, on final determination of the proceeding or contest, shall immediately pay or discharge any decision or judgment rendered against it, together with all costs, charges and interest. The parties acknowledge that the Developer will apply for a welfare exemption from real property taxes.

4.5 Obligation to Refrain from Discrimination. The Developer covenants by and for itself and any successors in interest that there shall be no discrimination against or segregation of any person or group of persons, on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of the Property or the Improvements, nor shall the Developer itself or any person claiming under or through it establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the Property. The foregoing covenants shall run with the land.

4.6 Effect and Duration of Covenants. The covenants established in this Agreement shall, without regard to technical classification and designation, be binding for the benefit and in favor of the City, its successors and assigns, the City and any successor in interest to the Property or any part thereof.

The City is deemed the beneficiary of the terms and provisions of this Agreement and of the covenants running with the land for and in its own rights and for the purposes of protecting the interests of the community and other parties, public or private, in whose favor and for whose benefit this Agreement and the covenants running with the land have been provided. This Agreement and the covenants shall run in favor of the City without regard to whether the City has been, remains or is an owner of any land or interest therein in the Property, any parcel or subparcel, or in the Project Area. The City shall have the right, if this Agreement or the covenants are breached, to exercise all rights and remedies and to maintain any actions or suits at

EXHIBIT A
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32 law or in equity or other proper proceedings to enforce the curing of such breaches to which it or any other beneficiaries of this Agreement and the covenants may be entitled.

4.7 Reserved.

4.8 Affordable Housing Obligations
A. City’s Affordable Housing Purpose. The City has entered into this Agreement to facilitate the development of affordable housing and to increase the supply of affordable housing and housing for persons with special needs in the City, if feasible.

B. Regulatory Agreement. To assure that affordable units will be developed and maintained as provided in this Section 4.8, at Close of Escrow, the Developer and the City will record an Affordable Housing Regulatory Agreement and Declaration of restrictive covenants substantially in the form attached to this Agreement as Exhibit G (the “Regulatory Agreement”) and fully incorporated herein. The City agrees to execute, and record at the Developer’s cost, subordination agreements to subordinate the Regulatory Agreement to the Developer’s construction and/or permanent loans for the Project if such construction and/or permanent financing is provided by the California Department of Housing and Community Development (“HCD”), the California Housing Financing Agency (“CalHFA”), HUD, or other public senior lender which requires by statute or regulation that regulatory agreements with local public entities be subordinated. In all cases, the City shall be entitled to notice and cure provisions contained in Health and Safety Code Section 33334.14(a)(4) which specifically provides for the subordination of regulatory agreements.

ARTICLE V

CONDITIONS AFFECTING THIRD PARTY INTERESTS IN THE PROPERTY

5.1 Taxes, Assessments, Encumbrances and Liens. The Developer shall pay when due all real estate taxes and assessments assessed and levied on the Property for any period subsequent to conveyance of title to the Property. The Developer shall not place or allow to be placed on the Property any mortgage, trust deed, encumbrance or lien unauthorized by this Agreement. The Developer shall remove or have removed any levy or attachment on the Property (or any portion thereof), or shall assure the satisfaction thereof, within a reasonable time, but in any event prior to any sale pursuant to any such mortgage, trust deed, encumbrance

EXHIBIT A
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Madison Street Project
33 or lien. Nothing herein contained shall be deemed to prohibit the Developer from contesting the validity or amounts of any tax, assessment, encumbrance or lien, or to limit the remedies available to the Developer in respect thereto. Nothing herein shall prohibit the Developer from filing claims for welfare exemption.

5.2 Prohibition Against Transfer of Leasehold Interest in the Property, the Improvements Thereon and Assignment of Agreement. Except as provided in Section 6.2 or as otherwise provided in the Financing Plan approved by the City, prior to the issuance of a Certificate of Occupancy, the Developer shall not, except as expressly permitted by this Agreement, sell, transfer, convey, assign or lease the whole or any part of the Property or the Improvements thereon without the prior written approval of the City. This prohibition shall not be deemed to prevent the granting of easements, rights of way, licenses or permits to facilitate the development of the Property. The Developer shall have the right to enter into lease agreements prior to the issuance of a Certificate of Occupancy as long as the occupancy is contingent upon receiving the Certificate of Occupancy. In the absence of specific written agreement by the City, no such transfer, assignment or approval by the City shall be deemed to relieve the Developer or any other party from any obligations under this Agreement.

5.3 Security Financing; Rights of Holders.

A. No Encumbrances Except Mortgages, Deeds of Trust or Other Financing for the Project. Notwithstanding Sections 5.1 and 5.2 of this Agreement, mortgages, deeds of trust, or any other form of conveyance required for any reasonable method of financing are permitted, but only for the purpose of securing loans of funds to be used for financing or refinancing the construction, reconstruction, rehabilitation of the Project and any other expenditures necessary and appropriate to develop, own and operate the Property in accordance with the provisions of this Agreement. The Developer shall notify the City in advance of any mortgage, deed of trust, or other form of conveyance for financing unless incorporated in the Financing Plan. Except as permitted in the Financing Plan approved by the City, the Developer shall not enter into any such conveyance for financing without the prior written approval of the City and shall promptly notify the City of any mortgage, deed of trust, sale and lease-back or other financing conveyance, encumbrance or lien that has been created or attached thereto whether by voluntary act of the Developer or otherwise unless incorporated in the Financing Plan. The words “mortgage” and “deed of trust,” as used herein, include all other appropriate modes of financing real estate acquisition, construction and land development.

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 49, Packet Page 84 Affordable Housing and Disposition Agreement
Madison Street Project
34 B. Holder Not Obligated to Construct Project. The holder of any mortgage, deed of trust or other security interest authorized by this Agreement shall in no way be obligated by the provisions of this Agreement to construct or complete the Project or to guarantee such construction or completion. Nothing in this Agreement shall be deemed to construe, permit or authorize any such holder to devote the Property to any uses or to construct any improvements on or within the Property other than those uses provided for or authorized by this Agreement.

No Mortgagee (including any Mortgagee who obtains title to the Developer's interest in the Property or any part thereof as a result of foreclosure proceedings or transfer in lieu of foreclosure) shall be obligated by the provisions of this Agreement to construct the Improvements on or within the Property unless Mortgagee expressly assumes such obligation by written notice to the City. Whether or not a Mortgagee elects to assume the Developer's obligation to construct the Improvements on or within the Property, nothing in this Agreement shall be construed to permit such Mortgagee to construct any Improvements other than the Improvements authorized under this Agreement. If the Mortgagee elects to assume the Developer's obligation to construct the Improvements on or within the Property, the Mortgagee shall not be bound by the Schedule of Performance, provided that, upon assuming such obligation, the Mortgagee and the City shall execute a new Schedule of Performance and the Mortgagee shall complete the Improvements on or within the Property in accordance with the new schedule of performance. If, after acquiring the Developer's interest in the Property, the Mortgagee elects not to assume the Developer's obligation to complete the Improvements, the Mortgagee shall so notify the City within sixty (60) calendar days after the Mortgagee's acquisition of the Developer's interest in the Property, and the Mortgagee shall use good faith efforts to sell such interest within one hundred eighty (180) calendar days after delivery of such notice to a developer that will construct the Improvements on or within the Property.

C. Notice of Default to Mortgage, Deed of Trust or Other Security Interest Holders; Right to Cure. Whenever the City shall deliver any notice or demand to the Developer with respect to any breach or default by the Developer in completion of construction of the Project, the City shall at the same time deliver a copy of such notice or demand to each holder of record of any security interest authorized by this Agreement who has previously made a written request to the City therefore. Each such holder shall (insofar as the rights of the City are concerned) have the right, at its option, within 30 calendar days after the receipt of the notice, to cure or remedy or commence to cure or remedy any such default and to add the cost thereof to the security interest debt and the lien on its security interest. In the event there is more than one such

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 50, Packet Page 85 Affordable Housing and Disposition Agreement
Madison Street Project
35 holder, the right to cure or remedy a breach or default of the Developer under this paragraph shall be exercised by the holder first in priority or as the holders may otherwise agree among themselves, but there shall be only one exercise of such right to cure and remedy a breach or default of the Developer under this paragraph. Nothing contained in this Agreement shall be deemed to permit or authorize such holder to undertake or continue the construction or completion of the Project (beyond the extent necessary to conserve or protect the Project or construction already made) without first having expressly assumed the Developer’s obligations to the City by written agreement satisfactory to the City. The holder in that event must agree to complete, in the manner provided in this Agreement, the Project to which the lien of such holder relates and submit evidence satisfactory to the City that it has the qualifications and financial responsibility necessary to perform such obligations. Any such holder properly completing such Project shall be entitled, upon written request made to the City, to a Certificate of Occupancy from the City.

D. Failure of Holder to Complete Improvements. Subject to Mortgagee and tax credit investor requirements, in any case where, three months after a default by the Developer in completion of construction of the Improvements, the holder of any mortgage, deed of trust or other security interest creating a lien or encumbrance upon the leasehold interest in the Property has not exercised the option to construct, or if it has exercised the option and has not proceeded diligently with construction, the City may purchase the mortgage, deed of trust or other security interest by payment to the holder of the amount of the unpaid debt, plus any accrued and unpaid interest. If the Developer’s leasehold interest in the Property has vested in the holder, the City, if it so desires, shall be entitled to the conveyance of such interest in the Property from the holder to the City upon payment to the holder of an amount equal to the sum of the following:

1. The unpaid security interest debt at the time leasehold interest in the Property became vested in the holder (less all appropriate credits, including those resulting from collection and application of rentals and other income received during foreclosure proceedings);

2. All expenses with respect to the reconveyance;

3. The net expenses, if any (exclusive of general overhead), incurred by the holder as a direct result of the subsequent management of the Property and Project;

4. The costs of any authorized improvements made by such holder; and

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 51, Packet Page 86 Affordable Housing and Disposition Agreement
Madison Street Project
36 5. An amount equivalent to the interest that would have accrued on the aggregate of such amounts had all such amounts become part of the debt and had the debt continued in existence to the date of payment by the City.

E. Right of City to Cure Security Interest Default. Subject to Mortgagee and tax credit investor requirements, in the event of a default or breach by the Developer of a mortgage, deed of trust or other security interest with respect to the leasehold interest in the Property prior to completion of the Project and the holder has not exercised its option to complete the Project, the City may cure the default prior to completion of any foreclosure. In such event, the City shall be entitled to reimbursement from the Developer of all costs and expenses incurred by the City in curing the default. The City shall also be entitled to a lien upon the Developer’s leasehold interest in the Property to the extent of such costs and disbursements. Any such lien shall be subject to mortgages, deeds of trust or other security interests executed for the sole purpose of obtaining funds to develop the Property as authorized herein.

ARTICLE VI

CHANGES IN DEVELOPER

6.1 Changes only Pursuant to this Agreement. The qualifications, experience and expertise of the Developer are of particular concern to the City. It is because of these qualifications, experience and expertise that the City has entered into this Agreement. No voluntary or involuntary successor in interest to the Developer shall acquire any rights or powers under this Agreement, other than pursuant to a Transfer permitted in Section 6.2. Any attempt to assign this Agreement or transfer any interest of the Developer under this Agreement without the prior written consent of the City shall be null and void and shall confer no rights or privileges upon the purported assign.

6.2 Prohibition Against Transfer of Property and Assignment of Agreement Prior To Completion. Except for Permitted Transfers under Section 16 of the Lease, prior to the recording of the Certificate of Occupancy, the Developer shall not voluntarily or involuntarily make or attempt any total or partial sale, transfer, conveyance, assignment or lease (“Transfer”) of the whole or any part of the leasehold interest in the Property or the buildings or structures thereon or this Agreement without the prior written approval of the City which the City may withhold in its reasonable discretion.

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 52, Packet Page 87 Affordable Housing and Disposition Agreement
Madison Street Project
37 If the Developer proposes a Transfer of the leasehold interest in the Property or a portion thereof, other than as authorized as a “Permitted Transfer” under Section 16 of the Lease or in the previous paragraph, the proposed transferee shall have the qualifications and financial resources necessary and adequate as may be reasonably determined by the City to fulfill the obligations undertaken in this Agreement by the Developer. Any transferee, by instrument in writing satisfactory to the City and in form recordable among the land records, for itself and its successors and assigns, and for the benefit of the City shall expressly assume all of the obligations of the Developer under this Agreement relating to the Property and agree to be subject to all the conditions and restrictions to which the Developer is subject. There shall be submitted to the City for review all instruments and other legal documents proposed to affect any such Transfer; and if approved by the City its approval shall be indicated to the Developer in writing. This Section 6.2 shall not be deemed to prevent the granting of easements, rights of way, licenses or permits to facilitate the development of the Property.

In the absence of specific written agreement by the City, no Transfer by the Developer other than a “Permitted Transfer” under Section 16 of the Lease shall be deemed to relieve the Developer or any other party from any obligations under this Agreement.

ARTICLE VII

DEFAULTS AND REMEDIES

7.1 Termination Without Fault. The occurrence of any of the following constitutes a basis for either Party to terminate this Agreement without fault of the other Party:
(a) The Developer, despite good faith and diligent efforts, is unable to satisfy all of the conditions precedent to the City’s obligation to convey the Property to the Developer, set forth in Article II, by not later than the date set forth in the Schedule of Performance or such later date mutually agreed upon by the City and the Developer; (b) The Developer is unable to obtain an allocation of tax credits, and the Parties do not agree upon an alternative means to finance the Project;

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 53, Packet Page 88 Affordable Housing and Disposition Agreement
Madison Street Project
38 (c) The City, despite good faith and diligent efforts, is unable to convey the leasehold interest in Property to the Developer because the Project is not approved for development pursuant to NEPA or CEQA, and the Developer is otherwise entitled to such conveyance; (d) Prior to the conveyance of the Property, the City fails to approve the Financing Plan pursuant to Section 2.2;
Upon the occurrence of any of the above-described events, and at the election of either Party, this Agreement may be terminated by written notice to the other Party. After termination, neither Party shall have any rights against, or liability to the other Party under this Agreement, except that the indemnification provisions of Sections 2.3 and 3.16 shall survive such termination and remain in full force and effect.

7.2 Fault of City. Except as to events constituting a basis for termination under Section 7.1, and provided further that the Developer has satisfied its obligations hereunder, the following events shall constitute an City Event of Default:
(a) The City, without good cause, fails to convey the leasehold interest in the Property to the Developer within the time and in the manner set forth in Section 2.2.D, and the Developer is otherwise entitled by this Agreement to such conveyance; or (b) The City breaches any other material provision of this Agreement and fails to cure such breach within any applicable cure period.

Upon the occurrence of any of the above-described events, the Developer shall first notify the City in writing of its purported breach or failure, giving the City sixty (60) calendar days from receipt of such notice to cure or, if cure cannot be accomplished within sixty (60) calendar days, to commence to cure such breach, failure, or act. In the event the City does not then so cure within sixty (60) calendar days, or if the breach or failure is of such a nature that it cannot be cured within sixty (60) calendar days, the City fails to commence to cure within sixty (60) calendar days and thereafter diligently complete such cure within a reasonable time thereafter but in no event later than one hundred twenty (120) calendar days, then the Developer shall be afforded all of its rights at law or in equity, including the following remedies:
(1) terminating this Agreement by delivery of written notice to the City (provided, however, that

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 54, Packet Page 89 Affordable Housing and Disposition Agreement
Madison Street Project
39 the indemnification provisions of Sections 2.3 and 3.16 shall survive such termination); and (2) prosecuting an action for specific performance.

7.3 Fault of the Developer. Except as to events constituting a basis for termination under Section 7.1, and provided further that the City has satisfied its obligations hereunder, the following events in shall each constitute a Developer Event of Default:
(a) The Developer fails or refuses to satisfy, within the time and in the manner set forth in Article II, one or more of the conditions precedent to the City’s obligation to convey the Property to the Developer;
(b) The Developer refuses to accept conveyance of the leasehold interest in the Property within the time periods and under the terms set forth in Article II; (c) An Event of Default arises under any City Document other than this Agreement and remains uncured beyond any applicable cure period;
(d) An Event of Default arises under any loan secured by a mortgage, deed of trust or other security instrument recorded against the leasehold interest in the Property and remains uncured beyond any applicable cure period such that the holder of such security instrument has the right to accelerate repayment of such loan;
(e) The Developer fails to commence or complete construction of the Project within the times set forth in Article III, or, subject to Section 9.7, abandons or suspends construction of the Project prior to completion of all construction for a period of sixty (60) calendar days after written notice of such abandonment or suspension;
(f) A Transfer occurs, either voluntarily or involuntarily, in violation of Article VI; (g) The Developer fails to maintain insurance on the Property and the Project as required pursuant to the City Documents and the Developer fails to cure such default within ten (10) calendar days.
(h) Following conveyance of the leasehold interest in the Property to the Developer, subject to the Developer’s right to contest the following charges pursuant to the City Documents, and as set forth in Section 4.4 herein, if the Developer fails to pay taxes or assessments due on

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 55, Packet Page 90 Affordable Housing and Disposition Agreement
Madison Street Project
40 the Property or the Project or fails to pay any other charge that may result in a lien on the Property or the Project, and the Developer fails to cure such default within thirty (30) calendar days.
(i) Any representation or warranty contained in this Agreement or in any application, financial statement, certificate or report submitted to the City in connection with this Agreement or in any other City Document proves to have been incorrect in any material and adverse respect when made and continues to be materially adverse to the City interest in the Property or this Agreement;
(j) A court having jurisdiction shall have made or entered any decree or order (1) adjudging the Developer to be bankrupt or insolvent, (2) approving as properly filed a petition seeking reorganization of the Developer or seeking any arrangement for either of the Developer 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 Developer in bankruptcy or insolvency or for any of its properties, or (4) directing the winding up or liquidation of the Developer;
(k) The Developer shall have assigned its assets for the benefit of its creditors (other than pursuant to a mortgage loan) or suffered a sequestration or attachment of or execution on any substantial part of its property, unless the property so assigned, sequestered, attached or executed upon shall have been returned or released within sixty (60) calendar days after such event (unless a lesser time period is permitted for cure under any other mortgage on the leasehold interest in the Property, in which event such lesser time period shall apply under this subsection as well) or prior to any sooner sale pursuant to such sequestration, attachment, or execution; (l) The Developer shall have voluntarily suspended its business or the Developer’s partnership shall have been dissolved or terminated; or (m) If the Developer defaults in the performance of any term, provision, covenant or agreement contained in this Agreement other than an obligation enumerated in this Section 7.3 and unless a shorter cure period is specified for such default, the default continues for ten (10) calendar days in the event of a monetary default or sixty (60) calendar days in the event of a nonmonetary default after the date upon which the City shall have given written notice of the default to the Developer; provided however, if the default is of a nature that it cannot be cured within sixty (60) calendar days, a Developer Event of Default shall not arise hereunder if the

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 56, Packet Page 91 Affordable Housing and Disposition Agreement
Madison Street Project
41 Developer commences to cure the default within sixty (60) calendar days and thereafter prosecutes the curing of such default with due diligence and in good faith to completion and in no event later than one hundred twenty (120) calendar days after receipt of notice of the default.

Upon a Developer’s Event of Default under this Agreement, the City shall provide written notice of the purported breach, and unless a shorter cure period is specified above or in the case of a Developer Event of Default arising under clauses (c) through (l) above, the Developer shall have sixty (60) calendar days after the date upon which the City shall have given written notice of the default to the Developer to cure such default; provided however, if the default is of a nature that it cannot be cured within sixty (60) calendar days, a Developer Event of Default shall not arise hereunder if the Developer commences to cure the default within sixty (60) calendar days and thereafter prosecutes the curing of such default with due diligence and in good faith to completion and in no event later than one hundred twenty (120) calendar days after receipt of notice of the default.

7.4 Legal Actions. Upon the occurrence of a default and the expiration of the applicable cure period the non-defaulting party shall have the right, in addition to any other rights or remedies, to institute any action at law or in equity to cure, correct, prevent or remedy any default, to recover damages for any default or to obtain any other remedy consistent with the purpose of this Agreement. Any such legal actions shall be filed in the Superior Court of Monterey County, California or in the Federal District Court for the Northern District of California. Notwithstanding anything herein to the contrary, a party’s right to recover damages in the event of a default shall be limited to recovery of actual damages and shall exclude consequential damages.

7.5 Remedies Cumulative; No Waiver. Except as otherwise expressly stated in this Agreement, the rights and remedies of the Parties hereunder are cumulative, and the exercise or failure to exercise one or more of such rights or remedies by either Party shall not preclude the exercise by it, at the same time or different times, of any right or remedy for the same default or any other default. Failure or delay by either Party in providing a notice of default shall not constitute a waiver of any default.

7.6 Construction Plans. If the Agreement is terminated pursuant to Section 7.3, the Developer shall deliver to the City, as a Project lender, but only if the City is a Project lender, copies of any development or construction plans the Developer has had prepared for the Project

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 57, Packet Page 92 Affordable Housing and Disposition Agreement
Madison Street Project
42 on the Property, subject to the rights of any senior Project lender, the third-party preparer of such documents, and without representations or warranties by the Developer.

7.7 Rights of Mortgagees. Any rights of the City under this Article VII shall not defeat, limit or render invalid any lease, mortgage, deed of trust or other security interest permitted by this Agreement or any rights provided for in this Agreement for the protection of holder of security interests in the Property.

ARTICLE VIII

RESERVED

ARTICLE IX

GENERAL PROVISIONS

9.1 Applicability. This Agreement shall remain as an encumbrance against the Property until expiration of the Term, at which point it shall have no further force or effect; provided, however, that any provisions herein that expressly provide for ongoing applicability, including Sections 2.3 and 3.16 shall survive the termination of this Agreement. The Parties agree to execute such document as may be necessary to remove this Agreement as an encumbrance upon title.

9.2 Holder To Be Notified. The Developer, for itself, its successors and assigns hereby warrants and agrees that each term contained herein dealing with security financing and rights of holders shall be either inserted into the relevant deed of trust or mortgage or shall provide written evidence that a copy of this Agreement was sent to the holder prior to its coming into any security right or interest in the leasehold interest in the Property.

9.3 Modifications To Agreement. The City shall not unreasonably withhold, delay or condition its consent to modifications of this Agreement requested by the Developer’s lender or lenders or investors provided such modifications do not alter the City’s substantive rights and obligations under this Agreement.

9.4 Notices, Demands and Communications. All notices, requests, demands, or other communications required or permitted to be given hereunder shall be in writing and shall be addressed and delivered by certified mail, return receipt requested; by reputable commercial

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 58, Packet Page 93 Affordable Housing and Disposition Agreement
Madison Street Project
43 delivery service; or by hand delivery by a reputable courier or by electronic mail (“email”), to each party at the addresses set forth below. Any such notice, request, demand or other communication shall be considered given or delivered, as the case may be, on the date shown on the delivery receipt as the date of delivery, the date delivery was refused or the date the item was returned as undeliverable, provided, however, if any notice is given by email, such notice shall not be deemed delivered or given until a copy of such notice is either deposited in the mail or with a reputable commercial delivery service. By giving prior written notice thereof, any party, from time to time, may change its address for notices under this Agreement.

City: City of Monterey
City Hall
580 Pacific Street
Monterey, CA 93940
Attn: City Manager
Developer: MidPen Housing Corporation
275 Main Street, Suite 204
Watsonville, CA 95076
Attn: Joanna Carman, Director of Housing
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 9.4.

9.5 Conflict of Interests. No member, official or employee of the City shall make any decision relating to the Agreement which affects his or her personal interests or the interests of any corporation, partnership or association in which he or she is directly or indirectly interested.

9.6 Non-Liability of City Officials, Employees and Agents. No member, official, employee or agent of the City shall be personally liable to the Developer, or any successor in interest, in the event of any default or breach by the City or for any amount, which may become due to the Developer or successor or on any obligation under the terms of this Agreement. No officer, director, employee, agent, member or partner of the Developer shall be personally liable for any breach of any obligation of the Developer.

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 59, Packet Page 94 Affordable Housing and Disposition Agreement
Madison Street Project
44 9.7 Enforced Delay. In addition to specific provisions of this Agreement, performance by either Party hereunder shall not be deemed to be in default where delays or defaults are due to war; insurrection; strikes; lock-outs; riots; floods; earthquakes; fires; casualties; acts of God; acts of the public enemy; epidemics; quarantine restrictions; freight embargoes; lack of transportation; governmental restrictions or priority; litigation (including suits filed by third parties concerning or arising out of this Agreement or suits challenging approvals of this Project by the City); weather or soils conditions which will necessitate delays; delays of any contractor, sub-contractor or supplier; acts of the other Party; unreasonable delays due to a lender identified in the Financing Plan not caused by the Developer, or any other causes beyond the control or without the fault of the Party claiming an extension of time to perform.

The Party claiming such extension shall send written notice of the extension to the other within thirty (30) calendar days from the commencement of the cause. The City and the Developer may also extend times of performance under this Agreement in writing by mutual agreement of the Developer and the City Manager unless the City Manager, in his or her reasonable discretion, refers the matter of extension to the City Council for its written approval. Any time period provided herein shall be extended by the period of an Enforced Delay.

9.8 Inspection of Books and Records. The City has the right at all reasonable times to inspect on a confidential basis the books, records and all other documentation of the Developer pertaining to its obligations under this Agreement, except those confidential and privileged records, including, but not limited to, financial information of investors, and financial information of the Developer or its affiliates unrelated to the Project. Notwithstanding the above limitation, upon reasonable prior written notice, the City will have the right to reasonable inspection of the financial records showing the development and construction of the Project on a confidential basis. The Developer also has the right at all reasonable times upon prior written notice to inspect the books, records and all other documentation of the City pertaining to its obligations under this Agreement or the condition of the Property.

9.9 Rights and Remedies Cumulative. Except as otherwise expressly stated in this Agreement, the rights and remedies are cumulative, and the exercise or failure to exercise one or more of such rights or remedies by either Party shall not preclude the exercise by it, at the same time or different times, of any right or remedy for the same default or any other default.

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 60, Packet Page 95 Affordable Housing and Disposition Agreement
Madison Street Project
45 9.10 Corporate Citizen. The City encourages the Developer to participate in civic activities sponsored by the City. The City urges the Developer to become involved with local civic organizations and to actively participate in community activities.

9.11 Development Changes. The City agrees that no amendment that changes the uses or development permitted on the Property or changes the restrictions or controls that apply to the Property or otherwise directly affect the use of the Property shall be made or become effective without the prior written consent of the Developer.

9.12 Amendments to this Agreement; Approvals. The Developer and the City agree to mutually consider reasonable requests for amendments to this Agreement (including any of the Attachments hereto) that may be made by any of the Parties hereto, lending institutions, the Developer’s tax credit investors, bond counsel, or financial consultants to the City, provided such requests are consistent with this Agreement and would not substantially alter the basic business terms included herein. The City Manager is hereby authorized to execute any such amendments to this Agreement on behalf of the City not otherwise requiring approval of the City Council.

The City Manager is hereby further authorized to execute any and all approvals on behalf of the City required by this Agreement and to take all further actions and execute all documents necessary to perform the agreements of the City contained herein.

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. Where this Agreement specifically refers to the City Council, then the approval, consent or waiver by said body is required. The City hereby authorizes the City Manager to deliver such approvals, consents as are required by this Agreement, or to waive requirements under this Agreement, on behalf of the City.

9.13 Reasonable Approvals. Unless the context indicates otherwise, where an action under this Agreement requires approval of a Party, such approval shall not be unreasonably withheld or delayed.

9.14 Applicable Law. This Agreement shall be interpreted under and pursuant to the laws of the State of California.

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 61, Packet Page 96 Affordable Housing and Disposition Agreement
Madison Street Project
46 9.15 Severability. If any term, provision, covenant or condition 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.

9.16 Legal Actions. In the event any legal action is commenced to interpret or to enforce the terms of this Agreement or to collect damages as a result of any breach thereof, the Party prevailing in any such action shall be entitled to recover against the Party not prevailing all reasonable attorney’s fees and costs incurred in such action.

9.17 Binding Effect. This Agreement shall be binding upon and inure to the benefit of the heirs, administrators, executors, successors in interest and assigns of each of the Parties hereto except that there shall be no transfer of any interest by any of the Parties hereto except pursuant to the terms of this Agreement. Any reference in this Agreement to a specifically named Party shall be deemed to apply to any successor, heir, administrator, executor or assign of such Party who has acquired an interest in compliance with the terms of this Agreement, or under law.

9.18 Parties Not Co-Venturers. Nothing in this Agreement is intended to or does establish the Parties as partners, co-venturers, or principal and agent with one another.

9.19 Time is of The Essence. In all matters under this Agreement, the Parties agree that time is of the essence.

9.20 Complete Understanding Of The Parties. This Agreement consists of the text of the Agreement and the attached Exhibits and constitutes the entire understanding and agreement of the Parties.

9.21 Good Faith. The Parties recognize that it is impractical in this Agreement to provide for every contingency which may arise during the life of the Agreement, and the Parties hereby agree that it is their intention that this Agreement shall operate fairly between them and without detriment to the interests of either of them, and that, if during the term of this Agreement either Party believes that this Agreement is operating unfairly, the Parties will use their best

EXHIBIT A
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Madison Street Project
47 efforts to agree on such action as may be necessary to remove the cause or causes of such unfairness.

SIGNATURES ON FOLLOWING PAGE

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 63, Packet Page 98 Affordable Housing and Disposition Agreement
Madison Street Project
48 IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first above written.

CITY MONTEREY
By: ________________________________
Hans Uslar, City Manager
ATTEST:

By: ___________________________
City Clerk
APPROVED AS TO FORM:

By: _________________________________
City Attorney
MP Madison Street Associates, L.P.
a California limited partnership
By: MP Madison Street LLC,
a California limited liability company,
its general partner
By: Mid-Peninsula San Carlos Corporation,
a California nonprofit public benefit corporation,
its sole member/manager
By: ____________________________
Matthew O. Franklin,

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 64, Packet Page 99 3462167.1 Legal Description of Property
Affordable Housing and Disposition Agreement
MidPen Housing Corporation
#20096185v1<ACTIVE> - Monterey - Madison Street DDA - Final 10-2-24 A-1

EXHIBIT A
Legal Description of Property

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 65, Packet Page 100 Scope of Development
Affordable Housing and Disposition Agreement
MidPen Housing Corporation
#20096185v1<ACTIVE> - Monterey - Madison Street DDA - Final 10-2-24 B-1

EXHIBIT B

SCOPE OF DEVELOPMENT
I. DEVELOPMENT
A. General
Capitalized terms which are not defined herein shall have the meaning set forth in the Disposition and Development Agreement (“AHDA”) attached hereto.

The Developer agrees that the Property shall be developed in accordance with the provisions of this Agreement and the plans, drawings and related documents approved by the City pursuant hereto. The Developer and its supervising architect, engineer and contractor shall work with City staff to coordinate the overall design, architecture and color of the Project on the Property.

B. The Project
The Developer shall construct, or cause to be constructed, on the Property (i) up to fortytwo (42) units of affordable housing consisting of studio, one, two, and three bedroom units, (ii) one (1) manager unit, and (iii) the Public Improvements. The affordable housing shall be operated in compliance with the terms of the Regulatory Agreement.

C. Architecture and Design
The Project shall be of high architectural quality, shall be well landscaped and shall be efficiently and aesthetically designed. The shape, scale of volume, exterior design and exterior finish of the building must be consistent with applicable City design guidelines. The Developer’s plans submitted to the City shall describe in detail the architectural character intended for the Project. The Developer’s design of the Project shall include “green” building components to the extent feasible as determined by the Developer.

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 66, Packet Page 101 Scope of Development
Affordable Housing and Disposition Agreement
MidPen Housing Corporation
#20096185v1<ACTIVE> - Monterey - Madison Street DDA - Final 10-2-24 B-2
D. Landscaping
Landscaping shall embellish all open spaces upon the Property to integrate the Project with adjacent properties. Landscaping includes such materials as paving, trees, shrubs and other plant materials, landscape containers, plaza furniture, top soil preparation, automatic irrigation and landscape and pedestrian lighting. Landscaping shall carry out the objectives and principles of the City’s desire to accomplish a high quality aesthetic environment.

G. Signs
All signs on the exterior of the buildings are of special concern to the City. All signs must comply with the City ordinances and must be approved by the City (which approval shall not be unreasonably withheld).

H. Screening
Trash areas shall be screened on all four (4) sides and have movable doors or other devices to obscure such areas from view. All fire standpipes and such other fire related mechanical devices shall be screened with plant materials.

I. Applicable Codes
The Project shall be constructed in accordance with the Uniform Building Code (with City modifications) and the City’s Municipal Code and other applicable ordinances or codes.

II. PUBLIC IMPROVEMENTS
The Developer shall construct, or cause to be performed, all public improvements required in connection with the development of the Property as follows: surface parking lot, improvements to Dutra Street, a pedestrian walkway, a city trash area and a public play area.

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 67, Packet Page 102 Lease Agreement
Affordable Housing and Disposition Agreement
MidPen Housing Corporation
#20096185v1<ACTIVE> - Monterey - Madison Street DDA - Final 10-2-24 C-1

EXHIBIT C

LEASE AGREEMENT

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 68, Packet Page 103 i

GROUND LEASE
by and between
City of Monterey
and
MP Madison Street Associates, L.P.

Dated as of ______________

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 69, Packet Page 104 i
ARTICLE 1. Definitions ..................................................................................................................1 Section 1.1 Definitions........................................................................................................1 Section 1.2 Exhibits. ...........................................................................................................6 ARTICLE 2. Lease of the Property .................................................................................................6 Section 2.1 Lease of Property. ............................................................................................6 Section 2.2 Term. ................................................................................................................6 Section 2.3 Use. ..................................................................................................................6 Section 2.4 Possession. .......................................................................................................7 Section 2.5 Memorandum of Lease. ...................................................................................7 ARTICLE 3. The Improvements .....................................................................................................7 Section 3.1 Construction. ....................................................................................................7 Section 3.2 Liens. ................................................................................................................7 Section 3.3 Permits, Licenses and Easements. ...................................................................9 Section 3.4 Title to Improvements. .....................................................................................9 Section 3.5 Benefits of Improvement During Term. ........................................................10 Section 3.6 No Abandonment. ..........................................................................................10 ARTICLE 4. Rents.........................................................................................................................10 Section 4.1 Ground Rent. ..................................................................................................10 Section 4.2 Payments. .......................................................................................................10 ARTICLE 5. Taxes and Other Impositions; Utilities ....................................................................11 Section 5.1 Payment of Impositions. ................................................................................11 Section 5.2 Possessory Interest Taxes. .............................................................................11 Section 5.3 Contested Taxes and Other Impositions. .......................................................11 Section 5.4 Valuation Assessment/Property Tax Exemption. ..........................................12 Section 5.5 Failure to Pay Impositions. ............................................................................12 Section 5.6 Utilities. ..........................................................................................................12

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 70, Packet Page 105 ii
ARTICLE 6. Insurance ..................................................................................................................12 Section 6.1 Required Insurance Coverage. .......................................................................12 Section 6.2 Insurance Policies and Premiums. .................................................................13 Section 6.3 Proceeds of Insurance. ...................................................................................14 Section 6.4 Limitation of Liability....................................................................................15 ARTICLE 7. MAINTENANCE, ALTERATIONS, REPAIRS AND REPLACEMENTS ..........15 Section 7.1 Maintenance of Leased Premises; Propertyscaping. ......................................16 Section 7.2 Landscaping Maintenance. ............................................................................16 Section 7.3 Alterations to Leased Premises. .....................................................................17 Section 7.4 Indemnifications. ...........................................................................................17 Section 7.5 Capital Replacement Reserve Account. ......... Error! Bookmark not defined.

Section 7.6 Operating Reserve Account. .......................... Error! Bookmark not defined.

ARTICLE 8. MORTGAGE LOANS .............................................................................................18 Section 8.1 Liens and Encumbrances Against the Leasehold Estate. ...............................18 Section 8.2 Cost of Approved Loans to be Paid by Lessee. .............................................21 Section 8.3 Proceeds of Approved Loans. ........................................................................21 Section 8.4 Notice and Right to Cure Defaults Under Approved Loans. .........................21 Section 8.5 Reserved. ........................................................................................................21 Section 8.6 Right to Pay Taxes and Senior Mortgage. .....................................................22 ARTICLE 9. REPRESENTATIONS, WARRANTIES AND COVENANTS .............................22 Section 9.1 Representations, Warranties and Covenants of City......................................22 Section 9.2 Representations, Warranties and Covenants of Lessee..................................23 Section 9.3 Hazardous Materials. .....................................................................................23 Section 9.4 Hazardous Materials Indemnification. ...........................................................24 Section 9.5 Prevailing Wage Requirements......................................................................25 Section 9.6 Compliance with Laws. .................................................................................27

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 71, Packet Page 106 iii
Section 9.7 Affordability and Use Restrictions. ...............................................................27 Section 9.8 Non-Discrimination; Compliance with Fair Housing Laws. .........................27 Section 9.9 Fair Housing...................................................................................................28 Section 9.10 Management Entity. .....................................................................................28 Section 9.11 Subleases. .....................................................................................................28 ARTICLE 10. EMINENT DOMAIN ............................................................................................29 Section 10.1 Termination of Lease. ..................................................................................29 Section 10.2 Continuation of Lease and Presumption of Restoration. .............................29 Section 10.3 Temporary Taking. ......................................................................................29 Section 10.4 Apportionment of Award. ............................................................................29 Section 10.5 Award on Total or Substantial Taking. ........................................................29 Section 10.6 Award on Partial Taking. .............................................................................30 Section 10.7 Joinder. .........................................................................................................30 Section 10.8 City Reservation of Rights. ..........................................................................30 ARTICLE 11. DAMAGE OR DESTRUCTION ...........................................................................31 Section 11.1 Damage or Destruction to Leased Premises. ...............................................31 Section 11.2 Damage or Destruction Near End of Term. .................................................31 Section 11.3 Distribution of Insurance Proceeds. .............................................................31 Section 11.4 Insurance Requirements. ..............................................................................32 ARTICLE 12. EVENTS OF DEFAULT .......................................................................................32 Section 12.1 Events of Default. ........................................................................................32 Section 12.2 Rights and Remedies....................................................................................33 Section 12.3 Default by City. ............................................................................................35 Section 12.4 Notices. ........................................................................................................35 ARTICLE 13. QUIET ENJOYMENT AND POSSESSION; INSPECTIONS .............................36 Section 13.1 Quiet Enjoyment. .........................................................................................36

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 72, Packet Page 107 iv
Section 13.2 City's Right of Inspection. ...........................................................................36 ARTICLE 14. VACATION OF LEASED PREMISES ................................................................36 Section 14.1 Vacation Upon Termination. .......................................................................36 ARTICLE 15. NON-MERGER .....................................................................................................36 Section 15.1 Non-Merger..................................................................................................36 ARTICLE 16. TRANSFERS .........................................................................................................36 Section 16.1 Permitted Transfer by Lessee.......................................................................36 ARTICLE 17. MISCELLANEOUS PROVISIONS ......................................................................37 Section 17.1 Consents. ......................................................................................................37 Section 17.2 Enforced Delay; Extension of Times of Performance. ................................37 Section 17.3 Interpretation. ...............................................................................................38 Section 17.4 Entire Agreement: Modifications. ...............................................................38 Section 17.5 Governing Law. ...........................................................................................38 Section 17.6 Binding Effect. .............................................................................................38 Section 17.7 Severability. .................................................................................................38 Section 17.8 Further Assurances. ......................................................................................38 Section 17.9 Authority to Execute Agreement. ................................................................39 Section 17.10 Lease Administration and Approvals. ........................................................39 Section 17.11 Captions. ....................................................................................................39 Section 17.12 Gender. .......................................................................................................39 Section 17.13 Exhibits. .....................................................................................................39 Section 17.14 References. .................................................................................................39 Section 17.15 Cumulative. ................................................................................................39 Section 17.16 Notices. ......................................................................................................39 Section 17.17 Counterparts. ..............................................................................................40 Section 17.18 Time of Essence. ........................................................................................40

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 73, Packet Page 108 v
Section 17.19 Attorneys' Fees. ..........................................................................................40 Section 17.20 No Third Party Beneficiaries. ....................................................................40 Section 17.21 Parties Not Co-Venturers; Independent Contractor. ..................................40 Section 17.22 No Personal Liability. ................................................................................40 Exhibit A: Legal Description of the Leased Premises
Exhibit B: Site Map of the Leased Premises
Exhibit C: Memorandum of Lease
Exhibit D: Scope of Development
Exhibit E: Financing Plan

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 74, Packet Page 109 1 GROUND LEASE
This Ground Lease (this “Lease”) is entered into as of ______________, (the “Commencement Date”) by and between the City of Monterey, a California charter city (“City”), and MP Madison Street Associates, L.P., a California limited partnership (“Lessee”).

RECITALS
A. City is the owner of certain property known as a portion of the City Hall campus located on Madison Street between Dutra and Van Buren Street, known as Assessor Parcel Numbers 001-522-009, 001-522-010, 001-522-011, and a portion of 001-522-015 (the “Property”), as more particularly described in Exhibit A attached hereto and incorporated herein by this reference.

B. Lessee and City, entered into that certain Affordable Housing Disposition Agreement dated __________ 2024 (the “AHDA”), pursuant to which City agreed to ground lease the Property to Lessee for ninety-nine (99) years, for the construction and operation of a forty-two (42) unit multifamily rental housing development with long term affordability requirements, including one manager's unit that will not be subject to affordability requirements (the “Project” or the “Improvements”).

C. City desires to lease the Property to Lessee, and Lessee desires to lease the Property from City for a period of ninety-nine (99) years pursuant to the terms of this Lease.

D. Capitalized terms which are referred to and utilized throughout this Lease are defined in Article 1 of this Lease.

NOW, THEREFORE, for and in consideration of the foregoing premises, the covenants, representations, warranties and agreements set forth herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto do hereby agree as follows:

ARTICLE 1.

DEFINITIONS
Section 1.1 Definitions. For the purposes of this Lease, the following defined terms shall have the meanings ascribed thereto in this Article 1:
(a) Additional Rent means all Impositions, taxes and other funds required to be paid by Lessee under Article 5 of this Agreement.
(b) Appraisal means the appraisal of the Property dated _______________. (c) Applicable Laws are defined in Section 9.6.
(d) Approved Loans means all loans, including without limitation, the City Loan and the PLHA Loan, obtained from time to time by Lessee for the construction and

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 75, Packet Page 110 2 permanent financing of the Improvements in compliance with the Financing Plan attached hereto as Exhibit E, as such Financing Plan may be revised from time to time by written consent of the Parties.
(e) Casualty is defined in Article 11 hereof.
(f) City means the City of Monterey, California.
(g) City's Estate means City's fee estate in the Property and reversionary interest in the Improvements pursuant to this Lease.
(h) City Loan means that certain loan to be provided by City to Lessee pursuant to the terms set forth in the City Loan Agreement between Lessee and City, effective as of _____________ 2024, as it may be amended, in the amount of One Million Five Hundred Fifty Thousand Dollars ($1,500,000).
(i) Claims means collectively: claims, demands, actions, causes of action, suits, judicial or administrative proceedings, damages, losses, liabilities, costs, expenses (including without limitation reasonable attorneys' fees), damages, penalties, deficiencies, fines, orders, charges, judgments, remedial action requirements, and enforcement actions of any kind. (j) Commencement Date means the date set forth in the first paragraph of this Lease.
(k) County means the County of Monterey, California.
(l) AHDA is defined in Recital B.
(m) Environmental Laws means federal, state or local statutes, ordinances, rules, regulations, orders, decrees, judgments or common law doctrines, and provisions and conditions of permits, licenses and other operating authorizations regulating, or relating to, or imposing liability or standards of conduct concerning (i) pollution or protection of the environment, including natural resources; (ii) exposure of persons, including employees and agents, to Hazardous Materials or other products, raw materials, chemicals or other substances; (iii) protection of the public health or welfare from the effects of by-products, wastes, emissions, discharges or releases of chemical substances from industrial or commercial activities; (iv) the manufacture, use or introduction into commerce of Hazardous Materials, including without limitation, their manufacture, formulation, labeling, distribution, transportation, handling, storage and disposal; or (iv) the use, release or disposal of Hazardous Materials or the remediation of air, surface waters, groundwater or soil, as now or may at any later time be in effect, together with any regulations promulgated thereunder.
(n) Event of Default is described in Article 12 of this Lease. (o) Governmental Authorities means any applicable federal, State or local governmental or quasi-governmental entities, subdivisions, agencies, authorities or instrumentalities having jurisdiction over the Leased Premises, the Improvements, City or Lessee.

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 76, Packet Page 111 3 (p) Hazardous Materials means any chemical, material or substance now or hereafter defined as or included in the definition of hazardous substances, hazardous wastes, hazardous materials, extremely hazardous waste, restricted hazardous waste, toxic substances, pollutant or contaminant, imminently hazardous chemical substance or mixture, hazardous air pollutant, toxic pollutant, or words of similar import under any local, state or federal law or under the regulations adopted or publications promulgated pursuant thereto applicable to the Leased Premises, including, without limitation: the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. 9601, et seq. (“CERCLA”); the Hazardous Materials Transportation Act, as amended, 49 U.S.C. 5101, et seq.; the Federal Water Pollution Control Act, as amended, 33 U.S.C. 1251, et seq.; and the Resource Conservation and Recovery Act of 1976, 42 U.S.C. 6901, et seq. (“RCRA”). The term Hazardous Materials shall also include any of the following: any and all toxic or hazardous substances, materials or wastes listed in the United States Department of Transportation Table (49 CFR 172.101) or by the Environmental Protection Agency as hazardous substances (40 CFR Part 302) and in any and all amendments thereto; oil, petroleum, petroleum products (including, without limitation, crude oil or any fraction thereof), asbestos and asbestos-containing materials, natural gas, natural gas liquids, liquefied natural gas or synthetic gas usable for fuel, not otherwise designated as a hazardous substance under CERCLA; any substance which is toxic, explosive, corrosive, reactive, flammable, infectious or radioactive (including any source, special nuclear or by product material as defined at 42 U.S.C. 2011, et seq.), carcinogenic, mutagenic, or otherwise hazardous and is or becomes regulated by any governmental authority; asbestos in any form; urea formaldehyde foam insulation; transformers or other equipment which contain dielectric fluid containing levels of polychlorinated biphenyl; radon gas; or any other chemical, material or substance (i) which poses a hazard to the Leased Premises, to adjacent properties, or to persons on or about the Leased Premises, (ii) which causes the Leased Premises to be in violation of any of the aforementioned laws or regulations, or (iii) the presence of which on or in the Leased Premises requires investigation, reporting or remediation under any such laws or regulations.

Hazardous Materials do not include substances that are used or consumed in the normal course of constructing, developing, operating, or occupying a residential and office mixed-use project, to the extent and degree that such substances are stored, used, and disposed of in the manner and in amounts that are consistent with normal practice and legal standards. (q) Impositions means all taxes, including without limitation, possessory interest taxes, assessments, water and sewer charges, charges for public utilities, excises, levies, license and permit fees and other charges that shall or may be assessed, levied or imposed during the Term by any Governmental Authorities upon the Leased Premises or any part thereof, including the buildings or improvements now or hereafter located thereon, trade fixtures, furnishings, equipment and all other personal property of Lessee contained in the Leased Premises. “Impositions” shall not include any income tax, capital levy, estate, succession, inheritance, or similar taxes of City. Except for a tax, assessment, or charge resulting from Lessee's use of the Leased Premises pursuant to this Lease, “Impositions” shall not include any franchise tax imposed upon any owner of the fee of the Leased Premises, or any income, profits or revenue tax, assessment or charge imposed upon the rent or other benefit received by City under this Lease by any Governmental Authorities.
(r) Improvements means the forty-two (42) units of affordable housing for income-eligible households, including one (1) manager's unit that will not be subject to

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 77, Packet Page 112 4 affordability restrictions, to be constructed in accordance with this Lease. The Improvements are also referred to in this Lease as the “Project”.
(s) Indemnitees means the City and its elected and appointed officials, officers, employees, agents, contractors, representatives and volunteers. (t) Insurance Requirements the requirements, whether now or hereafter in force, of any insurer or insurance carrier, any board of fire underwriters or any other company, bureau, organization or entity performing the same or similar functions, applicable to the Leased Premises and/or the Improvements, or any portion thereof, to the extent so applicable. (u) Investor means the low income housing tax credit investor that will provide equity to the Project.
(v) Lease Year means a calendar year.
(w) Leased Premises means the Property, together with the Improvements and any other improvements now or hereafter located thereon, and together with all and singular rights, easements, licenses, privileges and appurtenances thereunto attaching or in any way belonging thereto.
(x) Leasehold Mortgage Any mortgage, deed of trust, security agreement or collateral assignment pursuant to an Approved Loan encumbering Lessee's Estate as a leasehold mortgage lien.
(y) Legal Requirements means all laws, statutes, codes, ordinances, orders, rules, regulations and requirements of all Governmental Authorities and the appropriate agencies, officers, departments, boards and commissions thereof, whether now or hereafter in force applicable to City, Lessee, the Leased Premises, the Improvements, or any portion thereof, to the extent so applicable.
(z) Lender means the holder, mortgagee, grantee or secured party under any Leasehold Mortgage.
(aa) Lessee's Estate or Leasehold Estate means, during the Term of this Lease, Lessee's leasehold interest in the Property and Lessee's fee ownership interest in the Improvements.
(bb) Loan Documents means all documents executed by Lessee evidencing or securing a Leasehold Mortgage or evidencing any Approved Loan. (cc) Management Agent means the Person designated from time to time as “Management Agent” of all or any portion of the Improvements under any management agreement entered into from time to time with Lessee. The initial Management Agent will be MidPen Property Management Corporation.
(dd) Net Condemnation Award means net amounts owed or paid to the Parties or to which either of the Parties may be or become entitled by reason of any Taking or pursuant

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 78, Packet Page 113 5 to any agreement with any condemning authority which has been made in settlement of any proceeding relating to a Taking, less any costs and expenses incurred by the Parties in collecting such award or payment.
(ee) Party means the City or Lessee, as applicable. City and Lessee shall be referred to collectively as the “Parties.”
(ff) Permitted Encumbrances means the permitted title encumbrances as defined in Section 9.1(a).
(gg) Person means an individual, partnership, corporation, public benefit corporation, trust, unincorporated association, or other entity or association. (hh) Plans and Specifications means those plans and specifications approved by the City, for the construction of the Improvements, as they may be amended from time to time and as approved by City.
(ii) Project means the Improvements as defined above.
(jj) Property is defined in Recital A above.
(kk) Rent is described in Section 4.1 hereof.
(ll) Resident Sublease means any sublease or license agreement entered into by Lessee with residents of the residential units to be developed on the Property. (mm) Taking means a taking during the Term hereof of all or any part of the Leased Premises and/or the Improvements, or any interest therein or right accruing thereto, as a result of the exercise of the right of condemnation or eminent domain materially affecting the Leased Premises or any part thereof. A conveyance in lieu of or in anticipation of the exercise of any such right of condemnation or eminent domain shall be considered a Taking. Any such Taking shall be deemed to have occurred upon the earlier to occur of (a) the date on which the property, right or interest so taken must be surrendered to the condemning authority, or (b) the date title vested in a condemning authority or other party pursuant to any Taking. (nn) Tax Credit Eligible Household means a household that is eligible to rent and occupy a qualified low income dwelling unit under Section 42 of the Internal Revenue Code and applicable TCAC and State of California Legal Requirements relating to low income housing tax credits including but not limited to California Revenue and Taxation Code Sections 17057.5, 17058, 23610.4, and 23610.5 and California Health and Safety Code Section 50199, et seq.
(oo) Tax Credit Restrictive Covenant means the agreement with TCAC to be executed by Lessee and properly recorded against the Lessee's Estate in the land records of the County, setting forth certain terms and conditions under which forty-two (42) of the residential units in the Improvements will be operated.
(pp) TCAC means the California Tax Credit Allocation Committee.

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 79, Packet Page 114 6 (qq) Tenant(s) means any subtenant, sublessee or licensee of Lessee under any Resident Sublease(s).
(rr) Term means the period of time described in Section 2.2 hereof. (ss) Transfer: Any sale, assignment, transfer, conveyance, lease, sublease, encumbrance, mortgage, or hypothecation, in any manner or form or any agreement to do any of the foregoing.

Section 1.2 Exhibits. The Exhibits referred to in this Lease and attached hereto are:

Exhibit A: Legal Description of the Property
Exhibit B: Site Map of the Property
Exhibit C: Memorandum of Lease
Exhibit D: Scope of Development
Exhibit E: Financing Plan
ARTICLE 2.

LEASE OF THE PROPERTY
Section 2.1 Lease of Property. Subject to the terms hereof and in consideration of the covenants of payment and performance stipulated herein, City leases the Property to Lessee, and in consideration thereof, Lessee takes, hires and leases the Property from the City, pursuant to the terms of this Lease. This Lease, the interests of City and Lessee hereunder, and the Leased Premises, are in all respects subject to and bound by all of the covenants, conditions, restrictions, reservations, rights, rights-of-way, and easements of record prior to the date of this Lease.

Lessee hereby accepts the Leased Premises and acknowledges that the Leased Premises is in the condition required by this Lease.

Section 2.2 Term. Unless sooner terminated pursuant to the provisions hereof, this Lease shall continue in full force and effect for a term (“Term”), commencing on the Commencement Date and expiring on midnight the day immediately preceding the ninety-ninth (99th) anniversary thereof.

Section 2.3 Use. Subject to the provisions hereof, Lessee shall use the Leased Premises for the construction and operation of the Project, which includes the construction, development and operation of the Improvements on the Property in accordance with the restrictions and requirements set forth in Article 2 hereof. Further, Lessee agrees:
(a) that all uses conducted on the Leased Premises, including, without limitation, all activities undertaken by Lessee pursuant to this Lease, shall conform to all applicable provisions of the Monterey Municipal Code and the Regulatory Agreement as long as it remains in effect;
(b) not to use the Leased Premises for any disorderly or unlawful purpose;

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 80, Packet Page 115 7 (c) to use its commercially reasonable efforts to enforce the terms of any Tenant subleases to minimize any nuisance or unlawful conduct of any Tenant on or about the Leased Premises;
(d) to use its commercially reasonable efforts to enforce the covenants and conditions of this Lease on any Tenants with respect to the Improvements; (e) to take commercially reasonable action, if reasonably deemed necessary by Lessee, to abate any action by any Tenant that violates, or that would cause Lessee to violate this Lease; and
(f) subject to the laws of the State of California and the rights of Tenants, to permit City and its agents to inspect the Leased Premises or any part thereof, other than Tenant’s individual residential units, at any reasonable time during the Term.

Section 2.4 Possession. City agrees to and shall provide possession of the Leased Premises to Lessee upon close of construction financing, free and clear of all rights to possession or use by any tenants or other individuals or entities other than Lessee (except as disclosed to Lessee or apparent from Lessee's inspection), and free and clear of any encumbrances except as expressly approved by Lessee in writing in accordance with the terms of the AHDA.

Section 2.5 Memorandum of Lease. The Parties shall execute and acknowledge a Memorandum of Ground Lease, substantially in the form attached hereto as Exhibit C, which shall be recorded at Lessee's expense.

Section 2.6 Satisfaction of AHDA. By execution of this Lease, the Parties deem satisfied all provisions, terms, and conditions of the AHDA regarding conveyance by the City to Lessee of the Leasehold Estate. This Lease shall control as to issues of payment of rent and the Parties’ rights and obligations as landlord and tenant. Any provision of the AHDA relating to the foregoing matters is hereby terminated and of no further force and effect, except where the AHDA explicitly provides that certain provisions shall survive the termination thereof.

ARTICLE 3.

THE IMPROVEMENTS
Section 3.1 Construction. Lessee shall cause the Improvements to be constructed in substantial compliance with the construction plans approved by City and the terms and conditions of the land use permits and approvals and building permits, including any variances granted for the Improvements to be approved by City. Any and all Improvements constructed by or on behalf of Lessee shall be constructed in a good, skillful and professional manner, in compliance with all applicable Legal Requirements. Except as may be specified in any City financing for the Project that may be approved by the City in its sole discretion, Lessee shall bear the entire and sole cost of planning, designing, engineering, financing, constructing, supervising, and inspecting the Improvements, including all fees and mitigation measures.

Section 3.2 Liens. Lessee shall not have any right, authority or power to bind City, City's Estate, or any interest of City in the Property or the Leased Premises, for any claim for labor or material, or for any other charge or expense, lien or security interest incurred in

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 81, Packet Page 116 8 connection with Lessee's use of the Property, or the development, construction or operation of the Improvements, or any change, alteration of addition thereto Lessee shall have the right to enter into utility easements and other customary easements necessary and incidental to the development, construction and operation of the Improvements, which such easements shall not require the City's consent if not required by the utility provider.

The Lessee shall not create or permit or suffer to be created or to remain upon the City's Estate or any interest of City in the Property or the Leased Premises, or upon the Leased Premises, or any part thereof, and will discharge, any lien, including, but not limited to, the liens of mechanics, laborers, materialmen, suppliers or vendors for work or materials alleged to be done or furnished in connection with the Leased Premises or the Project, or any part thereof. If any claim of lien is filed against the City's Estate or any interest of City in the Property or the Leased Premises, or a stop notice is served on any other lender or other third party in connection with the Leased Premises or the Improvements, or upon the Leased Premises, or any part thereof, then the Lessee shall, within twenty (20) days after such filing or service, either pay and fully discharge the lien or stop notice, effect the release of such lien or stop notice by delivering to the City a surety bond in sufficient form and amount, or provide the City with other assurance satisfactory to the City that the claim of lien or stop notice will be paid or discharged. If the Lessee fails to discharge any lien, encumbrance, charge, or claim in the manner required in this Lease, 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 Lessee's expense. Any expense incurred by City pursuant to this Section shall be immediately due and payable by Lessee to City as Additional Rent under this Lease. The Lessee shall have the right to contest in good faith and by appropriate legal proceedings the validity or amount of any mechanics', laborers', materialmen's, suppliers' or vendors' lien or claimed lien; provided that the Lessee shall utilize all reasonable means (including the posting of adequate security for payment) to protect the Leasehold Estate, the City's Estate and any other interest of City in the Property or the Leased Premises against foreclosure. In addition to any other indemnities provided in this Lease, Lessee shall indemnify, protect, defend (with counsel reasonably acceptable to City), and hold harmless the Indemnitees from any and all alleged or actual Claims arising by reason of a mechanic's lien or work, labor, services, or materials supplied to Lessee or anyone holding the Leased Premises or the Improvements, or any part thereof, through or under Lessee, unless such Claims arise from or relate to sole negligence or willful misconduct of the City, City’s employees, agents, contractors, subcontractors, or any person acting on behalf of or as the invitee of any of the foregoing.

Nothing in this Lease shall be construed as constituting the consent of the City, expressed or implied, to the performance of any labor or the furnishing of any materials or any specific improvements, alterations of or repairs to the Leased Premises or the Project, or any part thereof, by any contractor, subcontractor, laborer or materialman, nor as giving the Lessee or any other person any right, power or authority to act as agent of or to contract for, or permit the rendering of, any services or the furnishing of any materials in such manner as would give rise to the filing of mechanics' liens or other claims against the City's Estate or any other interest of City in the Property or the Leased Premises. The City shall have the right at all reasonable times to post and keep posted on the Leased Premises any notices which the City may deem necessary for the protection of the City and of City's Estate or any other interest of City in the Property or the Leased Premises from mechanics' liens or other claims. In addition, but subject to the paragraph

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 82, Packet Page 117 9 above, the Lessee shall make, or cause to be made, prompt payment of all monies due and legally owing to all persons doing any work or furnishing any materials or supplies to the Lessee, or any of its respective contractors or subcontractors in connection with the Leased Premises and the Project. The provisions of this Section shall survive the expiration or termination of this Lease.

City's fee interest in the Property shall be senior to, and not be subordinated to, any financing obtained by Lessee in connection with the Leased Premises. Permits, Licenses and Easements. City agrees to use City's best reasonable efforts to assist Lessee in obtaining any and all permits, licenses, easements and other authorizations required by any Governmental Authority with respect to any construction or other work to be performed on the Leased Premises and to grant, or to assist Lessee in obtaining, as applicable, all permits, licenses, easements and other governmental authorizations that are necessary or helpful for electric, telephone, gas, cable television, water, sewer, drainage, access and such other public or private utilities or facilities as may be reasonably necessary or desirable in connection with the construction or operation of the Improvements. Payment of all fees, costs and expenses associated with any of the foregoing shall be the responsibility of Lessee, and City shall have no responsibility to pay any such fees, costs or expenses.

Section 3.3 Title to Improvements.
(a) During the Term. City hereby grants to Lessee, without warranty express or implied, any right, title, or interest that City may have in the Improvements now or hereafter located on the Leased Premises. Notwithstanding any provision in this Lease to the contrary, the Improvements and all alterations, additions, equipment, and fixtures built, made or installed by Lessee in, on, under or to the Leased Premises or Improvements shall be the sole property of Lessee until the expiration of the Term or other termination of this Lease; provided, however, that Lessee shall have no right to destroy, demolish or remove the Improvements except as specifically provided for in this Lease or as approved in writing by City. It is the intent of the parties hereto that this Lease shall create a constructive notice of severance of the Improvements from the Leased Premises without the necessity of a deed from City after the Improvements have been constructed. Notwithstanding the foregoing, Lessee shall be permitted to demolish the improvements located on the Leased Premises as of the Commencement Date, provided that all work related to such demolition is performed in compliance with all Legal Requirements, including without limitation, all Environmental Laws.
(b) After the Term. Upon the expiration of the Term or other termination of the Lease, the Improvements and all alterations, additions, equipment and fixtures shall be deemed to be and shall automatically become the property of City, without cost or charge to City. At such time, Lessee shall peaceably and quietly leave and surrender the Leased Premises and the Improvements to City in good order, condition, and repair, reasonable wear and tear and obsolescence excepted. Lessee shall leave in place and in good order, condition, and repair, all fixtures, machinery, or other personal property; except Lessee shall have the right to remove only Lessee-owned appliances, other unattached equipment, furniture and merchandise that Lessee shall have installed, which removal must be done without materially damaging the Leased Premises or Improvements. City agrees that Lessee, at any time prior to the expiration or other termination of this Lease, may remove from the Leased Premises any and all equipment which Lessee has furnished for maintenance or property operation purposes or for the use of the

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 83, Packet Page 118 10 Management Agent, provided that Lessee shall repair any physical damage to the Leased Premises caused by the removal of such equipment and property. Lessee agrees to execute, at the request of City at the end of the Term, a confirmatory quitclaim deed of the Improvements and/or the Leased Premises to City to be recorded at City's option and expense and any other documents that may be reasonably required by City or City's title company to provide City title to the Leased Premises and the Improvements free and clear of all monetary liens and monetary encumbrances not caused or agreed to by City. Without limiting the foregoing, upon the expiration or sooner termination of this Lease, Lessee shall deliver the Leased Premises and the Improvements to City free of all monetary liens and encumbrances unless otherwise consented to in writing by City. Any equipment or other personal property not removed from the Leased Premises by the expiration of the Term shall become the property of City, and City shall have the right to dispose of such equipment and property in the manner of City's choosing, subject to any applicable laws governing such disposal.

Section 3.4 Benefits of Improvement During Term. City acknowledges and agrees that any and all depreciation, amortization and tax credits for federal or state tax purposes relating to the Improvements located on the Leased Premises and any and all additions thereto, substitutions therefor, fixtures therein and other property relating thereto shall be deducted or credited exclusively by Lessee during the Term.

Section 3.5 No Abandonment. Lessee shall not abandon or vacate the Leased Premises or the Improvements at any time during the Term. If Lessee shall abandon, vacate, or otherwise surrender the Leased Premises or the Improvements, or be dispossessed thereof by process of law or otherwise, the same shall constitute a default under this Lease on the part of Lessee and, in addition to any other remedy available on the part of City, any of Lessee’s property left in, upon or about the Leased Premises or the Improvements (except for underground storage tanks) shall, at City’s option, be deemed to be abandoned and shall become the property of City. The appointment of a receiver pursuant to a Lender’s exercise of its rights under a Leasehold Mortgage, or the foreclosure of a Leasehold Mortgage, shall not be a default under this Section.

ARTICLE 4.

RENTS
Section 4.1 Ground Rent. Lessee shall pay to Lessor rent in the amount of One Dollar ($1.00) per year ("Rent"), for a total of Ninety-Nine Dollars ($99.00), which total amount shall be paid in advance upon Closing on the construction financing. No other base rent or annual rent shall be payable during the Term.

Section 4.2 Payments. All Rent, Additional Rent, and other sums, if any, due City hereunder shall be paid by Lessee to City at the address of City set forth hereinafter for notices, or to such other person and/or at such other address as City may direct by written notice to Lessee, without notice or demand, and without abatement, deduction or set off. Lessee may pay all Rent due at the rate set forth in Section 4.1 for the entire Term of this Lease in advance.

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 84, Packet Page 119 11 ARTICLE 5.

TAXES AND OTHER IMPOSITIONS; UTILITIES
Section 5.1 Payment of Impositions. As and when the same shall become due, Lessee will pay all of the Impositions, except that if any Imposition that Lessee is obligated to pay in whole or in part is permitted by law to be paid in installments, Lessee may pay or cause to be paid such Imposition (or its proportionate part thereof) in installments as and when such installments become due. Upon the written request of City, Lessee shall provide to City evidence satisfactory to City of payment of all Impositions. During the first and last years of the Term, all Impositions shall become payable during each calendar, fiscal, tax or Lease Year, as applicable, shall be ratably adjusted on a per diem basis between City and Lessee in accordance with the respective portions of such calendar, fiscal, tax, assessment or Lease Year during the Term. If any special assessments are payable in installments, Lessee shall pay only those installments that are due and payable during the Term.

Section 5.2 Possessory Interest Taxes. In accordance with California Revenue and Taxation Code Section 107.6(a), City notices Lessee that by entering into this Lease, a possessory interest subject to assessment and collection of property taxes may be created.

Lessee or other party in whom the possessory interest is vested may be subject to the payment of property taxes levied on such interest. If possessory interest taxes are assessed, Lessee agrees it is responsible for payment thereof and City has no obligation or liability of any kind or nature relating to payment of property taxes on Lessee's Estate. Lessee may, at its sole cost and expense, seek exemption from, or contest the payment of, assessments and the collection of property taxes pursuant to Revenue and Taxation Code Section 214, or a successor statute.

During the pendency of such contest or request, Lessee’s non-payment of assessments or taxes when due shall not constitute a default hereunder if (i) the validity of such assessments and taxes is actively contested in good faith and by appropriate proceedings, (ii) Lessee has demonstrated to City’s reasonable satisfaction that leaving such assessments or taxes unpaid pending the outcome of such proceedings will not result in conveyance of the Leased Premises in satisfaction of such assessments or taxes or otherwise impair City’s estate in the Leased Premises, (iii) Lessee has furnished City with a bond or other security satisfactory to City in an amount not less than 100% of the applicable claim (including interest and penalties) and (iv) upon the final disposition of such proceedings, Lessee shall promptly pay all taxes and assessments then due, inclusive of any unpaid accrued penalties and interest. City is a public agency and no property taxes will be or are legally assessable against its fee interest.

Section 5.3 Contested Taxes and Other Impositions.
(a) Lessee, in its own name or in the name of City if prior written consent of City is obtained by Lessee, may contest the validity or amount of any Imposition relating to all or any portion of the Leased Premises, in which event the payment thereof, if authorized by applicable law, may be deferred during the pendency of such contest, if diligently prosecuted. If applicable law is silent on or expressly disallows deferring payment pending the contest of validity, Lessee shall timely pay any Imposition that is subject to dispute under protest, reserving any and all rights for repayment from the applicable taxing entity if resolution of such contest results in a decision or judgment in Lessee's favor.

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 85, Packet Page 120 12 (b) As may be necessary or desirable, City or Lessee, as applicable, upon the request of the other Party, shall use its best reasonable efforts to assist in any such proceeding to contest the validity or amount of any Imposition.

Section 5.4 Valuation Assessment/Property Tax Exemption. If applicable, Lessee may attempt to obtain a lowering of the assessed valuation of the Leased Premises for any year or obtain a property tax exemption for the purpose of reducing taxes thereon. In such event, upon Lessee's request, City shall use its reasonable efforts to assist Lessee in such endeavor; provided, however, that City shall incur no out-of-pocket costs or liability or otherwise be construed as being in default under this Lease for any assistance (or limitation of assistance) provided to Lessee pursuant to this Section, unless such cost or liability arise out of or are related to the sole negligent acts or willful misconduct of the City,.

Section 5.5 Failure to Pay Impositions. If Lessee shall fail to pay any Impositions before the same become delinquent, except if Lessee is in good faith contesting such Impositions pursuant to Section 5.3 hereof, City, at its election, may pay such Impositions (but shall not be obligated to pay same), together with any interest and penalties due thereon, and the amount so paid by City shall be repayable to City by Lessee, within thirty (30) days as Additional Rent hereunder.

Section 5.6 Utilities. Lessee shall pay all charges for all utilities used, rendered or supplied upon or in connection with the Improvements on the Leased Premises and the operation or construction thereof including, but not limited to, all charges for gas, electricity, light, heat or power, all telephone and other communications services, all water rents and sewer service charges, and all sanitation fees or charges (all of the foregoing, collectively “Utility Charges”) levied or charged against the Leased Premises during the Term; provided, however, that Lessee shall have no responsibility hereunder for the payment of Utility Charges for utilities supplied by the respective providers directly to Tenants for such Tenants' use in connection with the occupancy of their respective residential units unless otherwise provide in the applicable Resident Sublease. Notwithstanding any contrary provision of this Lease, City shall have no responsibility for payment of any Utility Charges to the extent applicable to the Leased Premises.

ARTICLE 6.

INSURANCE
Section 6.1 Required Insurance Coverage. Standard “All Risk” Casualty and Fire and Extended Coverage Endorsement. Lessee shall during the Term keep the Leased Premises insured against loss or damage by a standard all risk policy in amounts such that the proceeds of such insurance shall not be less than the full replacement value of the Leased Premises unless otherwise consented to in writing by City and the other Lenders. (a) Liability and Property Damage Insurance. During the Term, Lessee shall keep in full force and effect a policy or policies of comprehensive general liability and property damage insurance against liability for bodily injury to or death of any person or property damage arising out of an occurrence on or about the Leased Premises. The limits of such insurance shall be not less than One Million Dollars ($1,000,000) combined single limit each occurrence, Two Million Dollars ($2,000,000) annual aggregate, together with Three Million Dollars ($3,000,000)

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 86, Packet Page 121 13 excess liability coverage, or such other policy limits as City may require in its reasonable discretion, including coverage for bodily injury, property damage, products, completed operations and contractual liability coverage. Such policy or policies shall be written on an occurrence basis and shall provide additional insured coverage for the Indemnitees. (b) Workers' Compensation Insurance. Lessee shall carry or cause to be carried workers' compensation insurance covering all persons employed in connection with the Leased Premises and with respect to whom death, bodily injury, or sickness insurance claims could be asserted against City and/or Lessee. Lessee shall furnish or cause to be furnished to City evidence satisfactory to City that Lessee and any contractor that has contracted for the performance of work on the Property or otherwise pursuant to this Lease carries statutory Workers' Compensation insurance and Employer's Liability insurance in a minimum amount of One Million Dollars ($1,000,000) per accident.
(c) Builders' Risk Insurance. Upon commencement of construction and continuing until issuance of a temporary certificate of occupancy, or equivalent for the Improvements, Lessee shall maintain a policy of builder's all-risk insurance providing coverage for itself and all contractors working on behalf of Lessee in an amount not less than the full insurable cost of the Project on a replacement cost basis naming City as loss payee as its interests may appear. During the course of any alteration, construction or reconstruction, the cost of which exceeds Two Hundred Fifty Thousand Dollars ($250,000), Lessee shall obtain or cause its contractor to obtain builders' risk insurance for the full insurable cost of the work and liability insurance in an amount not less than One Million Dollars ($1,000,000) combined single limit for bodily injury or property damage insuring the interests of City, Lessee and any contractors and subcontractors.
(d) Property Insurance. During the Term, Lessee shall keep in full force and effect a policy or policies of insurance against fire, extended coverage, vandalism, and malicious mischief, and such other additional perils, hazards, and risks as now are or may be included in the standard “all risk” form in general use in Monterey County, California, with the standard form fire insurance coverage in an amount equal to full actual replacement cost thereof, as the same may change from time to time. City shall be a loss payee under such policy or policies and such insurance shall contain a replacement cost endorsement.

Section 6.2 Insurance Policies and Premiums.
(a) All liability policies required by this Lease or any of the Lenders shall be written on an occurrence basis, and shall provide additional insured coverage for the Indemnitees.. Duplicate copies of such policies or certificates of such insurance shall be promptly furnished to City upon request.
(b) All policies of insurance shall include an endorsement that provides that notice of any change or cancellation of said policy must be made in writing and sent to Lessee and City at their respective principal offices at least thirty (30) days before the effective date of change or cancellation.

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 87, Packet Page 122 14 (c) The rights of City to receipt of any insurance proceeds will be subject and subordinate to the rights of any Lender pursuant to and in accordance with applicable Loan Documents.
(d) Companies writing the insurance required hereunder shall be approved to do business in the State of California. Insurance shall be placed with insurers with a current A.M. Best’s rating of no less than A: VII. The Commercial General Liability policies required hereunder shall provide additional insured coverage for the Indemnitees. Builder’s Risk and property insurance shall name City as loss payee.
(e) If any insurance policy or coverage required hereunder is canceled or reduced, Lessee shall, within thirty (30) days after receipt of notice of such cancellation or reduction in coverage, but in no event later than the effective date of cancellation or reduction, file with City a certificate showing that the required insurance has been reinstated or provided through another insurance company or companies. Upon failure to so file such certificate or provide other proof of insurance, City may, upon fifteen (15) days notice to Lessee, and at its option, procure such insurance coverage at Lessee's expense, and Lessee shall promptly reimburse City for such expense upon receipt of billing from City. (f) Coverage provided by Lessee shall be primary insurance and shall not be contributing with any insurance, or self-insurance maintained by City, and the policies shall so provide. The insurance policies shall contain a waiver of subrogation for the benefit of the City.

Lessee shall furnish the required certificates and endorsements to City prior to the commencement of rehabilitation or construction work on the Project and shall provide City with certified copies of the required insurance policies upon request of City. (g) Deductibles/Retentions. Any deductibles or self-insured retentions for insurance Lessee is required to maintain pursuant to this Lease shall be declared to, and be subject to approval by, City's Risk Manager. At the option of and upon request by City's Risk Manager if the Risk Manager determines that such deductibles or retentions are unreasonably high, either the insurer shall reduce or eliminate such deductibles or self-insurance retentions as respects the Indemnitees or the Parties shall meet and confer to discuss the City’s concerns regarding the amount of such deductibles or self-insurance retentions, or Lessee shall procure a bond guaranteeing payment of losses and related investigations, claims administration and defense expenses.
(h) Adjustments. If necessary, the limits of the liability coverage and, if necessary, the terms and conditions of insurance, shall be reasonably adjusted from time to time (not less than every ten (10) years after the Commencement Date nor more than once in every ten (10) year period) to address changes in circumstances, including, but not limited to, changes in the purchasing power of the dollar and the litigation climate in California. Within ninety (90) days following City's delivery of written notice of any such adjustments, Lessee shall provide City with amended or new insurance certificates and endorsements evidencing compliance with such adjustments, provided such amended or new coverage is commercially available at rates feasible based on the Project's use.

Section 6.3 Proceeds of Insurance.

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 88, Packet Page 123 15 (a) For so long as any Leasehold Mortgage on the Leased Premises is outstanding: All fire and standard risk or extended coverage (casualty) insurance proceeds shall be disbursed directly to Lessee, subject to the rights of any Lenders, and applied to the payment of the costs of repairing or rebuilding that part of the Leased Premises damaged or destroyed if (i) Lessee agrees in writing within ninety (90) days after payment of the proceeds of insurance that such repair or rebuilding is economically feasible, and (ii) each Lender permits such repair or rebuilding, provided that the extent of the Lessee's obligation to restore the Leased Premises shall be limited to the amount of the insurance proceeds. (b) If the Improvements are not repaired or rebuilt, all such proceeds shall be applied in a manner consistent with the terms of the Leasehold Mortgages. (c) In the event that no Leasehold Mortgage is outstanding, all insurance proceeds received under the policies set forth in this Article 6 shall be paid to Lessee, provided that Lessee agrees that it shall apply such proceeds for reconstruction or repair of the Improvements unless such repair or reconstruction is not economically feasible. (d) To the extent any of the above provisions are inconsistent with the provisions of any of the Loan Documents, the Loan Documents shall be controlling. (e) To the extent any of the above provisions of this Section 6.3 are inconsistent with the provisions of Article 11, this Section 6.3 shall control.

Section 6.4 Limitation of Liability.
(a) In addition to any other indemnities provided in this Lease, Lessee shall indemnify, protect, defend (with counsel reasonably acceptable to City), and hold harmless the Indemnitees from and against all Claims arising out of, attributable to or otherwise occasioned, in whole or in part, by (i) any material breach of Lessee’s representations and warranties or Lessee’s obligations under this Lease, or (ii) the operation of the Leased Premises, except to the extent any such Claim arises from the sole negligence or willful misconduct of City or the Indemnitees.
(b) In addition to any other indemnities provided in this Lease, City shall indemnify, protect, defend (with counsel reasonably acceptable to Lessee), and hold harmless Lessee, its officers, employees, agents, contractors, servants, directors, members, partners, or affiliated and/or related entities from and against all Claims arising out of, attributable to or otherwise occasioned, in whole or in part, by any breach of City's representations and warranties or City's obligations under this Lease, except to the extent any such Claim arises from the sole negligence or willful misconduct of Lessee or its officers, employees, agents, contractors, servants, directors, members or partners.
(c) The provisions of this Section 6.4 shall survive the expiration or termination of this Lease.

ARTICLE 7.

MAINTENANCE, ALTERATIONS, REPAIRS AND REPLACEMENTS

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 89, Packet Page 124 16 Section 7.1 Maintenance of Leased Premises; Landscaping. During the Term, at Lessee's sole cost and expense, Lessee shall keep and maintain the Leased Premises, all Improvements hereafter developed, and all appurtenances thereunto belonging, in good and safe order, condition and repair, free of debris, waste, and graffiti, in compliance with the terms of all applicable provisions of the Monterey Municipal Code, and in accordance with the standard of maintenance of affordable apartment projects within the region. To accomplish the maintenance, Lessee shall either staff or contract with and hire licensed and qualified personnel to perform the maintenance work, including the provision of labor, equipment, materials, support facilities, and any and all other items necessary to comply with the requirements of this Lease. All such maintenance and repair shall conform to and comply with all Legal Requirements affecting the Leased Premises. Lessee agrees that City shall not be required to perform any maintenance, repairs or services or to assume any expense in connection with the Improvements within the Leased Premises and the Leased Premises. Lessee hereby waives all rights to make repairs or to cause any work to be performed on or within the Leased Premises at the expense of City as may be provided for in Section 1941 and 1942 of the California Civil Code, if applicable.

Section 7.2 Landscaping Maintenance.
(a) Lessee, at no expense to the City, shall maintain in a healthful and reasonably weed-free manner all the landscaped areas within the Leased Premises as shown in the landscaping plan approved by the City. “Landscaped areas” as used in this Lease shall mean plantings and irrigation systems which have been installed, or are proposed to be installed, pursuant to the City-approved landscaped plan for the Project. All plantings shall be maintained using generally accepted methods of cultivation to ensure reasonably normal, healthy plant growth. Maintenance shall include replacement of plantings, when necessary, and all ordinary and usual care, including, but not limited to, irrigation, fertilization, pest and disease control, weeding, rotation of plantings and the removal of trimmings, rubbish, debris, and other solid waste. Lessee shall, at no expense to the City, install, maintain, repair, and replace, where necessary, such irrigation systems as are required to provide adequate irrigation in compliance with water conservation practices.
(b) If, in the reasonable judgment of the City, Lessee has failed to maintain properly any landscaping as required by this Lease, the City may perform such maintenance, at its option, after thirty (30) days' prior written notice to Lessee of such failure to maintain. In such event, the City's performance of such maintenance shall be at the Lessee's sole expense and Lessee, upon demand by the City, shall pay to the City all reasonable expenses incurred by the City in the performance of such maintenance.
(c) If any maintenance, repair, or replacement of landscaping needs immediate correction as a result of a public safety or health hazard, as reasonably determined by the City, and such maintenance is not performed Lessee within twenty-four (24) hours of receipt of such notice thereof, the City may perform or cause to be performed such maintenance at Lessee's expense, and Lessee, upon demand by the City, shall pay to the City all reasonable expenses incurred by the City in the performance of such maintenance. Notwithstanding the foregoing, if such maintenance cannot by its nature be performed within twenty-four (24) hours of Lessee’s receipt of notice thereof, Lessor may not perform or cause to be performed such maintenance until Lessee has had a reasonable opportunity to perform such maintenance.

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 90, Packet Page 125 17 Section 7.3 Alterations to Leased Premises. Lessee may make any additions, alterations or changes (sometimes collectively referred to herein as “Alterations”) in or to the Improvements subject, however, to the following conditions:
(a) No Alterations shall be made that would tend to impair the structural soundness of the Improvements;
(b) No Alterations shall be undertaken that are prohibited by, or would cause the Leased Premises, the Improvements, Lessee, or City to be in breach or violation of any Legal Requirements;
(c) No Alterations shall be undertaken until Lessee shall have procured, to the extent the same may be required from time to time, all permits and authorizations of all applicable Governmental Authorities, all require consents of any Lender, and the consent of City.

City shall join in the application for such permits or authorizations whenever such action is necessary or helpful and is requested by Lessee, and shall use City's reasonable efforts to obtain such permits or authorization; and
(d) Any Alterations shall be performed in good, skillful and professional manner and in compliance with all applicable Legal Requirements and all applicable Insurance Requirements.
(e) Any and all Alterations are consistent with the use of the Leased Premises as authorized under this Lease.
(f) Any Alteration that will exceed the sum of Two Hundred Fifty Thousand Dollars ($250,000) in cost shall require City's advance written consent, which approval shall not be unreasonably withheld, delayed, or conditioned.
(g) Any written request by Lessee for City's prior approval to make any Alterations, including under subsection 7.3(f) above, shall be deemed approved if, within thirty (30) days after the date that Lessee makes such request, the City has not responded to Lessee in writing either expressing approval or expressing disapproval and specifying the reasons for such disapproval.

Section 7.4 Indemnifications. Except with respect to the indemnifications concerning Hazardous Materials which are addressed in Section 9.3 of this Lease, notwithstanding any other provision of this Lease to the contrary, and in addition to any other indemnities provided in this Lease, to the fullest extent permitted by law, Lessee hereby agrees to indemnify, protect, hold harmless and defend (by counsel reasonably satisfactory to City) the Indemnitees from and against any and all Claims, to the extent arising from or relating to Lessee's material breach of its obligations under this Lease or the construction or operation of the Improvements or any Alterations on or within the Leased Premises except to the extent any such Claim arises from the solenegligence or willful misconduct of the Indemnitees. In addition and subject to the limitations set forth herein, if any contractor or subcontractor which performed any construction work for Lessee or Lessee's affiliates on the Improvements or Alterations on or within the Leased Premises shall assert any claim against City on account of any damage alleged to have

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 91, Packet Page 126 18 been caused by reason of acts of negligence of Lessee or Lessee's affiliates, members, partners, officers, directors, affiliates, agents, employees or construction contractors, Lessee shall defend at its own expense any suit based upon such claim; and if any judgment or claim against City shall be allowed, Lessee shall pay or cause to be paid or satisfied such judgment of claim and pay all costs and expenses in connection therewith to the extent such claim results from the acts of negligence alleged against Lessee. The provisions of this Section shall survive the expiration or termination of this Lease.

ARTICLE 8.

MORTGAGE LOANS
Section 8.1 Liens and Encumbrances Against the Leasehold Estate. The Lessee shall have the right to encumber the Leasehold Estate and the Improvements with leasehold deeds of trust, mortgages, and regulatory and affordability agreements related to the Approved Loans without City's consent (collectively, “Liens”) provided that all documents evidencing such Liens are consistent with the terms and conditions of this Lease. (a) For as long as there is any Lien securing any Approved Loan:
(1) City shall not agree to any mutual termination or accept any surrender of this Lease, nor shall City consent to any material amendment or modification of this Lease without the prior written consent of the Lenders that have outstanding Approved Loans, if and to the extent required by any such Lenders. In the event that City receives competing or conflicting offers to cure any default under this Lease, City shall accept the offers to cure in the following order: first, Lessee, then each Lender in the same relative priority as their respective Liens.
(2) Notwithstanding any default by Lessee under this Lease, City shall have no right to terminate this Lease unless City shall have given the Lenders that have outstanding Approved Loans written notice of such default and such Lenders shall have failed to remedy such default or acquire the Leasehold Estate or commence foreclosure or other appropriate proceedings as set forth in, and within the time specified by, this Section 8.1. (3) Any Lender that has an outstanding Approved Loan shall have the right, but not the obligation, at any time to pay any or all of the Rent or Additional Rent due pursuant to the terms of this Lease, and do any other act or thing required of Lessee by the terms of this Lease, to prevent termination of this Lease. Each Lender shall have sixty (60) days after receipt of notice from City describing such default to cure the default, which notice shall include, with respect to any monetary default, a detailed statement identifying the amounts due and the obligations to which amounts relate and with respect to any non-monetary default, a detailed statement identifying the obligations breached and the cure expected by City; provided, however, that if the default is not susceptible to cure within such period, the Lender shall have such longer period, not to exceed an additional one hundred twenty (120) days, as may be necessary to cure the default, so long as such Lender is diligently prosecuting such cure to completion (the “Initial Cure Period”). All payments so made and all things so done shall be as effective to prevent a termination of this Lease as the same would have been if made and performed by Lessee instead of by the Lender(s).

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 92, Packet Page 127 19 (4) In addition to the Initial Cure Period, if the default is such that possession of the Leasehold Estate may be reasonably necessary to remedy the default, any Lender that has an outstanding Approved Loan shall have a reasonable time after the expiration of the Initial Cure Period within which to remedy such default, provided that (A) such Lender shall have fully cured any default in the payment of any monetary obligations of Lessee under this Lease within the first sixty (60) days of the Initial Cure Period and shall continue to pay currently such monetary obligations when the same are due; (B) such Lender shall have acquired Lessee's Leasehold Estate hereunder or commenced foreclosure or other appropriate proceedings prior to or within the Initial Cure Period, and shall be diligently prosecuting the same; and (C) and after acquiring possession of the Leasehold Estate, such Lender shall diligently prosecute to completion such cures as may be reasonably possible to remedy nonmonetary defaults existing under this Lease.
(5) City shall promptly provide estoppel certificates reasonably requested by lenders or investors.
(6) If the Lenders are prohibited, stayed or enjoined by any bankruptcy or insolvency proceeding of any court, including without limitation a court having jurisdiction over Lessee in such proceeding, from commencing or prosecuting foreclosure proceedings, the times specified for commencing or prosecuting such foreclosure or other proceedings shall be extended for the period of such prohibition; provided that any Lender shall have fully cured any default in the payment of any monetary obligations of Lessee under this Lease, including without limitation any monetary obligations to third parties which have become, or threaten to become, liens against the Leased Premises or any portion thereof, and shall continue to pay currently such monetary obligations when the same fall due; provided, further, that, subject to subsection (1) of this Section 8.1(a), such Lender shall not interfere with City's efforts to seek compliance by Lessee with any non-monetary obligation under this Lease. (7) City shall mail or deliver to any Lenders that have any outstanding Approved Loans a duplicate copy of any notice of default which City may deliver to Lessee pursuant to this Lease. Lessee shall deliver to City the name and contact information for all Lenders that have outstanding Approved Loans, including successors in interest to Approved Loans. Provided Lessee has delivered City the name and contact information of the Lender having an outstanding Approved Loan, no notice of default by City to Lessee shall be effective as to that Lender unless and until a copy of the notice shall have been mailed or delivered to such Lender as set forth in this Section.
(8) The foreclosure of an Approved Loan, any sale thereunder, whether by judicial proceedings or by virtue of any power contained in the leasehold mortgage securing the Approved Loan, or any conveyance of the Leasehold Estate created hereby from Lessee to a Lender through or in lieu of foreclosure (a “Foreclosure Event”), shall not require the consent of City or constitute a breach of any provision of this Lease. In the event any Lender or its Nominee (as defined herein) becomes Lessee under this Lease by such means or pursuant to any new lease obtained under paragraph (9) of this Section 8.1(a) below, City shall recognize the Lender or its Nominee as Lessee hereunder or under such new lease and the Lender shall be personally liable under this Lease or such new lease only for the period of time that the Lender or its Nominee remains Lessee thereunder, provided that the Lender or its Nominee attorns to City

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 93, Packet Page 128 20 and agrees to be subject to the restrictions of this Lease. If a Lender or its Nominee becomes the lessee under this Lease or any such new lease, the Lender shall have the right thereafter to assign or sublease this Lease or such new lease, provided that any assignee: (A) shall take the Leasehold Estate subject to all of the provisions of this Lease or such new lease, (B) shall assume and agree to perform all obligations of Lessee under this Lease; and (C) shall be subject to the consent of City, which consent shall not be unreasonably withheld. Nothing in this Section shall be construed to obligate any Lender to remedy any default of Lessee, and any failure of any Lender to complete any such cure after commencing the same shall not give rise to any liability of any Lender to City or Lessee.
(9) In the event (A) a Lender, its designee or another purchaser in foreclosure proceedings becomes the legal owner of the Leasehold Estate, (B) City terminates this Lease by reason of any Event of Default (as defined herein) or if (C) this Lease shall otherwise terminate, then, upon written request by Lender given within sixty (60) days after such transfer or receipt of notice of such termination of the Leasehold Estate, City shall execute and deliver a new lease of the Leased Premises to such Lender, or its nominee, purchaser, assignee or transferee (the “Nominee”), provided that, if such Nominee is not wholly owned by one or more Lenders, such Nominee is approved by City in its reasonable discretion. Such new lease shall be substantially in the same form as this Lease, shall have a term equal to the remainder of the Term with the same agreements, covenants, reversionary interests and conditions (except for any requirements which have been fulfilled by Lessee prior to termination) as are contained in this Lease and with priority equal to this Lease with respect to encumbrances of City's interest in the Property or the Leased Premises or encumbrances of Lessee's interest in the Leased Premises permitted or caused by City, together with any provisions legally required in the event the Nominee is a governmental entity; provided, however, that any defaults by Lessee susceptible to cure by the Lender have been cured or reasonable assurance has been provided to City that such defaults shall be cured. Upon execution and delivery of such new lease by City and the Nominee, the Nominee shall have acquired all the right, title and interest of Lessee under this Lease prior to its termination. City, shall cooperate in taking such action as shall be necessary to cancel and discharge this Lease and to remove Lessee from the Leased Premises. (10) If a Lender subsequently transfers its interest under this Lease after acquiring such interest by foreclosure or deed in lieu of foreclosure and, in connection with any such transfer, the Lender takes a mortgage or deed of trust encumbering such leasehold interest to secure all or any portion of the purchase price given to the Lender for such transfer, then such mortgage or deed of trust shall be considered an Approved Loan hereunder provided that City has been provided an opportunity to review and approve the documents evidencing and securing such mortgage or deed of trust and the obligations secured thereby, and the Lender shall be entitled to receive the benefit of and to enforce the provisions of this Lease or the new lease approved pursuant to paragraph (9) of this Section 8.1(a). (11) Unless the Lenders otherwise consent in writing, City and Lessee each hereby waives, and agrees not to assert or otherwise take the benefit of, that portion of Section 365(d)4, or any other applicable provisions, of the United States Bankruptcy Code (11 U.S.C. Section 101 et seq.), which provides for the deemed rejection of a lease in certain circumstances, so long as the trustee is paying the rent due under the Lease and performs, or causes the performance of, the uses of the Leased Premises for the Project pursuant to this Lease.

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 94, Packet Page 129 21 (12) Subject to the rights of the Lenders, which shall have priority over all persons or entities given rights under this clause (12), any Investor limited partner (or members, as applicable) of Lessee shall have the same rights as any Lender authorized under paragraphs (2), (3) and (7) of this Section 8.1(a) of this Lease and any reference to a Lender in paragraphs 2), (3) and (7) of this Section 8.1(a) shall be deemed to include such limited partners (or members, as applicable).
(13) City shall cooperate in including in this Lease by suitable amendment from time to time any provision that may reasonably be requested by any Lender or any proposed lender, for the purpose of implementing the mortgagee-protection provisions contained in this Lease and allowing such Lender or proposed lender reasonable means to protect or preserve the lien of the leasehold mortgage and the value of its security, and to include any additional rights and privileges reasonably requested to be added by such Lender. City agrees to execute and deliver (and to acknowledge, if necessary, for recording purposes) any agreement necessary to effect any such amendment; provided, however, that any such amendment shall not in any way affect City's Estate or any other interest of City in the Property or the Leased Premises, affect the Term or rent under this Lease, or otherwise in any material respect adversely affect any rights of City under this Lease.
(b) Any Leasehold Mortgage shall be subject to the provisions of this Lease and all rights of City under this Lease. Notwithstanding any contrary provision of this Lease, in no event may any mortgage or other security instrument, including without limitation any Leasehold Mortgage, be recorded against City's fee interest in the Property or reversionary interest in the Improvements.

Section 8.2 Cost of Approved Loans to be Paid by Lessee. Lessee affirms that it shall bear all of the costs and expenses in connection with (a) the preparation and securing of the Approved Loans, (b) the delivery of any instruments and documents and their filing and recording, if required, and (c) all taxes and charges payable in connection with the Approved Loans.

Section 8.3 Proceeds of Approved Loans. It is expressly understood and agreed that all Approved Loan proceeds shall be paid to and become the property of Lessee, and that City shall have no right to receive any such Approved Loan proceeds.

Section 8.4 Notice and Right to Cure Defaults Under Approved Loans. Upon the recording of a memorandum of this Lease, City may record in the Official Records of the County of Monterey a request for notice of any default under each Approved Loan. In the event of default by Lessee under an Approved Loan, Lessee, or City if Lessee fails to commence curing said default within a reasonable time, shall have the right, but not the obligation, to cure the default in accordance with the Loan Documents. Any payments made by City to cure a default shall be treated as Additional Rent due from Lessee hereunder, which shall be paid within thirty (30) days of the date on which the payment was made by City.

Section 8.5 Reserved.

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 95, Packet Page 130 22 Section 8.6 Right to Pay Taxes and Senior Mortgage. All Lenders shall have the right (but not the obligation) to pay any taxes payable by City with respect to the Leased Premises, and to cure any monetary or nonmonetary default by City under any mortgage or other encumbrance on the Leased Premises which has priority over this Lease; and, if a Lender does so pay or cure, City agrees that it will reimburse the Lender for the amount thereof promptly following request by the Lender therefor.

ARTICLE 9.

REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 9.1 Representations, Warranties and Covenants of City. As an inducement to Lessee to enter into and proceed under this Lease, City warrants and represents to Lessee as follows, which warranties, representations and covenants are true and correct as of the date of this Lease, to the knowledge of City:
(a) City has the right, power and authority to enter into this Lease and to lease the Leased Premises to Lessee in accordance with the terms, provisions and conditions contained in this Lease, and no other party has any right or option to lease the Leased Premises; (b) City has not encumbered or hypothecated its interest in the Property or any part thereof with any mortgage, deed of trust, or other form of security interest, nor will it so encumber its fee interest in the Property so long as any obligation secured by a Leasehold Mortgage is outstanding.
(c) City has received no written notice and has no knowledge of any litigation or action, pending or threatened, materially and adversely affecting the Leased Premises; (d) City has received no written notice and has no knowledge of any pending or threatened Taking relating to all or any part of the Leased Premises; (e) the entry by City into this Lease with Lessee and the performance of all of the terms, provisions and conditions contained herein will not, or with the giving of notice or the passage of time, or both, would not, violate or cause a breach or default under any other agreement relating to the Leased Premises to which City is a party or by which it is bound; (f) except as disclosed to Lessee or as is apparent from Lessee's inspection, there is no tenant, lessee or other occupant of the Leased Premises having any right or claim to possession or use of the Leased Premises;
(g) there are no unpaid special assessments of which City has received notice for sewer, sidewalk, water, paving, gas, electrical or utility improvements or other capital expenditures affecting the Leased Premises;
(h) City has received no written notice and has no knowledge of any violations of any Legal Requirements affecting any portion of the Leased Premises that materially affect the development of the Improvements;

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 96, Packet Page 131 23 (i) To City's knowledge, there is no notice from any Governmental Authority or any Person, claiming any violation of any Legal Requirement pertaining to Hazardous Materials or any liability thereunder, or requiring or calling any attention to the need for any Environmental Cleanup Work on or in connection with the Leased Premises, and City, its agents or employees have not ever been informed of any threatened or proposed serving of any such notice of violation or corrective work order;
(j) Except for any representations and warranties specifically with respect to the condition of the Property or Leased Premises set forth in this Agreement, City makes no representation or warranty with respect to the condition of the Property or the Leased Premises or their fitness or availability for any particular use.

Section 9.2 Representations, Warranties and Covenants of Lessee. As an inducement to City to enter into and to proceed under this Lease, Lessee warrants and represents to City as follows, which warranties, representations and covenants are true and correct as of the date of this Lease:
(a) Authority. Lessee has the right, power and authority to enter into this Lease and the right, power and authority to comply with the terms, obligations, provisions and conditions contained in this Lease;
(b) No Breach of Obligations. The entry by Lessee into this Lease and the performance of all of the terms, provisions and conditions contained herein will not, or with the giving of notice or the passage of time, or both, would not, violate or cause a breach or default under any other agreements to which Lessee is a party or by which it is bound; (c) Litigation. Lessee has received no written notice and has no knowledge of any litigation or action, pending or threatened, materially and adversely affecting Lessee’s ability to carry out its obligations hereunder; and
(d) Bankruptcy. Lessee is not the subject of a pending or threatened bankruptcy proceeding.

Section 9.3 Hazardous Materials. Lessee shall not knowingly permit the Property or any portion thereof to be a site for the use, generation, treatment, manufacture, storage, disposal or transportation of Hazardous Materials or otherwise knowingly permit the presence or release of Hazardous Materials in, on, under, about or from the Leased Premises except: (a) as may be authorized by an agency of applicable jurisdiction, (b) for cleaning supplies and other materials in volumes and concentrations customarily used in construction, rehabilitation, use or maintenance of residential properties similar in nature to the Leased Premises and any commercial uses developed as part of the Project, and used, stored and disposed of in compliance with Environmental Laws; and (c) as may otherwise be allowed under Environmental Laws. For avoidance of ambiguity only, nothing in the previous sentence shall limit the Lessee from maintaining Hazardous Materials existing on the Leased Premises prior to the Commencement Date or consolidating such Hazardous Materials on the Leased Premises, all to the extent permitted by law.

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 97, Packet Page 132 24 Lessee shall take commercially reasonable action to prevent the release of any Hazardous Materials into the environment from the Leased Premises. Such precautions shall include compliance with all Governmental Requirements with respect to Hazardous Materials. In addition, Lessee shall install and utilize such equipment and implement and adhere to such procedures as are consistent with the standards generally applied by apartment complexes in Monterey County, California, as respects the disclosure, storage, use, removal, and disposal of Hazardous Materials.

Notwithstanding the obligation of Lessee to indemnify City and its officers, officials, members, employees, agents, and representatives pursuant to this section, and provided no Hazardous Materials exist on the Leased Premises prior to the Commencement Date as a result of City’s action or failure to act, Lessee shall, at its sole cost and expense, promptly take (i) all actions required by any federal, state, regional, or local governmental agency or political subdivision or any Environmental Laws and (ii) all actions necessary to make full economic use of the Leased Premises for the purposes contemplated by the Regulatory Agreement and this Lease, which requirements or necessity arise from the presence upon, about, or beneath the Leased Premises, of any new Hazardous Materials not existing upon, about, or beneath the Leased Premises as of the Commencement Date. Such actions shall include, but not be limited to, the investigation of the environmental condition of the Leased Premises, the preparation of any feasibility studies or reports, and the performance of any cleanup, remedial, removal, or restoration work.

In the event of a release of any Hazardous Materials into the environment, Lessee shall, as soon as possible after it becomes aware of the release, furnish to the City a copy of any and all reports relating thereto and copies of all correspondence with governmental agencies relating to the release. Upon request of the City, Lessee shall furnish to the City a copy or copies of any and all other environmental entitlements or inquiries relating to or affecting the Leased Premises including, but not limited to, all permit applications, permits, and reports, including, without limitation, those reports and other matters which may be characterized as confidential.

Section 9.4 Hazardous Materials Indemnification. From and after the Commencement Date, to the greatest extent allowed by law, Lessee shall indemnify, defend (with counsel reasonably approved by City) and hold Indemnitees harmless from and against all Claims resulting, arising, or based directly or indirectly in whole or in part, upon (i) the release, use, generation, discharge, storage or disposal of any Hazardous Material on, under, in or about the Leased Premises, or the transportation of any such Hazardous Material to or from, the Leased Premises occurring after the Commencement Date, or (ii) the failure of Lessee, Lessee’s employees, agents, contractors, subcontractors, or any person acting on behalf of or as the invitee of any of the foregoing to comply with Environmental Laws related to the Leased Premises, unless caused by the City’s active or passive negligence. The foregoing indemnity shall further apply to any residual Hazardous Materials in, on, under or about the Property or affecting any natural resources arising in connection with the generation, use, handling, treatment, storage, transport or disposal of any such Hazardous Material, and irrespective of whether any of such activities were or will be undertaken in accordance with Environmental Laws, but only to the extent that such release of Hazardous Materials occurs after the Commencement Date, and such Hazardous Materials did not exist on, under, in or about the Leased Premises prior to the

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 98, Packet Page 133 25 Commencement Date. The provisions of this Section shall survive the expiration or termination of this Lease.

Lessee’s indemnity obligations under this paragraph shall not apply to (a) any release of Hazardous Materials or Claim related to Hazardous Material that occurred or first accrued before the Lessee’s possession of the Property whether known or unknown, and (b) claims arising out of the City’s failure to disclose any known condition that the City is required to give to the Lessee.

City agrees to defend, indemnify, protect and hold harmless the Lessee, and its officers, beneficiaries, employees, agents, attorneys, representatives, legal successors and assigns (“Lessee Indemnities”) from, regarding and against any and all liabilities, obligations (including but not limited to the duty to respond to any governmental inquiry, investigation, claim or demand regarding such Hazardous Materials), orders, decrees, judgments, liens, demands, actions, environmental response actions, claims, losses, damages, fines, penalties, expenses, environmental response costs or costs of any kind or nature whatsoever, together with fees (including, without limitation, reasonable attorneys’ fees and experts’ and consultants’ fees), resulting from or in connection with (i) the release, use, generation, discharge, storage or disposal of any Hazardous Material on, under, in or about the Property, or the transportation of any such Hazardous Material to or from, the Property occurring during the City’s ownership of the Property and prior to the Commencement Date, or (ii) the failure of City, City’s employees, agents, contractors, subcontractors, or any person acting on behalf of or as the invitee of any of the foregoing, to comply with Environmental Laws, except to the extent caused in whole or in part by the negligence of Lessee or any of the Lessee Indemnitees in accordance with the principles of comparative negligence (“Lessee’s Indemnification”). If the City discovers Hazardous Materials or other materials subject to legal requirements or corrective action, the City shall immediately notify the Developer of the same.

Section 9.5 Prevailing Wage Requirements. To the extent required by law:
(a) The Lessee shall and shall cause its contractors and subcontractors to pay prevailing wages in the construction of the Improvements as those wages are determined pursuant to Labor Code Sections 1720 et seq., and the implementing regulations of the Department of Industrial Relations (the “DIR”), to employ apprentices as required by Labor Code Sections 1777.5 et seq., and the implementing regulations of the DIR and comply with the other applicable provisions of Labor Code Sections 1720 et seq., 1777.5 et seq., 1810-1815 and implementing regulations of the DIR.
(b) All calls for bids, bidding materials and the construction contract documents for the construction of the Improvements must specify that:
(1) No contractor or subcontractor may be listed on a bid proposal nor be awarded a contract for the construction of the Improvements unless registered with the DIR pursuant to Labor Code Section 1725.5.
(2) The Project is subject to compliance monitoring and enforcement by the DIR.

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 99, Packet Page 134 26 (c) The Lessee, as the “awarding body”, shall register the construction of the Improvements as required by Labor Code Section 1773.3 as set forth in the DIR's online form PWC-100 within two (2) days after entering into the construction contract and provide evidence of such registration to the City within two (2) days of such registration and any additional registration reporting to the DIR.
(d) As applicable in accordance with Labor Code Sections 1725.5 and 1771.1, The Lessee shall require that its contractors and subcontractors be registered with the DIR, and maintain such registration as required by the DIR for the duration of their specific contract for the construction of the Improvements.
(e) Pursuant to Labor Code Section 1771.4, the construction of the Improvements is subject to compliance monitoring and enforcement by the DIR. The Lessee shall and shall require its contractors and subcontractors to submit payroll and other records electronically to the DIR pursuant to Labor Code Sections 1771.4 and 1776 et seq., or in such other format as required by the DIR.
(f) The Lessee shall and shall cause its contractors and subcontractors to keep and retain such records as are necessary to determine if prevailing wages have been paid as required pursuant to Labor Code Sections 1720 et seq., and that apprentices have been employed as required by Labor Code Section 1777.5 et seq., and shall, from time to time upon the request of the City provide to the City such records and other documentation reasonably requested by the City.
(g) The Lessee shall and shall cause its respective contractors and subcontractors to comply with all other applicable provisions of Labor Code, including without limitation, Labor Code Sections 1720 et seq., 1725.5, 1771, 1771.1, 1771.4, 1776, 1777.5 et seq., 1810-1815 and implementing regulations of the DIR in connection with construction of the Improvements.
(h) Copies of the currently applicable current per diem prevailing wages are available from the DIR website, www.dir.ca.gov. The Lessee shall cause its respective contractors to post the applicable prevailing rates of per diem wages at the Project site and to post job site notices, in compliance with Title 8 California Code of Regulations 16451(d) or as otherwise as required by the DIR.
(i) The Lessee shall, and hereby agrees to, unconditionally indemnify, reimburse, defend, protect and hold harmless the City and its elective and appointive boards, commissions, officers, agents, attorneys, consultants and employees, and all of their respective successors and assigns, from and against any and all claims, demands, suits and actions at law or in equity, and losses, liabilities, expenses, penalties, fines, orders, judgments, injunctive or other relief, and costs and damages of every kind, nature and description (including but not limited to attorneys’ fees and court costs; with counsel reasonably acceptable to the City), and administrative, enforcement or judicial proceedings, whether known or unknown, and which directly or indirectly, in whole or in part, are caused by, arise from, or relate to, or are alleged to be caused by, arise from, or relate to, the payment or requirement of payment of prevailing wages or the requirement of competitive bidding in the construction of the Project, the failure to

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 100, Packet Page 135 27 comply with any state or federal labor laws, regulations or standards in connection with this Agreement, including but not limited to California Labor Code Section 1770 et seq. and the Prevailing Wage Laws, or any act or omission of Lessee related to this Agreement with respect to the payment or requirement of payment of prevailing wages or the requirement of competitive bidding, whether or not any insurance policies shall have been determined to be applicable to any such claims, demands, suits, actions, losses, liabilities, expenses, penalties, fines, orders, judgments, injunctive or other relief, costs, damages, or administrative, enforcement or judicial proceedings. It is further agreed that the City does not, and shall not, waive any rights against the Lessee which they may have by reason of this indemnity and hold harmless agreement because of the acceptance by the City, or the deposit with the City by the Lessee, of any of the insurance policies described in this Agreement.

If applicable, as provided in California Labor Code Section 1770 et seq., the hourly and daily rate of wages to be paid each of the classes of mechanics and worker employed in connection with construction of the Project shall not be less than the rate of such wages then prevailing in Monterey County. If Prevailing Wages applies to any portion of this Project, the Lessee agrees to and shall forfeit, as a penalty to the City, the sums established and applicable pursuant to California Labor Code Section 1770 et seq. for each calendar day or portion thereof that each workman employed in connection with the Project is paid less than the rates designated in this paragraph for any work performed under this Agreement by the Lessee or any subcontractors or agents of the Lessee; or is not reported to the labor commissioner and the City as required pursuant to California Labor Code Section 1770 et seq.

Section 9.6 Compliance with Laws. Lessee shall carry out and shall cause its contractors and subcontractors to carry out the construction of the Project, and shall operate the Project in conformity with all applicable federal, state and local laws, rules, ordinances and regulations (“Applicable Laws”), including without limitation, all applicable federal and state labor laws and standards, the City's zoning and development standards, building, plumbing, mechanical and electrical codes, all other provisions of the City's Municipal Code, and all applicable disabled and handicapped access requirements. To the greatest extent allowed by law, Lessee shall indemnify, defend (with counsel approved by City) and hold harmless the Indemnitees from and against any and all Claims arising in connection with the breach of Lessee's obligations set forth in this Section whether or not any insurance policies shall have been determined to be applicable to any such Claims, except to the extent such Claims arise out of or relate to the sole negligence or willful misconduct of City, City’s employees, agents, contractors, subcontractors, or any person acting on behalf of or as the invitee of any of the foregoing. This Section shall survive the expiration or termination of this Lease.

Section 9.7 Affordability and Use Restrictions. Lessee hereby covenants and agrees that the Leased Premises shall be used solely for the operation of a multifamily rental housing development, and any other uses permitted by and in compliance with the requirements set forth in that certain Affordable Housing Regulatory Agreement and Declaration of Restrictive Covenants recorded against the Lessee’s Estate, while such restriction remains in effect.

Section 9.8 Non-Discrimination; Compliance with Fair Housing Laws. Lessee shall not restrict the rental, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Leased Premises, or any portion thereof, on the basis of race, color, religion, creed, sex, sexual

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 101, Packet Page 136 28 orientation, disability, marital status, ancestry, or national origin of any person. Lessee covenants for itself and all persons claiming under or through it, and this Lease is made and accepted upon and subject to the condition that there shall be no discrimination against or segregation of any person or group of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Leased Premises or part thereof, nor shall Lessee or any person claiming under or through Lessee establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in, of, or for the Leased Premises or part thereof.

Lessee shall include such similar provision in all leases and rental agreements affecting the Leased Premises or part thereof, and shall enforce the same diligently and in good faith.

Section 9.9 Fair Housing. Lessee shall comply with state and federal fair housing laws in the marketing and rental of the units in the Project. Lessee shall accept as tenants, on the same basis as all other prospective tenants, persons who are recipients of federal certificates or vouchers for rent subsidies pursuant to the existing Section 8 program or any successor thereto.

Section 9.10 Management Entity. City approves MidPen Property Management Corporation as the initial property manager. In recognition of City's significant financial contribution to the Project, City shall have the right to review and approve any replacement of the management entity proposed by Lessee for the Project, and shall have the right to review and approve any agreement executed between Lessee and the management entity, which approval of agreement shall not be unreasonably withheld or delayed, provided, however, that (i) any written request by Lessee for such City approval shall be deemed approved if the City has not responded to Lessee within thirty (30) days after the date that Lessee makes such request, and (ii) that the City's approval shall not be required for the renewal of any management agreement provided that the property manager does not change. The contracting of management services to a management entity shall not relieve Lessee of its primary responsibility for proper performance of management duties. Upon City determination and delivery of written notice to Lessee that Lessee has failed to operate the Project in accordance with this Lease, City may, subject to any applicable cure period, require Lessee to contract with a qualified management agent selected by City subject to approval of the Investor and Lenders, if required, to operate the Project, or to make such other arrangements as City deems necessary to ensure performance of the required functions.

Section 9.11 Subleases. All Resident Subleases shall be in compliance with the applicable regulations of the California Tax Credit Allocation Committee and the applicable requirements of the Tax Credit Regulatory Agreement, and shall be subject to the following provisions and restrictions: Each Resident Sublease shall contain a provision, satisfactory to City, requiring the Subtenant to attorn to City upon (a) an Event of Default by Lessee under this Lease, and (b) receipt by such Subtenant of written notice of such Event of Default and instructions to make such Subtenant’s rental payments to City. On any termination of this Lease prior to the expiration of the Term, all of Lessee’s interest as sublessor under any and all existing valid and enforceable Resident Subleases shall be deemed automatically assigned, transferred, and conveyed to City and subtenants under such Resident Subleases shall be deemed to have

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 102, Packet Page 137 29 attorned to City. City shall thereafter be bound on such Resident Subleases to the same extent Lessee, as sublessor, was bound thereunder and City shall have all the rights under such Resident Subleases that Lessee, as sublessor, had under such Resident Subleases. Each Resident Sublease shall expressly provide that it is subject to each and all of the covenants, conditions, restrictions, and provisions of this Lease.

ARTICLE 10.

EMINENT DOMAIN
Section 10.1 Termination of Lease. City and Lessee agree that, in the event of a Taking such that Lessee reasonably determines that the Leased Premises cannot continue to be operated, at reasonable cost, for its then-current use, then, subject to the rights of Lenders, this Lease shall, at Lessee's sole option, terminate as of the date of the Taking.

Section 10.2 Continuation of Lease and Presumption of Restoration. City and Lessee agree that, in the event of a Taking that does not result in the termination of this Lease pursuant to Section 10.1 above, this Lease shall continue in effect as to the remainder of the Leased Premises, and the Net Condemnation Award will be disbursed in accordance with Section 10.4 below to City and Lessee and/or any Lender, if the terms of the applicable Leasehold Mortgage so require, and shall be used so as to make the same a complete, unified and efficient operating unit as nearly as reasonably possible to the condition existing prior to the Taking, subject to any applicable requirements of the Lender.

Section 10.3 Temporary Taking. If there shall be a temporary Taking with respect to all or any part of the Leased Premises or of Lessee's interest in this Lease, then the Term shall not be reduced and Lessee shall continue to pay in full all Rents, Impositions and other charges required herein, without reduction or abatement thereof at the times herein specified; provided, however, that Lessee shall not be required to perform such obligations that Lessee is prevented from performing by reason of such temporary Taking.

Section 10.4 Apportionment of Award. If there is a Taking, whether whole or partial, City and Lessee shall be entitled to receive and retain such separate awards and portions of lump sum awards as may be allocated to their respective interests in any condemnation proceedings, or as may be otherwise agreed, taking into consideration City's fee interest in the Property (as encumbered by this Lease) and reversionary interest in the Improvements upon the expiration of the Term or termination of this Lease. If the Leased Premises are restored as in contemplated in Section 10.2 above, Lessee shall be entitled to recover the costs and expenses reasonably incurred in such restoration out of any Net Condemnation Award. Thereafter, if the condemning authority does not make separate awards, the Parties agree that any Net Condemnation Award will be allocated as follows on a proportionate basis reflecting the Parties' respective interests in the Property and Improvements and the remaining duration of the Term as follows:

Section 10.5 Award on Total or Substantial Taking. In the event of a total or substantial taking, the award shall be apportioned as follows, in the following order:
(a) To the Lenders in an amount equal to the amounts owing on the Leasehold Mortgages.

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 103, Packet Page 138 30 (b) To City that portion of the award equal to the fair market value of the Property, minus the Improvements, but subject to the City’s reversionary interest. Any “bonus value” attributable to this Lease, as it applies to the City’s interest therein, shall be paid to City. (c) To Lessee, that portion of the award equal to the fair market value of the Improvements (subject to City's reversionary interest), less the amount paid to the Lenders pursuant to (a) above.
(d) The balance, if any, shall be allocated between City and Lessee respectively in that proportion in which (i) the fair market value of the Property bears to (ii) the fair market value of the Improvements, exclusive of City's reversionary interest.

Section 10.6 Award on Partial Taking. In the event of a partial taking, after application of the Award for restoration, any remaining portion of such award shall be apportioned as follows, in the following order:
(a) To the Lenders in an amount equal to the amounts owing on the Leasehold Mortgages.
(b) To City, that portion of the award attributable to the fair market value of the portion of the Property taken, minus the Improvements, but subject to the City’s reversionary interest.
(c) To Lessee, that portion of the award equal to the fair market value of the portion of the Improvements taken (subject to City's reversionary interest), less the amount paid to the Lenders pursuant to (a) above.
(d) The balance, if any, shall be allocated between City and Lessee respectively in that proportion in which (i) the fair market value of the Property bears to (ii) the fair market value of the Improvements exclusive of the reversionary interest of City. Any “bonus value” attributable to this Lease, as it applies to the City’s interest therein, shall be paid to City.
(e) Any severance damages awarded or payable because only a portion of the Property and Improvements are taken by eminent domain shall be (a) paid to Lessee during the first 49.5 years of this Lease and (b) equally divided between Lessee and City during the next

49.5 years of this Lease (except to the extent needed to replace any Improvements taken by eminent domain with equivalent Improvements on the remainder of the Property).

Section 10.7 Joinder. If a Leasehold Mortgage exists, the Lenders, to the extent permitted by law, shall be made a party to any Taking proceeding.

Section 10.8 City Reservation of Rights. Notwithstanding any provisions in this Lease to the contrary, nothing herein does or shall be construed to limit or require the City to exercise its ability to condemn any property, including the Leased Premises, in accordance with applicable law. .

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 104, Packet Page 139 31 ARTICLE 11.

DAMAGE OR DESTRUCTION
Section 11.1 Damage or Destruction to Leased Premises. Lessee shall give prompt written notice to City after the occurrence of any material fire, earthquake, act of God or other casualty, where estimated costs of such casualty exceed five-hundred thousand ($500,000) dollars, to or in connection with the Leased Premises, the Improvements or any portion thereof (hereinafter sometimes referred to as “Casualty”). Subject to Section 11.2 below, if during the Term the Improvements shall be damaged or destroyed by Casualty, Lessee shall repair or restore the Improvements, so long as Lessee determines, in its sole discretion, that it is feasible to do so and in such event Lessee provides or causes to be provided sufficient additional funds which, when added to such insurance proceeds, will fully effect such repair or restoration. Upon the occurrence of any such Casualty, Lessee, promptly and with all due diligence, shall apply for and collect all applicable insurance proceeds recoverable with respect to such Casualty, for the benefit of the Lenders. In the event that Lessee shall determine, subject to the rights of the Lenders, by notice to City given within sixty (60) days after receipt by Lessee of any such insurance proceeds, that it is not economically practical to restore the Improvements and/or the Leased Premises to substantially the same condition in which they existed prior to the occurrence of such Casualty, then Lessee may terminate this Lease as of a date that is not fewer than thirty (30) days after the date of such notice. If Lessee terminates this Lease pursuant to this Section

11.1, Lessee shall surrender possession of the Leased Premises to City immediately and assign to City (or, if same has already been received by Lessee, pay to City) all of its right, title and interest in and to the proceeds from Lessee's insurance upon the Leased Premises, subject to the prior rights of any Lender therein, as referenced in Section 11.3 below.

Section 11.2 Damage or Destruction Near End of Term. If, during the last seven (7) years of the Term, the Improvements shall be damaged by Casualty, then Lessee shall have the option, to be exercised within one hundred twenty (120) days after such Casualty:
(a) to repair or restore the Improvements as hereinabove provided in this Article 11; or
(b) subject to the rights of Lenders, to terminate this Lease by notice to City, which termination shall be deemed to be effective as of the date of Casualty. If Lessee terminates this Lease pursuant to this Section 11.2, Lessee shall surrender possession of the Leased Premises to City immediately and assign to City (or, if same has already been received by Lessee, pay to City) all of its right, title and interest in and to the proceeds from Lessee's insurance upon the Leased Premises, subject to the prior rights of any Lender therein, as referenced in Section 11.3 below.

Section 11.3 Distribution of Insurance Proceeds. In the event that this Lease is terminated pursuant to Sections 11.1 or 11.2 hereof, the insurance proceeds received as the result of such Casualty shall be distributed as follows: (a) first, if Leasehold Mortgage(s) are in place, to the Lenders to the extent of any indebtedness then owed to such Lender in order of the Lien priority of the Leasehold Mortgages; (b) second, the balance, if any, of such insurance proceeds shall be paid to Lessee or, as applicable pursuant to Sections 11.1 and 11.2 above, assigned or paid over to City.

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 105, Packet Page 140 32 Section 11.4 Insurance Requirements. Nothing in this Article 11 does or shall be construed as permitting Lessee to maintain less than the minimum insurance requirements set forth in this Lease.

ARTICLE 12.

EVENTS OF DEFAULT
Section 12.1 Events of Default. Each of the following shall be an “Event of Default” by Lessee hereunder:
(a) failure by Lessee to pay any Rent or Additional Rent when due if such failure shall continue for a period of ten (10) days after notice thereof has been given by City to Lessee;
(b) Lessee's default in the performance of any term, provision or covenant under this Lease (other than an obligation enumerated in this Section 12.1), and unless such provision specifies a shorter cure period for such default, the continuation of such default for thirty (30) days in the event of a monetary default or sixty (60) days in the event of a nonmonetary default following the date upon which City shall have given written notice of the default to Lessee, or if the nature of any such non-monetary default is such that it cannot be cured within sixty (60) days, Lessee's failure to commence to cure the default within sixty (60) days and thereafter prosecute and complete the curing of such default with due diligence and in good faith continue to cure the default until completion, but in no event shall the cure be completed more than one hundred twenty (120) days from receipt of the notice of default; (c) Lessee's failure to maintain insurance on the Leased Premises and the Improvements as required hereunder, and the failure of Lessee to cure such default within thirty (30) days;
(d) Subject to Lessee's right to contest the following charges, Lessee's failure to pay taxes or assessments due on the Leased Premises or the Improvements or failure to pay any other charge that may result in a lien on the Leased Premises or the Improvements, and Lessee's failure to cure such default within thirty (30) days of delinquency, but in all events prior to the date upon which the holder of any such lien has the right to foreclose thereon; (e) Lessee abandons, vacates, or otherwise surrenders the Leased Premises or the Improvements, or is dispossessed (other than dispossession as the result of a Taking subject to Section 10 hereof) by process of law or otherwise;
(f) A Transfer occurs, either voluntarily or involuntarily, in violation of this Lease;
(g) The subjection of any right or interest of Lessee in this Lease to attachment, execution, or other levy, or to seizure under legal process, if not released within sixty (60) days;

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 106, Packet Page 141 33 (h) Lessee shall have voluntarily or involuntarily suspended its business for a period in excess of thirty (30) days for reasons other than Force Majeure, or Lessee shall have been dissolved or terminated;
(i) Lessee defaults under any Loan Document and such default remains uncured beyond the expiration of all applicable cure periods such that the beneficiary under such Loan Document has the right to pursue foreclosure;
(j) The appointment of a receiver, to take possession of Lessee's Estate or of Lessee's operations on the Leased Premises for any reason, if such receivership is not terminated, dismissed or vacated within ninety (90) days after the appointment of the receiver; (k) 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”), Lessee (i) commences a voluntary case or proceeding; (ii) consents to the entry of an order for relief against Lessee or any general partner thereof in an involuntary case; (iii) consents to the appointment of a trustee, receiver, assignee, liquidator or similar official for Lessee or any general partner thereof or for the Leased Premises; (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; (l) The filing against Lessee of any involuntary proceedings under such Bankruptcy Code or similar law, if such proceedings have not been vacated or stayed within ninety (90) days of filing;
(m) The appointment of a trustee or receiver for Lessee or for all or the major part of Lessee's property or the Leased Premises, in any involuntary proceeding, or the taking of jurisdiction by any court over all or the major part of Lessee's property or the Leased Premises in any involuntary proceeding for the reorganization, dissolution, liquidation or winding up of Lessee, if such trustee or receiver shall not be discharged or such jurisdiction relinquished or vacated or stayed on appeal or otherwise stayed within ninety (90) days; (n) Any of Lessee's representations or warranties contained in this Lease or in any financial statement, certificate or report submitted to City in connection with this Lease proves to have been incorrect in any material and adverse respect when made and continues to be materially adverse to City’s financial interest in the Property or the Leased Premises if the failure of such representation or warranty is not cured within thirty (30) days after written notice of the default has been given to the Lessee.

Section 12.2 Rights and Remedies.
(a) At any time after the occurrence of an Event of Default hereunder, subject in all respects to the provisions of this Lease with respect to City's rights to cure defaults by Lessee and with respect to the rights of any Lenders, City may, in addition to any other rights and remedies available at law or in equity, terminate this Lease by giving Lessee written notice thereof (with a copy of such notice to the Lenders), setting forth in such notice an effective date for termination which is not less than thirty (30) days after the date of such notice, in which event this Lease and Lessee's Estate created hereby and all interest of Lessee and all parties claiming by, through or under Lessee shall automatically terminate upon the effective date for

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 107, Packet Page 142 34 termination as set forth in such notice, with the same force and effect and to the same extent as if the effective date of such notice had been the date originally fixed in Article 2 hereof for the expiration of the Term. In such event, City, its agents or representatives, shall have the right, without further demand or notice, to re-enter and take possession of the Leased Premises (including all buildings and other Improvements comprising any part thereof) at any time from and after the effective termination date without being deemed guilty of any manner of trespass and without prejudice to any remedies for arrears of Rent or existing breaches of covenants; provided that City shall not be entitled to disturb possession of any Tenants or others in possession pursuant to Resident Subleases with Lessee so long as such Tenant or others are not in default thereunder and attorn to City as their lessor. (b) Upon the exercise of City's remedies pursuant to this Section 12.2, Lessee shall execute such releases, deeds and other instruments in recordable form as City shall reasonably request in order to accurately set forth of record the then current status of Lessee's Estate and Lessee's rights hereunder.
(c) If Lessee shall have failed to cure a default by Lessee after expiration of the applicable time for cure of a particular default, City, at its election, but without obligation therefor (i) may seek specific performance of any obligation of Lessee, after which City shall retain, and may exercise and enforce, any and all rights that City may have against Lessee as a result of such default, (ii) from time to time without releasing Lessee in whole or in part from the obligations to be performed by Lessee hereunder, may cure the default at Lessee's cost, (iii) may terminate this Lease, (iv) subject to the rights of Lenders, may have a receiver appointed to take possession of Lessee's interest in the Leasehold Estate with power in the receiver (a) to administer Lessee's interest in the Leasehold Estate, (b) to collect all funds available in connection with the operation of the Project, and (c) to perform all other acts consistent with Lessee's obligations under this Lease, as the court deems proper, and/or (v) may exercise any other remedy given hereunder or now or hereafter existing at law or in equity. Any reasonable cost incurred by City in order to cure such a default by Lessee shall be due immediately from Lessee, together with interest, and may be offset against any amounts due from City to Lessee. (d) Remedies Cumulative. No remedy provided in this Section shall be considered exclusive of any other remedy, but the same shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute, and every power and remedy given by this Lease may be exercised from time to time and as often as occasion may arise or as may be deemed expedient, subject to any limitations referred to hereinabove.
(e) No Election of Remedies. The rights given in this Section to receive, collect or sue for any rent or rents, moneys or payments, or to enforce the terms, provisions and conditions of this Lease, or to prevent the breach or nonobservance thereof, or the exercise of any such right or of any other right or remedy hereunder or otherwise granted or arising, shall not in any way affect or impair or toll the right or power of City upon the conditions and subject to the provisions in this Lease to terminate Lessee's right of possession because of any default in or breach of any of the covenants, provisions or conditions of this Lease beyond the applicable cure period.

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 108, Packet Page 143 35 (f) Survival of Obligations. Nothing herein shall be deemed to affect the right of City to indemnification for liability arising prior to the termination of the Lease for personal injuries or property damage or in connection with any other Claim, nor shall anything herein be deemed to affect the right of City to equitable relief where such relief is appropriate.

No expiration or termination of this Lease by operation of law or otherwise, and no repossession of the Leased Premises or any part thereof, shall relieve Lessee of any of its obligations to indemnify and defend the Indemnitees pursuant to the provisions of this Lease, and all such provisions, and all of Lessee's accrued liabilities and obligations hereunder, shall survive such expiration, termination or repossession.
(g) No Waiver. Except to the extent that City may have agreed in writing, no waiver by City of any breach by Lessee of any of its obligations, agreements or covenants hereunder shall be deemed to be a waiver of any subsequent breach of the same or any other covenant, agreement or obligation, nor shall any forbearance by City to seek a remedy for any breach by Lessee be deemed a waiver by City of its rights or remedies with respect to such breach.

Section 12.3 Default by City.
(a) Events of Default. City shall be in default of this Lease if it fails to perform any provision of this Lease that is obligated to perform or if any City's representations or warranties is untrue or becomes untrue in any material respect, and if the failure to perform or the failure of such representation or warranty is not cured within sixty (60) days after written notice of the default has been given to City. If the default cannot reasonably be cured within sixty (60) days, City shall not be in default of this Lease if City commences to cure the default within such sixty (60) days and thereafter prosecutes and completes the cure of such default with due diligence and in good faith, but in no event shall the cure be completed more than one hundred twenty (120) days from the receipt of the notice of default. (b) Right to Cure; Lessee's Remedies. If City shall have failed to cure a default by City after expiration of the applicable time for cure of a particular default, Lessee, at its election, but without obligation therefor (i) may seek specific performance of any obligation of City, after which Lessee shall retain, and may exercise and enforce, any and all rights that Lessee may have against City as a result of such default, (ii) from time to time without releasing City in whole or in part from the obligation to be performed by City hereunder, may cure the default at City's cost provided that City has been given five (5) days advance written notice of Lessee's election to do so, and/or (iii) may terminate this Lease.

Section 12.4 Notices. Notices given by City under Section 12.1 or by Lessee under Section 12.4 shall specify the alleged default and the applicable Lease provisions, and shall demand that Lessee or City, as applicable, perform the appropriate provisions of this Lease within the applicable period of time for cure. No such notice shall be deemed a forfeiture or termination of this Lease unless expressly set forth in such notice.

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 109, Packet Page 144 36 ARTICLE 13.

QUIET ENJOYMENT AND POSSESSION; INSPECTIONS
Section 13.1 Quiet Enjoyment. City covenants and warrants that Lessee, upon payment of all sums herein provided and upon performance and observance of all its covenants herein contained, shall peaceably and quietly have, hold, occupy, use and enjoy, and shall have the full, exclusive and unrestricted use and enjoyment of, all of the Leased Premises during the Term, subject only to the provisions of this Lease and all applicable Legal Requirements.

Section 13.2 City's Right of Inspection. Notwithstanding Section 13.1 above, City, in person or through its agents, upon reasonable prior written notice to Lessee, shall have the right, subject to the rights of Tenants, to enter upon the Leased Premises, other than Tenants’ individual residential units, for purpose of reasonable inspections performed during reasonable business hours in order to assure compliance by Lessee with its obligations under this Lease.

ARTICLE 14.

VACATION OF LEASED PREMISES
Section 14.1 Vacation Upon Termination. Lessee covenants that upon any termination of this Lease, whether by lapse of time or because of any of the conditions or provisions contained herein, Lessee will peaceably and quietly yield and surrender possession of the Leased Premises to City. The foregoing, however, will be subject to the rights of Tenants or others in possession pursuant to Resident Subleases with Lessee, provided that such Tenants are not in default thereunder and attorn to City as their lessor. An action of forcible detainer shall lie if Lessee holds over after a demand for possession is made by City.

ARTICLE 15.

NON-MERGER
Section 15.1 Non-Merger. Except upon expiration of the Term or upon termination of this Lease, there shall be no merger of either this Lease or Lessee's Estate created hereunder with City's fee interest in the Property or Lessee's fee interest in the Improvements by reason of the fact that the same person may acquire, own or hold, directly or indirectly, (a) this Lease, Lessee's Estate created hereunder or any interest in this Lease or the Improvements, and (b) a fee interest in the Property or the Improvements, unless and until the City and all persons, including any assignee of City and any Lender with a Leasehold Mortgage, having an interest in (i) this Lease or Lessee's Estate created hereunder, and (ii) the fee estate in the Leased Premises or any part thereof, shall join in a written instrument effecting such merger and shall duly record the same.

ARTICLE 16.

TRANSFERS
Section 16.1 Permitted Transfer by Lessee.
(a) Except as provided in this Article 16, Lessee shall have no right to Transfer, assign or sublease any legal or beneficial interest in Lessee's Estate hereunder without City's prior written consent, which shall not be unreasonably withheld, delayed or conditioned.

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 110, Packet Page 145 37 Notwithstanding the foregoing, by its execution of this Lease, City is deemed to have consented to the following (“Permitted Transfers”):
(1) Permitted Encumbrances, Approved Loans and Leasehold Mortgages;
(2) a conveyance of the leasehold interest in the Lessee's Estate resulting from the foreclosure of a Leasehold Mortgage (or an assignment, new lease or deed-inlieu of such a foreclosure); (3) any transfer of limited partner interests in the Lessee that does not change management or operational control of Lessee or the Project,; (4) the lease of the residential units consistent with the Tax Credit Restrictive Covenant and the Regulatory Agreement; and
(5) a Transfer to MidPen Housing Corporation or an affiliate thereof in connection with its exercise of a purchase option or right of first refusal granted to it by Lessee.
(b) Upon the granting of any consent (deemed or otherwise) by City with respect to a Transfer by Lessee, this Lease shall be binding upon and shall inure to the benefit of City and Lessee and their respective heirs, successors, assigns, legal representatives, Lenders, Tenants and other transferees.

ARTICLE 17.

MISCELLANEOUS PROVISIONS
Section 17.1 Consents. City agrees not to unreasonably withhold or delay its consent to matters requiring City's consent hereunder unless the applicable provision of this Lease permits City to exercise City's sole discretion with respect to a particular matter. City agrees not to unreasonably delay any decision as to matters of consent within the City's sole discretion.

Section 17.2 Enforced Delay; Extension of Times of Performance. Time is of the essence in the performance of each of the Parties' respective obligations set forth in this Lease. Except as expressly set forth in this Section 17.2, performance by any Party hereunder shall not be deemed to be in default and such Party shall be entitled to an extension of time to perform its obligations hereunder where delays in performance are due to causes beyond the reasonable control and without the fault of such Party, including as applicable: war; acts of terrorism, insurrection; strikes; lockouts; riots; floods; earthquakes; fires; casualties; acts of God, acts of the public enemy; epidemics or other public health emergencies; quarantine restrictions; freight embargoes; governmental restrictions or priority; litigation (including suits filed by third parties concerning or arising out of this Agreement), unusually severe weather; inability to secure necessary labor, materials or tools; acts of the other Parties; acts or the failure to act of any public or governmental agency or entity (except that acts or the failure to act of the City shall not excuse performance of the City); or other causes beyond the control or without the fault of the Party claiming an extension of time to perform (“Force Majeure”). An extension of time for any cause permitted under this

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 111, Packet Page 146 38 Section 17.2 shall be limited to the period of the enforced delay, which period shall commence to run from the time of the commencement of the cause, if notice by the Party claiming such extension is sent to the other Party within fifteen (15) days of knowledge of the commencement of the cause.

If no written notice is sent within fifteen (15) days, for purposes of measuring the extension period for performance of the obligation in question, the period of the enforced delay shall commence to run from the date written notice is sent to the other Party. Times of performance under this Lease may be extended by mutual written agreement of the Parties.

Section 17.3 Interpretation. The terms of this Lease shall be construed in accordance with the meaning of the language used and shall not be construed for or against any Party by reason of the authorship of this Lease or any other rule of construction which might otherwise apply. The Section headings are for purposes of convenience only, and shall not be construed to limit or extend the meaning of this Lease.

Section 17.4 Entire Agreement: Modifications. This Lease supersedes all prior discussions and agreements between the Parties with respect to the leasing of the Leased Premises. This Lease thereto contain the sole and entire understanding between the parties with respect to the leasing of the Leased Premises. This Lease shall not be modified or amended in any respect, except by written instrument specifically referencing such modification or amendment which is executed by or on behalf of the Parties in the same manner as this Lease is executed and, to which each Lender has consented in writing (if required by the applicable Loan Documents).

Section 17.5 Governing Law. This Lease, and the rights and obligations of the Parties hereunder, shall be governed by and construed in accordance with the substantive laws of the State of California without regard to conflict of law principles. Venue for any dispute hereunder shall be in Monterey County, California.

Section 17.6 Binding Effect. This Lease shall inure to the benefit of and be binding upon the Parties hereto, their successors, administrators, executors and permitted assigns.

Section 17.7 Severability. In the event any provision or portion of this Lease is held by any court of competent jurisdiction to be invalid or unenforceable, such holdings shall not affect the remainder hereof, and the remaining provisions shall continue in full force and effect to the same extent as would have been the case had such invalid or unenforceable provision or portion never been a part hereof, except to the extent the rights and obligations of the parties have been materially altered by such unenforceability.

Section 17.8 Further Assurances. From and after the date of this Lease, City and Lessee, at the request of the other Party, shall make, execute and deliver or obtain and deliver all such affidavits, deeds, certificates, resolutions and other instruments and documents, and shall do or cause to be done all such other things that either Party may reasonably require in order to effectuate the provisions and the intention of this Lease.

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 112, Packet Page 147 39 Section 17.9 Authority to Execute Agreement. Each Party represents and warrants to the other Party that by proper action the person executing this Lease on behalf of such Party has been duly authorized to execute and deliver this Lease.

Section 17.10 Lease Administration and Approvals. The City Manager of the City of Monterey, or his or her designee, shall be the person designated by City to administer this Lease on behalf of City. The City Manager of the City of Monterey shall have the authority to consent to any matter requiring City approval or consent as provided in this Lease, and to perform and carry out any activities concerning this Lease, including but not limited to, the execution of any additional agreements, addenda or amendments so long as such actions do not substantially affect the rights and obligations of City as specified herein.

Section 17.11 Captions. All captions, headings, paragraphs, subparagraphs, letters and other reference captions are solely for the purpose of facilitating convenient reference to this Lease, shall not supplement, limit or otherwise vary the text of this Lease in any respect, and shall be wholly disregarded when interpreting the meaning of any terms or provisions hereof.

All references to particular articles, sections, subsections, paragraphs and subparagraphs by number refer to the text of such items as so numbered in this Lease.

Section 17.12 Gender. Words of any gender used in this Lease shall be held and construed to include any other gender, and words of a singular number shall be held to include the plural, and vice-versa, unless the context requires otherwise.

Section 17.13 Exhibits. Each and every exhibit referred to or otherwise mentioned in this Lease is attached to this Lease and is and shall be construed to be made a part of this Lease by such reference or other mention at each point at which such reference or other mention occurs, in the same manner and with the same effect as if each exhibit were set forth in full at length every time it is referred to and otherwise mentioned.

Section 17.14 References. All references to paragraphs or subparagraphs shall be deemed to refer to the appropriate paragraph or subparagraph of this Lease. Unless otherwise specified in this Lease, the terms “herein,” “hereof,” “hereinafter,” “hereunder” and other terms of like similar import, shall be deemed to refer to this Lease as a whole, and not to any particular paragraph or subparagraph hereof.

Section 17.15 Cumulative. Except as expressly limited by the terms of this Lease, all rights, powers and privileges conferred hereunder shall be cumulative and not restrictive of those provided at law or in equity.

Section 17.16 Notices. All notices, requests, demands, or other communications required or permitted to be given hereunder shall be in writing and shall be addressed and delivered by certified mail, return receipt requested; by reputable commercial delivery service; or by hand delivery by a reputable courier or by electronic mail (“email”), to each Party at the addresses set forth below. Any such notice, request, demand or other communication shall be considered given or delivered, as the case may be, on the date shown on the delivery receipt as the date of delivery, the date delivery was refused or the date the item was returned as undeliverable, provided, however, if any notice is given by email, such notice shall not be

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 113, Packet Page 148 40 deemed delivered or given until a copy of such notice is either deposited in the mail or with a reputable commercial delivery service. By giving prior written notice thereof, any Party, from time to time, may change its address for notices under this Lease.

To City: City of Monterey
580 Pacific Street
Monterey, CA 93940
Attention: City Manager
To Lessee: c/o MidPen Housing Corporation
303 Vintage Park Dr, Suite 250
Foster City, CA 94404
Attention: Joanna Carman, Director or Housing
Section 17.17 Counterparts. This Lease may be executed in several counterparts, each of which shall be deemed an original, and all such counterparts together shall constitute one and the same agreement.

Section 17.18 Time of Essence. Time is and shall be of the essence in this Lease.

Section 17.19 Attorneys' Fees. In any litigation or other action brought to enforce this Lease or regarding a dispute over terms of the Lease or the performance of a Party, the prevailing party in such litigation or action shall be entitled to attorneys' fees and the costs of such litigation.

Section 17.20 No Third Party Beneficiaries. Except as expressly set forth herein, nothing contained in this Lease is intended to or shall be deemed to confer upon any person, other than the Parties and their respective successors and assigns, any rights or remedies hereunder.

Section 17.21 Parties Not Co-Venturers; Independent Contractor; No Agency Relationship. Nothing in this Lease is intended to or shall establish the Parties as partners, coventurers, or principal and agent with one another. The relationship of Lessee and City under this Lease is and shall remain solely that of a tenant and landlord, and shall not be construed as a joint venture, equity venture, partnership or any other relationship. City neither undertakes nor assumes any responsibility or duty to Lessee (except as expressly provided in this Lease) or to any third party with respect to the Project.

Section 17.22 No Personal Liability. Notwithstanding anything contained in this Lease to the contrary, the obligations of the Parties under this Lease (including any actual or alleged breach or default) do not constitute personal obligations of the individual officers or employees of the Parties, and no Party shall not seek recourse against the individual officers or employees of the other Party, or against any of their personal assets, for satisfaction of any liability with respect to this Lease.

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 114, Packet Page 149 41 SIGNATURES ON FOLLOWING PAGE

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 115, Packet Page 150 42 IN WITNESS WHEREOF, this Lease is made and entered into in multiple original counterparts on the day and year first above written.

CITY: City of Monterey, a California Charter City
By:

Hans Uslar, City Manager
Attest:
_______________________
City Clerk
Approved as to Form:
______________________
City Attorney
LESSEE: MP Madison Street Associates, L.P.
a California limited partnership
By: MP Madison Street LLC,
a California limited liability company,
its general partner
By: Mid-Peninsula San Carlos Corporation,
a California nonprofit public benefit corporation,
its sole member/manager
By: ____________________________
Matthew O. Franklin,
Assistant Secretary

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 116, Packet Page 151 A-1

EXHIBIT A
Legal Description of Leased Premises

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 117, Packet Page 152 B-1

EXHIBIT B
Site Plan of Leased Premises
(Attached)

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 118, Packet Page 153

EXHIBIT C
Form of Memorandum of Lease

RECORDING REQUESTED BY AND WHEN
RECORDED RETURN TO:

WHEN RECORDED RETURN TO:

City of Monterey
580 Pacific Street
Monterey, CA 93940
Attention: City Clerk
_____________________________________________________________________________ APN: (SPACE ABOVE THIS LINE FOR RECORDER'S USE)

MEMORANDUM OF GROUND LEASE
(MidPen Housing Corporation)
THIS MEMORANDUM OF GROUND LEASE (the “Memorandum”) is entered into as of _______________, by and between the City of Monterey, a California charter city (“City”), and MP Madison Street Associates, L.P., a California limited partnership (the “Lessee”) with respect to that certain Ground Lease dated ________________ (the “Lease”), between the City and the Lessee. All capitalized terms used in this Memorandum and not defined shall have the meaning set forth in the Lease.

1. Pursuant to the Lease, City leases to Lessee and Lessee leases from City that certain real property, more particularly described in Exhibit A, attached hereto and incorporated herein (the “Leased Premises”). The Lease shall commence on _______________, and shall remain in effect for the ninety-nine (99) year term of the Lease, unless sooner terminated pursuant to the terms and conditions of the Lease.

2. As more particularly set forth in the Lease, certain development, affordability and occupancy restrictions apply to the use of the Leased Premises.

3. This Memorandum shall incorporate herein all of the terms and provisions of the Lease as though fully set forth herein.

4. This Memorandum is solely for recording purposes and shall not be construed to alter, modify, amend or supplement the Lease, of which this is a memorandum. In the event of any inconsistency between the terms and conditions of this Memorandum and the terms and conditions of the Lease, the terms and conditions of the Lease shall control.

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 119, Packet Page 154

5. This Memorandum may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts so executed shall together constitute but one and the same instrument.

SIGNATURES ON FOLLOWING PAGE

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 120, Packet Page 155 IN WITNESS WHEREOF, the parties have caused this Memorandum to be duly executed as of the date first above written.

CITY: City of Monterey, a California Charter City
By:

City Manager
ATTEST:

By: ___________________________
City Clerk
APPROVED AS TO FORM:

By: ____________________________
City Attorney
LESSEE: MP Madison Street Associates, L.P.
a California limited partnership
By: MP Madison Street LLC,
a California limited liability company,
its general partner
By: Mid-Peninsula San Carlos Corporation,
a California nonprofit public benefit corporation,
its sole member/manager
By: ____________________________
Matthew O. Franklin,
Assistant Secretary
[SIGNATURES MUST BE NOTARIZED]

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 121, Packet Page 156 D-1

EXHIBIT D

SCOPE OF DEVELOPMENT
Proposed scope of development on Leased Premises includes construction of a 42-unit, two- and threestory, affordable multi-family housing development within a single rectangular building featuring an open interior courtyard with a picnic area, open interior walkways encircling the courtyard, a laundry facility, a community room, and property management offices and facilities.

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 122, Packet Page 157 E-1

EXHIBIT E

FINANCING PLAN
Construction Sources of Financing
Permanent Sources of Financing
Rental Subsidies
Operating Reserves

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 123, Packet Page 158 Grant Agreement
Affordable Housing and Disposition Agreement
MidPen Housing Corporation
#20096185v1<ACTIVE> - Monterey - Madison Street DDA - Final 10-2-24 D-1

EXHIBIT D

GRANT AGREEMENT

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 124, Packet Page 159

EXECUTION COPY
Madison Street Project
Grant Agreement
1 GRANT AGREEMENT
THIS GRANT AGREEMENT (this “Agreement”) is entered into effective as of May 1, 2024 (the “Effective Date”) by and between the City of Monterey, a California municipal corporation (the “City”), and MidPen Housing Corporation, a California nonprofit public benefit corporation (“Developer”). City and Developer are referred to individually as “Party,” and collectively as the “Parties.”

B. Developer desires to construct and operate a forty-two (42) unit multifamily rental housing development with long term affordability requirements, including one manager's unit that will not be subject to affordability requirements (the “Project”) on a portion of the Property.

C. In order to assist in making determining the feasibility of the Project the City will provide a grant to Developer in the amount of not to exceed Two Million Two Hundred TwentyNine Thousand Thirty-Six Dollars ($2,229,036) (the “Grant”) from available Regional Early Action Planning Grant funds (the “REAP Funds”) to fund pre-development costs of the Project, pursuant to the terms of this agreement.

D. The City has entered a Memorandum of Understanding (“MOU”) with Association of Monterey Bay Area Governments (“AMBAG”) that controls the disbursement of the REAP Funds to the City.

E. The terms of the MOU are incorporated into this Agreement in full as if set forth herein and any changes in funding or change in any other terms of the MOU are fully incorporated in this Agreement.

F. The purpose of the Grant is to provide funding for certain predevelopment costs expended by the City and third-party consultants and contractors including but not limited to architecture, planning, plan check, permitting and other eligible costs for the Project.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties to this Agreement agree as follows:

Agreement #: Ag-12077 - Page 1 of 11
Docusign Envelope ID: C3C5C9F2-8BFD-4FF2-84EC-7B5A25707D35

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 125, Packet Page 160

EXECUTION COPY
Madison Street Project
Grant Agreement
2 ARTICLE 1.

TERMS OF GRANT

1.1 The Grant. The City agrees to provide the Grant to Developer in an amount not to exceed Two Million Two Hundred Twenty-Nine Thousand Thirty-Six Dollars ($2,229,036) upon the terms and conditions and for the purposes set forth in this Agreement.

1.2 Use of Grant Proceeds. Developer agrees to use the proceeds of the Grant (the “Grant Proceeds”) solely and exclusively to pay for costs billed by City or third-party contractors for eligible predevelopment costs of the Project that are approved by the City.

1.3 Disbursement of Grant Proceeds. Upon satisfaction of the conditions set forth in Section 1.4 herein, City shall disburse Grant Proceeds to Developer following Developer’s provision to City of a written requisition, in form and substance satisfactory to City as set forth in Exhibit B, specifying the amount and use of the requested Grant Proceeds, accompanied by copies of bills and invoices and such other documentation as City may reasonably require.

Subsequent disbursements shall be made to Developer no more than once per calendar month, upon City’s receipt of written requisitions and supporting documentation as described in this Section. Notwithstanding the foregoing, the City shall not disburse Grant Proceeds in an amount greater than One Million Four Thousand Thirty-Six Dollars ($1,004,036) without prior written approval from AMBAG.

1.4 Conditions Precedent to City’s Obligation to Disburse. The obligation of City to fund and disburse the Grant Proceeds is conditioned upon the receipt by City of the following:
(a) The executed Grant Agreement;
(b) A copy of Developer’s enabling operating agreement or enabling documents, certificate of good standing, corporate borrowing resolution and such other evidence satisfactory to the City that Developer is duly formed, validly existing, in good standing under the laws of the State of California, has the power and authority to enter into this Agreement, and shall be bound by its terms when executed and delivered; (c) A copy of all of Developer’s existing and proposed contract(s) with which Developer contracts, or may contract, either directly or indirectly through an affiliate, for the provision of services which will be paid from the Grant Proceeds; (d) Copies of any other documents related to the financing and development of the Project as City may reasonably request.
(e) Written approval from AMBAG for disbursement of any Grant Proceeds that would cause total disbursement of Grant Proceeds to be in excess of One Million Two Hundred Thousand Dollars.

1.5 No Obligation to Disburse Proceeds upon Default. Notwithstanding any other provision of this Agreement, the City shall have no obligation to disburse any portion of the Agreement #: Ag-12077 - Page 2 of 11
Docusign Envelope ID: C3C5C9F2-8BFD-4FF2-84EC-7B5A25707D35

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 126, Packet Page 161

EXECUTION COPY
Madison Street Project
Grant Agreement
3 Grant Proceeds if Developer’s representations and warranties fail to be true and correct in all material respects or if there is an occurrence of an Event of Default under any other documents entered into by and between the City and Developer that are related to the Project.

ARTICLE 2.

DEVELOPER REPRESENTATIONS AND WARRANTIES

2.1 Duly Organized. Developer warrants that it is duly organized under applicable laws of the State of California, is qualified to do business in the City, and is in compliance in all material respects with all laws and regulations necessary to construct the Project.

2.2 Authority. Developer warrants that it has authority and has completed all proceedings and obtained all approvals necessary to execute, deliver, and perform its obligations under this Agreement and the transactions contemplated thereby.

2.3 No Contravening Agreements. Developer warrants that the execution, delivery, and performance of this Agreement and all associated documents will not contravene or constitute a default under or result in a lien upon assets of Developer pursuant to any applicable law or regulation, any charter document of Developer, or any instrument binding upon or affecting Developer, or any contract, agreement, judgment, order, decree, or other instrument binding upon or affecting Developer.

2.4 Valid and Binding Obligations. Developer warrants that, when duly executed by Developer, this Agreement constitutes the legal, valid and binding obligations of Developer enforceable in accordance with their respective terms. Developer hereby waives any defense to the enforcement of the terms of this Agreement related to alleged invalidity of any provisions or conditions contained therein.

2.5 No Adverse Action. Developer warrants that there is no action, suit or proceeding pending or threatened against it which might adversely affect Developer in any material respect as it relates to Developer’s performance under this Agreement.

ARTICLE 3.

DEVELOPER COVENANTS

3.1 Use of Proceeds. Developer covenants that it shall use the Grant Proceeds solely for the purpose of financing predevelopment costs in accordance with Section 1.2 hereof.

3.2 Notification. Developer covenants that it will promptly notify the City in writing of the occurrence of any event which might materially and adversely affect its ability to perform its obligations under this Agreement, or which constitutes, or with the giving of notice or passage of time or both would constitute, an Event of Default under this Agreement. Such occurrences include, but are not limited to, the threat or initiation of lawsuits or administrative proceedings against Developer that results in a final judgment, order or decree that has a materially adverse effect on the business of Developer and its ability to perform its obligations under this Agreement #: Ag-12077 - Page 3 of 11
Docusign Envelope ID: C3C5C9F2-8BFD-4FF2-84EC-7B5A25707D35

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 127, Packet Page 162

EXECUTION COPY
Madison Street Project
Grant Agreement
4 Agreement, the revocation of material operating licenses, or problems with vendors, suppliers, or customers that has a materially adverse effect on the business of Developer and its ability to perform its obligations herein.

ARTICLE 4.

INDEMNITY REQUIREMENTS

4.1 Indemnity. Developer shall defend (with counsel reasonably acceptable to City), hold harmless and indemnify the City and its elected and appointed officials, officers, agents and employees from and against all claims, liability, costs, expenses, loss or damages of any nature whatsoever, including reasonable attorney’s fees, arising out of or in any way connected with Developer's failure to perform its covenants and obligations under this Agreement, excluding the willful misconduct or the gross negligence of the City and its elected and appointed officials, officers, agents and employees. The indemnification provisions of this Section 4.1 of this Agreement shall survive the expiration of this Agreement.

ARTICLE 5.

DEFAULT AND REMEDIES

5.1 Events of Default. Each of the following events will constitute an event of default (“Event of Default”) under this Agreement:
(a) Noncompliance with this Agreement. Developer's failure, neglect or refusal to perform any promise, agreement, covenant or obligation contained in this Agreement after any applicable cure periods.
(b) Noncompliance with Governmental Requirements. Developer's failure to timely comply with any governmental requirements that are applicable to the Project. (c) False Representations. If any material representation or disclosure made to City by Developer in connection with this Agreement proves to be false or misleading in any material adverse respect when made.
(d) Bankruptcy. The filing by or against Developer of a voluntary or involuntary petition in bankruptcy or the adjudication of Developer as bankrupt or insolvent, or the filing of any petition or answer seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief under present or any future federal bankruptcy act or any other present or future applicable federal, state or other statute or law, or the seeking or consenting to or acquiescing in the appointment of any trustee, receiver, liquidator of Developer or any substantial part of or all of the property of Developer, and if any such proceeding is not dismissed within sixty (60) days; Developer is named in any such proceeding and the same is not dismissed within one hundred twenty (120) days.

Agreement #: Ag-12077 - Page 4 of 11
Docusign Envelope ID: C3C5C9F2-8BFD-4FF2-84EC-7B5A25707D35

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 128, Packet Page 163

EXECUTION COPY
Madison Street Project
Grant Agreement
5 (e) Occurrence of an Event of Default in Other Documents. If an event of default has been declared under any other documents entered into by and between the City and Developer that are related to the Project, subject to the expiration of any applicable cure periods.

5.2 Declaring Default. Whenever any Event of Default has occurred, the City shall give written notice of default to Developer. Unless provision under which the Event of Default arises specifies a shorter cure period for such default, upon the continuation of such default for thirty (30) days in the event of a monetary default or sixty (60) days in the event of a nonmonetary default following the Date of Default (defined below), or if the nature of any such nonmonetary default is such that it cannot be cured within sixty (60) days, then upon Developer's failure to commence to cure the default within sixty (60) days and thereafter prosecute and complete the curing of such default with due diligence and in good faith continue to cure the default until completion, but in no event shall the cure be completed more than one hundred twenty (120) days from the Date of Default, then the City may enforce its rights and remedies under Section 5.3 below. Any default that has occurred shall be deemed to commence on the date that written notice of default is effective pursuant to Section 5.1 of this Agreement (the "Date of Default"). In the event of a default in the payment of any payment when due, Developer shall have thirty (30) calendar days from the Date of Default.

5.3 Remedies. Upon the occurrence of any Event of Default, in addition to its other rights in this Agreement, and the Note, at law, or in equity, the City may exercise any one or more of the following rights and remedies:
(a) proceed at law, or in equity, to require Developer to perform its obligations and covenants under this Agreement; and
(b) proceed as authorized at law or in equity with respect to the Event of Default, and in connection with that, pursue any and all other remedies available under law to enforce the terms of this Agreement and the DDA.

The remedies provided herein are cumulative and not exclusive of, and shall not prejudice, any other remedy provided in any other document related to the Project.

5.4 Costs and Expenses. Developer shall pay all reasonable costs and expenses incurred by or on behalf of City including, without limitation, reasonable attorneys’ fees, incurred in connection with the City’s enforcement of this Agreement.

ARTICLE 6.

MISCELLANEOUS

6.1 Relationship of Parties. Nothing contained in this Agreement shall be construed as creating the relationship of employer and employee or principal and agent between City and Developer or Developer’s agents or employees, and Developer shall be wholly responsible for the manner in which it or its agents, or both, perform under this Agreement.

Agreement #: Ag-12077 - Page 5 of 11
Docusign Envelope ID: C3C5C9F2-8BFD-4FF2-84EC-7B5A25707D35

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 129, Packet Page 164

EXECUTION COPY
Madison Street Project
Grant Agreement
6 6.2 No Third Party Claims. Nothing contained in this Agreement shall create or justify any claim against the City by any third person whom Developer may have employed or contracted or may employ or contract relative to the purchase of any material, supplies or equipment, or the furnishing or the performance of any work or services with respect to any programs or projects being undertaken by Developer.

6.3 Conflict of Interest. Except for approved eligible administrative or personnel costs, no employee, agent, consultant, officer or official of the City or Developer who is in a position to participate in a decision-making process or gain inside information with regard to such activities assisted under this Agreement, may obtain a personal or financial interest in or benefit from the activities assisted under this Agreement, or have an interest, direct or indirect, in any contract, subcontract or agreement with respect thereto, or in the proceeds thereunder either for himself/herself or for those with whom he/she has family or business ties, during his/her tenure and for one year thereafter.

6.4 Notices. Any notice, request or consent required pursuant to this Agreement shall be deemed delivered upon receipt when delivered personally or by facsimile transmission, provided that a transmission report is generated reflecting the accurate transmission thereof, or three (3) business days after being deposited in the U.S. mail, first class postage prepaid, return receipt requested, or one (1) day after deposit with a nationally recognized overnight carrier addressed as follows:

City: City of Monterey
580 Pacific Street
Monterey, CA 93940
Attn: City Manager
Developer: MidPen Housing Corporation
275 Main Street, Suite 204
Watsonville, CA 95076
Attention: Vanessa Diffenbaugh, Associate Director of Housing or to such other addresses as the parties may designate by notice as set forth above.

6.5 Successors and Assigns. All of the terms of this Agreement shall apply to and be binding upon, and inure to the benefit of, the successors and permitted assigns of the City and Developer, respectively, and all persons claiming under or through them.

6.6 Attorneys' Fees. If any action is instituted by any Party to this Agreement to enforce this Agreement or to collect any sums due hereunder, the prevailing Party in such action shall be entitled to recover its costs and reasonable attorneys' fees as awarded by the court in that action.

6.7 Severability. If one or more provisions of this Agreement are found invalid, illegal or unenforceable in any respect by a court of competent jurisdiction, the remaining Agreement #: Ag-12077 - Page 6 of 11
Docusign Envelope ID: C3C5C9F2-8BFD-4FF2-84EC-7B5A25707D35

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 130, Packet Page 165

EXECUTION COPY
Madison Street Project
Grant Agreement
7 provisions shall not in any way be affected, prejudiced, disturbed or impaired thereby, and all other provisions of this Agreement shall remain in full force and effect.

6.8 Amendments/Entire Agreement. City and Developer reserve the right to amend this Agreement by mutual consent. It is mutually understood and agreed that no amendment, modification, alteration or variation of the terms of this Agreement shall be valid unless in writing and signed and acknowledged and approved by both parties. This Agreement constitutes the entire agreement of the parties and no oral understandings or agreement not incorporated herein shall be binding on either Party.

6.9 Time. Time is of the essence in the performance of the terms and conditions of this Agreement.

6.10 Governing Law. The laws of the State of California shall govern this Agreement.

6.11 No Personal Liability. Notwithstanding anything contained in this Agreement to the contrary, the obligations of the Parties under this Agreement (including any actual or alleged breach or default) do not constitute personal obligations of the individual officers or employees of the Parties, and no Party shall not seek recourse against the individual officers or employees of the other Party, or against any of their personal assets, for satisfaction of any liability with respect to this Agreement.

6.12 City’s Rights and Consent. No forbearance, failure or delay by City in exercising any right, power or remedy, nor any single or partial exercise by City of any right or remedy hereunder shall preclude the further exercise of such right, power or remedy.

City’s consent to any act or omission by Developer may not be construed as the City’s consent to any other or subsequent act or omission or as a waiver of the requirement to obtain City’s consent in any other instance. All of City's rights, powers and remedies are cumulative and shall continue in full force and effect until specifically waived in writing by City.

6.13 Duration/Survival. This Agreement shall continue in full force and effect until the issuance of a Certificate of Occupancy for the Project. Notwithstanding the foregoing, the indemnification provisions of Section 4.1 of this Agreement shall survive the expiration of this Agreement.

6.14 Headings. The headings within this Agreement are for the purpose of reference only and shall not limit or otherwise affect any of the terms of this Agreement.

6.15 Counterparts, Facsimile Copies. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same agreement. This Agreement shall be effective upon transmission by any Party to the other parties of a fully signed facsimile copy of the Agreement after the formal approval by the governing body of the City, so long as a copy of the Agreement signed by the transmitting Party is delivered to the other parties within five (5) business days thereafter. In case of any conflict, the counterpart maintained by the City shall be deemed to be determinative.

Agreement #: Ag-12077 - Page 7 of 11
Docusign Envelope ID: C3C5C9F2-8BFD-4FF2-84EC-7B5A25707D35

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 131, Packet Page 166

EXECUTION COPY
Madison Street Project
Grant Agreement
8 SIGNATURES ON FOLLOWING PAGE
Agreement #: Ag-12077 - Page 8 of 11
Docusign Envelope ID: C3C5C9F2-8BFD-4FF2-84EC-7B5A25707D35

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 132, Packet Page 167

EXECUTION COPY
Madison Street Project
Grant Agreement
9 IN WITNESS WHEREOF, the City and Developer have executed this Agreement as of the date first above written.

CITY OF MONTEREY,
a California charter city
________________________________
City Manager
ATTEST:
_______________________________
City Clerk
APPROVED AS TO FORM:
________________________
City Attorney

MIDPEN HOUSING CORPORATION,
a California non-profit housing corporation
By: __________________________________
Name:-RDQQD&DUPDQ
Title: $VVLVWDQW6HFUHWDU\
Agreement #: Ag-12077 - Page 9 of 11
Docusign Envelope ID: C3C5C9F2-8BFD-4FF2-84EC-7B5A25707D35

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 133, Packet Page 168

EXHIBIT A

LEGAL DESCRIPTION OF THE PROPERTY
The land referred to herein is situated in the State of California, County of Monterey, City of Monterey, and is described as follows:
$JUHHPHQW
$J3DJHRI
$
Docusign Envelope ID: C3C5C9F2-8BFD-4FF2-84EC-7B5A25707D35

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 134, Packet Page 169

EXHIBIT B

FORM OF REQUISITION
Requisition No. _____
Reference is made to that certain Grant Agreement, dated as of April ___, 2024 (the “Agreement”), by and between the City of Monterey, a California Charter City (the “City”) and MidPen Housing Corporation, a California nonprofit public benefit corporation (“Developer”).

Capitalized terms used herein and not otherwise defined shall have the meanings set forth in the Agreement.

Developer requests a disbursement of Grant funds in the amount of $___________ for the costs incurred by Developer or _______________________ on behalf of Developer for the following predevelopment costs:
______________________________
______________________________
______________________________
Attached are copies of the supporting bills and invoices for this request. _________Developer requests that the disbursement be made directly to the Developer in for costs incurred directly by Developer or a third-party contractor hired by Developer.

OR, IF APPLICABLE
_________Developer requests that the disbursement be made directly to City to pay for City services related to this disbursement request.

The disbursement of the amount specified above, when added to all previous disbursements of Grant Proceeds, will result in not more than $ _________________ of Grant Proceeds having been used reimburse the Developer for predevelopment costs related to the Project. The balance of the Grant remaining after disbursement of funds requested pursuant to this requisition is $ .

The disbursement of funds requested by this Requisition No. ______ is in conformity with the requirements of the Agreement.
_______________________________
Developer
Approval: City of Monterey
By _______________________________________
Agreement #: Ag-12077 - Page 11 of 11
Docusign Envelope ID: C3C5C9F2-8BFD-4FF2-84EC-7B5A25707D35

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 135, Packet Page 170 City Loan Agreement
Affordable Housing and Disposition Agreement
MidPen Housing Corporation

#20096185v1<ACTIVE> - Monterey - Madison Street DDA - Final 10-2-24 E-1

EXHIBIT E

INTENTIONALLY OMITTED

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 136, Packet Page 171 PLHA Loan Agreement
Affordable Housing and Disposition Agreement
MP Madison Street LP

F-1

EXHIBIT F

PLHA LOAN AGREEMENT

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 137, Packet Page 172 DocuSign Envelope ID: EB181E1C-3B47-4188-BAAB-5BA582755152

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 138, Packet Page 173 DocuSign Envelope ID: EB181E1C-3B47-4188-BAAB-5BA582755152

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Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 139, Packet Page 174 DocuSign Envelope ID: EB181E1C-3B47-4188-BAAB-5BA582755152

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 140, Packet Page 175 DocuSign Envelope ID: EB181E1C-3B47-4188-BAAB-5BA582755152 7/13/2023 | 4:13 PM PDT

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 141, Packet Page 176 DocuSign Envelope ID: EB181E1C-3B47-4188-BAAB-5BA582755152

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 142, Packet Page 177 DocuSign Envelope ID: EB181E1C-3B47-4188-BAAB-5BA582755152

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 143, Packet Page 178 DocuSign Envelope ID: EB181E1C-3B47-4188-BAAB-5BA582755152

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 144, Packet Page 179 DocuSign Envelope ID: EB181E1C-3B47-4188-BAAB-5BA582755152

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 145, Packet Page 180 DocuSign Envelope ID: EB181E1C-3B47-4188-BAAB-5BA582755152

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 146, Packet Page 181 DocuSign Envelope ID: EB181E1C-3B47-4188-BAAB-5BA582755152

EXHIBIT A
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Affordable Housing and Disposition Agreement
MP Madison Street LP
G-1

EXHIBIT G

INTENTIONALLY OMITTED

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 201, Packet Page 236 Schedule of Performance
Affordable Housing and Disposition Agreement
MP Madison Street LP
H-1

EXHIBIT H

SCHEDULE OF PERFORMANCE
(All dates set forth below are subject to change by mutual agreement of the Parties. Each performance deadline is conditioned upon all prior performance deadlines being met in a timely manner. Capitalized terms shall have the meanings set forth in the Disposition and Development Agreement.)

ACTION DATE
Execution and Delivery of Agreement by the Developer. The Developer shall execute and deliver the Agreement to the City. (Section 2.1.A.)
Within 4 business days of
receipt of executable copies
Execution of Agreement by City. The City shall hold a public hearing to authorize execution of this Agreement by the City. If authorized, the City shall execute and deliver this Agreement to the Developer.

Within 4 business days of
Effective Date
Submittal of Revisions to Architectural Drawings. The Developer has submitted revised architectural drawings to the City. (Section

2.1.C)
Within 15 days of Effective
Date
Submission – Preliminary Financing Plan. The Developer shall submit to the City for review and approval the Preliminary Financing Plan. (Section 2.2.A.2)
Within 30 calendar days of the
Effective Date.

Approval – Preliminary Financing Plan. The City shall approve or disapprove the Developer’s Preliminary Financing Plan. (Section

2.2.A.2).

Within 30 business days
following written receipt of the
Preliminary Financing Plan

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 202, Packet Page 237 Schedule of Performance
Affordable Housing and Disposition Agreement
MP Madison Street LP
H-2
Execution of Loan Documents. The Developer shall execute loan documents for the City Loan from the City under a separate loan agreement with the City (Section 2.2.B.3.b).

On or prior to Close of Escrow
Affordability Levels. The Parties shall mutually agree upon the affordability levels to be inserted in the City Regulatory Agreement Prior to TCAC application
submittal date.

Pre-Disposition Requirements. (Section 2.2.A). Prior to Close of Escrow.

Submission – Certificates of Insurance and Surety Information. The Developer shall furnish to the City duplicate originals or appropriate certificates of insurance policies and surety bonds (Section 3.9.A and 3.10).

Prior to the commencement of
construction
Governmental Permits. The Developer shall obtain any and all permits required by the City of any other governmental agency.

Prior to the commencement of
construction of the
Improvements.

Close of Escrow and Commencement of Construction of Project.

The Developer shall commence construction of Improvements.

Within 180 or 194 calendar
days after the award to the
Developer of a nine percent
(9%) tax credit preliminary
reservation or a four percent
(4%) tax credit preliminary
reservation as determined by
awarding agency.

Completion of Construction of Project. The Developer shall complete construction of the Improvements to be constructed on the Property (Section 3.8).

Within 30 months of
commencement of project, or
within deadlines established by
funding source used, either
TCAC or CDLAC.

Issuance – Final Certificate of Occupancy for Project. The City Promptly after completion of

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 203, Packet Page 238 Schedule of Performance
Affordable Housing and Disposition Agreement
MP Madison Street LP
H-3
shall furnish the Developer with the final Certificate of Completion (Section 3.14).
all construction required to be
completed by the Developer on
the Property and upon written
request therefore submitted by
the Developer.

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 204, Packet Page 239 Preliminary Site Plan
Affordable Housing and Disposition Agreement
MP Madison Street
I-1

EXHIBIT I

PRELIMINARY SITE PLAN

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 205, Packet Page 240 Memorandum of Affordable
Housing Disposition Agreement
MidPen Housing
J-1

EXHIBIT J
Form of Memorandum of Affordable Housing Disposition Agreement

RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:

City of Monterey
580 Pacific Street
Monterey, California 93940
Attn: City Clerk
This document is exempt from the payment of
recording fees pursuant to. Government Code Section
27383.

APN: (Space Above for Recorder’s Use Only)

MEMORANDUM OF AFFORDABLE HOUSING DISPOSITION AGREEMENT
This Memorandum of Affordable Housing Disposition Agreement (this “Memorandum”) dated as of _____________, 2024, is entered into by and between the City of Monterey, a California charter city (“City”), and MP Madison Street Associates, L.P., a California limited partnership (“Developer”). City and Developer are hereinafter collectively referred to as the “Parties.”

1. AHDA. The Parties have entered into that certain Affordable Housing Disposition Agreement dated as of ___________, 2024 (the “AHDA”), with respect to development of certain real property located on Madison Street between Dutra and Van Buren Street, known as Assessor Parcel Numbers 001-522-009, 001-522-010, 001-522-011, and a portion of 001-522- 015 (the “Total Property”), as more particularly described in Exhibit A attached hereto and incorporated herein by this reference. Capitalized terms used and not defined herein have the meaning set forth in the AHDA.

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 206, Packet Page 241 Memorandum of Affordable
Housing Disposition Agreement
MidPen Housing
J-2
2 Conveyance, Development. Pursuant to the AHDA, the Developer will (i) lease a portion of the Total Property from the City (such portion referred to as the “Property”) to develop, construct, own and operate a forty-two (42) unit (including one unrestricted manager unit) affordable rental apartment project (the “Project”) affordable to individuals and families earning between thirty percent (30%) and sixty percent (60%) of area median income, and (ii) construct certain Public Improvements (as defined herein) on the remainder of the Total Property (the “City Property”), all as set forth in the Scope of Development (the “Scope of Development”) attached to the ADHA.

3. Pursuant to this Agreement, the Developer will also enter into an Affordable Housing Regulatory Agreement and Declaration of Restrictive Covenants with the City prior to or concurrent with Close of Escrow (the “Regulatory Agreement”) that will restrict the rent to an affordable housing cost on certain units located in the Project.

4. Restrictions on Transfer. The AHDA further provides that prior to expiration of the term of the Regulatory Agreement: (i) except as permitted by the AHDA, Developer shall not voluntarily or involuntarily make or attempt any total or partial sale, transfer, conveyance, assignment or lease of the whole or any part of the Property or the improvements located thereon without the prior written approval of the City and/or Agency; and (ii) any transferee of all or part of the Property shall be subject to and shall expressly assume all of the covenants, obligations and restrictions of the AHDA which pertain to the portion of the Property transferred, including without limitation, the provisions of the Regulatory Agreement.

5. AHDA Controls. The Parties have executed and recorded this instrument to give notice of the AHDA and the respective rights of the Parties thereunder. Copies of the unrecorded AHDA are available at the offices of the City, City of Monterey, City Hall, 580 Pacific Street Monterey, CA 93940, Attn: City Clerk, and such document is incorporated by reference in its entirety in this Memorandum. This Memorandum is solely for recording purposes and shall not be construed to alter, modify, amend or supplement the AHDA. In the event of any inconsistency between this Memorandum and the AHDA, the AHDA shall control.

6. Interpretation; Counterparts. This Memorandum shall be interpreted and enforced in accordance with California law without regard to principles of conflict of laws. This

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 207, Packet Page 242 Memorandum of Affordable
Housing Disposition Agreement
MidPen Housing
J-3
Memorandum may be executed in counterparts, each of which shall be an original and all of which together shall constitute one instrument.

7. Binding Effect. The AHDA shall bind and inure to the benefit of the Parties and their respective successors and assigns, subject to the provisions of the AHDA concerning assignment.

8. Termination. Upon completion of construction of the Project in accordance with the AHDA, the restrictions upon transfer shall terminate and upon request City agrees to record a termination of this Memorandum.

SIGNATURES ON FOLLOWING PAGE

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 208, Packet Page 243 Memorandum of Affordable Housing Disposition Agreement
Madison Street Project
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first above written.

CITY MONTEREY
By: ________________________________
Hans Uslar, City Manager
ATTEST:

By: ___________________________
City Clerk
APPROVED AS TO FORM:

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 209, Packet Page 244

EXHIBIT A
Council Regular Meeting, 10/15/2024, Item No. 7., Item Page 210, Packet Page 245 Council
Agenda Report
FROM: Christine Davi, City Attorney
SUBJECT: Appeal of Jerod Balthrop of Dismissal from the Position of Electrician with the Public Works Department (Not a Project Under CEQA per Article 20, Section 15378 and Under General Rule Article 5, Section 15061)
RECOMMENDATION:

That the City Council consider Jerod Balthrop’s appeal of his dismissal from the position of Electrician with the Public Works Department. Mr. Balthrop requested that his appeal be presented during an open session of the City Council. Afterwards, the City Council will adjourn to closed session for deliberations and a decision.

VALUE DRIVERS:

Provide sufficient resources and support to develop, retain, and recruit a high-quality city workforce.

POLICY IMPLICATIONS:

The City’s primary policy at issue in this appeal is set forth in City Code section 25-3.03(a) which provides:

The City of Monterey is committed to providing a work environment that is free of discrimination, harassment, abusive conduct/bullying, and retaliation and will take all reasonable steps to prevent discrimination, harassment, abusive conduct/bullying and retaliation from occurring. This rule describes the City regulations designed to achieve this goal.

The City will not tolerate or condone discrimination, harassment, bullying/abusive conduct or retaliation prohibited by law, or as defined by this policy, of employees, applicants, unpaid interns, and volunteers, by any persons, including supervisors, coworkers, and third parties. This policy prohibits retaliation against individuals who report a violation of this policy or who assist in the City’s investigation of a complaint made under this policy. The City will take disciplinary action, up to and including termination, against an employee who violates this policy.

Additional policies are outlined in the administrative record.

CAMPAIGN DISCLOSURE REQUIREMENT (LEVINE ACT) APPLIES: Yes.

Date: 10/15/2024
Item No.: 9.

Council Regular Meeting, 10/15/2024, Item No. 9., Item Page 1, Packet Page 246 №10/24
FISCAL IMPLICATIONS:

The City paid approximately $7,332 for the personnel investigation. The City has also incurred outside counsel attorney’s fees and costs. Those costs are disclosable publicly upon the conclusion of this matter.

ENVIRONMENTAL DETERMINATION:

The City of Monterey determined that the proposed action is not a project as defined by the California Environmental Quality Act (CEQA) (CCR, Title 14, Chapter 3 (“CEQA Guidelines”), Article 20, Section 15378). In addition, CEQA Guidelines Section 15061 includes the general rule that CEQA applies only to activities which have the potential for causing a significant effect on the environment. Where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA. Because the proposed action and this matter have no potential to cause any effect on the environment, or because it falls within a category of activities excluded as projects pursuant to CEQA Guidelines section 15378, this matter is not a project. Because the matter does not cause a direct or any reasonably foreseeable indirect physical change on or in the environment, this matter is not a project. Any subsequent discretionary projects resulting from this action will be assessed for CEQA applicability.

ALTERNATIVES CONSIDERED:

No alternatives are available as this appeal is proceeding consistent with the stipulation of the parties.

DISCUSSION:

Mr. Balthrop was terminated from his employment on November 8, 2023. The investigation and grounds for his termination are set forth in the attached Administrative Record on Appeal. (Administrative Record “AR” pages 001-097.)
Mr. Balthrop invoked the alternative dispute resolution process pursuant to the General Employees of Monterey’s Memorandum of Understanding, Section 48, which provides as follows:

SECTION 48 ALTERNATIVE DISPUTE RESOLUTION PROCEDURES

48.1 The City and GEM agree to an alternative dispute resolution procedure (grievance and discipline appeals) where GEM may opt for non-binding advisory factfinding at the appeal step between the Department Head and City Manager.

The cost of the factfinder to be paid by GEM. The City Manager will have discretion to implement any or no part of the fact-finder’s recommendation.

On June 28, 2024, the arbitrator issued her Finding of Facts and Recommendation on Appeal.

The arbitrator did not recommend termination. (AR 537-552.) City Manager Hans Uslar considered the Findings of Fact and Recommendation on Appeal and upheld Mr. Balthrop’s termination of employment. (AR 591-599.) The City Council is now to consider Mr. Balthrop’s appeal of the City Manager’s decision. In order to ensure a fair hearing and due process, in-house and outside counsel have been retained to ensure a separation of functions as follows:

Council Regular Meeting, 10/15/2024, Item No. 9., Item Page 2, Packet Page 247 №10/24
 Department of Public Works: Arcelia Hurtado, Esq., Sloan Sakai Yeung & Wong, LLP (advocate role) and Christine Davi, City Attorney (evaluation/advisory role)  City Manager Hans Uslar: represented by Assistant City Attorney Karin Salameh (decision-maker advisor)
 City Council: represented by Thais Alves, Esq. Colantuono Highsmith & Whatley (decision-maker advisor)
Mr. Balthrop is represented by Garrett R. Porter, Esq, of the firm Mastagni Holsted, A.P.C.

Attachments: 1. Administrative Record on Appeal
e: Garrett R. Porter, Esq., Mastagni Holsted, A.P.C., counsel for Mr. Balthrop Arcelia Hurtado, Esq., Sloan Sakai Yeung & Wong, LLP
Thais Alves, Esq., Colantuono, Highsmith & Whatley, AP
Hans Uslar, City Manager
Karin Salameh, Assistant City Attorney
Andrea Renny, Public Works Director
Brette Neal, Human Resources Director
Writings distributed for discussion or consideration on this matter within 72 hours prior to the meeting, pursuant to Government Code § 54957.5, will be made available at the following link:
https://monterey.gov/Submitted-Comments
Council Regular Meeting, 10/15/2024, Item No. 9., Item Page 3, Packet Page 248 Administrative Record Index
Appeal to City Council
re. Jerod Balthrop
Tab Title Bates No.
1 Notice of Disciplinary Action – Termination with
attachments
AR 001 –
AR 097
2 Fully Executed Stipulation regarding Record on Appeal AR 098 – AR 099
3 Miscellaneous documents used by Arbitrator AR 100 –
AR 272
4 April 24, 2024, Transcript of Proceedings - Arbitration between LIUNA Local 792 and City of Monterey
AR 273 –
AR 492
5 June 06, 2024, Arcelia Hurtado, Esq, attorney for the Department of Public Works, Post-Hearing Brief re:

Arbitration hearing held April 24, 2024
AR 493 –
AR 524
6 June 06, 2024, Garrett Porter, Esq., attorney for Jerod Balthrop, Appellant’s Closing Brief re: Arbitration hearing held April 24, 2024
AR 525 –
AR 536
7 June 28, 2024, Finding of Facts and Recommendation
issued by Arbitrator Andrea Dooley
AR 537 –
AR 552
8 August 5, 2024, Transcripts re. Oral Arguments before the City Manager
AR 553 –
AR 590
9 August 19, 2024, Decision by City Manager, Hans Uslar AR 591 – AR 599
10 Notice of Appeal filed on behalf of Jared Balthrop dated September 03, 2024
AR 600 –
AR 601
11 September 17, 2024, Notice of Appeal Hearing before
the Monterey City Council
AR 602 –
AR 603
Council Regular Meeting, 10/15/2024, Item No. 9., Item Page 4, Packet Page 249 AR 001 Council Regular Meeting, 10/15/2024, Item No. 9., Item Page 5, Packet Page 250 AR 002 Council Regular Meeting, 10/15/2024, Item No. 9., Item Page 6, Packet Page 251 AR 003 Council Regular Meeting, 10/15/2024, Item No. 9., Item Page 7, Packet Page 252 AR 004 Council Regular Meeting, 10/15/2024, Item No. 9., Item Page 8, Packet Page 253 AR 005 Council Regular Meeting, 10/15/2024, Item No. 9., Item Page 9, Packet Page 254 AR 006 Council Regular Meeting, 10/15/2024, Item No. 9., Item Page 10, Packet Page 255 AR 007 Council Regular Meeting, 10/15/2024, Item No. 9., Item Page 11, Packet Page 256 AR 008 Council Regular Meeting, 10/15/2024, Item No. 9., Item Page 12, Packet Page 257 AR 009 Council Regular Meeting, 10/15/2024, Item No. 9., Item Page 13, Packet Page 258 AR 010 Council Regular Meeting, 10/15/2024, Item No. 9., Item Page 14, Packet Page 259 AR 011 Council Regular Meeting, 10/15/2024, Item No. 9., Item Page 15, Packet Page 260 AR 012 Council Regular Meeting, 10/15/2024, Item No. 9., Item Page 16, Packet Page 261 AR 013 Council Regular Meeting, 10/15/2024, Item No. 9., Item Page 17, Packet Page 262 AR 014 Council Regular Meeting, 10/15/2024, Item No. 9., Item Page 18, Packet Page 263 AR 015 Council Regular Meeting, 10/15/2024, Item No. 9., Item Page 19, Packet Page 264 AR 016 Council Regular Meeting, 10/15/2024, Item No. 9., Item Page 20, Packet Page 265 AR 017 Council Regular Meeting, 10/15/2024, Item No. 9., Item Page 21, Packet Page 266 AR 018 Council Regular Meeting, 10/15/2024, Item No. 9., Item Page 22, Packet Page 267 AR 019 Council Regular Meeting, 10/15/2024, Item No. 9., Item Page 23, Packet Page 268 AR 020 Council Regular Meeting, 10/15/2024, Item No. 9., Item Page 24, Packet Page 269 AR 021 Council Regular Meeting, 10/15/2024, Item No. 9., Item Page 25, Packet Page 270 AR 022 Council Regular Meeting, 10/15/2024, Item No. 9., Item Page 26, Packet Page 271 AR 023 Council Regular Meeting, 10/15/2024, Item No. 9., Item Page 27, Packet Page 272 AR 024 Council Regular Meeting, 10/15/2024, Item No. 9., Item Page 28, Packet Page 273 AR 025 Council Regular Meeting, 10/15/2024, Item No. 9., Item Page 29, Packet Page 274 AR 026 Council Regular Meeting, 10/15/2024, Item No. 9., Item Page 30, Packet Page 275 AR 027 Council Regular Meeting, 10/15/2024, Item No. 9., Item Page 31, Packet Page 276 AR 028 Council Regular Meeting, 10/15/2024, Item No. 9., Item Page 32, Packet Page 277 AR 029 Council Regular Meeting, 10/15/2024, Item No. 9., Item Page 33, Packet Page 278 AR 030 Council Regular Meeting, 10/15/2024, Item No. 9., Item Page 34, Packet Page 279 AR 031 Council Regular Meeting, 10/15/2024, Item No. 9., Item Page 35, Packet Page 280 AR 032 Council Regular Meeting, 10/15/2024, Item No. 9., Item Page 36, Packet Page 281 AR 033 Council Regular Meeting, 10/15/2024, Item No. 9., Item Page 37, Packet Page 282 AR 034 Council Regular Meeting, 10/15/2024, Item 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046 Council Regular Meeting, 10/15/2024, Item No. 9., Item Page 50, Packet Page 295 AR 047 Council Regular Meeting, 10/15/2024, Item No. 9., Item Page 51, Packet Page 296 AR 048 Council Regular Meeting, 10/15/2024, Item No. 9., Item Page 52, Packet Page 297 AR 049 Council Regular Meeting, 10/15/2024, Item No. 9., Item Page 53, Packet Page 298 AR 050 Council Regular Meeting, 10/15/2024, Item No. 9., Item Page 54, Packet Page 299 AR 051 Council Regular Meeting, 10/15/2024, Item No. 9., Item Page 55, Packet Page 300 AR 052 Council Regular Meeting, 10/15/2024, Item No. 9., Item Page 56, Packet Page 301 AR 053 Council Regular Meeting, 10/15/2024, Item No. 9., Item Page 57, Packet Page 302 AR 054 Council Regular Meeting, 10/15/2024, Item No. 9., Item Page 58, Packet Page 303 AR 055 Council Regular Meeting, 10/15/2024, Item No. 9., Item Page 59, Packet Page 304 AR 056 Council Regular Meeting, 10/15/2024, Item No. 9., Item Page 60, Packet Page 305 AR 057 Council Regular Meeting, 10/15/2024, 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AR 092 Council Regular Meeting, 10/15/2024, Item No. 9., Item Page 96, Packet Page 341 AR 093 Council Regular Meeting, 10/15/2024, Item No. 9., Item Page 97, Packet Page 342 AR 094 Council Regular Meeting, 10/15/2024, Item No. 9., Item Page 98, Packet Page 343 AR 095 Council Regular Meeting, 10/15/2024, Item No. 9., Item Page 99, Packet Page 344 AR 096 Council Regular Meeting, 10/15/2024, Item No. 9., Item Page 100, Packet Page 345 AR 097 Council Regular Meeting, 10/15/2024, Item No. 9., Item Page 101, Packet Page 346 1 FACTUAL STIPULATIONS OF THE PARTIES

IN THE PROCEEDINGS BEFORE

ANDREA DOOLEY, ARBITRATOR

GENERAL EMPLOYEES OF MONTEREY
Union,
and

CITY OF MONTEREY,
Employer.
(Jerod Balthrop Termination)
Before Arbitrator ANDREA DOOLEY
Hearing Date: TBD

STIPULATION OF THE PARTIES REGARDING RECORD ON APPEAL
WHEREAS:

The parties have an opportunity to present a full factual record regarding Jerod Balthrop’s (“Balthrop”) termination in front of Arbitrator Andrea Dooley in a non-binding advisory factfinding hearing pursuant to Section 48 (Alternative Dispute Resolution Procedure) of the Memorandum of Understanding between the City of Monterey (“City”) and the General Employees of Monterey (“GEM”). This hearing will hereafter be referred to as the “Dooley FactFinding Hearing.” THE PARTIES STIPULATE THAT:

1. The evidentiary record created during the Dooley Fact-Finding Hearing, including exhibits, witness testimony, and the transcript of proceedings, will be the evidentiary record that will be relied upon all subsequent disciplinary appeal steps provided for under the Monterey City Code (“MCC”), including any appeal to the City Manager under MCC Section 25-14.09 and any AR 098
Council Regular Meeting, 10/15/2024, Item No. 9., Item Page 102, Packet Page 347 2 FACTUAL STIPULATIONS OF THE PARTIES
appeal to the City Council under MCC Section 25-14.10.

2. The City and Balthrop waive any right to present any further evidence, including exhibits and witness testimony, during either the City Manager appeal hearing under MCC Section 25-14.09 or the City Council appeal hearing under MCC Section 25-14.10. However, this stipulation does not prohibit either the City or Balthrop and/or their representatives from presenting additional oral argument during either of these disciplinary appeal steps provided that the oral argument is limited to the evidentiary record created during the Dooley Fact-Finding Hearing. The duration of any oral argument will be limited to 30 minutes for each party.

Dated: SLOAN SAKAI YEUNG & WONG LLP
By:

ERIC F. DELLA SANTA
Attorneys for Employer

CITY OF MONTEREY
Dated: MASTAGNI HOLSTEDT, A.P.C.

By:

GARRETT PORTER
Attorneys for JEROD BALTHROP
3/13/24
3/13/24
AR 099
Council Regular Meeting, 10/15/2024, Item No. 9., Item Page 103, Packet Page 348

CITY OF MONTEREY

CONFIDENTIAL MEMORANDUM
ATTENDEES: Andrea Renny, Public Works Director
Brette Neal,Human Resources Director
Thom Levendowski, Deputy Public Works Director/Administration Jerod Balthrop, Electrician
Ryan Heron, Two-Way Labor Relations Representative
SUBJECT: Skelly Meeting
Okay, so we are here for the Skelly meeting that you requested and you have a representative, Ryan, with you. And so um,you have the letter and the investigation and I know you guys did receive an email for additional information that we had requested.

Andrea:

JB: Yeah, yeah
AR: Okay
I did get that, thank you.

Okay, so gentlemen,I'm going to pass this on to you,if you want to add um, XXXX XXX, you know, one analogy is that I have been truthful from the get go and I don't exactly remember what transpired since it was 6 months later and I was angry and I thought, considered a friend of mine and she called me a liar a couple of times and so it angered me and I couldn't control my anger, which I apologized for that, um, and I said something I shouldn't have said in that angry moment.

You know, um,I just XXX, really, escalated, mainly with XXX H just want to tell you I'm sorry and I had told the truth,it was nothing sexual at all to her. Um,as I said,Iconsidered her a good friend, all three girls that work there. If you interview them as well,they will tell you,um, and then I got my feeling hurt and she called me a liar for trying to do my job. So, um, a lot of it,is not what it seems,it's not the way it happened,the way they made it seem, um, and um, so um,I want to say,I'm sorry um, I mean,I don't feel that a termination is,for a crime up to 24 years of being here and never being in trouble its heart sickening for what really happened and um I brought in something that I was employee of the year in 2005. I got this um,from Coronel Ramsey for pulling that 72 year old lady out of a burning car in front of the DU while on duty. I've had um, six awards from previous colonels. I have much more at home for work going above and beyond and I've gotten two years' awards for quality control for doing that. Um, you know,I have always been an above and beyond employee for the City,I've always gone out of my way to do a good job. Irealize that was very unprofessional at the time and um and I would like to write her an apology letter or send a letter I am willing to do whatever you guys feel I need to do; anger management classes, time-off without pay. I can see there needing to be a disciplinary measure for what I did.I'm owning it. I did say that I would accept it,I don't care for the way she does business for the Army, she treats them and over the years I've grown to not like her very much because of that. She doesn't follow her procedures with the Army. She tries to sneak stuff through and have the City do it and when you have trouble but um and that is one of the reasons, and I don't know why I care or JB:

AR:

JB:

AR 100
Council Regular Meeting, 10/15/2024, Item No. 9., Item Page 104, Packet Page 349 mentioned that or made me say that so urn but huh that part of it is true and I've said it from the beginning,I did say that,I'm not going to try and lie about it. Urn, but the XXX I did not do, and they weren't in junction with each other,and urn,I did not,I didn't slap my legs like I said in the original interview down low but it wasn't five minutes later when she made the sandwich as I was leaving.They made it seem like I went, you know and I don't if I went something like this right after which didn't take place like that and I'm not particularly able to do that standing up. I'm not,I have a doctor's letter.

A clarifying question then, so just to make clear what you are saying,is that you didn't say the words at the same time that you did the gesture?
AR:

JB: No,I just said what I said XXX,I said that.

AR No,I understand, XXX not at the same time with a gesture? :

No, no, it was not. It wasn't for 5 minutes later when she made my sandwich and I was leaving,I did the gesture or not. That's when I touched my leg,the top side of the leg. I wasn't facing her when I did that I was facing the door leaving. I grabbed my sandwich and was leaving and I was thinking about it, and I'm like, literally I can't purposely do it,I,I can't put my hands in a "V" to my groin standing up.

There is a reason, XXX
JB:

RH:

Note from my doctor, he just gave me a physical three weeks ago. I'll show you standing up. My stomach and my arm reach. I can't even put it to my groin. You see that, right? Does it look like I can reach my groin? So,I'm saying I didn't do that. I want to fess up and be honest for what I did do,I did say that, yes, and I said that from the get go, and I realize I shouldn't have done that.I do,it was unprofessional and I understand there needs to be some discipline,I do,but at the same time,I don't want to take blame for something I didn't do and I didn't do those things.

JB:

RH:It becomes irrelevant is XXX,there's this conclusion by the investigator. It was reported that you were not fully honest by saying that you know XXX
JB: XXX
RH: Did you hit your leg here,here, XXX
JB: Hit my leg XXX
RH XXX You know; you weren't fully honest :

XXX,honest and truthful,in the interview he said that. JB:

Jerod is charged with a handful of things,justified XXX which we don't believe is appropriate because if you listened to the interviews, you know,first the person that originally filed the complaint, Lt. Sanchez, you know,in his own words, stated that he interpreted it more like an "F You"then something sexual which we agree with.Obviously, XXX, not that that is okay, XXX I admit that this is unprofessional for some level of discipline but we don't feel that sexual harassment charge is appropriate or should be upheld. We are asking for that to be dropped off. The inefficiently, the neglect of duty charges, we don't feel are appropriate either because for one,Jerod was on break when this happened so he wasn't even attending to his duties.

RH:

AR 101
Council Regular Meeting, 10/15/2024, Item No. 9., Item Page 105, Packet Page 350 XXX I was responsible for it now. I was going on my 10:00 break,I was walking around like I normally do. I saw the door open and it was raining and storming because it was January. Then i saw the lights flicker, well they flickered three times but the power was about ready, when the closer switch opens,that's it, you're done. Hours without power. It would happen three times,it would flicker, once, twice,three times after that you're done. You're not going to have power. The reason why it was relevant to me because I'm the one that has to hook up the generator,I'm the one that has to order the generator for the PX because they have a bunch of refrigeration and freezer equipment stocked full of food, so if we let the power go off too long on that equipment,they would lose $60,000 worth of food and 6 hours or more than that without refrigeration kicking them on. So that is why I was looking at the lights, because I thought they were going to flicker because of the storm. That's when Itold her,I'm looking at the lights, she said,"no, you're not, you're lying" I said "no, no,I'm looking at the lights,I thought I saw them flicker." She said "You're just trying to walk through here. I specifically said you guys can't come through here no more." I'm like "I don't even come through here. I don't have a key to the door XXX. But,I was like when she told me that, she was accusing me of not doing my job,Ithought she was my friend and it hurt my feelings you know, being called a liar you know. I'm trying to do my job.

You know what Imean.

JB:

XXX the proposed discipline and the citation of the City code section cited. We don't feel it appropriate to call it neglect or inefficiently of duty because that would have to do with like if you didn't handle an assignment that you were assigned to do or you did a poor job of something. I personally feel like it's a little bit of a reach to say that. We do feel like he is certainly guilty of unprofessional behavior and conduct. We feel like he has been honest, we don't feel like the dishonestly charge...

RH:

AR: Can I ask a clarifying question?
RH: Of course, go ahead.

So just to clarify, when you're saying, so you don't have keys to the Subway shop? AR:

JB: No
Okay,so, so our Presidio keys or Building Maintenance keys wouldn't open the shop AR:

RH: The door was open
No, not any of them would work on the door for Subway or any shop XXX,it was wide open.She wasn't supposed to have it open. That's why she yelled at me for going through it. She had even been written up for it a couple of times for having it open. The flies come in and they told her to keep the door closed but it gets real hot because of the oven because they bake the bread everyday there. So she opens the door,she's the only one there. She had the door open. I heard her getting yelled at before for it,for that. So that is how I know but, you know,that's not why I was going in there. I haven't been through that door in 15 years, 14 years. XXX I could see the light through the door as I was walking in because you could see the lights in there, and that is why I was investigating really quick to see if the building was going to go out or not. Then I'm screwed, there is no break for me. I have to go run and call XXX, big old cables, you know, so,it's kind of a misunderstanding. The XXX guy has had it out for me. I filed a grievance on him,10 days prior to even getting this or knowing what happened here.It's with the Federal Government on him for harassment. Everything he put in there, said that I did was unprofessional on those grounds was actually kind of harassing coming in the gate and I have proof that JB:

AR 102
Council Regular Meeting, 10/15/2024, Item No. 9., Item Page 106, Packet Page 351 he is lying. He said I came 2 or 3 times 4 times and my life long gripe and I'm a follower at 6 in the morning. We don't work at 6 in the morning, we're here at 7:30 it was already daylight. It is provable, you can look on the computer.

RH: You never come through the gate
I never came through at 6 in the morning. You know our hours 7:00 to 4:30, correct? XXX um, so I mean, XXX that's from the contractor from the last time I walked somebody in, was him, and that was the procedure before I went out on my knee injury and came back. So I hadn't had to bring somebody in to look at work since him. He was the last one I brought in and it was a practice that they allowed us do that if the person was in a City car. He wrote that I was trying to uh, bring people without following procedure and all this stuff. That is a complete lie. That's proof that he is lying. That was standard procedure at the time. That's when I did it,I didn't know and I told him that."Hey,I'm sorry. The last time I brought somebody this was okay." And he said,"You know better than that, you are just trying to always get away with everything" screaming at me. Chuck Powers was with me. And ! said,"Hey,no problem, we will fill out whatever you need filled out. No problem,I didn't know." You know and he said a bunch of other stuff. But that is what he was saying I was calling,trying to get away with not following directions up there, when I never did that. This proves it.

JB:

RH Did you ever have any other issues with any of the other base guards? :

No, no they all love me. Even the Captain up there know me, 20 plus years, XXX Captains Noah, Davis XXX I don't have problems with anybody up there, nobody. I mean XXX,I wouldn't have any problems with anybody up there. It's just this one guard. He started harassing me because he likes this girl.She told him that we had this little disagreement and then he started harassing me every day after that. Every time I'd see him, he would harass me. That's why I filed a grievance on him with the people.

Why would I file a grievance on him if I didn't even know he did this? Ten days later I got called in and questioned about this. I didn't know that he was the one that did it. Right? That's kind of the context,right? Background context that shows that the credibility is called into question. The investigator concludes that they were credible and Jerod was not physically XXX of kind of has an ax to grind with Jerod who has never had any other issues with any other Army personnel.

After that he was the nicest XXX every time I would go through. There was never a problem.

Nice man and he said I covered my Dbids card with a stamp code to make it hard for them.I'm like "why would I do that?"I had my card out the XXX window ready to go.I've never done anything like that,you know and that just goes to show you that that guy is a liar and I can prove it if you look on my scan code on that day. It will be at 7:25, not at 6:00 am. XXX is straight provable. If there are cameras at Subway, it will show them leaving right when I walked in.I was there for probably 30 seconds and they left.

JB:

RH:

JB:

RH: You don't believe that you can actually witness
No, no I don't. They were leaving when I walked in. Me and her had that three minute conversation,four minute conversation and they were leaving as soon as I walked through the door, when I first started talking to her, they heard, as they were leaving she handed the XXX the change and they had their sandwiches and they were walking off XXX. If there was a camera there,by all means, it will prove that I'm telling you the truth. I don't have a reason to lie about it. To be honest with you. But I just want you guys to see the whole story,not just something thrown together to make it look like I'm a JB:

AR 103
Council Regular Meeting, 10/15/2024, Item No. 9., Item Page 107, Packet Page 352 sexual predator or something. I wouldn't do that, you know. I did say something wrong, and I understand that it wasn't professional. I do agree with that. I do agree that I should be punished for that but at the same token, I don't want to lose my job over something, half of it,I didn't even do.

So one more clarifying question. So when you are saying when you say the words,it was just you the crews weren't there anymore.

AR:

JB: No
AR Nobody else was there? It was just you. :

JB: No, just me and her, yeah.

AR: Okay.

They already walked off. When you leave Subway, you go up that center aisle at the mall type you know where the haircut place is, you walk through the center and go back through the main entrance to go out. There is actually a big, old wall there. When you reach Subway and you start walking that way,there is a big, huge wall and you can't see anything. And they were gone. That's why I said, "How did they witness,they witnessed me do all this stuff,they weren't even there" but it's his vendetta against me. That he was harassing me after that. I really didn't even do those things. He's lying,he's a liar.I can prove it.

JB:

So, so with regards to the charge of dishonestly, you know, we obviously you know, we object to that. We feel that Jerod was honest in the interview. They used the supposed credibility of these other witnesses to undermine the credibility of Jerod, but we feel like there are certainly credible issues with these other people based on some of the We things that we just pointed out. We also feel that it is not appropriate for Jerod to take a break and talk with his representatives during the interview. It feels almost if he investigator was using that against him."Oh, you're changing your story after you came back and talked with your rep privately." When first of all,that break was at the investigators suggestion. He said to Jerod,"Why don't you take a break and talk with Ryan." And he said,"Oh, okay, that's a good idea, we will come right back." Upon returning from that break,Jerod said,"you know what, yeah,that did happen, I did do that" and there was no hesitation,there was no dishonestly there at all. But it wasn't an hour forty plus minutes interview like the investigator suggests.It was only a couple of minutes from the point when he began asking the questions about whether or not this incident happened. Counting the whole hour and forty minutes, counts from XXX points from the interview like, how long have you worked for the City, what's your name, how many years, what's your assignment type of stuff. It's not that long, not an hour forty minutes of denying it. Of saying that never happened. XXX Regardless, during the interview,the initial interview,Jerod confessed and said,"yeah,I did that and I'm sorry." And the investigator even thanked him and said,"thank you for being truthful" RH:

JB: And honest
And honest. And also said that,for what it's worth,I expect you to get through this, no problemo. I would expect was the quote he used. Not that he was responsible for deciding the level of discipline. But, he was at that point thankful for the honesty and we felt that Jerod was fully open and honest during that interview. When he was initially asked some of these questions: one,it was six or so months following the incident so it wasn't really fresh on his mind. He wasn't really told ahead of time RH:

AR 104
Council Regular Meeting, 10/15/2024, Item No. 9., Item Page 108, Packet Page 353 what he was being interview about. So he wasn't thinking about this and blindsided by it.It wasn't until we had an opportunity to talk about it,think about it. He said,"oh yeah, now I'm recalling it, that did happen." He was open and honest with the interviewer. So we certainly don't feel that it is appropriate to hold it again him that he didn't remember it right away. And that he needed to XXX to talk privately with his rep that he is entitled to have during the interview like that. So we can certainly add that the XXX charge be dropped from the XXX,inefficiency to duty or lack of duty or essential harassment for what we feel is appropriate is certainly XXX is unprofessional. Definitely unprofessional. Unacceptable, we are not here today to excuse it or down play it. Like it's not no big deal. We are asking you to consider a reduction in the level of discipline. Something below termination. Jerod,I don't it can be understated,that 24 years of service to this City with zero disciplinary action, never a counseling memo, never a letter of reprimand, never an evaluation that was anything less than high performance,lots of accommodations, employee of the year.

JB: No one has this XXX in the whole department.XXX
RH: XXX, so if he acted inappropriately with a...

JB: Bad decision
Poor judgement, bad decision,the wrong thing to do,absolutely. We are not going to downplay that or try and deny it. But we don't feel that it is worthy of losing his job, XXX his quarter of a centur/ of service to the City that is unblemished. And we are just asking for another chance.

RH:

I have three XXX that are grown. XXX I need a job. So I'm truthfully am sorry.If you give me another chance. I know that it will never happen again.

I think that is important to highlight too,if you do give him another chance and bring him back to work, you will be getting back a high quality employee who is going to be able to be professional, learned his lesson,it's not going to happen again.I certainly think the track record of 24 years of service, with it never happening before. He is able to work and be professional and not have issues like that and he had been working for the last several months since this investigation began without incident so you can have a peace of mind to know if you bring him back you know that you will have a high quality employee.

JB:

RH:

Swap buildings with Don and never have to go to that building and see her or XXX at all.I could take one of his buildings XXX,not Subway and he then could take that one and I wouldn't have contact with those people for any reason. I would still be professional of course. Just to make sure, XXX.

JB:

RH: We would do whatever it takes.

JB: I would do whatever it takes.

RH: Certainly what other people have done similar things or worse things and not been terminated from their positions. We just asking for that second chance.

AR: XXX
If you would like,I can make you a whole set. JB:

AR: XXX
AR 105
Council Regular Meeting, 10/15/2024, Item No. 9., Item Page 109, Packet Page 354 JB I have a bunch more at home too. :

RH: These aren't all copies
JB: No, I got XXX
BN This is a Skelly hearing, XXX
RH: You need to make copies, XXX on the Xerox machine
BH: Well,I can go and make a copy.

JB Okay, sure, yeah, if you would. :

BN: XXX, put that out there.

XXX I got an award from SATCOM from Camp Roberts XXX and a XXX it was from when I first took over, pulling a lady from the car that was on fire.

Yeah, so if you could make copies of all that stuff. Appreciate that.

JB:

RH:

BN: XXX
So if you guys can give me another chance. JB:

Yeah, XXX details that we can pick into and break down with regards to this investigation, but I think ultimately at the end of the day,it comes down to a relatively straight forward thing. A one-time incident that was an error of judgement on a bad day and Jerod's very long track record is one XXX that a disciplinary action should be corrective and not punitive and I think the behavior is the message of the time. Jerod knows that what he did was wrong and it will never happen again.Something that happened one time in 24 years, so we are asking for that second chance.

We have been a little stressed up there. We have short two Electricians for 2 % years so me and Don have been getting dumped on with guys extra work every day minimum. We haven't had extra people in our Department to be able to have people help us because they are short-handed too. They have short on hiring people, as you know, probably. So that you know, probably had added a little bit to structural facture XXX. I'm not saying what I did was right, by any means,I was wrong, but I had been real stressed out the last couple of month over there because of the work load issue and stuff. I made a mistake,I'm sorry,it won't happen again and I'm willing to take any discipline you guys are willing to impose for what I did do.

RH:

JB:

AR Ryan, do you want to add anything or.. :

RH: No, I don't think so.

Okay. Alright, with that, we are concluding the Skelly meeting. AR:

AR 106
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AR 108 Council Regular Meeting, 10/15/2024, Item No. 9., Item Page 112, Packet Page 357 AR 109 Council Regular Meeting, 10/15/2024, Item No. 9., Item Page 113, Packet Page 358 AR 110 Council Regular Meeting, 10/15/2024, Item No. 9., Item Page 114, Packet Page 359 AR 111 Council Regular Meeting, 10/15/2024, Item No. 9., Item Page 115, Packet Page 360 AR 112 Council Regular Meeting, 10/15/2024, Item No. 9., Item Page 116, Packet Page 361 AR 113 Council Regular Meeting, 10/15/2024, Item No. 9., Item Page 117, Packet Page 362 GEM MOU July 1, 2022 – June 30, 2024 Page 1 of 32
10120812.1 MO475-018

MEMORANDUM OF UNDERSTANDING
between the

CITY OF MONTEREY
and the

GENERAL EMPLOYEES OF MONTEREY (GEM) /

LABORERS INTERNATIONAL UNION OF NORTH AMERICA (LIUNA) / UNITED PUBLIC EMPLOYEES OF CALIFORNIA (UPEC), LOCAL 792,

AFL-CIO
July 1, 2022 through June 30, 2024
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Table of Contents
SECTION 1 RECOGNITION AND IMPLEMENTATION ................................................................................4 SECTION 2 TERM AND EFFECT OF MEMORANDUM OF UNDERSTANDING ...........................................4 SECTION 3 SALARY ..................................................................................................................................5 SECTION 4 LONGEVITY PAY.....................................................................................................................5 SECTION 5 STEP ADVANCEMENTS..........................................................................................................5 SECTION 6 INSURANCE PLAN..................................................................................................................6 SECTION 7 RETIREMENT..........................................................................................................................8 SECTION 8 BENEFITS DURING WORKERS COMPENSATION & SHORT TERM DISABILITY PLAN ......10 SECTION 9 UNIFORM ALLOWANCE .......................................................................................................10 SECTION 10 SHOE REIMBURSEMENT .....................................................................................................11 SECTION 11 TOOL ALLOWANCE..............................................................................................................12 SECTION 12 STAND-BY AND COMPENSATION .......................................................................................12 SECTION 13 CALL BACK ..........................................................................................................................13 SECTION 14 COMPENSATORY TIME OFF ................................................................................................13 SECTION 15 HOLIDAY TIME......................................................................................................................14 SECTION 16 OVERTIME ............................................................................................................................15 SECTION 17 FLOATING HOLIDAY ............................................................................................................15 SECTION 18 NIGHT SHIFT DIFFERENTIAL ...............................................................................................15 SECTION 20 BILINGUAL PROGRAM AND COMPENSATION....................................................................16 SECTION 21 EDUCATION INCENTIVE PLAN.............................................................................................18 SECTION 22 TUITION REIMBURSEMENT .................................................................................................18 SECTION 23 MINIMUM LEAVE EVENTS....................................................................................................18 SECTION 24 VACATION SCHEDULE AND MAXIMUM ACCRUAL.............................................................18 SECTION 25 VOLUNTARY UNPAID LEAVE...............................................................................................19 SECTION 26 SICK LEAVE..........................................................................................................................20 SECTION 27 MATERNITY AND PARENTAL LEAVE ..................................................................................22 SECTION 28 PROBATION PERIOD DURATION.........................................................................................22 SECTION 29 RECLASSIFICATION.............................................................................................................22 SECTION 30 EMPLOYEE ASSISTANCE PROGRAM .................................................................................23 SECTION 31 DRUG AND ALCOHOL TESTING ..........................................................................................23 SECTION 32 WELLNESS PROGRAM ........................................................................................................25 SECTION 33 FITNESS ACTIVITY PLAN .....................................................................................................25 SECTION 34 BICYCLE COMMUTER PROGRAM .......................................................................................26 SECTION 35 BARGAINING UNIT STATUS FOR POSITION CLASSIFICATIONS-NOTICE PROCEDURE...26 SECTION 36 CITY EMAIL...........................................................................................................................27 SECTION 37 PERIODIC MEETINGS...........................................................................................................27 SECTION 38 BENEFITS COMMITTEE........................................................................................................27 SECTION 39 PERSONNEL RULES AND REGULATIONS ..........................................................................28 DocuSign Envelope ID: CEC5C45A-77AC-4129-A676-53E7A4680FBB DocuSign Envelope ID: 98C50369-AC5E-4596-BA52-C3B857174BBE AR 115
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SECTION 40 FLEXIBLE AND REMOTE SCHEDULING ..............................................................................28 SECTION 41 MEDICARE OPTION..............................................................................................................28 SECTION 42 DEFERRED COMPENSATION...............................................................................................28 SECTION 43 RETIREMENT HEALTH SAVINGS PLAN...............................................................................29 SECTION 44 WORKING OUT OF CLASS...................................................................................................29 SECTION 45 GROUP LEGAL SERVICES...................................................................................................29 SECTION 46 ALTERNATE STAFFING – ENGINEERING CLASSIFICATIONS............................................29 SECTION 47 CITY CEMETERY SERVICES ................................................................................................29 SECTION 48 ALTERNATIVE DISPUTE RESOLUTION PROCEDURE ........................................................30 SECTION 49 USE OF VOLUNTEERS .........................................................................................................30 SECTION 50 CITY RECREATION PROGRAM FEES ..................................................................................30 SECTION 51 MINIMUM SHIFT CHANGE NOTIFICATION FOR NON-EMERGENCY SITUATIONS..............30 SECTION 52 PROVISIONS OF LAW...........................................................................................................30 SECTION 53 CONTRACTING OUT.............................................................................................................31 SECTION 54 FULL UNDERSTANDING, MODIFICATION AND WAIVER.....................................................31 DocuSign Envelope ID: CEC5C45A-77AC-4129-A676-53E7A4680FBB DocuSign Envelope ID: 98C50369-AC5E-4596-BA52-C3B857174BBE AR 116
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MEMORANDUM OF UNDERSTANDING
between the

CITY OF MONTEREY
and the

GENERAL EMPLOYEES OF MONTEREY (GEM) /

LABORERS INTERNATIONAL UNION OF NORTH AMERICA (LIUNA) / UNITED PUBLIC EMPLOYEES OF CALIFORNIA (UPEC), LOCAL 792, AFL-CIO July 1, 2022 through June 30, 2024
This Memorandum of Understanding is entered into pursuant to the Meyers-MiliasBrown Act (Government Code Sections 3500-3510) and the Employer-Employee Relations Resolution of the City of Monterey and is made by and between authorized representatives of the City of Monterey (hereinafter referred to as "City"), and the General Employees of Monterey (hereinafter referred to as "Union").

SECTION 1 RECOGNITION AND IMPLEMENTATION

1.1. The City hereby recognizes the Union as the exclusive bargaining agent for all employees within the bargaining unit.

1.2. This Memorandum of Understanding (MOU) constitutes a mutual recommendation to be jointly submitted to the City Council. It is agreed that this Memorandum of Understanding shall not be binding upon the parties either in whole or in part unless and until ratified by the Union’s membership, and unless and until the City Council acts, by a four-fifths (4/5) vote, to formally approve this Memorandum of Understanding. It is understood by the parties that the City Council must, as a part of the implementation, appropriate the necessary funds required to implement the provisions of this Memorandum of Understanding which require funding; and take any other action required.

SECTION 2 TERM AND EFFECT OF MEMORANDUM OF UNDERSTANDING

2.1. This Memorandum of Understanding shall be effective on July 1, 2022 and shall remain in full force and effect through June 30, 2024. It is understood and agreed that the terms, conditions, wages, and all provisions of this Memorandum of Understanding shall continue in effect after June 30, 2024 until a new Memorandum of Understanding is negotiated and subsequently ratified by the Union and the City Council, or until this Memorandum of Understanding is superseded by action of the City Council.

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SECTION 3 SALARY

3.1. Salary Adjustments

3.1.1. For 2022-2023 fiscal year:
a. Effective September 16, 2022 salary schedules shall increase by

4.0%. In addition to the wage increase above, each employee will receive a one-time lump sum payment of $500.00.

3.1.2. For 2023-2024 fiscal year:
a. First full pay period following July 1, 2023, salary schedules increase by 4.0%. In addition to the wage increase above, each employee will receive a one-time lump sum payment of $500.00.

SECTION 4 LONGEVITY PAY

4.1. Employees hired into City employment on or after December 6, 2016, shall not be eligible for Longevity Pay.

4.2. Employees will receive longevity pay the first full pay period following the anniversary date that meets the following required years of continuous fulltime service:

4.2.1. For those employees hired before December 6, 2016, with at least twenty (20) years of continuous full-time City of Monterey service or more, the City will provide a 5.0% increase to base pay for longevity pay.

4.2.2. For those employees hired before December 6, 2016, with at least twenty-five (25) years of continuous full-time City of Monterey service or more, the City will provide a total of 10.0% increase to base pay for longevity.

4.2.3. For those employees hired before December 6, 2016, with at least thirty (30) years of continuous full-time City of Monterey service or more, the City will provide a total of 15.0% increase to base pay for longevity

4.3. Employees receiving stacked longevity pay in effect at the time of ratification will continue receiving such compounded 10.0% and 15.0% pay. For example, an employee currently receiving longevity for twenty-five (25) years will continue to receive 10.25% and those currently receiving longevity for thirty (30) years will continue to receive 15.763%. If an employee becomes eligible for longevity pay following ratification of this MOU, or additional longevity pay, the flat rates of 10.0% and 15.0% as described above will apply.
.

SECTION 5 STEP ADVANCEMENTS

5.1. Step advancements are merit increases and are not automatic. An employee must perform the duties of the position in a manner satisfactory to the department head to receive a step advancement.

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5.2. Eligibility for such step advance shall be upon completion of twelve (12) months satisfactory service in the employee's prior step. An employee's initial placement on the step system shall be determined by Sections 25-5.04 or 25-

5.06 of the Monterey City Code (Personnel Rules and Regulations).

5.3. Step advancements shall be made on the anniversary date. No advancement shall be made without a performance evaluation with a written recommendation by the department head and approval of the City Manager or designated representative.

SECTION 6 INSURANCE PLAN
The following is a brief summary of insurance benefits. To the extent that the insurance programs detailed below continue to be available, the City will continue to offer these programs. Employees should refer to the plan documents for a complete description of benefits, coverage and limitations. If, during the term of this agreement, a change in insurance plans or coverage is necessary, the City shall provide notice thirty (30) days in advance, and, upon request, meet with representatives of the Union. If, during the term of this agreement, the premium for an insurance plan changes, the City will attempt to provide a thirty (30) day notice in advance of the rate change.

6.1. Dental/Orthodontia Insurance

6.1.1. The City shall pay the full cost for employee dental insurance administered by a third-party administrator up to the annual maximums described in the plan description.

6.1.2. The City will afford eligible employee dependents the opportunity to participate in an open enrollment every three (3) years. An employee electing coverage for dependent(s) shall pay the full cost for dependent dental premiums rounded up to the nearest dollar.

6.2. Vision Care

6.2.1. The City will continue to provide vision care insurance, and pay the full cost of premiums, for employees and dependents. The plan will provide for expenses incurred up to the annual maximums described in the plan description.

6.3. Life Insurance

6.3.1. The City will continue to provide a $20,000.00 Term Life Insurance and Accidental Death and Dismemberment Policy for each employee covered by this agreement.

6.3.2. Additional Term Life Insurance may be purchased by each employee through payroll deductions in increments of $10,000.00, subject to the City’s life insurance carrier’s coverage limitations. At least $100,000.00 of term life insurance will be available to employees for purchase. Only premiums for up to $30,000.00 of employee purchased term life insurance may be paid on a pre-tax basis. The purchase of additional insurance shall be in accordance with payroll deduction DocuSign Envelope ID: CEC5C45A-77AC-4129-A676-53E7A4680FBB DocuSign Envelope ID: 98C50369-AC5E-4596-BA52-C3B857174BBE AR 119
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procedures established by the Finance Director and the underwriting requirements of the insurance carrier.

6.3.3. Subject to the conditions of the City’s life insurance carrier, the City shall offer to employees at the time of their retirement the option to convert their life insurance policy (both City-paid and employee-purchased supplemental insurance) to individual coverage at the employees’ expense.

6.4. Health Insurance – Cafeteria Plan

6.4.1. CalPERS Medical Benefits
a. The City provides health insurance through California Public Employee’s Retirement System (“CalPERS”) The provisions of this plan require participation by the Union in the Public Employees Medical and Hospital Care Act (“PEMHCA”) that requires the City to contribute a minimum monthly health premium contribution pursuant to Government Code 22892.
i. For the plan year beginning January 1, 2023, the City shall make a nonelective employer contribution to the flexible benefits plan on behalf of each active employee in an
amount which, inclusive of the minimum PEMHCA
contribution is up to the following amounts:
 $2,540.00 per month – family coverage
 $2,040.00 per month – employee + 1
 $899.00 per month – employee only
b. [EXAMPLE: For 2023, the PEMHCA minimum contribution is $151.00; the City shall make a flexible benefits plan contribution of $2,389.00 per month for family coverage, $1,889.00 per month for two-person coverage and $748.00 per month for single coverage.] c. This contribution is known as the Health Plan Spending Fund (“HPSF”).
i. For the plan year January 1, 2024 only, if the amounts in subsection a. above are less than the total premiums for CalPERS Gold, the City shall increase its contributions, not to exceed 9.0%, to the new CalPERS Gold premiums.

6.4.2. Medical Waiver
a. Employees who opt out of the City sponsored CalPERS plan for health insurance, and provide proof of alternate group medical insurance will be entitled to $300.00 per month. To qualify, an employee must provide proof of alternate group coverage to Human Resources. Alternate coverage must be acceptable by the City and compliant with the Affordable Care Act.

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6.4.3. Cafeteria Plan and Optional Benefits
a. In accordance with IRS Code Section 125, the City will provide a Flexible Benefits Plan (“Cafeteria Plan”) to all eligible employees.

Employees may elect to participate in the following three (3) Section 125 programs offered by the City:
 Premium Conversion;
 Dependent Care (IRS contribution limits apply); and
 Flexible Spending Account (IRS contribution limits apply). b. Each of these programs will be administered in accordance with the IRS Code.
c. Consistent with applicable laws and regulations, each employee may use his/her HPSF for any benefits permitted by law and provided for in the Cafeteria Plan document. Those benefits include:
 Health insurance in accordance with CalPERS
regulations and Federal law;
 Dependent dental coverage;
 Additional life insurance, provided by the City’s insurance carrier, up to the maximum allowed by the City’s carrier;  Dependent Care Assistance Plan (DCAP) Employees will
pay any administration fee for this service through payroll deductions;
 Flexible Spending Account (FSA) Employees will pay any administration fee for this service through payroll
deductions; and
 Effective January 1, 2021, the option to take any unused cash value after selecting from the above options has
been eliminated.

6.4.4. Retiree Medical Premium
a. Covered employees who retire under the provisions of the City’s contract with CalPERS, are currently eligible to continue CalPERS medical coverage. The City will make the mandatory minimum employer health premium contribution for City retirees participating in the PEMHCA. The mandatory monthly rate is established by CalPERS annually, and is effective on January 1 of each calendar year pursuant to Government Code Section 22892.

SECTION 7 RETIREMENT

7.1. Classic Members – Tier 1

7.1.1. For employees hired prior to January 1, 2013, the City will continue to provide the 2.7% @ 55 CalPERS Miscellaneous Members Retirement for each employee covered by this agreement. The same 2.7% @ 55 will DocuSign Envelope ID: CEC5C45A-77AC-4129-A676-53E7A4680FBB DocuSign Envelope ID: 98C50369-AC5E-4596-BA52-C3B857174BBE AR 121
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be provided to new employees, subject to CalPERS determination, who were previously employed by the City of Monterey as a full-time employee, or who were employed full-time by another CalPERS (or reciprocal) agency within six (6) months from date of hire by the City of Monterey.

This policy is in keeping with the California Public Employees’ Pension Reform Act (“PEPRA”). As of July 1, 2013, the City's contract with CalPERS for the 2.7% @ 55 plan contains the following plan amendments:
 Highest twelve (12) consecutive months for purposes of determining final compensation (Section 20042).
 Sick leave credit/conversion to service time (Section 20965).  1959 Survivor Benefit Level 4(Section 21574). The
employer’s cost for this benefit will be paid by the employees through payroll deduction. This amount is set by CalPERS each fiscal year.
 Exclusion of hourly rated employees (Section 20305).
 Military Service Credit (Section 21024).
 Partial Service Retirement (Section 21118).
 Employees Sharing Cost of Additional Benefits (Section 21354.5)

7.1.2. The City shall pay for any increase in the employer rate and shall retain any savings from a decrease in the employer rate and/or contribution credits (rebates) from CalPERS.

7.1.3. Classic employees contribute on a pre-tax basis the 8.0% employee contribution amount established by CalPERS. Effective July 1, 2011, Classic employees contribute on a pre-tax basis a 3.0% cost share towards the Employer Contribution to CalPERS. The total contribution, which is memorialized by a 2018 contract amendment with CalPERS, is

11.0%. The City shall maintain the IRS 414(h)(2) provision allowing employees to defer State and Federal Income taxes on their CalPERS contributions.

7.2. PEPRA Members – Tier 2

7.2.1. For employees hired on or after January 1, 2013 who have not been previously employed by the City of Monterey as a full-time employee, or who were employed full-time by another CalPERS (or reciprocal) agency and had a break in service greater than six (6) months from date of hire by the City of Monterey, subject to CalPERS determination, will be placed on a second CalPERS Plan tier. The second tier for these employees is the 2.0% @ 62 and contains the same plan amendments as the 2.7% @ 55 plan described above, except that PEPRA requires the 2.0% @ 62 retirement formula to be based on a 36-month average of annual pensionable compensation earned (rather than a 12- month average), and employees on the second tier contribute 50% of the normal cost of the plan as established by CalPERS and are not required DocuSign Envelope ID: CEC5C45A-77AC-4129-A676-53E7A4680FBB DocuSign Envelope ID: 98C50369-AC5E-4596-BA52-C3B857174BBE AR 122
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to participate in any cost-sharing of the Employers’ Contribution to CalPERS. The City shall maintain the IRS 414(h)(2) provision allowing employees to defer State and Federal Income taxes on their CalPERS contributions.

SECTION 8 BENEFITS DURING WORKERS COMPENSATION AND SHORT

TERM DISABILITY PLAN
The City provides workers compensation benefits in accordance with state law and shall provide a Short Term/Long Term Disability Plan. During the term of this agreement, the City will pay any increase in costs and will retain any savings resulting from a decrease in cost for this plan.

8.1. Maintenance of Benefits

8.1.1. The City will provide the employee on an industrial or non-industrial disability protected leave of absence with benefits for up to a maximum of twelve (12) months per incident in accordance with state and federal law.

8.1.2. Employees out on leave in excess of twelve (12) months will resume benefits in the first month after returning to work in a full-time status.

8.2. Leave Accrual

8.2.1. If, due to an industrial injury or illness, an employee is in a pay status (either City pay or WC pay) for the majority of the month, leave accruals (sick leave, vacation, and holidays) shall continue for the first six (6) months of the disability.

8.2.2. If, due to a non-industrial injury or illness, an employee receives disability payments for what constitutes the majority of the month, the employee shall not accrue leave (sick leave, vacation, and holiday).

SECTION 9 UNIFORM ALLOWANCE

9.1. Except where noted below, the City will provide and launder uniforms for employees who are required to wear a standard uniform.

9.2. All full-time non-sworn employees of the Police Department who are required to wear a standard uniform shall receive an allowance of $70.00 per month.

9.3. Each full-time Facility Attendant shall be reimbursed up to $230.00 per fiscal year upon submission of receipt(s) for the cost of purchasing City uniform pants.

9.4. In those divisions where uniforms are provided and laundered, eleven uniforms will be made available to each employee.

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SECTION 10 SHOE REIMBURSEMENT

10.1. All full-time employees required to wear safety shoes as a condition of employment shall, at the employee's request, receive up to $225.00 per fiscal year in reimbursement for the purchase or repair of safety shoes (so long as after the repair the shoes continue to meet the California Division of Occupational Safety and Health (OSHA) requirements for safety).

10.2. The City may authorize direct bill payment for shoes required at a vendor of the City’s choice. The employee may continue with the current reimbursement method or utilize the direct billing method. If the employee purchases shoes for an amount (including tax) greater than the annual limits described in this section, the employee shall pay the difference to the vendor at the time of purchase.

10.3. The following classifications are eligible to receive shoe reimbursement:

10.3.1. Building Maintenance
 Senior Parts Clerk
 HVAC Senior Technician
 Senior Locksmith
 Building Maintenance Supervisor
 Facilities Maintenance Coordinator
 Building Maintenance Craftsworker
 Building Maintenance Worker
 Custodian
 Senior Custodian
 Building Technician
 Inspector
 Senior Building Inspector
 Code Compliance Officer

10.3.2. Building and Safety
 Building Technician
 Inspector
 Senior Building Inspector
 Code Compliance Officer

10.3.3. Engineering
 Public Works Inspector
 Senior Public Works Inspector
 Environmental Regulations Analyst
 Engineering Technician
 Engineering Assistant II
 Engineering Assistant I
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10.3.4. Harbor
 Harbor Maintenance Craftsworker
 Harbor Security Worker (FT, RPT, PTS)
 Facility Attendant (RPT)
 Harbor Coordinator

10.3.5. Mechanical
 Parts Clerk
 Lead Mechanic
 Automotive Mechanic

10.3.6. Parking
 Parking Maintenance Leadworker
 Parking Maintenance Worker

10.3.7. Streets
 Street Maintenance Leadworker
 Street Maintenance Worker
 Senior Street Maintenance Worker
 Street and Utilities Supervisor
 Sign Craftsworker

10.3.8. Parks and Recreation
 Park Maintenance Worker
 Senior Park Maintenance Worker
 Park Maintenance Leadworker
 Park Maintenance Supervisor
 Park Maintenance Craftsworker
 Parks Maintenance Crafts Lead Worker
 Urban Forester
 Assistant Urban Forester
 Greenbelt Coordinator
 Park Attendant
 Cemetery Maintenance Worker
 Cemetery Coordinator
SECTION 11 TOOL ALLOWANCE

11.1. Full-time employees in the classifications of Lead Mechanic and Automotive Mechanic, who are required to provide their own tools, shall receive a tool allowance of $40.00 per month per employee.

SECTION 12 STAND-BY AND COMPENSATION

12.1. Employees shall be paid $35.00 per 24-hour period during a weekday, or portion thereof, and $80.00 per 24-hour period during a weekend day or DocuSign Envelope ID: CEC5C45A-77AC-4129-A676-53E7A4680FBB DocuSign Envelope ID: 98C50369-AC5E-4596-BA52-C3B857174BBE AR 125
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official holiday, or portion thereof, when assigned to stand-by in accordance with established departmental procedures.

12.2. Stand-by shall be defined as that circumstance which requires an employee who is not on duty and assigned by the department to:
 Be ready to respond immediately to a call for service;  Be readily available at all hours by telephone or other agreed upon communication equipment; and
 Refrain from activities which might impair their ability to perform their assigned duties when called upon.

12.3. Where an employee is on stand-by and called out to respond, the employee shall receive a minimum of two (2) hours compensation at time-and-one-half regular rate of pay, or compensation for hours worked (including Fair Labor Standards Act (FLSA) overtime, whichever is greater.)

12.4. The City will compensate those employees on stand-by for actual time worked or a minimum of $10.00 per incident, whichever is greater, if required to respond to calls but not required to report to work, for incident notifications received between the hours of 11:00 p.m. and 6:00 a.m. Incident, for purposes of this section, shall be defined as those calls initiating service, and to exclude follow-up calls relating to the initial service call.

12.5. Those employees who are on standby and are called to respond to duty, shall follow division procedure to provide notification when the employee leaves the designated work site following completion of the called-out duty request.

After thirty (30) minutes have expired following completion of the called out duty request, if the employee receives a new call to respond to duty while on standby, that employee shall receive a new two-hour minimum compensation for such call.

SECTION 13 CALL BACK

13.1. Those employees who are called back to work on a day off or after having completed the normal shift, and after having left the work site, for emergencies shall receive a minimum of two (2) hours compensation at timeand-one-half base pay or compensation for hours worked (including eligible FLSA overtime), whichever is greater, when called back to respond to such an emergency. Employees may be assigned to a roll down call back list and shall not be subject to the stand-by provisions and requirements of Section

13. Roll down call back lists are composed of employees who may be called during an emergency and are called in sequence until a person whose name is on the list is contacted and able to respond in a timely manner.

SECTION 14 COMPENSATORY TIME OFF

14.1. Employees who earn overtime may, at the option of the employee, elect to be paid cash or accrue compensatory time off (“CTO”) except as stated below.

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Compensatory time-off may be accrued to a maximum of forty (40) hours.

During the month of November each year, except as stated below, the compensatory time off balance as of October 31 for each employee will be paid off at the employee’s prevailing rate in October and the balance reduced to zero. Compensatory time off will be scheduled in the same manner as vacation time.

14.2. On October 31 of each year, employees may either receive pay for unused CTO or maintain unused CTO as CTO leave, in accordance with procedures to be developed by the Finance Director. If an employee does not make a selection, the entire CTO balance as of October 31 will be paid. Payments will be made the second payday in November. In no case may an employee maintain more than forty (40) hours of accrued CTO in their leave bank.

SECTION 15 HOLIDAY TIME

15.1. The Holiday schedule for the term of this agreement will be:
 New Year’s Day
 Martin Luther King, Jr. Birthday
 President’s Day
 Memorial Day
 Juneteenth
 Independence Day
 Labor Day
 Veteran’s Day
 Thanksgiving Day
 The day after Thanksgiving Day
 The working day immediately preceding Christmas Day
 Christmas Day
 The working day immediately following Christmas Day
 Admission Day

15.2. City Code Section 25-11.06 states: “Employees must be in a paid status the day before and after a holiday in order to be compensated for the holiday.” The parties agree to interpret this to mean that the City will take the average time in paid status the working day before and the working day after a holiday to calculate holiday pay. For example, if an employee is in an unpaid status the working day before a holiday and then works or uses accruals of eight (8) hours the working day after the holiday, the City will provide the employee with four (4) hours of holiday pay for the holiday.

15.3. If an employee is at the 40-hour maximum accrual in a pay period when an additional holiday is accrued, the employee may utilize accrued holiday hours in the same pay period in order to obtain the holiday accrual. Otherwise, the holiday is paid out in accordance with City Code Section 25-12.04(b)(3).

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SECTION 16 OVERTIME

16.1. For purposes of determining when overtime compensation is owed under both City Overtime Policy as defined in City Code Section 25-11.05 and the FLSA, only hours actually worked shall be counted. Excluded from this provision is paid time off on City Holidays.

16.2. The intent of this section is to bring the City’s overtime policy into alignment with what is mandated under FLSA. It is not the intent of this section to alter the way in which overtime is assigned.

16.3. The City will monitor and respond to overtime complaints to ensure overtime is assigned and compensated in an appropriate manner. The Union will work cooperatively with the City to ensure the appropriate application of this policy.

SECTION 17 FLOATING HOLIDAY

17.1. The Union's holiday schedule shall include one (1) floating holiday per fiscal year, per employee. The scheduling is at the discretion of the employee subject to approval by their department head.

17.2. The floating holiday may be rolled over to the next fiscal year. In no case shall an employee be allowed to accrue more than forty (40) hours of accrued floating holiday time, and there shall be no cash value for floating holidays.

17.3. If an employee is at the 40-hour maximum accrual, in a pay period when an additional holiday is accrued, the employee may utilize accrued holiday hours in the same pay period in order to obtain the holiday accrual. Otherwise, the employee forfeits that floating holiday.

SECTION 18 NIGHT SHIFT DIFFERENTIAL

18.1. An employee who is required and authorized to work a regularly scheduled shift at least part of which falls between 6:00 p.m. and 6:00 a.m. shall be paid a shift differential of $1.00 per hour for each hour worked between 6:00 p.m. and 6:00 a.m. This differential shall not apply to hours worked between 6:00 p.m. and 6:00 a.m. which result from a call-back, stand-by, overtime or mutually agreeable flexible schedules. For payroll reporting purposes, night shift differential will be paid in that pay period where the sum of previously worked qualified time equals at least one (1) hour.

SECTION 19 AUTOMOTIVE SERVICE EXCELLENCE CERTIFICATION AND

CONTRACTORS LICENSE INCENTIVE PAY

19.1. The following Incentive Pays shall be effective based on the demonstration and functioning continuation of the appropriate certifications or licensing.

19.2. Employees in the classifications of Fleet Coordinator, Lead Mechanic, and Automotive Mechanic shall receive 1.0% incentive pay for each Automotive DocuSign Envelope ID: CEC5C45A-77AC-4129-A676-53E7A4680FBB DocuSign Envelope ID: 98C50369-AC5E-4596-BA52-C3B857174BBE AR 128
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Service Excellence certification, up to a maximum of 5.0% total from the list of sixteen (16) certifications listed below:

19.2.1. Automobile and Light Truck Certification Tests
 A1 Engine Repair
 A2 Automatic Transmission/Transaxle
 A3 Manual Drive Train and Axles
 A4 Suspension and Steering
 A5 Brakes
 A6 Electrical/Electronic Systems
 A7 Heating and Air Conditioning
 A8 Engine Performance

19.2.2. Medium-Heavy Truck Certification Tests
 T1 Gasoline Engines
 T2 Diesel Engines
 T3 Drive Train
 T4 Brakes
 T5 Suspension & Steering
 T6 Electrical/ Electronic Systems
 T7 Heating, Ventilation & Air Conditioning (HVAC)
 T8 Preventive Maintenance Inspection

19.3. Employees in the classifications of Senior Craftsworker and Building Maintenance Craftsworker shall receive a 5.0% incentive pay for maintaining an active, or valid but inactive, California Class B General Building Contractors License.

19.4. In order to receive the incentive pay described above, the employee must present proof of the applicable current certification(s) or licensing to the Public Works Administration Division. The incentive pay will begin on the first day of the pay period following the department’s receipt of the proof of certification(s) or licensing. It is the employee’s responsibility to provide an updated certificate or license at the time it is set to expire. Failure to maintain the certification(s) or licensing will result in the loss of incentive pay effective on the first day of the pay period following the date of the certification(s) or licensing expiration that Human Resources has on file.

SECTION 20 BILINGUAL PROGRAM AND COMPENSATION

20.1. The City recognizes that there is merit to having employees who are bilingual.

20.2. The City will provide a $100.00 per month stipend ($1,200.00 per year), for up to ten (10) GEM represented employees who meet the testing criteria for being bilingual in Spanish and available to provide translation services.

20.3. Based on the needs of the Police Department, the Chief of Police may provide bilingual pay to eligible Police Services Technicians in excess of the DocuSign Envelope ID: CEC5C45A-77AC-4129-A676-53E7A4680FBB DocuSign Envelope ID: 98C50369-AC5E-4596-BA52-C3B857174BBE AR 129
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maximum ten (10) in accordance with the requirements and criteria set forth below.

20.4. These employees, if available during their work schedule, may be called upon by other departments on an as needed basis.

20.5. When a vacancy arises in the Bilingual Program roster, Human Resources will request that department heads, or their designee, recommend employees who speak Spanish to participate in the program. Nominated employees will undergo a bilingual exam and those employees who receive a passing score will be placed on the eligibility list, which will be used to fill vacancies in the Bilingual Program.

20.6. Examination Process

20.6.1. Human Resources contracts with Language International Testing to conduct an oral exam. The exam is conducted over the phone and is intended to assess the employee’s ability to comprehend and speak a foreign language. Language International Testing will provide the results of the examination, which are valid for three (3) years, to Human Resources for review, selection and placement.

20.7. Selection and Placement

20.7.1. The intent of the bilingual pay program is to diversify the selection and placement of the program participants across our various departments and divisions. Selection of employees to serve in the Bilingual Program is based on several factors, including but not limited to, the score received in the bilingual examination, work location, work schedule, seniority of the employee and ability to respond to a request for translation and interpretation if called upon. Approval is granted by the Human Resources Director.

20.8. Reinstatement

20.8.1. Laid off employees who were participating in the Bilingual Program have reinstatement rights over newly appointed program participants. If, during the layoff period, a new employee is selected to serve on the Bilingual Program, that new employee may be bumped by a returning program participant. The bumped employee, however, will return to the eligibility list should a future vacancy occur within the 3-year period of their exam score. The returning employee will be required to retest if their examination scores are expired. In no event will the number of employees participating in the program exceed the ten (10) GEM employees’ limit.

20.9. Renewal

20.9.1. Bilingual Program participants will serve a 3-year term, which coincides with the expiration date of their bilingual examination score.

Human Resources will notify participants when their term will expire.

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performance of the bilingual employees during the 3-year period, on the translation and interpretation needs of the City, and interest and availability of other qualified employees to provide bilingual services.

SECTION 21 EDUCATION INCENTIVE PLAN

21.1. All employees who have completed their initial probationary period are eligible for the City's Education Incentive Premium (“CEIP”) as outlined below and further described in the City's Administrative Policy.

21.2. To qualify for consideration, an employee must have a Baccalaureate or Master's Degree from an accredited college or university.

21.3. For a Baccalaureate, an employee would receive 5.0% premium pay on base salary and 7.5% premium pay on base salary for a Master's Degree. An employee cannot receive both of these premium pays.

21.4. For classifications that require the equivalent of a Baccalaureate degree or higher, the employee will not be eligible to receive this premium. Further, employees who accept a position which requires the equivalent of a Baccalaureate degree or better, shall cease to be eligible to receive this premium.

21.5. The City shall consider CEIP as part of base pay.

SECTION 22 TUITION REIMBURSEMENT

22.1. Subject to prior written approval by the Department Head, employees may be allotted up to $1,000.00 per fiscal year for Tuition Reimbursement. The reimbursement is allowed for costs incurred (including tuition and course textbooks) for job-related seminars, conferences and accredited courses that are taken during off-duty hours.

SECTION 23 MINIMUM LEAVE EVENTS

23.1. The minimum leave that can be taken by an employee for all leave events shall be fifteen (15) minutes, except for voluntary unpaid leave.

SECTION 24 VACATION SCHEDULE AND MAXIMUM ACCRUAL

24.1. The vacation accrual for regular full-time employees shall be as follows:
 All employees who have been employed continuously for less than five (5) years shall receive eighty (80) hours vacation accrual per year whether assigned to a forty (40) hour work week or other duty schedule.
 All employees who have been employed continuously for more than five (5) years but less than ten (10) years shall receive one hundred and twenty (120) hours vacation accrual per year DocuSign Envelope ID: CEC5C45A-77AC-4129-A676-53E7A4680FBB DocuSign Envelope ID: 98C50369-AC5E-4596-BA52-C3B857174BBE AR 131
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whether assigned to a forty (40) hour work week or other duty schedule.
 All employees who have been employed continuously for more than ten (10) years but less than fifteen (15) years shall receive one hundred and thirty six (136) hours vacation accrual per year whether assigned to a forty (40) hour work week or other duty schedule.
 All employees who have been employed continuously for more than fifteen (15) years but less than twenty (20) years shall receive one hundred and sixty hours (160) vacation accrual per year whether assigned to a forty (40) hour work week or other duty schedule.
 All employees who have been employed continuously for more than twenty (20) years shall receive one hundred and eighty four (184) hours vacation accrual per year whether assigned to a forty (40) hour work week or other duty schedule.

24.2. Vacation scheduling shall be subject to the current City Rules and Regulations in effect at the time of application:
 The department head and employee shall schedule the times at which vacation leave is to be taken with due consideration being given to the desires of the employee and the operational needs of the department. Use of vacation leave in less than fifteen (15) minute increments shall not be permitted. Scheduling of vacation shall be in accordance with any established departmental policy and subject to department head approval. The decision of the department head shall be final.
 Employees will not accrue vacation in excess of three hundred and twenty (320) hours.
 Vacation accrual based on the employee’s accrual rates shall commence only after an employee has utilized vacation, and accrual banks are below the three hundred and twenty (320) maximum allowed. Employees may cash-out vacation accrual in excess of two hundred and eighty (280) hours at the end of the calendar year. Vacation accruals may be cashed out upon separation from City employment.

SECTION 25 VOLUNTARY UNPAID LEAVE

25.1. With advance department head approval, an employee, other than a Police Services Technician, may take up to forty (40) hours of voluntary unpaid leave per calendar year in one (1) hour minimum increments subject to the following findings by the department head:
 It will create no overtime due to the absence of the employee; and  It will create no adverse operational impact on the department or division.

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25.2. Employees exceeding this amount of unpaid leave may be disciplined for excessive leave of absence. Excluded from discipline are absences certified as protected leave of absence under state or federal law or leave approved as a reasonable accommodation for a disability under state or federal law.

SECTION 26 SICK LEAVE
All full-time employees shall be provided paid sick leave as set forth below.

26.1. Sick Leave Accrual

26.1.1. Full-time employees shall accrue sick leave credits at the rate of eight (8) hours per month or major portion thereof.

26.1.2. Employees shall accrue sick leave and be permitted to use such accrued leave upon employment for the permitted uses in Monterey City Code Section 12.02.c.

26.1.3. All full-time employees may accrue sick leave without limitation.

26.2. Sick Leave Usage for Employee and Children (stepchildren, adopted, foster, or wards), Parents (step, foster, guardian, wards or in-laws), Spouse, Domestic Partner, Grandparent, Grandchild, Brother, Sister

26.2.1. Accrued sick leave may be utilized if the employee is required to be absent from work on account of non-job related illness or injury; routine medical or dental appointments; or for the care related to the illness or injury of the employee’s child (biological, adopted, or foster child, stepchild, legal ward, or a child to whom the employee stands in loco parentis), mother, father, spouse or domestic partner registered with the State and submitted to Department of Human Resources.

26.2.2. When utilizing the sick leave benefit, the employee shall notify the immediate supervisor, in accordance with departmental regulations and Monterey City Code Section 25-11.01(b).

26.2.3. Where the period of absence due to illness or injury is not known at the outset, it shall be the responsibility of the employee to remain in contact with the immediate supervisor, on a daily basis if deemed necessary by the supervisor.

26.2.4. Usage of sick leave shall be charged to the employee's balance on an hour-for-hour basis in one-fourth (1/4) hour increments or in accordance with current law.

26.3. Sick Leave Usage for Family Member Death (Bereavement)

26.3.1. All employees may be authorized to use up to eighty (80) hours of accrued sick leave per calendar year for the death of a family member or close relation. The maximum combined allowable use of sick leave for the above purposes shall not exceed eighty (80) hours in any calendar year.

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to provide evidence that the leave was used for the purposes intended by this section.

26.3.3. For purposes of determining the use of sick leave for death of a family member, the following definition shall be used: The employee's spouse, principal domestic partner, child, parent, brother, sister, grandparents, parents-in-law, brother-in-law, sister-in-law, son-in-law, daughter-in-law, step-parents, step-siblings, step-children, stepgrandparents or grandparents-in-law.

26.4. Medical/Dental Appointments

26.4.1. Accrued sick leave may, with department head approval, be used for medical and dental appointments of the employee where it is infeasible to schedule them on the employee's own time.

26.5. Sick Leave Abuse

26.5.1. Sick leave abuse shall mean: “Any use of sick leave, for purposes other than those identified in this section.” Sick leave abuse may subject the employee to disciplinary actions.

26.5.2. When the department head has reason to suspect that an employee has abused sick leave benefits, the department head may require that employee to file a personal affidavit or furnish medical verification or other substantiation for any such absences. The department head, at their discretion, may establish methods of verification as deemed appropriate. These means may include, but are not limited to, examination by a physician selected by and paid for by the City. If an employee is required to be examined by a physician selected by the City, the employee will be paid for the time, if off duty, and will be given reimbursement for mileage to attend the examination.

26.5.3. The payment of sick leave may be suspended or curtailed by the City Manager where there is evidence that absences taken on a given day or days are the result of a concerted action on the part of two (2) or more employees which is related to a labor dispute with the City directly, or one in which the City is involved as a third-party. Sick leave may be restored when proof is provided that the sick leave was taken as provided in these Rules.

26.6. Sick Leave Used as Personal Leave

26.6.1. Up to twenty-four (24) hours of accrued sick leave may be taken as Personal Leave during the calendar year so long as the employee has a minimum of one hundred and sixty (160) hours of accrued sick leave on the books at the time the Personal Leave is taken. Approval for the use of Personal Leave shall otherwise be subject to the same use rules as vacation, and requires advance Department Head approval.

26.7. Exhaustion of Sick Leave

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advance approval from their department head for the use of discretionary leaves (i.e., vacation, holiday and compensatory time off) in the event of illness or injury, with the department head having discretion to either deny or approve the request. Failure to receive advance approval for use of discretionary leaves following exhaustion of sick leave will result in unpaid unapproved leave for subsequent sick leave, and may subject the employee to discipline.

SECTION 27 MATERNITY AND PARENTAL LEAVE

27.1. Employees are entitled to leaves of absence for maternity, parental bonding, and pregnancy-related disability. All such leaves of absence shall be granted and compensated in accordance with state and federal laws covering these topics, including the Pregnancy Disability Leave, Family Medical Act, California Family Rights Act (“CFRA”) and the Fair Employment and Housing Act.

27.2. Employees taking an approved unpaid leave of absence for CFRA eligible baby bonding are entitled to utilize accrued leave, including use of sick leave.

SECTION 28 PROBATION PERIOD DURATION

28.1. All original appointees to positions in any classification shall serve a continuous probationary period of twelve (12) months. All promotional appointees shall serve a probationary period of six (6) months. Probation shall not apply to employees who are reclassified, re-employed, reinstated, lateral transfers, and demotions. In addition to the extension of probation allowed for extended leave of absence in accordance with City Code, a probation period may be extended by City Manager approval and mutual agreement by GEM for up to six (6) months in order to evaluate performance.

SECTION 29 RECLASSIFICATION

29.1. An employee or his/her representative may request in writing a reevaluation of his/her job based on significant permanent changes in job content or significant discrepancies between job content and classification description.

The request must be in writing, contain justification and be submitted to the Department Head for review and recommendation. Submittals may be made only on an annual basis during the period of September 10 through October 10.

The Human Resources Director or his or her designee will initially respond to such requests within ninety (90) calendar days by notice to the employee and the union; however, this timeline may be extended if necessary. This notice shall state whether a recommendation will be made to the City Manager and City Council for reclassification. If the employee or Union disagrees with the recommendation, the Union may submit a rebuttal for review. The rebuttal will advance with the HR Director’s recommendation to the City Manager and City Council as soon as administratively possible. The City Council’s decision on reclassification is final.

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SECTION 30 EMPLOYEE ASSISTANCE PROGRAM

30.1. The City shall provide an Employee Assistance Program. The Employee Assistance Program is a confidential service designed to help employees and their household members resolve personal and workplace challenges.

SECTION 31 DRUG AND ALCOHOL TESTING

31.1. Department of Transportation (DOT) Class B Licensing Requirements and Random Drug and Alcohol Testing
a. The parties acknowledge that, consistent with the United States DOT Regulations, all employees required to obtain and maintain a California Department of Motor Vehicles Class B license must participate in a random drug and alcohol testing program.
b. The following conditions shall apply to employees in the classifications of Street Maintenance Leadworker, Senior Street Maintenance Worker, and any employee subsequent to the promulgation of this policy required to operate a vehicle of the City of Monterey exceeding 26,000 lbs. gross weight and/or requiring a State of California Department of Motor Vehicle Class B License:
i. The City will provide formal training on duty time concerning the operation of vehicles of at least 26,001 lbs. This will include “walk around” training.
ii. City Reimbursements:
 The City will pay the difference in fees between a Class B and a Class C license as issued by the California
Department of Motor Vehicles. In addition, the City will pay for the DMV test fee to obtain and renew a Class B license.  The City will pay for the necessary medical examination associated with the employee obtaining and renewing a
Class B license.
iii. Employee Responsibilities:
 The employee must obtain and maintain a Class B license from the Department of Motor Vehicles of the State of
California.
 The employee must obtain airbrake or other applicable certification associated with a Class B license from the Department of Motor Vehicles.
 The employee will submit to the DOT drug testing, as
outlined in the City of Monterey Drug and Alcohol Policy pursuant to the DOT Regulations.
 All employee study time, required to obtain and maintain a Class B license, shall be off duty.

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iv. All employees in a designated classification or position with the City of Monterey shall be required to obtain a Class B license. Failing to obtain a Class B license when required as a condition of employment may result in the separation of the employee for failing to meet a basic employment requirement. For employees of the City in one of the classifications listed below as of August 6, 1997, failing to obtain a Class B license for medical and/or testing reasons will not be cause for separation from City employment so long as the employee has demonstrated in the view of the City a good faith effort to meet the requirements of obtaining a Class B license. At the time this agreement was promulgated, the City classifications that have, as a condition of employment the obtaining and maintenance of a Class B license, are:
 Street Maintenance Leadworker
 Senior Street Maintenance Worker
 Street and Utilities Supervisor
v. Any employee hired into the Lead Mechanic or Automotive Mechanic classifications on or after March 8, 2004 shall also be required to obtain and maintain a California Department of Motor Vehicles Class B license, and must participate in a random drug and alcohol testing program as described in this section. Those employees hired into the Lead Mechanic or Automotive Mechanic classifications prior to March 8, 2004 are not required to obtain or maintain a Class B license, and are not subject to the provisions of this section.
vi. Class B License Pay. Employees who are in positions within classifications designated as requiring Class B license as a condition of employment shall be eligible for a $40.00 per pay period premium pay. Specific positions within a classification that require a Class B license will be determined by the Department Director or designee. Employees shall not be eligible for this premium pay for any full or portion of a City pay period that the Class B License is suspended and/or expired. Employees not in a City pay status for one (1) full pay period or longer shall not be eligible for this premium pay during the time not in pay status. vii. The City, as a means of encouraging employee development for promotional opportunities, will pay on behalf of employees voluntarily obtaining a Class B license the difference in the fee between a Class C and a Class B license. Additionally, the City will pay for the necessary medical examination associated with the employee obtaining and renewing a Class B license. This benefit is limited to the employees in the classifications of Street Maintenance Worker, Lead Mechanic, Automotive Mechanic, Green Belt Coordinator, and Sign Crafts Worker.

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SECTION 32 WELLNESS PROGRAM

32.1. The Union and the City agree that employee health and fitness are important factors in maintaining an optimal work environment. Employees complying with membership requirements shall receive annual, renewable, and nontransferable employee-only passes to the Monterey Sports Center valued at the current rates, and subject to rate increases, in order to implement their personal fitness programs. The details of the program shall be as outlined in Fitness Program.

32.2. Employees may apply the dollar value of the employee-only pass to the Monterey Sports Center towards the purchase of a family pass to this facility.

The employee shall be responsible for the cost differential between the credit value of the employee-only pass and the family pass. During open enrollment, the employee shall be afforded the opportunity to make an election to continue crediting the value of the employee-only pass toward the family pass which shall be irrevocable for the next twelve (12) months.

32.3. Employees electing to receive a family pass under this program shall have a payroll deduction for the cost of maintaining the family pass active from month to month based on the difference between the cost of the family pass and the employee-only pass. Upon separation from the City, the family pass shall be cancelled unless the separated employee elects to maintain the pass under the same conditions available to the general public.

32.4. New hires can enroll in the Fitness Program upon hire, and then during open enrollment thereafter. Employees can cancel enrollment in the Fitness Program during open enrollment.

SECTION 33 FITNESS ACTIVITY PLAN

33.1. All GEM-represented members will be eligible to participate in a Fitness Activity Plan where they work out off-duty (not considered work time for purposes of Workers’ Compensation injury or illness) in exchange for leave time accrued in a fitness bank.

33.1.1. Conditions for Qualifying
a. Employees are required to work out a minimum of 1170 minutes per quarter in order to accrue ten (10) hours of leave. b. A session is considered to be any moderate or higher intensity physical activity lasting a minimum of fifteen (15) minutes. c. Participants will complete a Fitness Activity Log demonstrating completion of each workout, which is based on the honor system.

At the end of each quarter participants will send the Fitness Activity Log to the Human Resources Department for verification of qualifying activities. The ten (10) hours of leave will then be credited to the exercise incentive time bank as soon as practical DocuSign Envelope ID: CEC5C45A-77AC-4129-A676-53E7A4680FBB DocuSign Envelope ID: 98C50369-AC5E-4596-BA52-C3B857174BBE AR 138
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and will be available for immediate use by the employee. d. Each calendar year a maximum of forty (40) hours can be accrued in a separate exercise incentive time bank, with a maximum of eighty (80) hours allowed in the bank. The exercise incentive time bank has no cash value and the time accrued in this bank has no expiration date.
e. Leave time must be coordinated and approved in advance by the employee’s supervisor.
f. Participation is voluntary and for those electing to participate, an annual physical fitness assessment at the Monterey Sports Center, which can be used as a thirty (30) minute workout session is encouraged. Individual results of the physical fitness assessment will be confidential between the Monterey Sports Center and the employee.
g. Submitting a Fitness Plan Waiver form to Human Resources is required to participate in this program.

SECTION 34 BICYCLE COMMUTER PROGRAM

34.1. A GEM employee who regularly commutes by bicycle between home and work (or the alternatives described in the Bicycle Commuter Program Policy) may be reimbursed up to $20.00 per qualifying month for some of their bicycle commuting expenses. Submitting a Bicycle Commuter Waiver form to Human Resources is required to begin participation in this program, and completion of the “Bicycle Commuter Certification and Reimbursement Claim Form” must be submitted as outlined in the Program policy to claim reimbursement.

SECTION 35 BARGAINING UNIT STATUS FOR POSITION
CLASSIFICATION(S) – NOTICE PROCEDURE
When a position classification(s) is to be (1) modified, (2) created and assigned to a bargaining unit, (3) deleted, (4) reclassified, or (5) changed from one bargaining unit to another by City action, the following procedure shall apply:

35.1. The Executive Board members and GEM representative of the affected Union(s) shall receive written notice of the proposed action prior to the action being on the Council agenda. Delivery of said notice shall be made via e-mail.

35.2. The notification to the Executive Board members and GEM representative shall include all relevant information including but not limited to, the classification tile, classification description, and the number of positions to be changed, modified, or assigned and a general description of the justification for the proposed change. The City will provide a courtesy notification when administrative changes are made to job descriptions that do not have meet and confer implications.

35.3. The Union has ten (10) working days to request a meet and confer and DocuSign Envelope ID: CEC5C45A-77AC-4129-A676-53E7A4680FBB DocuSign Envelope ID: 98C50369-AC5E-4596-BA52-C3B857174BBE AR 139
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identify in writing and submitted to Human Resources the items for discussion that are subject to meet and confer under the Meyers-Milias-Brown Act. The parties must then schedule the first meeting within five (5) working days and complete the meet and confer process within a reasonable period of time. If the parties cannot reach mutual agreement, the parties may proceed any impasse procedures required by City Code or law. The City may implement the action after completing any impasse procedures required by law.

35.4. If GEM does not request to meet and confer within ten (10) days after receiving notice of proposed changes, the City may move forward with Council approval.

35.5. Nothing in this section prevents the parties from mutually agreeing to discuss issues not subject to meet and confer or to mutually waive timelines stated herein by written agreement.

SECTION 36 CITY EMAIL

36.1. All full-time City employees will be provided an email account for City communication purposes. Employees are expected to check email periodically or when advised by their department in order to obtain information regarding City matters.

36.2. The City shall allow GEM limited used of the City’s email system to notify members of bargaining unit meetings, which will be limited to the date, time, and location of the meeting, as well as a general description of the purpose of the meeting. All notices are to be provided to Human Resources for pre- approval.

Once approved, the City’s email system may be used.

36.3. The City agrees to provide GEM with a complete list of workplace email addresses for all employees in the Bargaining Units it represents.

SECTION 37 PERIODIC MEETINGS

37.1. The City agrees to meet on a periodic basis at Union's request to discuss items of common concern. Such meetings shall not include any meet and confer items or in any way open this Memorandum of Understanding.

SECTION 38 BENEFITS COMMITTEE

38.1. The Employee Benefits Committee is an educational committee which meets for the purposes of communicating information and facilitating the ability of employee unions to brief their membership regarding the City's benefit plans.

Two (2) Union representatives shall be appointed to serve on the Employee Benefits Committee.

38.2. Meetings of the Employer Benefits Committee will be held upon the joint concurrence of the City and the Union.

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SECTION 39 PERSONNEL RULES AND REGULATIONS

39.1. Personnel Rules and Regulations in effect at the time of ratification of this agreement shall prevail unless superseded specifically by this Memorandum of Understanding or modified subject to the meet and confer process between the City and the Union. This section does not subject those Personnel Rules and Regulations which would otherwise be excluded from the meet and confer process to any need to meet and confer.

SECTION 40 FLEXIBLE AND REMOTE SCHEDULING

40.1. The City and the Union recognize that the concept of flexible and remote schedules in certain circumstances may benefit and enhance the delivery of City services and operations while affording employees alternative work schedules.

The elements of this authority will include the following:
 Where operationally feasible, a department head may authorize flexible schedules on an individual or group basis.
 When a flexible schedule is approved, the City retains the right to return to the former schedule on a temporary or permanent basis.
 Employees may, individually or as a group, make a request for a flexible schedule to their immediate supervisor who shall forward said request with their recommendation to the department head. Such a request should address such items as staffing levels, impacts on services and operational needs. The determination of the department head shall be final, provided that a denial of the request shall be accompanied by a written statement setting forth the specific reason(s) for the denial.

40.2. The Union and the City agree that this description is a basic outline of the flexible and remote schedule authority.

SECTION 41 MEDICARE OPTION

41.1. This section is no longer relevant but is maintained in the Agreement for historical purposes.

41.2. Subject to the provisions of governing law, current employees hired by the City prior to April 1, 1986 will be given the option to be subject to Medicare payroll deductions effective July 1, 2001, or as soon as practical thereafter.

Enrollment in Medicare will be at the employee's option with the employee assuming the cost of the required employee contribution/tax and the City assuming the cost of the employer's contribution/tax.

SECTION 42 DEFERRED COMPENSATION

42.1. Effective the pay period following ratification, or as soon as administratively feasible, the City will match up to $50.00 per pay period ($100.00 per month) of an employee's contribution to a City authorized Deferred Compensation Plan authorized under Internal Revenue Code Section 457. The DocuSign Envelope ID: CEC5C45A-77AC-4129-A676-53E7A4680FBB DocuSign Envelope ID: 98C50369-AC5E-4596-BA52-C3B857174BBE AR 141
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employee's contribution does not need to be an increase from any existing contribution to count towards the amount the City will match. The combined contribution between the City's and the employee's contribution to the City's Deferred Compensation Plan (s) cannot exceed the maximum permitted by law.

SECTION 43 RETIREMENT HEALTH SAVINGS PLAN

43.1. The City agrees to look for a Retiree Health Savings Plan that provides employees the ability to “pre-fund” retiree health premiums and expenses through their own contributions. The City will keep GEM/UPEC informed as to the City’s success in finding a plan that meets with Internal Revenue Service requirements. Since all employees within a bargaining unit may be required to contribute an equal amount, the City agrees to enter into discussion with GEM/UPEC before any such program will be implemented.

SECTION 44 WORKING OUT OF CLASS

44.1. In lieu of the provisions of Section 25 – 5.11 a.2 of the Monterey City Code the following will apply:

44.2. Work at a higher level, when assigned, must be performed on a continuous basis for a period in excess of three (3) consecutive work weeks in order to be eligible for additional compensation, which will be applied to the excess period of time.

SECTION 45 GROUP LEGAL SERVICES

45.1. The City will provide a Group Legal Services Plan for employees represented by GEM through an employee-paid premium. Participation in the program shall be voluntary and consistent with the provider's requirements that the potential pool of participants must include a minimum of two hundred (200) employees.

SECTION 46 ALTERNATE STAFFING – ENGINEERING CLASSIFICATIONS

46.1. The City will provide an Alternate Staffing Program for the City’s professional engineering classes. This program is limited to the classifications in the Public Works Department. Eligible classifications under this section are Associate Civil Engineer, Associate Mechanical Engineer, Engineering Assistant and Engineering Technician. In the event of the creation of future professional engineer classifications or successor classifications, these new positions will be evaluated for inclusion in alternate staffing by the meet and confer process. (See Attachment G).

SECTION 47 CITY CEMETERY SERVICES

47.1. The survivors of an active employee who passes away (either while active DocuSign Envelope ID: CEC5C45A-77AC-4129-A676-53E7A4680FBB DocuSign Envelope ID: 98C50369-AC5E-4596-BA52-C3B857174BBE AR 142
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or within thirty (30) days of separation from the City) shall have access to the resident rates at Cemeterio El Encinal for cemetery services for the purpose of interring the employee, provided that the employee has had at least ten (10) years of continuous service with the City in either a full-time or combined fulltime/regular part-time capacity.

SECTION 48 ALTERNATIVE DISPUTE RESOLUTION PROCEDURE

48.1. The City and GEM agree to an alternate dispute resolution procedure (grievance and discipline appeals) where GEM may opt for non-binding advisory fact-finding at the appeal step between Department Head and City Manager.

The cost of the fact-finder to be paid by GEM. The City Manager will have discretion to implement any or no part of the fact-finder’s recommendation.

SECTION 49 USE OF VOLUNTEERS

49.1. The City of Monterey actively supports volunteerism in City departments and in the community. Volunteers make a positive impact on local government, assist in accomplishing tasks and help support new programs. They provide community outreach and augment the level and type of quality services provided by the City of Monterey.

49.2. When volunteer assignments are created, volunteers shall be used in a manner which assists unit employees and does not displace nor replace unit employees.

SECTION 50 CITY RECREATION PROGRAM FEES

50.1. The Resident Rates for City Recreation classes and programs shall be afforded to employees and immediate family household members (spouse, domestic partner and dependent children twenty (20) years of age and younger) of active City employees.

SECTION 51 MINIMUM SHIFT CHANGE NOTIFICATION FOR NONEMERGENCY SITUATIONS

51.1. The City shall provide a minimum of 72-hour advance notification of any alterations, changes or deviations from an employee’s regularly assigned work shift or work schedule. This notification requirement shall not apply in situations where the City faces unforeseen conditions such as damages to infrastructure caused by storms, rainfall, fires, or other natural disasters. Additionally, this notification requirement shall not apply when the City has to respond to unforeseen situations caused by unscheduled or not noticed events including but not limited to epidemics, riots, and assemblies.

SECTION 52 PROVISIONS OF LAW
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52.1. This agreement is subject to all current and future applicable Federal and State laws and regulations. If any part or provision of this agreement is in conflict or inconsistent with such applicable laws or regulations, or is otherwise held to be invalid or unenforceable by any tribunal of competent jurisdiction, such part or provision shall be suspended and superseded by such applicable law or regulation and the remainder of this agreement shall not be affected thereby.

SECTION 53 CONTRACTING OUT

53.1. City agrees to provide sixty (60) days advance notice prior to the contracting out of bargaining unit work.

SECTION 54 FULL UNDERSTANDING, MODIFICATION AND WAIVER

54.1. This agreement sets forth the full and entire understanding of the parties regarding the matters set forth herein, and any other prior or existing understanding or agreements by the parties, whether formal or informal, regarding any such matters contained herein are hereby superseded or terminated in their entirety. No other understandings or agreements are encompassed in this agreement. Existing benefits, rights and privileges, within the scope of representation, not changed herein shall remain in full force. It is not the intent of this section to bar, during the term of this agreement, meeting and conferring between the City and the Union on new issues that arise within the scope of representation. Nor is it the intent of this section to abridge any rights outlined in City Code Sections 25-16.03 through 25-16.05. (See Attachment H).

54.2. Except as specifically provided herein, it is agreed and understood that each party hereto voluntarily without qualification waives its right, and agrees that the other shall not be required to negotiate with respect to any subject or matter covered herein.

54.3. No agreement, alteration, understanding, variation, waiver, or modification of any of the terms or provisions contained herein shall in any manner be binding upon the parties hereto unless made and executed by both parties.

54.4. Nothing herein shall limit the authority of the City to make necessary and reasonable changes during emergencies. Emergency shall mean the actual or threatened existence of conditions of disaster or of extreme peril to the safety of persons and property within the City caused by such conditions as air pollution, fire, flood, storm, epidemic, riot, earthquake, or other conditions, including conditions resulting from war or imminent threat of war. However, the City shall notify the Association of such changes as soon as practicable. Such emergency assignments shall not extend beyond the period of the emergency.

54.5. The waiver of any breach, term or condition of this MOU by either party shall not constitute a precedent in the future enforcement of all its terms and provisions.

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The parties hereto have caused their duly authorized representatives to execute this Memorandum of Understanding the day, month and year noted below.

CITY OF MONTEREY: GENERAL EMPLOYEES OF MONTEREY:

Dated: ________________________ Dated: _________________________ ________________________________ _______________________________ Hans Uslar, City Manager Ryan Heron, Labor Relations, UPEC

Dated: __________________________ Dated: __________________________ _________________________________ ______________________________ Brette Neal, Human Resources Director Shay Balesteri, GEM Chair DocuSign Envelope ID: CEC5C45A-77AC-4129-A676-53E7A4680FBB 1/4/2023 | 1:55 PM PST
1/4/2023 | 1:58 PM PST 1/4/2023 | 2:17 PM PST
1/10/2023 | 7:33 AM PST
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March 6, 2023

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Monterey City CouncilOctober 15, 2024

Monterey City Council
October 15, 2024