City of Sacramento
City Council - 5PM Report
915 I Street Sacramento, CA 95814
www.cityofsacramento.org
File ID: 2024-01848 4/1/2025 Consent Item 19.
Fourth Amendment to Purchase and Sale Agreement: 3625 Fong Ranch Road File ID: 2024-01848
Location: 3625 Fong Ranch Road, District 3
Recommendation: Adopt a Resolution: 1) approving the Fourth Amendment to Purchase and Sale Agreement (“Fourth Amendment to PSA”) with Anton Fong Ranch Owners, LLC (“Anton”), for the sale of a portion of the real property located at 3625 Fong Ranch Road, APN: 225-0170-064 (the “Property”); 2) approving the revised Regulatory Agreement with Anton for a portion of the property that will include approximately 115 affordable housing units, in the form attached to the Fourth Amendment to PSA; 3) authorizing the City Manager or the City Manager’s designee to: execute the Fourth Amendment to PSA and implement the revised escrow instructions; at closing execute the revised Regulatory Agreement and Grant Deed; and to take all actions and execute all additional documents as may be necessary to implement the revised Property sale; and 4) finding the sale of
17.39 acres of the Property is in the best interest of the City under City Code section 3.88.090(A)(2).
Contact: Richard Sanders, Facilities & Real Property Superintendent, (916) 808-7034, [email protected], Department of Public Works; Ya-yin Isle, City Housing Manager, (916) 808-1869, [email protected], City Manager’s Office of Innovation and Economic Development
Presenter: None
Attachments:
1-Description/Analysis
2-Resolution
3-Fourth Amendment to PSA
Description/Analysis
Issue Detail: On January 18, 2022, Council approved Purchase and Sale Agreement No. 2022-0095 (“PSA”) to sell 22.81 acres of the Property to Anton for $6.4 million. Two minor amendments to the PSA were executed to extend the due diligence period based on unanticipated obstacles associated with investigation of the Property. In the original PSA, Anton planned to build 555 housing units, of which 406 would be market rate units and 149 would be affordable units on 22.81 acres. After conducting numerous inspections and studies of the Property during the due diligence period, it was
File ID: 2024-01848 4/1/2025 Consent Item 19.
determined that development of the Property in accordance with the terms of the PSA was not physically and financially feasible. In particular, Anton discovered that developing the northern portion of the Property was not feasible due to the need for a bridge street crossing over the drainage canal.
On June 28, 2022, Council approved a Third Amendment to the Purchase and Sale Agreement (Third Amendment to PSA). The Third Amendment to PSA changed the terms of the prior approved Purchase and Sale Agreement to purchase the 17.39 acres south of the drainage canal for $4 million to develop 384 housing units, of which 288 would be market rate units and 96 would be affordable units.
In September 2022, Anton submitted an application for entitlements to the City for the construction of the 384 units apartment project and encountered neighborhood concerns about potential traffic impacts due to the high density. In addition, in the fall of 2022, significant changes in market conditions that continue today, including increased costs, interest rates and instability in the capital markets, caused Anton to re-evaluate the proposed project. In August 2024, Anton reached out to the City with a revised proposal that would increase the overall affordability of the project to 115 affordable units and offer approximately 95 small lot entry level single family for sale units, thereby requiring this Fourth Amendment to the PSA. The 17.39 acres would be subdivided into several parcels, one approximately 3.5-acre parcel for the 115-unit affordable housing development, and 95 small lots approximately 2,700-3,000 square feet in size for the single family for sale units. Anton would develop the 115-unit affordable project which would include a mix of 1-, 2-, and 3-bedroom units to be financed using tax credits/tax exempt bonds to be affordable to extremely low-, very low-, and low-income households. The 95 single family units will be market-rate and anticipated to offer entry-level home ownership opportunities for the local workforce. In addition, Anton has agreed to construct a soundwall on the northern portion of the Original Property, concurrent with the construction of the Property, that ties into the existing soundwall at Fong Ranch Park and extends westerly along the northern property line of the Original Property to the northwestern corner of the Property at no cost to the City and to the satisfaction of City’s Department of Youth, Parks & Community Enrichment.
The Regulatory Agreement, Exhibit 7 of the Fourth Amendment to PSA, would only be recorded on the 3.5-acre affordable housing parcel which would be recorded in succession with the recording of the subdivision map. The State’s Department of Housing and Community Development (“HCD”) who oversees the requirements of the California Surplus Land Act (“SLA”) was consulted about this proposed change and opined that it met the requirements of the SLA. Other than these changes, the material terms of the sale as outlined in the Third Amendment to PSA, including the size of the parcel and the sales price, remain the same. The sale of 17.39 acres of the Property to Anton without a high -bid process is in the best interest of the City under City Code section 3.88.090(A)(2) because the California Surplus Land Act requires the City to offer its surplus property to the buyer that proposes the greatest number of affordable housing units. Even with Anton’s revised development plan as proposed in the Fourth Amendment to the PSA, Anton still proposes the most affordable housing
File ID: 2024-01848 4/1/2025 Consent Item 19.
units for the Property. The property sale will close after entitlements are approved, which Anton expects will take approximately six months.
Policy Considerations: The recommendations in this report are consistent with the provisions of City Code Chapter 3.04, City Code Chapter 3.88 regarding the disposition of real property owned by the City, and the California Surplus Land Act (Government Code section 54220 et seq.).
In addition, the recommendation is consistent with the General Plan Housing Element Policy H-
2.2: Maximize Use of Public Properties for Affordable Housing and Shelters. The City shall make City-owned properties that are no longer needed for current or foreseeable future public operations available for the development of affordable housing and emergency shelter space to the maximum extent feasible and shall encourage other public entities to do so as well.
Economic Impacts: The sale of this City property for the development of housing will infuse the economy with jobs for the construction of these housing units. The greater economic impact will be providing approximately 95 single-family for sale homes to market rate entry-level homebuyers and 115 units of affordable housing for extremely-low, very-low and low-income households.
Environmental Considerations: California Environmental Quality Act (CEQA): The sale of surplus property is exempt from environmental review under CEQA Guidelines Section 15312, Surplus Government Property Sales, because the Property is not located in an area of statewide, regional or areawide concern; it does not have significant values for wildlife habitat; the use of the Property and adjacent property has not changed since the time of purchase; and the PSA does not approve development of the Property. Anton will have to obtain approval of a General Plan amendment, rezoning, and site plan and design review before the conceptual site plan can be developed. During this planning process, the proposed development of the Property will undergo environmental review under CEQA. The PSA does not limit changes to the site plan or limit imposition of mitigation measures to reduce environmental impacts of the proposed project.
Sustainability: Not applicable.
Commission/Committee Action: None.
Rationale for Recommendation: Approval of the revised project and Purchase and Sale agreement outlined above will allow the City to dispose of the Property, which has been vacant for more than 20 years. The sale will eliminate a large portion of the costs for maintenance of the Property and provide funds to repay the Storm Drainage Fund (Fund 6011), inclusive of accrued Pool A interest, and provide for much needed affordable and market rate housing.
Financial Considerations: The Property was purchased in 2003 with $2,052,130 from the Storm Drainage Fund (Fund 6011) and $1,400,000 in bond proceeds from the 2002 Capital Improvement
File ID: 2024-01848 4/1/2025 Consent Item 19.
Revenue Bonds (CIRB). The total purchase price for this Property has not changed from the Third Amendment to the Purchase and Sale agreement and continues to be $4 million. The City must remit a portion of the sales proceeds back into the Storm Drainage Fund (Fund 6011) based on how much would have been accrued if those funds were invested instead in the City’s standard investment pool (Pool A). City staff will reassess Pool A interest earnings at the time of escrow closure to determine the final deposit amount into the Storm Drainage Fund (Fund 6011).
There is a 4% brokerage commission owed to the broker representing the City, and the City will be required to pay its share of prorations of property tax assessments, escrow fees, and transfer taxes.
In addition, Department of Public Works staff time will be paid out of the sale proceeds after the close of escrow. These costs and repayment of the Storm Drainage Fund (Fund 6011) will be deducted from the net cash sale proceeds. As per Resolution 2022-0218, the remaining net cash proceeds will be budgeted in the South Natomas Community Park Improvements Project (L19156600).
Local Business Enterprise (LBE): Not applicable.
RESOLUTION NO. 2025-
Adopted by the Sacramento City Council
Approving Fourth Amendment to Purchase and Sale Agreement for Property at 3625 Fong Ranch Road
BACKGROUND
A. On January 18, 2022, City Council approved a Purchase and Sale Agreement and Joint Escrow Instructions, referred to as City Agreement No. 2022-0095 (“PSA”), to sell 22.81 acres of the City-owned real property at 3625 Fong Ranch Road, APN:
225-0170-064 (“Original Property”) to Anton Fong Ranch Owners, LLC (“Anton”) for $6.4 million. Two minor amendments to the PSA were executed to extend the due diligence period based on unanticipated obstacles associated with investigation of the Property. Pursuant to the original PSA, Anton planned to build a total of 555 housing units, of which 406 would be market rate units and 149 would be affordable units.
B. However, Anton discovered that developing the northern portion of the Property was not feasible due to the need for a bridge street crossing over the drainage canal. On June 28, 2022, City Council approved the Third Amendment to Purchase and Sale Agreement for Anton to purchase of 17.39 acres south of the drainage canal (“Property”) to develop 384 housing units, of which 288 would be market rate units and 96 would be affordable units for $4 million.
C. Significant changes in market conditions, including increased costs, interest rates and instability in the capital markets, have caused Anton to re-evaluate the proposed project. Anton’s revised proposal would increase the overall affordability of the project to 115 affordable units and offer approximately 95 small lot entry level single family for sale units on the Property. Anton would develop the 115-unit affordable project which would include a mix of 1-, 2-, and 3-bedroom units to be financed using tax credits/tax exempt bonds to be affordable to extremely low-, very low-, and low-income households. The 95 single family units are anticipated to be affordable by design, offering entry level home ownership opportunities for the local workforce.
In addition, Anton has agreed to construct a soundwall on the northern portion of the Original Property, concurrent with the construction of the Property, that ties into the existing soundwall at Fong Ranch Park and extends westerly along the northern property line of the Original Property to the northwestern corner of the Property at no cost to the City and to the satisfaction of City’s Department of Youth, Parks & Community Enrichment.
D. The Regulatory Agreement would only be recorded on the 3.5-acre affordable housing parcel which would be recorded in succession with the recording of the subdivision map. The State’s Department of Housing and Community Development (“HCD”) who oversees the requirements of the California Surplus Land Act (“SLA”) was consulted about this proposed change and opined that it met the requirements of the SLA. City staff recommends execution of a fourth amendment to the PSA (“Fourth Amendment to PSA”) to reflect the revised development plan for the 17.39 acres.
E. The sale of 17.39 acres of the Property to Anton without a high-bid process is in the best interest of the City under City Code section 3.88.090(A)(2) because the California Surplus Land Act requires the City to offer its surplus property to the buyer that proposes the greatest number of affordable housing units. Even with Anton’s revised development plan, Anton still proposes the most affordable housing units for the Property.
F. The recommended Fourth Amendment to PSA, revised Regulatory Agreement, and other transactions to consummate the sale of 17.39 acres at 3625 Fong Ranch Road to Anton are in compliance with the provisions of City Code Chapter 3.04, City Code Chapter 3.88 regarding the disposition of real property, and the California Surplus Land Act (Government Code section 54220 et seq.).
BASED ON THE FACTS SET FORTH IN THE BACKGROUND, THE CITY COUNCIL RESOLVES AS FOLLOWS:
Section 1. The Fourth Amendment to PSA with Anton, for the sale of 17.39 acres of real property at 3625 Fong Ranch Road for $4 million, which is attached hereto as Exhibit A, is hereby approved.
Section 2. The revised Regulatory Agreement with Anton for the 115 affordable housing units in the form attached to the Fourth Amendment to PSA is hereby approved.
Section 3. The City Manager or the City Manager’s designee is authorized to execute the Fourth Amendment to PSA (attached hereto as Exhibit A) and implement the revised escrow instructions; at closing execute the revised Regulatory Agreement and Grant Deed; and to take all actions and execute all additional documents as may be necessary to implement the sale of 17.39 acres at 3625 Fong Ranch Road.
Section 4. The sale of 17.39 acres at 3625 Fong Ranch Road is in the best interest of the City under City Code section 3.88.090(A)(2).
Attachments:
Exhibit A – Fourth Amendment to PSA
__________________________
Fourth Amendment to the Purchase 1
and Sale Agreement - Fong Ranch
FOURTH AMENDMENT TO PURCHASE AND SALE AGREEMENT
FONG RANCH
THIS FOURTH AMENDMENT (the “Fourth Amendment”) to the Purchase and Sale Agreement for Fong Ranch located at 3625 Fong Ranch Road dated as of _______________ (“Effective Date”) is by and between the CITY OF SACRAMENTO (“City” or “Seller”) and ANTON FONG RANCH OWNERS, LLC, a Delaware limited liability company (“Buyer”). Seller and Buyer are c ollectively referred to herein as the “Parties”.
Background
A. The Parties entered into the Purchase and Sale Agreement for the acquisition by Buyer of approximately 22.81 acres of vacant land (APN No. 225-0170-064) owned by City (the “Original Property”) dated January 18, 2022, City Agreement No. 2022 -0095 (the “Principal Agreement”).
B. Under the First Amendment, Buyer’s Due Diligence Period was extended to June 2, 2022.
C. Under the Second Amendment, Buyer’s Due Diligence Period was extended t o July 15, 2022.
D. Buyer discovered that developing the northern portion of the Original Property was not financially feasible due to the need for a street bridge crossing over the drainage canal.
As a result, under the Third Amendment, the property description was modified to reduce the size of the property to be transferred to approximately 17.39 acres, the purchase price was modified, exhibits no longer ne cessary were removed, and the project description and development of the Property were modified to include fewer housing units and integration of the affordable and market rate units.
E. Due to potential traffic concerns expressed by neighbors and changes i n market conditions, Buyer has revised its proposal . Subsequent to Buyer’s purchase of the Property, Buyer proposes to subdivide the Property so that Buyer’s project will include approximately 95 small lot single family for sale units on a total of approxi mately 13.89 acres and approximately 115 affordable rental units on a total of approximately 3.5 acres, all of which are shown on revised Exhibit 4 attached hereto. In addition, Buyer has proposed that Buyer will construct a soundwall on the northern porti on of the Original Property, concurrent with the construction of the Property, said soundwall to tie in with the existing soundwall at Fong Ranch Park and extend westerly to the Property.
F. Seller is willing to agree to amend the Principal Agreement to incorporate these changes and understands that the project contemplated under this Fourth Amendment, may be subject to further changes due to the entitlement process.
NOW THEREFORE, it is mutually agreed between the Parties as follows:
__________________________
Fourth Amendment to the Purchase 2
and Sale Agreement - Fong Ranch
1. Development of Property.
(a) Section 6(b) of the Principal Agreement is amended to modify the description of the project to be developed on the Property as follows:
“(b) Buyer agrees to use commercially reasonable efforts to develop the Property with approximately 95 small lot single family for sale units (approximately 2,700-3,000 square foot lots) and an approximately 3.5 acre parcel for the development of approximately 115 affordable housing rental units by seeking all entitlements and permits requi red for that purpose; provided, however, that Seller acknowledges that the number and mix of housing units may change based upon the final Entitlements approved by the City. The Parties anticipate that all of the Entitlements (defined below) required for d evelopment of the Property can be processed within six months from the date the application is filed, assuming that an environmental impact report is not required. If an environmental impact report is required, the Parties acknowledge that the anticipated Closing Date may be delayed by approximately six (6) months. Buyer’s Project is expected to be built out over an approximately two (2) year period beginning in 202 6, with the first units to be delivered in approximately 2028, subject to market conditions a nd funding availability .
The Parties acknowledge that the foregoing timetable is a projection only and not a covenant by Buyer in any respects.”
(b) Section 6(c) of the Principal Agreement is revised to read as follows to reinstate reference to subdividing the Property:
“(c) Seller will issue to Buyer a Letter of Agency to allow Buyer to submit applications to the City for the Entitlements defined below and as generally depicted on the Preliminary Site Plan . Seller, acting as a government agency with municipal land use regulatory authority, retains the right in connection with its review of any applications for development of the Property that Buyer may file after the Effective Date, to consider the consistency of the proposed Project with the adopted plans and zoning regulations, and if needed to consider a rezoning of the Property to allow for residential development, to evaluate the environmental impacts of the Project pursuant to the California Environmental Quality Act (CEQA), to impose reasonable conditions that may modify the Project, to impose reasonable on -site and off -site utility and roadway improvements required to provide public services for the Project, to initially process a tentative subdivision map and site plan design review, and therea fter process a final subdivision map, parcel map, or phased final maps or parcel maps, and improvements plan (collectively the “Entitlements”).”
(c) Section 6(d) of the Principal Agreement is revised to read as follows to reinstate references to a subdivision map:
“(d) Buyer is aware that due to the requirements for a final subdivision map, parcel map, or phased final subdivision or parcel maps, Buyer may have to either dedicate land or pay a parkland dedication in lieu fee (i.e., Quimby), and that Buyer has to pay the Natomas Habitat Conservation Fees, among other conditions of approval of the Entitlements.”
__________________________
Fourth Amendment to the Purchase 3
and Sale Agreement - Fong Ranch
(d) Section 6(h) of the Principal Agreement is revised to read as follows to update the number and location of the affordable units:
“(h) In accordance with the Surplus Land Act, Seller will record a “Regulatory Agreement” against that portion of the Property constituting the approximately 3.5 acre parcel upon which the approximately 115 affordable housing rental units are contemplated to be constructed, in order to impose the requirement that the approximately 115 affordable rental units will meet the requirement that a minimum of 25% of the total housing units thereon will be affordable to Lower Income Households. The form of the Regulatory Agreement is attached as Exhibit 7. The content of the Regulatory Agreement is subject to approval by the California Housing and Community Development Department (HCD) as required under the Surplus Housing Act and Seller has been informed by HCD that HCD has approved the Regulatory Agreement form.”
(e) Section 6(i) is added to the Principal Agreement to read as follows:
“(i) Buyer agrees to construct a soundwall on the northern portion of the Original Property, concurrent with the construction of the Propert y, that ties into the existing soundwall at Fong Ranch Park and extends westerly along the northern property line of the Original Property to the northwestern corner of the Property at no cost to the City and to the satisfaction of City’s Department of You th, Parks & Community Enrichment.
City agrees to grant any necessary right of entry or other entry rights City determines necessary for Buyer to construct the soundwall. Buyer shall comply with any additional development requirements as determined by City’ s Department of Youth, Parks & Community Enrichment, related to the design and construction of the soundwall.
2. Maintenance of Property and Commitments After Effective Date. The following language from Section 8(c) of the Principal Agreement is reinstated and amended as follows:
“(c) Notwithstanding the foregoing provisions in subdivision (a), prior to the Closing, Seller will grant to Reclamation District 1000 a thirty (30)-foot wide easement for the drainage canal in the location and size as shown in t he Easement Diagrams attached as Exhibit 5. Any amendments as to the location or size thereof shall require Buyer’s prior written approval.”
3. Preliminary Site Plan . The Preliminary Site Plans set forth in Exhibit 4 of the Principal Agreement are deleted an d the revised Exhibit 4 with the new Preliminary Site Plan is attached and incorporated into this Fourth Amendment.
4. Sources and Uses Table . Exhibit 6 of the Principal Agreement, “Sources and Uses Table” showing a need for a subsidy of $7.2 million for the stand-alone affordable housing for Lower Income Households, is hereby reinstated. Reinstated and updated Exhibit 6 is attached hereto and replaces Exhibit 6 attached to the Principal Agreement.
5. Regulatory Agreement . The Regulatory Agreement set forth in Exhibit 7 of the Principal Agreement to be recorded against the approximately 3.5 acre parcel upon which the approximately 115 affordable housing rental units are contemplated to be constructed is __________________________
Fourth Amendment to the Purchase 4
and Sale Agreement - Fong Ranch
revised to reinstate reference to the Affordable Housing Units and the Affordable Housing Project and to set the number of below market rate (BMR), affor dable housing units a t a minimum of 115 units (inclusive of any manager’s unit(s)). The new Exhibit 7 is attached and incorporated into this Fourth Amendment.
6. Closing. The date for Closing shall remain unchanged.
7. Entire Agreement . This Fourth Amendment constitutes the entire agreement, and supersedes any prior written or oral agreements, between the Parties with respect to the matters contained herein. All other terms and conditions of the Principal Agreement not modified by this Fourth Amendment shall remain in full force and effect.
8. Authorization. Each individual executing this Fourth Amendment on behalf of any entity represents and warrants that he or she has been duly authorized to do so by the entity on whose behalf he or she executes this Fourth Amendment and said entity will thereby be obligated to perform the terms of this Fourth Amendment.
Executed by the Parties as of the Effective Date set forth above.
SELLER:
CITY OF SACRAMENTO, a municipal
corporation
By:
Ryan Moore, Assistant City Manager
Approved as to Form:
By: _________________________________
Senior Deputy City Attorney
Attest:
By: ________________________________
Assistant City Clerk
BUYER:
ANTON FONG RANCH OWNERS, LLC, a
Delaware limited liability company
By:
Trisha Malone
President
__________________________
Fourth Amendment to the Purchase 5
and Sale Agreement - Fong Ranch
EXHIBIT 4
PRELIMINARY SITE PLAN
__________________________
4th Amendment to the Purchase 6 Dated: 1-27-25
and Sale Agreement - Fong Ranch
EXHIBIT 5
EASEMENT DIAGRAMS
__________________________
4th Amendment to the Purchase 7
and Sale Agreement - Fong Ranch
EXHIBIT 6
SOURCES AND USES TABLE
AFFORDABLE HOUSING PROJECT
__________________________
4th Amendment to the Purchase 8
and Sale Agreement - Fong Ranch
EXHIBIT 7
REGULATORY AGREEMENT FORM
NO FEE DOCUMENT:
Entitled to free recording
per Government Code 6103.
When recorded, return to:
City of Sacramento
Real Estate Division
Public Works Department
915 I Street, 2nd Floor
Sacramento, CA 95814
REGULATORY AGREEMENT IMPOSING AFFORDABLE HOUSING OBLIGATION –
IMPLEMENTING CONDITION OF THE SALE OF SURPLUS PROPERTY SUITABLE FOR RESIDENTIAL USE; CONTAINING LAND USE COVENANTS AFFECTING REAL PROPERTY
Property Name Reference: Fong Ranch
Property Location: 3625 Fong Ranch Road
Portion of APN: 225-0170-064
In accordance with AB 1486 (Chapter 664, Statutes of 2019) known as the Surplus Land Act, as set forth in California Government Code Section 54220 et seq., the “Property” as defined in Exhibit A, is a portion of vacant land initially owned by the City of Sacramento that will be or has been created through the recording of a subdivision map. The entirety of the original parcel has been declared to be surplus property because it is not needed for the City’s use. The land has been determined to be suitable for residential development based on the development proposal received from Purchaser. As a condition of the sale of the original parcel, including the Property, to Purchaser pursuant to the Surplus Land Act, City is obligated to impose a land use covenant which requires Purchaser to develop a certain amount of “Affordable Housing Units” on the Property. The proposed Affordable Housing Project “Project” is to be developed on the Property, which will be developed to meet the affordability requirements of the Surplus Land Act as set forth below.
1. Definitions. The capitalized terms in this Regulatory Agreement Imposing Affordable Housing Obligation (the “Agreement”) shall have the meanings assigned below and as indicated in the body of this Agreement by quotation marks.
__________________________
4th Amendment to the Purchase 9
and Sale Agreement - Fong Ranch
Defined Term Definition
“Effective
Date”
This Agreement shall become effective as of the date that the Grant Deed conveying the Property from City to Purchaser was executed by City, which is the date that Purchaser will become the owner of the Property in fee. “City” City of Sacramento,
a municipal corporation
“Purchaser” Anton Fong Ranch Owners, LLC
a Delaware Limited Liability Company
“City Address” City’s business address is 915 I Street, Sacramento, California 95814 “Purchaser’s
Address”
Purchaser’s business address
is as follows:
1610 R Street, Suite 250
Sacramento, CA 95811
“Jurisdiction” City of Sacramento
“Property”
The Property is that certain real property as described in the legal description which is attached as Exhibit A – Legal Description and incorporated in this Agreement by this reference.
“Project”
Purchaser intends to develop the entirety of the original parcel for residential development containing a total of [210] housing units, of which a minimum of 25% of the total housing (the “Affordable Housing Units”) are required to be sold or rented at the Affordability Level. Purchaser plans on building [115] Affordable Housing Units (inclusive of any unrestricted manager’s unit(s)) on the Property as the Affordable Housing Units to meet the affordability requirements, and [95] market rate housing units on the other portion of the original parcel. The amount of Affordable Housing Units required is based on the percentage of total housing units actually built on the Property, even if the Project is developed in phases. The proposed Affordable Housing Units exceeds the required amount and will be located on the Property, a 3.5 acre parcel created through a subdivision final map or subdivision parcel map. Nothing herein shall prohibit the Purchaser from increasing the number of Affordable Housing Units. “Affordability
Level”
The Affordable Housing Units shall be offered for rent at an “Affordable Rent,” as defined in Section 50053(b)(2) of the CA Health and Safety Code (HSC) and will be restricted to occupancy by “Lower Income Households” as defined in HSC Section 50079.5. These requirements are set forth in Sections 4 and 5 below.
These requirements shall be enforceable against any owner who violates a covenant or restriction and each successor-in-interest who continues the violation by any of the entities described in subdivisions (a) to (f), inclusive, of Section 54222.5 of the CA Government Code.
“Affordability
Requirements”
All of the legal restrictions and obligations of Purchaser as set out in this Agreement which restricts the rental rate and use and occupancy of the Affordable Housing Units within the Project located on the Property as set forth in Section 4, are in consideration of City’s approval of the sale of the original parcel to Purchaser for development of the Project.
“Term” 55 years for the rental Affordable Housing Units as further described in Section 7 below.
__________________________
4th Amendment to the Purchase 10
and Sale Agreement - Fong Ranch
2. Representations. Purchaser enters into this Agreement for itself and its successors and assigns, and agrees to comply with all of the provisions set out in this Agreement for the Term of the Agreement. Purchaser has been provided with the opportunity to make itself independently familiar with the covenants, conditions, and restrictions set out in this Agreement and to confer with legal counsel, and Purchaser accepts and agrees to fully comply with all of the provisions contained in this Agreement. Purchaser understands and agrees that City is not obligated to issue to Purchaser an entitlement or a building permit to proceed with development of the Prop erty for the Project until this Agreement is recorded against the Property . Purchaser consents to the recordation of this Agreement against the Property by City.
3. Development of Project. Purchaser further understands and agrees that no entitlement or building permit , as is necessary for development of the Project , is being approved under this Agreement. This Agreement shall not be construed as a “development agreement” within the meaning of California Government Code Section 65864 et seq. Purchaser’s only recourse is to sell the Property to a third party, but the obligations under this Agreement to develop the Affordable Housing Units shall remain in effect.
4. Affordability Level and Initial Rent. Purchaser shall initially rent all of the Affordable Housing Units, less any manager’s units, only to households whose income does not exceed the Affordability Level at the Initial Rent amount as set out below, the “Affordability Requirements,” subject to an adjustment as provided in Section 5, below. (Initial Rent amounts will be included at time of signature and recording of the Agreement.)
“Affordability Level”
(% of Area Median
Income):
Total Number
of Affordable
Housing Units:
Number of Affordable
Housing Units by “Unit
Size,” which correlates
to “Family Size”:
“Initial Rent” per
Affordable
Housing Unit per
Month
96 units not to
exceed 60% of the
Area Median
Income (AMI)
18 units not to
exceed 80% AMI
114
TBD
TBD
TBD
5. Affordable Housing Cost.
a. The “Initial Rent” as set forth above shall be adjusted by Unit Size, as defined above, and Family Size and Affordable Housing Cost, as defined below, as of the date when each Affordable Housing Unit is ready for occupancy, which is the date of issuance of the final inspection or occupancy permit. The initial Rent shall also be updated to be the then current rent levels on the date of the issuance of the final inspection or occupancy permit. The Affordability Level income restriction shall be included in the individual leases with the renter. The rent level shall be adjusted annually based on changes to the Area Median Income levels. If the household income increases after the date of the lease agreement, Purchaser shall follow the rules and regulations relating to over income tenants set forth in, including the related rules and __________________________
4th Amendment to the Purchase 11
and Sale Agreement - Fong Ranch
regulations of the California Tax Credit Allocation Committee, the California Debt Limit Allocation Committee, the California Housing Finance Agency (CalHFA) and/or the California Department of Housing and Community Development for the Affordable Housing Units.
b. Purchaser shall only rent an Affordable Housing Unit at initial occupancy to income eligible households (based on the gross income of the household), adjusted based on Family Size which correlates to the number of bedrooms in the Affordable Housing Unit , for an amount that does not exceed the maximum Initial Rent, subject to an adjustment as set forth in this Section 5 unless otherwise allowed by the applicable provisions of the California Health and Safety Code or by project funding sources provided to the Affordable Housing Units, including the related rules and regulations of the California Tax Credit Allocation Committee, the California Debt Limit Allocation Committee, the California Housing Financing Agency (Cal HFA) and/or the California Department of Housing and Community Development for the Affordable Housing Units.
c. “Area Median Income” is published annually by the California Department of Housing and Community Development (HCD) for the Sacramento Metropolitan Statistical Area (per HSC Section 50053).
d. “Family Size” means a minimum of the following number of persons: studio unit - 1 person; 1 bedroom unit – 2 persons unless there is another federal or state statute applicable to the Project in which case those federal or state statutes shall apply (per HSC Section500583(e)).
e. The term “Initial Rent” is based on the total monthly housing expense which includes a reasonable allowance for utilities and costs related to occupancy as published by HCD. The Initial Rent for the household cannot exceed 30% of the Affordability Level (the percentage of the Median Income), after adjustment for Family Size, divided by 12, as set forth in Section 50053(b)(2).
f. The Initial Rent must also be adjusted by the “Affordable Housing Cost” for the actual household occupying the Affordable Housing Unit, which means that the monthly rent payment shall not exceed 30% of the gross income of the household (per HSC Sections 50052.5 and 50053(b)(2)).
g. Purchaser shall not pass utility charges paid by Purchaser, including water, sewer, and garbage collection charges, through to the tenants of the Affordable Housing Units as an add-on to their contracted rent subject to adjustments permitted by applicable utility allowances.
h. Purchaser shall not make payment of rental insurance premiums a condition of occupancy of the Affordable Housing Units. If Purchaser requires renters’ insurance, the policy premium must be deducted from the Affordable Housing Unit tenant’s rent. Purchaser shall not add the insurance premium to the tenant’s rent in either the initial or subsequent years.
__________________________
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and Sale Agreement - Fong Ranch
6. Development Standards. In developing the Affordable Housing Units, Purchaser shall ensure that the Affordable Housing Units are constructed in accordance with all applicable federal and state laws, CA Building Code, City Code requirements, and the Project entitlements and building permits issued by City. If applicable to this Project, pursuant to a separate loan or regulatory agreement specific to this Project, Purchaser shall comply with the development standards imposed by the Sacramento Housing and Redevelopment Agency (“Agency”), the Housing Authority of the City of Sacramento (“Authority”), the California Department of Housing and Community Development (HCD), along with any covenants recorded against the Property in favor of HCD or the U.S. Department of Housing and Urban Development (HUD), for any financing or loan agreements issued by these respective agencies. In the event of any conflict or discrepancy between the development standards imposed by City and the other referenced agencies, the most restrictive standards shall apply.
7. Term. The “Term” of this Agreement and the covenants contained herein shall regulate the Affordable Housing Units and burden that portion of the Property where the Affordable Housing Units are actually located for a period of 55 years, measured from the date each Affordable Housing Unit becomes available for initial occupancy, which is determined based on the date of issuance of the final inspection or occupancy permit for the multifamily building(s).
Purchaser agrees the rent of "in-place” tenants at the conclusion of the Term will continue to be governed by the applicable Affordability Requirements, so long as those tenants continue to live in the Affordable Housing Unit.
8. Rent Verification. Purchaser shall annually verify the income of all members of the household in each Affordable Housing Unit to determine if they still qualify at the specified Affordability Level and shall maintain books and records of their respective rents and incomes.
Upon receipt of a written request, Purchaser shall submit to City this annual report or the report as required by Agency, Authority, HCD or HUD, as applicable, if the report contains substantially the same information.
9. Disgorgement of Excess Rents. If City determines that Purchaser has collected rent in excess of the applicable Initial Rent, or the annual rent thereafter for any Affordable Housing Unit, City shall notify Purchaser of such overpayment. Within 30 days after the date of the notice, Purchaser shall either pay the individual tenants named in each affected lease or deliver to City the total amount of the overpayment charged improperly for the applicable period of time.
The Parties intend that such proceeds shall be returned to the individual tenants named in each affected lease by paying them the amount of overpayment that was paid by such tenant above the applicable Initial Rent or annual rent, as applicable. Purchaser shall be responsible to provide City with the current address of each renter entitled to such repayment, notwithstanding that the renter may have moved to a new address. If Purchaser and City are unable to find each renter that is owed a rebate, City may retain such proceeds for investment in or to benefit other affordable housing projects located within the City boundaries.
Notwithstanding the forgoing, if the Purchaser disputes the City’s determination regarding the collection of excess in good faith, the Purchaser shall not be required to make any payments pursuant to this Section 9 until said dispute has been resolved in favor of the City. __________________________
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10. Additional Covenants. Purchaser agrees to comply with the following additional covenants, which shall have the same Term as this Agreement:
a. Purchaser shall assure full compliance with the Affordability Requirements. In the event of a conflict between the Affordability Requirements and any covenant recorded against the Property in furtherance of any agreement between Purchaser and City, Agency, Authority, HCD or HUD which restricts the rental rate and occupancy of the Affordable Housing Units, the most restrictive covenant shall control.
b. Purchaser shall not transfer or encumber any portion of the Property or permit the conveyance, transfer, or encumbrance of any portion of the Property prior to the development of the Affordable Housing Units unless such assignee, transferee or encumbrancer has agreed, in writing and in a form suitable for recordation, to be bound by the terms of this Agreement.
c. Purchaser shall maintain the Affordable Housing Units and the building improvements, grounds, and equipment on the Property where the Affordable Housing Units are located in good repair and condition and in compliance with all applicable provisions of the Sacramento City Code, the Project entitlements which imposed conditions for approval of the Project, and applicable housing quality standards imposed by the agencies listed above and building code requirements. Purchaser shall keep the Affordable Housing Units reasonably free from graffiti and unrepaired vandalism and from accumulation of abandoned property, inoperable vehicles, unenclosed storage, debris, and waste materials. In the event of a casualty loss, Purchaser shall cause the restoration or replacement of the Affordable Housing Units in a timely manner, provided that such restoration or replacement is then economically feasible.
d. Purchaser shall comply with all applicable provisions of the Sacramento City Code, in particular Chapter 8.08, the Social Nuisance Code, with regard to management of the Affordable Housing Units to prevent tenants from engaging in illegal activities or causing any loud, unnecessary or unusual noise which disturbs the peace and quiet, or which causes discomfort and annoyance, to persons residing in the surrounding neighborhood, and Chapter 8.120, the Rental Housing Inspections Code.
e. Purchaser shall employ a qualified and experienced property manager who resides on the Property to conduct tenant background checks, enforce the lease restrictions, evict tenants that engage in unlawful or unpermitted activities, and other related matters with regard to the use and occupancy of the Affordable Housing Units as set out in this Agreement to the fullest extent allowed by law and/or the applicable requirements of the City, Agency, Authority, HCD or HUD.
f. Purchaser shall not cause, and shall not permit though his or her agents, discrimination of a purchaser or renter on the basis of his or her race, color, ancestry, national origin, religion, sex, marital status, sexual orientation, gender identity, age, disability, medical condition, citizenship, primary language, or immigration status in the rental of the Affordable Housing Units in accordance with CA Civil Code Section 51, and as it may be amended.
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g. Purchaser shall not evict, refuse to rent to, or otherwise treat someone differently because of that person’s status as a victim of domestic violence, dating violence, sexual assault, or stalking, in compliance with the Violence Against Women Act. This protection is available regardless of the tenant’s sex, gender identity, or sexual orientation.
h. To the fullest extent allowed by law and/or the applicable requirements of the City, Agency, Authority, HCD or HUD, Purchaser shall make all of the Affordable Housing Units, the indoor common areas, and other portions of the building(s) smoke free.
11. Nature of Covenants. The provisions contained in this Agreement are covenants that subject and burden the Property, as covenants running with the land. It is intended and agreed that the covenants, conditions and restrictions contained in this Agreement shall be covenants running with the land and equitable servitudes on the land, and that they shall, without regard to technical classifications or designation, be binding to the fullest extent permitted by law and equity for the benefit and in favor of, and enforceable by, City and any other governmental entity acting within its authority against Purchaser, its successors and assigns and every successor in interest to all or any part of the Property where the Affordable Housing Units are located.
12. Revival of Covenants After Foreclosure. The Affordability Requirements shall be revived after foreclosure by a lender with a secured interest in the Property, or after transfer of a deed in lieu of foreclosure to said lender, according to the terms set out herein if, during the original term of this Agreement, Purchaser or a related party or affiliate of Purchaser regains an ownership interest in the Property. For purposes of this provision, a “related party” is anyone with whom Purchaser has or had family or business ties, provided that such interest would not be considered a “remote interest” in the usual and customary use of the term, and an “affiliate” is a person or entity that controls, or is controlled by, Purchaser or who holds at least a 10% interest in ownership in the legal entity comprising Purchaser.
13. Recordkeeping and Reporting. Upon request of City, Purchaser shall promptly provide any additional information or documentation requested in writing by the City to verify Purchaser’s compliance with the provisions of this Agreement. At the written request of the City, Purchaser shall, within a reasonable period of time following receipt of such request, furnish reports and give specific answers to questions upon which information is desired from time to time relative to the income, assets, liabilities, contracts, operations, and condition of the Property, the Project, and the Affordable Housing Units. In no event shall Purchaser delay submittal of such information or documentation by more than thirty (30) days from the date of City’s written request.
14. Audit and Inspection. The Property, the Project, and all related plans, books, contracts, records, documents and other related papers shall at all times be maintained in reasonable condition for inspection, examination and audit by City or its agents. The books and accounts of the ownership and operation of the Property shall be kept in accordance with generally accepted accounting principles and practices. Purchaser shall provide City with access to the __________________________
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Property and the Affordable Housing Units during reasonable business hours upon reasonable prior notice for the purpose of reviewing Purchaser’s compliance with this Agreement.
15. Indemnity for Purchaser’s Failure to Meet Legal Requirements. Purchaser shall defend, indemnify and hold City, its officers, directors, employees, and agents harmless from any and all liability arising from Purchaser’s failure to comply with: (a) the covenants, conditions and restrictions contained in this Agreement, and (b) all other laws, rules, regulations and restrictions related to the Affordable Housing Units. Without limitation, such indemnity shall include repayment to the appropriate parties of rents in excess of amounts authorized to be charged under this Agreement, and repayment to the City of the costs of funds and the value of lost opportunities resulting from any repayment required of City by any federal or state agency due to Purchaser’s failure to comply with the terms of this Agreement.
16. Changes Without Consent of Lenders, Tenants, Lessees or Others. City (and its successors and assigns) and Purchaser (and its successors and assigns) shall have the right to consent and agree to changes in, or to eliminate in whole or in part, any of the covenants, conditions or restrictions contained in this Agreement without the consent of any easement holder, licensee, lessee, purchaser, tenant, lender, other mortgagee, trustee, beneficiary under a deed of trust, or any other person or entity having any interest less than a fee interest in the Property, provided, however, no such change shall increase the income or affordability restrictions set forth herein.
17. Default. Upon a breach of any of the provisions of this Agreement by Purchaser, City may give written notice of such breach to Purchaser by registered or certified mail. If such violation is not corrected to the satisfaction of City within sixty (60) days after the date of such notice or within such further time as the City may reasonably determine is necessary to correct the breach, and without further notice to Purchaser, City may declare a default under this Agreement. Effective on the date of such declaration of default, City may thereafter apply to any court for specific performance of this Agreement, for an injunction against any violation of this Agreement, for the appointment of a receiver to take over and operate the Property in accordance with the terms of this Agreement, for money damages, or for such other relief as may be appropriate, since the injury to the City arising from a default under any of the terms in this Agreement would be irreparable, and the amount of damage would be difficult to ascertain.
18. Binding on Successors in Interest and Assigns. This Agreement shall bind, and the benefits conveyed under this Agreement shall inure to, Purchaser and its successors in interest and assigns that hold an ownership interest in the Property for the Term of this Agreement. This Agreement is to be recorded against the Property to provide constructive notice of the obligations and restrictions that apply to the use and occupancy of the Property and City’s right to enforce said provisions to all successors and assigns of Purchaser. Purchaser shall not be required to obtain the advanced written consent of City before any interest in the Property may be sold, transferred, encumbered or assigned as long as the successor in interest or assignee acknowledges that the obligations and restrictions set out in this Agreement shall remain __________________________
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enforceable by City against the Property or that portion of the Property containing the Affordable Housing Units after they have been developed for the Term of this Agreement.
19. Contradictory Agreements. Purchaser warrants that it has not, and will not, execute any other agreement with provisions contradictory of, or in opposition to, the provisions of this Agreement, and that, in any event, the requirements of this Agreement are paramount and controlling as to the rights and obligations set forth herein and supersede any other requirements of Purchaser that may be in conflict with the terms of this Agreement, with the exception of any agreement with the City, Agency, Authority, HCD, or HUD which has more restrictive covenants as set out in Section 10 (a).
20. Attorneys' Fees. If the services of any attorney are required by a party to secure the performance of this Agreement, including, without limitation, enforcement upon the breach or default of the other party, or if any judicial remedy, arbitration or mediation is necessary to enforce or interpret any provision of this Agreement or the rights and duties of any person in relation to this Agreement, the prevailing party shall be entitled to recovery of reasonable attorneys' fees (including the fees of the office of the City Attorney), costs and other expenses, in addition to any other relief to which such party may be entitled. Any award of damages following judicial remedy or arbitration as a result of this Agreement or any of its provisions shall include an award of prejudgment interest from the date of the breach at the maximum amount of interest allowed by law. The prevailing party shall mean the party receiving an award in arbitration or a judgment in its favor.
21. Severability. The invalidity of any clause, part, or provision of this Agreement shall not affect the validity of the remaining portions of this Agreement.
22. Election of Remedies.
a. To the extent applicable, in the event of any breach or default of the covenants, conditions and restrictions contained in this Agreement, City shall reasonably endeavor to remedy such breach by conference and conciliation. If, in the opinion of City, City and Purchaser are unable mutually to agree upon a suitable remedy or the circumstances so warrant, such breach may be enjoined or abated by appropriate proceedings brought by the City.
b. City may institute or prosecute in its own name, any suit City may consider advisable in order to compel performance of any obligation of Purchaser or any successor or assign to develop, maintain and operate the Property in conformity with the terms of this Agreement and to remedy any default of Purchaser under of this Agreement. City may also seek a decree requiring removal of any non-residential and ancillary improvements constructed on the Property which improvements are designed for uses not permitted under this Agreement.
c. The remedies of City under this Agreement are cumulative, and the exercise of one or more of such remedies shall not be deemed an election of remedies and shall not preclude the exercise by City of any one or more of its other remedies. __________________________
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23. No Waiver or Modification. No waiver by City of any breach or default under this Agreement shall be deemed to be a waiver of any other or subsequent breach or default. No waiver of any provision in this Agreement will be effective unless it is in writing and executed by the authorized City official. This Agreement does not modify or supersede the terms and conditions in the Purchase and Sale Agreement between the Parties for the Property.
24. Notices. Written notices and other written communications by and between the Parties shall be addressed to the Purchaser at the Purchaser’s Address and to the City at the City’s Address or such other address as each respective party has designated by written notice to the other party.
25. Joint and Several Obligations. If more than one individual or entity comprises Purchaser, the obligations imposed on each individual or entity that comprises Purchaser under this Agreement shall be joint and several.
26. Enforcement of Agreement. This Agreement shall be governed, construed and enforced in accordance with the laws of the State of California. Venue of any litigation arising out of or connected with this Agreement shall lie exclusively in the state trial court or Federal District Court located in Sacramento County in the State of California, and the Parties consent to jurisdiction over their persons and over the subject matter of any such litigation in such courts, and consent to service of process issued by such courts.
27. Entire Agreement. This Agreement, which includes all attachments and all documents that are incorporated by reference, contains the entire agreement between the Parties and supersedes whatever oral or written understanding they may have had prior to the execution of this Agreement. No alteration to the terms of this Agreement shall be valid unless approved in writing by Purchaser and by City.
28. Authority. The person signing this Agreement for Purchaser represents and warrants that he or she is fully authorized to sign this Agreement on behalf of Purchaser and to bind Purchaser to the performance of its obligations hereunder.
The Parties have executed this Agreement in Sacramento, California on the following dates, although the Agreement will not become binding with regard to the Property until the Effective Date as defined above.
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Purchaser:
By:_________________________________
Trisha Malone
President
City:
By:_________________________________
Michael Jasso
Assistant City Manager
Approved as to form:
By: _______________________________
Senior Deputy City Attorney
Attest:
By: _______________________________
City Clerk
[Notary Acknowledgment Required]
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Exhibit A
Property Legal Description