Agenda packet — Palm Springs City Council, May 23, 2024 (part 7 of 7)

May 7, 2024
Evaluation of the Application. Pursuant to Municipal Code Section 8.05.090 (C, 1 ), the HSPB shall evaluate the application and make findings in conformance with the following criteria:

1. Criteria and Findings for Designation of Historic Districts. The proposed district and contributing resources located therein exhibit exceptional historic significance and meet one or more of the criteria listed below:

The report identifies the exterior of Ocotillo Lodge as a largely intact example of a MidCentury Modern hotel, which has since been converted to a condominium complex.

The units at the Ocotillo Lodge also catered to differing privacy and livability needs for both short and long-term visitors to the area. Staff finds the site qualifies as a historic resource under Criterion c by reflecting the local history of development and design shift in architectural style.
(Criterion d) Embodies the distinctive characteristics of a type, period or method of construction;
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Unlike the National Register criterion concerning construction, the Palm Springs evaluation of construction addresses the type (of construction), the period (of construction) and the method (of construction). Conventional construction methods and materials were used to develop this complex. The HRR goes into detail regarding the use of steel I-beams for the lobby building (identified as Building 1A) to create the expansive wall of concave windows. While the use of the steel beams allowed the glass in the south elevation to be configured in a unique way and what was known as the "Candlewood Room" to slightly cantilever over the area containing the swimming pool, the invention and use of the steel Ibeam for structural framing date further back than the 1950s. Staff finds the method and techniques used were not new to the period; therefore, contrary to the report, staff does not find the project qualifies for this criterion. (Criterion e) Presents the work of a master builder, designer, artist, or architect whose individual genius influenced his age, or that possesses high artistic value;
Architects Palmer and Krisel are credited for designing the Ocotillo Lodge and the prolific developers Alexander Construction built the complex. It was also noted in the report that the influential landscape architect Garrett Eckbo designed the original landscape features and that certain signature elements were considered physical representations of his theories. Each of the individuals that came together to design and develop this property have a level of influence in their respective fields, especially in the local context of Palm Springs. Their works are celebrated and continue to highly influence the field today. Ocotillo Lodge is a rare example where these three highly regarded masters collaborated on a single project, thus staff finds the project qualifies under Criterion e.
(Criterion 't) Represents a significant and distinguishable entity whose components may lack individual distinction, as used in evaluating applications for designation of historic districts, for parcels on which more than one entity exists; or
The structures and features within the proposed boundaries of the district may not independently possess historic distinction, however, as a collective the proposed district embodies the development history of Palm Springs and how existing structures were adapted for the population growth of full-time residents and the architectural trends that appealed to the people during that time. Thus, the proposed district also qualifies under Criterion f.
(Criterion g) Has yielded or may be likely to yield information important to national, state or local history or prehistory.

No information has been provided on any pre-historic significance of the site.

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Resolution No. HSPB 154 / HD-11 - "Ocotillo Lodge"

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May 7, 2024
SECTION 2: PART "C" ANALYSIS OF HISTORIC INTEGRITY.

Analysis of Integrity. (PSMC 8. 05. 090 (C, 2). The site, structure, building or object retains one or more of the following aspects of integrity, as established in the Secretary of the Interior's Standards: integrity of design, materials, workmanship, location, setting, feeling, or association. "Ocotillo Lodge" is evaluated as a historic district in terms of its historic integrity as follows:

Location.

The buildings, the configuration of parking, and open community spaces remain in their historic location, therefore, the proposed district retains its integrity of location.

Design.

The one and two-story structures are arranged on the site creating a hierarchy of buildings which seem to respond to the adjacent street conditions: the two-story building facing East Palm Canyon Drive and the clusters of one-story units face the neighborhood roads.

Vehicular circulation, including parking, is concentrated to the periphery of the site and the internal circulation consists of concrete pathways encouraging pedestrian use.

The one-story units were arranged in two different clusters around the central open space containing the keyhole-shaped pool. The report identifies the one-story clusters as "villa bungalows" and "courtyard bungalows". The "villa bungalows" comprise of 25 units and are arranged in a grid pattern, while the "courtyard bungalows" consist of 56 units that are clustered in a checkered pattern. The layout of the buildings allows for each unit to have their own private patio space and access to walkways that ultimately connect back to the central community space. The buildings all utilize a similar architectural language that exhibit modernism principles by using simple geometric forms, flat roots, exposed wooden beams, square concrete block walls, large expanses of glass walls, ribbon and/or clerestory windows, and simple line details with no ornamentation.

No original landscape files were found but the report confirms Garrett Eckbo's involvement in the project and credits the landscaping features around the main pool and the geometry of curves and angles found in the paving to him based on an interview with the architect. Other examples of his work help support this claim.

The building forms, the use of simple details and largely the site design are critical components of the design that largely remain; therefore, staff finds the design integrity is intact.

Setting.

According to the historic resources report, the property was constructed with an intent to house potential buyers of single-family homes that were being built in the adjacent Twin Palms tract just north of the property. As seen in the historic aerial images from 1965 and 1972 (Attachment B of the HRR), the lots directly east and west of the property along E.

Palm Canyon Drive were vacant. Currently those areas are zoned with differing degrees of residential and commercial uses but the original setting between Ocotillo Lodge and Item 2D - Page 274
Resolution No. HSPB 154 / HD-11 - "Ocotillo Lodge"

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the Twin Palms subdivision remains intact.

Materials.

The building materials consist of smooth plaster or stucco finished walls, T1-11 siding, masonry block walls, extruded wooden beams and fascia details, aluminum-framed windows and doors, and concrete pathways . . It appears that some original exterior material was replaced and there are areas of deterioration that need to be addressed but a majority of the original material remains. The overall integrity of materials is intact.

Workmanship.

Conventional construction methods and building materials were used for this development. Readily available materials such as concrete blocks were used to reinforce clean lines and the extrusion of blocks on the screen walls created a decorative pattern to highlight certain areas. Various repairs and changes have been made to individual units over time, however, the overall aesthetic was respected and changes that are less sympathetic appear reversable. The use of concrete square blocks down to the fascia details demonstrates a level of attention to detail and workmanship by the original designers. Staff finds enough integrity of workmanship remains on site.

Feeling.

The original design focused on the pedestrian experience by leaving the vehicles behind and immersing the visitors/residents into a network of walkable concreate paths. Each unit retains private courtyard spaces, and the main swimming pool retains its focal presence on the site as a space for community gathering. The feeling of leisure desert retreat remains on the site because all the private and communal spaces remain in their original configuration; therefore, staff finds the integrity of feeling remains intact.

Association.

The existing condition of the property maintains a physically recognizable association with the post World War II development in Palm Springs and the major design components of the site design and individual buildings are closely associated with the architects Palmer, Krisel and Eckbo. The integrity of association remains intact.

SECTION 3: DEFINING HISTORIC CHARACTERISTICS
In considering a recommendation for historic district designation it is important to distinguish those physical elements that are original or from the period of significance that contribute to the resource's historic significance from alterations, additions or features that were added at a later time that may be sympathetic to the original character, but which may create a false sense of historicity. Distinguishing original character-defining features from non-original elements aids the HSPB when it is tasked with evaluating future alterations to the historic resource.

Character-defining features listed below and more clearly referenced in Exhibit A:
• Site design and building cluster configurations on the lot around the central focal point of the main swimming pool shaped like a keyhole
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• Internal network of concrete pathways including the curved and angular geometry of the pavement credited to Garrett Eckbo
• Parking and vehicular circulation configuration around the perimeter of the property • One and two-story horizontal massing and simple geometric forms • Grid-like layout or clustered units arranged around the swimming pool and articulated by four-unit bungalows
• Keyhole-shaped pool within the open community space south of the lobby building • Painted masonry block screen walls with articulation on the north (front) and south (rear) elevations of the lobby building (identified as Building 1A in the HRR) • Distinctive semi-circular plan and concave windows in the "Candlewood Room" (identified as the south portion of Building 1A in the HRR) • Monumental porte cochere entry with restored Ocotillo Lodge signage (excluding the square notched archway in th~ porte cochere)
• Flat roofs that have wide overhanging eaves and cantilevered canopies • Fascia details that hide the electrical conduit
• Expressed post-and-beam construction using wood and steel members • Interior/exterior connections expressed through glass walls, the continuation of exposed beams and tongue-and-groove ceiling details to the exterior • Integration of private patios and semi-private decks for each unit • Unadorned smooth plaster or stucco-finished wall surfaces • Square concrete block walls in a stack bond pattern
• Flush-mounted aluminum-framed ribbon windows, clerestory windows, and glass sliding doors that span from floor to ceiling
• "Sun flap" of suspended concrete panels shading concave curtain wall • T1-11 wood siding on storage spaces and patio dividers for second floor units • Exposed pebble aggregate concrete stair treads in steel pipe column stairwells leading to the second floor units
• Glass walls incorporating sliding glass doors
• Glass walls with double glass doors at porte cochere wall of lobby • Landscape design features around the main pool by Garrett Eckbo and tall Washingtonia palms throughout the complex
• Curved cabana and restroom structure with trellis south of the keyhole-shaped pool designed by Garrett Eckbo (removed)
Non-contributing elements:
• Pool fencing installed around the keyhole-shaped swimming pool • Metal security gates at various entry points to the site • Metal screen security doors in front of entry doors on the units facing East Twin Palms Drive
• Metal mesh screening on stair railings
• Metal fence along the curved strip of grass where the original curved cabana/trellis was located south of the keyhole-shaped pool
• Glass blocks in original clerestory openings
• Roof-mounted mechanical equipment and accompanying ductwork • Sunshine Bar (identified as Building 5 in the HRR) added in 1973 and detached Item 2D - Page 276
Resolution No. HSPB 154 / HD-11 - "Ocotillo Lodge"

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barbecue added in 1994
• One-story conference room (identified as Building 4 in the HRR) east of the Sunshine bar (Building 5)
• Two non-original spas located northwest and directly east of the keyhole shaped swimming pool
SECTION 4: ENVIRONMENTAL ASSESSMENT
The proposed historic district designation is not subject to the California Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) (the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment) and 15060(c)(3) (the activity is not a project as defined in Section 15378) of the CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has no potential for resulting in physical changes to the environment, directly or indirectly.

SECTION 5: CONDITIONS THAT APPLY TO HISTORIC DISTRICTS.

According to Section 8.05 of the Municipal Code, the following General Conditions shall apply to Historic Districts:

1. It shall meet the definition of a historic district as outlined in Municipal Code Section

8.05.020.

2. An archival file on the property shall be maintained by the City.

3. It may be qualified as 'historic' at the federal, state, and/or county level.

4. The structure/site may not be modified nor objects removed without following the procedures outlined in Municipal Code Section 8.05.120 "Demolition or Alteration or New Construction within a Historic District - Certificate of Appropriateness".

5. A marker explaining the historic nature of the site may be installed at the site in a location viewable from the public way.

6. Compliance with all rules and regulations for Historic Sites and Historic Districts under Chapter 8.05 of the Municipal Code shall be required.

7. The site shall not be further subdivided.

8. The City Clerk shall submit the Council Resolution to the County recorder for recordation within 90 days of the effective date of the Council's resolution.

The following Specific Conditions of Approval shall apply to the Ocotillo Lodge Historic District:

1. Design Guidelines. The property owners in the proposed historic district shall develop a set of design guidelines as outlined in Section 8.05 for review and approval by the City's HPO prior to the City Council public hearing.

2. Review of future Certificates of Appropriateness {"C of A"). Alterations to buildings, structure, objects, and other character-defining and contributing resources within the historic district and described in Sections 2 and 3 are to be evaluated pursuant to PSMC Section 8.05.120 (E), including consistency with the Design Guidelines.

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Resolution No. HSPB 154 / HD-11 - "Ocotillo Lodge"

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Based upon the foregoing, the Historic Site Preservation Board recommends that the City Council designate "Ocotillo Lodge" located at 1111 East Palm Canyon Drive, a Historic District HSPB #154 / HD-11.

ADOPTED THIS SEVENTH DAY OF MAY, 2024.

AYES:

NOES:

ABSENT: .

ABSTAIN:

ATTEST:

Hough, Nelson, Hansen, Rosenow, Bachman, Herr, Moruzzi.

None.

CITY OF PALM SPRINGS, CALIFORNIA
Christopher Hadwin
Director of Planning Services
EXHIBIT A: Historic Resources Report chart of character-defining features Item 2D - Page 278
OCOTILLO LODGE, 1111 E. PALM CANYON DRIVE, PALM SPRINGS, CALIFORNIA

HISTORIC RESOURCES REPORT
EXHIBIT A:

HISTORIC RESOURCES REPORT CHART

OF CHARACTER-DEFINING FEATURES
Figure 2: Map of Ocotillo Lodge with contributors identified in red and non-contributors in blue . . . . - . . .
-
North Building Cluster (Attachment D, Images 1-45 and Attachment E, Images 1-32) 1A 1957 Contributing • Exterior materials of • Porte cochere notched concrete block, archways on east and west.
grooved concrete • Ocotillo Lodge
panels, wood, and sign/lettering.
glass. • New driveway pavers in
porte cochere.
• Projecting concrete • Etched leaf design on lobby
blocks used as door.
accents.
• Concrete block screen
walls flanking porte
cochere.
• Glass wall with double
glass doors at porte
cochere wall of lobby.
• Distinctive semicircular
plan and concave
glass wall divided by Ibeams at Candlewood
Room.
21 CHATTEL, INC. I HISTORIC PRESERVATION CONSULTANTS
Item 2D - Page 279
OCOTILLO LODGE, 1111 E. PALM CANYON DRIVE, PALM SPRINGS, CALIFORNIA

HISTORIC RESOURCES REPORT
• Concrete block piers
framing Candlewood
Room.
18 1957 Contributing
CHATTEL, INC. I HISTORIC PRESERVATION CONSULTANTS
22 Item 2D - Page 280
OCOTILLO LODGE, 1111 E. PALM CANYON DRIVE, PALM SPRINGS, CALIFORNIA

HISTORIC RESOURCES REPORT
1C 1957 Contributing • Interior/exterior
connections expressed
through the use of
glass walls,
continuation of interior
beams and tongueand-groove ceilings
with exposed beams
from indoors to
outdoors, and
continuation of
concrete block walls
into patios.
• Integration of private
patios and semiprivate decks into
plans for each
residential unit.
• North building
horizontal and vertical
circulation, including
breezeways and open
staircases.
• Expressed post-andbeam construction.
• Flat roofs with wide
overhanding eaves
and cantilevered
canopies.
• Unadorned wall
surfaces with little or
no decorative
detailing.
• Exterior materials of
concrete block,
grooved concrete
panels, wood, and
glass.
• Flush-mounted
ribbons, pair, and
single clerestory
windows.
• Glass walls
incorporating sliding
glass doors.

CHATTEL, INC. I HISTORIC PRESERVATION CONSULTANTS
• Breezeways: Wood and
steel supports added to
some staircases; screened
enclosures at stairways,
possible removal of some
planting areas.
• Some windows replaced,
including louver or jalousie
windows replaced with
glass block at breezeways.
• Conversion of former
residential space to laundry,
offices on first floor
immediately to the west
adjacent to center portion of
north building cluster.
23 Item 2D - Page 281
OCOTILLO LODGE, 1111 E. PALM CANYON DRIVE, PALM SPRINGS, CALIFORNIA

HISTORIC RESOURCES REPORT
Villa Bungalows (Attachment D, Images 46-70 and Attachment E, Images 33-44) 2A 1957 Contributing
28 1957 Contributing
2C 1957 Contributing
2D 1957 Contributing
2E 1957 Contributing
2F 1957 Contributing
• Interior/exterior
connections expressed
through the use of
glass walls,
continuation of interior
beams and tongueand-groove ceilings
with exposed beams
from indoors to
outdoors, and
continuation of
concrete block walls
into patios.
• Integration of private
patios and semiprivate decks into
plans for each
residential unit.
• Expressed post-andbeam construction.
• Flat roofs with wide
overhanding eaves
and cantilevered
canopies.
• Unadorned wall
surfaces with little or
no decorative
detailing.
• Exterior materials of
concrete block,
grooved concrete
panels, wood, and
glass.
• Flush-mounted
ribbons, pair, and
single clerestory
windows.
• Glasswalls
incorporating sliding
glass doors.
• Some windows replaced,
including louver or jalousie
windows replaced with
glass block at breezeways.
• Some front doors replaced.
• Installation of metal security
doors at perimeter units
facing adjacent streets.
• Patio modifications in some
units, including removal of
original paving and
landscape features such as
palms.
• Replacement of original
grape stake fencing.
• Removal of some wood
fencing entirely and
replacement with low slump
block walls at units facing
the pool.

Courtyard Bungalows (Attachment D, Images 71-103 and Attachment E, Images 45-88) 3A 1957 Contributing • Interior/exterior
3B 1957 Contributing connections expressed
24 CHATTEL, INC. I HISTORIC PRESERVATION CONSULTANTS
Item 2D - Page 282
OCOTILLO LODGE, 1111 E. PALM CANYON DRIVE, PALM SPRINGS, CALIFORNIA

HISTORIC RESOURCES REPORT
3C 1957 Contributing through the use of
glass walls,
continuation of interior
beams and tongueand-groove ceilings
with exposed beams
from indoors to
outdoors, and
continuation of
concrete block walls
into patios.
• Integration of private
patios and semiprivate decks into
plans for each
residential unit.
• Expressed post-andbeam construction.
• Flat roofs with wide
overhanding eaves
and cantilevered
canopies.
• Unadorned wall
surfaces with little or
no decorative
detailing.
• Exterior materials of
concrete block,
grooved concrete
panels, wood, and
glass.
• Flush-mounted
ribbons, pair, and
single clerestory
windows.
• Glass walls
incorporating sliding
glass doors.

CHATTEL, INC. I HISTORIC PRESERVATION CONSULTANTS
• Installation of metal security
doors at perimeter units
facing adjacent streets.
• Patio modifications in some
units, including removal of
original paving and
landscape features such as
palms, installation of private
spas.
• Replacement of original
wood grape stake fencing.
• Removal of some wood
fencing entirely and
replacement with low slump
block walls at units facing
the pool.
• Early addition of garage .
25 Item 2D - Page 283
OCOTILLO LODGE, 1111 E. PALM CANYON DRIVE, PALM SPRINGS, CALIFORNIA

HISTORIC RESOURCES REPORT
Conference Room (Attachment D, Images 104-108 and Attachment E, Images 89-91) 4 5
6 Site
c.1964 Non- • N/A
Contributing
• Suspected later addition to
property constructed
outside of the period of
significance, does not
appear in historic drawings
or photographs.
• West elevation alterations
impairing integrity including
infill, replacement of doors,
and moving of wood beam.

Sunshine Bar (Attachment D, Images 109-118 and Attachment E, Images 92-94) 1973 NonContributing • N/A • Later addition to property constructed outside of the period of significance.

Swimming Pool (Attachment D, Images 22-25)
1957 Contributing • Keyhole shape of
swimming pool
Landscape and Hardscape
• Original landscaping
where extant, including
palm trees and layout
of planting beds.
• Original pathway and
patio pavements,
where extant.
• Heat pumps added.
• Adjacent pool cabana,
restroom, and curved trellis
removed.
• Fencing added around pool
deck area.
• Covering of original
walkway paving.
• A large amount of surface
mounted conduit and
raceways.
26 CHATTEL, INC. j HISTORIC PRESERVATION CONSULTANTS

HISTORIC SITE PRESERVATION BOARD

STAFF REPORT
DATE: May 7, 2024 PUBLIC HEARING
SUBJECT: AN APPLICATION BY OCOTILLO LODGE OWNERS’ ASSOCIATION (OLOA) REPRESENTED BY CHATTEL INC. FOR HISTORIC DISTRICT DESIGNATION OF THE “OCOTILLO LODGE” LOCATED AT 1111 EAST PALM CANYON DRIVE, HSPB #154 / HD-11, APNs 511-035-001
THROUGH 511-035-128 (SY).

FROM: Department of Planning Services

SUMMARY
The Ocotillo Lodge Owners Association (OLOA) is seeking historic district designation for a residential condominium complex known as Ocotillo Lodge completed in 1957.

As a property located on Reservation Fee Land, the application was forwarded to the Tribe’s Historic Preservation Officer (THPO) for recommendation. Comments regarding the Historic Resources Report (HRR) were provided (Attachment D) but no recommendation was provided regarding the request for historic district designation.

If designated as a historic district, the property would be subject to the regulations outlined in Section 8.05 of the Palm Springs Municipal Code.

RECOMMENDATION:

1. Open the public hearing and receive public testimony.

2. Close the public hearing and adopt Resolution HSPB #154, “A RESOLUTION OF

THE HISTORIC SITE PRESERVATION BOARD OF THE CITY OF PALM

SPRINGS, CALIFORNIA, RECOMMENDING THAT THE CITY COUNCIL DESIGNATE “OCOTILLO LODGE” LOCATED AT 1111 EAST PALM CANYON DRIVE, AS A HISTORIC DISTRICT, HSPB #154 / HD - 11, SUBJECT TO CONDITIONS, APNs 511-035-001 THROUGH 511-035-128.”
BACKGROUND AND SETTING:

Originally designed as a hotel, Ocotillo Lodge was converted into a 124-unit condominium complex in 1996. The property was designed by Palmer & Krisel and constructed by George and Robert Alexander in 1957. Garrett Eckbo collaborated with the team as the Item 2D - Page 284
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master landscape architect. Located at the corner of East Palm Canyon Drive and Arquilla Road, the property is roughly 4.16 acres.1
Proposed District Boundaries: The report provides a site plan (HRR Attachment B) that identifies the existing property lines which would be the boundaries of the proposed historic district. The property contains a total of 31 structures and the keyhole-shaped swimming pool at the center of the layout. Parking and vehicular circulation was designed around the perimeter of the property.

AERIAL VIEW OF THE SITE.

A VIEW OF THE KEYHOLE-SHAPED POOL, “CANDLEWOOD ROOM”,
AND PAINTED MASONRY WALLS.
1 Lot size information according to the Riverside County database records.

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Related Relevant City Actions by HSPB, Planning, Fire, Building, etc.

March 4, 2021
January 6, 2022
January 10, 2022
Three Community meetings conducted remotely via Zoom
with property owners within the proposed HD and City Staff pursuant PSMC 8.05.090 (B,1)
May, 2024 Site inspection by members of the HSPB and City Staff.

List of potentially contributing resources, APN’s and Unit Numbers: The report identifies a total of 124 individual units with unique APN’s. Prior to the City Council hearing for designation, names of the owners for each unit should be included on the list. Below is Image 12 - Attachment B of the HRR identifying the contributing structures in red and the non-contributing structures in blue:

Property Owner Support: The application includes the ballot count supporting the historic district nomination. Of the 124 units, 64 voted in favor of the nomination which is 51% of owner support. This meets the Historic Preservation Ordinance requirements pursuant to Section 8.050.090(A)(3)(c).

Period of Significance: According to the Citywide historic context statement and survey findings, this development would be categorized in the Post-World War II Palm Springs (1945-1969) period. This period following the war resulted in an influx in population to the area which increased development needs in all areas, particularly residential development. According to the report, Ocotillo Lodge was built next to the Twin Palms housing tract as a convenient lodging opportunity for potential buyers in the Twin Palms neighborhood. The period of significance for this site is 1957, which is when the complex was completed.

Item 2D - Page 286
E Twin Palms Dr
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Proposed Historic District Design Guidelines: Historic District design guidelines are required to include, but not limited to development standards, aesthetic standards, and approval criteria in preserving the character of the district and contributing structures therein. As part of this application, the applicant submitted a current version of the design guidelines used by the condominium to review exterior changes. If recommended for designation, it is recommended as a condition of approval that a comprehensive design guideline be submitted with instructions on how to submit for a Certificate of Appropriateness for the City’s Historic Preservation Officer to review.

ANALYSIS:

A historic resources report prepared by Chattel, Inc. dated June 30, 2023 (“the report”) and a site visit by staff and members of the HSPB are the basis of this staff report.

Historic Preservation activities in Palm Springs are regulated under Municipal Code Section 8.05 (“Historic Preservation”). The purpose of the Historic Preservation Ordinance is:
“…to stabilize and improve buildings, structures or areas which are considered to be of historical, architectural, archaeological or ecological value, to foster civic beauty, to strengthen the local economy and to promote the use of historic resources for the education and welfare of the citizens.” Standard Conditions that apply to Historic Districts:

1. It shall meet the definition of a historic district as outlined in Municipal Code Section 8.05.020.

2. An archival file shall be maintained on the property by the City.

3. It may be qualified as ‘historic’ at the federal, state, and/or county level.

4. A marker explaining the historic nature of the site may be installed in a location viewable from the public way.

5. Compliance with all rules and regulations for Historic Resources and Historic Districts under Chapter 8.05 of the Municipal Code.

6. If designated, the findings in support of designation shall be stated in a resolution of the City Council that shall be recorded with the County Recorders’ office within 90 days of the effective date of the Council’s resolution.

Evaluation of the Application. Pursuant to Municipal Code Section 8.05.090 (C), “In considering an application for designation of a historic district, the HSPB and City Council shall evaluate the application and make findings for conformance with the following criteria and a district may be designated provided the following findings are met:” PSMC 8.05.090 (C, 1) Analysis of Eligibility: The proposed district and the contributing resources located therein exhibit exceptional historic significance and meet one or more of the criteria listed below:

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The report identifies the exterior of Ocotillo Lodge as a largely intact example of a MidCentury Modern hotel, which has since been converted to a condominium complex.

Designed by Palmer and Krisel, the complex exhibits character-defining features of the Modern Movement through the use of site planning, building form and material selection, but it also visualizes the development trends of Palm Springs during that period. The report also references the landscape architect Garrett Eckbo and his involvement with the project.
(Criterion a) Is associated with events that have made a meaningful contribution to the nation, state or community;
No information was provided indicating any significant event was directly associated with this site. The site does not qualify under Criterion a. (Criterion b) Is associated with the lives of persons who made a meaningful contribution to national, state or local history;
The report does not call out any individuals associated with the property who made any meaningful contribution to national, state, or local history. The site does not qualify under Criterion b.
(Criterion c) Reflects or exemplifies a particular period of national, state or local history;
During the post-World War II period in Palm Springs, there was a growing demand for single-family residential homes and housing for seasonal residents. Local developers like the Alexander Construction Company developed residential tracts to meet this need, and the Ocotillo Lodge was constructed, in part, to house potential homebuyers while the homes were being built. The different unit types designed for the Ocotillo Lodge showcase the modern aesthetic that would mirror significant features in the homes that would be constructed in the Twin Palms tract. The units at the Ocotillo Lodge also catered to differing privacy and livability needs for both short and long-term visitors to the area. Staff finds the site qualifies as a historic resource under Criterion c by reflecting the local history of development and design shift in architectural style. (Criterion d) Embodies the distinctive characteristics of a type, period or method of construction;
Unlike the National Register criterion concerning construction, the Palm Springs evaluation of construction addresses the type (of construction), the period (of construction) and the method (of construction). Conventional construction methods and materials were used to develop this complex. The HRR goes into detail regarding the use of steel I-beams for the lobby building (identified as Building 1A) to create the expansive wall of concave windows. While the use of the steel beams allowed the glass in the south Item 2D - Page 288
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elevation to be configured in a unique way and what was known as the “Candlewood Room” to slightly cantilever over the area containing the swimming pool, the invention and use of the steel I-beam for structural framing date further back than the 1950s. Staff finds the method and techniques used were not new to the period; therefore, contrary to the report, staff does not find the project qualifies for this criterion. (Criterion e) Presents the work of a master builder, designer, artist, or architect whose individual genius influenced his age, or that possesses high artistic value;
Architects Palmer and Krisel are credited for designing the Ocotillo Lodge and the prolific developers Alexander Construction built the complex. It was also noted in the report that landscape architect Garrett Eckbo was involved in the design of the landscape for the project. Each of the individuals that came together to design and develop this property have a level of influence in their respective fields, especially in the local context of Palm Springs. Their works are celebrated and continue to highly influence the field today.

Ocotillo Lodge is a rare example where these three highly regarded masters collaborated on a single project, thus staff finds the project qualifies under Criterion e. (Criterion f) Represents a significant and distinguishable entity whose components may lack individual distinction, as used in evaluating applications for designation of historic districts, for parcels on which more than one entity exists; or
The structures and features within the proposed boundaries of the district may not independently possess historic distinction, however, as a collective the proposed district embodies the development history of Palm Springs and how existing structures were adapted for the population growth of full-time residents and the architectural trends that appealed to the people during that time. Thus, the proposed district also qualifies under Criterion f.
(Criterion g) Has yielded or may be likely to yield information important to national, state or local history or prehistory.

No information has been provided on any pre-historic significance of the site.

Analysis of Integrity. (PSMC 8.05.090 (C,2). The site, structure, building or object retains one or more of the following aspects of integrity, as established in the Secretary of the Interior’s Standards: integrity of design, materials, workmanship, location, setting, feeling, or association. “Ocotillo Lodge” is evaluated as a historic district in terms of its historic integrity as follows:

Item 2D - Page 289
Historic Site Preservation Board Staff Report: May 7, 2024 HSPB-154 / HD-11 – Ocotillo Lodge

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Location.

The buildings, the configuration of parking, and open community spaces remain in their historic location, therefore, the proposed district retains its integrity of location.

Design.

Vehicular circulation, including parking, is concentrated to the periphery of the site and the internal circulation consists of concrete pathways encouraging pedestrian use.

The one-story units were arranged in two different clusters around the central open space containing the keyhole-shaped pool. The report identifies the one-story clusters as “villa bungalows” and “courtyard bungalows”. The “villa bungalows” comprise of 25 units and are arranged in a grid pattern, while the “courtyard bungalows” consist of 56 units that are clustered in a checkered pattern. The layout of the buildings allows for each unit to have their own private patio space and access to walkways that ultimately connect back to the central community space. The buildings all utilize a similar architectural language that exhibit modernism principles by using simple geometric forms, flat roots, exposed wooden beams, square concrete block walls, large expanses of glass walls, ribbon and/or clerestory windows, and simple line details with no ornamentation.

No original landscape files were found but the report confirms Garrett Eckbo’s involvement in the project and credits the landscaping features around the main pool and the geometry of curves and angles found in the paving to him based on an interview with the architect. Other examples of his work help support this claim.

The building forms, the use of simple details and largely the site design are critical components of the design that largely remain; therefore, staff finds the design integrity is intact.

Setting.

Palm Canyon Drive were vacant. Currently those areas are zoned with differing degrees of residential and commercial uses but the original setting between Ocotillo Lodge and the Twin Palms subdivision remains intact.

Materials.

The building materials consist of smooth plaster or stucco finished walls, T1-11 siding, masonry block walls, extruded wooden beams and fascia details, aluminum-framed windows and doors, and concrete pathways. It appears that some original exterior material was replaced and there are areas of deterioration that need to be addressed but Item 2D - Page 290
Historic Site Preservation Board Staff Report: May 7, 2024 HSPB-154 / HD-11 – Ocotillo Lodge

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a majority of the original material remains. The overall integrity of materials is intact.

Workmanship.

Feeling.

Association.

DEFINING HISTORIC CHARACTERISTICS
In considering a recommendation for historic district designation it is important to distinguish those physical elements that are original or from the period of significance that contribute to the resource’s historic significance from alterations, additions or features that were added at a later time that may be sympathetic to the original character, but which may create a false sense of historicity. Distinguishing original character-defining features from non-original elements aids the HSPB when it is tasked with evaluating future alterations to the historic district.

On page 19, the report identifies character-defining historic features of this site. In conjunction with the list in the report, Staff compiled the following list of character-defining features for consideration by the HSPB.
• Site design and building cluster configurations on the lot around the central focal point of the main swimming pool shaped like a keyhole
• Internal network of concrete pathways including the curved and angular geometry of the pavement credited to Garrett Eckbo
• Parking and vehicular circulation configuration around the perimeter of the property Item 2D - Page 291
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• One and two-story horizontal massing and simple geometric forms • Grid-like layout or clustered units arranged around the swimming pool and articulated by four-unit bungalows
• Keyhole-shaped pool within the open community space south of the lobby building • Painted masonry block screen walls with articulation on the north (front) and south (rear) elevations of the lobby building (identified as Building 1A in the HRR) • Distinctive semi-circular plan and concave windows in the “Candlewood Room” (identified as the south portion of Building 1A in the HRR) • Monumental porte cochere entry with restored Ocotillo Lodge signage (excluding the square notched archway in the porte cochere)
• Flat roofs that have wide overhanging eaves and cantilevered canopies • Fascia details that hide the electrical conduit
• Expressed post-and-beam construction using wood and steel members • Interior/exterior connections expressed through glass walls, the continuation of exposed beams and tongue-and-groove ceiling details to the exterior • Integration of private patios and semi-private decks for each unit • Unadorned smooth plaster or stucco-finished wall surfaces • Square concrete block walls in a stack bond pattern
• Flush-mounted aluminum-framed ribbon windows, clerestory windows, and glass sliding doors that span from floor to ceiling
• “Sun flap” of suspended concrete panels shading concave curtain wall • T1-11 wood siding on storage spaces and patio dividers for second floor units • Exposed pebble aggregate concrete stair treads in steel pipe column stairwells leading to the second floor units
• Glass walls incorporating sliding glass doors
• Glass walls with double glass doors at porte cochere wall of lobby • Landscape design features around the main pool by Garrett Eckbo and tall Washingtonia palms throughout the complex
• Curved cabana and restroom structure with trellis south of the keyhole-shaped pool designed by Garrett Eckbo (removed)
Non-contributing elements:
• Pool fencing installed around the keyhole-shaped swimming pool • Metal security gates at various entry points to the site • Metal screen security doors in front of entry doors on the units facing East Twin Palms Drive
• Metal mesh screening on stair railings
• Metal fence along the curved strip of grass where the original curved cabana/trellis was located south of the keyhole-shaped pool
• Glass blocks in original clerestory openings
• White dual cone exterior sconce
• Roof-mounted mechanical equipment and accompanying ductwork • Sunshine Bar (identified as Building 5 in the HRR) added in 1973 and detached barbecue added in 1994
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• One-story conference room (identified as Building 4 in the HRR) east of the Sunshine bar (Building 5)
• Two non-original spas located northwest and directly east of the keyhole shaped swimming pool

ENVIRONMENTAL ASSESSMENT
The proposed historic resource designation is not subject to the California Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) (the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment) and 15060(c)(3) (the activity is not a project as defined in Section 15378) of the CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has no potential for resulting in physical changes to the environment, directly or indirectly.

NOTIFICATION
Pursuant to section 8.05.140 of the Municipal Code of Palm Springs, all residents within five hundred (500) feet of the subject property have been notified and notice was published in a newspaper of general circulation.

CONCLUSION:

Ocotillo Lodge meets the definition of a historic district based on Criteria c, e and f and meets the integrity findings of the Palm Springs Historic Preservation Ordinance; therefore, staff recommends that the complex be designated as a Historic District.

PREPARED BY: Sarah Yoon, Associate Planner/Historic Preservation Officer REVIEWED BY: David Newell, AICP, Assistant Director of Planning ATTACHMENTS:

A. Vicinity Map
B. Draft Resolution
C. Application, related background materials, photos.

D. Architectural Design Guidelines for Ocotillo Lodge
E. THPO Comment Letter
F. Public Comment
Item 2D - Page 293

EXCERPTS OF MINUTES
At the Historic Site Preservation Board meeting of the City of Palm Springs, held May 7, 2024, the Historic Site Preservation Board took the following action:

2.A. APPLICATION BY THE OCOTILLO LODGE OWNERS’ ASSOCIATION (OLOA) REPRESENTED BY CHATTEL, INC. FOR HISTORIC DISTRICT DESIGNATION OF THE “OCOTILLO LODGE” LOCATED AT 1111 EAST PALM CANYON DRIVE, CASE HSPB #154 / HD-11 (APNs 511-035-001 THROUGH 511-035-128) (SY).

Staff member Yoon, Historic Preservation Officer, presented the staff report to the Board.

Alvin Nuval, Planner with Chattel, for the Applicant, spoke and answered questions of the Board.

Condominium property owners, and a neighboring property owner, commented on the application.

Motion by Member Hansen, seconded by Member Nelson to adopt the revised findings that include references to recommend that the City Council designate “The Ocotillo Lodge” (HSPB 154 / HD-11) as a Historic District.

AYES: Hough, Nelson, Hansen, Bachman, Herr, Moruzzi, Rosenow.

NOES: None.

ABSENT: None.

Item 2D - Page 294

CITY COUNCIL STAFF REPORT
DATE: MAY 23, 2024 BUSINESS & LEGISLATIVE
SUBJECT: DESIGNATION OF AN ALTERNATE FOR THE RIVERSIDE COUNTY

TRANSPORTATION COMMISSION
FROM: Scott C. Stiles, City Manager
BY: Brenda Pree, City Clerk

RECOMMENDATION:

Designate an alternate to the Riverside County Transportation Commission, and amend the 2024 Roster of City Council Subcommittees, Appointees, Liaisons, and Representatives To External Organizations.

BACKGROUND:

The City Council routinely appoints Councilmembers to serve on standing or ad hoc subcommittees, or individual Councilmembers may volunteer to serve as liaisons to study various topics. The City Council also appoints representatives to external organizations as needed. On an annual basis, however, an alternate member was not identified for the Riverside County Transportation Commission in the current roster (Attachment A), adopted December 14, 2023. Staff requests that the City Council designate an alternate to the Riverside County Transportation Commission.

FISCAL IMPACT:

None.

REVIEWED BY:

Department Director: Brenda Pree
City Manager: Scott Stiles
ATTACHMENT:

A. 2024 Roster of City Council Subcommittees and Appointees to External Organizations
Item 3A - Page 1

ATTACHMENT A
Item 3A - Page 2
Office of the City Clerk

CITY OF PALM SPRINGS, CALIFORNIA
Roster of City Council Subcommittees (2024)
Committee Status Meetings Member Member
Finance (R-12147) Standing As Needed (MAYOR)
Bernstein
(MPT)
deHarte
Board & Commission Interviews Ad Hoc As Needed Bernstein deHarte Business Retention / Economic
Development Standing As Needed Holstege Bernstein
Parks & Recreation Master Plan
(Approved 10/26/23)
Task
Force As Needed Holstege Bernstein
Roster of City Council
Appointees to External Organization (2024)
External Organizations Meetings Appointee Alternate
Coachella Valley Association of Governments (CVAG): (SE/, Form 700 required) Executive Committee
(Agendize assignment at the end of each FY)
Last Monday,
4:30 p.m.
(MAYOR)
Bernstein
(MPT)
deHarte
Energy & Environmental Resources 2
nd Thursday,
Noon deHarte Garner
Homelessness 3
rd Wednesday,
10 a.m. deHarte Garner
Public Safety 2
nd Monday,
9a.m. Garner Bernstein
Transportation 1
st Monday,
11 a.m. Middleton Garner
California Coalition of Mayors 1
st & 3rd Friday,
12:30 p.m. Bernstein N/A
Coachella Valley Conservation Commission
(SE/, Form 700 required)
2 nd Thursday,
10:30 a.m. deHarte Garner
Coachella Valley Economic Partnership 3
rd Wednesday
8 a.m. Garner Bernstein
Coachella Valley Mountains Conservancy Bd.
(SE/, Form 700 required)
2 nd Monday,
3 p.m. Garner deHarte
Desert Community Energy Board
(SE/, Form 700 required)
3 rd Monday,
2:30 p.m. Middleton Bernstein
Eastern Riverside County Interoperable
Communications Authority
2 nd Thursday of
April & October,
2 p.m.

Garner Middleton
Friends of PS Animal Shelter Varies Bernstein Middleton Greater PS Convention & Visitors Bureau
(SE/, Form 700 required) Varies Bernstein deHarte
League of California Cities Varies Middleton
Main Street/Uptown Business Association 1
st & 3rd Tuesday,
8:30 a.m. deHarte Garner
Palm Springs Chamber of Commerce 3
rd Thursday,
8 a.m.

Bernstein deHarte
Item 3A - Page 3
Office of the City Clerk
External Organizations Meetings Appointee Alternate
Palm Springs Tourism & Hospitality Organizations
(MAYOR)
Bernstein deHarte
Hotel General Managers Weekly Meeting Wednesdays
8 a.m.

PS Hospitality Association Board Meetings 2
nd Thursday
11 a.m.

PS Hospitality Association Member Meeting 3
rd Thursday
11:30 a.m.

PS Resorts Meetings Varies
Plaza Theater Restoration Fundraising
Committee Varies Bernstein N/A
Office of Neighborhood Involvement
(One-PS)
2 nd Tuesday,
4:30 p.m. Bernstein Middleton
Riverside County Community Action Comm.
(SE/, Form 700 required)
3 rd Thursday,
5:30 p.m. Virata
Riverside County Transportation Commission
(SE/, Form 700 required)
2 nd Wednesday,
9 a.m.

Middleton
So. California Association of Governments
Conference & General Assembly Meeting
(SE/, Form 700 required)
TBA Middleton
Sunline Transit Agency
(SE/, Form 700 required)
4 th Wednesday,
Noon Middleton Garner
Item 3A - Page 4

CITY COUNCIL STAFF REPORT
DATE: MAY 23, 2024 BUSINESS & LEGISLATIVE
SUBJECT: A JOINT ACTION BY THE CITY COUNCIL, ON BEHALF OF THE CITY

AND THE HOUSING SUCCESSOR AGENCY, TO APPROVE
DISPOSITION AND DEVELOPMENT AGREEMENT NO. 23P369 WITH
NEIGHBORHOOD PARTNERSHIP HOUSING SERVICES, INC. FOR

DISPOSITION OF REAL PROPERTY FOR DEVELOPMENT OF A

HOMEOWNERSHIP OPPORTUNITY PROGRAM AND APPROVE A

JOINT RESOLUTION DECLARING REAL PROPERTY AS EXEMPT
PROPERTY; APPROVAL OF CONDITIONAL GRANT AGREEMENT FOR

CITY TO PROVIDE FINANCIAL ASSISTANCE FOR DEVELOPMENT OF

RESIDENTIAL HOUSING
FROM: Scott C. Stiles, City Manager
BY: Housing and Community Development Department
SUMMARY:

This is a request to approve a Disposition and Development Agreement with Neighborhood Partnership Housing Services, Inc. (NPHS), a California corporation, or its affiliate, NPHS Community Redevelopment, Inc., a California Nonprofit Corporation, which will provide for (A) the sale of three (3) parcels owned by the City and the Housing Successor Agency (Properties) for development of a homeownership opportunity program, and (B) a Conditional Grant Agreement to provide financial assistance for the development of six (6) single-family homes.

RECOMMENDATION:

1. Approve Disposition and Development Agreement No. 23P369 with Neighborhood Partnership Housing Services, Inc., or its affiliate, NPHS Community Redevelopment, Inc., a California Nonprofit Corporation, to provide for the sale of real property for development of a homeownership opportunity program and provide a grant to NPHS in an amount not to exceed $2,815,570 for construction of six (6) single-family homes.

2. Adopt Joint Resolution No. _____, “A RESOLUTION BY THE CITY COUNCIL OF

THE CITY OF PALM SPRINGS, ON BEHALF OF THE CITY AND ON BEHALF

OF THE HOUSING SUCCESSOR AGENCY FOR THE COMMUNITY
Item 3B - Page 1

REDEVELOPMENT AGENCY OF THE CITY OF PALM SPRINGS, DECLARING REAL PROPERTY AS EXEMPT SURPLUS LAND (APN: 669-353-001, 669-401- 010, and 401-401-039).

3. Authorize the City Manager or designee to execute all necessary documents.

BUSINESS PRINCIPAL DISCLOSURE:

A Public Integrity Disclosure form is provided as Attachment C. Neighborhood Partnership Housing Services, Inc. and NPHS Community Redevelopment, Inc., are registered in the State of California.

BACKGROUND:

The City of Palm Springs and the Housing Successor Agency to the Community Redevelopment Agency of the City of Palm Springs own three single family lots as follows, and shown in Attachment D:

Housing Successor Properties:
• 233 West Tramview Road Palm Springs, California, 92262: The Property consists of Assessor Parcel Number 669-401-010 and is approximately 0.17 acres in size.

Originally purchased by the Palm Springs Community Redevelopment Agency in 2005 at a price of $66,165. An appraisal completed in May 2023 estimated the Property to be worth $111,000.
• West side of El Dorado Boulevard south of West Tramview Road Palm Springs, California, 92262: The Property consists of Assessor Parcel Number 669-401- 039 and is approximately 0.21 acres in size. Originally acquired by the Palm Springs Community Redevelopment Agency in 2004 through a land swap. An appraisal completed in May 2023 estimated the Property to be worth $136,000.

City Property:
• Rosa Parks Road Palm Springs, California, 92262: The Property consists of Assessor Parcel Number 669-353-001 and is approximately 0.22 acres in size.

Acquired in 2011 from the former Redevelopment Agency. An appraisal completed in May 2023 estimated the property to be worth $141,000.

The Properties were purchased for inclusion in the Desert Highland Infill Program. The Desert Highland Infill Program targeted moderate-income families that had become priced out of the single-family market in Palm Springs. Ultimately, only five homes were built on scattered lots within the Desert Highland Estates Neighborhood as part of the program and the subject lots are a remnant that were never developed.

Item 3B - Page 2
On January 26, 2023, City Council directed Staff to utilize the Properties for homeownership opportunities.

Prior to disposing of the properties, the City/Successor Agency must declare the properties as “exempt surplus land” in accordance with the California Surplus Land Act (Cal. Government Code § 54220 et seq.). These properties qualify as exempt surplus land because they are small parcels (less than one-half acre) and do not meet criteria that would otherwise require issuance of a notice of availability. These properties would also qualify for an exemption for disposition to a Community Land Trust for purposes of a homeownership program, provided that a covenant with affordability restrictions is recorded against each parcel.

STAFF ANALYSIS:

The Housing and Community Development Department worked with the Procurement and Contracting Department to issue a Request for Proposals (RFP) to find a contractor for the needed services. The RFP was advertised in the local newspaper and published on the PlanetBids website. One proposal was received by the deadline of October 12, 2023 as follows:
• Neighborhood Partnership Housing Services, Inc., Rancho Cucamonga, CA The evaluation team made up of City staff from the Housing and Development and Planning Departments evaluated the proposal received against published criteria that included the firms experience, the understanding of the scope of work, the firm’s concept, the site plan, architectural and landscaping quality, local preference, and price.

Neighborhood Partnership Housing Services, Inc. was deemed qualified to complete the work. Staff determined the cost proposal was deemed to be fair and reasonable for the work. Staff recommends that the City Council approve the disposition and development agreement with Neighborhood Partnership Housing Services, Inc (NPHS).

NPHS is proposing to develop six (6) eco-friendly factory-built single-family homes in Palm Springs’ Desert Highland Estates Neighborhood. Below is a sample of one of the home styles.

Item 3B - Page 3
To increase the number of homes to be constructed, NPHS will subdivide each of the three parcels using the City’s Urban Lot Split Ordinance as shown below.

Each home will span approximately 1,500 square feet, with 3 bedrooms, 2 bathrooms, 2- car garages, solar panels, and battery storage.

Item 3B - Page 4
The estimated City investment for this project is $2,815,570, with a scheduled completion set for the winter of 2025. A sources and uses table for the project is shown below:

Homeownership Opportunities Program
Sources and Uses
Sources Amount
City Contribution $2,815,570.62
Low Income Investment Fund (Lift to Rise) $1,020,000.00 Total $3,835,570.62
Uses Amount
Predevelopment $ 245,189.98
MH Unit Cost $ 1,100,082.00
Onsite Construction $ 1,042,470.00
Offsite Construction $ 240,600.00
Financing Expenses $ 146,800.00
Resale Occupancy Subtotal $ 78,150.00
Contingency $ 502,790.40
Developer Fee $ 348,688.24
Other (Delivery, Fencing and landscaping) $ 130,800.00
Total $ 3,835,570.62
This development aims to benefit the City of Palm Springs, the Desert Highlands Estates Neighborhood, and low-income first-time homebuyers. The project will provide homeownership opportunities for low- income households who earn not more than 80% sin
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Item 3B - Page 5
area median income (AMI). The properties purchased with Housing Successor Agency funds are required to be used for Low Income housing projects (up to 80% AMI). By targeting buyers within this income range, NPHS offers viable homeownership options for those who struggle to find housing within their budget. To ensure long-term affordability, each property will be placed in a Community Land Trust (CLT), ensuring a 99-year affordability commitment. The program will also be utilizing innovative development practices and sustainable affordability through creative ownership structures. The latest income limits for Riverside County are shown below:

Riverside County Income Limits
($97,500 Area Median Income)
FY 2024 Persons in Family
1 2 3 4 5 6 7 8
Acutely
Low (15%) 10,250 11,700 13,200 14,650 15,800 17,000 18,150 19,350 Extremely
Low (30%)
21,550 24,600 27,700 31,200 36,580 41,960 47,340 52,720 Very Low
Income
(50%)
35,900 41,000 46,100 51,250 55,350 59,450 63,550 67,650 Low
Income
(80%)
57,400 65,600 73,800 82,000 88,600 95,150 101,650 108,250 Median
Income
(100%)
68,250 78,000 87,750 97,500 105,300 113,100 120,900 128,700 Moderate
Income
(120%)
81,900 93,600 105,300 117,000 126,350 135,700 145,100 154,450 It is anticipated the sales prices will range from approximately $200,000 to $250,000 depending on household income and current market factors. If the household were to sell the property, the maximum sales price would be based on the future Area Median Income for a similar sized household. For example, in 2022 the area median income (100%) for a household of four in Riverside County was $87,400. In 2024 the area median income for a household of four in Riverside County is $97,500, or 11.56% higher. If the home were purchased for $200,000 in 2022, and sold in 2024, the maximum sales price would be 11.56% higher than the purchase price, or $223,120, which is an increase of $23,120.

Community land trusts are non-profit organizations that hold land for community benefit.

As proposed, the NPHS Community Land Trust (NPHS CLT) will retain ownership of the I
Item 3B - Page 6
land and lease the land to the buyers at a low rate. Qualified buyers purchase and own the houses (Improvements) at an affordable purchase price. As defined in the Regulatory Agreement, "Affordable Purchase Price" means a home purchase price resulting in an average monthly housing payment (including mortgage loan principal and interest, ground lease fee, mortgage insurance fees, property taxes and assessments, homeowners’ insurance premiums, and homeowners’ association dues, if any) that is affordable to Low Income Households….” Low Income Households are those whose annual income does not exceed eighty percent (80%) of area median income adjusted for household size.

Essentially, the land becomes a community asset that enables affordable home ownership.

Under the Homeownership Opportunities Program buyers may benefit in a variety of ways:
• Home value appreciation.
• Hedge against rent increases and inflation.
• Long term stability for the household and the community. • Housing payments going towards building equity.

In addition, the use of factory-built housing, solar panels, and battery storage features reduces the long-term operating costs for homeowners and contributes to environmental sustainability.

ENVIRONMENTAL ASSESSMENT:

The requested City Council action is not a “Project” as defined by the California Environmental Quality Act (CEQA). Pursuant to Section 15378(a), a “Project” means the whole of an action, which has a potential for resulting in either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment. However, the requested action is not approval of a Project and constitutes a “preliminary contract” within the meaning of Section 15004 because the Project is subject to compliance with CEQA, and the DDA does not bind any party or commit to any definitive course of action prior to CEQA compliance, does not restrict the City from considering any feasible mitigation measures or alternatives, does not restrict the City from disapproving entitlements for the Project, and does not create any vested rights to proceed with the Project.

ALIGNMENT WITH STRATEGIC PLANNING:

Approval of this action supports City Council priority 1C, Quality of Life – Affordable Housing.

Item 3B - Page 7
FISCAL IMPACT:

Approval of this action would allocate $2,815,570 for the Homeownership Opportunity Program and approve contribution of three parcels valued at $388,000 to the project. Two of the parcels were purchased with former redevelopment agency Housing Set-aside funds and one was purchased with General Funds. Sufficient funds are budgeted and available in the current Fiscal Year 2023-24 Housing Set-aside budget.

REVIEWED BY:

Department Director: Jay Virata
Deputy City Manager: Flinn Fagg
City Manager: Scott Stiles
ATTACHMENTS:

A. Disposition and Development Agreement (with Deed of Trust, Notice of Affordability Restrictions, Conditional Grant Agreement, and Regulatory Agreement)
B. Resolution
C. Public Integrity Disclosure
D. Location Maps
Item 3B - Page 8

ATTACHMENT A
Item 3B - Page 9
55575.18265\42293348.1
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2024 DISPOSITION AND DEVELOPMENT AGREEMENT
Sale of Real Property for Development of a Homeownership Opportunity Program between

THE CITY OF PALM SPRINGS
a California municipal corporation
and
NPHS Community Redevelopment Inc.
a California Nonprofit Corporation
Item 3B - Page 10
55575.18265\42293348.1
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-1-

DISPOSITION AND DEVELOPMENT AGREEMENT
[NPHS SCATTERED SITE AFFORDABLE HOMEOWNERSHIP PROJECT]
This 2024 DISPOSITION AND DEVELOPMENT AGREEMENT (“Agreement”) is dated as of __________, 2024 (“Date of Agreement”), for reference purposes only, and is entered into by and between the City of Palm Springs, a California municipal corporation (“City”) and NPHS Community Redevelopment Inc., a California nonprofit corporation (“Developer”). The City and the Developer are sometimes referred to in this Agreement, each individually, as a “Party,” or collectively, as the “Parties.”

RECITALS
This Agreement is entered into with reference to the following recitals of fact (“Recitals”) that City and Developer believe to be true as of the Effective Date of this Agreement:

A. The City is the owner of that real property located on Rosa Parks Road (APN: 669- 353-001). The City, acting as the Successor Agency to the Palm Springs Redevelopment Agency, is the owner of real property located at 233 Tramview Road (APN: 669-401-010) and El Dorado Boulevard (APN: 669-401-039). The real property referenced in this paragraph is specifically described in Exhibit A attached hereto and incorporated herein by this reference (hereafter, each is individually referred to as a “Parcel” and collectively they are referred to as the “Property”).

B. On August 31, 2023, the City issued Request for Proposals 39-23 for “Sale of Real Property for Development of a Homeownership Opportunity Program,” which identified the Property as available for sale for purposes of development of homes that would be sold to lowerincome households in accordance with state law.

C. The Developer proposed acquiring and developing the Property with single-family residences, which would be transferred to a low income household for an affordable housing cost pursuant to the terms of a ground lease and a Regulatory Agreement, defined below, that will be recorded against the Property. Developer has proposed constructing two (2) single-family residences on each Parcel, resulting in a total of six (6) affordable homes available for purchase by low income households (the “Project”).

C. The Developer’s proposed acquisition of the Property and subsequent construction and operation of the Project (as further defined in Section 1.1.58) pursuant to the terms of this Agreement is in the best interest of the City and the health, safety and welfare of the City’s taxpayers and residents and is in accordance with the public purposes set forth in applicable law.

Implementation of this Agreement will further the goals and objectives of the City’s general plan by: (i) strengthening the City’s land use and social structure, (ii) alleviating economic and physical blight on the Property and in the surrounding community, and (iii) providing incentives for welldesigned housing and affordable housing opportunities.

D. The City desires to convey the Property to the Developer for the development of the Project and the Developer desires to purchase the Property from the City for the same purpose.

Each Parcel shall be subject to affordability covenants that satisfy the terms and conditions of this -
Item 3B - Page 11
55575.18265\42293348.1
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Agreement to ensure each unit is transferred to eligible households in accordance with this Agreement.

NOW, THEREFORE, in consideration of the mutual promises set forth in this Agreement and other good and valuable consideration, the receipt and sufficiency of which is acknowledged by City and Developer, the Parties agree as follows:

TERMS AND CONDITIONS

ARTICLE I
DEFINITIONS; REPRESENTATIONS AND WARRANTIES;

EFFECTIVE DATE

1.1 Definitions. All initially capitalized terms not otherwise defined in this Agreement shall have the following meanings:

1.1.1 “Additional Insureds” has the meaning ascribed to such term in Section 6.9.

1.1.2 “CEQA” means the California Environmental Quality Act, Public Resources Code Sections 21000, et seq.

1.1.3 “Certificate of Completion” means the written certification of City that the construction of the Project has been completed in compliance with the terms and conditions of this Agreement, substantially in the form of Exhibit G attached to this Agreement.

1.1.4 “City” means the City of Palm Springs, California, a California municipal corporation.

1.1.5 “City Manager” means the City Manager of the City or his or her designee or successor in function.

1.1.6 “City Requirements” has the meaning ascribed to the term in Section

3.6.2. 1.1.7 “City’s Title Notice Response” means the written response of the City to the Developer’s Title Notice, in which the City either (i) elects to cause the removal from the Preliminary Report of any matters shown in Schedule B of the Preliminary Report as exceptions to coverage under the proposed Title Policy that were objected to in the Developer’s Title Notice, or (ii) elects not to cause the removal from the Preliminary Report of any matters shown in Schedule B of the Preliminary Report as exceptions to coverage under the proposed Title Policy that were objected to in the Developer’s Title Notice.

1.1.8 “Close of Escrow” or “Closing” means the recording of the Grant Deed for each Parcel in the Official Records of the Recorder of the County, and completion of each of the actions set forth in ARTICLE IV by the Escrow Holder for the City to sell the Property to the Developer and the Developer to purchase the Property from the City.

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1.1.9 “Completion of Construction” means the issuance of a Certificate of Completion confirming that the final certificate of occupancy for the Project, based on the plans submitted by the Developer to the City, has been issued.

1.1.10 “Conditional Grant Agreement” means the grant agreement in the form attached hereto as Exhibit H.

1.1.11 “Construction Costs” means the total cost incurred by Developer in acquiring the Property and constructing the Project in accordance with this Agreement.

1.1.12 “Construction Lender” means a Lender(s) that provide(s) a Construction Loan to the Developer to pay the Construction Costs of all or a portion of the Project.

1.1.13 “Construction Loan” means a Loan obtained by Developer from a Construction Lender to finance all or part of the Construction Costs in conformity with the Financing Plan.

1.1.14 “Construction Loan Deed of Trust(s)” means the Lien(s) required by a Construction Lender to secure the Developer’s performance under the associated Construction Loan.

1.1.15 “Control” means and refers to possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person or entity, whether by ownership of equity interests, by contract or otherwise.

1.1.16 “Controlling” and “Controlled” mean and refer to exercising or having Control.

1.1.17 “County” means the County of Riverside, California.

1.1.18 “Developer’s Title Notice” means a written notice from the Developer to the City indicating the Developer’s acceptance of the state of the title to the Property, as described in the Preliminary Report, or the Developer’s objection to specific matters shown in Schedule B of the Preliminary Report as exceptions to coverage under the proposed Title Policy for the Property, describing in suitable detail the actions that the Developer reasonably believes are indicated to cure or correct each of the Developer’s objections.

1.1.19 “Developer’s Title Notice Waiver” means a written notice from the Developer to the City waiving the Developer’s previous objection in the Developer’s Title Notice to specific matters shown in Schedule B of the Preliminary Report as exceptions to coverage under the proposed Title Policy for the Property.

1.1.20 “Due Diligence Investigations” means the Developer’s due diligence investigations of the Property to determine the suitability of the Property for development and operation of the Project, including, without limitation, investigations of the environmental and geotechnical suitability of the Property, as deemed appropriate in the reasonable discretion of the Developer, all at the sole cost and expense of the Developer.

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1.1.21 “Due Diligence Investigation Conclusion Notice” means a written notice of the Developer delivered to the City and the Escrow Holder, prior to the end of the Due Diligence Period, indicating the Developer’s acceptance of the condition of the Property or indicating the Developer’s rejection of the condition of the Property and refusal to accept a conveyance of fee title to the Property, describing in reasonable detail the actions that the Developer reasonably believes are indicated to allow the Developer to accept the condition of the Property.

1.1.22 “Due Diligence Period” means the date commencing on the Effective Date and ending at 5:00 p.m. on the ninetieth (90th) day following the Effective Date.

1.1.23 “Earnest Money Deposit” means Three Dollars ($3.00) payable in cash or other immediately available funds, which represents a payment of One Dollar ($1.00) for each Parcel.

1.1.24 “Effective Date” has the meaning ascribed to the term in Section 1.4.

1.1.25 “Environmental Claims” has the meaning ascribed to the term in Section 6.8.

1.1.26 “Environmental Laws” means all federal, state, local, or municipal laws, rules, orders, regulations, statutes, ordinances, codes, decrees, or requirements of any government authority regulating, relating to, or imposing liability of standards of conduct concerning any hazardous substance (as later defined), or pertaining to occupational health or industrial hygiene (and only to the extent that the occupational health or industrial hygiene laws, ordinances, or regulations relate to hazardous substances on, under, or about the Property, occupational or environmental conditions on, under, or about the Property, as now or may at any later time be in effect, including without limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (“CERCLA”) [42 USC Section 9601 et seq.]; the Resource Conservation and Recovery Act of 1976 (“RCRA”) [42 USC Section 6901 et seq.]; the Clean Water Act, also known as the Federal Water Pollution Control Act (“FWPCA”) [33 USC Section 1251 et seq.]; the Toxic Substances Control Act (“TSCA”) [15 USC Section 2601 et seq.]; the Hazardous Materials Transportation Act (“HMTA”) [49 USC Section 1801 et seq.]; the Insecticide, Fungicide, Rodenticide Act [7 USC Section 6901 et seq.] the Clean Air Act [42 USC Section 7401 et seq.]; the Safe Drinking Water Act [42 USC Section 300f et seq.]; the Solid Waste Disposal Act [42 USC Section 6901 et seq.]; the Surface Mining Control and Reclamation Act [30 USC Section 101 et seq.] the Emergency Planning and Community Right to Know Act [42 USC Section 11001 et seq.]; the Occupational Safety and Health Act [29 USC Section 655 and 657]; the California Underground Storage of Hazardous Substances Act [California Health & Safety Code Section 25288 et seq.]; the California Hazardous Substances Account Act [California Health & Safety Code Section 25300 et seq.]; the California Safe Drinking Water and Toxic Enforcement Act [California Health & Safety Code Section 24249.5 et seq.] the Porter-Cologne Water Quality Act [California Water Code Section 13000 et seq.] together with any amendments of or regulations promulgated under the statutes cited above and any other federal, state, or local law, statute, ordinance, or regulation now in effect or later enacted that pertains to occupational health or industrial hygiene, and only to the extent the occupational health or industrial hygiene laws, ordinances, or regulations relate to hazardous substances on, under, or about the Property, or the Item 3B - Page 14
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regulation or protection of the environment, including ambient air, soil, soil vapor, groundwater, surface water, or land use.

1.1.27 “Environmental Matters” has the meaning ascribed to the term in Section 6.8.

1.1.28 “Escrow” has the meaning ascribed to the term in Section 3.1.

1.1.29 “Escrow Closing Date” has the meaning ascribed to the term in Section

4.6. 1.1.30 “Escrow Holder” means Title Insurance Company.

1.1.31 “Escrow Opening Date” has the meaning ascribed to the term in Section 4.1.

1.1.32 “Event of Default” has the meaning ascribed to the term in Section 8.1.

1.1.33 “Financing Commitment” means (a) one or more commitment(s) from one or more Construction Lender(s) agreeing to provide sufficient funds which, when combined with the Developer’s equity contribution and the financial assistance to be provided by the City pursuant to this Agreement, is sufficient, as determined by the City in its reasonable discretion, to fully fund the Project’s Construction Costs, or (b) a letter from one or more Construction Lender(s) indicating approval of a loan to the Developer for the development of the Property.

1.1.34 “FIRPTA Affidavit” means an affidavit complying with Section 1445 of the United States Internal Revenue Code.

1.1.35 “Governmental Agency” means any and all courts, boards, agencies, commissions, offices, or authorities of any nature whatsoever for any governmental unit (federal, state, county, district, municipal, city, or otherwise) whether now or later in existence.

1.1.36 “Governmental Requirements” means all codes, statutes, ordinances, laws, permits, orders, and any rules and regulations promulgated thereunder of any Governmental Agency.

1.1.37 “Grant Deed” means a deed in the form of Exhibit D to this Agreement, conveying all of the City’s interest in the Property to the Developer.

1.1.38 “Hazardous Substances” means, without implied limitation, substances defined as “hazardous substances,” “hazardous material,” “toxic substance,” “solid waste,” or “pollutant or contaminate” in the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. Sections 9601, et seq.; the Toxic Substances Control Act (“TSCA”) [15 U.S.C. Sections 2601, et seq.]; the Hazardous Materials Transportation Act, 49 U.S.C. Sections 1801, et seq.; the Resource Conservation and Recovery Act, 42 U.S.C. Sections 6901, et seq.; those substances listed in the United States Department of Transportation (DOT) Table [49 CFR 172.101], or by the EPA, or any successor authority, as hazardous substances [40 CFR Part 302]; and those substances defined as “hazardous waste” in Item 3B - Page 15
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Section 25117 of the California Health and Safety Code or, as “hazardous substances” in Section 25316 of the California Health and Safety Code; other substances, materials, and wastes that are, or become, regulated or classified as hazardous or toxic under federal, state, or local laws or regulations and in the regulations adopted pursuant to said laws, and shall also include manure, asbestos, polychlorinated biphenyl, flammable explosives, radioactive material, petroleum products, and substances designated as a hazardous substance pursuant to 33 USC Section 1321 or listed pursuant to 33 USC Section 1317.

1.1.39 “Indemnified Parties” has the meaning ascribed to the term in Section

6.8. 1.1.40 “Lender” means any state or federally chartered bank, savings and loan, capital investment group, or other third party financial institution which routinely makes Loans to developments and developers such as the Project and the Developer in the normal course of business and which has been approved by the City pursuant to Section 7.3.

1.1.41 “Lien” means any mortgage, deed of trust, or other security instrument encumbering Developer’s fee interest in the Property and/or Project, or any part thereof, or any pledge or other agreement given as security for the repayment of a Loan and by which a Lender would be able to acquire any interest in the Developer upon the Developer’s breach of any obligation under the Lender’s Loan Documents.

1.1.42 “Loan” means any loan or third party equity/capital contribution (e.g. mezzanine financing) for the Project other than that provided by the City.

1.1.43 “Loan Documents” means the various documents and instruments made by and between the Developer and a Lender that evidence a Loan and the security for repayment of such Loan.

1.1.44 “Maintenance Deficiency” has the meaning ascribed to the term in Section 6.3.1.

1.1.45 “Normal Business Hours” means the normal business hours of the City. As of the Effective Date, the City’s normal business hours are Monday through Thursday, between the hours of 7:30 a.m. and 5:30 p.m. Pacific Time.

1.1.46 “Notice of Agreement” means the notice in the form of Exhibit E to this Agreement to be recorded against the Property at the Close of Escrow to provide constructive record notice of the existence and application of this Agreement to the Property.

1.1.47 “Party” means individually, the City or the Developer, as applicable.

1.1.48 “Parties” means collectively, the City and the Developer.

1.1.49 “PCO Statement” means a preliminary change of ownership statement provided for in California Revenue and Taxation Code Section 480.3.

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1.1.50 “Permitted Exceptions” means (i) any and all items shown in Schedule B of the Preliminary Report as exceptions to coverage under the proposed Title Policy that the Developer accepts, pursuant to Section 3.4; (ii) any exceptions from coverage under the proposed Title Policy resulting from the Developer’s activities on the Property; (iii) non-delinquent property taxes and assessments; (iv) this Agreement; or (v) the Grant Deed.

1.1.51 “Permitted Transfer” means and refers to any of the following types of Transfers by the Developer, where the person or entity to which such Transfer is made expressly assumes the obligations of the Developer under this Agreement in a written instrument satisfactory to the City.

1.1.51.1 Any Transfer of stock or equity of the Developer that does not change management or operational Control of the Property or the Project;

1.1.51.2 Any Lien given to Lender in connection with a Loan approved by the City pursuant to Section 7.3; and,

1.1.51.3 Any Transfer to Eligible Household pursuant to this Agreement, the Regulatory Agreement and the Ground Lease.

1.1.52 “Plans and Specifications” has the meaning ascribed to the term in Section 2.6.1.

1.1.53 “Preliminary Report” means a preliminary report issued by the Title Company in contemplation of the issuance of the Title Policy, accompanied by legible copies of all documents listed in Schedule B of the report as exceptions to coverage under the proposed Title Policy. The Parties acknowledge that they may prepare one (1) or more Preliminary Reports for each parcel, or group of parcels, comprising the Property. In such case, all reports, notices, and objection letters which pertain to the Preliminary Report for the entirety of the Property shall apply separately to each Preliminary Report associated with a parcel or a group of parcels.

1.1.54 “Project” means the construction and development of the Property for development of six (6) single family homes restricted under the Regulatory Agreement, including all required or associated on-site and off-site improvements, all hardscape and all landscaping, all as specifically described in the Scope of Development, and all to be developed in accordance with the Plans and Specifications to be approved by the City and any conditions imposed by the City in its approval of the Plans and Specifications.

1.1.55 “Project Completion Date” means that date set forth therefor by which a Certificate of Completion shall be issued for the Project, as more particularly provided in the Schedule of Performance. The Project Completion Date shall be no later than the date which is two (2) years after the Close of Escrow.

1.1.56 “Property” means that real property and each Parcel, and all current and future improvements thereon (including, without implied limitation, the Project), legally described in Exhibit A.

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1.1.57 “Property Transfer” means and refers to any “change in ownership,” as defined in Revenue and Taxation Code Sections 60, et seq., of all or any portion of the Property.

1.1.58 “Purchase Price” means the amount of Three Hundred Dollars ($300.00), in cash or immediately available funds, which represents a payment of One Hundred Dollars ($100.00) for each Parcel.

1.1.59 “Record”, “recorded”, “recording” or “recordation” each mean and refer to recordation of the referenced document in the official records of the Recorder of the County of Riverside, California.

1.1.60 “Regulatory Agreement” means the Affordable Housing Regulatory Agreement With Declaration of Restrictive Covenants with Option to Purchase required by this Agreement and in substantially the same form as Exhibit I.

1.1.61 “Restricted Home” means each of the six (6) affordable units to be constructed on the Property and subject to the Regulatory Agreement.

1.1.62 “Schedule of Performance” means the schedule for the performance of certain actions by the Parties pursuant to this Agreement, attached to this Agreement as Exhibit C.

1.1.63 “Scope of Development” means the detailed description of the Project attached to this Agreement as Exhibit B.

1.1.64 “Title Company” means Title Company.

1.1.65 “Title Policy” means a standard CLTA owners’ policy of title insurance issued by the Title Company, with coverage in the full amount of the Purchase Price and insuring fee title to the Property, subject only to the Permitted Exceptions. However, at Developer’s option, Developer may acquire an ALTA extended coverage policy. City shall pay for the standard CLTA policy. Developer shall pay for any additional or ALTA extended coverage policy.

1.1.66 “Transfer” means any of the following:

1.1.66.1 Any total or partial sale, assignment, conveyance, trust, power, or transfer in any other mode or form, by the Developer of more than a 49% interest in the Developer’s interest in this Agreement, the Property, or a series of such sales, assignments and the like that, in the aggregate, result in a disposition of more than a 49% interest in the Developer’s interest in this Agreement, the Property or the Project; or

1.1.66.2 Any total or partial sale, assignment, conveyance, or transfer in any other mode or form, of or with respect to any interest in the Developer or a series of such sales, assignments and the like that, in the aggregate, result in a disposition of more than a 49% interest in any interest in the Developer; or

1.1.66.3 Any merger, consolidation, sale, or lease of all or substantially all of the assets of the Developer or a series of such sales, assignments and the like that, in the Item 3B - Page 18
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aggregate, result in a disposition of more than a 49% interest of all or substantially all of the assets of the Developer; or

1.1.66.4 Any Property Transfer; or

1.1.66.5 The recordation of any deed of trust, mortgage, Lien or similar encumbrance against a Parcel, all or any portion of the Property, or the Project.

1.1.67 “Unavoidable Delay” means any delay that is caused by the exclusively by the other party or that is beyond the control of the City or the Developer, including delay caused by strikes, acts of God, weather, inability to obtain labor or materials, inability to obtain governmental permits or approvals, governmental restrictions, civil commotion, fire or similar causes, but excluding circumstances subject to Section 8.7.2.

1.2 Representations and Warranties.

1.2.1 City Representations and Warranties. The representations and warranties of City contained in this Section 1.2.1 shall be based upon the actual knowledge of the City Manager as of the Effective Date, and subject to all conditions stated in this Agreement. All representations and warranties contained in this Section 1.2.1 are true and correct as of the Effective Date. City’s liability for misrepresentation or breach of warranty, representation or covenant, wherever contained in this Agreement, shall survive the execution and delivery of this Agreement and the Closing. City hereby makes the following representations, covenants and warranties and acknowledges that the execution of this Agreement by Developer has been made in material reliance by Developer on such covenants, representations and warranties:

1.2.1.1 City is a California municipal corporation, duly formed and operating under the laws of the State of California. City has the legal power, right and authority to enter into this Agreement and to execute the instruments and documents referenced herein, and to consummate the transactions contemplated hereby.

1.2.1.2 The persons executing any instruments for or on behalf of City have been authorized to act on behalf of City and this Agreement is valid and enforceable against City in accordance with its terms and each instrument to be executed by City pursuant hereto or in connection therewith will, when executed, shall be valid and enforceable against City in accordance with its terms. No approval, consent, order or authorization of, or designation or declaration of any other person, is required in connection with the valid execution and delivery of and compliance with this Agreement by City.

1.2.1.3 City has taken all requisite action and obtained all requisite consents for agreements or matters to which City is a party in connection with entering into this Agreement and the instruments and documents referenced herein and in connection with the consummation of the transactions contemplated hereby.

1.2.1.4 If the City becomes aware of any act or circumstance that would change or render incorrect, in whole or in part, any representation or warranty made by the City under this Agreement, whether as of the date given or any time thereafter, whether or not such Item 3B - Page 19
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representation or warranty was based upon the City’s knowledge and/or belief as of a certain date, the City will give immediate written notice of such changed fact or circumstance to the Developer.

1.2.2 Developer Representations and Warranties. All representations and warranties contained in this Section 1.2.2 are true and correct as of the Effective Date. Developer’s liability for misrepresentation or breach of warranty, representation or covenant, wherever contained in this Agreement, shall survive the execution and delivery of this Agreement and the Closing. Developer hereby makes the following representations, covenants and warranties and acknowledges that the execution of this Agreement by City has been made in material reliance by City on such covenants, representations and warranties:

1.2.2.1 Developer is a California nonprofit corporation, lawfully entitled to do business in the State of California and the City. Developer has the legal right, power and authority to enter into this Agreement and the instruments and documents referenced herein and to consummate the transactions contemplated hereby. The persons executing this Agreement and the instruments referenced herein on behalf of Developer hereby represent and warrant that such persons have the power, right and authority to bind Developer.

1.2.2.2 Developer has taken all requisite action and obtained all requisite consents in connection with entering into this Agreement and the instruments and documents referenced herein and the consummation of the transactions contemplated hereby, and no consent of any other party is required for Developer’s authorization to enter into Agreement.

1.2.2.3 Neither the execution of this Agreement nor the consummation of the transactions contemplated hereby shall result in a breach of or constitute a default under any other agreement, document, instrument or other obligation to which Developer is a party or by which Developer may be bound, or under law, statute, ordinance, rule, governmental regulation or any writ, injunction, order or decree of any court or governmental body applicable to Developer or to the Property.

1.2.2.4 This Agreement is, and all agreements, instruments and documents to be executed by Developer pursuant to this Agreement shall be, duly executed by and shall be valid and legally binding upon Developer and enforceable in accordance with their respective terms. No approval, consent, order or authorization of, or designation or declaration of any other person, is required in connection with the valid execution and delivery of in compliance with this Agreement by Developer.

1.2.2.5 If the Developer becomes aware of any act or circumstance that would change or render incorrect, in whole or in part, any representation or warranty made by the Developer under this Agreement, whether as of the date given or any time thereafter, whether or not such representation or warranty was based upon the Developer’s knowledge and/or belief as of a certain date, the Developer will give immediate written notice of such changed fact or circumstance to the City.

1.3 Effective Date. This Agreement is dated _______, 2024 for reference purposes only. This Agreement shall not become effective until the date on which all of the following are true (“Effective Date”): (i) this Agreement is approved and executed by the appropriate authorities -
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of Developer and delivered to City; (ii) Developer has delivered to City a certified copy of the official action taken by all of the members of the Developer approving this Agreement, in the form attached to this Agreement as Exhibit F; (iii) following all legally required notices and hearings, this Agreement is approved by the City Council; and (iv) this Agreement is executed by the authorized representatives of City.

1.4 Exhibit List. The following is a list of the Exhibits attached to this Agreement.

Each of the Exhibits is incorporated by this reference into the text of this Agreement.

Exhibit A Legal Description of Property
Exhibit B Scope of Development
Exhibit C Schedule of Performance
Exhibit D Form of Grant Deed
Exhibit E Form of Notice of Agreement
Exhibit F Form of Official Action of Developer
Exhibit G Form of Certificate of Completion
Exhibit H Form of Conditional Grant Agreement
Exhibit I Form of City Deed of Trust
Exhibit J Form of Affordable Housing Regulatory Agreement with Declaration of Restrictive Covenants with Option to Purchase Exhibit K Form of Notice of Affordability Restrictions on Transfer of Property Exhibit L Pro Forma

ARTICLE II

PROPERTY DISPOSITION

2.1 Purchase and Sale. In exchange for the Purchase Price and the Developer’s other covenants and undertakings set forth in this Agreement, the City shall sell the Property to the Developer and the Developer shall purchase the Property from the City pursuant to the terms and conditions of this Agreement. For the purposes of exchanging funds and documents to complete the sale from the City to the Developer and the purchase by the Developer from the City of the Property pursuant to the terms of this Agreement, the City and the Developer agree to open an escrow (“Escrow”) with the Escrow Holder. ARTICLE III of this Agreement constitutes the joint escrow instructions of the Parties to the Escrow Holder for completion of the Escrow for the sale of the Property, as contemplated by this Agreement. The Developer and the City shall execute such further escrow instructions, consistent with the provisions of this Agreement, as may be reasonably requested by the Escrow Holder. In the event of any conflict between the provisions of this Agreement and any other escrow instructions requested by the Escrow Holder, the provisions of this Agreement shall control.

2.2 Payment of Purchase Price. The Developer shall deposit the Purchase Price into Escrow, subject to credit to the Developer for the Earnest Money Deposit.

2.3 Earnest Money Deposit. Concurrent with its opening of the Escrow, the Developer shall pay the Ernest Money Deposit directly to the City. The Earnest Money Deposit Item 3B - Page 21
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shall be nonrefundable. Upon the Close of Escrow, the Earnest Money Deposit shall be credited to the Developer toward the Purchase Price. Should Escrow fail to close, the Earnest Money Deposit shall be forfeited by Developer.

2.4 Title Approval. As soon as practicable following the opening of the Escrow, the City shall obtain from Title Company the Preliminary Report and deliver a copy of the Preliminary Report to the Developer. Within thirty (30) days following the Developer’s receipt of a Preliminary Report for the entire Property, the Developer shall deliver the Developer’s Title Notice to the City. If the Developer fails to deliver the Developer’s Title Notice to the City within thirty (30) days following the Developer’s receipt of the Preliminary Report, the Developer will be deemed to disapprove the status of title to the Property and refuse to accept title to the Property, in which case the City shall have the right, subject to Section 2.4.2, to cancel the Escrow and terminate this Agreement, in the City’s sole discretion, without liability to the Developer or any other person, by delivery of a written notice of termination to the Developer and Escrow Holder.

Within twenty (20) days following receipt by the City of Developer’s Title Notice, if any, the City shall serve City’s Title Notice Response. If Developer’s Title Notice does not object to any matter in the Preliminary Report, the City shall not be required to serve City’s Title Notice Response. If the City does not serve City’s Title Notice Response, if necessary, within twenty (20) days following its receipt of Developer’s Title Notice, the City shall be deemed to elect not to remove any matter objected to in Developer’s Title Notice, if any, from the Preliminary Report. If the City elects in City’s Title Notice Response to cause the removal of any matter objected to in Developer’s Title Notice from the Preliminary Report, the City shall cause the removal of each such objectionable matter from the Preliminary Report within sixty (60) days following receipt by the Developer of City’s Title Notice Response or such other period of time that may be agreed to in writing by both the City and the Developer. If the City is unwilling or unable to cause the removal of any matter objected to in Developer’s Title Notice from the Preliminary Report, then, within ten (10) days following the Developer’s receipt of City’s Title Notice Response stating that the City is unwilling to remove or cause the removal of any matter objected to in Developer’s Title Notice or upon the expiration of the above sixty (60) day time period during which the City elected to remove such objectionable matters from the Preliminary Report and was unable to do so, the Developer may either (1) refuse to accept the title to and conveyance of the Property, in which case the Parties shall have the right, subject to Section 2.4.2, to cancel the Escrow and terminate this Agreement without liability to either Party or any other person, by delivery of a written notice of termination to the Escrow Holder, or (2) waive its objection to any items set forth in Developer’s Title Notice by delivering Developer’s Title Notice Waiver to the City. Failure by the Developer to deliver Developer’s Title Notice Waiver, where City’s Title Notice Response or the City’s failure to serve City’s Title Notice Response indicates the City’s election not to cause the removal of any matter objected to in Developer’s Title Notice from the Preliminary Report, for the City to deliver City’s Title Notice Response under this Agreement, will be deemed the Developer’s continued refusal to accept the title to and conveyance of the Property, in which case the City shall have the right, subject to Section 2.4.2, to cancel the Escrow and terminate this Agreement, in the City’s sole discretion, without liability to the Developer or any other person, by delivery of a written notice of termination to the Developer and Escrow Holder.

2.4.1 If at any time prior to the Close of Escrow the Title Company issues an updated Preliminary Report containing any previously undisclosed matter affecting title to the Property, or the City becomes aware of any previously undisclosed matter affecting title to the Item 3B - Page 22
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Property, following the delivery of the Developer’s Title Notice, the City shall provide written notice to the Developer of such matter, together with any updated Preliminary Report related to such matter. The City and the Developer shall have such rights and obligations with respect to such previously undisclosed title matters as they did with respect to any title matters set forth in the original Preliminary Report as set forth in Section 2.4.

2.4.2 Before exercising any right a Party may have under this Section 2.4 to cancel the Escrow and terminate this Agreement, such Party shall notify the non-terminating Parties in writing of its election to terminate and shall, upon a non-terminating Party’s request, which must be delivered, if at all, within three (3) days following its receipt of the terminating Party’s notice of election to terminate, meet and confer with the non-terminating Parties for a period of thirty (30) days. During such time, the Parties shall meet as often as reasonably requested by any Party to negotiate, in good faith, methods and means by which the objectionable title matter may be eliminated or mitigated. Nothing herein shall constitute an agreement, representation, or warranty by any Party that an acceptable resolution of the objectionable title matter will be achieved, nor shall any Party be obligated to expend any funds or undertake any other action whatsoever with respect to such title matter unless such agreement is reduced to a writing which is approved by all Parties, in their sole and absolute discretion. If, at the end of such thirty (30) day period, the Parties have not been able to agree on a mutually acceptable method of resolving such title matter, or if any proposed agreement is disapproved by the City Council, the Escrow shall be cancelled, this Agreement shall be terminated without liability to any Party, and the Parties shall proceed pursuant to Section 4.9.

2.5 Developer Investigations.

2.5.1 The Developer shall have until the expiration of the Due Diligence Period to complete all of its Due Diligence Investigations with respect to the entirety of the Property. The Developer shall complete all of its Due Diligence Investigations within the Due Diligence Period and shall conduct all of its Due Diligence Investigations at its sole cost and expense. The Developer shall rely solely and exclusively upon the results of its Due Diligence Investigations of the Property, including, without limitation, investigations regarding geotechnical soil conditions, compliance with applicable laws pertaining to the use of the Property by the Developer and any other matters relevant to the condition or suitability of the Property for the Project, as the Developer may deem necessary or appropriate. City makes no representation or warranty to the Developer relating to the condition of the Property or suitability of the Property for any intended use or development by the Developer. The Developer shall deliver a Due Diligence Investigation Conclusion Notice to the City and the Escrow Holder prior to the end of the Due Diligence Period. If the Developer does not unconditionally accept the condition of the Property by delivery of its Due Diligence Investigation Conclusion Notice indicating such acceptance prior to the end of the Due Diligence Period, the Developer shall be deemed to have rejected the condition of the Property and refused to accept conveyance of title to the Property. If the condition of the Property is rejected or deemed rejected by the Developer, then the City shall have the right, subject to Section 2.4.2, to cancel the Escrow and terminate this Agreement, in the City’s sole discretion, without liability to the Developer or any other person, by delivery of a written notice of termination to the Developer and Escrow Holder. The Developer shall accept all conditions of the Property, without any liability of the City whatsoever, upon the Developer’s acceptance of the condition of the Property indicated in its Due Diligence Investigation Conclusion Item 3B - Page 23
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Notice. The Developer’s delivery of its Due Diligence Investigation Conclusion Notice indicating the Developer’s unconditional acceptance of the condition of the Property shall evidence the acceptance of the condition of the Property by the Developer in its existing “AS IS,” “WHERE IS” and “SUBJECT TO ALL FAULTS” condition, as of the last day of the Due Diligence Period.

In its sole discretion, the Developer may accept the Property in its “AS IS,” “WHERE IS” and “SUBJECT TO ALL FAULTS” condition at any time before the end of the Due Diligence Period.

The Developer shall conduct during the Due Diligence Period such environmental assessment(s) of the Property as the Developer deems appropriate. If such assessment(s) do not reveal the presence of any Hazardous Substances on the Property in levels that exceed applicable Governmental Requirements, then the City shall promptly and at its sole cost and expense install security fencing around the Property. If such assessment(s) do reveal the presence of any Hazardous Substances on the Property in levels that exceed applicable Governmental Requirements, then the City and the Developer shall negotiate in good faith in an effort to reach agreement as to the allocation of responsibility and cost of remediation thereof.

2.5.2 Any Due Diligence Investigations of the Property by the Developer shall not unreasonably disrupt any then existing use or occupancy of the Property or the operations of the City. The Developer shall be liable for any damage or injury to any person or property arising from the acts of the Developer, its employees, agents or representatives during the course of any Due Diligence Investigations on the Property and the Developer shall indemnify, defend with counsel reasonably acceptable to the City and hold harmless the City and its elected officials, officers, directors, attorneys, contractors, agents and employees from any and all actual or alleged liens, claims, demands or liability arising from any Due Diligence Investigations by the Developer on the Property. Prior to commencing any Due Diligence Investigations on the Property, the Developer shall deliver copies of policies or certificates of insurance to the City evidencing compliance by the Developer with the insurance requirements of Section 5.8.

2.5.3 Before exercising any right a Party may have under this Section 2.5 to cancel the Escrow and terminate this Agreement, such Party shall notify the non-terminating Parties in writing of its election to terminate and shall, upon a non-terminating Party’s request, which must be delivered, if at all, within three (3) days following its receipt of the terminating Party’s notice of election to terminate, meet and confer with the non-terminating Parties for a period of thirty (30) days. During such time, the Parties shall meet as often as reasonably requested by any Party to negotiate, in good faith, methods and means by which the objectionable Due Diligence matter may be eliminated or mitigated. Nothing herein shall constitute an agreement, representation, or warranty by any Party that an acceptable resolution of the objectionable Due Diligence matter will be achieved, nor shall any Party be obligated to expend any funds or undertake any other action whatsoever with respect to such Due Diligence matter unless such obligation is reduced to a writing which is approved by all Parties, in their sole and absolute discretion. If, at the end of such thirty (30) day period, the Parties have not been able to agree on a mutually acceptable method of resolving the objectionable Due Diligence matter, or if any proposed agreement is disapproved by the City Council, the Escrow shall be cancelled, this Agreement shall be terminated without liability to any Party, and the Parties shall proceed pursuant to Section 3.10.

Item 3B - Page 24
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2.6 Developer to Obtain all Project Entitlements.

2.6.1 Developer has developed and presented to City staff and the City Council, for review, the following (collectively, the “Plans and Specifications”):

2.6.1.1 A proposed complete conceptual development plan for the Project on the Property, inclusive of each Parcel, that describes and depicts: (1) the location and placement of proposed buildings and (2) the architecture and elevations of the proposed buildings;

2.6.1.2 Proposed zoning change or changes to the City’s General Plan, if any, necessary to accommodate the Project on the Property, and an application pursuant to Senate Bill 9 (or equivalent procedure) for entitlement to construct two (2) Restricted Units on each Parcel, which may be subdivided provided that the covenants set forth in the Regulatory Agreement are applicable to each resulting lot and each Restricted Unit;

2.6.1.3 A list of potential users or tenants and anticipated sale prices for the Restricted Units as developed with the Project;

2.6.1.4 A proposed time schedule and cost estimates for the development of the Project on the Property;

2.6.1.5 A proposed financing plan identifying financing sources for all private and public improvements proposed for the Project; and

2.6.1.6 A preliminary financial analysis demonstrating the costs and benefits to the City and the City regarding all construction, maintenance and operations of all proposed public improvements, the costs of additional or increased levels of public services and any new public revenues anticipated to be generated by the Project.

2.6.2 The City’s zoning, building and land use regulations (whether contained in ordinances, the City’s municipal code, conditions of approval, policies, practice or elsewhere) (collectively, the “City Requirements”), shall be applicable to the use and development of the Project on the Property by the Developer. The Developer acknowledges that all Plans and Specifications and any changes to the Plans and Specifications shall be subject to the City Requirements. No action by the City with reference to this Agreement or any related documents shall be deemed to constitute a waiver of any City Requirements regarding the Property, the Project, the Developer, any successor-in-interest of the Developer or any successor-in-interest to the Property. The City Requirements may only be changed or waived by modification or variance approved by the City and consistent with this Agreement. No entitlement, permit or other approval from the City for development of the Project on the Property shall attach to any portion of the Property or otherwise become effective to allow the Developer to develop the Project on the Property until after the Developer owns fee title to that portion of the Property to which such entitlement, permit or other approval pertains. Under no circumstances shall the Developer commence development of any portion of the Project on the Property prior to the Developer owning fee title to the Property.

2.6.3 The approval of the Scope of Development shall not be binding on the City Council or the Planning Commission of the City regarding any approvals of the Project Item 3B - Page 25
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required by such bodies. The Developer obtains no right to develop the Project on the Property or any portion of the Property by virtue of this Agreement, except that following the Close of Escrow, the Developer shall possess the same rights as any other owner of property within the City that desires to develop its property in a manner consistent with the City’s General Plan. If any revisions of the Scope of Development are required by a Governmental Agency (other than the City) having jurisdiction over the Property or the Project, the Developer shall promptly make any such revisions that are generally consistent with the Scope of Development.

2.6.4 Notwithstanding any provision to the contrary in this Agreement, following the Close of Escrow, the Developer agrees to accept and comply fully with any and all conditions of approval applicable to all approvals, permits and other governmental actions regarding the development or operation of the Project on the Property, so long as such conditions of approval are consistent with the Scope of Development and this Agreement in all material respects.

2.6.5 Developer to Pay All Costs and Expenses. The Parties agree that the City shall not provide any financial assistance to the Developer in connection with the Project, except as agreed to by the Parties in the Conditional Grant Agreement, or as may otherwise be expressly set forth in this Agreement. The Developer shall be solely responsible for paying for the costs of all design work, construction, labor, materials, fees and permit expenses associated with the Project. The Developer shall pay any and all fees pertaining to the review and approval of the Project by the City, any other Governmental Agency and utility service providers, including the costs of preparation of all required construction, planning and other documents reasonably required by a Governmental Agency pertinent to the development or operation of the Project on the Property, including, but not limited to, specifications, drawings, plans, maps, permit applications, land use applications, zoning applications, environmental review and disclosure documents and design review documents. The Developer shall pay for any and all costs, including, but not limited to, the costs of design, construction, relocation and securing of permits for sewer or utility improvements and connections, that may be required in development of the Project, whether located on or off of the Property. The Developer shall obtain any and all necessary approvals, prior to the commencement of applicable portions of construction, and the Developer shall take reasonable precautions to ensure the safety and stability of surrounding properties during said construction. In accordance with this Section 2.6.5, Developer shall be responsible for the costs, or immediate reimbursement to the City upon delivery of an invoice for the costs, of the following:

2.6.5.1 all fees or expenses of engineers, architects, financial consultants, legal, planning or other consultants or contractors, retained by the Developer for any study, analysis, evaluation, report, schedule, estimate, environmental review, planning and/or design activities, drawings, specifications or other activity or matter relating to the Property or the Project or the negotiation of this Agreement that may be undertaken by the Developer;

2.6.5.2 all fees, charges and costs, make all deposits and provide all bonds or other security associated with the submission to and processing by the City of any and all applications and other documents and information to be submitted to the City by the Developer pursuant to this Agreement or otherwise associated with the Project; and Item 3B - Page 26
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2.6.6 The Developer shall obtain all entitlements, permits and other approvals for use and development of the Project on the Property from each Governmental Agency, within the time period for such actions specifically set forth in the Schedule of Performance, subject to any extensions of time authorized by this Agreement upon the occurrence of an Unavoidable Delay.

2.7 Conditional Grant Agreement. Developer has requested the City provide financial assistance for development of the Project. Developer’s request for financial assistance is subject to the final agreement and approval of a Conditional Grant Agreement in the form attached hereto as a Exhibit H. Developer agrees and acknowledges that, if the Conditional Grant Agreement is approved and finalized, then the conveyance of the Property shall be subject to compliance with the terms and conditions of the Conditional Grant Agreement.

ARTICLE III

ESCROW INSTRUCTIONS

3.1 Opening of Escrow. For purposes of this Agreement, the opening of Escrow shall be the first date on which a fully executed copy of this Agreement and Earnest Money Deposit are deposited with Escrow Holder (“Escrow Opening Date”). The Developer shall cause the Escrow to be opened within five (5) days following the Effective Date. Escrow Holder shall promptly confirm in writing to each of the Parties the date of the Escrow Opening Date. This ARTICLE III shall constitute the joint escrow instructions of the City and the Developer to Escrow Holder for conduct of the Escrow to complete the purchase and sale of the Property between them, as contemplated in this Agreement.

3.2 Conditions to Close of Escrow. The conditions set forth below shall be satisfied or waived in writing by the respective benefited Party on or before the Escrow Closing Date or the Party benefited by any unsatisfied condition shall not be required to proceed to close Escrow.

3.2.1 Developer’s Conditions to Close of Escrow. The Developer’s obligation to purchase the Property from the City on the Escrow Closing Date shall be subject to the satisfaction of the following conditions precedent, each of which can only be waived in writing by the Developer:

3.2.1.1 The Developer agrees to accept the title to and conveyance of the Property, pursuant to Section 2.4;

3.2.1.2 The Developer delivers its Due Diligence Investigation Conclusion Notice to both the City and Escrow Holder indicating the Developer’s unconditional acceptance of the condition of the Property, prior to the expiration of the Due Diligence Period;

3.2.1.3 The City’s planning commission finds, pursuant to Government Code Section 65402, that the Project is consistent with the City’s General Plan;

3.2.1.4 The Title Company is unconditionally committed to issue the Title Policy for the Property, subject to any Permitted Exceptions, to the Developer; Item 3B - Page 27
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3.2.1.5 The City deposits the items into the Escrow required by Section

4.3;

3.2.1.6 The representations, warranties and covenants of the City set forth in Section 1.2.1 are true and correct in all material respects on the Effective Date and on the Escrow Closing Date;

3.2.1.7 The Developer has obtained all entitlements required in connection with the development of the Property with the Project, subject to conditions of approval acceptable to Developer in Developer’s sole discretion, any applicable appeal period has expired without appeal having been filed or, if an appeal is filed, such appeal has been denied, and no legal action has been instituted against Developer or the City alleging the invalidity of such entitlements; and

3.2.1.8 The City has completed all of their material obligations required by this Agreement to be completed prior to the Close of Escrow.

3.2.2 City’s Conditions to Close of Escrow. The City’s obligation to sell the Property to the Developer on or before the Escrow Closing Date shall be subject to the satisfaction of the following conditions precedent, which can only be waived in writing by the City:

3.2.2.1 The Developer paid the Earnest Money Deposit to the City and the remainder of the Purchase Price into Escrow;

3.2.2.2 The Developer agrees to accept the title to and conveyance of the Property, pursuant to Section 2.4;

3.2.2.3 The Developer delivers its Due Diligence Investigation Conclusion Notice to both the City and Escrow Holder indicating the Developer’s unconditional acceptance of the physical condition of the Property, prior to the expiration of the Due Diligence Period;

3.2.2.4 The City has completed any required environmental review for the Project and approved Developer’s entitlements for development of the Property with the Project, inclusive of a lot split or other approval allowing two (2) units on each Parcel, and Developer has agreed to accept the entitlements, with any conditions of approval, and any applicable appeal period has expired without appeal having been filed or, if an appeal is filed, such appeal has been denied, and no legal action has been instituted against Developer or the City alleging the invalidity of such entitlements or environmental review;

3.2.2.5 The City’s planning commission finds, pursuant to Government Code Section 65402, that the Project is consistent with the City’s General Plan, and the City has received a determination from the California Department of Housing and Community Development that disposition of the Property is permitted under the provisions for exempt surplus land;
Item 3B - Page 28
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3.2.2.6 The Title Company is unconditionally committed to issue the Title Policy for the Property, and each Parcel, with the Regulatory Agreement in a senior position to the Construction Loan, if any, subject to any Permitted Exceptions, to the Developer;

3.2.2.7 The Developer submits to the City, at least five (5) business days prior to the Escrow Closing Date, evidence satisfactory to the City, in the City’s reasonable discretion, that the Developer has obtained all entitlements necessary for the development of the Property from each applicable Governmental Agency, including the City;

3.2.2.8 The Developer delivers to the City, at least thirty (30) days prior to the Escrow Closing Date, in form and substance acceptable to the City, (1) the Financing Commitment(s) applicable to the Property, (2) a copy of the fully executed Regulatory Agreement, with all exhibits thereto, which is to be recorded against each Parcel, inclusive of any resulting parcel or lot in accordance with the entitlements, (3) an Affirmative Marketing and Homebuyer Qualifying Plan;

3.2.2.9 The City has agreed to the terms and conditions of a Conditional Grant Agreement, if requested by Developer, and Developer has executed and delivered the signed Conditional Grant Agreement; Developer acknowledges and understands that the Conditional Grant Agreement is made by the City only and does not include the City acting in its capacity as a Successor Agency;

3.2.2.10 The Developer obtains the City’s approval of the Construction Loan and Construction Lender, if any, in accordance with Section 6.3, which shall not be unreasonably withheld;

3.2.2.11 The Developer has completed all of its material obligations required by this Agreement to be completed prior to the Close of Escrow;

3.2.2.12 The representations, warranties and covenants of the Developer set forth in Section 1.2.2 are true and correct in all material respects on the Effective Date and on the Escrow Closing Date; and

3.2.2.13 The Developer deposits the funds and items into the Escrow required by Section 3.3 for the Escrow.

3.3 Developer’s Escrow Deposits. Following satisfaction or waiver of each of the Developer’s conditions to Close of Escrow set forth in Sections 3.2.1, as applicable, the Developer shall deposit the following funds and documents into Escrow at least two (2) business days prior to the Escrow Closing Date in a writing delivered to the Parties:

3.3.1 Purchase Price and Other Funds. Purchase Price, less the amount of the Earnest Money Deposit, plus any additional funds required to be deposited into Escrow by the Developer under the terms of this Agreement to close the Escrow, all in immediately available funds.

3.3.2 PCO Statement. A PCO Statement executed by the authorized representative(s) of the Developer.

Item 3B - Page 29
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3.3.3 Acceptance of Grant Deed. The Certificate of Acceptance of the Deed, in the form attached to the Grant Deed, executed by the authorized representative(s) of the Developer in recordable form.

3.3.4 Notice of Agreement. The Notice of Agreement executed by the authorized representative(s) of the Developer in recordable form.

3.3.5 Regulatory Agreement. An original, duly executed version of the Regulatory Agreement for recording against each Parcel.

3.3.6 City Deed of Trust. An original, duly executed version of the Deed of Trust for recording against each Parcel, inclusive of each parcel or lot created resulting from the entitlements.

3.3.7 Authorizing Documents. A certificate, resolution, or other documentation evidencing Developer has approval to consummate the purchase of the Property.

3.4 City’s Escrow Deposits. Following satisfaction or waiver of each of the City’s conditions to Close of Escrow set forth in Sections 3.2.2, as applicable, the City shall deposit the following documents into Escrow at least two (2) business days prior to the Escrow Closing Date:

3.4.1 Grant Deed. The Grant Deed executed by the authorized representative(s) of the City in recordable form for each Parcel.

3.4.2 FIRPTA Affidavit (City). The FIRPTA Affidavit completed and executed by the authorized representative(s) of the City.

3.4.3 Notice of Agreement. The Notice of Agreement executed by the authorized representative(s) of the City in recordable form.

3.4.4 Regulatory Agreement. A duly executed version of the Regulatory Agreement for recording against each Restricted Unit, and each parcel for the Restrictive Units.

3.4.5 Certificate of Acceptance for Deed of Trust. A duly executed Certificate of Acceptance for each City Deed of Trust.

3.5 Closing Procedure. When each of the Developer’s Escrow required deposits, as set forth in Section 3.3, and each of the City’s Escrow required deposits, as set forth in Section

3.4, are deposited into Escrow, Escrow Holder shall request confirmation in writing from both the City and the Developer that each of their respective conditions to the Close of Escrow, as set forth in Section 3.2, are satisfied or waived. Upon Escrow Holder’s receipt of written confirmation from both the City and the Developer that each of their respective conditions to the Close of Escrow are either satisfied or waived, Escrow Holder shall close the Escrow for the Property by doing all of the following:

3.5.1 Recordation of Documents. File the following with the Office of the Recorder of the County, for recordation in the order set forth in Section 3.7 (i) the Grant Deed, with the Developer’s certificate of acceptance attached, (ii) the Notice of Agreement, (iii) the Item 3B - Page 30
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Regulatory Agreement, (iv) the City Deed of Trust, (v) the Notice of Affordability Restrictions, and (vi) if applicable, the Construction Loan Deed of Trust.

3.5.2 Distribution of Recorded Documents. Distribute each recorded document to the Party or person designated for such distribution in Section 3.7.

3.5.3 PCO Statement. File the PCO Statement with the Office of the Recorder of the County.

3.5.4 FIRPTA Affidavit. File the FIRPTA Affidavit with the United States Internal Revenue Service.

3.5.5 Title Policy. Obtain and deliver the Title Policy to the Developer.

3.5.6 Purchase Price. Deliver the Purchase Price to the City, less the City’s share of Escrow closing costs, and less any other charges to the account of the City, and return any remaining funds held by Escrow Holder for the account of the Developer to the Developer, less the Developer’s share of Escrow closing costs, and less any other charges to the account of the Developer.

3.6 Close of Escrow. Close of Escrow shall occur no later than the earlier of: (1) the tenth (10th) business day following Escrow Holder’s receipt of written confirmation from both the City and the Developer of the satisfaction or waiver of all conditions precedent to the Close of Escrow for the Property, or (2) sixty (60) days from the end of the Due Diligence Period (the “Escrow Closing Date”).1 If for any reason the Close of Escrow has not occurred by the Escrow Closing Date, then any Party not then in default of this Agreement may cancel the Escrow and terminate this Agreement, subject to the notice and cure provisions of Section 7.1 (to the extent applicable), without liability to any other Party or any other person for such termination and cancellation, by delivering written notice of termination to the other Party(ies) and Escrow Holder and, thereafter, the Parties shall proceed pursuant to Section 3.10 if the non-terminating Party is not in default or pursuant to Section 7.2 or 7.3 (as applicable) if the non-terminating Party is in default. Without limiting the right of any Party to terminate this Agreement, pursuant to the preceding sentence, if Escrow does not close on or before the Escrow Closing Date, and no Party has exercised its contractual right to cancel Escrow and terminate this Agreement before such time, then Escrow shall close as soon as reasonably possible following the first date on which Escrow Holder is in a position to close the Escrow pursuant to the terms and conditions of this Agreement.

3.7 Recordation and Distribution of Documents. As applicable, Escrow Holder shall cause the following documents to be recorded against each Parcel in the official records of the Recorder of the County in the following order of priority at the Close of Escrow, for each Parcel:
(i) the Grant Deed, with the Developer’s certificate of acceptance attached, (ii) the Notice of Agreement, (iii) the City Deed of Trust, (iii) the Regulatory Agreement, (iv) the Notice of Affordability Restrictions, and (v) the Construction Loan Deed of Trust, if applicable, and (vi) any other documents to be recorded through Escrow upon the joint instructions of the Parties. All recorded documents shall provide that they are to be returned to Escrow Holder after recordation.

When originals of such recorded documents are returned to Escrow Holder, Escrow Holder shall

1 Developer to confirm this timing works for getting entitlements, financing, etc.

Item 3B - Page 31
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deliver: (i) the original Grant Deed, with the Developer’s original certificate of acceptance attached, to the Developer and copies to the City, each showing all recording information, (ii) the original of the Notice of Agreement to the City, with copies to the Developer, each showing all recording information, (iii) the original of the Regulatory Agreement to the City, with copies to the Developer, each showing all recording information, (iv) the original Notice of Affordability Restrictions to the City, (v) the original City Deed of Trust to the City, (vi) the Construction Loan Deed of Trust, if applicable, to the Construction Lender for the Project, with copies to the Developer and the City, each showing all recording information, and (vii) the original of any other document recorded at the close of Escrow to the Party or other person designated in the joint escrow instructions of the Parties for such recordation and a copy of each such document to the other Party or Parties, each showing all recording information.

3.8 Escrow Closing Costs, Taxes and Title Policy Premium. The City and the Developer shall each pay one-half (1/2) of the Escrow fees and such other costs as Escrow Holder may charge for the conduct of the Escrow. Escrow Holder shall notify the Developer and the City of the costs to be borne by each of them at the Close of Escrow by delivering the Escrow Holder’s estimated closing/settlement statement to both the City and the Developer at least four (4) business days prior to the Escrow Closing Date. The City shall pay the premium charged by the Title Company for the standard Title Policy for the Property, exclusive of any endorsements or other supplements to the coverage of such Title Policy that may be requested by the Developer, as well as documentary transfer taxes and any and all other charges, fees and taxes levied by a Governmental Authority relative to the conveyance of any portion of the Property through the Escrow transaction contemplated in this Agreement. The Developer shall pay any and all recording fees relative to the conveyance of any portion of the Property through the Escrow transaction contemplated in this Agreement.

3.9 Escrow Cancellation Charges. If the Escrow fails to close due to either the City’s material default under this Agreement and the Escrow is cancelled and this Agreement is terminated, the City shall pay all ordinary and reasonable Escrow and title order cancellation charges. If the Escrow fails to close due to the Developer’s material default under this Agreement and the Escrow is cancelled and this Agreement is terminated, the Developer shall pay all ordinary and reasonable Escrow and title order cancellation charges. If the Escrow fails to close for any reason other than the material default of either the Developer or the City and the Escrow is cancelled and this Agreement is terminated, the Developer and the City shall each pay one-half (1/2) of any ordinary and reasonable Escrow and title order cancellation charges.

3.10 Escrow Cancellation. If this Agreement is terminated and the Escrow cancelled pursuant to a contractual right granted to a Party in this Agreement to terminate this Agreement and cancel the Escrow, other than due to the material default of another Party, the Parties shall do each of the following:

3.10.1 Cancellation Instructions. The Parties shall, within three (3) business days of receipt of Escrow Holder’s written request, execute any reasonable Escrow cancellation instructions requested by Escrow Holder;

3.10.2 Return of Funds and Documents. Within ten (10) days of receipt by the Parties of a settlement statement of Escrow and title order cancellation charges from Escrow Item 3B - Page 32
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Holder: (i) the Developer or Escrow Holder shall return to the City any documents previously delivered by the City to the Developer or Escrow Holder, (ii) the City or Escrow Holder shall return to the Developer all documents previously delivered by the Developer to the City or Escrow Holder; (iii) Escrow Holder shall return to the Developer any funds deposited by Developer into Escrow, including the Earnest Money Deposit, less the Developer’s share of customary and reasonable Escrow and title order cancellation charges, if any; and (iv) Escrow Holder shall return to the City any funds deposited by City into Escrow if it has already been deposited, less the City’s share of customary and reasonable Escrow and title order cancellation charges, if any.

3.11 Report to IRS. Following the Close of Escrow and prior to the last date on which such report is required to be filed with the Internal Revenue Service, if such report is required pursuant to Section 6045(e) of the Internal Revenue Code, Escrow Holder shall report the gross proceeds of the purchase and sale of the Property to the Internal Revenue Service on Form 1099- B, W-9 or such other form(s) as may be specified by the Internal Revenue Service pursuant to Section 6045(e). Upon the filing of such reporting form with the Internal Revenue Service, Escrow Holder shall deliver a copy of the filed form to the City and the Developer.

ARTICLE IV

PROJECT DEVELOPMENT

4.1 Developer Covenant to Undertake Project. The Developer covenants, for itself, its successors and assigns, to and for the exclusive benefit of the City, that the Developer shall commence and complete the development of the Project on the Property within the time period for such actions set forth in the Schedule of Performance. The Developer covenants and agrees for itself, its successors, and assigns, that the Property shall be improved and developed with the Project in substantial conformity with the terms and conditions of this Agreement, the Scope of Development, the Schedule of Performance, any and all plans, specifications and similar development documents required by this Agreement, except for such changes as may be mutually agreed upon in writing by and among the Parties, and all applicable laws, regulations, orders and conditions of each Governmental Agency with jurisdiction over the Property or the Project. The covenants of this Section 4.1 shall run with the land of the Property until the earlier of the date of recordation of the Certificate of Completion or the fifteenth (15th) anniversary of the date of the Close of Escrow.

4.2 Developer Changes to Plans and Specifications During Course of Construction. The Developer shall have the right during the course of construction of the Project to make “minor field changes,” without seeking the approval of the City, if such changes do not affect the type of use to be conducted within all or any portion of a structure. “Minor field changes” shall be defined as those changes from the approved Plans and Specifications that have no substantial effect on the Project or are made in order to expedite the work of construction in response to field conditions. The Developer shall submit all other changes, i.e. those changes which are not “minor field changes”, to the City for its review and approval no less than fifteen (15) days prior to the date that the Developer intends to implement such changes. The City shall have ten (10) days from its receipt of such proposed changes to review the same and advise the Developer in writing whether such changes are acceptable to the City in its reasonable discretion.

Any proposed changes which are not disapproved by the City within such ten (10) day period shall Item 3B - Page 33
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be deemed approved. Nothing contained in this Section 4.2 shall be deemed to constitute a waiver of or change in the City Requirements governing “minor field changes” or other changes or in any approvals by the City otherwise required for “minor field changes.” or other changes.

4.3 Construction Start and Completion of Project. The Developer shall commence construction of the Project in accordance with the Schedule of Performance and, thereafter, shall diligently proceed to complete the construction of the Project in a good and workmanlike manner in substantial conformity with the approved plans, specifications, and conditions for the Project approved by the City and the Schedule of Performance. The Developer shall obtain a Certificate of Completion on or before the Project Completion Date. The Developer will, promptly upon completion of construction of the Project, cause the Project to be inspected by each Governmental Agency with jurisdiction over the Project, shall correct any defects and deficiencies that may be disclosed by any such inspection and shall cause to be duly issued all occupancy certificates and other licenses, permits and authorizations necessary for the operation and occupancy of the completed Project. The Developer shall do and perform all of the foregoing acts and things and cause to be issued and executed all such occupancy certificates, licenses, and authorizations for the Project on or before the date set forth therefor in the Schedule of Performance as the completion date for the Project. After commencement of the work of improvement of the Project, the Developer shall not permit the work of improvement of the Project to cease or be suspended for a time period in excess of thirty (30) consecutive calendar days, subject to Unavoidable Delays.

4.4 Compliance with Laws. All work performed in connection with the development of the Project shall comply with all Governmental Requirements.

4.5 Schedule of Performance. The Schedule of Performance establishes various dates and times for the accomplishment of various tasks assigned to the City and the Developer and the satisfaction of the conditions precedent to the close of the Escrow. The Parties agree that time is of the essence in the performance of such tasks and the satisfaction of conditions precedent, in view of the large investment of resources that all Parties recognize will be required for assembly of the Property and the undertaking of the Project. If the date or time for the performance of a task or the satisfaction of a condition, as set forth in either the text of this Agreement or in the Schedule of Performance, may not be achieved, then prior to such date or time set forth in the text of this Agreement or the Schedule of Performance, the Parties shall consider whether a modification to the text of this Agreement or to the Schedule of Performance is indicated. Any decision to approve a modification to a time or date established in either the text of this Agreement or the Schedule of Performance shall be subject to the sole discretion of each Party. Any modification of a time or date for performance of a particular task or satisfaction of a particular condition that does not result in a change of more than one hundred eighty (180) days may be approved on behalf of the City by the City Manager, in his or her reasonable discretion. A modification of a time or date for performance of a task or satisfaction of a condition (or a series of such modifications) that results in an aggregate change of more than one hundred eighty (180) days shall be subject to the approval of the City Council, in its sole and absolute discretion. If performance of a task or satisfaction of a condition in the Schedule Performance is prevented or delayed by Unavoidable Delays, the deadline for completion of such task or satisfaction of such condition shall be extended by the period of such Unavoidable Delays.

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4.6 Developer Attendance at City Meetings. The Developer agrees to have one or more of its employees or consultants who are knowledgeable regarding this Agreement and the development of the Project, such that such person(s) can meaningfully respond to City questions regarding the progress of the Project, attend City Council meetings, when requested to do so on not less than ten (10) days prior written notice by City staff.

4.7 City’s Right to Inspect Project and Property. Officers, employees, agents and representatives of the City shall have the right of reasonable access to the Property, without the payment of charges or fees, during normal construction hours, during the period of construction of the Project. Such officers, employees, agents or representatives of the City shall be those persons who are designated by the City Manager. Any and all officers, employees, agents or representatives of the City who enter the Property shall identify themselves at the construction management office on the Property, upon their entrance on to the Property, and shall at all times be accompanied by a representative of the Developer, while on the Property. The Developer shall make a representative of the Developer available for this purpose at all times during normal construction hours, upon reasonable notice from the City. The City shall indemnify and hold the Developer harmless from injury, property damage or liability arising out of the exercise by the City of the right of access to the Property provided in this Section 4.7, other than injury, property damage or liability arising from the negligence or willful misconduct of the Developer or its officers, agents or employees. The City shall inspect relevant portions of the Property, prior to issuing any written statements reflecting adversely on the Developer’s compliance with the terms and conditions of this Agreement pertaining to development of the Project. If in the City’s reasonable judgment it is necessary, the City shall have the further right, from time to time, to retain a consultant or consultants to inspect the Project and verify compliance by the Developer with the provisions of this Agreement. The Developer acknowledges and agrees that any such inspections are for the sole purpose of protecting the City’s rights under this Agreement, are made solely for the City’s benefit, that the inspections may be superficial and general in nature, and are for the purposes of informing the City of the progress of the Project and the conformity of the Project with the terms and conditions of this Agreement, and that the Developer shall not be entitled to rely on any such inspection(s) as constituting an approval, satisfaction or acceptance of any materials, workmanship, conformity of the Project with this Agreement or otherwise. The Developer agrees to make its own regular inspections of the work of construction of the Project to determine that the quality of the Project and all other requirements of the work of construction of the Project are being performed in a manner satisfactory to the Developer. The Developer also agrees to immediately notify the City in writing should the Developer’s inspections show any matters that will prevent the entire Project from being completed by the Project Completion Date set forth therefore in the Schedule of Performance. Without limiting the foregoing, the Developer shall permit the City upon reasonable notice to examine and copy all books and account records and other papers relating to the Property and the construction of the Project. The Developer will use commercially reasonable efforts to cause all contractors, subcontractors and materialmen to cooperate with the City to enable such examination.

4.8 Cost of Construction. The cost and expense of undertaking and completing the Project, including, without limitation, constructing all legally imposed on- and off-site improvements, and providing all utilities therefor, shall be borne by Developer at its sole cost, expense and liability. Developer shall be solely responsible for payment of all City land use, construction, inspection, plan check and development impact fees (collectively, “Development Item 3B - Page 35
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Fees”) imposed by the City with respect to the development of the Project. Developer shall bear all costs and expenses associated with the processing and obtaining of the entitlements and shall bear all costs and expenses (except to the extent expressly set forth otherwise in this Agreement), associated with any and all terms, conditions, requirements, mitigation measures and other exactions imposed on, or required in connection with, the entitlements.

4.9 Prevailing Wages.

4.9.1 The Developer acknowledges that the City has not made any representation, express or implied, to the Developer or any person associated with the Developer regarding whether or not laborers employed relative to the construction of the Project must be paid the prevailing per diem wage rate for their labor classification, as determined by the State of California, pursuant to Labor Code Sections 1720, et seq. The Developer agrees with the City that the Developer shall assume the responsibility and be solely responsible for determining whether or not laborers employed relative to the construction of the Project must be paid the prevailing per diem wage rate for their labor classification.

4.9.2 The Developer, on behalf of itself, its successors, and assigns, waives and releases the City from any right of action that may be available to it pursuant to Labor Code Sections 1726 and 1781. The Developer acknowledges the protections of Civil Code Section 1542 relative to the waiver and release contained in this Section 4.9, which reads as follows:
“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS

WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO

EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING

THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST

HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT
WITH THE DEBTOR.”

BY INITIALING BELOW, THE DEVELOPER KNOWINGLY AND VOLUNTARILY WAIVES THE PROVISIONS OF SECTION 1542 SOLELY IN CONNECTION WITH THE WAIVERS AND RELEASES OF THIS SECTION 4.9.2.
_________________
Developer’s Initials

4.9.3 Additionally, in accordance with Section 7.7, the Developer shall indemnify, defend with counsel acceptable to the City and hold the City harmless against any claims pursuant to Labor Code Sections 1726 and 1781 arising from this Agreement or the construction or operation of the Project.

4.10 Certificate of Completion.

4.10.1 Following the substantial completion of construction of the Project, and upon written request from the Developer for issuance of a Certificate of Completion for the Project, the City shall inspect the Project to determine whether or not the Project has been substantially completed in compliance with this Agreement. If the City determines that the Project is complete and in compliance with this Agreement, the City Manager shall furnish the Developer with a Item 3B - Page 36
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Certificate of Completion for the Project. If the City determines that the Project is not in compliance with this Agreement, the City Manager shall send written notice of each nonconformity to the Developer. Upon issuance of the final certificate of occupancy for the development of the Project, based on the plans submitted by the Developer to the City, the City shall furnish the Developer with a Certificate of Completion for the Project.

4.10.2 Upon the Developer’s substantial completion of the Project, the Developer shall request and be entitled to receive a Certificate of Completion, including the right of the City Manager to issue the Certificate of Completion, except that the Certificate of Completion, upon issuance, shall be evidence of the City’s conclusive determination of satisfactory substantial completion of the entirety of the Project pursuant to the terms of this Agreement.

4.10.3 The City shall not unreasonably withhold the issuance of a Certificate of Completion. A Certificate of Completion shall be evidence of the City’s conclusive determination of satisfactory completion of the Project to which it pertains pursuant to the terms of this Agreement. After the recordation of a Certificate of Completion for the Project, any person then owning or thereafter purchasing, leasing or otherwise acquiring any interest in the Property improved with the Project shall not (because of such ownership, purchase, lease or acquisition) incur any obligation or liability under this Agreement regarding construction or installation of the Project except that such person shall be bound by any reservations, covenants, conditions, restrictions and other interests recorded against the Property pursuant to this Agreement, the Grant Deed, the Regulatory Agreement.

4.10.4 If the City fails or refuses to issue a Certificate of Completion following written request from the Developer, the City shall, within fifteen (15) calendar days of the Developer’s written request or within three (3) calendar days after the next regular meeting of the City Council, whichever date occurs later, provide the Developer with a written statement setting forth the reasons for the City’s failure or refusal to issue a Certificate of Completion. The statement shall also contain the City’s opinion of the action(s) the Developer must take to obtain a Certificate of Completion from the City. If the reason for the Developer’s failure to complete the Project is confined to the immediate unavailability of specific items or materials for construction or landscaping at a price reasonably acceptable to the Developer or other minor building “punchlist” items, the City may issue its Certificate of Completion upon the posting of a bond or irrevocable standby letter of credit by the Developer in a form reasonably acceptable to the City in an amount representing the fair value of the work on the Project remaining to be completed, as reasonably determined by the City. If the City fails to provide such written statement, within the specified time period, the Developer shall be deemed conclusively and without further action of the City to have satisfied the requirements of this Agreement with respect to the Project, as if a Certificate of Completion had been issued by the City pursuant to this Agreement.

4.10.5 A Certificate of Completion shall not constitute evidence of compliance with or satisfaction of any obligation of the Developer to any holder of a mortgage, or any insurer of a mortgage securing money loaned to finance the Project, or any parts thereof. A Certificate of Completion shall not be deemed to constitute a notice of completion under Section 3093 of the California Civil Code, nor shall it act to terminate the continuing covenants, restrictions or conditions contained in the Grant Deed or any other instruments recorded against the Property Item 3B - Page 37
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pursuant to this Agreement. A Certificate of Completion is not evidence of the compliance of the Project with any City Requirements or any building code, conditions of approval, land use, zoning or other requirements of the City or any Governmental Agency with jurisdiction over the Property, other than the City.

4.11 Assignment Rights in Project Contracts. All contracts for acquisition of materials, preparation of plans and specifications (including but not limited to designs and drawings), and construction of the Project shall provide, in a form and substance reasonably satisfactory to the City, for the assignment thereof to the City if the City terminates this Agreement, and shall allow the City the rights and authority under the contracts in the event of termination by the City.

ARTICLE V

DEVELOPER COVENANTS

5.1 Covenant to Maintain Property on Tax Rolls. The Developer for itself, its successors and assigns to all or any part or portion of the Property and/or Project, covenants and agrees that:

5.1.1 The entire Property shall remain on the County secured real property tax rolls in accordance with state law applicable to the Project or the Property, including any obligation arising from any agreements or obligations of the City as a Successor Agency.

5.1.2 The Developer shall pay all property tax bills with respect to the Property and all improvements thereon on or before the last day for the timely payment of each property tax installment on each December 10 and April 10 during such time period and to timely pay all supplemental tax bills regarding the Property issued by the County. The Developer further covenants and agrees to provide to the City, upon request from the City, commencing in the calendar year following the calendar year in which a Certificate of Completion is recorded and in each calendar year, thereafter, for the full term of this covenant: (i) a true and correct copy of all property tax assessment notices, property tax bills and property tax assessment correspondence by and between the Developer and the County regarding the Property and all improvements thereon, with respect to the preceding fiscal year of the County, and (ii) cancelled checks issued by the Developer in payment of all property tax payments that are made to the County regarding the Property and all improvements thereon (or other reasonably acceptable evidence of such payment), with respect to the preceding County fiscal year.

5.2 RESERVED

5.3 Compliance with the Regulatory Agreement. The Developer for itself, its successors and assigns to all or any part or portion of the Property and/or Project, covenants and agrees that:

5.3.1 The Property and each Parcel shall be used and operated in accordance with the Regulatory Agreement.

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5.3.2 Each Restricted Home shall be transferred through a long-term ground lease to an eligible low income household in accordance with the Regulatory Agreement.

5.3.3 The covenants of this Section 5.3 shall run with the land of the Property, shall be enforceable against the Developer and its successors and assigns, and shall be covenants set forth in the Grant Deed.

5.3.4 Within thirty (30) days of approval of the entitlements for the Project, or thirty (30) days prior to Close of Escrow, whichever is earlier, Developer shall submit all exhibits to the Regulatory Agreement, inclusive of the Ground Lease, or any other agreement or instrument utilized for transferring units to Eligible Households, to the City for review and approval . The City shall have at least fifteen (15) days to provide approval or disapproval, which approval shall not be unreasonably withheld.

5.4 Maintenance Condition of the Property. The Developer for itself, its successors and assigns to all or any part or portion of the Property and/or Project, covenants and agrees that:

5.4.1 The areas of the Property that are subject to public view (including all existing and future improvements, paving, walkways, landscaping, exterior signage and ornamentation) shall be maintained in good repair and a neat, clean and orderly condition, ordinary wear and tear excepted. If there is an occurrence of an adverse condition on any area of the Property that is subject to public view in contravention of the general maintenance standard described above (a “Maintenance Deficiency”), then the City shall notify the Developer in writing of the Maintenance Deficiency. If the Developer fails to cure or commence and diligently pursue to cure the Maintenance Deficiency within thirty (30) days of its receipt of notice of the Maintenance Deficiency, the City shall have the right to enter the Property and perform all acts necessary to cure the Maintenance Deficiency, or to take any other action at law or in equity that may then be available to the City to accomplish the abatement of the Maintenance Deficiency.

Any sum expended by the City for the abatement of a Maintenance Deficiency on the Property pursuant to this Section 5.4.1 shall become a lien on the Property, as applicable. If the amount of the lien is not paid within thirty (30) days after written demand for payment from the City to the Developer, the City shall have the right to enforce the lien in the manner provided in Section 5.4.3.

5.4.2 Graffiti, as this term is defined in Government Code Section 38772, that has been applied to any exterior surface of a structure or improvement on the Property that is visible from any public right-of-way adjacent or contiguous to the Property, shall be removed by the Developer by either painting over the evidence of such vandalism with a paint that has been color-matched to the surface on which the paint is applied, or graffiti may be removed with solvents, detergents or water, as appropriate. If any such graffiti is not removed within ninety-six (96) hours following the time of the discovery of the graffiti, the City shall have the right to enter the Property and remove the graffiti, without notice to the Developer. Any sum reasonably expended by the City for the removal of graffiti from the Property pursuant to this Section 5.4.2, shall be a lien on the Property. If the amount of the lien is not paid within thirty (30) days after written demand to the Developer from the City, the City shall have the right to enforce its lien in the manner provided in Section 5.4.3.

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5.4.1 or Section 5.4.2, including the reasonable attorneys’ fees and costs of the City associated with the abatement of a Maintenance Deficiency or removal of graffiti. For the purposes of the preceding sentence the words “reasonable attorneys’ fees and costs of the City” mean and include the salaries, benefits and costs of the City Attorney and the lawyers employed in the Office of the City Attorney.

5.4.4 The provisions of this Section 5.3, shall be a covenant running with the land of the Property, shall be enforceable against the Developer and its successors and assigns, and shall be covenants set forth in the Grant Deed. Nothing in the foregoing provisions of this Section

5.4 shall be deemed to preclude the Developer from making any alteration, addition, or other change to any structure or improvement or landscaping on the Property, provided that any such changes comply with applicable zoning and building regulations of the City.

5.5 Obligation to Refrain from Discrimination. The Developer for itself, its successors and assigns to all or any part or portion of the Property and/or Project, covenants and agrees:

5.5.1 Fair Housing Covenant. There shall be no discrimination against or segregation of any person, or group of persons on account of actual or perceived race, color, religion, sex, gender, gender identity, gender expression, sexual orientation, marital status, national origin, ancestry, familial status, source of income, disability, veteran or military status, or genetic information, in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property. Developer, for 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, sub-tenants, sub-lessees or vendees of the Property.

The covenant of this Section 5 shall run with the land of the Property and shall be enforceable against the Developer and its successors and assigns in perpetuity and be a covenant in the Grant Deed and the Notice of Agreement. The covenant of this Section 5 shall run with the land of the Property in perpetuity, shall be enforceable against the Developer and its successors and assigns, and shall be covenants set forth in the Grant Deed.

5.5.2 Fair Employment Covenant. In connection with its performance under this Agreement, Developer shall not discriminate against any employee or applicant for employment on account of actual or perceived race, color, religion, sex, gender, gender identity, gender expression, sexual orientation, marital status, national origin, ancestry, familial status, source of income, disability, veteran or military status, or genetic information. Developer shall ensure that applicants are employed, and that employees are treated during their employment, without regard to any prohibited basis.

5.5.3 Compliance with Palm Springs Municipal Code Section 7.09.040.

Developer certifies and agrees to comply with the City’s Municipal Code provisions that prohibit discrimination. Developer’s obligations under this paragraph shall apply to all activities under this Item 3B - Page 40
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Agreement, including the development and operation of the Project, and employment activities that include but are not limited to: employment, upgrading, demotion or transfer; recruitment or recruitment advertising; layoff or termination; rates of pay or other forms of compensation; and selection for training, including apprenticeship.

5.6 Form of Non-Discrimination and Non-Segregation Clauses. The Developer for itself, its successors and assigns to all or any part or portion of the Property and/or Project, covenants and agrees that:

5.6.1 The Developer, such successors and such assigns shall refrain from restricting the sale, lease, sublease, rental, transfer, use, occupancy, tenure or enjoyment of the Property (or any portion thereof) on the basis of actual or perceived race, religion, color, sex, age, marital status, ancestry, national origin (i.e., place of origin, immigration status, cultural or linguistic characteristics, or ethnicity), sexual orientation, gender identity, gender expression, physical or mental disability, or medical condition (each a “prohibited basis”), of any person of any person. All deeds, leases or contracts pertaining to the Property shall contain or be subject to substantially the following non-discrimination or non-segregation covenants:

5.6.1.1 In deeds: “The grantee herein covenants by and for itself, its successors and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of race, color, religion, sex, gender, gender identity, gender expression, sexual orientation, marital status, national origin, ancestry, familial status, source of income, disability, veteran or military status, or genetic information, of any person, in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the premises herein conveyed, nor shall the grantee 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, sub-tenants, sublessee, or vendees in the premises herein conveyed. The foregoing covenants shall run with the land.”

5.6.1.2 In leases: “The Lessee herein covenants by and for itself, its successors and assigns, and all persons claiming under or through them, and this lease is made and accepted upon and subject to the following conditions: That there shall be no discrimination against or segregation of any person or group of persons, on account of race, color, religion, sex, gender, gender identity, gender expression, sexual orientation, marital status, national origin, ancestry, familial status, source of income, disability, veteran or military status, or genetic information, of any person, in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of the premises herein leased nor shall the lessee 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, sub-lessee, sub-tenants, or vendees in the premises herein leased.”

5.6.1.3 In contracts: “There shall be no discrimination against or segregation of any person or group of persons on account of race, color, religion, sex, gender, gender identity, gender expression, sexual orientation, marital status, national origin, ancestry, familial status, source of income, disability, veteran or military status, or genetic information, of any person, in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the Item 3B - Page 41
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premises herein conveyed or leased, nor shall the transferee 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, sub-lessees, sub-tenants, or vendees of the premises herein transferred.” The foregoing provision shall be binding upon and shall obligate the contracting party or parties and any subcontracting party or parties, or other transferees under the instrument.

5.6.2 The covenant of this Section 6 shall run with the land of the Property in perpetuity, shall be enforceable against the Developer and its successors and assigns, and shall be covenants set forth in the Grant Deed.

5.7 Survival of Special Development Covenants. All of the covenants set forth in this ARTICLE V, inclusive, shall be a covenant running with the land of the Property and each such special development covenant shall survive the Close of Escrow, execution and recordation of the Grant Deed, and issuance and recordation of any Certificate of Completion for the time period specifically set forth in each such special development covenant. The Parties acknowledge that although the special development covenants apply to the entirety of the Property, portions of the Project and Property may, in accordance with the Permitted Transfer requirements, be sold or otherwise transferred to various successors and assigns of the Developer. Accordingly, the City agrees that with respect to enforcement of any of the special development covenants, it is understood and agreed that, in the event of a breach of any of the special development covenants, the City will seek to enforce those covenants only against the then-current owner(s) of that portion of the Property which is not in compliance with any one or more the special development covenants. No owner of any portion of the Property which is in compliance with the special development covenants shall be liable for the breach of any of the special development covenants by any other owner of any other portion of the Property; provided, however, that the foregoing shall not preclude City from seeking damages against any prior owner of any portion of the Property if, during the tenure of such owner’s ownership, such owner’s portion of the Property was not in compliance with any one or more of the special development covenants.

5.8 Developer Covenant to Defend this Agreement. The Developer acknowledges that the City is a “public entity” and/or “public agency” as defined under applicable California law. Therefore, the City must satisfy the requirements of certain California statutes relating to the actions of public entities and public agencies including, without limitation, CEQA. Also, as a public body, the City’s action in approving this Agreement may be subject to proceedings to invalidate this Agreement or mandamus. The Developer assumes the risk of delays and damages that may result to the Developer from any third-party legal actions related to the City’s approval of this Agreement or the pursuit of the activities contemplated by this Agreement, even in the event that an error, omission or abuse of discretion by the City is determined to have occurred. If a thirdparty files a legal action regarding the City’s approval of this Agreement or the pursuit of the activities contemplated by this Agreement, either the City may terminate this Agreement on thirty (30) days written notice to the Developer of the City’s intent to terminate this Agreement, referencing this Section 5.8, without any further obligation to perform the terms of this Agreement and without any liability to the Developer resulting from such termination, unless the Developer unconditionally agrees to indemnify and defend the City, with legal counsel acceptable to the City, against such third-party legal action, as provided in the next sentence. Within thirty (30) days of receipt of the City’s notice of intent to terminate this Agreement, as provided in the preceding Item 3B - Page 42
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sentence, the Developer may offer to defend the City, with legal counsel reasonably acceptable to the City, in the third-party legal action and pay all of the court costs, attorney fees, monetary awards, sanctions, attorney fee awards, expert witness and consulting fees, and the expenses of any and all financial or performance obligations resulting from the disposition of the legal action.

Any such offer from the Developer must be in writing and reasonably acceptable to the City in both form and substance. Nothing contained in this Section 5.8 shall be deemed or construed to be an express or implied admission that the City is liable to the Developer or any other person or entity for damages alleged from any alleged or established failure of the City to comply with any statute, including, without limitation, CEQA. The Developer’s defense of such third party actions as described in this Section 5.8 shall constitute an Unavoidable Delay.

5.9 Environmental Indemnity of the City by the Developer. The Developer agrees, at its sole cost and expense, to fully indemnify, protect, hold harmless, and defend (with counsel selected by the Developer and approved by the City) the City and its commissions, agents, attorneys, officers, employees, and authorized representatives (collectively, the “Indemnified Parties”), from and against any and all claims, demands, damages, losses, liabilities, obligations, penalties, fines, actions, causes of action, judgments, suits, proceedings, costs, disbursements and expenses, including, without limitation, attorney fees, disbursements and costs of attorneys, environmental consultants and other experts, and all foreseeable and unforeseeable damages or costs of any kind or of any nature whatsoever (collectively, “Environmental Claims”) that may, at any time, be imposed upon, incurred or suffered by, or claimed, asserted or awarded against, the Indemnified Parties, directly or indirectly relating to or arising from any of the following “Environmental Matters” existing or occurring during or arising from the Developer’s ownership of the Property or construction or operation of the Project:

5.9.1 The presence of Hazardous Materials on, in, under, from or affecting all or any portion of the Property or the Project.

5.9.2 The storage, holding, handling, release, threatened release, discharge, generation, leak, abatement, removal or transportation of any Hazardous Materials on, in, under, from or affecting the Property or the Project.

5.9.3 The violation of any law, rule, regulation, judgment, order, permit, license, agreement, covenant, restriction, requirement or the like by the Developer, its agents or contractors, relating to or governing in any way Hazardous Materials on, in, under, from or affecting the Property or the Project.

5.9.4 The failure of the Developer, its agents or contractors, to properly complete, obtain, submit and/or file any and all notices, permits, licenses, authorizations, covenants and the like in connection with the Developer’s activities on the Property or regarding the Project.

5.9.5 The implementation and enforcement by the Developer, its agents or contractors of any monitoring, notification or other precautionary measures that may, at any time, become necessary to protect against the release, potential release or discharge of Hazardous Materials on, in, under, from or affecting the Property or the Project.

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5.9.6 The failure of the Developer, its agents or contractors, in compliance with all applicable Environmental Laws, to lawfully remove, contain, transport or dispose of any Hazardous Materials existing, stored or generated on, in, under or from the Property or the Project.

5.9.7 Any investigation, inquiry, order, hearing, action or other proceeding by or before any governmental agency in connection with any Hazardous Materials on, in, under, from or affecting the Property or the Project or the violation of any Environmental Law relating to the Property or the Project.

5.9.8 The Developer shall pay to the Indemnified Parties all costs and expenses including, without limitation, reasonable attorneys' fees and costs, incurred by the Indemnified Parties in connection with enforcement of the aforementioned environmental indemnity.

5.10 Insurance. In order to protect the City and its commissions, agents, attorneys, officers, employees and authorized representatives (collectively, “Additional Insureds”) against any and all claims and liability for death, injury, loss and damage resulting from the Developer’s actions in connection with this Agreement, the Property, and the Project, the Developer shall secure and maintain the insurance coverage, described in and required by this Section 5.10. The City shall not have any obligation under this Agreement until the Developer provides the required policies and/or certificates evidencing the insurance required by this Section 5.10 to the City and the City approves such evidence of insurance. The Developer shall pay any deductibles and selfinsured retentions under all insurance policies issued in satisfaction of the terms of this Agreement.

Developer shall retain all insurance policies as set forth in this Section 5.10 until recordation of the Certificate of Completion.

5.10.1 Workers’ Compensation Insurance Requirement. The Developer shall submit written proof that the Developer is insured against liability for workers’ compensation in accordance with the provisions of Section 3700 of the Labor Code. By executing this Agreement, the Developer makes the following certification, required by Section 1861 of the Labor Code:
“I am aware of the provisions of section 3700 of the Labor Code which require every employer to be insured against liability for workers’ compensation or to undertake self-insurance in accordance with the provisions of that code, and I will comply with such provisions before commencing the performance of the work of the Agreement.”
The Developer shall require each contractor and sub-contractor performing work on the Project to provide workers’ compensation coverage for all of such contractor’s or sub-contractor’s employees, unless the contractor’s or sub-contractor’s employees are covered by workers’ compensation insurance provided by the Developer. If any class of employees engaged in work or services performed in connection with the Project is not covered by Labor Code Section 3700, the Developer shall provide and/or require each contractor or sub-contractor to provide adequate workers’ compensation insurance covering such employees. Each workers’ compensation policy Item 3B - Page 44
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procured pursuant to this Section 5.10.1 shall contain a full waiver of subrogation clause in favor of the Additional Insureds.

5.10.2 Liability and Permanent Insurance Requirements.

5.10.2.1 The Developer shall maintain in full force and effect, until the issuance of the Certificate of Completion, subject to Section 5.10.2.4, the following insurance coverage:

5.10.2.1.1 Commercial General Liability Insurance coverage, including, but not limited to, Premises-Operations, Contractual Liability Insurance (specifically covering all indemnity obligations of the Developer pursuant to this Agreement), ProductsCompleted Operations Hazards, Personal Injury (including bodily injury and death), and Property Damage for liability arising out of the construction of the Project and/or the Developer’s operations concerning the Property or the Project. The commercial general liability insurance coverage shall have minimum limits for Bodily Injury and Property Damage liability of TWO MILLION DOLLARS ($2,000,000) each occurrence and FOUR MILLION DOLLARS ($4,000,000) aggregate.

5.10.2.1.2 Automobile Liability Insurance against claims of Personal Injury (including bodily injury and death) and Property Damage covering all owned, leased, hired and non-owned vehicles used by the Developer with minimum limits for Bodily Injury and Property Damage of ONE MILLION DOLLARS ($1,000,000) each occurrence and TWO MILLION DOLLARS ($2,000,000) aggregate. Such insurance shall be provided by a business or commercial vehicle policy.

5.10.2.1.3 If the Developer hires a consultant to provide design services, such as architectural or engineering services in connection with the Project, or any portion of the Project, the Developer shall require each such consultant to provide Professional Liability (Errors and Omissions) Insurance, for liability arising out of, or in connection with, the performance of such design services, with limits of not less than ONE MILLION DOLLARS ($1,000,000).

5.10.2.1.4 Upon acceptance of the Project or any portion thereof, from each contractor, the Developer shall maintain Fire and Extended Coverage Insurance on the Project on a blanket basis or with an agreed amount clause in amounts not less than 100% of the replacement value of all portions of the Project so accepted.

5.10.2.2 During the construction of the Project, the Developer shall require that each contractor performing work on the Project maintain the following insurance coverage, as specified below, at all times during the performance of said work, or the Developer shall provide for such contractors “wrap” coverage, as specified below, at all times during the performance of said work:

5.10.2.2.1 The Developer, or its contractor, subject to the City’s written approval, shall maintain Builder’s Risk Insurance to be written on an All Risk Completed Value form, in an aggregate amount equal to 100% of the completed insurable value of the Project or portion of the Project on which such contractor is performing work.

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5.10.2.2.2 Each general contractor and each sub-contractor shall maintain Commercial General Liability Insurance with limits of not less than ONE MILLION DOLLARS ($1,000,000) per occurrence and TWO MILLION DOLLARS ($2,000,000) aggregate to protect the Developer during the construction of the Project from claims involving bodily injury and/or death and damage to the property of others.

5.10.2.2.3 Each general contractor and each sub-contractor shall maintain Automobile Liability Insurance against claims of personal injury (including bodily injury and death) and property damage covering all owned, leased, hired and non-owned vehicles used in the performance of the contractor’s obligations with minimum limits for bodily injury and property damage of ONE MILLION DOLLARS ($1,000,000) each occurrence and TWO MILLION DOLLARS ($2,000,000) aggregate. Such automobile liability insurance shall be provided by a business or commercial vehicle policy.

5.10.2.3 The insurance required in Section 5.10.2.1 and Section 5.10.2.2 above shall include endorsements naming the Additional Insureds as additional insured for liability arising out of this Agreement and any operation related to this Agreement.

5.10.2.4 Any insurance coverage required under this Agreement shall not be written on a “claims made” basis. The applicable certificate of insurance must clearly provide that the coverage is on an “occurrence” basis. The requirements of this Section 5.10.2.4 shall survive any expiration or termination of this Agreement and the recordation of the Grant Deed and any Certificate of Completion.

5.10.2.5 Receipt by the City of evidence of insurance that does not comply with the above requirements shall not constitute a waiver of the insurance requirements of this Agreement.

5.10.2.6 Subject to Section 5.10.2.4, all of the insurance coverage required under this Section 5.9 shall be maintained by the Developer or its contractors, as required by the terms of this Agreement, until the issuance of the Certificate of Completion and shall not be reduced, modified, or canceled without, at least, thirty (30) days prior written notice to the City.

Also, phrases such as “endeavor to” and “but failure to mail such notice shall impose no obligation or liability of any kind upon the company” shall not be included in the cancellation wording of any certificates of insurance or any coverage for the Additional Insureds. The Developer shall immediately obtain replacement coverage for any insurance policy that is terminated, canceled, non-renewed, or whose policy limits are exhausted or upon insolvency of the insurer that issued the policy.

5.10.2.7 All insurance to be obtained and maintained by the Developer under this Section 5.10 shall be issued by a company or companies listed in the then current “Best’s Key Rating Guide” publication with a minimum of an “A:VII” rating and be admitted to conduct business in the State of California by the State of California Department of Insurance.

5.10.2.8 The City will not accept self-insurance in satisfaction of the insurance requirements of this Section 5.10.

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5.10.2.9 All insurance obtained and maintained by the Developer in satisfaction of the requirements of this Agreement shall be primary to and not contributing to any insurance maintained by the Additional Insureds.

5.10.2.10 Insurance coverage in the minimum amounts set forth in this Section 5.9 shall not be construed to relieve the Developer of any liability, whether within, outside, or in excess of such coverage, and regardless of solvency or insolvency of the insurer that issues the coverage; nor shall it preclude the Additional Insureds from taking such other actions as are available to them under any other provision of this Agreement or otherwise at law.

5.10.3 Failure by the Developer to maintain all insurance coverage required by this Section 5.10 in effect shall be an Event of Default by the Developer. The City, at its sole option, may exercise any remedy available to them in connection with such an Event of Default.

Alternatively, the City may, at its sole option, purchase any such required insurance coverage and the City shall be entitled to immediate payment from the Developer for any premiums and associated costs paid by the City for such insurance coverage. Any election by the City to purchase or not to purchase insurance otherwise required to be carried by the Developer shall not relieve the Developer of its obligation to obtain and maintain the insurance coverage required by this Agreement.

ARTICLE VI

PROJECT FINANCING

6.1 Recordation of Construction Loan Deed of Trust. The Developer covenants to the City that, if Developer has arranged any secured Construction Loan, the Developer shall cause the Construction Loan Deed of Trust(s) to be recorded against the Property within sixty (60) days following the Close of Escrow.

6.2 Unauthorized Liens. Except as provided in Section 6.3, until recordation of the Certificate of Completion, the Developer shall not record, and shall not allow to be recorded, against the Property, or any portion thereof, any Lien not expressly authorized by this Agreement.

Until recordation of the Certificate of Completion, the Developer shall remove, or shall have removed, any unauthorized Lien made or recorded against the Property or any portion of the Property, or shall assure the satisfaction thereof to the satisfaction of the City. After one hundred twenty (120) calendar days prior written notice to the Developer, the City shall have the right, but not the obligation, to satisfy any unauthorized Lien made or recorded prior to recordation of the Certificate of Completion and receive reimbursement from the Developer for any amounts paid or incurred in satisfying any such Lien, upon demand. Nothing in this Section 6.2, though, shall require the Developer to pay or make provisions for the payment of any tax, assessment, lien, or charge that the Developer is in the process of contesting the validity or amount thereof, in good faith, and so long as such contest shall not subject the Property, or any portion thereof, to forfeiture or sale.

6.3 Rights of Lenders and City Regarding Permitted Loans and Liens.

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6.3.1 The City shall have the right of reasonable review and approval of any Lender from which the Developer proposes to obtain any Loan, including a Construction Loan, whether or not such Loan is secured by a Lien against the Property or any portion thereof. The City shall not unreasonably withhold, condition or delay its approval of any proposed Lender or Loan. In deciding whether to give, condition or withhold such approval, the City may consider, among other matters, whether or not the proposed Lender is a state or federally chartered bank, savings and loan, or other financial institution which routinely provides construction financing to development projects such as the Project, whether the terms of the Loan are reasonable and customary when compared to the financing terms of similar development projects in the County, the size and financial strength of the proposed Lender, and what effect, if any, any changes requested by the Lender to either this Agreement or any of the exhibits to this Agreement may have upon the City’s rights and remedies hereunder. In connection therewith, in any notice requesting approval of a proposed Lender and Loan, the Developer shall include a statement identifying any amendments, modifications, or other changes to this Agreement or its exhibits which the proposed Lender will request in connection with the Developer’s obtaining of the Loan.

The City agrees to reasonably consider, but shall not be obligated to accept, any amendment, modification, or other change to this Agreement or any of the exhibits to this Agreement which materially restricts, diminishes, or burdens the City’s rights and remedies.

6.3.2 Whenever the City delivers any notice or demand to the Developer regarding any breach or default by the Developer under this Agreement that, if not timely cured by the Developer, would entitle the City to terminate this Agreement, the City shall send a copy of such notice to each affected Lender of which the City has received notice and a contact address for transmittal of such notices. Whenever the City delivers any notice or demand to the Developer regarding any breach or default by the Developer under this Agreement that, if not timely cured by the Developer, would entitle the City to exercise its power of termination of the fee estate of all or any portion of the Property pursuant to Section 7.6, the City shall at the same time send a copy of such notice or demand to each affected Lender of which the City has received notice and a contact address for transmittal of such notice. Each affected Lender receiving a copy of any such notice shall have the right, at its option, to commence the cure or remedy of any such default of the Developer and to diligently and continuously proceed with such cure or remedy, within one hundred eighty (180) calendar days following its receipt of notice of the default. If a default of the Developer under this Agreement cannot, with diligence, be remedied or cured, or the remedy or cure of such default cannot be commenced, within such one hundred eighty (180) calendar day period, the Lender shall have such additional time as is reasonably necessary to remedy or cure such default of the Developer, but in no event beyond three hundred sixty five (365) calendar days following its receipt of notice of the default. If such default of the Developer can only be remedied or cured by the Lender upon obtaining possession of the Property, the Lender shall seek to obtain possession of the Property with diligence and continuity through a receiver or otherwise, and shall remedy or cure such default of the Developer within one hundred eighty (180) calendar days after obtaining possession of the Property. Nothing contained in this Agreement shall be deemed to permit or authorize any Lender to undertake or continue the construction of any portion of the Project (beyond the extent necessary to conserve or protect improvements or construction already made), without expressly assuming the Developer’s obligations under this Agreement by written agreement approved by the City, in which the Lender agrees to complete, in the manner provided in this Agreement, the improvements to which the Lien or title of the Lender relates, which approval shall not unreasonably be withheld, delayed, or conditioned by the City.

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6.3.3 In any case where, one hundred eighty (180) calendar days after delivery of notice of a default of the Developer under Section 6.3.2, an affected Lender has not exercised the option provided in Section 6.3.2 to construct the applicable portions of the Project, or has exercised the option, but has not proceeded diligently and continuously with construction, the City shall have the option, in the City’s sole and absolute discretion, to purchase the Loan of such Lender and any security interest of such Lender under its Loan Documents by payment to the Lender of the amount of the unpaid Loan, including principal, accrued and unpaid interest, late charges, costs, expenses and other amounts payable to the Lender by the Developer under its Loan Documents and, if the ownership of the Property or any portion of the Property has previously vested in such Lender, the City, at its option but not as its obligation, shall be entitled to a conveyance of any title or interest in the Property vested in such Lender from such Lender.

6.3.4 After expiration of the one hundred eighty (180) calendar day period provided for in Section 6.3.3, any affected Lender may demand, in writing, that the City act to exercise or forego the option granted in Section 6.3.3. If the City fails to exercise the right granted in Section 6.3.3 within sixty (60) calendar days from the date of the City’s receipt of such written demand from a Lender, the City shall be conclusively deemed to have waived its right of purchase of that Lender’s interest pursuant to Section 6.3.3.

6.3.5 In the event of a default or breach by the Developer under any Loan Documents, where the Lender has not exercised its option to complete the Project under Section

6.3.2, the City may cure the default of the Developer under the applicable Loan Documents, but is under no obligation to do so, prior to completion of any sale or foreclosure of the Property or any portion thereof under the applicable Loan Documents. The City shall be entitled to reimbursement from the Developer of all costs and expenses incurred by the City in curing any default of the Developer under any Loan Documents.

6.3.6 In any case where a Lender has acquired title to all or any portion of the Property or Project through foreclosure, deed in lieu of foreclosure, or any other means, and such Lender proposes to enter into an agreement to transfer the Property and/or Project, or any portion thereof, to a third party transferee, the Lender shall provide the City with written notice thereof, which notice shall include a reasonably detailed description of the terms and conditions of the proposed transaction. The City shall have the option, but not the obligation, to purchase the Property and/or Project on substantially the same terms as described in the Lender’s notice, which option, if ever, shall be exercised by written notice from the City to the Lender within twenty (20) days following the City’s receipt of the Lender’s notice. If the City elects not to exercise its option, then, subject to Section 8.2.2, the Lender may complete the transaction described in its notice, provided that such transaction is closed on materially identical terms and conditions as those described in the Lender’s notice to the City. If the Lender and third party transferee desire to materially amend the terms of their proposed transaction, the Lender shall give the City written notice of the proposed modifications and the City shall once again have the right to elect to acquire the Property and the Project (or portion thereof) on terms and conditions substantially similar to those modified terms. If, for any reason, the proposed transaction between the Lender and third party transferee fails to close within two hundred forty (240) days following the date on which the City first receives notice of the proposed transaction (or notice of the proposed modified transaction, whichever is later), then the City once again have the right to elect to acquire the Property and/or Project pursuant to this Section 6.3.6.

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6.3.7 The restrictions set forth in this Section 6.3 shall remain in effect only until the recordation of the Certificate of Completion for the Project.

ARTICLE VII

DEFAULTS, REMEDIES AND TERMINATION

7.1 Defaults - General.

7.1.1 Subject to any extensions of time provided for in this Agreement, failure or delay by any Party to perform any term or provision of this Agreement shall constitute an “Event of Default” under this Agreement; provided, however, that if a Party otherwise in default commences to cure, correct or remedy such default, within thirty (30) calendar days after receipt of written notice from the injured Party specifying such default, and shall diligently and continuously prosecute such cure, correction or remedy to completion (and where any time limits for the completion of such cure, correction or remedy are specifically set forth in this Agreement, then within said time limits), such Party shall not be deemed to be in default under this Agreement and no Event of Default shall be deemed to have occurred.

7.1.2 The injured Party shall give written notice of default to the Party in default, specifying the default complained of by the non-defaulting Party. Delay in giving such notice shall not constitute a waiver of any default nor shall it change the time of default.

7.1.3 Any failure or delays by any Party in asserting any of their rights and/or remedies as to any default shall not operate as a waiver of any default or of any such rights or remedies. Delays by any Party in asserting any of its rights and/or remedies shall not deprive that Party of its right to institute and maintain any actions or proceedings that it may deem necessary to protect, assert or enforce any such rights or remedies.

7.1.4 In addition to other acts or omissions of the Developer that may legally or equitably constitute a default or breach of this Agreement, the occurrence of any of the following specific events, prior to the issuance of a Certificate of Completion for the Project, shall constitute an “Event of Default” under this Agreement and shall not be subject to the notice and cure provisions of Section 7.1.1:

7.1.4.1 Any material default by the Developer under any Loan Documents for any purpose or reason that remains uncured following any applicable notice and expiration of any applicable cure period under such Loan Documents.

7.1.4.2 Any representation, warranty or disclosure made to the City by the Developer regarding this Agreement or the Project is materially false or misleading, whether or not such representation or disclosure appears in this Agreement.

7.1.4.3 The Developer fails to make any payment or deposit of funds required under this Agreement or to pay any other charge set forth in this Agreement, following seven (7) days’ written notice to the Developer from the City of such failure.

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7.1.4.4 The construction of the Project is delayed or suspended for a period in excess of that permitted under Section 4.3 or the Developer has not been issued, or entitled to be issued, a Certificate of Completion by the Project Completion Date.

7.1.4.5 There occurs any event of dissolution, reorganization or termination of the Developer that adversely and materially affects the operation or value of the Property or the Project, and such event is not corrected within five (5) days following written notice of such event from the City to the Developer.

7.1.4.6 The Developer Transfers its interest in this Agreement, the Property, or the Project, or any portion thereof, whether voluntarily or involuntarily or by operation of law, in violation of the terms and conditions of this Agreement and such action is not cured within the period prescribed in Section 8.2.2.

7.1.4.7 The Developer becomes insolvent or a receiver is appointed to conduct the affairs of the Developer under state or federal law.

7.1.4.8 The Developer’s legal status as a California nonprofit corporation authorized by the Secretary of State of the State of California to transact business in California is suspended or terminated.

7.1.4.9 The Developer fails to comply with obligations set forth in the Regulatory Agreement, Conditional Grant Agreement, or City Deed of Trust, or takes other actions preventing the complete execution and recording of the same, as applicable.

7.2 LIQUIDATED DAMAGES TO THE CITY. UPON THE OCCURRENCE OF

AN EVENT OF DEFAULT BY THE DEVELOPER UNDER THIS AGREEMENT PRIOR TO

THE CLOSE OF ESCROW, THE CITY MAY CANCEL THE ESCROW PURSUANT TO SECTION 3.10, AND UPON CANCELLATION OF THE ESCROW, THE CITY SHALL BE

RELIEVED OF ANY OBLIGATION UNDER THIS AGREEMENT TO SELL OR CONVEY

THE PROPERTY OR ANY PORTION THEREOF AND ANY SUCH ESCROW

CANCELLATION SHALL BE WITHOUT ANY LIABILITY OF THE CITY TO THE DEVELOPER OR ANY OTHER PERSON ARISING FROM SUCH ACTIONS. THE CITY

AND THE DEVELOPER ACKNOWLEDGE THAT IT IS EXTREMELY DIFFICULT AND

IMPRACTICAL, IF NOT IMPOSSIBLE, TO ASCERTAIN THE AMOUNT OF DAMAGES

THAT WOULD BE SUFFERED BY THE CITY IN THE EVENT OF A CANCELLATION OF

THE ESCROW DUE TO THE OCCURRENCE OF AN EVENT OF DEFAULT BY THE DEVELOPER UNDER THIS AGREEMENT PRIOR TO THE CLOSE OF ESCROW. HAVING

MADE DILIGENT BUT UNSUCCESSFUL ATTEMPTS TO ASCERTAIN THE ACTUAL

DAMAGES THE CITY WOULD SUFFER IN THE EVENT OF A CANCELLATION OF THE

ESCROW DUE TO THE OCCURRENCE OF AN EVENT OF DEFAULT BY THE

DEVELOPER UNDER THIS AGREEMENT PRIOR TO THE CLOSE OF ESCROW, THE

CITY AND THE DEVELOPER AGREE THAT A REASONABLE ESTIMATE OF THE CITY’S DAMAGES IN SUCH EVENT IS THE TOTAL SUM OF ALL AMOUNTS OF THE CITY GRANT DISBURSED TO DEVELOPER (THE “LIQUIDATED DAMAGES AMOUNT”). THEREFORE, UPON THE CANCELLATION OF THE ESCROW BY THE

CITY DUE TO THE OCCURRENCE OF AN EVENT OF DEFAULT BY THE DEVELOPER Item 3B - Page 51
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UNDER THIS AGREEMENT PRIOR TO THE CLOSE OF THE ESCROW, ESCROW

HOLDER SHALL IMMEDIATELY CANCEL THE ESCROW AND PAY THE LIQUIDATED

DAMAGES AMOUNT TO THE CITY, IN PART, FROM THE EARNEST MONEY DEPOSIT WITHIN FIVE (5) DAYS OF ESCROW CANCELLATION. RECEIPT OF THE LIQUIDATED

DAMAGES AMOUNT, INCLUDING ANY AMOUNT OWED BY DEVELOPER DIRECTLY, SHALL BE THE CITY’S SOLE AND EXCLUSIVE REMEDY UPON THE CANCELLATION

OF THE ESCROW DUE TO THE OCCURRENCE OF AN EVENT OF DEFAULT BY THE DEVELOPER UNDER THIS AGREEMENT PRIOR TO THE CLOSE OF ESCROW.

CITY’S INITIALS: _____ DEVELOPER’S INITIALS: _____

7.3 DEVELOPER’S ELECTION RE: SPECIFIC ENFORCEMENT OF

AGREEMENT OR WAIVER OF RIGHT TO SPECIFIC PERFORMANCE AND LIMITATION ON RECOVERY OF DAMAGES PRIOR TO CLOSE OF ESCROW.

UPON THE OCCURRENCE OF AN EVENT OF DEFAULT PERTAINING TO THE

CONVEYANCE OF THE PROPERTY BY THE CITY UNDER THIS AGREEMENT PRIOR

TO CLOSE OF ESCROW, THE DEVELOPER SHALL, AS ITS SOLE AND EXCLUSIVE

REMEDY, HAVE THE RIGHT TO EXERCISE ONE OF THE ALTERNATIVE REMEDIES DESCRIBED IN SECTIONS 7.3.1 AND 7.3.2. THE DEVELOPER’S ELECTION, ONCE MADE, SHALL BE IRREVOCABLE.

7.3.1 WAIVER OF RIGHT TO SPECIFIC PERFORMANCE AND
LIMITATION ON RECOVERY OF DAMAGES. THE DEVELOPER MAY WAIVE THE REMEDIES SET FORTH IN SECTION 7.3.2 AND MAY CANCEL THE ESCROW PURSUANT TO SECTION 3.10, AND UPON CANCELLATION OF THE ESCROW, THE

DEVELOPER SHALL BE RELIEVED OF ANY OBLIGATION UNDER THIS AGREEMENT

TO PURCHASE OR ACCEPT TITLE TO THE PROPERTY AND ANY SUCH ESCROW

CANCELLATION SHALL BE WITHOUT ANY LIABILITY OF THE DEVELOPER TO THE CITY OR ANY OTHER PERSON ARISING FROM SUCH ACTIONS. THE DEVELOPER

SHALL BE LIMITED TO RECOVERING ANY AMOUNTS ACTUALLY EXPENDED BY

THE DEVELOPER IN REASONABLE RELIANCE ON THIS AGREEMENT PRIOR TO THE

DATE OF THE OCCURRENCE OF THE EVENT OF DEFAULT BY THE CITY, NOT TO EXCEED TEN THOUSAND DOLLARS ($10,000). THE DEVELOPER WAIVES ANY RIGHT

TO RECOVER ANY OTHER SUMS FROM THE CITY ARISING FROM AN EVENT OF DEFAULT BY THE CITY PRIOR TO THE CLOSE OF ESCROW. THE DEVELOPER ACKNOWLEDGES THE PROTECTIONS OF CIVIL CODE SECTION 1542 RELATIVE TO THE WAIVER AND RELEASE CONTAINED IN THIS SECTION 7.3.1, WHICH CIVIL CODE SECTION READS AS FOLLOWS:
“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS

THAT THE CREDITOR OR RELEASING PARTY DOES NOT

KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT

THE TIME OF EXECUTING THE RELEASE AND THAT, IF

KNOWN BY HIM OR HER, WOULD HAVE MATERIALLY

AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR
OR RELEASED PARTY.”
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BY INITIALING BELOW, THE DEVELOPER KNOWINGLY AND VOLUNTARILY WAIVES THE PROVISIONS OF SECTION 1542 SOLELY IN CONNECTION WITH THE WAIVERS AND RELEASES OF THIS SECTION 7.3.1.

DEVELOPER’S INITIALS ____________
IN CONNECTION WITH THE WAIVERS OF THIS SECTION 7.3.1, THE

DEVELOPER FURTHER WAIVES THE RIGHT TO RECORD A NOTICE OF PENDENCY

OF ACTION AGAINST ALL OR ANY PORTION OF THE PROPERTY EXCEPT

DEVELOPER MAY RECORD SUCH A NOTICE IN CONNECTION WITH ANY SUIT FOR

SPECIFIC PERFORMANCE PERMITTED HEREUNDER IN THE EVENT DEVELOPER

ELECTS NOT TO WAIVE ITS RIGHT TO SEEK SPECIFIC PERFORMANCE UNDER SECTION 7.3.2.

7.3.2 SPECIFIC PERFORMANCE. THE DEVELOPER MAY WAIVE
THE REMEDIES SET FORTH IN SECTION 7.3.1 AND, IN ACCORDANCE WITH CIVIL CODE SECTION 3384, ET SEQ., INSTITUTE AN ACTION AGAINST THE CITY FOR

SPECIFIC PERFORMANCE OF THE TERMS OR PROVISIONS OF THIS AGREEMENT

WHICH WERE TO HAVE BEEN COMPLETED BY THE CITY PRIOR TO THE CLOSE OF ESCROW.

7.4 Legal Actions.

7.4.1 Except as otherwise provided by Section 7.3, any Party may institute legal action to cure, correct or remedy any default, to recover damages for any default, or to obtain any other remedy available to that Party under this Agreement or at law or in equity. Such legal actions must be instituted in the Superior Court of the State of California in and for the County of Riverside, California, in any other appropriate court within the County of Riverside, California.

7.4.2 The procedural and substantive laws of the State of California shall govern the interpretation and enforcement of this Agreement, without regard to conflicts of laws principles. The Parties acknowledge and agree that this Agreement is entered into, is to be fully performed in and relates to real property located in the City of Palm Springs, County of Riverside, California.

7.5 Rights and Remedies are Cumulative. Except as otherwise expressly stated in this Agreement, the rights and remedies of the Parties set forth in this ARTICLE VII are nonexclusive and cumulative, and the exercise by any Party of one or more of such rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default by the other Party(ies).

7.6 City Power of Termination Regarding the Property.

7.6.1 The City hereby reserves a power of termination pursuant to Civil Code Sections 885.010, et seq., exercisable by the City, in its sole and absolute discretion, upon thirty (30) calendar days written notice to the Developer referencing this Section 7.6, to terminate the fee interest of the Developer in the Property and/or any improvements to the Property and revest such fee title in the City and take possession of all or any portion of such real property and Item 3B - Page 53
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improvements, without compensation to the Developer, upon the occurrence of an Event of Default by the Developer following the Close of Escrow and for a period of thirty (30) years thereafter.

7.6.2 The thirty (30) calendar day written notice specified Section 7.6.1 shall specify the Event of Default by the Developer triggering the City’s exercise of its power of termination. The City shall proceed with its remedy set forth in Section 7.6.1 only if the Developer continues in default for a period of sixty (60) calendar days following such notice or, upon commencing to cure such default, fails to diligently and continuously prosecute said cure to satisfactory conclusion.

7.6.3 The rights of the City under this Section 7.6 shall be subject and subordinate to, shall be limited by and shall not defeat, render invalid or limit:

7.6.3.1 Each Lien recorded against the Property and specifically authorized by this Agreement as a Permitted Transfer;

7.6.3.2 Any declarations of covenants, conditions and restrictions, easement agreements or other recorded documents or interests applicable to the Property and specifically authorized by this Agreement as a Permitted Transfer.

7.6.4 Upon the City’s exercise of its power of termination pursuant to this Section 7.6, the Developer or its successors or assigns shall convey by grant deed to the City title to the Property, as specified in the City’s notice pursuant to Section 7.6.1, and all improvements thereon, in accordance with Civil Code Section 1109, as such code section may hereafter be amended, renumbered, replaced or substituted. Such conveyance shall be duly acknowledged by the Developer and a notary in a manner suitable for recordation. The City may enforce its rights pursuant to this Section 7.6 by means of an injunctive relief or forfeiture of title action filed in any court of competent jurisdiction.

7.6.5 Upon the revesting in the City of title to the Property, whether by grant deed or court decree, the City shall exercise its reasonable good faith efforts to resell the Property at an Affordable Purchase Price, as defined in the Regulatory Agreement, as soon and in such manner as the City shall, in its sole discretion, find feasible and consistent with the objectives of the City’s General Plan, to a qualified and responsible person or persons (as reasonably determined by the City) who will assume the Developer’s obligations to begin and/or complete and/or operate that portion of the Project located on the Property, or such other replacement development acceptable to the City, in its sole and absolute discretion. Upon any such resale of the Property (or any portion thereof), the proceeds to the City from such sale shall be applied as follows:

7.6.5.1 First, to pay any and all amounts required to release/reconvey any Lien recorded against all or any portion of the Property; and

7.6.5.2 Second, to reimburse the City on its own behalf or on behalf of the City for all actual internal and third-party costs and expenses previously or currently incurred by the City related to the Property, the Project, or this Agreement, including, but not limited to, customary and reasonable fees or salaries to third-party personnel engaged in such actions, in connection with the recapture, management and resale of the Property or any part thereof; all taxes, assessments and utility charges paid by the City with respect to the Property or portion thereof; Item 3B - Page 54
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any payment made or necessary to be made to discharge or prevent from attaching or being made any subsequent encumbrances or liens due to obligations incurred by the Developer with respect to the acquisition of the Property or the construction of the Project; and amounts otherwise owing to the City by the Developer or its successors or assigns pursuant to the terms of this Agreement, inclusive of the Conditional Grant Agreement; and

7.6.5.3 Third, to the extent that any proceeds from such resale are, thereafter, available, taking into account any prior encumbrances with a claim thereto, to reimburse the Developer, or its successors in interest to the equal to the sum of: (1) the Purchase Price; and (2) the third-party costs actually incurred and paid by the Developer regarding the development of the Project located on the Property, including, but not limited to, pro rata costs of carry, taxes, and other items as set forth in a cost certification to be made by the Developer to the City prior to any such reimbursement, which certification shall be subject to the City’s reasonable approval; provided, however, that the Developer shall not be entitled to reimbursement for any expenses to the extent that such expenses relate to any loans, Liens or other encumbrances that are paid by the City pursuant to the provisions of sub-sections 7.6.5.1 or 7.6.5.2 above.

7.6.5.4 Any portion of the proceeds from the resale of the Property remaining after the foregoing applications shall be retained by the City as their sole and exclusive property.

7.6.6 IMMEDIATELY FOLLOWING THE THIRTY (30) DAY PERIOD
SPECIFIED IN SECTION 7.6.1, ABOVE, THE CITY, ITS EMPLOYEES AND AGENTS

SHALL HAVE THE RIGHT TO REENTER AND TAKE POSSESSION OF THE PROPERTY

AND ANY IMPROVEMENTS THEREON, WITHOUT FURTHER NOTICE OR COMPENSATION TO THE DEVELOPER. BY INITIALING BELOW, THE DEVELOPER

HEREBY EXPRESSLY WAIVES, TO THE MAXIMUM EXTENT ALLOWED BY LAW, ANY

AND ALL RIGHTS THAT THE DEVELOPER MAY HAVE UNDER CALIFORNIA CIVIL CODE SECTION 791 AND CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 1162,

AS THOSE STATUTES MAY BE AMENDED, REPLACED, RENUMBERED OR

SUBSTITUTED, OR UNDER ANY OTHER STATUTES OR COMMON LAW PRINCIPLES OF SIMILAR EFFECT.

DEVELOPER’S INITIALS ____________

7.6.7 THE DEVELOPER ACKNOWLEDGES AND AGREES THAT THE
CITY’S EXERCISE OF ITS POWER OF TERMINATION AND RIGHT OF REENTRY PURSUANT TO THIS SECTION 7.6 MAY WORK A FORFEITURE OF THE ESTATE IN THE

DEFAULTED PORTION OF THE PROPERTY CONVEYED TO THE DEVELOPER THROUGH THE GRANT DEED. THE DEVELOPER HEREBY EXPRESSLY WAIVES, TO

THE MAXIMUM EXTENT ALLOWED BY LAW, ANY AND ALL EQUITABLE AND

LEGAL DEFENSES THAT THE DEVELOPER MAY HAVE TO SUCH FORFEITURE,

INCLUDING, BUT NOT LIMITED TO, THE DEFENSES OF LACHES, WAIVER, ESTOPPEL, SUBSTANTIAL PERFORMANCE OR COMPENSABLE DAMAGES. THE

DEVELOPER FURTHER EXPRESSLY WAIVES, TO THE MAXIMUM EXTENT ALLOWED

BY LAW, ANY AND ALL RIGHTS AND DEFENSES THAT THE DEVELOPER MAY HAVE UNDER CALIFORNIA CIVIL CODE SECTION 3275 OR ANY OTHER STATUTE OR Item 3B - Page 55
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COMMON LAW PRINCIPLE OF SIMILAR EFFECT. THE DEVELOPER ACKNOWLEDGES

THAT THE TERMS AND CONDITIONS OF THIS AGREEMENT REFLECT THE POSSIBILITY OF FORFEITURE BY VIRTUE OF THE EXERCISE OF THE CITY’S POWER OF TERMINATION PROVIDED IN THIS SECTION 7.6 AND FURTHER ACKNOWLEDGE

THAT IT HAS RECEIVED INDEPENDENT AND ADEQUATE CONSIDERATION FOR ITS

WAIVER AND RELINQUISHMENT OF RIGHTS AND REMEDIES PURSUANT TO SECTION 7.6.6. AND THIS SECTION 7.6.7.

DEVELOPER’S INITIALS ____________

7.7 Developer Indemnification of the City. In addition to any other specific indemnification or defense obligations of the Developer set forth in this Agreement, the Developer agrees to indemnify, defend (upon written request by the City and with counsel reasonably acceptable to the City) and hold harmless the Indemnified Parties, from any and all losses, liabilities, charges, damages, claims, liens, causes of action, awards, judgments, costs and expenses, including, but not limited to reasonable attorney’s fees of counsel retained by the Indemnified Parties, expert fees, costs of staff time, and investigation costs, of whatever kind or nature, that are in any manner directly or indirectly caused, occasioned or contributed to in whole or in part, through any act, omission, fault or negligence, whether active or passive, of the Developer or the Developer’s officers, agents, employees, independent contractors or subcontractors of any tier, relating in any manner to this Agreement, any work to be performed by the Developer related to this Agreement, the Property, or the Project, or any authority or obligation exercised or undertaken by the Developer under this Agreement. Without limiting the generality of the foregoing, the Developer’s obligation to indemnify the Indemnified Parties shall include injury or death to any person or persons, damage to any property, regardless of where located, including the property of the Indemnified Parties, any workers’ compensation or prevailing wage determination, claim or suit or any other matter arising from or connected with any goods or materials provided or services or labor performed regarding the Project or the Property on behalf of the Developer by any person or entity.

ARTICLE VIII
GENERAL PROVISIONS.

8.1 Incorporation of Recitals. The Recitals of fact set forth preceding this Agreement are true and correct and are incorporated into this Agreement in their entirety by this reference.

8.2 Restrictions on Transfers.

8.2.1 The Developer acknowledges that the qualifications and identity of the Developer are of particular importance to the City. The Developer further recognizes and acknowledges that the City has relied and is relying on the specific qualifications and identity of the Developer in entering into this Agreement with the Developer and, as a consequence, Transfers are permitted only as expressly provided in this Agreement. The Developer shall promptly notify the City in writing of any and all changes whatsoever in the identity of the business entities or individuals either comprising or in control of the Developer, as well as any and all changes in the interest or the degree of control of the Developer by any such person, of which information the Item 3B - Page 56
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Developer or any of its partners, members or officers are notified or may otherwise have knowledge or information.

8.2.2 Except as expressly permitted in this Agreement, the Developer represents to the City that it has not made and agrees that it will not make or create, or suffer to be made or created, any Transfer other than a Permitted Transfer, either voluntarily, involuntarily or by operation of law, until after the recordation of a Certificate of Completion for the Project subject to the Transfer; provided, however, that the City may approve in its reasonable discretion, Transfers other than Permitted Transfers prior to the recordation of a Certificate of Completion.

In deciding whether to approve or disapprove any proposed Transfer, the City may consider the proposed transferee’s financial strength and the experience of the proposed transferee and its senior management in undertaking and successfully completing projects of a similar type and size as the Project or that portion of the Project proposed to be transferred. Any Transfer made in contravention of this Section 8.2 shall be voidable at the election of the City and this Agreement may be terminated by the City or the City may exercise any other remedy available to the City under the terms of this Agreement, provided, however, that (i) the City shall first notify the Developer in writing of its intention to terminate this Agreement or to exercise any other remedy, and (ii) the Developer shall have twenty (20) calendar days following its receipt of such written notice to commence and, thereafter, diligently and continuously proceed to cure the default of the Developer and submit evidence of the initiation and satisfactory completion of such cure to the City, in a form and substance reasonably satisfactory to the City.

8.2.3 The Developer shall provide the City no less than thirty (30) days prior written notice of any proposed Permitted Transfer which the Developer desires to enter into prior to the recordation of a Certificate of Completion for the Project subject to the Transfer, other than a Permitted Transfer for which no notice shall be required. The Developer shall have the burden of demonstrating to the City’s reasonable satisfaction that the proposed Permitted Transfer meets the conditions and requirements of this Agreement with respect to Permitted Transfers.

8.2.4 In connection with the City’s review of any request for approval of any proposed Transfer under this Section 8.2, or of any Lender or Loan under Section 6.3, the Developer agrees to reimburse the City for those third party costs and expenses incurred by the City in connection with its review of the Developer’s request for approval, including, without implied limitation, the reasonable fees and costs of those outside consultants and legal counsel retained by the City to assist it in its review of the Developer’s request, including the City Attorney.

8.2.5 Anything in this Agreement to the contrary notwithstanding, the restrictions and prohibitions on Transfers contained in this Section 8.2 shall terminate upon issuance of a Certificate of Completion for the Project, and commencing at that time the Property shall be subject to the Regulatory Agreement.

8.2.6 A Permitted Transfer made pursuant to the Regulatory Agreement shall only occur after issuance of a Certificate of Occupancy for the improvements on a particular Parcel, and shall comply with the terms and conditions set forth in the Regulatory Agreement.

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8.3 Notices, Demands and Communications Between the Parties.

8.3.1 Any and all notices, demands or communications submitted by any Party to another Party pursuant to or as required by this Agreement shall be proper, if in writing and dispatched by messenger for immediate personal delivery, by a nationally recognized overnight courier service or by registered or certified United States Mail, postage prepaid, return receipt requested, to the principal office of the City or the Developer, as applicable, as designated in Section 9.3.2. Such written notices, demands or communications may be sent in the same manner to such other addresses as either Party may from time to time designate. Any such notice, demand or communication shall be deemed to be received by the addressee, regardless of whether or when any return receipt is received by the sender or the date set forth on such return receipt, on the day that it is delivered by personal delivery, on the date of delivery by a nationally recognized overnight courier service or three (3) calendar days after it is placed in the United States Mail, as provided in this Section 9.3.

8.3.2 The following are the authorized addresses for the submission of notices, demands or communications to the Parties:

TO DEVELOPER: NPHS Community Redevelopment, Inc.

ADDRESS
(T)
(F)
COPY TO:

TO CITY:

COPY TO:

8.4 Conflict of Interest. No member, official or employee of the City, having any conflict of interest, direct or indirect, related to this Agreement, the Property, or the development or operation of the Project shall participate in any decision relating to this Agreement. The Parties represent and warrant that they do not have knowledge of any such conflict of interest.

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8.5 Warranty Against Payment of Consideration for Agreement. The Developer warrants that it has not paid or given, and will not pay or give, any third party any money or other consideration for obtaining this Agreement. Third parties, for the purposes of this Section 9.5, shall not include persons to whom fees are paid for professional services, if rendered by attorneys, financial consultants, accountants, engineers, architects and the like when such fees are considered necessary by the Developer.

8.6 Non-liability of City, Officials and Employees. No member, official or employee of the City shall be personally liable to the Developer, or any successor in interest of the Developer, in the event of any default or breach by the City under this Agreement or for any amount that may become due to the Developer or to its successor, or on any obligations under the terms of this Agreement, except as may arise from the gross negligence or willful acts of such member, official or employee.

8.7 Unavoidable Delay; Extension of Time of Performance.

8.7.1 Subject to specific provisions of this Agreement, performance by any Party under this Agreement shall not be deemed, or considered to be, in default where any such default is due to an Unavoidable Delay that is not attributable to the fault of the Party claiming an extension of time to perform. An extension of time for any Unavoidable Delay shall be for the period of the Unavoidable Delay and shall commence to run from the date of occurrence of the Unavoidable Delay, if the Party asserting the existence of the Unavoidable Delay provides the other Parties with written notice of the occurrence of the Unavoidable Delay, within ten (10) days of the commencement of such asserted Unavoidable Delay. Otherwise, the extension of time for an Unavoidable Delay shall commence on the date of receipt of written notice of the occurrence of the Unavoidable Delay by the Parties not requesting an extension of time to perform due to such Unavoidable Delay.

8.7.2 The Parties expressly acknowledge and agree that changes in either general economic conditions or changes in the economic assumptions of either of them that may have provided a basis for entering into this Agreement and that occur at any time after the execution of this Agreement, do not constitute an Unavoidable Delay and do not provide any Party with grounds for asserting the existence of an Unavoidable Delay in the performance of any covenant or undertaking arising under this Agreement. Each Party expressly assumes the risk that changes in general economic conditions or changes in such economic assumptions relating to the terms and covenants of this Agreement could impose an inconvenience or hardship on the continued performance of such Party under this Agreement.

8.8 Inspection of Books and Records. The City shall have the right at all reasonable times, at the City’s cost and expense, to inspect the books and records of the Developer pertaining to the Property and/or the Project. The Developer shall also have the right at all reasonable times, at the Developer’s sole cost and expense, to inspect the books and records of the City pertaining to the Property and/or the Project, to the extent relevant to the Developer’s obligations under this Agreement. Nothing in this Section 9.8 or elsewhere in this Agreement shall, however, constitute a waiver or modification of any right or privilege which any Party may have with respect to any Item 3B - Page 59
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document, statement, or other record, including, without implied limitation, the attorney-client privilege, the attorney-work product privilege, any privilege arising under any state or federal evidentiary code or rule, or any privilege or exclusionary right arising under any state or federal freedom of information or public records disclosure law.

8.9 Real Estate Commissions. The City shall not be liable for any real estate commissions, brokerage fees or finder fees that may arise from or be related to this Agreement.

The Developer shall pay any fees or commissions or other expenses related to its retention or employment of real estate brokers, agents or other professionals.

8.10 Binding on Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the Parties and their respective heirs, executors, administrators, legal representatives, successors, and assigns.

8.11 Entire Agreement.

8.11.1 This Agreement shall be executed in three (3) duplicate originals, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument. This Agreement includes pages (exclusive of signature pages) and exhibits, that constitute the entire understanding and agreement of the Parties regarding the Property, the Project, and the other subjects addressed in this Agreement.

8.11.2 This Agreement integrates all of the terms and conditions mentioned in this Agreement or incidental to this Agreement, and supersedes all negotiations or previous agreements between the Parties with respect to the Property, the Project, and the other subjects addressed in this Agreement.

8.11.3 None of the terms, covenants, agreements or conditions set forth in this Agreement shall be deemed to be merged with any deed conveying title to the Property and this Agreement shall continue in full force and effect before and after such conveyances.

8.11.4 All waivers of the provisions of this Agreement and all amendments to this Agreement must be in writing and signed by the authorized representative(s) of all Parties.

8.12 Execution of this Agreement. Following execution of three (3) originals of this Agreement by the authorized representative(s) of the Developer and prompt delivery of such originals, thereafter, to the City, accompanied by an official action of the governing body of the Developer authorizing the individuals executing this Agreement on behalf of the Developer to execute and perform this Agreement, in form and substance acceptable to the City, this Agreement shall be subject to the review and approval by the City Council, in their sole and absolute discretion, no later than forty-five (45) calendar days after such date of delivery to the City. If the City have not approved, executed, and delivered an original of this Agreement to the Developer within the foregoing time period, then no provision of this Agreement shall be of any force or effect for any purpose.

8.13 Survival of Indemnity Obligations. All general and specific indemnity and defense obligations of the Parties set forth in this Agreement shall survive the expiration or Item 3B - Page 60
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termination of this Agreement, the execution or recordation of the Grant Deed, and/or the issuance and recordation of any Certificate of Completion.

8.14 Time Declared to be of the Essence. As to the performance of any obligation hereunder as to which time is a component thereof, the performance of such obligation within the time provided is of the essence.
[Signatures on Following Pages]
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SIGNATURE PAGE
TO
2024 DISPOSITION AND DEVELOPMENT AGREEMENT
Sale of Real Property for Development of a Homeownership Opportunity Program CITY:

THE CITY OF PALM SPRINGS
a California municipal corporation
Dated:_________________, 2024 By:

City Manager
ATTEST:
____________________________
City Clerk
APPROVED AS TO LEGAL FORM:

BEST BEST & KRIEGER LLP
By: _______________________
City Attorney
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SIGNATURE PAGE
TO
2024 DISPOSITION AND DEVELOPMENT AGREEMENT
Sale of Real Property for Development of a Homeownership Opportunity Program DEVELOPER:

NPHS COMMUNITY REDEVELOPMENT, INC.,
a California corporation
Dated:_____________________ By:
[TITLE]
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EXHIBIT A

EXHIBIT A
TO
2024 DISPOSITION AND DEVELOPMENT AGREEMENT
Sale of Real Property for Development of a Homeownership Opportunity Program Legal Description of the Property

DESCRIPTION FOR THREE SEPARATE PARCELS TO BE ADDED
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EXHIBIT B

EXHIBIT B
TO
2024 DISPOSITION AND DEVELOPMENT AGREEMENT
Sale of Real Property for Development of a Homeownership Opportunity Program Scope of Development

TO BE ADDED
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EXHIBIT C

EXHIBIT C
TO
Sale of Real Property for Development of a Homeownership Opportunity Program Schedule of Performance
Action Date Action to be
Completed By

1. Effective Date See Section 1.3

2. Developer to open Escrow and, concurrently, deposit Earnest Money Deposit into Escrow
Within 5 days
following the
Effective Date

3. Due Diligence Period commences The date of the
Escrow Opening
Date

4. City to deliver Preliminary Report to Developer Within 3 days following City’s
receipt of the
Preliminary Report
from Title
Company

5. Developer to deliver Developer’s Title Notice to Agency Within 30 days following
Developer’s receipt
of the Preliminary
Report

6. City to deliver City’s Title Notice Response to Developer, if appropriate
Within 20 days
following City’s
Receipt of
Developer’s Title
Notice

7. Developer to deliver Developer’s Title Notice Waiver, if appropriate
Within 10 days
following
Developer’s receipt
of City’s Title
Notice Response

8. Developer to deliver its Due Diligence Investigation Conclusion Notice
On or before the
end of the Due
Diligence Period

9. Due Diligence Period ends On the 90th day
following the
Escrow Opening
Date
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EXHIBIT C
Action Date Action to be
Completed By

15. Escrow Closing Date The earlier of: (i)
the 10th business
day from Escrow
Holder’s receipt of
written
confirmation from
City and Developer
that conditions
precedent have
been satisfied, or
(ii) 60 days from
end of the Due
Diligence Period

16. Developer to commence construction of the Project; Developer to transmit Project Commencement Notice to City
No later than 10
days after the close
of escrow

17. Developer to complete construction and installation of the Project (issuance of certificate of occupancy for the entire Project by the City)
No later than Two
(2) years from the
Close of Escrow
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EXHIBIT D

EXHIBIT D
TO 2024 DISPOSITION AND DEVELOPMENT AGREEMENT
Sale of Real Property for Development of a Homeownership Opportunity Program Form of Grant Deed
[Attached Behind This Page]
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EXHIBIT D

RECORDING REQUESTED BY
AND WHEN RECORDED RETURN TO:

The City of Palm Springs
3200 East Tahquitz Canyon Way
Palm Springs, California 92262
Attn: City Manager

Exempt from Recording fee
pursuant to Gov’t Code § 27383

THE CITY OF PALM SPRINGS

GRANT DEED

PART ONE
FOR A VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, THE CITY OF PALM SPRINGS, a California municipal corporation (“Grantor”), hereby grants to
NPHS Community Redevelopment, Inc., a California nonprofit corporation (“Grantee”), that certain real property located in the City of Palm Springs, County of Riverside, State of California, specifically described in Exhibit “A” attached to this Grant Deed (“Property”) and made a part of this Grant Deed by this reference.

PART TWO
The conveyance of the Property by the Grantor to the Grantee in Part One is subject to the following community development terms, conditions, covenants and restrictions:

Section 1. Conveyance Subject to Terms of a Disposition and Development Agreement. The Property is conveyed subject to that certain 2024 Disposition and Development Agreement, dated as of _______, 2024, between the Grantor and the Grantee (the “Agreement”).

The provisions of the Agreement are incorporated into this Grant Deed by this reference and are deemed to be a part of this Grant Deed, as though fully set forth in this Grant Deed.

Section 2. Condition of Property. The Grantee acknowledges and agrees that the Property is conveyed by the Grantor to the Grantee in its “AS IS,” “WHERE IS” and “SUBJECT TO ALL FAULTS CONDITION,” as of the date of recordation of this Grant Deed, with no warranties, expressed or implied, as to the environmental or other physical condition of the Property, the presence or absence of any patent or latent environmental or other physical condition on or in the Property, or any other matters affecting the Property.

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EXHIBIT D
Section 3. Obligation to Refrain from Discrimination. The Grantee for itself, its successors and assigns to all or any part or portion of the Property and/or Project, covenants and agrees that:

3.1 There shall be no discrimination against or segregation of any person, or group of persons, on account of actual or perceived race, color, religion, sex, gender, gender identity, gender expression, sexual orientation, marital status, national origin, ancestry, familial status, source of income, disability, veteran or military status, or genetic information, of any person, in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property 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, sub-tenants, sub-lessees or vendees of the Property.

3.2 The covenant of this Section 3 shall run with the land of the Property in perpetuity, shall be enforceable against the Grantee and its successors and assigns, and shall be covenants set forth in the Grant Deed.

Section 4. Form of Non-Discrimination and Non-Segregation Clauses. The Grantee for itself, its successors and assigns to all or any part or portion of the Property and/or Project, covenants and agrees that:

4.1 The Grantee, such successors and such assigns shall refrain from restricting the sale, lease, sublease, rental, transfer, use, occupancy, tenure or enjoyment of the Property (or any portion thereof) on account of actual or perceived race, color, religion, sex, gender, gender identity, gender expression, sexual orientation, marital status, national origin, ancestry, familial status, source of income, disability, veteran or military status, or genetic information. All deeds, leases or contracts pertaining to the Property shall contain or be subject to substantially the following non-discrimination or non-segregation covenants:
(a) In deeds: “The grantee herein covenants by and for itself, its successors and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of actual or perceived race, color, religion, sex, gender, gender identity, gender expression, sexual orientation, marital status, national origin, ancestry, familial status, source of income, disability, veteran or military status, or genetic information, in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the premises herein conveyed, nor shall the grantee 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, sub-tenants, sub-lessee, or vendees in the premises herein conveyed. The foregoing covenants shall run with the land.”
(b) In leases: “The Lessee herein covenants by and for itself, its successors and assigns, and all persons claiming under or through them, and this lease is made and accepted upon and subject to the following conditions: That there shall be no discrimination against or segregation of any person or group of persons, on account of actual or perceived race, color, religion, sex, gender, gender identity, gender expression, sexual orientation, marital status, national origin, ancestry, familial status, source of income, disability, veteran or military status, or Item 3B - Page 70
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EXHIBIT D
genetic information, in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of the premises herein leased, nor shall the lessee 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, sub-lessee, sub-tenants, or vendees in the premises herein leased.”
(c) In contracts: “There shall be no discrimination against or segregation of any person or group of persons on account of actual or perceived race, color, religion, sex, gender, gender identity, gender expression, sexual orientation, marital status, national origin, ancestry, familial status, source of income, disability, veteran or military status, or genetic information, in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the premises herein conveyed or leased, nor shall the transferee 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, sub-lessees, sub-tenants, or vendees of the premises herein transferred.” The foregoing provision shall be binding upon and shall obligate the contracting party or parties and any subcontracting party or parties, or other transferees under the instrument.

4.2 The covenants of this Section 5 shall run with the land of the Property in perpetuity.

Section 5. Covenant to Maintain Property on Tax Rolls. The Grantee for itself, its successors and assigns to all or any part or portion of the Property and/or Project, covenants and agrees that:

5.1 The entire Property shall remain on the County secured real property tax rolls in accordance with state law applicable to the Project. Developer and homeowners purchasing the individual units shall be jointly and severally responsible for any and all property taxes, charges, or other fees assessed against the Property.

5.2 The Grantee shall pay all property tax bills with respect to the Property and all improvements thereon on or before the last day for the timely payment of each property tax installment on each December 10 and April 10 during such time period and to timely pay all supplemental tax bills regarding the Property issued by the County. The Grantee further covenants and agrees to provide to the Grantor, upon request from Grantor, commencing in the calendar year following the calendar year in which a Certificate of Completion for the Project is recorded and in each calendar year, thereafter, for the full term of this covenant: (i) a true and correct copy of all property tax assessment notices, property tax bills and property tax assessment correspondence by and between the Grantee and the County regarding the Property and all improvements thereon, with respect to the preceding fiscal year of the County, and (ii) cancelled checks issued by the Grantee in payment of all property tax payments that are made to the County regarding the Property and all improvements thereon, with respect to the preceding County fiscal year.

5.3 The covenants of this Section 5 shall run with the land of the Property, shall be enforceable against the Grantee and its successors and assigns.

Section 6. RESERVED.

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EXHIBIT D
Section 7. Maintenance Condition of the Property. The Grantee for itself, its successors and assigns to all or any part or portion of the Property and/or Project, covenants and agrees that:

7.1 The areas of the Property that are subject to public view (including all existing and future improvements, paving, walkways, landscaping, exterior signage and ornamentation) shall be maintained in good repair and a neat, clean and orderly condition, ordinary wear and tear excepted. If there is an occurrence of an adverse condition on any area of the Property that is subject to public view in contravention of the general maintenance standard described above (a “Maintenance Deficiency”), then the Grantor shall notify the Grantee in writing of the Maintenance Deficiency. If the Grantee fails to cure or commence and diligently pursue to cure the Maintenance Deficiency within thirty (30) days of its receipt of notice of the Maintenance Deficiency, the Grantor shall have the right to enter the Property and perform all acts necessary to cure the Maintenance Deficiency, or to take any other action at law or in equity that may then be available to the Grantor to accomplish the abatement of the Maintenance Deficiency.

Any sum expended by the Grantor for the abatement of a Maintenance Deficiency on the Property pursuant to this Section 7.1 shall become a lien on the Property, as applicable. If the amount of the lien is not paid within thirty (30) days after written demand for payment from the Grantor to the Grantee, the Grantor shall have the right to enforce the lien in the manner provided in Section

7.1. 7.2 Graffiti, as this term is defined in Government Code Section 38772, that has been applied to any exterior surface of a structure or improvement on the Property that is visible from any public right-of-way adjacent or contiguous to the Property, shall be removed by the Grantee by either painting over the evidence of such vandalism with a paint that has been colormatched to the surface on which the paint is applied, or graffiti may be removed with solvents, detergents or water, as appropriate. If any such graffiti and is not removed within ninety-six (96) hours following the time of the discovery of the graffiti, the Grantor shall have the right to enter the Property and remove the graffiti, without notice to the Grantee. Any sum expended by the Grantor for the removal of graffiti from the Property pursuant to this Section 7.2, shall be a lien on the Property. If the amount of the lien is not paid within thirty (30) days after written demand to the Grantee from the Grantor, the Grantor shall have the right to enforce its lien in the manner provided in Section 7.2.

7.3 The Parties further mutually understand and agree that the rights conferred upon the Grantor under this Section 7.3 expressly include a grant by the Grantee of a security interest in the Property with the power to establish and enforce a lien or other encumbrance against the Property or any portion thereof, in the manner provided under Civil Code Sections 2924, 2924b and 2924c, to secure the obligations of the Grantee and it successors under Section 7.1 or Section

7.2, including the reasonable attorneys’ fees and costs of the Grantor associated with the abatement of a Maintenance Deficiency or removal of graffiti. For the purposes of the preceding sentence the words “reasonable attorneys’ fees and costs of the Grantor” mean and include the salaries, benefits and costs of the City Attorney and the lawyers employed in the Office of the City Attorney.

7.4 The provisions of this Section 7.4, shall be a covenant running with the land of the Property, shall be enforceable against the Grantee and its successors and assigns in perpetuity. Nothing in the foregoing provisions of this Section 7 shall be deemed to preclude the Item 3B - Page 72
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Grantee from making any alteration, addition, or other change to any structure or improvement or landscaping on the Property, provided that any such changes comply with applicable zoning and building regulations of the City.

Section 8 Grantor Power of Termination Regarding the Property.

8.1 The Grantor hereby reserves a power of termination pursuant to Civil Code Sections 885.010, et seq., exercisable by the Grantor, in its sole and absolute discretion, upon thirty (30) calendar days written notice to the Grantee referencing this Section 8.1, to terminate the fee interest of the Grantee in the Property and/or any improvements to the Property and revest such fee title in the Grantor and take possession of all or any portion of such real property and improvements, without compensation to the Grantee, upon the occurrence of an Event of Default by the Grantee following the Close of Escrow and for a period of thirty (30) years thereafter.

8.2 The thirty (30) calendar day written notice specified Section 8.1 shall specify the Event of Default by the Grantee triggering the Grantor’s exercise of its power of termination. The Grantor shall proceed with its remedy set forth in Section 8.1 only if the Grantee continues in default for a period of sixty (60) calendar days following such notice or, upon commencing to cure such default, fails to diligently and continuously prosecute said cure to satisfactory conclusion.

8.3 The rights of the Grantor under this Section 8 shall be subject and subordinate to, shall be limited by and shall not defeat, render invalid or limit:
(1) Each Lien recorded against the Property and specifically authorized by this Agreement as a Permitted Transfer;
(2) Any leases, declarations of covenants, conditions and restrictions, easement agreements or other recorded documents or interests applicable to the Property and specifically authorized by this Agreement as a Permitted Transfer.

8.4 Upon the Grantor’s exercise of its power of termination pursuant to this Section 8, the Grantee or its successors or assigns shall convey by grant deed to the Grantor title to the Property, as specified in the Grantor’s notice pursuant to Section 8.1, and all improvements thereon, in accordance with Civil Code Section 1109, as such code section may hereafter be amended, renumbered, replaced or substituted. Such conveyance shall be duly acknowledged by the Grantee and a notary in a manner suitable for recordation. The Grantor may enforce its rights pursuant to this Section 8.4 by means of an injunctive relief or forfeiture of title action filed in any court of competent jurisdiction.

8.5 Upon the revesting in the Grantor of the Property, whether by grant deed or court decree, the Grantor shall exercise its reasonable good faith efforts to resell the Property at its then fair market value, as soon and in such manner as the Grantor shall, in its sole discretion, find feasible and consistent with the objectives of the City’s General Plan, to a qualified and responsible person or persons (as reasonably determined by the Grantor) who will assume the Grantee’s obligations to begin and/or complete and/or operate the Project located on the Property, or such other replacement development acceptable to the Grantor, in its sole and absolute discretion. Upon Item 3B - Page 73
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any such resale of the Defaulted Portion of the Property (or any portion thereof), the proceeds to the Grantor from such sale shall be applied as follows:
(1) First, to pay any and all amounts required to release/reconvey any Lien recorded against all or any portion of the Property; and (2) Second, to reimburse the Grantor on its own behalf or on behalf of the City for all actual internal and third-party costs and expenses previously or currently incurred by the Grantor, or the City related to the Property, the Project, or this Agreement, including, but not limited to, customary and reasonable fees or salaries to third-party personnel engaged in such actions, in connection with the recapture, management and resale of the Property or any part thereof; all taxes, assessments and utility charges paid by the City and/or the Grantor or authority with respect to the Property or portion thereof; any payment made or necessary to be made to discharge or prevent from attaching or being made any subsequent encumbrances or liens due to obligations incurred by the Grantee with respect to the acquisition of the Property or the construction of the Project and amounts otherwise owing to the Grantor or authority by the Grantee or its successors or assigns pursuant to the terms of this Agreement, including the Conditional Grant Agreement; and
(3) Third, to the extent that any proceeds from such resale are, thereafter, available, taking into account any prior encumbrances with a claim thereto, to reimburse the Grantee, or its successors in interest to the equal to the sum of: (1) Purchase Price; and (2) the third-party costs actually incurred and paid by the Grantee regarding the development of the Project, including, but not limited to, pro rata costs of carry, taxes, and other items as set forth in a cost certification to be made by the Grantee to the Grantor prior to any such reimbursement, which certification shall be subject to the Grantor’s reasonable approval; provided, however, that the Grantee shall not be entitled to reimbursement for any expenses to the extent that such expenses relate to any loans, Liens or other encumbrances that are paid by the Grantor pursuant to the provisions of sub-sections (1) or (2) above. (4) Any portion of the proceeds from the resale of the Property remaining after the foregoing applications shall be retained by the Grantor as its sole and exclusive property.

8.6 IMMEDIATELY FOLLOWING THE THIRTY (30) DAY PERIOD
SPECIFIED IN SECTION 8.1, ABOVE, THE GRANTOR, ITS EMPLOYEES AND AGENTS

SHALL HAVE THE RIGHT TO REENTER AND TAKE POSSESSION OF THE PROPERTY

AND ANY IMPROVEMENTS THEREON, WITHOUT FURTHER NOTICE OR COMPENSATION TO THE GRANTEE. BY INITIALING BELOW, THE GRANTEE

HEREBY EXPRESSLY WAIVES, TO THE MAXIMUM EXTENT ALLOWED BY LAW, ANY Item 3B - Page 74
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AND ALL RIGHTS THAT THE GRANTEE MAY HAVE UNDER CALIFORNIA CIVIL CODE SECTION 791 AND CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 1162,

AS THOSE STATUTES MAY BE AMENDED, REPLACED, RENUMBERED OR

SUBSTITUTED, OR UNDER ANY OTHER STATUTES OR COMMON LAW PRINCIPLES OF SIMILAR EFFECT.

GRANTEE’S INITIALS ____________

8.7 THE GRANTEE ACKNOWLEDGES AND AGREES THAT THE
GRANTOR’S EXERCISE OF ITS POWER OF TERMINATION AND RIGHT OF REENTRY PURSUANT TO THIS SECTION 8.7 MAY WORK A FORFEITURE OF THE ESTATE IN THE PROPERTY CONVEYED TO THE GRANTEE THROUGH THE GRANT DEED. THE

GRANTEE HEREBY EXPRESSLY WAIVES, TO THE MAXIMUM EXTENT ALLOWED BY

LAW, ANY AND ALL EQUITABLE AND LEGAL DEFENSES THAT THE GRANTEE MAY

HAVE TO SUCH FORFEITURE, INCLUDING, BUT NOT LIMITED TO, THE DEFENSES

OF LACHES, WAIVER, ESTOPPEL, SUBSTANTIAL PERFORMANCE OR COMPENSABLE DAMAGES. THE GRANTEE FURTHER EXPRESSLY WAIVES, TO THE

MAXIMUM EXTENT ALLOWED BY LAW, ANY AND ALL RIGHTS AND DEFENSES THAT THE GRANTEE MAY HAVE UNDER CALIFORNIA CIVIL CODE SECTION 3275 OR ANY OTHER STATUTE OR COMMON LAW PRINCIPLE OF SIMILAR EFFECT. THE

GRANTEE ACKNOWLEDGES THAT THE TERMS AND CONDITIONS OF THE

AGREEMENT REFLECT THE POSSIBILITY OF FORFEITURE BY VIRTUE OF THE EXERCISE OF THE GRANTOR’S POWER OF TERMINATION PROVIDED IN THIS SECTION 8.7 AND FURTHER ACKNOWLEDGE THAT IT HAS RECEIVED

INDEPENDENT AND ADEQUATE CONSIDERATION FOR ITS WAIVER AND RELINQUISHMENT OF RIGHTS AND REMEDIES PURSUANT TO SECTION 8.6 AND THIS SECTION 8.7.

GRANTEE’S INITIALS ____________

PART THREE
Section 9. Developer Covenant to Undertake Project. The Developer covenants, for itself, its successors and assigns, to and for the exclusive benefit of the City, that the Developer shall commence and complete the development of the Project on the Property within the time period for such actions set forth in the Schedule of Performance. The Developer covenants and agrees for itself, its successors, and assigns, that the Property shall be improved and developed with the Project in substantial conformity with the terms and conditions of this Agreement, the Scope of Development, the Schedule of Performance, any and all plans, specifications and similar development documents required by this Agreement, except for such changes as may be mutually agreed upon in writing by and among the Parties, and all applicable laws, regulations, orders and conditions of each Governmental Agency with jurisdiction over the Property or the Project. The covenants of this Section 9 shall run with the land of the Property until the earlier of the date of recordation of the Certificate of Completion or the fifteenth (15th) anniversary of the date of the Close of Escrow.

Section 10. Developer’s Agreement to Affordable Housing Covenants and Compliance Item 3B - Page 75
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with Regulatory Agreement. The Developer covenants, for itself, its successors and assigns, to and for the exclusive benefit of the City, that the Developer shall comply with the Regulatory Agreement recorded against the Property to provide affordable homeownership opportunities to low income households in accordance with the requirements further set forth in the Regulatory Agreement.

Section 11. Covenants Run with the Land of the Property. Each of the covenants and agreements contained in this Grant Deed touch and concern the Property and each of them is expressly declared to be a community development covenant that runs with the land for the benefit of the Grantor or the City of Palm Springs, as the successor public agency to the Grantor, and such covenants run with the land in favor of the Grantor for the entire period that such covenants are in full force and effect, regardless of whether the Grantor is or remains an owner of any land or interest in land to which such covenants relate. The Grantor, in the event of any breach of any such covenants, has the right to exercise all of the rights and remedies, and to maintain any actions at law or suits in equity or other proper proceedings, to enforce the curing of such breach, as provided in the Agreement or by law. The covenants contained in this Grant Deed are for the benefit of and are enforceable only by the Grantor or the City of Palm Springs, as the successor public agency to the Grantor, and shall survive the execution and recordation of this Grantor Deed and the issuance and recordation of each and every Certificate of Completion, for the time period set forth above for each covenant.

Section 11. Costs and Attorneys’ Fees for Enforcement Proceeding. If legal proceedings are initiated to enforce the rights, duties or obligations of any of the covenants set forth in this Grant Deed, then the prevailing party in such proceeding shall be entitled to collect its reasonable attorney fees and costs from the other party in addition to any other damages or relief obtained in such proceedings.

Section 12. Effect of Unlawful Provision; Severability. In the event that any provision of this Grant Deed is held to be invalid or unlawful by a final judgment of a court of competent jurisdiction, such invalidity shall not affect the validity of any other provision of this Grant Deed.

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IN WITNESS WHEREOF, the Grantor has caused this Grant Deed to be executed by its authorized representative(s) on this ____ day of _____________, 2024.

GRANTOR:

THE CITY OF PALM SPRINGS
a California municipal corporation

By: ___________________________
City Manager

[ALL SIGNATURES MUST BE NOTARY ACKNOWLEDGED]
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EXHIBIT A
TO

GRANT DEED
Property Legal Description

TO BE ADDED FOR EACH PARCEL
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CERTIFICATE OF ACCEPTANCE OF

GRANT DEED
The undersigned hereby acknowledges acceptance by _____________, a California limited liability company, the Grantee in the within Grant Deed, of the delivery of the subject Property described in the within Grant Deed from the City of Palm Springs.

GRANTEE:

NPHS COMMUNITY REDEVELOPMENT, INC.,
a California nonprofit corporation
Dated:_____________________ By:
[TITLE]
[ALL SIGNATURES MUST BE NOTARY ACKNOWLEDGED]
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EXHIBIT E

EXHIBIT E
TO
2024 DISPOSITION AND DEVELOPMENT AGREEMENT
Sale of Real Property for Development of a Homeownership Opportunity Program Form of Notice of Agreement
[Attached Behind This Page]
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RECORDING REQUESTED BY
AND WHEN RECORDED RETURN TO:

The City of Palm Springs
3200 East Tahquitz Canyon Way
Palm Springs, California 92262
Attn: City Manager

Exempt from Recording fee
pursuant to Gov’t Code § 27383

NOTICE OF AGREEMENT
2024 Disposition and Development Agreement
Sale of Real Property for Development of a Homeownership Opportunity Program TO ALL INTERESTED PERSONS PLEASE TAKE NOTICE that NPHS Community Redevelopment Inc., a California nonprofit corporation (the “Developer”) and the City of Palm Springs, a California municipal corporation (the “City”) entered into an agreement entitled 2024 Disposition and Development Agreement, dated as of ______, 2024 (the “Agreement”). A copy of the Agreement is on file with the City and is available for inspection and copying by interested persons as a public record of the City at the City’s offices located at 3200 East Tahquitz Canyon Way, Palm Springs, California 92262, during the City’s regular business hours.

The Agreement affects the real property described in Exhibit A attached to this Notice of Agreement (the “Property”). The meaning of defined terms, indicated by initial capitalization, used in this Notice of Agreement shall be the same as the meaning ascribed to such terms in the Agreement.

PLEASE TAKE FURTHER NOTICE that the Agreement contains certain development covenants running with the land of the Property and other agreements between the Developer and the City affecting the Property, as set forth below (all section references are to the Agreement):

Section 4.1 of the Agreement provides:

4.1 Developer Covenant to Undertake Project. The Developer covenants, for itself, its successors and assigns, to and for the exclusive benefit of the City, that the Developer shall commence and complete the development of the Project on the Property within the time period for such actions set forth in the Schedule of Performance. The Developer covenants and agrees for itself, its successors, and assigns, that the Property shall be improved and developed with the Project in substantial conformity with the terms and conditions of this Agreement, the Scope of Development, the Schedule of Performance, any and all plans, specifications and similar development documents required by this Agreement, except for such changes as may be mutually agreed upon in writing by and among the Parties, and all applicable laws, regulations, orders and conditions of each Governmental Agency with jurisdiction over the Property or the Project. The covenants of this Section 4.1 shall run with the land of the Property until the earlier of the date of Item 3B - Page 81
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recordation of the Certificate of Completion or the fifteenth (15th) anniversary of the date of the Close of Escrow.

Section 5.1 of the Agreement provides:

5.1 Covenant to Maintain Property on Tax Rolls. The Developer for itself, its successors and assigns to all or any part or portion of the Property and/or Project, covenants and agrees that:

5.1.1 The entire Property shall remain on the County secured real property tax rolls in accordance with state law applicable to the Project.

5.1.2 The Developer shall pay all property tax bills with respect to the Property and all improvements thereon on or before the last day for the timely payment of each property tax installment on each December 10 and April 10 during such time period and to timely pay all supplemental tax bills regarding the Property issued by the County. The Developer further covenants and agrees to provide to the City, within thirty (30) days of any request by the City, commencing in the calendar year following the calendar year in which a Certificate of Completion is recorded and in each calendar year, thereafter, for the full term of this covenant: (i) a true and correct copy of all property tax assessment notices, property tax bills and property tax assessment correspondence by and between the Developer and the County regarding the Property and all improvements thereon, with respect to the preceding fiscal year of the County, and (ii) cancelled checks issued by the Developer in payment of all property tax payments that are made to the County regarding the Property and all improvements thereon (or other reasonably acceptable evidence of such payment), with respect to the preceding County fiscal year.

5.1.3 The covenants of this Section 5.1 shall run with the land of the Property, shall be enforceable against the Developer and its successors and assigns, and shall be covenants set forth in the Grant Deed.

Section 5.3 of the Agreement provides:

5.3 Compliance with the Regulatory Agreement. The Developer for itself, its successors and assigns to all or any part or portion of the Property and/or Project, covenants and agrees that:

5.3.1 The Property shall be used and operated in accordance with the Regulatory Agreement.

5.3.2 Each Restricted Home shall be transferred through a long-term ground lease to an eligible low income household in accordance with the Regulatory Agreement. The Regulatory Agreement requires each individual homebuyer to execute a ground lease that states the resale restrictions and deed of trust in favor of the City that secures the City’s financial contribution to the Project.

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5.3.3 The covenants of this Section 5.3 shall run with the Property, shall be enforceable against the Developer and its successors and assigns, and shall be covenants set forth in the Grant Deed.

Section 5.4 of the Agreement provides:

5.4 Maintenance Condition of the Property. The Developer for itself, its successors and assigns to all or any part or portion of the Property and/or Project, covenants and agrees that:

5.4.3 The Parties further mutually understand and agree that the rights conferred upon the City under this Section 5.4 expressly include a grant by the Developer of a security interest in the Property with the power to establish and enforce a lien or other encumbrance against the Property or any portion thereof, in the manner provided under Civil Code Sections 2924, 2924b and 2924c, to secure the obligations of the Developer and it successors under Section 5.4.1 or Section 5.4.2, including the reasonable attorneys’ fees and costs of the City associated with the abatement of a Maintenance Deficiency or removal of graffiti. For the purposes of the preceding sentence the words “reasonable attorneys’ fees and costs of the City” mean and include the salaries, benefits and costs of the City Attorney and the lawyers employed in the Office of the City Attorney.

Item 3B - Page 83
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5.4.4 The provisions of this Section 5.4, shall be a covenant running with the land of the Property, shall be enforceable against the Developer and its successors and assigns, and shall be covenants set forth in the Grant Deed. Nothing in the foregoing provisions of this Section 5.3 shall be deemed to preclude the Developer from making any alteration, addition, or other change to any structure or improvement or landscaping on the Property, provided that any such changes comply with applicable zoning and building regulations of the City.

Section 5.5 of the Agreement provides:

5.5 Obligation to Refrain from Discrimination. The Developer for itself, its successors and assigns to all or any part or portion of the Property and/or Project, covenants and agrees that:

5.5.1 There shall be no discrimination against or segregation of any person, or group of persons, on account of actual or perceived sex, marital status, race, color, religion, sex, gender, gender identity, gender expression, sexual orientation, marital status, national origin, ancestry, familial status, source of income, disability, veteran or military status, or genetic information, in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property 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, sub-tenants, sub-lessees or vendees of the Property.

The covenant of this Section 5.5 shall run with the land of the Property and shall be enforceable against the Developer and its successors and assigns in perpetuity and be a covenant in the Grant Deed and the Notice of Agreement.

5.5.2 The covenant of this Section 5.5 shall run with the land of the Property in perpetuity, shall be enforceable against the Developer and its successors and assigns, and shall be covenants set forth in the Grant Deed.

Item 3B - Page 84
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This NOTICE OF AGREEMENT is dated as of _________________, 2024, and has been executed on behalf of the Developer and the City by and through the signatures of their authorized representative(s) set forth below. This Notice of Agreement may be executed in counterparts and when fully executed each counterpart shall be deemed to be one original instrument.

CITY:

THE CITY OF PALM SPRINGS
a California municipal corporation
Dated: _________________, 2024 By: _______________________________ City Manager
ATTEST:
____________________________
City Clerk
APPROVED AS TO LEGAL FORM:

BEST BEST & KRIEGER LLP
By: _______________________
City Attorney
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DEVELOPER:

NEIGHBORHOOD PARTNERSHIP HOUSING
SERVICES, INC., a California corporation
Dated:_____________________ By:
[TITLE]
[ALL SIGNATURES MUST BE NOTARY ACKNOWLEDGED]
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EXHIBIT A
TO

NOTICE OF AGREEMENT
Legal Description of Property

TO BE ADDED FOR EACH PARCEL
Item 3B - Page 87
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EXHIBIT F

EXHIBIT F
TO
2024 DISPOSITION AND DEVELOPMENT AGREEMENT
Sale of Real Property for Development of a Homeownership Opportunity Program Form of Official Action of Developer

TO BE ADDED
Item 3B - Page 88
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EXHIBIT G

EXHIBIT G
TO
2024 DISPOSITION AND DEVELOPMENT AGREEMENT
Sale of Real Property for Development of a Homeownership Opportunity Program Form of Certificate of Completion
[Attached Behind This Page]
Item 3B - Page 89
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RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:

City of Palm Springs
3200 E. Tahquitz Canyon Way
Palm Springs, California 92262
Attn: City Manager
Exempt from Recording fee
pursuant to Gov’t Code § 27383

CITY OF PALM SPRINGS

CERTIFICATE OF COMPLETION
(_____________)
I, Scott Stiles, City Manager of the City of Palm Springs (the “City”) certify that:

Section 1. The Project described as [______________________] required to be constructed in accordance with that certain 2024 Disposition and Development Agreement (_____________), dated _______, 2024 (“DDA”), between the City and _____________, a California limited liability company (the “Developer”), on that certain real property specifically described in the legal description(s) attached to this Certificate of Completion as Exhibit A (the “Property”), is complete in accordance with the provisions of the Agreement.

This Certificate of Completion constitutes conclusive evidence of the City’s determination of the Developer’s satisfaction of its obligation under the Agreement to construct and install the Project on the Property, including any and all buildings, parking areas, landscaping areas and related improvements necessary to support or meet any requirements applicable to the Project and its use and occupancy on the Project, whether or not such improvements are located on or off the Property or on other property subject to the Agreement. Notwithstanding any provision of this Certificate of Completion, the City may enforce any covenant surviving this Certificate of Completion in accordance with the terms and conditions of the Agreement and the Grant Deed by which the Property was conveyed to the Developer by the City under the Agreement. The Agreement is an official record of the City and a copy of the Agreement may be inspected at the City’s office located at 3200 East Tahquitz Canyon, Palm Springs, California 92262, during the City’s regular business hours.

DATED AND ISSUED this _____ day of ______________, _____.

THE CITY OF PALM SPRINGS
a California municipal corporation
Item 3B - Page 90
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By: ___________________________
City Manager
Item 3B - Page 91
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EXHIBIT A
TO

CERTIFICATE OF COMPLETION
Legal Description of the Property
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STATE OF CALIFORNIA )
) ss.

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

WITNESS my hand and official seal.
_____________________________
Notary Public
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EXHIBIT H

EXHIBIT H
TO
2024 DISPOSITION AND DEVELOPMENT AGREEMENT
Sale of Real Property for Development of a Homeownership Opportunity Program Form of Conditional Grant Agreement
[Attached Behind This Page]

TO BE ADDED
Item 3B - Page 94
55575.18265\42295160.1

CONDITIONAL GRANT AGREEMENT
Affordable Homeownership Opportunity Program
between

THE CITY OF PALM SPRINGS
a California municipal corporation
and
NPHS COMMUNITY REDEVELOPMENT, INC.
a California Nonprofit Corporation
Item 3B - Page 95
55575.18265\42295160.1
NPHS Conditional Grant Agreement
2 CONDITIONAL GRANT AGREEMENT
Affordable Homeownership Opportunity Program
THIS CONDITIONAL GRANT AGREEMENT ("Agreement") dated, for identification purposes only, as of _______________, 2024, is made and entered into by and between the City of Palm Springs, a charter city and municipal corporation ("City"), and NPHS Community Redevelopment Inc., a California nonprofit corporation ("Developer") with reference to the following:

RECITALS:

A. On August 31, 2023, the City issued Request for Proposals 39-23 for “Sale of Real Property for Development of a Homeownership Opportunity Program,” which identified that certain real property located at and commonly known as Rosa Parks Road (APN: 669-353-001).

The City, acting as the Successor Agency to the Palm Springs Redevelopment Agency, is the owner of real property located at 233 Tramview Road (APN: 669-401-010) and El Dorado Boulevard (APN: 669-401-039). The real property referenced in this paragraph is specifically described in Exhibit A attached hereto and incorporated herein by this reference (hereafter, each is individually referred to as a “Parcel” and collectively they are referred to as the “Property”).

B. On __________, 2024, the City entered into a Disposition and Development Agreement (“DDA”) with NPHS, pursuant to which NPHS agreed to develop the Property with affordable housing.

C. In accordance with the DDA, the City Property has been deeded to NPHS by the City pursuant to a Grant Deed recorded in the Official Records of Riverside County (“Official Records”) substantially concurrently herewith.

D. NPHS will commence to develop the Property with six single family residences (each a “Restricted Home”), which shall be sold to Eligible Buyers in accordance with this Agreement. NPHS will retain fee ownership in the underlying land for the Property and enter into a ground lease (“Ground Lease”) with Eligible Buyers, who will concurrently purchase the fee interest in the improvements that comprise the Restricted Home.

E. This Agreement is entered into for the purpose of the City providing financial assistance to NPHS to develop the Property with the Restricted Homes that will be used for an affordable homeownership program within the City, pursuant to an Affordable Housing Regulatory Agreement With Declaration of Restrictive Covenants with Option to Purchase (“Regulatory Agreement”), executed on or about the same date of this Agreement.

F. NPHS has requested a grant in the amount of Two Million Eight Hundred Fifteen Thousand Five Hundred Seventy Dollars and Sixty Two Cents ($2,815,570.62), based upon a development proforma and projected cash flows for the Project submitted by the Developer to the City ("Proforma").
-
Item 3B - Page 96
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NPHS Conditional Grant Agreement
3 G. Pursuant to this Agreement, the City agrees to make the requested grant on the terms and conditions set forth herein. Among other things, this Agreement requires the Regulatory Agreement be recorded against the Property, and compliance with all terms therein to ensure the affordable housing requirements of this Agreement, and that the financial assistance provided by the City is secured by the City Deed of Trust, as defined below.

H. The Project is in the best interest of the City and the health, safety and welfare of the residents of the City, and in accordance with the public purposes and provisions of applicable federal, state and local laws and requirements.

NOW, THEREFORE, for and in consideration of the mutual covenants and agreements herein contained, City and Developer agree as follows:

1. DEFINITIONS AND INTERPRETATION

1.1 Defined Terms. All capitalized terms used herein, including, without limitation, in the Recitals above, unless otherwise expressly defined, are defined where first used in this Agreement and/or as set forth in this Article 1. Except as otherwise specified in this Agreement, all capitalized terms shall have the definition set forth in the DDA. (a) "Building Permit" means the building permit(s) issued by City and required for the construction.
(b) "Business Day" means any Monday, Tuesday, Wednesday, Thursday or Friday on which the Palm Springs City Hall is open to the public to conduct City affairs. (c) "Calendar Year" means each consecutive twelve (12) month period from January 1 to December 31.
(d) "Certificate of Completion" has the meaning set forth in Article 13. (e) "City" means the City of Palm Springs, California, a charter city and municipal corporation.
(f) “City Deed of Trust” means the Deed of Trust granted by Developer as trustor to City, as beneficiary and trustee, securing the performance of obligations relating to the Project in this Agreement and the Regulatory Agreement. (g) "City Grant" means a grant in the original principal amount of up to Two Million Eight Hundred Fifteen Thousand Five Hundred Seventy Dollars and Sixty Two Cents ($2,815,570.62to be made to Developer by the City to be funded from the available City funds. (h) "City Project Manager" shall mean the City Manager for the City, or designee.

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4 (i) "County" means the County of Riverside, California. (j) "Developer" means NPHS Community Redevelopment, Inc., a California nonprofit corporation.
(k) "Governmental Authority" means any governmental or quasigovernmental agency, board, bureau, commission, department, court, administrative tribunal or other instrumentality or authority, and any public utility. (l) "Hazardous Materials" without implied limitation, substances defined as “hazardous substances,” “hazardous material,” “toxic substance,” “solid waste,” or “pollutant or contaminate” in the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. Sections 9601, et seq.; the Toxic Substances Control Act (“TSCA”) [15 U.S.C. Sections 2601, et seq.]; the Hazardous Materials Transportation Act, 49 U.S.C.

Sections 1801, et seq.; the Resource Conservation and Recovery Act, 42 U.S.C. Sections 6901, et seq.; those substances listed in the United States Department of Transportation (DOT) Table [49 CFR 172.101], or by the EPA, or any successor authority, as hazardous substances [40 CFR Part 302]; and those substances defined as “hazardous waste” in Section 25117 of the California Health and Safety Code or, as “hazardous substances” in Section 25316 of the California Health and Safety Code; other substances, materials, and wastes that are, or become, regulated or classified as hazardous or toxic under federal, state, or local laws or regulations and in the regulations adopted pursuant to said laws, and shall also include manure, asbestos, polychlorinated biphenyl, flammable explosives, radioactive material, petroleum products, and substances designated as a hazardous substance pursuant to 33 USC Section 1321 or listed pursuant to 33 USC Section 1317. (m) "HUD" means the United States (U.S.) Department of Housing and Urban Development, and any successors or assigns thereof.
(n) "Improvements" means all improvements, including the Restricted Homes, and fixtures now and hereafter comprising any portion of the Property, including, without limitation, landscaping, trees and plant materials; and offsite improvements, as required through the City of Palm Springs entitlement process.
(o) "Indemnitees" has the meaning set forth in Section 11.5. (p) "Laws" means all statutes, laws, ordinances, regulations, orders, writs, judgments, injunctions, decrees or awards of the United States or any state, county, municipality or other Governmental Authority.
(q) "Lien" means any lien, mortgage, pledge, security interest, charge or encumbrance of any kind, including any conditional sale or other title retention agreement, any lease in the nature thereof, and any agreement to give any lien or security interest. (r) "Project" means the construction of the Improvements generally described in the attached Exhibit A upon the Property by Developer pursuant to this Agreement.

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5 (s) "Project Budget" means the line-item budget for the Project attached hereto as Exhibit C, as modified from time to time in accordance with this Agreement. (t) "Property" means the property referenced in Recital A and more particularly described in the legal description attached hereto as Exhibit A. (u) “Regulatory Agreement” means the Affordable Housing Agreement and Declaration of Restrictive Covenants with Option to Purchase required by Section 4.1. (v) “Restricted Homes” means the six (6) single-family homes to be developed on the Property, with two on each individual Parcel, which are to be transferred exclusively to low-income households that qualify as Eligible Buyers through a long-term Ground Lease, as required by the Regulatory Agreement.
(w) "Scope of Work/Schedule of Performance" means the detailed statement of the work to be performed by Developer on and to the Property for the Project pursuant to this Agreement, along with the Schedule of Performance setting forth timeframes for certain tasks, which document is attached hereto as Exhibit B.
(x) "Senior Lender" means a commercial or institutional financial institution providing the Senior Loan or any other holder of the Senior Loan Note. (y) "Senior Loan" means a loan from the Senior Lender, approved by the City pursuant to Section 12, for payment of a portion of the construction costs, and shall include any subsequent loan that permanently refinances the initial Senior Loan. (z) "Senior Loan Deed of Trust" means the first deed(s) of trust securing the Senior Loan by encumbering the Property.
(aa) "Senior Loan Documents" means, collectively, the loan agreement governing the Senior Loan, the Senior Loan Note, the Senior Loan Deed of Trust, and any other agreement, document or instrument that the Senior Lender requires in connection with the Senior Loan.

1.2 Singular and Plural Terms. Any defined term used in the plural in this Agreement shall refer to all members of the relevant class and any defined term used in the singular shall refer to any number of the members of the relevant class.

1.3 References and Other Terms. Any reference to this Agreement shall include such document both as originally executed and as it may from time to time be modified. References herein to Articles, Sections and Exhibits shall be construed as references to this Agreement unless a different document is named. References to subparagraphs shall be construed as references to the same Section in which the reference appears. The term "document" is used in its broadest sense and encompasses agreements, certificates, opinions, consents, instruments and other written material of every kind. The terms "including" and "include" mean "including (include) without limitation." Item 3B - Page 99
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6 1.4 Exhibits Incorporated. All exhibits to this Agreement, as now existing and as the same may from time to time be modified, are incorporated herein by this reference. The exhibits attached hereto and incorporated herein include:

Exhibit A – Legal Description
Exhibit B – Project Description/ Scope of Work/Schedule of Performance Exhibit C – Project Budget
Exhibit D – Regulatory Agreement

2. SCOPE OF WORK/PROJECT BUDGET
The Project is generally described in Exhibit B, and shall comprise of the development, construction, and operation of the Property as providing the six (6) Restricted Homes. The "Scope of Work" and "Schedule of Performance" for the Project is attached hereto as Exhibit B. Any material change to the Scope of Work/Schedule of Performance requested by the Developer shall be subject to the prior written approval of the City Project Manager. The Scope of Work/Schedule sets forth the construction work that shall be performed on the Property for the Project and timeframes for approvals of such work.

A line-item budget for the Project, including a summary of statement of sources and uses of funds, is incorporated into Exhibit C ("Project Budget").

3. CONDITIONAL GRANT

3.1 Amount and Purpose. Subject to the terms and conditions of this Agreement, City agrees to make a grant to Developer from available City funds in the principal amount of up to Two Million Eight Hundred Fifteen Thousand Five Hundred Seventy Dollars and Sixty Two Cents ($2,815,570.62. The City Grant shall be disbursed in accordance with Article 4, and the Developer may use the City Grant in accordance with this Agreement for expenses that are actually and reasonably incurred by Developer and approved by City (such approval not to be unreasonably withheld or delayed), and for no other purpose.

3.2 The City Grant is comprised of the following:
(a) A pre-development disbursement in the amount of [$245,189.98.00] (the “Pre-Development Disbursement”);
(b) A disbursement for the cost of acquiring the materials for the manufactured home of [$1,100,082.00] (the “[Materials Acquisition Disbursement]”); (c) Construction disbursements in a total amount not to exceed [$1,323,268.00], which amount shall be allocated in six equal amounts (not exceeding [$220,544.00]) for each Restricted Home, as approved by the City (the “Construction Disbursements”); and, Item 3B - Page 100
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7 (d) Final disbursements in a total amount not to the remainder of the City Grant, after disbursements pursuant to sub-paragraphs (a)-(c), above, which amount shall be allocated in six equal amounts for each Restricted Home, as approved by the City (the “Final Disbursements).

3.3 Repayment Obligation; Termination.
(a) In the event the Project is not constructed in compliance with the Scope of Work and Schedule of Performance within two (2) years from the date of the first disbursement of the City Grant funds, the City may terminate this Agreement and, pursuant to the default remedy provisions of this Agreement set forth in Section 16.1, the City may seek repayment of City Grant funds not expended on the Project.
(b) Provided Developer constructs the Project according to the Scope of Work and Schedule of Performance, and operates the Project in accordance with the Regulatory Agreement, Developer will be subject to no repayment obligation.

4. CONDITIONS TO DISBURSEMENT OF GRANT PROCEEDS

4.1 Conditions Precedent. City's obligation to disburse the City Grant is subject to the satisfaction of the following conditions precedent:
(a) City Council. Review, approval and execution of this Agreement, the Regulatory Agreement, and the entitlements for the Project. (b) Code Compliance. Compliance with California Health and Safety Code and applicable regulations set forth in Section 34176.
(c) Environmental Review. Compliance with and completion of environmental review of the Project pursuant to the California Environmental Quality Act ("CEQA") and approval thereof.
(d) Close of Escrow for the DDA. The City and Developer have closed escrow on the DDA and the Developer has acquired title to the Property. (e) Recordation of Affordability Restrictions. The six (6) "Restricted Homes" at the Project shall and will be restricted for sale to an affordable housing cost based on the Regulatory Agreement. The Restricted Homes shall remain permanently affordable in accordance with the Regulatory Agreement, which shall be recorded against the Project in the Official Records, County of Riverside, California.
(f) Insurance. City shall have received evidence satisfactory to the City Attorney that all of the policies of insurance required by Section 19 of this Agreement are in full force and effect.

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8 (g) Representations and Warranties. The representations and warranties of Developer contained in this Agreement shall be correct in all material respects as of the date of disbursement as though made on and as of that date, and if requested by the City Project Manager, City shall have received a certificate to that effect signed by Developer's Representative. (h) No Default. No Event of Default by Developer shall have occurred, and no event shall have occurred which, with the giving of notice or the passage of time or both, would constitute an Event of Default by Developer under this Agreement or the DDA and if requested by the City Project Manager, City shall have received a certificate to that effect signed by Developer's Representative.
(i) Satisfactory Progress. The City Project Manager shall be satisfied that, based on his/her own inspections or other reliable information, the construction is progressing satisfactorily in conformance with all applicable laws and other requirements. (j) Condition of Title. The City Project Manager reasonably believes that no event has occurred that would give rise to a colorable claim against the Property (e.g., a mechanic's lien) superior to the claim of City against the Property with respect to the subject disbursement, or if such claim is made, then City Project Manager shall receive satisfactory evidence that such claim has been bonded over until its resolution. (k) Representations and Warranties. The representations and warranties of Developer contained in this Agreement shall be correct in all material respects as of the date of the disbursement as though made on and as of that date. (l) Availability of Funds. The City has available funds for disbursement of the City Grant.
(m) Compliance with all other covenants, conditions, and restrictions set forth in this Agreement, including but not limited to City's analysis of the available funding sources and development and operating costs of the Project and the overall economic feasibility of the Project.

4.2 Disbursement Procedures for Grant; Conditions for Initial and Final Disbursement. Subject to the conditions of this Agreement, the City Grant proceeds shall be disbursed to Developer to finance the development and construction of the Project (as evidenced in the Project Budget, attached as Exhibit C), in accordance with the requirements of this Section

4.2. The City Grant proceeds shall not be used for any purpose other than for development and construction costs set forth in the Project Budget, including Developer fee and soft costs related to the development of the Project (costs all subject to City's prior review). (a) The Pre-Development Disbursement of [$234,192] shall be made within thirty (30) days of a determination by the City that the Project is eligible for an exemption to the California Environmental Quality Act (“CEQA”), notwithstanding the conditions set forth in Section 4.1(d) and (e), which are not applicable to this disbursement.

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9 (b) The [Materials Acquisition Disbursement] of [$1,100,082] upon execution of a binding contract and invoice showing the amount owed for the purchase of the materials for the individual Restricted Homes; provided that the City is provided with the proposed contract for manufactured homes that will be installed as Restricted Homes, and the City has thirty (30) days to review and approve the contract, which approval shall not be unreasonably withheld. (c) City shall make the Construction Disbursements on a per unit basis for the Restricted Homes, as set forth in the Proforma, if all the following conditions are satisfied:
(i) All grading permits shall have been issued or the City shall have issued a letter stating that Building Permits are ready to issue, subject only to payment of fees and the completion of grading.
(ii) City has received and approved the construction contract for the work to be performed. Within thirty (30) days, the City shall approve or disapprove the construction contract. If approved, within seven (7) days of receipt for an invoice for payment on the approved construction contract, then City shall disburse the approved amount of the Construction Disbursements.
(iii) Developer shall have secured all necessary financing and funding for the construction and operation of the Project. Such financing and funding shall be sufficient to pay all Project development costs, as set forth in the final budget consistent with the approved Proforma (or as otherwise approved by the City).
(iv) Developer shall have provided evidence to the City that the Developer has obtained insurance policies and certificates or endorsements acceptable to the City, as described in this Agreement.
(v) Developer shall have provided construction security in favor of the City, which may include a completion guarantee from Developer and/or a letter of credit and/or performance and payment bonds from the general contractor for the Project (or some combination of these), in an amount sufficient to ensure the Project will be completed and placed in service within the time set forth in the Project schedule approved by the City. (d) City shall make Final Disbursements for the remaining amount of the City Grant on a per unit basis for each Restricted Home, upon satisfaction of the following conditions:
(i) Construction of the Restricted Homes is completed.
(ii) The Restricted Home(s) has received a certificate of occupancy, or similar document as applicable.
(iii) Each Parcel is lien free, determined as follows:

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10 (1) Thirty-five (35) days shall have passed since the recording of a valid Notice of Completion as required by Section 8.5 for the construction, and no mechanic's or materialman's lien shall be outstanding; or
(2) Ninety-five (95) days shall have passed since actual completion of the construction, and no mechanic's or materialman's lien shall be outstanding, or Developer shall have bonded over any such lien to City's reasonable satisfaction. (e) Developer may request disbursements for some or all of the Restricted Units at the same time.

4.3 Termination for Failure of Condition. If (a) any of the conditions precedent set forth herein are not timely satisfied within two (2) years of the date of this Agreement (subject to applicable notice and cure rights), and (b) City is not in default under this Agreement, City may terminate this Agreement without any further liability on its part by giving written notice of termination to Developer. Upon the giving of such notice, the City shall not be obligated to pay to Developer the City Grant, any portion thereof, or any other amounts owing under the Agreement, and Developer shall be required to return to the City any City Grant monies received but not expended on the Project as of the date of the notice of termination.

4.4 Waiver of Conditions. The conditions set forth pertaining to City's obligation to make disbursements of the City Grant proceeds are for City's benefit only and the City Project Manager may waive all or any part of such rights by written notice to Developer.

4.5 Manner of Disbursement. City may make any disbursement by check or wire transfer payable to Developer, or through Escrow, as agreed to by the Parties.

4.6 Waiver of Disbursement Conditions. Unless City otherwise agrees in writing, the making by City of any disbursement with knowledge that any condition to such disbursement is not fulfilled shall constitute a waiver of such condition only with respect to the particular disbursement made, and such condition shall be conditioned to all further disbursements until fulfilled.

4.7 Other Terms and Conditions of Grant. Any disbursed Grant amounts not already expended for development and construction shall become immediately due and payable by Developer back to City, in the event of any of the following:
(a) Failure to complete the Project within two (2) years of the date of the first disbursement, unless extended due to Unavoidable Delay; (b) Violation of any of the use covenants and restrictions contained in this Agreement after the expiration of any applicable notice and cure periods; or, (c) An Event of Default by Developer, which is not timely cured after expiration of any applicable notice and cure periods pursuant to the terms of this Agreement.

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11 4.8 Costs and Fees. Developer shall pay all recording fees and charges on any document recorded pursuant to this Agreement.

5. USE AND MAINTENANCE OF THE PROPERTY

5.1 Maintenance of the Property. During construction of the homes, solely at Developer's expense, Developer agrees to maintain the Property in a clean and orderly condition and in good condition and repair and keep the Property free from any accumulation of debris and waste materials. If at any time Developer fails to maintain, or cause to be maintained, the Property as required by this section, and said condition is not corrected after the expiration of a reasonable period of time not to exceed thirty (30) days from the date of written notice from the City, unless such condition cannot reasonably be cured within thirty (30) days, in which case Developer shall have such additional time as reasonably necessary to complete such cure, the City may perform the necessary maintenance and Developer shall pay all reasonable costs incurred for such maintenance. Following the Certificate of Completion for construction of the homes, the Property maintenance shall be governed by the provisions of the Regulatory Agreement.

5.2 Obligation to Refrain from Discrimination. The Developer for itself, its successors and assigns to all or any part or portion of the Property and/or Project, covenants and agrees (a) Fair Housing Covenant. There shall be no discrimination against or segregation of any person, or group of persons on account of actual or perceived race, color, religion, sex, gender, gender identity, gender expression, sexual orientation, marital status, national origin, ancestry, familial status, source of income, disability, veteran or military status, or genetic information, in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property. Developer, for 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, sub-tenants, sub-lessees or vendees of the Property. (b) Fair Employment Covenant. In connection with its performance under this Agreement, Developer shall not discriminate against any employee or applicant for employment on account of actual or perceived race, color, religion, sex, gender, gender identity, gender expression, sexual orientation, marital status, national origin, ancestry, familial status, source of income, disability, veteran or military status, or genetic information. Developer shall ensure that applicants are employed, and that employees are treated during their employment, without regard to any prohibited basis.
(c) Compliance with Palm Springs Municipal Code Section 7.09.040.

Developer certifies and agrees to comply with the City’s Municipal Code provisions that prohibit discrimination. Developer’s obligations under this paragraph shall apply to all activities under this Agreement, including the development and operation of the Project, and employment activities that include but are not limited to: employment, upgrading, demotion or transfer; recruitment or recruitment advertising; layoff or termination; rates of pay or other forms of compensation; and selection for training, including apprenticeship.

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12 6. RESERVED

7. GENERAL PROVISIONS AND WARRANTIES
As a material inducement to City to enter into this Agreement, Developer represents and warrants as follows, which representations and warranties are made solely by Developer and not by or on behalf of any partner of Developer:

7.1 Formation, Qualification and Compliance. Developer is a nonprofit organization. Developer is in compliance with all laws applicable to its business and has obtained all approvals, licenses, exemptions and other authorizations from, and has accomplished all filings, registrations and qualifications with, any Governmental Authority that are necessary for the transaction of its business.

7.2 Execution and Performance of Grant Documents.
(a) Developer has all requisite authority to execute and perform its obligations under this Agreement.
(b) The execution and delivery by Developer of, and the performance by Developer of its obligations under, this Agreement that has been authorized by all necessary action and does not and will not:
(i) require any consent or approval not heretofore obtained of any person having any interest in Developer;
(ii) violate any provision of, or require any consent or approval not heretofore obtained under, any articles of incorporation, by-laws or other governing document applicable to Developer;
(iii) result in or require the creation of any lien, claim, charge or other right of others of any kind (other than under this Agreement and under the contemplated the Senior Loan Documents) on or with respect to any property now or hereafter owned or leased by Developer;
(iv) to the best of its knowledge, violate any provision of any law presently in effect; or
(v) constitute a breach or default under, or permit the acceleration of obligations owed under, any contract, loan agreement, lease or other agreement or document to which Developer is a party or by which Developer or any of its property is bound. (c) Developer is not in default, in any respect that is materially adverse to the interests of City under this Agreement or that would have any material adverse effect on the financial condition of Developer or the conduct of its business, under any law, contract, lease or Item 3B - Page 106
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13 other agreement or document described in sub-paragraph (iii) or (v) of sub-paragraph (b) of this Section 7.2.
(d) Except for the development and construction permitting contemplated to be subsequently obtained under this Agreement, no approval, license, exemption or other authorization from, or filing, registration or qualification with, any Governmental Authority is required which has not been previously obtained in connection with the execution by Developer of, and the performance by Developer of its obligations under, this Agreement.

7.3 Financial and Other Information. To the best of Developer's knowledge, all financial information furnished to City by the Developer or any affiliate thereof with respect to Developer in connection with the City Grant (a) is complete and correct in all material respects as of the date of preparation thereof, (b) accurately presents the financial condition of Developer, and (c) has been prepared in accordance with generally accepted accounting principles consistently applied or in accordance with such other principles or methods as are reasonably acceptable to City. To the best of Developer's knowledge, all other documents and information furnished to City by the Developer or any affiliate thereof with respect to Developer, in connection with the Grant, are correct and complete insofar as completeness is necessary to give the City accurate knowledge of the subject matter. To the best of Developer's knowledge Developer has no material liability or contingent liability not disclosed to City in writing and there is no material lien, claim, charge or other right of others of any kinds (including liens or retained security titles of conditional vendors) on any property of Developer not disclosed in such financial statements or otherwise disclosed to City in writing.

7.4 No Material Adverse Change. There has been no material adverse change in the condition, financial or otherwise, of Developer since the dates of the latest financial statements furnished to City, except for Senior Loan Documents that have been disclosed to the City. Since those dates, Developer has not entered into any material transaction not disclosed in such financial statements or otherwise disclosed to City in writing.

7.5 Tax Liability. Developer has filed all required federal, state and local tax returns and has paid all taxes (including interest and penalties, but subject to lawful extensions disclosed to City in writing) other than taxes being promptly and actively contested in good faith and by appropriate proceedings. Developer is maintaining adequate reserves for tax liabilities (including contested liabilities) in accordance with generally accepted accounting principles or in accordance with such other principles or methods as are reasonably acceptable to City.

7.6 Governmental Requirements. Except for the development and construction permitting contemplated to be subsequently obtained under this Agreement, to best of its knowledge, Developer is in compliance with all laws relating to the Property and all Governmental Authority approvals, including zoning, land use, planning requirements, and requirements arising from or relating to the adoption or amendment of, any applicable general plan, subdivision and parcel map requirement; environmental requirements, including the requirements of the California Environmental Quality Act and the National Environmental Policy Item 3B - Page 107
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14 Act, and the preparation and approval of all required environmental impact statements and reports; use, occupancy and building permit requirements; and public utilities requirements.

7.7 Rights of Others. Developer is in compliance with all covenants, conditions, restrictions, easements, rights of way and other rights of third parties relating to the Property as may be shown on title for the Property

7.8 Litigation. There are no material actions or proceedings pending or, to the best of the Developer's knowledge, threatened against or affecting Developer or any property of Developer before any Governmental Authority, except as disclosed to City in writing prior to the execution of this Agreement.

7.9 Bankruptcy. To the best of Developer's knowledge, no attachments, execution proceedings, assignments for the benefit of creditors, insolvency, bankruptcy, reorganization or other proceedings are pending or threatened against Developer, nor are any of such proceedings contemplated by Developer.

7.10 Information Accurate. To the best of Developer's knowledge, all information, regardless of its form, conveyed by Developer to City, by whatever means, is accurate, and correct in all material respects and is sufficiently complete to give City true and accurate knowledge of its subject matter, and does not contain any material misrepresentation or omission.

7.11 Conflicts of Interest. No member, official or employee of the City shall have any personal interest, direct or indirect, in this Agreement, nor shall any such member, official or employee participate in any decision relating to this Agreement which affects his/her personal interests or the interests of any corporation, partnership or association in which he/she has a direct or indirect financial interest. The Developer warrants that it neither has paid nor given, nor will pay or give, any third party any money or other consideration for obtaining this Agreement.

7.12 Nonliability of City Officials and Employees. No member, official or employee of the City shall be personally liable to the Developer in the event of any default or breach by the City or for any amount which may become due to Developer or on any obligations under the terms of this Agreement.

7.13 No Assignment. Developer expressly acknowledges and agrees that the City has only agreed to assist the Developer as a means by which to induce the construction and development of the Project. Accordingly, Developer further expressly acknowledges and agrees that this Agreement is a personal right of Developer that is neither negotiable, transferable, nor assignable except as set forth herein. Developer may assign some or all of its rights under the Agreement only with the prior written consent of the City Project Manager, except that no prior consent is necessary for an assignment by a limited partner of Developer to an affiliate, for the inclusion of tax credit investors in the Agreement.

7.14 Applicable Law. This Agreement shall be interpreted, governed and enforced under federal and California state law with venue in Orange County, California.

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15 7.15 Third Parties. This Agreement is made for the sole benefit of Developer and the City and their successors and assigns, and no other person or persons shall have any rights or remedies under or by reason of this Agreement or any right to the exercise of any right or power of the City hereunder or arising from any default by Developer, nor shall the City owe any duty whatsoever to any claimant for labor performed or materials furnished in connection with the construction of the Property.

8. CONDITIONS FOR CONSTRUCTION

8.1 Permits and Approvals. Developer shall diligently obtain all permits, including all Building Permits, licenses, approvals, exemptions and other authorizations of Governmental Agencies required in connection with the construction and conversion of the Property. Developer shall follow Best Management Practices, as applicable, during construction.

8.2 Commencement and Completion of Construction. The construction of the Project shall be considered complete for purposes of this Agreement only when (a) all work described has been completed and fully paid for, and (b) all work requiring inspection or certification by Governmental Authority has been completed and all requisite certificates, approvals and other necessary authorizations (including required final certificates of occupancy) have been obtained.

8.3 Entry and Inspection. At all times prior to completion of the construction, upon reasonable prior written notice and subject to reasonable job site safety rules, City and its agents shall have (a) the right of free access to the Property and all sites away from the Property where materials for the construction are stored, (b) the right to inspect all labor performed and materials furnished for the construction, and (c) the right to inspect and copy all documents pertaining to the construction.

8.4 Construction Information. From time to time, as needed, during the course of the construction, within ten (10) Business Days following City's written demand therefore, Developer shall furnish requested reports of Project Costs, progress schedules and contractors' costs breakdowns for the construction, itemized as to trade description and item, showing the name of the contractor(s) and/or subcontractor(s), and including such indirect costs as real estate taxes, legal and accounting fees, insurance, architects' and engineers' fees, loan fees, interest during construction and contractors' overhead.

8.5 Protection Against Liens: Developer shall diligently file a valid Notice of Completion upon completion of the construction, diligently file a notice of cessation in the event of a cessation of labor on the construction for a period of thirty (30) days or more, and take all actions reasonably required to prevent the assertion of claims of lien against the Property. In the event that any claim of lien is asserted against the property or any stop notice or claim is asserted against the City by any person furnishing labor or materials to the Property, Developer shall immediately give written notice of the same to City and shall, promptly and in any event within ten (10) Business Days after written demand therefor, (a) pay and discharge the same, (b) effect the release thereof Item 3B - Page 109
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16 by delivering to City a surety bond complying with the requirement of applicable laws for such release, or (c) take such other action as City may require to release City from any obligation or liability with respect to such stop notice or claim.

8.6 Prevailing Wages.
(a) DEVELOPER SHALL ASSUME ANY AND ALL RESPONSIBILITY

AND BE SOLELY RESPONSIBLE FOR DETERMINING WHETHER OR NOT LABORERS

EMPLOYED RELATIVE TO THE CONSTRUCTION OR INSTALLATION OF THE

PROJECT MUST BE PAID THE PREVAILING PER DIEM WAGE RATE FOR THEIR

LABOR CLASSIFICATION, AS DETERMINED BY THE STATE, PURSUANT TO LABOR CODE SECTIONS 1720, ET SEQ.
(b) DEVELOPER, ON BEHALF OF ITSELF, ITS SUCCESSORS, AND

ASSIGNS, WAIVES AND RELEASES THE CITY FROM ANY RIGHT OF ACTION THAT MAY BE AVAILABLE TO ANY OF THEM PURSUANT TO LABOR CODE SECTION 1781.

DEVELOPER ACKNOWLEDGES THE PROTECTIONS OF CIVIL CODE SECTION 1542 RELATIVE TO THE WAIVER AND RELEASE CONTAINED IN THIS SECTION 8.6, WHICH READS AS FOLLOWS:

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE

CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER

FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN

BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER
SETTLEMENT WITH THE DEBTOR.
(c) BY INITIALING BELOW, DEVELOPER KNOWINGLY AND
VOLUNTARILY WAIVES THE PROVISIONS OF SECTION 1542 SOLELY IN CONNECTION WITH THE WAIVERS AND RELEASES OF THIS SECTION 8.6. (d) ADDITIONALLY, DEVELOPER SHALL INDEMNIFY, DEFEND AND

HOLD HARMLESS THE CITY AGAINST ANY CLAIMS PURSUANT TO LABOR CODE SECTION 1781 ARISING FROM THIS AGREEMENT OR THE CONSTRUCTION OR INSTALLATION OF ALL OR ANY PORTION OF THE PROJECT.

8.7 Developer's Assurance of Construction Completion. Prior to commencement of construction of the Improvements, Developer shall furnish to City evidence that assures Developer that sufficient monies will be available to complete the proposed construction. The amount of money available shall be at least the total estimated construction cost. Such evidence may take one of the following forms:
(i) Performance bond and labor and materials bond in a principal sum equal to the total estimated construction cost supplied by Contractor or subcontractors, provided said bonds are issued jointly to Developer, City and any Senior Lenders as obligees.

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17 (ii) Irrevocable letter of credit issued to City from a financial institution to be in effect until City acknowledges satisfactory Completion of Construction; (iii) Cash deposited with the City (may be in the form of cashier's check or money order or may be electronically deposited);
(iv) A completion guaranty, in favor of City from an Affiliate of Developer, in a form reasonably acceptable to City, coupled with a repayment guaranty in favor of the Senior construction Lender for its loan;
(v) Any combination of the above.

All bonds and letters of credit must be issued by a company qualified to do business in the State of California and acceptable to City. All bonds and letters of credit shall be in a form acceptable to the City's Risk Manager in its reasonable discretion, and shall insure faithful and full observance and performance by Developer of all terms, conditions, covenants, and agreements relating to the construction of improvements within the Property.

Developer shall provide or cause its Contractor to provide payment and/or performance bonds in connection with the construction of the Project Improvements, and shall name the City as an additional obligee on, with the right to enforce, any such bonds.

9. PROJECT COVENANTS

9.1 Maintenance. At all times during the term of this Agreement, Developer shall cause the Property and the Project to be maintained in a decent, safe and sanitary manner, regardless of cause of the disrepair.

9.2 Conflict of Interest. Developer shall comply with and be bound by the conflict of interest provisions set forth in all applicable state regulations pertaining to conflict of interest.

9.3 Right to Work and Minimum Wage Laws.
(a) Pursuant to the United States of America Fair Labor Standard Act of 1938, as amended, and State of California Labor Code, Section 1178.5, Developer shall pay no less than the greater of the Federal or California Minimum Wage to all its employees that directly or indirectly service the Property, in any manner whatsoever. Developer shall require and verify that all its subcontractors or other persons servicing the Property on behalf of the Developer also pay their employees no less than the greater of the Federal or California Minimum Wage. (b) Developer shall comply and verify that its subcontractors comply with all other Federal and State of California laws for minimum wage, overtime pay, record keeping, and child labor standards pursuant to the servicing of the Property or terms and conditions of this Lease.

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18 9.4 Assignment Rights in Project Contracts. All contracts for acquisition of materials, preparation of plans and specifications (including but not limited to designs and drawings), and construction of the Project shall provide, in a form and substance reasonably satisfactory to the City, for the assignment thereof to the City if the City terminates this Agreement, and shall allow the City the rights and authority under the contracts in the event of termination by the City.

10. ENVIRONMENTAL MATTERS

10.1 Representation and Warranty. Except as disclosed in writing to the City, Developer represents that it has no knowledge: (a) of the presence on, under or about the Property, now or in the past, of any Hazardous Materials, or of the transportation to or from the Property of any Hazardous Materials; (b) that asbestos or polychlorinated biphenyls (PCBs) are contained in or stored on the Property; or, (c) that there are any underground storage tanks located in, on or under the Property.

10.2 Compliance with Environmental Laws. Developer shall: (a) comply with all environmental laws and environmental permits applicable to the construction of the Property; (b) immediately pay or cause to be paid all costs and expenses incurred by reason of such compliance; (c) keep the Property free and clear of any environmental claims or liens imposed pursuant to any environmental law; and, (d) obtain and renew all environmental permits required for ownership or use of the Property.

10.3 Presence of Hazardous Materials. Developer shall not, and shall not permit anyone else to, generate, use, treat, store, handle, release, or dispose of Hazardous Materials on the Property, or transport or permit the transportation of Hazardous Materials to or from the Property, except for de minimis quantities used at the Property in compliance with all applicable environmental laws and required in connection with the construction of the homes and the routine operation and maintenance of the Property.

10.4 Notice of Environmental Matters. Developer shall immediately advise City in writing of any of the following: (a) any pending or threatened environmental claim against Developer or the Property; or (b) any condition or occurrence that: (i) results in noncompliance with any applicable environmental law; (ii) could reasonably be anticipated to cause the Property to be subject to any restrictions on the ownership, occupancy, use or transferability of the Property under any environmental Law; or, (iii) could reasonably be anticipated to form the basis of an environmental claim against the Property or Developer.

10.5 Environmental Indemnification by the Developer. Developer agrees to defend, indemnify and hold harmless the City and its respective officers, directors, employees and agents (collectively the "Indemnitees") from and against any and all obligations (including removal and remediation), losses, claims (including third party claims), suits, judgments, liabilities, penalties, damages (including consequential and punitive damages), costs and expenses (including consultants, and attorneys' fees) of whatever kind or nature whatsoever that may at any time be Item 3B - Page 112
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19 incurred by, imposed on, or asserted against the Indemnitees directly or indirectly based on, or arising or resulting from any Hazardous Materials on the Property, other than resulting from the gross negligence or willful misconduct of any Indenmitee.

11. OTHER AFFIRMATIVE COVENANTS
The following provisions shall apply, except to the extent that City Project Manager otherwise consents in writing:

11.1 Existence. The sole member of Developer's managing general partner shall maintain its existence in good standing under the laws of the State of California.

11.2 Notice of Certain Matters. Developer shall give notice to City, within ten (10) days of Developer's learning thereof, of each of the following:
(a) any filed litigation or claim affecting or relating to the Property and involving an amount in excess of $5,000; and any litigation or claim that might subject Developer or any general partner to liability in excess of $5,000, whether covered by insurance or not; (b) any dispute between Developer and a Governmental Authority relating to the Property, the adverse determination of which might materially affect the Property; (c) any change in Developer's principal place of business; (d) any aspect of the Improvements that is not in substantial conformity with the plans or code;
(e) any event which after the giving of all required notices and the expiration of all applicable cure periods, would constitute an Event of Default; (f) any material default by Developer or any other party under any Senior Loan document, or the receipt by Developer of any notice of default under any Senior Loan document;
(g) the creation or imposition of any mechanics' or materialmans' lien or other lien against the Property which might materially affect the Property, which is not bonded over or released; and/or
(h) any material adverse change in the financial condition of Developer.

11.3 Further Assurances. Developer shall execute and acknowledge (or cause to be executed and acknowledged) and deliver to City all documents, and take all actions, reasonably required by City from time to time to confirm the rights created or now or hereafter intended to be created under this Agreement.

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20 12. OTHER COVENANTS
The following provisions shall apply, except to the extent that the City Project Manager otherwise consents in writing:

12.1 City Approval of Senior Loan. Developer shall obtain City’s prior written consent before agreeing to a Senior Loan. City may approve or disapprove a Senior Loan, and any related subordination request, in City’s sole and absolute discretion.

12.2 Default on Senior Loan. Developer shall not default on any Senior Loan, provided however, that Developer shall have such period as is provided in the Senior Loan Documents during which to effectuate a cure.

12.3 Sale or Lease of Property. Developer shall not sell, lease (other than to qualified homeowners meeting the requirements set forth in this Agreement), sublease or otherwise transfer all or any part of the Property or any interest therein without the prior written consent of the City Project Manager, which consent may be withheld in the City Project Manager's sole discretion. In connection with the foregoing consent requirements, Developer acknowledges that City relied upon Developer's particular expertise in entering into this Agreement and continues to rely on such expertise to ensure the satisfactory completion of the construction.

13. CERTIFICATE OF COMPLETION
Upon satisfactory completion of the construction and upon the request of Developer, or at its own election, the City shall issue a Certificate of Completion. Such Certificate of Completion shall be, and shall so state, conclusive determination of satisfactory completion of the construction.

If City declines to furnish a Certificate of Completion after written request from Developer, the City Project Manager shall, within thirty (30) days after receipt of the request, provide Developer with a written statement of the reasons therefore. The statement shall contain a description of the action Developer must take to obtain a Certificate of Completion. If the reason therefore is that the Developer has not completed a minor portion of the construction, City may, in its sole and absolute discretion, issue the Certificate of Completion upon the posting with City of a bond or other form of security acceptable to the City Project Manager in the amount of the fair value of the uncompleted work.

A Certificate of Completion is not "notice of completion" referred to in Section 3093 of the California Civil Code.

14. INDEMNIFICATION

14.1 Nonliability of City. Developer acknowledges and agrees that:
(a) The relationship between Developer and the City is and shall remain solely that of Developer and grantor. City neither undertakes nor assumes any responsibility to review, inspect, supervise, approve (other than for aesthetics) or inform Developer of any matter in Item 3B - Page 114
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21 connection with the construction, including matters relating to: (i) the performance of the construction work; (ii) architects, contractors, subcontractors and materialmen, or the workmanship of or materials used by any of them; or, (iii) the progress of the construction; and Developer shall rely entirely on its own judgment with respect to such matters and acknowledges that any review, inspection, supervision, approval or information supplied to Developer by City in connection with such matters is solely for the protection of City, and that neither Developer nor any third party is entitled to rely on it;
(b) Notwithstanding any other provision of this Agreement: (i) the City is not a partner, joint venture, alter-ego, manager, controlling person or other business associate or participant of any kind of Developer, and City does not intend to ever assume any such status; (ii) City's activities in connection with the Grant shall not be "outside the scope of the activities of a lender of money" within the meaning of California Civil Code Section 3434, as modified or recodified from time to time, and City does not intend to ever assume any responsibility to any person for the quality or safety of the Property; and, (iii) City shall not be deemed responsible for or a participant in any acts, omissions or decisions of Developer; (c) City shall not be directly or indirectly liable or responsible for any loss or injury of any kind to any person or property resulting from any construction on, or occupancy or use of, the Property, whether arising from: (i) any defect in any building, grading, landscaping or other onsite or offsite improvement; (ii) any act or omission of Developer or any of Developer's agents, employees, independent contractors, licensees or invitees; or (iii) any accident on the Property or any fire or other casualty or hazard thereon; and,
(d) By accepting or approving anything required to be performed or given to City under this Agreement, including any certificate, financial statement, survey, appraisal or insurance policy, City shall not be deemed to have warranted or represented the sufficiency or legal effect of the same, and no such acceptance or approval shall constitute a warranty or representation by City to anyone.

14.2 Indemnity.
(a) Developer shall defend (by counsel reasonably satisfactory to City), indemnify and save and hold harmless the Indemnitees from and against all claims, damages, demands, actions, losses, liabilities, costs and expenses (including, without limitation, reasonable attorneys' fees and court costs) arising from or relating to: (i) this Agreement; (ii) the making of the Grant(s); (iii) a claim, demand or cause of action that any person has or asserts against Developer; (iv) any act or omission of Developer, any contractor, subcontractor or material supplier, engineer, architect or other person with respect to the Property. Developer's obligations under this Section shall survive the issuance of the Certificate of Completion, and termination of this Agreement.
(b) Notwithstanding the foregoing, neither Developer, nor any of its partners, shall be personally liable for any indemnification obligation hereunder that would result as the repayment of the Grant.

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22 14.3 Reimbursement of City. With respect to the indemnification obligations under this Article 14, Developer shall reimburse City immediately upon written demand for all costs reasonably incurred by City (including the reasonable fees and expenses of attorneys, accountants, appraisers and other consultants, whether the same are independent contractors or employees of City) in connection with the enforcement of the Grant Documents and all related matters, including all claims, demands, causes of action, liabilities, losses, commissions and other costs against which City is indemnified under the Grant Documents. Such reimbursement obligations shall bear interest from the date occurring twenty (20) days after City gives written demand to Developer. Such reimbursement obligations shall survive the issuance of a Certificate of Completion and termination of this Agreement.

15. INSURANCE, CASUALTY AND CONDEMNATION

15.1 Policies Required. Developer shall maintain, at Developer's sole expense, insurance that satisfies the requirements of the DDA and the Regulatory Agreement. The City Attorney may modify the type and amounts of insurance required pursuant to this Section if the requirements of the City changes.1

15.2 Claims and Proceedings. Developer shall give City immediate notice of any material casualty to any portion of the Property, whether or not covered by insurance, and of the initiation or threatened initiation of any proceeding for the condemnation or other taking for public or quasi-public use of any portion of the Property (collectively, "Condemnation"), and shall provide City with copies of all documents which pertain to any such casualty or Condemnation. Developer shall take all action reasonably required by City in connection therewith to protect the interests of Developer and/or City, and City shall be entitled (without regard to the adequacy of its security) to participate in any action, claim, adjustment or proceeding and to be represented therein by counsel of its choice. Developer shall not settle, adjust, or compromise any claim, action, adjustment or proceeding without prior written approval, which approval shall not be unreasonably withheld or delayed.

15.3 Delivery of Proceeds to City. In the event that, notwithstanding the "lender's loss payable endorsement" requirement set forth above, the proceeds of any casualty insurance policy described herein are paid to Developer, Developer shall, subject to any superior rights of the Senior Lender, deliver such proceeds to the City immediately upon receipt.

15.4 Application of Casualty Insurance Proceeds. Subject to any superior rights of the Senior Lender, any proceeds collected (the "Proceeds") under any casualty insurance policy described in this Agreement shall be disbursed to Developer as provided below, but only upon fulfillment of each of the following conditions (the "Restoration Conditions") within ninety (90) days (unless extended by mutual agreement of Developer and City) following the occurrence of the receipt of the Proceeds:
1 Pending further review.

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23 (a) Developer shall demonstrate to City's reasonable satisfaction that the Proceeds (together with amounts deposited by Developer pursuant to subparagraph (b)) will be adequate to repair the Improvements and to restore the fair market value of the Property, within a time period reasonably determined by City, to at least the value it had immediately prior to sustaining the damage. Such demonstration shall include delivery to City of: (i) plans and specifications reasonably satisfactory to City; and, (ii) a construction contract in form and content, and with a contractor, reasonably satisfactory to City; (b) To the extent that the Proceeds (together with all undisbursed Grant proceeds and any other financing proceeds available to the Developer) are insufficient to accomplish the restoration required above, Developer shall deliver to City funds (the "Shortfall Funds") in the amount of such shortfall, which funds shall be assigned to City as security for Developer's obligation hereunder and held and disbursed in the same manner as the Proceeds; (c) Developer shall execute such documents as City reasonably requires to evidence and secure Developer's obligation to use all amounts disbursed for the diligent restoration of the Property; and,
(d) No Event of Default shall remain uncured.

15.5 Method of Disbursement and Undisbursed Funds. Any Proceeds and Shortfall Funds to be disbursed to Developer shall be held by the Senior Lender if a Senior Loan is outstanding, and disbursed in accordance with the Senior Loan Documents or, if no Senior Loan, then held by the City and disbursed in accordance with the City's then customary disbursement procedures and related provisions. Any amounts remaining undisbursed following completion of such restoration shall be returned to Developer up to the amount of any Shortfall Funds deposited by Developer, and any other amounts remaining shall either be paid to Developer or applied by the Senior Lender, or the City in the absence of a Senior Loan, as the case may be against any obligations that are secured by a lien on the Property, as they elect in their sole and absolute discretion.

15.6 Failure to Satisfy Conditions. In the event that Developer fails to fulfill the Restoration Conditions within one hundred and eighty (180) days (unless extended pursuant to Section 15.4) following the date Proceeds are received, the Proceeds shall be applied by City against any obligations to City that are secured by a lien on the Property, and the selection of which such obligations to apply the Proceeds against shall be made by City in its sole and absolute discretion.

15.7 Restoration. Nothing in this Article 15 shall be construed to excuse Developer from repairing and restoring all damage to the Property in accordance with other Grant Document provisions.

15.8 Condemnation; Treatment of Compensation.

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24 (a) Subject to any superior rights of Senior Lender, Developer hereby assigns to the City, as security for all obligations to City secured by a lien on the Property, all amounts payable to Developer in connection with any Condemnation, and any proceeds of any related settlement (collectively, "Compensation"). Subject to any superior rights of Senior Lender, Developer shall deliver such remaining Compensation to City immediately upon receipt. If the taking results in a loss of the Property to an extent that, in the reasonable opinion of City, renders or is likely to render the Property not economically viable or if, in City's reasonable judgment Developer's security is otherwise impaired, City may apply the Compensation received due to judgment or settlement in connection with any condemnation or other taking to repay the Grant. If so applied, any award in excess of the Grant repayment and other sums due to City shall be paid to Developer or Developer's assignee. City shall have no obligation to take any action in connection with any actual or threatened condemnation or other proceeding. (b) Notwithstanding the foregoing, as long as the value of City's liens are not impaired, any condemnation proceeds may be used by the Developer for repair and/or restoration of the Project.

15.9 Waiver of Subrogation. Developer hereby waives all rights to recover against the City (or any officer, employee, agent or representative of City) for any loss incurred by Developer from any cause insured; provided, however, that this waiver of subrogation shall not be effective with' respect to any insurance policy if the coverage thereunder would be materially reduced or impaired as a result. Developer shall use its best efforts to obtain only policies that permit the foregoing waiver of subrogation.

16. DEFAULTS AND REMEDIES

16.1 Events of Default. Failure or delay by either party to perform any material term or provision of this Agreement within the time periods provided herein for such performance constitutes a default under the Agreement. If any party defaults in performance of its material obligations, covenants or agreements hereunder, the defaulting party shall be entitled to cure the default in accordance with this section. The injured party shall give written notice of default to the party in default, specifying the default complained of by the injured party. Delay in giving such notice shall not constitute a waiver of any default nor shall it change the time of default. Without limitation, the occurrence of any of the following, whatever the reason therefore which is not cured, shall constitute an Event of Default by Developer:
(a) Developer fails to perform any obligation for the payment of money under this Agreement, and such failure is not cured within ten (10) Business Days after Developer's receipt of written notice that such obligation was not performed when due; (b) Developer fails to perform any obligation (other than the obligations described in subparagraph (a) above) under this Agreement, and such failure is not cured within thirty (30) days after Developer's receipt of written notice that such obligation was not performed; provided that, if cure cannot reasonably be effected within such thirty (30)-day period, such Item 3B - Page 118
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25 failure shall not be an Event of Default so long as Developer (in any event, within ten (10) Business Days after receipt of such notice) commences to cure, and thereafter diligently (in any event within ninety (90) days after receipt of such notice) prosecutes such cure to completion; (c) Any representation or warranty in this Agreement proves to have been incorrect in any material respect when made;
(d) The Property is materially damaged or destroyed by fire or other casualty unless Developer fulfills the Restoration Conditions set forth in the insurance provisions of this Agreement within one hundred eighty (180) days (unless extended pursuant to Section 19.5) and thereafter diligently restores the Property in accordance with this Agreement; (e) Work on the construction ceases for thirty (30) consecutive days for any reason (other than governmental orders, decrees or regulations, acts of God or any other deity, strikes or other causes beyond Developer's reasonable control); (f) Developer is enjoined or otherwise prohibited by any Governmental Authority from constructing and/or occupying the Improvements and such injunction or prohibition continues unstayed for sixty (60) days or more for any reason; (g) Developer is dissolved, liquidated or terminated, or all or substantially all of the assets of Developer are sold or otherwise transferred without the City Project Manager's prior written consent; or,
(h) Developer is the subject of an order for relief by a bankruptcy court, or is unable or admits its inability to pay its debts as they mature, or makes an assignment for the benefit of creditors; or Developer applies for or consents to the appointment of any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer for it or any part of its property; or any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer is appointed without the application or consent of Developer and the appointment continues undischarged or unstayed for ninety (90) days; or Developer institutes or consents to any bankruptcy, insolvency, reorganization, arrangement, readjustment of debt, dissolution, custodianship, conservatorship, liquidation, construction or similar proceeding relating to it or any part of its property; or any similar proceeding is instituted without the consent of Developer and continues undismissed or unstayed for ninety (90) days; or any judgment, writ, warrant of attachment or execution, or similar process is issued or levied against any property of Developer and is not released, vacated or fully bonded within ninety (90) days after its issue or levy.
(i) Notwithstanding anything to the contrary contained herein, City hereby agrees that any cure of any default made or tendered under this Agreement by an entity on behalf of Developer shall be deemed to be a cure by Developer and shall be accepted or rejected on the same basis as if made or tendered by Developer.

16.2 Remedies Upon Default. Upon the occurrence of any Event of Default, City may, at its option and in its absolute discretion, do any or all of the following:

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26 (a) Terminate this Agreement;
(b) By written notice to Developer, declare all amounts disbursed under this Agreement, together with all accrued interest, if any, and other amounts owing in connection therewith, to be immediately due and payable, regardless of any other specified due date; provided that any Event of Default described in Section 16.1 (d) shall automatically, without notice or other action on City's part, cause all such amounts to be immediately due and payable; (c) By written notice to Developer, require repayment of all or some portion of the City Grant proceeds disbursed to Developer back to the City proportionate to the scale and duration of the uncorrected noncompliance relative to the term of the Regulatory Agreement; (d) In its own right or by a court-appointed receiver, take possession of the Property, enter into contracts for and otherwise proceed with the completion of the construction by expenditure of its own funds;
(e) Exercise any of its rights under this Agreement, the City Deed of Trust, and any rights provided by law, including, without limitation, the right to seek specific performance and the right to foreclose on any security and exercise any other rights with respect to any security, all in such order and manner as City elects in its sole and absolute discretion; and, (f) Suspend or terminate the award of City Grant funds if Developer fails to comply with any term of such award.

16.3 Cumulative Remedies: No Waiver. City's rights and remedies under the Grant Documents are cumulative and in addition to all rights and remedies provided by law. The exercise by City of any right or remedy shall not constitute a cure or waiver of any default, nor invalidate any notice of default or any act done pursuant to any such notice, nor prejudice the City in the exercise of any other right or remedy. No waiver of any default shall be implied from any omission by City to take action on account of such default if such default persists or is repeated.

No waiver of any default shall affect any default other than the default expressly waived, and any such waiver shall be operative only for the time and to the extent stated. No waiver of any provision of any Grant Document shall be construed as a waiver of any subsequent breach of the same provision. City's consent to orapproval of any act by Developer requiring further consent or approval shall not be deemed to waive or render unnecessary City's consent to or approval of any subsequent act. The City's acceptance of the late performance of any obligation shall not constitute a waiver by City of the right to require prompt performance of all further obligations; City's acceptance of any performance following the sending or filing of any notice of default shall not constitute a waiver of either party's right to proceed with the exercise of its remedies forany unfulfilled obligations; and City's acceptance of any partial performance shall not constitute a waiver by City of any rights.

16.4 Limitation of Developer Remedies. In the event that the City is liable for damages to Developer, such liability shall not exceed costs incurred by the Developer in the Item 3B - Page 120
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27 performance of this Agreement and shall not extend to compensation for loss of future income, profits or assets.

16.5 Liability. Developer shall have liability under this Agreement for any judgment, decree or order for the payment of money obtained in any action to enforce the obligation of Developer to repay grant

17. MISCELLANEOUS

17.1 Obligations Unconditional and Independent. Notwithstanding the existence at any time of any obligation or liability of City to Developer, or any other claim by developer against City, in connection with the Grant or otherwise, Developer hereby waives any right it might otherwise have: (a) to offset any such obligation, liability or claim against Developer's obligations under this Agreement; or, (b) to claim that the existence of any such outstanding obligation, liability or claim excuses the nonperformance by Developer of any of its obligations under this Agreement.

17.2 Notices. All notices required pursuant to this Agreement shall be in writing and may be given by personal delivery or by registered or certified mail, return receipt requested, to the party to receive such notice at the addresses set forth below:

TO NPHS: _____________
(T)
(F)
COPY TO:

TO CITY:

COPY TO:

City of Palm Springs
3200 East Tahquitz Canyon Way
Palm Springs, California 92262
Attention: City Manager
(T) 760-323-8299
(F) 760-322-8332
Best Best & Krieger, LLP
655 West Broadway, 15th Floor
San Diego, CA 92101
Attention: Jeffrey Ballinger
(T) 619-525-1343
(F) 619-233-6118
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28 Addresses for notice may be changed as required by written notice to all other parties.

17.3 Survival of Representations and Warranties. All representations and warranties in this Agreement shall survive the making of the Grant(s) described herein until the City determination of Completion of Construction and have been or will be relied on by City notwithstanding any investigation made by either party.

17.4 No Third Parties Benefited. This Agreement is made for the purpose of setting forth rights and obligations of Developer and the City, and no other person shall have any rights hereunder or by reason hereof.

17.5 Binding Effect; Assignment of Obligations. This Agreement shall bind, and shall inure to the benefit of, Developer and City and their respective successors and assigns. Other than as expressly provided to the contrary in this Agreement, Developer shall not assign any of its rights or obligations under this Agreement without the prior written consent of City, which consent may be withheld in City's sole and absolute discretion. Any such assignment without such consent shall, at City's option, be void.

17.6 Prior Agreements; Amendments; Consents. This Agreement contains the entire agreement between the City and Developer with respect to the Grant, and all. prior negotiations, understandings and agreements are superseded by this Agreement. No modification of this Agreement (including waivers of rights and conditions) shall be effective unless in writing and signed by the party against whom enforcement of such modification is sought, and then only in the specific instance and for the specific purpose given.

17.7 Governing Law. This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of California. Developer irrevocably and unconditionally submits to the jurisdiction of the Superior Court of the State of California for the County of Orange or the United States District Court of the Central District of California, as City may deem appropriate, in connection with any legal action or proceeding arising out of or relating to this Agreement. Assuming proper service of process, Developer also waives any objection regarding personal or in rem jurisdiction or venue.

17.8 Severability of Provisions. No provision of this Agreement that is held to be unenforceable or invalid shall affect the remaining provisions, and to this end all provisions of this Agreement are hereby declared to be severable.

17.9 Headings. Article and section headings are included in this Agreement for convenience of reference only and shall not be used in construing this Agreement.

17.10 Conflicts. In the event of any conflict between the provisions of this Agreement and those of the Ground Lease or the Regulatory Agreement, this Agreement, unless otherwise expressly provided, shall prevail; provided however that, with respect to any matter addressed in the other such documents, the fact that one document provides for greater, lesser or different rights Item 3B - Page 122
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29 or obligations than the others shall not be deemed a conflict unless the applicable provisions are inconsistent and could not be simultaneously enforced or performed.

17.11 Time of the Essence. Time is of the essence under this Agreement and in the performance of every term, covenant, and obligation contained herein.

17.12 Conflict of Interest. No member, official or employee of the City shall have any direct or indirect interest in this Agreement, nor participate in any decision relating to the Agreement, which is prohibited by law.

17.13 Warranty Against Payment of Consideration. Developer warrants that it has not paid or given, and will not pay or give, any third person any money or other consideration for obtaining this Agreement.

17.14 Plans and Data. Where Developer does not proceed with the work and construction of the Project, and when this Agreement is terminated with respect thereto for any reason, Developer shall deliver to City any and all plans and data concerning the Property, and City or any person or entity designated by City shall have the right to use such plans and data without compensation to Developer. Such right of City shall be subject to any right of the preparer of the plans to their use.

17.15 Authority to Enter Agreement. Each undersigned represents and warrants that its signature hereinbelow has the power, authority and right to bind their respective parties to each of the terms of this Agreement, and shall indemnify the City fully, including reasonable costs and attorney's fees, for any injuries or damages to City in the event that such authority or power is not, in fact, held by the signatory or is withdrawn.
[SIGNATURES ON FOLLOWING PAGE; SIGNATURES MUST BE NOTARIZED] Item 3B - Page 123
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30 IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first written above.

NPHS:
______________________________
A nonprofit public benefit corporation
By:__________________________________

Executive Director
CITY :

City of ________ ,
a municipal corporation
By:__________________________________
City Manager
ATTEST:

By:__________________________________
City Clerk
APPROVED AS TO FORM:

By:_________________________________
City Attorney
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DRAFT
5/14/24

EXHIBIT I

EXHIBIT I
TO
2024 DISPOSITION AND DEVELOPMENT AGREEMENT
Sale of Real Property for Development of a Homeownership Opportunity Program Form of City Deed of Trust
[Attached Behind This Page]

TO BE ADDED
Item 3B - Page 125
2022337.1
Recording requested by and when
recorded mail to:

City of Palm Springs
3200 E. Tahquitz Canyon Way
Palm Springs, California 92262
Attn: City Manager

EXEMPT FROM RECORDING FEES PER
GOVERNMENT CODE §§6103, 27383
Space above this line for Recorder’s use.

CITY DEED OF TRUST
( ____________ Lot __)1

THERE ARE RESTRICTIONS ON THE SALE OF THE PROPERTY
ENCUMBERED BY THIS DEED OF TRUST. EXCEPT FOR A TRANSFER TO THE CITY OF PALM SPRINGS (THE “CITY”) OR CITY’S ASSIGNEE FOLLOWING CITY’S EXERCISE OF ITS OPTION TO PURCHASE, THE HOME CONSTRUCTED ON THIS PROPERTY MAY ONLY BE SOLD TO “ELIGIBLE BUYERS” AT A PRICE NOT TO EXCEED AN “AFFORDABLE PURCHASE PRICE.”
This DEED OF TRUST (“Deed of Trust”) is made as of ___, 2024 (“Effective Date”) by the NPHS Community Redevelopment Inc., a California nonprofit public benefit corporation (“Trustor”), in favor of ________ Title Company (“Trustee”), for the benefit of the City of ___________ , a municipal corporation (“City” or “Beneficiary”) as Beneficiary.

RECITALS
A. Trustor is the owner of the real property identified as Lot __ in the _____________ (the “Development”) located in Palm Springs, California, and more particularly described in the attached Exhibit A (the “Property).

B. Trustor shall cause the Property to be leased to Eligible Buyers pursuant to a ninety-nine (99)-year renewable Ground Lease, and the terms of that certain Affordable Housing Regulatory Agreement With Declaration of Restrictive Covenants with Option to Purchase (the “Regulatory Agreement”), dated concurrently with this Deed of Trust and executed by the Parties and recorded substantially concurrently herewith in the Official Records of Riverside County (the “Official Records”).

1 This will need to be updated for each parcel/lot that is part of the transfer. •
•
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2 Capitalized terms not defined herein shall have the meaning ascribed to them in the Regulatory Agreement.

C. Pursuant to the Regulatory Agreement, Trustor is obligated, among other requirements, to enter into a ground lease with the owner of the Restricted Home constructed on the Property to ensure that the Restricted Home is purchased only by Eligible Buyers at a price not in excess of the Affordable Purchase Price.

D. The Regulatory Agreement also provides (among other provisions) that Beneficiary has certain remedies for a default of the Regulatory Agreement, including but not limited to: an option to purchase the Property or part thereof if a Restricted Home is sold or otherwise transferred to persons who do not qualify as Eligible Buyers, and the right to recover monetary damages or reimbursement of financial support provided by Beneficiary for the Project under a Conditional Grant Agreement (the “Conditional Grant Agreement”). This Deed of Trust secures the obligations of the Regulatory Agreement and Conditional Grant Agreement.

NOW, THEREFORE, to secure the full and timely performance by Trustor of the Secured Obligations (defined below), it is agreed as follows:

1. Grant in Trust. Trustor, in consideration of the promises herein recited and the trust herein created, hereby irrevocably and unconditionally grants, transfers, conveys and assigns to Trustee, in trust for the benefit of Beneficiary, with power of sale, all estate, right title and interest which Trustor now has or may later acquire in and to that certain real property located in the City of Palm Springs, County of Riverside, State of California, described in the attached Exhibit A (the “Property”) together with all of the following:
(i) all improvements now or hereafter located or constructed on the Property, and all replacements and additions thereto (“Improvements”); (ii) all easements, rights of way, appurtenances and other rights used in connection with the Property or as a means of access thereto (“Appurtenances”); (iii) all fixtures now or hereafter attached to or used in and about the Property or the improvements located thereon or hereafter located or constructed on the Property, and all renewals or replacements thereof or articles in substitution therefor, whether or not the same are, or shall be attached to the improvements in any manner (“Fixtures and Equipment”); and
(iv) all leases, subleases, licenses and other agreements relating to use or occupancy of the Property (“Leases”) and all rents or other payments which may now or hereafter accrue or otherwise become payable to or for the benefit of Trustor (“Rents”) (whether or not such Leases and Rents are permitted by the Regulatory Agreement).

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3 All of the above-referenced Property, Improvements, Appurtenance, Fixtures and Equipment, Leases and Rents are herein referred to collectively as the “Security”.

2. Obligations Secured. This Deed of Trust is given for the purpose of securing payment and performance of the following (the “Secured Obligations”): (i) all present and future obligations of Trustor set forth in this Deed of Trust, or in the Regulatory Agreement (including without limitation, Trustor’s obligation to ensure that the Restricted Home is conveyed only to Eligible Buyers at no more than the Affordable Purchase Price, and the obligation to make all payments required by the Regulatory Agreement, if anyRegulatory Agreement; (ii) all additional present and future obligations of Trustor to Beneficiary under the Conditional Grant Agreement, and any other agreement or instrument acknowledged by Trustor (whether existing now or in the future) which states that it is or such obligations are, secured by this Deed of Trust; (iii) all modifications, supplements, amendments, renewals, and extensions of any of the foregoing, whether evidenced by new or additional documents; and (iv) reimbursement of all amounts advanced by or on behalf of Beneficiary to protect Beneficiary’s interests under this Deed of Trust.

3. Assignment of Rents, Issues, and Profits. Trustor hereby irrevocably, absolutely, presently and unconditionally assigns to Beneficiary the rents, royalties, issues, profits, revenue, income and proceeds of the Property. This is an absolute assignment and not an assignment for security only. Beneficiary hereby confers upon Trustor a license to collect and retain such rents, royalties, issues, profits, revenue, income and proceeds as they become due and payable prior to any Event of Default hereunder. Upon the occurrence of any such Event of Default, Beneficiary may terminate such license without notice to or demand upon Trustor and without regard to the adequacy of any security for the indebtedness hereby secured, and may either in person, by agent, or by a receiver to be appointed by a court, enter upon and take possession of the Property or any part thereof, and sue for or otherwise collect such rents, issues, and profits, including those past due and unpaid, and apply the same, less costs and expenses of operation and collection, including reasonable attorneys’ fees, to any indebtedness secured hereby, and in such order as Beneficiary may determine. Beneficiary’s right to the rents, royalties, issues, profits, revenue, income and proceeds of the Property does not depend upon whether or not Beneficiary takes possession of the Property. The entering upon and taking possession of the Property, the collection of such rents, issues, and profits, and the application thereof as aforesaid, shall not cure or waive any default or notice of default hereunder or invalidate any act done pursuant to such notice. If an Event of Default occurs while Beneficiary is in possession of all or part of the Property and/or is collecting and applying Rents as permitted under this Deed of Trust, Beneficiary, Trustee and any receiver shall nevertheless be entitled to exercise and invoke every right and remedy afforded any of them under this Deed of Trust and at law or in equity, including the right to exercise the power of sale granted hereunder. Regardless of whether or not Beneficiary, in person or by agent, takes actual possession of the Land and Improvements, Beneficiary shall not be deemed to be a “mortgagee in possession,” shall not be responsible for performing any obligation of the lessor under any Lease, shall not be liable in any manner for the Property, or the use, occupancy, enjoyment or operation Item 3B - Page 128
4 of any part of it , and unless due solely to the willful misconduct or gross negligence of Beneficiary, shall not be responsible for any dangerous or defective condition of the Property or any negligence in the management, repair or control of the Property.

4. Fixture Filing. This Deed of Trust is intended to be and constitutes a fixture filing pursuant to the provisions of the California Commercial Code (“UCC”) with respect to all of the Property constituting fixtures, is being recorded as a fixture financing statement and filing under the UCC, and covers property, goods and equipment which are or are to become fixtures related to the Land and the Improvements. Trustor covenants and agrees that this Deed of Trust is to be filed in the real estate records of Riverside County and shall also operate from the date of such filing as a fixture filing in accordance with UCC Section 9502 and other applicable provisions of the UCC. This Deed of Trust shall also be effective as a financing statement covering minerals or the like (including oil and gas) and accounts subject to the UCC, as amended. Trustor shall be deemed to be the “debtor” and Beneficiary shall be deemed to be the “secured party” for all purposes under the UCC. The full name of Trustor and the mailing address of Trustor are set forth in Section

15.5 of this Deed of Trust.

5. Trustor’s Representations, Warranties and Covenants.

5.1 Trustor’s Estate. Trustor represents and warrants that Trustor is lawfully seized of the estate hereby conveyed and has the right to grant and convey the Security, that other than this Deed of Trust, the Security is encumbered only by the Regulatory Agreement and such other instruments as Trustor has disclosed to Beneficiary in writing.

Trustor agrees to warrant and defend generally the title to the Security against all claims and demands, subject to any declarations, easements or restrictions of record as of the date hereof.

5.2 Regulatory Agreement. Trustor will observe and perform all of Trustor’s covenants and agreements set forth in the Regulatory Agreement.

5.3 Senior Loans; Conditional Grant Agreement. Trustor will observe and perform all of the covenants and agreements of any loan documents evidencing or securing loans secured by the Property or other financial assistance for the Project, including but not limited to the Conditional Grant Agreement, and any other instruments that are senior in priority to this Deed of Trust.

5.4 Charges; Liens. Trustor will pay prior to delinquency, all taxes, assessments and other charges, fines and impositions affecting the Security directly to the payee thereof. Upon request by the City, Trustor will promptly furnish to the City all notices of such amounts due. Trustor shall pay when due each obligation secured by or reducible to a lien, charge or encumbrance which now does or later may encumber or appear to encumber all or part of the Property or any interest in it, whether or not such lien, charge or encumbrance is or would be senior or subordinate to this Deed of Trust.

Trustor shall not be required to pay any tax, levy, charge or assessment so long as its validity is being actively contested in good faith and by appropriate actions and/or Item 3B - Page 129
5 proceedings which will operate to prevent the enforcement of the lien or forfeiture of the Security or any part thereof.

5.5 Hazard Insurance.
(a) Trustor shall maintain the insurance required by Section 5.10 of the DDA that meets the requirements set forth therein. Except as otherwise required by the DDA, Trustor shall comply with the insurance requirements stated herein. (b) Trustor will keep the Security insured by a standard all risk property insurance policy equal to the replacement value of the Security (adjusted every five (5) years by appraisal, if requested by the City). If the Security is located in a flood plain, Trustor shall also obtain flood insurance. In no event shall the amount of insurance be less than the amount necessary to prevent Trustor from becoming a co-insurer under the terms of the policy.

The insurance carrier providing this insurance shall be licensed to do business in the State of California and be chosen by Trustor subject to approval by the City.

All insurance policies and renewals thereof will be in a form acceptable to the City, and will include a standard mortgagee clause with standard lender’s endorsement in favor of City as its interests may appear and in a form acceptable to the City. The City shall have the right to hold, or cause its designated agent to hold, the policies and renewals thereof, and Trustor shall promptly furnish to the City, or its designated agent, the original insurance policies or certificates of insurance, all renewal notices and all receipts of paid premiums. In the event of loss, Trustor will give prompt notice to the insurance carrier and the City or its designated agent. The City, or its designated agent, may make proof of loss if not made promptly by Trustor. The City shall receive thirty (30) days advance notice of cancellation of any insurance policies required under this section.

Unless otherwise permitted by the City in writing, insurance proceeds, subject to the rights of any senior lienholder, will be applied to restoration or repair of the Security damaged. If permitted by City, and subject to the rights of any senior lienholder, the insurance proceeds shall be used to repay any amounts due under the Regulatory Agreement, with the excess, if any, paid to Trustor. If the Security is abandoned by Trustor, or if Trustor fails to respond to the City, or its designated agent, within thirty (30) days from the date notice is mailed by either of them to Trustor that the insurance carrier offers to settle a claim for insurance benefits, the City, or its designated agent, is authorized to collect and apply the insurance proceeds at the City’s option either to restoration or repair of the Security or to pay amounts due under the Regulatory Agreement.

Notwithstanding anything to the contrary set forth herein, during such time that Trustor is not the owner in fee of the Improvements, Trustor may satisfy the requirements of this Section if Beneficiary is named as additional insured/loss payee as Beneficiary’s Item 3B - Page 130
6 interests may appear under the policies of insurance Trustor requires the fee owner(s) of such Improvements to maintain.

If the Security is acquired by the City, all right, title and interest of Trustor in and to any insurance policy and in and to the proceeds thereof resulting from damage to the Security prior to the sale or acquisition will pass to the City to the extent of the sums secured by this Deed of Trust immediately prior to such sale or acquisition, subject to the rights of any senior lienholder.
(c) During the course of any construction on the Property, Trustor shall comply with the insurance requirements set forth in Section 5.10.2.2 of the DDA.

Trustor shall hire only licensed contractors who maintain the following forms of insurance:
(i) Builder’s Risk Insurance. Builder’s Risk Insurance to be written on an All Risk Completed Value form, in an aggregate amount equal to 100% of the completed insurable value of the Project or portion of the Project on which such contractor is performing work.
(ii) Liability Insurance. Each general contractor and each subcontractor shall maintain Commercial General Liability Insurance with limits of not less than TWO MILLION DOLLARS ($2,000,000) per occurrence and FOUR MILLION DOLLARS ($2,000,000) aggregate to protect the Developer during the construction of the Project from claims involving bodily injury and/or death and damage to the property of others.
(iii) Automobile Insurance. Each general contractor and each sub-contractor shall maintain Automobile Liability Insurance against claims of personal injury (including bodily injury and death) and property damage covering all owned, leased, hired and non-owned vehicles used in the performance of the contractor’s obligations with minimum limits for bodily injury and property damage of ONE MILLION DOLLARS ($1,000,000) each occurrence and TWO MILLION DOLLARS ($2,000,000) aggregate. Such automobile liability insurance shall be provided by a business or commercial vehicle policy.

Workers’ Compensation Insurance. Workers’
compensation insurance covering all persons employed in connection with any work on the Property in accordance with requirements of State Law.

5.6 Preservation and Maintenance of Security. Trustor will keep the Security in good repair and in a neat, clean, and orderly condition and will not commit waste or permit impairment or deterioration of the Security, or the Maintenance Standard, as required by the Regulatory Agreement. If there arises a condition in contravention of this Section, and if the Trustor has not cured such condition within thirty (30) days after receiving a City notice of such a condition, then in addition to any other rights available to the City, the City shall have the right (but not the obligation) to perform all acts Item 3B - Page 131
7 necessary to cure such condition, and to establish or enforce a lien or other encumbrance against the Security to recover its cost of curing.

5.7 Protection of the City’s Security. If Trustor fails to perform the covenants and agreements contained in this Deed of Trust or if any action or proceeding is commenced which materially affects the City’s interest in the Security, including, but not limited to, default under any senior lienholder document, eminent domain, insolvency, code enforcement, or arrangements or proceedings involving a bankrupt or decedent, then the City, at the City’s option, without releasing Trustor from any obligation hereunder, may make such appearances, disburse such sums and take such action as it determines necessary to protect the City’s interest, including but not limited to, disbursement of reasonable attorneys’ fees and entry upon the Security to make repairs. Any amounts disbursed by the City pursuant to this paragraph, with interest thereon, will become an indebtedness of Trustor secured by this Deed of Trust. Unless Trustor and City agree to other terms of payment, such amount will be payable upon notice from the City to Trustor requesting payment thereof, and will bear interest from the date of disbursement at the lesser of (i) ten percent (10%); or (ii) the highest rate permissible under applicable law. Nothing contained in this paragraph will require the City to incur any expense or take any action hereunder.

5.8 Inspection. The City may make or cause to be made reasonable entries upon and inspections of the Security; provided that the City will give Trustor reasonable notice of inspection.

5.9 Hazardous Substances. Trustor shall not cause or permit the presence, use, disposal, storage, or release of any Hazardous Substances in, on, under, about, or from the Property. Trustor shall not do, nor allow anyone else to do, anything affecting the Property that is in violation of any Environmental Law. The preceding two sentences shall not apply to the presence, use, or storage on the Property of small quantities of Hazardous Substances that are generally recognized to be appropriate to normal residential uses and to maintenance of the Property when used and disposed of in accordance with Environmental Law.
“Hazardous Substances” means any substance defined as toxic or as a hazardous substance or hazardous waste, or regulated under any Environmental Law, and the following substances: gasoline, kerosene, other flammable or toxic petroleum products, toxic pesticides and herbicides, volatile solvents, materials containing asbestos or formaldehyde, and radioactive materials.
“Environmental Law” means all federal, state or local statutes, ordinances, regulations, orders, decrees and judgments that relate to health, safety or environmental protection including without limitation the regulation of the use, disposal, manufacture, or release of Hazardous Substances.

Trustor shall promptly give City written notice of any investigation, claim, demand, lawsuit or other action by any governmental or regulatory agency or private Item 3B - Page 132
8 party involving the Property and any Hazardous Substance or Environmental Law of which Trustor has actual knowledge. If Trustor learns, or is notified by any governmental or regulatory authority, that any removal or other remediation of any Hazardous Substance affecting the Property is necessary, Trustor shall promptly take all necessary remedial actions in accordance with Environmental Law.

6. Nonliability for Negligence, Loss, or Damage; No Joint Venture. Trustor acknowledges, understands and agrees that City does not undertake or assume any responsibility for or duty to Trustor to select, review, inspect, supervise, pass judgment on, or inform Trustor of the quality, adequacy or suitability of the Security or any other matter. The City owes no duty of care to protect Trustor against negligent, faulty, inadequate or defective building or construction or any condition of the Security, and Trustor agrees that neither Trustor, nor Trustor’s heirs, successors or assigns shall ever claim, have or assert any right or action against the City for any loss, damage or other matter arising out of or resulting from any condition of the Security, and Trustor will hold City harmless from any liability, loss or damage for these things. Nothing contained herein or in the DDA or the Regulatory Agreement shall be deemed to create or construed to create a partnership, joint venture or any relationship other than that of a borrower and lender.

7. Indemnity. Trustor agrees to defend, indemnify, and hold the City of Palm Springs, on its behalf and on behalf of the Successor Agency for the Redevelopment Agency of the City of Palm Springs, and their elected and appointed officials, officers, employees, and agents (“Indemnitees”) harmless from and against all losses, damages, liabilities, claims, actions, judgments, costs, and reasonable attorneys’ fees that the Indemnitees may incur as a direct or indirect consequence of Trustor’s failure to perform any obligations as and when required by the Regulatory Agreement and this Deed of Trust.

8. Default. An event of default (“Default”) shall arise hereunder upon the occurrence of any one or more of the following and the expiration of any applicable cure period:
(a) Trustor fails to construct, develop and operate the Project, and make the Restricted Units available for sale to Eligible Buyers in accordance with the Regulatory Agreement.
(b) A Homebuyer fails to occupy a Restricted Home as Homebuyer’s principal residence, except for a transfer in accordance with the Regulatory Agreement; (c) The sale, conveyance, encumbrance, refinance, assignment, or other transfer of the Property including without limitation, the lease or rental of the Property in violation of the Regulatory Agreement;
(d) An event of default arises under the DDA, the Conditional Grant Agreement, or the Regulatory Agreement, and such default remains uncured following the expiration of any applicable cure period;
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9 (e) Trustor fails to pay when due any sum payable pursuant to the DDA, the Conditional Grant Agreement, the Regulatory Agreement, or this Deed of Trust; (f) The Property is refinanced or encumbered in violation of the Regulatory Agreement or this Deed of Trust;
(g) Trustor fails to maintain insurance on the Property as required by the DDA, the Regulatory Agreement, or this Deed of Trust, (h) Subject to Trustor’s right to contest the following charges, Trustor fails to pay prior to delinquency taxes or assessments due on the Property, or fails to pay when due any other charge that may result in a lien on the Property, and Trustor fails to cure such default within twenty (20) days of date of delinquency, but in all events prior to the time that the holder of such lien has the right to pursue foreclosure thereon; (i) Trustor declares bankruptcy or makes an assignment of assets for the benefit of creditors, or an order for relief is entered under federal bankruptcy laws as to Trustor, or Trustor is adjudicated as insolvent or bankrupt pursuant to the provisions of any state or federal insolvency or bankruptcy, or Trustor consents to, acquiesces in, or attempts to secure the appointment of, any receiver for all or any substantial part of the Property; (j) The occurrence of an event of default under any loan secured by the Property and the continuance of such default beyond the expiration of all applicable cure periods such that the holder of such loan has the right to accelerate such loan. (k) Trustor fails to observe or perform any other covenant, condition, or agreement to be observed or performed by Trustor pursuant to the Conditional Grant Agreement, the Regulatory Agreement, or this Deed of Traust. 9 Remedies. Upon the occurrence of a Default, the giving of notice thereof and the expiration of any applicable cure period, City may, at its option, exercise any one or more of the following remedies:
(a) declare all of the sums secured by this Deed of Trust to be immediately due and payable without further demand and may invoke the power of sale and any other remedies permitted by California law;
(b) either in person or by agent, with or without bringing any action or proceeding, or by a receiver appointed by a court, and without regard to the adequacy of its security, enter upon the Security and take possession thereof (or any part thereof) and of any of the Security, in its own name or in the name of Trustee, and do any acts which it deems necessary or desirable to preserve the value or marketability of the Property, or part thereof or interest therein, increase the income therefrom or protect the security thereof. The entering upon and taking possession of the Security shall not cure or waive any breach hereunder or invalidate any act done in response to such breach and, notwithstanding the continuance in possession of the Security, the City shall be entitled to Item 3B - Page 134
10 exercise every right provided for in this Deed of Trust, or by law upon occurrence of any uncured breach, including the right to exercise the power of sale; (c) commence an action to foreclose this Deed of Trust as a mortgage, appoint a receiver, or specifically enforce any of the covenants hereof; (d) deliver to Trustee a written declaration of default and demand for sale, pursuant to the provisions for notice of sale found at California Civil Code Sections 2924 et seq., as amended from time to time;
(e) exercise the power of termination pursuant to Civil Code Sections 885.010, et seq., as set forth in the Grant Deed;
(f) exercise its option to purchase the Property pursuant to the Regulatory Agreement; or
(g) exercise all other rights and remedies provided herein, in the instruments by which the Trustor acquires title to any Security, or in any other document or agreement now or hereafter evidencing, creating or securing all or any portion of the obligations secured hereby, or provided by law.

The City shall be entitled to collect all reasonable costs and expenses incurred in pursuing the remedies provided in this paragraph, including, but not limited to, reasonable attorneys’ fees.

10. Acceleration and Sale.
(a) Notice of Default. Upon Trustor’s breach of any covenant or agreement of Trustor under the the DDA, the Conditional Grant Agreement, or the Regulatory Agreement, City shall mail notice to Trustor as provided in Section 14.5 hereof specifying: (i) the nature of the breach; (ii) the action required to cure such breach; (iii) a date no less than thirty (30) days from the date the notice is mailed to Trustor by which such breach must be cured or such shorter cure period as may be provided in the the DDA, the Conditional Grant Agreement, or the Regulatory Agreement, or this Deed of Trust; and (iv) that failure to cure such breach on or before the date specified in the notice may result in acceleration of the Loan and the sale of the Property (“Notice of Default”).

The Notice of Default shall further inform Trustor of Trustor’s right to reinstate after acceleration and the right to bring a court action to assert the nonexistence of a default or any other defense of Trustor to acceleration and sale. If the breach is not cured on or before the date specified in the Notice of Default, City at City’s option declare all of the sums secured by this Deed of Trust to be immediately due and payable without further demand and may invoke the power of sale and/or pursue any other remedy provided herein or available under law. City shall be entitled to collect from the Trustor, or from the proceeds of the sale of the Property, all reasonable costs and expenses incurred in pursuing the remedies provided hereunder, including, but not limited to, reasonable attorneys’ fees.

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11 (i) If a non-monetary default is not reasonably capable of being cured within thirty (30) days, the City, in its sole and absolute discretion, may grant the Trustor or a first mortgage lender such additional time as is reasonably necessary to cure the default provided that the Trustor or the first mortgage lender (i) initiates corrective action within said period, and (ii) diligently, continually, and in good faith works to effect a cure as soon as possible. (ii) Notwithstanding the cure periods established in this Section, in no event shall the City be precluded from sooner exercising any remedies if its security becomes or is about to become materially jeopardized by any failure to cure a default or the default is not cured within ninety (90) days after the first notice of default or delinquency is given.
(b) Trustor’s Right to Reinstate. Notwithstanding City’s acceleration of the sums secured by this Deed of Trust, Trustor will have the right to have any proceedings begun by City to enforce this Deed of Trust discontinued at any time prior to five (5) days before sale of the Property pursuant to the power of sale contained in this Deed of Trust or at any time prior to entry of the judgment enforcing this Deed of Trust if:
(i) Trustor pays City all sums which would be then due under this Deed of Trust and the DDA, the Conditional Grant Agreement, or the Regulatory Agreement had no acceleration occurred;
(ii) Trustor pays all reasonable expenses incurred by City and Trustee in enforcing the covenants and agreements of Trustor contained in this Deed of Trust, including, but not limited to, reasonable attorneys’ fees; (iii) Trustor cures all breaches of any other covenants or agreements of Trustor set forth in the the DDA, the Conditional Grant Agreement, or the Regulatory Agreement, and this Deed of Trust; and
(iv) Trustor takes such action as City may reasonably require to assure that the lien of this Deed of Trust, City’s interest in the Property and Trustor’s obligation to pay the sums and perform the obligations secured by this Deed of Trust shall continue unimpaired. Upon such payment and cure by Trustor, this Deed of Trust and the obligations secured hereby will remain in full force and effect as if no acceleration had occurred.
(c) Sale. After delivery to Trustee of a Notice of Default and a demand for sale and after the expiration of such time and the giving of such notice of default and sale as may then be required by law, and without demand on Trustor, Trustee shall sell the Property at the time and place of sale fixed by it in said notice of sale, at public auction to the highest bidder for cash in lawful money of the United States of America, payable at time of sale. Trustee may postpone sale of all or any portion of the Property by public announcement at such time and place of sale and from time to time thereafter may postpone such sale by public announcement at the time and place fixed by the preceding Item 3B - Page 136
12 postponement. Any person, including Trustor, Trustee or the City, may purchase at such sale. Upon such sale by Trustee it shall deliver to such purchaser its deed conveying the Property so sold, but without any covenant or warranty expressed or implied. The recitals in such deed of any matters or facts shall be conclusive proof of their truthfulness. Upon sale by Trustee and after deducting all costs, expenses and fees of Trustee, Trustee shall apply the proceeds of sale to the payment of the indebtedness hereby secured, any advances made or costs or expenses paid or incurred by City under this Deed of Trust, any indebtedness evidenced by any other instrument hereby secured, and all other sums then secured hereby, including without limitation, interest as provided in the the DDA, the Conditional Grant Agreement, or the Regulatory Agreement, in such order as the City shall direct; and then the remainder, if any, shall be paid to the person or persons legally entitled thereto.

11. Reconveyance. Upon the expiration or termination of the Regulatory Agreement, if the Trustor is not in violation of any provisions of this Deed of Trust or the Regulatory Agreement, the City will request Trustee to reconvey the Security and will surrender this Deed of Trust and the Regulatory Agreement to Trustee. Trustee will reconvey the Security without warranty and without charge to the person or persons legally entitled thereto. Such person or persons will pay all costs of recordation, if any.

12. Substitute Trustee. The City, at the City’s option, may from time to time remove Trustee and appoint a successor trustee to any Trustee appointed hereunder. The successor trustee will succeed to all the title, power and duties conferred upon the Trustee herein and by applicable law.

13. Subordination. City retains the sole and absolute discretion whether, if required to assist Eligible Buyers to secure purchase money financing for the acquisition of the Restricted Home, to enter into a subordination agreement with a purchase money lender to subordinate any claims to monetary payment under this Agreement, under such terms as the City may determine to accept in its sole and absolute discretion. Any such subordination agreement shall not subordinate the affordability covenants and related provisions of this Agreement. The City agrees that if City succeeds to the interest of Trustor under any ground lease applicable to any one or more home constructed on the Property pursuant to the exercise of City’s remedies under the Regulatory Agreement or this Deed of Trust, unless the Regulatory Agreement or Ground Lease authorizes termination of the Lessee, the City agrees that it shall recognize the Lessee under such ground lease and shall comply with the requirements of Fannie Mae Form 2100 (3/06) and Fannie Mae Announcement 06-03 or similar successor policy, as such documents may be modified or amended.

14. Request for Notice. City requests that copies of the notice of default and notice of sale be sent to City at the address set forth in Section 15.5.

15. Miscellaneous.

15.1 Forbearance by the City Not a Waiver. Any forbearance by the City in exercising any right or remedy will not be a waiver of the exercise of any such right or Item 3B - Page 137
13 remedy. The procurement of insurance or the payment of taxes or other liens or charges by the City will not be a waiver of the City’s right to require satisfaction of any obligations secured by this Deed of Trust.

15.2 Remedies Cumulative. All remedies provided in this Deed of Trust are distinct and cumulative to any other right or remedy under this Deed of Trust or any other document, or afforded by law or equity, and may be exercised concurrently, independently or successively.

15.3 Successors and Assigns Bound. The covenants and agreements herein contained shall bind, and the rights hereunder shall inure to, the respective successors and assigns of the City and Trustor subject to the provisions of this Deed of Trust.

15.4 Joint and Several Liability. If this Deed of Trust is executed by more than one person as Trustor, the obligations of each shall be joint and several.

15.5 Notices. Except for any notice required under applicable law to be given in another manner, any notice to Trustor or to City pursuant to this Deed of Trust will be given by certified mail, return receipt requested, express delivery with delivery receipt or personal delivery with delivery receipt, addressed to the applicable party at the address shown below, or such other address as such party may designate by notice to the other party as provided herein. Notice shall be effective as of the date received by City as shown on the return receipt.

TO TRUSTOR: _____________
(T)
(F)
COPY TO:

TO TRUSTEE:

Item 3B - Page 138
14 TO CITY:

COPY TO:

15.6 Governing Law. This Deed of Trust shall be governed by the laws of the State of California.

15.7 Severability. In the event that any provision or clause of this Deed of Trust or the Regulatory Agreement conflicts with applicable law, such conflict will not affect other provisions of this Deed of Trust or the Regulatory Agreement which can be given effect without the conflicting provision, and to this end the provisions of the Deed of Trust and the Regulatory Agreement are declared to be severable.

15.8 Captions. The captions and headings in this Deed of Trust are for convenience only and are not to be used to interpret or define the provisions hereof.

15.9 Nondiscrimination. Trustor covenants by and for itself and its successors and assigns that there shall be no discrimination against or segregation of a person or of a group of persons on account of race, color, religion, sex, gender, gender identity, gender expression, sexual orientation, marital status, national origin, ancestry, familial status, source of income, disability, veteran or military status, or genetic information, of any person in the sale, lease, transfer, use, occupancy, tenure or enjoyment of the Property, nor shall Trustor or any person claiming under or through Trustor establish or permit any such practice or practices of discrimination or segregation with reference to the use, occupancy, or transfer of the Property. The foregoing covenant shall run with the land. [SIGNATURE ON FOLLOWING PAGE; SIGNATURE MUST BE
NOTARIZED.]
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15 IN WITNESS WHEREOF, Trustor has executed this Deed of Trust as of the date first written above.

TRUSTOR:
___________
A nonprofit public benefit corporation
By: _________________________________

Executive Director
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ACKNOWLEDGMENT

STATE OF CALIFORNIA )
)
COUNTY OF ___________ )
On _____________ 20__, before me, _______________, a Notary Public, in and for said State and County, personally appeared _______________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

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

WITNESS my hand and official seal.
____________________________
Notary Public
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EXHIBIT A

LEGAL DESCRIPTION
Real property in the City of ___________ , County of ___________ , State of California, described as follows:
[Insert description of single lot]
APN: ________
3704750.2
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DRAFT
5/14/24

EXHIBIT J

EXHIBIT J
TO
2024 DISPOSITION AND DEVELOPMENT AGREEMENT
Sale of Real Property for Development of a Homeownership Opportunity Program Form of Affordable Housing Regulatory Agreement With
Declaration of Restrictive Covenants with Option to Purchase [Attached Behind This Page]

TO BE ADDED
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1 Recording requested by and when
recorded mail to:

City of Palm Springs
3200 E. Tahquitz Canyon Way
Palm Springs, California 92262
Attn: City Manager

EXEMPT FROM RECORDING FEES PER
GOVERNMENT CODE §§6103, 27383
Space above this line for Recorder’s use.

AFFORDABLE HOUSING REGULATORY AGREEMENT WITH

DECLARATION OF RESTRICTIVE COVENANTS WITH OPTION TO

PURCHASE
(NPHS Affordable Housing Project)
APN: [669-353-001] [6649-401-010] [669-401-039]
This Affordable Housing Regulatory Agreement With Declaration of Restrictive Covenants with Option to Purchase (this "Agreement") is entered into effective as of _______, 2024 (“Effective Date”), by and between the City of Palm Springs, a California charter city and municipal corporation (“City”), and NPHS Community Redevelopment, Inc. a California nonprofit corporation ("NPHS"). City and NPHS are hereafter referred to as the “Parties.”

RECITALS
A. On August 31, 2023, the City issued Request for Proposals 39-23 for “Sale of Real Property for Development of a Homeownership Opportunity Program,” which identified that certain real property located at and commonly known as [ADDRESS] (APN [669-353-001] [6649-401-010] [669-401-039]), more specifically described in Attachment No. 1, incorporated herein by this reference (the “Property”), as available for development of homes that would be conveyed to lower-income households.

B. On __________, 2024, the City entered into a Disposition and Development Agreement (“DDA”) with NPHS, pursuant to which NPHS agreed to develop the Property with affordable housing.

D. NPHS will commence to develop the Property with two-single family residences (each a “Restricted Home”), which shall be sold to Eligible Buyers in accordance with this Agreement. NPHS will retain fee ownership in the underlying land for the Property and enter into a ground lease (“Ground Lease”) with Eligible Buyers, -
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2 who will concurrently purchase the fee interest in the improvements that comprise the Restricted Home.

E. This Agreement is entered into for the purpose of imposing conditions, covenants, and restrictions on the use of the Property that implement an affordable homeownership program within the City and enforce affordability covenants for the sale, occupancy, and maintenance of the Restricted Homes.

NOW, THEREFORE, the Parties agree as follows:

1. Definitions. As used in this Agreement, the following terms shall have the meanings set forth below. Additional terms are defined in the Recitals and the text of this Agreement.
(a) "Affordable Purchase Price" means a home purchase price resulting in an average monthly housing payment (including mortgage loan principal and interest, ground lease fee, mortgage insurance fees, property taxes and assessments, homeowners insurance premiums, and homeowners association dues, if any) that is affordable to Low Income Households, as determined using standard underwriting criteria in common use by Fannie Mae or the California Housing Finance Agency (typically up to 80 % of AMI); provided, however, that the monthly payments shall not exceed the “affordable housing cost” for a Low Income Household as defined in Health and Safety Code Section 50052.5(b)(3) and accompanying regulations of the California Department of Housing and Community Development.
(b) "Area Median Income" or “AMI” means the median household income, adjusted for household size, applicable to Riverside County, California as published periodically by the State Department of Housing and Community Development in the California Code of Regulations, Title 25, Section 6932 pursuant to California Health and Safety Code Section 50093(c) (or successor provision).
(c) "Eligible Buyer" means a Low Income Household, which the City has determined meets the eligibility requirements for purchase of a Restricted Home. (d) "Deed of Trust" means the deed of trust, dated as of the date hereof, executed by NPHS as Trustor for the benefit of City, which secures NPHS’s performance under this Agreement, and which will be recorded in the Official Records substantially concurrently herewith.
(e) “Homebuyer” means an Eligible Buyer who purchases a Restricted Home for an Affordable Purchase Price in accordance with this Agreement. (f) “Immediate Family” means a person who is related to Homebuyer as follows: (i) a spouse or domestic partner, (ii) a child or children, or (iii) a parent, grandparent, or sibling, who resided with Homebuyer in a Restricted Home for at least one (1) year prior to Homebuyer’s death.

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3 (g) “Low Income Household” means a household with annual income that does not exceed eighty percent (80%) of Area Median Income adjusted for household size in accordance with California Health and Safety Code Section 50052.5(h). (h) "Maximum Initial Sales Price" means the initial Affordable Purchase Price for a Home as determined by City.
(i) “Restricted Home(s)” shall have the meaning set forth in Recital D, and shall include all structures, including the house, fixtures, and other improvements on the Property, subject to the rights to use the Property in accordance with the Ground Lease. (j) “Transfer” means any sale, lease, grant, disposition, or other conveyance of a Restricted Home to a Homebuyer, and such terms shall be synonomous unless otherwise specified.

2. Affordable Housing Obligation. NPHS, for itself, its successors and assigns, covenants and agrees that:
(a) NPHS shall construct, or cause to be constructed, two (2) Restricted Homes on the Property and transfer each Restricted Home to an Eligible Buyer for an Affordable Purchase Price. The Affordable Purchase Price shall be determined in accordance with Exhibit B, which is attached hereto and incorporated herein by reference.1
(b) Concurrently with the sale of each Restricted Home, NPHS shall require the Homebuyer to execute a Ground Lease substantially in the form attached hereto as Exhibit C, which sets forth the the rights of the Homebuyer to maintain ownership of the Restricted Home on the Property. Among other provisions, the Ground Lease will require the Restricted Home (i) to be used solely for residential purposes, (ii) to be occupied as the Homebuyer’s principal residence, and (iii) cannot be transferred except as permitted herein to NPHS, another Eligible Buyer, or upon the death of the Homebuyer, to the Homebuyer’s Immediate Family who qualify as a Low Income Household. NPHS agrees that the intent of this Agreement and the Ground Lease is that the Restricted Home shall be permanently affordable to Eligible Buyers and NPHS agrees that resale of the Restricted Homes shall be so restricted pursuant to the Ground Lease. (c) NPHS shall enforce the terms, conditions, and obligations of the Ground Lease and, in the event of a default by a Homebuyer, NPHS shall terminate the Ground Lease as it relates to that Homebuyer in accordance with this Regulatory Agreement and the Ground Lease.

3. Marketing and Selection of Eligible Homebuyers. NPHS, for itself, its successors and assigns, covenants and agrees that:

1 If the lot split is complete before close of escrow, then the regulatory agreement would be recorded against each lot.

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4 (a) NPHS shall transfer the Restricted Home to Eligible Buyers at an Affordable Purchase Price as described in Section 4 in accordance with Exhibit B. (b) Subject to limits of state and federal law, within the pool of eligible applicants, NPHS shall adopt a preference people who live or work in the City of Palm Springs at the time of the application [or within the preceding ___ months of the application]. The City and NPHS may alter or modify the terms of this local preference, in writing, as permitted by law.
(c) City shall cooperate with NPHS to identify Eligible Buyers; provided, however, NPHS will have sole responsibility for marketing the Restricted Homes, finding qualified Eligible Buyers, and screening and selecting applicants. Notwithstanding the foregoing, City shall have no obligation to pay costs related to marketing, sales efforts or real estate commissions.
(d) NPHS agrees that it shall comply, and shall require its agents, employees, contractors, and subcontractors, to comply, with applicable fair housing laws in the marketing and sale, as applicable, of a Restricted Home, and the non-discrimination provisions of this Agreement
(e) NPHS must verify, or cause the lender to verify, the income qualifications for each Homebuyer with documentation that shall include one or more of the following:
(1) an income tax return and copy of each W2 Wage and Earnings Statement for the most recently concluded income tax year for each adult in the Homebuyer’s household; (2) an income verification form from the current employer(s) of each adult in Homebuyer’s household; (3) an income verification form from the United States Social Security Administration or the California Department of Social Services for each person in Homebuyer’s household who receives assistance from either of such agencies (if any); or (4) for each adult person in the Homebuyer’s household who is unemployed or has no such income tax return, another form of independent income verification (if any). (f) Upon identifying a proposed Eligible Buyer, and prior to conveying a Restricted Home, NPHS must follow the process for Transfer of Restricted Homes set forth in Section 4, below.

4. Transfer of Restricted Homes. NPHS, for itself, its successors and assigns, covenants and agrees that:
(a) Affordable Purchase Price. The Restricted Home must only be transferred to Low Income Households for an amount that does not exceed an Affordable Purchase Price, determined as of a date not greater than sixty (60) days prior to transfer of a Restricted Home. The Maximum Initial Sales Price for a Restricted Home, as determined by the City, is shown in Exhibit B attached hereto and incorporated herein. (b) Process for Sale of Restricted Home. NPHS, or a subsequent Homebuyer, must provide notice to City prior to any transfer of a Restricted Home, or any interest in a Restricted Home (“Transfer Notice”), and shall obtain City’s written concurrence that Item 3B - Page 147
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5 the proposed transfer complies with this Agreement and the resale restrictions set forth in the Ground Lease.
(c) The Transfer Notice shall include the form of (i) the proposed Purchase and Sale Agreement, and (ii) the proposed Ground Lease. (d) Each Transfer Notice shall include all of the following information:
(i) the identity of the Eligible Buyer, and any other adult proposing to reside in the Restricted Home;
(ii) all of the documentation described in Section 3(e) regarding the income for household of the proposed Eligible Buyer;
(iii) the proposed sale price of the Restricted Home payable by the proposed Eligible Buyer, the terms of the financing, the estimated amount of costs to transfer the Property, real estate broker fees and other costs or charges payable by the proposed Eligible Buyer to acquire the Restricted Home; (iv) the name, address, and telephone number of the escrow agent proposed to conduct the escrow for the transfer of the Restricted Home; (v) a written acknowledgment and agreement from the proposed Eligible Buyer for the benefit of City that the Eligible Buyer received the Notice of Affordability Restrictions and the Restricted Home is subject to this Agreement; and, (vi) such other information as City may reasonably request. (e) Within fifteen (15) days following the receipt of a Transfer Notice, and all information requested pursuant to subparagraph (c) of this Section 4, whichever is later, City shall deliver to NPHS, or its successor in interest, a written concurrence or objection to the transfer of the Restricted Home.
(f) Approved Financing. A Homebuyer shall only be allowed to encumber a Restricted Home with a first purchase money deed of trust that complies with this Agreement (“Approved Financing”). Encumbering the title to a Restricted Home with anything other than Approved Financing is prohibited and shall constitute a Default under this Agreement. The sum of the Approved Financing shall never exceed the Affordable Purchase Price paid by Homebuyer to acquire the subject Restricted Home. Homebuyer acknowledges and agrees by accepting a transfer of a Restricted Home subject to this Agreement that City has a substantial interest in promoting stability of ownership of the Restricted Home and that the restriction on encumbrances in this Section 4(g) is reasonable and calculated to avoid potential foreclosure and sale of the Restricted Home. (g) Refinancing. A Homebuyer shall be entitled to enter into a refinancing transaction, which meets all of the following requirements: (a) the transaction represents a refinancing of either or all of the Homebuyer’s then current Approved Financing; (b) the refinancing loan bears for its entire term a fixed annual percentage rate that is lower Item 3B - Page 148
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6 than the annual percentage rate of the loan being refinanced; (c) the entirety of the gross proceeds of the refinancing loan, less reasonable and customary costs of processing the refinancing loan, obtaining appraisals, and the like not exceeding six percent (6%) of the refinancing loan amount, are used to refinance the entire balance of all of the Homebuyer’s then current Approved Financing (no “cash out” to Homebuyer and the Restricted Home is completely released from the lien of the then current deed of trust securing the Approved Financing); (d) the refinancing loan does not provide Homebuyer with the ability to obtain cash advances or other “cash out” options; and (e) Homebuyer’s monthly principal and interest expenses or loan term are reduced relative to the same elements of the loan being refinanced. A refinancing loan obtained by Homebuyer that satisfies all of the requirements of this Section 4(h) shall be considered the Homebuyer’s Approved Financing.
(h) Financing and Refinancing to Comply with Ground Lease. Except as specifically provided for herein, the Approved Financing and any refinancing shall comply with the Ground Lease.

5. Maintenance Obligations. NPHS, for itself, its successors and assigns, covenants and agrees that:
(a) The Property shall be maintained in good condition and repair and a neat, clean and orderly condition, including, without limitation, maintenance, repair, reconstruction and replacement of any and all asphalt, concrete, walkways, landscaping, utility systems, irrigation systems, drainage facilities or systems, grading, subsidence, retaining walls or similar support structures, foundations, ornamentation, and all other improvements on or to the specified property, now existing or made in the future, by or with the consent of the NPHS or Homebuyer, as specified in a ground lease (the “Maintenance Standard”) The Maintenance Standard includes, as necessary to maintain the appearance and character of the specified property, all of the following: (i) maintaining the surfaces in a level, smooth and evenly covered condition; (ii) removing all papers, mud, sand, debris, filth and refuse and sweeping areas to the extent reasonably necessary to keep areas in a clean and orderly condition; (iii) removing or covering graffiti with the type of surface covering originally used on the affected area, (iv) installing, operating, keeping in repair and replacing where necessary, such artificial lighting facilities as shall be reasonably required; (v) maintaining, mowing, weeding, trimming and watering all landscaped areas and making such replacements of plants and other landscaping material as necessary to maintain the appearance and character of the landscaping; (vi) properly maintaining windows, structural elements, and painted exterior surface areas of improvements in a clean and presentable manner; (vii) keeping outdoor areas free of accumulated debris, appliances, inoperable motor vehicles or motor vehicle parts, or free of storage of lumber, building materials or equipment; and (viii) parking of any commercial motor vehicle in excess of 10,000 pounds gross weight shall be limited to a temporary basis; and (ix) restricting the use of garage areas for purposes other than the parking of motor vehicles and the storage of personal possessions of the owners or occupants of the specified property.

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7 (b) In addition to the Maintenance Standard set forth herein, NPHS and Homebuyer agree that to comply with Section 7 of the Grant Deed, which governs a Maintenance Deficiency, and that the remedies provided therein shall be cumulative and not restrict or limit in any way the remedies set forth in this Agreement. (c) All portions of the Property owned or controlled by NPHS shall be continuously maintained by NHS, at NPHS’s sole cost and expense, in accordance with the Maintenance Standard.
(d) If City serves a notice of Default of the Maintenance Standard, and NPHS or the Homebuyer fails to cure or commence and diligently pursue to cure the Default within thirty (30) calendar days following service of the notice, City shall have the right to enter the affected portion of the Property and perform all acts necessary to cure the condition or deficiency, or to take any other action at law or in equity that may then be available to City to accomplish the abatement of the condition or deficiency. Any sum expended by City for the abatement pursuant to this Section 5(c) shall be reimbursed to City by NPHS within thirty (30) calendar days after notice requesting payment. If any amount becoming due to City under this Section 5(c) is not paid within thirty (30) calendar days after notice to NPHS requesting payment, NPHS shall also pay interest on such amount, until such amount is paid in full.
(e) NPHS may impose the obligations of the Maintenance Standard and this Section 5 on Homebuyers through a ground lease; provided, however, that Homebuyer’s breach shall not relieve NPHS from compliance with this Section 5.

6. Compliance Reports, Inspections, Monitoring.
(a) Upon completion of construction of a Restricted Home, and annually thereafter by no later than each anniversary of the Effective Date, upon City’s request, NPHS shall submit to City a Compliance Report verifying NPHS’s compliance with this Agreement, and certified as correct by NPHS under penalty of perjury. The Compliance Report shall be in such format as City may reasonably request and shall contain certifications regarding the eligibility of homebuyers and evidence of the homebuyer’s and NPHS’s execution of the Ground Lease.
(b) NPHS shall retain all records related to compliance with this Agreement, and shall make such records available to City or its designee for inspection and copying on five (5) business days' written notice. NPHS shall permit City and its designees to inspect the Property to monitor compliance with this Agreement following two (2) business days' written notice.

7. NPHS to Retain Fee Title in the Land; Assignments.
(a) NPHS shall retain fee simple interest ownership in the land comprising the Property, and no transfer of the Restricted Homes shall include a fee simple interest in the land comprising the Property, or otherwise encumber the fee simple interest in the land comprising the Property.

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8 (b) NPHS agrees and acknowledges that the City entered into the DDA, this Agreement, and the Conditional Grant Agreement based upon NPHS’s unique qualifications to operate the Project. Except as expreslly authorized herein, NPHS shall not assign, encumber, hypothecate, or otherwise transfer the fee simple interest in the land comprising the Property, the Project, or the Restricted Homes, without City’s written consent.

8. Covenants Run with the Land. The covenants and conditions herein contained shall apply to and bind, during their respective periods of fee ownership, NPHS and its heirs, executors, administrators, successors, transferees, and assignees having or acquiring any right, title or interest in or to any part of the Property and shall run with and burden such portions of the Property, and all leasehold or other property interests therein.

This Agreement establishes vested rights and shall remain in effect in perpetuity unless released by City pursuant to an instrument recorded in the Official Records.

9. Defaults and Remedies.
(a) A breach or violation of the obligations under this Agreement shall constitute a default (“Default”). For any Default, City shall have the right to exercise any or all of the remedies described in this Section 9, all cumulative (so exercise of one remedy shall not preclude exercise of another remedy), in addition to such other remedies as may be available at law or in equity or under any other provisions of this Agreement or the DDA.
(b) City may sue the defaulting party for damages or other relief, from time to time, at City’s election, without terminating this Agreement, including by mandamus or other suit, action or proceeding at law or in equity, to require the defaulting party to perform the covenants or agreements or observe the conditions or restrictions of this Agreement, or enjoin any acts or things that may be unlawful or in violation of the rights of City under this Agreement; or by other action at law or in equity, as necessary or convenient to enforce the covenants, agreements, conditions or restrictions of this Agreement.
(c) Receipt of Moneys. No receipt of money by City from any person after any notice of Default to any party shall affect any notice previously given to such party, or waive City’s right to enforce payment or deposit of any amount payable or later falling due, or City’s right to enter the Property, including the Restricted Home, it being agreed that after service of notice of Default or the commencement of suit or proceedings, or after final order or judgment, City may demand, receive, and collect any moneys due or thereafter falling due, without in any manner affecting such notice, proceeding, order, suit or judgment, all such moneys collected being deemed payments on account of the applicable party’s liability to City.
(d) No Waiver. No failure by City to insist upon strict performance of any condition, covenant, agreement, restriction or reservation of this Agreement or to exercise any right or remedy upon a Default, and no acceptance of full or partial payment of any amount due or becoming due to City during the continuance of any such Default, shall Item 3B - Page 151
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9 waive any such Default or such condition, covenant, agreement, restriction or reservation.

No obligation of a party under this Agreement shall be modified and no Default shall be waived, except by a written instrument signed by City. No waiver of any Default shall modify this Agreement. Each and every covenant, agreement, condition, restriction and reservation of this declaration shall continue in full force and effect with respect to any other then-existing or subsequent Default of such condition, covenant, agreement, restriction or reservation of this Agreement.
(e) Damages. City may recover from each other party all damages City incurs by reason of such party’s Default and reimbursement of City’s reasonable out of pocket costs, including reasonable attorney fees. City may recover such damages at any time after another party’s Default. Notwithstanding any applicable law to the contrary, City need not commence separate actions to enforce another party’s obligations for each amount or payment not paid, or each month’s accrual of damages and costs for the other party’s Default, but may bring and prosecute a single combined action for all such damages and costs.
(f) Injunction of Breaches. Whether or not a Default has occurred, the City may obtain a court order enjoining each other party from continuing any Default or from committing any threatened Default.
(g) Specific Enforcement. NPHS and each Homebuyer agree that specific enforcement of their respective non-monetary obligations under this Agreement is one of the reasons that City entered into this Agreement and that, if NPHS or Homebuyer Defaults or breaches in performance or failure to perform any such obligation, potential monetary damages to City, as well as to prospective Eligible Buyers, would be difficult, if not impossible, to evaluate and quantify. Therefore, in addition to any other relief to which City may be entitled as a consequence of a Default by NPHS or Homebuyer under this Agreement, NPHS and each Homebuyer agree to the imposition of the remedy of specific performance against NPHS or any Homebuyer under this Agreement. (h) Enforcement. City shall have the power to enforce this Agreement against NPHS, Homebuyer or the Property. This Agreement may also be enforced by:
(i) A resident of a Restricted Home.
(ii) A residents association with members who reside in a Restricted Home.
(iii) A former resident of a Restricted Home who last resided in that Unit.
(iv) An Eligible Buyer seeking to enforce the covenants or restrictions of this Agreement, if the applicant conforms to all of the following:
(1) Is of low or moderate income, as defined in Section 50093 of the Health and Safety Code;
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10 (2) Is able and willing to occupy that particular unit; and, (3) Was denied occupancy of that particular unit due to an alleged breach of a covenant or restriction of this Agreement. (v) A person on an affordable housing waiting list who qualifies as Low Income, as defined in Section 50093 of the Health and Safety Code, and who is a qualified applicant that is able and willing to occupy a Restricted Home.

10. Option to Purchase, Enter and Possess. City shall have the right, at its option, to purchase, enter and take possession of the Property, inclusive of the fee interest in the Property and the Restricted Home and any other improvements, or any portion thereof owned by NPHS (the "Option"), if, at or after the initial sale of a Restricted Home, a Restricted Home is sold or otherwise transferred to persons who do not qualify as Eligible Buyers. In such event, City shall have an option to purchase the Property, including the Restricted Home, at the Affordable Purchase Price, as determined pursuant to this Agreement, or the City may pursue any remedies it may have under this Agreement, the Deed of Trust or under law or in equity. To exercise the Option, City shall pay an amount equal to:
(a) The lower of either (i) the fair market value of the Property, including the Restricted Home, at the time of exercise of the Option, or (ii) the Affordable Purchase Price for the Property, including the Restricted Home(s), for which City is exercising the Option; less
(b) Any gains or income withdrawn or made by NPHS from the applicable portion of the Property, including the Restricted Home; less (c) The value of any liens or encumbrances on the applicable portion of the Property or the Restricted Home, which the City agrees to assume or take subject to; less (d) Any damages to which the City is entitled under this Agreement.

In order to exercise the Option, the City shall give NPHS notice of such exercise, and NPHS shall, within thirty (30) days after receipt of such notice, (1) provide notice to the occupants of the Restricted Home to terminate the leasehold interest for the thencurrent Homebuyer and (2) provide the City with an accounting of all amounts referenced in this Section. Within thirty (30) days of the City’s receipt of the accounting required by NPHS pursuant to this paragraph, the City shall pay into an escrow established for such purpose cash in the amount of all sums owing pursuant to this Section 9, and NPHS shall execute and deposit into such escrow a grant deed transferring to the City all of NPHS’s interest in the Property, or portion thereof, as applicable and the improvements located thereon. Within ninety (90) days from the date City service the notice to exercise the Option, NPHS shall deliver, or cause to be delivered, the Restricted Home without occupants to the City.

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11 subject to the existing ground lease for the occupant(s) of the Restricted Home. If the City elelcts to take ownership subject to the existing ground lease, then the fair market value of the payment amount referenced above shall be reduced based on the diminished value of the Property.

11. Non-Discrimination. There shall be no discrimination against or segregation of any person, or group of persons, on account of actual or perceived race, color, religion, sex, gender, gender identity, gender expression, sexual orientation, marital status, national origin, ancestry, familial status, source of income, disability, veteran or military status, or genetic information, of any person, in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property 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, sub-tenants, sub-lessees or vendees of the Property. The covenant of this Section 10 shall run with the land of the Property and shall be enforceable against the Developer and its successors and assigns in perpetuity.

12. Mortgagee Protection. The City’s rights pursuant to Section 10 shall not defeat, limit or render invalid any mortgage or deed of trust recorded against the Property or any portion thereof, including without limitation, a Restricted Home, provided the mortgage or deed of trust is subordinated in accordance with Section 19. Any conveyance of the Property to the City pursuant to Section 10 shall be subject to mortgages and deeds of trust permitted by this Agreement, provided the mortgage or deed of trust is subordinated in accordance with Section 19.

13. Remedies Cumulative. No right, power, or remedy specified in this Agreement is intended to be exclusive of any other right, power, or remedy, and each and every such right, power, or remedy shall be cumulative and in addition to every other right, power, or remedy available to the City under law or in equity. Neither the failure nor any delay on the part of the City to exercise any such rights, powers or remedies shall operate as a waiver thereof, nor shall any single or partial exercise by the City of any such right, power or remedy preclude any other or further exercise of such right, power or remedy, or any other right, power or remedy.

14. Attorneys’ Fees and Costs. The City shall be entitled to receive from NPHS, an Eligible Buyer, Homebuyer, or any person violating the requirements of this Agreement, in addition to any remedy otherwise available under this Agreement or at law or equity, whether or not litigation is instituted, the costs of enforcing this Agreement, including without limitation reasonable attorneys' fees and the costs of City staff time. In any dispute arising in connection with this Agreement, the prevailing party shall be entitled to recover reasonable attorneys’ fees.

15. Appointment of Other Entities. In its sole discretion, the City may designate, appoint or contract with any other person, public agency or public or private entity to perform some or all of the City's obligations under this Agreement.

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12 16. Hold Harmless. NPHS, Eligible Buyers, and Homebuyers (“Indemnitors”) agree to indemnify, defend (with counsel approved by the City) and hold harmless City and its elected and appointed officials, officers, employees, representatives and agents (all of the foregoing, collectively the "Indemnitees") from and against all liability, loss, cost, claim, demand, action, suit, legal or administrative proceeding, penalty, deficiency, fine, damage and expense (including, without limitation, reasonable attorney's fees and costs of litigation) (all of the foregoing, collectively hereinafter “Claims”) arising or allegedly arising out of or relating in any manner to the Project, the Property, or Indemnitor's performance or nonperformance under this Agreement, except to the extent arising from the gross negligence or willful misconduct of the City. The provisions of this section shall survive the expiration or other termination of this Agreement or any release of part or all of the Property from the burdens of this Agreement.

17. Insurance Requirements. NPHS shall obtain and maintain at NPHS’s expense, Commercial General Liability, naming Indemnitees as additional insureds with aggregate limits of not less than Two Million Dollars ($2,000,000) for bodily injury and death or property damage including coverage for contractual liability and premises operations, purchased from an insurance company duly licensed to issue such insurance in the State of California with a current Best’s Key Rating of not less than A-V, such insurance shall be evidenced by an endorsement which so provides and delivered to the City prior to the Effective Date.

18. Notices. All notices required pursuant to this Agreement shall be in writing and may be given by personal delivery or by registered or certified mail, return receipt requested, to the party to receive such notice at the addresses set forth below:

TO NPHS: _____________
(T)
(F)
COPY TO:

Item 3B - Page 155
55575.18265\42281292.1
NPHS Regulatory Agreement
13 TO CITY:

COPY TO:

City of Palm Springs
3200 East Tahquitz Canyon Way
Palm Springs, California 92262
Attention: City Manager
(T) 760-323-8299
(F) 760-322-8332
Best Best & Krieger, LLP
655 West Broadway, 15th Floor
San Diego, CA 92101
Attention: Jeffrey Ballinger
(T) 619-525-1343
(F) 619-233-6118
Any party may change the address to which notices are to be sent by notifying the other parties of the new address, in the manner set forth above.

19. Integrated Agreement; Amendments. This Agreement, together with the exhibits hereto, the Deed of Trust and exhibits thereto, executed by City and NPHS constitutes the entire Agreement between the Parties with respect to the subject matter hereof. No modification of or amendment to this Agreement shall be binding unless reduced to writing and signed by the Parties. The City Manager or his or her designee shall have authority to approve or disapprove minor or technical amendments to this Agreement on behalf of the City.

20. Subordination; Execution of Riders for the Benefit of Mortgage Lenders. City retains the sole and absolute discretion whether, if required to assist Eligible Buyers to secure purchase money financing for the acquisition of the Restricted Homes, to enter into a subordination agreement with a purchase money lender to subordinate any claims to monetary payment under this Agreement, under such terms as the City may determine to accept in its sole and absolute discretion. Any such subordination agreement shall not subordinate the affordability covenants and related provisions of this Agreement.

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

22. Further Assurances; Action by the City. The Parties shall execute, acknowledge and deliver to the other such other documents and instruments, and take such other actions, as either shall reasonably request as may be necessary to carry out the intent of this Agreement. Except as may be otherwise specifically provided herein, whenever any approval, notice, direction, consent or request by the City is required or permitted under this Agreement, such action shall be in writing, and such action may be given, made or taken by the City Manager or by any person who shall have been designated by the City Manager, without further approval by the City Council unless the City Manager determines in his or her discretion that such action requires such approval.

Item 3B - Page 156
55575.18265\42281292.1
NPHS Regulatory Agreement
14 23. Governing Law; Venue. This Agreement shall be construed and enforced in accordance with the laws of the State of California without regard to principles of conflicts of law. NPHS, Eligible Buyers, and Homebuyers consent to the jurisdiction of any federal or state court in the Riverside County, and agree that any controversy arising under or in relation to this Agreement shall be litigated exclusively in Riverside County, or a federal court with jurisdiction in Riverside County. NPHS, Eligible Buyers, and Homebuyers irrevocably consent to service, jurisdiction, and venue of such courts for any such litigation and waives any other venue to which it might be entitled by virtue of domicile, habitual residence or otherwise.

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

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

26. Counterparts. This Agreement may be executed in counterparts, each of which shall be an original and all of which taken together shall constitute one and the same instrument.

27. Severability. If any provision contained in this Agreement is to be held by a court of competent jurisdiction to be void or unenforceable the remaining portions of this Agreement shall remain in full force and effect.

28. Exhibits. The following exhibits attached to this Agreement are hereby incorporated herein by reference:

Exhibit A Legal Description of the Property
Exhibit B Maximum Homebuyer Income Level; Unit Size and Bedroom Count; Maximum Initial Sales Price
Exhibit C Form of Ground Lease
[SIGNATURES ON FOLLOWING PAGE; SIGNATURES MUST BE NOTARIZED] Item 3B - Page 157
55575.18265\42281292.1
NPHS Regulatory Agreement
15 IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first written above.

NPHS:
______________________________
A nonprofit public benefit corporation
By:__________________________________

Executive Director
CITY :

City of ________ ,
a municipal corporation
By:__________________________________
City Manager
ATTEST:

By:__________________________________
City Clerk
APPROVED AS TO FORM:

By:_________________________________
City Attorney
Item 3B - Page 158
55575.18265\42281292.1
NPHS Regulatory Agreement
16 A notary public or other officer completing
this certificate verifies only the identity of the
individual who signed the document to which
this certificate is attached, and not the
truthfulness, accuracy, or validity of that
document.

ACKNOWLEDGMENT

STATE OF CALIFORNIA )
)
COUNTY OF _____ )
On _____________ 20__, before me, _______________, a Notary Public, in and for said State and County, personally appeared _______________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

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

WITNESS my hand and official seal.
____________________________
Notary Public
Item 3B - Page 159
55575.18265\42281292.1
NPHS Regulatory Agreement
17 Exhibit A

LEGAL DESCRIPTION OF THE PROPERTY
Real property in the City of ________ , County of , State of California, described as follows:
[To Be Inserted – Single Lot Legal Description ]
APN: _____________
Item 3B - Page 160
55575.18265\42281292.1
NPHS Regulatory Agreement
18 Exhibit B
Maximum Initial Sales Price: Maximum Initial Sales Price will be calculated on AMI not to exceed 80 % AMI on the current year Income Limit Chart published by HCD.

Designation of Plans and Specifications for Unit

LOT SQARE FT BDRMS BATHS ELEV GARAGE

The index that will be used to calculate the affordable price to Low Income households will be the current “Area Median Income”* for Riverside County as published periodically. Once the families are selected and the incomes verified, the exact price of the home will be determined and calculated as described and entered into this Exhibit B using the Resale Formula as described in the Ground Lease in Exhibit C.

*"Area Median Income" means the median household income, adjusted for household size, applicable to Riverside County, California as published periodically by the State Department of Housing and Community Development in the California Code of Regulations, Title 25, Section 6932 pursuant to California Health and Safety Code Section 50093(c) (or successor provision).

Item 3B - Page 161
55575.18265\42281292.1
NPHS Regulatory Agreement
19 Exhibit C
[Attach Form of Ground Lease]

TO BE ADDED
Item 3B - Page 162
55575.18265\42293348.1
DRAFT
5/14/24

EXHIBIT K

EXHIBIT K
TO
2024 DISPOSITION AND DEVELOPMENT AGREEMENT
Sale of Real Property for Development of a Homeownership Opportunity Program Form of Notice of
Affordability Restrictions on Transfer of Property
[Attached Behind This Page]

TO BE ADDED
Item 3B - Page 163
55575.18265\42294660.1

RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:

City of Palm Springs
3200 E. Tahquitz Canyon Way
Palm Springs, California 92262
Attn: City Manager

EXEMPT FROM RECORDING FEES PER
GOVERNMENT CODE §§6103, 27383
Exempt From Recording Fee Pursuant to Government
Code § 27383

NOTICE OF AFFORDABILITY RESTRICTIONS

ON TRANSFER OF PROPERTY
(__________ Lot __)
Important notice to owners, purchasers, tenants, lenders, brokers, escrow and title companies, and other persons, regarding affordable housing restrictions on the real property described in this Notice: Affordable housing restrictions have been recorded with respect to the property described below (referred to in this Notice as the “Property”) which require that the Property be developed as an affordable for-sale home and that the home be conveyed to and occupied by persons and households of low income at an affordable housing cost through a long-term ground lease.

Title of Document Containing Affordable Housing Restrictions:

Affordable Housing Regulatory Agreement With Declaration of Restrictive Covenants With Option to Purchase (“Regulatory Agreement”).

Parties to Agreement: NPHS Community Redevelopment Inc., a California nonprofit public benefit corporation (“NPHS”), and the City of Palm Springs, a California charter city and municipal corporation (“City”).

The Agreement is recorded concurrently with this Notice, in the Official Records of Riverside County.

Legal Description of Property: See Exhibit “A” attached hereto and incorporated herein by this reference.

Property Location: ______ , California. -
Item 3B - Page 164
55575.18265\42294660.1
-2-
Assessor’s Parcel Number of Property: _________________________.

Summary of Agreement:
o The Agreement requires NPHS to develop a single family home on the Property (the “Restricted Home”).
o The Agreement restricts the sale of the Restricted Home to Low Income Households, as defined in Health and Safety Code Section 50093.
o The Agreement requires the Restricted Home to be sold at an “Affordable Purchase Price,” which is subject to the definition of an “Affordable Housing Cost,” as defined in Health and Safety Code Section 50052.5.

o Affordable Purchase Price means a home purchase price resulting in an average monthly housing payment (including mortgage loan principal and interest, ground lease payments, mortgage insurance fees, property taxes and assessments, homeowners insurance premiums, and homeowners association dues, if any) which is affordable to households of Low Income, as determined using standard underwriting criteria in common use by Fannie Mae or the California Housing Finance Agency (typically up to 80 % of AMI); provided, however, that the monthly payments shall not exceed the “affordable housing cost” for a Low Income Household as defined in Health and Safety Code Section 50052.5(b)(3) and accompanying regulations of the California Department of Housing and Community Development.
o Area Median Income is established and published periodically by the California Department of Housing and Community Development. o Concurrently with the sale of the Restricted Home, NPHS will enter into a ground lease (“Ground Lease”) with the homebuyer in order to ensure long-term affordability of the Restricted Home. The Ground Lease requires that each Homebuyer acknowledge receipt of this Notice and that Homebuyer has been notified the Ground Lease is Item 3B - Page 165
55575.18265\42294660.1
-3-
subject to compliance with the Regulatory Agreement. The Ground Lease is subject to City’s review and approval.
o The Restricted Home must be owner-occupied and the Homebuyer’s primary residence.
o Homebuyer must comply with re-sale restrictions, including but not limited to:
o Providing a Transfer Notice to City and obtaining City’s concurrence to a proposed transfer;
o City has an option to purchase the Property;
o The proposed transferee must meet qualifications of an Eligible Buyer; and
o City’s approval of an Affordable Purchase Price.
o The term of the Regulatory Agreement is for perpetuity, unless released by City pursuant to an instrument recorded in the Official Records of Riverside County.
o The requirements of the Regulatory Agreement are secured by a Deed of Trust in favor of the City. A breach of the Regulatory Agreement may result in a foreclosure of the Property and termination of the Ground Lease.

This Notice does not contain a full description of the details of all of the terms and conditions of the Agreement. You will need to obtain and read the Agreement to fully understand the restrictions and requirements which apply to the Property.
[IF APPLICABLE: This Notice is being recorded and filed in compliance with Health and Safety Code Section 33334.3(f)(3) and (4), and shall be indexed against City and NPHS, who will own fee title to the land portion of the Property.] CITY :

City of Palm Springs,
a municipal corporation
Item 3B - Page 166
55575.18265\42294660.1
-4-
By:____________________________
City Manager
ATTEST:

By:____________________________
City Clerk
APPROVED AS TO FORM:

By:____________________________
City Attorney
NPHS :

NPHS Community Redevelopment,
Inc., a California nonprofit public
benefit corporation
By:____________________________

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

Item 3B - Page 167
55575.18265\42294660.1
-5-
State of California )
County of __________ )
On , before me, , Notary Public,
(here insert name and title of the officer)
personally appeared ,
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument, and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

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

WITNESS my hand and official seal.

Signature
(seal)
Item 3B - Page 168
55575.18265\42294660.1
-6-
EXHIBIT “A”

LEGAL DESCRIPTION OF PROPERTY
All of that certain real property located in the City of ______ , County of ______ , State of California, described as follows:
[Insert description for single lot]
APN: ____________
3705317.1
Item 3B - Page 169
55575.18265\42293348.1

EXHIBIT L

EXHIBIT L
TO
2024 DISPOSITION AND DEVELOPMENT AGREEMENT
Sale of Real Property for Development of a Homeownership Opportunity Program Pro Forma
[Attached Behind This Page]

TO BE ADDED
Item 3B - Page 170

ATTACHMENT B
Item 3B - Page 171
RESOLUTION NO. ________

A RESOLUTION BY THE CITY COUNCIL OF THE

CITY OF PALM SPRINGS, ON BEHALF OF THE

CITY AND ON BEHALF OF THE HOUSING

SUCCESSOR AGENCY FOR THE COMMUNITY

REDEVELOPMENT AGENCY OF THE CITY OF

PALM SPRINGS, DECLARING REAL PROPERTY
AS EXEMPT SURPLUS LAND (APN: 669-353-001,
669-401-010, and 401-401-039)
WHEREAS, the City of Palm Springs (the “City”) is the owner in fee simple of that certain real property approximately 0.22 acres in size, with Assessor Parcel Number 669-353-001 and located on Rosa Parks Road in the City, as further described and depicted in Exhibit “A” attached hereto and incorporated herein (“Parcel 1”); and
WHEREAS, the City, as the Housing Successor Agency to the Community Redevelopment Agency of the City of Palm Springs, is the owner in fee simple of the following real property: (A) a parcel approximately 0.17 acres in size, with Assessor Parcel Number 669-401-010, located at 233 West Tramview Road in the City, as further described and depicted in Exhibit “B,” attached and incorporated herein (Parcel 2”), and (B) a parcel approximately

0.21 acres in size, with Assessor Parcel Number 401-401-039, located on El Dorado Boulevard in the City, as further described and depicted in Exhibit “C,” attached and incorporated herein (“Parcel 3”);
WHEREAS, Parcel 1, Parcel 2, and Parcel 3 (collectively, the “Property”) are each less than one half acre in area, or 21,780 square feet, and not contiguous to land owned by a state or local agency that is used for open-space or low- or moderate-income housing purposes; and
WHEREAS, the City and Housing Successor Agency no longer has any use for the Property; and
WHEREAS, the Surplus Land Act, Government Code sections 54220 et seq. (the “Act”), applies when a local agency disposes of “surplus land,” as that term is defined in Government Code section 54221; and
WHEREAS, the Property is “surplus land” under the Act, because it is land owned in fee simple by the Agency and is not necessary for the Agency’s use; and
WHEREAS, the Property may be declared “exempt surplus land” under the Act if it is less than one-half acre in area and it is not contiguous to state or local agency property used for open-space or low- or moderate-income housing (Government Code section 54221(f)(1)(B)); and
Item 3B - Page 172
WHEREAS, the Property may be declared as exempt surplus land by resolution of the City Council, acting for the City and as the Housing Successor Agency to the Community Redevelopment Agency for the City of Palm Springs.

NOW, THEREFORE, the City Council/Housing Successor Agency to the Community Redevelopment Agency for the City of Palm Springs hereby declare as follows:

SECTION 1. The above recitals are true and correct and are a substantive part of this Resolution.

SECTION 2. The City, on its own behalf, and as the Housing Successor Agency to the Community Redevelopment Agency for the City of Palm Springs, has legal authority to declare, and hereby does declare, that (A) the Property is surplus because it is no longer necessary for use by the City or the Housing Successor Agency, and (B) the Property is exempt surplus property pursuant to California Government Code Section 54221, based on the findings set forth herein.

SECTION 3. The Property is exempt surplus property under subdivision (f)(1)(B) of Government Code Section 54221 because Parcel 1, Parcel 2, and Parcel 3 are each smaller than one-half acre in area, and they are not contiguous to state or local agency property used for open-space or low- or moderate-income housing. In addition, the Property does not meet any criteria identified in Government Code section 54221(f)(2).

SECTION 4. The Property is exempt surplus property for purposes of a transfer to a community land trust, provided that all of the requirements in subdivision (f)(1)(R) of Government Code Section 54221, and any implementing guidelines or regulations, are satisfied, including: (i) the Property is being developed for owner-occupied single-family dwellings, owner-occupied multifamily dwellings, member-occupied units in a limited equity housing cooperative, or rental housing; (ii) the improvements on the Property will be available for use and ownership or for rent by qualified persons, as defined in paragraph (6) of subdivision (c) of Section 214.18 of the Revenue and Taxation Code; (iii) the Property is subject to a deed restriction or other instrument requiring a contract or contracts serving as an enforceable restriction on the sale or resale value of the owner-occupied units or affordability of rental units is recorded on or before the lien date following the acquisition of the property by the community land trust; and (iv) a copy of the deed restriction or other instrument is provided to the County Assessor.

SECTION 5. Pursuant to the requirements of state and local law, the City may dispose of the Property pursuant to one or both of the exempt surplus land determinations set forth in Section 3 or Section 4, above.

SECTION 6. If any section, subsection, paragraph, sentence, clause or phrase of this notice is declared by a court of competent jurisdiction to be Item 3B - Page 173
unconstitutional or otherwise invalid, such decision shall not affect the validity of the remaining portions of this notice.

SECTION 7.The City Clerk, on behalf of the City and the Housing Successor Agency, shall certify to the adoption of this Resolution.

SECTION 8. This Resolution shall be effective immediately upon approval.

PASSED, APPROVED AND ADOPTED at a regular meeting of the City Council of the City of Palm Springs, for the City and the Housing Successor Agency, on the ____ day of _______, 2024.
_______________________
Jeffrey Bernstein
Mayor & Housing Successor Agency Chair

CERTIFICATION
I, the undersigned, hereby certify: That I am the duly appointed and acting City Clerk of the City of Palm Springs, and that at a regular meeting of the City Council/Housing Successor Agency held on ___________, 2024, the foregoing Resolution No. _______ was duly and regularly adopted by said Council/Housing Successor Agency, and that said resolution has not been rescinded or amended since the date of its adoption, and that it is now in full force and effect.

DATED:

City Clerk

Item 3B - Page 174
Exhibit A
Parcel 1
APN: 669-353-001

0.22 ACRES LOT 63 MB 039/058 PALM SPRINGS GATEWAY ESTATES 10~:·~·1::·1:·~·P:~·~ 3~42 EAS5:~~i:~~~RCA W
,ran Sot locatio n 3811 ASTGAliE ~D S9a-~VENIDA CE[CA
3§14 ASTGA1E-R0
~ 687-~VENIDA CE CA
3fa5 ASTGA -REI
688 LAS VEGAS R
3700 EAS GA E RD
W Las Ve as Rd
645 OSA PARKS R
-0
644 GATEWAY. ffR
m
1ij
-'--- - -'------'----'---__,,, ~
.. _ ___, __ w_ G~aleway Dr w 555 Ros•
693 \GAT~-- _J_ -l mm unitv lMapsCooJi:to,s, Loma Linda u~iversitv, UC Rive 5earc;hfor ainad ress orlo-c:ateon mao
[ .... 1 669-353-001
Show resul s with in O Miles
0 0
( Pea rcels
Parcels;
J\PN_0
ASMT
SITUS_5TRE
OWNER1
OWNER2

MAILADDR

MAILCITY

MAILSTATE
6'19-353-00 1
Cl , Of PALM SPRI N S
PO OX2743
PALM 5 INGS
CA
MAILZ P 92 63
LEGAL_DESC
ACBO_LAND
YEAR_BUILT

ACREAGE
J\CTlJJ\LARE
ZONING
LOT 63 MB 039/058 PALM
S INGSGATEWAYE5TA S I

0.2200
RIC
Item 3B - Page 175
Exhibit B
Parcel 2
APN: 669-401-010
233 West Tramview Road Palm Springs, California, 92262
LOT 295 MB 024/053 DESERT HIGHLAND ESTATES
O\mer 2:

REDEVELOPMENT AGENCY

CITY OF PALM SPRINGS
Own •~d PO BOX 3743 PALM SPRING er~ ress . S, CA 90044
Legal Oescripuon. ~?;Jc!J~BE~.;:;.r:ESERT _,,,,=a=- o. of Units :

Year Built :

Bu,kJ,ng Areo
Lot Area (assessor)
7,370 S FT (0.17 ACRES)
Flood Zone X
Zoo,ng R10
Shared Notes O Results
O Resu s
Item 3B - Page 176
Exhibit C
Parcel 3
APN: 669-401-039
West side of El Dorado Boulevard south of West Tramview Road Palm Springs, CA 92262

0.21 ACRES M/L IN POR LOT F AND LOT 38 MB 024/053

DESERT HIGHLAND ESTATES
Parcel Number · 669401039

REDEVELOPMENT AGENCY
Owner 1 · CITY OF PALM SPRINGS
Owner 2·
3200 E TAHQUITZ CANYON W
Owner Address : AY, PALM SPRINGS, CA 9226
2 .21 ACRES MIL IN POR LOT F
Legal Descnpllon. AND LOT 38 MB 0241053 DES

ERT HIGHLAND ESTATES
No. of Units :

Year Built .

Building Area ·
Lot Area (assesSOf) . 9,147 SQFT (0.21 ACRES)
Let Area (calculated} . 9.147 SQFT (0 21 ACRES)
Flood Zone · X
Zoning · R1D
Shared Noles . 0 Results
. -. . .- 0 Results
'".,,• I • • •• ·•-•• • • l
• .. • ~ I I'" 0 t ' I
l-1 t I • • ,.. '- e A •
' .• ,4 ' " .... ...
. .

Item 3B - Page 177

ATTACHMENT C
Item 3B - Page 178

PUBLIC INTEGRITY DISCLOSURE

APPLICANT DISCLOSURE FORM

1. 2. Address of Entity (Principal Place of Business)

3. Local or California Address (if different than #2)

4. State where Entity is Registered with Secretary of State If other than California, is the Entity also registered in California?  Yes  No

5. Type of Entity
 Corporation  Limited Liability Company  Partnership  Trust  Other (please specify)

6. Officers, Directors, Members, Managers, Trustees, Other Fiduciaries (please specify) Note: If any response is not a natural person, please identify all officers, directors, members, managers and other fiduciaries for the member, manager, trust, or other entity
________________________  Officer  Director  Member  Manager [name]  General Partner  Limited Partner
Other ___________________________
_______________________________  Officer  Director  Member  Manager [name]  General Partner  Limited Partner
 Other __________________________
________________________________  Officer  Director  Member  Manager [name]  General Partner  Limited Partner
 Other __________________________
Name of Entity
NPHS Community Redevelopment, Inc.
9551 Pittsburgh Ave., Rancho Cucamonga, CA 91730
California
Clemente Mojica
Solon Escobar
Jesse Ibarra
x
x
x
x
I l
-
~
-
-
-
-
L
Item 3B - Page 179

7. Owners/Investors with a 5% beneficial interest in the Applicant Entity or a related entity

EXAMPLE

JANE DOE
[name of owner/investor]
50%, ABC COMPANY, Inc.
[percentage of beneficial interest in entity and
name of entity]
A.
[name of owner/investor] [percentage of beneficial interest in entity and name of entity]
B.
[name of owner/investor] [percentage of beneficial interest in entity and name of entity]
C.
[name of owner/investor] [percentage of beneficial interest in entity and name of entity]
D.
[name of owner/investor] [percentage of beneficial interest in entity and name of entity]
E.
[name of owner/investor] [percentage of beneficial interest in entity and name of entity]

I DECLARE UNDER PENALTY OF PERJURY UNDER THE LAWS OF THE STATE OF CALIFORNIA THAT THE FOREGOING IS TRUE AND CORRECT.

Signature of Disclosing Party, Printed Name, Title Date 10/11/2023 c{/
()
Item 3B - Page 180

ATTACHMENT D
Item 3B - Page 181
Exhibit A
Parcel 1
APN: 669-353-001

0.22 ACRES LOT 63 MB 039/058 PALM SPRINGS GATEWAY ESTATES MIJA G ANOE \ g 1----1 51:ig-,.,J AVENIDA C~RCA W
38:4 MISSION PE.AK z!42 EASTGAili.R-Cl-l
""',,.,,.an~S-et~lo-,-~,-io~n j 3811 ASTGAliE ,; • 595-~VENIDACErA B ~ 68,.JWE NIDA CE RCA 812 MISSION l':EAK 3~14 ASTGATj-•E-R·lal
784 MI SSION PEAK 3fs5 ASTGA IE-REJ
3755 EAS TGAliE RD
DG~---'-'--'----'l~- --j 3758 EASTGATERO
y3708MEADOW JEW 373 EASTGAT RD
370 EASTGAT RD
588 LAS VEGAS R
3700 EAS GA E RD
W La s Ve as Rd
645 OSA PAR S R
"O
644 GATEWAY. ElR
m
;;; -~- - --'----'---'---'~
.. _ _ __ w_ G_aleway o, w 555 Rosa
693 \GATr-·---
1- -l mmun;ty lMap•ConJ ;:lllo<S, Loma L;nda u ~;ve•s~, UC R;ve Search for an address or locate on mao
[ • 1 669-353-001
Shaw resul s with in O Mi~ss
0 0
( Pa:rcels
Para.ls;
APN_O
ASMT
SITUS_STRE
OWNER1
OWNER2

MAILADDR

MAILCITY

MAILSTATE
MAIL2P
LEGAL_DESC

ACBC LAND

YEAR BUILT

ACREAGE

ACTUALARE
ZONING
r.a:r,,.1 J:11 lltJ
61, .J 3-00 1
Cl , 0 ALM PRIN S
POBOX 743
PALM 5 INGS
CA
92263
LOT 63 MB 039/058 PALM
s INGSGATEWAYESTATES I

0.2200
Rl
Item 3B - Page 182
Parcel 2
APN: 669-401-010
233 West Tramview Road Palm Springs, California, 92262
LOT 295 MB 024/053 DESERT HIGHLAND ESTATES
Owner 2:

REDEVELOPMENT AGENCY
CITY OF PALM SPRl GS
Own ·~d es . PO BOX 3743 PALM SPRING er~ ' 5 · S, CA 90044 Legal Descripuon ~?JJ95 t~BE02T~~rSDESERT 1r-;;;;=;;: 11:;:, o. of Units :

Year Built :

Bu11d1ng Area
Lot Area (assessor)
7,370 S FT (0.17 ACRES)
Flood Zone X
Zoo,ng R10
Shared Notes O Results
O Results
Item 3B - Page 183
Parcel 3
APN: 669-401-039
West side of El Dorado Boulevard south of West Tramview Road Palm Springs, CA 92262

0.21 ACRES M/L IN POR LOT F AND LOT 38 MB 024/053

DESERT HIGHLAND ESTATES
Parcel Number · 669401039
Owner 1_ REDEVELOPMENT AGENCY

CITY OF PALM SPRINGS
Owner 2·
3200 E TAHQUITZ CANYO W
Owner Address : AY, PALM SPRINGS, CA 9226
2 .21 ACRES MIL IN POR LOT F
Legal Descnphon. AND LOT 38 MB 0241053 DES

ERT HIG LAND ESTATES
No. of Unhs :

Year Built .

Building Area ·
Lot Area (assessor) . 9,147 SOFT (0.21 ACRES)

9.147 SOFT (0 21 ACRES)
Flood Zone · X
Zoning · R1D
Shared Notes . 0 Resu ts
0 Results
., ~ t • 4 ~ • ~•• •• • ' II
..... ~ • I f : \~ ~ ' ' t I - •
I ~• •! , ,.~ ...... • •
Item 3B - Page 184

Palm Springs City CouncilMay 23, 2024

Palm Springs City Council
May 23, 2024