Agenda packet, regular meeting — Pleasanton City Council, May 21, 2024 (part 2 of 5)

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10 of the Project receive all notices, benefits and assistance to which they are entitled in accordance with California Relocation Assistance Law (Government Code Section 7260 et seq.), all State and local regulations implementing such law, and all other applicable local, State and federal laws, regulations and policies, including but not limited to the Uniform Relocation Act (42 U.S.C. § 4601 et seq.) and implementing regulations (all of the foregoing, collectively “Relocation Laws”) relating to the displacement and relocation of eligible persons as defined in such Relocation Laws. All costs incurred in connection with the temporary and/or permanent displacement and/or relocation of occupants of the Project, including without limitation payments to a relocation consultant, moving expenses, and payments for temporary and permanent relocation benefits pursuant to Relocation Laws shall be paid by Owner, and City shall have no responsibility for payment therefor.

Owner shall indemnify, defend with counsel approved by City, and hold the Indemnitees harmless from and against all Claims arising from the breach of Owner’s obligations set forth in this Section whether or not any insurance policies shall have been determined to be applicable to any such Claims. Owner’s indemnification obligations set forth in this Section: (i) shall survive the expiration or earlier termination of this Agreement, and (ii) shall not extend to Claims to the extent arising from the gross negligence or willful misconduct of the Indemnitees. City does not and shall not waive any rights against Owner that it may have by reason of any indemnity and hold harmless provision set forth in this Agreement because of the acceptance by City, or the deposit with City by Owner, of any of the insurance policies described in this Agreement.

3.11 Rental Agreements. Lease and rental agreements for the Restricted Units must comply with the following terms.
(1) The term must be not less than one (1) year unless by mutual agreement between tenant and Owner.
(2) Any termination of tenancy or refusal to renew a lease must be preceded by thirty (30) days written notice (or such longer period as required by law) specifying the grounds for the action. Owner shall not terminate the tenancy or refuse to renew the lease of a tenant except for serious or repeated violation of the terms and conditions of the lease, for violation of applicable federal, state, or local law, or for other good cause.
(3) Leases may not contain any of the following prohibited clauses:
• Agreement by the tenant to be sued, to admit guilt, or to a judgment in favor of Owner or Owner’s agent in a lawsuit brought in connection with the lease; • Agreement by the tenant that Owner may take, hold, or sell personal property of household members without notice to the tenant and a court decision on the rights of the parties. This prohibition, however, does not apply to an agreement by the tenant concerning disposition of personal property remaining in the housing unit after the tenant has moved out of the unit. Owner may dispose of this personal property in accordance with State law;

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11 • Agreement by the tenant not to hold Owner or Owner’s agents legally responsible for any action or failure to act, whether intentional or negligent; • Agreement of the tenant that Owner or Owner’s agent may institute a lawsuit without notice to the tenant;
• Agreement by the tenant that Owner or Owner’s agent may evict the tenant or household members without instituting a civil court proceeding in which the tenant has the opportunity to present a defense, or before a court decision on the rights of the parties;
• Agreement by the tenant to waive any right to a trial by jury; • Agreement by the tenant to waive tenant’s right to appeal, or to otherwise challenge in court, a court decision in connection with the lease; and • Agreement by the tenant to pay attorneys’ fees or other legal costs even if the tenant wins in a court proceeding by Owner against the tenant. The tenant, however, may be obligated to pay costs if the tenant loses.

4. Reporting Requirements; Annual Monitoring Fee; Inspections.

4.1 Financial Accounting and Post-Completion Audit. No later than 60 days following City’s issuance of a final certificate of occupancy or equivalent following completion of Project rehabilitation, Owner shall provide to City a summary of all sources and uses of funds for the Project and a draft of the Project Cost Certification.

4.2 Tenant Certification. Owner or Owner’s authorized agent shall obtain from each household prior to initial occupancy of each Restricted Unit, and on every anniversary thereafter, a written certificate containing all of the following in such format and with such supporting documentation as City may reasonably require:
(i) The identity of each household member;
(ii) The total household Gross Income; and
(iii) The age of each household member or other basis upon which the household qualifies as an Eligible Household.

Owner shall retain such certificates for not less than five (5) years, and upon City’s request, shall provide copies of such certificates to City and make the originals available for City inspection.

4.3 Monitoring Fee. Following completion of rehabilitation of the Project, as evidenced by City’s issuance of a final certificate of occupancy or equivalent, Owner shall be obligated to pay to City an annual fee (the “Affordable Housing Monitoring Fee”) in the amount of (Ten Thousand Dollars ($10,000). The Affordable Housing Monitoring Fee is payable annually on the same date that the Annual Report is due pursuant to Section 4.4 below. City shall have the right to file a lien against the Project if the Affordable Housing Monitoring Fee is not

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12 paid when due and remains unpaid thirty (30) days following the date that City provides written notice of the delinquency. The Affordable Housing Monitoring Fee will increase annually by three percent (3%) over the prior year.

4.4 Annual Report; Estimate of Surplus Cash; Annual Budget.

4.4.1 Annual Report; Estimate of Surplus Cash. By not later than April 30 of each year during the Term, Owner shall submit an annual report (“Annual Report”) to the City in form satisfactory to City, together with a certification that the Project is in compliance with the affordability and occupancy requirements of this Agreement. The Annual Report shall, at a minimum, include the following information for each Restricted Unit: (i) unit number; (ii) number of bedrooms; (iii) current rent, utility, and other charges; (iv) the affordability category and affordability restrictions that apply to the unit; (v) dates of any vacancies during the previous year; (vi) number of people residing in the unit; (vii) total household Gross Income; (viii) documentation of source of household income; (ix) lease commencement and termination dates; and (x) the information required by Section 4.2.

Owner shall include with the Annual Report, an income recertification for each household, documentation verifying tenant eligibility, and such additional information as City may reasonably request from time to time in order to demonstrate compliance with this Agreement. The Annual Report shall conform to the format requested by City; provided however, during such time that the Project is subject to a regulatory agreement restricting occupancy and/or rents pursuant to requirements imposed in connection with the use of State or federal low-income housing tax credits, Owner may satisfy the requirements of this Section that pertain to tenant income certification and rents by providing City with a copy of compliance reports required in connection with such financing.

In addition to the information described above, the Annual Report shall include the following:
(i) A Project income and expense statement for the reporting period; (ii) A summary of maintenance and other issues anticipated to affect the current budget needs of the Project and the amount expected to be needed for major repairs or other needs during the following fiscal year;
(iii) A report on the Project operating and replacement reserve accounts summarizing draws of such funds and remaining balances; (iv) Information on the status of the waiting list for units, including the number of households on the list and the number of City of Pleasanton residents and persons employed in the City on the list;
(v) If rents for any Restricted Units have been increased pursuant to Section

3.3, documentation that the increase in rents is required for Financial Feasibility, and documentation regarding Owner’s efforts to secure additional sources of rent or operating subsidy for the Project;

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13 (vi) A financial audit of the books and records of the Project prepared in accordance with generally accepted auditing standards by an independent certified public accountant; and
(vii) In accordance with Section 1.3 of the Note, a calculation of Project surplus cash for the preceding calendar year accompanied by the supporting documentation described in the Note.

City may, in its reasonable discretion, from time to time request additional information, and Owner shall promptly supply such information in the Annual Report.

4.4.2 Annual Budget. In accordance with Section 1.3 of the Note, by not later than November 1 of each year, Owner shall provide to City a proposed Project budget for the following calendar year which shall include estimated Project revenue, expenses and debt service, and an estimate of Surplus Cash. City will review the proposed budget and, if acceptable, approve it, which approval shall not be unreasonably withheld, provided, however, if the proposed budget has not been rejected by City within forty-five (45) days of receipt, City shall be deemed to have accepted the budget. If the budget is not acceptable, City shall specify the reasons for disapproval. Once approved, any changes to the budget that exceed ten percent (10%) of the total budget shall require City's prior written consent, which consent shall not be unreasonably withheld. Upon City’s request, the budget shall include a long-term capital needs and replacement reserve plan supported by a physical needs assessment prepared by a third-party at Borrower’s expense.

4.5 Maintenance and Inspection of Books and Records; Audits.

4.5.1 Maintenance of Books and Records. Owner shall keep and maintain at the Property or Owner’s principal place of business, or elsewhere with City’s consent, full, complete and accurate books, records, and accounts relating to the Project, including all such books, records, and accounts necessary to evidence and substantiate compliance with the City Documents, without limitation, the records required to substantiate compliance with Relocation Laws and if applicable to the Project, California Labor Code Section 1720 et seq. (Prevailing Wage Laws), the calculation of payments required under the Note and the Ground Lease, and the records required to substantiate compliance with this Agreement. Books shall be kept and maintained in accordance with generally accepted accounting principles consistently applied.

Owner shall maintain all records regarding the rehabilitation of the Project for five (5) years after final payment and all other pending matters are closed. Owner shall also maintain tenant leases, income certifications and other matters related to the leasing of the Project for a period of five (5) years after the final date of occupancy by each tenant. If any litigation, claim, negotiation, audit exception, monitoring, inspection or other action relating to the use of the Loan is pending at the end of the record retention period stated herein, then Owner shall retain such records until such action and all related issues are resolved.

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14 4.5.2 Access to Records; Inspection and Audit. Upon request, and with at least two (2) business days’ prior written notice, Owner shall permit the City and its authorized agents and representatives to inspect during normal business hours, those books, records and all other documents of Owner necessary to determine Owner’s compliance with the terms of this Agreement and the other City Documents. All Project books, records, and accounts, and all tax returns and other reports that Owner may be required to furnish to any governmental agency shall be open to and available for audit, inspection and copying by the City, its auditors and other authorized representatives at reasonable intervals during normal business hours upon not less than two (2) business days’ prior written notice. With at least two (2) business days’ prior written notice, during normal business hours and as often as may be deemed necessary, City and its authorized agents and representatives shall be permitted access to and the right to examine the Project and the Property and to interview tenants and employees of the Project, for the purpose of verifying compliance with applicable regulations and compliance with the conditions of this Agreement and the other City Documents.

City shall notify Owner of any records it reasonably deems insufficient. Owner shall have fifteen (15) calendar days from such notice to correct any specified deficiency in the records, or, if more than fifteen (15) days shall be reasonably necessary to correct the deficiency, Owner shall begin to correct the deficiency within fifteen (15) days and diligently pursue the correction of the deficiency as soon as reasonably possible.

City’s receipt or acceptance of any statement delivered or payment made by Owner pursuant to this Agreement or the other City Documents shall not bind the City as to the correctness of such statement or payment. Within three (3) years after the receipt of any such statement or payment, the City or its designated agent shall be entitled to audit all books, records, and accounts pertaining to the calculation of payment amounts due under the City Documents.

Such audit shall be conducted upon not less than two (2) business days’ prior written notice during normal business hours at the principal place of business of Owner and other places where Project records are kept. Promptly following completion of an audit, the City shall deliver a copy of the audit results to Owner. If the audit determines that there has been a deficiency in a payment under the Note or the Ground Lease, then subject to Owner’s right to provide a reconciliation of such deficiency to City within 30 days following Owner’s receipt of the audit results, such deficiency shall, if not reconciled to the satisfaction of City, become immediately due and payable with interest at the rate set forth in the Note, accruing from the date that such payment should have been made; provided however, if Owner's failure, refusal, or repeated failure to correctly calculate and/or submit the payment required under the Note or the Ground Lease constitutes an Event of Default, interest shall be payable at the default rate specified in the Note accruing from the date that such payment should have been made. In addition, if the City audit for any period determines that surplus cash payable pursuant to the Note or the Ground Lease during such period exceeds Owner’s calculation by the lesser of (a) five percent (5%) of the amount payable or (b) Five Thousand Dollars ($5,000), then in addition to the interest charges described above, Owner shall pay the City's cost to conduct the audit.

5. Binding Upon Successors; Covenants to Run with the Land. Owner hereby subjects its interest in the Property and the Project to the covenants and restrictions set forth in this Agreement. The City and Owner hereby declare their express intent that the covenants and

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15 restrictions set forth herein shall be deemed covenants running with the land and shall be binding upon and inure to the benefit of the heirs, administrators, executors, successors in interest, transferees, and assigns of Owner and City, regardless of any sale, assignment, conveyance or transfer of the Property, the Project or any part thereof or interest therein. Any successor-in-interest to Owner, including without limitation any purchaser, transferee or lessee of the Property or the Project (other than the tenants of the individual dwelling units within the Project) shall be subject to all of the duties and obligations imposed hereby for the full Term. Each and every contract, deed, ground lease or other instrument affecting or conveying the Property or the Project or any part thereof, shall conclusively be held to have been executed, delivered and accepted subject to the covenants, restrictions, duties and obligations set forth herein, regardless of whether such covenants, restrictions, duties and obligations are set forth in such contract, deed, ground lease or other instrument. If any such contract, deed, ground lease or other instrument has been executed prior to the date hereof, Owner hereby covenants to obtain and deliver to City an instrument in recordable form signed by the parties to such contract, deed, ground lease or other instrument pursuant to which such parties acknowledge and accept this Agreement and agree to be bound hereby. Owner agrees for itself and for its successors that in the event that a court of competent jurisdiction determines that the covenants herein do not run with the land, such covenants shall be enforced as equitable servitudes against the Property and the Project in favor of City.

6. Property Management; Repair and Maintenance; Marketing.

6.1 Management Responsibilities. Owner shall be responsible for all management functions with respect to the Property and the Project, including without limitation the selection of tenants, certification and recertification of household income and eligibility, evictions, collection of rents and deposits, maintenance, landscaping, routine and extraordinary repairs, replacement of capital items, and security. City shall have no responsibility for management or maintenance of the Property or the Project.

6.2 Management Entity. City shall have the right to review and approve the qualifications of (i) the management entity, and shall have the right to review and approve any agreement executed between Owner and such entity, which approval shall not be unreasonably withheld. The contracting of management services to a management entity shall not relieve Owner of its primary responsibility for proper performance of management duties. City hereby approves Eden Housing Management, Inc., a California nonprofit public benefit corporation, as the initial management entity for the Project. Any subsequent management entity shall be subject to City review and approval, which shall not be unreasonably withheld or delayed. Upon City determination and delivery of written notice to Owner that Owner has failed to operate the Project in accordance with this Agreement, subject to any applicable cure period and the approval of the Project lenders and equity investors, City may require Owner to contract with a qualified management agent selected by City and approved by the Project lender and equity investor, to operate the Project, or to make such other arrangements as City deems necessary to ensure performance of the required functions.

6.3 Repair, Maintenance and Security. Throughout the Term, Owner shall at its own expense, maintain the Property and the Project in good physical condition, in good repair, and in decent, safe, sanitary, habitable and tenantable living conditions in conformity with all applicable

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16 state, federal, and local laws, ordinances, codes, and regulations. Without limiting the foregoing, Owner agrees to maintain the Project and the Property (including without limitation, the residential units, common areas, meeting rooms, landscaping, driveways, parking areas and walkways) in a condition free of all waste, nuisance, debris, unmaintained landscaping, graffiti, disrepair, abandoned vehicles/appliances, and illegal activity, and shall take all reasonable steps to prevent the same from occurring on the Property or at the Project. Owner shall prevent and/or rectify any physical deterioration of the Property and the Project and shall make all repairs, renewals and replacements necessary to keep the Property and the improvements located thereon in good condition and repair. Owner shall provide adequate security measures for the Project, including without limitation, the installation of adequate lighting and deadbolt locks.

6.3.1 Additional Requirements. All construction work and professional services for the Project shall be performed by persons or entities licensed or otherwise authorized to perform the applicable work or service in the State of California and shall have a current City of Pleasanton business license if required under local law. To the extent allowed by state and federal laws, Owner shall limit the installation of satellite dish, antenna and other such equipment to screened locations on the Property as approved by the City. Owner shall diligently work to resolve complaints related to noise, parking, litter or other neighborhood concerns related to the Project.

6.4 City’s Right to Perform Maintenance. In the event that Owner breaches any of the covenants contained in Section 6.3, and such default continues for a period of ten (10) days after written notice from City (with respect to graffiti, debris, and waste material) or thirty (30) days after written notice from City (with respect to landscaping, building improvements and general maintenance), then City, in addition to any other remedy it may have under this Agreement or at law or in equity, shall have the right, but not the obligation, to enter upon the Property and perform all acts and work necessary to protect, maintain, and preserve the improvements and the landscaped areas on the Property. All costs expended by City in connection with the foregoing, shall constitute an indebtedness secured by the Deed of Trust, and shall be paid by Owner to City upon demand. All such sums remaining unpaid thirty (30) days following delivery of City’s invoice therefor shall bear interest at the lesser of 10% per annum or the highest rate permitted by applicable law. City shall have a lien against the Project for the amount of such unpaid sums and shall have the right to record a Notice of Claim of Lien against the Project.

6.5 Property Management and Marketing; Form of Residential Lease. Prior to the Closing Date, Owner shall submit to City for City review and approval proposed forms of the following documents for the Project: (i) the property management plan (“Property Management Plan”), (ii) the property management agreement, (iii) a plan for marketing the Property (“Marketing Plan”), and (iv) the form of rental agreement that Owner proposes to enter into with Project tenants. The Marketing Plan shall address in detail how Owner plans to market the Restricted Units to prospective Eligible Households in accordance with fair housing laws and this Agreement. The Property Management Plan shall include descriptions of (i) the procedures to be used to certify the eligibility of prospective tenants; (ii) the management team; and (iii) procedures Owner and the management entity will follow to manage and maintain the Property and the Project. Owner shall abide by the terms of the Marketing Plan and the Property

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17 Management Plan as approved by City, and throughout the Term, shall submit proposed modifications to City for review and approval.

In addition to the foregoing, the Marketing Plan and the Property Management Plan, as applicable, shall address the following:
(a) The actions to be taken by Owner to affirmatively market units in compliance with fair housing laws and in compliance with City’s policies and procedures, including the policies described in Section 3.9.1 above; (b) Criteria, procedures and policies that will be used to determine tenant eligibility, including certification of household income and size, age of household members or other qualifying criteria, and establishing reasonable occupancy standards (which shall not exceed standards established by state and federal fair housing laws and state housing and building codes), and procedures for screening prospective tenants, including obtaining credit reports, unlawful detainer reports, landlord references and criminal background investigations;
(c) Subject to Section 3.9.1, a requirement that eligible tenants be selected based on order of application, lottery or other reasonable method approved by City; (d) A requirement that eligible applicants be notified of eligibility and be provided an estimate regarding when a unit may be available; (e) A requirement that ineligible applicants be notified of the reason for their ineligibility;
(f) Specific procedures through which applicants deemed to be ineligible may appeal this determination;
(g) Maintenance of a waiting list of eligible applicants; (h) Specific procedures for obtaining documentation regarding prospective tenants’ incomes, as necessary, to certify that such income does not exceed income limits;
(i) Specific procedures for certification and recertification of household incomes and procedures for handling over-income tenants; (j) A description of actions that will be taken to provide reasonable accommodations to residents as needed;
(k) A requirement that a written rental agreement (in form approved by City) be executed with each Eligible Household selected to occupy a Restricted Unit; (l) A detailed listing of reasonable rules of conduct and occupancy which

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18 shall be consistent with federal and state law, and a written copy of which shall be provided to each tenant upon occupancy;
(m) A requirement that there be no storage on balconies and patios and that tenants must keep all balconies, patios and other exterior areas neat, clean and clutter free, including no clotheslines or laundry;
(n) A parking management plan which details, among other things, how parking spaces will be assigned, how guest parking will be handled and how parking will be managed to encourage tenants to use their assigned parking spaces; (o) Procedures for maintenance and management of the Project; (p) Procedures for dealing with tenant or neighborhood issues or concerns; (q) Procedures for maintaining a reserve account, budgeting for maintenance and repair needs as well as long-term rehabilitation needs, and handling net cash flow; and
(r) Such other requirements and criteria/procedures as City may reasonably determine appropriate.

6.6 Approval of Amendments. If City has not responded to any submission of the Property Management Plan, the Marketing Plan, the proposed management entity, the proposed management agreement, or a proposed amendment or change to any of the foregoing within sixty (60) days following City’s receipt of such plan, proposal, agreement or amendment, the plan, proposal, agreement, or amendment shall be deemed approved by City.

6.7 Fees, Taxes, and Other Levies. Owner shall be responsible for payment of all fees, assessments, taxes, charges, liens and levies applicable to the Property or the Project, including without limitation possessory interest taxes, if applicable, imposed by any public entity, and shall pay such charges prior to delinquency. However, Owner shall not be required to pay any such charge so long as (a) Owner is contesting such charge in good faith and by appropriate proceedings, (b) Owner maintains reserves adequate to pay any contested liabilities, and (c) on final determination of the proceeding or contest, Owner immediately pays or discharges any decision or judgment rendered against it, together with all costs, charges and interest. The foregoing is not intended to impair Owner’s ability to apply for any applicable exemption from property taxes or other assessments and fees.

6.8 Insurance Coverage. Throughout the Term, Owner shall comply with the insurance requirements set forth in Exhibit B, and shall, at Owner’s expense, maintain in full force and effect insurance coverage as specified in Exhibit B.

6.9 Property Damage or Destruction. If any part of the Project is damaged or destroyed, Owner shall repair or restore the same, consistent with the occupancy and rent restriction requirements set forth in this Agreement. Such work shall be commenced as soon as reasonably practicable after the damage or loss occurs and shall be completed within one

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19 year thereafter or as soon as reasonably practicable, provided that insurance proceeds are available to be applied to such repairs or restoration within such period and the repair or restoration is financially feasible. During such time that senior lenders or low-income housing tax credit investors providing financing for the Project impose requirements that differ from the requirements of this Section, the requirements of such lenders and investors shall prevail.

6.10 Reserves. Owner shall establish and maintain operating and replacement reserves in the amounts required by Project lenders and investors. City’s advance written consent, which shall not be unreasonably withheld, shall be required for withdrawals from reserves for non-routine expenses exceeding the sum of $50,000. If City does not respond within twenty (20) days of City’s receipt of a reserve withdrawal request, such request shall be deemed approved. City will not withhold consent if the withdrawal has been approved by Project lenders and investors if consent by such parties is required.

7. Recordation; No Subordination. This Agreement shall be recorded in the Official Records senior in priority to all deeds of trust recorded against the Project or Owner’s leasehold interest in the Property. Owner hereby represents, warrants and covenants that with the exception of easements of record, absent the written consent of City, this Agreement shall not be subordinated in priority to any lien (other than those pertaining to taxes or assessments), encumbrance, deed of trust, or other interest in the Property or the Project. If at the time this Agreement is recorded, any interest, lien, or encumbrance has been recorded against the Project in position superior to this Agreement, upon the request of City, Owner hereby covenants and agrees to promptly undertake all action necessary to clear such matter from title or to subordinate such interest to this Agreement consistent with the intent of and in accordance with this Section 7, and to provide such evidence thereof as City may reasonably request.

8. Transfer and Encumbrance.

8.1 Restrictions on Transfer and Encumbrance. During the Term, except as permitted pursuant to the Ground Lease or this Agreement, Owner shall not directly or indirectly, voluntarily, involuntarily or by operation of law make or attempt any total or partial sale, transfer, conveyance, assignment or lease (collectively, “Transfer”) of the whole or any part of the Property, the Project, or the improvements located on the Property, without the prior written consent of the City, which approval shall not be unreasonably withheld. In addition, prior to the expiration of the Term, except as expressly permitted by this Agreement or the Ground Lease, Owner shall not undergo any significant change of ownership without the prior written approval of City. For purposes of this Agreement, a “significant change of ownership” shall mean a transfer of the beneficial interest of more than twenty-five percent (25%) in aggregate of the present ownership and /or control of Owner, taking all transfers into account on a cumulative basis; provided however, neither the admission of an investor limited partner, nor the transfer by the investor limited partner to subsequent limited partners shall be restricted by this provision.

8.2 Conditionally Permitted Transfers. Subject to Section 8.3 below, the prohibitions on Transfer set forth in this Section 8, shall not be deemed to prevent: (i) the granting of easements or permits to facilitate development of the Property; (ii) the dedication of any property required pursuant to the Ground Lease; (iii) the lease of individual dwelling units to tenants for

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20 occupancy as their principal residence in accordance with this Agreement; (iv) assignments creating security interests for the purpose of financing the acquisition, rehabilitation, construction, or permanent financing of the Project or the Property provided that such financing is Approved Financing (as defined in the Ground Lease), or Transfers directly resulting from the foreclosure of, or granting of a deed in lieu of foreclosure of, such a security interest; (v) a Transfer of the Project and Owner’s interest in the Property or a Transfer of the limited partner’s interest in Owner to a tax-exempt entity under the direct control of or under common control with Eden Housing Inc., a California nonprofit public benefit corporation (“Eden”); (vi) a Transfer to a limited partnership or limited liability company in which a tax-exempt affiliate of Eden is the managing general partner or managing member/sole member, as applicable; (vii) the admission of limited partners and any transfer of limited partnership interests in accordance with Owner’s agreement of limited partnership (the “Partnership Agreement”); (viii) the removal of Owner’s general partner by the limited partner of Owner for a default under the Partnership Agreement, provided that the replacement general partner is an entity reasonably satisfactory to City or is an affiliate of a limited partner of Owner that will serve as general partner for an interim period of no more than 180 days during which time a permanent replacement general partner reasonably satisfactory to City shall be identified and admitted; (ix) the transfer of the general partner’s interest to a nonprofit entity that is tax-exempt under Section 501(c)(3) of the Internal Revenue Code of 1986 as amended or to a limited liability company whose sole member is a nonprofit entity that is tax-exempt under Section 501(c)(3) of the Internal Revenue Code of 1986 as amended, provided such replacement general partner is reasonably satisfactory to City; or (x) the transfer of the Project and Owner’s interest in the Property or a Transfer of the limited partner’s interest in Owner to Owner’s general partner, Eden or an affiliate of Eden pursuant to an option or right of first refusal granted such parties pursuant to the Partnership Agreement.

8.3 Requirements for Proposed Transfers. The City may, in the exercise of its sole discretion, consent to a proposed Transfer of this Agreement, the Project, and Owner’s interest in the Property, or part thereof if all of the requirements set forth in this Section 8.3 are met (provided however, the requirements of this Section 8.3 shall not apply to Transfers described in clauses (i), (ii), (iii), (iv), and (vii) of Section 8.2, and solely with respect to the removal of the general partner by the limited partner for a default under the Partnership Agreement and the replacement of the general partner with an affiliate of the limited partner for an interim period of not more than 180 days, clause (viii) of Section 8.2; provided that the provisions of this Section

8.3 shall apply to the selection of a replacement general partner after such interim period. (i) The proposed transferee demonstrates to the City’s satisfaction that it has the qualifications, experience and financial resources necessary and adequate as may be reasonably determined by the City to competently complete rehabilitation of the Project, manage the Project and otherwise fulfill the obligations undertaken by the Owner under this Agreement. The assumption of such obligations shall be documented in an assignment and assumption agreement in form approved by City. (ii) The Owner and the proposed transferee shall submit for City review and approval all instruments and other legal documents proposed to effect any Transfer of all or any part of or interest in the Property, the Project or this Agreement together with such documentation of the proposed transferee’s qualifications and

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21 development capacity as the City may reasonably request. (iii) The proposed transferee shall expressly assume all of the rights and obligations of the Owner under this Agreement and the other City Documents arising after the effective date of the Transfer and all obligations of Owner arising prior to the effective date of the Transfer (unless Owner expressly remains responsible for such obligations) and shall agree to be subject to and assume all of Owner’s obligations under this Agreement and the Ground Lease.
(iv) The Transfer shall be effectuated pursuant to a written instrument satisfactory to the City in form recordable in the Official Records. (v) The final form of the partnership agreement, operating agreement, and other organizational documents of the proposed transferee and its general partner(s)/managing member, and any subsequent amendments that affect the City’s economic interests under this Agreement or the City Documents shall be subject to City’s review and approval.

Consent to any proposed Transfer may be given by the City’s Authorized Representative unless the City’s Authorized Representative, in his or her discretion, refers the matter of approval to the City Council. If the City has not rejected a proposed Transfer or requested additional information regarding a proposed Transfer in writing within forty-five (45) days following City’s receipt of written request by Owner, the proposed Transfer shall be deemed approved.

8.4 Effect of Transfer without City Consent. In the absence of specific written agreement by the City, no Transfer of the Project or Owner’s interest in the Property shall be deemed to relieve the Owner or any other party from any obligation under this Agreement. It shall be an Event of Default hereunder entitling City to pursue remedies including without limitation, acceleration of the Loan and/or foreclosure under the Deed of Trust if without the prior written approval of the City, Owner assigns or Transfers the Project or Owner’s interest in the Property, or any part thereof of interest therein, or undergoes any other Transfer (including without limitation, any assignment for security or encumbrance of the Property, or the Project, or part thereof) in violation of Section 8.

8.5 Recovery of City Costs. Within ten (10) days following City’s delivery to Owner of an invoice detailing such costs, Owner shall reimburse City for all City costs, including but not limited to reasonable attorneys’ fees, incurred in reviewing instruments and other legal documents proposed to effect any Transfer, and in reviewing the qualifications and financial resources of a proposed transferee.

8.6 Encumbrances. Owner agrees to cooperate with City in good faith to ensure that all deeds of trust or other security instruments and any applicable subordination agreement recorded against Owner’s interest in the Property, the Project or part thereof for the benefit of a lender other than City (“Third-Party Lender”) shall contain each of the following provisions:
(i) Third-Party Lender shall use its best efforts to provide to City a copy of any notice of default issued to Owner concurrently with provision of such notice to Owner; and (ii) City shall have the

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22 reasonable right, but not the obligation, to cure any default by Owner within the same period of time provided to Owner for such cure extended by an additional ninety (90) days. Owner agrees to provide to City a copy of any notice of default Owner receives from any Third-Party Lender within three (3) business days following Owner’s receipt thereof.

8.7 Mortgagee Protection. No violation of any provision contained herein shall defeat or render invalid the lien of any mortgage or deed of trust made in good faith and for value upon all or any portion of the Project or Owner’s interest in the Property, and the purchaser at any trustee’s sale or foreclosure sale shall not be liable for any violation of any provision hereof occurring prior to the acquisition of title by such purchaser. Such purchaser shall be bound by and subject to this Agreement from and after such trustee’s sale or foreclosure sale. Promptly upon determining that a violation of this Agreement has occurred, City shall give written notice to the holders of record of any mortgages or deeds of trust encumbering the Project or Owner’s interest in the Property that such violation has occurred.

9. Default and Remedies.

9.1 Events of Default. The occurrence of any one or more of the following events shall constitute an event of default hereunder ("Event of Default"):
(i) The occurrence of a Transfer in violation of Section 8 hereof; (ii) Owner’s failure to maintain insurance on the Property and the Project as required hereunder, and the failure of Owner to cure such default within five (5) days; (iii) Subject to Owner’s right to contest the following charges, Owner’s failure to pay prior to delinquency taxes or assessments due on the Property or the Project or failure to pay when due any other charge that may result in a lien on the Property or the Project, and Owner’s failure to cure such default within twenty (20) days of delinquency, but in all events prior to the date upon which the holder of any such lien has the right to foreclose thereon; (iv) A default arises under any loan secured by a mortgage, deed of trust or other security instrument recorded against the Project or Owner’s interest in the Property and remains uncured beyond any applicable cure period such that the holder of such security instrument has the right to accelerate repayment of such loan; (v) Owner defaults under the Note, the Deed of Trust, or the Ground Lease and such default remains uncured beyond the expiration of any applicable cure period; (vi) Owner defaults in the performance of any term, provision or covenant under this Agreement (other than an obligation enumerated in this Section 9.1), and unless such provision specifies a shorter cure period for such default, the continuation of such default for ten (10) days in the event of a monetary default or thirty (30) days in the event of a non-monetary default following the date upon which City shall have given written notice of the default to Owner, or if the nature of any such non-monetary default is such that it cannot be cured within thirty (30) days, Owner’s failure to commence to cure the default within thirty (30) days and thereafter prosecute the curing of such default to completion with due diligence and in good

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23 faith, but in no event later than ninety (90) days from receipt of the notice of default.

9.2 Limited Partner’s Right to Cure. Owner’s limited partners shall have the right to cure any default of Owner hereunder upon the same terms and conditions afforded to Owner; provided however, if the default is of such nature that the limited partners reasonably determine that it is necessary to replace the general partner of Owner in order to cure such default, then the cure period shall be extended by an additional sixty (60) days after the removal and replacement of such general partner, provided that the limited partners have promptly commenced and diligently proceeded with all requisite actions to effect such removal and replacement. City shall provide a copy of any notice of default hereunder to the limited partners at the address set forth in Section 11.3 hereof, or to such other address provided to the City in writing, concurrently with the provision of such notice to Owner.

9.3 Remedies. Upon the occurrence of an Event of Default and its continuation beyond any applicable cure period, City may proceed with any of the following remedies:
(i) Bring an action for equitable relief seeking the specific performance of the terms and conditions of this Agreement, and/or enjoining, abating, or preventing any violation of such terms and conditions, and/or seeking declaratory relief; (ii) Accelerate and declare the balance of the Note and interest accrued thereon immediately due and payable and proceed with foreclosure under the Deed of Trust;
(iii) For violations of obligations with respect to rents for Restricted Units, impose a charge in an amount equal to the actual amount collected in excess of the Affordable Rent; or
(iv) Pursue any other remedy allowed under the City Documents or at law or in equity.

Each of the remedies provided herein is cumulative and not exclusive. The City may exercise from time to time any rights and remedies available to it under applicable law or in equity, in addition to, and not in lieu of, any rights and remedies expressly provided in this Agreement.

10. Indemnity. To the greatest extent permitted by law, Owner shall indemnify, defend (with counsel approved by City) and hold the Indemnitees harmless from and against all Claims arising directly or indirectly, in whole or in part, as a result of or in connection with Owner’s or Owner’s employees’, agents’, contractors’, or subcontractors’ (all of the foregoing, collectively, “Owner’s Parties”) rehabilitation, construction, management, or operation of the Property and the Project, failure to comply with applicable law, including without limitation, State and federal fair housing laws, or any failure to perform any obligation as and when required by this Agreement. Owner’s indemnification obligations set forth in this Section: (i) shall survive the expiration or earlier termination of this Agreement; (ii) shall apply whether or not any insurance policies shall have been determined to be applicable to any Claim, (iii) shall not extend to Claims

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24 to the extent arising from the gross negligence or willful misconduct of the Indemnitees, and (iv) shall be subject to the additional provisions set forth in Section 10.1.

10.1 Terms Applicable to Indemnity Provisions. The terms set forth in this Section

10.1 shall apply to all provisions of this Agreement that pertain to Owner’s obligations to indemnify City and the other Indemnitees, including without limitation, Sections 3.1, 3.10, and

10. In connection with each such provision, all of the following shall apply:
(a) City does not and shall not waive any rights that it may have by reason of any indemnity and hold harmless provision set forth in this Agreement because of the acceptance by City, or the deposit with City by Owner, of any of the insurance policies described in this Agreement or the Ground Lease.
(b) Owner’s obligation to indemnify the Indemnitees shall not be limited or impaired by any of the following: (i) any amendment or modification of any City Document; (ii) any extensions of time for performance required by any City Document; (iii) any provision in any of the City Documents limiting City’s recourse to property securing the Secured Obligations (as defined in the Deed of Trust), or limiting the personal liability of Owner, or any other party for payment of all or any part of the indebtedness evidenced by the Note; (iv) the accuracy or inaccuracy of any representation and warranty made by Owner under this Agreement or by Owner or any other party under any City Document, (v) the release of Owner or any other person, by City or by operation of law, from performance of any obligation under any City Document; (vi) the release or substitution in whole or in part of any security for repayment of the indebtedness evidenced by the Note; and (vii) City’s failure to properly perfect any lien or security interest given as security for repayment of the indebtedness evidenced by the Note. (c) The obligations of Owner to indemnify the Indemnitees shall survive any repayment or discharge of the indebtedness evidenced by the Note, any foreclosure proceeding, any foreclosure sale, any delivery of any deed in lieu of foreclosure, any release of record of the lien of the Deed of Trust, and the termination or expiration of this Agreement.

11. Miscellaneous.

11.1 Amendments. This Agreement may be amended or modified only by a written instrument signed by both Parties and recorded in the Official Records.

11.2 No Waiver. Any waiver by City of any term or provision of this Agreement must be in writing. No waiver shall be implied from any delay or failure by City to take action on any breach or default hereunder or to pursue any remedy allowed under this Agreement or applicable law. No failure or delay by City at any time to require strict performance by Owner of any provision of this Agreement or to exercise any election contained herein or any right, power or remedy hereunder shall be construed as a waiver of any other provision or any succeeding breach of the same or any other provision hereof or a relinquishment for the future of such election.

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25 11.3 Notices. Except as otherwise specified herein, all notices to be sent pursuant to this Agreement shall be made in writing, and sent to the Parties at their respective addresses specified below or to such other address as a Party may designate by written notice delivered to the other parties in accordance with this Section. All such notices shall be sent by: (i) personal delivery, in which case notice is effective upon delivery; (ii) certified or registered mail, return receipt requested, in which case notice shall be deemed delivered upon receipt if delivery is confirmed by a return receipt; or (iii) nationally recognized overnight courier, with charges prepaid or charged to the sender’s account, in which case notice is effective on delivery if delivery is confirmed by the delivery service.

City: City of Pleasanton
P.O. Box 520
123 Main Street
Pleasanton, CA 94566
Attention: City Manager
With a copy to: Burke, Williams & Sorensen, LLP
1999 Harrison Street, Suite 1650
Oakland, CA 94612
Attention: Susan E. Bloch, Esq.

Owner: Ridge View Commons II Associates, L.P.
c/o Eden Housing, Inc.
22645 Grand Street
Hayward, California 84541
Attention: President
With a copy to: Gubb & Barshay LLP
235 Montgomery Street, Suite 1110
San Francisco, CA 94104
Attention: Nicole Kline, Esq.

With a copy to:

11.4 Further Assurances. The Parties shall execute, acknowledge and deliver to the other such other documents and instruments, and take such other actions, as either shall reasonably request as may be necessary to carry out the intent of this Agreement.

11.5 Parties Not Co-Venturers; Independent Contractor; No Agency Relationship.

Nothing in this Agreement is intended to or shall establish the Parties as partners, co-venturers, or principal and agent with one another. The relationship of Owner and City shall not be construed as a joint venture, equity venture, partnership or any other relationship. City neither undertakes nor assumes any responsibility or duty to Owner (except as expressly provided in this

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4879-3324-5885v3
26 Agreement) or to any third party with respect to the Project. Owner and its employees are not employees of City but rather are, and shall always be considered independent contractors.

Furthermore, Owner and its employees shall at no time pretend to be or hold themselves out as employees or agents of City. Except as City may specify in writing, Owner shall not have any authority to act as an agent of City or to bind City to any obligation.

11.6 Action by the City. 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’s Authorized Representative or by any person who shall have been designated by the City’s Authorized Representative, without further approval by the City Council.

11.7 Non-Liability of City and City Officials, Employees and Agents. No member, official, employee or agent of the City shall be personally liable to Owner or any successor in interest, in the event of any default or breach by the City, or for any amount of money which may become due to Owner or its successor or for any obligation of City under this Agreement.

11.8 Headings; Construction; Statutory References. The headings of the sections and paragraphs of this Agreement are for convenience only and shall not be used to interpret this Agreement. Except as otherwise expressly stated herein, any reference to a particular section of this Agreement shall mean a reference to all subsections of such section. The language of this Agreement shall be construed as a whole according to its fair meaning and not strictly for or against any Party. All references in this Agreement to particular statutes, regulations, ordinances or resolutions of the United States, the State of California, or the City of Pleasanton shall be deemed to include the same statute, regulation, ordinance or resolution as hereafter amended or renumbered, or if repealed, to such other provisions as may thereafter govern the same subject.

11.9 Time is of the Essence. Time is of the essence in the performance of this Agreement.

11.10 Governing Law; Venue. This Agreement shall be construed in accordance with the laws of the State of California without regard to principles of conflicts of law. Any action to enforce or interpret this Agreement shall be filed and heard in the Superior Court of Alameda County, California or in the Federal District Court for the Northern District of California.

11.11 Attorneys' Fees and Costs. If any legal or administrative action is brought to interpret or enforce the terms of this Agreement, the prevailing party shall be entitled to recover all reasonable attorneys' fees and costs incurred in such action.

11.12 Severability. If any provision of this Agreement is held invalid, illegal, or unenforceable by a court of competent jurisdiction, the validity, legality, and enforceability of the remaining provisions shall not be affected or impaired thereby.

11.13 Entire Agreement; Exhibits. This Agreement, together with the Note, the Deed of Trust, and the Ground Lease contains the entire agreement of Parties with respect to the subject matter hereof, and supersedes all prior oral or written agreements between the Parties with

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27 respect thereto. Exhibits A and B, attached hereto are incorporated herein by this reference.

11.14 Survival. Owner’s obligations pursuant to Sections 3.1, 3.10, and 10, and all other provisions that expressly so state shall survive the expiration or termination of this Agreement.

11.15 Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be an original and all of which together shall constitute one agreement.

SIGNATURES ON FOLLOWING PAGE(S).

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IN WITNESS WHEREOF, the Parties have executed this Affordable Housing Regulatory Agreement and Declaration of Restrictive Covenants as of the date first written above.

CITY:

City of Pleasanton, a municipal corporation
By: _______________________________
Gerry Beaudin, City Manager
ATTEST:
_____________________________
Jocelyn Kwong, City Clerk
APPROVED AS TO FORM:
____________________________________
Daniel G. Sodergren, City Attorney
OWNER:

Ridge View Commons II Associates, L.P., a California limited partnership By: Ridge View Commons LLC,
a California limited liability company,
its general partner
By: Eden Investments, Inc.,
a California nonprofit public benefit corporation,
its sole member/manager
By: ____________________________
Andrea Osgood, Chief of Real Estate Development and
Executive Vice President
SIGNATURES MUST BE NOTARIZED.

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ACKNOWLEDGMENT
State of California )
) ss
County of ___________ )
On , before me,___________________________________________, (Name of Notary)
notary public, personally appeared _________________________________________________ who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

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

WITNESS my hand and official seal.
(Notary Signature)
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.

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

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Exhibit A

LEGAL DESCRIPTION OF THE PROPERTY
The land referred to is situated in the City of Pleasanton, County of Alameda, State of California, and is described as follows:

PARCEL ONE:

ALL BUILDINGS AND OTHER IMPROVEMENTS WHICH BUILDINGS AND IMPROVEMENTS ARE AND SHALL REMAIN AS REAL PROPERTY, SITUATED ON THE FOLLOWING DESCRIBED:

PARCEL 2 AS SHOWN ON PARCEL MAP NO. 5231, FILED APRIL 22, 1988, IN BOOK 176 OF MAPS AT PAGES 40 AND 41, ALAMEDA COUNTY RECORDS.

PARCEL TWO:

PARCEL 2 AS SHOWN ON PARCEL MAP NO. 5231, FILED APRIL 22, 1988, IN BOOK 176 OF MAPS AT PAGES 40 AND 41, ALAMEDA COUNTY RECORDS.

EXCEPTING FROM PARCEL TWO ALL BUILDINGS AND OTHER IMPROVEMENTS SITUATED ON ABOVE SAID LAND, WHICH ARE AND SHALL REMAIN AS REAL PROPERTY.

APN: 947-0008-010

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Exhibit B
INSURANCE REQUIREMENTS – subject to City review.

Prior to initiating work on the Project and continuing through throughout the Term, Owner shall obtain and maintain the following policies of insurance:
(a) Commercial General Liability. Owner shall maintain a commercial general liability policy in the amount of Two Million Dollars ($2,000,000) each occurrence, Four Million Dollars ($4,000,000) annual aggregate, together with Ten Million Dollars ($10,000,000) excess liability coverage, or such other policy limits as City may require in its reasonable discretion, including coverage for bodily injury, property damage, products, completed operations and contractual liability coverage. Such policy or policies shall be written on an occurrence basis and shall name the Indemnitees as additional insureds.
(b) Automobile. if Owner owns any vehicles, a comprehensive automobile liability coverage in the amount of Two Million Dollars ($2,000,000), combined single limit including coverage for owned and non-owned vehicles and shall furnish or cause to be furnished to City evidence satisfactory to City that Owner and any contractor with whom Owner has contracted for the performance of work on the Property or otherwise pursuant to this Agreement carries workers’ compensation insurance as required by law. Automobile liability policies shall name the Indemnitees as additional insureds.
(c) Workers’ Compensation and Employer’s Liability. Owner shall furnish or cause to be furnished to City evidence satisfactory to City that Owner (if it has any employees) and any contractor that has contracted for the performance of work on the Property or otherwise pursuant to this Agreement carries statutory Workers’ Compensation insurance and Employer’s Liability insurance in a minimum amount of One Million Dollars ($1,000,000) per accident. (d) Builder’s Risk. Upon commencement of construction work and continuing until issuance of a final certificate of occupancy or equivalent for the Project, Owner and all contractors working on behalf of Owner shall maintain a policy of builder's all-risk insurance in an amount not less than the full insurable cost of the Project on a replacement cost basis with a lender’s loss payable endorsement for the benefit of City. (e) Professional Liability/Errors and Omissions. Owner shall require the Project architect, engineer, and general contractor to maintain Professional Liability/Errors and Omissions (“E&O”) insurance with limits not less than Two Million Dollars ($2,000,000) each claim. The City’s Risk Manager may approve lower limits for professionals that will provide a limited scope of services for the Project. Certificates evidencing this coverage must reference both the Owner and the Indemnitees. If the professional liability/errors and omissions insurance is written on a claims made form: (i) the retroactive date must be shown and must be before the Effective Date, (ii) insurance must be maintained and evidence of insurance must be provided for at least three (3) years after completion of Project rehabilitation, and (iii) if coverage is cancelled or non-renewed and not replaced with another claims made policy form with a retroactive date prior to the Effective Date, Owner must purchase, or require the provision of, extended period

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coverage for a minimum of three (3) years after completion of construction. (f) Pollution Legal Liability. Owner shall require the general contractor to carry pollution liability insurance to provide third-party coverage for bodily injury, property damage, cleanup, and related defense costs, with limits not less than One Million ($1,000,000) per occurrence or claim and Two Million ($2,000,000) policy aggregate. If the policy provides coverage on a claims-made basis, the retroactive date must be shown and must be before the Closing Date.
(g) Property Insurance. Owner shall maintain property insurance covering all risks of loss (other than earthquake), including flood (if required) for 100% of the replacement value of the Project with deductible, if any, in an amount acceptable to City, with a lender’s loss payable endorsement for the benefit of City.
(h) Insurance Providers. Companies writing the insurance required hereunder shall be licensed to do business in the State of California. Insurance shall be placed with insurers with a current A.M. Best's rating of no less than A:VII.
(i) Evidence of Insurance; Endorsements; Policies. Prior to the Effective Date of this Agreement, Owner shall furnish City with certificates of insurance in form acceptable to City evidencing the required insurance coverage and duly executed endorsements required hereunder.

The certificates shall contain a statement of obligation on the part of the carrier to notify City of any material adverse change, cancellation, termination or non-renewal of the coverage at least thirty (30) days in advance of the effective date of any such material adverse change, cancellation, termination or non-renewal. Upon request by the City Attorney, Owner shall provide or arrange for the insurer to provide within thirty (30) days of the request, certified copies of the actual insurance policies or relevant portions thereof.
(j) Additional Insured Endorsements. The additional insured endorsements for the general liability coverage shall use Insurance Services Office (ISO) Form No. CG 20 09 11 85 or CG 20 10 11 85, or equivalent, including (if used together) CG 2010 10 01 and CG 2037 10 01; but shall not use the following forms: CG 20 10 10 93 or 03 94. (k) Reinstatement. If any insurance policy or coverage required hereunder is canceled or reduced, Owner shall, within five (5) days after receipt of notice of such cancellation or reduction in coverage, but in no event later than the effective date of cancellation or reduction, file with City a certificate showing that the required insurance has been reinstated or provided through another insurance company or companies. Upon failure to so file such certificate, City may, without further notice and at its option, procure such insurance coverage at Owner’s expense, and Owner shall promptly reimburse City for such expense upon receipt of billing from City. Owner shall require all persons and entities that are required to provide professional liability/E&O coverage pursuant to paragraph (e) above to use best efforts to reinstate the required coverage limits in the event coverage under such policies is reduced. (l) Coverage; Waiver of Subrogation; Annual Aggregate Limits. All coverage shall be primary insurance and shall not be contributing with any insurance, or self-insurance maintained by City, and the policies shall so provide. Each insurance policy shall contain a

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waiver of subrogation for the benefit of the City. Owner agrees to waive subrogation rights for commercial general liability, automobile liability, and worker’s compensation against Indemnitees regardless of the applicability of insurance proceeds, and agrees to require all contractors and subcontractors to do likewise. With the exception of E&O policies, if any of the required insurance is provided under a form of coverage that includes an annual aggregate limit or provides that claims investigation or legal defense costs are included in such annual aggregate limit, such annual aggregate limit shall be three times the applicable occurrence limits specified above.
(m) Deductibles/Retentions. Any deductibles or self-insured retentions shall be declared to, and shall be subject to approval by, the City Attorney. At the option of and upon request by the City Attorney if the City Attorney determines that such deductibles or retentions are unreasonably high, either the insurer shall reduce or eliminate such deductibles or selfinsurance retentions as respects the Indemnitees or Owner shall procure a bond guaranteeing payment of losses and related investigations, claims administration and defense expenses. (n) Adjustments. The limits of the liability coverage and, if necessary, the terms and conditions of insurance, shall be reasonably adjusted from time to time (not less than every five (5) years after the Effective Date nor more than once in every three (3) year period) to address changes in circumstances, including, but not limited to, changes in inflation and the litigation climate in California, provided that such adjustments are consistent with generally prevailing requirements for residential multi-family developments similar to the Project and located in the San Francisco/Alameda County area. Within thirty (30) days following City’s delivery of written notice of any such adjustments, Owner shall provide City with amended or new insurance certificates and endorsements evidencing compliance with such adjustments. (o) Additional Insured Coverage; Liability Limits. For all liability insurance required by this Agreement except E&O and Workers’ Compensation policies, Owner (and Owner’s contractors, as applicable) shall obtain endorsements that name the Indemnitees as additional insured in the full amount of all applicable policies, notwithstanding any lesser minimum limits specified in this Agreement. This Agreement requires Owner (and Owner’s contractors) to obtain and provide for the benefit of the Indemnitees, additional insured coverage in the same amount of insurance carried by Owner (or Owner’s contractors, as applicable), but in no event less than the minimum amounts specified in this Agreement. In the event that Owner (or Owner’s contractors as applicable) obtains insurance policies that provide liability coverage in excess of the amounts specified in this Agreement, the actual limits provided by such policies shall be deemed to be the amounts required under this Agreement. Without limiting the foregoing, the limits of liability coverage specified in this Agreement are not intended, nor shall they operate, to limit City’s ability to recover amounts in excess of the minimum amounts specified in this Agreement.

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Resolution No.

Page 4 of 4 ends

EXHIBIT B
Amended and Restated Ground Lease

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OAK #4823-7863-2026 v6

GROUND LEASE
by and between

CITY OF PLEASANTON, AS LESSOR
and
RIDGE VIEW COMMONS ASSOCIATES II, L.P., AS LESSEE
Ridge View Commons

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TABLE OF CONTENTS
PAGE
i
4859-3312-3005v3
ARTICLE 1. DEFINITIONS .................................................................................................... 1 Section 1.1 Definitions.................................................................................................. 1 Section 1.2 Exhibits...................................................................................................... 7 ARTICLE 2. LEASE OF THE LAND...................................................................................... 7 Section 2.1 Lease of Land............................................................................................. 7 Section 2.2 Term........................................................................................................... 7 Section 2.3 Use ............................................................................................................. 7 Section 2.4 Possession .................................................................................................. 8 Section 2.5 Memorandum of Lease .............................................................................. 8 Section 2.6 AS-IS Conveyance………………………………………………………..8
Section 2.7 Lessee to Rely on Own Experts…………………………………………..9 ARTICLE 3. THE IMPROVEMENTS
Section 3.1 Construction............................................................................................... 9 Section 3.2 Liens......................................................................................................... 10 Section 3.3 Permits, Licenses and Easements ………………………………….

Section 3.4 Title to Improvements.............................................................................. 11 Section 3.5 Benefits of Improvements During Term.................................................. 11 ARTICLE 4. RENTS .............................................................................................................. 12 Section 4.1 Ground Rent............................................................................................. 12 Section 4.2 Payments.................................................................................................. 12 ARTICLE 5 TAXES AND OTHER IMPOSITIONS; UTILITIES ...................................... 12 Section 5.1 Payment of Impositions ........................................................................... 12 Section 5.2 Possessory Interest Taxes ........................................................................ 13 Section 5.3 Contested Taxes and Other Impositions.................................................. 13 Section 5.4 Valuation Assessment/Property Tax Exemption ..................................... 13 Section 5.5 Failure to Pay Impositions....................................................................... 13 Section 5.6 Utilities..................................................................................................... 13 ARTICLE 6. INSURANCE .................................................................................................... 14 Section 6.1 Required Insurance Coverage .................................................................. 14 Section 6.2 Insurance Policies and Premiums............................................................ 15 Section 6.3 Proceeds of Insurance .............................................................................. 16 ARTICLE 7. MAINTENANCE, ALTERATIONS, REPAIRS AND
REPLACEMENTS............................................................................................ 17

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Section 7.1 Maintenance of Leased Premises; Landscaping ...................................... 17 Section 7.2 Landscaping Maintenance ....................................................................... 18 Section 7.4 Indemnification........................................................................................ 18 ARTICLE 8. MORTGAGE LOANS ...................................................................................... 19 Section 8.1 Intentionally omitted................................................................................ 19 Section 8.2 Liens and Encumbrances Against the Leasehold Estate.......................... 19 Section 8.3 Cost of Approved Loans to be Paid by Tenant........................................ 23 Section 8.4 Proceeds of Approved Loans................................................................... 23 Section 8.5 Notice and Right to Cure Defaults Under Approved Loans.................... 23 Section 8.6 Rights of Investor..................................................................................... 23 Section 8.7 Right to Pay Taxes and Senior Mortgage ................................................ 23 ARTICLE 9. REPRESENTATIONS, WARRANTIES AND COVENANTS....................... 23 Section 9.1 Representations, Warranties and Covenants of Lessee............................ 25 Section 9.2 Relocation ................................................................................................ 25 Section 9.3 Hazardous Materials Indemnification...................................................... 26 Section 9.4 Prevailing Wage Requirements................................................................ 26 Section 9.5 Compliance with Laws ............................................................................ 27 Section 9.6 Affordability and Use Restrictions .......................................................... 27 Section 9.7 Preference for City of Pleasanton Residents and Employees.................. 27 Section 9.8 Reporting Requirements; Access to Information; Inspections ................ 29 Section 9.9 Fair Housing
Section 9.10 Management Entity
ARTICLE 10 EMINENT DOMAIN........................................................................................ 30 Section 10.1 Termination of Lease ............................................................................... 30 Section 10.2 Continuation of Lease and Presumption of Restoration .......................... 30 Section 10.3 Temporary Taking ................................................................................... 30 Section 10.4 Joinder...................................................................................................... 32 ARTICLE 11. DAMAGE OR DESTRUCTION ...................................................................... 32 Section 11.1 Damage or Destruction to Leased Premises ............................................ 32 Section 11.2 Damage or Destruction Near End of Term.............................................. 33 Section 11.3 Distribution of Insurance Proceeds.......................................................... 33 Section 11.4 Insurance Coverage.................................................................................. 33

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ARTICLE 12. EVENTS OF DEFAULT .................................................................................. 33 Section 12.1 Events of Default ..................................................................................... 33 Section 12.2 Rights and Remedies................................................................................ 35 Section 12.3 Default by Lessor..................................................................................... 36 Section 12.4 Notices..................................................................................................... 37 ARTICLE 13. QUIET ENJOYMENT AND POSSESSION; INSPECTIONS ........................ 37 Section 13.1 Quiet Enjoyment...................................................................................... 37 Section 13.2 Lessor’s Right of Inspection .................................................................... 37 ARTICLE 14. VACATION OF LEASED PREMISES............................................................ 37 Section 14.1 Vacation Upon Termination .................................................................... 37 ARTICLE 15. NON-MERGER ................................................................................................ 37 Section 15.1 Non-Merger.............................................................................................. 37 ARTICLE 16. TRANSFERS .................................................................................................... 38 Section 16.1 Permitted Transfer by Lessee................................................................... 38 ARTICLE 17. MISCELLANEOUS PROVISIONS ................................................................. 39 Exhibit A: Legal Description of the Leased Premises
Exhibit B: Form of Memorandum of Lease
Exhibit C: Regulatory Agreement
Exhibit D: Note

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1 4859-3312-3005v2

GROUND LEASE
(Ridge View Commons)
This Ground Lease (the “Lease”) dated as of ___________, 2024, is entered into by and between City of Pleasanton, a California municipal corporation (“Lessor”) and Ridge View Commons II Associates, L.P., a California limited partnership (“Lessee”).

RECITALS
A. Lessor is the owner of the real property located at 5200 Case Avenue in the City of Pleasanton, known as Alameda County Assessor’s Parcel No. 947-0008-010, and more particularly described in Exhibit A attached hereto (the “Land”).

B. Lessor and Eden Housing, Inc., a California nonprofit public benefit corporation (“Eden”), entered into that certain Ground Lease of the Land dated as of June 1, 1988 (the “Original Ground Lease”), a short form of which was recorded in the Official Records of Alameda County (“Official Records”) on June 9, 1988 as Instrument No. 88-138518. The Original Ground Lease was amended by that certain Amendment to Ground Lease and Short Form Ground Lease dated June 27, 1988, executed by City and Eden, and recorded in the Official Records on June 30, 1988 as Instrument No. 88-157652. Pursuant to an Assignment of Lease dated October 31, 1989, executed by and among City, Eden, and Ridge View Commons Associates, a California limited partnership (“Ridge View”), and recorded in the Official Records on November 14, 1989 as Instrument No. 89-308001, Eden assigned its rights under the Original Ground Lease (as amended) to Ridge View. The Original Ground Lease as amended and assigned is referred to herein as the “Prior Ground Lease”. During the term of the Prior Ground Lease, Ridge View was the owner of the 200-unit multi-family residential project and related improvements located on the Land (the “Project”).

C. Substantially concurrently with the execution and delivery of this Lease, Ridge View will sell the Project to Lessee.

D. This Lease supersedes and replaces the Prior Ground Lease in its entirety.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Lessor and Lessee hereby agree as follows:

ARTICLE 1.

DEFINITIONS
Section 1.1 Definitions. For the purposes of this Lease, the following terms shall have the meanings set forth in this Article 1:
“Additional Rent” means all sums payable by Lessee to Lessor pursuant to this Lease other than Rent, including without limitation, sums payable to reimburse Lessor for the following, together with applicable interest and penalties thereon: (i) amounts paid by Lessor to discharge liens and claims pursuant to Section 3.2, (ii) Impositions paid by Lessor pursuant to

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Section 5.5, (iii) amounts paid by Lessor pursuant to Section 7.2, and (iv) amounts paid by Lessor to cure Lessee defaults under loans secured by the Leased Premises and the Improvements.
“Affordable Rent” is defined in the Regulatory Agreement. “Applicable Laws” is defined in Section 9.7.
“Approved Loans” means the Senior Loan, the Seller Loan, and the City Loan, and other loans obtained from time to time by Lessee for the rehabilitation, construction and permanent financing of the Improvements, as approved by Lessor, which approval will not be unreasonably withheld.
“Casualty” is defined in Article 11 hereof.
“City” means the City of Pleasanton, California.
“City Documents” means collectively, this Lease, the Regulatory Agreement, the Note and the Deed of Trust.
“City Loan” means the financing provided by Lessor to Lessee’s predecessor in interest in connection with the development of the Project. Lessor has assumed the obligation to repay the City Loan, as evidenced by the Note and secured by the Deed of Trust. “City Manager” means the City Manager of the City of Pleasanton. “Claims” means collectively: claims, demands, actions, causes of action, suits, judicial or administrative proceedings, damages, losses, liabilities, costs, expenses (including without limitation reasonable attorneys’ fees), damages, penalties, deficiencies, fines, orders, charges, judgments, remedial action requirements, and enforcement actions of any kind. “Construction Plans” means all construction documents upon which Lessee and Lessee’s contractors shall rely in rehabilitating the Project (including landscaping, parking, common and public areas) and shall include, without limitation, final architectural drawings, the site development plan, landscaping, exterior lighting and signage plans and specifications, materials specifications, final elevations, and building plans and specifications. “County” means the County of Alameda, California.
“Commencement Date” means the date that the Memorandum is recorded in the Official Records.
“CTCAC Regulatory Agreement” means the agreement to be executed by Lessee and CTCAC that sets forth certain affordability restrictions and other terms and conditions pertaining to operation of the Project, and that will be recorded against Lessee’s Estate following completion of rehabilitation of the Improvements and the conversion of the Project construction loan.

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“CTCAC” means the California Tax Credit Allocation Committee. “CTCAC Rider” means the CTCAC Lease Rider that will be recorded against the Land and the Leased Premises in form approved by Lessor, Lessee, and CTCAC following completion of rehabilitation of the Improvements and the conversion of the Project construction loan. “Deed of Trust” means that certain Amended and Restated Leasehold Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing dated as of the date hereof, executed by Lessee as Trustor for the benefit of Lessor as Beneficiary and securing Lessee’s obligation to repay the City Loan.
“Eden” is defined in Recital B.
“Eligible Household” is defined in the Regulatory Agreement. “Environmental Laws” means all federal, state or local statutes, ordinances, rules, regulations, orders, decrees, judgments or common law doctrines, and provisions and conditions of permits, licenses and other operating authorizations regulating, or relating to, or imposing liability or standards of conduct concerning (i) pollution or protection of the environment, including natural resources; (ii) exposure of persons, including employees and agents, to Hazardous Materials or other products, raw materials, chemicals or other substances; (iii) protection of the public health or welfare from the effects of by-products, wastes, emissions, discharges or releases of chemical substances from industrial or commercial activities; (iv) the manufacture, use or introduction into commerce of Hazardous Materials, including without limitation, their manufacture, formulation, labeling, distribution, transportation, handling, storage and disposal; or (iv) the use, release or disposal of Hazardous Materials or the remediation of air, surface waters, groundwaters or soil, as now or may at any later time be in effect, together with any regulations promulgated thereunder.
“Event of Default” is defined in Article 12 of this Lease. “Governmental Authorities” means all federal, State and local governmental or quasigovernmental entities, subdivisions, agencies, authorities or instrumentalities having jurisdiction over the Leased Premises, the Improvements, Lessor or Lessee. “Hazardous Materials” means any chemical, material or substance now or hereafter defined as or included in the definition of hazardous substances, hazardous wastes, hazardous materials, extremely hazardous waste, restricted hazardous waste, toxic substances, pollutant or contaminant, imminently hazardous chemical substance or mixture, hazardous air pollutant, toxic pollutant, or words of similar import under any local, state or federal law or under the regulations adopted or publications promulgated pursuant thereto applicable to the Leased Premises, including, without limitation: the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. 9601, et seq. (“CERCLA”); the Hazardous Materials Transportation Act, as amended, 49 U.S.C. 5101, et seq.; the Federal Water Pollution Control Act, as amended, 33 U.S.C. 1251, et seq.; and the Resource Conservation and Recovery Act of 1976, 42 U.S.C. 6901, et seq. (“RCRA”). The term Hazardous Materials shall also include any of the following: any and all toxic or hazardous substances, materials or wastes listed in the United States Department of Transportation Table (49 CFR 172.101) or by the Environmental

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Protection Agency as hazardous substances (40 CFR Part 302) and in any and all amendments thereto; oil, petroleum, petroleum products (including, without limitation, crude oil or any fraction thereof), asbestos and asbestos-containing materials, natural gas, natural gas liquids, liquefied natural gas or synthetic gas usable for fuel, not otherwise designated as a hazardous substance under CERCLA; any substance which is toxic, explosive, corrosive, reactive, flammable, infectious or radioactive (including any source, special nuclear or by product material as defined at 42 U.S.C. 2011, et seq.), carcinogenic, mutagenic, or otherwise hazardous and is or becomes regulated by any governmental authority; asbestos in any form; urea formaldehyde foam insulation; transformers or other equipment which contain dielectric fluid containing levels of polychlorinated biphenyls; radon gas; or any other chemical, material or substance (i) which poses a hazard to the Leased Premises, to adjacent properties, or to persons on or about the Leased Premises, (ii) which causes the Leased Premises to be in violation of any of the aforementioned laws or regulations, or (iii) the presence of which on or in the Leased Premises requires investigation, reporting or remediation under any such laws or regulations. “HUD” means the U.S. Department of Housing and Urban Development. “Impositions” means all taxes, assessments, water and sewer charges, charges for public utilities, excises, levies, license and permit fees and other charges that shall or may be assessed, levied or imposed during the Term by any Governmental Authorities upon the Leased Premises or any part thereof, including the buildings or improvements now or hereafter located thereon, including without limitation, possessory interest taxes. “Impositions” shall not include any income tax, capital levy, estate, succession, inheritance, or similar taxes of Lessor. Except for a tax, assessment, or charge resulting from Lessee’s use of the Leased Premises pursuant to this Lease, “Impositions” shall not include any franchise tax imposed upon any owner of the fee of the Leased Premises, or any income, profits or revenue tax, assessment or charge imposed upon the rent or other benefit received by Lessor under this Lease by any Governmental Authorities. “Improvements” or “Project” means the affordable senior housing development comprised of 200 multi-family residential dwelling units located on the Land, all of which, other than two (2) manager’s units, will be restricted for occupancy by Eligible Households at Affordable Rents in accordance with the Regulatory Agreement, and related improvements, including without limitation, the following: community space, parking, and related ancillary facilities, together with any and all replacements or substitutions therefor or modifications thereto, in accordance with all City approvals and use conditions applicable to the Leased Premises. The Improvements will be rehabilitated in accordance with construction plans approved by the City.
“Indemnitees” means collectively, Lessor and its elected and appointed officers, officials, employees, agents, contractors, consultants and representatives. “Insurance Requirements” means the requirements, whether now or hereafter in force, of any insurer or insurance carrier, any board of fire underwriters or any other company, bureau, organization or entity performing the same or similar functions, applicable to the Leased Premises and/or the Improvements, or any portion thereof, to the extent so applicable.

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“Investor” means the low income housing tax credit investor that will provide equity to the Project and all permitted successors and assigns. __________________ is the initial Investor. “Land” is defined in Recital A.
“Lease Year” means a calendar year during the term of this Lease. “Leased Premises” means the Land, together with all easements, licenses, privileges and appurtenances attaching or in any way belonging thereto. “Leasehold Mortgage” means any mortgage, deed of trust, security agreement or collateral assignment pursuant to an Approved Loan encumbering Lessee’s Estate as a leasehold mortgage lien.
“Legal Requirements” means all laws, statutes, codes, ordinances, orders, rules, regulations and requirements of all Governmental Authorities and the appropriate agencies, officers, departments, boards and commissions thereof, whether now or hereafter in force applicable to Lessor, Lessee, the Leased Premises, the Improvements, or any portion thereof, to the extent so applicable.
“Lender” means the holder, mortgagee, grantee or secured party under any Leasehold Mortgage, including, without limitation, the Senior Lender. “Lessee’s Estate” or “Leasehold Estate” means during the Term of this Lease, Lessee’s leasehold interest in the Land and Lessee’s fee ownership interest in the Improvements. “Lessor’s Estate” means Lessor’s fee estate in the Land and reversionary interest in the Improvements pursuant to this Lease.
“Management Agent” means the person or entity designated from time to time as “Management Agent” of all or any portion of the Improvements under any property management agreement entered into from time to time with Lessee.
“Memorandum” means the Memorandum of Ground Lease to be executed by the Parties substantially in the form attached hereto as Exhibit B and recorded in the Official Records as of the Commencement Date.
“Note” means that certain Amended and Restated Secured Promissory Note dated as of the date hereof, executed by Lessee for the benefit of Lessor and evidencing Lessee’s obligation to repay the City Loan. The form of Note is attached hereto as Exhibit D. “Net Condemnation Award” means the net amounts owed or paid to the Parties or to which either of the Parties may be or become entitled by reason of any Taking or pursuant to any agreement with any condemning authority which has been made in settlement of any proceeding relating to a Taking, less any costs and expenses incurred by the Parties in collecting such award or payment
“Official Records” means the Official Records of Alameda County.

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“Party” means Lessor or Lessee, as applicable. Lessor and Lessee shall be referred to collectively as the “Parties.”
“Permitted Encumbrances” means permitted title encumbrances as defined in Section

9.1(a).
“Project” means the Improvements as defined above.
“Regulatory Agreement” means that certain Affordable Housing Regulatory Agreement and Declaration of Restrictive Covenants dated as of the date hereof, executed by Lessor and Lessee and recorded concurrently with execution of this Lease. The Regulatory Agreement is attached hereto as Exhibit C, and is incorporated into this Lease. “Rent” is defined in Section 4.1 hereof.
“Seller Loan” means that certain Seller carryback loan to be provided by Ridge View to Lessee in the amount of approximately [Five Million Two Hundred Sixteen Thousand Five Hundred Thirty-Five Dollars ($5,216,535)].
“Seller Deed of Trust” means that certain Short Form Leasehold Deed of Trust and Assignment of Rents dated as of [June 1, 2024], executed by Lessee for the benefit of Ridge View and to be recorded in the Official Records on the Commencement Date. “Senior Loan” means that certain construction loan in the original principal amount of approximately [Thirty-Nine Million, Six Hundred Sixty-Eight Thousand, Six Hundred Dollars ($39,668,600)] to be provided to Lessee by Senior Lender. “Senior Loan Documents” means all documents executed by Lessee evidencing or securing the Senior Loan.
“Senior Lender” means Silicon Valley Bank, a division of First-Citizens Bank & Trust Company.
“Senior Deed of Trust” means that certain Construction and Permanent Leasehold Deed of Trust, with Assignment of Leases and Rents, Security Agreement and Fixture Filing, securing Lessee’s obligation to repay the Senior Loan, dated as of [May 1, 2024], executed by Lessee for the benefit of California Housing Finance Agency, a public instrumentality and political subdivision of the State of California (“CalHFA”), to be recorded in the Official Records on the Commencement Date, and for which CalHFA’s beneficial interest has been assigned to [Senior Lender] [First-Citizens Bank & Trust Company].
“Surplus Cash” is defined in the Note.
“Taking” means a taking during the Term hereof of all or any part of the Leased Premises and/or the Improvements, or any interest therein or right accruing thereto, as a result of the exercise of the right of condemnation or eminent domain materially affecting the Leased Premises or any part thereof. A conveyance in lieu of or in anticipation of the exercise of any such right of condemnation or eminent domain shall be considered a Taking. Any such Taking

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shall be deemed to have occurred upon the earlier to occur of (a) the date on which the property, right or interest so taken must be surrendered to the condemning authority, or (b) the date title vested in a condemning authority or other party pursuant to any Taking. “Tenant” means any tenant that has the right to reside in a residential unit in the Project pursuant to a Tenant Lease.
“Tenant Lease” means any lease or rental agreement entered into by Lessee with a Tenant.
“Term” is defined in Section 2.2 hereof.
“Transfer” is defined in the Regulatory Agreement.

Section 1.2 Exhibits. The following exhibits are attached hereto and are incorporated into this Lease:

Exhibit A: Legal Description of the Land
Exhibit B: Form of Memorandum of Lease
Exhibit C: Regulatory Agreement
Exhibit D: Note
ARTICLE 2.

LEASE OF THE LAND
Section 2.1 Lease of Land. Subject to the terms hereof and in consideration of the covenants of payment and performance stipulated herein, Lessor leases the Land to Lessee, and in consideration thereof, Lessee takes, hires and leases the Land from the Lessor, pursuant to the terms of this Lease.

Section 2.2 Term. Unless sooner terminated pursuant to the provisions hereof, this Lease shall continue in full force and effect for a term (“Term”), commencing on the Commencement Date and expiring at midnight the day immediately preceding the seventy-fifth (75th) anniversary thereof.

Section 2.3 Use. Subject to the provisions hereof, Lessee shall use the Leased Premises for the rehabilitation and operation of the Project, which includes the redevelopment, construction, and operation of the Improvements on the Land in accordance with the restrictions and requirements set forth in Article 3 hereof. Further, Lessee agrees:
(a) not to use the Leased Premises for any disorderly or unlawful purpose; (b) to use reasonable efforts to prevent any Tenant from committing or maintaining any nuisance or unlawful conduct on or about the Leased Premises;

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(c) to use reasonable efforts to prevent any action by any Tenant that would cause Lessee to violate any of the covenants and conditions of this Lease with respect to the Improvements;
(d) to take reasonable action, if necessary, to abate any action by any Tenant that violates, or that would cause Lessee to violate this Lease; and (e) subject to the laws of the State of California and the rights of Tenants, to permit Lessor and its agents to inspect the Leased Premises or any part thereof at any reasonable time during the Term.

Section 2.4 Possession; Permitted Encumbrances. Lessor shall provide possession of the Leased Premises to Lessee on the Commencement Date. Lessor hereby approves the encumbrances associated with the Senior Loan, the City Loan, and the Seller Loan, provided that: (i) the Regulatory Agreement shall remain senior in lien priority to the Senior Deed of Trust and the Seller Deed of Trust, and (ii) the City Deed of Trust shall remain senior in lien priority to the Seller Deed of Trust. Lessor agrees to permit recordation of the CTCAC Rider against the Land and Lessee’s Estate, and agrees to permit recordation of the CTCAC Regulatory Agreement against Lessee’s Estate, each in form approved by Lessor, Lessee, and CTCAC.

Section 2.5 Memorandum of Lease. The Parties shall execute and acknowledge a memorandum of ground lease, substantially in the form attached hereto as Exhibit B, which shall be recorded at Lessee’s expense
Section 2.6 AS-IS Conveyance. Lessee specifically acknowledges that Lessor is leasing the Leased Premises to Lessee on an “AS IS”, “WHERE IS” and “WITH ALL FAULTS” basis and that except as may be expressly stated in this Lease, Lessee is not relying on any representations or warranties of any kind whatsoever, express or implied, from Lessor as to any matters concerning the Leased Premises, including without limitation: (i) the quality, nature, adequacy and physical condition of the Leased Premises, including, but not limited to, appurtenances, access, landscaping, parking facilities, (ii) the quality, nature, adequacy, and physical condition of soils, geology and any groundwater, (iii) the existence, quality, nature, adequacy and physical condition of utilities serving the Leased Premises, (iv) the development potential of the Leased Premises, and the Leased Premises’ use, merchantability, or fitness, suitability, value or adequacy of the Leased Premises for any particular purpose, (v) the zoning or other legal status of the Leased Premises or any other public or private restrictions on use of the Leased Premises, (vi) the compliance of the Leased Premises or its operation with any Environmental Laws, covenants, conditions and restrictions of any governmental or quasigovernmental entity or of any other person or entity, (vii) the presence or removal of Hazardous Material, substances or wastes on, under or about the Leased Premises or the adjoining or neighboring property; (viii) the quality of any labor and materials used in any improvements on the Leased Premises, or (ix) the condition of title to the Leased Premises.

Section 2.7 Lessee to Rely on Own Experts. Lessee understands that notwithstanding the delivery by Lessor to Lessee of any materials, including, without limitation, third party reports, Lessee will rely entirely on Lessee’s own experts and consultants and its own independent investigation in proceeding with the leasing of the Leased Premises.

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ARTICLE 3.

THE IMPROVEMENTS
Section 3.1 Construction. Lessee shall cause the Improvements to be rehabilitated in compliance with the Construction Plans approved by City and the terms and conditions of Project land use permits and approvals and building permits. Any and all Improvements constructed or rehabilitated by or on behalf of Lessee shall be constructed and rehabilitated in a good and workmanlike manner, in compliance with all applicable Legal Requirements. Lessee shall bear the entire and sole cost of planning, designing, engineering, financing, constructing, rehabilitating, supervising, and inspecting the Improvements, including all fees and mitigation measures. Lessor acknowledges that as of the Commencement Date, the City has approved the Construction Plans.

Section 3.2 Liens. Lessee shall not have any right, authority or power to bind Lessor, Lessor’s Estate, or any interest of Lessor in the Land or the Leased Premises, for any claim for labor or material, or for any other charge or expense, lien or security interest incurred in connection with Lessee’s use of the Land, or the development, rehabilitation, construction or operation of the Improvements, or any change, alteration or addition thereto. Lessee shall have the right to encumber Lessee’s Estate with security instruments required in connection with the Approved Loans, and with utility easements and other customary easements necessary and incidental to the development, rehabilitation, construction and operation of the Improvements, provided that such easements are subject to the approval of Lessor, which shall not be unreasonably withheld, conditioned or delayed.

The Lessee shall not create or permit or suffer to be created or to remain upon the Lessor’s Estate or any interest of Lessor in the Land or the Leased Premises, or upon the Leased Premises, or any part thereof, and will discharge, any lien, including, but not limited to, the liens of mechanics, laborers, materialmen, suppliers or vendors for work or materials alleged to be done or furnished in connection with the Leased Premises or the Project, or any part thereof. If any claim of lien is filed against the Lessor’s Estate or any interest of Lessor in the Land or the Leased Premises, or a stop notice is served on any other lender or other third party in connection with the Leased Premises or the Improvements, or upon the Leased Premises, or any part thereof, then the Lessee shall, within twenty (20) days after such filing or service, either pay and fully discharge the lien or stop notice, effect the release of such lien or stop notice by delivering to the Lessor a surety bond in sufficient form and amount, or provide the Lessor with other assurance satisfactory to the Lessor that the claim of lien or stop notice will be paid or discharged. If the Lessee fails to discharge any lien, encumbrance, charge, or claim in the manner required in this Lease, then in addition to any other right or remedy, the Lessor may (but shall be under no obligation to) following not less than 10 days’ written notice to Lessee, discharge such lien, encumbrance, charge, or claim at the Lessee’s expense. Any expense incurred by Lessor pursuant to this Section shall be immediately due and payable by Lessee to Lessor as Additional Rent under this Lease. The Lessee shall have the right to contest in good faith and by appropriate legal proceedings the validity or amount of any mechanics’, laborers’, materialmen’s, suppliers’ or vendors’ lien or claimed lien; provided that the Lessee shall utilize

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all reasonable means (including the posting of adequate security for payment) to protect the Leasehold Estate, the Lessor’s Estate and any other interest of Lessor in the Land or the Leased Premises against foreclosure. In addition to any other indemnities provided in this Lease, Lessee shall indemnify, protect, defend (with counsel of Lessor’s choosing), and hold harmless the Indemnitees from any and all alleged or actual Claims arising by reason of a mechanic’s lien or work, labor, services, or materials supplied or claimed to have been supplied to Lessee or anyone holding the Leased Premises or the Improvements, or any part thereof, through or under Lessee.

Nothing in this Lease shall be construed as constituting the consent of the Lessor, expressed or implied, to the performance of any labor or the furnishing of any materials or any specific improvements, alterations of or repairs to the Leased Premises or the Project, or any part thereof, by any contractor, subcontractor, laborer or materialman, nor as giving the Lessee or any other person any right, power or authority to act as agent of or to contract for, or permit the rendering of, any services or the furnishing of any materials in such manner as would give rise to the filing of mechanics’ liens or other claims against the Lessor’s Estate or any other interest of Lessor in the Land or the Leased Premises. The Lessor shall have the right at all reasonable times to post and keep posted on the Leased Premises any notices which the Lessor may deem necessary for the protection of the Lessor and of Lessor’s Estate or any other interest of Lessor in the Land or the Leased Premises from mechanics’ liens or other claims. In addition, but subject to the paragraph above, the Lessee shall make, or cause to be made, prompt payment of all monies due and legally owing to all persons doing any work or furnishing any materials or supplies to the Lessee, or any of its respective contractors or subcontractors in connection with the Leased Premises and the Project. The provisions of this Section shall survive the expiration or termination of this Lease.

Section 3.3 Permits, Licenses and Easements. Lessor agrees to use reasonable efforts to assist Lessee in obtaining any and all permits, licenses, easements and other authorizations required by any Governmental Authority with respect to any construction or other work to be performed on the Leased Premises and to grant, or to assist Lessee in obtaining, as applicable, all permits, licenses, easements and other governmental authorizations that are necessary or helpful for electric, telephone, gas, cable television, water, sewer, drainage, access and such other public or private utilities or facilities as may be reasonably necessary or desirable in connection with the operation of the Improvements. Payment of all fees, costs and expenses associated with any of the foregoing shall be the responsibility of Lessee, and Lessor shall have no responsibility to pay any such fees, costs or expenses.

Section 3.4 Title to Improvements.
(a) During the Term. Lessor hereby grants to Lessee, without warranty express or implied, any right, title, or interest that Lessor may have in the Improvements now or hereafter located on the Leased Premises. Notwithstanding any provision in this Lease to the contrary, the Improvements and all alterations, additions, equipment, and fixtures built, made or installed by Lessee in, on, under or to the Leased Premises or Improvements shall be the sole property of Lessee until the expiration of the Term or other termination of this Lease; provided, however, that Lessee shall have no right to destroy, demolish or remove the Improvements except as specifically provided for in this Lease or as approved in writing by Lessor. It is the intent of the

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parties hereto that this Lease shall create a constructive notice of severance of the Improvements from the Leased Premises without the necessity of a deed from Lessor. (b) After the Term. Upon the expiration of the Term or other termination of the Lease, the Improvements and all alterations, additions, equipment and fixtures shall be deemed to be and shall automatically become the property of Lessor, without cost or charge to Lessor.

Lessor agrees that Lessee, at any time prior to the expiration or other termination of this Lease, may remove from the Leased Premises any and all equipment which Lessee has furnished for maintenance purposes or for the use of the Management Agent, provided that Lessee shall repair any physical damage to the Leased Premises caused by the removal of such equipment and property. Lessee agrees to execute, at the request of Lessor at the end of the Term, a confirmatory quitclaim deed of the Improvements to Lessor to be recorded at Lessor’s option and expense and any other documents that may be reasonably required by Lessor or Lessor’s title company to provide Lessor title to the Leased Premises and the Improvements free and clear of all monetary liens and monetary encumbrances not caused or agreed to by Lessor. Without limiting the foregoing, upon the expiration or sooner termination of this Lease, Lessee shall deliver the Leased Premises and the Improvements to Lessor free of all monetary liens and encumbrances unless otherwise consented to in writing by Lessor. Any equipment or other personal property not removed from the Leased Premises by the expiration of the Term shall become the property of Lessor, and Lessor shall have the right to dispose of such equipment and property in the manner of Lessor’s choosing.

Section 3.5 Benefits of Improvements During Term. Lessor acknowledges and agrees that any and all depreciation, amortization and tax credits for federal or State tax purposes relating to the Improvements located on the Leased Premises and any and all additions thereto, substitutions therefor, fixtures therein and other property relating thereto shall be deducted or credited exclusively by Lessee during the Term.

ARTICLE 4.

RENTS
Section 4.1 Ground Rent. Subject to the provisions of this Section, during the period commencing on the Commencement Date and ending on the fifty-fifth (55th) anniversary of the Commencement Date, Lessee shall pay rent to Lessor in the aggregate amount of Five Million Dollars ($5,000,000) (“Aggregate Rent”). During the 15-year period commencing upon the Project placed-in-service date, by not later than June 30 of each Lease Year, Lessee shall pay to Lessor thirty-three and 33/100 percent (33.33%) of all Surplus Cash (as defined in and calculated pursuant to the Note) generated by the Project during the previous calendar year.

Commencing upon the earlier of (a) the commencement of the sixteenth (16th) year following the Project placed-in-service date, and (b) the date that any deferred developer fee has been fully paid, annual payments due under this Section shall increase to equal fifty percent (50%) of Surplus Cash generated by the Project during the previous calendar year. Each payment of Surplus Cash due pursuant to this Section shall be considered “Rent” due and payable hereunder; provided however, Lessee acknowledges that in Lessor’s sole discretion, by written notice to Lessee, Lessor may elect to apply Lessee’s payments of Surplus Cash toward the

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balance payable under the Note in lieu of treating such payments as Rent. Any unpaid balance of Aggregate Rent shall be due and payable by not later than June 30, 2079.

Section 4.2 Payments. All Rent, Additional Rent, and other sums, if any, due Lessor hereunder shall be paid by Lessee to Lessor at the address of Lessor set forth hereinafter for notices, or to such other person and/or at such other address as Lessor may direct by written notice to Lessee, without notice or demand, and without abatement, deduction or set off.

ARTICLE 5.

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

Section 5.2 Possessory Interest Taxes. Notwithstanding any contrary provision of this Lease, Lessee shall be responsible for payment of any possessory interest taxes payable in connection with this Lease and the Leasehold Estate.

Section 5.3 Contested Taxes and Other Impositions.
(a) Lessee, in its own name or in the name of Lessor if prior written consent of Lessor is obtained by Lessee, may contest the validity or amount of any Imposition relating to all or any portion of the Leased Premises, in which event the payment thereof, if authorized by applicable law, may be deferred during the pendency of such contest, if diligently prosecuted.

If applicable law is silent on or expressly disallows deferring payment pending the contest of validity, Lessee shall timely pay any Imposition that is subject to dispute under protest, reserving any and all rights for repayment from the applicable taxing entity if resolution of such contest results in a decision or judgment in Lessee’s favor. (b) As may be necessary or desirable, Lessor or Lessee, as applicable, upon the request of the other Party, shall use reasonable efforts to assist in any such proceeding to contest the validity or amount of any Imposition.

Section 5.4 Valuation Assessment/Property Tax Exemption. If applicable, Lessee may attempt to obtain a lowering of the assessed valuation of the Leased Premises for any year or obtain a property tax exemption for the purpose of reducing taxes thereon. In such event, upon Lessee’s request, Lessor shall use reasonable efforts to assist Lessee in such endeavor; provided, however, that Lessor shall incur no liability or otherwise be construed as being in default under

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this Lease for any assistance (or limitation of assistance) provided to Lessee pursuant to this Section.

Section 5.5 Failure to Pay Impositions. If Lessee fails to pay any Impositions before the same become delinquent, except if Lessee is in good faith contesting such Impositions pursuant to Section 5.3 hereof, Lessor, at its election, may pay such Impositions (but shall not be obligated to pay same), together with any interest and penalties due thereon, and the amount so paid by Lessor shall be repayable to Lessor by Lessee, with an additional interest payment payable to Lessor in an amount of 10% of the total payment (including interest and payments) paid by Lessor for the Imposition, or the maximum amount of interest allowable pursuant to law, whichever is less, within thirty (30) days as Additional Rent hereunder.

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

ARTICLE 6.

INSURANCE
Section 6.1 Required Insurance Coverage. Throughout the term of this Lease, Lessee shall maintain the following policies of insurance and shall comply with the requirements set forth in this Article 6 and the requirements set forth in Exhibit B of the Regulatory Agreement. (a) Property Insurance. Lessee shall keep the Leased Premises insured against loss or damage by a standard all risk policy, excluding earthquake risks, in amounts such that the proceeds of such insurance shall not be less than the full replacement value of the Improvements. (b) Liability and Property Damage Insurance. During the Lease Term, Lessee shall keep in full force and effect a policy or policies of comprehensive general liability and property damage insurance against liability for bodily injury to or death of any person or property damage arising out of an occurrence on or about the Leased Premises. The limits of such insurance shall be not less than Two Million Dollars ($2,000,000) combined single limit each occurrence, Four Million Dollars ($4,000,000) annual aggregate, together with Ten Million Dollars ($10,000,000) excess liability coverage, or such other policy limits as Lessor may require in its reasonable discretion, including coverage for bodily injury, property damage, hired and non-owned automobile liability, products, completed operations and contractual liability coverage. (c) Workers’ Compensation Insurance. Lessee shall require all contractors performing work on the Leased Premises to carry workers’ compensation insurance covering all

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persons employed in connection with the Leased Premises or the Improvements and with respect to whom death, bodily injury, or sickness insurance claims could be asserted against Lessor and/or Lessee. Lessee shall furnish or cause to be furnished to Lessor evidence satisfactory to Lessor that Lessee (if Lessee has any employees), and any contractor that has contracted for the performance of work on the Leased Premises, or otherwise pursuant to this Lease carries statutory Workers’ Compensation insurance and Employer’s Liability insurance in a minimum amount of One Million Dollars ($1,000,000) per accident. (d) Builders’ Risk Insurance. Upon commencement of construction and continuing until issuance of a certificate of occupancy, or equivalent for the Improvements, Lessee and all contractors working on behalf of Lessee shall maintain a policy of builder’s all-risk insurance in an amount not less than the full insurable cost of the Project on a replacement cost basis with a lender’s loss payable endorsement for the benefit of Lessor. During the course of any alteration, construction or reconstruction, the cost of which exceeds Two Hundred Fifty Thousand Dollars ($250,000), Lessee shall require any contractor to provide builders’ risk insurance for the full insurable cost of the work and liability insurance in an amount not less than One Million Dollars ($1,000,000) combined single limit for bodily injury or property damage insuring the interests of Lessor, Lessee and any contractors and subcontractors.

Section 6.2 Insurance Policies and Premiums.
(a) All liability policies required by this Lease shall be written on an occurrence basis, and shall name the Indemnitees as additional insureds. Duplicate copies of such policies or certificates of such insurance shall be promptly furnished to Lessor. (b) All policies of insurance shall include an endorsement that provides that notice of any change or cancellation of said policy must be made in writing and sent to Lessee and Lessor at their respective principal offices at least thirty (30) days before the effective date of change or cancellation.
(c) Companies writing the insurance required hereunder shall be licensed to do business in the State of California. Insurance shall be placed with insurers with a current A.M. Best’s rating of no less than A:VII.
(d) If any insurance policy or coverage required hereunder is canceled or reduced, Lessee shall, within five (5) days after receipt of notice of such cancellation or reduction in coverage, but in no event later than the effective date of cancellation or reduction, file with Lessor a certificate showing that the required insurance has been reinstated or provided through another insurance company or companies. Upon failure to so file such certificate, Lessor may, with notice and at its option, procure such insurance coverage at Lessee’s expense, and Lessee shall promptly reimburse Lessor for such expense upon receipt of billing from Lessor.
(e) Coverage provided by Lessee shall be primary insurance and shall not be contributing with any insurance, or self-insurance maintained by Lessor, and the policies shall so provide. The insurance policies shall contain a waiver of subrogation for the benefit of the Lessor. Lessee shall furnish the required certificates and endorsements to Lessor prior to the

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commencement of rehabilitation or construction work on the Project, and shall provide Lessor with certified copies of the required insurance policies upon request of Lessor. (f) Deductibles/Retentions. Any deductibles or self-insured retentions shall be declared to, and shall be subject to Lessor approval. At the option of and upon request by the Lessor, if Lessor determines that such deductibles or retentions are unreasonably high, either the insurer shall reduce or eliminate such deductibles or self-insurance retentions as respects the Indemnitees or Lessee shall procure a bond guaranteeing payment of losses and related investigations, claims administration and defense expenses. (g) Adjustments. The limits of the liability coverage and, if necessary, the terms and conditions of insurance, shall be reasonably adjusted from time to time (not less than every five (5) years after the Commencement Date nor more than once in every three (3) year period) to address changes in circumstances, including, but not limited to, changes in inflation and the litigation climate in California, provided that such adjustments are consistent with generally prevailing requirements for residential multi-family developments similar to the Project and located in the San Francisco/Alameda County area. Within thirty (30) days following Lessor’s delivery of written notice of any such adjustments, Lessee shall provide Lessor with amended or new insurance certificates and endorsements evidencing compliance with such adjustments.
(h) Additional Insured. For all liability insurance required by this Lease, Lessee (and Lessee’s contractors, as applicable) shall obtain endorsements that name the Indemnitees as additional insured in the full amount of all applicable policies, notwithstanding any lesser minimum limits specified in this Lease. This Lease requires Lessee (and Lessee’s contractors) to obtain and provide for the benefit of the Indemnitees, additional insured coverage in the same amount of insurance carried by Lessee (or Lessee’s contractors, as applicable), but in no event less than the minimum amounts specified in this Lease. In the event that Lessee (or Lessee’s contractors as applicable) obtain insurance policies that provide liability coverage in excess of the amounts specified in this Lease, the actual limits provided by such policies shall be deemed to be the amounts required under this Lease. Without limiting the foregoing, the limits of liability coverage specified in this Lease are not intended, nor shall they operate, to limit Lessor’s ability to recover amounts in excess of such minimum amounts.

Section 6.3 Proceeds of Insurance.
(a) For so long as the Senior Deed of Trust or any deed of trust securing a loan approved by Lessor that refinances the Senior Loan, is outstanding: all fire and standard risk or extended coverage (casualty) insurance proceeds shall be applied to the payment of the costs of repairing or rebuilding that part of the Leased Premises damaged or destroyed if (i) Lessee agrees in writing within ninety (90) days after payment of the proceeds of insurance that such repair or rebuilding is economically feasible, and (ii) the Senior Lender or the holder of the refinanced Senior Loan permits such repair or rebuilding, provided that the extent of the Lessee’s obligation to restore the Leased Premises shall be limited to the amount of the insurance proceeds.

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(b) If the Improvements are not repaired or rebuilt, all such proceeds shall be applied in a manner consistent with the terms of the Senior Deed of Trust or if the Senior Deed of Trust is not outstanding, shall be applied in a manner consistent with the City Deed of Trust. (c) In the event that none of the Senior Deed of Trust, any deed of trust securing a refinancing of the Senior Loan, nor the City Deed of Trust are outstanding, all insurance proceeds received under the policies set forth in this Article 6 shall be paid to Lessee, provided that Lessee agrees that it shall apply such proceeds for reconstruction or repair of the Improvements unless such repair or reconstruction is not economically feasible. (d) To the extent any of the above provisions are inconsistent with the provisions of the Senior Loan Documents, the Senior Loan Documents shall control.

ARTICLE 7.

MAINTENANCE, ALTERATIONS, REPAIRS AND REPLACEMENTS
Section 7.1 Maintenance of Leased Premises; Landscaping. During the Term, at Lessee’s sole cost and expense, Lessee shall keep and maintain the Leased Premises, all Improvements, and all appurtenances thereto, in good and safe order, condition and repair. All such maintenance and repair shall conform to and comply with all Legal Requirements affecting the Leased Premises.

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

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Engineer, and such maintenance is not performed, or cannot be performed, by Lessee within twenty-four (24) hours of receipt of such notice thereof, the Lessor may perform or cause to be performed such maintenance at Lessee’s expense, and Lessee, upon demand by the Lessor, shall pay to the Lessor all reasonable expenses incurred by the Lessor in the performance of such maintenance.

Section 7.3 Alterations to Leased Premises. Lessee may make additions, alterations or changes in or to the Improvements (“Alterations”) subject, however, to the following conditions:
(a) No Alterations shall be made that would tend to impair the structural soundness of the Improvements;
(b) No Alterations shall be undertaken that are prohibited by, or would cause the Leased Premises, the Improvements, Lessee, or Lessor to be in breach or violation of any Legal Requirements;
(c) No Alterations shall be undertaken until Lessee shall have procured, to the extent the same may be required from time to time, all permits and authorizations of all applicable Governmental Authorities, all required consents of any Lender, and the consent of Lessor. Lessor shall join in the application for such permits or authorizations whenever such action is necessary or helpful and is requested by Lessee, and shall use Lessor’s reasonable efforts to obtain such permits or authorization;
(d) All Alterations shall be performed in good and workmanlike manner and in compliance with all applicable Legal Requirements and all applicable Insurance Requirements; and
(e) All Alterations shall be consistent with the use of the Leased Premises as authorized under this Lease.
(f) Any Alteration that will exceed the sum of Two Hundred Fifty Thousand Dollars ($250,000) in cost (increasing annually by the amount of the Consumer Price IndexUrban (CPI-U) for the San Francisco-Oakland-San Jose, California metropolitan area) shall require Lessor’s advance written consent which shall not be unreasonably withheld.

Section 7.4 Indemnification. Notwithstanding any other provision of this Lease to the contrary, and in addition to any other indemnities provided in this Lease, to the fullest extent permitted by law, Lessee hereby agrees to indemnify, protect, hold harmless and defend (by counsel reasonably satisfactory to Lessor) the Indemnitees from and against any and all Claims, arising from or relating to Lessee’s obligations under this Lease or the rehabilitation, construction or operation of the Improvements or any Alterations except to the extent any such Claim arises from the gross negligence or willful misconduct of the Indemnitees. In addition, if any contractor or subcontractor that performed any construction work for Lessee or Lessee’s affiliates on the Improvements or Alterations shall assert any claim against Lessor on account of any damage alleged to have been caused by reason of acts of negligence of Lessee or Lessee’s affiliates, members, partners, officers, directors, affiliates, agents, employees or construction

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contractors, Lessee shall defend at its own expense any suit based upon such claim; and if any judgment or claim against Lessor shall be allowed, Lessee shall pay or cause to be paid or satisfied such judgment of claim and pay all costs and expenses in connection therewith. The provisions of this Section shall survive the expiration or termination of this Lease.

ARTICLE 8.

MORTGAGE LOANS
Section 8.1 Intentionally omitted.

Section 8.2 Liens and Encumbrances Against the Leasehold Estate. The Lessee shall have the right to encumber the Leasehold Estate and the Improvements with leasehold deeds of trust, mortgages, and regulatory and affordability agreements related to the Approved Loans (collectively, “Liens”) provided that all documents evidencing such Liens are consistent with the terms and conditions of this Lease and subject to Lessor’s approval which shall not be unreasonably withheld.
(a) For as long as there is any Lien securing any Approved Loan:
(1) Lessor shall not agree to any cancellation, termination (except for a termination for a default by Lessee which is not cured by Lessee or any Lender in accordance with this Lease), or accept any surrender of this Lease, nor shall Lessor consent to any amendment or modification of this Lease without the prior written consent of the Senior Lender.

In the event that Lessor receives competing or conflicting offers to cure any default under this Lease, Lessor shall accept the offers to cure in the following order: first, Lessee or the limited partner (or members, as applicable) therein, then each Lender in the same relative priority as their respective Liens.
(2) Notwithstanding any default by Lessee under this Lease, Lessor shall have no right to terminate this Lease unless Lessor shall have given the Lenders that have outstanding Approved Loans written notice of such default and such Lenders shall have failed to remedy such default or acquire the Leasehold Estate or commence foreclosure or other appropriate proceedings as set forth in, and within the time specified by, this Section 8.2. (3) Any Lender that has an outstanding Approved Loan shall have the right, but not the obligation, at any time to pay any or all of the Rent or Additional Rent due pursuant to the terms of this Lease, and do any other act or thing required of Lessee by the terms of this Lease, to prevent termination of this Lease. Lessor shall provide each Lender written notice of default concurrently with delivery of such notice to Lessee. Each Lender shall have the same period to cure such default as afforded to Lessee, extended by an additional thirty (30) days in the case of a monetary default, and by an additional sixty (60) days in the case of a nonmonetary default. The notice of default shall describe the action necessary to cure the default, and shall include, with respect to any monetary default, a detailed statement identifying the amounts due and the obligations to which amounts relate, and with respect to any nonmonetary default, a detailed statement identifying the obligations breached and the cure expected by Lessor; provided, however, that if any nonmonetary default is not susceptible to cure within

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the applicable cure period, the Lender shall have such longer period, not to exceed an additional ninety (90) days, as may be necessary to cure the default, so long as such Lender is diligently prosecuting such cure to completion. All payments so made and all things so done shall be as effective to prevent a termination of this Lease as the same would have been if made and performed by Lessee instead of by the Lender(s).
(4) In addition to the cure periods described in the preceding Paragraph (3), if the default is such that possession of the Leasehold Estate may be reasonably necessary to remedy the default, the Senior Lender shall have a reasonable time after the expiration of the applicable cure period described in the preceding Paragraph (3) within which to remedy such default, provided that (A) such Lender shall have fully cured any default in the payment of any monetary obligations of Lessee under this Lease within the applicable period described in the preceding Paragraph (3) and shall continue to pay currently such monetary obligations when the same are due; (B) such Lender shall have acquired Lessee’s Leasehold Estate hereunder or commenced foreclosure or other appropriate proceedings prior to or within the period described in the preceding Paragraph (3), and shall be diligently prosecuting the same; and (C) and after acquiring possession of the Leasehold Estate, such Lender shall diligently prosecute to completion such cures as may be reasonably possible to remedy nonmonetary defaults existing under this Lease. Any default under this Lease which by its nature cannot be remedied by Lender shall be deemed remedied upon Lender or its Nominee (as hereinafter defined) acquiring Lessee’s interest in the Premises as provided in this Section. (5) Lessor shall promptly provide estoppel certificates reasonably requested by Lenders or Project investors.
(6) If the Lenders are prohibited, stayed or enjoined by any bankruptcy or insolvency proceeding of any court, including without limitation a court having jurisdiction over Lessee in such proceeding, from commencing or prosecuting foreclosure proceedings, the times specified for commencing or prosecuting such foreclosure or other proceedings shall be extended for the period of such prohibition; provided that any Lender shall have fully cured any default in the payment of any monetary obligations of Lessee under this Lease, including without limitation any monetary obligations to third parties which have become, or threaten to become, liens against the Leased Premises or any portion thereof, and shall continue to pay currently such monetary obligations when the same fall due; provided, further, that, subject to Paragraph (1) of this Section 8.2(a), such Lender shall not interfere with Lessor’s efforts to seek compliance by Lessee with any non-monetary obligation under this Lease. (7) Lessor shall mail or deliver to any Lenders that have any outstanding Approved Loans a duplicate copy of any notice which Lessor may deliver to Lessee pursuant to this Lease, including any notice of default. Lessee shall deliver to Lessor the name and contact information for all Lenders that have outstanding Approved Loans, including successors in interest to Approved Loans. Provided Lessee (or Lender) has delivered Lessor the name and contact information of the Lender having an outstanding Approved Loan, no notice of default by Lessor to Lessee shall be effective as to that Lender unless and until a copy of the notice shall have been mailed or delivered to such Lender as set forth in this Section.

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(8) The foreclosure of an Approved Loan, any sale thereunder, whether by judicial proceedings or by virtue of any power contained in the Leasehold Mortgage securing the Approved Loan, or any conveyance of the Leasehold Estate created hereby from Lessee to a Lender through or in lieu of foreclosure (a “Foreclosure Event”), shall not require the consent of Lessor or constitute a breach of any provision of this Lease. In the event any Lender or its Nominee (as defined herein) becomes Lessee under this Lease by such means or pursuant to any new lease obtained under Paragraph (9) of this Section 8.2(a) below, Lessor shall recognize the Lender or its Nominee as Lessee hereunder or under such new lease and the Lender shall be personally liable under this Lease or such new lease only for the period of time that the Lender or its Nominee remains Lessee thereunder, provided that the Lender or its Nominee attorns to Lessor and agrees to be subject to the restrictions of this Lease. If a Lender or its Nominee becomes the lessee under this Lease or any such new lease, the Lender shall have the right thereafter to assign or sublease this Lease or such new lease one time, provided that any assignee: (A) shall take the Leasehold Estate subject to all of the provisions of this Lease or such new lease, and (B) shall assume and agree to perform all obligations of Lessee under this Lease.

Any further assignment shall be subject to the consent of Lessor, which consent shall not be unreasonably withheld. Nothing in this Section shall be construed to obligate any Lender to remedy any default of Lessee, and any failure of any Lender to complete any such cure after commencing the same shall not give rise to any liability of any Lender to Lessor or Lessee. (9) In the event (A) a Lender, its designee or another purchaser in foreclosure proceedings becomes the legal owner of the Leasehold Estate, or (B) Lessor terminates this Lease by reason of any Event of Default (as defined herein), then, upon written request by Lender given within sixty (60) days after such transfer or receipt of notice of such termination of the Leasehold Estate, Lessor shall execute and deliver a new lease of the Leased Premises to such Lender, or its nominee, purchaser, assignee or transferee (the “Nominee”), provided that, except as provided in Paragraph (8) of this Section 8.2(a) if such Nominee is not the purchaser at a foreclosure sale and is not wholly owned by one or more Lenders, such Nominee is approved by Lessor in its reasonable discretion. Such new lease shall be substantially in the same form as this Lease, shall have a term equal to the remainder of the Lease Term with the same agreements, covenants, reversionary interests and conditions (except for any requirements which have been fulfilled by Lessee prior to termination) as are contained in this Lease and with priority equal to this Lease with respect to encumbrances of Lessor’s interest in the Land or the Leased Premises or encumbrances of Lessee’s interest in the Leased Premises permitted or caused by Lessor, together with any provisions legally required in the event the Nominee is a governmental entity; provided, however, that any defaults by Lessee susceptible to cure by the Lender have been cured or reasonable assurance has been provided to Lessor that such defaults shall be cured. Upon execution and delivery of such new lease by Lessor and the Nominee, the Nominee shall have acquired all the right, title and interest of Lessee under this Lease prior to its termination. Lessor, shall cooperate in taking such action as shall be necessary to cancel and discharge this Lease and to remove Lessee from the Leased Premises. After such termination and cancellation of the Lease and prior to the expiration of the period within which Lender or Nominee may elect to obtain a new lease from Lessor, Lessor shall refrain from terminating any existing sublease or otherwise encumbering the Premises without the prior written consent of Lender or Nominee. Any new lease granted hereby shall vest in Lender or Nominee all right, title, interest, power and privileges of Lessee hereunder in and to the Premises, including, without limitation, the assignment of Lessee’s interest in and to

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all then existing subleases and sublease rentals and the automatic vesting of title to all Improvements, fixtures and personal property of Lessee in Lender or Nominee. Such new lease shall provide, with respect to each and every permitted sublease that the new lessee shall be deemed to have recognized the sublessee under the sublease, pursuant to the terms of the sublease as though the sublease had never terminated but had continued in full force and effect after the termination of the Lease, and to have assumed all the obligations of the sublessor under the sublease accruing from and after the termination of the Lease, except that the obligation of the new lessee, as sublessor, under any covenant of quiet enjoyment, expressed or implied, contained in any such sublease shall be limited to the acts of such new lessee and those claiming by, under or through such new lessee. If more than one Lender is entitled to a new lease pursuant to this Paragraph (9), Lessor shall enter into such new lease with the lender whose mortgage or deed of trust that has the highest lien priority. (10) If a Lender or Nominee subsequently transfers its interest under this Lease after acquiring such interest by foreclosure or deed in lieu of foreclosure and, in connection with any such transfer, the transferee obtains a mortgage or deed of trust encumbering such leasehold interest to secure all or any portion of the purchase price given to the Lender or Nominee for such transfer, then such mortgage or deed of trust shall be considered an Approved Loan hereunder provided that Lessor has been provided an opportunity to review and approve the documents evidencing and securing such mortgage or deed of trust and the obligations secured thereby, and the Lender shall be entitled to receive the benefit of and to enforce the provisions of this Lease or the new lease approved pursuant to Paragraph (9) of this Section 8.2(a).
(11) Unless the Lenders otherwise consent in writing, Lessor and Lessee each hereby waives, and agrees not to assert or otherwise take the benefit of, that portion of Section 365(d)4, or any other applicable provisions, of the United States Bankruptcy Code (11 U.S.C. Section 101 et seq.), which provides for the deemed rejection of a lease in certain circumstances, so long as the trustee is paying the rent due under the Lease and performs, or causes the performance of, the uses of the Leased Premises for the Project pursuant to this Lease. (12) Subject to the rights of the Lenders, which shall have priority over all persons or entities given rights under this Paragraph (12), any Investor limited partners of Lessee shall have the same rights as any Lender authorized under Paragraphs (2), (3) and (7) of this Section 8.2(a) of this Lease and any reference to a Lender in Paragraphs (2), (3) and (7) of this Section 8.2(a) shall be deemed to include such limited partners. (13) Lessor shall cooperate in including in this Lease by suitable amendment from time to time any provision which may reasonably be requested by any Lender or any proposed lender, for the purpose of implementing the mortgagee-protection provisions contained in this Lease and allowing such Lender or proposed lender reasonable means to protect or preserve the lien of the leasehold mortgage and the value of its security, and to include any additional rights and privileges reasonably requested to be added by such Lender. Lessor agrees to execute and deliver (and to acknowledge, if necessary, for recording purposes) any agreement necessary to effect any such amendment; provided, however, that any such amendment shall not in any way affect Lessor’s Estate or any other interest of Lessor in the Land or the Leased

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Premises, affect the Lease Term or rent under this Lease, or otherwise in any material respect adversely affect any rights of Lessor under this Lease. (b) Any Leasehold Mortgage shall be subject to the provisions of this Lease and all rights of Lessor under this Lease. Notwithstanding any contrary provision of this Lease, in no event may any mortgage or other security instrument, including without limitation any Leasehold Mortgage, be recorded against Lessor’s fee interest in the Land or reversionary interest in the Improvements without Lessor’s prior written consent, which Lessor may grant or withhold in the exercise of Lessor’s sole discretion. Lessor will not encumber or transfer Lessor’s fee interest in the Land or reversionary interest in the improvements without the prior written consent of the Senior Lender.
(c) Intentionally omitted.
(d) Notwithstanding any contrary provision hereof, if prior to completion of rehabilitation or construction of the Improvements, a Lender completes a foreclosure sale or accepts a deed in lieu of foreclosure, such Lender or Nominee may complete the rehabilitation or construction with modifications to the Construction Plans as necessary to make the Project economically feasible and as reasonably approved by the City of Pleasanton, provided that such modifications will not result in a reduction in the number of residential units, a reduction in the number of on-site parking spaces, or a significant reduction in Project common space or amenities.

Section 8.3 Cost of Approved Loans to be Paid by Tenant. Lessee affirms that it shall bear all of the costs and expenses in connection with (a) the preparation and securing of the Approved Loans, (b) the delivery of any instruments and documents and their filing and recording, if required, and (c) all taxes and charges payable in connection with the Approved Loans.

Section 8.4 Proceeds of Approved Loans. It is expressly understood and agreed that all Approved Loan proceeds shall be paid to and become the property of Lessee, and that Lessor shall have no right to receive any such Approved Loan proceeds.

Section 8.5 Notice and Right to Cure Defaults Under Approved Loans. Upon the recording of a memorandum of this Lease, Lessor may record in the Official Records a request for notice of any default under each Approved Loan. In the event of default by Lessee under an Approved Loan, Lessor shall have the right, but not the obligation, to cure the default in accordance with the applicable loan documents. Any payments made by Lessor to cure a default shall be treated as Additional Rent due from Lessee hereunder, which shall be paid within thirty (30) days of the date on which the payment was made by Lessor.

Section 8.6 Rights of Investor. The Investor shall have the same notice and cure rights as any Lender for so long as it is a limited partner of Lessee; provided however, the references in this Section 8 to additional cure periods of Lender to permit Lender to foreclose shall instead refer to Investor’s actions to remove the general partner of Lessee.

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Section 8.7 Right to Pay Taxes and Cure Defaults. All Lenders shall have the right (but not the obligation) to pay any taxes payable by Lessor with respect to the Leased Premises, and to cure any monetary or nonmonetary default by Lessor under any mortgage or other encumbrance on the Leased Premises; and, if a Lender does so pay or cure, Lessor agrees that it will reimburse the Lender for the amount thereof promptly following request by the Lender therefor.

Section 8.8 Silicon Valley Bank Provisions. Until such time as the Senior Deed of Trust is reconveyed or Silicon Valley Bank (“SVB”) notifies Lessor in writing that all obligations under the Senior Loan have been satisfied, Lessor agrees that:
(a) Effect of Lessee Waiver. Lessor will not enforce against SVB any waiver or election made by Lessee under the Lease which has a material adverse effect on the value of the Project without the prior written consent of SVB (which will not be unreasonably withheld or delayed);
(b) Notice to SVB. Lessor will concurrently deliver to SVB a copy of any notice given by Lessor to Lessee under the Lease at the address specified in Section 17.16 below, and no such notice shall be effective unless the concurrent copy thereof is delivered to SVB, and no cure period provided to Lenders under the Lease shall commence until such notice is delivered to SVB;
(c) SVB Right to Access Property to Cure Defaults. Lessor and Lessee will allow SVB and its representatives access to the Project for the purpose of effecting any cure right exercised by SVB pursuant to its cure rights under this Lease, and any cure by SVB shall have the same effect as a cure by Lessee;
(d) Obligations of New Lessee. Following any foreclosure, enforcement or assignment described in subparagraph (8) or (9) of Section 8.2(a) above, the new lessee shall be personally obligated only for performance of obligations under the Lease commencing as of the date of such foreclosure, enforcement or assignment and, provided that a successor lessee has assumed such obligations, ending as of the date of any assignment of the Lease to a successor lessee. Any liability of SVB, or any new lessee that succeeds to SVB’s interest for any such obligations, shall not exceed SVB’s, or such new lessee’s, interest in the Project.
(e) Insurance and Condemnation Proceedings. That Lessor will provide reasonable prior notice to SVB of any proceedings for adjustment or adjudication of any insurance or condemnation claim involving the Project, and will permit SVB to participate therein as an interested party.
(f) No Lien on Personal Property. Lessor acknowledges that any equipment or other personal property of Lessee now or hereafter located on the Project shall be and remain the personal property of Lessee and shall not become a part of the Project; Lessor expressly waives any lien on any such equipment or other personal property of Lessee.

To the extent that Lessee grants a lien or security interest in such equipment or other personal property to SVB to secure the Lessee’s obligations under the Senior Loan

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Documents, Lessor agrees that, upon enforcement or exercise by SVB of any of its rights with respect thereto, Lessor shall afford SVB reasonable access to the Project for the purpose of preserving its interests therein or enforcing or exercising such rights, subject to the payment by SVB to Lessor of a daily rental at the rate provided for in the Lease.

ARTICLE 9.

REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 9.1 Representations, Warranties and Covenants of Lessee. As an inducement to Lessor to enter into and to proceed under this Lease, Lessee warrants and represents to Lessor as follows, which warranties, representations and covenants are true and correct as of the date of this Lease:
(a) Authority. Lessee has the right, power and authority to enter into this Lease and the right, power and authority to comply with the terms, obligations, provisions and conditions contained in this Lease;
(b) No Breach of Obligations. The entry by Lessee into this Lease and the performance of all of the terms, provisions and conditions contained herein will not, or with the giving of notice or the passage of time, or both, would not, violate or cause a breach or default under any other agreements to which Lessee is a party or by which it is bound.

Section 9.2 Relocation. Lessee shall comply with all provisions of Section 3.10 of the Regulatory Agreement pertaining to relocation of existing Tenants and indemnification of Lessor in connection therewith.

Section 9.3 Hazardous Materials; Indemnification. Lessee (i) shall not cause or permit any Hazardous Materials to be placed, held, located or disposed of on, under or at the Leased Premises or any part thereof, except in commercially reasonable amounts used in the construction and operation of the Improvements and in accordance with Legal Requirements, and (ii) shall not cause or permit any Hazardous Materials contamination of the Leased Premises or any part thereof.

Lessee shall indemnify, protect, hold harmless and defend (by counsel reasonably satisfactory to Lessor) the Indemnitees from and against any and all Claims arising directly or indirectly, in whole or in part, out of (i) any activity by Lessee, its affiliates or its agents or contractors carried on or undertaken on or off the Leased Premises in connection with the handling, treatment, removal, storage, decontamination, cleanup, transport or disposal of any Hazardous Materials located or present in, on, under or about the Leased Premises; or (ii) the failure of Lessee to comply with any Environmental Laws relating to the handling, treatment, presence, removal, storage, decontamination, cleanup, transportation, or disposal of Hazardous Materials into, on, under or from the Leased Premises, except to the extent any such Claim arises from the gross negligence or willful misconduct of the Indemnitees. The provisions of this Section shall survive the expiration or termination of this Lease.

Section 9.4 Prevailing Wage Requirements. If required by applicable federal or State law, Lessee and its contractors, subcontractors and agents shall comply with California Labor

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Code Section 1720 et seq. and the regulations adopted pursuant thereto (and if applicable due to financing sources for the Project, with the federal Davis Bacon Act and implementing regulations) (all of the foregoing, collectively, “Prevailing Wage Laws”), and shall be responsible for carrying out the requirements of such provisions. To the greatest extent allowed by law, Lessee shall indemnify, defend (with counsel approved by Lessor) and hold the Indemnitees harmless from and against all Claims which directly or indirectly, in whole or in part, are caused by, arise in connection with, result from, relate to, or are alleged to be caused by, arise in connection with, or relate to, the payment or requirement of payment of prevailing wages (including without limitation, all claims that may be made by contractors, subcontractors or other third party claimants pursuant to Labor Code Sections 1726 and 1781) or the requirement of competitive bidding in connection with the Project, the failure to comply with any state or federal labor laws, regulations or standards in connection with this Lease, including but not limited to the Prevailing Wage Laws, or any act or omission of Lessee related to this Lease with respect to the payment or requirement of payment of prevailing wages or the requirement of competitive bidding, whether or not any insurance policies shall have been determined to be applicable to any such Claims. The provisions of this Section shall survive the expiration or earlier termination of this Lease.

Section 9.5 Compliance with Laws. Lessee shall carry out and shall cause its contractors and subcontractors to carry out the rehabilitation of the Project, and shall operate the Project in conformity with all applicable federal, state and local laws, rules, ordinances and regulations (“Applicable Laws”), including without limitation, all applicable federal and state labor laws and standards, Section 3 of the Housing and Community Development Act of 1974, as amended (if applicable), applicable provisions of the California Public Contracts Code (if any), the City’s zoning and development standards, building, plumbing, mechanical and electrical codes, all other provisions of the City’s Municipal Code, and all applicable disabled and handicapped access requirements, including without limitation, the Americans with Disabilities Act, 42 U.S.C. Section 12101, et seq., Government Code Section 4450, et seq., Government Code Section 11135, et seq., and the Unruh Civil Rights Act, Civil Code Section 51, et seq.. To the greatest extent allowed by law, Lessee shall indemnify, defend (with counsel approved by Lessor) and hold harmless the Indemnitees from and against any and all Claims arising in connection with the breach of Lessee’s obligations set forth in this Section whether or not any insurance policies shall have been determined to be applicable to any such Claims. This Section shall survive the expiration or termination of this Lease.

Section 9.6 Affordability and Use Restrictions. Lessee hereby covenants and agrees that the Leased Premises shall be used solely for the operation of a multifamily senior housing development in compliance with the requirements set forth herein and in the Regulatory Agreement. The Regulatory Agreement sets forth requirements pertaining to Tenant income and other eligibility requirements, maximum rents that may be charged to residents of the Project, limitations on rent increases, and other matters pertaining to use and occupancy of the Project. Lessee shall comply with all such requirements.

Section 9.7 Preference for City of Pleasanton Residents and Employees. Lessee shall comply with the requirements set forth in Section 3.9.1 of the Regulatory Agreement, subject to the application of Applicable Rules and Regulations (as defined in the Regulatory Agreement).

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Section 9.8 Reporting Requirements; Access to Information; Inspections. The Regulatory Agreement sets forth requirements pertaining to Tenant certification, annual reports required that Lessee is required to submit to Lessor, maintenance of records, and City rights to inspect and audit Project records and inspect the Leased Premises. Lessee shall be subject to, and shall comply with, all such requirements.

Section 9.9 Non-Discrimination; Compliance with Fair Housing Laws. Lessee shall not restrict the rental, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Leased Premises, or any portion thereof, on the basis of race, color, religion, creed, sex, sexual orientation, disability, marital status, ancestry, or national origin of any person. Lessee covenants for itself and all persons claiming under or through it, and this Lease is made and accepted upon and subject to the condition that there shall be no discrimination against or segregation of any person or group of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Leased Premises or the Project, or part thereof, nor shall Lessee or any person claiming under or through Lessee establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in, of, or for the Leased Premises or the Project, or part thereof. Lessee shall include such provision in all leases and rental agreements affecting the Leased Premises or part thereof, and shall enforce the same diligently and in good faith.

Section 9.10 Fair Housing. Lessee shall comply with state and federal fair housing laws in the marketing and rental of the units in the Project. Lessee shall accept as tenants, on the same basis as all other prospective tenants, persons who are recipients of federal certificates or vouchers for rent subsidies pursuant to the existing Section 8 program or any successor thereto.

Section 9.11 Management Agent. Lessor approves Eden Housing Management, Inc., a California nonprofit public benefit corporation as the initial Management Agent. In recognition of Lessor’s significant financial contribution to the Project, Lessor shall have the right to review and approve any replacement of the Management Agent proposed by Lessee for the Project, and shall have the right to review and approve any agreement executed between Lessee and the management entity, which approval of agreement shall not be unreasonably withheld. The contracting of management services to a management agent shall not relieve Lessee of its primary responsibility for proper performance of management duties. Upon Lessor determination and delivery of written notice to Lessee that Lessee has failed to operate the Project in accordance with this Lease, Lessor may, subject to any applicable cure period, require Lessee to contract with a qualified management agent selected by Lessor subject to approval of the Investor and Lenders, if required, to operate the Project, or to make such other arrangements as Lessor deems necessary to ensure performance of the required functions.

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ARTICLE 10.

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

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

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

Section 10.4 Apportionment of Award. If there is a Taking, whether whole or partial, Lessor and Lessee shall be entitled to receive and retain such separate awards and portions of lump sum awards as may be allocated to their respective interests in any condemnation proceedings, or as may be otherwise agreed, taking into consideration Lessor’s fee interest in the Land (as encumbered by this Lease) and reversionary interest in the Improvements upon the expiration of the Term or termination of this Lease. If the Leased Premises are restored as is contemplated in Section 10.2 above, Lessee shall be entitled to pay the costs and expenses reasonably incurred in such restoration out of any Net Condemnation Award payable to Lessee.

Thereafter, if the condemning authority does not make separate awards, the Parties agree that any Net Condemnation Award will be allocated as follows on a proportionate basis reflecting the Parties’ respective interests in the Land and Improvements and the remaining duration of the Term as follows:
(A) Award on Total or Substantial Taking. In the event of a total or substantial taking, the award shall be apportioned as follows, in the following order:
(a) To the Lenders in an amount equal to the indebtedness then owed to such Lenders in order of the Lien priority of the Leasehold Mortgages (b) To Lessor that portion of the award equal to the fair market value of the Land.

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(c) To Lessee, that portion of the award equal to the fair market value of the Improvements (subject to Lessor’s reversionary interest), less the amount paid to the Lenders pursuant to (a) above.
(d) Any “bonus value” (i.e., any portion of the award attributable to the fact that the rent payable by Lessee under this Lease is at a below market rate) shall be paid to Lessor; provided however, if the condemning agency is Lessor, any such “bonus value” shall be equally divided between Lessor and Lessee.
(e) The balance, if any, shall be allocated between Lessor and Lessee respectively in that proportion in which (i) the fair market value of the Land bears to (ii) the fair market value of the Improvements, exclusive of Lessor’s reversionary interest. (B) Award on Partial Taking. In the event of a partial taking, after application of the Award for restoration, any remaining portion of such award shall be apportioned as follows, in the following order:
(a) To the Lenders in an amount equal to the indebtedness then owed to such Lenders in order of the Lien priority of the Leasehold Mortgages . (b) To Lessor, that portion of the award attributable to the fair market value of the portion of the Land taken.
(c) To Lessee, that portion of the award equal to the fair market value of the portion of the Improvements taken (subject to Lessor’s reversionary interest), less the amount paid to the Lenders pursuant to (a) above, but only to the extent that the proceeds of the award are not used for restoration of the Improvements. (d) Any “bonus value” (i.e., any portion of the award attributable to the fact that the rent payable by Lessee under this Lease is at a below market rate) shall be paid to Lessor; provided however, if the condemning agency is Lessor, any such “bonus value” shall be equally divided between Lessor and Lessee.
(e) The balance, if any, shall be allocated between Lessor and Lessee respectively in that proportion in which (i) the fair market value of the Land bears to (ii) the fair market value of the Improvements exclusive of the reversionary interest of Lessor.
(f) Any severance damages awarded or payable because only a portion of the Land and Improvements are taken by eminent domain shall be (a) paid to Lessee during the first 37.5 years of this Lease and (b) equally divided between Lessee and Lessor during the next 37.5 years of this Lease (except to the extent needed to replace any Improvements taken by eminent domain with equivalent Improvements on the remainder of the Land).
(C) Award for Temporary Taking. Any award for a temporary taking shall, subject to the rights of any Lender, be awarded and retained by Lessee.

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(D) Rent Abatement for Partial Taking. In the event of any partial taking of the Improvements, commencing upon the date of the final order of condemnation, Rent payable under this Lease shall be reduced by the percentage equal to the square footage of the condemned portion of the Improvements divided by the total square footage of the Improvements prior to the taking.

Section 10.5 Joinder. If a Leasehold Mortgage exists, the Lenders, to the extent permitted by law, shall be made a party to any Taking proceeding.

Section 10.6 City Reservation of Rights. Notwithstanding any provisions in this Lease to the contrary, nothing herein does or shall be construed to limit or require the City to exercise its ability to condemn any property, including the Leased Premises, in accordance with applicable law. Nothing in this Lease does or shall be construed as requiring the City to pay to Lessee, any Lender, or any other third party with an interest in the Leased Premises, any amount of money, as compensation for alleged condemnation or otherwise, if City (or its successor) seeks to enforce any of the rights and obligations under this Lease and any executed attachments thereto. Except when City exercises its ability to condemn the Leased Premises by adoption of a resolution of necessity and pursuant to other provisions of applicable law, City shall not be a construed as pursuing or effectuating a Taking or acting as a “condemning authority” under this Lease.

ARTICLE 11.

DAMAGE OR DESTRUCTION
Section 11.1 Damage or Destruction to Leased Premises. Lessee shall give prompt written notice to Lessor after the occurrence of any fire, earthquake, act of God or other casualty to or in connection with the Leased Premises, the Improvements or any portion thereof (hereinafter sometimes referred to as “Casualty”). Subject to Section 11.2 below, if during the Term the Improvements shall be damaged or destroyed by Casualty, Lessee shall repair or restore the Improvements, so long as Lessee determines, in its reasonable discretion, that it is feasible to do so and in such event Lessee provides or causes to be provided sufficient additional funds which, when added to such insurance proceeds, will fully effect such repair or restoration.

Upon the occurrence of any such Casualty, Lessee, promptly and with all due diligence, shall apply for and collect all applicable insurance proceeds recoverable with respect to such Casualty, for the benefit of the Lenders. In the event that Lessee shall determine, with Investor’s prior written consent during the Compliance Period (as defined in Section 42 of the Code), subject to the rights of the Lenders, by notice to Lessor given within thirty (30) days after receipt by Lessee of any such insurance proceeds, that it is not economically practical to restore the Improvements and/or the Leased Premises to substantially the same condition in which they existed prior to the occurrence of such Casualty, then, subject to the written approval of Lenders, Lessee may terminate this Lease as of a date that is not fewer than thirty (30) days after the date of such notice. If Lessee terminates this Lease pursuant to this Section 11.1, Lessee shall surrender possession of the Leased Premises to Lessor immediately and assign to Lessor (or, if same has already been received by Lessee, pay to Lessor) all of its right, title and interest in and to the proceeds from Lessee’s insurance upon the Leased Premises, subject to the prior rights of any Lender therein, as referenced in Section 11.3 below.

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

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

Section 11.4 Insurance Coverage Requirements. Nothing in this Article 11 does or shall be construed as permitting Lessee to maintain less than the minimum insurance coverage set forth in this Lease and the Regulatory Agreement.

ARTICLE 12.

EVENTS OF DEFAULT
Section 12.1 Events of Default. Each of the following shall be an “Event of Default” by Lessee hereunder:
(a) failure by Lessee to pay any Rent or Additional Rent when due if such failure shall continue for a period of ten (10) days after notice thereof has been given by Lessor to Lessee;
(b) Lessee’s default in the performance of any term, provision or covenant under this Lease (other than an obligation enumerated in this Section 12.1), and unless such provision specifies a shorter cure period for such default, the continuation of such default for ten (10) days in the event of a monetary default or thirty (30) days in the event of a non-monetary default following the date upon which Lessor shall have given written notice of the default to Lessee, or if the nature of any such non-monetary default is such that it cannot be cured within thirty (30) days, Lessee’s failure to commence to cure the default within thirty (30) days and thereafter prosecute the curing of such default with due diligence and in good faith, but in no event longer than ninety (90) days from receipt of the notice of default;

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(c) Lessee’s failure to maintain insurance on the Leased Premises and the Improvements as required hereunder, and the failure of Lessee to cure such default within five (5) days;
(d) Subject to Lessee’s right to contest the following charges, Lessee’s failure to pay taxes or assessments due on the Leased Premises or the Improvements or failure to pay any other charge that may result in a lien on the Leased Premises or the Improvements, and Lessee’s failure to cure such default within twenty (20) days of delinquency, but in all events prior to the date upon which the holder of any such lien has the right to foreclose thereon; (e) A Transfer occurs, either voluntarily or involuntarily, in violation of this Lease and the Regulatory Agreement;
(f) the subjection of any right or interest of Lessee in this Lease to attachment, execution, or other levy, or to seizure under legal process, if not released within ninety (90) days; (g) Lessee shall have voluntarily suspended its business for a period in excess of thirty (30) days for reasons other than Force Majeure, or Lessee shall have been dissolved or terminated;
(h) pursuant to or within the meaning of the United States Bankruptcy Code or any other federal or state law relating to insolvency or relief of debtors (“Bankruptcy Law”), Lessee or any general partner thereof: (i) commences a voluntary case or proceeding; (ii) consents to the entry of an order for relief against Lessee or any general partner thereof in an involuntary case; (iii) consents to the appointment of a trustee, receiver, assignee, liquidator or similar official for Lessee or any general partner thereof or for the Leased Premises; (iv) makes an assignment for the benefit of its creditors; or (v) admits in writing its inability to pay its debts as they become due; provided however, with respect to Lessee’s general partner, the foregoing actions shall not constitute an Event of Default if the Investor promptly takes action to replace the general partner;
(i) the filing against Lessee of any involuntary proceedings under such Bankruptcy Code or similar law, if such proceedings have not been vacated or stayed within ninety (90) days of filing;
(j) the appointment of a trustee or receiver for Lessee or for all or the major part of Lessee’s property or the Leased Premises, in any involuntary proceeding, or the taking of jurisdiction by any court over all or the major part of Lessee’s property or the Leased Premises in any involuntary proceeding for the reorganization, dissolution, liquidation or winding up of Lessee, if such trustee or receiver shall not be discharged or such jurisdiction relinquished or vacated or stayed on appeal or otherwise stayed within ninety (90) days; (k) any of Lessee’s representations or warranties contained in this Lease or in any financial statement, certificate or report submitted to Lessor in connection with this Lease proves to have been false or misleading in any adverse respect when made and continues to be adverse to Lessor.

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Section 12.2 Rights and Remedies.
(a) At any time after the occurrence of an Event of Default hereunder, subject in all respects to the provisions of this Lease with respect to Lessor’s rights to cure defaults by Lessee and with respect to the rights of any Lenders, Lessor may, in addition to any other rights and remedies available at law or in equity, terminate this Lease by giving Lessee written notice thereof (with a copy of such notice to the Lenders), setting forth in such notice an effective date for termination which is not less than thirty (30) days after the date of such notice, in which event this Lease and Lessee’s Estate created hereby and all interest of Lessee and all parties claiming by, through or under Lessee shall automatically terminate upon the effective date for termination as set forth in such notice, with the same force and effect and to the same extent as if the effective date of such notice had been the date originally fixed in Article 2 hereof for the expiration of the Term. In such event, Lessor, its agents or representatives, shall have the right, without further demand or notice, to re-enter and take possession of the Leased Premises (including all buildings and other Improvements comprising any part thereof) at any time from and after the effective termination date without being deemed guilty of any manner of trespass and without prejudice to any remedies for arrears of Rent or existing breaches of covenants; provided that Lessor shall not be entitled to disturb possession of any Tenants or others in possession pursuant to Tenant Leases so long as such Tenant or others are not in default thereunder and attorn to Lessor as their lessor.
(b) Upon the exercise of Lessor’s remedies pursuant to this Section 12.2, Lessee shall execute such releases, deeds and other instruments in recordable form as Lessor shall reasonably request in order to accurately set forth of record the then current status of Lessee’s Estate and Lessee’s rights hereunder.
(c) If Lessee shall have failed to cure a default by Lessee after expiration of the applicable time for cure of a particular default, Lessor, at its election, but without obligation therefor (i) may seek specific performance of any obligation of Lessee, after which Lessor shall retain, and may exercise and enforce, any and all rights that Lessor may have against Lessee as a result of such default, (ii) from time to time without releasing Lessee in whole or in part from the obligations to be performed by Lessee hereunder, may cure the default at Lessee’s cost, (iii) may terminate this Lease pursuant to Paragraph (a) above, (iv) subject to the rights of Lenders, may have a receiver appointed to take possession of Lessee’s interest in the Leasehold Estate with power in the receiver (1) to administer Lessee’s interest in the Leasehold Estate, (2) to collect all funds available in connection with the operation of the Project, and (3) to perform all other acts consistent with Lessee’s obligations under this Lease, as the court deems proper, and/or (v) may exercise any other remedy given hereunder or now or hereafter existing at law or in equity. Any reasonable cost incurred by Lessor in order to cure such a default by Lessee shall be due immediately from Lessee, together with interest, and may be offset against any amounts due from Lessor to Lessee.
(d) Remedies Cumulative. No remedy provided in this Section shall be considered exclusive of any other remedy, but the same shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute, and every power and remedy given by this Lease may be exercised from time to

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time and as often as occasion may arise or as may be deemed expedient, subject to any limitations referred to hereinabove.
(e) No Election of Remedies. The rights given in this Section to receive, collect or sue for any rent or rents, moneys or payments, or to enforce the terms, provisions and conditions of this Lease, or to prevent the breach or nonobservance thereof, or the exercise of any such right or of any other right or remedy hereunder or otherwise granted or arising, shall not in any way affect or impair or toll the right or power of Lessor, upon the conditions and subject to the provisions in this Lease, to terminate Lessee’s right of possession because of any default in or breach of any of the covenants, provisions or conditions of this Lease that remains uncured beyond the applicable cure period.
(f) Survival of Obligations. Nothing herein shall be deemed to affect the right of Lessor to indemnification for liability arising prior to the termination of the Lease for personal injuries or property damage or in connection with any other Claim, nor shall anything herein be deemed to affect the right of Lessor to equitable relief where such relief is appropriate.

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

Section 12.3 Default by Lessor.
(a) Events of Default. Lessor shall be in default of this Lease if it fails to perform any Lessor obligation hereunder, and such failure is not cured within sixty (60) days after Lessee provides written notice of the default to Lessor. If the default cannot reasonably be cured within sixty (60) days, Lessor shall not be in default if Lessor commences to cure the default within such 60-day period and diligently and in good faith continues to cure the default until completion.
(b) Right to Cure; Lessee’s Remedies. If a Lessor default remains uncured beyond the expiration of the applicable cure period, Lessee, at its election, but without obligation therefor (i) may seek an order for specific performance, (ii) without releasing Lessor in whole or in part from Lessor’s obligations hereunder, Lessee may cure the default at Lessor’s cost provided that Lessee has provided Lessor with sixty (60) days advance written notice of Lessee’s election to do so and Lessor has not within such time notified Lessee that Lessor will cure the default, and/or (iii) may terminate this Lease, subject to any required consent of the Lenders.

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Section 12.4 Notices. Notices given by Lessor under Section 12.1 or by Lessee under Section 12.3 shall specify the alleged default and the applicable Lease provisions, and shall demand that Lessee or Lessor, as applicable, perform the appropriate provisions of this Lease within the applicable period of time for cure. No such notice shall be deemed a forfeiture or termination of this Lease unless expressly set forth in such notice.

ARTICLE 13.

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

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

ARTICLE 14.

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

ARTICLE 15.

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

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ARTICLE 16.

TRANSFERS
Section 16.1 Restrictions on Transfer. The Regulatory Agreement (i) sets forth certain restrictions on the Transfer of the Project and Lessee’s interest in the Property, and on changes in the ownership and control of Lessee, and (ii) describes requirements for proposed Transfers.

Lessee shall comply with all such restrictions and requirements, including without limitation the requirement that any approved transferee shall assume the rights and obligations of Lessee under this Lease, the Regulatory Agreement, and the other City Documents pursuant to a written instrument satisfactory to Lessor and recorded in the Official Records.

ARTICLE 17.

MISCELLANEOUS PROVISIONS

Section 17.1 Notices. All notices, requests, demands, or other communications required or permitted to be given hereunder shall be in writing and shall be addressed and delivered by certified mail, return receipt requested; by reputable commercial delivery service; or by hand delivery by a reputable courier, to each Party at the addresses set forth below. Any such notice, request, demand or other communication shall be considered given or delivered, as the case may be, on the date shown on the delivery receipt as the date of delivery, the date delivery was refused or the date the item was returned as undeliverable. By giving prior written notice thereof, any Party, from time to time, may change its address for notices under this Lease.

To Lessor: City of Pleasanton
123 Main Street
Pleasanton, CA 94566-0802
Attention: City Manager
With a copy to: Burke, Williams & Sorensen, LLP
1999 Harrison Street, Suite 1650
Oakland, CA 94612
Attention: Susan E. Bloch, Esq.

To Lessee: Ridge View Commons II Associates, L.P.
c/o Eden Housing, Inc.
22645 Grand Street
Hayward, California 84541
Attention: President
With a copy to: Gubb & Barshay LLP

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235 Montgomery Street, Suite 1110
San Francisco, CA 94104
Attention: Nicole Kline, Esq.

With a copy to:

Section 17.2 Interpretation. The terms of this Lease shall be construed in accordance with the meaning of the language used and shall not be construed for or against any Party by reason of the authorship of this Lease or any other rule of construction which might otherwise apply. The Section headings are for purposes of convenience only, and shall not be construed to limit or extend the meaning of this Lease.

Section 17.3 Modifications; No Waiver. This Lease shall not be modified or amended in any respect, except by written instrument executed by the Parties. Any waiver by Lessor of any term or provision of this Agreement must be in writing. No waiver shall be implied from any delay or failure by Lessor to take action on any breach or default hereunder or to pursue any remedy allowed under this Agreement or applicable law. No failure or delay by Lessor at any time to require strict performance by Lessee of any provision of this Agreement or to exercise any election contained herein or any right, power or remedy hereunder shall be construed as a waiver of any other provision or any succeeding breach of the same or any other provision hereof or a relinquishment for the future of such election.

Section 17.4 Governing Law; Venue. This Lease, and the rights and obligations of the Parties hereunder, shall be governed by and construed in accordance with the substantive laws of the State of California without regard to conflict of law principles. Venue for any dispute hereunder shall be in Alameda County, California.

Section 17.5 Binding Effect. This Lease shall inure to the benefit of and be binding upon the Parties hereto, their successors, administrators, executors and permitted assigns, subject to the limitations on Transfer set forth herein and in the Regulatory Agreement.

Section 17.6 Severability. In the event any provision or portion of this Lease is held by any court of competent jurisdiction to be invalid or unenforceable, such holdings shall not affect the remainder hereof, and the remaining provisions shall continue in full force and effect to the same extent as would have been the case had such invalid or unenforceable provision or portion never been a part hereof, except to the extent the rights and obligations of the parties have been materially altered by such unenforceability.

Section 17.7 Further Assurances. From and after the date of this Lease, Lessor and Lessee, each agree to undertake such actions and to execute and deliver such instruments as reasonably requested to effectuate the provisions of this Lease.

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Section 17.8 Authority to Execute Agreement. The persons executing this Lease on behalf of each Party each represent and warrant to the other Party that such persons have been duly authorized to execute and deliver this Lease.

Section 17.9 Action by Lessor. The City Manager or his or her designee shall have the authority to consent to any matter requiring Lessor approval or consent as provided in this Lease, and to perform and carry out any activities concerning this Lease, including but not limited to, the execution of any additional agreements, addenda or amendments so long as such actions do not substantially affect the rights and obligations of Lessor as specified herein.

Section 17.10 Headings; Construction; Statutory References. The headings of the sections and paragraphs of this Agreement are for convenience only and shall not be used to interpret this Agreement. Except as otherwise expressly stated herein, any reference to a particular section of this Agreement shall mean a reference to all subsections of such section. The language of this Agreement shall be construed as a whole according to its fair meaning and not strictly for or against any Party. All references in this Agreement to particular statutes, regulations, ordinances or resolutions of the United States, the State of California, or the City of Pleasanton shall be deemed to include the same statute, regulation, ordinance or resolution as hereafter amended or renumbered, or if repealed, to such other provisions as may thereafter govern the same subject. Unless otherwise specified in this Lease, the terms “herein,” “hereof,” “hereinafter,” “hereunder” and other terms of like similar import, shall be deemed to refer to this Lease as a whole, and not to any particular paragraph or subparagraph hereof.

Section 17.11 Entire Agreement; Exhibits. This Lease together with the City Documents contains the entire agreement of the Parties with respect to the subject matter hereof, and supersedes all prior oral and written agreements between the Parties with respect thereto.

Exhibits A through D attached hereto are incorporated herein.

Section 17.12 Time of Essence. Time is and shall be of the essence in this Lease.

Section 17.13 Attorneys’ Fees. In any litigation or other action brought to enforce this Lease or regarding a dispute over terms of the Lease or the performance of a Party, the prevailing party in such litigation or action shall be entitled to attorneys’ fees and the costs of such litigation.

Section 17.14 No Third Party Beneficiaries. Except as expressly set forth herein, nothing contained in this Lease is intended to or shall be deemed to confer upon any person, other than the Parties and their respective successors and assigns, any rights or remedies hereunder.

Section 17.15 Parties Not Co-Venturers; Independent Contractor; No Agency Relationship. Nothing in this Lease is intended to or shall establish the Parties as partners, coventurers, or principal and agent with one another. The relationship of Lessee and Lessor is and shall remain solely that of a tenant and landlord, and shall not be construed as a joint venture, equity venture, partnership or any other relationship. Lessor neither undertakes nor assumes any responsibility or duty to Lessee (except as expressly provided in this Lease) or to any third party with respect to the Project.

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Section 17.16 Survival. Lessee’s obligations pursuant to Sections 3.2, 7.4, 9.2, 9.3, 9.4, and 9.5 and all other provisions that expressly so state shall survive the expiration or termination of this Agreement.

Section 17.17 Counterparts. This Lease may be executed in several counterparts, each of which shall be deemed an original, and all such counterparts together shall constitute one and the same agreement.

SIGNATURES ON FOLLOWING PAGE

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IN WITNESS WHEREOF, this Lease is made and entered into effective as of the date first written above.

LESSOR:

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4859-3312-3005v2
Exhibit A

LEGAL DESCRIPTION OF LEASED PREMISES
The land referred to is situated in the City of Pleasanton, County of Alameda, State of California, and is described as follows:

PARCEL ONE:

ALL BUILDINGS AND OTHER IMPROVEMENTS WHICH BUILDINGS AND IMPROVEMENTS ARE AND SHALL REMAIN AS REAL PROPERTY, SITUATED ON THE FOLLOWING DESCRIBED:

PARCEL 2 AS SHOWN ON PARCEL MAP NO. 5231, FILED APRIL 22, 1988, IN BOOK 176 OF MAPS AT PAGES 40 AND 41, ALAMEDA COUNTY RECORDS.

PARCEL TWO:

PARCEL 2 AS SHOWN ON PARCEL MAP NO. 5231, FILED APRIL 22, 1988, IN BOOK 176 OF MAPS AT PAGES 40 AND 41, ALAMEDA COUNTY RECORDS.

EXCEPTING FROM PARCEL TWO ALL BUILDINGS AND OTHER IMPROVEMENTS SITUATED ON ABOVE SAID LAND, WHICH ARE AND SHALL REMAIN AS REAL PROPERTY.

APN: 947-0008-010

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Exhibit B

FORM OF MEMORANDUM OF LEASE

RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:

City of Pleasanton
123 Main Street
Pleasanton, CA 94566
Attention: City Manager

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

MEMORANDUM OF GROUND LEASE
(Ridge View Commons)
THIS MEMORANDUM OF GROUND LEASE (the “Memorandum”) is dated as of _____________, 2024, and is executed by and between the City of Pleasanton, a California municipal corporation (the “Lessor”) and Ridge View Commons II Associates, L.P., a California limited partnership (the “Lessee”), with respect to that certain Ground Lease dated as of _________________, 2024 (the “Lease”), between the Lessor and the Lessee. All capitalized terms used in this Memorandum and not defined shall have the meaning set forth in the Lease.

1. Documentary Transfer Tax is not shown pursuant to Revenue and Taxation Code Section 11932. See that certain Statement of Documentary Transfer Tax Due, which shall be affixed to this Memorandum in the Official Records of Alameda County (“Official Records”) after record of this Memorandum is made and before the original is returned as specified in Government Code Section 27321.

2. Pursuant to the Lease, Lessor leases to Lessee and Lessee leases from Lessor that certain real property, more particularly described in Exhibit A, attached hereto and incorporated herein (the “Property”). The Commencement Date of the Lease shall be the date that this Memorandum is recorded in the Official Records, and the Lease shall remain in effect for the seventy-five (75) year period ending on the day preceding the seventy-fifth (75th) anniversary of the Commencement Date, unless sooner terminated pursuant to the terms and conditions of the Lease.

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

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

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

6. This Memorandum may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts so executed shall together constitute but one and the same instrument. [REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]

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IN WITNESS WHEREOF, the parties have caused this Memorandum to be duly executed as of the date first above written.

LESSOR:

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

WITNESS my hand and official seal.

(Notary Signature)
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.

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

WITNESS my hand and official seal.

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Exhibit A to Memorandum

PROPERTY
The land referred to is situated in the City of Pleasanton, County of Alameda, State of California, and is described as follows:

PARCEL ONE:

ALL BUILDINGS AND OTHER IMPROVEMENTS WHICH BUILDINGS AND IMPROVEMENTS ARE AND SHALL REMAIN AS REAL PROPERTY, SITUATED ON THE FOLLOWING DESCRIBED:

PARCEL 2 AS SHOWN ON PARCEL MAP NO. 5231, FILED APRIL 22, 1988, IN BOOK 176 OF MAPS AT PAGES 40 AND 41, ALAMEDA COUNTY RECORDS.

PARCEL TWO:

PARCEL 2 AS SHOWN ON PARCEL MAP NO. 5231, FILED APRIL 22, 1988, IN BOOK 176 OF MAPS AT PAGES 40 AND 41, ALAMEDA COUNTY RECORDS.

EXCEPTING FROM PARCEL TWO ALL BUILDINGS AND OTHER IMPROVEMENTS SITUATED ON ABOVE SAID LAND, WHICH ARE AND SHALL REMAIN AS REAL PROPERTY.

APN: 947-0008-010

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Exhibit C

REGULATORY AGREEMENT
[Attach form of Regulatory Agreement.]

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Exhibit D
NOTE
[Attach form of Note.]

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Item #7

CITY COUNCIL AGENDA REPORT
May 21, 2024
Community Development
TITLE: CONTINUED FROM MAY 7, 2024 - APPROVE AND AUTHORIZE THE CITY

MANAGER TO EXECUTE THE SECOND AMENDMENT TO THE MAINTENANCE SERVICES AGREEMENT WITH ST. FRANCIS ELECTRIC FOR ROUTINE

SIGNAL MAINTENANCE, SIGNAL UPGRADES, AND EMERGENCY REPAIRS, EXTENDING THE CONTRACT TERM TO JUNE 30, 2025, INCREASING THE RATES FOR MAINTENANCE OF INTERSECTIONS, BEACONS, AND INPAVEMENT LIGHTS, AND AMENDING THE COMPENSATION TO A NOT-TOEXCEED ANNUAL AMOUNT OF $500,000

SUMMARY
The City operates over 120 traffic signals within Pleasanton. Routine maintenance and emergency repair of these signals is performed by St. Francis Electric, which has been performing routine signal maintenance, signal upgrades, and emergency repairs for the City since 2021 when it was selected following a competitive bidding process. The terms of the original agreement included an initial term of two years, with an option for two one-year extensions. The first amendment to the contract extended the term by one year, through June 30, 2024. This requested Second Amendment extends the contract term for the final year, through June 30, 2025. This Second Amendment also includes an increase to the monthly flat rates for routine maintenance per intersection, from $130.25 to $136.24, and increases the flat rate for per-beacon and in-pavement lights maintenance from $62.52 to $65.40. The original agreement did not include a “not-to-exceed” amount as the emergency work performed under the contract is not consistent on a month-to-month basis. This Second Amendment also includes an annual “not-to-exceed” amount of $500,000; this maximum applies to all work performed under the contract, including routine traffic signal maintenance, signal upgrades, and emergency repairs.

RECOMMENDATION
Continued from May 7, 2024 - Approve and authorize the City Manager to execute the second amendment to the Maintenance Services Agreement with St. Francis Electric for routine signal maintenance, signal upgrades, and emergency repairs, extending the contract term to June 30, 2025, increasing the rates for maintenance of intersections, beacons, and in-pavement lights, and amending the compensation to a not-to-exceed annual amount of $500,000.

BACKGROUND
The City has utilized an outside contractor for signal maintenance and repair for more than 20 years as this service is highly specialized, requiring specific contractor licenses, equipment, vehicles, and technical knowledge. In July 2021, the City entered into a two-year contract with St. Francis Electric for maintenance and repair of the City’s traffic signals. The agreement with St. Francis included the option for two additional one-year extensions, the first of which was issued at the mutual agreement of the City and St. Francis at the end of the initial two-year term in 2023, thereby extending the contract through June 30, 2024.

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DISCUSSION
St. Francis Electric has maintained traffic signals for several Bay Area and Central Valley agencies since 2015 and has provided signal maintenance and emergency repair services for the City since 2021. St. Francis’ work in routine traffic signal maintenance includes reviewing proper equipment functionality and operations, cleaning, visual inspection of signal and pedestrian heads, safety lighting, verifying operations of pedestrian push buttons, and ensuring equipment is properly fastened and secured. St. Francis also performs signal upgrades and emergency repairs that are not included in routine preventative maintenance, such as repairing signals that have been knocked down and upgrading video detection cameras. The terms of the original agreement allow contract extensions of up to two additional one-year terms. The first extension extended the term to June 30, 2024. Approving the Second Amendment as proposed extends the contract term until June 30, 2025.

In addition to extending the maintenance services term by one year, to account for Consumer Price Index increases the proposed Second Amendment updates the monthly flat rate for routine maintenance per intersection to $136.24, and the monthly flat rate per beacon and inpavement lights to $65.40. The amendment will also clarify the agreement by adding a not-toexceed amount of $500,000 annually for the cumulative costs for routine maintenance, signal upgrades, and emergency repairs. For reference, the table below summarizes the annual signal maintenance, signal upgrades, and emergency repair expenditures for the past five years. As shown, historically, the total annual expenditures have not exceeded $500,000:

Year Total Annual Expenditure for Routine Maintenance, Signal Upgrades, and Emergency Repairs
2023 $481,122
2022 $488,768
2021 $447,315
2020 $493,731
2019 $495,858

EQUITY AND SUSTAINABILITY
Not applicable, as this item is a routine matter of City business.

OUTREACH
No outreach was conducted, as this item is a routine matter of City business.

STRATEGIC PLAN ALIGNMENT
Approval of this action advances the Citywide strategic goal of Investing in Our Environment, Strategy 2 - Develop an Asset Management Plan to address comprehensive long-term planning for maintenance, renovation, repair and/or replacement of infrastructure and public facilities, as this action will support maintaining the state of good repair and ensure proper operation of the traffic signal system citywide.

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FISCAL IMPACT
The majority of funding for routine traffic signal maintenance is included in the Traffic Engineering Division’s General Fund operating budget, with the balance of funding provided through cost-sharing agreements and insurance reimbursements for damage caused by third parties. The Hacienda Owners’ Association is responsible (via reimbursement to the City) for the annual routine maintenance costs of 29 of the 120 total signals ($45,327 for FY 2023/24) and any additional emergency work completed for those signals. Caltrans is responsible for half of the annual cost of routine maintenance at intersection signals at freeway ramps ($9,378 for FY 2023/24) and half the cost of any emergency work performed at those signals. Damage recovery through third-party insurance coverage varies significantly from year to year, with recent annual recovery amounts ranging from approximately $15,000 to $40,000.

Prepared by: Submitted by: Approved by:

Cedric Novenario, Senior
Transportation Engineer
Ellen Clark, Director of Community
Development
Gerry Beaudin, City
Manager
Attachments:

1. Second Amendment to Agreement

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ATTACHMENT 1
Second Amendment Page 1

SECOND AMENDMENT TO AGREEMENT
This Second Amendment to Agreement is entered into this 7th day of May, 2024 by the City of Pleasanton ("City") and St. Francis Electric ("Contractor”) Whereas, on July 1, 2021 the City and Contractor entered into Traffic Signal Maintenance Agreement for traffic signal maintenance services ("Agreement"); and Whereas, the agreement allows for two one-year extensions; and Whereas, on July 1, 2023 the City and Contractor executed the First Amendment to the agreement to extend the term of the agreement to expire on June 30, 2024; and Whereas, the parties desire to extend the term of the Agreement; and Whereas, the parties desire to amend the Agreement to update rates based on Consumer Price Index increases, and to the clarify the total annual “not to exceed” amount of the contract.

Now, therefore, in exchange for valuable consideration, the receipt of which is hereby acknowledged, the parties agree as follows:

1. A. Section 2 of the Agreement, "Compensation" is amended to read:

The total annual compensation payable to Contractor by City for the services under this Agreement SHALL NOT EXCEED $500,000. This includes the monthly flat rate fee of $136.24 PER INTERSECTION, $65.40 PER BEACON & IN-PAVEMENT LIGHTS and any additional authorized extra work (pursuant to Paragraph 5). The pricing for the additional authorized extra work is set forth in Exhibit D – Proposal Price Comparison (FY 24-25).

B. Exhibit D - Proposal Price Comparison of the Agreement is replaced with Exhibit D - Proposal Price Comparison (FY 24-25)
C. Section 3 of the Agreement, “Term” is amended to read:

The term of this Agreement shall be extended until June 30, 2025 D. Section 5 of the Agreement, “Extra Work” is amended to read:

The City shall pay Contractor for City authorized extra work detailed in Attachment C - Scope of Work, included within the services described in Paragraph 1 and such amounts as mutually agreed to in advance. Unless the City and Contractor have agreed in writing before the performance of extra work, no liability and no right to claim compensation for such extra work or expenses shall exist. The applicable hourly

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ATTACHMENT 1
Second Amendment Page 2
rates, equipment rates and material costs for extra work shall be at the rates set forth in Exhibit D - Proposal Price Comparison (FY 24-25).

2. This amendment may be executed in multiple counterparts, each of which shall be an original and all of which together shall constitute one agreement. Counterparts may be delivered via facsimile, electronic mail (including pdf or any electronic signature complying with U.S. federal E-Sign Act of 2000 (15 U.S. Code §7001 et seq.), California Uniform Electronic Transactions Act (Cal. Civil Code §1633.1 et seq.), or other applicable law) or other transmission method, and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.

3. All other terms and conditions of the Agreement shall remain in full force and effect.

In witness whereof, authorized representatives of the parties have executed this First Amendment to the Agreement as of the date first above written.

CITY OF PLEASANTON CONTRACTOR or

CONSULTANT

_____________________________ By: __________________________ Gerry Beaudin, City Manager Signature
__________________________
Print name
Title: __________________________
[If Contractor or Consultant is a
corporation, signatures must comply with
California Corporations Code §313]
ATTEST:

_____________________________
Jocelyn Kwong, City Clerk
APPROVED AS TO FORM:

By: __________________________
_____________________________ Signature
Daniel G. Sodergren, City Attorney
__________________________
Print name

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ATTACHMENT 1
Second Amendment Page 3
Title: __________________________
Rev. 3/23

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Item #8

CITY COUNCIL AGENDA REPORT
May 21, 2024
Finance
TITLE: ACCEPT THE MONTHLY DISBURSEMENTS AND INVESTMENT REPORT FOR MARCH 2024

SUMMARY
Attached is the City of Pleasanton monthly disbursements and investment report for March 2024

RECOMMENDATION
Accept claim disbursements in the amount of $15,652,115 and the investment report for the month of March 2024.

BACKGROUND
The City's Investment Policy requires the Director of Finance to submit a monthly transaction report to the City Council within 60 days of the end of the reporting period in accordance with California Government Code Section 53607.

The Investment Policy also requires the Director of Finance to submit a quarterly report to the City Council on the status of the City's investment portfolio no later than 45 days after the end of each month. This report shall include the types of investments, the amount of money invested with various institutions, purchase and maturity dates, and yield on investments. The Director of Finance certifies that the investment portfolio is in compliance with the investment policy and that it will meet cash flow needs for the next six months. This report also includes check and electronic payment information for March 2024.

DISCUSSION
The book value of the City of Pleasanton primary investment portfolio decreased by $24.6 million from $250.5 million to $225.9 million during the quarter ending March 31, 2024. This decrease was mainly due to the timing of fund transfers from the bank account to the Local Agency Investment Fund account and payments for invoices. The fiscal year-to-date effective rate of return on the portfolio was 1.54 percent. The average days to maturity (ADM) decreased from 594 days on December 31, 2023, to 549 days on March 31, 2024.

The City's investment in the Local Agency Investment Fund (LAIF) decreased to $49.0 million from $59.0 million last quarter ending December 31, 2023. The quarterly LAIF apportionment interest rate was 4.30 percent with ADM of 226 days. The average monthly effective yield was

4.23 percent in March, 4.12 percent in February, and 4.01 percent in January. During the quarter, there was one redemption; Citibank NA matured on January 23, 2024 for approximately $1.02 million, including interest. As of March 31, 2024, approximately 66.3 percent of the total portfolio consisted of federal agency securities, while the LAIF investment was 21.6 percent of the portfolio. Corporate notes accounted for 11.5 percent of the portfolio.

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• Fair Market Value of total portfolio - $225,865,252
• Fiscal year-to-date effective rate of return - 1.54 percent • Weighted average days to maturity – 549 days
• Fiscal year-to-date net interest earnings - $2,688,828 Asset Composition:

As of March 31, 2024, the effective rate of return is 1.54 percent.

As reported previously, the Federal Reserve (the Fed) has been raising interest rates since March 2022. In 2022, the Fed raised rates 7 times for a total of 425 basis points. In 2023, the Fed raised another 100 basis points in total, resulting in even higher comparative market rates. Most of the securities in the City’s investment portfolio were purchased before the rate hikes, and the overall investment return is expected to be lower than the market rates in the

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near term. As securities mature and funds are reinvested, the City will be able to achieve higher investment returns.

As of March 31, 2024, the entire portfolio, exclusive of money market accounts and LAIF was held in third party safekeeping for the benefit of the City of Pleasanton at Bank of New York Mellon. Bank of New York Mellon is a contractual agent for the City of Pleasanton.

As of March 31, 2024, all investments in the portfolio are authorized by State of California Government Section 53600 et. Seq. and the City's investment policy.

Securities rated below "AA-/AA3"
Please note that the medium term note with 3M Company is rated at A by Moody's and rated at BBB+ by S&P. A rating of A indicates the investment grade is very high and a rating of BBB+ indicates the investment grade is good. When this investment was purchased in 2019, it met the A rating category required by the City's investment policy. This investment is scheduled to mature in February 2025. Staff has been monitoring this investment and will take action such as selling the security before maturity if warranted.

The effective fiscal year rate of return on the portfolio was 1.54 percent, an increase of 0.05 percent from 1.49 percent from last quarter and an increase of 0.25 percent from 1.29 percent reported at the same time last year.

Maturities
No securities were purchased during the quarter, and one matured in January. Staff continued to be conservative on investment. Staff will continue to monitor cash inflows and outflows, taking into consideration anticipated construction costs for large capital projects and unexpected events.

Section 115 Trust Fund
In June 2018, the City Council approved the investment of $28.0 million of various reserves into a Section 115 Trust Fund to help smooth the pension liabilities which are expected to

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grow in the long run. The investment is made into two separate portfolios, the first one for $6.7 million into a Conservative portfolio which is available to pay the annual unfunded liabilities if necessary, and the second one for $21.3 million into a long-term Capital Growth portfolio.

In February 2020, City Council authorized Finance staff to deposit to and withdraw from the Conservative portfolio an additional amount up to the total annual required CalPERS payment.

In March and June 2020, two additional $5.0 million contributions were deposited into the Conservative portfolio for a total of $16.7 million deposited into the Conservative portfolio.

As presented in the chart below, the Conservative portfolio balance was $19.3 million at the end of March 31, 2024, an increase of $0.04 million from the prior quarter. The Conservative portfolio investment return for the quarter ended March 31, 2024, was 1.74 percent, and the five-year annualized return was 3.54 percent.

The second portfolio (Capital Growth) addresses the longer-term pension liabilities with an initial investment of $21.3 million. The focus of this portfolio is to earn a higher rate of return over the next ten years or so before the City needs to draw upon it.

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The Capital Growth portfolio balance was $31.2 million at the end of March 31, 2024, an increase of $1.5 million from the prior quarter. The Capital Growth portfolio quarterly investment return was 5.23 percent, and the five-year annualized return was 8.06 percent.

The two portfolios total $50.5 million, which are held by a third party for the benefit of the City of Pleasanton at US Bank. US Bank is the contractual agent for PARS trust investments that are managed by PFM Asset Management (formerly Highmark Capital Management).

EQUITY AND SUSTAINABILITY
Not applicable, as this item is a routine administrative matter of City business.

OUTREACH
No outreach was conducted, as this item is a routine administrative matter of City business.

STRATEGIC PLAN ALIGNMENT
Not applicable, as this item is a routine administrative matter of City business.

FISCAL IMPACT
There is no fiscal impact associated with this action.

Prepared by: Submitted by: Approved by:

Dawn DeMarcus, Senior
Budget and Finance Analyst
Susan Hsieh, Director of Finance Gerry Beaudin, City
Manager
Attachments:

1. March 2024 Disbursements & Investment Report

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CITY OF PLEASANTON Portfolio Management March 31, 2024 City of Pleasanton Portfolio Summary % of Portfolio Book Value Investments Market Value Par Value Days to Term Maturity YTM 360 Equiv. YTM 365 Equiv. Certificates of Deposit - Bank 491,206.57 491,206.57 491,206.57 0.21 560 15 2.110 2.139 LAIF 49,000,000.00 48,683,613.42 49,000,000.00 20.47 1 1 4.213 4.272 Medium Term Notes 26,970,000.00 25,889,006.60 27,513,515.08 11.49 1,801 442 1.573 1.594 Federal Agency Issues - Coupon 3,000,000.00 2,750,850.00 2,995,657.09 1.25 1,825 994 1.262 1.280 Federal Agency Issues - Callable 158,630,000.00 147,129,507.13 158,420,440.80 66.17 1,822 729 0.903 0.916 Supranationals 1,000,000.00 921,068.20 980,200.00 0.41 1,704 696 0.922 0.935 239,401,019.54 100.00% Investments 239,091,206.57 225,865,251.92 1,444 549 1.665 1.688 Current Year March 31 338,048.78 Fiscal Year To Date 2,688,827.64 Average Daily Balance Effective Rate of Return 240,078,438.89 231,555,909.39 1.66% 1.54% Total Earnings Month Ending I hereby certify that, to the best of my knowledge, this report includes all investments in the cash management program, is in accordance with the City's current investment policy dated June 20, 2023 and will meet the City's cash flow needs for the next six months. Market value amounts are from Bank of New York Mellon (safekeeping bank) month-end statements. Book value amounts include premiums or discounts and are adjusted at year end on the general ledger. __________________________________________________ ____________________ SUSAN HSIEH, DIRECTOR OF FINANCE Portfolio PLST CC Reporting period 03/01/2024-03/31/2024 Run Date: 05/06/2024 - 16:57 PM (PRF_PM1) 7.3.11 Report Ver. 7.3.11 5/11/2024

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CITY OF PLEASANTON
PARS Post-Employment Benefits Trust 3/1/2024 to 3/31/2024 Susan Hsieh
Director of Finance
City of Pleasanton
123 Main Street
Pleasanton, CA 94566
Account Summary
Source 3/1/2024 Contributions Earnings Expenses Distributions Transfers 3/31/2024 PENSION - Short Term 1075 $19,097,864.66 $0.00 $171,026.97 $5,630.60 $0.00 $0.00 $19,263,261.03 PENSION - Long Term 1076 $30,425,357.72 $0.00 $781,313.75 $9,143.47 $0.00 $0.00 $31,197,528.00 Totals $49,523,222.38 $0.00 $952,340.72 $14,774.07 $0.00 $0.00 $50,460,789.03 Investment Selection
Source
PENSION - Short Term
PENSION - Long Term
Investment Objective
Source
PENSION - Short Term
PENSION - Long Term
Investment Return
Source 1-Month 3-Months 1-Year 3-Years 5-Years 10-Years PENSION - Short Term 0.90% 1.74% 7.26% 2.06% 3.54% - 6/21/2018 PENSION - Long Term 2.57% 5.23% 15.87% 4.29% 8.06% - 6/21/2018 Information as provided by US Bank, Trustee for PARS; Not FDIC Insured; No Bank Guarantee; May Lose Value Headquarters - 4350 Von Karman Ave., Suite 100, Newport Beach, CA 92660 800.540.6369 Fax 949.250.1250 www.pars.org Account balances are inclusive of Trust Administration, Trustee and Investment Management fees Annualized Return
Investment Return: Annualized rate of return is the return on an investment over a period other than one year multiplied or divided to give a comparable one-year return.

Past performance does not guarantee future results. Performance returns may not reflect the deduction of applicable fees, which could reduce returns. Information is deemed reliable but may be subject to change.

Individual Custom Account
Account Report for the Period
Balance as of
City of Pleasanton
Balance as of
Individual Custom Account
City of Pleasanton - Capital Growth
Plan's Inception Date

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Item #9

CITY COUNCIL AGENDA REPORT
May 21, 2024
Library and Recreation
TITLE: APPROVE THE SUBMITTAL OF AN APPLICATION TO THE CALIFORNIA STATE LIBRARY FOR GRANT FUNDS IN THE AMOUNT OF $42,948 FOR FISCAL YEAR 2024/25

SUMMARY
Adult Literacy Services at the Pleasanton Library along with English-as-a-Second Language services - referred to collectively as Pleasanton Reads - meet the needs of English language learners. Funding from the State of California Library Literacy Services (CLLS) directs state and federal funds each year to support local public libraries. Staff requests that the City Council authorize the submittal of an application for the annual grant cycle of $42,948 for fiscal year (FY) 2024/25. This grant funding would supplement the City’s funding of $83,422 annually to support Adult Literacy Services in Pleasanton.

RECOMMENDATION
Approve the submittal of an application to the California State Library for grant funds in the amount of $42,948 for fiscal year 2024/25.

BACKGROUND
The Pleasanton Library has provided Adult Literacy Services since 1985. Beginning in 2006, the City has applied for and received California Library Literacy Services (CLLS) funding, administered by the California State Library under the direction of the State Librarian. In 2023, CLLS awarded an Adult Literacy Services grant to the City in the amount of $43,777. The FY 2022/23 grant served a total of 181 adult English-language learners, 660 conversation group attendees and 163 volunteer tutors. The program offered learners a welcoming environment to practice language skills that improved their quality of life, helped them form friendships, connect with community partner organizations and provided channels for them to participate more fully in civic life. Learner feedback indicates that these opportunities filled critical needs, which included speaking English and language fluency, building community connections and utilizing unique supports not found elsewhere in the community such as Wi-Fi, computers, printing, books and materials, and library programs.

DISCUSSION
For FY 2024/25, the Adult Literacy Services grant (Attachment 1) and in-kind City funding will continue to support the Pleasanton Reads Program, with the following literacy program goals:
• Seek new ways to attract volunteer tutors through marketing and outreach • Support waitlisted learners with resources (small group sessions) or referrals while they wait to be placed with volunteer tutors
• Connect tutors with in-service opportunities to help them expand their skills and confidence

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• Work with community partners such as Tri-Valley Career Center and CityServe TriValley to close service gaps for learners with referrals based on learner needs and goals
• Inspire new language and life goals
• Provide learner and tutor pairs with print materials, high-quality digital tools, take-home computers, and Wi-Fi hotspots.

EQUITY AND SUSTAINABILITY
Adult Literacy Services further equity and belonging in the community by providing resources and tools for community members who need to learn English language skills, apply for jobs, navigate local services, help their children with their schoolwork, build social connections and participate more fully in civic life.

OUTREACH
There has been no outreach in advance of this item and this is a routine matter of City business.

STRATEGIC PLAN ALIGNMENT
This action advances the ONE Pleasanton Strategic Plan goals of Building a Community Where Everyone Belongs, Strategy 1 – Apply strategies from the City diversity, equity, and inclusion (DEI) action plan to increase equitable access to City programs and services for the community and Strategy 3 – Implement high priority items from the Library and Recreation Strategic Plan to continue to deliver activities and programs that meet the needs and interests of the community.

FISCAL IMPACT
To meet the timeline for the City budget development process, the revenues and expenditures for the Adult Literacy Grant have been submitted as part of the Fiscal Year 2024/25 Mid-Term budget, with $42,948 in grant funding revenue and matching expenditures budgeted in the library grants account (Org 11652102 and Project 14815).

City in-kind general fund funding of $95,983 for Adult Literacy Services is budgeted in the Library Public Services account (Org 00152300).

Prepared by: Submitted by: Approved by:

Lia Bushong, Assistant
Director of
Library/Recreation
Heidi Murphy, Director of Library and
Recreation
Gerry Beaudin, City
Manager
Attachments:

1. Draft Grant Application for FY2024/25 - Adult Literacy Services Grant

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California Library Literacy Services | Continuing Libraries Application Form | April 2024 1 California Library Literacy Services
2024-2025 Continuing Libraries Application Form
Grant Period: July 1, 2024 – June 30, 2025
Deadline: Thursday, May 30 (5:00 PM)
Section 1. Applicant Information

1.1 Library Information
Question Response
a. Full legal name of library jurisdiction Pleasanton Public Library b. Street 400 Old Bernal Ave.
c. City Pleasanton
d. Zip 94566

1.2 Literacy Program Coordinator’s Contact Information
Question Response
a. Name Julie Eseltine
b. Email [email protected]
c. Phone 925-934-3400 x4428
d. New coordinator since January 2024? No
e. Check here if your program has an additional literacy contact person working with the program.

Lori Carducci, [email protected]
925-931-3405

1.3 Library Director’s Contact Information
Attachment 1

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California Library Literacy Services | Continuing Libraries Application Form | April 2024 2 Question Response
a. Library Director’s Name Heidi Murphy
b. Library Director’s Email [email protected] c. Library Director’s Phone 925-931-3406
d. New director since January 2024? No
e. For library directors: Have you read, and do you agree with the CLLS program essentials? Yes/No
Yes

1.4 Authorized Representative Information
Question Response
a. Authorized Representative’s Name Gerry Beaudin
b. Authorized Representative’s Email [email protected] c. Is this individual the correct signatory on any claim forms? Yes If “no,” please indicate the correct individual’s name and email address.
d. Is this individual the correct signatory on any certifications? Yes If “no,” please indicate the correct individual’s name and email address.
e. Is this individual the correct signatory on any reports? Yes If “no,” please indicate the correct individual’s name and email address.

Section 2. Program Information

2.1 Basic or institutional information
Question Response
a. Program name Pleasanton Reads: Adult Literacy and ESL Services b. What year did the program start? With grant funding from CA State Library: FY 2006-2007 c. Year left/returned to the program. N/A

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California Library Literacy Services | Continuing Libraries Application Form | April 2024 3 Question Response
d. How is the program provided?
• In-house by the library
• Contract with another library (please provide the
library’s name and the director’s contactinformation)
• Contract with another agency (please provide the
agency’s name and the director’s contactinformation)
• Other, please specify (please provide the organization’s name and the director’s contact information)
In-house by the library
e. Number of main and branch libraries where adult library literacy services will be provided.
1 f. Number of community locations where adult library literacy services will be provided.
1 g. Total number of locations. 2
h. Number of main and branch libraries within the library jurisdiction.
1 i. Percentage of total library outlets where adult literacy services will be provided.
100%

2.2 Participation in Regional Networks
Question Response
a. Regional network name Bay Area Literacy (BALit)
b. Will you or a representative from your library actively participate in your regional literacy network during the reporting period?
Yes
If “No” was selected for question 2.2.b., please explain why you or a representative were unable to participate in your regional literacy network.
c. Will you or a representative from your library attend any CLLS statewide virtual network meeting or training during the reporting period?
Yes

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California Library Literacy Services | Continuing Libraries Application Form | April 2024 4 Question Response
If “No” was selected for question 2.2.c., please explain why you or a representative were unable to attend a CLLS statewide virtual network meeting or training.
d. Will you or a representative from your library participate in your local Adult Education Consortium during the reporting period?
Yes
If “No” was selected for question 2.2.d., please explain why you or a representative were unable to participate in your Adult Education Consortium.

Section 3. Financial Report: Adult Literacy Services, Family Literacy Services, and English as a Second Language Services

3.1 Program Budget
Budget Categories ALS -
CLLS
ALS -
Local
FLS -
CLLS
FLS -
Local
ESL –
CLLS
ESL –
Local
Total
CLLS
Funds
Total
Local
Funds
Grand
Totals
Narrative of expenses (required)
Salaries, Wages, &
Benefits
$35,978 $81,422 $44,700 $6,438 $80,678 $87,860 $168,538 FTE for ALS: ALS: Supervising Librarian .05; Librarian/Coordinators (2) .25 each.

ESL: one Supervising Librarian (Jeff
Gibson) .05, two Librarians (Julie Eseltine,
Lori Carducci) .25 each, and one Program
Assistant (Traci Menendez).11.

Consultant Fees
Travel $3,110 $369 $3,110 $369 $3,479 Estimated costs for 2 literacy coordinators to attend CLA
conference, Pasadena, CA.

Supplies/Materials $2220 $4,561 $6,000 $2,000 $12,970 $4,000 $16,970 ALS: Print materials, training supplies, ESL: Print materials.

Equipment ($5,000+)
Services $4,750 $10,000 $7,261 $7,261 $7,261 ALS-CLLS: LiveScan; $3750 Spotify $1000.

ALS-Local: Pronunciator/Bluebird $3000;
Materials translation $2000; Chromebook
LTE $5000.

ESL-CLLS: ZoomPro subscription

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California Library Literacy Services | Continuing Libraries Application Form | April 2024 5 Budget Categories ALS -
CLLS
ALS -
Local
FLS -
CLLS
FLS -
Local
ESL –
CLLS
ESL –
Local
Total
CLLS
Funds
Total
Local
Funds
Grand
Totals
Narrative of expenses (required)
reimbursements for tutors providing
virtual instruction $900; in-service training
fee $420; Spotify outreach $1000; Engen
app $4141; News for You online $800.

Subtotal $42, 948 $95,983 $61,071 $8,807 $104,019 $104,229 $196,248 Indirect
Totals $42,948 $95,983 $61,071 $8,807 $104,019 $104,229 $196,248 Program assistant hours paid from grant rather than local funds.

Section 4. Staff Commitment: Adult Literacy Services, Family Literacy Services, and English as a Second Language Services

4.1 Library Personnel
Program FTE Narrative (required)
Total ALS FTE 0.55 Supervising Librarian .05; Librarian/Coordinators (2) .25 each.

Total FLS FTE N/A
Total ESL FTE 0.65 Supervising Librarian 0.03; Librarian/Coordinators (2) .13 each; Program Assistant .38.

Total FTE – library personnel 1.2 Library staff: Supervising Librarian, Librarian/Coordinators (2), Program Assistant.

Section 5. Description of Programs and Activities

5.1 Adult Literacy Services
Question Response
a. Adult Literacy Services Yes
b.Please describe your planned programming that explains what you will do, how you will do it, for whom you will do it, and the anticipated benefits. (Max. 150 words.)
Continue seeking new ways to attract volunteers (print/ audio/library commission outreach) and streamline new tutor trainings (5 per year). Support waitlisted learners with resources

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California Library Literacy Services | Continuing Libraries Application Form | April 2024 6 Question Response
(small group) or referrals. Keep tutors apprised of in-service training opportunities to help them expand skills and confidence.

Work with community partners to close service gaps for learners and provide quality referrals based on learner needs/goals. Inform learners and volunteers of program, library, city, and community activities to encourage community engagement, foster
interpersonal connections, and inspire new language and life goals. Provide learning pairs with print materials, high-quality digital resources, take-home computers, and Wi-Fi hotspots. c. Please describe your outreach plans for recruiting learners and tutors for your program. (Max. 150 words.)
Recruitment will focus on work with community partners (Library Commission, Tri Valley Career Center, CityServe Tri Valley) and continued use of print and audio methods. Maintain
communication with library commission to keep the group informed about literacy program and how they can provide support as community ambassadors. Schedule site visit with TVCC, continue cross postings/referrals, explore possible collaborative programs. Establish referral process for CSTV clients who may benefit from literacy services. Create content designed to attract local ALS learners/volunteers via radio spots, Spotify and print ads. These would be in addition to regular social media, flyers, Volunteer Match, newsletters, and word-of-mouth. d.Please describe how your program will engage learners in program planning and how you will discover learners’
aspirations. (Max. 150 words.)
Refined intake interviews include detailed information about learner aspirations, needs, and goals; results of these needs assessments inform recruitment efforts, programs and services offered, and materials purchased.
e.Anticipated number of adult learners to be served this year. 103

5.2 Family Literacy Services
Question Response
a. Family Literacy Services No
b. Family Literacy Services Continuing No
c. Please describe your planned programming for enrolled N/A

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California Library Literacy Services | Continuing Libraries Application Form | April 2024 7 Question Response
adult learners and their families, explaining what you will do, how you will do it, for whom you will do it, and the
anticipated benefits. Please include any relevant mobile literacy services that are connected to your CLLS family literacy services. NOTE: We will no longer be explicitly requesting MLLS information on this application or the final report. General library mobile services should be reported on the Public Library Survey, and CLLS-specific services using vehicles should be reported under the correct service area (adult literacy, family literacy, or ESL). (150 words.) d. Anticipated number of enrolled adult learners to be served this year with their families.

N/A
e. Please describe your outreach plans and programming
plans for CLLS eligible-but-not-yet-enrolled adults (with families) that explains what you will do, how you will do it, for whom you will do it, and the anticipated benefits.

Please include any relevant mobile literacy services that are connected to your CLLS Family Literacy Services.

NOTE: We will no longer be explicitly requesting MLLS
information on this application or the final report.

General library mobile services should be reported on
the Public Library Survey, and CLLS-specific services
using vehicles should be reported under the correct
service area (adult literacy, family literacy, or ESL). (150 words.)
N/A
f. Please describe how your program will engage learners in planning for your family literacy services and how you will discover learners’ aspirations for their families. (150 words.) N/A

5.3 English as a Second Language Services
Question Response
a. English as a Second Language Services Separate application for ESL grant for FY 24-25 and FY 25-26.

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California Library Literacy Services | Continuing Libraries Application Form | April 2024 8 Question Response
b. English as a Second Language Services Continuing Separate application for ESL grant for FY 24-25 and FY 25-26. c. Please describe your planned program that explains what you will do, how you will do it, for whom you will do it, and the anticipated benefits. (150 words.)
Separate application for ESL grant for FY 24-25 and FY 25-26. d.Please describe your outreach plans for recruiting learners and tutors for your program. (150 words.)
Separate application for ESL grant for FY 24-25 and FY 25-26. e. Please describe how your program will engage learners in program planning and how you will discover learners’
aspirations. (150 words.)
Separate application for ESL grant for FY 24-25 and FY 25-26. f. Anticipated number of English as a Second Language
learners to be served this year.

Separate application for ESL grant for FY 24-25 and FY 25-26.

Section 6: Community Partners
Question Response
a. Community Partner b.Community Partner Description (Max. 150 words for each description.)
Tri-Valley Career Center Local full-service employment services organization. Collaboration involves cross-posting events and services and making referrals.

CityServe Tri-Valley City Serve Tri-Valley coordinates with local government, churches, and other non-profit organizations to meet human services needs in the local community.

Collaboration involves cross-posting events and services and making referrals.

Section 7: Is there anything else you would like to tell us?

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California Library Literacy Services | Continuing Libraries Application Form | April 2024 9 Question Response
Is there anything you would like to tell us?

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Item #10

CITY COUNCIL AGENDA REPORT
May 21, 2024
Public Works - Engineering Division
TITLE: ADOPT A RESOLUTION OF SUMMARY VACATION FOR A PUBLIC SERVICE EASEMENT AT 870 ST. JOHN COURT

SUMMARY
In 1995, Tract 6728 dedicated public easements within the St. John Place residential subdivision, including easements that encumber the property at 870 St. John Court, as currently owned by Jim and Denise Lehrman. The Lehrmans' plan is to install a swimming pool on the property, but the pool conflicts with a portion of a public service easement (PSE). The granted 15-foot-wide PSE extends along the frontage of St. John Court, continues east across the driveway and southern side of the property, and then continues north along the side yard of the property, terminating at the Arroyo del Valle. The purpose of the PSE across the driveway and side yard is unknown to City staff and is suspected to be a mapping error.

The California Streets and Highways Code prescribes the process to be used by the City to vacate public easements. This process requires, among other requirements, that the City formally notify those who benefit from the easements. The beneficiaries of the PSE are those purveyors who operate utility networks in Pleasanton (PG&E, AT&T, Comcast, and others). If the easement was never utilized for its intended purpose, a simplified “summary” vacation process is allowed by state law. The easement beneficiaries have the right to protest the planned vacation.

The City sent formal notices to each potential easement beneficiary asking whether they would object to the vacation process. There were no objections submitted by any of the beneficiaries.

The project is now ready to move forward, subject to the City’s processing of the easement vacation as prescribed by §8330 et seq. of the California Streets and Highways Code.

RECOMMENDATION
Approve the Resolution of Summary Vacation as it meets the following requirements:

1. The City Council may summarily vacate a public service easement if it has not been used for the purpose for which it was dedicated or acquired for five consecutive years immediately preceding the proposed vacation (§8333(a)).

2. The City Council may vacate the street, highway, or public service easement by adopting a Resolution of Summary Vacation (§8335(a)(1)).

3. The Resolution of Summary Vacation must state the following (§8335(b)):
a. That the vacation is made under this chapter; and
b. That the vacation area is precisely described; and
c. That the facts under which this summary vacation is made are as stated in this report; and
d. That from and after the date this Resolution of Summary Vacation is recorded with

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the Alameda County Recorder’s Office, the street, highway, or public service easement vacated no longer constitutes a street, highway, or public service easement; and
e. That notice of the Resolution of Summary Vacation has been provided to all entities having any right, title, or interest in the public service easement.

BACKGROUND
On June 28, 1995, the City Council adopted Resolution PC-95-41, approving Vesting Tentative Tract Map 6728 (St. John Place). This allowed the New Cities Development Group and The Stringer Company (New Cities Development) to subdivide an approximately 7.6-acre site into 43 single-family residential lots with common open space. The Vesting Tentative Tract Map included Lot 11, now known as 870 St. John Court.

On December 4, 1995, the City Council held a Special Meeting and voted to approve the final map for Tract 6728 (St. John Place) and accept all parcels of land and easements as offered for dedication, including public service easements. Said final map was subsequently recorded on February 23, 1996 (Book 224 of Maps at Pages 14 through 17).

On October 7, 1997, the City Council authorized the City Clerk to file a Notice of Completion for subdivision improvements built as part of Tract 6728, St. John Place. New Cities Development completed the improvements.

DISCUSSION
The City Council, as a legislative body, has been granted the authority to summarily vacate public easements that are no longer needed or relevant, provided the regulatory procedure prescribed by the California Streets and Highways Code is followed. A portion of the public service easement dedicated by Tract 6728 across the property at 870 St. John Court (Attachment 3) requires a vacation of unencumbered land where a swimming pool is planned and where no public utilities exist.

Adoption of a Resolution of Summary Vacation for Public Service Easements (Attachment 1) and approval of the Quitclaim Deed of Public Service Easement (Attachment 2) across 870 St.

John Court effectuates the removal of an unused public easement without adversely impacting the City’s rights or obligations.

EQUITY AND SUSTAINABILITY
Not applicable, as this item is an administrative matter of City business.

OUTREACH
Notification letters were sent to easement beneficiaries as required by California Streets and Highways Code §8335(b)(5). No easement beneficiary submitted an objection to the proposed vacation.

STRATEGIC PLAN ALIGNMENT
Not applicable, as this item is an administrative matter of City business.

FISCAL IMPACT

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There is no fiscal impact associated with this action.

Prepared by: Submitted by: Approved by:

Tommy Nguyen, Associate
Engineer
Siew-Chin Yeong, Director of Public
Works
Gerry Beaudin, City
Manager
Attachments:

1. Resolution of Summary Vacation for Public Service Easement

2. Quitclaim Deed of Public Service Easement across 870 St. John Court

3. Vicinity Map

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RESOLUTION NO.

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PLEASANTON OF SUMMARY VACATION FOR PUBLIC SERVICE EASEMENT AT 870 ST. JOHN COURT
WHEREAS, On June 28, 1995, the City Council adopted Resolution PC-95-41, approving Vesting Tentative Tract Map 6728 (St. John Place). This Resolution allowed the Stringer Company to subdivide an approximately 7.6-acre site into 43 single-family residential lots with common open space. The Vesting Tentative Tract Map included Lot 11, now known as 870 St. John Court; and
WHEREAS, On December 4, 1995, the City Council held a Special Meeting and voted to approve the final map for Tract 6728 (St. John Place) and accept all parcels of land and easements as offered for dedication including public service easements. Said final map was subsequently recorded on February 23, 1996 (Book 224 of Maps at Pages 14 through 17); and WHEREAS, on October 7, 1997, the City Council authorized the City Clerk to file a Notice of Completion for subdivision improvements built as part of Tract 6728, St. John Place (New Cities Development Group and The Stringer Company); and WHEREAS, the current owners of 870 St. John Court, Jim and Denise Lehrman, have asked the City to vacate a portion of the public service easement that encumbers their residential lot; and
WHEREAS, local utility purveyors who benefit from public service easements held by the City were sent formal notices about the proposed vacation asking whether they would object. No objections were submitted, and the City confirmed that no public utilities current reside within the vacation area; and
WHEREAS, the City Council, as legislative body, has been granted the authority to summarily vacate public easements that are no longer needed or relevant according to the regulatory procedure prescribed by §8330 et seq. of the California Streets and Highways Code.

NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF PLEASANTON DOES RESOLVE, DECLARE, DETERMINE AND ORDER THE FOLLOWING:

SECTION 1. This Resolution of Summary Vacation for Public Service and Access Easement at 870 St. John Court is hereby adopted based on the following:
• The summary vacation of Public Service Easement is made under California Streets and Highways Code §8330 et seq.
• The portion of the Public Service Easement to be summarily vacated was granted across Lot 11 of Tract Map 6728 (Book 224 of maps at Pages 14 through 17) as accepted by the City Clerk and as described in detail in the Quitclaim of Public Service Easement across 870 St. John Court to be recorded together with this Resolution.

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• This Resolution is prima facie evidence that the Public Service Easement is determined to be excess.
• That from and after the date this Resolution is recorded, the vacated Public Service Easement no longer constitutes a street, highway, or public service easement.
• That all entities having any right, title, or interest in the Public Service Easement being vacated have been notified of this action.

SECTION 2. The City Manager shall execute the Quitclaim of Public Service Easement across 870 St. John Court as authorized by this Resolution.

SECTION 3. The City Clerk shall cause a certified copy of this Resolution, as attested under seal, to be recorded without acknowledgment, certificate of acknowledgment, or further proof in the office of the Alameda County Recorder together with the fully executed Quitclaim of Public Service Easement across 870 St. John Court.

PASSED, APPROVED AND ADOPTED by the City Council of the City of Pleasanton at a regular meeting held on May 21, 2024.

I, Jocelyn Kwong, City Clerk of the City of Pleasanton, California, certify that the foregoing resolution was adopted by the City Council at a regular meeting held on the 21st day of May 2024 by the following vote:

Ayes:

Noes:

Absent:

Abstain:
__________________________
Jocelyn Kwong, City Clerk
APPROVED AS TO FORM:
_________________________________
Daniel G. Sodergren, City Attorney

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RECORDING REQUESTED BY:

City of Pleasanton
AND WHEN RECORDED MAIL TO:

City of Pleasanton
Attention: City Clerk
P.O. Box 520
Pleasanton, CA 94566
Space Above This Line For Recorder’s Use Only
Recording requested pursuant to
APN 941-119-14 Government Code Sections §27383 & §6103 (No Fee)

QUITCLAIM DEED
FOR VALUABLE CONSIDERATION, receipt and adequacy of which are hereby acknowledged, the CITY OF PLEASANTON, a municipal corporation (“City”), pursuant to Resolution No. 2024-______ adopted by the Pleasanton City Council on May 21, 2024, hereby RELEASE, REMISE, AND QUITCLAIM to:

JIM AND DENISE LEHRMAN, PROPERTY OWNERS AT LOT 11 OF TRACT 6728 (BOOK 224 OF MAPS AT PAGES 14 THROUGH 17) COMMONLY KNOWN AS 870 ST. JOHN COURT Any and all right, title, and interest City may have in and to the

PUBLIC SERVICE EASEMENT
as described in Exhibit A and as depicted on Exhibit B, attached hereto and made a part hereof.

Executed as of this ___________ day of ______________________, 2024.

City of Pleasanton
_________________________________
Gerry Beaudin, City Manager
Approved as to Form:
__________________________________
Daniel G. Sodergren, City Attorney
Attest:
____________________________________
Jocelyn Kwong, City Clerk

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NOTARY ACKNOWLEDGMENT ATTACHED

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Vicinity Map

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Item #11

CITY COUNCIL AGENDA REPORT
May 21, 2024
Public Works - Operations Division
TITLE: APPROVE AS-NEEDED MAINTENANCE AND TRADE SERVICES

AGREEMENTS FOR FACILITIES, UTILITIES, STREETS, PARKS, FLEET, AND

ENVIRONMENTAL SERVICES DIVISIONS FOR GENERAL MAINTENANCE

INFRASTRUCTURE REPAIRS

SUMMARY
To effectively maintain the integrity of City infrastructure, the City utilizes contract services in a broad range of areas, which include facilities renovation, utilities (water, sewer, and storm) repairs, street repairs, parks, trails and median renovation, fleet maintenance, and outfitting environmental services testing and repairs. In April 2024, staff solicited Request for Proposals (RFP) for the six identified divisions for the services of experienced license contractors to perform as-needed, necessary maintenance services in these areas. Based on the proposals received, staff has established a list of as-needed maintenance and trade services agreements with annual not-to-exceed limits. The recommended as-needed services agreements will commence on July 1, 2024, and expire on June 30, 2027, with an option for two additional one-year extensions.

RECOMMENDATION
Approve the recommended three-year as-needed agreements for the six Public Works divisions.

BACKGROUND
Within the City’s approximately 24 square miles boundaries are numerous infrastructure assets that require ongoing maintenance and as-needed repairs, including:
• 331 miles of water mains, 260 miles of sewers, and 196 miles of storm pipeline • 217 miles of roads
• 139 publicly maintained buildings
• 1016 acres of Open Space, 385 developed acres of parks, 85 acres of medians, and 23 miles of trails
• 300+ vehicles and 100 pieces of equipment
• 300 backflow prevention assemblies, five above-ground storage tanks, and two underground storage tanks.

To meet the City’s needs, as-needed contractors that augment the work of City staff are essential to supporting the City’s core essential functions and keeping the city in good operating order. The City has been successful in the past in using contracting services to supplement internal resources, especially during emergency and urgent needs and when the work requires specialized tools, equipment, and skills.

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The current as-needed service agreements are set to expire on June 30, 2024. An RFP was formally advertised in April 2024 for new agreements for as-needed services, by posting a legal publication and notification on the City’s website and through third-party vendor Bidnet Direct. A total of 56 proposals were received from licensed contractors for the six divisions, and 30 categories were identified for as-needed, necessary services. All proposals have been evaluated and met or exceeded the minimum qualifications listed in the RFP for the categories listed in Table 1 below. Contractors’ licenses and DIR registration have been verified.

DISCUSSION
Utilizing prequalified and preapproved as-needed service agreements allows staff to authorize and direct the work effectively and efficiently. When utilizing the as-needed service contractors to perform essential tasks, staff will follow the approved Procurement Procedures and Manual (as approved by the City Council on March 21, 2024). Appropriate contractors with the required license and area of expertise will be contacted with a scope of service to provide a quote for those services. For all individual work/projects, the Contractor(s) will submit a written estimate detailing the cost to perform the requested work or services. A task order is issued based on the lowest responsible and responsive bids that are available to meet the City’s specified performance timeline. The costs will be applied against the not-to-exceed limit of the agreement. The City will then issue a Task Authorization letter as a guide for reimbursement when the scheduled work is completed to the satisfaction of the City.

As part of the bid process, all as-needed contractors provided labor and equipment rates, markup percentages, and their Department of Industrial Relations (DIR) number where applicable. In addition, as a condition of the agreement, each contractor will provide the required certificates of insurance and verification of a current City of Pleasanton business license. Performance and Payment Bonds may be requested depending on the type of services requested and the risk evaluation by staff.

Table 1 below lists each type of as-needed service category, the recommended contractor(s) to enter into agreement with for that category based on pricing rates and qualifications, and the recommended not-to-exceed limit for year one of each agreement. In many cases, staff recommends entering into an agreement with multiple contractors for a single service category to have the flexibility to obtain the best combination of pricing, trade skills, and response time on a task-by-task basis. For the service categories with multiple agreements, since the percentage use of each contractor cannot be fully defined at this time, the total not-to-exceed agreement amounts are higher than the anticipated expenditures; however, staff will track expenditures from authorized task orders against all agreements to ensure they are within budgeted amounts. The Department will ensure all cumulative task orders issued against the listed contracts below will not exceed the total approved budget. For the three service categories that received no submitted proposals, staff will enter into a single-use agreement for each project.

Table 1 – Recommended As-Needed Services Agreements
Service Categories Contractor Year One
Not-ToExceed

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Amount (1)
FACILITIES RENOVATION:

Building Painting Services D&D Commercial & Residential Paint
$200,000
General Contractor Services Donny Chu Construction, Inc Jennison Construction
Wilson General Contracting Inc.
$200,000
$200,000
$200,000
Electrical Service Repairs Donny Chu Construction, Inc
Harvey Electric
Wilson General Contracting Inc.
$200,000
$200,000
$200,000
Locksmith Services No Proposals
Plumbing Services/Repairs ACCO Engineered Systems
Donny Chu Construction, Inc
Wilson General Contracting Inc.
$50,000
$50,000
$50,000
Roll-Up Doors/Gate Repairs Nor-Cal Overhead, Inc.

Wilson General Contracting Inc.
$75,000
$75,000
Roofing Repairs/Replacement Roofline Builders Inc. $150,000 Window/Door Glass Repairs Donny Chu Construction, Inc.

Team Glass, Inc.
$75,000
$75,000
UTILITIES (WATER, SEWER, AND STORM) REPAIRS:

Generator Repair Services Got Power Inc dba CD & Power $300,000 Electrical Services Calcon Systems, Inc
SD Electric
$200,000
$200,000
Polybutylene Service
Replacement
DPI, Inc
West Valley Construction Co. Inc.
$200,000
$200,000
Process Control ATEEM Electrical Engineering Inc.

Telstar Instruments
Tesco Controls, LLC
$150,000
$150,000
$150,000
Pump Repairs Pump Repair Service Co, Inc $250,000
Reservoir Cathodic Protection &
Inspection
No Proposals
Reservoir Cleaning & Inspection Coating Specialists and Inspection, Inc
$75,000
Underground Infrastructure
Repairs
Cazadoro Construction Inc
DPI, Inc
West Valley Construction Co. Inc
$300,000
$300,000
$300,000
STREETS REPAIRS:

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Asphalt Paving & Patching No Proposals
Pressure Wash Services JL McComb Coating Services LLC $100,000 Sidewalk/Curb & Gutter Removal
& Replacement
George Bianchi Construction, Inc $300,000
Sidewalk Offset Repairs Precision Concrete Cutting $300,000 Soundwall Repairs George Bianchi Construction, Inc $100,000 PARKS, TRAILS AND MEDIAN RENOVATION:

Fence Installation & Repairs Chain Link Fence Supply
Suarez & Munoz Construction
$300,000
$300,000
Landscape Maintenance New Image Landscape Company
Terra Landscape
$150,000
$150,000
Landscape Services New Image Landscape Company
Suarez & Munoz Construction
Terra Landscape
$250,000
$250,000
$250,000
Trail Maintenance Services Imhof Tractor
Santa Cruz Mountains Trail
Stewards
Suarez & Munoz Construction
$100,000
$100,000
$100,000
Tree Work Services A Plus Tree, Inc.

Bay Area Tree Specialist
Best Quality Tree Service
Cagwin & Dorward LLC
Hamilton Tree Service Inc
New Image Landscape Company
$150,000
$150,000
$150,000
$150,000
$150,000
$150,000
Weed Abatement Imhof Tractor
RJN Inc – H&N Enterprises
Terra Landscape
$100,000
$100,000
$100,000
FLEET MAINTENANCE:

Fleet Repairs & Outfitting Stommel Inc., dba LEHR
NextGen Alpha Uplifting
$250,000
$250,000
ENVIRONMENTAL SERVICES:

Backflow Testing, Repairs &
Replacement
Stead Backflow Prevention
Services Inc.
$40,000
Above Ground & Underground
Storage Tanks Systems
Eco-Check Compliance, Inc
Service Station Systems Inc
$40,000
$40,000
Total Agreements (56) - Total Amount $9,345,000
Notes:

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1. For subsequent years, contractor proposals shall be increased based on the San Francisco-Oakland-San Jose Metropolitan Area consumer price Index for the 12-month period ending in May.

Staff recognizes that these as-needed contracts encumber a significant aggregate, not-toexceed total at a time when the City is implementing cost reductions and related cost containment strategies. At the same time, these contracts support the operations and delivery of ongoing programs and services for the entire CIty organization. With that, staff intends to utilize these contracts for necessary and essential tasks.

EQUITY AND SUSTAINABILITY
Not applicable, as this item is a routine matter of City business.

OUTREACH
No outreach was conducted, as this item is a routine matter of City business.

STRATEGIC PLAN ALIGNMENT
Approval of this action advances several strategies under the Citywide ONE Pleasanton strategic plan goal of Investing in Our Environment intended to promote the effective use of existing facilities through maintenance and repair and plan for future facilities, amenities, and infrastructure to benefit the community with a focus on environmental stewardship to address comprehensive long-term planning to meet current and future needs.

FISCAL IMPACT
For FY 2024/25, funding for these agreements is budgeted in the General Fund and the Internal Service Funds for the Public Works Department’s division that oversees the respective programs. The FY 2024/25 not-to-exceed limit for each agreement is listed in Table 1. For all subsequent years, the proposed rates by contractors for each agreement shall be increased based on the San Francisco-Oakland-San Jose Metropolitan Area Consumer Price Index (CPI) for the 12-month period ending in April. Funding for these agreements beyond FY 2024/25 is subject to City Council approval through an annual budget process.

Prepared by: Submitted by: Approved by:

Dan Villasenor,
Management Analyst
Siew-Chin Yeong, Director of Public
Works
Gerry Beaudin, City
Manager
Attachments:

1. (Sample) As-Needed Maintenance and Trade Services Agreement

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(SAMPLE) AS-NEEDED MAINTENANCE AND TRADE SERVICES AGREEMENT FOR FACILITIES MAINTENANCE & RENOVATION/REPAIRS RFP #PWD 24-403 THIS AGREEMENT is made and entered into this first day of July 2024 between D&D Commercial & Residential Painting Inc. ("Contractor"), a California Corporation, whose address is P.O. Box 1149 Pleasanton, CA 94566 and the CITY OF PLEASANTON, a municipal corporation ("City").

RECITALS
A. Contractor has submitted a proposal in response to the City of Pleasanton’s Request for Proposals (RFP) #PWD 24-403 and is qualified and experienced in providing Building Painting Services as set forth in Exhibit A of this Agreement.

B. City finds it necessary and advisable to obtain work or services from Contractor on both a scheduled basis as set forth in RFP #PWD 24-403, as well as on an as-needed basis for potential unscheduled work, including but not limited to urgent requests by the City or a declaration of an emergency by local or state officials, described therein.

NOW THEREFORE, in consideration of the mutual covenants and conditions in this Agreement, City and Contractor agree as follows:

1. Term. The term of this Agreement commences on the date written above and will expire on June 30, 2027, unless the parties agree to extend the Agreement for an additional two (2) one-year terms, not to exceed five (5) years total for this Agreement.

2. Services to be performed. Contractor shall perform, or cause to be performed, the work or services described in Exhibit A. This Agreement does not obligate the City to utilize Contractor exclusively for such work or services.
a. Task Authorization – For all services Contractor will submit a written estimate detailing the cost to perform the requested work or services, the City will then issue a Task Authorization letter as a guide for reimbursement once the scheduled work is completed and to the satisfaction of the City.

If authorized work exceeds the initial estimate or City requests additional services, Contractor is to notify the City of the additional cost and the City will provide an amended Task Authorization.

No work shall be performed unless approved by the City’s designated project manager.

3. Compensation. Total compensation pursuant to this Agreement shall not exceed $200,000 per fiscal year and $600,000 for the Term. Rates shall be as set forth in Exhibit A. For the second or subsequent years of the Agreement, the cost of each one-year term may increase only by the change in the consumer price index for the San Francisco-Oakland-San Jose Metropolitan Area (all items index; all urban consumers) for the twelve-month period ending in May each year as published by the Bureau of Labor Statistics, U.S. Department of Labor.

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a. Payment shall be made within thirty (30) days of receipt of Contractor’s invoice and approval by City.
b. If the prevailing wage for crafts or classifications subject to this Agreement change during the term of this Agreement, the City will accept corresponding increases in Contractor’s hourly rates when sufficient documentation is received from the Contractor and verified with the Department of Industrial Relations.

4. Indemnification. Contractor shall hold harmless, defend, and indemnify the City, its officers, agents, and employees (“Indemnities”), against any and all claims, costs, demands, causes of action, suits, losses, expenses, attorney’s fees, or liability, arising from or in any manner related to Contractor’s (includes Contractor’s employees, agents, or subcontractors) negligent act or omission, whether alleged or actual, regarding the work or services performed or caused to be performed pursuant to this Agreement and any amendments thereto. Contractor shall not, however, be obligated to indemnify Indemnities from claims arising from the sole negligence or willful misconduct of Indemnities. This indemnification includes any claim that the materials or equipment provided under this Agreement, or any tool, article, or process used, constitutes an infringement of any patent issued by the United States. This indemnification provision shall survive termination or cancellation of the Agreement.

5. Insurance. During the term of this Agreement, Contractor shall maintain at its own cost and expense the following insurance coverage with insurers with an A.M. Best’s rating of no less than A:VII:
a. General Liability and Bodily Injury Insurance. Commercial general liability insurance with limits of at least $2,000,000 combined limit for bodily injury and property damage that provides that the City, its officers, employees, and agents are named additional insured under the policy as evidenced by an additional insured endorsement satisfactory to the City Attorney.

The policy shall further state in writing either on the Certificate of Insurance or attached rider that this insurance will operate as primary insurance for work performed by Contractor and its subcontractors, and that no other insurance effected by City or other named insured will be called on to cover a loss.
b. Automobile Liability Insurance. Automobile liability insurance with limits not less than $2,000,000 per person/per occurrence.
c. Workers' Compensation Insurance. Workers' Compensation Insurance for all of the Contractor's employees shall be in strict compliance with State laws, including a waiver of subrogation and Employer’s Liability Insurance with limits of at least $1,000,000.

For work or services deemed public works, by signing this Agreement, Contractor is certifying, pursuant to Section 1861 of the California Labor Code, that: "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 this Contract."

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d. Certificate of Insurance. Contractor shall file a certificate of insurance with the City prior to the City’s execution of this Agreement, and prior to engaging in any operation or activity set forth in this Agreement. The Certificate of Insurance shall provide in writing that the insurance afforded by this Certificate shall not be suspended, voided, canceled, reduced in coverage or in limits without providing notice to the City in accordance with California Insurance Code section 677.2 which requires the notice of cancellation to: 1) include the effective date of the cancellation; 2) include the reasons for the cancellation; and 3) be given at least 30 days prior to the effective date of the cancellation, except that in the case of cancellation for nonpayment of premiums or for fraud, the notice shall be given no less than 10 days prior to the effective date of the cancellation. Notice shall be sent by certified mail, return receipt requested. In addition, the insured shall provide thirty (30) days prior written notice to the City of any cancellation, suspension, reduction of coverage or in limits, or voiding of the insurance coverage required by this agreement. The City reserves the right to require complete certified copies of policies.
e. Subcontractors. Contractor shall include all subcontractors as insured under its policies or shall furnish separate certificates and endorsements for each subcontractor. All coverages for subcontractors shall be subject to all of the requirements stated in this Agreement, including but not limited to naming additional insureds.
f. Waiver of Subrogation. The insurer agrees to waive all rights of subrogation against the City, its officers, employees, and agents.
g. Defense Costs. Coverage shall be provided on a “pay on behalf of” basis, with defense costs payable in addition to policy limits. There shall be no cross-liability exclusions.

6. Independent Contractor. The Contractor is an independent contractor retained by the City. All personnel employed by the Contractor, including subcontractors, and personnel of subcontractors, are not and shall not be employees of the City.

7. Contractor’s Warranty. Contractor shall bear the risk of loss or damage to any goods associated with the services until delivered to and accepted by City. Contractor further warrants that all work done and goods provided under this Agreement shall: a) meet all conditions of the Agreement; b) shall be free from all defects in design, material and workmanship; and 3) shall be fit for the purposes intended. If any defects occur within the 12 months following acceptance, Contractor shall be solely responsible for the correction of those defects.

8. Labor Code/Prevailing Wages. The work performed under this Agreement is a “public work” and prevailing wage laws shall apply. No less than the general prevailing rate of per diem wages, and not less than the general prevailing rate of per diem wages for holidays and overtime work, for each craft, classification or type of worker needed to execute the work under this Agreement shall be paid to all workers, laborers and mechanics employed in the execution of the work by the Contractor or any subcontractor doing or contracting to do any part of the work. The appropriate determination of the Director of the California Department of Industrial Relations shall be

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available for inspection. Contractor shall post, at each job site, a copy of the prevailing rate of per diem wages.

To the extent applicable, Contractor shall comply with all requirements of the California Labor Code, including but not limited to, Labor Code sections: 1773.2 (regarding posting wage determinations at each job site); section 1776 (regarding the certification, maintenance, and availability for inspection of payroll records); section 1777.5 (regarding employment of apprentices); section 1810 (regarding a legal day’s work as 8 hours of labor); and section 1775 (regarding penalties for violations). The Contractor shall forfeit fifty dollars ($50.00) for each calendar day or portion thereof for each worker paid less than the stipulated prevailing rates for any public work done under the Agreement by it or by any subcontractor under Contractor.

9. Notices. All notices, demands, requests or approvals to be given under this Agreement shall be given in writing and conclusively shall be deemed served when delivered personally or on the second business day after the deposit thereof in the United States Mail, postage prepaid, registered or certified, addressed as hereinafter provided.

To Contractor: _____________________ To City: City Manager _____________________ City of Pleasanton
_____________________ P.O. Box 520
_____________________ Pleasanton, CA 94566

10. Conflict of Interest. In accepting this Agreement, Contractor covenants that it presently has no interest, and will not acquire any interest, direct or indirect, financial or otherwise, which would conflict in any manner or degree with the performance of this Agreement. Contractor further covenants that, in the performance of this Agreement, it will not employ any person having such an interest. Contractor certifies that no City officer, employee, or authorized representative has any financial interest in the business of Contractor and that no person associated with Contractor has any interest, direct or indirect, which could conflict with the faithful performance of this Agreement. Contractor agrees to advise City if any conflicts arise.

11. Miscellaneous Provisions.
a. City may terminate this Agreement at any time by mailing a notice to Contractor. Contractor shall be paid for that portion of work or services already completed by Contractor as approved by City.
b. Contractor acknowledges that time is of the essence regarding the performance of this Agreement.
c. Contractor shall not assign or transfer this Agreement. d. If either City or Contractor waives a breach of this Agreement, such waiver shall not constitute a waiver of other or succeeding breaches of this Agreement. e. This Agreement constitutes the entire understanding of the parties. f. This Agreement may only be modified by a writing signed by the authorized representative of both parties.

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g. Contractor covenants that it has obtained and will keep in effect during the term of the Agreement all certificates, licenses, including a City Business License, permits or the like required by any federal, state or local regulatory agency in order to perform the work under this Agreement.
h. Contractor shall comply with all federal, state and local laws, regulations and rules, including but not limited to applicable safety and environmental laws. Contractor shall bear full and exclusive responsibility for any release of hazardous or non-hazardous substances and disposal of hazardous wastes.
i. The Contractor will permit the City to audit, examine and make copies of all contracts, invoices, payrolls and other documents or data relating to this Agreement. Such records shall be maintained for three years from the date of final payment under this Agreement. j. This Agreement may be executed in multiple counterparts, each of which shall be an original and all of which together shall constitute one agreement. Counterparts may be delivered via facsimile, electronic mail (including pdf or any electronic signature complying with U.S. federal E-Sign Act of 2000 (15 U.S. Code §7001 et seq.), California Uniform Electronic Transactions Act (Cal. Civil Code §1633.1 et seq.), or other applicable law) or other transmission method, and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes. k. This Agreement shall be governed by the laws of the State of California, with venue for any action under this Agreement in Alameda County, California.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date and year first above written.

CITY OF PLEASANTON CONTRACTOR
_____________________________ By: __________________________ Gerry Beaudin, City Manager Signature
__________________________
Print name
ATTEST: Title: __________________________
____________________________ [If Contractor is a corporation, signatures must Jocelyn Kwong, City Clerk comply with California Corporations Code §313] APPROVED AS TO FORM: _____________________________
Signature
__________________________ __________________________
Daniel Sodergren, City Attorney Print name
Title: __________________________

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Item #12

CITY COUNCIL AGENDA REPORT
May 21, 2024
Public Works - Engineering Division
TITLE: ADOPT RESOLUTIONS APPROVING THE ENGINEER’S REPORTS FOR LANDSCAPE MAINTENANCE DISTRICTS 1984-1 (PONDEROSA-DEL PRADO), 1993-1 (WINDSOR), 1993-2 (BONDE RANCH), 1994-1 (OAK TREE FARM), AND 1995-1 (MOLLER RANCH), DECLARING THE CITY’S INTENTION TO ASSESS

THE PROPERTIES FOR THE COST TO OPERATE AND MAINTAIN THE DISTRICTS; AND SETTING JUNE 18, 2024, AT 7:00 P.M. AS THE DATE AND

TIME FOR THE PUBLIC HEARING

SUMMARY
The annual Engineer’s Reports for the Landscape Maintenance Districts (LMDs) in the Ponderosa-Del Prado, Windsor, Bonde Ranch, Oak Tree Farm, and Moller Ranch subdivisions have been completed for FY 2024/25. The Engineer’s Reports determine the tax assessments that will be levied against property owners within each LMD for the electrical costs, maintenance, and irrigation for the special district improvements installed as part of each development. All assessment amounts remain unchanged from previous years because the original district formation documents did not include an escalation clause to address inflation.

While maintenance costs and water rates have increased, the level of maintenance has decreased a corresponding amount thus depleting funding reserves, such that staff will be proceeding with initiation of the Proposition 218 process for two of the districts. Staff recommends the City Council approve the Engineer’s Report for each LMD, declare the intention to levy and collect assessments, and schedule a public hearing for 7 p.m. on June 18, 2024, to receive testimony from those that will be subject to the assessments, and direct the City Clerk to advertise a Notice of Annual Hearing 10 days prior to the hearing.

RECOMMENDATION
Adopt resolutions approving the Engineer’s reports for Landscape Maintenance Districts 1984- 1 (Ponderosa-Del Prado), 1993-1 (Windsor), 1993-2 (Bonde Ranch), 1994-1 (Oak Tree Farm), and 1995-1 (Moller Ranch), declaring the City’s intention to assess the properties for the cost to operate and maintain the Districts; and setting June 18, 2024, at 7 p.m. as the date and time for the public hearing, and authorize the City Clerk to advertise a Notice of Annual Hearing (Cal. Streets & Highways Code §22626) 10 days prior to the hearing.

BACKGROUND
The Landscaping and Lighting Act of 1972 authorizes local agencies to impose an annual assessment on real property benefiting from project-specific improvements to pay for the construction and maintenance of landscaping and lighting special improvements that benefit those parcels. The assessments are collected by the Alameda County Assessor’s Office to be applied to each owner’s property tax bill.

For each LMD, City staff follows a statutorily imposed process for yearly administration. Staff

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performs regular field inspections to ensure satisfactory performance by a City-hired maintenance contractor, completes reviews, addresses complaints or concerns from property owners, and processes progress payments to the contractor. City administration generally includes the following steps:

1. Solicit competitive bids from contractors to perform the required maintenance work

2. Review bids and recommend acceptance of the lowest responsive bid

3. Review maintenance costs, estimate annual costs (water, electricity, etc.) and prepare a budget to be included in the annual Engineer's Report and City budget

4. Prepare the Engineer’s Report for each district disclosing the annual assessment amounts

5. Present the Engineer’s Reports to the City Council during a public hearing

6. Adopt the annual assessments and coordinate with the City’s Finance Department and City Clerk to authorize collection of assessments with the Alameda County Assessor’s Office and receipt of the assessments as special revenue.

Effects of Proposition 218
Proposition 218, commonly referred to as the "Right to Vote on Taxes Act," was passed by California voters in November 1996. The Proposition amends the State's Constitution by adding Articles XIII(C) and XIII(D) to do the following:
• Limit the authority of local governments (including cities, counties, special districts and school districts) to impose taxes and property-related assessments, fees, and charges; and
• Establish procedures for implementing annual assessments which include maintenance assessments for landscaping and lighting maintenance districts. Procedures include a requirement that the city develop an Engineer's Report which identifies the special benefits that will accrue to each property as a result of the assessment. Subject to certain exceptions, it also establishes that the majority of property owners in the district must vote in favor of any proposed increase in an assessment prior to its implementation.

To date, the Proposition 218 procedures have not been necessary in Pleasanton as assessments have not been increased since district formation.

DISCUSSION
The City currently operates five Landscape Maintenance Districts that are assessed. The assessments include an added 1.7 percent to the base assessment as an administration fee imposed by the county. The assessments on the City-owned parcels located within the Ponderosa-Del Prado, Bonde Ranch, Oak Tree Farm, and Moller Ranch districts do not include the 1.7 percent county administration fee as the Finance Department transfers the

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Pleasanton City CouncilMay 21, 2024

Pleasanton City Council
May 21, 2024