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DISPOSITION AND DEVELOPMENT AGREEMENT
(1715 North Arrowhead Avenue )
between
THE CITY OF SAN BERNARDINO
a California municipal corporation
and
MONTEBELLO HOUSING DEVELOPMENT CORPORATION,
a California noprofit corporation
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1 This DISPOSITION AND DEVELOPMENT AGREEMENT ( 1715 North Arrowhead Avenue) (“ Agreement”) is dated as of __________, 2026 (“ Effective Date”), for reference purposes only, and is entered into by and between the City of San Bernardino, a California municipal corporation (“City”), and Montebello Housing Development Corporation, a California noprofit corporation (“Developer”). The City and the Developer are sometimes referred to in this Agreement, each individually, as a “Party,” or collectively, as the “Parties.”
RECITALS
This Agreement is entered into with reference to the following recitals of fact (“Recitals”) that City and Developer believe to be true as of the Effective Date of this Agreement:
A. City, the fee owner of that certain real property located at 1715 North Arrowhead Avenue, known as Site 6 for Surplus Land Act (the “ Act”) disposal purposes (APN: 0146 -072- 02), in the City of San Bernardino and State of California more specifically described in Exhibit A (the “Property”); and
B. On November 16, 2022, the City Council, adopted Resolution No. 2022-234, which declared the Property surplus under the Act and issued Notices of Availability (“ NOA”) on November 30, 2022 and February 27, 2024; and
C. On or about October 14, 2024, the California Department of Housing and Community Development (“HCD”) issued a letter to the City determining that the City had met all the requirements under the Act for the purposes of disposing the Property, provided that the required affordability covenant is recorded against the Property; and D. City has selected Developer to develop the Property; and E. Developer proposes to acquire, construct and develop the Property with two manufactured housing units consisting of a primiary unit with 3-bedrooms and 2 bathrooms and a secondary unit with 1 -bedroom and 1 bathroom (the “ Project”). The proposed Project will be developed pursuant to the Scope of Development and Schedule of Performance attached hereto as Exhibits C & D and incorporated herein by this reference; and F. Developer’s proposed acquisition of the Property and subsequent construction, development and completion of the Project on the Property pursuant to the terms of this Agreement is in the best interest of the City and the health, safety and welfare of the Ci ty’s taxpayers and residents and is in accordance with the public purposes set forth in applicable law. Implementation of this Agreement will further the goals and objectives of the City’s general plan by: (i) developing an adequate and diverse supply of quality housing, (ii) promoting the efficient use and development of land, and (iii) alleviating economic and physical blight on the Property and in the surrounding community; and
G. The City desires to convey the Property to the Developer for the construction and development of the Project and the Developer desires to acquire the Property from the City for the same purpose. The transfer of the Property shall be for the Purchase Price, as defined herein, but 55600.00203\44900577.8
2 the City and the Developer will negotiate terms of a seller carryback loan for the value of the land, including the terms and conditions for assignment to a subsequent homebuyer.
NOW, THEREFORE, in consideration of the mutual promises set forth in this Agreement and other good and valuable consideration, the receipt and sufficiency of which is acknowledged by City and Developer, the Parties agree as follows:
TERMS AND CONDITIONS
ARTICLE I
DEFINITIONS; REPRESENTATIONS AND WARRANTIES;
EFFECTIVE DATE
1.1 Definitions. All initially capitalized terms not otherwise defined in this Agreement shall have the following meanings:
1.1.1 “Additional Insureds ” has the meaning ascribed to such term in Section 5.10.
1.1.2 “Affiliate” means and refers to any person or entity, directly or indirectly, Controlling or Controlled by or under common Control with the Developer, whether by direct or indirect ownership of equity interests, by contract or otherwise.
1.1.3 “Affordability Covenant ” means the Affordable Housing Covenant required by this Agreement and in substantially the same form as Exhibit I.
1.1.4 “CEQA” means the California Environmental Quality Act, Public Resources Code Sections 21000, et seq.
1.1.5 “Certificate of Completion” means the written certification of City that the construction of each phase of the Project, as described in the Schedule of Performance and referenced on Exhibit B hereto, has been completed in compliance with the terms and conditions of this Agreement, substantially in the form of Exhibit H attached to this Agreement.
1.1.6 “City” means the City of San Bernardino, California, a California municipal corporation, whether acting in its capacity as Successor Agency to the former Redevelopment Agency or otherwise.
1.1.7 “City Deed of Trust ” means the Deed of Trust, Security Agreement and Fixture Filing (With Assignment of Rents) in a form substantially similar to Exhibit K attached hereto and incorporated herein by reference and which secures the Seller Carryback Loan.
1.1.8 “City Promissory Note ” means the Promissory Note – Seller Carryback Loan Secured by the Deed of Trust, which evidences the Seller Carryback Loan, in a form substantially similar to Exhibit J attached hereto and incorporated herein by reference.
1.1.9 “City Manager ” means the City Manager of the City or his or her designee or successor in function.
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3 1.1.10 “City Requirements” has the meaning ascribed to the term in Section
2.7.1. 1.1.11 “City’s Title Notice Response” means the written response of the City to the Developer’s Title Notice, in which the City either (i) elects to cause the removal from the Preliminary Report of any matters shown in Schedule B of the Preliminary Report as exceptions to coverage under the proposed Title Policy that were objected to in the Developer’s Title Notice, or (ii) elects not to cause the removal from the Preliminary Report of any matters shown in Schedule B of the Preliminary Report as exceptions to cove rage under the proposed Title Policy that were objected to in the Developer’s Title Notice.
1.1.12 “Close of Escrow” or “Closing” means the recording of the Grant Deed for the Property in the Official Records of the Recorder of the County, and completion of each of the actions set forth in Article III by the Escrow Holder for the City to convey the Property to the Developer and the Developer to receive title the Property from the City.
1.1.13 “Closing Date” means the date that the Closing occurs.
1.1.14 “Completion of Construction” means the issuance of a Certificate of Completion confirming that the final certificate of occupancy for each phase of the Project, as described in the Schedule of Performance and referenced on Exhibit B hereto, based on the plans submitted by the Developer to the City, has been issued.
1.1.15 “Construction Commencement Date ” means the date that is ninety (90) days from the Permit Issuance Date.
1.1.16 “Construction Costs” means the total cost incurred by Developer in acquiring the Property and constructing the Project in accordance with this Agreement.
1.1.17 “Construction Drawings Submittal Date ” means the date when Developer submits to the City its Plans and Specifications, which date shall be no later than one hundred eighty (180) days from the Entitlement Obtainment Date. This one hundred eighty (180) day time period for Developer to submit Plans and Specifications to the City shall be extended, to the extent necessary, to negotiate and obtain any and all necessary approvals from any City Department, Government Agency, and/or utility company that would be re quired prior to submitting any Plans and Specifications. City Department(s), government agencies, and/or utility companies, include but are not limited to, City Planning Department, Building and Safety Deparment, Community Development and Housing Departmen t, Fire Department, Police Department, Water Department, East Valley Water District, Southern California Edison, Southern California Gas Company, San Bernardino County Health Department, and/or consultants of the City.
1.1.18 “Construction Lender ” means a Lender(s) that provide(s) a Construction Loan to the Developer to pay the Construction Costs of all or a portion of the Project.
1.1.19 “Construction Loan ” means a Loan obtained by Developer from a Construction Lender to finance all or part of the Construction Costs in conformity with the Financing Plan.
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4 1.1.20 “Construction Loan Deed of Trust(s)” means the Lien(s) required by a Construction Lender to secure the Developer’s performance under the associated Construction Loan.
1.1.21 “Control” means and refers to possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person or entity, whether by ownership of equity interests, by contract or otherwise.
1.1.22 “Controlling” and “Controlled” mean and refer to exercising or having Control.
1.1.23 “County” means the County of San Bernardino, California.
1.1.24 “Developer’s Title Notice” means a written notice from the Developer to the City indicating the Developer’s acceptance of the state of the title to the Property, as described in the Preliminary Report, or the Developer’s objection to specific matters shown in Schedule B of the Pre liminary Report as exceptions to coverage under the proposed Title Policy for the Property, describing in suitable detail the actions that the Developer reasonably believes are indicated to cure or correct each of the Developer’s objections.
1.1.25 “Developer’s Title Notice Waiver ” means a written notice from the Developer to the City waiving the Developer’s previous objection in the Developer’s Title Notice to specific matters shown in Schedule B of the Preliminary Report as exceptions to coverage under the proposed Title Policy for the Property.
1.1.26 “Due Diligence Investigations ” means the Developer’s due diligence investigations of the Property to determine the suitability of the Property for development and operation of the Project, including, without limitation, investigations of the environmental and geotechnical suitability of the Property, as deemed appropriate in the reasonable discretion of the Developer, all at the sole cost and expense of the Developer.
1.1.27 “Due Diligence Investigation Conclusion Notice ” means a written notice of the Developer delivered to the City and the Escrow Holder, prior to the end of the Due Diligence Period, indicating the Developer’s acceptance of the condition of the Property or indicating the Developer’s rejection of the condi tion of the Property and refusal to accept a conveyance of fee title to the Property, describing in reasonable detail the actions that the Developer reasonably believes are indicated to allow the Developer to accept the condition of the Property.
1.1.28 “Due Diligence Period ” means the date commencing on the Escrow Opening Date and ending at 5:00 p.m. on the ninetieth (90 th) day following the Escrow Opening Date.
1.1.29 “Earnest Money Deposit ” means Five Thousand Dollars and Zero Cents ($5,000.00) payable in cash or other immediately available funds.
1.1.30 “Effective Date” has the meaning ascribed to the term in Section 1.3. 55600.00203\44900577.8
5 1.1.31 “Entitlement(s)” means any entitlement, permit, or other approval issued by the City for the development of the Project on the Property.
1.1.32 “Entitlement Application Date” means to the extent entitlements are necessary, the date when Developer submits its application(s) to the City to obtain all necessary Entitlements to commence construction of the Project, which date shall be no later than one hundred eighty (180) days f rom the date Developer and City determine that such Entitlement Application is necessary for any Project phase or portion of any project phase. This one hundred eighty (180) day time period for Developer to submit any entitlement application to the City shall be extended, to the extent necessary, to negotiate and obtain any and all necessary approvals from any City Department, Government Agency, and/or utility company that would be required prior to submitting any Plans and Specifications. City Department(s), government agencies, and/or utility companies, include but are not limited to, City Planning Department, Building Department, Fire Department, Engineering Department, Water Department, Police Department, affiliates of the City, East Valley Water District, Southern California Edison, Southern California Gas Company, San Bernardino County Health Department, and/or consultants of the City.
1.1.33 “Entitlement Obtainment Date” means to the extent entitlements are necessary, the date when Developer obtains all necessary Entitlements to commence construction of the Project, which date shall be no later than nine (9) months from the Entitlement Application Date. This nine (9) month time period for Developer to obtain entitlements shall be extended, to the extent necessary, to negotiate and obtain any and all necessary approvals from any City Department, Government Agency, and/or utility company that wou ld be required prior to submitting any Plans and Specifications. City Department(s), Government Agencies, and/or utility companies, include but are not limited to, City Planning Department, Building Department, Fire Department, Engineering Department, Wate r Department, Police Department, affiliates of the City, East Valley Water District, Southern California Edison, Southern California Gas Company, San Bernardino County Health Department, and/or consultants of the City.
1.1.34 “Environmental Claims ” has the meaning ascribed to the term in Section 5.9.
1.1.35 “Environmental Laws ” means all federal, state, local, or municipal laws, rules, orders, regulations, statutes, ordinances, codes, decrees, or requirements of any government authority regulating, relating to, or imposing liability of standards of conduct concerning any hazard ous substance (as later defined), or pertaining to occupational health or industrial hygiene (and only to the extent that the occupational health or industrial hygiene laws, ordinances, or regulations relate to hazardous substances on, under, or about the Property, occupational or environmental conditions on, under, or about the Property, as now or may at any later time be in effect, including without limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (“CERCLA”) [42 USC Section 9601 et seq.]; the Resource Conservation and Recovery Act of 1976 (“RCRA”) [42 USC Section 6901 et seq.]; the Clean Water Act, also known as the Federal Water Pollution Control Act (“FWPCA”) [33 USC Section 1251 et seq.]; the Toxic Substances Control Act (“TSCA”) [15 USC Section 2601 et seq.]; the Hazardous Materials Transportation Act (“HMTA”) [49 USC Section 1801 et seq.]; the Insecticide, Fungicide, Rodenticide Act [7 USC Section 6901 et seq.] the Clean Air Act [42 USC Section 7401 et seq.]; the Safe Drinking Water Act [42 USC Section 300f et seq.]; the Solid Waste 55600.00203\44900577.8
6 Disposal Act [42 USC Section 6901 et seq.]; the Surface Mining Control and Reclamation Act [30 USC Section 101 et seq.] the Emergency Planning and Community Right to Know Act [42 USC Section 11001 et seq.]; the Occupational Safety and Health Act [29 USC Section 655 and 657]; the California Underground Storage of Hazardous Substances Act [California Health & Safety Code Section 25288 et seq.]; the California Hazardous Substances Account Act [California Health & Safety Code Section 25300 et seq.]; the California Safe Drinking Water and Toxic Enforcement Act [California Health & Safety Code Section 24249.5 et seq.] the Porter-Cologne Water Quality Act [California Water Code Section 13000 et seq.] together with any amendments of or regulations promulgated under the statutes cited above and any other federal, state, or local law, statute, ordinance, or regulation now in effect or later enacted that pertains to occupational health or industrial hyg iene, and only to the extent the occupational health or industrial hygiene laws, ordinances, or regulations relate to hazardous substances on, under, or about the Property, or the regulation or protection of the environment, including ambient air, soil, so il vapor, groundwater, surface water, or land use.
1.1.36 “Environmental Matters ” has the meaning ascribed to the term in Section 5.9.
1.1.37 “Escrow” has the meaning ascribed to the term in Section 2.1.
1.1.38 “Escrow Closing Date” has the meaning ascribed to the term in Section
3.6. 1.1.39 “Escrow Holder ” means Commonwealth Land Title Insurance Company.
1.1.40 “Escrow Opening Date ” has the meaning ascribed to the term in Section 3.1.
1.1.41 “Event of Default” has the meaning ascribed to the term in Section 7.1.
1.1.42 “Financing Commitment” means (a) one or more commitment(s) from one or more Construction Lender(s) agreeing to provide sufficient funds which, when combined with the Developer’s equity contributionand any financial assistance to be provided by the City pursuant to this Agreement, is sufficient, as determined by the City in its reasonable discretion, to fully fund the Project’s Construction Costs, or (b) a letter from one or more Construction Lender(s) indicating approval of a loan to the Developer for the development of the Property.
1.1.43 “FIRPTA Affidavit” means an affidavit complying with Section 1445 of the United States Internal Revenue Code.
1.1.44 “Grant Deed” means a deed in the form of Exhibit E to this Agreement, conveying all of the City’s interest in the Property to the Developer.
1.1.45 “Governmental Agency” means any and all courts, boards, agencies, commissions, offices, or authorities of any nature whatsoever for any governmental unit (federal, state, county, district, municipal, city, or otherwise) whether now or later in existence. These include, but ar e not limited to, City Planning Department, Building Department, Community 55600.00203\44900577.8
7 Development and Housing Department, Fire Department, Engineering Department, Water Department,Police Department, affiliates of the City, East Valley Water District, Southern California Edison, Southern California Gas Company, San Bernardino County Health Department, and/or consultants of the City.
1.1.46 “Governmental Requirements” means all codes, statutes, ordinances, laws, permits, orders, and any rules and regulations promulgated thereunder of any Governmental Agency.
1.1.47 “Hazardous Substances ” means, without implied limitation, substances defined as “hazardous substances,” “hazardous material,” “toxic substance,” “solid waste,” or “pollutant or contaminate” in the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. Sections 9601, et seq.; the Toxic Substances Control Act (“TSCA”) [15 U.S.C. Sections 2601, et seq.]; the Hazardous Materials Transportation Act, 49 U.S.C. Sections 1801, et seq.; the Resource Conservation and Recov ery Act, 42 U.S.C. Sections 6901, et seq.; those substances listed in the United States Department of Transportation (DOT) Table [49 CFR 172.101], or by the EPA, or any successor authority, as hazardous substances [40 CFR Part 302]; and those substances defined as “hazardous waste” in Section 25117 of the California Health and Safety Code or, as “hazardous substances” in Section 25316 of the California Health and Safety Code; other substances, materials, and wastes that are, or become, regulated or classifi ed as hazardous or toxic under federal, state, or local laws or regulations and in the regulations adopted pursuant to said laws, and shall also include manure, asbestos, polychlorinated biphenyl, flammable explosives, radioactive material, petroleum products, and substances designated as a hazardous substance pursuant to 33 USC Section 1321 or listed pursuant to 33 USC Section 1317.
1.1.48 “HUD” means the U.S. Department of Housing and Urban Development.
1.1.49 “Indemnified Parties” has the meaning ascribed to the term in Section
5.9. 1.1.50 “Lender” means any state or federally chartered bank, savings and loan, capital investment group, or other third party financial institution which routinely makes Loans to developments and developers such as the Project and the Developer in the normal course of business and which has been approved by the City pursuant to Section 6.3.
1.1.51 “Lien” means any mortgage, deed of trust, or other security instrument encumbering Developer’s fee interest in the Property and/or Project, or any part thereof, or any pledge or other agreement given as security for the repayment of a Loan and by which a Lender would be able to acquire any interest in the Developer upon the Developer’s breach of any obligation under the Lender’s Loan Documents.
1.1.52 “Loan” means any loan or third party equity/capital contribution (e.g. mezzanine financing) for the Project.
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8 1.1.53 “Loan Documents ” means the various documents and instruments made by and between the Developer and a Lender that evidence a Loan and the security for repayment of such Loan.
1.1.54 “Maintenance Deficiency ” has the meaning ascribed to the term in Section 5.4.1.
1.1.55 “Normal Business Hours ” means the normal business hours of the City. As of the Effective Date, the City’s normal business hours are Monday through Thursday, between the hours of 7:30 a.m. and 5:30 p.m. Pacific Time; and Friday between the hours of 7:30 a.m. and 4:30 p.m. Pacific Time.
1.1.56 “Notice of Agreement ” means the notice in the form of Exhibit F to this Agreement to be recorded against the Property at the Close of Escrow to provide constructive record notice of the existence and application of this Agreement to the Property.
1.1.57 “Official Records ” means the Official Records of San Bernardino County.
1.1.58 “Party” means, individually, the City or the Developer, as applicable.
1.1.59 “Parties” means, collectively, the City and the Developer.
1.1.60 “PCO Statement” means a preliminary change of ownership statement provided for in California Revenue and Taxation Code Section 480.3.
1.1.61 “Permit Issuance Date” means the date when the City issues the first building permit to Developer, which date shall be no later than sixty (60) days from the Construction Drawings Submittal Date. This sixty (60) day time period for City to issue the first building permit to Developer shall be extended, to the extent necessary, to negotiate and obtain any and all necessary approvals from any City Department, government agency, and/or utility company that would be required prior to submitting any Plans and Sp ecifications. City Department(s), government agencies, and/or utility companies, include but are not limited to, City Planning Department, Building Department, Fire Department, Engineering Department, Water Department, Police Department, affiliates of the City, East Valley Water District, Southern California Edison, Southern California Gas Company, San Bernardino County Health Department, and/or consultants of the City.
1.1.62 “Permitted Exceptions” means (i) any and all items shown in Schedule B of the Preliminary Report as exceptions to coverage under the proposed Title Policy that the Developer accepts, pursuant to Section 2.3; (ii) any exceptions from coverage under the proposed Title Policy resulting from the Developer’s activities on the Property; (iii) non-delinquent property taxes and assessments; (iv) this Agreement; or (v) the Grant Deed.
1.1.63 “Permitted Transfer” means and refers to any of the following types of Transfers by the Developer, where the person or entity to which such Transfer is made expressly assumes the obligations of the Developer under this Agreement in a written instrument satisfactory to the City.
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9 1.1.63.1 Any Transfer of stock or equity of the Developer that does not change management or operational Control of the Property or the Project; and
1.1.63.2 Any Lien given to Lender in connection with a Loan approved by the City pursuant to Section 6.3.
1.1.64 “Plans and Specifications ” has the meaning ascribed to the term in Section 2.7.1.
1.1.65 “Preliminary Report” means a preliminary report issued by the Title Company in contemplation of the issuance of the Title Policy, accompanied by legible copies of all documents listed in Schedule B of the report as exceptions to coverage under the proposed Title Policy. The Parties acknowledge that they may prepare one (1) or more Preliminary Reports for each parcel, or group of parcels, comprising the Property. In such case, all reports, notices, and objection letters which pertain to the Preliminary Report for the entirety of the Property shall apply separately to each Preliminary Report associated with a parcel or a group of parcels.
1.1.66 “Project” means two manufactured housing units constiting of a primiary unit with 3 -bedrooms and 2 bathrooms and a secondary unit with 1 -bedroom and 1 bathroom.
1.1.67 “Project Completion Date ” means that dates set forth therefor by which a Certificate of Completion shall be issued for the Project, as more particularly provided in the Schedule of Performance referenced in Exhibit D.
1.1.68 “Property” means that real property, and all current and future improvements thereon (including, without implied limitation, the Project), legally described in Exhibit A and depicted in Exhibit B.
1.1.69 “Property Transfer” means and refers to any “change in ownership,” as defined in Revenue and Taxation Code Sections 60, et seq., of all or any portion of the Property.
1.1.70 “Purchase Price ” means the amount of Forty Eight Thousand Five Hundred Dollars and Zero Cents ($48,500,00).
1.1.71 “Record”, “recorded”, “recording” or “ recordation” each mean and refer to recordation of the referenced document in the official records of the Recorder of the County of San Bernardino, California.
1.1.72 “Schedule of Performance” means the phased Project schedule, for the performance of certain actions by the Parties pursuant to this Agreement, attached to and incorporated into this Agreement by reference as Exhibit D.
1.1.73 “Scope of Development” means the detailed description of the Project attached to this Agreement as Exhibit C.
1.1.74 “Seller Carryback Loan ” means the loan from the City to the Developer in the amount of the Purchase Price, less the Earnest Money Deposit actually paid by 55600.00203\44900577.8
10 the Developer, which shall be evidenced by the City Promissory Note and secured by the City Deed of Trust.
1.1.75 “Title Approval Date ” means the date when Developer submits the Developer’s Title Notice, which date shall be no later than sixty (60) days from the Escrow Opening Date.
1.1.76 “Title Company ” means Commonwealth Land Title Insurance Company, which shall be the same party named in 1.1.37.
1.1.77 “Title Policy” means a standard CLTA owners’ policy of title insurance issued by the Title Company, with coverage in the full amount of the Purchase Price and insuring fee title to the Property, subject only to the Permitted Exceptions. However, at Developer’s option, Developer may acquire an ALTA extended coverage policy. City shall pay for the standard CLTA policy. Developer shall pay for any additional or ALTA extended coverage policy if requested by Developer.
1.1.78 “Transfer” means any of the following:
1.1.78.1 Any total or partial sale, assignment, conveyance, trust, power, or transfer in any other mode or form, by the Developer of : (a) more than a forty-nine percent (49%) interest in the Developer’s interest in this Agreement, (b) the Property, or (c) a series of such sales, assignments and the like that, in the aggregate, result in a disposition of (a) more than a forty-nine percent (49%) interest in the Developer’s interest in this Agreement, (b) the Property or (c) the Project; or
1.1.78.2 Any total or partial sale, assignment, conveyance, or transfer in any other mode or form, of or with respect to any interest in the Developer or a series of such sales, assignments and the like that, in the aggregate, result in a disposition of more than a forty-nine percent (49%) interest in any interest in the Developer; or
1.1.78.3 Any merger, consolidation, or sale of all or substantially all of the assets of the Developer or a series of such sales, assignments and the like that, in the aggregate, result in a disposition of more than a forty-nine percent (49%) interest of all or substantially all of the assets of the Developer; or
1.1.78.4 INTENTIONALLY DELETED
1.1.78.5 The recordation of any deed of trust, mortgage, Lien or similar encumbrance against all or any portion of the Property or the Project.
1.1.78.6 Transfer shall not include the sale, transfer, assignment, or conveyance in any form of shares, interest, membership, affiliation, or stock in Developer, so long as orginal members, stock/share/interest holder(s) in Developer retain management and control of Developer.
1.1.79 “Unavoidable Delay” means any delay that is exclusively caused by the other party or that is beyond the control of the City or the Developer, including delay caused 55600.00203\44900577.8
11 by strikes, acts of God, weather, inability to obtain labor or materials, inability to obtain governmental permits, inspections, or approvals, governmental restrictions, civil commotion, fire or similar causes, Unforeseen Site Conditions, but excluding cir cumstances subject to Section
9.7.2. 1.1.80 “Unforeseen Site Conditions ” means any condition of the Property and/or Project that are concealed or latent physical conditions or subsurface conditions that (a) materially differ from the conditions encountered or anticipated by Developer while preparing Plans and Specifications, or (b) are of an unusual nature, differing materiall y from the conditions ordinarily encountered, or generally recognized as inherent, in Developers work.
1.2 Representations and Warranties.
1.2.1 City Representations and Warranties . The representations and warranties of City contained in this Section 1.2.1 shall be based upon the actual knowledge of the City Manager as of the Effective Date, without any duty of investigation or inquiry. All representations and warranties contained in this Section 1.2.1 are true and correct as of the Effective Date. City’s liability for misrepresentation or breach of warranty, representation or covenant, wherever contained in this Agreement, shall survive the execution and delivery of this Agreement and the Closing. City hereby makes the following representations, covenants and warranties and acknowledges that the execution of this Agreement by Developer has been made in material reliance by Developer on such covenants, representations and warranties:
1.2.1.1 City is a California municipal corporation, duly formed and operating under the laws of the State of California. City has the legal power, right and authority to enter into this Agreement and to execute the instruments and documents referenced herein, and to consummate the transactions contemplated hereby.
1.2.1.2 The persons executing any instruments for or on behalf of City have been authorized to act on behalf of City and this Agreement is valid and enforceable against City in accordance with its terms and each instrument to be executed by City pursuant hereto or in connection therewith will, when executed, shall be valid and enforceable against City in accordance with its terms. No approval, consent, order or authorization of, or designation or declaration of any other person, is required in connection with the valid execution and delivery of and compliance with this Agreement by City.
1.2.1.3 City has taken all requisite action and obtained all requisite consents for agreements or matters to which City is a party in connection with entering into this Agreement and the instruments and documents referenced herein and in connection with the consummation of the transactions contemplated hereby. Execution hereon by City requires no further votes, resolutions or approvals of this Agreement.
1.2.1.4 If the City becomes aware of any act or circumstance that would change or render incorrect, in whole or in part, any representation or warranty made by the City under this Agreement, whether as of the date given or any time thereafter, whether or not such representation or warranty was based upon the City’s knowledge and/or belief as of a certain date, the City will give immediate written notice of such changed fact or circumstance to the Developer. 55600.00203\44900577.8
12 1.2.1.5 The City represents and asserts that it owns and controls the Property.
1.2.2 Developer Representations and Warranties. The representations and warranties of Developer contained in this Section 1.2.2 shall be based upon the actual knowledge of Developer as of the Effective Date, without any duty of investigation or inquiry. All representations and warranties contained in this Section 1.2.2 are true and correct as of the Effective Date. Developer’s liability for misrepresentation or breach of warranty, representation or covenant, wherever contained in this Agreement, shall survive the execution and delivery of this Agreement and the Closing. Developer hereby makes the following representations, covenants and warranties and acknowledges that the execution of this Agreement by City has been made in material reliance by City on such covenants, representations and warranties:
1.2.2.1 Developer is a California Nonprofit corporation, lawfully entitled to do business in the State of California and the City. Developer has the legal right, power and authority to enter into this Agreement and the instruments and documents referenced herein a nd to consummate the transactions contemplated hereby. The persons executing this Agreement and the instruments referenced herein on behalf of Developer hereby represent and warrant that such persons have the power, right and authority to bind Developer.
1.2.2.2 Developer has taken all requisite action and obtained all requisite consents in connection with entering into this Agreement and the instruments and documents referenced herein and the consummation of the transactions contemplated hereby, and no consent of any other party is required for Developer’s authorization to enter into Agreement.
1.2.2.3 Neither the execution of this Agreement nor the consummation of the transactions contemplated hereby shall result in a breach of or constitute a default under any other agreement, document, instrument or other obligation to which Developer is a party or by which Developer may be bound, or under law, statute, ordinance, rule, governmental regulation or any writ, injunction, order or decree of any court or governmental body applicable to Developer or to the Property.
1.2.2.4 This Agreement is, and all agreements, instruments and documents to be executed by Developer pursuant to this Agreement shall be, duly executed by and shall be valid and legally binding upon Developer and enforceable in accordance with their respective terms. No approval, consent, order or authorization of, or designation or declaration of any other person, is required in connection with the valid execution and delivery of in compliance with this Agreement by Developer.
1.2.2.5 If the Developer becomes aware of any act or circumstance that would change or render incorrect, in whole or in part, any representation or warranty made by the Developer under this Agreement, whether as of the date given or any time thereafter, whether or not such representation or warranty was based upon the Developer’s knowledge and/or belief as of a certain date, the Developer will give immediate written notice of such changed fact or circumstance to the City.
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13 1.3 Effective Date. This Agreement is dated _______, 2026 for reference purposes only. This Agreement shall not become effective until the date on which all of the following are true (“Effective Date”): (i) this Agreement is approved and executed by the appropriate authorities of Developer and delivered to City; (ii) Developer has delivered to City a certified copy of the official action taken by all of the members of the Developer approving this Agreement, in the form attached to this Agreement as Exhibit G; (iii) following all legally required notices and h earings, this Agreement is approved by the City Council; and (iv) this Agreement is executed by the authorized representatives of City.
1.4 Exhibit List. The following is a list of the Exhibits attached to this Agreement.
Each of the Exhibits is incorporated by this reference into the text of this Agreement.
Exhibit A Legal Description of Property
Exhibit B Property Site Plan
Exhibit C Scope of Development
Exhibit D Schedule of Performance
Exhibit E Form of Grant Deed
Exhibit F Form of Notice of Agreement
Exhibit G Form of Official Action of Developer
Exhibit H Form of Certificate of Completion
Exhibit I Form of Affordability Covenant
Exhibit J Form of City Promissory Note
Exhibit K Form of City Deed of Trust
ARTICLE II
PROPERTY DISPOSITION
2.1 Purchase and Sale . Developer agrees to purchase, and City agrees to sell, the Property for the Purchase Price. For the purposes of exchanging funds and documents to complete the sale from the City to the Developer and the purchase by the Developer from the City of the Property pursuant to the terms of this Agreement, the City and the Developer agree to open an escrow (“Escrow”) with the Escrow Holder. ARTICLE III of this Agreement constitutes the joint escrow instructions of the Parties to the Escrow Holder for completion of the Escrow for the sale of the Property, as contemplated by this Agreement. The Developer and the City shall execute such further escrow inst ructions, consistent with the provisions of this Agreement, as may be reasonably requested by the Escrow Holder. In the event of any conflict between the provisions of this Agreement and any other escrow instructions requested by the Escrow Holder, the provisions of this Agreement shall control.
2.2 Payment of Purchase Price; Seller Carryback Loan . The Developer shall deposit the Purchase Price into Escrow, subject to any credit to the Developer for the Earnest Money Deposit, unless the City and the Developer agree to a Seller Carryback Loan that meets the following requirements:
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14 2.2.1 Within ten (10) days from expiration of the Due Diligence Period, the City and the Developer shall agree upon the final terms of the Seller Carryback Loan, the City Promissory Note evidencing the amount of the Seller Carryback Loan , and the City Deed of Trust securing the Seller Carryback Loan.
2.2.2 At least five (5) days prior to Close of Escrow, Developer shall deliver the executed City Promissory Note to the City, and City Deed of Trust with Escrow Holder for recording against the Property in accordance with this Agreement; and
2.2.3 Any other terms and conditions required by the City, in the exercise of its sole and absolute discretion.
2.3 Earnest Money Deposit. Concurrent with its opening of the Escrow, the Developer shall deposit into Escrow the Earnest Money Deposit. The Escrow Holder shall deposit the Earnest Money Deposit into an interest bearing account. All interest earned on such funds shall be added to the original principal amount of the Earnest Money Deposit and be considered part of the same.
The Earnest Money Deposit shall be nonrefundable upon the conclusion of the Due Diligence Period. Should Escrow fail to close after the conc lusion of the Due Diligence Period, the Earnest Money Deposit shall be forfeited by Developer and shall be paid to the City upon the cancellation of Escrow in accordance with Section 3.10. The Earnest Money Deposit shall be returned to Developer if this Agreement is terminated due to the exercise by the Developer of any contingencies or disapprovals allowed herein prior to the end of the Due Diligence Period.
2.4 Title Approval. As soon as practicable following the opening of the Escrow, the City shall obtain from Title Company the Preliminary Report and deliver a copy of the Preliminary Report to the Developer. Within [sixty (60)] days following the Escrow Opening Date (defined at Section 3.1), the Developer shall deliver the Developer’s Title Notice to the City. If the Developer fails to deliver the Developer’s Title Notice to the City by the Title Approval Date, the Developer will be deemed to disapprove the stat us of title to the Property and refuse to accept title to the Property, in which case the City shall have the right, subject to Section 2.4.2, to cancel the Escrow and terminate this Agreement, in the City’s sole discretion, without liability to the Developer or any other person, by delivery of a written notice of termination to the Developer and Escrow Holder. Within twenty (20) days following receipt by the City of Developer’s Title Notice, if any, the City shall serve City’s Title Notice Response. If Developer’s Title Notice does not object to any matter in the Preliminary Report, the City shall not be required to serve City’s Title Notice Response. If the City does not serve City’s Title Notice Response, if necessary, within twenty (20) days following its receipt of Developer’s Title Notice, the City shall be deemed to elect not to remove any matter objected to in Developer’s Title Notice, if any, from the Preliminary Report. If the City elects in City’s Title Notice Response to cause the removal of any matter objected to in Developer’s Title Notice from the Preliminary Report, the City shall cause the removal of each such objectionable matter from the Preliminary Report within sixty (60) days following receipt by the Developer of City’s Title Notice Response or such other period of time that may be agreed to in writing by both the City and the Developer, and any such delay will also delay the end of the Due Diligence Period. If the City is unwilling to cause the removal of any matter objected to in Developer’s Title Notice from the Preliminary Report, then, within ten (10) days following the Developer’s receipt of City’s Title Notice Response stating that the City is unwilling to remove or cause the removal of any matter objected to in Developer’s Title Notice, the Developer may either 55600.00203\44900577.8
15 (1) refuse to accept title to and conveyance of the Property, in which case the Parties shall have the right, subject to Section 2.4.2, to cancel the Escrow and terminate this Agreement without liability to either Party or any other person, by delivery of a written notice of termination to the Escrow Holder, or (2) waive its objection to any items set forth in Developer’s Title Notice by delivering Developer’s Title Notice Waiver to the City. Failure by the Developer to deliver Developer’s Title Notice Waiver, where City’s Title Notice Response or the City’s failure to serve City’s Title Notice Response indicates the City’s election not t o cause the removal of any matter objected to in Developer’s Title Notice from the Preliminary Report, for the City to deliver City’s Title Notice Response under this Agreement, will be deemed the Developer’s continued refusal to accept the title to and co nveyance of the Property, in which case the City shall have the right, subject to Section 2.4.2, to cancel the Escrow and terminate this Agreement, in the City’s sole discretion, without liability to the Developer or any other person, by delivery of a written notice of termination to the Developer and Escrow Holder. If the City’s Title Notice Respon se indicates that the City will cause the removal of any matter of Title, but upon the expiration of the above sixty (60) day time period during which the City elected to remove such objectionable matters from the Preliminary Report and was unable to do so, City must notify Developer that it was unable to do so. Within ten (10) days after this notice, Developer may either (1) refuse to accept the title to and conveyance of the Property, in which case the Parties shall have the right, subject to Section
2.4.2, to cancel the Escrow and terminate this Agreement without liability to either Party or any other person, by delivery of a written notice of termination to the Escrow Holder, or (2) waive its objection to any items set forth in Developer’s Title Notice by delivering Developer’s Title Notice Waiver to the City.
2.4.1 If at any time prior to the Close of Escrow the Title Company issues an updated Preliminary Report containing any previously undisclosed matter affecting title to the Property, or the City becomes aware of any previously undisclosed matter affecting title to the Property, following the delivery of the Developer’s Title Notice, the City shall provide written notice to the Developer of such matter, together with any updated Preliminary Report related to such matter. The City and the Developer shall have such rights and obligations with respect to such previously undisclosed title matters as they did with respect to any title matters set forth in the original Preliminary Report as set forth in this Section 2.4.
2.4.2 Before exercising any right a Party may have under this Section 2.4 to cancel the Escrow and terminate this Agreement, such Party shall notify the non -terminating Parties in writing of its election to terminate and shall, upon a non -terminating Party’s req uest, which must be delivered, if at all, within three (3) days following its receipt of the terminating Party’s notice of election to terminate, meet and confer with the non -terminating Parties for a period of thirty (30) days. During such time, the Parties shall meet as often as reasonably requested by any Party to negotiate, in good faith, methods and means by which the objectionable title matter may be eliminated or mitigated. Nothing herein shall constitute an agreement, representation, or warranty by any Party that an acceptable resolution of the objectionable title matter will be achieved, nor shall any Party be obligated to expend any funds or undertake any other action whatsoever with respect to such title matter unless such agreement is reduced to a writing which is approved by all Parties, in their sole and absolute discretion. If, at the end of such thirty (30) day period, the Parties have not been able to agree on a mutually acceptable method of resolving such title matter, or if any proposed agreement is disapproved by the City Council, the Escrow shall be cancelled, this Agreement shall be terminated without liability to any Party, and the Parties shall 55600.00203\44900577.8
16 proceed pursuant to Section 3.10. The phrase “without liability to any party” includes return of Developer’s Earnest Money Deposit, subject to Sections 2.4 and 3.10, and so long as the notice referred to in the first sentence of this paragraph is delivered prior to the end of the Due Diligence Period, the additional time periods in this paragraph shall not act to cause Developer’s Earnest Money Deposit to be forfeited.
2.4.3 Developer acknowledges and agrees that the City is required to record the Affordability Covenant against the Property, that the City has the right to record the Affordability Covenant prior to the date of Close of Escrow, and that the Developer agrees to take title to the Property subject to the Affordability Covenant.
2.5 Developer Investigations.
2.5.1 The Developer shall have until the expiration of the Due Diligence Period to complete all of its Due Diligence Investigations with respect to the entirety of the Property. The Developer shall complete all of its Due Diligence Investigations within the Due Diligence Period and shall conduct all of its Due Diligence Investigations at its sole cost and expense. The Developer shall rely solely and exclusively upon the results of its Due Diligence Investigations of the Property, including, without limitation, investigations regarding geotechnical soil conditions, compliance with applicable laws pertaining to the use of the Property by the Developer and any other matters relevant to the condition or suitability of the Property for the Project, as the Developer may deem necessary or appropriate. City makes no representation or warranty to the Developer relating to the condition of the Property or suitability of the Property for any intended use or development by the Developer. The Developer shall deliver a Due Diligence Investigation Conclusion Notice to the City and the Escrow Holder prior to the end of the Due Diligence Period. If the Developer does not unconditionally accept the condition of the Property by delivery of its Due Diligence Investigation Conclusion No tice indicating such acceptance prior to the end of the Due Diligence Period, the Developer shall be deemed to have rejected the condition of the Property and refused to accept conveyance of title to the Property. If the condition of the Property is reject ed or deemed rejected by the Developer, then the City shall have the right, subject to Section 2.5.3, to cancel the Escrow and terminate this Agreement, in the City’s sole discretion, without liability to the Developer or any other person, by delivery of a written notice of termination to the Developer and Escrow Holder. The Developer shall accept all conditions of the Property, without any liability of the City whatsoever, upon the Developer’s acceptance of the condition of the Property indicated in its Due Diligence Investigation Conclusion Notice. The Developer’s delivery of its Due Diligence Investigation Conclusion Notice indicating the Developer’s unconditional acceptance of the condition of the Property shall evidence the acceptance of the condition o f the Property by the Developer in its existing “AS IS,” “WHERE IS” and “SUBJECT TO ALL FAULTS” condition, as of the last day of the Due Diligence Period.
In its sole discretion, the Developer may accept the Property in its “AS IS,” “WHERE IS” and “SUBJECT TO ALL FAULTS” condition at any time before the end of the Due Diligence Period.
The Developer shall conduct during the Due Diligence Period such environmental assessment(s) of the Property as the Developer deems appropriate. If such assessment(s) do not reveal the presence of any Hazardous Substances on the Property in levels that exceed applicable Governmental Requirements, then the City shall promptly and at its sole cost and expense install security fencing around the Property. If such assessment(s) do reveal the presence of any Hazardous Substances on the Property in levels that exceed applicable Governmental 55600.00203\44900577.8
17 Requirements, then the City and the Developer shall negotiate in good faith in an effort to reach agreement as to the allocation of responsibility and cost of remediation thereof.
2.5.2 Any Due Diligence Investigations of the Property by the Developer shall not unreasonably disrupt any then-existing use or occupancy of the Property or the operations of the City. The Developer shall be liable for any damage or injury to any person or prope rty arising from the acts of the Developer, its employees, agents or representatives during the course of any Due Diligence Investigations on the Property and the Developer shall indemnify, defend (with counsel reasonably acceptable to the City), and hold harmless the City and its elected officials, officers, directors, attorneys, contractors, agents and employees from any and all actual or alleged liens, claims, demands or liability arising from any Due Diligence Investigations by the Developer on the Property. Prior to commencing any Due Diligence Investigations on the Property, the Developer shall deliver copies of policies or certificates of insurance to the City evidencing compliance by the Developer with the insurance requirements of Section 5.10.
2.5.3 Before exercising any right a Party may have under this Section 2.5 to cancel the Escrow and terminate this Agreement, including the failure of Developer to timely deliver the Due Diligence Investigation Conclusion Notice, such Party shall notify the non - terminating Parties in writing of its election to terminate and shall, upon a non-terminating Party’s request, which must be delivered, if at all, within three (3) days following its receipt of the terminating Party’s notice of election to terminate, meet a nd confer with the non -terminating Parties for a period of thirty (30) days. During such time, the Parties shall meet as often as reasonably requested by any Party to negotiate, in good faith, methods and means by which the objectionable Due Diligence matt er may be eliminated or mitigated. Nothing herein shall constitute an agreement, representation, or warranty by any Party that an acceptable resolution of the objectionable Due Diligence matter will be achieved, nor shall any Party be obligated to expend any funds or undertake any other action whatsoever with respect to such Due Diligence matter unless such obligation is reduced to a writing which is approved by all Parties, in their sole and absolute discretion, and this time period will extend the Due Dil igence Period. If, at the end of such thirty (30) day period, the Parties have not been able to agree on a mutually acceptable method of resolving the objectionable Due Diligence matter, or if any proposed agreement is disapproved by the City Council, the Escrow shall be cancelled, this Agreement shall be terminated without liability to any Party, and the Parties shall proceed pursuant to Section 3.10. City, and staff and agents will reasonably cooperate with Developer’s efforts to investigate the property at Developer’s cost, including but not limited to: authorizing any City consultants with prior reports or findings, if any, to issue certificates of reliance on the prior reports to Developer, at Developer’s costs and without warranty from or liability to City; authorizing such consultants and contractors, subject to the City’s prior review and approval, to open up records, if any, to Developer, and/o r provide copies (digital versions where available) of reports and findings, if any, to Developer or its consultants. Any such information provided to Developer shall be without warranty from or liability to City.
2.6 City Obligations.
2.6.1 From the effective date and approval of this Agreement by the City, City agrees to indemnify and hold harmless Developer from any claims, fines, or penalties including any statutory penalties which may be calculated based upon the sale price, arising from the City’s 55600.00203\44900577.8
18 real or alleged violation of law or breach of contractual obligations to third parties with respect to and in connection with the Surplus Land Act (Government Code section 54220 et seq. including through and including 54234) (the “ SLA” and any claim, an “ SLA Claim”). SLA Claims shall include any notice of violation or action taken by the State of California directly or by any third - party asserting rights as a private attorney general against the Developer pursuant to the SLA in connection with the City’s di sposition of the Property by this Agreement, and the City will be responsible, without reimbursement by Developer, for any such SLA Claim, for its own defense, and any and all statutory penalties, fines if any are imposed. An SLA Claim will not allow, or b e sufficient grounds for the City to cancel or terminate this Agreement. The Developer shall promptly notify the City following its receipt or knowledge of any notice of violation, claim, action, or proceeding initiated by the State of California, (or thir d party asserting such violations as a Qui Tam or otherwise acting as a private attorney general) and the Developer shall reasonably and in good faith cooperate in the City’s defense. The indemnification obligation contained in this Section 2.6.1 shall sur vive the Closing but shall not survive the expiration or earlier termination of this Agreement. In the event an SLA Claim demands, seeks or places restrictions on use of the Property which were not contemplated in this Agreement, then Developer may termina te this Agreement on thirty (30) days notice, presuming said notice is served before Close of Escrow.
2.7 Developer to Obtain all Project Entitlements.
2.7.1 By the Construction Drawings Submittal Date and pursuant to and in accordance with the timeline contained on the Schedule of Performance, Developer shall submit to City staff and the City Council, for review, the following (collectively, the “ Plans and Specifications”):
2.7.1.1 A proposed complete conceptual development plan for the for that phase of the Project on the Property that describes and depicts the location and placement of the maunfactored housing units;
2.7.1.2 Proposed zoning change or changes to the City’s General Plan, if any, necessary to accommodate that phase of the Project on the Property;
2.7.1.3 A list of potential users or tenants and anticipated lease rates and resale land prices for that phase of the Property, as developed with the Project;
2.7.1.4 A proposed time schedule and cost estimates for the development of that phase of the Project on the Property;
2.7.2 The City’s zoning, building and land use regulations (whether contained in ordinances, the City’s municipal code, conditions of approval, policies, practice or elsewhere) (collectively, the “ City Requirements”), shall be applicable to the use and development of the Project on the Property by the Developer. The Developer acknowledges that all Plans and Specifications and any changes to the Plans and Specifications shall be subject to the City Requirements. No action by the City with reference to this Agreeme nt or any related documents shall be deemed to constitute a waiver of any City Requirements regarding the Property, the Project, the Developer, any successor -in-interest of the Developer or any successor -in-interest to the Property. The City Requirements may only be changed or waived by modification or variance 55600.00203\44900577.8
19 approved by the City and consistent with this Agreement. No entitlement shall attach to any portion of the Property or otherwise become effective to allow the Developer to develop the Project on the Property until after the Developer owns fee title to that portion of the Property to which such Entitlement pertains. Under no circumstances shall the Developer commence development of any portion/phase of the Project on the Property prior to the Developer owning fee title to the Property.
2.7.3 The approval of the Scope of Development shall not be binding on the City Council or the Planning Commission of the City regarding any approvals of the Project required by such bodies. The Developer obtains no right to develop the Project on the Property or any portion of the Property by virtue of this Agreement, except that following the Close of Escrow, the Developer shall possess the same rights as any other owner of property that desires to develop its property in a manner consistent with the City’s Gen eral Plan. If any revisions of the Scope of Development are required by a Governmental Agency (other than the City) having jurisdiction over the Property or the Project, the Developer shall promptly make any such revisions that are generally consistent with the Scope of Development. Should any revisions be required by any such Government Agency, any timeline contemplated herein shall be extended to to enable Developer to submit and obtain approval from that Government Agency.
2.7.4 Notwithstanding any provision to the contrary in this Agreement, following the Close of Escrow, the Developer agrees to accept and comply fully with any and all conditions of approval applicable to all Entitlements. Developer will seek Entitlements consistent with the Plans and Specifications, but in the event such Entitlement conditions of approval require a greater than twenty-five percent (25%) adjustment or change to the number and size of units, or the layout, arrangement of any structures now on the P lans and Specifications, or as indicated in the Scope of Development, Developer shall notify the City.
2.7.5 Assignment Rights of City . The Developer agrees and warrants that the Plans and Specifications shall be assigned to the City in the event of a default of this Agreement. The Developer shall ensure that any contract providing for the Plans and Specifications includes authorization for the Developer to assign the rights thereunder to the City.
2.7.6 Developer to Pay All Costs and Expenses . The Parties agree that the City shall not provide any financial assistance to the Developer in connection with the Project. The Developer shall be solely responsible for paying for the costs of all design work, construction, labor, materials, fees and pe rmit expenses associated with the Project. The Developer shall pay any and all fees pertaining to the review and approval of the Project by the City, any other Governmental Agency and utility service providers, includ ing the costs of preparation of all required construction, planning and other documents reasonably required by a Governmental Agency pertinent to the development or operation of the Project on the Property, including, but not limited to, specifications, dr awings, plans, maps, permit applications, land use applications, zoning applications, environmental review and disclosure documents and design review documents. The Developer shall pay for any and all costs, including, but not limited to, the costs of design, construction and securing of permits for sewer or utility improvements and connections, that may be required in development of the Project, whether located on or off of the Property.
Except as otherwise specified herein, Developer is not responsible for City’s costs in reaching this Agreement, nor for attorneys fees, internal staff costs or hours expended by City staff, or other costs incurred by City during escrow, and any City costs not specifically made the Developer’s 55600.00203\44900577.8
20 responsibility are excluded. By no later than the Entitlement Application Date, the Developer shall apply to obtain any and all necessary Entitlements, and by no later than the Entitlement Obtainment Date obtain any and all necessary Entitlements, prior to the commencement of applicable portions of construction, and the Developer shall take reasonable precautions to ensure the safety and stability of surrounding properties during said construction. In accordance with this Section 2.7.6, Developer shall be responsible for the costs, or immediate reimbursement to the City upon delivery of an invoice for the costs, of the following:
2.7.6.1 all fees or expenses of engineers, architects, financial consultants, legal, planning or other consultants or contractors, retained exclusively by the Developer for any study, analysis, evaluation, report, schedule, estimate, environmental review, planning and/or design activities, drawings, specifications or other activity or matter relating to the Property or the Project or the negotiation of this Agreement that may be undertaken by the Developer;
2.7.6.2 all fees, charges and costs, make all deposits and provide all bonds or other security associated with the submission to and processing by the City of any and all applications and other documents and information to be submitted to the City by the Developer pursuant to this Agreement or otherwise associated with the Project; and
2.7.7 The Developer shall obtain all Entitlements for use and development of the Project on the Property from each Governmental Agency, within the time period for such actions specifically set forth in the Schedule of Performance, subject to any extensions of ti me authorized by this Agreement upon the occurrence of an Unavoidable Delay.
2.7.8 The Developer may prior to Close of Escrow seek to obtain building permits issued by the City, and other governmental agencies as required, for construction of the Project to proceed. Parties hereto agree that the time for Developer to Close Escrow shall b e extended until seven (7) days after such necessary building permits are issued for construction, or all needed plans for construction of the Project are fully approved by all required governmental agencies and have achieved “ready to issue permit” status . Developer may waive this condition and Close Escrow without such permits or “ready to issue” plans at its sole discretion.
ARTICLE III
ESCROW INSTRUCTIONS
3.1 Opening of Escrow. For purposes of this Agreement, the opening of Escrow shall be the first date on which a fully executed copy of this Agreement and Earnest Money Deposit are deposited with Escrow Holder (“Escrow Opening Date”). The Developer shall cause the Escrow to be opened within fourteen (14) days following the Effective Date. Escrow Holder shall promptly confirm in writing to each of the Parties the date of the Escrow Opening Date. This ARTICLE III shall constitute the joint escrow instructions of t he City and the Developer to Escrow Holder for conduct of the Escrow to complete the purchase and sale of the Property between them, as contemplated in this Agreement.
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21 3.2 Conditions to Close of Escrow . The conditions set forth below shall be satisfied or waived in writing by the respective benefited Party on or before the Escrow Closing Date or the Party benefited by any unsatisfied condition shall not be required to proceed to close Escrow.
3.2.1 Developer’s Conditions to Close of Escrow . The Developer’s obligation to purchase the Property from the City on the Escrow Closing Date shall be subject to the satisfaction of the following conditions precedent, each of which can only be waived in writing by the Developer:
3.2.1.1 The Developer agrees to accept the title to and conveyance of the Property, pursuant and subject to procedures in Sections 2.4 and 2.5;
3.2.1.2 The Developer delivers its Due Diligence Investigation Conclusion Notice to both the City and Escrow Holder indicating the Developer’s unconditional acceptance of the condition of the Property, prior to the expiration of the Due Diligence Period;
3.2.1.3 The Title Company is unconditionally committed to issue the Title Policy for the Property, subject to any Permitted Exceptions, to the Developer;
3.2.1.4 The City deposits the items into the Escrow required by Section
3.4;
3.2.1.5 The representations, warranties and covenants of the City set forth in Section 1.2.1 are true and correct in all material respects on the Effective Date and on the Escrow Closing Date;
3.2.1.6 The Developer has obtained, to the extent necessary, all Entitlements, subject to conditions of approval acceptable to Developer in Developer’s sole discretion, any applicable appeal period has expired without appeal having been filed or, if an appeal is f iled, such appeal has been denied, and no legal action has been instituted against Developer or the City alleging the invalidity of such Entitlements;
3.2.1.7 The Developer and the City have agreed to the Seller Carryback Loan as provided for in Section 2.2 of this Agreement; and
3.2.1.8 The City has completed all of its material obligations required by this Agreement to be completed prior to the Close of Escrow.
3.2.2 City’s Conditions to Close of Escrow. The City’s obligation to sell the Property to the Developer on or before the Escrow Closing Date shall be subject to the satisfaction of the following conditions precedent, which can only be waived in writing by the City:
3.2.2.1 The Developer has deposited the Purchase Price less the Earnest Money Deposit into Escrow, or the Developer and the City have agreed to the Seller Carryback Loan and the Developer has provided the City Promissory Note and City Deed of Trust as required by this Agreement;
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22 3.2.2.2 The Affordability Covenant has been recorded against the Property and the Developer agrees to take title to the Property subject to the Affordability Covenant;
3.2.2.3 The Developer agrees to accept the title to and conveyance of the Property, pursuant and subject to procedures in Sections 2.4 and 2.5;
3.2.2.4 The Developer delivers its Due Diligence Investigation Conclusion Notice to both the City and Escrow Holder indicating the Developer’s unconditional acceptance of the physical condition of the Property, prior to the expiration of the Due Diligence Period;
3.2.2.5 The City has taken the necessary actions to comply with CEQA;
3.2.2.6 The City has taken the necessary steps to comply with the requirements of Government Code section 65402;
3.2.2.7 The Title Company is unconditionally committed to issue the Title Policy for the Property, subject to any Permitted Exceptions, to the Developer;
3.2.2.8 To the extent applicable, the Developer submits to the City, at least five (5) business days prior to the Escrow Closing Date, evidence satisfactory to the City, in the City’s reasonable discretion, that the Developer has obtained all Entitlements if necessary from each applicable Governmental Agency, including the City;
3.2.2.9 To the extent applicable, the Developer delivers to the City, at least thirty (30) days prior to the Escrow Closing Date, in form and substance acceptable to the City, the Financing Commitment(s) applicable to the Property;
3.2.2.10 To the extent applicable, the Developer obtains the City’s approval of the Construction Loan and Construction Lender applicable to the Property, in accordance with Section 6.3, which approval shall not be unreasonably withheld;
3.2.2.11 The Title Company is prepared to issue an ALTA Lender Policy to the City for the amount of the Seller Carryback Loan secured by the City Deed of Trust in a first lien position, unless the City agrees, in writing, to a subordinate lien position;
3.2.2.12 The City and De veloper agree upon the form of Apporoved Homebuyer Loan Documents, if applicable, as referenced in Section 6.1.3.
3.2.2.13 The Developer has completed all of its material obligations required by this Agreement to be completed prior to the Close of Escrow;
3.2.2.14 The representations, warranties and covenants of the Developer set forth in Section 1.2.2 are true and correct in all material respects on the Effective Date and on the Escrow Closing Date; and
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23 3.2.2.15 The Developer deposits the funds and items into the Escrow required by Section 3.3 for the Escrow.
3.3 Developer’s Escrow Deposits . Following satisfaction or waiver of each of the Developer’s conditions to Close of Escrow set forth in Sections 3.2.1, as applicable, the Developer shall deposit the following funds and documents into Escrow at least two (2) business days prior to the Escrow Closing Date in a writing delivered to the Parties:
3.3.1 Earnest Money Deposit . The Earnest Money Deposit, plus any additional funds required to be deposited into Escrow by the Developer under the terms of this Agreement to close the Escrow, all in immediately available funds.
3.3.2 Purchase Price and Other Funds ; Seller Carryback Loan Documents. Purchase Price, less the amount of the Earnest Money Deposit, plus any additional funds required to be deposited into Escrow by the Developer under the terms of this Agreement to close the Escrow, all in immediately available funds. In the event the Parties agreed to a Seller Carryback Loan, then the Developer shall deliver the City Promissory Note to the City and deposit the executed City Deed of Trust with the Escrow Holder for recording.
3.3.3 PCO Statement . A PCO Statement executed by the authorized representative(s) of the Developer.
3.3.4 Acceptance of Grant Deed. The Certificate of Acceptance of the Deed, in the form attached to the Grant Deed, executed by the authorized representative(s) of the Developer in recordable form.
3.3.5 Notice of Agreement . The Notice of Agreement executed by the authorized representative(s) of the Developer in recordable form.
3.3.6 Authorizing Documents . A certificate, resolution, or other documentation evidencing Developer has approval to consummate the purchase of the Property.
3.4 City’s Escrow Deposits . Following satisfaction or waiver of each of the City’s conditions to Close of Escrow set forth in Sections 3.2.2, as applicable, the City shall deposit the following documents into Escrow at least two (2) business days prior to the Escrow Closing Date:
3.4.1 Grant Deed . The Grant Deed executed by the authorized representative(s) of the City in recordable form.
3.4.2 FIRPTA Affidavit (City) . The FIRPTA Affidavit completed and executed by the authorized representative(s) of the City.
3.4.3 Notice of Agreement . The Notice of Agreement executed by the authorized representative(s) of the City in recordable form.
3.4.4 Affordability Covenant . An original, duly executed version of the Affordability Covenant for recording.
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24 3.5 Closing Procedure. When each of the Developer’s Escrow required deposits, as set forth in Section 3.3, and each of the City’s Escrow required deposits, as set forth in Section
3.4, are deposited into Escrow, Escrow Holder shall request confirmation in writing from both the City and the Developer that each of their respective conditions to the Close of Escrow, as set forth in Section 3.2, are satisfied or waived. Upon Escrow Holder’s receipt of written confirmation from both the City and the Developer that each of their respective conditions to the Close of Escrow are either satisfied or waived, Escrow Holder shall close the Escrow for th e Property by doing all of the following:
3.5.1 Recordation of Documents. File the following with the Office of the Recorder of the County, for recordation in the order set forth in Section 3.7 (i) the Grant Deed, with the Developer’s certificate of acceptance attached, (ii) the Notice of Agreement, (iii) the City Deed of Trust, and (iv) if applicable, the Construction Loan Deed of Trust.
3.5.2 Distribution of Recorded Documents . Distribute each recorded document to the Party or person designated for such distribution in Section 3.7.
3.5.3 PCO Statement . File the PCO Statement with the Office of the Recorder of the County.
3.5.4 FIRPTA Affidavit. File the FIRPTA Affidavit with the United States Internal Revenue Service.
3.5.5 Title Policy. Obtain and deliver the Title Policy to the Developer, and deliver any lender title policy to the lender if applicable.
3.5.6 Purchase Price or Seller Carryback Loan. Deliver the Purchase Price to the City, less the City’s share of Escrow closing costs, and less any other charges to the account of the City, and return any remaining funds held by Escrow Holder for the account of the Developer to the Developer, less the D eveloper’s share of Escrow closing costs, and less any other charges to the account of the Developer; provided, however, if the City and the Developer agree to a Seller Carryback Loan, then the Developer shall deliver the City Promissory Note and the City Deed of Trust shall be recorded as provided for in this Agreement.
3.6 Close of Escrow. Close of Escrow shall occur no later than the tenth (10th) business day following Escrow Holder’s receipt of written confirmation from both the City and the Developer of the satisfaction or waiver of all conditions precedent to the Close of Escrow for the Property, or upon such earlier date as the City and Developer may both agree upon in writing, (the “Escrow Closing Date”). If for any reason the Close of Escrow has not occurred by the Escrow Closing Date, then any Party not then in defaul t of this Agreement may cancel the Escrow and terminate this Agreement, subject to the notice and cure provisions of Section 7.1 (to the extent applicable), without liability to any other Party or any other person for such termination and cancellation, by delivering written notice of termination to the other Party(ies) and Escrow Holder and, thereafter, the Parties shall proceed pu rsuant to Section 3.10 if the non-terminating Party is not in default or pursuant to Section 7.2 or 7.3 (as applicable) if the non -terminating Party is in default. Without limiting the right of any Party to terminate this Agreement, pursuant to the preceding sentence, if Escrow does not close on or before the Escrow Closing Date, and no Party 55600.00203\44900577.8
25 has exercised its contractual right to cancel Escrow and terminate this Agreement before such time, then Escrow shall close as soon as reasonably possible following the first date on which Escrow Holder is in a position to close the Escrow pursuant to the terms and conditions of this Agreement.
3.7 Recordation and Distribution of Documents. As applicable, Escrow Holder shall cause the following documents to be recorded in the official records of the Recorder of the County in the following order of priority at the Close of Escrow: (i) the Grant Deed, with the Developer’s certificate of accept ance attached, (ii) the Notice of Agreement; (iii) the City Deed of Trust, if applicable; (iv) the Construction Loan Deed of Trust, if applicable, and ( v) any other documents to be recorded through Escrow upon the joint instructions of the Parties. All recorded documents shall provide that they are to be returned to Escrow Holder after recordation. When originals of such recorded documents are returned to Escrow Holder, Escrow Holder shall deliver: (i) the original Grant Deed, with the Developer’s original certificate of acceptance attached, to the Developer and copies to the City, each showing all recording information, (ii) the original of the Notice of Agreement to the City, with copies to the Developer, each sh owing all recording information, (iii) the City Deed of Trust to the City; (iv) the Construction Loan Deed of Trust to the Construction Lender for the Project, with copies to the Developer and the City, each showing all recording information, and (v) the original of any other document recorded at the close of Escrow to the Party or other person designated in the joint escrow instructions of the Parties for such recordation and a copy of each such document to the other Party or Parties, each showing all recording information. If any construction lender requests that the original deed of trust be delivered elsewhere then that request will be honored by Escrow Holder.
3.8 Escrow Closing Costs, Taxes and Title Policy Premium . The Developer shall pay the Escrow fees and such other costs as Escrow Holder may charge for the conduct of the Escrow. Escrow Holder shall notify the Developer of the costs for Close of Escrow by delivering the Escrow Holder’s estimated closing/settlement statement to both the City and the Developer at least four (4) business days prior to the Escrow Closing Date. The Developer shall pay the premium charged by the Title Company for the standard Title Po licy for the Property, exclusive of any endorsements or other supplements to the coverage of such Title Policy that may be requested by the City, as well as documentary transfer taxes and any and all other charges, fees and taxes levied by a Governmental A uthority relative to the conveyance of any portion of the Property through the Escrow transaction contemplated in this Agreement. The Developer shall pay any City and/or County and/or state transfer taxes calculated on the value of the Property if any are charged. The Developer shall pay any and all recording fees relative to the conveyance of any portion of the Property through the Escrow transaction contemplated in this Agreement.
3.9 Escrow Cancellation Charges. If the Escrow fails to close due to either the City’s material default under this Agreement and the Escrow is cancelled and this Agreement is terminated, the City shall pay all ordinary and reasonable Escrow and title order cancellation charges. If the Escrow fails to close due to the Developer’s material default under this Agreement and the Escrow is cancelled and this Agreement is terminated, the Developer shall pay all ordinary and reasonable Escrow and title order cancellati on charges. If the Escrow fails to close for any reason other than the material default of either the Developer or the City and the Escrow is cancelled and this Agreement is terminated, the Developer and the City shall each pay one -half (1/2) of any ordinary and reasonable Escrow and title order cancellation charges. 55600.00203\44900577.8
26 3.10 Escrow Cancellation. If this Agreement is terminated and the Escrow cancelled pursuant to a contractual right granted to a Party in this Agreement to terminate this Agreement and cancel the Escrow, other than due to the material default of another Party, the Parties shall do each of the following:
3.10.1 Cancellation Instructions. The Parties shall, within three (3) business days of receipt of Escrow Holder’s written request, execute any reasonable Escrow cancellation instructions requested by Escrow Holder.
3.10.2 Return of Funds and Documents . Within ten (10) days of receipt by the Parties of a settlement statement of Escrow and title order cancellation charges from Escrow Holder: (i) the Developer or Escrow Holder shall return to the City any documents previously delivered by the City to the D eveloper or Escrow Holder, (ii) the City or Escrow Holder shall return to the Developer all documents previously delivered by the Developer to the City or Escrow Holder; (iii) Escrow Holder shall return to the Developer any f unds deposited by Developer into Escrow, including the Earnest Money Deposit (subject to Section 2.2), less the Developer’s share of customary and reasonable Escrow and title order cancellation charges, if any; and (iv) Escrow Holder shall return to the Ci ty any funds deposited by City into Escrow if it has already been deposited, less the City’s share of customary and reasonable Escrow and title order cancellation charges, if any.
3.11 Report to IRS. Following the Close of Escrow and prior to the last date on which such report is required to be filed with the Internal Revenue Service, if such report is required pursuant to Section 6045(e) of the Internal Revenue Code, Escrow Holder shall report the gro ss proceeds of the purchase and sale of the Property to the Internal Revenue Service on Form 1099 - B, W-9 or such other form(s) as may be specified by the Internal Revenue Service pursuant to Section 6045(e). Upon the filing of such reporting form with the Internal Revenue Service, Escrow Holder shall deliver a copy of the filed form to the City and the Developer.
ARTICLE IV
PROJECT DEVELOPMENT
4.1 Developer Covenant to Undertake Project. Upon Close of Escrow the Developer covenants, for itself, its successors and assigns, to and for the exclusive benefit of the City, that the Developer shall commence and complete the construction and development of the Project on the Property within the time period for such actions set forth in the Schedule of Performance. Upon Close of Escrow the Developer covenants and agrees for itself, its successors, and assigns, that the Property shall be improved and developed with the Project in substantial conformity with the terms and conditions of this Agreement, the Scope of Development, the Schedule of Performance, any and all plans, specifications and similar development documents required by this Agreement, except for such changes as may be mutually agreed upon in writing by and among the Parties, and all applicable laws, regulations, orders and conditions of each Governmental Agency with jurisdiction over the Property or the Project. The covenants of this Section 4.1 shall run with the land of the Property until the earlier of the date of recordation of the Certificate of Completion or the fifteenth (15th) anniversary of the date of the Close of Escrow. 55600.00203\44900577.8
27 4.2 Developer Changes to Plans and Specifications During Course of Construction. The Developer shall have the right during the course of construction of the Project to make “minor field changes,” without seeking the approval of the City, if such changes do not affect the type of use to be conducted within all or any portion of a structure. “ Minor field changes” shall be defined as those changes from the approved Plans and Specifications that have no substantial effect on the Project or are made in order to expe dite the work of construction in response to field conditions. The Developer shall submit all other changes, i.e. “Material Changes”, to the City for its review and approval no less than fifteen (15) days prior to the date that the Developer intends to implement such changes. Material Changes shall mean and substantial changes to the Project that effect the overall adaptive reuse natu re of the Project the City approved through any AUP (Administrative Use Permit), EIR (Environmental Impact Report), etc. Material Changes shall not include changes to construction drawings, type, materials, etc. and/or changes caused by Unforeseen Site Conditions. The City shall have ten (10) days from its receipt of such proposed changes to review the same and advise the Develo per in writing whether such changes are acceptable to the City in its reasonable discretion. Any proposed changes which are not disapproved by the City within such ten (10) day period shall be deemed approved.
Nothing contained in this Section 4.2 shall be deemed to constitute a waiver of or change in the City Requirements governing “minor field changes” or other changes or in any approvals by the City otherwise required for “minor field changes.” or other changes.
4.3 Construction Start and Completion of Project. The Developer shall commence construction of the Project in accordance with the Schedule of Performance and, thereafter, shall diligently proceed to complete the construction of the Project in a good and workmanlike manner in substantial conformity with the approved plans, specifications, and conditions for the Project approved by the City and the Schedule of Performance. The Developer shall obtain a Certificate of Completion on or before the Project Completion Date subject to extension for unavoidable delays, or other extensions pursuant to this Agreement. The Developer will, promptly upon completion of construction of the Project, cause the Project to be inspected by each Governmental Agency with jurisdiction o ver the Project, shall correct any defects and deficiencies that may be disclosed by any such inspection and shall cause to be duly issued all occupancy certificates and other licenses, permits and authorizations necessary for the operation and occupancy o f the completed Project. The Developer shall do and perform all of the foregoing acts and things and cause to be issued and executed all such occupancy certificates, licenses, and authorizations for the Project on or before the date set forth therefor in the Schedule of Performance as the completion date for the Project. After commencement of the work of improvement for each phase of the Project, the Developer shall not permit the work of improvement of the Project to cease or be suspended for a time period in excess of thirty (30) consecutive calendar days, subject to Unavoidable Delays, Unforeseen Site Conditions and/or other extensions of time pursuant to this Agreement.
4.4 Compliance with Laws. All work performed in connection with the development of the Project shall comply with all Governmental Requirements.
4.5 Schedule of Performance. The Schedule of Performance establishes various dates and times for the accomplishment of various tasks assigned to the City and the Developer and the satisfaction of the conditions precedent to the close of the Escrow. The Parties agree that time is of the essence in the performance of such tasks and the satisfaction of conditions precedent, in 55600.00203\44900577.8
28 view of the large investment of resources that all Parties recognize will be required for assembly of the Property and the undertaking of the Project. If the date or time for the performance of a task or the satisfaction of a condition, as set forth in either the text of this Agreement or in the Schedule of Performance, may not be achieved, then prior to such date or time set forth in the text of this Agreement or the Schedule of Performance, the Parties shall consider whether a modification to the text of this Agreement or to the Schedule of Performance is warranted. Any decision to approve a modification to a time or date established in either the text of this Agreement or the Schedule of Performance shall be subject to the sole discretion of each Party. A ny modification of a time or date for performance of a particular task or satisfaction of a particular condition that does not result in a change of more than one hundred eighty (180) days, and/or as a result of Unavoidable Delays, Unforeseen Site Conditio ns, and/or other delay resulting in an extension of time to perform pursuant to this Agreement, may be approved on behalf of the City by the City Manager, in his or her reasonable discretion. A modification of a time or date for performance of a task or satisfaction of a condition (or a series of such modifications), for any other reason, that results in an aggregate change of more than one hundred eighty (180) days shall be subject to the approval of the City Council, in its sole and absolute discretion. If performance of a task or satisfaction of a condition in the Schedule Performance is prevented or delayed by Unavoidable Delays, Unforeseen Site Conditions, and/or other delay resulting in an extension of time to perform pursuant to this Agreement the dea dline for completion of such task or satisfaction of such condition shall be extended by the period of such Unavoidable Delays.
4.6 Developer Attendance at City Meetings . The Developer agrees to have one or more of its employees or consultants who are knowledgeable regarding this Agreement and the development of the Project, such that such person(s) can meaningfully respond to City questions regarding the progress of the Pr oject, attend City Council meetings, when requested to do so on not less than ten (10) days prior written notice by City staff.
4.7 City’s Right to Inspect Project and Property . Officers, employees, agents, and representatives of the City shall have the right of reasonable access to the Property, without the payment of charges or fees, during normal construction hours, during the period of construction of the Project. Such officers, employees, agents or representatives of the City shall be those persons who are designated by the City Manager. Any and all officers, employees, agents or representatives of the City who enter the Property shall identify themselves at the construction management office on the Property, upon their entrance on to the Property, and shall at all times be accompanied by a representative of the Developer, while on the Property. The Developer shall make a representative of the Developer available for this purpose at all times during normal construction hours, upon reasonable notice from the City which is to be no less than two (2) business days in advance. The City shall indemnify and hold the Developer harmless from injury, property damage or liability arising out of the exercise by the City of the right of access to the Property provided in this Section
4.7, other than injury, property damage or liability arising from the negligence or willful misconduct of the Developer or its officers, agents or employees. The City shall inspect relevant portions of the Property, prior to issuing any written statements ref lecting adversely on the Developer’s compliance with the terms and conditions of this Agreement pertaining to development of the Project. If in the City’s reasonable judgment it is necessary, the City shall have the further right, from time to time, to retain a consultant or consultants to inspect the Project and verify compliance by the Developer with the provisions of this Agreement. The Developer acknowledges and agrees that any such inspections are for the sole purpose of protecting the City’s 55600.00203\44900577.8
29 rights under this Agreement, are made solely for the City’s benefit, that the inspections may be superficial and general in nature, and are for the purposes of informing the City of the progress of the Project and the conformity of the Project with the terms and conditions of this Agreement, and that the Developer shall not be entitled to rely on any such inspection(s) as constituting an approval, satisfaction or acceptance of any materials, workmanship, conformity of the Project with this Agreement or othe rwise. The Developer agrees to make its own regular inspections of the work of construction of the Project to determine that the quality of the Project and all other requirements of the work of construction of the Project are being performed in a manner satisfactory to the Developer. The Developer also agrees to immediately notify the City in writing should the Developer’s inspections show any matters that will prevent the entire Project from being completed by the Project Completion Date set forth therefor e in the Schedule of Performance.
Without limiting the foregoing, the Developer shall permit the City upon reasonable notice to examine and copy all records relating to construction of the Project. The Developer will use commercially reasonable efforts to cause all contractors, subcontractors and materialmen to cooperate with the City to enable such examination.
4.8 Cost of Construction . The cost and expense of undertaking and completing the Project, including, without limitation, constructing all legally imposed on - and off -site improvements, and providing all utilities therefor, shall be borne by Developer at its sole cost, expense and l iability. Developer shall be solely responsible for payment of all City land use, construction, inspection, plan check, and development impact fees (collectively, “ Development Fees”) imposed by the City with respect to the development of the Project. Developer shall bear all costs and expenses associated with the processing and obtaining of the Entitlements and shall bear all costs and expenses (except to the extent expressly set forth otherwise in this Agreement), associated with any and all terms, conditions, requirements, mitigation measures and other exactions imposed on, or required in connection with, the Entitlements.
4.9 Prevailing Wages.
4.9.1 The Developer acknowledges that the City has not made any representation, express or implied, to the Developer or any person associated with the Developer regarding whether or not laborers employed relative to the construction of the Project must be paid the prevailing per diem wage rate for their labor classification, as determined by the State of California, pursuant to Labor Code Sections 1720, et seq. The Developer agrees with the City that the Developer shall assume the responsibility and be solely res ponsible for determining whether or not laborers employed relative to the construction of the Project must be paid the prevailing per diem wage rate for their labor classification.
4.9.2 The Developer, on behalf of itself, its successors, and assigns, waives and releases the City from any right of action that may be available to it pursuant to Labor Code Sections 1726 and 1781. The Developer acknowledges the protections of Civil Code Section 1542 relative to the waiver and release contained in this Section 4.8, which reads as follows:
“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS
THAT THE CREDITOR OR RELEASING PARTY DOES NOT
KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT
THE TIME OF EXECUTING THE RELEASE AND THAT, IF
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30 KNOWN BY HIM OR HER, WOULD HAVE MATERIALLY
AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR
OR RELEASED PARTY.”
BY INITIALING BELOW, THE DEVELOPER KNOWINGLY AND
VOLUNTARILY WAIVES THE PROVISIONS OF SECTION 1542 SOLELY IN
CONNECTION WITH THE WAIVERS AND RELEASES OF THIS SECTION
4.9.2. _________________
Developer’s Initials
4.9.3 Additionally, in accordance with Section ARTICLE VIII, the Developer shall indemnify, defend with counsel acceptable to the City and hold the City harmless against any claims pursuant to Labor Code Sections 1726 and 1781 arising from this Agreement or the construction or operation of the Project.
4.10 Project as a Private Undertaking. It is specifically understood and agreed by and between the parties hereto that the development of the Project is a private development, that neither party is acting as the agent of the other in any respect hereunder, and that each party is an independent contracting entity with respect to the terms, covenants and conditions contained in this Agreement. No partnership, joint venture or other association of any kind is formed by this Agreement. The only relationship between City and Owner is that of a government entity regulating the development of private property and the owner of such property.
4.10 Certificate of Completion.
4.10.1 Following the substantial completion of construction of the Project pursuant to the Schedule of Performance, and upon written request from the Developer for issuance of a Certificate of Completion for the Project, the City shall inspect the Project to dete rmine whether or not the Project has been substantially completed in compliance with this Agreement. If the City determines that the Project is complete and in compliance with this Agreement, the City Manager shall furnish the Developer with a Certificate of Completion for the Project. If the City determines that the Project is not in compliance with this Agreement, the City Manager shall send written notice of each non -conformity to the Developer. Upon issuance of the final certificate of occupancy for the development of the Project, based on the plans submitted by the Developer to the City, the City shall furnish the Developer with a Certificate of Completion for the Project. Until the issuance of the Certificate of Completion, the City shall retain of rig ht of reverter in the Property pursuant to Section 7.6. The City shall not unreasonably interfere with the usual inspections by City agencies or other typical governmental inspections related to requirements for a certificate of occupancy.
4.10.2 The City shall not unreasonably withhold the issuance of a Certificate of Completion. A Certificate of Completion shall be evidence of the City’s conclusive determination of satisfactory completion of the Project to which it pertains pursuant to the terms of this Agreement. After the recordation of a Certificate of Completion for the Project, any person then owning or thereafter purchasing, leasing or otherwise acquiring any interest in the Property 55600.00203\44900577.8
31 improved with the Project shall not (because of such ownership, purchase, lease or acquisition) incur any obligation or liability under this Agreement regarding construction or installation of the Project except that such person shall be bound by any reser vations, covenants, conditions, restrictions and other interests recorded against the Property pursuant to this Agreement and the Grant Deed.
4.10.3 If the City fails or refuses to issue a Certificate of Completion following written request from the Developer within fifteen (15) calendar days of the Developer’s written request or within three (3) calendar days after the next regular meeting of the City Council, whichever date occurs later, the City shall provide the Developer with a written statement setting forth the reasons for the City’s failure or refusal to issue a Certificate of Completion. The statement shall also contain the City’s opinion of the action(s) the Developer must take to obtain a Certificate of Completion from the City. If the reason for the Developer’s failure to complete the Project is confined to the immediate unavailability of specific items or materials for construction or landscaping at a price reasonably acceptable to the Developer or other minor building “ punch- list” items, the City may issue its Certificate of Completion upon the posting of a bond or irrevocable standby letter of credit by the Developer in a form reasonably ac ceptable to the City in an amount representing the fair value of the work on the Project remaining to be completed, as reasonably determined by the City. If the City fails to provide such written statement, within the specified time period, the Developer s hall be deemed conclusively and without further action of the City to have satisfied the requirements of this Agreement with respect to the Project, as if a Certificate of Completion had been issued by the City pursuant to this Agreement.
4.10.4 A Certificate of Completion shall not constitute evidence of compliance with or satisfaction of any obligation of the Developer to any holder of a mortgage, or any insurer of a mortgage securing money loaned to finance the Project, or any parts thereof. A Certificate of Completion shall not be deemed to constitute a notice of completion under Section 3093 of the California Civil Code, nor shall it act to terminate the continuing covenants, restrictions or conditions contained in the Grant Deed or any other instruments recorded against the Property pursuant to this Agreement. A Certificate of Completion is not evidence of the compliance of the Project with any City Requirements or any building code, conditions of approval, land use, zoning or other requirements of the City or any Governmental Agency with jurisdiction over the Property, other than the City.
4.10.5 The City and Developer acknowledge that the nature of the Project, including but not limited to, the risk of Unforeseen Site Conditions and Unavoidable Delays.
Should any Unforeseen Site Conditions and/or Unavoidable Delays impede Developes ability to seek a Certificate of Occupancy and/or Certificate of Completion for any particular phase, Developer may request a Temporary Certificate of Occupancy (“ TCO”) for that phase(s) or portions of a phase(s) ready to be occupied. Developer may seek a TCO for all or portions of a phase in order to further the Parties interests contained herein. Should Developer seek and be issued a TCO by the City, such TCO shall extend Developers obligation to obtain a Certificate of Completion for the duration such TCO is valid.
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32 ARTICLE V
DEVELOPER COVENANTS
5.1 Covenant to Maintain Property on Tax Rolls . The Developer for itself, its successors and assigns to all or any part or portion of the Property and/or Project, covenants and agrees that after Close of Escrow:
5.1.1 The entire Property shall remain on the County secured real property tax rolls for twenty years from the date of issuance of a certificate of occupancy for the Project.
5.1.2 The Developer shall pay all property tax bills with respect to the Property and all improvements thereon on or before the last day for the timely payment of each property tax installment during such time period and to timely pay all supplemental tax bills regarding the Property issued by the County. Nothing herein shall prohibit Developer, or current owner from making property tax payments pursuant to any tax collector approved payment plan.
The Developer further covenants and agrees to provide to the City, on or before July 31 of each year, commencing in the calendar year following the calendar year in which a Certificate of Completion is recorded and in each calendar year, thereafter, for the full term of this covenant: (i) a true and correct copy of all property tax assessment notices, property tax bills and property tax assessment correspondence by and between the Developer and the County regarding the Property and all improvements thereon, with respect to the precedin g fiscal year of the County, and (ii ) cancelled checks issued or other proof of payment by the Developer in payment of all property tax payments that are made to the County regarding the Property and all improvements thereon (or other reasonably acceptable evidence of such payment), with respect to the preceding County fiscal year.
5.1.3 The covenants of this Section 5.1 shall run with the land of the Property, shall be enforceable against the Developer and its successors and assigns, and shall be covenants set forth in the Grant Deed.
5.2 No Conveyance to Tax Exempt Entity . The Developer for itself, its successors and assigns to all or any part or portion of the Property and/or Project, covenants and agrees that:
5.2.1 The Developer shall not use or otherwise sell, transfer, convey, assign, lease, leaseback or hypothecate the Property, the Project, or any portion of any of the foregoing to any entity or person, or for any use of the Property, the Project, or any portion of any of the foregoing, that is partially or wholly exempt from the payment of real or personal property taxes or that would cause the exemption of the payment of all or any portion of real or personal property taxes otherwise assessable regarding the Pro perty, the Project, or any portion of any of the foregoing, without the prior written consent of the City, which may be withheld in the City’s sole and absolute discretion for a period of twenty (20) years from the date of issuance of the Certificate of Completion for the Project by the City.
5.2.2 If the Property, or any portion of the Property, shall be conveyed, transferred or sold to any entity or person that is partially or wholly exempt from the payment of real or personal property taxes otherwise assessable against the Property, or any portion thereof 55600.00203\44900577.8
33 (each, a “Tax-Exempt Entity”), without the prior written consent of the City, then, at the City’s election and in addition to all other remedies available to the City under this Agreement or at law or in equity, the Developer or its successor or assigns shall pay to the City a fee in lieu of payment of such taxes each year in an amount determined by the City to be one percent (1%) of the “ full cash value” of the Property, or portion thereof, as may be subject to such exemption from payment of real or person al property taxes. The City’s determination of “ full cash value ” for in -lieu payment purposes under this Section 5.2.2 shall be established by the City each year, if necessary, by reference to the real or personal property tax valuation principles and practices generally applicable to a county property tax assessor under Section 1 of Article XIIIA of the California Constitution. The City’s determination of “ full cash value ” and that an in -lieu payment is due shall be conclusive on such matters. If the City determines that an amount is payable as an in-lieu payment under this Section 5.2.2 in any tax year, then such amount shall be paid to the City for that tax year within forty -five (45) days following transmittal by the City to the Developer or its successor or assigns of an invoice for payment of the in -lieu amount. Notwithstanding anyth ing contrary to the foregoing, Developer shall not responsible for any in -lieu amounts if (a) the City consents to Transfer of the Project to a non -Tax-Exempt Entity which subsequently becomes a Tax-Exempt Entity, or (b) a City-approved non-Tax-Exempt Entity to whom Developer Transfers the Property sells to a Tax-Exempt Entity or non-Tax-Exempt Entity which subsequently becomes a Tax-Exempt Entity.
5.2.3 The covenants of this Section 5.2 shall run with the land of the Property, shall be enforceable against the Developer and its successors and assigns , and shall be covenants set forth in the Grant Deed.
5.3 Deleted.
5.4 Maintenance Condition of the Property. The Developer for itself, its successors and assigns to all or any part or portion of the Property and/or Project, covenants and agrees that after Close of Escrow:
5.4.1 The areas of the Property that are subject to public view (including all existing and future improvements, paving, walkways, landscaping, exterior signage and ornamentation) shall be maintained in good repair and a neat, clean and orderly condition, ordinary wear and tear excepted. If there is an occurrence of an adverse condition on any area of the Property that is subject to public view in contravention of the general maintenance standard described above (a “ Maintenance Deficiency ”), then the City shall notify the Developer in writing of the Maintenance Deficiency. If the Developer fails to cure or commence and diligently pursue to cure the Maintenance Deficiency within thirty (30) days of its receipt of notice of the Maintenance Deficiency, the City shal l have the right to enter the Property and perform all acts necessary to cure the Maintenance Deficiency, or to take any other action at law or in equity that may then be available to the City to accomplish the abatement of the Maintenance Deficiency. Any sum expended by the City for the abatement of a Maintenance Deficiency on the Property pursuant to this Section 5.4.1 shall become a lien on the Property, as applicable. If the amount of the lien is not paid within thirty (30) days after written demand for payment from the City to the Developer, the City shall have the right to enforce the lien in the manner provided in Section 5.4.3. 55600.00203\44900577.8
34 5.4.2 Graffiti, as this term is defined in Government Code Section 38772, that has been applied to any exterior surface of a structure or improvement on the Property that is visible from any public right-of-way adjacent or contiguous to the Property after close of escrow, shall be removed by the Developer by either painting over the evidence of such vandalism with a paint that has been color -matched to the surface on which the paint is applied, or graffiti may be removed with solvents, detergents or water, as app ropriate. If any such graffiti is not removed within five (5) days following the time of the discovery of the graffiti, the City shall have the right to enter the Property and remove the graffiti, without notice to the Developer. Any sum reasonably expended by the City for the removal of graffiti from the Property pursuant to this Section 5.4.2, shall be a lien on the Property. If the amount of the lien is not paid within thirty (30) days after written demand to the Developer from the City, the City shall have the right to enforce its lien in the manner provided in Section 5.4.3. Address Graffiti prior to the close of escrow shall be the responsibility of the City.
5.4.3 The Parties further mutually understand and agree that the rights conferred upon the City under this Section 5.4 expressly include a grant by the Developer of a security interest in the Property with the power to establish and enforce a lien or other encumbrance against the Property or any portion thereof, in the manner provided under Civil Code Sections 2924, 2924b and 2924c, to secure the obligations of the Developer and it successors under Section
5.4.1 or Section 5.4.2, including the reasonable attorneys’ fees and costs of the City associated with the abatement of a Maintenance Deficiency or removal of graffiti. For the purposes of the preceding sentence the words “reasonable attorneys’ fees and costs of the City” mean and include the salaries, benefits and costs of the City Attorney and the lawyers employed in the Office of the City Attorney. Said security interest will not be enforced without providing Developer an additional notice and thirty (30) days opportunity to pay all costs, interest, and fees due and owing to the City.
5.4.4 The provisions of this Section 5.4, shall be a covenant running with the land of the Property, shall be enforceable against the Developer and its successors and assigns, and shall be covenants set forth in the Grant Deed, but said covenants under section 5.4 expire and are of no further force and effect after the Certificate of Completion has been issued for the final phase of the Project. Nothing in the foregoing provisions of this Section 5.4 shall be deemed to preclude the Developer from making any alter ation, addition, or other change to any structure or improvement or landscaping on the Property, provided that any such changes comply with applicable zoning and building regulations of the City. The expiration of the Covenant on completion does not restrict City from enforcement of any other laws related to public or private nuisances, graffiti removal, or from issuing notices of violations of any City or state code regarding health and safety, building codes or similar codes.
5.5 Obligation to Refrain from Discrimination . The Developer for itself, its successors and assigns to all or any part or portion of the Property and/or Project, covenants and agrees that:
5.5.1 There shall be no discrimination against or segregation of any person, or group of persons, on account of sex, marital status, race, color, religion, creed, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoy ment of the Property nor shall the Developer, itself or any person claiming under or through it, establish or 55600.00203\44900577.8
35 permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, sub -tenants, sub -lessees or vendees of the Property. The covenant of this Section 5.5 shall run with the land of the Property and shall be enforceable against the Developer and its successors and assigns in perpetuity and be a covenant in the Grant Deed and the Notice of Agreement.
5.5.2 The covenant of this Section 5.5 shall run with the land of the Property in perpetuity, shall be enforceable against the Developer and its successors and assigns, and shall be covenants set forth in the Grant Deed.
5.5.3 Fair Employment Covenant. In connection with its performance under this Agreement, Developer shall not discriminate against any employee or applicant for employment on account of actual or perceived race, color, religion, sex, gender, gender identity, gender expression, sexual orientation, marital status, national origin, ancestry, familial status, source of income, disability, veteran or military status, or genetic information . Developer shall ensure that applicants are employed, and that employees are tre ated during their employment, without regard to any prohibited basis.
5.6 Form of Non-Discrimination and Non-Segregation Clauses. The Developer for itself, its successors and assigns to all or any part or portion of the Property and/or Project, covenants and agrees that:
5.6.1 The Developer, such successors and such assigns shall refrain from restricting the sale, lease, sublease, rental, transfer, use, occupancy, tenure or enjoyment of the Property (or any portion thereof) on the basis of sex, marital status, race, color, relig ion, creed, ancestry or national origin of any person. All deeds, leases or contracts pertaining to the Property shall contain or be subject to substantially the following non -discrimination or non -segregation covenants:
5.6.1.1 In deeds: “The grantee herein covenants by and for itself, its successors and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of race, color, creed, religion, sex, marital status, national origin, or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the premises herein conveyed, nor shall the grantee or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, sub -tenants, sub -lessee, or vendees in the premises herein conveyed. The foregoing covenants shall run with the land.”
5.6.1.2 In leases: “The Lessee herein covenants by and for itself, its successors and assigns, and all persons claiming under or through them, and this lease is made and accepted upon and subject to the following conditions: That there shall be no discrimination against or segregation of any person or group of persons, on account of race, color, creed, religion, sex, marital status, national origin, or ancestry, in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of the premises herein leased nor shall the lessee itself, or any person claiming under or through it, establish or permit any such practice or practices of 55600.00203\44900577.8
36 discrimination or segregation with reference to the selection, location, number, use, or occupancy, of tenants lessees, sub-lessee, sub-tenants, or vendees in the premises herein leased.”
5.6.1.3 In contracts: “There shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, marital status, national origin, or ancestry, in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the premises herein conveyed or leased, nor shall the transferee or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, locat ion, number, use, or occupancy, of tenants, lessees, sub-lessees, sub-tenants, or vendees of the premises herein transferred.” The foregoing provision shall be binding upon and shall obligate the contracting party or parties and any subcontracting party or parties, or other transferees under the instrument.
5.6.2 The covenant of this Section 5.6 shall run with the land of the Property in perpetuity, shall be enforceable against the Developer and its successors and assigns, and shall be covenants set forth in the Grant Deed.
5.7 Survival of Special Development Covenants . All of the covenants set forth in ARTICLE V, inclusive, shall be a covenant running with the land of the Property and each such special development covenant shall survive the Close of Escrow, execution and recordation of the Grant Deed, and issuance and recordation of any Certificate of Completion for the time period specifically set forth in each such special development covenant, except as expressly limited otherwise above. The Parties acknowledge that although the special development covenants apply to the entirety of the Property, portions of th e Project and Property may, in accordance with the Permitted Transfer requirements, be sold or otherwise transferred to various successors and assigns of the Developer. Accordingly, the City agrees that with respect to enforcement of any of the special development covenants, it is understood and agreed that, in the event of a breach of any of the special development covenants, the City will seek to enforce those covenants only against the then-current owner(s) of that portion of the Property which is not in compliance with any one or more the special development covenants. No owner of any portion of the Property which is in compliance with the special development covenants shall be liable for the breach of any of the special development covenants by any other owner of any other portion of the Property; provided, however, that the foregoing shall not preclude City from seeking damages against any prior owner of any portion of the Property if, during the tenure of such owner’s ownership, such owner’s portion of the Property was not in compliance with any one or more of the special development covenants.
5.8 Developer Covenant to Defend this Agreement . The Developer acknowledges that the City is a “ public entity” and/or “public agency” as defined under applicable California law. Therefore, the City must satisfy the requirements of certain California statutes relating to the actions of public entities and public agencies including, without limitation, CEQA and the SLA.
Also, as a public body, the City’s action in approving this Agreement may be subject to proceedings to invalidate this Agreement or mandamus. The Developer assumes the risk of delays and damages and costs that may result to or be incurred by the Developer from any third -party legal actions related to the City’s approval of this Agreement or the pursuit of the activities contemplated by this Agreement, even in the event that an error, omission or abuse of discretion by the City is determined to have occurred. If a third -party asserts a claim, including, in the case 55600.00203\44900577.8
37 of a government entity, a notice of violation, against the City or Developer regarding the City’s approval of this Agreement or the pursuit of the activities contemplated by this Agreement, the City may terminate this Agreement on thirty (30) days’ written notice to the Developer of the City’s intent to terminate this Agreement, referencing this Section 5.8, without any further obligation to perform the terms of this Agreement and without any liability to the Developer resulting from such termination, unles s the Developer unconditionally agrees to indemnify and defend the City, with legal counsel acceptable to the City, against such third-party legal action, as provided in the next sentence. Within thirty (30) days of receipt of the City’s notice of intent t o terminate this Agreement, as provided in the preceding sentence, the Developer may offer to defend the City, with legal counsel reasonably acceptable to the City, in the third-party legal action and pay all of the court costs, attorney fees, monetary awa rds, sanctions, attorney fee awards, expert witness and consulting fees, and the expenses of any and all financial or performance obligations resulting from the disposition of the legal action. Any such offer from the Developer must be in writing and reaso nably acceptable to the City in both form and substance.
Notwithstanding the language in this paragraph, in the case of an SLA-related action section 2.5.3 shall control. Notwithstanding anything to the contrary in this Agreement and for the avoidance of doubt, nothing contained in this Section 5.8 shall be deemed or construed to be an express or implied admission that the City is liable to the Developer or any other person or entity for damages alleged from any alleged or established failure of the City to comply with any statute, including, without limitation, CEQA and the SLA. The Developer’s defense of such third party actions as described in this Section 5.8 shall constitute an Unavoidable Delay.
5.9 Environmental Indemnity of the City by the Developer . The Developer agrees that after Close of Escrow, at its sole cost and expense, to fully indemnify, protect, hold harmless, and defend (with counsel selected by the Developer and approved by the City) the City and its commissions, agents, attorneys, officers, employees, and authorized representatives (collectively, the “ Indemnified Parties ”), from and against any and all claims, demands, damages, losses, liabilities, obligations, penalties, fines, actions , causes of action, judgments, suits, proceedings, costs, disbursements and expenses, including, without limitation, attorney fees, disbursements and costs of attorneys, environmental consultants and other experts, and all foreseeable and unforeseeable dam ages or costs of any kind or of any nature whatsoever (collectively, “Environmental Claims”) that may, at any time, be imposed upon, incurred or suffered by, or claimed, asserted or awarded against, the Indemnified Parties, directly or indirectly relating to or arising from any of the following “ Environmental Matters ” existing or occurring during or arising from the Developer’s ownership of the Property or construction or operation of the Project:
5.9.1 The presence of Hazardous Materials on, in, under, from or affecting all or any portion of the Property or the Project.
5.9.2 The storage, holding, handling, release, threatened release, discharge, generation, leak, abatement, removal or transportation of any Hazardous Materials on, in, under, from or affecting the Property or the Project.
5.9.3 The violation of any law, rule, regulation, judgment, order, permit, license, agreement, covenant, restriction, requirement or the like by the Developer, its agents or contractors, relating to or governing in any way Hazardous Materials on, in, under, from or affecting the Property or the Project.
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38 5.9.4 The failure of the Developer, its agents or contractors, to properly complete, obtain, submit and/or file any and all notices, permits, licenses, authorizations, covenants and the like in connection with the Developer’s activities on the Property or regard ing the Project.
5.9.5 The implementation and enforcement by the Developer, its agents or contractors of any monitoring, notification or other precautionary measures that may, at any time, become necessary to protect against the release, potential release or discharge of Hazardo us Materials on, in, under, from or affecting the Property or the Project.
5.9.6 The failure of the Developer, its agents or contractors, in compliance with all applicable Environmental Laws, to lawfully remove, contain, transport or dispose of any Hazardous Materials existing, stored or generated on, in, under or from the Property or the Project.
5.9.7 Any investigation, inquiry, order, hearing, action or other proceeding by or before any governmental agency in connection with any Hazardous Materials on, in, under, from or affecting the Property or the Project or the violation of any Environmental Law relating to the Property or the Project.
5.9.8 The Developer shall pay to the Indemnified Parties all costs and expenses including, without limitation, reasonable attorneys’ fees and costs, incurred by the Indemnified Parties in connection with enforcement of the aforementioned environmental indemnity.
5.9.9 Nothing herein shall require Developer to protect, defend or indemnify the City from costs arising from actions by other governmental agencies including fines, or required contributions to remediation costs, or a pro -rated portion of the total costs, inclu ding attorneys’ fees and consultant expenses if it is determined by a court of competent jurisdiction that the City itself was a generator of Hazardous Materials which is determined to have placed, released, or allowed migration of such materials onto or under the Property during a period of time prior to the execution of this Agreement. The term “generator” as used herein means that the City was directly involved in the use, placement, release, or migration of the Hazardous Materials.
5.10 Insurance. In order to protect the City and its commissions, agents, attorneys, officers, employees and authorized representatives (collectively, “ Additional Insureds”) against any and all claims and liability for death, injury, loss and damage resulting from the Developer’s actions in connection with this Agreement, the Property, and the Project, the Developer shall secure and maintain the insurance coverage, describe d in and required by this Section 5.10. The City shall not have any obligation under this Agreement until the Developer provides the required policies and/or certificates evidencing the insurance required by this Section 5.10 to the City and the City approves such evidence of insurance. The Developer shall pay any deductibles and self - insured retentions under all insurance policies issued in satisfaction of the terms of this Agreement.
Developer shall retain all insurance policies as set forth in this Secti on 5.10 until recordation of the Certificate of Completion.
5.10.1 Workers’ Compensation Insurance Requirement . The Developer shall submit written proof that the Developer is insured against liability for workers’ compensation 55600.00203\44900577.8
39 in accordance with the provisions of Section 3700 of the Labor Code. By executing this Agreement, the Developer makes the following certification, required by Section 1861 of the Labor Code:
“I am aware of the provisions of section 3700 of the Labor Code which require every employer to be insured against liability for workers’ compensation or to undertake self-insurance in accordance with the provisions of that code, and I will comply with suc h provisions before commencing the performance of the work of the Agreement.”
The Developer shall require each contractor and sub-contractor performing work on the Project to provide workers’ compensation coverage for all of such contractor’s or sub -contractor’s employees, unless the contractor’s or sub -contractor’s employees are co vered by workers’ compensation insurance provided by the Developer. If any class of employees engaged in work or services performed in connection with the Project is not covered by Labor Code Section 3700, the Developer shall provide and/or require each co ntractor or sub -contractor to provide adequate workers’ compensation insurance covering such employees. Each workers’ compensation policy procured pursuant to this Section 5.10.1 shall contain a full waiver of subrogation clause in favor of the Additional Insureds.
5.10.2 Liability and Permanent Insurance Requirements.
5.10.2.1 The Developer shall maintain or cause to be maintained in full force and effect, until the issuance of the Certificate of Completion, subject to Section 5.10.2.4, the following insurance coverage:
5.10.2.1.1 Commercial General Liability Insurance coverage, including, but not limited to, Premises -Operations, Contractual Liability Insurance (specifically covering all indemnity obligations of the Developer pursuant to this Agreement), Products - Completed Operations Hazards, Personal Injury (including bodily injury and death), and Property Damage for liability arising out of the construction of the Project and/or the Developer’s operations concerning the Property or the Project. The commercial general liability insu rance coverage in conjunction with any “umbrella policy” shall have minimum limits for Bodily Injury and Property Damage liability of TWO MILLION DOLLARS ($2,000,000) each occurrence and FOUR MILLION DOLLARS ($4,000,000) aggregate. The use of an “umbrella policy” is permitted to achieve the aforementioned liability limits.
5.10.2.1.2 Developer will require the general contractor and subcontractors to obtain Automobile Liability Insurance against claims of Personal Injury (including bodily injury and death) and Property Damage covering all owned, leased, hired and non-owned vehicles used by the Developer with minimum limits for Bodily Injury and Property Damage of ONE MILLION DOLLARS ($1,000,000) each occurrence. Such insurance shall be provided by a business or commercial vehicle policy.
5.10.2.1.3 If the Developer hires a consultant to provide design services, such as architectural or engineering services in connection with the Project, or any portion 55600.00203\44900577.8
40 of the Project, the Developer shall require each such consultant to provide Professional Liability (Errors and Omissions) Insurance, for liability arising out of, or in connection with, the performance of such design services, with limits of not less than ONE MILLION DOLLARS ($1,000,000).
5.10.2.1.4 Upon acceptance of the Project or any portion thereof, from each contractor, the Developer shall maintain Fire and Extended Coverage Insurance on the Project on a blanket basis or with an agreed amount clause in amounts not less than 100% of the replacement value of all portions of the Project so accepted.
5.10.2.2 During the construction of the Project, the Developer shall require that each contractor performing work on the Project maintain the following insurance coverage, as specified below, at all times during the performance of said work, or the Developer shall provide for such contractors “wrap” coverage, as specified below, at all times during the performance of said work:
5.10.2.2.1 The Developer shall maintain Builder’s Risk
Insurance to be written on an All Risk Completed Value form, in an aggregate amount equal to one hundred percent ( 100%) of the completed insurable value of the Project or portion of the Project on which such contractor is performing work.
5.10.2.2.2 Each general contractor and each sub -contractor shall maintain Commercial General Liability Insurance with limits of not less than ONE MILLION DOLLARS ($1,000,000) per occurrence and TWO MILLION DOLLARS ($2,000,000) aggregate to protect the Developer during the construction of the Project from claims involving bodily injury and/or death and damage to the property of others.
5.10.2.2.3 Each general contractor and each sub -contractor shall maintain Automobile Liability Insurance against claims of personal injury (including bodily injury and death) and property damage covering all owned, leased, hired and non-owned vehicles used in the performance of the contractor’s obligations with minimum limits for bodily injury and property damage of ONE MILLION DOLLARS ($1,000,000) each occurrence and TWO MILLION DOLLARS ($2,000,000) aggregate. Such automobile liability insurance shall be provided by a business or commercial vehicle policy.
5.10.2.3 The insurance required in Section 5.10.2.1 and Section 5.10.2.2 above shall include endorsements naming the Additional Insureds as additional insured for liability arising out of this Agreement and any operation related to this Agreement.
5.10.2.4 Any insurance coverage required under this Agreement shall not be written on a “claims made” basis, except the 5.10.2.1.3 professional liability insurance which may be on a claims made basis. The applicable certificate of insurance must clearly provide tha t the coverage is on an “occurrence” basis. The requirements of this Section 5.10.2.4 shall survive any expiration or termination of this Agreement and the recordation of the Grant Deed and any Certificate of Completion.
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41 5.10.2.5 Receipt by the City of evidence of insurance that does not comply with the above requirements shall not constitute a waiver of the insurance requirements of this Agreement.
5.10.2.6 Subject to Section 5.10.2.4, all of the insurance coverage required under this Section 5.10 shall be maintained by the Developer or its contractors, as required by the terms of this Agreement, until the issuance of the Certificate of Completion and requested not to be reduced, modified, or canceled without, at least, thirty (30) days prior written notice to the City.
These insurance requirements in 5.10.2 may be met in part or in whole by an OCIP (Owner Controlled Insurance Program), Builder’s Risk or other ‘wrap’ type policy even if the above paragraphs state ‘each’ contractor or subcontractor must have separate insurance. The Developer shall immediately obtain replacement coverage for any insurance policy that is terminated, canceled, non-renewed, or whose policy limits are exhausted or upon insolvency of the insurer that issued the policy. If any notices of change, or cancellation are received Developer shall immediately notify the City, but requirements for “no changes without 30 days ’ advance notice” may not be accepted by insurers, and minor variations in notice of cancellations clauses shall not be a breach of this Agreement. Failure of Developer to have replacement insurance meeting all requirements put in place prior to the cancellation date of any required insurance policy is a breach of this Agreement.
5.10.2.7 All insurance to be obtained and maintained by the Developer under this Section 5.10 shall be issued by a company or companies listed in the then current “Best’s Key Rating Guide” publication with a minimum of an “A:VII” rating and be authorized to conduct business in the State of California, but said carriers may be ‘non-admitted’.
5.10.2.8 The City will not accept self -insurance in satisfaction of the insurance requirements of this Section 5.10.
5.10.2.9 All insurance obtained and maintained by the Developer in satisfaction of the requirements of this Agreement shall be primary to and not contributing to any insurance maintained by the Additional Insureds.
5.10.2.10 Insurance coverage in the minimum amounts set forth in this Section 5.10 shall not be construed to relieve the Developer of any liability, whether within, outside, or in excess of such coverage, and regardless of solvency or insolvency of the insurer that issues the coverage; nor shall it preclude the Additional Insureds from taking such other actions as are available to them under any other provision of this Agreement or otherwise at law.
5.10.3 Failure by the Developer to maintain all insurance coverage required by this Section 5.10 in effect shall be an Event of Default by the Developer. The City, at its sole option, may exercise any remedy available to them in connection with such an Event of D efault.
Alternatively, the City may, at its sole option, purchase any such required insurance coverage and the City shall be entitled to immediate payment from the Developer for any premiums and associated costs paid by the City for such insurance coverage. Any election by the City to purchase or not to purchase insurance otherwise required to be carried by the Developer shall not relieve the Developer of its obligation to obtain and maintain the insurance coverage required by this Agreement.
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42 ARTICLE VI
PROJECT FINANCING
6.1 Approved Project Financing; Recordation of Approved Loans.
6.1.1 If the City and the Developer agree to a Seller Carryback Loan, as provided for in Section 2.2, the City Deed of Trust shall be recorded in a first lien position.
6.1.2 To the extent the Developer seeks a Construction Loan, the Developer shall cause the Construction Loan Deed of Trust(s) to be recorded against the Property within sixty (60) days following the Close of Escrow.
6.1.3 If, upon completion of the Project, Developer agrees to sell the Affordable Units for an affordable housing cost, as defined in California Health and Safety Code section 50052.5, then prior to any sale to a homebuyer, the Developer may request the City ’s approval of an assignment and assumption agreement, or other loan agreement evidencing homebuyer’s obligation to pay the Seller Carryback Loan, which shall be secured by a deed of trust in favor of the City and recorded against the Property, and shall remain in a first lien position.
The City Manager, or designee, shall have the right to approve any such assignment and assumption, or other homebuyer loan agreement for the same purpose, on substantially similar terms as the Seller Carryback Loan, provided that the form of the agreement is agreed upon by the Parties prior to Close of Escrow . Notwithstnading anything to the contrary herein, the Seller Carryback Loan shall be repaid in accordance with the City Promissory Note , and the City Deed of Trust shall remain a lien on the Property unless and until the City approves a reconveyance upon satisfaction of the City Promisssory Note.
6.2 Unauthorized Liens. Except as provided in Section 6.3, until recordation of the Certificate of Completion, the Developer shall not record, and shall not allow to be recorded, against the Property, or any portion thereof, any Lien not expressly authorized by this Agreement.
Until recordation of the Certificate of Completion, the Developer shall remove, or shall hav e removed, any unauthorized Lien made or recorded against the Property or any portion of the Property, or shall assure the satisfaction thereof to the satisfaction of the City. After one hundred twenty (120) calendar days prior written notice to the Developer, the City shall have the right, but not the obligation, to satisfy any unauthorized Lien made or recorded prior to recordation of the Certificate of Completion and receive reimbursement from the Developer for any amounts paid or incurred in satisfying any such Lien, upon demand. Nothing in this Section 6.2, though, shall require the Developer to pay or make provisions for the payment of any tax, assessment, lien, or charge that the Developer is in the process of contesting the validity or amount thereof, in good faith, and so long as such contest shall not subject the Property, or any portion thereof, to forfeiture or sale. Preliminary notices and/or other liens that are generally accectable during the course of the contruction from contractors/material suppliers shall not be subject to this provision.
6.3 Rights of Lenders and City Regarding Permitted Loans and Liens.
6.3.1 The City shall have the right of reasonable review and approval of any Lender from which the Developer proposes to obtain any Loan, whether or not such Loan is 55600.00203\44900577.8
43 secured by a Lien against the Property or any portion thereof. The City shall not unreasonably withhold, condition or delay its approval of any proposed Lender or Loan. In deciding whether to give, condition or withhold such approval, the City may consider , among other matters, whether or not the proposed Lender is a state or federally chartered bank, savings and loan, or other financial institution which routinely provides construction financing to development projects such as the Project, whether the terms of the Loan are reasonable and customary when compared to the financing terms of similar development projects in the County, the size and financial strength of the proposed Lender, and what effect, if any, any changes requested by the Lender to either th is Agreement or any of the exhibits to this Agreement may have upon the City’s rights and remedies hereunder. In connection therewith, in any notice requesting approval of a proposed Lender and Loan, the Developer shall include a statement identifying any amendments, modifications, or other changes to this Agreement or its exhibits which the proposed Lender will request in connection with the Developer’s obtaining of the Loan. The City agrees to reasonably consider, but shall not be obligated to accept, any amendment, modification, or other change to this Agreement or any of the exhibits to this Agreement which materially restricts, diminishes, or burdens the City’s rights and remedies.
6.3.2 Whenever the City delivers any notice or demand to the Developer regarding any breach or default by the Developer under this Agreement that, if not timely cured by the Developer, would entitle the City to terminate this Agreement, the City shall send a cop y of such notice to each affected Lender of which the City has received notice and a contact address for transmittal of such notices. Whenever the City delivers any notice or demand to the Developer regarding any breach or default by the Developer under th is Agreement that, if not timely cured by the Developer, would entitle the City to exercise its power of termination of the fee estate of all or any portion of the Property pursuant to Section 7.6, the City shall at the same time send a copy of such notice or demand to each affected Lender of which the City has received notice and a contact address for transmittal of such notice. Each affected Lender receiving a copy of any such notice shall have t he right, at its option, to commence the cure or remedy of any such default of the Developer and to diligently and continuously proceed with such cure or remedy, within one hundred eighty (180) calendar days following its receipt of notice of the default. If a default of the Developer under this Agreement cannot, with diligence, be remedied or cured, or the remedy or cure of such default cannot be commenced, within such one hundred eighty (180) calendar day period, the Lender shall have such additional time as is reasonably necessary to remedy or cure such default of the Developer, but in no event beyond three hundred sixty five (365) calendar days following its receipt of notice of the default. If such default of the Developer can only be remedied or cured by the Lender upon obtaining possession of the Property, the Lender shall seek to obtain possession of the Property with diligence and continuity through a receiver or otherwise, and shall remedy or cure such default of the Developer within one hundred eighty (180) calendar days after obtaining possession of the Property. Nothing contained in this Agreement shall be deemed to permit or authorize any Lender to undertake or continue the construction of any portion of the Project (beyond the extent necessary to conserve or protect improvements or construction already made), without expressly assuming the Developer’s obligations under this Agreement by written agreement approved by the City, in which the Lender agrees to complete, in the manner provided in this Agreement, the improvements to which the Lien or title of the Lender relates, which approval shall not unreasonably be withheld, delayed, or conditioned by the City. 55600.00203\44900577.8
44 6.3.3 In any case where, one hundred eighty (180) calendar days after delivery of notice of a default of the Developer under Section 6.3.2, an affected Lender has not exercised the option provided in Section 6.3.2 to construct the applicable portions of the Project, or has exercised the option, but has not proceeded diligently and continuously with construction, the City shall have the option, in the City’s sole and absolute discretion, to purchase the Loan of such Lender and any security interest of such Lender under its Loan Documents by payment to the Lender of the amount of the unpaid Loan, including principal, accrued and unpaid interest, late charges, costs, expenses and other amounts payable to the Lender by the Developer under its Loan Documents and, if the ownership of the Property or any portion of the Property has previously vested in such Lender, the City, at its option but not as its obligation, shall be entitled to a conveyance of any title or interest in the Property vested in such Lender from such Lender.
6.3.4 After expiration of the one hundred eighty (180) calendar day period provided for in Section 6.3.3, any affected Lender may demand, in writing, that the City act to exercise or forego the option granted in Section 6.3.3. If the City fails to exercise the right granted in Section 6.3.3 within sixty (60) calendar days from the date of the City’s receipt of such written demand from a Lender, the City shall be conclusively deemed to have waived its right of purchase of that Lender’s interest pursuant to Section 6.3.3.
6.3.5 In the event of a default or breach by the Developer under any Loan Documents, where the Lender has not exercised its option to complete the Project under Section
6.3.3, the City may cure the default of the Developer under the applicable Loan Documents, but is under no obligation to do so, prior to completion of any sale or foreclosure of the Property or any portion thereof under the applicable Loan Documents. The City shall be entitled to reimbursement from the Developer of all costs and expenses incurred by the City in curing any default of the Developer under any Loan Documents.
6.3.6 In any case where a Lender has acquired title to all or any portion of the Property or Project through foreclosure, deed in lieu of foreclosure, or any other means, and such Lender proposes to enter into an agreement to transfer the Property and/or Project, or any portion thereof, to a third party transferee, the Lender shall provide the City with written notice thereof, which notice shall include a reasonably detailed description of the terms and conditions of the proposed transaction. The City shall have the option, but not the obligation, to purchase the Property and/or Project on substantially the same terms as described in the Lender’s notice, which option, if ever, shall be exercised by written notice from the City to the Lender within twenty (20) days following the City’s receipt of the Lender’s notice. If the City elects not to exercise its option, then, subject to Section 9.2.2, the Lender may complete the transaction described in its notice, provided that such transaction is closed on materially identical terms and conditions as those described in the Lender’s notice to the City. If the Lender and third party transferee desire to materially amend the terms of their proposed transaction, the Lender shall give the City written notice of the proposed modifications and the City shall once again have the right to elect to acquire the Property and the Project (or portion thereof) on t erms and conditions substantially similar to those modified terms. If, for any reason, the proposed transaction between the Lender and third party transferee fails to close within two hundred forty (240) days following the date on which the City first rece ives notice of the proposed transaction (or notice of the proposed modified transaction, whichever is later), then the City once again have the right to elect to acquire the Property and/or Project pursuant to this Section 6.3.6. 55600.00203\44900577.8
45 6.3.7 The restrictions set forth in this Section 6.3 shall remain in effect only until the recordation of the Certificate of Completion for the Project.
ARTICLE VII
DEFAULTS, REMEDIES AND TERMINATION
7.1 Defaults - General.
7.1.1 Subject to any extensions of time provided for in this Agreement, failure or delay by any Party to perform any term or provision of this Agreement shall constitute an “Event of Default” under this Agreement; provided, however, that if a Party otherwise in default commences to cure, correct, or remedy such default, within thirty (30) calendar days after receipt of written notice from the injured Party specifying such default, and shall diligently and continuously prosecute such cure, correction, or remedy to completion (and where any time limits for the completion of such cure, correction, or remedy are specifically set forth in this Agreement, then within said time limits), such Party shall not be deemed to be in default under this Agreement and no Event of Default shall be deemed to have occurred.
7.1.2 The injured Party shall give written notice of default to the Party in default, specifying the default complained of by the non-defaulting Party. Delay in giving such notice shall not constitute a waiver of any default nor shall it change the time of default.
7.1.3 Any failure or delays by any Party in asserting any of their rights and/or remedies as to any default shall not operate as a waiver of any default or of any such rights or remedies. Delays by any Party in asserting any of its rights and/or remedies shall n ot deprive that Party of its right to institute and maintain any actions or proceedings that it may deem necessary to protect, assert or enforce any such rights or remedies.
7.1.4 In addition to other acts or omissions of the Developer that may legally or equitably constitute a default or breach of this Agreement, the occurrence of any of the following specific events, prior to the issuance of a Certificate of Completion for the Project, shall constitute an “Event of Default” under this Agreement and shall not be subject to the notice and cure provisions of Section 7.1.1:
7.1.4.1 Any material default by the Developer under any Loan Documents for any purpose or reason that remains uncured following any applicable notice from Lender and expiration of any applicable cure period under such Loan Documents.
7.1.4.2 Any representation, warranty or disclosure made in writing to the City by the Developer regarding this Agreement or the Project is intentionally or recklessly and materially false or misleading, whether or not such representation or disclosure appears in t his Agreement.
7.1.4.3 The construction of the Project is delayed or suspended for a period in excess of that permitted under Section 4.3 or the Developer has not been issued, or entitled to be issued, a Certificate of Completion by the Project Completion Date. 55600.00203\44900577.8
46 7.1.4.4 There occurs any event of dissolution, reorganization or termination of the Developer that adversely and materially affects the operation or value of the Property or the Project, and such event is not corrected within five (5) days following written notice of such event from the City to the Developer.
7.1.4.5 The Developer Transfers its interest in this Agreement, the Property, or the Project, or any portion thereof, whether voluntarily or involuntarily or by operation of law, in violation of the terms and conditions of this Agreement and such action is not cur ed within the period prescribed in Section 9.2.2.
7.1.4.6 The Developer becomes insolvent or a receiver is appointed to conduct the affairs of the Developer under state or federal law.
7.1.4.7 The Developer’s legal status as a Nonprofit California corporation authorized by the Secretary of State of the State of California to transact business in California is suspended or terminated.
7.1.4.8 The Developer fails to comply with obligations set forth in the Affordability Covenant or takes other actions preventing the complete execution and recording of the same.
7.2 LIQUIDATED DAMAGES TO THE CITY . UPON THE OCCURRENCE OF
AN EVENT OF DEFAULT BY THE DEVELOPER UNDER THIS AGREEMENT PRIOR TO
THE CLOSE OF ESCROW, THE CITY MAY CANCEL THE ESCROW PURSUANT TO SECTION 3.10, AND UPON CANCELLATION OF THE ESCROW, THE CITY SHALL BE
RELIEVED OF ANY OBLIGATION UNDER THIS AGREEMENT TO SELL OR CONVEY
THE PROPERTY OR ANY PORTION THEREOF AND ANY SUCH ESCROW
CANCELLATION SHALL BE WITHOUT ANY LIABILITY OF THE CITY TO THE DEVELOPER OR A NY OTHER PERSON ARISING FROM SUCH ACTIONS. THE CITY
AND THE DEVELOPER ACKNOWLEDGE THAT IT IS EXTREMELY DIFFICULT AND
IMPRACTICAL, IF NOT IMPOSSIBLE, TO ASCERTAIN THE AMOUNT OF DAMAGES
THAT WOULD BE SUFFERED BY THE CITY IN THE EVENT OF A CANCELLATION OF
THE ESCROW DUE TO THE OCCURRENCE OF AN EVENT OF DEFAULT BY THE DEVELOPER UNDER THIS AGREEMENT PRIOR TO THE CLOSE OF ESCROW. HAVING
MADE DILIGENT BUT UNSUCCESSFUL ATTEMPTS TO ASCERTAIN THE ACTUAL
DAMAGES THE CITY WOULD SUFFER IN THE EVENT OF A CANCELLATION OF THE
ESCROW DUE TO THE OCCURRENCE OF AN EVENT OF DEFAULT BY THE
DEVELOPER UNDER THIS AGREEMENT PRIOR TO THE CLOSE OF ESCROW, THE
CITY AND THE DEVELOPER AGREE THAT A REASONABLE ESTIMATE OF THE CITY’S DAMAGES IN SUCH EVENT IS THE TOTAL S UM OF THE EARNEST MONEY DEPOSIT(THE “ LIQUIDATED DAMAGES AMOUNT ”). IN ADDITION, THE CITY
SHALL BE ENTITLED TO AN ASSIGNMENT OF THE PLANS AND SPECIFICATIONS FOR THE PROJECT. THEREFORE, UPON THE CANCELLATION OF THE ESCROW BY
THE CITY DUE TO THE OCCURRENCE OF AN EVENT OF DEFAULT BY THE
DEVELOPER UNDER THIS AGREEMENT PRIOR TO THE CLOSE OF THE ESCROW,
ESCROW HOLDER SHALL IMMEDIATELY CANCEL THE ESCROW AND PAY THE LIQUIDATED DAMAGES AMOUNT (I.E., THE EARNEST MONEY DEPOSIT) TO THE 55600.00203\44900577.8
47 CITY WITHIN FIVE (5) DAYS OF ESCROW CANCELLATION. IN ADDITION, THE
DEVELOPER SHALL EXECUTE ANY INSTRUMENT REQUIRED TO ASSSIGN THE PLANS AND SPECIFICATIONS TO THE CITY. RECEIPT OF THE LIQUIDATED
DAMAGES AMOUNT AND THE ASSIGNMENT OF PLANS AND SPECIFICATIONS SHALL BE THE CITY’S SOLE AND EXCLUSIVE REMEDY UPON THE CANCELLATION
OF THE ESCROW DUE TO THE OCCURRENCE OF AN EVENT OF DEFAULT BY THE DEVELOPER UNDER THIS AGREEMENT PRIOR TO THE CLOSE OF ESCROW.
CITY’S INITIALS: _____ DEVELOPER’S INITIALS: _____
7.3 DEVELOPER’S ELECTION RE: SPECIFIC ENFORCEMENT OF
AGREEMENT OR WAIVER OF RIGHT TO SPECIFIC PERFORMANCE AND LIMITATION ON RECOVERY OF DAMAGES PRIOR TO CLOSE OF ESCROW. UPON
THE OCCURRENCE OF AN EVENT OF DEFAULT PERTAINING TO THE CONVEYANCE
OF THE PROPERTY BY THE CITY UNDER THIS AGREEMENT PRIOR TO CLOSE OF
ESCROW, THE DEVELOPER SHALL, AS ITS SOLE AND EXCLUSIVE REMEDY, HAVE
THE RIGHT TO EXERCISE ONE OF THE ALTERNATIVE REMEDIES DESCRIBED IN SECTIONS 7.3.1 AND 7.3.2. THE DEVELOPER’S ELECTION, ONCE MADE, SHALL BE IRREVOCABLE.
7.3.1 WAIVER OF RIGHT TO SPECIFIC PERFORMANCE AND
LIMITATION ON RECOVERY OF DAMAGES . THE DEVELOPER MAY WAIVE THE REMEDIES SET FORTH IN SECTION 7.3.2 AND MAY CANCEL THE ESCROW PURSUANT TO SECTION 3.10, AND UPON CANCELLATION OF THE ESCROW, THE
DEVELOPER SHALL BE RELIEVED OF ANY OBLIGATION UNDER THIS AGREEMENT
TO PURCHASE OR ACCEPT TITLE TO THE PROPERTY AND ANY SUCH ESCROW
CANCELLATION SHALL BE WITHOUT ANY LIABILITY OF THE DEVELOPER TO THE CITY OR ANY OT HER PERSON ARISING FROM SUCH ACTIONS. THE DEVELOPER
WAIVES ANY AND ALL RIGHT TO RECOVER ANY SUMS FROM THE CITY ARISING FROM AN EVENT OF DEFAULT BY THE CITY PRIOR TO THE CLOSE OF ESCROW. THE DEVELOPER ACKNOWLEDGES THE PROTECTIONS OF CIVIL CODE SECTION 1542 RELATIVE TO THE WAIVER AND RELEASE CONTAINED IN THIS SECTION 7.3.1, WHICH CIVIL CODE SECTION READS AS FOLLOWS:
“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT THE CREDITOR
OR RELEASING PARTY DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR
HER FAVOR AT THE TIME OF EXECUTING THE RELEASE AND THAT, IF
KNOWN BY HIM OR HER, WOULD HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR OR RELEASED PARTY.”
BY INITIALING BELOW, THE DEVELOPER KNOWINGLY AND VOLUNTARILY WAIVES THE PROVISIONS OF SECTION 1542 SOLELY IN CONNECTION WITH THE WAIVERS AND RELEASES OF THIS SECTION 7.3.1.
55600.00203\44900577.8
48 DEVELOPER’S INITIALS _______
IN CONNECTION WITH THE WAIVERS OF THIS SECTION 7.3.1, THE
DEVELOPER FURTHER WAIVES THE RIGHT TO RECORD A NOTICE OF PENDENCY
OF ACTION AGAINST ALL OR ANY PORTION OF THE PROPERTY EXCEPT
DEVELOPER MAY RECORD SUCH A NOTICE IN CONNECTION WITH ANY SUIT FOR
SPECIFIC PERFORMANCE PERMITTED HEREUNDER IN THE EVENT DEV ELOPER
ELECTS NOT TO WAIVE ITS RIGHT TO SEEK SPECIFIC PERFORMANCE UNDER SECTION 7.3.2.
7.3.2 SPECIFIC PERFORMANCE . THE DEVELOPER MAY
WAIVE THE REMEDIES SET FORTH IN SECTION 7.3.1 AND, IN ACCORDANCE WITH CIVIL CODE SECTION 3384, ET SEQ., INSTITUTE AN ACTION AGAINST THE CITY FOR
SPECIFIC PERFORMANCE OF THE TERMS OR PROVISIONS OF THIS AGREEMENT
WHICH WERE TO HAVE BEEN COMPLETED BY THE CITY PRIOR TO AND AT THE CLOSE OF ESCROW.
7.4 Legal Actions.
7.4.1 Except as otherwise provided by Section 7.3, any Party may institute legal action to cure, correct or remedy any default, to recover damages for any default, or to obtain any other remedy available to that Party under this Agreement or at law or in equity. Such legal actions must be instituted in t he Superior Court of the State of California in and for the County of San Bernardino, California, in any other appropriate court within the County of San Bernardino, California.
7.4.2 The procedural and substantive laws of the State of California shall govern the interpretation and enforcement of this Agreement, without regard to conflicts of laws principles. The Parties acknowledge and agree that this Agreement is entered into, is to b e fully performed in and relates to real property located in the City of Ontario, County of San Bernardino, California.
7.5 Rights and Remedies are Cumulative . Except as otherwise expressly stated in this Agreement, the rights and remedies of the Parties set forth in this ARTICLE VII are non- exclusive and cumulative, and the exercise by any Party of one or more of such rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default by the other Party(ies).
7.6 City Power of Termination and Reverter Regarding the Property.
7.6.1 The City hereby reserves a power of termination pursuant to Civil Code Sections 885.010, et seq., exercisable by the City, in its sole and absolute discretion, upon sixty (60) calendar days written notice to the Developer referencing this Section 7.6, to terminate the fee interest of the Developer in the Property and/or any improvements to the Property and revest such fee title in the City and take possession of all or any portion of such real property and improvements, without compensation to the Developer, other than reimbursement for actual costs 55600.00203\44900577.8
49 incurred by the Developer upon the occurrence of an Event of Default by the Developer following the Close of Escrow and prior to the issuance of the Certificate of Completion.
7.6.2 The sixty (60) calendar day written notice specified in Section 7.6.1 shall specify the Event of Default by the Developer triggering the City’s exercise of its power of termination. The City shall proceed with its remedy set forth in Section 7.6.1 only if the Developer continues in default for a period of sixty (60) calendar days following such notice or, upon commencing to cure such default within the sixty (60) day period, fails to diligently and continuously prosecute said cure to satisfactory conclusion.
7.6.3 The rights of the City under this Section 7.6 shall be subject and subordinate to, shall be limited by and shall not defeat, render invalid or limit:
7.6.3.1 Each Lien recorded against the Property and specifically authorized by this Agreement as a Permitted Transfer;
7.6.3.2 Any leases, declarations of covenants, conditions and restrictions, easement agreements or other recorded documents or interests applicable to the Property and specifically authorized by this Agreement as a Permitted Transfer.
7.6.4 Upon the City’s exercise of its power of termination pursuant to this Section
7.6, the Developer or its successors or assigns shall convey by grant deed to the City title to the Property, as specified in the City’s notice pursuant to Section 7.6.1, and all improvements thereon, in accordance with Civil Code Section 1109, as such code section may hereafter be amended, renumbered, replaced or substituted. Such conveyance shall be duly acknowledged by the Developer and a notary in a manner suitable fo r recordation. The City may enforce its rights pursuant to this Section 7.6 by means of an injunctive relief or forfeiture of title action filed in any court of competent jurisdiction.
7.6.5 Upon the revesting in the City of title to the Property, whether by grant deed or court decree, the City shall exercise its reasonable good faith efforts to resell the Property at its then fair market value, as soon and in such manner as the City shall, in its sole discretion, find feasible and consistent with the objectives of the City’s General Plan, to a qualified and responsible person or persons (as reasonably determined by the City) who will assume the Developer’s obligations to begin and/or complete and/or operate that portion of the Project located on the Property, or such other replacement development acceptable to the City, in its sole and absolute discretion. Upon any such resale of the Property (or any portion thereof), the proceeds to the City from such sale shall be applied as follows:
7.6.5.1 First, to pay any and all amounts required to release/reconvey any Lien recorded against all or any portion of the Property; and
7.6.5.2 Second, to reimburse the City on its own behalf or on behalf of the City for all actual internal and third-party costs and expenses previously or currently incurred by the City related to the Property, the Project, or this Agreement, including, but not lim ited to, customary and reasonable fees or salaries to third -party personnel engaged in such actions, in connection with the recapture, management and resale of the Property or any part thereof; all taxes, assessments and utility charges paid by the City wi th respect to the Property or portion thereof; 55600.00203\44900577.8
50 any payment made or necessary to be made to discharge or prevent from attaching or being made any subsequent encumbrances or liens due to obligations incurred by the Developer with respect to the acquisition of the Property or the construction of the Project; and amounts otherwise owing to the City by the Developer or its successors or assigns pursuant to the terms of this Agreement; and
7.6.5.3 Third, to the extent that any proceeds from such resale are, thereafter, available, taking into account any prior encumbrances with a claim thereto, to reimburse the Developer, or its successors in interest to the equal to the sum of: (1) the Purchase Pri ce; and (2) the third-party costs actually incurred and paid by the Developer regarding the development of the Project located on the Property, including, but not limited to, pro rata costs of carry, taxes, and other items as set forth in a cost certification to be made by the Developer to the City prior to any such reimbursement, which certification shall be subject to the City’s reasonable approval; provided, however, that the Developer shall not be entitled to reimbursement for any expenses to the extent that such expenses relate to any loans, Liens or other encumbrances that are paid by the City pursuant to the provisions of sub-sections 7.6.5.1 or 7.6.5.2 above.
7.6.5.4 Any portion of the proceeds from the resale of the Property remaining after the foregoing applications shall be retained by the City as their sole and exclusive property.
7.6.6 The City’s power to terminate per Section 7.6 ends upon issuance of a Certificate of Completion.
7.6.7 IMMEDIATELY FOLLOWING THE SIXTY (60) DAY PERIOD
SPECIFIED IN SECTION 7.6.1, ABOVE, AS MAYBE EXTENDED AS SET FIRTH THEREIN,
THE CITY, ITS EMPLOYEES AND AGENTS SHALL HAVE THE RIGHT TO REENTER
AND TAKE POSSESSION OF THE PROPERTY AND ANY IMPROVEMENTS THEREON, WITHOUT FURTHER NOTICE OR COMPENSATION TO THE DEVELOPER.
DEVELOPER’S INITIALS _______
7.6.8 THE DEVELOPER ACKNOWLEDGES AND AGREES THAT THE
CITY’S EXERCISE OF ITS POWER OF TERMINATION AND RIGHT OF REENTRY PURSUANT TO THIS SECTION 7.6 MAY WORK A FORFEITURE OF THE ESTATE IN THE
DEFAULTED PORTION OF THE PROPERTY CONVEYED TO THE DEVELOPER THROUGH THE GRANT DEED. THE DEVELOPER ACKNOWLEDGES THAT THE TERMS
AND CONDITIONS OF THIS AGREEMENT REFLECT THE POSSIBILITY OF FORFEITURE BY VIRTUE OF TH E EXERCISE OF THE CITY’S POWER OF TERMINATION PROVIDED IN THIS SECTION 7.6.
DEVELOPER’S INITIALS _______
55600.00203\44900577.8
51 ARTICLE VIII
8.1 Developer Indemnification of the City. In addition to any other specific indemnification or defense obligations of the developer set forth in this agreement, the Developer agrees to indemnify, defend (upon written request by the city and with counsel reasonably acceptable to the city and hold harmless the Indemnified Parties, from any and all losses, liabilities, charges, damages, claims, liens, causes of action, awards, judgments, costs and expenses, including, but not limited to reasonable attorney’s fees of counsel retained by the indemnified parties, expert fees, costs of staff time, and investigation costs, of whatever kind or nature, that are in any manner directly or indirectly caused, occasioned or contributed to in whole or in part, through any omission, fault or active negligence, of the Develop er or the Developer’s officers, agents, employees, independent contractors or subcontractors of any tier, relating in any manner to this agreement, any work to be performed by the developer related to this ag reement, the property, or the project, or any authority or obligation exercised or undertaken by the Developer under this agreement. Without limiting the generality of the foregoing, the Developer’s obligation to indemnify the indemnified parties shall include injury or death to any person or persons, damage to any property, regardless of where located, including the property of the Indemnified Parties, claim or suit or any other matter arising from or connected with any goods or materials provided or services or labor performed regarding the project or the property on behalf of the developer by any person or entity. The indemnity obligations in this paragraph shall not extend to losses, liabilities, charges, damages, claims, liens, causes of action, awards, judgments, costs and expenses, including, but not limited to reasonable attorney’s fees of counsel retained by the indemnified parties, expert fees, costs of staff time, and investigation costs, which are caused by the sole negligence or willful misconduc t of the city or its agents. Nothing in this paragraph supersedes express indemnity obligations agreed to elsewhere by the city.
ARTICLE IX
GENERAL PROVISIONS
9.1 Incorporation of Recitals. The Recitals of fact set forth preceding this Agreement are true and correct and are incorporated into this Agreement in their entirety by this reference.
9.2 Restrictions on Transfers.
9.2.1 The Developer acknowledges that the qualifications and identity of the Developer are of particular importance to the City. The Developer further recognizes and acknowledges that the City has relied and is relying on the specific qualifications and identity of the Developer in entering into this Agreement with the Developer and, as a consequence, Transfers are permitted only as expressly provided in this Agreement. The Developer shall promptly notify the City in writing of any and all changes whatsoever in t he identity of the business entities or individuals either comprising or in control of the Developer, as well as any and all changes in the interest or the degree of control of the Developer by any such person, of which information the 55600.00203\44900577.8
52 Developer or any of its partners, members or officers are notified or may otherwise have knowledge or information.
9.2.2 Except as expressly permitted in this Agreement, the Developer represents to the City that it has not made and agrees that it will not make or create, or suffer to be made or created, any Transfer other than a Permitted Transfer, either voluntarily, involuntarily or by operation of law, until after the recordation of a Certificate of Completion for the Project subject to the Transfer; provided, however, that the City may approve in its reasonable discretion, Transfers other than Permitted Transfers prior to the recordation of a Certificate of Completion. In deciding whether to approve or disapprove any proposed Transfer, the City may consider the proposed transferee’s financial strength and the experience of the proposed transferee and its senior management in undertaking and successfully completing projects of a similar type and size as the Project or that portion of the Project proposed to be transferred. The City may not consider the amount of money that the proposed transferee is paying or intends to pay to the Developer as consideration for such Transfer or condition approval of the Transfer on the sharing of any such payment made or to be made to the Developer with the City. In connection with a proposed Transfer, Developer shall submit to the City appropriate documentation, including but not limited to a form of an assignment and assumption a greement, for City’s review and written approval, which approval shall not be unreasonably delayed or denied. Any Transfer made in contravention of this Section 9.2 shall be voidable at the election of the City and this Agreement may be terminated by the City or the City may exercise any other remedy available to the City under the terms of this Agreement, provided, however, that (i) the City shall first notify the D eveloper in writing of its intention to terminate this Agreement or to exercise any other remedy, and (ii) the Developer shall have twenty (20) calendar days following its receipt of such written notice to commence and, thereafter, diligently and continuously proceed to cure the default of the Developer and submit evidence of the initiation and satisfactory completion of such cure to the City, in a form and substance reasonably satisfactory to the City.
9.2.3 The Developer shall provide the City no less than thirty (30) days prior written notice of any proposed Transfer which the Developer desires to enter into prior to the recordation of a Certificate of Completion for the Project subject to the Transfer, othe r than a Permitted Transfer for which no notice shall be required. The Developer shall have the burden of demonstrating to the City’s reasonable satisfaction that the proposed Transfer meets the conditions and requirements of this Agreement with respect to Permitted Transfers.
9.2.4 In connection with the City’s review of any request for approval of any proposed Transfer under Section 1.1.73 and this Section 9.2, or of any Lender or Loan under Section 6.3, the Developer agrees to reimburse the City for those third party costs and expenses incurred by the City in connection with its review of the Developer’s request for approval, including, without implied limitation, the reasonable fees and costs of those outside consultants and legal counsel retained by the City to assist it in its review of the Developer’s request, including the City Attorney.
9.2.5 Anything in this Agreement to the contrary notwithstanding, the restrictions and prohibitions on Transfers contained in this Section 9.2 shall terminate upon issuance of a Certificate of Completion for the Project. 55600.00203\44900577.8
53 9.3 Notices, Demands and Communications Between the Parties.
9.3.1 Any and all notices, demands or communications submitted by any Party to another Party pursuant to or as required by this Agreement shall be proper, if in writing and dispatched by messenger for immediate personal delivery, by a nationally recognized overnight courier service or by registered or certified United States Mail, postage prepaid, return receipt requested, to the principal office of the City or the Developer, as applicable, as designated in Section 9.3.2. Such written notices, demands or communications may be sent in the same manner to such other addresses as either Party may from time to time designate. Any such notice, demand or communication shall be deemed to be received by the addressee, regardless of whether or when any return receipt is received by the sender or the date set forth on such return receipt, on the day that it is delivered by personal delivery, on the date of delivery by a nationally recognized overnight courier service or three (3) calendar days after it is placed in the United States Mail, as provided in this Section 9.3.
9.3.2 The following are the authorized addresses for the submission of notices, demands or communications to the Parties:
TO DEVELOPER: Montebello Housing Development Corporation 1619 Paramount Boulevard,
Montebello, CA 90640
Att: Robert Monzon
COPY TO: NONE
TO CITY:
City of San Bernardino
290 N D Street,
San Bernardino, CA 92401
Attn.: City Manager
COPY TO: Sonia Carvalho
City Attorney
City of San Bernardino
18101 Von Karman Ave
Suite 1000
Irvine, CA 92612
Office: (949) 263-2600
Fax: (949) 260-0972
9.4 Conflict of Interest . No member, official or employee of the City, having any conflict of interest, direct or indirect, related to this Agreement, the Property, or the development 55600.00203\44900577.8
54 or operation of the Project shall participate in any decision relating to this Agreement. The Parties represent and warrant that they do not have knowledge of any such conflict of interest.
9.5 Warranty Against Payment of Consideration for Agreement . The Developer warrants that it has not paid or given, and will not pay or give, any third party any money or other consideration for obtaining this Agreement. Third parties, for the purposes of this Section 9.5, shall not include persons to whom fees are paid for professional services, if rendered by attorneys, financial consultants, accountants, engineers, architects and the like when such fees are considered necessary by the Developer.
9.6 Non-liability of City, Officials and Employees. No member, official or employee of the City shall be personally liable to the Developer, or any successor in interest of the Developer, in the event of any default or breach by the City under this Agreement or for any amount that may become due to the Deve loper or to its successor, or on any obligations under the terms of this Agreement, except as may arise from the gross negligence or willful acts of such member, official or employee.
9.7 Unavoidable Delay; Extension of Time of Performance.
9.7.1 Subject to specific provisions of this Agreement, performance by any Party under this Agreement shall not be deemed, or considered to be, in default where any such default is due to an Unavoidable Delay, Unforeseen Circumstance, and/or other delay resulting in an extension of time pursuant to this Agreement that is not attributable to the fault of the Party claiming an extension of time to perform. An extension of time for any Unavoidable Delay, Unforeseen Circumstance, and/or other delay resulting in an ex tension of time pursuant to this Agreement shall be for the period of the Unavoidable Delay, Unforeseen Circumstance, and/or other delay resulting in an extension of time pursuant to this Agreement and shall commence to run from the date of occurrence of the Unavoidable Delay, Unforeseen Circumstance, and/or other delay resulting in an extension of time pursuant to this Agreement if the Party asserting the existence of the Unavoidable Delay, Unforeseen Circumstance, and/or other delay resulting in an extension of time pursuant to this Agreement, provides the other Parties with written notice of the occurrence of the Unavoidable Delay, Unforeseen Circumstance, and/or other delay resulting in an extension of time pursuant to this Agreement, within ten (10) day s of the commencement, and/or that Parties knowledge of such asserted Unavoidable Delay, Unforeseen Circumstance, and/or other delay resulting in an extension of time pursuant to this Agreement. Otherwise, the extension of time for an Unavoidable Delay, Un foreseen Circumstance, and/or other delay resulting in an extension of time pursuant to this Agreement, shall commence on the date of receipt of written notice of the occurrence of the Unavoidable Delay, Unforeseen Circumstance, and/or other delay resultin g in an extension of time pursuant to this Agreement, by the Parties not requesting an extension of time to perform due to such Unavoidable Delay, Unforeseen Circumstance, and/or other delay resulting in an extension of time pursuant to this Agreement.
9.7.2 The Parties expressly acknowledge and agree that changes in either general economic conditions or changes in the economic assumptions of either of them that may have provided a basis for entering into this Agreement and that occur at any time after the execution of this Agreement, do not constitute an Unavoidable Delay and do not provide any Party with grounds for asserting the existence of an Unavoidable Delay in the performance of any 55600.00203\44900577.8
55 covenant or undertaking arising under this Agreement. Each Party expressly assumes the risk that changes in general economic conditions or changes in such economic assumptions relating to the terms and covenants of this Agreement could impose an inconvenie nce or hardship on the continued performance of such Party under this Agreement.
9.8 Inspection of Books and Records. The City shall have the right at all reasonable times, at the City’s cost and expense, to inspect the books and records of the Developer pertaining to the Property and/or the Project, to the extent relevant to the City’s obligations under this Agreement. The Developer shall also have the right at all reasonable times, at the Developer’s sole cost and expense, to inspect the books and records of the City pertaining to the Property and/or the Project, to the extent relevant to the Developer’s obligations under this Agreement. Nothing in this Section 9.8 or elsewhere in this Agreement shall, however, constitute a waiver or modification of any right or privilege which any Party may have with respect to any document, statement, or other record, including, without implied limitation, the attorney -client priv ilege, the attorney -work product privilege, any privilege arising under any state or federal evidentiary code or rule, or any privilege or exclusionary right arising under any state or federal freedom of information or public records disclosure law.
9.9 Real Estate Commissions . The City shall not be liable for any real estate commissions, brokerage fees or finder fees that may arise from or be related to this Agreement.
The Developer shall pay any fees or commissions or other expenses related to its retention or employment of real estate brokers, agents or other professionals.
9.10 Binding on Successors and Assigns . This Agreement shall be binding upon and inure to the benefit of the Parties and their respective heirs, executors, administrators, legal representatives, successors, and assigns.
9.11 Entire Agreement.
9.11.1 This Agreement shall be executed in three (3) duplicate originals, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument. This Agreement including all exhibits shall constitute the entire un derstanding and agreement of the Parties regarding the Property, the Project, and the other subjects addressed in this Agreement.
9.11.2 This Agreement integrates all of the terms and conditions mentioned in this Agreement or incidental to this Agreement, and supersedes all negotiations or previous agreements between the Parties with respect to the Property, the Project, and the other subje cts addressed in this Agreement.
9.11.3 None of the terms, covenants, agreements or conditions set forth in this Agreement shall be deemed to be merged with any deed conveying title to the Property and this Agreement shall continue in full force and effect before and after such conveyances.
9.11.4 All waivers of the provisions of this Agreement and all amendments to this Agreement must be in writing and signed by the authorized representative(s) of all Parties. 55600.00203\44900577.8
56 9.12 Execution of this Agreement . Following execution of three (3) originals of this Agreement by the authorized representative(s) of the Developer and prompt delivery of such originals, thereafter, to the City, accompanied by an official action of the governing body of the Developer authorizing the individuals executing this Agreement on behalf of the Developer to execute and perform this Agreement, in form and substance acceptable to the City, this Agreement shall be subject to the review and approval by the C ity Council, in their sole and absolute discretion, no later than forty-five (45) calendar days after such date of delivery to the City. If the City have not approved, executed, and delivered an original of this Agreement to the Developer within the forego ing time period, then no provision of this Agreement shall be of any force or effect for any purpose.
9.13 Survival of Indemnity Obligations . All general and specific indemnity and defense obligations of the Parties set forth in this Agreement shall survive the expiration or termination of this Agreement, the execution or recordation of the Grant Deed, and/or the issuance and recordation of any Certificate of Completion, all subject to any express limitations set forth elsewhere in the Agreement.
9.14 Time Declared to be of the Essence . As to the performance of any obligation hereunder as to which time is a component thereof, the performance of such obligation within the time provided is of the essence.
[Signatures on Following Pages]
55600.00203\44900577.8
1 SIGNATURE PAGE
TO
DISPOSITION AND DEVELOPMENT AGREEMENT
CITY:
THE CITY OF SAN BERNARDINO
a California municipal corporation
By: ___________________
City Manager
Dated:_________________, 2026
By:
ATTEST:
____________________________
City Clerk
APPROVED AS TO LEGAL FORM:
BEST BEST & KRIEGER LLP
By: _______________________
City Attorney
55600.00203\44900577.8
1 SIGNATURE PAGE
TO
DISPOSITION AND DEVELOPMENT AGREEMENT
DEVELOPER:
MONTEBELLO HOUSING
DEVELOPMENT CORPORATION,
a California noprofit corporation
By: ___________________
[TITLE]
Dated:_________________, 2026__
By:
55600.00203\44900577.8
EXHIBIT A
Legal Description of Property
EXHIBIT A
TO
DISPOSITION AND DEVELOPMENT AGREEMENT
(1715 North Arrowhead Avenue )
Legal Description of the Property
TO BE ADDED
55600.00203\44900577.8
EXHIBIT B
Property Site Plan
EXHIBIT B
TO
DISPOSITION AND DEVELOPMENT AGREEMENT
(1715 North Arrowhead Avenue)
Property Site Plan
TO BE ADDED
55600.00203\44900577.8
EXHIBIT C
Scope of Development
EXHIBIT C
TO
DISPOSITION AND DEVELOPMENT AGREEMENT
(1715 North Arrowhead Avenue )
Scope of Development
Montebello Housing Development Corporation (“Developer”) will obtain all entitlements and develop the property with two residential units and related improvements.
The proposed development involves the use of two manufactured housing units. The primary unit will be not less than 1,000 square feet and have three (3) bedrooms and two (2) bathrooms. The second unit will be an accessory dwelling unit that is not less than seven hundred fifty (750) square feet and will have one (1) bedroom and one (1) bathroom.
Developer shall be responsible for acquiri ng the property, obtaining all entitlements, acquiring all materials, construction of the units, and use and operation of the property.
55600.00203\44900577.8
EXHIBIT D
Schedule of Performance
EXHIBIT D
TO
DISPOSITION AND DEVELOPMENT AGREEMENT
Schedule of Performance
Action Date Action to
be Completed
By
Agreement
Section(s)
1. Effective Date. See Section 1.3 1.3
2. Developer to open Escrow and, concurrently,
deposit Earnest Money Deposit into Escrow.
Within 14 days
following the
Effective Date
(“Escrow
Opening Date”)
1.1.29, 3.1
3. Due Diligence Period commences. The date of the
Escrow Opening
Date
1.1.28, 2.4
4 Developer to submit application(s) for Entitlements Within 60 days following the
Effective Date
(“Entitlement
Application
Date”)
1.1.32 5. Developer to deliver Developer’s Title Notice to City
Within 60 days
following Escrow
Opening Date
1.1.24, 2.4
6. City to deliver City’s Title Notice Response to
Developer, if appropriate.
Within 20 days
following City’s
receipt of
Developer’s Title
Notice
1.1.11, 2.4
7. Developer to deliver Developer’s Title Notice
Waiver, if appropriate.
Within 10 days
following
Developer’s
receipt of City’s
Title Notice
Response
1.1.25, 2.4
8. Developer to deliver its Due Diligence Investigation Conclusion Notice.
On or before the
end of the Due
Diligence Period
1.1.27, 2.5.1
9. Due Diligence Period ends. On the 90th day
following the
Escrow Opening
Date
1.1.28, 2.5
55600.00203\44900577.8
EXHIBIT D
Schedule of Performance
Action Date Action to
be Completed
By
Agreement
Section(s)
10. Developer to obtain Entitlements. Within 9 months
of Entitlement
Application Date
(“Entitlement
Obtainment
Date”)
2.7.6 11. Developer to submit Plans and Specifications to City.
Within 180 days
from Entitlement
Obtainment Date
(“Construction
Drawings
Submittal Date”)
1.1.17, 2.7.1
12. City to issue building permits. Within sixty (60)
days from
Construction
Drawing
Submittal Date
(“Permit
Issuance Date”)
1.1.61 13. Escrow Closing Date The tenth (10th)
business day
following Escrow
Holder’s receipt
of written
confirmation
from both City
and Developer of
the satisfaction or
waiver of all
conditions
precedent to the
Close of Escrow
for the Property.
2.7.7 (building
permits), 3.6
14. Developer to commence construction of the Project. No later than 60 days from Permit
Issuance Date
(“Construction
Commencement
Date”)
1.1.15, 4.3
55600.00203\44900577.8
EXHIBIT D
Schedule of Performance
Action Date Action to
be Completed
By
Agreement
Section(s)
15. Developer to complete construction of the Project
(issuance of certificate of occupancy for the entire
Project by the City)
Within 24
months from
Commencement
Construction
Date
1.1.14, 4.3
55600.00203\44900577.8
EXHIBIT – E
Grant Deed
EXHIBIT E
TO DISPOSITION AND DEVELOPMENT AGREEMENT
(1715 North Arrowhead Avenue)
Form of Grant Deed
GRANT DEED
SEE FOLLOWING PAGES
55600.00203\44900577.8
EXHIBIT – E
Grant Deed
RECORDING REQUESTED BY AND
WHEN RECORDED MAIL TO:
City of San Bernardino
290 N “D” Street
San Bernardino, CA 92401
Attn: City Manager
EXEMPT FROM RECORDING FEES PURSUANT
TO GOVERNMENT CODE §27383 AND 6103
SPACE ABOVE THIS LINE FOR RECORDER’S USE
FOR VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, THE CITY OF SAN BERNARDINO, a California municipal corporation ( “Grantor”), does hereby grant and convey to Montebello Homes Development Corporation, a California corporation (“Grantee”) that certain real property situated in the City of San Bernardino, County of San Bernardino, State of California, more particularly described on Exhibit “1” attached hereto and incorporated herein by reference (“Property”).
IN WITNESS WHEREOF, Grantor has caused this instrument to be executed this ____ day of __________________, 2026.
GRANTOR:
CITY OF SAN BERNARDINO
a California municipal corporation
By: ________________________
Name: ________________________
Title: ________________________
ATTEST:
By: ________________________
City Clerk
55600.00203\44900577.8
EXHIBIT – 1
Grant Deed – Property Legal Description
EXHIBIT 1
TO
GRANT DEED
Property Legal Description
55600.00203\44900577.8
EXHIBIT – F
Notice of Agreement
EXHIBIT F
TO
DISPOSITION AND DEVELOPMENT AGREEMENT
(1715 North Arrowhead Avenue)
FORM OF NOTICE OF AGREEMENT
RECORDING REQUESTED BY
AND WHEN RECORDED RETURN TO:
The City of San Bernardio
290 North D Street
San Bernardino, CA 92401
Attn: City Manager
Exempt from Recording fee pursuant to Gov’t Code § 27383
NOTICE OF AGREEMENT
Disposition and Development Agreement
(1715 North Arrowhead Avenue)
TO ALL INTERESTED PERSONS PLEASE TAKE NOTICE that Montebello Housing Development Corporation, a California nonprofit corporation (the “Developer”) and the City of San Bernardino, a California municipal corporation (the “City”) entered into an agreement entitled Disposition and Development Agreement, dated as of ______, 2026 (the “Agreement”). A copy of the Agreement is on file with the City and is available for inspection and copying by interested persons as a public record of the City at the City’s offices located at 290 North D Street, San Bernardino, California, during the City’s regular business hours.
The Agreement affects the real property described in Exhibit A attached to this Notice of Agreement (the “ Property”). The meaning of defined terms, indicated by initial capitalization, used in this Notice of Agreement shall be the same as the meaning ascribed to such terms in the Agreement.
PLEASE TAKE FURTHER NOTICE that the Agreement contains certain development covenants running with the land of the Property and other agreements between the Developer and the City affecting the Property, as set forth below (all section references are to the Agreement):
55600.00203\44900577.8
EXHIBIT – F
Notice of Agreement
Section 4.1 of the Agreement provides:
4.1 Developer Covenant to Undertake Project. Upon Close of Escrow the Developer covenants, for itself, its successors and assigns, to and for the exclusive benefit of the City, that the Developer shall commence and complete the construction and development of the Project on the Property within the time period for such actions set forth in the Schedule of Performance. Upon Close of Escrow the Developer covenants and agrees for itself, its successors, and assigns, that the Property shall be improved and developed with the Project in substantial conformity with the terms and conditions of this Agreement, the Scope of Development, the Schedule of Performance, any and all plans, specifications and similar development documents required by this Agreement, except for such changes as may be mutually agreed upon in writing by and among the Parties, and all applicable laws, regulations, orders and conditions of each Governmental Agency with jurisdiction over the Property or the Project. The covenants of this Section 4.1 shall run with the land of the Property until the earlier of the date of recordation of the Certificate of Completion or the fifteenth (15th) anniversary of the date of the Close of Escrow.
Section 5.1 of the Agreement provides:
5.1 Covenant to Maintain Property on Tax Rolls . The Developer for itself, its successors and assigns to all or any part or portion of the Property and/or Project, covenants and agrees that after Close of Escrow:
5.1.1 The entire Property shall remain on the County secured real property tax rolls for twenty years from the date of issuance of a certificate of occupancy for the Project.
5.1.2 The Developer shall pay all property tax bills with respect to the Property and all improvements thereon on or before the last day for the timely payment of each property tax installment during such time period and to timely pay all supplemental tax bills regarding the Property issued by the County. Nothing herein shall prohibit Developer, or current owner from making property tax payments pursuant to any tax collector approved payment plan. The Developer further covenants and agrees to provide to the City, on or before July 31 of each year, commencing in the calendar year following the calendar year in which a Certificate of Completion is recorded and in each calendar year, thereafter, for the full term of this covenant: (i) a true and correct copy of all property tax assessment notices, property tax bills and property tax assessment correspondence by and between the Developer and the County regarding the Property and all improvements thereon, with respect to the precedin g fiscal year of the County, a nd (ii) cancelled checks issued or other proof of payment by the Developer in payment of all property tax payments that are made to the County regarding the Property and all improvements thereon (or other reasonably acceptable evidence of such payment), with respect to the preceding County fiscal year.
5.1.3 The covenants of this Section 5.1 shall run with the land of the Property , shall be enforceable against the Developer and its successors and assigns, and shall be covenants set forth in the Grant Deed.
Section 5.2 of the Agreement provides:
55600.00203\44900577.8
EXHIBIT – F
Notice of Agreement
5.2 No Conveyance to Tax Exempt Entity . The Developer for itself, its successors and assigns to all or any part or portion of the Property and/or Project, covenants and agrees that:
5.2.1 The Developer shall not use or otherwise sell, transfer, convey, assign, lease, leaseback or hypothecate the Property, the Project, or any portion of any of the foregoing to any entity or person, or for any use of the Property, the Project, or any portion of any of the foregoing, that is partially or wholly exempt from the payment of real or personal property taxes or that would cause the exemption of the payment of all or any portion of real or personal property taxes otherwise assessable regarding the Pro perty, the Project, or any portion of any of the foregoing, without the prior written consent of the City, which may be withheld in the City’s sole and absolute discretion for a period of twenty (20) years from the date of issuance of the Certificate of Completion for the Project by the City.
5.2.2 If the Property, or any portion of the Property, shall be conveyed, transferred or sold to any entity or person that is partially or wholly exempt from the payment of real or personal property taxes otherwise assessable against the Property, or any portion thereof (each, a “Tax-Exempt Entity”), without the prior written consent of the City, then, at the City’s election and in addition to all other remedies available to the City under this Agreement or at law or in equity, the Developer or its successo r or assigns shall pay to the City a fee in lieu of payment of such taxes each year in an amount determined by the City to be one percent (1%) of the “full cash value” of the Property, or portion thereof, as may be subject to such exemption from payment of real or personal property taxes. The City’s determination of “full cash value” for in-lieu payment purposes under this Section 5.2.2 shall be established by the City each year, if necessary, by reference to the real or personal property tax valuation principles and practices generally applicable to a county property tax assessor under Section 1 of Article XIIIA of the California Consti tution.
The City’s determination of “ full cash value ” and that an in -lieu payment is due shall be conclusive on such matters. If the City determines that an amount is payable as an in-lieu payment under this Section 5.2.2 in any tax year, then such amount shall be paid to the City for that tax year within forty-five (45) days following transmittal by the City to the Developer or its successor or assigns of an invoice for payment of the in-lieu amount. Notwithstanding anything contrary to the foregoing, Developer shall not responsible for any in -lieu amounts if (a) the City consents to Transfer of the Project to a non -Tax-Exempt Entity which subsequently becomes a Tax -Exempt Entity, or (b) a City-approved non-Tax-Exempt Entity to whom Developer Transfers the Property sells to a Tax -Exempt Entity or non -Tax-Exempt Entity which subsequently becomes a Tax - Exempt Entity.
5.2.3 The covenants of this Section 5.2 shall run with the land of the Property, shall be enforceable against the Developer and its successors and assigns , and shall be covenants set forth in the Grant Deed.
Section 5.4 of the Agreement provides:
5.4 Maintenance Condition of the Property. The Developer for itself, its successors and assigns to all or any part or portion of the Property and/or Project, covenants and agrees that:
5.4.1 The areas of the Property that are subject to public view (including all existing and future improvements, paving, walkways, landscaping, exterior signage and 55600.00203\44900577.8
EXHIBIT – F
Notice of Agreement
ornamentation) shall be maintained in good repair and a neat, clean and orderly condition, ordinary wear and tear excepted. If there is an occurrence of an adverse condition on any area of the Property that is subject to public view in contravention of the general maintenance standard described above (a “ Maintenance Deficiency ”), then the City shall notify the Developer in writing of the Maintenance Deficiency. If the Developer fails to cure or commence and diligently pursue to cure the Maintenance Deficien cy within thirty (30) days of its receipt of notice of the Maintenance Deficiency, the City shall have the right to enter the Property and perform all acts necessary to cure the Maintenance Deficiency, or to take any other action at law or in equity that m ay then be available to the City to accomplish the abatement of the Maintenance Deficiency. Any sum expended by the City for the abatement of a Maintenance Deficiency on the Property pursuant to this Section 5.4.1 shall become a lien on the Property, as applicable. If the amount of the lien is not paid within thirty (30) days after written demand for payment from the City to the Developer, the City shall have the right to enforce the lien in the manner provided in Section 5.4.3.
5.4.2 Graffiti, as this term is defined in Government Code Section 38772, that has been applied to any exterior surface of a structure or improvement on the Property that is visible from any public right-of-way adjacent or contiguous to the Property after close of escrow, shall be removed by the Developer by either painting over the evidence of such vandalism with a paint that has been color-matched to the surface on which the paint is applied, or graffiti may be removed with solvents, detergents or water, as appropriate. If any such graffiti is not removed within five (5) days following the time of the discovery of the graffiti, the City shall have the right to enter the Property and remove the graffiti, without notice to the Developer. Any sum reasonably e xpended by the City for the removal of graffiti from the Property pursuant to this Section 5.4.2, shall be a lien on the Property. If the amount of the lien is not paid within thirty (30) days after written demand to the Developer from the City, the City shall have the right to enforce its lien in the manner provided in Section 5.4.3. Address Graffiti prior to the close of escrow shall be the responsibility of the City
5.4.3 The Parties further mutually understand and agree that the rights conferred upon the City under this Section 5.4 expressly include a grant by the Developer of a security interest in the Property with the power to establish and enforce a lien or other encumbrance against the Property or any portion thereof, in the manner provided under Civil Code Sections 2924, 2924b and 2924c, to secure the obligations of the Developer and it successors under Section 5.4.1 or Section 5.4.2, including the reasonable attorneys’ fees and costs of the City associated with the abatement of a Maintenance Deficiency or removal of graffiti. For the purposes of the preceding sentence the words “reasonable attorneys’ fees and costs of the City” mean and include the salaries, benefits and costs of the City Attorney and the lawyers employed in the Office of the City Attorney.
Said security interest will not be enforced without providing Developer an additional notice and thirty (30) days opportunity to pay all costs, interest, and fees due and owing to the City.
5.4.4 The provisions of this Section 5.4, shall be a covenant running with the land of the Property, shall be enforceable against the Developer and its successors and assigns, and shall be covenants set forth in the Grant Deed, but said covenants under Section 5.4 expire and are of no further force and effect after the Certificate of Completion has been issued for the final phase of the Project. Nothing in the foregoing provisions of this Section 5.4 shall be deemed to preclude the Developer from making a ny alteration, addition, or other change to any structure or 55600.00203\44900577.8
EXHIBIT – F
Notice of Agreement
improvement or landscaping on the Property, provided that any such changes comply with applicable zoning and building regulations of the City. The expiration of the Covenant on completion does not restrict City from enforcement of any other laws related to public or private nuisances, graffiti removal, or from issuing notices of violations of any City or state code regarding health and safety, building codes or similar codes
Section 5.5 of the Agreement provides:
5.5.1 There shall be no discrimination against or segregation of any person, or group of persons, on account of sex, marital status, race, color, religion, creed, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property nor shall the Developer, itself or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, sub-tenants, sub-lessees or vendees of the Property.
The covenant of this Section 5.5 shall run with the land of the Property and shall be enforceable against the Developer and its successors and assigns in perpetuity and be a covenant in the Grant Deed and the Notice of Agreement.
5.5.2 The covenant of this Section 5.5 shall run with the land of the Property in perpetuity, shall be enforceable against the Developer and its successors and assigns, and shall be covenants set forth in the Grant Deed.
5.5.3 Fair Employment Covenant. In connection with its performance under this Agreement, Developer shall not discriminate against any employee or applicant for employment on account of actual or perceived race, color, religion, sex, gender, gender identity, gen der expression, sexual orientation, marital status, national origin, ancestry, familial status, source of income, disability, veteran or military status, or genetic information. Developer shall ensure that applicants are employed, and that employees are treated during their employment, without regard to any prohibited basis
Section 5.6 of the Agreement provides:
5.6 Form of Non-Discrimination and Non-Segregation Clauses. The Developer for itself, its successors and assigns to all or any part or portion of the Property and/or Project, covenants and agrees that:
5.6.1 The Developer, such successors and such assigns shall refrain from restricting the sale, lease, sublease, rental, transfer, use, occupancy, tenure or enjoyment of the Property (or any portion thereof) on the basis of sex, marital status, race, color, reli gion, creed, ancestry or national origin of any person. All deeds, leases or contracts pertaining to the Property shall contain or be subject to substantially the following non -discrimination or non -segregation covenants:
5.6.1.1 In deeds: “The grantee herein covenants by and for itself, its successors and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of race, color, creed, religion, sex, marital status, national origin, or ancestry in the sale, lease, sublease, transfer, 55600.00203\44900577.8
EXHIBIT – F
Notice of Agreement
use, occupancy, tenure, or enjoyment of the premises herein conveyed, nor shall the grantee or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, loc ation, number, use or occupancy of tenants, lessees, sub -tenants, sub -lessee, or vendees in the premises herein conveyed. The foregoing covenants shall run with the land.”
5.6.1.2 In leases: “The Lessee herein covenants by and for itself, its successors and assigns, and all persons claiming under or through them, and this lease is made and accepted upon and subject to the following conditions: That there shall be no discrimination against or segregation of any person or group of persons, on account of race, color, creed, religion, sex, marital status, national origin, or ancestry, in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of the premises herein leased nor shall the lessee itself, or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy, of tenants lessees, sub-lessee, sub-tenants, or vendees in the premises herein leased.
5.6.1.3 In contracts: “There shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, marital status, national origin, or ancestry, in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the premises herein conveyed or leased, nor shall the transferee or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selecti on, location, number, use, or occupancy, of tenants, lessees, sub-lessees, sub-tenants, or vendees of the premises herein transferred.” The foregoing provision shall be binding upon and shall obligate the contracting party or parties and any subcontracting party or parties, or other transferees under the instrument.
5.6.2 The covenant of this Section 5.6 shall run with the land of the Property in perpetuity, shall be enforceable against the Developer and its successors and assigns, and shall be covenants set forth in the Grant Deed.
This NOTICE OF AGREEMENT is dated as of _________________, 202_, and has been executed on behalf of the Developer and the City by and through the signatures of their authorized representative(s) set forth below. This Notice of Agreement may be executed in counterparts and when fully executed each counterpart shall be deemed to be one original instrument.
SIGNATURES ON FOLLOWING PAGE
55600.00203\44900577.8
EXHIBIT – F
Notice of Agreement
CITY OF SAN BERNARDINO
a California municipal corporation
By: ________________________
Name: ________________________
Title: ________________________
ATTEST:
By: ________________________
City Clerk
55600.00203\44900577.8
EXHIBIT 1
Notice Agreement – Legal Description of Property
EXHIBIT 1
TO
NOTICE OF AGREEMENT
Legal Description of Property
55600.00203\44900577.8
EXHIBIT G
Official Action of Developer
EXHIBIT G
TO
DISPOSITION AND DEVELOPMENT AGREEMENT
(1715 North Arrowhead Avenue)
Form of Official Action of Developer
CERTIFICATION OF AUTHORITY
The undersigned individual of Montebello Housing Development Corporation, a California nonprofit corporation (the “ Company”), do es certify that the Company has authorized and empowered the undersigned for and on behalf of and in the name of the Company to execute and deliver that certain Disposition and Development Agreement, dated _______, 2026, between the City of San Bernardino , a California municipal corporation, (“ City”) and the Company (the “Agreement”), to (1) purchase certain real property located in the City of San Bernardino , California, as specifically described in the Agreement, (2) obtain a loan for the purchase of the Property, as specified in the Agreement , and (3) all other documents to be executed by the Company in connection with the transactions contemplated in the Agreement, and to take all actions that may be considered necessary to conclude the transactions contemplated in the Agreement and perform the other obligations of the Company pursuant to the Agreement.
The authority conferred shall be considered retroactive, and any and all acts authorized in this document that were performed before the execution of this Certificate are approved and ratified.
The authority conferred shall continue in full force and effec t until the City of San Bernardino, a California municipal corporation shall have received notice in writing from the Company of the revocation of this Certificate.
I further certify that the activities covered by the foregoing certifications constitute duly authorized activities of the Company; that these certifications are now in full force and effect; and that there is no provision in any document under which the Company is organized and/or that governs the Company’s continued existence, limiting the power of the undersigned to make the certifications set forth in this certificate, and that such certifications are in conformity with the provisions of all such documents.
Montebello Housing Development Corporation,
a California nonprofit corporation
____________________________
___________________________
55600.00203\44900577.8
EXHIBIT H
Certificate of Completion
EXHIBIT H
TO
DISPOSITION AND DEVELOPMENT AGREEMENT
(1715 North Arrowhead Avenue)
Form of Certificate of Completion
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
The City of San Bernardio
290 North D Street
San Bernardino, CA 92401
Attention: City Manager
EXEMPT FROM RECORDING FEE PURSUANT TO GOV’T CODE § 27383
CITY OF SAN BERNARDINO
CERTIFICATE OF COMPLETION
(_____________)
I, __________, City Manager of the City of San Bernardino (the “City”) certify that:
Section 1. The Project to be located at the property located at and commonly known as 1715 North Arrowhead Avenue, San Bernardino, California in accordance with that certain Disposition, Development and Loan Agreement (_____________), dated _______, 202 6 (“DDA”), between the City and Montebello Housing Development Corporation (the “Developer”), on that certain real property specifically described in the legal description(s) attached to this Certificate of Completion as Exhibit 1 (the “Property”), is complete in accordance with the provisions of the Agreement.
This Certificate of Completion constitutes conclusive evidence of the City’s determination of the Developer’s satisfaction of its obligation under the Agreement to construct and install the Project on the Property, including any and all buildings, parking areas, landscaping areas and related improvements necessary to support or meet any requirements applicable to the Project and its use and occupancy on the Project, whether or not such improvements are located on or off the Property or on other property sub ject to the Agreement. Notwithstanding any provision of this Certificate of Completion, the City may enforce any covenant surviving this Certificate of Completion in accordance with the terms and conditions of the Agreement and the Deed by which the Property was conveyed to the Developer by the City under the Agreement. The Agreement is an official record of the City and a copy of the Agreement may be inspected at the City’s office located at 290 North D Street, San Bernardino, California, during the City’s regular business hours. 55600.00203\44900577.8
EXHIBIT H
Certificate of Completion
DATED AND ISSUED this _____ day of ______________, _____.
THE CITY OF SAN BERNARDINO
a California municipal corporation
By: ___________________________
City Manager
55600.00203\44900577.8
EXHIBIT A
Certificate of Completion – Legal Description of Property
EXHIBIT A
TO
CERTIFICATE OF COMPLETION
Legal Description of the Property
55600.00203\44900577.8
EXHIBIT A
Certificate of Completion – Legal Description of Property
STATE OF CALIFORNIA )
ss)
COUNTY OF SAN BERNARDINO)
On ________________, before me, , Notary Public, personally appeared , personally known to me to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
_____________________________
Notary Public
55600.00203\44900577.8
EXHIBIT I
Affordability Covenant
EXHIBIT I
TO
DISPOSITION AND DEVELOPMENT AGREEMENT
Form of Affordability Covenant
[Attached Behind This Page]
55600.00203\44900577.8
EXHIBIT I
Affordability Covenant
RECORDING REQUESTED BY
AND WHEN RECORDED RETURN TO:
The City of San Bernardio
290 North D Street
San Bernardino, CA 92401
Attn: City Manager
EXEMPT FROM RECORDING FEE PURSUANT TO GOV’T CODE § 27383 Affordable Housing Covenant
(Per Government Code Section 54233)
If ten (10) or more residential units are developed on 1715 North Arrowhead Avenue, San Bernardino, CA (APN: 0146 -072-02), not less than 15 percent of the total number of residential units developed on the property shall be sold or rented at affordable housing cost, as defined in Section 50052.5 of the California Health and Safety Code, or affordable rent, as defined in Section 50053 of the California Health and Safety Code, to lower income households, as defined in Section 50079.5 of the California Health and Safety Code. Rental units shall remain affordable t o and occupied by lower income households for a period of fifty-five (55) years for rental housing and forty-five (45) years for ownership housing. The initial occupants of all ownership units shall be lower income households, and the units shall be subject to an equity sharing agreement consistent with the provisions of paragraph (2) of subdivision (c) of 65915 of the Ca lifornia Government Code. These requirements shall be covenants or restrictions running with the land and 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 California Government Code.
Date: ______________________
_____________________________________[LOCAL AGENCY NAME] By: ____________________________
Name: __________________________
Title: ___________________________
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EXHIBIT J
City Promissory Note
EXHIBIT J
TO
DISPOSITION AND DEVELOPMENT AGREEMENT
Form of City Promissory Note
[Attached Behind This Page]
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EXHIBIT J
City Promissory Note
CITY PROMISSORY NOTE
SELLER CARRYBACK LOAN SECURED BY DEED OF TRUST
(1715 North Arrowhead Avenue)
Principal Amount: [43,500.00] Date of Note: ______, 2026 Borrower: ,
Lender: City of San Bernardino, a California municipal corporation Maturity Date: [30 years from Date of Note] Interest Rate: 3% per annum
1. Seller Carryback Loan.
FOR VALUE RECEIVED, the undersigned [MONTEBELLO HOUSING DEVELOPMENT CORPORATION, a California nonprofit corporation (“Borrower”), with its principal place of business located at [1619 Paramount Boulevard, Montebello, CA 90640 ], promises to pay to the City of San Bernardino, a California municipal corporation (“the City” or “City”) at 290 N D Street, San Bernardino, CA 92401 , or such place as the City may, from time to time, designate by written notice to the Borrower, the principal sum of [Forty Three Thousand Five Hundred Dollars ($43,500.00] (the “Seller Carryback Loan”), together with any accrued interest, if applicable, as set forth in this City Promissory Note - Seller Carryback Loan Secured by Deed of Trust (the “Note”). This Note is made and given pursuant to that certain Disposition and De velopment Agreement between the City and Borrower, dated on or about [INSERT DATE], (the “Disposition and Development Agreement”). The Disposition and Development Agreement is incorporated herein by this reference. The Disposition and Development Agreement requires Borrower to develop certain real property, referred to therein as 1715 North Arrowhead Avenue, with a single-family residence and an accessory dwelling unit, with related amenities and improvements, as defined further therein (the “Project”). All initially capitalized terms used but not defined herein will have the meanings given to them in the Disposition and Development Agreement. The Seller Carryback Loan is made to enable Borrower to pay the purchase price for the conveyance of the Property by the City to Borrower in accordance with the terms and conditions of the Disposition and Development Agreement.
2. Term of Seller Carryback Loan and Right of Prepayment. a. Maturity Date. All accrued interest, if any, and unpaid principal will be due and payable in full without any further demand on the date that is [thirty (30)] years from the date of Close of Escrow under the Disposition and Development Agreement (“Maturity Date”), except for an event of acceleration or Default as provided for herein. b. Prepayment. This Note may be prepaid in whole or in part at any time and from time to time without penalty or premium.
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EXHIBIT J
City Promissory Note
3. Security for Note.
This Note is secured by a Deed of Trust , Security agreement and Fixture Filing (With Assignment of Rents) (“Deed of Trust ”), executed by Borrower which encumbers certain real property described therein and in the Disposition and Development Agreement.
4. Interest Calculation.
The Seller Carryback Loan shall accrue interest at the rate of three percent (3%) per annum.
Interest, if accrued for a Default, will be computed based on an actual day year and the actual number of days elapsed.
5. Repayment Terms.
a. No regular payments on the Seller Carryback Loan are due. Borrower shall repay the Seller Carryback Loan , plus any interest accrued, upon the Maturity Date, except for acceleration or Default, as provided for in Section 6.
b. Except as provided for herein, all p rincipal and interest , if any, shall be payable in lawful money of the United States of America.
6. Default; Acceleration.
a. The occurrence of any of the following shall constitute an event of default (“Default”) under this Note:
(i) Borrower fails to pay any amount due hereunder when due. (ii) Any other default by Borrower under this Note, the Deed of Trust, or the Disposition and Development Agreement after the expiration of all applicable cure periods. (iii) Any default by Borrower under any other obligation recorded against the Property after the expiration of all applicable cure periods. (iv) A Notice of Default or Notice of Trustee’s Sale is filed by a lien holder of the Property.
b. Upon the occurrence of any uncured event of default, or at any time thereafter, at the option of City, the entire unpaid principal and interest owing under this Note shall become immediately due and payable. This option may be exercised at any time followi ng such event, and the acceptance of one or more installments thereafter shall not constitute a waiver of City’s option. City’s failure to exercise such option shall not constitute a waiver of such option with respect to any subsequent event. City’s failur e in the exercise of any other right or remedy hereunder or under any agreement which secures the City Loan or is related thereto shall not affect any right or remedy and no single or partial exercise of any such right or remedy shall preclude any further exercise thereof.
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EXHIBIT J
City Promissory Note
c. Should the undersigned Borrower agree to or sell, convey, transfer, or dispose of the real property described in the City Deed of Trust securing this Note or any part thereof or interest therein, without first obtaining the prior written consent of the City (except for a Permitted Transfer, as defined in the Disposition and Development Agreement), then, at the option of the City, all principal and interest due hereunder shall immediately become due and payable upon 30 days written notice from the City to the Borrower. Consent to one transaction of this type will not constitute a waiver of the right to require consent to future or successive transactions.
7. Interest on Default.
From and after a Default, the entire outstanding principal balance of this Note will automatically bear an annual interest rate equal to the lesser of eight percent (8%) compounding annually or the maximum interest rate allowed by law.
8. Costs Paid by Borrower.
Borrower agrees to pay the following costs, expenses and attorneys’ fees paid or incurred by the City of this Note, or as adjudged by a court of competent jurisdiction: (a) reasonable costs of collection, costs and expenses and attorneys’ fees paid or incurred in connection with the collection or enforcement of this Note, whether or not suit is filed; and (b) costs of suit in such sum as the court may adjudge reasonable as attorneys’ fees in any action to enforce payment of this instrument.
9. Waiver.
To the extent permitted by law, Borrower and all persons or entities liable or which may become liable on this Note hereby waive diligence, presentment, protest and demand, notice of protest, dishonor and nonpayment of this instrument, and expressly agree that, without in any way affecting the liability of Borrower hereunder, the City hereof may extend the Maturity Date or the time for payment of any installment due hereunder or any other term hereof, accept additional security, release any party liable her eunder or release any security now or hereafter securing this Note. Borrower hereby waives, to the fullest extent permitted by law, the right to plead any and all statutes of limitations as a defense to any demand on this instrument or any deed of trust, security agreement, guarantee or other agreement now or hereafter securing this Note.
10. Nonrecourse.
This Note is a nonrecourse obligation of Borrower, and, as a result, the City agrees that Borrower and its constituent members or partners will not be personally liable for the payment of any sums now or hereafter owing to the City under the terms of this Note. If any Default should occur under this Note or under any other instrument the default of which constitutes a Default on this Note, the City agrees that its rights for any monetary claim, as to the Borrower and its constituent members or partners, will be limited to a proceeding against the security for the indebtedness evidenced by this Note and that the City will have no right to proceed directly against the Borrower and its constituent members or partners for the satisfaction of any monetary claims that the City may have against the Borrower or for any deficiency judgment remaining after 55600.00203\44900577.8
EXHIBIT J
City Promissory Note
foreclosure of any real or personal property securing the obligations owing to City.
Notwithstanding the generality of the foregoing, Borrower must indemnify, defend, protect and hold City harmless from and against any and all loss, damage, liability, action, cause of action, cost or expense, including, without limitation, reasonable attorneys’ fees and expenses incurred by the City, to the extent arising as a result of any (a) fraud or intentional and material misrepresentation (meaning a misrepresentation that materially impacts the consideration that the City receives under the agreements, or which served as a material basis for the City entering into the agreements) by the Borrower under or in connection with the Disposition and Development Agreement or any other agreements or documents executed in connection therewith; (b) intentional material and bad faith waste of the Property encumbered by the City Deed of Trust; and (c) losses resulting from Borrower’s failure to maintain insurance required under the provisions of the City Deed of Trust , except to the extent that Borrower did not have the legal right, because of a bankruptcy, receivership or similar judicial proceeding, to direct payments to acquire and maintain such required insurance. Borrower’s obligation to indemnify the City hereof as aforesaid will be recourse obligations of the Borrower, and on the occurrence of any of the foregoing events, the City will have the right to proceed directly against the Borrower to recover any and all losses, damages, liability, costs and expenses (including without limitation, reasonable attorneys’ fees and expenses) and may bring any action and institute any proceeding to obtain a judgment in or following foreclosure for any and all such losses, damages, liabilities, costs and expenses resulting from such occurrence.
11. Severability.
If any provision of this Note is determined by a court of competent jurisdiction to be void or unenforceable, such determination will not affect any other provision of this instrument, and all other provisions hereof will remain valid and in full force and effect.
12. Non-Waiver.
No delay in demanding or failure to demand performance hereunder will constitute a waiver by the City hereof of its right to subsequently demand such performance or to exercise any remedies for any Default hereunder. Further, in order to be effective, any waiver of any of the City’s rights and remedies hereunder must be expressed in a writing signed by a duly appointed representative of the City hereof. Further, waiver by the City hereof of any right hereunder will not constitute a waiver of any other right , including, but not limited to, the right to exercise any and all remedies for a different or subsequent event of Default hereunder.
BORROWER:
MONTEBELLO HOUSING DEVELOPMENT CORPORATION
a California corporation
By: ____________________
Title: ____________________
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EXHIBIT K
City Deed of Trust
EXHIBIT K
TO
DISPOSITION AND DEVELOPMENT AGREEMENT
Form of City Deed of Trust
[Attached Behind This Page]
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RECORDING REQUESTED BY AND
WHEN RECORDED MAIL TO:
City of San Bernardino
290 N “D” Street
San Bernardino, CA 92401
Attn: City Manager
EXEMPT FROM RECORDING FEES PURSUANT
TO GOVERNMENT CODE §27383 AND 6103
SPACE ABOVE THIS LINE FOR RECORDER’S USE
Location: 1715 Arrowhead Avenue
APN: 0146-072-02
CITY DEED OF TRUST, SECURITY AGREEMENT AND FIXTURE FILING (WITH ASSIGNMENT OF RENTS)
This City Deed of Trust, Security Agreement and Fixture Filing (with Assignment of Rents) (“ City Deed of Trust ”) is dated as of [INSERT DATE ], by Montebello Housing Development Corporation, a California corporation, whose address is 1619 Paramount Boulevard, Montebello, CA 90640 (“Trustor”), to [INSERT TRUSTEE] (“Trustee”), for the benefit of the City of San Bernardino, a California municipal corporation (“Beneficiary”) whose address is 290 North D Street, San Bernardino, CA 92401 (“Beneficiary”), and is executed to secure that certain City Promissory Note – Seller Carryback Loan Secured by Deed of Trust, in the principal amount of [$43,500.00] (the "City Promissory Note") , executed by Trustor in favor of Be neficiary, the provisions of which are incorporated in this City Deed of Trust by this reference.
This City Deed of Trust is made with respect to that certain Disposition and Development Agreement (1715 North Arrowhead Avenue ), dated [INSERT DATE ], for reference purposes only, between the Trustor and Beneficiary (the “Disposition and Development Agreement”).
Trustor hereby IRREVOCABLY GRANTS, TRANSFERS AND ASSIGNS to Trustee, its successors and assigns, in Trust, with POWER OF SALE TOGETHER WITH RIGHT OF ENTRY AND POSSESSION, the following property (“Trust Estate”):
1. All of that certain real property in the City of San Bernardino , County of San Bernardino, State of California, more particularly described in Exhibit “A” attached hereto and by this reference made a part hereof (“Subject Property”);
2. All buildings, structures and other improvements now or in the future located or to be constructed on the Subject Property (“Improvements”);
3. All tenements, hereditament, appurtenances, privileges, franchises and other rights and interests now or in the future benefitting or otherwise relating to the Subject Property or the Improvements, including easements, rights -of-way and development rights (“Appurtenances”). (Appurtenances, together with the Subject Property and the Improvements, are hereafter collectively referred to as the “Real Property”);
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4. All rents, issues, income, revenues, royalties and profits now or in the future payable with respect to or otherwise derived from the Trust Estate or the ownership, use, management operation, leasing or occupancy of the Trust Estate, including those past du e and unpaid (“Rents”);
5. All present and future right, title and interest of Trustor in and to all inventory, equipment, fixtures and other goods (as those terms are defined in Division 9 of the California Uniform Commercial Code (“ UCC”), whether existing now or in the future) located at, upon or about, or affixed or attached to or installed in, the Real Property, or used or to be used in connection with or otherwise relating to the Real Property or the ownership, use, development, cons truction, maintenance, management, operation, marketing, leasing or occupancy of the Real Property, including furniture, furnishings, machinery, appliances, building materials and supplies, generators, boilers, furnaces, water tanks, heating, ventilating and air conditioning equipment and all other types of tangible personal property of any kind or nature, and all accessories, additions, attachments, parts, proceeds, products, repairs, replacements and substitutions of or to any of such property (“Goods,” and together with the Real Property, collectively the “Property”); and
6. All present and future right, title and interest of Trustor in and to all accounts, general intangibles, chattel paper, deposit accounts, money, instruments and documents (as those terms are defined in the UCC) and all other agreements, obligations, rights and written material (in each case whether existing now or in the future) now or in the future relating to or otherwise arising in connection with or derived from the Property or any other part of the Trust Estate or the ownership, use, development, const ruction, maintenance, management, operation, marketing, leasing, occupancy, sale or financing of the Property or any other part of the Trust Estate, including (to the extent applicable to the Property or any other portion of the Trust Estate) (i) permits, approvals and other governmental authorizations, (ii) improvement plans and specifications and architectural drawings, (iii) agreements with contractors, subcontractors, suppliers, project managers, supervisors, designers, architects, engineers, sales agen ts, leasing agents, consultants and property managers, (iv) takeout, refinancing and permanent loan commitments, (v) warranties, guaranties, indemnities and insurance policies, together with insurance payments and unearned insurance premiums, (vi) claims, demands, awards, settlements, and other payments arising or resulting from or otherwise relating to any insurance or any loss or destruction of, injury or damage to, trespass on or taking, condemnation (or conveyance in lieu of condemnation) or public use of any of the Property, (vii) license agreements, service and maintenance agreements, purchase and sale agreements and purchase options, together with advance payments, security deposits and other amounts paid to or deposited with Trustor under any such ag reements, (viii) reserves, deposits, bonds, deferred payments, refunds, rebates, discounts, cost savings, escrow proceeds, sale proceeds and other rights to the payment of money, trade names, trademarks, goodwill and all other types of intangible personal property of any kind or nature, and (ix) all supplements, modifications, amendments, renewals, extensions, proceeds, replacements and substitutions of or to any of such property (collectively, “Intangibles”).
Trustor further grants to Trustee and Beneficiary, pursuant to the UCC, a security interest in all present and future right, title and interest of Trustor in and to all Goods and Intangibles and all of the Trust Estates described above in which a security interest may be created under the UCC (collectively, the “Personal Property”). This City Deed of Trust constitutes a security agreement under the UCC, conveying a security interest in the Personal Property to Trustee and Beneficiary. 55600.00203\44900577.8
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Trustee and Beneficiary shall have, in addition to all rights and remedies provided herein, all the rights and remedies of a “secured party” under the UCC and other applicable California law.
Trustor covenants and agrees that this City Deed of Trust constitutes a fixture filing under Sections 9313 and 9402(6) of the UCC.
FOR THE PURPOSE OF SECURING, in such order of priority as Beneficiary may elect, the following: (a) payment of that certain City Promissory Note dated on or about the same date hereof, in the original principal amount of [INSERT AMOUNT ] (the “ Note”); and (b) due, prompt and complete observance, performance and discharge of each and every monetary and non- monetary condition, obligation, covenant and agreement contained herein , contained in the Secured Obligations, or contained in the Disposition and Developm ent Agreement . The Disposition and Development Agreement and the Note (collectively, “Secured Obligations”) and all of their terms are incorporated herein by reference and this conveyance shall secure any and all extensions, amendments, modifications or renewals thereof, however evidenced.
AND TO PROTECT THE SECURITY OF THIS CITY DEED OF TRUST , TRUSTOR COVENANTS AND AGREES:
a. That Trustor shall perform its obligations as set forth in the Secured Obligations at the time and in the manner respectively provided therein; b. That Trustor shall not permit or suffer the use of any of the property for any purpose other than the use for which the same was intended at the time this City Deed of Trust was executed;
c. That the Secured Obligations are incorporated in and made a part of this City Deed of Trust. Upon default of a Secured Obligation, and after the giving of notice and the expiration of any applicable cure period, subject to the rights of any senior lenders, the Beneficiary, at its option, may declare the whole of the indebtedness secured hereby to be due and payable. This City Deed of Trust shall cover, and the property subject hereto shall include, all property now or hereafter affixed or attached to or incorporated upon the Subject Property in, to or under which Trustor now has or hereafter acquires any right, title or interest, which, to the fullest extent permitted by law, shall be deemed fixtures and a part of the Subject Property. To the extent any of t he property subject to this City Deed of Trust consists of rights in action or personal property covered by the UCC, this City Deed of Trust shall also constitute a security agreement, and Trustor hereby grants to Beneficiary, as secured party, a security interest in such property, including all proceeds thereof, for the purpose of securing the Secured Obligations. In addition, for the purpose of securing the Secured Obligations, Trustor hereby grants to Beneficiary, as secured party, a security interest i n all of the property described herein in, to, or under which Trustor now has or hereafter acquires any right, title or interest, whether present, future or contingent, including, but not limited to, all equipment, inventory, accounts, general intangibles, instruments, documents and chattel paper, as those terms are defined in the UCC, and all other personal property of any kind (including, without limitation, money and rights to the payment of money), whether now existing or hereafter created, that are now or at any time hereafter (a) in the possession or control of Beneficiary in any capacity; (b) erected upon, attached to or appurtenant to the Subject Property; ( c) located or used on the Subject Property or identified for use on the Subject Property (whet her stored on the Subject Property or elsewhere); or (d) used in connection with, arising from, related to, or associated with 55600.00203\44900577.8
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the Subject Property or any of the personal property described herein, the construction of any improvements on the Subject Property, the ownership, development, maintenance, management or operation of the Subject Property, the use or enjoyment of the Subject Property or the operation of any business conducted thereon, including, without limitation, all such property described as the Trust Estate hereinabove. The security interests granted in this Paragraph 3 are hereinafter severally and collectively called the “Security Interest”. The Security Interest shall be self - operative with respect to the real property described herein but Trustor shall execute and deliver on demand such additional security agreements, financing statements and other instruments as may be requested in order to impose the Security Interest more specifically upon the real and personal property encumbered hereby. The Security Interest, at all times, shall be prior to any other interest in the personal property encumbered hereby. Trustor shall act and perform as necessary and shall execute and file all security agreements, financing statements, continuation statements and other documents requested by Beneficiary to establish, maintain and continue the perfected Security Interest. Trustor, on demand, shall promptly pay all costs and expenses of filing and recordation, to ensure the continued priority of the Security Interest. Trustor shall not sell, transfer, assign or otherwise dispose of any personal property encumbered hereby without obtaining the prior written consent of Beneficiary, except that the Trustor may, in the ordinary course of business, replace personal property or dispose of personal property that will not be replaced because of its obsolescence. Unless Beneficiary then agrees otherwise in writing, all proceeds from any permitted sale or disposition in excess of that required for full replacement shall be paid to Beneficiary to be applied on the Note subject to the rights of any senior lenders. Although proceeds of personal prop erty are covered hereby, this shall not be construed to mean that Beneficiary consents to any sale of such personal property. Upon its recordation in the real property records of San Bernardino County, this City Deed of Trust shall be effective as a financing statement filed as a fixture filing. In addition, a carbon, photostatic or other reproduced copy of this City Deed of Trust and/or any financing statement relating hereto shall be sufficient for filing and/or recording as a financing statement;
d. Subject to the rights of any senior lenders, all rents, profits and income from the property covered by this City Deed of Trust are hereby assigned to the Beneficiary for the purpose of discharging the debt hereby secured. Permission is hereby given to Trustor so long as no default exists hereunder after the giving of notice and the expiration of any applicable cure period, to collect such rents, profits and income for use in accordance with the provisions of the Secured Obligations;
e. Subject to the rights of any senior lenders, that upon default hereunder or under the aforementioned agreements, and after the giving of notice and the expiration of any applicable cure period, Beneficiary shall be entitled to the appointment of a receiver by any court having jurisdiction, without not ice, to take possession and protect the property described herein and operate same and collect the rents, profits and income therefrom; f. That Trustor will keep the improvements hereafter erected on the property insured against loss by fire and such other hazards, casualties, and contingencies as may be required by applicable provisions of the Secured Obligations, and all such insurance sha ll be evidenced by standard fire and extended coverage insurance policy or policies. Such policies shall be endorsed with standard mortgage clause with loss payable to the Beneficiary and certificates thereof together with copies of original policies, if requested, shall be deposited with the Beneficiary; 55600.00203\44900577.8
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g. To pay before delinquency any taxes and assessments affecting said Property; to pay, when due, all encumbrances, charges and liens, with interest, on said Property or any part thereof which appear to be prior or superior hereto; and to pay all costs, fees, and expenses of this trust. Notwithstanding anything to the contrary contained in this City Deed of Trust, Trustor shall not be required to pay and discharge any such tax, assessment charge or levy so long as Trustor is contesting the legality thereof in good faith and by appropriate proceedings, and Trustor has adequate funds to pay any liabilities contested pursuant to this Paragraph 7; h. As it is provided more specifically in the Secured Obligations, to keep said property in good condition and repair, subject to ordinary wear and tear, casualty and condemnation, not to remove or demolish any buildings hereafter erected thereon; to complete or restore promptly and in good and workmanlike manner any building which may be constructed, damaged, or destroyed thereon and to pay when due all claims for labor performed and materials furnished therefor; to comply with all laws af fecting said propert y or requiring any alterations or improvements to be made thereon (subject to Trustor’s right to contest the validity or applicability of laws or regulations); not to commit or permit waste thereof; not to commit, suffer or permit any act upon said property in violation of law and/or covenants, conditions and/or restrictions affecting said property; not to permit or suffer any material alteration of or addition to the buildings or improvements hereafter constructed in or upon said property without the conse nt of the Beneficiary;
i. To appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee, and to pay all costs and expenses, including cost of evidence of title and reasonable attorney’s fees in a reasonable sum, in any such action or proceeding in which Beneficiary or Trustee may appear; j. Should Trustor fail, after the giving of notice and the expiration of any applicable cure period, to make any payment or do any act as herein provided, then Beneficiary or Trustee, but without obligation so to do and without notice to or demand upon Trustor and without releasing Trustor from any obligation hereof, may make or do the same in such manner and to such extent as either may deem necessary to protect the security hereof. Following default, after the giving of notice and the expiration of any applicable cure period, subject to the rights of any senior lenders, Beneficiary or Trustee, being authorized to enter upon said property for such purposes, may commence, appear in and/or defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee; may pay, purchase, contest or compromise any encumbrance, charge, or lien which in the judgment of either appears to be prior or superior hereto; and, in exercising any such powers, may pay necessary expenses, employ counsel, and pay his reasonable fees;
k. Beneficiary shall have the right to pay all insurance premiums required by the Secured Obligations when due should Trustor fail to make any required premium payments. All such payments made by the Beneficiary shall be added to the sums secured hereby; l. To pay immediately and without demand all sums so expended by Beneficiary or Trustee, under permission given under this City Deed of Trust , with interest from date of expenditure, at the highest rate of interest permitted by law; 55600.00203\44900577.8
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m. That the funds to be advanced hereunder are to be used in accordance with applicable provisions of the Secured Obligations; upon the failure of Trustor to do so, after the giving of notice and the expiration of any applicable cure period, Trustor shall be in default hereunder;
n. Trustor further covenants that it will not voluntarily create, suffer, or permit to be created against the property subject to this City Deed of Trust any lien or liens except as authorized by Beneficiary and/or as provided in the Secured Obligations and further that it will keep and maintain the property free from the claims of all persons supplying labor or materials which will enter into the construct ion of any and all buildings now being erected or to be erected on said premises. Notwithstanding anything to the contrary contained in this City Deed of Trust, Trustor shall not be obligated to pay any claims for labor, materials or services which Trustor in good faith disputes and is diligently contesting, provided that Trustor shall, at Beneficiary’s written request, within 30 days after the filing of any claim or lien (but in any event, and without any requirement that Beneficiary must first provide a written request prior to foreclosure) record in the Office of the Recorder of San Bernardino County, a surety bond in the amount required by law to protect against a claim of lien, or provide such other security reasonably satisfactory to Beneficiary; o. That any and all improvements made or about to be made upon the premises covered by this City Deed of Trust and all plans and specifications, comply with all applicable municipal ordinances and regulations and all other applicable regulations made or promulgated, now or hereafter, by lawful authority, and that the same will upon completion comply with all such municipal ordinances and regulations and with the rules of the applicable fire rating or inspection organization, bureau, association or office.
IT IS MUTUALLY AGREED THAT:
p. Trustor confirms that if Trustor should sell, enter into a contract of sale, convey, or in any way transfer all or any interest of Trustor in the Real Property encumbered by this City Deed of Trust or suffer Trustor’s title or any interest therein to be divested, whether voluntarily or involuntarily, unless the same is a Permitted Transfer as defined in the Disposition and Development Agreement, without the prior written consent of the Beneficiary being first obtained, then subject to the rights of any senior lenders, Beneficiary shall have the right, at Beneficiary’s sole option, to declare all sums payable under the Note secured hereby immediately due and payable in full, irrespective of the maturity date otherwise specified in the Note. No waiver of this right shall be effective unless in writing and signed by the Beneficiary. Consent by the Beneficiary to any one such transaction shall not be deemed a waiver of the right to require such consent to future or successive transactions. Further, upon default under one of the Secured Obligations, and after the giving of notice and the expiration of any applicable cure period provided therein without a cure having been made, subject to the rights of any senior lenders, the Beneficiary, at its option, may declare the whole of the indebtedness secured hereby to be immediately due and payable in full, irrespective of the maturity date otherwise specified in the Note; q. As provided more specifically in the Secured Obligations, should the Property or any part thereof be taken or damaged by reason of any public improvement or condemnation proceeding, or damaged by fire, or earthquake, or in any other manner, subject to the rights of any senior lenders, Beneficiary shall be entitled to all compensation, awards, and other payments or 55600.00203\44900577.8
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relief therefor which are not used to reconstruct, restore or otherwise improve the property or part thereof that was taken or damaged, and shall be entitled at its option to commence, appear in and prosecute in its own name, any action or proceedings, or to make any compromise or settlement, in connection with such taking or damage subject to the rights of any senior lenders. All such compensation, awards, damages, rights of action and proceeds which are not used to reconstruct, restore or otherwise improve the property or part thereof that was taken or damaged, including the proceeds of any policies of fire and other insurance affecting said property, are hereby assigned to Beneficiary subject to the rights of any senior lenders; r. Notwithstanding Sections 16 and 17, in the event that a portion of the Property is taken for a public improvement or pursuant to a condemnation proceeding and the Affordable Units (as defined in the Declaration) remain intact and continue to be owned and operated by Trustor in conformance with the Disposition and Development Agreement and the Declaration, Beneficiary shall not declare all sums due and payable under the Note, nor shall the Beneficiary be entitled to any compensation, awards and other payment s therefor, provided that such compensation, awards and other payments are used for (a) making improvements to the Property that are approved by Beneficiary, in its reasonable discretion, (b) payment of principal owing under the Note, or (c) another purpose required by any senior lenders. Subject to the rights of any senor lenders, in the event that Trustor receives such compensation, awards or other payments and fails to expend the funds in conformance with any of subsections (a), (b), or (c) of this section within 30 days of receipt of such funds, Trustor shall be in default under this City Deed of Trust; s. As is provided more specifically in the Note secured hereby, the provisions of which in this regard shall control over any contrary language in this Paragraph 19, upon default by Trustor in taking any action or in making any payments provided for herein, or in the Secured Obligations, if Trustor shall fail to perform any covenant or agreement in this City Deed of Trust within thirty (30) days after written demand therefor by Beneficiary (or, in the event that more than thirty (30) days is reasonably require d to cure such default, should Trustor fail to promptly commence such cure within such thirty (30) days, and diligently prosecute same to completion), after the giving of notice and the expiration of any applicable cure period and subject to the rights of any senior lenders , Beneficiary may declare all sums secured hereby immediately due and payable by delivery to Trustee of written declaration of default and demand for sale, and of written notice of default and of election to cause the property to be sold, which notice Trustee shall cause to be duly filed for record and Beneficiary may foreclose this City Deed of Trust. Beneficiary shall also deposit with Trustee this City Deed of Trust and all documents evidencing expenditures secured hereby;
t. After the lapse of such time as may then be required by law following the recordation of said notice of default, and notice of sale having been given as then required by law, subject to the rights of any senior lenders, Trustee, without demand on Trustor, shall sell said property at the time and place fixed by it in said notice of sale, either as a whole or in separate parcels, and in such order as it may determine at public auction to the highest bidder for cash in lawful money of the United States, payable at time of sale. Trustee may postpone sale of all or any portion of said property by public announcement at the time and place of sale, and from time to time thereafter may postpone the sale by public announcement at the time and place of sale, and from time to time thereafter may postpone the sale by public announcement at the time fixed by the preceding postponement. Trustee shall deliver to the purchaser its Deed conveying the property 55600.00203\44900577.8
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so sold, but without any covenant or warranty, express or implied. The recitals in the Deed of any matters or facts shall be conclusive proof of the truthfulness thereof. Any person, including Trustor, Trustee or Beneficiary, may purchase at the sale. The Trustee shall apply the proceeds of sale to payment of (a) the expenses of such sale, together with the reasonable expenses of this trust including therein reasonable Trustee’s fees or attorney’s fees for conducting the sale, and the actual cost of publish ing, recording, mailing and posting notice of the sale; ( b) the cost of any search and/or other evidence of title procured in connection with such sale and revenue stamps on Trustee’s Deed; ( c) all sums expended under the terms hereof, not then repaid, with accrued interest at the maximum rate allowed by law; ( d) all other sums then secured hereby; and ( e) the remainder, if any, to the person or persons legally entitled thereto; u. Beneficiary may from time to time substitute a successor or successors to any Trustee named herein or acting hereunder to execute this City Deed of Trust . Upon such appointment, and without conveyance to the successor trustee, the latter shall be vested with all title, powers, and duties conferred upon any Trustee herein named or acting hereunder. Each such appointment and substitution shall be made by wri tten instrument executed by Beneficiary, containing reference to this City Deed of Trust and its place of record, which, when duly recorded in the proper office of the county or counties in which the property is situated, shall be conclusive proof of proper appointment of the successor trustee;
v. The pleading of any statute of limitations as a defense to any and all obligations secured by this City Deed of Trust is hereby waived to the full extent permissible by law; w. Upon written request of Beneficiary stating that all sums secured hereby have been paid and all obligations secured hereby have been satisfied, and upon surrender of this City Deed of Trust to Trustee for cancellation and retention and upon payment of its fees, Trustee shall reconvey, without warranty, the property then held hereunder. The recitals in such reconveyance of any matters of fact shall be conclusive proof of the truthfulness there of. The grantee in such reconveyance may be described as “the person or persons legally entitled thereto”; x. The trust created hereby is irrevocable by Trustor;
y. This City Deed of Trust applies to, inures to the benefit of, and binds all parties hereto, their heirs, legatees, devisees, administrators, executors, successors, and assigns. The term “Beneficiary” shall include not only the original Beneficiary hereunder but also any future successor in interest to Beneficiary. In this City Deed of Trust, whenever the context so requires, the masculine gender includes the feminine and/or neuter, and the singular number includes the plural. All obligations of Trustor hereunder are joint and several; z. Trustee accepts this Trust when this City Deed of Trust , duly executed and acknowledged, is made public record as provided by law. Except as otherwise provided by law, the Trustee is not obligated to notify any party hereto of pending sale under this City Deed of Trust or of any action or proceeding in which Trustor, Beneficiary, or Trustee shall be a party unless brought by Trustee;
aa. The undersigned Trustor requests that a copy of any notice of default and of any notice of sale hereunder be mailed to it at the address set forth in the City Deed of Trust; 55600.00203\44900577.8
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bb. As is provided more specifically in the Disposition and Development Agreement, the provisions of which in this regard will control over any contrary language in this Paragraph 28, Trustor agrees at any time and from time to time, within a reasonable time after receipt of a written request from Beneficiary, to furnish to Beneficiary detailed statements in writing of income, rents, profits, and operating expenses of the premises, and the names of the occupants and tenants in possession, together with the expi ration dates of their leases and full information regarding all rental and occupancy agreements, and the rents provided for by such leases and rental and occupancy agreements, and such other information regarding the premises and their use as may be requested by Beneficiary;
cc. Trustor agrees that the obligations secured by this City Deed of Trust are made expressly for the purpose of acquiring the Property and completing the construction work necessary to construct a new [sixteen (16)]-unit affordable housing development on the Property, as is more specifically provided in the Secured Obligations; dd. As is provided more specifically in the Secured Obligations, the obligations of Trustor thereunder are nonrecourse obligations of the Trustor. The sole recourse of Beneficiary shall be the exercise of its rights against the Property; ee. Notwithstanding specific provisions of this City Deed of Trust , non -monetary performance hereunder shall not be deemed to be in default where delays or defaults are due to:
war; insurrection; strikes; lock-outs; riots; floods; earthquakes; fires; casualties; acts of God; acts of the public enemy; epidemics; pandemics; quarantine restrictions; a declaration or proclamation of a state of emergency by either the City or by the Governor of the State of California; freight embargoes; lack of transportation; gove rnmental restrictions or priority; litigation; unusually severe weather; inability to secure necessary labor, materials or tools; delays of any contractor or supplier; acts of the other party; acts or failure to act of the City or any other public or governmental agency or entity (except that any act or failure to act of Beneficiary shall not excuse performance by Beneficiary unless such act or failure to act is allowed or required by law); or any other causes beyond the reasonable control or without the fault of the party claiming an extension of time to perform. An extension of time for any such cause (a “ Force Majeure Delay ”) shall be for the period of the enforced delay and shall commence to run from the time of the commencement of the cause. If, however, notice by the party claiming such extension is sent to the other party more than 30 days after the commencement of the c ause, the period shall commence to run only thirty (30) days prior to the giving of suc h notice. Times of performance under this City Deed of Trust may also be extended in writing by the Beneficiary and Trustor; ff. If the rights and liens created by this City Deed of Trust shall be held by a court of competent jurisdiction to be invalid or unenforceable as to any part of the obligations described herein, the unsecured portion of such obligations shall be completely performed and paid prior to the performance and payment of t he remaining and secured portion of the obligations, and all performance and payments made by Trustor shall be considered to have been performed and paid on and applied first to the complete payment of the unsecured portion of the obligations; gg. If the provisions set forth below in this Paragraph 33 are contrary to provisions in the Secured Obligations, the provisions in the Secured Obligations will control:
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1. Subject to the extensions of time set forth in Paragraph 31, and subject to the further provisions of this Paragraph 33, failure or delay by Trustor to perform any term or provision respectively required to be performed under the Secured Obligations or thi s City Deed of Trust constitutes a default under this City Deed of Trust;
2. Beneficiary shall give written notice of default to Trustor, specifying the default complained of by the Beneficiary. Delay in giving such notice shall not constitute a waiver of any default nor shall it change the time of default;
3. Any failures or delays by Beneficiary in asserting any of its rights and remedies as to any default shall not operate as a waiver of any default or of any such rights or remedies. Delays by Beneficiary in asserting any of its rights and remedies shall not deprive Beneficiary of its right to institute and maintain any actions or proceedings which it may deem necessary to protect, assert, or enforce any such rights or remedies;
4. If an event of default occurs under the terms of this City Deed of Trust , prior to exercising any remedies hereunder or thereunder, Beneficiary shall give Trustor written notice of such default. Trustor shall have a reasonable period of time after such notice is given within which to cure the default prior to exercise of remed ies by Beneficiary under this City Deed of Trust. In no event shall Beneficiary be precluded from exercising remedies if its security becomes or is about to become materially jeopardized by any failure to cure a default or the default is not cured within thirty (30) days after the notice of default is first given;
5. If an event of default occurs under the terms of the Secured Obligations, prior to exercising any remedies hereunder or thereunder, Beneficiary shall give Trustor notice of such default. As is provided more specifically in the Secured Obligations, if the d efault is reasonably capable of being cured within thirty (30) days, Trustor shall have such period to effect a cure prior to exercise of remedies by the Beneficiary under the Secured Obligations, or this Deed of Trust – Seller Carryback Loan. If the default is such that it is not reasonably capable of being cured within thirty (30) days, and Trustor (i) initiates corrective action within said period, and (ii) diligently and in good faith works to effect a cure as soon as possible, then Trustor shall have s uch additional time as is reasonably necessary to cure the default prior to exercise of any remedies by Beneficiary.
In no event shall Beneficiary be precluded from exercising remedies if its security becomes or is about to become materially jeopardized by any failure to cure a default.
IN WITNESS WHEREOF, Trustor has executed this City Deed of Trust as of the day and year first set forth above.
TRUSTOR:
MONTEBELLO HOMES DEVELOPMENT CORPORATION
a California corporation
By: ____________________
Name: ____________________
Title: ____________________
55600.00203\44900577.8
STATE OF CALIFORNIA )
COUNTY OF ___________ )
On ____________________, before me, ___________________________, Notary Public, personally appeared ______________________________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the wi thin instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify UNDER PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
______________________________________
Name: _______________________________
Notary Public
A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. 55600.00203\44900577.8
EXHIBIT A
Deed of Trust – Legal Description of Property
EXHIBIT A
(1715 North Arrowhead Avenue)
Legal Description of Subject Property
TO BE ADDED