Agenda packet, regular meeting — San Mateo City Council, May 18, 2026 (part 2 of 40)

The overall addiƟonal cost, Ɵme, and bureaucracy here was significant. It is inappropriate to impose these kinds of requirements on the number of homes and homeowners in quesƟon. I say this as someone who is a careful steward of my home’s character and who cares about preserving San Mateo history. There is a difference between protecƟng San Mateo’s most notable buildings and casƟng such a wide net as this without owner consent.

Thank you,
- Rick Ballard
San Mateo resident
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1 From: Christine Barulich
Sent: Sunday, May 17, 2026 11:41 AM
To: Rob Newsom; Adam Loraine; Danielle Cwirko-Godycki; Nicole Fernandez; Lisa Diaz Nash; Martin McTaggart
Subject: My Home Is One of 124 — Vote No on the Historic Ordinance, my home is 1001 Palm Ave, San Mateo
Dear Mayor and Members of the City Council,
I am writing because my home at is one of 124 properties being swept into this historic preservation ordinance without my consent. I object to the City Council approving this ordinance as written, and I urge you to remove it from Monday's Consent Agenda and not proceed to a vote.

I was never asked. I was never notified. I only recently learned that my home has been designated as eligible for historic landmark status based on a 1989 survey I knew nothing about — a survey that was never completed and never formally adopted by the City Council. This is the first I have heard of it, and I am deeply opposed.

Every other San Mateo homeowner retains the right to opt out of historic designation. My home is being treated differently — singled out along with 123 others — with no explanation, no notice, and no opportunity to object before Monday's vote. I have lived at this home for 20 years and this is the first I have heard of any of this.

If historic designation were genuinely beneficial — if it came with financial incentives, tax relief, or meaningful support — homeowners would sign up willingly. We are not signing up willingly. That should tell the Council everything it needs to know.

I urge the Council to remove this item from Monday's Consent Agenda, hold a proper public hearing with individual notice to all 124 affected owners, and not approve this ordinance until affected homeowners have had a genuine opportunity to be heard.

This is not AI generated. I am a real San Mateo homeowner. Please reply to confirm receipt and to address my concerns directly as this is very alarming that you can do something without my consent of a home I have paid for and continue to pay taxes on each and every year.

Thank you for your time and attention.

Christine Barulich
---
NOTE TO CITY CLERK: Please include this letter in the official meeting packet for every session at which this ordinance appears on the agenda, until it is finally resolved. 272 of 11211
1 From: Joan L. Cassman
Sent: Monday, May 18, 2026 8:06 AM
To: Rob Newsom; Adam Loraine; Danielle Cwirko-Godycki; Nicole Fernandez; Clerk Cc: [email protected]; Alex Khojikian; Prasanna Rasiah; Historic Policy Subject: Do Not Approve Item 14 Historic Ordinance AND No surveys without Consent.

NOTE: This is NOT an AI generated message and I am a real person. You can easily verify this by replying to this email.

Dear City Council,
The proposed Historic Ordinance on your Council agenda tonight, which includes dangerous edits to the April 27th draft, is a ticking time bomb of anger and the desire to control the property rights of others.

Language introduced in Section 020 (j)(2) would allow Non-Owners to nominate ANY neighborhood in San Mateo to the State as an historic district. And if that nomination is agendized and approved, even if 100% of the Owners in that neighborhood OBJECT, City Law would then categorize the neighborhood as "historic" based on a State appointed commission (no elected members) determining the properties in question are “eligible.”
This new language contradicts EVERY value that the council has agreed and communicated it will honor during the Historic process discussions, especially regarding Owner Consent, transparency and good government.
* DO NOT APPROVE Item 14 Historic Ordinance which has been buried in the Consent Calendar. * REMOVE Item 14 on the Historic Ordinance from the Consent Calendar and vote NO * DO NOT SUPPORT or ALLOW ANY ORDINANCE TO SURVEY homes WITHOUT prior and express OWNER

CONSENT
Thank you for your attention to this very serious matter.

Joan L. Cassman
Partner
To help
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This communication, including any attachments, is confidential and may be protected by privilege. If you are not the intended recipient, any use, dissemination, distribution, or copying of this communication is strictly prohibited. If you have received this communication in error, please immediately notify the sender by telephone or email, and permanently delete all copies, electronic or other, you may have.

The foregoing applies even if this notice is embedded in a message that is forwarded or attached. 273 of 11211
1 From: Paul Clausing
Sent: Monday, May 18, 2026 8:51 AM
To: Rob Newsom; Adam Loraine; Danielle Cwirko-Godycki; Nicole Fernandez; Clerk Cc: [email protected]; Alex Khojikian; Prasanna Rasiah; Historic Policy Subject: Do Not Approve Item 14 Historic Ordinance AND No surveys without Consent NOTE: This is NOT an AI generated message and I am a real person. You can easily verify this by replying to this email.

Dear City Council,
The Historic Ordinance as of the April 27th draft is a ticking time bomb of owner anger.

Language introduced in Section 020 (j)(2) would allow non-Owners to nominate ANY neighborhood in San Mateo to the State as a historic district. And if that nomination is agendized and approved, even if 100% of the Owners Object, the City Law would categorize them as “historic” based on the State saying they are ‘eligible’.

Paul & Amy Clausing
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1 From: Doug D'Anna
Sent: Monday, May 18, 2026 8:01 AM
To: City Council (San Mateo); Clerk; City Attorney's Office; Alex Khojikian; Prasanna Rasiah Subject: Requesting City Attorney Review of Less Red Tape's May 15 Letter Before Any Amendment Is Considered
Mayor and Members of the City Council,
Thank you for your unanimous vote designating Glazenwood as a historic district.

I respectfully ask that this ordinance be adopted in its current form through the consent calendar.

If the Council wishes to consider Less Red Tape’s proposed language, I ask that it be scheduled as a separate agenda item — after the City Attorney has provided a complete written opinion addressing its legal effect.

Here is why.

As a resident tracking this process, the Council and the public deserve explicit clarity on how these proposed amendments interact with the protections already granted. I ask that the City Attorney formally clarify three straightforward questions before any text amendments are considered:

1. Does Less Red Tape’s proposed revision to the “Historic Resource” definition conflict with Section 27.66.030(c), which explicitly protects historic districts designated by resolution before this Ordinance takes effect — including Glazenwood’s April 20, 2026 designation and other historic districts designated prior to this Ordinance? (See Less Red Tape’s proposed revision, Section 2 of their May 15, 2026 letter.)

2. Does Less Red Tape’s proposed revision to the “Individually Eligible Historic Resource” definition — which their attorney titles “Clarify that ‘Individually Eligible Historic Resources’ Exclude District-Based Designations” — alter the status or treatment of contributing properties and other resources currently subject to Section 27.66.110? (See Less Red Tape’s proposed revision, Section 1 of their May 15, 2026 letter.)

3. If the proposed amendments narrow or alter existing demolition protections for district contributors, does that material change to the ordinance’s regulatory scope invalidate the City’s reliance on the Common Sense CEQA exemption under Section 15061(b)(3) — requiring further environmental review before adoption? The ordinance itself relies on the Common Sense exemption under Section 15061(b)(3). That reliance warrants scrutiny if the amendments materially alter its regulatory scope.

There is an additional reason for careful legal review before any amendment is considered.

Their attorney’s letter states:
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2 “LRT hereby incorporates by reference, and preserves in full, all objections, arguments, and reservations of rights set forth in its prior letters regarding the proposed historic preservation ordinance.”
The letter also states that “a separate letter addressing additional objections and preservation of claims” is forthcoming.

Because these proposed amendments are submitted alongside an explicit reservation of rights and notice of a forthcoming objections letter, a formal written review by the City Attorney is simply a prudent and necessary step to protect the City’s record.

Notably, these amendments were submitted three calendar days before a consent calendar vote — with only one intervening business day — an interval that does not provide adequate time for the legal analysis their complexity warrants.

Both complete proposed revisions are contained in Less Red Tape’s May 15, 2026 letter, which has already been submitted to the City Council and is part of the public record.

Given the unresolved legal questions raised by the proposed amendments, and the express reservation of rights contained in Less Red Tape’s submission — I respectfully ask that this ordinance be adopted in its current form tonight, and that no amendment be considered until the City Attorney provides a complete written opinion.

Respectfully,
Doug D’Anna
Glazenwood Historic District, San Mateo
276 of 11211
1 From: Richard Delaney
Sent: Sunday, May 17, 2026 3:29 PM
To: Rob Newsom; Adam Loraine; Danielle Cwirko-Godycki; Nicole Fernandez; Lisa Diaz Nash; Martin McTaggart; [email protected]; Alex Khojikian Subject: Historic Ordinance: Take No Further Action Until SMHA Withdraws Baywood Nomination
Dear Mayor and Members of the City Council,
I object to the City Council approving this historic preservaƟon ordinance as wriƩen. You should take no further acƟon on this ordinance unƟl the San Mateo Heritage Alliance (SMHA) and Laurie HieƩer voluntarily withdraw the Baywood neighborhood nominaƟon from the state historic inventory and you survey the 124 property owners of all the properƟes declared historic by this ordinance.

I am a commercial real estate broker. Although I have no business in San Mateo County the economic facts are the same everywhere. Real properƟes have two values. One is their current economic value and one is the potenƟal economic value. Many of the properƟes being declared historic have a potenƟal economic value in excess of the current value. One of the causes of this discrepancy is measure T. The owners of these properƟes would suffer an economic loss if their property was declared historic. See a current example of a lawsuit claiming this loss when Marilyn Monroe’s home was declared historic. (Marilyn Monroe Homeowners vs, City of Los Angeles.) I urge the Council to reject this ordinance as wriƩen. Take no further acƟon unƟl SMHA withdraws the Baywood nominaƟon from the state historic inventory. Then start over — with real incenƟves, proper public noƟce, and an ordinance that San Mateo residents can actually support.

Thank you for your consideraƟon.

Richard Delaney
---
NOTE TO CITY CLERK: Please include this leƩer in the official meeƟng packet for every session at which this ordinance appears on the agenda, unƟl it is finally resolved.
277 of 11211
1 From: Richard Delaney
Sent: Monday, May 18, 2026 8:15 AM
To: Rob Newsom; Adam Loraine; Danielle Cwirko-Godycki; Nicole Fernandez; Clerk Cc: Tracy Volponi; Alex Khojikian; Prasanna Rasiah; Historic Policy Subject: Do Not Approve Item 14 Historic Ordinance AND No surveys without Consent.

NOTE: This is NOT an AI generated message and I am a real person. You can easily verify this by replying to this email.

Dear City Council,
The Historic Ordinance as of the April 27th draŌ with edits is a Ɵcking Ɵme bomb of owner anger.

Language introduced in SecƟon 020 (j)(2) would allow a non-Owners to nominate ANY neighborhood in San Mateo to the State as a historic district. And if that nominaƟon is agendized and approved, even if 100% of the Owners Object, the City Law would categorize them as "historic" based on the State saying they are 'eligible'.

Richard Delaney
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1 From:

Sent: Monday, May 18, 2026 8:31 AM
To: Danielle Cwirko-Godycki
Cc: Rob Newsom; Nicole Fernandez; Lisa Diaz Nash; Adam Loraine; Martin McTaggart Subject: RE: May 18 consent agenda item 14; I oppose historic designation of our church without our consent
Danielle –
Thank you for your response.

I understand that the ordinance does not automatically designate properties on the 1989 survey and that there would be notice and a public participation opportunity before designation.

My concern is that the ordinance does not require our consent to designate it. It is unreasonable that only the properties on the survey are singled out for potential involuntary designation.

We are committed to respecting the architectural values of our church, and we have done so in our past remodeling. I invite you to attend next Sunday (10:30 am) to see our beautiful sanctuary.

But we simply do not have the resources to add all of the procedural and substantive compliance costs that would be imposed on the church if we decide to make minor alterations in the future.

Nor do we have the resources to participate in challenging the survey update or contesting a designation if the Council decides to single out our church. So the notice and participation provisions you point to are not sufficient protection.

Please remove Section 27.66.060(a)(5) from the proposed ordinance.

Thank you for your consideration,
John Farrow
From: Danielle Cwirko-Godycki <[email protected]> Sent: Monday, May 18, 2026 6:04 AM
To:

Subject: RE: May 18 consent agenda item 14; I oppose historic designation of our church without our consent Hi John,
Hi Max,
Thank you for your email. I’d like to clarify what is, and is not, in the ordinance. Here is the language added by Council on May 4th (with highlights for emphasis):
1989 Historic Building Survey. The City Council may nominate properties listed on the 1989 Survey for addition to the San Mateo Historic Resources Inventory. Following property owner notification and 415 of 11211
2 documentation to support findings, the City Council shall hold a public hearing to consider a resolution to approve the designation based on the criteria set forth in Section 27.66.040. If the application is approved by City Council, the resource shall be added to the San Mateo Historic Resources Inventory.

No property will be designated and added to the HRI as part of this ordinance adoption. The City will need to do owner notification and update the documentation for each property in the 1989 Survey before Council can consider any properties for designation, and this will happen at a future meeting after the aforementioned work has been completed,
And, before any work starts, Council will need to approve the scope of work for the 1989 Survey update (contract amendment), which staff will bring to a future meeting once it has been prepared. So, there will be at least two more meetings where the Council and public will have a chance to weigh in before any designation happens.

Best,
Danielle
From:

Sent: Sunday, May 17, 2026 7:13 PM
To: Rob Newsom <[email protected]>; Nicole Fernandez <[email protected]>; Danielle Cwirko-Godycki <[email protected]>; Lisa Diaz Nash <[email protected]>; Adam Loraine <[email protected]>; Martin McTaggart <[email protected]> Subject: May 18 consent agenda item 14; I oppose historic designation of our church without our consent Dear Mayor and Members of the City Council,
I am a member of the Unitarian Universalists of San Mateo. I write to object to the proposal in the historic resources ordinance to permit the City Council to designate buildings on the 1989 survey as an historic resource without owner consent. That survey includes our sanctuary building at which includes our Sanctuary building at 300 East Santa Inez Avenue.

All other historic designations in the proposed ordinance require owner consent. Only buildings on the 1989 survey are singled out for involuntary designation under Section 27.66.060(a)(5). This seems fundamentally unfair.

I am concerned that designation might impose substantial constraints and additional costs to renovation work we might undertake. We are sensitive to the historic values of our building and we have honored these values in our recent extensive interior remodeling program. Indeed, our work has removed some of the additions that were not in character with the original building. However, as a small non-profit organization we simply do not have the resources to work through the bureaucratic and substantive requirements that might result from designation as an historic resource.

Please remove Section 27.66.060(a)(5) from the proposed ordinance.

Thank you,
John Farrow
416 of 11211
3 * PRIVILEGE AND CONFIDENTIALITY NOTICE: This message, together with any attachments, is intended only for the use of the individual or entity to which it is addressed. It may contain information that is confidential and prohibited from disclosure. If you are not the intended recipient, you are hereby notified that any dissemination or copying of this message or any attachment is strictly prohibited. If you have received this message in error, please notify the original sender immediately by telephone or by return email and delete this message along with any attachments from your computer. Thank you. 417 of 11211
1 From: Freedman, Daniel F.

Sent: Friday, May 15, 2026 12:06 PM
To: Adam Loraine; Nicole Fernandez; Lisa Diaz Nash; Rob Newsom; Danielle CwirkoGodycki; Zachary Dahl; Alex Khojikian; Christina Horrisberger; Prasanna Rasiah; Historic Policy
Cc: Historic Policy; Clerk
Subject: LRT’s Requested Edits to the Proposed Updated Historic Ordinance - City Council Hearing Date May 18, Item 14.

Attachments: Ltr to San Mateo CC re Requested Revisions 5-18-26(51484382.1).pdf Importance: High
On behalf of Less Red Tape, please see the attached letter concerning the revised Historic Preservation Ordinance and comments for the upcoming City Council meeting.

Daniel F. Freedman
Brownstein Hyatt Farber Schreck, LLP
2029 Century Park East, Suite 950
Los Angeles, CA 90067
WE HAVE MOVED: Our new address is: 2029 Century Park East, Suite 950 Los Angeles, CA 90067 From: Freedman, Daniel F.

Sent: Thursday, April 30, 2026 12:01 PM
To: Adam Loraine <[email protected]>; Nicole Fernandez <[email protected]>; Lisa Diaz Nash <[email protected]>; Rob Newsom <[email protected]>; [email protected]; Zachary Dahl <[email protected]>; Alex Khojikian <[email protected]>; Christina Horrisberger <[email protected]>; Prasanna Rasiah <[email protected]>; [email protected] Cc: [email protected]
Subject: LRT Objection to Revised Final Draft Historic Preservation Ordinance; Reservation of Rights On behalf of Less Red Tape, please see the attached letter concerning the revised Historic Preservation Ordinance and comments for the upcoming City Council meeting.

Sincerely,
Daniel
Daniel F. Freedman
Brownstein Hyatt Farber Schreck, LLP
2029 Century Park East, Suite 950
Los Angeles, CA 90067
418 of 11211
2 WE HAVE MOVED: Our new address is: 2029 Century Park East, Suite 950 Los Angeles, CA 90067 STATEMENT OF CONFIDENTIALITY & DISCLAIMER: The information contained in this email message is attorney privileged and confidential, intended only for the use of the individual or entity named above. If the reader of this message is not the intended recipient, you are hereby notified that any dissemination, distribution or copy of this email is strictly prohibited. If you have received this email in error, please notify us immediately by calling (303) 223-1300 and delete the message. Thank you.

STATEMENT OF CONFIDENTIALITY & DISCLAIMER: The information contained in this email message is attorney privileged and confidential, intended only for the use of the individual or entity named above. If the reader of this message is not the intended recipient, you are hereby notified that any dissemination, distribution or copy of this email is strictly prohibited. If you have received this email in error, please notify us immediately by calling (303) 223-1300 and delete the message. Thank you. 419 of 11211
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310.500.4600 main
2029 Century Park East, Suite 950
Los Angeles, California 90067-2918
Daniel F. Freedman
Attorney At Law
www.bhfs.com
Brownstein Hyatt Farber Schreck, LLP
May 15, 2026

VIA E-MAIL
Mayor Loraine, Deputy Mayor Fernandez and
Hon. Members of the San Mateo City Council
City of San Mateo
San Mateo City Hall
330 West 20th Avenue
San Mateo, CA 94403
RE: LRT’s Requested Edits to the Proposed Updated Historic Ordinance City Council Hearing Date: May 18, 2026
Dear Mayor Loraine and Hon. Members of the City Council :

On behalf of Less Red Tape, we write to request two targeted revisions to the draft Historic Preservation Ordinance. These changes are straightforward. They would resolve the ordinance’s most important remaining ambiguity and bring the ordinance back into alignment with the Council’s original objective: a local and consent-based process.

1. CLARIFY THAT “INDIVIDUALLY ELIGIBLE HISTORIC RESOURCES” EXCLUDE DISTRICT-BASED DESIGNATIONS.

The ordinance uses the term “individually eligible historic resource” as a trigger in Sections

27.66.090(a) and 27.66.120, but does not define it. While it is properly read to exclude districts – and contributors thereto – the City should make this express in the definition. More specifically, the definition should make clear that an “individually eligible historic resource” means a resource that independently qualifies on its own merits, and does not include a property whose only claimed significance is as a contributor or non-contributor to a district. We recommend adding a definition substantially as follows:
“Individually Eligible Historic Resource” means an individual building, structure, site, or object that independently satisfies one or more of the criteria in Section 27.66.040 based on its own history, architecture, or significance. The term does not include any property whose claimed eligibility derives from its location within, contribution to, or noncontributor status in a designated or eligible historic district.

Section 27.66.110 should then be revised to use that same defined term, rather than the broader and undefined phrase “eligible historic resource.”

2. REVISE “HISTORIC RESOURCE” DEFINITION TO REQUIRE A LOCAL PROCESS.

The ordinance should make clear that, for purposes of this chapter, a property is not subject to local historic regulation merely because it is eligible for or listed in a state or federal register. Local ordinance consequences should attach only if the City Council has formally adopted the resource 422 of 11211
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310.500.4600 main
2029 Century Park East, Suite 950
Los Angeles, California 90067-2918
Daniel F. Freedman
Attorney At Law
www.bhfs.com
Brownstein Hyatt Farber Schreck, LLP
May 18, 2026

VIA E-MAIL
Mayor Loraine, Deputy Mayor Fernandez and
Hon. Members of the San Mateo City Council
City of San Mateo
San Mateo City Hall
330 West 20th Avenue
San Mateo, CA 94403
RE: LRT’s Further and Reiterated Objections to the Proposed Updated Historic Ordinance City Council Hearing Date: May 18, 2026
Dear Mayor Loraine and Hon. Members of the City Council :

Less Red Tape submits this supplemental objection to the City’s proposed CEQA determination and budget impact conclusion for the Historic Preservation Ordinance and Historic Resources Commission Ordinance. The staff report concludes that the ordinances are exempt under CEQA Guidelines sections 15061(b)(3), 15378(b)(5), and 15308 because they merely “update and clarify” existing historic preservation policies. The record does not support that conclusion.

The Historic Preservation Ordinance is not merely administrative or clarifying. It creates or revises procedures for identifying, designating, and treating historic resources and districts; authorizes City Council nomination of properties listed on the 1989 Historic Building Survey; creates review requirements for exterior modifications, alterations, additions, Certificates of Appropriateness, demolition, and Downtown Retail Core design controls; and creates operative consequences for “eligible” and “individually eligible” historic resources. These provisions can affect whether projects are approved, delayed, redesigned, reduced, abandoned, or shifted elsewhere. The City therefore cannot rely on the common sense exemption. Guidelines section 15061(b)(3) applies only where it can be seen with certainty that there is no possibility of a significant environmental effect. That is not this case. At minimum, the ordinance raises legitimate questions about foreseeable physical effects on demolition, alterations, additions, redevelopment, housing, and the built environment.

The City’s reliance on section 15308 is also unsupported. Class 8 is not a blanket exemption for any ordinance that invokes environmental protection. The City must support the exemption with substantial evidence showing that the actual ordinance, as adopted, assures the maintenance, restoration, enhancement, or protection of the environment. The staff report contains no such factual analysis. Moreover, The ordinance is also not uniformly protective. It creates a classification system that determines which buildings are treated as Landmarks, Contributors, Non-contributors, eligible historic resources, individually eligible historic resources, or outside the ordinance’s review triggers. That classification system selectively allocates preservation protection and demolition risk.

Some properties may receive heightened review; others may receive a clearer path to demolition, alteration, or redevelopment because they are classified outside protected categories. The ordinance also allows preservation controls to yield to economic considerations through an Economic Hardship Exception. The City has not analyzed how these classifications, exceptions, and economic-balancing 424 of 11211
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May 15, 2026

Page 3 ends

51497193.1
Danielle Cwirko-Godycki, Council Member ([email protected]) Zachary Dahl, Community Development Dir., City of San Mateo ([email protected]) Alex Khojikian, City Manager, City of San Mateo ([email protected]) Christina Horrisberger, Assistant City Manager, City of San Mateo ([email protected]) Prasanna W. Rasiah, City Attorney, City of San Mateo ([email protected]) Somer Smith, Senior Planner, City of San Mateo ([email protected] ) Less Red Tape
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1 From: Ralph Garcia
Sent: Sunday, May 17, 2026 11:08 PM
To: Rob Newsom; Adam Loraine; Danielle Cwirko-Godycki; Nicole Fernandez; Clerk Cc: [email protected]; Alex Khojikian; Prasanna Rasiah; Historic Policy Subject: Do Not Approve Item 14 Historic Ordinance AND No surveys without Consent.

NOTE: This is NOT an AI generated message and I am a real person. You can easily verify this by replying to this email.

Dear City Council,
The Historic Ordinance as of the April 27th draŌ with edits is a Ɵcking Ɵme bomb of owner anger.

Ralph Garcia, Jr.

RG2 has sent this message.
427 of 11211
1 From: Jean Garcia
Sent: Sunday, May 17, 2026 5:23 AM
To: Rob Newsom; Adam Loraine; Danielle Cwirko-Godycki; Nicole Fernandez; Lisa Diaz Nash; Martin McTaggart
Subject: Historic Ordinance: Take No Further Action Until SMHA Withdraws Baywood Nomination
Dear Mayor and Members of the City Council,
I object to the City Council approving this historic preservaƟon ordinance as wriƩen. You should take no further acƟon on this ordinance unƟl the San Mateo Heritage Alliance (SMHA) and Laurie HieƩer voluntarily withdraw the Baywood neighborhood nominaƟon from the state historic inventory.

The Baywood nominaƟon alone would affect 444 homes. Add to that the 124 properƟes being swept into this ordinance without their owners' consent. And then consider this: SMHA operates independently and answers to no one. They can nominate addiƟonal properƟes outside of this ordinance enƟrely — meaning the number of San Mateo homes subject to historic restricƟons could grow exponenƟally, with no limit, no oversight, and no recourse for homeowners. This ordinance hands a rogue organizaƟon a tool it can use without accountability. That is not a risk the City Council should be willing to take.

The fact that 124 homeowners are being swept into this ordinance against their will is itself proof that the ordinance does not work. If historic designaƟon were genuinely beneficial — if it came with financial incenƟves, tax relief, grants, or meaningful support — homeowners would be lining up to parƟcipate. They are not. Not one of the 124 affected owners came forward voluntarily. That is not a coincidence. That is a signal the City should not ignore.

The right approach is to first figure out what would make people want designaƟon. Build those incenƟves into the ordinance. Pilot the program with willing parƟcipants. Demonstrate that it works and that it benefits homeowners — not just preservaƟonists and planning staff. Then, and only then, finalize and adopt the ordinance.

Instead, the City is moving in the opposite direcƟon — locking in 124 unwilling homeowners, handing SMHA a powerful new tool, and leaving the door wide open for hundreds more. The City needs a fair, open, and transparent partner in this process. SMHA has not demonstrated that it is that partner.

I urge the Council to reject this ordinance as wriƩen. Take no further acƟon unƟl SMHA and Laurie HieƩer withdraw the Baywood nominaƟon from the state historic inventory. Then start over — with real incenƟves, proper public noƟce, and an ordinance that San Mateo residents can actually support.

This is not AI generated. I am a real San Mateo resident. Please reply to confirm receipt and to address my concerns directly.

Thank you for your consideraƟon.

Jean Garcia
---
NOTE TO CITY CLERK: Please include this leƩer in the official meeƟng packet for every session at which this ordinance appears on the agenda, unƟl it is finally resolved.
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2 Sent from my iPhone
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1 From: Colin Hoffman
Sent: Saturday, May 16, 2026 5:02 PM
To: Rob Newsom; Adam Loraine; Danielle Cwirko-Godycki; Nicole Fernandez; Lisa Diaz Nash; Martin McTaggart
Subject: My Home Is One of 124 %2�� Vote No on the Historic Ordinance Dear Mayor and Members of the City Council,
I am a marine veteran with a VA disability rating = 100%. If my house is designated as historic, it will impact my life in an extremely negative way.

I am writing because my home at is one of 124 properties being swept into this historic preservation ordinance without my consent. I object to the City Council approving this ordinance as written, and I urge you to remove it from Monday's Consent Agenda and not proceed to a vote.

I was never asked. I was never notified. I only recently learned that my home has been designated as eligible for historic landmark status based on a 1989 survey I knew nothing about - a survey that was never completed and never formally adopted by the City Council. This is the first I have heard of it, and I am deeply opposed.

Every other San Mateo homeowner retains the right to opt out of historic designation. My home is being treated differently - singled out along with 123 others - with no explanation, no notice, and no opportunity to object before Monday's vote.

If historic designation were genuinely beneficial - if it came with financial incentives, tax relief, or meaningful support - homeowners would sign up willingly. We are not signing up willingly. That should tell the Council everything it needs to know.

This is not AI generated. I am a real San Mateo homeowner. Please reply to confirm receipt and to address my concerns directly.

Thank you for your time and attention.

Colin Hoffman
Disabled Marine veteran
---
NOTE TO CITY CLERK: Please include this letter in the official meeting packet for every session at which this ordinance appears on the agenda, until it is finally resolved.

Yahoo Mail: Search, Organize, Conquer
430 of 11211
1 From: Vineet Jain
Sent: Monday, May 18, 2026 6:33 AM
To: Rob Newsom; Adam Loraine; Danielle Cwirko-Godycki; Nicole Fernandez; Clerk Cc: [email protected]; Alex Khojikian; Prasanna Rasiah; Historic Policy Subject: Do Not Approve Item 14 Historic Ordinance AND No surveys without Consent.

NOTE: This is NOT an AI generated message and I am a real person. You can easily verify this by replying to this email.

Dear City Council,
The Historic Ordinance as of the April 27th draŌ with edits is a Ɵcking Ɵme bomb of owner anger.

Regards
Vineet Jain
, Baywood
431 of 11211
1 From: Anand Kishore
Sent: Monday, May 18, 2026 7:38 AM
To: Rob Newsom; Adam Loraine; Danielle Cwirko-Godycki; Nicole Fernandez; Clerk Cc: [email protected]; Alex Khojikian; Prasanna Rasiah; Historic Policy Subject: Do Not Approve Item 14 Historic Ordinance AND No surveys without Consent.

NOTE: This is NOT an AI generated message and I am a real person. You can easily verify this by replying to this email.

Dear City Council,
The Historic Ordinance as of the April 27th draft with edits is a ticking time bomb of owner anger.

Language introduced in Section 020 (j)(2) would allow a non-Owners to nominate ANY neighborhood in San Mateo to the State as a historic district. And if that nomination is agendized and approved, even if 100% of the Owners Object, the City Law would categorize them as "historic" based on the State saying they are 'eligible'.

Anand Kishore
432 of 11211
Honorable Mayor and members of City Council,
The decision by City Council to include eligibility for the properties identified in the 1989 Resource Survey and to allow for designation of the same within our new historic resource ordinance will enable the recognition of some of San Mateo’s oldest and (I believe) some of its most significant properties. Included in the consent item on the agenda for Monday’s council meeting is direction to update the existing survey; after some time for that work to be completed, City Council will have the opportunity to review the findings and consider properties for addition to our new Resource Inventory. As we proceed to that step, I have my own comments and suggestions about how to proceed:

1. Prioritize: I have taken some time to look at the resources included on the survey list and the associated documentation. Referring to the designation criteria in our ordinance, I would place the survey properties into two categories:
• Historical Significance: These are properties would qualify under criteria A or B.

They may be directly referenced in our Historic Context Statement, and/or have strong, documented connections to notable events, people, and communities in San Mateo
• Aesthetic Value/Thematic: These are buildings which stand out in San Mateo as strong examples of a particular form or style or “represents the work of an important creative individual, or possesses high artistic values.” For what I mean by “thematic”: there are some properties on the survey which were included because they were seen as embodying historic structures designed for specific functions (gas station, motor court, etc.) These resources would qualify under Criteria C in our ordinance.

As part of the update work to the survey, I recommend that Criteria A/B eligible resources be placed at the top of any list for potential designation. I believe that the number of eligible resources which meet these criteria is a small subset of the total number in the survey. We already have strong documentary evidence of their historical connection to the individuals and communities that built San Mateo; they are often the properties already mentioned by name when discussing local history; beginning with these resources will establish the objectivity of our local process, and is also the best use of finite resources.

The resources which I feel fall under Criteria C are not without value, but aesthetics is often more subjective and not always a subject where everyone agrees. When it comes to thematic properties like Olympian Gas on Palm Avenue: the preservation of service stations and other examples of “roadside architecture” is established practice; that does 433 of 11211
not mean it is without controversy, and the value of historic designation of any property should be weighed against our other civic priorities.

It is also worth noting that the 1989 Survey was not fully comprehensive. A review by the State Office of Historic Preservation at the beginning of the published report notes that time and financial constraints meant that a full review of all neighborhoods was not completed. Some properties that were included on the survey list as “representative examples” of a type or style may be better represented by comparable resources that were not included on the original survey list. Beginning the designation process with the resources which have the strongest documented history avoids questions of relative value that might arise for some resources that fall under Criteria C.

2. Collaboration and Incentives: While the process for designation of 1989 survey properties will no longer require owner consent, I strongly encourage that any designation should still begin with outreach to property owners, and that their responses should be given appropriate consideration as part of the designation process. • It is possible that many concerns can be satisfied with the right incentives. I am very appreciative that Council adopted the planning commission’s recommendation that our new Historic Resource Commission study additional incentives to be added to the ordinance. Simple suggestions like waiving or reducing some administrative fees, or the promise of timely review for permits, can remove common sources of complaint about landmark designation.

Adjustments to allowable lot coverage and setbacks can make it easier to build on some parcels alongside eligible resources, easing concerns about loss of economic potential.

It would be valuable to poll the property owners of eligible resources on what incentives would encourage their voluntary participation in our local program to help inform the commission. It will also help San Mateo set our new landmarks program on a more viable long-term path. As this program continues and we look beyond the 1989 survey towards any potential resources where owner consent will be required, the owners of those potential landmarks will be watching to see how our ordinance is implemented before they make a decision on whether to step forward. If the designation process is visibly collaborative and properly incentivized, we will have better outcomes.

3. Lasting Protections: It is also important to know that many of the oldest and most significant resources on the survey list are within the radius of the transit-oriented 434 of 11211
development zone around the downtown Caltrain station that will be created by SB 79 when it takes effect in July. SB 79 contains provisions affecting historic resources designated after January of 2025 in transit zones; these provisions combined with CEQA exemptions in laws like AB 130 make it possible that even if properties are included on a local resource inventory, a qualified housing project may be able to bypass review and any protections a local designation would have previously imposed. This does not mean that landmark designation is not worthwhile, but it does reinforce the point that more than ever before, the ability to create durable protection for historic resources will require the active cooperation of property owners.

In Summary
For the last several years, historic preservation practice in San Mateo has been at the center of a great deal of controversy. I am a strong believer in the value of historic places; I further believe that to maintain the viability and legitimacy of preservation work, we must proceed in a manner that is as objective as possible and responsive to community concerns. This is an opportunity for City Council to reset the conversation around historic resource policy, and ensure the long-term success of our Historic Resource Inventory. Identifying and prioritizing the most significant properties in the 1989 survey with updated research and our excellent new Historic Context Statement will establish the bona fides of our updated historic resource ordinance. Ongoing opportunities for community input and the adoption of additional incentives alongside new designations should help ease concerns over the potential impacts of designations on property rights. The policy is written; how we implement it is equally important.

Thank you,
-Adam Klafter
435 of 11211
1 From:

Sent: Sunday, May 17, 2026 3:42 PM
To: Rob Newsom; Adam Loraine; Danielle Cwirko-Godycki; Nicole Fernandez; Lisa Diaz Nash; Martin McTaggart
Cc: Alex Khojikian; Prasanna Rasiah
Subject: Historic Ordinance: Take No Further Action Until SMHA Withdraws Baywood Nomination
Dear Mayor and Members of the City Council,
Here we go again! We are busy recovering from the fiasco brought on by the lack of transparency regarding the Sobering Center on El Camino Real. Several neighborhoods were irate that there was no proper notification, followed by all that finger pointing. Did this council not learn that the public expects transparency in all issues as you promised when you were running for council? San Mateo belongs to the voters. It’s time you started listening to the majority.

The 124 homeowners do not give a hoot about a non-codified survey from 1989 that was never approved. It is meaningless in their opinion.

I urge Council to reject this ordinance as written. Start over — with proper public notice as a priority.

There were several law suits in Palo Alto regarding the very issues being discussed. It is irresponsible for any council member to say that they are willing to risk any law suits in order to push through these 124 homes. Better check with these homeowners first. They value their property rights, they have made their sacrifices and they need to be notified.

Stop pushing people around. You need their permission!
This is not AI generated. I am a real San Mateo resident. Please reply to confirm receipt and to address my concerns directly.

Thank you for your consideration.

Anna Kuhre
NOTE TO CITY CLERK: Please include this letter in the official meeting packet for every session at which this ordinance appears on the agenda, until it is finally resolved. 436 of 11211
1 From: Nikki Lindgren
Sent: Monday, May 18, 2026 9:45 AM
To: Rob Newsom; Adam Loraine; Danielle Cwirko-Godycki; Nicole Fernandez; Clerk Cc: Support User; Alex Khojikian; Prasanna Rasiah; Historic Policy Subject: Please, Do Not Approve Item 14 Historic Ordinance Dear City Council,
The Historic Ordinance as of the April 27th draft makes me very angry as a newer home owner in the area. I did not move here to have 3rd parties dictate what I can and cannot do with the style and character of my home. This is maddening and frankly makes me seriously consider relocating my family of 5 elsewhere.

NOTE: This is NOT an AI generated message and I am a real person. You can easily verify this by replying to this email.

Nikki
437 of 11211
1 From: Jeane Makar
Sent: Sunday, May 17, 2026 11:30 PM
To: Rob Newsom; Adam Loraine; Danielle Cwirko-Godycki; Nicole Fernandez; Clerk Cc: [email protected]; Alex Khojikian; Prasanna Rasiah; Historic Policy Subject: Do Not Approve Item 14 Historic Ordinance AND No surveys without Consent.

NOTE: This is NOT an AI generated message and I am a real person. You can easily verify this by replying to this email.

Dear City Council,
The Historic Ordinance as of the April 27th draŌ with edits is a Ɵcking Ɵme bomb of owner anger.

Jeane Makar
Sent from my iPhone
438 of 11211
1 From: Max Mautner
Sent: Sunday, May 17, 2026 9:01 PM
To: City Council (San Mateo); Clerk; Alex Khojikian; Zachary Dahl Subject: Agenda Item 14 — Please pull from consent
Dear Mayor and Councilmembers,
For the public record on Agenda Item 14 (May 18, 2026): I'm asking you to pull this item from the consent calendar.

The ordinance allows Council to permanently encumber a property — with no realistic path to reversal — after notifying the owner and holding a public hearing. Owner consent is not required. The triggering list is a 37-year-old building survey.

Here is the challenge I'd put to you: come to my block. Walk it. Try to identify which houses are on the 1989 Survey, and how many. You won't be able to. And neither can my neighbors who live on the list.

Several of them are on it and have no idea — nothing about their homes, their street, or any prior city communication tells them so. They are working full-time jobs, raising kids, and trusting that a change with this kind of permanence wouldn't move through Council on consent.

The stakes for an affected owner are concrete:
- Permanent loss of SB 9 eligibility (lot splits, duplexes); state law exempts parcels on a local historic register
- Certificate of Appropriateness review for routine exterior work, with original-material requirements that materially raise cost-of-living in an ultra-high-cost-of-living area - Reduced land value, especially for parcels with redevelopment potential under General Plan 2040 - An encumbrance that runs with the land in perpetuity
Some owners genuinely want historic designation and the Mills Act benefits that come with it. The clean policy answer is voluntary opt-in. There is no principled reason involuntary designation should be the default, and no good reason to make that choice on consent.

My asks:

1. Pull Item 14 from consent.

2. Direct staff to individually notify every owner on the 1989 Survey, by mail, in plain language, before any nomination proceeds.

3. Discuss publicly whether involuntary designation should require a higher bar than "notification plus hearing" — owner consent, supermajority vote, or specific written findings.

If the historic value of a property is real then it will survive a process that respects the owner.

If it isn't then the process shouldn't manufacture it.
439 of 11211
2 Thank you.

Max Mautner
San Mateo, CA
440 of 11211
1 From: Chris Misner
Sent: Monday, May 18, 2026 11:54 AM
To: Rob Newsom; Adam Loraine; Danielle Cwirko-Godycki; Nicole Fernandez; Clerk Cc: Alex Khojikian; Prasanna Rasiah; Historic Policy
Subject: Please Do Not Approve Item 14 - Historic Review and Survey.

Dear City Council,
I’ve spoken in person before the Council previously on this issue of Historic designaƟons, and I want to register my opposiƟon to the Historic Ordinance (the April 27th draŌ).

Language introduced in SecƟon 020 (j)(2) would allow anyone to nominate a neighborhood in San Mateo to the State as an historic district. Even if 100% of the owners object, the City would categorize them as "historic" based on the State saying they are “eligible.”
This is the opposite of what the Council has communicated during the review of the Historic process - especially around owner consent.
• Please DO NOT APPROVE Item 14 Historic Ordinance as part of the Consent Calendar • and please do not allow homes to be surveyed/designated as historic homes without neighborhood/community consent Thank you for your aƩenƟon to the details of this important community maƩer.

Thank you,
Chris Misner
San Mateo, CA.
441 of 11211
1 From: Jon New
Sent: Saturday, May 16, 2026 10:55 PM
To: Rob Newsom; Adam Loraine; Danielle Cwirko-Godycki; Nicole Fernandez; Lisa Diaz Nash; Martin McTaggart
Subject: Vote No on the Historic Home Ordinance
Dear City Council,
I was alarmed to learn that the home of my neighbor, a disabled marine veteran (who also emailed you), is at risk of being pulled into a historic preservation ordinance without any sort of notification. I strongly urge the Council to remove this item from Monday's Consent Agenda, and postpone this ordinance until affected homeowners are properly notified and have had a genuine opportunity to be heard.

I personally find it deeply troubling that the Council would consider imposing significant property restrictions on residents without explicit notice or consent. Historic designation is not a symbolic honor to many homeowners; it carries real and lasting burdens that property owners deserve the chance to evaluate for themselves.

Thank you for your time and attention.

Jonathan New
San Mateo homeowner
---
NOTE TO CITY CLERK: Please include this letter in the official meeting packet for every session at which this ordinance appears on the agenda, until it is finally resolved. 442 of 11211
1 From: Mignon O'Young
Sent: Monday, May 18, 2026 7:11 AM
To: Rob Newsom; Adam Loraine; Danielle Cwirko-Godycki; Nicole Fernandez; Clerk Cc: [email protected]; Alex Khojikian; Prasanna Rasiah; Historic Policy Subject: Do Not Approve Item 14 Historic Ordinance AND No surveys without Consent.

NOTE: This is NOT an AI generated message and I am a real person. You can easily verify this by replying to this email.

Dear City Council,
The Historic Ordinance as of the April 27th draft with edits is a ticking time bomb of owner anger.

Mignon O’Young
443 of 11211
1 From: Elisa Radice
Sent: Monday, May 18, 2026 8:45 AM
To: Rob Newsom; Adam Loraine; Danielle Cwirko-Godycki; Nicole Fernandez; Clerk Subject: Do Not Approve Item 14 Historic Ordinance AND No surveys without Consent Dear City Council,
Please do not vote in favor of the new Historic Ordnance language. Language introduced in Section 020 (j)(2) would allow non-Owners to nominate ANY neighborhood in San Mateo to the State as a historic district. And if that nomination is agendized and approved, even if 100% of the Owners Object, the City Law would categorize them as “historic” based on the State saying they are ‘eligible’.

NOTE: This is NOT an AI generated message and I am a real person. You can easily verify this by replying to this email.

Dear City Council,
The Historic Ordinance as of the April 27th draft with edits is a ticking time bomb of owner anger.

Hanish
445 of 11211
1 From: Steve Revesz
Sent: Monday, May 18, 2026 5:29 AM
To: Rob Newsom; Adam Loraine; Danielle Cwirko-Godycki; Nicole Fernandez; Clerk Cc: [email protected]; Alex Khojikian; Prasanna Rasiah; Historic Policy Subject: Do Not Approve Item 14 Historic Ordinance AND No surveys without Consent.

NOTE: This is NOT an AI generated message and I am a real person. You can easily verify this by replying to this email.

Dear City Council,
The Historic Ordinance as of the April 27th draŌ with edits is a Ɵcking Ɵme bomb of owner anger.

Sent from my iPhone
446 of 11211
1 From: Andrew Ryan
Sent: Friday, May 15, 2026 1:48 PM
To: City Council (San Mateo); Alex Khojikian; Clerk
Subject: "There is no budget impact" for Historic Policy? Once again San Mateo's city gov't carelessly disregard reality
In the Agenda Report for the Monday May 18th "Historic Policy Update — Ordinance Adoption" under the "Budget Impact" section, you state "There is no budget impact." This is clearly false. The City is continuing a policy of misrepresenting what they are doing to the Council and the citizens of San Mateo.

First, the Agenda Report says "Council by motion also directed that the 1989 Historic Building Survey be updated". Surveys cost money to be updated. The costs of updating the 1989 survey could easily exceed $100,000, but the larger point is that we simply don't know, because San Mateo's city government is hiding these costs from us. We have heard that the City already spent $15,000 updating the Glazenwood district survey, which was around 30 homes.
 What is the cost to update the 1989 survey, which has 3-4 times as many homes, and more importantly, requires greater levels of documentation because these are individual resources and not a district?
 Why aren't we being told the true costs of what we will have to pay to update the 1989 survey? Second, the ordinance establishes a new, permanent seven member commission with substantial training requirements. Recruiting and training commissioners, plus the costs of and running committee meetings for this new commission cannot be free. We need to account for the true costs of establishing and running this committee and represent them clearly to this City.

Need I remind you, the City is under a $17 million budget deficit and is about to come to the people of San Mateo with hat in hand, seeking a new tax increase on the next ballot. Council, if you wonder why people don't trust you with our tax money, it is because we see how you spend money so carelessly on things that most people in this city don't want.

Andrew Ryan
Baywood
447 of 11211
1 From: Kolja Schluetter
Sent: Sunday, May 17, 2026 6:26 PM
To: City Council (San Mateo); Clerk
Cc: Alex Khojikian; Zachary Dahl
Subject: Please Pull Agenda Item 14 From the Consent Calendar Good evening Council,

Please pull Agenda Item 14 from the consent calendar of the upcoming council meeting.

The recently debated changes to the ordinance are so far-reaching and impactful that this should not be passed as part of the consent calendar without proper public debate.

First, I am dumbfounded that after roughly 1.5 years of discussion and outreach, the debate about adding 1989 survey homes into the ordinance without owner consent only appeared over the past few weeks. This was never discussed with the broader community or any of the affected property owners during the entire outreach process.

Council and community largely arrived at the understanding that owner consent would be the guiding principle for historic designation. Why is the City now attempting to bypass that principle for certain homes?

There are major issues with relying on the 1989 survey:

1. The 1989 survey was never completed or officially adopted by the City Council. By now it survey is outdated.

2. It is not an official City historic inventory document. The recommendation for adoption came from an external commission, not the Council itself. The actual intent of the Council at the time is unknown. However, it seems reasonable to assume there was substantial pushback, as only Downtown and Glazenwood ultimately received designation.

3. None of the 124 affected homeowners have ever been notified that the City may now consider their homes historic or historically eligible. Many homeowners purchased and invested in these homes without any knowledge of potential historic restrictions.

4. This is major news to affected homeowners, and basic fairness requires direct notification and a proper standalone public debate before actions with potentially irreversible consequences are taken.

5. Updating these surveys is estimated to cost an additional $200,000-$300,000 on top of what has already been spent. At a time when the City is facing an approximately $16 million deficit, it is fair to ask whether this should be a financial priority.

6. Many of the properties in question are located in economically disadvantaged parts of the city.

Historic restrictions will significantly increase costs, delays, and permitting complexity for homeowners. In reality, excessive restrictions often result in homeowners pursuing unpermitted work simply to avoid the cost and red tape associated with historic review.

7. This current approach will also likely invite significant legal scrutiny and potential challenges from affected homeowners. At a time when the City already faces major financial pressures, exposing taxpayers to additional legal expenses and liabilities should be carefully considered. 448 of 11211
2 Recommendations before taking any action:
 Demand that the Baywood nomination be dropped before pursuing any additional survey-based designations. Wasn’t this the “deal”? The SMHA gets a local process, and in turn the Baywood nomination, that is widely unpopular, is dropped for good.  Notify all affected property owners directly.
 Use a consent-driven approach for the survey properties in question. How many property owners would voluntarily choose designation?
 Rank the existing survey properties by actual historical significance and preservation priority.

Entirely unremarkable office buildings or gas stations should simply not be on that list. Narrow the list to the 10 most significant properties that truly must be preserved.  If the City still chooses to pursue designation without consent, consider a phased approach with financial incentives for the property owners.

I do support preserving major historic buildings in the city that have shaped our shared history.

What is simply not right is that the City demands protections while placing all related costs and burdens onto unsuspecting homeowners, who may now face lifelong restrictions on their primary assets despite never asking for them in the first place.

Thanks & Best, Kolja
449 of 11211
1 From: Daniel Schonberg
Sent: Monday, May 18, 2026 4:49 AM
To: Rob Newsom; Adam Loraine; Danielle Cwirko-Godycki; Nicole Fernandez; Clerk Cc: [email protected]; Alex Khojikian; Prasanna Rasiah; Historic Policy Subject: Do Not Approve Item 14 Historic Ordinance AND No surveys without Consent.

NOTE: This is NOT an AI generated message and I am a real person. You can easily verify this by replying to this email.

Dear City Council,
The Historic Ordinance as of the April 27th draft with edits is a ticking time bomb of owner anger.

Sincerely,
Daniel Schonberg, District 3 resident.
450 of 11211
1 From: Gerald Stokes
Sent: Monday, May 18, 2026 7:07 AM
To: Rob Newsom; Adam Loraine; Danielle Cwirko-Godycki; Nicole Fernandez; Clerk Cc: [email protected]; Alex Khojikian; Prasanna Rasiah; Historic Policy Subject: Do Not Approve Item 14 Historic Ordinance AND No surveys without Consent.

NOTE: This is NOT an AI generated message and I am a real person. You can easily verify this by replying to this email.

Dear City Council,
The Historic Ordinance as of the April 27th draŌ with edits is a Ɵcking Ɵme bomb of owner anger.

Sent from my iPhone
451 of 11211
1 From: Lynn Tognoli
Sent: Monday, May 18, 2026 6:56 AM
To: City Council (San Mateo)
Subject: Agenda item 14, Historic policy UpdateCity Council Members, I am writing with a strong belief that I should be able to consent or deny being placed on agenda item 14, the historic policy designation that might effect my home.

I have lived in San Mateo my whole life. I went to San Mateo schools as did my wife's family and now we own San Mateo for over 35years.

It is our biggest investment, take pride of ownership, and want to protect our right as a homeowner.

We do not want our home on the Historic designation list.

Michael Fox
452 of 11211
1 From: Robin Wall
Sent: Monday, May 18, 2026 9:04 AM
To: Rob Newsom; Adam Loraine; Danielle Cwirko-Godycki; Nicole Fernandez; Clerk Cc: [email protected]; Alex Khojikian; Prasanna Rasiah; Historic Policy Subject: Do Not Approve Item 14 Historic Ordinance AND No surveys without Consent.

NOTE: This is NOT an AI generated message and I am a real person. You can easily verify this by replying to this email.

Dear City Council,
The Historic Ordinance as of the April 27th draŌ with edits is a Ɵcking Ɵme bomb of owner anger.

Robin Wall
Sent from my iPhone
Please excuse any type-os
453 of 11211
1 From: Bebe
Sent: Sunday, May 17, 2026 11:41 PM
To: Rob Newsom; Adam Loraine; Danielle Cwirko-Godycki; Nicole Fernandez; Clerk Cc: [email protected]; Alex Khojikian; Prasanna Rasiah; Historic Policy Subject: Do Not Approve Item 14 Historic Ordinance AND No surveys without Consent.

NOTE: This is NOT an AI generated message and I am a real person. You can easily verify this by replying to this email.

Dear City Council,
The Historic Ordinance as of the April 27th draŌ with edits is a Ɵcking Ɵme bomb of owner anger.

Bebe Young
454 of 11211
1 From:

Sent: Monday, May 18, 2026 3:19 PM
To: Rob Newsom; Adam Loraine; Danielle Cwirko-Godycki; Nicole Fernandez; Clerk Cc: [email protected]; Alex Khojikian; Prasanna Rasiah; Historic Policy Subject: Do Not Approve Item 14 Historic Ordinance AND No surveys without Consent.

NOTE: This is NOT an AI generated message and I am a real person. You can easily verify this by replying to this email.

Dear City Council,
The Historic Ordinance as of the April 27th draŌ with edits is a Ɵcking Ɵme bomb of owner anger.

Sent from my iPhone
455 of 11211
1 From: Ryan Chow
Sent: Monday, May 18, 2026 3:02 PM
To: Rob Newsom; Adam Loraine; Danielle Cwirko-Godycki; Nicole Fernandez; Clerk Cc: [email protected]; Alex Khojikian; Prasanna Rasiah; Historic Policy Subject: D2 Do Not Approve Item 14 Historic Ordinance AND No surveys without Consent.

NOTE: This is NOT an AI generated message and I am a real person. You can easily verify this by replying to this email.

Dear Council Member Fernandez and City Council,
The Historic Ordinance as of the April 27th draft with edits is a ticking time bomb of owner anger. How many of the 124 Properties on the 1989 Survey, most in D2, know that the City is considering making them historic without their awareness and express consent? With a simple post card, you could find out. * DO NOT SURVEY homes without prior and express owner consent Additionally, language introduced in Section 020 (j)(2) would allow non-Owners to nominate ANY neighborhood in San Mateo to the State as a historic district. And if that nomination is agendized and approved, even if 100% of the Owners Object, the City Law would categorize them as "historic" based on the State saying they are 'eligible'.

Ryan
456 of 11211
1 From: Joyce Chow
Sent: Monday, May 18, 2026 2:56 PM
To: Rob Newsom; Adam Loraine; Danielle Cwirko-Godycki; Nicole Fernandez; Clerk Cc: [email protected]; Alex Khojikian; Prasanna Rasiah; Historic Policy Subject: Do Not Approve Item 14 Historic Ordinance AND No surveys without Consent.

NOTE: This is NOT an AI generated message and I am a real person. You can easily verify this by replying to this email.

Dear City Council,
The Historic Ordinance as of the April 27th draft with edits is a ticking time bomb of owner anger.

This bypasses EVERY value that you've communicated during the Historic process especially around Owner Consent.
* DO NOT APPROVE Item 14 Historic Ordinance as part of the Consent Calendar * DO NOT SURVEY homes without prior and express owner consent Thank you for your attention to this very serious matter. 457 of 11211
1 From: steven denys
Sent: Monday, May 18, 2026 2:40 PM
To: Rob Newsom; Adam Loraine; Danielle Cwirko-Godycki; Nicole Fernandez; Clerk Cc: [email protected]; Alex Khojikian; Prasanna Rasiah; Historic Policy Subject: Do Not Approve Item 14 Historic Ordinance AND No surveys without Consent.

NOTE: This is NOT an AI generated message and I am a real person. You can easily verify this by replying to this email.

Dear City Council,
The Historic Ordinance as of the April 27th draŌ with edits is a Ɵcking Ɵme bomb of owner anger.

Best,
steven
458 of 11211
1 From: Kim
Sent: Monday, May 18, 2026 2:13 PM
To: Rob Newsom; Adam Loraine; Danielle Cwirko-Godycki; Nicole Fernandez; Clerk Cc: [email protected]; Alex Khojikian; Prasanna Rasiah; Historic Policy Subject: D2 Do Not Approve Item 14 Historic Ordinance AND No surveys without Consent.

NOTE: This is NOT an AI generated message and I am a real person. You can easily verify this by replying to this email.

Dear Council Member Fernandez and City Council,
The Historic Ordinance as of the April 27th draŌ with edits is a Ɵcking Ɵme bomb of owner anger. How many of the 124 ProperƟes on the 1989 Survey, most in D2, know that the City is considering making them historic without their awareness and express consent? With a simple post card, you could find out. * DO NOT SURVEY homes without prior and express owner consent AddiƟonally, language introduced in SecƟon 020 (j)(2) would allow non-Owners to nominate ANY neighborhood in San Mateo to the State as a historic district. And if that nominaƟon is agendized and approved, even if 100% of the Owners Object, the City Law would categorize them as "historic" based on the State saying they are 'eligible'.

Kim DiGiulio
459 of 11211
1 From: Ligia Flory
Sent: Monday, May 18, 2026 3:09 PM
To: Rob Newsom; Adam Loraine; Danielle Cwirko-Godycki; Nicole Fernandez; Clerk Cc: [email protected]; Alex Khojikian; Prasanna Rasiah; Historic Policy Subject: Do Not Approve Item 14 Historic Ordinance AND No surveys without Consent. Do Not Approve Item 14 Historic Ordinance AND No surveys without Consent.

NOTE: This is NOT an AI generated message and I am a real person. You can easily verify this by replying to this email.

Dear City Council,
D2 - D5 Council Members vote NO, 5/18 at 7pm meeting!!!!!! The Historic Ordinance as of the April 27th draft is a ticking time bomb of owner anger.

Ligia Flory
460 of 11211
1 From: Carol Gillman
Sent: Monday, May 18, 2026 3:13 PM
To: Clerk; City Council (San Mateo); City Attorney's Office; Alex Khojikian; Prasanna Rasiah Subject: Proposed Amendments- Glazenwood
My husband Martin and I (Carol) live on in Glazenwood.

I am concerned about what is actually at stake tonight.

The current ordinance requires a full planning review before anyone can demolish a contributing property in our historic district.

The proposed amendments raise the question of whether that protection survives for district contributors. If it doesn't — what stops a developer from buying the house next door and tearing it down with no review, no appeal, and no recourse? We want a written City Attorney review before a single word is changed.

Carol and Martin Gillman
San Mateo
461 of 11211
1 From: Karen E. Hummel
Sent: Monday, May 18, 2026 2:28 PM
To: Rob Newsom; Adam Loraine; Danielle Cwirko-Godycki; Nicole Fernandez; Clerk Cc: [email protected]; Alex Khojikian; Prasanna Rasiah; Historic Policy Subject: Do Not Approve Item 14 Historic Ordinance AND No surveys without Consent.

NOTE: This is NOT an AI generated message and I am a real person. You can easily verify this by replying to this email.

Dear City Council,
The Historic Ordinance as of the April 27th draŌ with edits is a Ɵcking Ɵme bomb of owner anger.

This bypasses EVERY value that you've communicated during the Historic process especially around Owner Consent. * DO NOT APPROVE Item 14 Historic Ordinance as part of the Consent Calendar * DO NOT SURVEY homes without prior and express owner consent Thank you for your aƩenƟon to this very serious maƩer.
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1 From: Karen E. Hummel
Sent: Monday, May 18, 2026 2:23 PM
To: Rob Newsom; Adam Loraine; Danielle Cwirko-Godycki; Nicole Fernandez; Clerk Cc: [email protected]; Alex Khojikian; Prasanna Rasiah; Historic Policy Subject: D2 Do Not Approve Item 14 Historic Ordinance AND No surveys without Consent.

NOTE: This is NOT an AI generated message and I am a real person. You can easily verify this by replying to this email.

That Baywood nightmare but in your own District. And this bypasses EVERY value that you've communicated during the Historic process especially around Owner Consent.
* DO NOT APPROVE Item 14 Historic Ordinance as part of the Consent Calendar * DO NOT SURVEY homes without prior and express owner consent Thank you for your aƩenƟon to this very serious maƩer.
463 of 11211
1 From: Lane Poms
Sent: Monday, May 18, 2026 2:33 PM
To: Rob Newsom; Adam Loraine; Danielle Cwirko-Godycki; Nicole Fernandez; Clerk Cc: [email protected]; Alex Khojikian; Prasanna Rasiah; Historic Policy Subject: D2 Do Not Approve Item 14 Historic Ordinance AND No surveys without Consent.

NOTE: This is NOT an AI generated message and I am a real person. You can easily verify this by replying to this email.

Sent: Monday, May 18, 2026 1:35 PM
To: Rob Newsom; Adam Loraine; Danielle Cwirko-Godycki; Nicole Fernandez; Clerk Cc: [email protected]; Alex Khojikian; Prasanna Rasiah; Historic Policy Subject: Do Not Approve Item 14 Historic Ordinance AND No surveys without Consent.

NOTE: This is NOT an AI generated message and I am a real person. You can easily verify this by replying to this email.

Dear City Council,
The Historic Ordinance as of the April 27th draft with edits is a ticking time bomb of owner anger.

This bypasses EVERY value that you've communicated during the Historic process especially around Owner Consent.
* DO NOT APPROVE Item 14 Historic Ordinance as part of the Consent Calendar * DO NOT SURVEY homes without prior and express owner consent Thank you for your attention to this very serious matter. 465 of 11211
1 From: Rebecca Smith
Sent: Monday, May 18, 2026 3:20 PM
To: Rob Newsom; Adam Loraine; Danielle Cwirko-Godycki; Nicole Fernandez; Clerk Subject: Item 14 should NOT be on the consent agenda
Dear City CouncilNOTE: This is not an AI generated message. I am a real person and voter in the City of San Mateo.

I am gravely concerned that you are pushing forward a Historic Ordinance (April 27 draft language) without proper consideration for the snowball effects this ordinance will have on property owners. As a resident of Hayward Park, I love the character of our neighborhood. Having a son who works in the property insurance industry, I also know that insurers are declining to cover homes that are designated historic. For those lucky enough to be able to get insurance on properties with this designation, their premiums are dramatically higher than similar properties without that designation. San Mateo is already unaffordable. This ordinance will force people out of their homes because they will not be able to afford insurance, and for those who stay, perhaps risking being underinsured/uninsured, they will not be able to afford to complete necessary maintenance and upgrades due to the added burden of additional planning review and requirements. This ordinance is highly problematic and is a solution to a problem that doesn't exist. I also believe that listing houses as historic without the consent of the owners could be considered an illegal taking and will result in legal expenses for the city as homeowners not only fight the designation but sue the city for the loss in value and added costs of maintaining and insuring these homes. *DO NOT APPROVE item 14 Historic Ordinance as part of the consent agenda. * DO NOT SURVEY homes without the prior and express consent of the owner.

Thank you.

Rebecca Smith
San Mateo
466 of 11211
1 From: Deepthi Somasunder
Sent: Monday, May 18, 2026 3:23 PM
To: Rob Newsom; Adam Loraine; Danielle Cwirko-Godycki; Nicole Fernandez; Clerk Cc: [email protected]; Alex Khojikian; Prasanna Rasiah; Historic Policy Subject: D2 Do Not Approve Item 14 Historic Ordinance AND No surveys without Consent.

NOTE: This is NOT an AI generated message and I am a real person. You can easily verify this by replying to this email.

Sent from my iPhone
467 of 11211
1 From: Deepthi Somasunder
Sent: Monday, May 18, 2026 3:23 PM
To: Rob Newsom; Adam Loraine; Danielle Cwirko-Godycki; Nicole Fernandez; Clerk Cc: [email protected]; Alex Khojikian; Prasanna Rasiah; Historic Policy Subject: D3 Do Not Approve Item 14 Historic Ordinance AND No surveys without Consent.

NOTE: This is NOT an AI generated message and I am a real person. You can easily verify this by replying to this email.

Dear City Council,
The Historic Ordinance as of the April 27th draŌ with edits is a Ɵcking Ɵme bomb of owner anger.

Language introduced in SecƟon 020 (j)(2) would allow non-Owners to nominate ANY neighborhood in San Mateo to the State as a historic district. And if that nominaƟon is agendized and approved, even if 100% of the Owners Object, the City Law would categorize them as "historic" based on the State saying they are 'eligible'.

Sent from my iPhone
468 of 11211
1 From: Deepthi Somasunder
Sent: Monday, May 18, 2026 3:23 PM
To: Rob Newsom; Adam Loraine; Danielle Cwirko-Godycki; Nicole Fernandez; Clerk Cc: [email protected]; Alex Khojikian; Prasanna Rasiah; Historic Policy Subject: D4 Do Not Approve Item 14 Historic Ordinance AND No surveys without Consent.

NOTE: This is NOT an AI generated message and I am a real person. You can easily verify this by replying to this email.

Dear City Council,
The Historic Ordinance as of the April 27th draŌ with edits is a Ɵcking Ɵme bomb of owner anger.

Sent from my iPhone
469 of 11211
1 From: Deepthi Somasunder
Sent: Monday, May 18, 2026 3:23 PM
To: Rob Newsom; Adam Loraine; Danielle Cwirko-Godycki; Nicole Fernandez; Clerk Cc: [email protected]; Alex Khojikian; Prasanna Rasiah; Historic Policy Subject: D5 Do Not Approve Item 14 Historic Ordinance AND No surveys without Consent.

NOTE: This is NOT an AI generated message and I am a real person. You can easily verify this by replying to this email.

Dear City Council,
The Historic Ordinance as of the April 27th draŌ with edits is a Ɵcking Ɵme bomb of owner anger.

Sent from my iPhone
470 of 11211
1 From: Deepthi Somasunder
Sent: Monday, May 18, 2026 3:24 PM
To: Rob Newsom; Adam Loraine; Danielle Cwirko-Godycki; Nicole Fernandez; Clerk Cc: [email protected]; Alex Khojikian; Prasanna Rasiah; Historic Policy Subject: D5 Do Not Approve Item 14 Historic Ordinance AND No surveys without Consent.

NOTE: This is NOT an AI generated message and I am a real person. You can easily verify this by replying to this email.

Dear City Council,
The Historic Ordinance as of the April 27th draŌ with edits is a Ɵcking Ɵme bomb of owner anger.

Sent from my iPhone
471 of 11211
1 From: Peter Stone
Sent: Monday, May 18, 2026 3:06 PM
To: Rob Newsom; Adam Loraine; Danielle Cwirko-Godycki; Nicole Fernandez; Clerk Cc: [email protected]; Alex Khojikian; Prasanna Rasiah; Historic Policy Subject: Do Not Approve Item 14 Historic Ordinance AND No surveys without Consent.

Dear City Council,
The Historic Ordinance as of the April 27th draft is a ticking time bomb of owner anger.

The Baywood nightmare but in your own District. This bypasses EVERY value that you’ve communicated during the Historic process especially around Owner Consent.
 DO NOT APPROVE Item 14 Historic Ordinance as part of the Consent Calendar  DO NOT SURVEY homes without prior and express owner consent I have written to the City Council a number of times about this and have attended three City Council meetings. In my view, the City of San Mateo is poorly run. Per page 2 of the Spring 2026 San Mateo News, you’ve run a deficit since 2024. In January 2025 I attended a City Council meeting where you approved spending $350K on a consultant to study the Historic District matter. I knew then that it would cost at least twice that amount. I am certain you’ve spent more than this and have nothing to show for it. Why are you doing this? Why are you wasting money on things that your constituents do not want? I will never vote for anyone who continues to push this BS. Please focus on more important matters like fixing the roads.

Thank you for your attention to this very serious matter.

Peter R. Stone
472 of 11211
From: Aida Kedefors
Sent: Monday, May 18, 2026 3:46 PM
To: Clerk; City Council (San Mateo); City Attorney's Office; Alex Khojikian; Prasanna Rasiah Subject: Glazenwood District
Dear Members of the City Council,
I'm a Glazenwood resident from

Five months ago we learned our neighborhood had been stripped of its historic designation without our knowledge. We organized. We gathered signatures from 83% of our neighbors. We came to this Council three times. You voted 5-0 to restore what was ours.

Tonight we are back - not because we want to be, but because proposed amendments submitted at the last minute raised questions this Council has not yet had time to answer.

Was the vote you cast on April 20th the vote you intended? If yes - are you confident tonight's proposed amendments do not change what that vote means?

Please adopt the ordinance as written. Get the City Attorney opinion. Then decide.

Thank you.

Aida Kedefors

San Mateo
473 of 11211
1 Erin Fellers
From: Liz Magnee-Schalch
Sent: Monday, May 18, 2026 3:51 PM
To: Rob Newsom; Adam Loraine; Danielle Cwirko-Godycki; Nicole Fernandez; Clerk Cc: [email protected]; Alex Khojikian; Prasanna Rasiah; Historic Policy Subject: D3 Do Not Approve Item 14 Historic Ordinance AND No surveys without Consent.

Dear San Mateo City Council,
I am a home owner in D3 with 2 houses in this district and I oppose any changes to how historic housing is classified or surveys that are without the express consent of the owner of the property. Not only did you spend money on a non-issue to draŌ up new Historic housing you are making it difficult in an already difficult area by puƫng a "possible" historic house burden on exisƟng homeowner or when selling.

These are not insagnificate burdens in an area that is already struggling with how to manage the housing that is here.

Why would you want to add to this by updaƟng and bring homes into the "historic" classificaƟon is beyond me.

NOTE: This is NOT an AI generated message and I am a real person. You can easily verify this by replying to this email.

I want you to not approve the following:

And this bypasses EVERY value that you've communicated during the Historic process especially around Owner Consent. * DO NOT APPROVE Item 14 Historic Ordinance as part of the Consent Calendar * DO NOT SURVEY homes without prior and express owner consent The Historic Ordinance as of the April 27th draŌ with edits is a Ɵcking Ɵme bomb of owner anger.

Thank you for your aƩenƟon to this very serious maƩer.

Regards,
Liz Magnee-Schalch
474 of 11211

CITY OF SAN MATEO
Agenda Report
City Hall
330 W. 20th Avenue
San Mateo CA 94403
www.cityofsanmateo.org
Agenda Number: 15 Section Name: OLD BUSINESS Account Number: 10-4661 File ID: 26-11129 TO: City Council
FROM: Alex Khojikian, City Manager
PREPARED BY: Public Works Department
MEETING DATE: May 18, 2026
SUBJECT:
19th Avenue / Fashion Island Boulevard Multimodal Improvement Project — Informational Update RECOMMENDATION:

Receive an informational update about the 19th Avenue/Fashion Island Boulevard Multimodal Improvements Project.

BACKGROUND:
19th Avenue/Fashion Island Boulevard Multimodal Improvement Project (Project) will enhance safety, accessibility, and operations along this 1.3-mile east–west corridor from Pacific Boulevard to Mariners Island Boulevard for motorists, bicyclists, and pedestrians.

The Project combines two previously separate efforts: the Fashion Island Class IV Bikeway Project, identified through the Smart Corridor and Mobility Hub Study to improve bicycle connectivity, and the Norfolk Street/Fashion Island Boulevard Intersection Reconstruction Project, which addresses congestion and traffic flow at a key junction.

By consolidating these efforts, the City and its partners can deliver a more integrated solution that advances safety, reduces congestion, and strengthens multimodal connectivity.

Sponsored by the City of San Mateo, with the San Mateo County Transportation Authority as lead implementation agency, the Project is estimated at $28 million and funded through local and federal sources. Design began in early 2025. Key improvements include Class IV separated bikeways, intersection and signal upgrades, removal of conflict points, lighting enhancements, and pedestrian improvements.

September 2025 City Council Update
On September 15, 2025, the Project team provided an update to City Council at roughly the 35% design phase. In that meeting staff discussed the Project scope, goals, initial outreach strategy and feedback, funding and overall schedule for the Project. There were over 15 public comments with the overall tone strongly positive and supportive, with broad consensus favoring the Project’s safety improvements, protected bike lanes, pedestrian enhancements, and Complete Streets approach. Many speakers praised the design as thoughtful, well-researched, and a rare opportunity to leverage significant grant funding ($500k–$1.5M city contribution toward ~$28M total Project cost) for substantial safety gains on a high-injury corridor.

Council feedback was consistent with public feedback where it was strongly supportive of the Project. A general theme praised the Project’s scope and goals in that not only would it improve safety and modal usage on the corridor but also provide congestion relief. Outside of the positive support, Council wanted the Project to continue the robust outreach so voices are heard and acknowledged, focus on decisions backed by data and while it’s great to leverage so much grant 475 of 11211
funding, the Project team should be cautious against rushing the Project through because of grant deadlines. Below is a summary of the positive and constructive feedback provided for the Project team to focus on moving forward.

Common positive themes:
• Urgent need for safety upgrades due to current traffic conditions (speeding, close passes, collisions at intersections like the gas station/Arco gas station driveway, bridges, and Norfolk/Fashion Island intersection) • Benefits for families, children biking/walking to school, equity (youth, seniors, diverse users), reduced screen time for kids, and shifting short local trips away from cars to ease congestion • Appreciation for protected/separated bike infrastructure, buffers, improved crosswalks/ramps, and specific fixes at the gas station and ramps
• Strong support for multimodal balance and future growth (upzoning/developments) many viewed safer infrastructure as a way to reduce overall vehicle traffic and congestion long-term • Praise for early outreach, staff presentation, and the Project’s funding leverage Concerns or constructive suggestions:
• Need for robust traffic modeling to account for future developments (15–20% potential increase) and avoid spillover into neighborhoods like Fiesta Gardens or impacts on school safety (e.g., Bermuda Drive) • Requests for more right-turn storage, better enforcement (blocking lanes), improved lighting (especially under overpasses), and careful handling of parking loss (some suggested diagonal parking alternatives) • Questions about specific design elements, such as the number of crosswalks at Norfolk, bike islands in turn lanes, signal phasing at the gas station, bus integration, and engagement with the Arco gas station owner • Emphasis on continued community input, data sharing (including bike usage stats and industrial camera data), and ensuring the Project remains balanced for all users (cars, bikes, peds, transit) without rushing solely for grants • One or two speakers stressed low current bike/transit mode share but saw the Project as key to increasing it safely Outreach Efforts Since September 2025 Council Update
Since September 2025, staff have incorporated feedback from the City Council and advanced the Project while maintaining a robust community engagement plan. As the design progressed from 35% to 100% completion, the team adapted by holding additional discussions where needed.

Over the past six months, the Project team has conducted four community workshops. Efforts to maximize reach and create an inclusive environment for all community members were utilized: two sets of in-person and virtual meeting options were provided, and all meetings were advertised through the various city channels including the e-newsletter, social media, city website, over 10,000 mailers to residents in surrounding neighborhoods for each pair of in-person/virtual community workshops, and 46 poster boards along the corridor and high-traffic areas in close proximity to the corridor including the Hayward Park Caltrain Station, Trader Joe’s, and the Fiesta Gardens community center for each community workshop.

Additionally, all printed materials for the community workshops included Spanish and simplified Chinese translations, and all community workshops provided Spanish and Chinese translation services.

In addition to the community workshops, staff held multiple focused meetings with business owners, concerned community groups, established homeowner associations, College Park Elementary School PTA, SAMCEDA, a coalition of students from Nueva School, and re-engaged with the Sustainability and Infrastructure Commission (SIC) through the quarterly Bicycle Pedestrian Advisory Committee and a dedicated SIC meeting in April just for this Project. The Project team also provided information about the Project to the Center for Independence of Individuals with Disabilities but did not receive a response when requesting a meeting to discuss it further.

The Project team also continued engaging with SamTrans, the San Mateo Police Department, and San Mateo Consolidated Fire Department as stakeholders to review and provide feedback on the Project designs and receive their buy-in on the proposed design. One recommendation for changes came from the Fire Department to increase the width of the travel lanes at a pinch point in the corridor, which led to modifying the westbound protected bikes lanes. There are no outstanding comments from any of these stakeholders.
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Community Feedback
Through this engagement, several consistent themes have emerged:

1. Congestion Relief:

Congestion along the corridor, particularly at Norfolk Street, has been a longstanding issue and emerged as a top community priority during the first workshop. In response, the Project team refined and optimized the design to ensure meaningful reductions in travel time and delay.

Traffic modeling identified key bottlenecks and informed targeted improvements, including revised lane configurations on the bridge, intersection reconfiguration, extended turn pockets, and optimized signal timing.

Staff shared these findings with the community at the second and final workshops, demonstrating how the design responds directly to input.

The final design is expected to reduce travel times by nearly 30% during the morning peak and nearly 50% in the afternoon peak in the peak direction. These gains are balanced by modest impacts in the westbound direction, with delays increasing by 15% or less, reflecting a carefully calibrated approach that improves overall corridor performance while maintaining acceptable conditions for all users.

2. Safety:

Improving safety along the corridor is a central objective of the Project, informed by collision history and community concern. The corridor is part of the C/CAG Countywide High Injury Network, with over 200 collisions between 2019 and 2024. A disproportionate share of these incidents at nearly 25% of all collisions occurred at the 19th Avenue/Delaware Street intersection and at the SR-92 eastbound off-ramp near the ARCO gas station driveway, highlighting these locations as critical conflict points.

To specifically address the high collision rates at the SR-92 off-ramp and gas station driveway, and to provide additional protection for the two-way protected bikeway, a new median is proposed along the off-ramp and extending toward the 19th Avenue/Delaware Street intersection. This median will eliminate a major conflict point by restricting turning movements at the driveway, significantly reducing the potential for vehicle conflicts.

Recognizing the importance of maintaining access to the adjacent gas station, staff have worked closely with the property owner and ARCO’s parent company, British Petroleum, to refine the design. As a result of this coordination, the design of the median has shifted northerly to ensure that gas tanker trucks can maneuver safely and efficiently out of the gas station and onto 19th Avenue.

At the owner’s request, access to the ARCO station from northbound Delaware Street has also been maintained, rather than fully restricted as initially proposed. To support this change, the driveway on Delaware Street will be widened to accommodate increased use. While inbound access to the gas station is maintained, eastbound left turns from the driveway onto northbound Delaware, one of the higher-conflict movements, will be prohibited to improve safety. Instead, motorists traveling northbound on Delaware, eastbound on 19th Avenue, or toward the eastbound freeway on-ramp will be directed to use the new signalized intersection at 19th Avenue.

Together, these targeted design changes address the corridor’s most significant safety risks while balancing operational needs and maintaining viable access for adjacent properties.

3. Multimodal Connectivity:

As one of four critical east–west crossings of US 101, the corridor plays an essential role in connecting neighborhoods east and west of the US-101 freeway. Because these crossings are limited, improving this corridor is key to providing safe, reliable travel options for all users and supporting long-term mobility across 478 of 11211
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CITY OF SAN MATEO
the city.

The Project delivers a continuous 1.3-mile Class IV separated bikeway from Pacific Boulevard to Mariners Island Boulevard, creating a high-quality, low-stress route that physically separates bicyclists from vehicle traffic. This facility helps close a key gap in the City’s bicycle network and improves access to nearby schools, parks, transit stops, and employment areas.

To support safe and efficient travel, the bikeway is paired with five signal modifications, including dedicated bicycle signals and improved intersection controls. These upgrades provide safer crossings while maintaining coordinated traffic flow along the corridor.

The Project also improves connections to transit by coordinating with SamTrans and maintaining reliable bus operations along the corridor, a new bus island for westbound buses near the Mariners Island Blvd intersection along with a short bus-only lane. Pedestrian enhancements, including improved crossings, ADA-compliant facilities, and better lighting, further strengthen first- and last-mile connections to transit and nearby destinations.

Together, these improvements create a more balanced corridor that accommodates all modes of travel. By expanding safe and convenient options beyond driving, the Project supports mode shift for shorter trips, reduces pressure on the roadway network over time, and enhances overall corridor efficiency.

4. Pedestrian and Lighting Enhancements:

Public input consistently identified gaps in lighting and pedestrian infrastructure as key concerns along the corridor, particularly near freeway ramps, bridges, and complex intersections. These conditions reduce visibility and contribute to safety challenges for people walking, especially during early morning and evening hours.

The Project addresses these issues through corridor-wide streetlighting upgrades that bring existing facilities up to current City standards, significantly improving overall illumination and visibility. New lighting will also be installed over the Seal Slough Bridge, where no lighting currently exists to provide a more consistent and safer environment for all users.

Pedestrian improvements are designed to enhance both safety and accessibility. These include ADAcompliant curb ramps, high-visibility raised crosswalks, and protected intersections that reduce exposure to turning vehicles and clarify right-of-way. Curb extensions (bulb-outs) at key locations will shorten crossing distances and improve sightlines between pedestrians and drivers.

A critical enhancement is the addition of a new pedestrian walkway on the south side of the Seal Slough Bridge. Currently, pedestrians must use the north side and cross multiple times to access destinations on the south side, creating inconvenience. The new walkway will provide a continuous, direct route, closing this gap in the network thereby creating a continuous walkway along the entire southerly side of the corridor.

By incorporating extensive community and Council input, the Project delivers a true Complete Street aligned with the City’s 2040 General Plan. The final design reduces congestion, enhances safety, and expands travel options through coordinated, data-driven improvements, transforming the corridor into a safer, more reliable, and more equitable east– west connection across US 101.

April 30, 2026, Sustainability and Infrastructure Commission Feedback The Sustainability & Infrastructure Commission held a special meeting on April 30, 2026, to review the final design of the 19th Avenue / Fashion Island Boulevard multimodal improvements project. Staff presented Project goals, history, outreach efforts, and design status, and solicited commissioner input prior to advancing the item to City Council in mid480 of 11211

CITY OF SAN MATEO
May 2026. Key elements discussed included congestion relief (particularly eastbound PM peak traffic), enhanced pedestrian and bicycle safety/access, improved transit operations, and efforts to minimize parking impacts.

Commissioners provided supportive feedback on the final design, with several highlighting the strong emphasis on safety improvements. Commissioners commended the protected bike lane configuration and two-way facility on the westerly segment as a meaningful step toward better multimodal connectivity, while noting the importance of the concrete medians and intersection treatments (such as curb bulbs and truck aprons) for reducing turning conflicts, and supported the pedestrian pathway additions along the southerly side of the Seals Slough Bridge to close existing gaps and the significant safety improvements the Project will bring to the Delaware Street and 19th Avenue intersection near the ARCO gas station.

Commissioners inquired about construction phasing and potential impacts to nearby businesses, expressing appreciation for the outreach efforts and the Project’s alignment with the Bike and Pedestrian Master Plans. Overall, the Commission expressed broad support for advancing the design, with minor questions focused on implementation details such as street lighting/landscaping enhancements and parking mitigation strategies.

Funding and Schedule
The Project reached a major milestone in early 2026 with the award of nearly $16.5 million in San Mateo County Transportation Authority (SMCTA) Highway Program funding for construction. An additional $3 million in Regional Measure 3 funding has also been recommended by the Transportation Authority and is expected to be formally allocated by the Metropolitan Transportation Commission (MTC) in fall 2026.

The total Project cost is estimated at approximately $28 million. With these funds, the City’s contribution remains just $500,000, about 1.8% of the total, substantially reducing local costs while advancing critical safety, congestion relief, and multimodal improvements.

Next Steps
The Project team anticipates final Caltrans approval by August 2026 and formal allocation of the remaining $3 million in MTC funding by fall 2026. Remaining federal funds are expected to be obligated by January 2027. Staff will then advertise the construction bid and return to City Council in mid-2027 for contract award.

This item is for informational purposes, and staff welcomes Council feedback as the Project transitions from final design into construction.

Additional information is available at www.cityofsanmateo.org/19thFIB, including the concept design and Project fact sheet.

BUDGET IMPACT:

There is no budget impact for this informational presentation.

ENVIRONMENTAL DETERMINATION:

This informational update is not a project subject to CEQA, because it can be seen with certainty that it will not cause a physical change in the environment. (Public Resources Code Section 21065.)

NOTICE PROVIDED
All meeting noticing requirements were met.

ATTACHMENTS
None

STAFF CONTACT
Bethany Lopez, Senior Engineer
[email protected]
(650) 522-7313
481 of 11211

CITY OF SAN MATEO

CITY OF SAN MATEO
Agenda Report
City Hall
330 W. 20th Avenue
San Mateo CA 94403
www.cityofsanmateo.org
Agenda Number: 16 Section Name: PUBLIC HEARING Account Number: File ID: 26-11202 TO: City Council
FROM: Alex Khojikian, City Manager
PREPARED BY: Community Development Department
MEETING DATE: May 18, 2026
LAST AMENDED: May 18, 2026 – Amended to update Exhibits A-L on Attachment 2 – Draft Resolution
SUBJECT:
445 S. B Street (Bespoke) – New Mixed-Use Development – Approval and Ordinance Introduction RECOMMENDATION:

1. Introduce an Ordinance approving a Development Agreement (DA) associated with the construction a new mixeduse development totaling 239,628 square feet and consisting of one seven-story, 76,072 square-foot affordable housing building and one six-story, 162,926 square-foot office/commercial building located at 445 South B Street (“Project”).

2. Adopt a Resolution approving a Disposition and Development Agreement (“DDA”) for the Project, including a form of Ground Lease, Reciprocal Easement Agreement, Temporary Construction Easement, and Predevelopment and Permanent Loan Documents (Loan Agreement, Deed of Trust, Promissory Note, Financing Regulatory Agreement), and authorizing the City Manager to execute all documents and make any appropriate changes, with the concurrence of the City Attorney, so long as the changes do not alter substantive rights and obligations of the City.

3. Adopt a Resolution appropriating two million nine hundred thousand dollars ($2,900,000) into the Bespoke Predevelopment Project from a Developer Equity Contribution held by the City and provided to the Residential Developer in the form of a Predevelopment Loan.

4. Adopt a Resolution appropriating three million dollars ($3,000,000) in the form of a loan to support the affordable housing construction, with two million dollars ($2,000,000) from the Low Moderate Income Housing Asset Fund (Fund 255) and One Million Dollars ($1,000,000) from the Commercial Linkage Fee Fund (Fund 270) to the Housing Bespoke Project to fund the loan.

5. Adopt a Resolution to approve the Site Plan and Architectural Review (“SPAR”), Special Use Permit (“SUP”), and Site Development Planning Application (“SDPA”) for the Project and to adopt a Mitigated Negative Declaration and Mitigation Monitoring and Reporting Program (“MMRP”) in compliance with the California Environmental Quality Act (“CEQA”), based on the Findings for Approval and subject to the Conditions of Approval for the Project.

BACKGROUND:

Surplus Land Act and Developer Selection
Pursuant to Government Code Sections 54220 et seq., known as the “Surplus Land Act” (SLA), the City Council adopted a Resolution declaring two City-owned surface parking lots at East 4th Avenue and South Railroad Avenue (“Talbot’s Site”), and 308 5thAvenue (“Ravioli Site”) as “Surplus Land” on January 4, 2021. In accordance with the SLA, staff then released a Notice of Surplus Lands Availability (Notice) to all housing developers registered with the California Department of Housing and Community Development (HCD).

The City selected one of the three proposals received to redevelop the Talbot’s Site and entered into an Exclusive Negotiating 482 of 11211

CITY OF SAN MATEO
Agreement (ENA) with a three-party Development Team (Development Team) composed of Prometheus Real Estate Group, Harvest Properties, and Alta Housing (a non-profit affordable housing developer) on October 4, 2021. The City has since been working with the Development Team to refine the proposed mixed-use project, now referred to as Bespoke, through the planning entitlement process and to negotiate the terms which will govern the project moving forward.

Prior Meetings and Milestones
On September 1, 2022, the Development Team hosted a pre-application community meeting to gather feedback and answer questions. The Project was presented to the Planning Commission at a study session on October 11, 2022. A formal planning application was subsequently submitted in February 2023 and deemed complete on July 17, 2024.

Since then, it has been presented to the City Council at two study sessions, held on May 15, 2023 and September 16, 2024, to provide the Council with status updates and review the draft term sheets summarizing key deal terms for the publicprivate partnership between the City and the Development Team. The ENA has been extended four times, to July 2026.

The Bespoke project (Project) includes the following components:
• A seven-story, 71-unit 100-percent affordable housing building on the City’s lot with community space for Self-Help for the Elderly (a local not-for-profit) on the first floor; • A six-story 162,934 square-foot commercial and office building with ground floor retail; • Improvements in the public right-of-way along all four street frontages, and • 137 parking spaces in an underground parking garage that spans both residential and commercial parcels and is accessed via the City-owned lot.
o 37 will be reserved for the residential building.
o 100 will serve commercial and office uses. Of those:
▪ 28 stacking stalls will be for the exclusive use of the commercial and office. ▪ 10 will be for exclusive use of the commercial and office. ▪ 25 will be accessible to the residential building after-hours. ▪ 37 will be available for public use after regular business hours, and during evenings and weekends.

Project Agreements and Deal Terms
As the Project includes a City-owned parcel, the City is not merely acting in a regulatory capacity but is also acting in a proprietary capacity as a landowner and partner in the Project. The Project also spans multiple parcels under different ownership and will be constructed in phases, starting with the underground parking garage and shared podium (constructed by the Commercial Developer), followed by construction of the commercial and residential superstructures by their respective developers. The City and Developer Team must therefore enter into several legal agreements that will govern the various aspects of this Project, in addition to the planning entitlements.

These include a Disposition and Development Agreement (“DDA”) that contains the terms and conditions under which the Development Team will build the Project and a 99-year Ground Lease with the Residential Developer for $1 per year to own and operate the affordable housing. In addition, the City will execute a Lot Tie Agreement, Reciprocal Easement Agreement, and Shared Parking Agreement to allow for the construction of the underground parking garage across multiple parcels and for its ongoing use and maintenance.

For the residential component of the Project, the City will execute a Predevelopment and Permanent Loan Agreement and two Regulatory Agreements that will restrict the residential units for rental to lower-income households. Each of these documents, with the exception of the Shared Parking Agreement, which will be executed at a later time, are provided in the attachments to this report and are outlined below.

To address potential delays in the construction of the residential component, the Commercial Developer has committed to making a series of contributions and deposits to the affordable housing upon key Project milestones. The timing of the contribution to the affordable housing ($2.9M), the initial deposit ($3M), and additional deposit ($3.5M) are outlined in the Schedule of Performance. Most recently, a deposit of $100,000 per year for up to four years ($400,000) was added to the DDA to provide some compensation to the City for land holding costs if the Commercial Developer does not begin 483 of 11211

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construction of the parking garage and the Project fails to commence.

The deal terms of the Project presented at the September 16, 2024 study session formed a basis for the agreements that support this Project. However, it took several months to resolve some major outstanding terms; those were discussed in the October 6, 2025 City Council report that allowed for the final ENA extensions to July 2026. Additionally, the Schedule of Performance –a document with binding project milestones that underpins the obligations, defaults, and remedies of all the parties outlined in the DDA – was refined and revised as the entitlement date shifted. Overall, the Schedule of Performance includes a timeline that results in a completed affordable housing development by 2035 or as late as 2040 if all applicable “buffers” are exercised as permitted in the DDA.

A summary of the key project terms is provided below:
• The City will contribute $3 million to support the affordable housing development in the form of a loan. • The Commercial Developer will contribute $2.9 million to support pre-development costs for affordable housing. The City will disburse the $2.9 million to the Residential Developer in the form of a zero-interest, forgivable predevelopment loan.
• The Commercial Developer will finance and construct the shared underground parking garage across the entire site.
• The shared parking will include a minimum of 37 reserved residential spaces, and 37 spaces in the commercial garage will be publicly accessible during evenings and weekends. Staff will execute a Shared Parking Agreement with the Development Team to memorialize these terms and conditions, consistent with the City’s standard template for this type of agreement.
• The Residential Developer will provide ground floor space in the affordable housing building at $1 per year to the not-for-profit organization Self-Help for the Elderly. • The Commercial Developer will make an annual payment of $100,000 per year for up to four years, that the City will retain if the underground parking garage construction does not start within the timeframe in the DDA. • The Commercial Developer will provide additional assurances for the affordable housing in the form of:
o A deposit of $3 million at building permit issuance for the garage (returned if affordable housing is completed).
o An additional deposit of $3.5 million at certificate of occupancy of the commercial/office building (returned if affordable housing is completed).
• If the Residential Developer is unable to proceed, depending on when this failure occurs:
o The Commercial Developer will find an alternate affordable housing partner, with the City’s approval, who can revise and deliver the affordable housing component within a to-be-determined timeframe. o All plans and entitlements will revert to the City to find an alternate developer who can deliver the residential units or explore alternatives such as a market-rate project. • The project will be subject to prevailing wage and Department of Industrial Relations (DIR) registry requirements.
• The Development Team is encouraged to make a good faith effort to propose a joint public art proposal for the residential and commercial components of the project at the project site. • The Development Team will enter into a Temporary Construction Easement, in a form approved by the City Council, prior to the issuance of any building permits.

Planning Commission Recommendation
On April 28, 2026, the Planning Commission held a public hearing to consider the Project. Public comments were provided and expressed support for the new affordable housing that would be built and that the project was using union labor; and comments also expressed concern that labor agreements had not been reached with all trades and that the project could create traffic and circulation impacts around the neighborhood and along 5th Avenue. Commissioners expressed support for the affordable housing and the Project’s architectural design, with concerns raised about the significant amount of time that would be needed before the Project was built and occupied. Following deliberations, the Commission voted unanimously to recommend that the City Council adopt an Ordinance approving a Development Agreement for the 484 of 11211

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Project; adopt a Resolution approving the Site Plan and Architectural Review (“SPAR”), Special Use Permit (“SUP”), and Site Development Planning Application (“SDPA”) for the Project; and adopt a Mitigated Negative Declaration and Mitigation Monitoring and Reporting Program (“MMRP”) for the Project.

The Commissioners also recommended that two “Walk of Honor” plaques that are installed in the sidewalk surrounding the Project site be removed and given to the City. The City will determine whether and how to preserve these plaques.

The draft Ordinance to adopt the Development Agreement is provided as Attachment 1, the Resolution including the draft Disposition and Development Agreement (DDA) and its exhibits is provided as Attachment 2, and the draft Resolution with the Findings for Approval, Conditions of Approval, and MMRP is provided as Attachment 3.

Health & Safety Code Section 33433 Summary Report
As the Talbot’s Site is a former Redevelopment Agency (“RDA”) property, a Summary Report (“33433 Report”) was drafted pursuant to California Health & Safety Code Section 33433. This statute requires that, prior to the sale, lease, or other disposition of real property acquired with Redevelopment funds, the conveying entity must prepare a report summarizing the financial and development-related terms of the proposed transaction. The 33433 Report provides estimates of the cost of the transaction that will result in the 71-unit affordable housing development on the Talbot’s Site, the value of the site at its highest and best use, and the reuse value of the site. The 33433 Report is provided as Attachment 6.

PROJECT OVERVIEW:

Site Description
The Project site consists of four parcels that collectively occupy an entire block, with the site bounded by East 4th Avenue to the northwest, South Railroad Avenue and the Caltrain right-of-way to the northeast, South B Street to the southwest, and East 5th Avenue to the southeast. The Project site is 1.16 acres in size, with a General Plan Land Use Designation of Downtown Retail Core and a zoning designation of CBD/R, Central Business, Residential Overlay District. It is also one block south of the Downtown Historic District.

The Project site is currently developed with four commercial buildings (including retail, fast dining and restaurant uses) and a City-owned surface parking lot. Existing buildings along South B Street and East 4th and 5th Avenues range between one to two stories in height. Surrounding uses include the Downtown Caltrain Station to the east approximately 0.2 miles away, a mix of commercial uses to the north and south, and a seven-story residential building to the east.

Project Description
The proposed seven-story residential building would be approximately 76,072 square feet in footprint, 85.5 feet in height to the highest plate line, and would occupy the City-owned parcel located at the corner of South Railroad Avenue and East 4th Avenue. The project contains 72 units, including 71 affordable units and one manager unit. The 71 affordable residential units would consist of three studio units, 24 one-bedroom units, 22 two-bedroom units, and 22 three-bedroom units. The residential building would be assigned 37 below grade parking spaces. The ground floor includes a lobby, leasing office, common spaces for residents, and approximately 5,964 square feet of community non-profit space (Self-Help for the Elderly). Other public facilities for residents are on the second floor, including a laundry room, community room and a 4,271 square feet courtyard terrace with landscaping, outdoor furniture and play equipment.

The six-story commercial building is approximately 162,934 square feet in size, which consists of 148,939 square feet of office and 13,995 square feet of ground floor retail space. The building would be 85.8 feet in height to the highest plate line.

The L-shaped building would occupy the remaining portion of the block, wrapping around the residential building. The ground floor of the commercial building would include a lobby, office uses, bike storage and all the retail area. The commercial building’s required open space is provided on the ground level (794 square feet) and upper-level patio spaces (1,487 square feet) for a total of 2,281 square feet of open space areas, consistent with SMMC Section 27.38.090.

APPLICABLE HOUSING LAWS:

State Density Bonus Law
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The Project utilizes State Density Bonus Law (SDBL) in accordance with Government Code Section 65915. SDBL allows for increased residential density, reduced parking standards, and “incentives” and “waivers” or reductions from development standards for residential projects that provide a certain percentage of units as affordable to Very Low, Low, or ModerateIncome households.

The base residential density of the site is 58 units, while the Project is proposing a total of 71 units, or a 22% density bonus.

By providing 100% of the units at the low-income level (or 80% of Area Median Income) with a target average AMI of 60% or less, the Project is eligible for an unlimited percentage of density bonus, up to four concessions, up to 33 feet of additional building height, unlimited waivers or reduced development standards, and no parking standards, given that the Project is within half mile of major transit.

Although the Project is eligible for four concessions and unlimited waivers, the Project application is seeking two concessions and six waivers for aspects of the Project that do not meet various City development standards. A summary of the Project’s concessions and waivers, and the applicant’s density bonus request letter are included as Attachment 10.

CITY PLANS, POLICIES, AND STANDARDS:

General Plan and Zoning Code
As this Project was submitted prior to General Plan 2040’s effective date on April 17, 2024, it is subject to the goals, policies, and actions within General Plan 2030 under City Council Resolution No. 25 (2024). The General Plan 2030 Land Use Map designates the Project site as Downtown Retail Core, which is intended to combine a diversity of uses including a mix of ground floor retail uses to foster retail vitality and improve Downtown’s pedestrian-oriented environment. With approval of the requested concessions and waivers, the Project will conform to all applicable General Plan standards. A list of applicable General Plan 2030 policies and a discussion of the Project’s conformance are included in the Draft Resolution (Attachment 3). Consistent with its land use designation, the Project site is zoned CBD (Central Business District), Residential Overlay District (CBD/R). A Project Data Table listing the applicable Zoning Code standards and the Project’s conformance to them is included as Attachment 9.

The Project site is located within 0.5-mile of a major transit stop, (the Downtown San Mateo Caltrain station), and is therefore not subject to minimum parking requirements or parking in-lieu fees, pursuant to Government Code Section 65863.2 (AB 2097). Nevertheless, the Developer Team is proposing to provide a total of 137 spaces in the subterrain parking garage. Both residential and commercial parking spaces include standard, compact, and American with Disabilities Act (ADA) compliant stalls and stalls equipped with mechanic lift.

Downtown Area Plan
Located within Downtown Retail Core sub-area in the Downtown Plan, the Project is subject to the Downtown Area Plan, which establishes goals and policies to implement the overall vision of the downtown. In conformance with the Downtown Area Plan, the Project includes ground floor retail and commercial uses and office and residential uses on the upper floors, with extensive glazing at ground level to enhance visibility into indoor activity. The proposed new street trees, streetlights, public furnishing zones along sidewalks, and wider sidewalk paving are consistent with both the Downtown Retail Core policies and compatible with recently constructed Project’s in the same vicinity.

Citywide Pedestrian Master Plan
The Citywide Pedestrian Master Plan contains recommendations to improve the pedestrian realm throughout the city. The Project is in substantial conformance with the Pedestrian Master Plan in that the Project meets the sidewalk guidelines and is compliant with the Zoning Code and ADA standards on all frontages, resulting in wider sidewalk widths when compared to existing conditions. In addition, the Project provides aesthetic and functional improvements in the pedestrian environment, including pedestrian facilities, street furnishings, pedestrian scale lighting, plant containers, street trees, and bike racks.

Bicycle Master Plan
The City’s Bicycle Master Plan provides policies and recommendations to implement citywide infrastructure improvements to support bicycle use. The Project does not propose any features that would conflict with the future improvements 486 of 11211

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identified in the Bicycle Master Plan and provides a total of 23 short-term bicycle spaces (8 office, 7 retail, and 8 residential) and 140 long-term bicycle spaces (56 in the non-residential building, 84 in the residential building). As required by the City’s Zoning Code, four bike racks (eight spaces) are provided for the residential building, and a total of eight racks (16 spaces) are provided for the commercial building adjacent to building entrances.

Transportation Impact Analysis
Vehicle Miles Traveled CEQA Analysis
A Transportation Impact Analysis (TIA) was prepared by Fehr and Peers to analyze the Project’s transportation impacts in accordance with the standards of the California Environmental Quality Act (CEQA), the City’s General Plan, and the City’s TIA Guidelines (Attachment 6 Exhibit A). Since the implementation of Senate Bill 743, the Governor’s Office of Land Use and Climate Innovation (formerly Office of Planning and Research) established Vehicle Miles Traveled (VMT) as the metric used under CEQA for determining the significance of transportation impacts in a Guideline. The TIA concludes that the Project will not result in significant VMT CEQA impacts and that no further VMT analysis is required, based on the Project’s proximity to high quality transit (0.5 miles from the Downtown San Mateo Caltrain Station) in accordance with the Guideline.

Level of Service Impact and Local Transportation Analysis In addition to analyzing the Project’s VMT impact, Fehr & Peers conducted a Level of Service (LOS) analysis at six studyintersections within the Project vicinity. Although the TIA identified that intersection operations worsened from existing to cumulative, plus Project conditions, all six study intersections would continue to operate acceptably in both the AM and PM peak periods. Based on the City’s threshold for adverse intersection operations outlined in the City’s TIA Guidelines, the Project would not have an adverse effect on traffic conditions under cumulative or cumulative plus Project conditions. The TIA also considered impacts to vehicle, pedestrian and bicycle site access, hazards and emergency vehicle access, and parking in accordance with the City’s General Plan Circulation Element. The TIA concludes that the proposed Project would not result in any adverse effects on traffic operations at the study locations.

Transportation Demand Management (TDM)
The Project will implement the Transportation Demand Management (TDM) Plan for the commercial part of the proposed Project, prepared by the City’s TDM Consultant, Steer, which is included as Attachment 8. While the Project does not cause a VMT impact in accordance with CEQA, the City/County Association of Governments (C/CAG) of San Mateo County requires Projects that generate more than 100 average daily trips to implement trip reduction measures. Based on C/CAG’s guidelines, this Project is required to reach a minimum 25% trip reduction through TDM measures. The Project’s TDM Plan estimates an overall trip reduction of 25% through implementation of various core TDM measures as required by C/CAG. The draft Conditions of Approval requiring implementation of these TDM measures are in Attachment 3.

PLANNING APPLICATIONS:

Development Agreement Ordinance
The Project includes an Ordinance that establishes a DA between the City, the Developer Team, and the owner of the property leased by the Commercial Developer that is part of the Project (Attachment 1). The purpose of the Development Agreement is to provide assurance to the Developer Team that the Project can be built as entitled and will be subject only to the laws, policies, and regulations in place on the effective date of the agreement. The term of the DA is 14 ½ years from the effective date, which accounts for the maximum time allowed for the Project’s completion in the Schedule of Performance using extensions, or “buffers.” The term may be extended in the case of “force majeure” events, which are delays that occur outside the control of the parties to the DA.

Site Plan and Architectural Review (SPAR)
The Project requires a Site Plan and Architectural Review (SPAR) approval for construction of new buildings and no on-site loading zone pursuant to San Mateo Municipal Code (“SMMC”) Section 27.08.030. Overall, the Project design supports orderly and harmonious development of the site, complies with applicable development standards and General Plan policies, and would not result in adverse impacts. Details on the SPAR findings for approval are included in the Draft Resolution (Attachment 3).

SMMC Section 27.64.390 requires a total of four off-street, 10-foot by 25-foot loading berths for freight loading. The code 487 of 11211

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requires two loading berths for office use, two for retail, and one for residential use, although the residential may be eliminated in mixed-use developments where a minimum of one loading berth is required for nonresidential uses.

The Project proposes two on-street loading areas and no off-street loading facilities. The Developer Team is requesting a SPAR to allow a modification of the loading requirements pursuant to SMMC 27.64.390. Staff reviewed the proposed loading zones and concluded that the Project meets the applicable SPAR findings for the modification of the loading requirements, as discussed in greater detail in the Draft Resolution (Attachment 3).

Site Development Permit and Tree Removal (SDPA)
Municipal Code Chapter 23.40 requires a Site Development Planning Application (SDPA) approval for removal of major vegetation in conjunction with redevelopment. There are a total of 23 trees on-site, all of which qualify as protected trees and are proposed to be removed. These trees are located within the proposed building footprint or other site improvements.

The equivalent landscape unit (LU) value of the removed trees, noted at 260.14, would be replaced as conditioned via planting of new trees, payment of an in-lieu fee, or a combination of both in accordance with Municipal Code Section 27.71.

Additional details on the SDPA findings for approval are included in the Draft Resolution (Attachment 3).

Special Use Permit (SUP)
The Project will require a Special Use Permit (SUP) to allow ground floor community service/non-profit use in required retail frontage area (SMMC Section 27.74). Overall, the proposed mixed-use with some ground floor community service/nonprofit and housing above is substantially similar to and compatible with adjacent uses. The proposed community service/non-profit tenant is an active use, as volunteers visit the site on a daily basis and the organization conducts events on site that attract visitors. Thus, granting an SUP for a community service/non-profit use as part of a mixed-use Project at this location is consistent with the City’s General Plan, Housing Element, Downtown Area Plan, and Zoning Code requirements, and the SUP findings for approval are included in the Draft Resolution (Attachment 3).

NEXT STEPS:

Under state law, a Development Agreement must be approved by ordinance. The ordinance approving the DA would become effective 30 days after adoption. No later than 10 days after the City enters into the DA, it should be recorded against the property.

By approving the DDA, the City Council would also approve the Schedule of Performance and several additional agreements provided as exhibits to the DDA: the Ground Lease, Lot Tie Agreement, Reciprocal Easement Agreement, Construction Easement, Predevelopment Loan documents, and Permanent Loan documents. Some of these will not be executed until later project milestones, which may not take place for several years.

The Predevelopment Loan documents will be executed immediately upon approval. The Reciprocal Easement Agreement, Lot Tie Agreement, and Temporary Construction Easement will be executed prior to issuance of the first building permit, as these agreements apply to the construction of the underground parking garage. The Ground Lease and Permanent Loan documents will be executed concurrently with the close of financing for the residential component of the Project. The City will also enter into a Shared Parking Agreement with the Developer Team; this applies to the completed underground parking garage and will be executed at a later date.

In addition to executing the above documents, within 120 days of the effective date of the DA, the Commercial Developer will deposit $2,900,000 with the City to be provided in the form of a loan to the Residential Developer for predevelopment costs. Staff has already reviewed a draft draw request of eligible predevelopment costs from the Residential Developer and anticipates disbursing funds shortly after receiving the deposit. Per the Schedule of Performance in the DDA, the Commercial Developer has up to four years from the effective date of the DA to obtain a building permit for the construction of the underground parking garage.

NOTICE PROVIDED AND PUBLIC COMMENTS:

In accordance with Government Code Section 65090, notice of this Public Hearing was published in the San Mateo Daily Journal newspaper more than ten days in advance of this City Council meeting. In accordance with Government Code Section 488 of 11211

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65091 and the City’s Municipal Code noticing requirements, this Public Hearing was noticed to the following parties more than ten days in advance of this Planning Commission meeting:
● Property owners, residential tenants and business tenants within 1,000 feet of the Project site. ● The City’s Planning “Notify Me” email list; and,
● The interested parties list, which includes interested individuals who contacted the City and requested to be added to the Project notification list.

There were a total of 14 public comments submitted to staff (Attachment 13). Public comments received after publication of this report will be forwarded to the City Council for review and consideration at the public hearing and posted to this item on the City’s Agendas & Minutes Public Meeting Portal as “Post Packet Public Comments.” FISCAL IMPACT:

The City will provide Three Million Dollars ($3,000,000) in the form of a loan to support the affordable housing construction.

The City is appropriating Two Million Dollars ($2,000,000) from the Low Moderate Income Housing Asset Fund (Fund 255) and One Million Dollars ($1,000,000) from the Commercial Linkage Fee Fund (Fund 270) to the Housing Bespoke Project to fund the loan. This loan is an eligible use of both funding sources and there are sufficient balances in both Fund 255 and Fund 270 to support this loan activity.

The City will provide an appropriation of Two Million Nine Hundred Thousand Dollars ($2,900,000) in revenue in the form of a Developer Equity Contribution to the Predevelopment Bespoke Project. The Commercial Developer will make this contribution to the City, which shall be held by the City and provided to the Residential Developer in the form of a Predevelopment Loan, to pay predevelopment expenses associated with the Residential Development.

The applicants would be subject to payment of the following impact fees and in-lieu fees. The residential and commercial components have separate developers who will pay their respective impact fees, with the commercial impact fees being collected prior to issuance of building permits, and the residential impact fees being deferred and collected prior to final occupancy.
● Commercial Linkage Fee, assessed on new commercial and office floor area to offset the impact of development Projects on the need for affordable housing. Fee is estimated at $4,970,900. ● Child Care Development Fee, assessed on commercial and office floor area, to offset the impact on the need for future childcare space needs by new development. Fee is estimated at $344,760. ● Transportation Improvement Fee, to offset the cost of transportation improvements to serve new development.

The fee is estimated at $992,940.
● School Impact Fees, to offset the increased demands on school facilities caused by new development based on new residential and commercial floor area. The School Impact fees are calculated by the School District. ● Landscape Unit In-Lieu Fee, to compensate for removed street trees, on-site trees and for every 400 square feet of required landscaping area in accordance with the City’s Comprehensive Fee Schedule. The fee is estimated at $57,065.
● Wastewater Capacity Charge, for net increase of wastewater generation based on net increase of average daily flow for all uses. The fee is estimated at $710,255.
● Parkland Impact Fee, to mitigate impact to parkland and open space recreational areas as a result of residential development. The fee is estimated at $1,519,970.

ENVIRONMENTAL DETERMINATION:

In accordance with CEQA, an Initial Study and Mitigated Negative Declaration (IS/MND) has been prepared to assess the Project’s environmental impact (Attachment 11). The IS/MND concludes that the Project would not have significant effects on the environment with implementation of Mitigation Measures. The Project’s Mitigation Monitoring and Reporting Program (MMRP) is included in the Project approval resolution (Attachment 3). The Mitigation Measures are also included as conditions of approval.
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In compliance with AB 52, which requires the City to provide written notification to Native American tribes that are traditionally and culturally affiliated with the geographic area, staff sent letters via certified mail and/or emails to eleven (11) Native American individuals and organizations on March 27, 2024. The City received one response pursuant to AB 52 from the Indian Canyon Band of Costanoan Ohlone People on April 19, 2024. Prior to the issuance of a building permit for demolition, the applicants shall provide proof of an agreement with a qualified Native American representative to provide at least one cultural sensitivity training to construction personnel prior to grading activities.

Distribution of the IS/MND consisted of a paper copy available at City Hall and at the Main Library, and posted online on the City’s website. A Notice of Intent (NOI) was sent to all property owners and tenants within 1,000 feet of the Project site, publicly noticed in the San Mateo Daily Journal newspaper, posted in the San Mateo County Clerk-Recorder’s Office, and submitted to the State Clearinghouse, Office of Land Use and Climate Innovation. The IS/MND was circulated for a 30-day public review period from October 4, 2024, to November 4, 2024. Staff received 10 items of public correspondence pertaining to the IS/MND. A memo responding to the public comments is included in Attachment 11 Exhibit B. No comments required further analysis or resulted in the identification of new or worse impacts.

ATTACHMENTS
Att 1 - Draft Ordinance – Development Agreement
Exhibit A - Development Agreement
Att 2 - Draft Resolution – Disposition and Development Agreement Exhibit A - Disposition and Development Agreement
Exhibit B - Development Plan
Exhibit C - Schedule of Performance
Exhibit D - Initial Financing Plan
Exhibit E - Ground Lease
Exhibit F - Lot Tie Covenant
Exhibit G – Form of REA
Exhibit H – Site Plan
Exhibit I – Temporary Construction Easement
Exhibit J - Memo of Disposition & Development Agreement Exhibit K – Predevelopment Loan Agreement
Exhibit K 1 – Loan Agreement
Exhibit L – Insurance
Att 3 - Draft Resolution – SPAR, SDPA and SUP Approval with Findings and Conditions of Approval Att 4 - Draft Resolution –Developer Equity Contribution Appropriation Att 5 - Draft Resolution –Housing Funds Appropriation
Att 6 - Summary Report – H&SC §33433
Att 7 - Location Map
Att 8 - Project Plans
Att 9 - Project Data Table
Att 10 - Density Bonus Summary and Request Letter
Att 11 - Initial Study/Mitigated Negative Declaration
Exhibit A - Technical Studies
Exhibit B - Responses to IS/MND Comments
Att 12 - Transportation Demand Management Plan
Att 13 - Public Comments

STAFF CONTACTS
Christina Horrisberger, Assistant City Manager
[email protected]
(650) 435-0010
Rachel Horst, Housing Manager
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[email protected]
(650) 522-7223
Elaine Ling, Principal Planner
[email protected]
(650) 522-7216
Lisa Costa-Sanders, Contract Planner
[email protected]
491 of 11211
660\14\4212950.1

CITY OF SAN MATEO
DRAFT ORDINANCE NO. _____(2026)

APPROVING A DEVELOPMENT AGREEMENT FOR
445 SOUTH B. STREET, “BESPOKE” MIXED USE DEVELOPMENT
(PA-2023-012)
WHEREAS, on January 4, 2021, the City Council approved Resolution No. 3 (2021) declaring the Cityowned parking lot at East 4th Avenue and South Railroad Avenue as “surplus land” and subsequently released a Notice of Surplus Lands Availability to all housing developers that have registered with the State Department of Housing and Community Development (HCD); and
WHEREAS, on April 19, 2021, the City received four proposals for the acquisition and development of Talbot's Lot, including a proposal from the three-party Development Team composed of Prometheus Real Estate Group, Harvest Properties, and Alta Housing; and
WHEREAS, on October 4, 2021, the City Council approved the City entering into an Exclusive Negotiating Agreement (ENA) for the redevelopment of this City-owned surface parking lot located at 4th and South Railroad Avenues, with amendments to the ENA approving extensions to July 14, 2026; and WHEREAS, DTSM Talbots Ventures, LLC, (herein referred to as the “Applicant”) submitted a planning application (PA-2023-012) on February 24, 2023 associated with the construction of a new mixed-use development totaling 239,628 square feet and consisting of one seven-story affordable housing building approximately 76,072 square feet in area and one six-story building totaling 162,926 square feet of office/commercial area located at 445 South B Street (collectively referred to as “Project”) in the City; WHEREAS, the Applicant has requested a Development Agreement with the City (the “Agreement”); and WHEREAS, the applicant wishes assurance that it may proceed with the Project under the laws, regulations, and policies as specified in the Agreement, in effect on the date of the approval; and WHEREAS, the state legislature has authorized cities to enter into Development Agreements in order to provide assurance to developers that they may proceed with projects in reliance on existing laws, regulations, and policies; and
WHEREAS, the City, in Resolution No. 120 (1990), has adopted procedures for reviewing and entering into such Development Agreements; and
WHEREAS, the Planning Commission considered the application on April 28, 2026, and recommended adoption of the Mitigated Negative Declaration and Mitigation Monitoring and Reporting Program for the Project (PA-2023-012); and
WHEREAS, the Planning Commission recommended approval of the construction of a new mixed-use development consisting of two new buildings, a subterrain parking garage, landscaping, roadway and other public improvements and common areas, subject to the Findings for Approval and Conditions of Approval; and WHEREAS, the City Council held a duly noticed public hearing on __________,2026, at which time all public comments were considered.
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NOW, THEREFORE BE IT RESOLVED, THAT THE CITY COUNCIL OF THE CITY OF SAN MATEO, CALIFORNIA, FINDS THAT:

1. The Council finds that the environmental impacts of the Agreement were analyzed in the Mitigated Negative Declaration, before approving the Agreement, as included in City Council Resolution No. ______.

2. In accordance with Government Code section 65867.5(b), the Agreement is consistent with the City’s General Plan, Downtown Area Plan, Citywide Pedestrian Master Plan, and Bicycle Master Plan, for the reasons set forth in the Findings for Approval, as included in City Council Resolution No. ___ attached in the Administrative Report accompanying this Ordinance, and

3. The Agreement is compatible with the requirements of the City’s Zoning Ordinance for the reasons set forth in the Findings for Approval, as included in City Council Resolution No. ___ attached in the Administrative Report accompanying this Ordinance, and

4. For the reasons set forth in the Administrative Report accompanying this Ordinance, the Agreement provides substantial public benefits to persons residing or owning property outside the boundaries of the Project, beyond the exactions for public benefits required in the normal development review process under federal, state, or local law.

NOW, THEREFORE, THE COUNCIL OF THE CITY OF SAN MATEO ORDAINS AS FOLLOWS:

Section 1. The Council approves the Agreement attached as Exhibit A to this Ordinance and authorizes the City Manager to execute the Agreement.

Section 2. A Mitigated Negative Declaration and Mitigation Monitoring and Reporting Program (MMRP) were prepared for this project in accordance with the provisions of California Environmental Quality Act (CEQA) and adopted by the City Council on _________, 2026.

Section 3. Severability. If any section, subsection, sentence, clause or phrase of this ordinance is for any reason held to be unconstitutional, such decision shall not affect the validity of the other remaining portions of this ordinance. The City Council hereby declares that it would have passed this ordinance and each section, subsection, sentence, clause or phrase thereof, irrespective of the fact that any one or more section, subsection, sentence, clause or phrase be declared unconstitutional.

Section 4. Publication. This Ordinance shall be published in summary in a newspaper of general circulation, posted in the City Clerk's Office, and posted on the City's website, all in accord with Section 2.15 of the City Charter.

Section 5. Recordation. In accordance with Government Code Section 65868.5, the Agreement will be recorded no later than 10 days after execution.

Section 6. Legislative History and Effective Date. This ordinance was introduced on ___________, 2026 and adopted on ____________, and shall be effective 30 days after its second reading and adoption. 493 of 11211
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RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:

City Clerk’s Office
City of San Mateo
330 West 20th Avenue
San Mateo, CA 94403
Exempt from Recording Fee
Pursuant to Government
Code Section 27383
______________________________________________________________________________ Space above this line for Recorder’s Use Only

DEVELOPMENT AGREEMENT
by and between

THE CITY OF SAN MATEO
and
DTSM TALBOTS VENTURE, LLC, a Delaware limited liability company and
MOORE TALBOT PARTNERS, LP, a California limited partnership City of San Mateo, California
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TABLE OF CONTENTS
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ARTICLE I. DEFINITIONS ........................................................................................................3

1.1 Definitions. ..............................................................................................................3

1.2 Exhibits. ...................................................................................................................5 ARTICLE II. GENERAL PROVISIONS ...................................................................................5

2.1 Parties. .....................................................................................................................5

2.2 Recording.................................................................................................................6

2.3 Term.........................................................................................................................7

2.4 Force Majeure..........................................................................................................7 ARTICLE III. DEVELOPMENT OF THE PROPERTY .........................................................7

3.1 Use of the Property and Applicable Law.................................................................7

3.2 No Conflicting Enactments......................................................................................7

3.3 Reservations of Authority........................................................................................8

3.4 Subsequently Enacted Rules and Regulations.........................................................8

3.5 Nexus/Reasonable Relationship Waiver..................................................................8

3.6 Initiatives and Referenda. ........................................................................................8

3.7 Compliance With Requirements of Other Governmental Entities. .........................9

3.8 City’s Police Power. ..............................................................................................10

3.9 Subsequent Approvals for the Property.................................................................10

3.10 Life of Approvals and City Permits.......................................................................11

3.11 Developer Obligations. ..........................................................................................11

3.12 City Obligations.....................................................................................................11 ARTICLE IV. COMMUNITY BENEFITS ..............................................................................11 ARTICLE V. AMENDMENT OF AGREEMENT AND APPROVALS ...............................12

5.1 Amendment or Cancellation Procedure.................................................................12

5.2 Minor Amendments to Project...............................................................................12

5.3 Requirement for a Writing.....................................................................................12

5.4 Amendments to Development Agreement Legislation..........................................13

5.5 Amendment of Development Approvals. ..............................................................13

5.6 Effect of Termination on Developer’s Obligations. ..............................................13 ARTICLE VI. ANNUAL REVIEW...........................................................................................14

6.1 Time of Review. ....................................................................................................14

6.2 Compliance Letter. ................................................................................................14

6.3 Determination of Good Faith Compliance. ...........................................................14

6.4 No Waiver..............................................................................................................15 495 of 11211

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ARTICLE VII. DEFAULT, REMEDIES, AND TERMINATION ........................................15

7.1 Notice of Breach. ...................................................................................................15

7.2 Remedies for Breach..............................................................................................15

7.3 Termination by Mutual Consent............................................................................15 ARTICLE VIII. ESTOPPEL CERTIFICATE.........................................................................15 ARTICLE IX. TRANSFERS, ASSIGNMENTS.......................................................................16

9.1 Agreement Runs With the Land. ...........................................................................16

9.2 Right to Assign. .....................................................................................................16

9.3 Partial Assignment of Development Agreement. ..................................................16

9.4 Release Upon Assignment.....................................................................................16 ARTICLE X. MORTGAGEE PROTECTION ........................................................................17

10.1 Mortgage Protection. .............................................................................................17

10.2 Mortgagee Not Obligated. .....................................................................................17

10.3 Notice of Default to Mortgagee.............................................................................17

10.4 No Supersedure......................................................................................................18 ARTICLE XI. INDEMNIFICATION .......................................................................................18

11.1 No Duty of City; Hold Harmless. ..........................................................................18

11.2 Indemnification......................................................................................................18 ARTICLE XII. NOTICES ..........................................................................................................19

12.1 Notices. ..................................................................................................................19 ARTICLE XIII. MISCELLANEOUS .......................................................................................20

13.1 Cooperation in the Event of Third-party Legal Challenge. ...................................20

13.2 Invalidity................................................................................................................20

13.3 Joint and Severable Liability; Property Owner Assumption. ................................20

13.4 Applicable Law and Venue. ..................................................................................20

13.5 Severability. ...........................................................................................................21

13.6 Nondiscrimination. ................................................................................................21

13.7 Headings. ...............................................................................................................21

13.8 Agreement is Entire Understanding.......................................................................21

13.9 Interpretation..........................................................................................................21

13.10 Recordation of Termination...................................................................................21

13.11 Counterparts...........................................................................................................22 496 of 11211

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Exhibits
Exhibit A-1 – Legal Description of the Property
Exhibit A-2 Legal Description of Developer Owned Property Exhibit A- 3 Legal Description of Developer Leased Property 497 of 11211

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DEVELOPMENT AGREEMENT
This Development Agreement (“Agreement”) is entered into on the ____ day of __________, 20__ (the “Effective Date”) by and between the CITY OF SAN MATEO, a California municipal corporation (the “City”), and DTSM Talbots Venture, LLC, a Delaware limited liability company (the “Developer”), and MOORE TALBOT PARTNERS, LP, a California limited partnership (“Property Owner”) under the authority of Sections 65864 et seq. of the California Government Code, with reference to the following facts, purposes, and understandings:

RECITALS
A. California Government Code Section 65864 et seq. authorizes the City to establish procedures for and to enter into binding development agreements with persons having legal or equitable interests in real property located within the City that is the subject of the development agreement.

B. As authorized by Government Code Section 65865(c), the City has adopted Resolution No. 120, the Development Agreement Resolution, establishing the procedures and requirements for the consideration of development agreements within the City. This Agreement is consistent with the City’s development agreement provisions.

C. The City owns certain real property located at 4th and Railroad Avenue designated as Assessor’s Parcel No. 034-179-050 (the “City Property”) and more particularly described in Exhibit A-1, attached hereto and incorporated by this reference. Developer owns certain real property located at 302 E. 4th Avenue, and 407 South B Street in the City of San Mateo designated as Assessor’s Parcel Nos 034-179-10 and 034-179-020 (the “Developer Owned Property”) and more particularly described in Exhibit A-2. Property Owner owns certain real property, which is ground leased to Developer, located at 415 and 445 South B Street in the City of San Mateo and designated as Assessor’s Parcel No. APN 034-179-030 and 034-179-040 (the “Developer Leased Property”) and more particularly described in Exhibit A-3.

D Government Code Section 65865 requires that an applicant for a development agreement holds a legal or equitable interest in the real property that is the subject of the development agreement. Developer affirms that it has an ownership interest in the Developer Owned Property and a leasehold interest in the Developer Lease Property pursuant to a lease from the Property Owner, as further described in Exhibits A-2 and A-3 (collectively, the “Developer Property”). City Property and Developer Property are collectively referred to herein as the “Property”.

E. Developer desires to develop the real property through a public-private partnership, in accordance with the provisions of this Agreement, the Development Approvals (defined below), a Disposition and Development Agreement between City, AH Bespoke LP, and DTSM Housing, LLC, of even date herewith (the "Disposition and Development Agreement"), and other applicable regulations of the City of San Mateo and other governmental agencies having jurisdiction over the Property.
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F. On ____, 20__, City’s Planning Commission held a duly noticed public hearing on this Agreement and (i) determined that this Agreement complies in all respects with CEQA, (ii) determined that this Agreement is consistent with the City’s General Plan, and (iii) recommended that the City Council approve this Agreement.

G. The following approvals, entitlements, and findings are being concurrently reviewed and approved by the City with respect to the Property, by City Council Resolution No. __, and constitute the “Development Approvals”:
(1) Initial Study/Mitigated Negative Declaration
(2) Special Use Permit
(3) Site Plan and Architectural Review (SPAR) ,
(4) Site Development Planning Application (SDPA)
H. On ___, 20___, the City examined the environmental effects of the Development Approvals in an Initial Study/Mitigated Negative Declaration (State Clearing House #2024100181), prepared pursuant to CEQA (the “IS/MND”). On ___, 20__, the City Council reviewed and certified as adequate and completed the IS/MND by Resolution No. ___ and adopted written findings and approved the MMRP.

I. On ______, 20__, the City Council held a duly noticed public hearing on this Agreement and considered the Planning Commission’s recommendations and testimony and information submitted by City staff, Developer, and members of the public, and found this Agreement to be consistent with the City’s General Plan and introduced Ordinance No. ____, approving this Agreement.

J. On ___________, 20__, the City Council adopted Ordinance No. ____ enacting this Agreement.

K. The City (in its capacity as “lead agency”) has approved the entitlement application for the Development (as herein defined) and, in accordance with the California Environmental Quality Act, has adopted a mitigated negative declaration for the Development.

L. The development of the Project may require future discretionary approvals and will require certain ministerial approvals from the City, potentially including, but not limited to, landscaping plans, master sign programs, transportation demand management programs, art permits, tree removal permits, encroachment permits, demolition permits, grading permits, building permits, and certificates of occupancy (“Subsequent Approvals”).

M. City, Developer, and Property Owner may each be referred to herein individually as a “Party” or collectively as the “Parties”.
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AGREEMENT
NOW, THEREFORE, for and in consideration of the foregoing Recitals, which are hereby incorporated into this Agreement by this reference, and for other good and valuable consideration, the receipt and sufficiency of which consideration is hereby acknowledged, the City and Developer hereby agree as follows:

ARTICLE I.

DEFINITIONS

1.1 Definitions. In addition to the terms defined elsewhere in this Agreement, the following defined terms are used in this Agreement:

1.1.1 “Adopting Ordinance” shall mean City Council Ordinance No. ___ approving and adopting this Agreement.

1.1.2 “Agreement” shall mean this Development Agreement, as the same may be amended from time to time, including the attached Exhibits and all subsequent operating memoranda and amendments to this Agreement.

1.1.3 “Applicable Law” shall consist of the following:
(a) The City of San Mateo Charter;
(b) The 2030 General Plan of the City;
(c) Downtown Area Plan adopted May 19, 2009;
(d) The City’s Municipal Code current as of the Effective Date; (e) The Development Approvals and their terms and conditions; (f) All other ordinances, resolutions, rules, regulations, standards, policies, conditions, and specifications applicable to the Property in effect on the Effective Date, except as provided in Sections 3.3 and 3.6.

1.1.4 “CEQA” shall mean the California Environmental Quality Act (California Public Resources Code Sections 21000-21177) and the implementing regulations promulgated thereunder by the Secretary for Resources (California Code of Regulations, Title 14, section 15000 et seq.).

1.1.5 “City” shall mean the City of San Mateo, a municipal corporation, and any successor or assignee of the rights and obligations of the City of San Mateo hereunder.

1.1.6 “City Council” shall mean the governing body of the City of San Mateo.

1.1.7 “City Law” shall mean, individually, the San Mateo Municipal Code, the City Charter, and other ordinances, resolutions, rules, regulations, standards, policies, conditions, or specifications of the City.
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1.1.8 “Compliance Letter” shall mean a letter submitted by Developer describing Developer’s compliance with the terms of the Development Approvals and this Agreement.

1.1.9 “City Planning Commission” shall mean the duly appointed and constituted planning commission of the City.

1.1.10 “City Property” has the meaning set forth in Recital C.

1.1.11 “Developer” shall mean DTSM Talbots Venture, LLC, a Delaware limited liability company, and any successor or assignee to all or any portion of its right, title, and/or interest in and to ownership of all or a portion of the Developer Property and/or the Project.

1.1.12 “Developer Property” has the meaning set forth in Recital D.

1.1.13 “Development Agreement Statute” shall mean California Government Code Sections 65864-65869.5, inclusive.

1.1.14 “Director” shall mean the City’s Community Development Director.

1.1.15 “Effective Date” shall mean the date the Authorizing Ordinance becomes effective.

1.1.16 “General Plan” shall mean the City’s 2030 General Plan adopted by the City Council on October 18, 2010.

1.1.17 “Mortgage” shall mean the mortgage, deed of trust, sale and leaseback arrangement, or any other form of conveyance in which the Property, or a part or interest in the Property, is pledged as security and contracted for in good faith and for fair value.

1.1.18 “Mortgagee” shall mean the holder of a beneficial interest under a Mortgage or any successor or assignee of the Mortgagee.

1.1.19 “Project” consists of the construction of two buildings over a shared parking subterranean parking garage—a seven-story residential building that would include approximately 71 affordable units and approximately 5,700 square feet of ground floor commercial space, anticipated to be initially leased to the Center for Self-Help for the Elderly, and the “Commercial Development” consisting of a six-story commercial building that would include approximately 149,000 square feet of office and approximately 14,000 square feet of retail/restaurant space, as further and more specifically described in the Development Approvals.

1.1.20 “Property” is defined in Recital D.

1.1.21 “Residential Development” means the development which will be located on the City Property, consisting of a seven story building with approximately 71 affordable housing units, approximately 5,700 square feet of ground floor commercial space anticipated to be initially leased to the Center for Self-Help for the Elderly, and on-site open space to be developed by the Residential Developer.
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1.1.22 “Residential Developer” shall mean the developer that enters into the ground lease with the City to develop the Residential Development.

1.1.23 “Term” is defined in Section 2.3.

1.1.24 “Third Party Challenge” shall mean any legal action instituted by a third party or other governmental entity or official challenging the validity of any provision of this Agreement.

1.1.25 “Subsequent Approvals” is defined in Recital K.

1.2 Capitalized Terms. If any capitalized terms contained in this Agreement are not defined above, then any such terms shall have the meaning otherwise ascribed to them in this Agreement.

1.3 Recitals. The Parties hereby confirm the accuracy of the foregoing Recitals, which are incorporated herein by this reference.

1.4 Exhibits.

The following exhibits are attached to and incorporated to the Agreement:

Exhibit A-1: Legal Description of the City Property
Exhibit A-2: Legal Description of the Developer Owned Property Exhibit A-3: Legal Description of Developer Leased Property ARTICLE II.

GENERAL PROVISIONS

2.1 Parties.

2.1.1 Parties to this Agreement.
(a) The City of San Mateo, a California charter city. The office of the City is located at 330 West 20th Avenue, San Mateo, California 94403. (b) DTSM Talbots Venture, LLC, a Delaware limited liability company, is the Commercial Developer. For purposes of this Agreement, the principal address of this Commercial Developer is 180 Grand Ave, Oakland, California 94610. (c) Moore Talbot Partners, LP, a California limited partnership, is the Property Owner of that certain property leased to Commercial Developer. For purposes of this Agreement, the principal address of Property Owner is 2628 Sunset Terrace, San Mateo, California 94403.

2.1.2 Developer Representations and Warranties.
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(a) Developer represents and warrants that, as of the Effective Date of this Agreement, Developer is:
(i) Duly organized and validly existing under the laws of the State of California;
(ii) Qualified and authorized to do business in the State of California and has duly complied with all requirements pertaining thereto; (iii) In good standing and has all necessary powers under the laws of the State of California to own property and, in all other respects, enter into and perform the undertakings and obligations of this Agreement.
(b) Developer further represents and warrants:
(i) That no approvals or consents of any persons are necessary for the execution, delivery, or performance of this Agreement by Developer, except as have been obtained;
(ii) That the execution and delivery of this Agreement and the performance of the obligations of Developer have been duly authorized by all necessary actions and approvals required under any management and operating agreement for the corporation constituting Developer; and
(iii) That this Agreement is a valid obligation of Developer enforceable in accordance with its terms.
(c) Property Owner Representations and Warranties.
(i) Is the legal owner of the Developer Lease Property; (ii) Has entered into a lease agreement with Developer; (iii) Consents to the terms of this Agreement;
(iv) Consents to the recordation of this Agreement against the title of the Developer Leased Property.

2.1.3 Relationship of City and Developer.

It is understood that this Agreement is a contract that has been negotiated and voluntarily entered into by City and Developer and that the Developer is an independent contractor and not an agent or partner of City.

City and Developer hereby renounce the existence of any form of joint venture or partnership between them and agree that nothing contained in this Agreement or in any document executed in connection with this Agreement shall be construed as making City and Developer joint venturers or partners.
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2.2 Recording.

Within ten (10) days after the Effective Date, the City Clerk shall cause recordation of this Agreement with the County Recorder against the fee interest of Property.

2.3 Term.

The term of this Agreement (the “Term”) shall commence upon the Effective Date and shall terminate ten (10) years following the Effective Date, unless sooner terminated. The Term shall be automatically extended for the period of time of each "buffer" (as defined in the Disposition and Development Agreement) in the "Schedule of Performance" (as defined in the Disposition and Development Agreement) granted by the City in accordance with the terms of the Disposition and Development Agreement. In no event shall the Term, including all extensions, extend beyond fourteen (14) years and six (6) months following the Effective Date except for permitted extensions to the Term for qualifying Force Majeure Events under Section

2.4. Notwithstanding the foregoing, those provisions of this Agreement that recite that they survive termination of this Agreement shall all remain in full force and effect.

2.4 Force Majeure.

Performance by a Party hereunder shall not be deemed to be in default where delays or failure in performance of any obligation under this Agreement are due to, and are outside the reasonable control of, and at the time of entering into this Agreement are not known and cannot be anticipated by the Party claiming the delay: war; insurrection; strikes; lock-outs; riots; floods; earthquakes; fires; casualties; acts of God; disruptions to supply chains, failure of utility providers to timely provide the applicable service; or acts of the public enemy (collectively, “Force Majeure Events”). In order to claim a delay under this Section 2.4, a Party must notify the other applicable Party of such delay claim within fifteen (15) business days after the claiming Party has actual knowledge of such delay and the delay will be deemed granted if not rejected by the other Party within fifteen (15) business days after receipt of the notice. In no event shall the cumulative delays exceed one hundred eighty (180) days, unless otherwise agreed to in writing by the Parties, or unless and to the extent that physical damage to improvements impacted by a Force Majeure Event cannot reasonably be repaired within the remaining days within the 180- day cumulative limit as reasonably determined by the Developer and its contractor. Force Majeure Events shall be concurrent with and not additional to delays caused by Force Majeure Events under the Disposition and Development Agreement. The Term shall be automatically extended by the period of time of a Force Majeure Event, subject to the cumulative maximum delay for Force Majeure Events permitted by this Section 2.4.

ARTICLE III.

DEVELOPMENT OF THE PROPERTY

3.1 Use of the Property and Applicable Law.

3.1.1 Subject to Agreement.
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The Property is hereby made subject to the provisions of this Agreement. All development of, or on, the Property, or any portion thereof, shall be undertaken only in compliance with the provisions of this Agreement and with Applicable Law.

3.1.2 Permitted Uses.

The permitted uses of the Property, the density or intensity of use, the maximum height and size of proposed buildings, and provisions for reservation or dedication of land for public purposes shall be governed by Applicable Law.

3.2 No Conflicting Enactments.

Except as and to the extent required by state or federal law, and subject to the provisions of Sections 3.3 and 3.7 below, the City shall not impose on the Property any City Law that has any of the following effects on the rights provided by Applicable Law:

3.2.1 Reduces the maximum amount of development space or residential units if permitted on the Property from that permitted by Applicable Law;

3.2.2 Changes any land use designation or permitted use of the Property from that shown in Applicable Law;

3.2.3 Limits or controls the rate, timing, phasing or sequencing of the approval, development, or construction of all or any part of the Property except as set forth in the Applicable Law;

3.2.4 Limits or restricts any right or use specifically granted by the Development Approvals;

3.2.5 Imposes new requirements for dedication of land or monetary exactions other than as provided in the Development Approvals or pursuant to this Agreement; or

3.2.6 Imposes new impact fees or increases to impact fee by an amount greater than contemplated by a fee escalator existing as of the Effective Date.

3.3 Reservations of Authority.

The development of the Project will require Subsequent Approvals from the City.

Notwithstanding any other provision of this Agreement, and notwithstanding the provisions of Section 3.2, at the time Subsequent Approvals are applied for, the following regulations and provisions in place at the time of Subsequent Approval application shall apply to those Subsequent Approvals:

3.3.1 All taxes and assessments imposed by the City which are in force and effect within the jurisdiction of the City for a broadly based class of land, projects, discretionary or ministerial approvals, or taxpayers, as applicable, on which they are imposed. 506 of 11211
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3.3.2 Processing fees and charges of every kind and nature imposed by the City, including application, inspection, and monitoring fees, which are in force and effect within the jurisdiction of the City for the class of Subsequent Approvals being applied for.

3.3.3 Procedural regulations relating to hearing bodies, petitions, applications, notices, findings, records, hearings, reports, recommendations, appeals and any other matter of procedure, which are in force and effect within the jurisdiction of the City for the class of City Permits being applied for.

3.3.4 Regulations governing construction standards and specifications including, without limitation, the City’s building code, plumbing code, mechanical code, electrical code, fire code and grading code, all provisions of Title 23 of the San Mateo Municipal Code, and all other uniform construction codes which are in force and effect within the jurisdiction of the City for the class of Subsequent Approvals being applied for. The Parties acknowledge that California Assembly Bill 130 (2025), Chapter 22 (Cal. Stat. 2025) ("AB 130"), limits the changes permitted to be made to the California Building Standards applicable to residential units until June 1, 2031.

3.4 Subsequently Enacted Rules and Regulations.

The City may during the term of this Agreement apply such newer City Laws that are in force and effect within the jurisdiction of the City for the class of Subsequent Approvals being applied for and which are not in conflict with the terms of this Agreement or the Development Approvals. To the extent any changed City Law is in conflict with the terms of this Agreement or the Development Approvals, the terms of this Agreement or the Development Approvals, as applicable, shall prevail.

3.5 Nexus/Reasonable Relationship Waiver.

Developer consents to, and waives any rights it may have now or in the future, to challenge with respect to the Project or Development Approvals, the legal validity of, the conditions, requirements, policies, or programs required by this Agreement, or the Development Approvals, including, without limitation, any claim that they constitute an abuse of police power, violate substantive due process, deny equal protection of the laws, effect a taking of property without payment of just compensation, or impose an unlawful tax.

3.6 Initiatives and Referenda.

3.6.1 If any City Law is enacted or imposed by a citizen-sponsored initiative or referendum, or by the City Council directly or indirectly in connection with any proposed initiative or referendum, which City Law would conflict with this Agreement or the Development Approvals, such City Law shall not apply to the Project. The parties, however, acknowledge that the City’s approval of this Agreement is a legislative action subject to referendum.

3.6.2 Without limiting the generality of any of the foregoing, no City-adopted moratorium or other limitation (whether relating to the rate, timing, phasing or sequencing of development) affecting subdivision maps, building permits, or other Subsequent Approvals shall 507 of 11211
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apply to the Project. Developer agrees and understands that the City does not have authority or jurisdiction over another public agency’s authority to grant a moratorium or impose any other limitation that may affect the Project.

3.6.3 The timing, sequencing, and phasing of the development is solely the responsibility of Developer so long as it is consistent with Applicable Law. In particular, the parties desire to avoid the result of Pardee Construction Co. v. City of Camarillo (1984) 37 Cal.3d 465, where the failure of the parties therein to consider and expressly provide for the timing of the development resulted in a later adopted initiative restricting the timing of development to prevail over such parties’ agreement. The parties therefore acknowledge that Developer shall have the right to develop the Project at such time as Developer deems appropriate so long as such development is consistent with Applicable Law.

3.6.4 The City shall cooperate with Developer and shall undertake such actions as may be necessary to ensure this Agreement remains in full force and effect.

3.7 Compliance With Requirements of Other Governmental Entities.

3.7.1 During the Term, Developer, at no cost to City, shall comply with lawful requirements of, and obtain all permits and approvals required by other local, regional, State and Federal agencies having jurisdiction over Developer's activities in furtherance of this Agreement.

Developer shall pay all required fees when due to Federal, State, regional, or other local governmental agencies other than the City and acknowledges that City does not control the amount of any such fees.

3.7.2 City shall cooperate with Developer in Developer’s effort to obtain permits and approvals from Federal, State, regional, and other local governmental agencies, provided that same does not impose any costs on or require the City to incur any costs without compensation or reimbursement, or require the City to amend any of the City’s policies, regulations, or ordinances.

3.7.3 As provided in California Government Code § 65869.5, this Agreement shall not preclude the application to the Property and Project of changes in laws, regulations, plans, or policies, to the extent that such changes are specifically mandated and required by changes in State or Federal laws or regulations. In the event changes in the law prevent or preclude compliance with one or more provisions of this Agreement, this Agreement shall be modified or suspended as may be necessary to comply with such State or Federal laws or regulations. The parties shall meet and confer in good faith in order to determine whether such provisions of this Agreement shall be modified or suspended as may be necessary to comply with changes in the law, and City and Developer shall agree to such action as may be reasonably required. It is the intent of the parties that any such modification or suspension be limited to that which is necessary and to preserve to the extent possible the original intent of the parties in entering into this Agreement. This Agreement shall remain in full force and effect to the extent it is not inconsistent with such laws or regulations. Nothing in this Agreement shall preclude the City or Developer from contesting by any available means (including administrative or judicial proceedings) the applicability to the Property or Project of any such State or Federal laws or regulations.
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3.7.4 To the extent that any actions of Federal or State agencies (or actions of other governmental agencies, including City, required by Federal or State agencies, or actions of City taken in good faith to prevent adverse impacts upon City by actions of Federal, State or other governmental agencies) have the effect of preventing, delaying, or modifying development of the Property or any portion thereof, City shall not in any manner be liable for any such prevention, delay, or modification. Such actions include, but are not limited to, flood plain or wetlands designations and actions of City or other governmental agencies as a result; the imposition of air quality or transportation measures or sanctions and actions of City or other governmental agencies as a result; or changes to CEQA and actions of City or other governmental agencies as a result. As a condition to being able to proceed with development, Developer may be required, at its cost, to participate in such regional or local programs and to be subject to such development restrictions as may be necessary or appropriate by reason of actions of Federal, State or other governmental agencies (or action of City taken in order to prevent adverse impacts upon City by actions of Federal, State, or other governmental agencies).

3.8 City’s Police Power.

The parties acknowledge and agree that the limitations, reservations, and exceptions contained in this Agreement are intended to reserve to the City that part of its police power which cannot be limited by contract, and this Agreement shall be construed to reserve to the City that part of its police power which cannot be restricted by contract.

3.9 Subsequent Approvals for the Property.

3.9.1 Applications for Subsequent Approvals are anticipated to be submitted to the City by the Developer. Applications for Subsequent Approvals shall be processed and considered in a manner consistent with the rights granted by this Agreement and Applicable Law, including without limitation the Development Approvals.

3.9.2 The City has made a final policy decision that the development of the Property consistent with the Development Approvals, is in the best interests of the public health, safety, and general welfare. Accordingly, the City shall not use its authority in considering any application for a Subsequent Approval that is consistent with the Development Approvals to change the policy decisions reflected by the Development Approvals. Nothing herein shall limit the ability of the City to require the necessary reports, analysis, or studies to assist in determining whether the requested Subsequent Approvals are consistent with Applicable Law and this Agreement. City’s review of the Subsequent Approvals shall be consistent with this Agreement, including without limitation Section 3.2 of this Agreement.

3.9.3 Any conditions, terms, restrictions, or requirements imposed by the City on Subsequent Approvals shall not prevent development of the Property for the uses and to the density and intensity of development included in the Development Approvals.

3.10 Life of Approvals and City Permits.

The terms of (a) any future tentative or parcel map (including vesting maps, map amendments, and lot line adjustments) which may be approved for the Property (as provided for in the Subdivision Map Act, Government Code Sections 66410 et seq.), or (b) the Development 509 of 11211
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Approvals and Subsequent Approvals, shall automatically be extended for the longer of the duration of this Agreement (including any Extensions) or the term otherwise applicable to such Development Approval if this Agreement is no longer in effect.

3.11 Developer Obligations.

In addition to any other obligations of Developer set forth herein, in consideration of City entering into this Agreement, Developer has agreed that if Developer commences development of the Property and proceeds to develop the Property, such development shall be in conformance with all of the terms, covenants, and requirements of this Agreement and Applicable Law, and Developer shall perform those specific obligations identified in the Development Approval.

Developer shall pay when due any and all fees, impact fees, and costs which are lawfully imposed on all or any portion of the Property, whether imposed by City or other agencies. As a material inducement to City to enter into this Agreement, Developer further agrees that, as long as this Agreement is in effect:

3.11.1 The provisions of this Agreement shall govern and control the City Law to be applied to this development of the Property over any contrary or inconsistent provisions of the Development Agreement Statute. Developer waives the benefits of any Development Agreement Statute as it may be inconsistent or contrary to the provisions of this Agreement.

3.12 City Obligations.

In addition to any other obligations of City set forth herein, and in consideration of Developer entering into this Agreement, City acknowledges that the primary purpose of this Agreement is to effectuate the terms of the Development Approvals so that the Project is developed.

ARTICLE IV.

COMMUNITY BENEFITS

4.1 Developer shall provide the following benefits to the City, which are essential consideration to the City, without which the City would not have entered into this Agreement:

4.1.1 Construction of the parking garage, including 37 dedicated spaces and 25 shared spaces for the affordable housing project. Developer and City will enter into a shared parking agreement whereby Developer will make available to the public [__] parking spaces in the underground garage on [dates and times]. This agreement will be entered into by the parties prior to issuance of the first building permit for the underground garage.

4.1.2 Developer Contribution Payment. A payment from the Developer to the City of $2,900,000 to be made within one hundred twenty (120) days of issuance of Project Development Approvals (the “Developer Contribution”).

4.1.3 Residential Developer will offer ground floor space in the affordable housing building at a substantially subsidized rent to Self-Help for the Elderly or other nonprofit entity as reasonably approved by the Director.
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4.1.4 Project construction will be subject to the prevailing wage and Department of Industrial Relations (DIR) registry requirements.

ARTICLE V.

AMENDMENT OF AGREEMENT AND APPROVALS

5.1 Amendment or Cancellation Procedure.

City and Developer by mutual agreement may terminate or amend the terms of this Agreement, and the amendment or termination shall be accomplished in the manner provided under California law pertaining to development agreements and City of San Mateo Municipal Code Section 27.06, or any successor provisions thereto.

5.2 Minor Amendments to Project.

Upon the written application of Developer, and mutual consent of the parties, minor modifications and clarifications to the Project may be approved by the Director and submitted to the Planning Commission on the consent calendar, in conformance with San Mateo Municipal Code section 27.06.40. The Director, in consultation with the City Manager, shall determine whether a requested modification may be effectuated pursuant to this Section. Such minor modifications and changes to the Project shall not be considered to be amendments pursuant to Section 5.1, above.

5.3 Requirement for a Writing.

No amendment, or cancellation of this Agreement or any provision hereof shall be effective for any purpose unless adopted in the manner provided under California law, San Mateo Municipal Code Chapter 27, and Ordinance No. 120 pertaining to development agreements and specifically set forth in a writing, which refers expressly to this Agreement and is signed by duly authorized representatives of the parties. The City Clerk shall record an appropriate notice of any amendment or cancellation with the County Recorder not later than ten (10) days after the effective date of the action effecting such amendment or cancellation, accompanied by a legal description of the Property.

5.4 Amendments to Development Agreement Legislation.

This Agreement has been entered into in reliance upon the provisions of the Development Agreement Statute, as those provisions existed at the date of execution of this Agreement. No amendment or addition to those provisions which would materially affect the interpretation or enforceability of this Agreement shall be applicable to this Agreement unless such amendment or addition is specifically required by State Law, or is mandated by a court of competent jurisdiction. If such amendment or change is permissive (as opposed to mandatory), this Agreement shall not be affected unless the parties mutually agree in writing, after following the procedures in Section 5.1, to amend this Agreement to permit such applicability.

5.5 Amendment of Development Approvals.
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To the extent permitted by local, state, and federal law, any Development Approval may, from time to time, be amended or modified by submittal of an application from the Developer and following the procedures for such amendment or modification contained in the San Mateo Municipal Code. Upon any approval of such an amendment or modification, the amendment or modification shall automatically be deemed to be incorporated into the Applicable Law without any further procedure to amend this Agreement.

5.6 Effect of Termination on Developer’s Obligations.

5.6.1 Notwithstanding any other provision to the contrary, termination or cancellation of this Agreement or termination of the rights of Developer as to the entire Property, or any part of the Property, shall not affect any requirement to comply with the Development Approvals, the terms and conditions of any other Subsequent Approval, nor any payments then due and owing to City, nor shall it affect the covenants of Developer specified in Section 5.6.2 below, to continue after the termination or cancellation of this Agreement. After termination of this Agreement, Developer shall have no rights to challenge a modification to the Development Approvals by reason of this Agreement other than the rights, if any, Developer would have in the absence of this Agreement.

5.6.2 Notwithstanding anything in this Agreement to the contrary, the following provisions of this Agreement shall survive and remain in effect following termination or cancellation of this Agreement for so long as necessary to give them full force and effect with respect to claims or rights of City arising prior to termination or cancellation:
(a) Section 5.6 (Developer’s obligations upon termination or cancellation); (b) Section 7.2 (Remedies; limitation on damages); and
(c) Section 11.2 (Indemnification).

ARTICLE VI.

ANNUAL REVIEW

City and Developer shall review all actions taken pursuant to the terms of this Agreement once annually, within sixty (60) days prior to each anniversary of the Effective Date, during each year of the Term unless the City and Developer agree in writing to conduct the review at another time. Review of compliance with the terms of this Agreement shall be conducted by the Planning Commission. Pursuant to San Mateo Municipal Code Section 27.60.120 and Resolution No. 120 (1999), Developer shall initiate the review by filing an application with the City and provide all the documents and information necessary for the City to complete the annual review and make a determination of whether Developer is in compliance.

6.2 Compliance Letter.

Before each anniversary of the Effective Date, Developer shall submit a letter (“Compliance Letter”), along with all necessary supporting documentation, to the Director 512 of 11211
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describing Developer’s compliance with the terms of the Development Approvals and this Agreement during the preceding year. The Compliance Letter shall include a statement that the Compliance Letter is submitted to the City pursuant to the requirements of Government Code Section 65865.1 and of the City’s regulations on Development Agreements.

6.3 Determination of Good Faith Compliance.

Within thirty (30) days after receipt of the Compliance Letter, the Planning Commission shall determine whether, for the year under review, Developer has demonstrated good faith substantial compliance with the terms of this Agreement. If the Planning Commission finds and determines that Developer has complied substantially with the terms of this Agreement, or does not determine otherwise within thirty (30) days after delivery of the Compliance Letter, the annual review shall be deemed concluded and this Agreement shall remain in full force and effect. Upon its determination of compliance, the Developer may request a recordable certificate confirming Developer’s compliance through the year under review. Developer may record the certificate with the San Mateo County Recorder’s Office.

If the Planning Commission initially determines the Compliance Letter to be inadequate in any respect, the City shall provide notice to that effect to Developer and schedule a public hearing. If after a duly noticed public hearing, the City Council finds and determines, on the basis of substantial evidence, that Developer has not complied substantially in good faith with the terms of this Agreement for the year under review, the City Council shall give written notice thereof to Developer specifying the noncompliance. If Developer fails to cure the noncompliance within a reasonable period of time as established by the City Council, but in no event less than 60 days from the date of receipt of such notice, the City Council, in its discretion, may (a) grant additional time for Developer’s compliance, or, following the hearing, modify this Agreement to the extent necessary to remedy or mitigate the noncompliance, (b) may modify this Agreement pursuant to the provisions of Section 8 below, or (c) terminate the Agreement pursuant to Article VI below.

6.4 No Waiver.

Failure of City to conduct an annual review shall not constitute a waiver by City of its rights to otherwise enforce the provisions of this Agreement nor shall Developer have or assert any defense to such enforcement by reason of any failure to conduct an annual review. City does not waive any claim of defect or breach by Developer if, following periodic review pursuant to this Article V, City does not propose to modify or terminate this Agreement.

ARTICLE VII.

DEFAULT, REMEDIES, AND TERMINATION

7.1 Notice of Breach.

Failure by either party to perform any material term or provision of this Agreement shall constitute a default hereunder, provided that the party alleging the default shall have given the other party advance written notice thereof and sixty (60) days within which to cure the condition, or, if the nature thereof is such that it cannot be cured within that time, the party receiving notice shall not be in default hereunder if the party promptly commences to perform its obligations 513 of 11211
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hereunder and thereafter diligently completes performance. Written notice hereunder shall specify in detail the nature of the obligation to be performed by the party receiving notice.

7.2 Remedies for Breach.

It is acknowledged by the parties that neither City nor Developer would have entered into this Agreement if it were to be liable for damages under, or with respect to, this Agreement or the application thereof. The City shall not be liable in damages to Developer, or to any assignee, transferee or any other person, and Developer covenants not to sue for or claim damages, while reserving the right to initiate legal proceedings to specifically enforce or terminate this Agreement. Developer shall not be liable in damages to the City, or to any assignee, transferee or any other person, and City covenants not to sue for claims for damages. Upon Developer’s material default pursuant to Article VII hereof, City shall be entitled to initiate legal proceedings to specifically enforce or terminate this Agreement or the City may terminate this Agreement pursuant to Article VI. Nothing in this Section 7.2 is intended to limit the remedies available to the City or Developer under the Disposition and Development Agreement.

7.3 Termination by Mutual Consent.

This Agreement may be voluntarily terminated in whole or in part by the mutual consent of the parties or their successors in interest, in the sole and absolute discretion of each as to its consent.

ARTICLE VIII.

ESTOPPEL CERTIFICATE
Either party may, at any time, and from time to time, deliver written notice to the other party requesting such party to certify in writing that, to the knowledge of the certifying party, (a) this Agreement is in full force and effect and is a binding obligation of the parties, (b) this Agreement has not been amended or modified or, if so amended or modified, identifying the amendments or modifications, and (iii) the requesting party is not in default in the performance of its obligations under this Agreement, or if in default, to describe the nature of any defaults.

The party receiving a request under this Article VIII shall execute and return the certificate within thirty (30) days following receipt of the request. The Director shall be authorized to execute any certificate requested by Developer. Developer and City acknowledge that a certificate hereunder may be relied upon by transferees and Mortgagees. Developer shall pay the City’s reasonable costs involved in providing such estoppel certificate.

ARTICLE IX.

TRANSFERS, ASSIGNMENTS

9.1 Agreement Runs With the Land.

9.1.1 This Agreement and all of its provisions, agreements, rights, powers, standards, terms, covenants and obligations, shall be binding upon the parties and their respective heirs, successors (by merger, consolidation, or otherwise) and assigns, devisees, administrators, representatives, lessees, and all other persons or entities acquiring the Property or any portion thereof, or any interest therein, whether by sale, operation of law, or in any manner whatsoever, 514 of 11211
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and shall inure to the benefit of the parties and their respective heirs, successors (by merger, consolidation or otherwise) and assigns.

9.1.2 All of the provisions of this Agreement shall be enforceable during the Term as equitable servitudes and constitute covenants running with the land pursuant to applicable law, including, but not limited to Section 1468 of the Civil Code of the State of California. Each covenant to do or refrain from doing some act on the Property hereunder, (a) is for the benefit of the Property and is a burden upon the Property, (b) runs with the Property, and (c) is binding upon Developer and each successive owner during its ownership of the Property or any portion thereof, and each person or entity having any interest in the Property. Every person who now or hereafter owns or acquires any right, title or interest in or to any portion of the Property is and shall be conclusively deemed to have consented and agreed to every provision contained herein, whether or not any reference to this Agreement is contained in the instrument by which such person acquired an interest in the Property.

9.2 Right to Assign.

9.2.1 Developer shall have the right to assign its rights to develop the Property (by sale, transfer, or otherwise) to any person, business entity, or other similar entity (“Assignee”). Any such transfer shall be deemed to include an assignment of all rights, duties, and obligations created by this Agreement with respect to all or any portion of the Property.

9.3 Partial Assignment of Development Agreement.

9.3.1 Notwithstanding anything to the contrary set forth herein, concurrently with the closing of the ground lease contemplated in the Disposition and Development Agreement, the Commercial Developer and or Residential Developer shall have the right to cause those portions of this Agreement which are applicable to the Residential Developer or the residential development to be assumed and assigned to the Residential Developer pursuant to a separate recorded agreement between the City and Residential Developer (and subject to the reasonable approval of the Commercial Developer, or Residential Developer, as applicable).

9.4 Release Upon Assignment.

9.4.1 Upon the express written assumption by the Assignee of Developer’s rights and interests under this Agreement (the “Assignment Agreement”), Developer shall be free from any and all liabilities accruing on or after the date of assignment with respect to those obligations assumed by the Assignee pursuant to the Assignment Agreement, except to the extent that Developer is in default with respect to any and all obligations at the time of the proposed transfer.

ARTICLE X.

MORTGAGEE PROTECTION

10.1 Mortgage Protection.

This Agreement shall be superior and senior to any lien placed upon the Property or any portion of the Property after the date of recording of this Agreement, including the lien of any 515 of 11211
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deed of trust or mortgage (“Mortgage”). Notwithstanding the foregoing, no breach of this Agreement shall defeat, render invalid, diminish, or impair the lien of any Mortgage made in good faith and for value, but all of the terms and conditions contained in this Agreement (including but not limited to City’s remedies to terminate the rights of Developer (and its successors and assigns) under this Agreement, to terminate this Agreement, and to seek other relief as provided in this Agreement) shall be binding upon and effective against any person or entity, including any deed of trust beneficiary or mortgagee (“Mortgagee”) who acquires title to the Property, or any portion thereof, by foreclosure, trustee’s sale, deed in lieu of foreclosure, or otherwise.

10.2 Mortgagee Not Obligated.

Notwithstanding the provisions of Section 10.1 above, no Mortgagee shall have any obligation or duty under this Agreement to construct or complete the construction of improvements on the Property, or to guarantee such construction or completion; provided, however, that a Mortgagee shall not be entitled to devote the Property to any uses or to construct any improvements on the Property other than those uses or improvements provided for or authorized by this Agreement, or otherwise under Applicable Law. City, upon receipt of a written request from a Mortgagee, shall permit the Mortgagee to succeed to the rights and obligations of Developer under this Agreement, provided that all defaults by Developer hereunder that are reasonably susceptible of being cured are cured by the Mortgagee as soon as is reasonably possible after the Mortgagee takes possession of the Property.

10.3 Notice of Default to Mortgagee.

If City receives a written notice from a Mortgagee, Developer, or any approved Assignee requesting a copy of any notice of default given Developer or any approved Assignee and specifying the address for service, then City shall deliver to the Mortgagee at Mortgagee’s cost (or Developer’s cost), concurrently with service to Developer, any notice given to Developer with respect to any claim by City the Developer is in default under this Agreement, and if City makes a determination of default, City shall if so requested by the Mortgagee likewise serve at Mortgagee’s cost (or Developer’s cost) notice of noncompliance on the Mortgagee concurrently with service on Developer. Each Mortgagee shall have the right during the same period available to Developer to cure or remedy, or to commence to cure or remedy, the event of default claimed or the areas of noncompliance set forth in City’s notice.

10.4 No Supersedure.

Nothing in this Article X shall be deemed to supersede or release a Mortgagee or modify a Mortgagee’s obligations under any subdivision improvement agreement or other obligation incurred with respect to the Property outside this Agreement, nor shall any provision of this Article X constitute an obligation of City to the Mortgagee, except as to the notice requirements of Section 10.3.

ARTICLE XI.

INDEMNIFICATION

11.1 No Duty of City; Hold Harmless.
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It is specifically understood and agreed by the parties that the development contemplated by this Agreement is a private development, that City has no interest in or responsibility for or duty to third persons concerning any of said improvements, and that Developer shall have full power over and exclusive control of the Property subject only to the limitations and obligations of Developer under this Agreement.

11.2 Indemnification.

Developer hereby agrees to and shall indemnify, defend (with counsel approved by the City), and hold harmless City and its elected and appointed representatives, officers, agents, and employees (“Indemnified Parties”) from any loss, liability, fines, penalties, forfeitures, costs, and damages (whether in contract, tort, or strict liability, including but not limited to personal injury, death at any time, and property damage) and from any and all claims, demands, and actions in law or equity (including attorneys’ fees and litigation expenses) to the extent directly or indirectly arising or alleged to have arisen out of or in any way related to: (a) the approval of this Agreement or the Development Approvals; (b) any development or use of the Property under this Agreement or the Development Approvals; (c) directly or indirectly arising from Hazardous Materials existing or occurring prior to, during or arising from Developers’ ownership or lease of the Developer Property or development of the Property, including without limitation the costs of any required or necessary repair, cleanup, or detoxification of the Property or the Project, and the preparation and implementation of any closure, remedial or other required plans; and (d) any actions or inactions by the Developer or its contractors, subcontractors, agents, or employees in connection with the construction or improvement of the Property and the Project; excepting to the extent arising from the intentional acts or willful misconduct of City, its elected and appointed representatives, officers, agents, employees, contractors or subcontractors.

For purposes of this Section 11.2, “Hazardous Materials” means flammable materials, explosives, radioactive materials, hazardous wastes, toxic substances and similar substances and materials, including all substances and materials defined as hazardous or toxic wastes, substances, or materials under any applicable law, including, without limitation, the Resource Conservation and Recover Act, 42 U.S.C. Sections 6901 et seq., the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S. C. Sections 9601 et seq.as amended, those substances defined as “hazardous waste” in Section 25117 of the California Health and Safety Code, and other substances, materials, and wastes that are, or become, regulated or classified as hazardous or toxic under federal, state, or local laws or regulations and in regulations adopted pursuant to said laws. “Hazardous Materials” expressly excludes substances typically used in the construction, development or maintenance of a commercial or residential building provided such substances are used in accordance with all applicable laws.

This indemnification and hold harmless agreement applies to all damages and claims for damages suffered or alleged to have been suffered by reason of the operations referred to in this Section 11.2, regardless of whether or not City prepared, supplied, or approved plans or specifications for the Property, but does not apply to damages and claims for damages caused by City with respect to public improvements and facilities after City has accepted responsibility for them. Developer’s duty to indemnify shall survive expiration or early termination of this Agreement.
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ARTICLE II.

NOTICES

2.1 Notices.

Formal written notices, demands, correspondence and communications between City and Developer shall be sufficiently given if: (a) personally delivered; or (b) dispatched by next day delivery by a reputable carrier such as Federal Express or DHL to the offices of City and Developer indicated below, provided that a receipt for delivery is provided; or (c) if dispatched by certified mail, postage prepaid, to the offices of City and Developer indicated below. Such written notices, demands, correspondence, and communications may be sent in the same manner to such persons and addresses as either party may from time-to-time designate by notice as provided in this Section. A copy of the notice should be sent via e-mail as well to the email addresses provided in this Section.

CITY: City Manager
City of San Mateo
330 West 20th Avenue
San Mateo, CA 94403
email:

With copy to: City Attorney
City of San Mateo
330 West 20th Avenue
San Mateo, CA 94403
email:

DEVELOPER:

DTSM Talbots Venture, LLC
c/o Harvest Properties
180 Grand Avenue, Suite 1400
Oakland, CA 94612
Attn: Preston O’Connell
With a copy to:

Prometheus Real Estate Group, Inc.
1 N. B Street, Suite 4000
San Mateo, California 94401
Attn: ______________
PROPERTY OWNER:

Moore Talbot Partners, LP,
2628 Sunset Terrace
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San Mateo, California 94403.

Attn:

With copy to :

ARTICLE III.

MISCELLANEOUS

3.1 Cooperation in the Event of Third-party Legal Challenge.

In the event of any legal action instituted by a third party or other governmental entity or official challenging the validity of any provision of this Agreement (“Third Party Challenge”), the parties shall mutually cooperate with each other relating to the Third Party Challenge.

3.2 Invalidity.

If any part of this Agreement is held by a court of competent jurisdiction to be invalid or unlawful, the parties shall: use their best efforts to cure any inadequacies or deficiencies identified by the court in a manner consistent with the express and implied intent of this Agreement, and then to adopt or re-enact such part of this Agreement as necessary or desirable to permit implementation of this Agreement.

3.3 Joint and Severable Liability; Property Owner Assumption. All covenants, obligations, and agreements of Developer under this Agreement, including but not limited to the indemnification in Section 11.2, shall be joint and severable as it related to the Developer Leased Property and shall automatically be assigned to and assumed by Property Owner upon termination of Developer’s property interest in the Developer Leased Property.

3.4 Applicable Law and Venue.

This Agreement shall be construed and enforced in accordance with the laws of the State of California. Any action at law or in equity arising under this Agreement or brought by any Party for the purposes of enforcing, construing, or determining the validity of any provision of this Agreement shall be filed and tried in the Superior Court of the County of San Mateo, or the United States District Court for the 9th District of California.

3.5 Severability.

Except as otherwise provided herein, if any provision(s) of this Agreement is (are) held invalid, the remainder of this Agreement shall not be affected except as necessarily required by the determination of invalidity, and shall remain in full force and effect unless amended or modified by mutual consent of the parties.

3.6 Nondiscrimination.
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Developer covenants by and for itself and any successors in interest that there shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, marital status, ancestry, or national origin in the development of the Property in furtherance of this Agreement. The foregoing covenant shall run with the land.

13.7 Headings.

The language in this Agreement in all cases shall be construed as a whole and in accordance with its fair meaning. Section and subsection headings in this Agreement are for convenience only and are not intended to be used in interpreting or construing the terms, covenants, or conditions of this Agreement.

13.8 Agreement is Entire Understanding.

This Agreement is executed in one original, which constitutes the entire understanding and agreement of the parties. The parties acknowledge and agree that neither of them has made any representation with respect to the subject matter of this Agreement or any representations inducing the execution and delivery hereof, except representations set forth herein, and each party acknowledges that it has relied on its own judgment in entering this Agreement. The parties further acknowledge that, except for those contained in Applicable Law, all statements or representations that heretofore may have been made by either of them to the other are void and of no effect, and that neither of them has relied thereon in its dealings with the other. To the extent that there is any conflict between the Applicable Law and this Agreement, this Agreement shall govern the parties’ respective rights and obligations.

13.9 Interpretation.

Each party to this Agreement has had an opportunity to review the Agreement, confer with legal counsel regarding the meaning of the Agreement, and negotiate revisions to the Agreement. Accordingly, neither party shall rely upon Civil Code Section 1654 in order to interpret any uncertainty in the meaning of the Agreement.

13.10 Recordation of Termination.

Upon completion of performance of the parties or termination of this Agreement, a written statement acknowledging such completion or termination shall be recorded by City in the Official Records of San Mateo County, California.

Signatures on the Following Page
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IN WITNESS HEREOF, the parties have executed this Agreement as of the Effective Date.

CITY:

CITY OF SAN MATEO,
a California charter city
By:

Alex Khojikian, City Manager
Dated: __________________________
DEVELOPER:

DTSM HOUSING, LLC , a Delaware limited
liability company
By:

Its:

Dated: __________________________
ATTEST:
________________________________
City Clerk
Dated: __________________________
APPROVED AS TO FORM:
____________________________________
Mazarin Vakharia
Assistant City Attorney
Dated: __________________________
PROPERTY OWNER:

MOORE TALBOT PARTNERS, LP
a limited partnership
By: __________________________
it's General Partner
By: __________________________
Dated: __________________________
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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 within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

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

WITNESS my hand and official seal.
______________________________________
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. 523 of 11211
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I certify UNDER PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.
______________________________________
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. 525 of 11211
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526 of 11211
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I certify UNDER PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

LEGAL DESCRIPTION OF THE CITY PROPERTY
The real property referred to herein is that certain real property located in the City of San Mateo, County of San Mateo, State of California, described as follows:

THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF SAN

MATEO, COUNTY OF SAN MATEO, STATE OF CALIFORNIA AND IS DESCRIBED AS FOLLOWS: LOTS 2, 3 AND 4, BLOCK 10, AS DELINEATED UPON THAT CERTAIN MAP ENTITLED "MAP OF THE TOWN OF SAN MATEO", FILED FOR RECORD IN THE

OFFICE OF THE RECORDER OF THE COUNTY OF SAN MATEO, STATE OF CALIFORNIA, ON JANUARY 24TH, 1867 IN BOOK 2 OF MISCELLANEOUS RECORDS, PAGE 95 AND A COPY ENTERED INTO BOOK 1 OF MAPS, PAGE 45.

APN: 034-179-050, JPN: 034-017-179-05.00, 034-179-060, JPN: 034-017-179-06.00 528 of 11211
A-1-1
529 of 11211
A-2-1
Exhibit A-2
Developer Owned Property
The Land referred to herein below is situated in the City of San Mateo, County of San Mateo, State of California, and is described as follows:

LOT 5, BLOCK 10, AS DESIGNATED ON THE MAP ENTITLED, "MAP OF THE TOWN OF SAN MATEO, SAN MATEO COUNTY, CALIFORNIA", FILED IN THE OFFICE

OF THE RECORDER OF THE COUNTY OF SAN MATEO, STATE OF CALIFORNIA ON JANUARY 24, 1963 IN BOOK 2 OF MISCELLANEOUS RECORDS, AT PAGE 95, AND A COPY ENTERED IN BOOK 1 OF MAPS AT PAGE 45.

For conveyancing purposes only: APN 034-179-010
Real property in the City of San Mateo, County of San Mateo, State of California, described as follows:

LOT 6, BLOCK 10, AS DESIGNATED ON THE MAP ENTITLED, "MAP OF THE TOWN OF SAN MATEO, SAN MATEO COUNTY, CAL.", WHICH MAP WAS FILED IN

THE OFFICE OF THE RECORDER OF THE COUNTY OF SAN MATEO, STATE OF CALIFORNIA ON JANUARY 24, 1863 IN BOOK 2 OF MISCELLANEOUS RECORDS AT PAGE 95 AND A COPY ENTERED IN BOOK 1 OF MAPS AT PAGE 45.

APN: 034-179-020
530 of 11211
A-2-1
531 of 11211
A-3-1
Exhibit A-3
Developer Leased Property
PARCEL ONE AS DESIGNATED ON THAT CERTAIN MAP ENTITLED, "PARCEL MAP NO. 325 LANDS OF MOORE FOR LOT MERGER PURPOSES FOR THE MERGER OF LOTS 1, 7 AND 8, BLOCK 10, AS SHOWN ON THE MAP ENTITLED, "MAP OF THE TOWN OF SAN MATEO, SAN MATEO COUNTY, CALIFORNIA," WHICH MAP WAS

FILED IN THE OFFICE OF THE RECORDER OF THE COUNTY OF SAN MATEO, STATE OF CALIFORNIA ON FEBRUARY 11, 1991, IN BOOK 64 OF PARCEL MAPS AT PAGE

54. For conveyancing purposes only: APN 034-179-040 (Affects a portion of said land) and 034-179-030 (Affects a portion of said land)
532 of 11211
A-3-1
533 of 11211
534 of 11211
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CITY OF SAN MATEO
RESOLUTION NO. _______(2026)
MAKING FINDINGS PURSUANT TO HEALTH & SAFETY CODE SECTION 33433 AND APPROVING A DISPOSITION AND DEVELOPMENT AGREEMENT FOR A 71-UNIT RESIDENTIAL AFFORDABLE HOUSING BUILDING AND ONE OFFICE/RETAIL COMMERCIAL BUILDING LOCATED AT 445 SOUTH B STREET (APNS 034-179-010, 034-179-020, 034-179030, 034-179-040, 034-179-050, and 034-179-060)
(PA-2023-012, 445 SOUTH B STREET, “BESPOKE” MIXED USE PROJECT) WHEREAS, on January 4, 2021, the City Council approved Resolution No.3 (2021) declaring the City-owned parking at East 4th Avenue and South Railroad Avenue (APNs 034-179-050 and 034-179-060, herein referred to as the “Property”) as “surplus land” and subsequently released a Notice of Surplus Lands Availability to all housing developers that have registered with the State Department of Housing and Community Development (HCD); and WHEREAS, on April 19, 2021, the City received four proposals for the acquisition and development of the Property, including a proposal from the three-party Development Team composed of Prometheus Real Estate Group and Harvest Properties (collectively referred to as “Commercial Developer”), and Alta Housing (“Residential Developer”); and
WHEREAS, on October 4, 2021, the City Council approved the City entering into an Exclusive Negotiating Agreement (ENA) with DTSM Housing, LLC for the redevelopment of the Talbot’s Lot; and WHEREAS, the City, the Commercial Developer, and the Residential Developer desire for the Development Team to construct a mixed-use development that incorporates the adjacent parcels on the block (which are partially owned or controlled by the Parties) totaling 239,628 square feet and consisting of one seven-story, 76,072 squarefoot affordable housing building that includes approximately 5,964 square feet of ground floor community space (“Residential Improvements”);one six-story, 162,926 square-foot office/commercial building (“Commercial Improvements”); and an underground parking garage, located at 445 South B Street (collectively referred to as the “Project”); and
WHEREAS, the Applicant submitted a formal Planning Application (PA-2023-012) on February 24, 2023 with the Planning Division for a Disposition and Development Agreement, a Development Agreement, Site Plan and Architectural Review, Special Use Permit, and Site Development Planning Application associated with the Project in the City of San Mateo; and
WHEREAS, the City Council held two separate public study sessions, on May 15, 2023 and September 16, 2024, to review the proposed term sheets associated with the development agreements required for the proposed Project; and
WHEREAS, the Planning Commission held a public hearing for the Project on April 28, 2026, duly noticed, at which all public comments were considered, and by a vote of 5-0-0, recommended that the City Council adopt a Resolution to approve the Site Plan and Architectural Review, Special Use Permit, and Site Development Planning Application subject to the listed Findings for Approval and Conditions of Approval for Planning Application No.

PA-2023-012 and adopting the Initial Study/Mitigated Negative Declaration and Mitigated Monitoring and Reporting Program for the Project; and
WHEREAS, per the terms of the Disposition and Development Agreement (“DDA”), the City will ground lease the Talbot’s Lot to the Residential Developer; enter into a Lot Tie agreement and a Reciprocal Easement agreement with the Commercial Developer and any other fee owner of a portion of the Commercial Property to facilitate development of the Project across parcels under separate ownership; enter into other agreements with the 535 of 11211
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Residential Developer and Commercial Developer associated with the development and ongoing operation and maintenance of the Project; and provide a loan of three million dollars ($3,000,000) for construction of the Residential Improvements; and
WHEREAS, in accordance with Health & Safety Code Section 33433, the City has prepared a Summary Report for the disposition of the Property, formerly held by the Redevelopment Agency of the City of San Mateo, which contains the project costs and revenues to the City from the proposed transaction and determines the reuse value of the property.

NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SAN MATEO, CALIFORNIA HEREBY FINDS AND RESOLVES THAT:

1. Pursuant to Health & Safety Code Section 33433 and the Summary Report attached hereto as Exhibit A, the City finds that:
a. The lease of the Property will assist in providing housing for lower-income households. b. The lease of the Property is consistent with the implementation plan of the former Redevelopment Agency of the City of San Mateo adopted pursuant to Section 33490 because it authorized the use of redevelopment agency funds for lower-income housing and will assist in the elimination of blight. c. The consideration to be provided by the Residential Developer is not less than the fair reuse value at the use and with the covenants and conditions and development costs authorized by the lease because the reuse appraisal demonstrates that with these restrictions, the reuse value of the Property is less than zero.

2. The Disposition and Development (DDA) with AH Bespoke LP and DTSM Housing, LLC (attached herein as Exhibit B), which authorizes the execution of a Ground Lease, Lot Tie Agreement, Reciprocal Easement Agreement, Predevelopment Loan Agreement, and Permanent Loan Agreement is hereby approved.

3. The City Manager is authorized to execute the DDA in substantially the form attached. The City Manager is authorized to approve and execute future revisions to the DDA with the concurrence of the City Attorney, so long as the changes do not materially alter substantial rights and obligations of the City.

4. The City Manager is authorized to negotiate and execute a shared parking agreement consistent with the terms of the DDA, subject to the approval of the City Attorney.

5. The City hereby grants and accepts the reciprocal easements depicted in the form of Reciprocal Easement Agreement attached as Exhibit G to the DDA, and such grant and acceptance of easement is to be effective upon execution of the Reciprocal Easement Agreement.

6. The City Manager is authorized to approve and execute any other documents required by the City implementing the provisions in the DDA, subject to the approval of the City Attorney. 536 of 11211
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Exhibit A
33433 Summary Report – TO BE INSERTED
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Exhibit B
DDA – TO BE INSERTED
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DISPOSITION AND DEVELOPMENT AGREEMENT

BETWEEN

THE CITY OF SAN MATEO,

AH BESPOKE LP,
a California limited partnership
AND

DTSM HOUSING, LLC,
a Delaware limited liability company
[_______], 2026
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Article 1. SUBJECT OF AGREEMENT........................................................................................ 3 Section 1.1 Recitals........................................................................................................ 3 Section 1.2 Purpose........................................................................................................ 3 Section 1.3 Parties to this Agreement............................................................................ 3 Section 1.4 Term............................................................................................................ 4 Section 1.5 Definitions................................................................................................... 4 Section 1.6 Exhibits..................................................................................................... 12 Section 1.7 Project Structure........................................................................................ 12 Section 1.8 Residential Improvements ........................................................................ 12 Section 1.9 Commercial Improvements....................................................................... 13 Section 1.10 Construction Phasing ................................................................................ 14 Section 1.11 Execution of Disposition and Development Agreement, Lot Tie Agreement, REA, Shared Parking Agreement and Construction Easement................................................................................................... 14 Article 2. INTENTIONALLY DELETED ................................................................................... 15 Article 3. CITY FINANCIAL ASSISTANCE to residential development.................................. 15 Section 3.1 City Loan .................................................................................................. 15 Section 3.2 Ground Lease ............................................................................................ 16 Article 4. Intentionally deleted ..................................................................................................... 16 Article 5. COMMERCIAL DEVELOPMENT CONTRIBUTION TO RESIDENTIAL DEVELOPMENT; DEPOSITS .................................................................................................... 16 Section 5.1 Commercial Developer Equity Contribution............................................ 16 Section 5.2 Contribution of Parking to the Residential Development......................... 17 Section 5.3 Deposits..................................................................................................... 17 Section 5.4 Interim Contingent Payments ................................................................... 18 Article 6. PREDISPOSITION REQUIREMENTS....................................................................... 19 Section 6.1 Conditions Precedent to Conveyance of Property .................................... 19 Section 6.2 Government Approvals; Schedule of Performance .................................. 19 Section 6.3 Financing Plan .......................................................................................... 20 Section 6.4 Other Approved Financing ....................................................................... 21 Section 6.5 HUD Requirements................................................................................... 21 Section 6.6 Residential Tenant Selection..................................................................... 21 Article 7. LEASE OF PROPERTY .............................................................................................. 21 Section 7.1 Ground Lease ............................................................................................ 21 Section 7.2 Form of Ground Lease .............................................................................. 22 Section 7.3 Opening Escrow........................................................................................ 22 Section 7.4 Closing ...................................................................................................... 22 542 of 11211
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Section 7.5 Condition of Title...................................................................................... 23 Section 7.6 Condition of Property ............................................................................... 23 Section 7.7 Costs of Escrow and Closing .................................................................... 24 Article 8. CONSTRUCTION OF IMPROVEMENTS................................................................. 24 Section 8.1 Construction Pursuant to Plans................................................................. 24 Section 8.2 Construction Contracts.............................................................................. 24 Section 8.3 Underground Parking Garage Construction Bonds. ................................. 25 Section 8.4 Residential Improvements Construction Bonds........................................ 25 Section 8.5 Commencement of Residential Improvements......................................... 26 Section 8.6 Completion of the Residential Improvements .......................................... 26 Section 8.7 Change in Construction of Residential Improvements or Underground Parking Garage ................................................................... 26 Section 8.8 Certificate of Completion ......................................................................... 27 Section 8.9 Compliance with Applicable Law; Prevailing Wage Requirement.......... 27 Section 8.10 Mechanics Liens, Stop Notices, and Notices of Completion.................... 29 Section 8.11 Equal Opportunity..................................................................................... 30 Section 8.12 Inspections ................................................................................................ 30 Section 8.13 Information ............................................................................................... 30 Section 8.14 Records. .................................................................................................... 30 Article 9. ONGOING RESIDENTIAL DEVELOPER OBLIGATIONS..................................... 30 Section 9.1 Applicability ............................................................................................. 30 Section 9.2 Use ............................................................................................................ 31 Section 9.3 Maintenance.............................................................................................. 31 Section 9.4 Residential Property Management Agent ................................................. 31 Section 9.5 Taxes, Assessments and Development Impact Fees................................. 32 Section 9.6 Hazardous Materials ................................................................................. 32 Section 9.7 Audits........................................................................................................ 33 Article 10. INSURANCE REQUIREMENTS.............................................................................. 33 Article 11. ASSIGNMENT AND TRANSFERS ......................................................................... 33 Section 11.1 Definitions................................................................................................. 33 Section 11.2 Purpose of Restrictions on Transfer.......................................................... 34 Section 11.3 Prohibited Transfers.................................................................................. 35 Section 11.4 Permitted Transfers................................................................................... 35 Section 11.5 Effectuation of Certain Permitted Transfers............................................. 36 Section 11.6 Other Transfers with City Consent ........................................................... 36 Article 12. DEFAULT AND REMEDIES.................................................................................... 37 Section 12.1 General Applicability................................................................................ 37 Section 12.2 No Fault of Parties.................................................................................... 37 Section 12.3 Fault of City .............................................................................................. 38 543 of 11211
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Section 12.4 Fault of Developer .................................................................................... 39 Section 12.5 Right to Cure at Residential Developer's Expense ................................... 44 Section 12.6 Remedies Cumulative ............................................................................... 45 Section 12.7 Waiver of Terms and Conditions.............................................................. 45 Section 12.8 Rights of Mortgagees................................................................................ 45 Section 12.9 No Cross Default....................................................................................... 45 Section 12.10 Assignment of Work................................................................................. 45 Article 13. SECURITY FINANCING AND RIGHTS OF HOLDERS ....................................... 46 Section 13.1 No Encumbrances Except for Residential Development Purposes .......... 46 Section 13.2 Holder Not Obligated to Construct........................................................... 46 Section 13.3 Notice of Default and Right to Cure......................................................... 46 Section 13.4 Failure of Holder to Complete Improvements.......................................... 46 Section 13.5 Right of City to Cure................................................................................. 47 Section 13.6 Right of City to Satisfy Other Liens......................................................... 47 Section 13.7 Holder to be Notified ................................................................................ 47 Section 13.8 Commercial Developer Financing ............................................................ 47 Article 14. GENERAL PROVISIONS ......................................................................................... 49 Section 14.1 Notices, Demands and Communications.................................................. 49 Section 14.2 Non-Liability of City Officials, Employees and Agents .......................... 50 Section 14.3 Non-Liability of Developer, Employees and Agents................................ 50 Section 14.4 Forced Delay............................................................................................. 50 Section 14.5 Inspection of Books and Records ............................................................. 51 Section 14.6 Provision Not Merged with Lease ............................................................ 51 Section 14.7 Title of Parts and Sections........................................................................ 51 Section 14.8 General Indemnification ........................................................................... 51 Section 14.9 Applicable Law......................................................................................... 52 Section 14.10 No Brokers................................................................................................ 52 Section 14.11 Severability ............................................................................................... 52 Section 14.12 Venue ........................................................................................................ 53 Section 14.13 Binding Upon Successors......................................................................... 53 Section 14.14 Parties Not Co-Venturers.......................................................................... 53 Section 14.15 Time of the Essence .................................................................................. 53 Section 14.16 Action by the City..................................................................................... 53 Section 14.17 Identity and Authority of Developer......................................................... 53 Section 14.18 Complete Understanding of the Parties .................................................... 54 Section 14.19 Entry by the City....................................................................................... 55 Section 14.20 Discretion Retained by the City................................................................ 55 Section 14.21 Conflict of Interest .................................................................................... 55 Section 14.22 No Third-Party Beneficiaries.................................................................... 55 Section 14.23 Amendments............................................................................................. 55 Section 14.24 Implementation Agreements..................................................................... 56 Section 14.25 Multiple Originals; Counterparts. ............................................................. 56 Section 14.26 City Council Appeal; Mediation............................................................... 56 Section 14.27 Litigation................................................................................................... 57 544 of 11211
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Section 14.28 Minimum Wages....................................................................................... 57 Exhibit A: Legal Description of the Property
Exhibit B: Development Plan
Exhibit C: Schedule of Performance
Exhibit D: Initial Financing Proposal
Exhibit E: Form of Ground Lease
Exhibit F: Form of Lot Tie Agreement
Exhibit G: Form of REA
Exhibit H: Site Plan
Exhibit I: Construction Easement
Exhibit J: Memorandum of Disposition and Development Agreement Exhibit K: Form of City Predevelopment Loan Documents
Exhibit K-1: Form of City Permanent Loan Documents
Exhibit L: Insurance Coverage
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DISPOSITION AND DEVELOPMENT AGREEMENT
This Disposition and Development Agreement (the "Agreement") is entered into as of ______________, 2026 (the "Effective Date"), by and among the City of San Mateo, a California charter city (the "City"), AH Bespoke LP, a California limited partnership (the “Residential Developer”) and DTSM Housing, LLC, a Delaware limited liability company (the "Commercial Developer"), who may individually be referred to as a “Party” and collectively be referred to as the “Parties,” with reference to the following facts, understandings and intentions of the Parties.

RECITALS
A. These Recitals refer to and utilize certain capitalized terms that are defined in Article 1 of this Agreement. The Parties intend to refer to those definitions in connection with the use of capitalized terms in these Recitals.

B. The City owns certain real property located at 4th and Railroad Avenue, as more particularly described in Exhibit A attached to this Agreement (the “Residential Site” or the “Residential Property” or the “Property”). The APNs for the Property are as follows: 034-179- 050 and 034-179-060.

C. On January 7, 2021, the City issued a Notice of Availability of Surplus Land to solicit proposals to develop on the Residential Site an affordable housing development consistent with the California Surplus Land Act (California Government Code Section 54220-54234). On May 27, 2021, DTSM Housing, LLC submitted a letter of intent to the City.

D. After careful consideration, the City selected DTSM Housing, LLC and its affiliates for exclusive negotiations for development of the Property, due to DTSM Housing, LLC’s and its affiliates’ unique qualifications and ability to execute the project. Accordingly, the City has approved Commercial Developer, DTSM Housing, LLC, as the developer of the Commercial Development. The City received a letter from the Department of Housing and Community Development on August 23, 2021, stating that they had reviewed and approved the City’s selection of the Commercial Developer in accordance with the California Surplus Lands Act.

E. On ___________, the City approved entitlements consisting of the following:
________________ [TO REFERENCE CITY COUNCIL MEETINGS, RESOLUTIONS AND OTHER ENTITLEMENT DETAILS](the “Entitlements”). The City, the Commercial Developer and the Residential Developer desire for the Development to include the Property in a mixed-use development that incorporates the adjacent parcels on the block (as shown in the Development Plan in Exhibit B attached to this Agreement) (which are partially owned or controlled by the Parties), and includes the improvements described in the Entitlements, including (i) improvements consisting of approximately 14 units available to households at or below 30% of AMI, 36 units available to households at or below 50% of AMI, 12 units available to households at or below 60% of AMI, 8 units available to households at or below 70% of AMI and one (1) unrestricted staff unit, and approximately 5,000 square feet of ground floor community space located on the airspace of the Property (which improvements are referred to as the “Residential Improvements”), (ii) improvements consisting of approximately 150,000 square feet of 546 of 11211
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commercial office space and approximately 12,000 square feet of ground floor retail space located on the airspace of the portion of the Commercial Property (as herein defined), (which improvements are herein referred to as the “Commercial Improvements”) and (iii) the Underground Parking Garage (as herein defined) that will span the entire Development site.

F. The Commercial Developer, the Residential Developer and the City intend that the Residential Developer will construct and own the Residential Improvements and that the Commercial Developer will construct the Underground Parking Garage and the Commercial Improvements and own the Commercial Improvements located on the Commercial Property.

G. The City will enter into a lot tie agreement in the form substantially similar to that of Exhibit F attached hereto (the “Lot Tie Agreement”) and a reciprocal easement agreement in a substantially similar form of Exhibit G attached hereto (the “REA”) with the Commercial Developer and any other fee owner of a portion of the Commercial Property to allow for (i) the construction of the Underground Parking Garage to span multiple assessors’ parcels, (ii) the construction of the Commercial Improvements to span multiple assessor’s parcels and (ii) the establishment of certain reciprocal easements and the allocation of responsibilities and cost sharing relating to facilities (e.g., the Underground Parking Garage) to be shared by the Residential Improvements and the Commercial Improvements. The City and the Residential Developer will also enter into a ground lease of the Property to allow for the development of the Residential Improvements by the Residential Developer on the air rights above the portion of the Underground Parking Garage owned by the City. The Ground Lease will be subordinated to the Lot Tie Agreement, the Shared Parking Agreement and the REA.

H. The City has determined that the Commercial Developer and the Residential Developer each have the necessary expertise, skill and ability to carry out their respective commitments set forth in this Agreement and that this Agreement is in the best interests and will materially contribute to increasing the supply of low income housing available at affordable housing cost within the City.

I. The Residential Developer's construction and operation of the Residential Development is not financially feasible without the City's financial assistance. The City therefore desires to provide the Residential Developer with the City Loans to provide preconstruction and construction funding in consideration for the Residential Developer's agreement to construct and operate the Residential Development, as applicable, consistent with this Agreement and the Regulatory Agreement, including (without limitation) the occupancy and affordability restrictions. The amount of the City Loans provided pursuant to this Agreement does not exceed the amount of City's assistance necessary to make the Residential Developer's acquisition of the leasehold interest in the Property and the construction and operation of the Residential Development, as applicable, as restricted by this Agreement, financially feasible.

J. To strengthen the public planning process, encourage private participation in comprehensive planning and reduce the economic risk of development, the Legislature of the State of California enacted California Government Code § 65864 et seq. (“Development Agreement Statute”), which authorizes the City to enter into an agreement with any person having a legal or equitable interest in real property regarding the development of such property. 547 of 11211
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K. The City (in its capacity as “lead agency”) has approved the entitlement application for the Development (as herein defined) and, in accordance with the California Environmental Quality Act and the National Environmental Policy Act, has adopted a mitigated negative declaration and finding of no significant impact for the Development.

NOW THEREFORE, for and in consideration of the foregoing Recitals which are hereby incorporated into this Agreement by this reference, and for other good and valuable consideration, the receipt and sufficiency of which consideration is hereby acknowledged, the City, Residential Developer and Commercial Developer hereby agree as follows:

ARTICLE 1.

SUBJECT OF AGREEMENT
Section 1.1 Recitals.

The Parties hereby confirm the accuracy of the foregoing Recitals which are incorporated herein by this reference.

Section 1.2 Purpose.

The purpose of this Agreement is to provide the terms and conditions under which the Commercial Developer shall prepare or cause to be prepared all required documents necessary to receive all required permits and approvals to construct the Commercial Development and the Residential Developer shall prepare or cause to be prepared all required documents necessary to receive all required permits and approvals to construct the Residential Development and Commercial Development, to obtain either title or irrevocable access until construction completion to the Property, as applicable, to complete construction of their respective Development (as herein defined) and to establish how the respective parties shall allocate responsibility for the maintenance of shared facilities pursuant to the REA (as herein defined).

Furthermore, this Agreement shall provide the terms and conditions under which the City shall ground lease the Property to the Residential Developer and under which the City will contribute certain funds for the development of the Property. Furthermore, this Agreement provides the terms under which the Development vests its rights under the Government Code Section 65868.

Section 1.3 Parties to this Agreement.
(a) The City of San Mateo, a California charter city. The office of the City is located at 330 West 20th Avenue, San Mateo, California 94403; (b) DTSM Housing, LLC, a Delaware limited liability company, which is the Commercial Developer. For purposes of this Agreement, the principal address of the Commercial Developer is 180 Grand Avenue, Suite 1400, Oakland, California 94612, c/o Harvest Properties; and
(c) AH Bespoke LP, a California limited partnership, which is the Residential Developer. For purposes of this Agreement, the principal address of the Residential Developer is 3460 West Bayshore Road, Suite 104, Palo Alto, California 94303/ Attn: Vice President, Real Estate Development.
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Section 1.4 Term.

The term of this Agreement (the “Term”) shall commence upon the Effective Date and shall expire, unless terminated, modified or extended, as provided herein, (i) with respect to the Residential Development upon delivery of the Residential Development Certificate of Occupancy, at which time this Agreement shall terminate and be of no further force and effect as to the Residential Development, and (ii) with respect to the Commercial Development, the date on which the final Certificate of Occupancy for the Residential Development is obtained, at which time this Agreement shall terminate and be of no further force and effect as to the Commercial Development. Notwithstanding the foregoing, those provisions of this Agreement that recite that they survive termination of this Agreement shall all remain in full force and effect. After termination of this Agreement, the Parties agree to execute any documents necessary at that time to satisfy the Title Company and any lenders that this Agreement has been terminated (with respect to the Residential Development and/or the Commercial Development, as applicable) and is of no further force and effect.

Section 1.5 Definitions.

In addition to the terms defined elsewhere in this Agreement, the following definitions shall apply throughout this Agreement.
(a) “Additional Deposit” shall have the meaning set forth in Section 5.3(b). (b) "Agreement" means this Disposition and Development Agreement, including the attached Exhibits and all subsequent operating memoranda and amendments to this Agreement.
(c) "AMI" means the area median gross yearly income, adjusted for household size, in the County of San Mateo, California, as determined by TCAC and HCD in accordance with the Density Bonus Requirements (it being agreed and acknowledged that pursuant to the Density Bonus Requirements 20% of the affordable units shall be subject to rent and income requirements of HCD and the remainder shall be subject to the rent and income requirements of TCAC). In the event that such income determinations are no longer published or are not updated for a period of at least eighteen (18) months, the City shall provide the Developer with other income determinations which are reasonably similar with respect to methods of calculation to those previously published by the California Tax Credit Allocation Committee. (d) "Annual Operating Expenses" with respect to a particular fiscal year shall mean the following costs reasonably and actually incurred for operation and maintenance of the Residential Development to the extent that they are consistent with the annual budget for the Residential Development, approved by the City pursuant to the Regulatory Agreement and with an annual independent audit performed by a certified public accountant, reasonably acceptable to the City, using generally accepted accounting principles:
(1) Property taxes and assessments imposed on the Residential Development;
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(2) Debt service currently due on a non-optional basis (excluding debt service due from residual receipts or surplus cash of the Residential Development) on loans associated with construction of the Residential Development and approved by the City in the Financing Plan pursuant to Section 6.3.
(3) Property management fees and reimbursements, not to exceed fees and reimbursements which are standard in the industry, and pursuant to a management contract approved by the City;
(4) Premiums for property damage and liability insurance; (5) Utility services not paid for directly by tenants, including water, electrical, sewer, and trash collection;
(6) Maintenance and repair (including any maintenance and repair costs relating to the Underground Parking Garage allocated to the Residential Development pursuant to the REA and the Shared Parking Agreement);
(7) Any annual license or certificate of occupancy fees required for operation of the Residential Development;
(8) Security services;
(9) Advertising and marketing costs;
(10) Cash deposited into reserves for capital replacements of the Residential Development in an amount to be approved by the City as part of the Financing Plan or as otherwise required by Residential Developer’s senior lender and/or tax credit equity investor;
(11) Cash deposited into an operating reserve in an amount to be approved by the City as part of the Financing Plan or as otherwise required by Residential Developer’s senior lender and/or tax credit equity investor; (12) Resident services fees and expenses;
(13) Any previously unpaid portion of the developer fee due (without interest) not exceeding a cumulative amount of the developer fee in an amount to be approved by the City as part of the Financing Plan;
(14) An annual partnership management fee(s) of not less than TwentyFive Thousand Dollars per year ($25,000) adjusted annually at three percent (3%) (which shall accrue if not paid) and other fees approved by Senior Lenders included in the approved Financing Plan;
(15) An annual audit fee;
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(16) Extraordinary operating costs necessitated by force majeure events or as otherwise specifically approved in writing by the City as part of the annual budget approval process pursuant to the Regulatory Agreement;
(17) Payments of deductibles in connection with casualty insurance claims not normally paid from reserves;
(18) Fidelity bond premiums;
(19) The amount of uninsured losses actually replaced, repaired or restored, and not normally paid from reserves; and
(20) Other ordinary and reasonable operating expenses approved in the Financing Plan or as otherwise approved in writing by the City and not listed above. (21) Annual Operating Expenses shall exclude the following:
depreciation, amortization, depletion or other non-cash expenses; initial deposits to establish the operating reserve and the replacement reserve paid for from development sources and any amount expended from a reserve account; and any capital cost with respect to the Development not otherwise listed above, as determined by the accountant for the Residential Development. (e) "Approved Financing" shall be limited to all of the funds acquired by the Residential Developer and approved by the City for the purpose of financing the Residential Development and listed in the approved Financing Plan. For the avoidance of doubt, the City shall not have any approval right over financing obtained by the Commercial Developer with respect to the financing of the Commercial Development. (f) "Certificate of Occupancy" means the final certificate of occupancy issued by the City, or comparable City sign-off on the completion of construction of the Residential Development, as applicable.
(g) "City" has the meaning set forth in the first paragraph of this Agreement. (h) "City Council" means the City Council of the City of San Mateo. (i) "City Documents" shall mean, collectively, this Agreement, the Ground Lease, the City Predevelopment Loan, the City Loan, the Promissory Notes, the Leasehold Deed of Trust, the Regulatory Agreements, the Lot Tie Agreement, the REA, the Shared Parking Agreement, the Construction Easement and all other documents required by the City to be executed by the Commercial Developer and/or Residential Developer in connection with the transaction contemplated by this Agreement.
(j) "City Event of Default" has the meaning set forth in Section 12.3(a). (k) “City Permanent Loan” shall have the meaning set forth in Section

3.1(a)(2).
(l) “City Predevelopment Loan” shall have the meaning set forth in Section

3.1(a)(1).
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(m) "City Loans" shall have the meaning set forth in Section 3.1(a). (n) "Closing Date" means the date of recording in the Official Records of San Mateo County the Memorandum of Ground Lease and Leasehold Deed of Trust. (o) “Commercial Construction Commencement Conditions” has the meaning set forth in Section 1.11.
(p) “Commercial Developer” means DTSM Housing, LLC, a Delaware limited liability company (and its permitted successors and assigns), and its permitted successors and assigns, who will be responsible for obtaining the financing for, and constructing the Underground Parking Garage and the Commercial Improvements. (q) “Commercial Developer Event of Default” has the meaning set forth in Section 12.4(b).
(r) “Commercial Development” means the Commercial Improvements and the Underground Parking Garage.
(s) “Commercial Development Financing” means any financing obtained by the Commercial Developer in connection with the Commercial Development. (t) “ Commercial Development Financing Interest” has the meaning set forth in Section 13.8.
(u) “Commercial Improvements” has the meaning set forth in Recital E, above.
(v) “Commercial Property” shall mean the Development Site but excluding the Residential Property
(w) “Construction Commencement Failure” shall have the meaning set forth in Section 5.4.
(x) “Construction Easement” shall have the meaning set forth in Section 1.10. (y) "Construction Plans" means all construction documentation upon which the Commercial Developer or the Residential Developer, as applicable, and their respective contractors, shall rely in building each and every part of the Improvements (including landscaping, parking, and common areas) and shall include, but not necessarily be limited to, architectural drawings, landscaping plans and specifications, final elevations, building plans and specifications (also known as "working drawings") and a time schedule for construction. For the purposes of this Agreement, “Construction Plans” shall refer to the individual construction plans for the Residential Development or the Commercial Development, or both collectively, as applicable.
(z) “Density Bonus Requirements” means the income and rent limitations set forth in California Government Code Sections 65915(b)(1)(G) and 65915(c)(1). 552 of 11211
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(aa) “Deposit” shall have the meaning set forth in Section 5.3(b). (bb) "Developer" means the Commercial Developer and/or the Residential Developer, as applicable.
(cc) “Developer Equity Contribution” shall have the meaning set forth in Section 5.1.
(dd) "Development" means the Residential Development and/or the Commercial Development, as applicable.
(ee) “Development Plan” means the Development Plan described in Exhibit B attached hereto.
(ff) “Development Site” means the parcels shown in Exhibit B upon which the Underground Parking Garage, the Residential Improvements, and the Commercial Improvements will be constructed and is inclusive of the Residential Property that is the subject of this Agreement.
(gg) “Entitlements” shall mean all discretionary permits and approvals that need to be issued by the City and any other necessary governmental authority(ies) with jurisdiction in order for the Development to be developed. (hh) “Entitlements Date” shall mean the date on which the Entitlements are effective and the dates for any appeals or challenges have lapsed without such appeal or challenge being commenced or, if commenced, then such appeal or challenge has been finally resolved in a manner satisfactory to the Commercial Developer, the Residential Developer and the City, in their respective sole and absolute discretion. (ii) "Escrow" means the escrow established with the Title Company for the purpose of completing the transactions contemplated by this Agreement, including ground leasing the Residential Property from the City to the Developer. (jj) “Financing Commitment” shall have the meaning set forth in Section

5.3(d).
(kk) "Financing Plan" has the meaning set forth in Section 6.3(b). (ll) “Force Majeure Events” has the meaning set forth in Section 14.4. (mm) "Ground Lease" means the ground lease, between the City and the Residential Developer, whereby the Residential Developer shall lease the Residential Property from the City, in substantially the form attached to this Agreement as Exhibit E, incorporated herein by this reference.
(nn) "Hazardous Materials" means
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(1) any "hazardous substance" as defined in Section 101(14) of CERCLA (42 U.S.C. Section 9601(14)) or Section 25281(d) or 25316 of the California Health and Safety Code as amended from time to time;
(2) any "hazardous waste," "infectious waste" or "hazardous material" as defined in Section 25117, 25117.5 or 25501(j) of the California Health and Safety Code as amended from time to time;
(3) any other waste, substance or material designated or regulated in any way as "toxic" or "hazardous" in the RCRA (42 U.S.C. Section 6901 et seq.), CERCLA (42 U.S.C. Section 9601 et seq.), Federal Water Pollution Control Act (33 U.S.C. Section 1251 et seq.), Safe Drinking Water Act (42 U.S.C. Section 300(f) et seq.), Toxic Substances Control Act (15 U.S.C. Section 2601 et seq.), Clear Air Act (42 U.S.C. Section 7401 et seq.), California Health and Safety Code (Section 25100 et seq., Section 39000 et seq.), or California Water Code (Section 13000 et seq.) as amended from time to time; and (4) Any additional wastes, substances or materials which at such time are classified, considered or regulated as hazardous or toxic under any other present or future environmental or other similar laws relating to the Development.

The term "Hazardous Materials" shall not include: (i) construction materials, gardening materials, household products, office supply products or janitorial supply products customarily used in the construction, operation, or maintenance, of residential developments, or typically used in office or residential activities; or (ii) certain substances which may contain chemicals listed by the State of California pursuant to California Health and Safety Code Sections 25249.8 et seq., which substances are commonly used by a significant portion of the population living within the region of the Development, including, but not limited to, alcoholic beverages, aspirin, tobacco products, nutrasweet and saccharine. (oo) “Hazardous Materials Claims” means any claims or actions pending or threatened against the City, Residential Developer, the Property, or the Improvements by any governmental entity or agency or any other person or entity relating to Hazardous Materials or pursuant to any Hazardous Materials Laws, or arising from claims of nuisance, or damage to property or personal injury relating to Hazardous Materials associated with the Property or the Improvements thereon.
(pp) "Hazardous Materials Laws" means all federal, state, and local laws, ordinances, regulations, orders and directives pertaining to Hazardous Materials in, on or under the Development or any portion thereof.
(qq) “HCD” means the California Department of Housing and Community Development.
(rr) "HUD" means the United States Department of Housing and Urban Development.
(ss) "Improvements" means the Commercial Improvements and the Residential Improvements.
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(tt) “Initial Deposit” shall have the meaning set forth in Section 5.3(a). (uu) “Interim Contingent Payments” shall have the meaning set forth in Section

5.4. (vv) "Investor" means a tax credit investor limited partner entity admitted to the Residential Developer for purposes of syndicating federal low-income housing tax credits established pursuant to Section 42 of the Internal Revenue Code of 1986. (ww) "Leasehold Deed of Trust" means a leasehold deed of trust that will encumber the Residential Developer's leasehold interest in the Residential Property to secure repayment of the Promissory Note for the City Permanent Loan, in a form to be agreed to by the City and the Residential Developer.
(xx) “Lot Tie Agreement” has the meaning in Recital G.
(yy) “Lower Income” means households whose income does not exceed that as defined in Health and Safety Code section 50079 for the County of San Mateo as published annually by the California Department of Housing and Community Development, as adjusted for household size.
(zz) "Memorandum of Disposition and Development Agreement" means the memorandum of the Disposition and Development Agreement to be recorded in the Official Records of San Mateo County against the Commercial Property and the Property pursuant to Section 1.11(c), in the form attached hereto as Exhibit J. (aaa) "Memorandum of Ground Lease" means the memorandum of the Ground Lease to be recorded in the Official Records of San Mateo County against the Residential Developer's leasehold interest in the Residential Property at the Closing Date, in a form to be agreed to by the City and the Residential Developer.
(bbb) "Parties" and “Party” have the meanings set forth in the first paragraph of this Agreement.
(ccc) "Partnership Agreement" means an agreement of limited partnership and related documents (including, without limitation, a budget for the use of capital contributions, any funding agreement, and any option and/or right of first refusal for Alta Housing, or an affiliate thereof, to repurchase the Residential Development from the Residential Developer) governing the Residential Developer.
(ddd) “Podium Completion” means the completion of such portion of the Underground Parking Garage as is necessary in order to allow vertical construction of the Residential Improvements to commence, as confirmed by an engineer’s certification and approval by the City Building Official.
(eee) "Promissory Notes" shall mean the promissory notes that will evidence the Residential Developer's obligation to repay the City Loans as set forth in this Agreement. (fff) “REA” has the meaning in Recital G.
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(ggg) "Regulatory Agreement" means the Regulatory Agreement that will be recorded against the Residential Developer's leasehold interest in the Residential Property upon execution of the Ground Lease and will restrict the Residential Project to affordable housing, in a form to be agreed to by the City and the Residential Developer. (hhh) "Residential Developer Event of Default" has the meaning set forth in Section 12.4(a).
(iii) “Residential Development” means the Residential Property and the Residential Improvements.
(jjj) “Residential Developer” means AH Bespoke LP, a California limited partnership, an affiliate of Alta Housing, who will be responsible for financing and constructing the Residential Improvements.
(kkk) “Residential Improvements” has the meaning as set forth in Recital D, above.
(lll) “Residential Improvements Certificate of Completion” has the meaning set forth in 8.8.
(mmm)"Residential Property" has the meaning set forth in Recital B. above. (nnn) “Residential Property Management Agent" means Alta Housing, or a management agent retained by the Residential Developer and approved by the City to manage the Residential Development
(ooo) "Schedule of Performance" means the summary schedule of actions to be taken by the Parties pursuant to this Agreement to achieve leasing of the leasehold interest in the Residential Property to the Residential Developer and the construction of the Residential Improvements. The Schedule of Performance is attached hereto as Exhibit C. (ppp) "Security Financing Interest" has the meaning set forth in Section 13.1. (qqq) “Shared Parking Agreement” has the meaning set forth in Section 1.9(d). (rrr) "Tax Credits" means federal low-income housing tax credits established pursuant to Section 42 of the Internal Revenue Code of 1986, as amended. (sss) “TCAC” means the California Tax Credit Allocation Committee. (ttt) "Tax Credit Funds" means the proceeds generated from the sale of limited partnership interest in the Residential Developer to the Investor in the anticipated amount set forth in the Financing Plan, or such other amount as may be approved by the City in an amended Financing Plan.
(uuu) "Term" shall have the meaning set forth in Section 1.4. 556 of 11211
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(vvv) "Title Company" means the office of First American Title Company located at 1850 Mt. Diablo Blvd., Walnut Creek, CA 94596, Attn: Patrick Lough ([email protected]), unless modified pursuant to Section 7.3. (www) "Transfer" has the meaning set forth in Section 11.1. (xxx) “Underground Parking Garage” means the subterranean parking spaces and all associated appurtenances and related improvements to be constructed by the Commercial Developer that span the Development Site and comprise the parking that will be dedicated to the Residential Development and the Commercial Development. (yyy) "Unit" means each of the residential units to be constructed on the Residential Property.

Section 1.6 Exhibits.

The following exhibits are attached to and incorporated in the Agreement:

Exhibit A: Legal Description of the Property
Exhibit B: Development Plan
Exhibit C: Schedule of Performance
Exhibit D: Initial Financing Proposal
Exhibit E: Form of Ground Lease
Exhibit F: Form of Lot Tie Agreement
Exhibit G: Form of REA
Exhibit H: Site Plan
Exhibit I: Construction Easement:

Exhibit J: Memorandum of Disposition and Development Agreement Exhibit K: Form of City Predevelopment Loan Documents
Exhibit K-1: Form of City Permanent Loan Documents
Exhibit L: Insurance Coverage
Section 1.7 Project Structure.

The Development is divided into three components, (i) the “Underground Parking Garage” to be completed as part of the Commercial Development by the Commercial Developer and which will span the Development Site, (ii) the “Residential Improvements” to be completed as the Residential Development by the Residential Developer located on the Residential Property, and (iii) the “Commercial Improvements” to be completed as part of the Commercial Development by the Commercial Developer and located on the Commercial Property. These three improvements make up the Development, as approved and to be entitled by the City.

Section 1.8 Residential Improvements.

The Residential Improvements consist of no less than seventy-one (71) units, including one (1) unrestricted staff unit, of multi-family rental housing, to be made available to and occupied by low, very low and extremely low income households, and including all common areas, amenities, plans, entitlements, appurtenances, improvements easements, buildings and 557 of 11211
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fixtures associated with the Residential Property. It is currently anticipated that the Residential Improvements shall consist of the following income and unit mix:
30% AMI 50% AMI 60% AMI 70% AMI Staff Total
Studio 4 1 5
1 Bedroom 4 17 21
2 Bedroom 3 10 6 4 23
3 Bedroom 3 8 6 4 1 22
Total 14 36 12 8 1 71
The Parties agree and acknowledge that the income and unit mix of the Residential Improvements is subject to change in the discretion of the Residential Developer and such changes shall be permitted, subject to City approval which shall not be unreasonably withheld, conditioned or delayed, so long as the income and unit mix of the Residential Improvements comply with the Density Bonus Requirements, the City’s Inclusionary Ordinance, and units remain affordable to Lower Income households. On-site amenities include a laundry room, community space, and an interior courtyard. The Residential Improvements will include an approximately 6,000 square foot community space on the ground floor dedicated for non-profit use intended to be initially leased by Self Help for the Elderly. (a) The Residential Improvements shall be owned, maintained, and operated by the Residential Developer.
(b) Monthly rents will be calculated based on the household income, adjusted for household size in accordance with the Density Bonus Requirement. (c) A live or work preference for the City of San Mateo will be applied to all units to the extent permitted by law and the other Residential Project funding sources. (d) Residential Developer and City shall discuss set-asides and focused outreach and marketing to special needs groups identified in the City’s Housing Element to the extent permitted by applicable federal, state and/or local fair housing law and applicable tax credit rules and regulations.
(e) The Residential Developer shall maintain the portion of the Underground Parking Garage located within the Property to the extent provided in the REA. In addition, as soon as reasonably possible after the Entitlements Date, the Parties intend to negotiate and enter into a garage maintenance agreement allocating certain obligations and responsibilities among the Parties with respect to the portion of the Underground Parking Garage utilized by the City and/or the Residential Developer (or their respective tenants, guests and invitees).

Section 1.9 Commercial Improvements.

The Commercial Improvements consist of the construction of an underground parking garage with approximately one hundred and thirty-seven (137) parking stalls located across the entire Development site and approximately 150,000 square feet of office development and approximately 12,000 square feet of ground floor retail development; and potentially combined public art.
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(a) The Commercial Improvements shall be owned, maintained and operated by the Commercial Developer.
(b) The Commercial Developer will dedicate no less than thirty-seven (37) parking spaces for exclusive use of the Residential Development for the term of the Ground Lease in the location specified on the site plan attached hereto as Exhibit H. (c) Twenty-five (25) parking spaces shall be available to the Residential Development during non-peak hours on weekday evenings and generally available on weekends as more particularly described in the REA (the “Off-Hours Parking Spaces”). (d) All parking spaces in the Underground Parking Garage (excluding parking spaces for the exclusive use of the Residential Development, the Off-Hours Parking Spaces, parking spaces for the exclusive use of the Commercial Development (no more than 10), and parking spaces with 28 mechanical stackers) shall be made available to the general public during non-peak hours on weekday evenings and generally available on weekends as more particularly described in the REA and a shared parking agreement between the Commercial Developer and the City that shall be negotiated and entered into as soon as reasonably possible after the Entitlement Date and not later than the date of Podium Completion (the “Shared Parking Agreement”).

Section 1.10 Construction Phasing.

The Commercial Development will commence construction first in order to complete the Underground Parking Garage that will span the entire Development site. Once Podium Completion has been achieved, then the Residential Development will be constructed on top of the Underground Parking Garage in the airspace of the Residential Property, in accordance with the Schedule of Performance attached hereto as Exhibit C. For the avoidance of doubt and notwithstanding anything to the contrary contained in this Agreement, in no event shall the Commercial Developer be obligated to commence construction of the Commercial Improvements and neither the construction nor occupancy of the Commercial Development shall be conditioned on the commencement, completion or occupancy of all or any portion of the Residential Development. In connection with the development of the Underground Parking Garage on the Residential Property, the City shall enter into a temporary construction easement with the Commercial Developer in the form attached hereto as Exhibit I, which construction easement shall be recorded in the Official Records of the County of San Mateo (the “Construction Easement”).

Section 1.11 Execution of Disposition and Development Agreement, Lot Tie Agreement, REA, Shared Parking Agreement and Construction Easement.

Within ten (10) days after the Entitlements Date, the Parties shall take the following actions (the “Commercial Construction Commencement Conditions”):
(a) The City, the Commercial Developer and any other fee owner of any portion of the Commercial Property shall execute and acknowledge the Lot Tie Agreement and the REA allowing for the construction, maintenance and operation of the Underground Parking Garage and construction of the Commercial Development across multiple assessor’s parcels and 559 of 11211
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the Parties shall cause the Lot Tie Agreement and the REA to be recorded in the Official Records of San Mateo County. On or before the Podium Completion, the City, the Commercial Developer and any other fee owner of any portion of the Commercial Property shall execute and acknowledge the Shared Parking Agreement and cause the Shared Parking Agreement to be recorded in the Official Records of San Mateo County. Notwithstanding anything to the contrary contained herein, upon execution of the Lot Tie Agreement and the REA and the Shared Parking Agreement, then to the extent the terms of this Agreement are in conflict with the terms of the Lot Tie Agreement and/or the REA and/or the Shared Parking Agreement, the requirements of the Lot Tie Agreement and/or the REA and/or the Shared Parking Agreement, as applicable, will prevail.
(b) The Commercial Developer and the Residential Developer shall each provide the City with a certified copy of an authorizing resolution, approving this Agreement, the Lot Tie Agreement, the REA, the Shared Parking Agreement and the conditions and covenants set forth in this Agreement.
(c) The Parties shall execute and acknowledge the Memorandum of Disposition and Development Agreement and cause the Memorandum to be recorded in the Official Records of San Mateo County.
(d) The City and the Commercial Developer shall execute and acknowledge the Construction Easement and cause the Construction Easement to be recorded in the Official Records of San Mateo County.

ARTICLE 2.

INTENTIONALLY DELETED
ARTICLE 3.

CITY FINANCIAL ASSISTANCE TO RESIDENTIAL DEVELOPMENT
Section 3.1 City Loan.

The City shall provide financial assistance to the Residential Developer in the form of two loans (“City Loans”):
(a) A loan to pay expenses incurred with respect to the predevelopment of the Residential Development (“City Predevelopment Loan”) in a principal amount up to Two Million Nine Hundred Thousand Dollars ($2,900,000). The City Predevelopment Loan shall have a 57 year term, accrue no interest, and shall be payable in full upon maturity. The Residential Developer’s obligation to repay the City Predevelopment Loan shall be evidenced by a Promissory Note and secured by an Assignment of Plans (the City Predevelopment Loan, Promissory Note and Assignment of Plans are collectively the "City Predevelopment Loan Documents"). The source of the Predevelopment Loan is the Developer Equity Contribution and City shall not be obligated to fund any amount of the City Predevelopment Loan in excess of the amount of Developer Equity Contribution actually received or prior to receipt of the Developer Equity Contribution. The City Predevelopment Loan Documents shall be in a form substantially similar to that in Exhibit K.
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(b) A loan to the Residential Developer as construction and permanent financing for the Residential Development (“City Permanent Loan”) in the principal amount of Three Million Dollars ($3,000,000), provided the Financing Plan reasonably demonstrates that the amount requested as the City Permanent Loan is necessary to enable the construction of the Residential Improvements contemplated by this Agreement. The City Permanent Loan shall have a 57 year term, accrue simple interest at three percent (3%) per annum on the principal amount except during the occurrence and continuation of a Residential Developer Event of Default, whereupon interest shall accrue from and after the date of the Promissory Note for the City Permanent Loan until paid at the lower of five percent (5%), or the highest rate permitted by law. The Residential Developer's obligation to pay the City Permanent Loan shall be evidenced by a Promissory Note and secured by a Leasehold Deed of Trust (the City Permanent Loan, Promissory Note, Leasehold Deed of Trust, and Regulatory Agreement are collectively the "City Permanent Loan Documents"). The Leasehold Deed of Trust shall be subordinate to the Lot Tie Agreement, REA, and Shared Parking Agreement. The City Permanent Loan Documents shall be in a form substantially similar to that in Exhibit K-1.

Section 3.2 Ground Lease.

The Ground Lease for the Residential Property will be provided to the Residential Developer for a term of 99 years at the rate of $1 per year for the duration of the term, in a form substantially similar to that in Exhibit E.

ARTICLE 4.

INTENTIONALLY DELETED
ARTICLE 5.

COMMERCIAL DEVELOPMENT CONTRIBUTION TO RESIDENTIAL DEVELOPMENT;

DEPOSITS
Section 5.1 Commercial Developer Equity Contribution
Following the Entitlements Date, but subject to satisfaction of the Commercial Construction Commencement Conditions, the Commercial Developer shall make a contribution to the City in the amount of $2,900,000 (the “Developer Equity Contribution”) within 120 days after the Entitlements Date. The Developer Equity Contribution shall be held by the City and shall be disbursed to the Residential Developer to pay architectural, design, and engineering expenses incurred with respect to the pre-development and vertical development plans of the Residential Project, as approved by the Community Development Director, or designee. The City, Commercial Developer and Residential Developer acknowledge and agree that the Commercial Developer has submitted a draw request in the amount of $583,769.90 for expenses incurred by the Commercial Developer in connection with the Residential Development and the City agrees to distribute such amount from the Developer Equity Contribution to the Residential Developer for subsequent distribution to the Commercial Developer, in each case promptly (but not more than ten (10) business days) after (i) receipt by the City of the Developer Equity Contribution, with respect to such distribution by the City to the Residential Developer, and (ii) receipt by the Residential Developer of such distribution from the City, with respect to the distribution by the Residential Developer to the Commercial Developer. For the avoidance of 561 of 11211
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doubt, the Developer Equity Contribution is the only financial contribution that the Commercial Developer is required to provide with respect to the development of the Residential Development and is in addition to expenditure of funds for the development and construction of the Underground Parking Garage and Deposits identified in Section 5.3, regardless of whether there is sufficient other financing or equity available to commence and/or complete the Residential Development. The Developer Equity Contribution will be advanced to the Residential Developer from time to time pursuant to the Predevelopment Loan negotiated between the City and the Residential Developer prior to the satisfaction of the Commercial Construction Commencement Conditions. The City shall have no obligation to return to the Commercial Developer any unexpended funds from the Developer Equity Contribution. If the Residential Development does not receive a Building Permit by the latest date specified in the Schedule of Performance, then the City may only utilize the Developer Equity Contribution for the purpose of funding (in a manner consistent with industry standards and best practices) the development on the Residential Property of an affordable or market rate housing project, or may apply the funds to other programs or projects that support affordable housing in the City. Neither the payment of the Developer Equity Contribution to the City nor the disbursement of the Developer Equity Contribution to the Residential Developer shall be deemed to give the Commercial Developer any ownership interest in the Residential Developer nor, except as otherwise provided in this Section 5.1, shall the Residential Developer have any obligation to return any amount of the Developer Equity Contribution which has been disbursed to the Residential Developer to the Commercial Developer.

Section 5.2 Contribution of Parking to the Residential Development.

The Commercial Developer shall bear the sole responsibility to finance and construct the approximately one hundred thirty-seven (137) space Underground Parking Garage and will provide thirty-seven (37) parking spaces for the exclusive use of the Residential Improvements and the Off-Hours Residential Parking Spaces at no cost to the Residential Development.

Notwithstanding the foregoing, nothing in this Agreement shall obligate the Commercial Developer to develop the Commercial Development.

Section 5.3 Deposits.
(a) Prior to the issuance of the first building permit for the construction of the Underground Parking Garage, the Commercial Developer shall deposit with the City funds in the amount of Three Million Dollars ($3,000,000) (the “Initial Deposit”). The Initial Deposit shall be held in trust by the City in an interest bearing account and shall be disbursed as provided in Section 5.3(c). The Initial Deposit shall be in addition to, and not in lieu of, the Developer Equity Contribution.
(b) If, as of the date that the Commercial Developer seeks to obtain the first occupancy permit for office space within the Commercial Improvements, the Financing Commitment has not yet been obtained, then prior to issuance of such occupancy permit, the Commercial Developer shall deposit with the City additional funds in the amount of Three Million Five Hundred Thousand Dollars ($3,500,000) (the “Additional Deposit;” and, together with the Initial Deposit, the “Deposit”). The Additional Deposit shall be held in trust by the City in an interest bearing account and shall be disbursed as provided in Section 5.3(c). 562 of 11211
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(c) If the Financing Commitment has not been obtained by the last date for obtaining the Financing Commitment as shown on the Schedule of Performance (subject to Force Majeure Events), then the City may utilize all or a portion of the Deposit for the sole purpose of funding (in a manner consistent with industry standards and best practices) the development on the Residential Property of an affordable housing project substantially similar to the Residential Development described in the Development Plan, or may apply the funds to other programs or projects that support affordable housing in the City. At such time, if any, as the Financing Commitment is obtained (even if after the date shown on the Schedule of Performance), then any unused Deposit shall be returned by the City to the Commercial Developer within ten (10) business days after the Financing Commitment is obtained. Any interest accruing on the Deposit shall become a part of the Deposit. (d) For the purposes hereof, “Financing Commitment” shall mean the receipt of the following: (i) a preliminary reservation of federal and/or state low income housing tax credits, (ii) to the extent applicable, an allocation of tax exempt private activity volume cap, (iii) a fully executed commitment letter or similar documentation evidencing the agreement of a tax credit equity investor to make an investment in Residential Developer, and (iv) a fully executed commitment letter or similar documentation evidencing the agreement(s) by one or more lenders to fund the portion of the cost of constructing the Residential Improvements required to be funded by third party lenders (other than the City) each as contemplated by the Finance Plan, which allocations and commitment letters or similar documentation may be subject to customary conditions and requirements consistent with those conditions and requirements contained in commitments or similar documentation for affordable housing projects in the San Francisco Bay Area. Notwithstanding anything to the contrary set forth herein, the Financing Commitment shall not be deemed to have been obtained prior to the date on which Podium Completion occurs.

Section 5.4 Interim Contingent Payments.

Commercial Developer shall pay the City, as interim payments (the “Interim Contingent Payments”) an amount equal to One Hundred Thousand Dollars ($100,000) per year, with the first such payment due within ten (10) days after the Entitlements Date and with each additional payment due on the one (1) year anniversary of the Entitlements Date until the earlier of (i) the date on which the City delivers a written notice to Commercial Developer pursuant to Section

12.4(f) terminating this Agreement, (ii) the date on which Commercial Developer delivers to the City a written notice notifying the City that the Commercial Developer does not intend to commence construction of the Underground Garage and is electing to terminate this Agreement (the events described in clauses (i) and (ii) each being herein referred to as a “Construction Commencement Failure”), and (iii) the commencement of construction of the Underground Garage (and upon the occurrence of any of the events described in clauses (i), (ii) and (iii), the obligation to make additional Interim Contingent Payments shall terminate). The Interim Contingent Payments shall be held by the City in an interest bearing account and the funds shall remain in such account and the City shall not be entitled to access such funds until (x) if this Agreement terminates as a result of a Construction Commencement Failure, the City shall be entitled to retain the Interim Contingent Payments (plus any interest accruing thereon) and may use them for any purpose, as determined by the City in its sole discretion, or (y) if the Commercial Developer commences construction of the Underground Garage on or before the termination of this Agreement as a result of a Construction Commencement Failure, then the 563 of 11211
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City shall return the Interim Contingent Payments (plus any interest accruing thereon) to Commercial Developer within ten (10) days after the commencement of construction of the Underground Garage.

ARTICLE 6.

PREDISPOSITION REQUIREMENTS
Section 6.1 Conditions Precedent to Conveyance of Property.

The requirements set forth in this Article are conditions precedent to the City's obligations to lease the Property to the Residential Developer pursuant to the Ground Lease. The City's obligation to lease the Property to the Residential Developer shall be subject to the satisfaction of all such conditions precedent, unless otherwise waived by the City.

Section 6.2 Government Approvals; Schedule of Performance. (a) The City shall cooperate with the Commercial Developer and the Residential Developer on obtaining any approvals from other governmental entities and public utilities, provided the City shall not be obligated to incur any costs associated with obtaining such permits and approvals.
(b) The Parties shall reasonably cooperate in order to achieve the timing set forth in the Schedule of Performance (but subject to Force Majeure Events and the provisions of Sections 1.10 and 5.2).
(c) Without limiting the provisions of Section 14.4, the dates set forth in the Schedule of Performance are subject to potential extensions described as “buffers.” If the Commercial Developer or the Residential Developer, as applicable, in its reasonable discretion, requires such an extension, the applicable party shall provide written notice to the City (and to the Developer not requesting such extension) indicating the reasons why such extension is required, and such request shall be subject to the reasonable approval of the City Manager or his or her designee, which approval shall not be unreasonably conditioned, delayed or withheld and a determination shall be made by the City within thirty (30) calendar days after the City’s receipt of such request. If the extension request is approved, then the applicable time for performance under the Schedule of Performance shall be extended by the extension period described in the applicable “buffer” (and all other unperformed items contained in the Schedule of Performance shall also automatically be extended for the same period of time). For the avoidance of doubt, (i) all provisions in this Agreement that provide for performance by a Party by a date set forth in the Schedule of Performance shall be construed to mean that such date is subject to potential extension by the applicable “buffers” regardless of whether a reference to such “buffers” is expressly included in the applicable provision, and (ii) the “buffers” shall be additive such that if task #1 utilizes its 30-day buffer period due to delays and task #2 has an initial 30-day buffer period, then task #2’s buffer period would increase to 60 days (i.e., the 30-day delay/buffer period from task #1 is added to the 30-day buffer period for task #2), and all subsequent tasks would have an additional 60 days added to their respective buffer periods. Notwithstanding anything to the contrary, the City Manager may, in its sole discretion, provide additional time extensions beyond the “buffers” articulated in the Schedule of Performance, provided that the 564 of 11211
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deadline to complete construction remains as specified in the Schedule of Performance and is not extended beyond any utilized “buffers”.
(d) The Commercial Developer and the Residential Developer each acknowledge that execution of this Agreement by the City does not constitute approval by the City of any required or additional permits, applications, or allocations, if any, and in no way limits the discretion of the City in the permit allocation and approval process.

Section 6.3 Financing Plan.
(a) The Residential Developer intends to finance the Residential Development with sources that may include but are not limited to the City Loans, Tax Credit Funds, and other public financing and private lender construction and permanent financing. As of the Effective Date, the City has approved the Residential Developer’s preliminary financing proposal attached to this Agreement as Exhibit D (the “Financing Proposal”). The City and the Residential Developer acknowledge that the Residential Developer may pursue additional funding options and the list of funding sources described above is not intended to be a limitation on the sources that the Residential Developer may utilize to finance the construction and operation of the Residential Development. The Financing Proposal shall be in effect until a Financing Plan is approved by the City pursuant to subsection (c) below. The City shall approve updates to the Financing Proposal and the Financing Plan and any amendments thereto, provided any such alternate funding options are reasonable, and the Residential Developer and the City agree to replace the Initial Financing Proposal with the approved Financing Plan for the Residential Development, which shall meet the requirements of subsection (b) below. (b) By the time specified in the Schedule of Performance, the Residential Developer shall have submitted for City review a financing plan (the “Financing Plan”) containing the following: (1) a "sources and uses" breakdown of the costs of constructing the Residential Improvements, and (2) an operating proforma for the Residential Development.

Such sources and uses breakdown and operating proforma shall reflect the Residential Developer's then current expectations for funding sources, development costs, and Annual Operating Expenses (including the Residential Developer’s expense burden relating to the Underground Parking Garage). The purpose of the City review shall be to determine (i) whether the Residential Developer's estimates of costs and net operating income indicate that the construction and operation of the Residential Development will be done in accordance with this Agreement and the proposed Ground Lease, and (ii) if the development and operating budgets for the Residential Development meet the City’s underwriting criteria. (c) Upon receipt by the City of the proposed Financing Plan, the City shall promptly review the Financing Plan and shall approve or disapprove it within fifteen (15) business days after submission if it conforms to the provisions of this Agreement. If the City does not respond within fifteen (15) days following the City’s receipt of the complete Financing Plan either approving or disapproving the Financing Plan it shall be deemed approved. The City's review of the Financing Plan shall be limited to determining if the contemplated financing will be reasonably available, if the financing contemplated in the Financing Plan would provide sufficient funds to undertake and complete the development and construction of the Residential Improvements and determining if it is consistent with the terms of this Agreement, Ground Lease, and City’s underwriting criteria.
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(d) If the Financing Plan is not approved by the City, the City shall notify the Residential Developer in writing of the reasons therefor. The Residential Developer shall thereafter resubmit a revised Financing Plan to the City for its approval within fifteen (15) days after the City's notification of disapproval. The City will either approve or disapprove the revised Financing Plan within fifteen (15) days after resubmission by the Residential Developer.

Section 6.4 Other Approved Financing.
(a) As set forth in the Schedule of Performance all financing necessary to construct the Residential Improvements, as required and approved by the City in the Financing Plan, shall be closed by the Residential Developer prior to, or simultaneously with, the execution of the Ground Lease by the City. The Residential Developer shall also submit to the City evidence reasonably satisfactory to the City that any conditions to the release or expenditure of funds described in the approved Financing Plan as the sources of funds to pay the costs of constructing the Residential Improvements have been met or will be met upon the execution of the Ground Lease and subject to the Residential Developer's satisfaction of standard disbursement preconditions allowing for the construction of the Residential Development. (b) In the event after making a good faith effort, Residential Developer is unable to obtain financing mutually acceptable to the Residential Developer and the City by the time set forth in the Schedule of Performance, subject to the provisions of Section 12.4(d), the Residential Developer or the City may terminate this Agreement with respect to the Residential Developer and the Residential Development only, by providing written notice to the other Parties and Residential Developer shall have no continuing liability or obligation to the City or the Commercial Developer.

Section 6.5 HUD Requirements.

The City agrees that if the Residential Developer obtains financing subject to an FHA insurance program of HUD, the City shall modify the Loan Agreement and City Documents (other than the REA, the Lot Tie Agreement, and the Construction Easement) unless such modifications are approved by the Commercial Developer and all other parties to the REA, the Lot Tie Agreement and the Construction Easement, in their respective sole discretion) to conform to HUD requirements.

Section 6.6 Residential Tenant Selection.

By the time specified in the Schedule of Performance, the Residential Developer shall provide to the City, for its review and approval the Residential Developer’s written tenant selection plan and a marketing plan for marketing the Residential Development to incomeeligible households as required pursuant to this Agreement, including information on affirmative marketing efforts and compliance with fair housing laws and the City’s Housing Element goals and policies (subject to all applicable laws and tax credit rules and regulations).

ARTICLE 7.

LEASE OF PROPERTY
Section 7.1 Ground Lease.
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Provided the pre-disposition requirements set forth in ARTICLE 6 and the additional closing conditions set forth in Section 7.4 have been satisfied, the City shall lease to the Residential Developer the Property pursuant to the Ground Lease. If the parties are unable to negotiate the terms of a Ground Lease or a Regulatory Agreement, this Agreement may be terminated with respect to the Residential Developer only, as set forth in Section 12.2 below.

Notwithstanding anything to the contrary contained herein, upon execution of the Ground Lease, then to the extent the terms of this Agreement are in conflict with the terms of the Ground Lease, the requirements of the Ground Lease shall prevail.

Section 7.2 Form of Ground Lease.

The City and the Developer agree that the Ground Lease to be executed by the Parties will be substantially consistent with the terms of the form of Ground Lease attached hereto as Exhibit E (as such may be further negotiated).

Section 7.3 Opening Escrow.

The Parties shall establish the Escrow with the Title Company. The Parties shall execute and deliver all written instructions to the Title Company to accomplish the terms hereof, which instructions shall be consistent with this Agreement. Upon request by the Commercial Developer, the Title Company may be changed to a company requested by the Commercial Developer, provided: (a) the Commercial Developer makes the request prior to the opening of Escrow; and (b) the new title company is approved by the City, which approval shall not be unreasonably withheld.

Section 7.4 Closing.

The Closing Date shall occur within thirty (30) days following the date on which all conditions precedent to conveyance set forth in ARTICLE 6 have been satisfied or waived by the City. In addition to the conditions precedent to execution of the Ground Lease as set forth in ARTICLE 6 (including but not limited to the closing of the financing set forth in the approved Financing Plan), the following conditions shall be satisfied or waived prior to or concurrently with, and as conditions of, execution of the Ground Lease:
(a) The Residential Developer shall provide the City with a certified copy of an authorizing resolution, approving the Ground Lease.
(b) The Commercial Developer and the Residential Developer, as applicable, shall have furnished the City with evidence of the insurance coverage meeting the general insurance requirements set forth in Exhibit L.
(c) The Residential Developer shall have executed and delivered to the City the City Documents to be executed by the Residential Developer (to the extent not previously executed and delivered), and any other documents and instruments required to be executed and delivered by the Residential Developer pursuant to this Agreement, all in a form and substance reasonably satisfactory to the City, the Commercial Developer and the Residential Developer (except that if a City Document is attached as an exhibit to this Agreement, then such document shall be in substantially the form attached to this Agreement). 567 of 11211
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(d) The Memorandum of Disposition and Development Agreement, the Memorandum of Ground Lease, the Leasehold Deed of Trust, and the Regulatory Agreement, shall have been recorded against the Residential Developer's interest in the Property as a lien subject only to the exceptions authorized by the City.
(e) City has approved the final Financing Plan in accordance with Section 6.3. (f) Podium Completion shall have occurred.
(g) There shall exist no Residential Event of Default under this Agreement. (h) All representations and warranties of the Residential Developer contained in any part of this Agreement shall be true and correct in all material respects.

Section 7.5 Condition of Title.

On the Closing Date, the Residential Developer shall have an insurable leasehold interest to the Property which shall be free and clear of all liens, encumbrances, clouds and conditions, rights of occupancy or possession, except:
(a) Applicable building and zoning laws and regulations; (b) The provisions of the Ground Lease;
(c) The provisions of the Lot Tie Agreement;
(d) The provisions of the Regulatory Agreement;
(e) Any lien for current taxes and assessments or taxes and assessments accruing for periods subsequent to recordation of the Memorandum of the Ground Lease; (f) The liens of any loan approved by the City in the Financing Plan; (g) The REA;
(h) The Shared Parking Agreement; and
(i) Permitted exceptions reasonably acceptable to the Residential Developer.

Section 7.6 Condition of Property.
(a) In fulfillment of the purposes of Health and Safety Code Section 25359.7(a), the City represents and warrants that it has no further knowledge, and no reasonable cause to believe, that any Hazardous Materials are located on or beneath the Property, except as disclosed in the Phase I Environmental Site Assessment for Development site, including the Property, dated April 21, 2023 prepared by Langan Engineering and Environmental Services, Inc.
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(b) The physical condition, possession or title of the Property shall be delivered from the City to the Residential Developer in an as is condition, with no warranty expressed or implied by the City, including without limitation, the presence of hazardous materials or condition of the soil, its geology, the presence of known or unknown faults, or the suitability of the Residential Parcel for the Residential Development. Notwithstanding the previous sentence, the Residential Developer and the Commercial Developer shall be indemnified by the City from liability due to any environmental issues not identified in the Phase I Environmental Site Assessment described in Section 7.6(a).

Section 7.7 Costs of Escrow and Closing.

All ad valorem taxes for the Property, if any, shall be prorated as of the Closing Date.

The Residential Developer shall pay the cost of title insurance, document preparation, recordation fees, transfer tax, if any, and any additional recording costs to close the Escrow for the Property.

ARTICLE 8.

CONSTRUCTION OF IMPROVEMENTS
Section 8.1 Construction Pursuant to Plans.

Unless modified by operation of Section 8.7, (i) the Residential Developer shall be responsible for constructing the Residential Improvements substantially in accordance with the Development Plan and the Construction Plans applicable to the Residential Improvements and the applicable terms and conditions of the land use permits and approvals and building permits, including any variances granted for the Development, as they all may be amended from time to time, and (ii) the Commercial Developer shall be responsible for constructing the Underground Parking Garage substantially in accordance with the Development Plan and the Construction Plans applicable to the Underground Parking Garage and the applicable terms and conditions of the land use permits and approvals and building permits, including any variances granted for the Development, as they all may be amended from time to time.

Section 8.2 Construction Contracts.
(a) At least ten (10) days prior to the commencement of construction of the Underground Parking Garage, the Commercial Developer shall submit to the City for its limited approval the sections of the proposed separate construction contract for the Underground Parking Garage which are necessary for the City’s limited review as provided in this Section 8.2(a) and as necessary to confirm Podium Completion. The City's review and approval shall be limited exclusively to a determination whether the construction contract contains provisions consistent with the requirements of Section 8.9 below.
(b) No later than the date set forth in the Schedule of Performance, the Residential Developer shall submit to the City for its limited approval the proposed separate construction contract for the Residential Improvements. The City's review and approval shall be limited exclusively to a determination whether: (1) the guaranteed maximum construction cost set forth in the relevant construction contract is consistent with the approved Financing Plan; and 569 of 11211
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(2) the construction contract contains provisions consistent with the requirements of Section 8.9 below.
(c) Upon receipt by the City of a proposed construction contract (or the relevant sections thereof), the City shall promptly review the same and approve each of the contracts, within ten (10) business days of submission if it satisfies the limited criteria set forth above. If the submitted construction contract is not approved by the City, the City shall set forth in writing and notify the Residential Developer or the Commercial Developer, as applicable, of the City's reasons for withholding such approval. The applicable Developer shall thereafter submit a revised construction contract for City approval, which approval shall be granted or denied in five (5) business days in accordance with the criteria and procedures set forth above.

Any construction contract executed by the Residential Developer for the Residential Improvements shall be in the form approved by the City. Any construction contract executed by the Commercial Developer for the Underground Parking Garage shall be in the form approved by the City as it relates solely to the matters described in Section 8.9 below. If the City fails to approve or disapprove the Residential Developer’s or the Commercial Developer’s form of construction contract within the foregoing ten (10) business day or five (5) business day, as applicable, review period, the applicable form of construction contract shall be deemed approved by the City.

Section 8.3 Underground Parking Garage Construction Bonds.

Prior to building permit issuance for construction of the Underground Parking Garage, the Commercial Developer shall obtain (directly or through Commercial Developer’s general contractor) one (1) labor and material bond and one (1) performance bond for construction of the Underground Parking Garage, each in an amount equal to one hundred percent (100%) of the scheduled cost of construction under the construction contract for the Underground Parking Garage. Each bond shall name the City as co-obligee and shall be issued by a reputable insurance company licensed to do business in California, reasonably acceptable to the City. The surety company or its parent company shall have and maintain an acceptable credit rating as set forth below:
(1) Standard and Poors Insurer Financial Strength Rating of A or better rating, or
(2) A.M. Best Company, Financial Strength Rating of B+ or better rating.

The form of the labor and material bonds and the performance bonds shall be subject to the City's prior review and written approval, which shall not be unreasonably withheld or delayed.

Section 8.4 Residential Improvements Construction Bonds.

No later than the date set forth in the Schedule of Performance, the Residential Developer shall obtain (directly or through Residential Developer’s general contractor) one (1) labor and material bond and one (1) performance bond for construction of the Residential Improvements, each in an amount equal to one hundred percent (100%) of the scheduled cost of construction under the construction contract for the Residential Development. Each bond shall name the City 570 of 11211
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as co-obligee and shall be issued by a reputable insurance company licensed to do business in California, reasonably acceptable to the City. The surety company or its parent company shall have and maintain an acceptable credit rating as set forth below:
(1) Standard and Poors Insurer Financial Strength Rating of A or better rating, or
(2) A.M. Best Company, Financial Strength Rating of B+ or better rating.

The form of the labor and material bonds and the performance bonds shall be subject to the City's prior review and written approval, which shall not be unreasonably withheld or delayed.

Section 8.5 Commencement of Residential Improvements.

The Residential Developer shall commence construction of the Residential Improvements no later than the date set forth in the Schedule of Performance.

Section 8.6 Completion of the Residential Improvements.

The Residential Developer shall diligently prosecute to completion the construction of the Residential Improvements no later than the date set forth in the Schedule of Performance.

Section 8.7 Change in Construction of Residential Improvements or Underground Parking Garage.
(a) If the Residential Developer desires to make any material change in the Residential Improvements which are not substantially consistent with the Construction Plans for the Residential Development, the Residential Developer shall submit the proposed change to the City for its approval. No change which is required for compliance with building codes or other government health and safety regulations shall be deemed material. If the Residential Improvements, as modified by any such proposed change, do not materially alter the approved planning application and will conform to the requirements of this Agreement, and the Construction Plans for the Residential Development, the City Manager or their designate shall approve the change by notifying the Residential Developer in writing within ten (10) business days. For purposes of this Section 8.7(a), a “material change” shall mean any change which is expected to substantially alter the external appearance of the Residential Development (including any color change) or which is expected to result in an individual change of One Hundred Thousand Dollars ($100,000) or a cumulative change of Two Hundred and Fifty Thousand Dollars ($250,000), or more, in the cost of construction of the Residential Improvements. (b) If the Commercial Developer desires to make any material change in the Underground Parking Garage which is not substantially consistent with the Construction Plans for the Underground Parking Garage, the Commercial Developer shall submit the proposed change to the City and the Residential Developer for their respective approval. No change which is required for compliance with building codes or other government health and safety regulations shall be deemed material. If the Underground Parking Garage, as modified by any such 571 of 11211
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proposed change, does not materially alter the approved planning application and will conform to the requirements of this Agreement and the Construction Plans for the Underground Parking Garage, then the City Manager or his or her designee (on behalf of the City) and the Residential Developer shall each approve the change by notifying the Commercial Developer in writing within ten (10) business days, which approval shall not be unreasonably withheld. For purposes of this Section 8.7(b), a “material change” shall mean any change which is expected to result in a material impact to the design, functionality, constructability or development cost of the Residential Development and/or the number, location or availability of the parking spaces designated for use by the Residential Development or public in the REA and Shared Parking Agreement.
(c) Unless a proposed change is rejected by the City or the Residential Developer, as applicable, within ten (10) business days, it shall be deemed approved by the applicable party. If rejected within such time period, the previously approved Construction Plans for the Residential Development or the Underground Parking Garage, as applicable, shall continue to remain in full force and effect. If the City or the Residential Developer, as applicable, rejects a proposed change, it shall provide the Residential Developer or the Commercial Developer, as applicable, with the specific reasons therefore. (d) The approval of changes in the Construction Plans for the Residential Development or the Underground Parking Garage, as applicable, by the City pursuant to this Section shall be in addition to any approvals required to be obtained from the City pursuant to building permit requirements.

Section 8.8 Certificate of Completion.

Within thirty (30) days after completion of the construction of the Residential Improvements, in accordance with those provisions of this Agreement relating solely to the obligations of the Residential Developer to construct the Residential Improvements (including the dates for beginning and completing construction of the Residential Improvements), as set forth below, the City shall provide an instrument so certifying the completion of the construction of the Residential Improvements (the "Residential Improvements Certificate of Completion").

The Residential Improvements Certificate of Completion shall be a conclusive determination that the covenants in this Agreement with respect to the obligations of the Residential Developer to construct the Residential Improvements have been met. The certification shall be in such form as will enable such certificate to be recorded in the Official Records. These certifications and determinations shall not constitute satisfaction of any obligation of the Residential Developer to any holder of a Security Financing Interest, shall not be deemed a notice of completion under the California Civil Code, nor a certificate of occupancy and shall neither hinder nor convey any rights to occupy any portion of the Improvements.

Section 8.9 Compliance with Applicable Law; Prevailing Wage Requirement. (a) Each Developer shall cause all construction with respect to such Developer’s respective Development to be performed in compliance with:
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(1) All applicable laws, ordinances, rules and regulations of federal, state, county or municipal governments or agencies now in force or that may be enacted hereafter.
(2) All directions, rules and regulations of any fire marshal, health officer, building inspector, or other officer of every governmental agency now having or hereafter acquiring jurisdiction. The work shall proceed only after the payment of all applicable fees, procurement of each permit, license, or other authorization that may be required by any governmental agency having jurisdiction, and each Developer shall be responsible to the City for the procurement and maintenance thereof, as may be required of the Developer with respect to such Developer’s Development and all entities engaged in work on the Property. (b) Each Developer shall pay and shall cause its respective contractors and subcontractors to pay prevailing wages in the construction of the Development as those wages are determined pursuant to California Labor Code Section 1720 et seq., to employ apprentices as required by California Labor Code Sections 1777.5 et seq., and the implementing regulations of the Department of Industrial Relations (the "DIR") to the extent applicable to that Developer’s component of the Development. In addition, as applicable, each Developer shall cause its respective contractors and subcontractors in the construction of the applicable Development to do all the following: (1) all calls for bids, bidding materials and the construction contract documents for the applicable Development must specify that (A) no contractor or subcontractor may be listed on a bid proposal nor be awarded a contract for the applicable Development unless registered with the DIR pursuant to Labor Code Section 1725.5, and (B) the applicable Development is subject to compliance monitoring and enforcement by the DIR; (2) each Developer is required to provide the City all information required by Labor Code Section 1773.3 as set forth in the DIR's online form PWC-100 within 2 days of the award of the contract (https://www.dir.ca.gov/pwc100ext/); (3) each Developer shall cause its respective contractors to post job site notices, as prescribed by regulation by the DIR; or (4) each Developer shall cause its respective contractors to furnish payroll records required by Labor Code Section 1776 directly to the Labor Commissioner, at least monthly in the electronic format prescribed by the Labor Commissioner. Each Developer shall indemnify, hold harmless and defend (with counsel reasonably acceptable to the City) the City against any claim for damages, compensation, fines, penalties or other amounts arising out of the failure or alleged failure of any person or entity (including the applicable Developer, its contractor and subcontractors) to pay prevailing wages in accordance with the terms of this Agreement as determined pursuant to California Labor Code Section 1720 et seq., to employ apprentices pursuant to California Labor Code Section 1777.5 et seq., and implementing regulations of the DIR or to comply with the other applicable provisions of California Labor Code Sections 1720 et seq., 1777.5 et seq., and the implementing regulations of the DIR in connection with the construction of the applicable Developer’s Development. The requirements in this Subsection survive the repayment of the City Loans and the reconveyance of the Leasehold Deeds of Trust.
(c) Each Developer shall defend (with counsel reasonably acceptable to the City) the City against any claim for damages, compensation, fines, penalties or other amounts arising out of the failure or alleged failure of any person or entity (including the applicable Developer, its contractor and subcontractors) to pay prevailing wages in accordance with this Agreement as determined pursuant to Labor Code Sections 1720 et seq., and implementing 573 of 11211
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regulations of the Department of Industrial Relations or comply with the other applicable provisions of Labor Code Sections 1720 et seq., to employ apprentices pursuant to Labor Code Sections 1777.5 et seq., and implementing regulations of the Department of Industrial Relations in connection with the construction, pursuant to this Agreement, of the applicable Developer’s Development, and shall indemnify and hold the City harmless against any damages, compensation, fines, penalties or other amounts resulting from the successful prosecution of such claim.
(d) Each Developer shall construct its respective Development to comply with all applicable federal and state disabled persons accessibility requirements including but not limited to the Federal Fair Housing Act, Section 504 of the Construction Act of 1973, Title II and/or Title III of the Americans with Disabilities Act of 1990, Title 24 of the California Code of Regulations and the Uniform Federal Accessibility Standards. To the extent required by the funding sources for the Residential Developer, in compliance with Section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794, et seq.), a minimum of 11 units in the Residential Development shall be constructed by the Residential Developer to be readily accessible and usable by households with a mobility impaired member and a minimum of 8 units shall be constructed and to be readily accessible and usable by households with a hearing or visually impaired member.
(e) For the avoidance of doubt and without affecting any other limitations on liability contained in this Agreement, neither the Residential Developer nor the Commercial Developer shall have any obligation, liability or responsibility for any breach of the provisions of this Section 8.9 by the other Developer, including, without limitation, any payment or indemnity obligations contained in this Section 8.9.

Section 8.10 Mechanics Liens, Stop Notices, and Notices of Completion. (a) If any claim of lien is filed against the Property or the Residential Improvements or a stop notice affecting the City Loans is served on the City or any other lender or other third party in connection with the Residential Development, then the Commercial Developer (to the extent said lien arises in connection with the construction of the Underground Parking Garage or the Commercial Improvements) or the Residential Development (to the extent said lien arises in connection with the construction of the Residential Improvements shall, within thirty (30) days after such filing or service, either pay or fully discharge the lien or stop notice, effect the release of such lien or stop notice by delivering to the City a surety bond from a surety acceptable to the City in sufficient form and amount, or provide the City with other assurance satisfactory to the City that the claim of lien or stop notice will be paid or discharged. (b) If the Residential Developer fails to discharge any lien, encumbrance, charge, or claim in the manner required in this Section or obtain a surety bond, then in addition to any other right or remedy, the City may (but shall be under no obligation to) discharge such lien, encumbrance, charge, or claim at the Residential Developer's expense. Alternatively, the City may require the Residential Developer to immediately deposit with the City the amount necessary to satisfy such lien or claim and any costs, pending resolution thereof. The City may use such deposit to satisfy any claim or lien that is adversely determined against the Residential Developer.
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(c) The Residential Developer shall file a valid notice of cessation or notice of completion upon cessation of construction of the Development for a continuous period of thirty (30) days or more and take all other reasonable steps to forestall the assertion of claims of lien against the Property and/or Residential Improvements. The Residential Developer authorizes the City, but without any obligation, to record any notices of completion or cessation of labor, or any other notice that the City deems necessary or desirable to protect its interest in the Residential Development and Property.

Section 8.11 Equal Opportunity.

During the construction of the Residential Development there shall be no discrimination on the basis of race, color, creed, religion, sex, sexual orientation, gender identity, marital status, national origin or ancestry, or source of income, in the hiring, firing, promoting or demoting of any person engaged in the construction work.

Section 8.12 Inspections.

The Residential Developer shall permit and facilitate, and shall require its contractors to permit and facilitate, observation and inspection at the Residential Development by the City and by public authorities during reasonable business hours upon forty-eight (48) hours' written notice for the purposes of determining compliance with this Agreement.

Section 8.13 Information.

The Residential Developer shall provide any information reasonably requested by the City in connection with the Residential Development.

Section 8.14 Records.
(a) The Residential Developer shall maintain complete, accurate, and current records pertaining to its interests in the Residential Development for a period of five (5) years after the creation of such records and shall permit any duly authorized representative of the City to inspect and copy records upon reasonable notice to the Residential Developer. Such records shall include all invoices, receipts, and other documents related to expenditures from City Loan funds. Records must be kept accurate and current.
(b) The City shall notify the Residential Developer of any records it deems insufficient. The Residential Developer shall have thirty (30) calendar days after the receipt of such a notice to correct any deficiency in the records specified by the City in such notice, or if a period longer than thirty (30) days is reasonably necessary to correct the deficiency, then the Residential Developer shall begin to correct the deficiency within thirty (30) days and complete the correction of the deficiency as soon as reasonably possible.

ARTICLE 9.

ONGOING RESIDENTIAL DEVELOPER OBLIGATIONS
Section 9.1 Applicability.
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The conditions and obligations set forth in this ARTICLE 9 shall apply from the date Residential Developer obtains a leasehold interest in the Property and throughout the term of the Ground Lease, unless a different period of applicability is specified for a particular condition or obligation.

Section 9.2 Use.
(a) The Residential Developer hereby agrees that, for the entire term of the Ground Lease, the Residential Development (other than with respect to the Community Space) will be used only for residential use consistent with the Ground Lease and the Regulatory Agreement.
(b) The Regulatory Agreement shall require that a portion of the Units shall be affordable to and occupied by low, very low and extremely low income households as those terms are defined in the Regulatory Agreement in accordance with the Density Bonus Requirements.

Section 9.3 Maintenance.
(a) The Residential Developer agrees, for the entire term of the Ground Lease, to maintain all interior and exterior improvements, including landscaping, of the Residential Development in condition, repair and sanitary condition (and, as to landscaping, in a healthy condition) and in accordance with a management plan, as the same may be amended from time to time, and all applicable laws, rules, ordinances, orders, and regulations of all federal, state, municipal, and other governmental agencies and bodies having or claiming jurisdiction and all their respective departments, bureaus, and officials.
(b) In the event that the Residential Developer breaches any of the covenants contained in this section and such default continues for a period of fifteen (15) days after written notice from the City with respect to graffiti, debris, waste material, and general maintenance or thirty (30) days after written notice from the City with respect to landscaping and building improvements, then the City, in addition to whatever other remedy it may have at law or in equity, shall have the right to enter upon the Residential Property and perform or cause to be performed all such acts and work necessary to cure the default. Pursuant to such right of entry, the City shall be permitted (but is not required) to enter upon the Residential Property and perform all acts and work necessary to protect, maintain, and preserve the Residential Improvements and landscaped areas on the Residential Property, and to attach a lien on the Residential Property, or to assess the Residential Property, in the amount of the expenditures arising from such acts and work of protection, maintenance, and preservation by the City and/or costs of such cure, including a ten percent (10%) administrative charge, which amount shall be promptly paid by the Residential Developer to the City upon demand.

Section 9.4 Residential Property Management Agent.

The Residential Development shall at all times be managed by an experienced management agent reasonably acceptable to the City, with demonstrated ability to operate residential facilities like the Residential Development in a manner that will provide decent, safe, and sanitary housing. For any change in the Residential Property Management Agent, the 576 of 11211
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Residential Developer shall submit for the City's approval the identity of any proposed Residential Property Management Agent. The Residential Developer shall also submit such additional information about the background, experience and financial condition of any proposed Residential Property Management Agent as is reasonably necessary for the City to determine whether the proposed Residential Property Management Agent meets the standard for a qualified Residential Property Management Agent set forth above. If the proposed Residential Property Management Agent meets the standard for a qualified Residential Property Management Agent set forth above, the City shall approve the proposed Residential Property Management Agent by notifying the Residential Developer in writing. The City hereby pre-approves Alta Housing, as the initial Residential Property Management Agent.

Section 9.5 Taxes, Assessments and Development Impact Fees. (a) The Residential Developer shall pay all real and personal property taxes, assessments and charges and all franchise, income, employment, old age benefit, withholding, sales, and other taxes assessed against it, or payable by it, at such times and in such manner as to prevent any penalty from accruing, or any lien or charge from attaching to the Property or the Residential Developer's leasehold interest in the Property; provided, however, that the Residential Developer shall have the right to contest in good faith any such taxes, assessments, or charges. In the event the Residential Developer exercises its right to contest any tax, assessment, or charge against it, the Residential Developer, on final determination of the proceeding or contest, shall immediately pay or discharge any decision or judgment rendered against it, together with all costs, charges and interest. (b) The Residential Developer will pay those City impact fees that are determined to apply to this project, in accordance with Government Code Section 66007. The fees associated with the Commercial Development will be due by the Commercial Developer to the City in the amount(s) and at the time(s) set forth in the separate development agreement between the City and the Commercial Developer. The fees associated with the Residential Development will be due by the Residential Developer to the City at the time of issuance of a certificate of occupancy or the date of final inspection, whichever occurs first.

Section 9.6 Hazardous Materials.
(a) Remedial Action. The City, in its role as landowner, will fully and completely cooperate with Commercial Developer in Commercial Developer’s obligations (i) to comply with the Construction Easement; (ii) to comply with the conditions of approval of the Entitlements; (iii) to comply with the REA; and (iv) to remediate Hazardous Materials conditions encountered on the Property from and after the date on which Commercial Developer commences construction of the Underground Parking Garage until the date on which Podium Completion occurs in a manner consistent with the Property’s reasonably anticipated use. For the avoidance of doubt, Commercial Developer shall not be required to (i) commence any remediation at the Property until the Commercial Developer commences construction of the Underground Parking Garage, or (ii) remediate the Property with respect to Hazardous Materials first introduced to the Property from and after the date on which Podium Completion occurs.

Except as otherwise provided in this Agreement, Commercial Developer’s remediation of Hazardous Materials encountered in the construction of the Underground Parking Garage shall be at no cost or expense to the City. The Residential Developer shall not take any remedial 577 of 11211
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action in response to the presence of any Hazardous Materials on, under, or about the Residential Development (other than in emergency situations or as required by governmental agencies having jurisdiction), nor enter into any settlement agreement, consent decree, or other compromise in respect to any Hazardous Materials Claims without the City's prior written consent, which shall not be unreasonably withheld or delayed. (b) Indemnification. Commercial Developer hereby agrees to and shall indemnify, defend (with counsel approved by the City for Claims against the City and counsel approved by Residential Developer for Claims against the Residential Developer) and hold harmless the City and its elected and appointed representatives, officers, agents, and employees (“City Indemnified Parties”) and Residential Developer and its representatives, officers, agents, and employees (“Residential Developer Indemnified Parties”) from any loss, liability, fines, penalties, forfeitures, costs, and damages (whether in contract, tort, or strict liability, including but not limited to personal injury, death, and property damage) and from any and all claims, demands, and actions in law or equity (including attorneys’ fees and litigation expenses), and Hazardous Materials Claims (“Claims”) to the extent arising out of or in any way related to the development and implementation of remedial actions required pursuant to Section 9.6(a) or otherwise required by Project Entitlements conditions of approval or other public agency oversight of remediation required pursuant to Section 9.6(a) and Project Entitlements. The provisions of this Section shall survive expiration of the Term or other termination of this Agreement.
(c) Reserved.

Section 9.7 Audits.

The Residential Developer shall make available for examination at reasonable intervals and during normal business hours to the City all books, accounts, reports, files, and other papers or property with respect to all matters covered by this Agreement, and shall permit the City to audit, examine, and make excerpts or transcripts from such records. The City may make audits of any conditions relating to this Agreement.

ARTICLE 10.

INSURANCE REQUIREMENTS
Each Developer will maintain, at their sole cost and expense (but subject to any agreements among or between the Parties allocating such costs and expenses in a different manner, including, without limitation, the REA and the Shared Parking Agreement, if applicable), the insurance coverage described in Exhibit L for itself and its applicable Improvements.

ARTICLE 11.

ASSIGNMENT AND TRANSFERS
Section 11.1 Definitions.

As used in this Article, the term "Transfer" means:
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(a) Any total or partial sale, assignment or conveyance, or any trust or power, or any transfer in any other mode or form, of or with respect to this Agreement or of the Residential Development or any part thereof or any interest therein or any contract or agreement to do any of the same;
(b) Any total or partial sale, assignment or conveyance, or any trust or power, or any transfer in any other mode or form, of or with respect to any ownership interest in Residential Developer or any contract or agreement to do any of the same; (c) Any merger, consolidation, sale or lease of all or substantially all of the assets of the Residential Developer; or
(d) The leasing of part or all of the Residential Property or the Residential Improvements thereon; provided, however, that leasing of the Units included within the Residential Improvements to tenant occupants in accordance with the Regulatory Agreement shall not be deemed a Transfer for purposes of this Article.

Section 11.2 Purpose of Restrictions on Transfer.
(a) This Agreement is entered into solely for the purpose of the development and operation of the Development and its subsequent use in accordance with the terms hereof.

Each Developer recognizes that the qualifications and identity of such Developer are of particular concern to the City, in view of:
(1) The importance of the development of the Property to the general welfare of the community;
(2) The land acquisition assistance and other public aids that have been made available by law and by the government for the purpose of making such development possible;
(3) The reliance by the City upon the unique qualifications and ability of the Developer to serve as the catalyst for the development of the Property and upon the continuing interest which the Developer will have in the Residential Improvements and Underground Garage to assure the quality of the use, operation and maintenance deemed critical by the City in the development of the Property;
(4) The fact that a change in ownership or control of the owner of the Residential Improvements or of a substantial part thereof, or any other act or transaction involving or resulting in a significant change in ownership or with respect to the identity of the parties in control of the Developer or the degree thereof is for practical purposes a transfer or disposition of the Property;
(5) The fact that the Property is not to be acquired or used for speculation, but only for the Residential Development and Underground Garage and operation by the Developer of the Residential Development and Underground Garage in accordance with the Agreement and the REA; and
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(6) The importance to the City and the community of the standards of use, operation and maintenance of the Property.
(b) The Developer further recognizes that it is because of such qualifications and identity that the City is entering into this Agreement with the Developer and that Transfers are permitted only as provided in this Agreement.

Section 11.3 Prohibited Transfers.
(a) The limitations on Transfers set forth in this Section shall apply until the end of the Term. Except as expressly permitted in this Agreement, each Developer represents and agrees that such Developer has not made or created and will not make or create or suffer to be made or created, any Transfer, either voluntarily or by operation of law without the prior written approval of the City.
(b) Any Transfer made in contravention of this Section shall be void and shall be deemed to be a default under this Agreement whether or not the Developer knew of or participated in such Transfer.

Section 11.4 Permitted Transfers.
(a) Notwithstanding the provisions of Section 11.3, the following Transfers shall be permitted and are hereby approved by the City:
(1) Any Transfer creating a Security Financing Interest permitted pursuant to the approved Financing Plan;
(2) Any Transfer directly resulting from the foreclosure of a Security Financing Interest or the granting of a deed in lieu of foreclosure of a Security Financing Interest or as otherwise permitted under ARTICLE 13;
(3) The leasing of residential units and Community Space within the Residential Development in accordance with the Regulatory Agreement; (4) The granting of easements or permits to facilitate the development of the Property;
(5) A loan to refinance the financing identified in the approved Financing Plan.
(b) The City hereby approves a Transfer of a limited partnership interest in the Residential Developer, or to an affiliate of the Investor (provided such affiliate provides documentation reasonably acceptable to the City that the affiliate has sufficient financial capability to provide the capital contributions set forth in the Financing Plan) and future transfers of such interest.
(c) The Parties agree and acknowledge that Alta Housing shall remain sole member and manager of the managing general partner of the Residential Developer throughout the term of the Ground Lease unless otherwise consented to by the City. In the event the general 580 of 11211
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partner of the Residential Developer is removed by the limited partner of the Residential Developer for cause following default under the Partnership Agreement, the City hereby approves the transfer of the general partner interest to a 501(c)(3) tax-exempt nonprofit public benefit corporation that is selected by the limited partner and approved in advance and in writing by the City, which approval shall not be unreasonably withheld. (d) The City also hereby approves Transfer of the Property or partnership interest from the Residential Developer to a limited liability company or limited partnership, the managing member or partner of which is Alta Housing, or a nonprofit public benefit corporation affiliated with Alta Housing, or any combination thereof. (e) For the avoidance of doubt, there shall be no restrictions on Transfers with respect to the Commercial Developer following the date on which Podium Completion occurs.

Section 11.5 Effectuation of Certain Permitted Transfers. (a) No Transfer of this Agreement permitted pursuant to Section 11.4 (other than (i) Transfers with respect to the Commercial Developer following building permit issuance for the Residential Development, and (ii) Transfers pursuant to Sections 11.4(a)(1) and (3)-(5), which Transfers shall not be subject to the provisions of this Section 11.5) shall be effective unless, at the time of the Transfer, the person or entity to which such Transfer is made, by an instrument in writing prepared by the City and in form recordable among the land records, shall expressly assume the obligations of the applicable Developer under this Agreement and agree to be subject to the conditions and restrictions to which the applicable Developer is subject arising during this Agreement, to the fullest extent that such obligations are applicable to the particular portion of or interest in the Development conveyed in such Transfer. Anything to the contrary notwithstanding, the holder of a Security Financing Interest or a Commercial Development Financing Interest, as applicable, whose interest shall have been acquired by, through or under a Security Financing Interest or Commercial Development Financing Interest, as applicable, or shall have been derived immediately from any holder thereof shall not be required to give to City such written assumption until such holder or other person is in possession of the Property or the Commercial Property, as applicable, or entitled to possession thereof pursuant to enforcement of the Security Financing Interest or the Commercial Development Financing Interest, as applicable.
(b) In the absence of specific written agreement by the City, no such Transfer, assignment or approval by the City shall be deemed to relieve the applicable Developer or any other party from any obligations under this Agreement.

Section 11.6 Other Transfers with City Consent.

The City may, in its sole discretion, approve in writing other Transfers as requested by the Developer. In connection with such request, there shall be submitted to the City for review all instruments and other legal documents proposed to effect any such Transfer. If a requested Transfer is approved by the City such approval shall be indicated to the Developer in writing.

Such approval shall be granted or denied by the City within ninety (90) days of receipt by the City of Developer's request for approval of a Transfer. In the event the City does not respond either granting or denying the request within ninety (90) days the request shall be deemed 581 of 11211
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approved. Upon such approval, if granted, the transferee, by an instrument in writing prepared by the City and in form recordable among the land records, shall expressly assume the obligations of the Developer under this Agreement and agree to be subject to the conditions and restrictions to which the Developer is subject arising during this Agreement, to the fullest extent that such obligations are applicable to the particular portion of or interest in the Development conveyed in such Transfer.

ARTICLE 12.

DEFAULT AND REMEDIES
Section 12.1 General Applicability.

The provisions of this Article shall govern the parties' remedies for breach or failure of this Agreement.

Section 12.2 No Fault of Parties.
(a) The following events constitute a basis for the City or the Residential Developer to terminate this Agreement as to the Residential Developer and the Residential Development only prior to the Closing Date without the fault of the other:
(1) The Residential Developer, despite good faith and diligent efforts, is unable to satisfy all of the conditions precedent to the City's obligation to execute the Ground Lease set forth in ARTICLE 6 by the dates set forth in the Schedule of Performance, subject to any applicable “buffers” and Force Majeure Events;
(2) The City and the Residential Developer, despite good faith and diligent efforts, are unable to execute the Ground Lease by the dates set forth in the Schedule of Performance, subject to any applicable “buffers” and Force Majeure Events; (b) Residential Developer and Commercial Developer agree to cooperate with each other in the development of the plans and specifications required in order for the Commercial Developer to obtain a building permit for the Underground Parking Garage within the time periods outlined in the Schedule of Performance and for the Residential Developer to obtain a building permit ready for issuance letter for the Residential Development within the time periods outlined in the Schedule of Performance. If Residential Developer fails to provide such cooperation, then, without limiting any of Commercial Developer’s remedies under this Agreement, Commercial Developer may send a written notice to Residential Developer, with a copy of such notice sent to the City at the same time, stating with reasonable specificity the nature of such failure and requesting that the Residential Developer and the Commercial Developer meet and confer for a period of twenty (20) days to attempt to resolve such failure. If the Commercial Developer and the Residential Developer are unable to resolve such failure within such twenty (20) day period (as such period may be extended by the written agreement of such parties or as may be necessary for the Residential Developer to exercise remedies against non-performing consultants), then for so long as the Residential Developer continues to fail to cooperate, the Commercial Developer may proceed to prepare such plans and specifications on behalf of the Residential Developer (in accordance with all requirements of this Agreement and 582 of 11211
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law, rules and regulations applicable to the Residential Development) without Residential Developer’s input as to any matters as to which Residential Developer has failed to cooperate. If the Commercial Developer elects to proceed to prepare such plans and specifications on behalf of the Residential Developer, the Commercial Developer shall use commercially reasonable efforts to prepare the plans and specifications in a manner consistent with the prior work of the Residential Developer and not in a manner which would materially impact the cost or constructability of the Residential Development to the extent reasonably feasible. Commercial Developer shall provide notice to the City within five (5) business days if it has elected to prepare plans and specifications on behalf of the Residential Developer. (c) Upon the happening of any of the events described in Sections 12.2(a) and at the election of either the City or the Residential Developer, the electing party shall first notify the non-electing party (and the Commercial Developer shall also be notified) in writing of the electing party’s intention to terminate this Agreement, giving the non-electing party (and the Commercial Developer) thirty (30) days from receipt of such notice to cure or, if cure cannot be accomplished within thirty (30) days, to commence to cure such breach, failure, or act. In the event the non-electing party (or the Commercial Developer) does not then so cure within said thirty (30) days, or if the breach or failure is of such a nature that it cannot be cured within thirty (30) days, and thereafter diligently completes such cure within a reasonable time thereafter but in no event later than ninety (90) days, then, subject to Section 12.4(c), this Agreement may be terminated. After termination, neither party shall have any rights against or liability to the other under this Agreement. Notwithstanding the foregoing, a termination of this Agreement pursuant to Section 12.2(a) shall only result in a termination of this Agreement with respect to the Residential Developer and shall not result in a termination of this Agreement with respect to the Commercial Developer and in such event, this Agreement shall remain in full force and effect as between the City and the Commercial Developer with neither the City nor the Commercial Developer having any further right or remedy against Residential Developer.

Section 12.3 Fault of City.
(a) Except as to events constituting a basis for termination under Section 12.2, the following events each constitute a “City Event of Default” and a basis for the Commercial Developer and/or the Residential Developer, as applicable, to take action against the City:
(1) The City, without good cause, fails to lease the Property to the Residential Developer within the time and in the manner set forth in ARTICLE 7 and the Residential Developer is otherwise entitled by this Agreement to such conveyance; (2) The City fails to make a City Loan in accordance with Section 3.1 of this Agreement; or
(3) The City breaches any other material provision of this Agreement. (b) Upon the happening of any of the events described in Section 12.3(a), the Residential Developer (with respect to the City Events of Default in Sections 12.3(a)(1) and (2)), or the Residential Developer and/or the Commercial Developer, as applicable (with respect to the City Event of Default in Section 12.3(a)(3)) shall first notify the City in writing of its purported breach or failure, giving the City forty-five (45) days from receipt of such notice to cure or, if 583 of 11211
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cure cannot be accomplished within forty-five (45) days, to commence to cure such breach, failure, or act. In the event the City does not then so cure within said forty-five (45) days, or if the breach or failure is of such a nature that it cannot be cured within forty-five (45) days, the City fails to commence to cure within such forty-five (45) days and thereafter diligently completes such cure within a reasonable time thereafter but in no event later than one hundred twenty (120) days, then the applicable Developer(s) shall be afforded the following remedies: (1) terminating in writing this Agreement (provided, however, that those provisions of this Agreement that recite that they survive termination of this Agreement shall all remain in full force and effect) and, if applicable, the Ground Lease; provided, however, in no event shall any such termination affect the REA, the Lot Tie Agreement, the Shared Parking Agreement or the Construction Easement if construction of the Underground Parking Garage has commenced; and (2) prosecuting an action for specific performance and for damages. However, in the event of the default described in section (a)(2) above, Residential Developer’s remedy is limited to City’s repayment of Residential Developer’s third party pre-development costs for the Residential Development incurred prior to applying for tax credits. Notwithstanding the foregoing, subsequent to Podium Completion, (i) only Residential Developer shall have the right to declare the City in default pursuant to this Agreement (except with respect to any claim that Commercial Developer shall have with respect to the Deposit), (ii) only Residential Developer shall have the right to cause the termination of this Agreement, (iii) Commercial Developer shall have no right to cause the termination of this Agreement, and (iv) without limiting Commercial Developer’s rights set forth in this Agreement, the termination of this Agreement as to any Party for any reason whatsoever shall not affect Commercial Developer’s right to develop the Commercial Project or to enforce its rights under the REA, the Lot Tie Agreement, the Shared Parking Agreement and/or the Construction Easement. For the avoidance of doubt, if this Agreement terminates due to a City Event of Default, then Developer Equity Contribution that has not been disbursed or committed to be disbursed pursuant to the City Predevelopment Loan and Deposit shall be returned to Commercial Developer. A copy of any default notice or notice terminating this Agreement pursuant to this Section 12.3 shall be given by the notifying Developer to the other Developer at the same time that such notice is provided to the City. Notwithstanding anything to the contrary in this Section 12.3(b), a termination of this Agreement by Residential Developer pursuant to this Section 12.3(b) prior to Podium Completion shall only result in a termination of this Agreement with respect to the Residential Developer and shall not result in a termination of this Agreement with respect to the Commercial Developer and in such event, this Agreement shall remain in full force and effect as between the City and the Commercial Developer with neither the City nor the Commercial Developer having any further right or remedy against Residential Developer.

Section 12.4 Fault of Developer.
(a) Residential Developer Event of Default. Except as to events constituting a basis for termination under Section 12.2, the following events each constitute a “Residential Developer Event of Default” and a basis for the City to take action against the Residential Developer:
(1) The Residential Developer fails to exercise good faith and diligent efforts to satisfy one or more of the conditions precedent to the City's obligation to convey the leasehold interest in the Property to the Residential Developer pursuant to the Ground Lease; 584 of 11211
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(2) The Residential Developer refuses to execute the Ground Lease within the time periods and under the terms set forth in ARTICLE 7; (3) The Residential Developer constructs or attempts to construct the Residential Improvements in violation of ARTICLE 8;
(4) A Transfer by the Residential Developer occurs, either voluntarily or involuntarily, in violation of ARTICLE 11;
(5) A court having jurisdiction shall have made or entered any decree or order (1) adjudging the Residential Developer to be bankrupt or insolvent, (2) approving as properly filed a petition seeking its reorganization of the Residential Developer or seeking any arrangement for the Residential Developer under the bankruptcy law or any other applicable debtor's relief law or statute of the United States or any state or other jurisdiction, (3) appointing a receiver, trustee, liquidator, or assignee of the Residential Developer in bankruptcy or insolvency or for any of their properties, or (4) directing the winding up or liquidation of the Residential Developer, if any such decree or order described in clauses (1) to (4), inclusive, shall have continued unstayed or undischarged for a period of ninety (90) days unless a lesser time period is permitted for cure under any other mortgage on the Property, in which event such lesser time period will apply under this subsection (a)(5) as well; or the Residential Developer shall have admitted in writing its inability to pay its debts as they fall due or shall have voluntarily submitted to or filed a petition seeking any decree or order of the nature described in clauses (1) to (4), inclusive;
(6) The Residential Developer shall have assigned its assets for the benefit of its creditors or suffered a sequestration or attachment of or execution on any substantial part of its property, unless the property so assigned, sequestered, attached or executed upon shall have been returned or released within ninety (90) days after such event (unless a lesser time period is permitted for cure under any other mortgage on the Property, in which event such lesser time period shall apply under this subsection (a)(6) as well) or prior to sooner sale pursuant to such sequestration, attachment, or execution; (7) The Residential Developer shall have been dissolved or shall have voluntarily suspended its business; or
(8) The Residential Developer breaches any other material provision of this Agreement.
(b) Liquidated Damages. In the event that this Agreement terminates as a result of a Construction Commencement Failure prior to the date on which Commercial Developer has commenced construction of the Underground Garage, Commercial Developer and City agree that City’s actual damages would be impracticable or extremely difficult to determine as of the date of this Agreement and that the amount of the Interim Contingent Payments then held by the City represents the Commercial Developer and City’s reasonable estimate of such damages. The impracticability and difficulty of determining actual damages are caused, without limitation, by the fact that the affordable housing development would not be able to proceed without the completion of the Underground Garage and Podium, leaving the City with a deficit of anticipated affordable housing necessary to provide housing for the community and for the 585 of 11211
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City to meet its Regional Housing Needs Allocation obligations in the sixth cycle Housing Element, having removed the Property from the market, and City expenditures in both staff time and consultant costs in negotiating a future agreement to effectuate the development goals for the Property. In the event this Agreement terminates as a result of a Construction Commencement Failure prior to the date on which Commercial Developer has commenced construction of the Underground Garage, as the City’s sole and exclusive remedy, the City may retain, as liquidated damages, the amount of the Interim Contingent Payments then held by the City (together with interest accruing thereon). For the avoidance of doubt, a Commercial Developer Event of Default that occurs after the commencement of construction of the Underground Garage shall be governed by Section 12.4(c), below, and shall not be subject to the provisions of this Section

12.4(b). Further, in accordance with Section 5.1, the City shall not be required to return to the Commercial Developer any unexpended funds from the Developer Equity Contribution. City and Commercial Developer acknowledge that they have read and understand the provisions of this Section 12.4(b) and by their initials immediately below agree to be bound by its terms.

Commercial Developer ______ City ________
(c) Commercial Developer Event of Default. Except as to events constituting a basis for termination under Section 12.2, the following events each constitute a “Commercial Developer Event of Default” and a basis for the City to take action against the Commercial Developer as expressly provided in Section 12.4(e) below:
(1) The Commercial Developer fails to make the Developer Equity Contribution, Deposits (if applicable) or make the required number of parking spaces available in violation of ARTICLE 5;
(2) The Commercial Developer constructs the Underground Parking Garage and Podium Completion in material violation of ARTICLE 8; (3) The Commercial Developer fails to complete construction of the Underground Parking Garage and podium in accordance with the Schedule of Performance, once construction has commenced (subject to any applicable “buffers” and Force Majeure Events); (4) A Transfer by the Commercial Developer occurs, either voluntarily or involuntarily, in violation of ARTICLE 11;
(5) A court having jurisdiction shall have made or entered any decree or order (1) adjudging the Commercial Developer to be bankrupt or insolvent, (2) approving as properly filed a petition seeking its reorganization of the Commercial Developer or seeking any arrangement for the Commercial Developer under the bankruptcy law or any other applicable debtor's relief law or statute of the United States or any state or other jurisdiction, (3) appointing a receiver, trustee, liquidator, or assignee of the Commercial Developer in bankruptcy or insolvency or for any of their properties, or (4) directing the winding up or liquidation of the Commercial Developer, if any such decree or order described in clauses (1) to (4), inclusive, shall have continued unstayed or undischarged for a period of ninety (90) days; or the Commercial Developer shall have admitted in writing its inability to pay its debts as they fall due or shall have voluntarily submitted to or filed a petition seeking any decree or order of the nature described in clauses (1) to (4), inclusive;
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(6) The Commercial Developer shall have been dissolved; (7) Prior to Podium Completion (and without limiting the rights of any lender providing financing to the Commercial Developer as provided in this Agreement, including, without limitation, the provisions of Section 12.8 and Article 13) , title of the Commercial Property is transferred through any: (a) judicial or non-judicial foreclosure; (b) trustee’s sale; (c) deed, transfer, assignment, or other conveyance in lieu of foreclosure; (d) other similar exercise of rights or remedies under any security instrument; or (e) transfer of operation of or through any bankruptcy proceeding;
(8) The Commercial Developer is not in compliance with the Schedule of Performance (to the extent it applies to the Commercial Developer’s responsibilities) subject to any applicable “buffers” and Force Majeure Events; or (9) The Commercial Developer breaches any other material provision of this Agreement.
(d) Upon the happening of a Residential Developer Event of Default, the City shall first notify the Residential Developer (with a simultaneous copy of such notice to the Commercial Developer) in writing of its purported breach, failure or act above described, giving the Residential Developer in writing sixty (60) days from receipt of such notice to cure, or, if cure cannot be accomplished within said sixty (60) days, to commence to cure such breach, failure, or act. In the event the Residential Developer fails to cure within said sixty (60) days, or if such breach is of a nature that it cannot be cured within sixty (60) days, Residential Developer fails to commence to cure within said sixty (60) days and diligently complete such cure within a reasonable time thereafter but in no event later than one hundred twenty (120) days, then the City shall be afforded all of its rights at law or in equity by taking any or all of the following remedies:
(1) Termination of this Agreement (with respect to the Residential Developer only) and the Ground Lease by written notice to the Residential Developer (and the Commercial Developer), subject to the terms and conditions of the Ground Lease; (2) Prosecuting an action for damages against the Residential Developer (but specifically excluding lost profits, punitive damage, special damages and consequential damages);
(3) Any of the other remedies specified in this Agreement with respect to the Residential Developer; and
(4) Acceleration of a City Loan.

Notwithstanding the foregoing, the occurrence of a Residential Developer Event of Default shall not result in a termination of this Agreement with respect to the Commercial Developer and, in such event, this Agreement shall remain in full force and effect as between the City and the Commercial Developer.
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(e) Notwithstanding anything to the contrary contained in this Agreement, if the City (with respect to the Residential Developer) or the Residential Developer has elected to terminate this Agreement pursuant to this ARTICLE 12, then prior to such termination becoming effective, Commercial Developer shall have the right to request that the City replace the then current Residential Developer by providing written notice to the City within thirty (30) days after receipt of the applicable termination notice notifying the City that the Commercial Developer would like to replace Residential Developer (a “Replacement Notice”). If Commercial Developer delivers a Replacement Notice to the City within such thirty (30) day period, then the Commercial Developer shall have an additional sixty (60) days to propose to the City a replacement Residential Developer, and such termination shall not become effective. A replacement Residential Developer must be a nonprofit entity and demonstrate at least ten (10) years of experience in developing and operating affordable housing projects, and shall be subject to the approval of the City, which approval shall be at the City’s sole discretion. If City does not approve the proposed replacement Residential Developer, Commercial Developer may propose an alternative replacement Residential Developer within another sixty (60) day period. In addition, the City, Commercial Developer and the replacement Residential Developer shall renegotiate the Schedule of Performance to account for the delays resulting from having to replace the Residential Developer and all time periods under the then existing Schedule of Performance shall be tolled pending agreement on such renegotiated Schedule of Performance.

Renegotiation of the Schedule of Performance must occur within a sixty (60) day period (as such period may be extended as reasonably agreed to by City, Commercial Developer, and replacement Residential Developer). Any renegotiation of the Schedule of Performance will require approval by the City Council. If this Agreement terminates as to the Residential Developer prior to Podium Completion and there is no replacement Residential Developer identified within six (6) months (as such period may be extended as reasonably agreed by the City and the Commercial Developer) after the date on which this Agreement would have terminated but for delivery of a Replacement Notice (provided, that such period shall be automatically extended for an additional three (3) month period if at the end of such period there are active negotiations among the Commercial Developer, the City and a potential replacement Residential Developer), then, subject to the provisions of Section 13.8, the Agreement shall terminate and Commercial Developer shall assign to the City, without warranty and subject to any third party required consents, the Commercial Developer’s interest in the plans and specifications for the Underground Parking Garage located on the Property and the portion of the Underground Parking Garage located on the Property, by mutually acceptable assignment documents; provided, that such assignment shall be on a non-exclusive basis to the extent Commercial Developer needs to use such plans and specifications with respect to the Commercial Development.
(f) Upon the happening of a Commercial Developer Event of Default, the City shall first notify the Commercial Developer in writing of its purported breach, failure or act above described, giving the Commercial Developer in writing sixty (60) days from receipt of such notice to cure, or, if cure cannot be accomplished within said sixty (60) days, to commence to cure such breach, failure, or act. In the event the Commercial Developer fails to cure within said sixty (60) days, or if such breach is of a nature that it cannot be cured within sixty (60) days, Commercial Developer fails to commence to cure within said sixty (60) days and diligently complete such cure within a reasonable time thereafter but in no event later than one hundred 588 of 11211
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twenty (120) days, then the City, as its sole and exclusive remedies at law and in equity and may take any or all of the following remedies:
(1) Termination of this Agreement by written notice to the Commercial Developer and to retain the Developer Equity Contribution and any Deposits made by Commercial Developer; provided, that notwithstanding anything to the contrary contained in this Agreement, if the applicable Commercial Developer Event of Default is due to a Construction Commencement Failure, then the City’s sole and exclusive remedy shall be to terminate this Agreement and retain the Interim Contingent Payments as liquidated damages and unexpended funds from the Developer Equity Contribution; and (2) If construction of the Underground Parking Garage has commenced, then the City may pursue its rights under any bonds provided by the Commercial Developer and to retain the Developer Equity Contribution and any Deposits made by Commercial Developer;
(3) Commencing after the date of Podium Completion, the City may bring an action for specific performance to require Commercial Developer to perform its obligations and covenants under this Agreement which are to be performed after the date of Podium Completion; and
(4) Any other remedies expressly specified in this Agreement (but for the avoidance of doubt, in no event shall the City be entitled to bring an action for damages or, subject to Section 12.4(f)(3), an action for specific performance against the Commercial Developer with respect to a failure by Commercial Developer to perform any of its obligations and covenants under this Agreement; provided, that the foregoing restriction shall not affect the City’s right to retain the Interim Contingent Payments as liquidated damages pursuant to Section

12.4(b), if applicable).

Notwithstanding the foregoing, the occurrence of a Commercial Developer Event of Default subsequent to Podium Completion shall not result in a termination of this Agreement with respect to the Residential Developer and, in such event, this Agreement shall remain in full force and effect as between the City and the Residential Developer. (g) For the avoidance of doubt, but without limiting the provisions of the Lot Tie Agreement, the REA, the Shared Parking Agreement or the Construction Easement, the termination of this Agreement shall not result in a termination of the Lot Tie Agreement, the REA, the Shared Parking Agreement or the Construction Easement, unless construction of the Underground Parking Garage has not commenced as of the date of such termination, in which case the Lot Tie Agreement, the REA, the Shared Parking Agreement and the Construction Easement shall terminate.

Section 12.5 Right to Cure at Residential Developer's Expense.

The City shall have the right to cure any monetary default by the Residential Developer under a loan secured by the Property or the Residential Improvements in connection with the Residential Development. However, if the Residential Developer is in good faith contesting a claim of default under a loan and the City's interest under this Agreement is not imminently 589 of 11211
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threatened by such default, in the City's sole judgment, the City shall not have the right to cure such default. The Residential Developer agrees to reimburse the City for any funds advanced by the City to cure a monetary default by Residential Developer upon demand therefore, together with interest thereon at the lesser of the rate of five percent (5%) per annum or the maximum rate permitted by law from the date of expenditure until the date of reimbursement.

Section 12.6 Remedies Cumulative.

Except as otherwise expressly provided in this Agreement, including, without limitation, the provisions of Section 12.4(f), no right, power, or remedy given by the terms of this Agreement is intended to be exclusive of any other right, power, or remedy; and each and every such right, power, or remedy shall be cumulative and in addition to every other right, power, or remedy given by the terms of any such instrument, or by any statute or otherwise. Neither the failure nor any delay to exercise any such rights and remedies shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or remedy preclude any other or further exercise of such right or remedy, or any other right or remedy expressly provided in this Agreement.

Section 12.7 Waiver of Terms and Conditions.

No waiver of any default or breach by the Developer hereunder shall be implied from any omission by the City to take action on account of such default if such default persists or is repeated, and no express waiver shall affect any default other than the default specified in the waiver, and such waiver shall be operative only for the time and to the extent therein stated.

Waivers of any covenant, term, or condition contained in this Agreement shall not be construed as a waiver of any subsequent breach of the same covenant, term, or condition. The consent or approval by the City to or of any act by the Developer requiring further consent or approval shall not be deemed to waive or render unnecessary the consent or approval to or of any subsequent similar act.

Section 12.8 Rights of Mortgagees.

Any rights of the City under this Article shall not defeat, limit or render invalid any Security Financing Interest permitted by this Agreement or any rights provided for in this Agreement for the protection of holders of Security Financing Interests.

Section 12.9 No Cross Default.

Notwithstanding anything to the contrary contained in this Agreement, in no event shall a default or breach by the Commercial Developer be treated as a default or breach by the Residential Developer and in no event shall a default or breach by the Residential Developer be treated as a default or breach by the Commercial Developer.

Section 12.10 Assignment of Work.

Upon termination of this Agreement pursuant to Section 12.2(a) or 12.4(a), the Residential Developer shall assign its rights, title, and interest in the plans, specifications, work 590 of 11211
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product, and documents related to the Residential Development, by mutually agreeable assignment documents without representation or warranty.

ARTICLE 13.

SECURITY FINANCING AND RIGHTS OF HOLDERS
Section 13.1 No Encumbrances Except for Residential Development Purposes.

Notwithstanding any other provision of this Agreement, mortgages and deeds of trust, or any other reasonable method of security are permitted to be placed upon the Residential Developer's leasehold interest in the Property but only for the purpose of securing loans approved by the City pursuant to the approved Financing Plan. Mortgages, deeds of trust, or other reasonable security instruments securing loans approved by the City pursuant to the approved Financing Plan are each referred to as a "Security Financing Interest." The words "mortgage" and "deed of trust" as used in this Agreement include all other appropriate modes of financing real estate construction, and land development. The provisions of this Section 13.1 (except Section 13.8) shall not apply to the Commercial Property.

Section 13.2 Holder Not Obligated to Construct.

The holder of any Security Financing Interest authorized by this Agreement is not obligated to construct or complete any Residential Improvements or to guarantee such construction or completion; nor shall any covenant or any other provision in the Ground Lease be construed so to obligate such holder. However, nothing in this Agreement shall be deemed to permit or authorize any such holder to devote the Property or any portion thereof to any uses, or to construct any improvements thereon, other than those uses of Improvements provided for or authorized by this Agreement.

Section 13.3 Notice of Default and Right to Cure.

Whenever the City pursuant to its rights set forth in ARTICLE 12 of this Agreement delivers any notice or demand to the Residential Developer with respect to the commencement, completion, or cessation of the construction of the Residential Improvements, the City shall at the same time deliver to each holder of record of any Security Financing Interest creating a lien upon the Residential Developer's leasehold interest in the Property or any portion thereof, and the Investor, a copy of such notice or demand. Each such holder shall (insofar as the rights of the City are concerned) have the right, but not the obligation, at its option, within ninety (90) days after the receipt of the notice, to cure or remedy or commence to cure or remedy any such default or breach affecting the Property which is subject to the lien of the Security Financing Interest held by such holder and to add the cost thereof to the security interest debt and the lien on its security interest. Any such holder properly completing such Residential Improvements pursuant to this paragraph shall assume all rights and obligations of Residential Developer under this Agreement and shall be entitled, upon completion of such cure and written request made to the City, to a certificate of completion from the City, in a form reasonably acceptable to such holder and the City.

Section 13.4 Failure of Holder to Complete Improvements. 591 of 11211
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In any case where six (6) months after default by the Residential Developer (and the expiration of all applicable cure periods) in completion of construction of the Residential Improvements under this Agreement, the holder of record of any Security Financing Interest, having first exercised its option to construct, has not proceeded diligently with construction, the City shall be afforded those rights against such holder it would otherwise have against Residential Developer under this Agreement.

Section 13.5 Right of City to Cure.

In the event of a default or breach by the Residential Developer of a Security Financing Interest prior to the completion of the Residential Development, and the holder has not exercised its option to complete the Residential Development, the City may cure the default, prior to the completion of any foreclosure. In such event the City shall be entitled to reimbursement from the Residential Developer of all costs and expenses incurred by the City in curing the default.

The City shall also be entitled to a lien upon the Property or any portion thereof to the extent of such costs and disbursements. The City agrees that such lien shall be subordinate to any Security Financing Interest, and the City shall execute from time to time any and all documentation reasonably requested by Residential Developer to effect such subordination.

Section 13.6 Right of City to Satisfy Other Liens.

After the conveyance of title to the Property or any portion thereof and after the Residential Developer has had a reasonable time to challenge, cure or satisfy any liens or encumbrances on the Property or any portion thereof, the City shall have the right to satisfy any such lien or encumbrances; provided, however, that nothing in this Agreement shall require the Residential Developer to pay or make provision for the payment of any tax, assessment, lien or charge so long as the Residential Developer in good faith shall contest the validity or amount therein and so long as such delay in payment shall not subject the Property or any portion thereof to forfeiture or sale.

Section 13.7 Holder to be Notified.

The provisions of this Article shall be incorporated into the relevant deed of trust or mortgage evidencing each Security Financing Interest to the extent deemed necessary by, and in form and substance reasonably satisfactorily to the City, or shall be acknowledged by the holder of a Security Financing Interest prior to its coming into any security right or interest in the Property.

Section 13.8 Commercial Developer Financing.

If the Commercial Developer obtains Commercial Development Financing that is secured, in whole or in part, by a mortgage, deed of trust or other security instrument with respect to Commercial Developer’s rights under this Agreement and/or any of the City Documents, including, without limitation, the Construction Easement, the REA, the Shared Parking Agreement and/or the Lot Tie Agreement (the interests secured by any such mortgage, deed of trust or other security instrument being herein referred to as a “Commercial Development Financing Interest”), then the following provisions shall apply to such Commercial Development Financing:
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(a) The holder of any Commercial Development Financing Interest is not obligated to construct or complete any of the Commercial Development, including, without limitation, the Underground Parking Garage, or to guarantee such construction or completion or to perform any of Commercial Developer’s obligations under any of the City Documents; nor shall any covenant or any other provision in this Agreement be construed so to obligate such holder. However, nothing in this Agreement shall be deemed to permit or authorize any such holder to construct any Improvements on the Property, other than those Improvements provided for or authorized by this Agreement or the City Documents. (b) Whenever the City pursuant to its rights set forth in ARTICLE 12 of this Agreement delivers (i) any notice or demand to the Commercial Developer that the Commercial Developer has not performed any action which is the responsibility of the Commercial Developer within the applicable time period for such performance (taking into account all extension periods applicable to such performance) or (ii) a notice terminating all or any portion of this Agreement, the City shall at the same time deliver to each holder of record of any Commercial Development Financing Interest, a copy of such notice or demand. Each such holder shall (insofar as the rights of the City are concerned) have the right, but not the obligation, at its option, within thirty (30) days after the receipt of the notice or demand, to notify the City that it is electing to cure or remedy or commence to cure or remedy the failure giving rise to such notice or demand (including, without limitation, the right to identify a substitute Residential Developer, subject to the City’s reasonable approval rights) and to add the cost thereof to the security interest debt and the lien on its security interest. Any such holder properly remedying such failure (to the extent it is required to remedy such failure) pursuant to this paragraph may elect to assume all rights and obligations of Commercial Developer under this Agreement and shall be entitled, upon completion of such cure and written request made to the City, to a certificate of completion from the City, in a form reasonably acceptable to such holder and the City. Such holder shall have until the later of (A) sixty (60) days after the date such failure is required to be cured by Commercial Developer and (B) sixty (60) days after such holder is given notice of such failure, to cure or remedy such failure; provided, however, that if a failure is not capable of being cured or remedied by such holder within such time period, such holder shall have such greater period of time as is necessary to cure or remedy such default if such holder shall: (i) commence to cure or remedy the failure within such time period and shall diligently continue to prosecute such cure or remedy to completion, or (ii) if possession of any of the collateral securing the applicable Commercial Development Financing is required in order to cure or remedy such failure, institutes judicial or non-judicial foreclosure proceedings within such sixty (60) day period and diligently prosecutes such proceedings in order to obtain possession directly or through a receiver, and, upon obtaining such possession, commences promptly to cure or remedy the failure and diligently prosecutes the same to completion, provided that, during the period in which such action is being taken and any foreclosure proceedings are pending, all of the other obligations of Commercial Developer under this Agreement, to the extent they are reasonably susceptible to being performed by such holder, shall be performed. Notwithstanding the foregoing, such holder shall not be required to cure or remedy any failure that is not susceptible of cure or remedy by such holder (including, without limitation, any default under Sections 12.4(c)(4)-(7)) and taking into account any extensions of time to which the Commercial Developer would have been entitled pursuant to this Agreement.

If such holder fails to cure or remedy any failure to the extent provided in this Section 13.8(b), 593 of 11211
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then the City shall be afforded those rights against such holder it would otherwise have against Commercial Developer under Section 12.4(e) of this Agreement. (c) Any rights of the City under ARTICLE 12 shall not defeat, limit or render invalid any Commercial Development Financing Interest or any rights provided for in this Agreement for the protection of holders of Commercial Development Financing Interests.

ARTICLE 14.

GENERAL PROVISIONS
Section 14.1 Notices, Demands and Communications.
(a) Formal notices, demands, and communications between the City and a Developer shall be sufficiently given if and shall not be deemed given unless dispatched by registered or certified mail, postage prepaid, return receipt requested, overnight delivery using a nationally recognized overnight courier, or delivered personally, to the principal office of the City and such Developer as follows:

City: City of San Mateo
320 W. 20th Avenue
San Mateo, CA 99403
Attn: Community Development, Housing Manager
Commercial Developer:

DTSM Housing, LLC
c/o Harvest Properties
180 Grand Avenue, Suite 1400
Oakland, CA 94612
Attn: Preston O’Connell
With a copy to:

Prometheus Real Estate Group, Inc.
1 N. B Street, Suite 4000
San Mateo, California 94401
Attn: ______________
With a copy to:

Morrison & Foerster LLP
755 Page Mill Road
Palo Alto, CA 94304
Attn: Philip J. Levine, Esq.

Residential Developer:

AH Bespoke LP
c/o Alta Housing
3460 West Bayshore Road, Suite 104
Palo Alto, CA 94303
Attn: Randy Tsuad
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With a copy to:

Bocarsly Emden Cowan Esmail & Arndt LLP
633 West Fifth Street, Suite 5880
Los Angeles, CA 90071
Attn: Kyle Arndt
(b) Such written notices, demands and communications may be sent in the same manner to such other addresses as the affected party may from time to time designate by mail as provided in this Section. Each Party shall give a copy to each other Party of any notice sent by such Party to another Party.

Section 14.2 Non-Liability of City Officials, Employees and Agents.

No member, official, employee or agent of the City or the City shall be personally liable to the Developer, or any successor in interest, in the event of any default or breach by the City or for any amount which may become due to the Developer or successor or on any obligation under the terms of this Agreement.

Section 14.3 Non-Liability of Developer, Employees and Agents.

No member, director, employee or agent of the Developer or the Developer shall be personally liable to the City, or any successor in interest, in the event of any default or breach by the Developer or for any amount which may become due to the City or successor or on any obligation under the terms of this Agreement.

Section 14.4 Forced Delay.

In addition to specific provisions of this Agreement, performance by a Party hereunder shall not be deemed to be in default (and the time for performance, including, without limitation, the time for performance under the Schedule of Performance, shall be extended) where delays or failure in performance of any obligation under this Agreement are due to, and are outside the reasonable control of, and at the time of entering into this Agreement are not known and cannot be anticipated by Developer: war; insurrection; strikes; lock-outs; riots; floods; earthquakes; fires; casualties; acts of God; disruptions to supply chains; failure of utility providers to timely provide the applicable service; or acts of the public enemy (collectively, “Force Majeure Events”). Times of performance under this Agreement may also be extended in writing by the City and the applicable Developer with respect to the Commercial Development or the Residential Development, as applicable. In order to claim a delay under this Section 14.4, a Party must notify the other applicable Party of such delay claim within fifteen (15) business days after the claiming Party has actual knowledge of such delay and the delay will be deemed granted if not rejected by the other Party within fifteen (15) business days after receipt of the notice. In no event shall the cumulative delays exceed one hundred eighty days (180), unless otherwise agreed to in writing by the Parties, or unless to the extent that physical damage to improvements impacted by a Force Majeure Event cannot reasonably be repaired within the remaining days within the 180-day cumulative limit as reasonably determined by the applicable Developer and its contractor. If a Force Majeure Event occurs, the applicable Developer agrees to establish a construction schedule as soon after such occurrence as is commercially reasonably possible and thereafter to diligently proceed to complete the repair work. In addition to the 595 of 11211
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foregoing provisions, if the City does respond to any permit submission from a Developer within twenty (20) business days from the date of such submission, there shall be an automatic day for day Force Majeure Event for each day beyond such twenty (20) business day period until the City provides a response with respect to the applicable submission.

Section 14.5 Inspection of Books and Records.

Upon written request from the City, Residential Developer shall permit the City to inspect at reasonable times those books, records and all other documents of Residential Developer reasonably necessary to determine Residential Developer's compliance with the terms of this Agreement. Residential Developer and Commercial Developer have the right at all reasonable times to inspect the books, records and all other documentation of the City pertaining to its obligations under this Agreement.

Section 14.6 Provision Not Merged with Lease.

None of the provisions of this Agreement are intended to or shall be merged by any Ground Lease transferring title to any real property which is the subject of this Agreement from City to Residential Developer or any successor in interest, and any such Ground Lease shall not be deemed to affect or impair the provisions and covenants of this Agreement, prior to the termination hereof.

Section 14.7 Title of Parts and Sections.

Any titles of the articles, sections or subsections of this Agreement are inserted for convenience of reference only and shall be disregarded in construing or interpreting any part of its provision.

Section 14.8 General Indemnification.
(a) Except as otherwise provided in this Agreement, the Ground Lease and/or the Lot Tie Agreement and/or the REA and/or the Shared Parking Agreement, each Developer (for itself and not on behalf of the other Developer) agrees to indemnify, protect, hold harmless and defend (by counsel reasonably satisfactory to the City) the City, its elected and appointed officials, employees, and agents, from all suits, actions, claims, causes of action, administrative proceeding, arbitrations, enforcement actions, costs, demands, judgments and liens to the extent arising out of such Developer's performance or non-performance under this Agreement, or any other agreement executed by such Developer pursuant to this Agreement, or to the extent arising out of acts or omissions of any of such Developer's contractors, subcontractors, or persons claiming under any of the Developer’s contractors or subcontractors, except to the extent directly caused by the City's or its elected and appointed officials, employees, and agents willful misconduct or gross negligence. The provisions of this Section shall survive expiration of the Term or other termination of this Agreement and shall remain in full force and effect for claims based on events occurring prior to the expiration or termination of this agreement. (b) Except as otherwise provided in this Agreement, the Ground Lease and/or the Lot Tie Agreement and/or the REA and/or the Shared Parking Agreement, the City agrees to indemnify, protect, hold harmless and defend (by counsel reasonably satisfactory to the 596 of 11211
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applicable Developer) each Developer, its partners, members, officers and board members, employees, and agents, from all suits, actions, claims, causes of action, administrative proceeding, arbitrations, enforcement actions, costs, demands, judgments and liens to the extent arising out of the City's performance or non-performance under this Agreement, or any other agreement executed pursuant to this Agreement, or to the extent arising out of acts or omissions of any of the City's contractors, subcontractors, or persons claiming under any of the City’s contractors or subcontractors, except to the extent directly caused by the applicable Developer's or its officers and board members, employees, and agents willful misconduct or gross negligence. The provisions of this Section shall survive expiration of the Term or other termination of this Agreement and shall remain in full force and effect for claims based on events occurring prior to the expiration or termination of this agreement.. (c) Responsibility for Actions and Claims. Without limiting the provisions of Sections 14.8(a) and 14.8(b), the Commercial Developer shall be solely responsible for any actions or claims to the extent arising out of the construction, use, maintenance, and/or operations of the Commercial Improvements and the Residential Developer shall be solely responsible for any actions or claims to the extent arising out of the construction, use, maintenance and/or operation of the Residential Improvements. The Commercial Developer shall be solely responsible for any actions or claims to the extent arising out of the construction of the Underground Parking Garage. The Commercial Developer and/or the Residential Developer, as applicable, shall be responsible for any actions or claims to the extent arising out of the use, maintenance, and/or operation of the Underground Parking Garage to the extent set forth in the REA. The provisions of this Section shall survive expiration of the Term or other termination of this Agreement.

Section 14.9 Applicable Law.

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

Section 14.10 No Brokers.

Each Party represents to each other Party that it has not had any contact or dealings regarding the Property, or any communication in connection with the subject matter of this transaction, through any real estate broker or other person who can claim a right to a commission or finder's fee except as agreed to in writing by the City and each of the Developers. If any broker or finder makes a claim for a commission or finder's fee based upon a contact, dealings, or communications (including any such claim by a party against the City with respect to the actions of Commercial Developer with respect to the Commercial Property), the Party through whom the broker or finder makes this claim shall indemnify, defend with counsel of the indemnified party's choice, and hold the indemnified party harmless from all expense, loss, damage and claims, including the indemnified party's attorneys' fees, if necessary, arising out of the broker's or finder's claim. For the avoidance of doubt, except as expressly provided in the immediately preceding sentence, this Section 14.10 shall not apply to any transactions applicable to the Commercial Property. The provisions of this Section shall survive expiration of the Term or other termination of this Agreement and shall remain in full force and effect.

Section 14.11 Severability.
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If any term, provision, covenant or condition of this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the provisions shall continue in full force and effect unless the rights and obligations of the parties have been materially altered or abridged by such invalidation, voiding or unenforceability.

Section 14.12 Venue.

In the event any legal action is commenced to interpret or to enforce the terms of this Agreement or to collect damages as a result of any breach thereof, the venue for such action shall be the Superior Court of the County of San Mateo, or where otherwise appropriate, exclusively in the United District Court, Northern District, San Francisco, California.

Section 14.13 Binding Upon Successors.

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

Section 14.14 Parties Not Co-Venturers.

Nothing in this Agreement is intended to nor does establish the Parties as partners, coventurers, or principal and agent with one another.

Section 14.15 Time of the Essence.

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

Section 14.16 Action by the City.

Except as may be otherwise specifically provided in this Agreement or another City Document, whenever any approval, notice, direction, finding, consent, request, waiver, or other action by the City is required or permitted under this Agreement or another City Document, such action may be given, made, or taken by the City Manager, or by any person who shall have been designated in writing to the Residential Developer and the Commercial Developer by the City Manager, without further approval by the City Council. Any such action shall be in writing.

Section 14.17 Identity and Authority of Developer.

Each Developer hereby represents and warrants to the City (with respect to such Developer only) as follows:
(a) Organization. The Developer is a duly organized, validly existing entity and is in good standing under the laws of its state of formation and has the power and authority to own its property and carry on its business as now being conducted. 598 of 11211
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(b) Authority of Developer. The Developer has full power and authority to execute and deliver this Agreement, or to be executed and delivered, pursuant to this Agreement, and to perform and observe the terms and provisions of all of the above. (c) Authority of Persons Executing Documents. This Agreement and all other documents or instruments executed and delivered, or to be executed and delivered, pursuant to this Agreement have been executed and delivered by persons who are duly authorized to execute and deliver the same for and on behalf of Developer, and all actions required under the Developer's organizational documents and applicable governing law for the authorization, execution, delivery and performance of this Agreement and all other documents or instruments executed and delivered, or to be executed and delivered, pursuant to this Agreement, have been duly taken.
(d) Valid Binding Agreements. This Agreement and all other documents or instruments which have been executed and delivered pursuant to or in connection with this Agreement constitute or, if not yet executed or delivered, will when so executed and delivered constitute, legal, valid and binding obligations of the Developer enforceable against it in accordance with their respective terms.
(e) No Breach of Law or Agreement. Neither the execution nor delivery of this Agreement or of any other documents or instruments executed and delivered, or to be executed or delivered, pursuant to this Agreement, nor the performance of any provision, condition, covenant or other term hereof or thereof, will conflict with or result in a breach of any statute, rule or regulation, or any judgment, decree or order of any court, board, commission or agency whatsoever binding on the Developer, or any provision of the organizational documents of the Developer, or will conflict with or constitute a breach of or a default under any agreement to which the Developer is a party, or will result in the creation or imposition of any lien upon any assets or property of the Developer, other than liens established pursuant hereto. (f) Compliance with Laws; Consents and Approvals. The construction of the Residential Improvements (with respect to the Residential Developer) and the construction of the Underground Parking Garage (with respect to the Commercial Developer) will comply with all applicable laws, ordinances, rules and regulations of federal, state and local governments and agencies and with all applicable directions, rules and regulations of the fire marshal, health officer, building inspector and other officers of any such government or agency. (g) Pending Proceedings. The Developer is not in default under any law or regulation or under any order of any court, board, commission or agency whatsoever, and there are no claims, actions, suits or proceedings pending or, to the knowledge of the Developer, threatened against or affecting the Developer, at law or in equity, before or by any court, board, commission or agency whatsoever which might, if determined adversely to the Developer, materially affect the Developer's ability to develop the Residential Improvements (with respect to the Residential Developer) and the construction of the Underground Parking Garage (with respect to the Commercial Developer).

Section 14.18 Complete Understanding of the Parties.
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This Agreement is executed in duplicate originals each of which is deemed to be an original. This Agreement and the attached exhibits constitute the entire understanding and agreement of the parties with respect to the matters set forth in this Agreement.

Section 14.19 Entry by the City.

The applicable Developer shall permit the City, through its officers, agents, or employees, at all reasonable times to enter into the Residential Development and, prior to Completion, the portion of the Underground Parking Garage located on the Residential Property (a) to inspect the work of construction to determine that the same is in conformity with the requirements of this Agreement, and (b), following completion of construction of the Residential Project, to inspect the ongoing operation and management of the Residential Development to determine that the same is in conformance with the requirements of this Agreement. Each Developer acknowledges that the City is under no obligation to supervise, inspect, or inform the applicable Developer of the progress of construction, or operations and neither Developer shall rely upon the City therefore. Any inspection by the City during the construction is entirely for its purposes in determining whether the applicable Developer is in compliance with this Agreement and is not for the purpose of determining or informing the applicable Developer of the quality or suitability of construction. Each Developer shall rely entirely upon its own supervision and inspection in determining the quality and suitability of the materials and work, and the performance of architects, subcontractors, and material suppliers.

Section 14.20 Discretion Retained by the City.

The City's execution of this Agreement does not constitute approval by the City and in no way limits the discretion of the City in the permit, entitlement, and approval process in connection with Development of the Improvements.

Section 14.21 Conflict of Interest.

No member, official, employee or agent of the City shall make any decisions relating to this Assignment which affects their personal interests or the interest of any corporation, partnership, association in which they are directly or indirectly interested in.

Section 14.22 No Third-Party Beneficiaries.

No person or entity other than the City, the Commercial Developer or the Residential Developer and their permitted successors and assigns shall have the right of action under this Agreement.

Section 14.23 Amendments.

The Parties can amend this Agreement only by means of a writing executed by all Parties; provided, that (i) the Commercial Developer and the City can amend this Agreement by a written amendment to the extent such amendment does not have an adverse effect on the Residential Developer or Residential Development upon not less than ten (10) Business Day’s prior written notice to Residential Developer and (ii) the Residential Developer and the City can amend this Agreement by a written amendment to the extent such amendment does not have an 600 of 11211
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adverse effect on the Commercial Developer upon not less than ten (10) Business Day’s prior written notice to Commercial Developer or Commercial Development. If this Agreement is amended pursuant to clause (i) or (ii), the City shall promptly deliver a copy of such amendment to the Residential Developer (in the case of an amendment pursuant to clause (i) or to the Commercial Developer (in the case of an amendment pursuant to clause (ii).

Section 14.24 Implementation Agreements.

The Parties acknowledge that the provisions of this Agreement require a close degree of cooperation and that new information and future events may demonstrate that changes are appropriate with respect to the details of performance of the Parties under this Agreement. The Parties desire, therefore, to retain a certain degree of flexibility with respect to the details of performance for those items covered in general terms under this Agreement. If and when, from time to time, the Parties find that refinements or adjustments are desirable, such refinements or adjustments shall be accomplished through operating memoranda or implementation agreements approved by the Parties which, after execution shall be attached to this Agreement as addenda and become a part hereof. Operating memoranda or implementation agreements may be executed on the City's behalf by the Executive Director, or the Executive Director's designee. In the event a particular subject requires notice or hearing, such notice or hearing shall be appropriately given. Notwithstanding the foregoing, nothing in this Section shall be deemed to require a party to consider any request by another party for a waiver of any particular obligation as set forth herein.

Section 14.25 Multiple Originals; Counterparts.

This Agreement may be executed in multiple originals, each of which is deemed to be an original, but all of which, taken togethr, shall constitute one and the same Agreement. For purposes of execution, facsimile signatures and signature pages sent through electronic mail (including electronic signatures) shall be cosnidered effective and binding and shall have the same legal effect as physically delivered original signatures. .

Section 14.26 City Council Appeal; Mediation.
(a) With respect to the City Manager’s approval rights contained in Sections

4.3(a)(7), 6.2(c), 8.7(a) and/or 8.7(b) of this Agreement, if the City Manager does not approve the applicable action (or fails to respond within any applicable time period for providing such approval), then the applicable Developer may appeal such decision to the City Council by providing written notice to the City within ten (10) business days from the date on which the City Manager provides its disapproval (or was required to have done so, if applicable) and the City shall be required to cause such appeal to be heard by the City Council during one of the next two City Council meetings immediately following delivery of such appeal notice (provided, that a City Council meeting scheduled within seven (7) days after the date that the applicable Developer provides its appeal notice shall not be counted in such determination). (b) Should any dispute arise out of this Agreement that is not described in Section 14.26(a)(including, without limitation, a dispute arising from any action or failure to act by the City Manager under the authority granted to the City Manager pursuant to Section 14.16), any party may request that it be submitted to mediation. The parties shall meet in mediation with 601 of 11211
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thirty days (30) days of a request, and such mediation shall be limited to one (1) day of mediation. The mediator shall be agreed to by the mediating parties. In the absence of an agreement, the parties shall each submit one name from mediators listed by either the American Arbitration Association, the State Mediation and Conciliation Service, or other agreed-upon service. The mediator shall be selected by a blind draw. The cost of mediation (other than attorneys' fees of each party) shall be borne equally by the parties. Neither party shall be deemed the prevailing party. No party shall be permitted to file a legal action without first meeting in mediation and making a good faith attempt to reach a mediated settlement. The mediation process, once commenced by a meeting with the mediator, shall last until agreement is reached by the parties, but not more than sixty (60) days from when such process is commenced, unless the maximum time is extended by mutual written agreement executed by both parties.

Section 14.27 Litigation.

The City may request the Commercial Developer and/or the Residential Developer to testify, if litigation is brought against City in connection with this Agreement, to the extent that they are considered a material witness to the action being litigated. Unless the action is brought by such Commercial Developer and/or the Residential Developer, or is based upon such Commercial Developer and/or the Residential Developer 's wrongdoing, City shall compensate the testifying party for all reasonable attorneys' fees, and for preparation of testimony and travel at such Developer's standard hourly rates at the time of actual testimony. Notwithstanding the foregoing, a party’s election to testify shall be made in such Developer’s sole discretion.

Section 14.28 Minimum Wages.

Residential Developer and Commercial Developer shall comply with the City of San Mateo local minimum wage requirements as set forth in San Mateo Municipal Code Chapter

5.92. [Signatures on following page]
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IN WITNESS WHEREOF, the City, the Commercial Developer and the Residential Developer have executed this Agreement in triplicate on or as of the date first above written.

COMMERCIAL DEVELOPER:

DTSM Housing, LLC , a Delaware limited liability
company
By:

Its:

RESIDENTIAL DEVELOPER:

Name:

Title:

CITY:

CITY OF SAN MATEO, a California charter city
By:

Alex Khojikian, City Manager
Approved to as form and legality
Mazarin Vakharia, Assistant City Attorney
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EXHIBIT A

LEGAL DESCRIPTION OF THE PROPERTY
The real property referred to herein is that certain real property located in the City of San Mateo, County of San Mateo, State of California, described as follows:

THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF SAN MATEO, COUNTY OF SAN MATEO, STATE OF CALIFORNIA AND IS DESCRIBED AS FOLLOWS: LOTS 2, 3 AND 4, BLOCK 10, AS DELINEATED UPON THAT CERTAIN MAP ENTITLED "MAP OF THE TOWN OF SAN MATEO", FILED FOR RECORD IN THE OFFICE OF THE RECORDER OF THE COUNTY OF SAN MATEO, STATE OF CALIFORNIA, ON JANUARY 24TH, 1867 IN BOOK 2 OF MISCELLANEOUS RECORDS, PAGE 95 AND A COPY ENTERED INTO BOOK 1 OF MAPS, PAGE 45.

APN: 034-179-050, JPN: 034-017-179-05.00, 034-179-060, JPN: 034-017-179-06.00 604 of 11211
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EXHIBIT B

DEVELOPMENT PLAN
(SHOULD INCLUDE MAP DEMONSTRATING PARCELS INCLUDED IN THE

DEVELOPMENT SITE)
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EXHIBIT C

SCHEDULE OF PERFORMANCE
(TO BE ATTACHED)
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EXHIBIT D

INITIAL FINANCING PLAN
This Financing Proposal represents an estimate of the total development costs and expected funding sources. The City and the Developer acknowledge that the Developer may pursue additional funding options and the list of funding sources described above is not intended to be a limitation on the sources that the Developer may utilize to finance the construction and operation of the Development. The Developer will update the Financing Proposal in accordance with Section 6.3(b) of the Agreement. The Financing Proposal shall be in effect until a Financing Plan is approved by the City pursuant to Section 6.3(b).
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EXHIBIT E

FORM OF GROUND LEASE
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F-1
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EXHIBIT F

FORM OF LOT TIE AGREEMENT
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G-1
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EXHIBIT G

FORM OF REA
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H-1
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EXHIBIT H

SITE PLAN
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I-1
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EXHIBIT I

TEMPORARY CONSTRUCTION EASEMENT
(TO BE INSERTED)
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EXHIBIT J

MEMORANDUM OF DISPOSITION AND DEVELOPMENT AGREEMENT
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K-1
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EXHIBIT K

FORM OF CITY PREDEVELOPMENT LOAN AGREEMENT
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K-1-1
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EXHIBIT K-1

FORM OF CITY PERMANENT LOAN AGREEMENT
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EXHIBIT L

INSURANCE COVERAGE
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EXHIBIT B

DEVELOPMENT PLAN
The Bespoke project (Project) includes the following components:

A seven-story, 71-unit 100-percent affordable housing building on the City’s lot with community space for Self-Help for the Elderly (a local not-for-profit) on the first floor; A six-story 162,934 square-foot commercial and office building with ground floor retail; Improvements in the public right-of-way along all four street frontages, and 128 parking spaces in an underground parking garage that spans both residential and commercial parcels and is accessed via the city-owned lot. 37 will be reserved for the residential building
91 will serve commercial and office uses.
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66 of the commercial spaces will be available for public use after regular business hours, during evenings and weekends.
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EXHIBIT C

SCHEDULE OF PERFORMANCE
Assume Effective Entitlement Date of July 1, 2026. All dates in the schedule shall be adjusted based on the Effective Entitlement Date.

Action/Obligation Responsible
Parties
Timeline for
Performance
Target
Completion*
Exclusive of any buffers
Buffers*
Each buffer commences from
the date of completion of prior
milestone
Default Date
Exceeding this date
constitutes a default
under the terms of this
Agreement

1. Commercial Developer
deposits $2.9M contribution with
the City (Developer Equity
Contribution).

Commercial
Developer
Within 120 days
of Entitlement
Date
Thursday,
October 29,
2026
No buffer
Thursday,
October 29,
2026

1.5 Mass Excavation and Shoring
Permit Submission
Commercial
Developer and
Residential
Developer
Within 18
months of the
Entitlement Date
Wednesday,
January 29,
2028
No buffer
Wednesday,
January 29,
2028
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Action/Obligation Responsible
Parties
Timeline for
Performance
Target
Completion*
Exclusive of any buffers
Buffers*
Each buffer commences from
the date of completion of prior
milestone
Default Date
Exceeding this date
constitutes a default
under the terms of this
Agreement

2. Master Building Permit
Submission (including
foundation, residential
superstructure, and commercial
superstructure permits)
Commercial
Developer and
Residential
Developer
Within 6 months
of Mass
Excavation and
Shoring Permit
Submission
Saturday, July
29, 2028 Up to 3 months Friday, October29, 2028

3. Commercial Developer
deposits $3M with the City
(Initial Deposit).

Commercial
Developer
Prior to
foundation
Building Permit
issuance
See #4 No buffer See #4
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Action/Obligation Responsible
Parties
Timeline for
Performance
Target
Completion*
Exclusive of any buffers
Buffers*
Each buffer commences from
the date of completion of prior
milestone
Default Date
Exceeding this date
constitutes a default
under the terms of this
Agreement

4. Issuance of Building Permit
(commercial and parking garage)
and building permit ready-forissuance letter (residential). City commits to expeditious review of
permit submittals. Applicant
commits to timely and complete
resubmittals.

City Within 18
months of
Master Building
Permit
Submission
Tuesday,
January 29,
2030
6 months
Tuesday,
October 29,
2030

5. Commercial Developer to
commence construction of the
Underground Parking Garage
Commercial
Developer
Within 6 months
from issuance of
Building Permit
(commercial and
parking garage)
Tuesday, July
29, 2031 No buffer April 29, 2032

6. Underground Parking Garage
completion and residential pad
turnover
Commercial
Developer
Within 12
months of
underground
garage
construction
commencement
Thursday, July
29, 2032 Up to 3 months Friday, July 29,2033

7. Commercial Developer makes
contribution of $3.5M to City
(Additional Deposit).

Commercial
Developer
Prior to
Temporary or
Final Certificate
of Occupancy
for first tenant
(of office)
To Be
Determined No buffer To Be Determined
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Action/Obligation Responsible
Parties
Timeline for
Performance
Target
Completion*
Exclusive of any buffers
Buffers*
Each buffer commences from
the date of completion of prior
milestone
Default Date
Exceeding this date
constitutes a default
under the terms of this
Agreement

8. Residential submits for federal
tax credits (Typically Feb.)
Residential
Developer
The first
February after 3
months prior to
podium
completion.

Monday,
February 28,
2033 (or tax
credit
application
deadline,
whichever first)
No buffer
Tuesday,
February 28,
2034
(or tax credit
application
deadline,
whichever first)

9. Residential Developer submits
to City final Tenant Selection and
Marketing Plan and Financing
Plan (Conditions Precedent to
Conveyance of Property)
Residential
Developer
One month prior
to closing on all
necessary
financing for
Residential
Development
(#10, below)
See #10 No buffer See #10
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Action/Obligation Responsible
Parties
Timeline for
Performance
Target
Completion*
Exclusive of any buffers
Buffers*
Each buffer commences from
the date of completion of prior
milestone
Default Date
Exceeding this date
constitutes a default
under the terms of this
Agreement

10. Residential Developer shall
secure and close on all necessary
financing for the Residential
Development (the “Financing
Commitment”).

Residential
Developer
Within 10
months of
successfully
submitting for
tax credits.

Residential
developer may
apply for up to 3
rounds of tax
credit funding
cycles. This must
be preceded by,
and coordinated
with, state
funding sources
(assumes 3
cycles, or five
years maximum).

December 31,
2034
(or tax creditrequired closing
date, whichever
first)
No buffer - refer to
Timeline for
Performance.

December 31,
2038 (or tax
credit-required
closing date,
whichever first)

11. City and Residential
Developer shall execute, and City
shall record, the Residential
Ground Lease, Regulatory
Agreement and Deed of Trust.

City and
Residential
Developer
Concurrently
with the close of
financing for
Residential
Development
(#10, above).

December 31,
2034 No buffer
December 31,
2038 (or tax
credit-required
closing date,
whichever first)
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Action/Obligation Responsible
Parties
Timeline for
Performance
Target
Completion*
Exclusive of any buffers
Buffers*
Each buffer commences from
the date of completion of prior
milestone
Default Date
Exceeding this date
constitutes a default
under the terms of this
Agreement

12. Residential Developer shall
obtain Building permits for the
Residential Development and
commence construction of the
Residential Improvements.

Developer
Within 30 days
from the close of
Escrow of the
Residential
Financing (#10,
above)
January 29,
2035 No buffer January 29, 2039

13. Residential Developer obtains
Final Building Inspection for
superstructure.

Residential
Developer
Within 24
months
following the
commencement
of construction
January 29,
2037 Up to 9 months January 29,2041
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EXHIBIT D

INITIAL FINANCING PLAN
This Financing Proposal represents an estimate of the total development costs and expected funding sources. The City and the Developer acknowledge that the Developer may pursue additional funding options and the list of funding sources described above is not intended to be a limitation on the sources that the Developer may utilize to finance the construction and operation of the Development. The Developer will update the Financing Proposal in accordance with Section 6.3(b) of the Agreement. The Financing Proposal shall be in effect until a Financing Plan is approved by the City pursant to Section 6.3(b).
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• 660\14\4020879.2

GROUND LEASE AGREEMENT
By and Between
the
City of San Mateo
and
AH Bespoke LP
(__________________)
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• 660\14\4020879.2

TABLE OF CONTENTS
ARTICLE 1 Definitions..................................................................................................................4 Section 1.1 Definitions...................................................................................................4 ARTICLE 2 Lease of the Land; Rental Provisions; Taxes and Assessments.................................8 Section 2.1 Lease of the Land ........................................................................................8 Section 2.2 Lease Term..................................................................................................8 Section 2.3 Ground Rent Charges..................................................................................8 Section 2.4 Use of Project and Assurances of Lessee.................................................... 8 Section 2.5 Taxes and Assessments.............................................................................10 Section 2.6 Definitions.................................................................................................10 Section 2.7 Purpose of Restrictions on Transfer.......................................................... 11 Section 2.8 Prohibited Transfers..................................................................................11 Section 2.9 Permitted Transfers...................................................................................12 Section 2.10 Effectuation of Certain Permitted Transfers .............................................13 Section 2.11 Other Transfers with City Consent ........................................................... 13 Section 2.12 Assumptions..............................................................................................13 ARTICLE 3 Maintenance; Use of Premises.................................................................................14 Section 3.1 Title to Improvements...............................................................................14 Section 3.2 Permits, Licenses and Easements..............................................................14 Section 3.3 Use of Project............................................................................................14 Section 3.4 Construction of the Improvements............................................................15 Section 3.5 Maintenance of the Project........................................................................15 Section 3.6 Outdoor Public Access Area ..................................................................... 16 Section 3.7 Limitations on the Outdoor Public Access Area.......................................16 Section 3.8 Property Management ...............................................................................17 Section 3.9 Utilities......................................................................................................18 627 of 11211
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Section 3.10 Inspection .................................................................................................. 18 Section 3.11 Subordination ............................................................................................18 Section 3.12 Non-Discrimination ..................................................................................19 ARTICLE 4 Mortgage Loans........................................................................................................19 Section 4.1 Loan Obligations.......................................................................................19 Section 4.2 Liens and Encumbrances against Lessee's Interest in the Leasehold Estate .........................................................................................................19 Section 4.3 Cost of Other Loans to be Paid by Lessee ................................................21 Section 4.4 Proceeds of Loans .....................................................................................22 Section 4.5 Notice and Right to Cure Defaults Under Loans ......................................22 ARTICLE 5 Insurance ..................................................................................................................22 Section 5.1 Required Insurance Coverage ...................................................................22 Section 5.2 Additional Insurance Provisions...............................................................23 Section 5.3 Proceeds of Insurance ...............................................................................24 Section 5.4 Indemnification .........................................................................................24 Section 5.5 Hazardous Materials Indemnification ....................................................... 25 Section 5.6 "As Is" Conveyance................................................................................... 26 ARTICLE 6 Condemnation, Damage or Destruction of the Project ............................................27 Section 6.1 Condemnation ...........................................................................................27 Section 6.2 Administration of Construction Fund in the Event of Condemnation, or Damage or Destruction of Project............................... 29 Section 6.3 Lessee, City, Lenders to be Made Parties in Legal Proceedings............... 29 ARTICLE 7 Assurances of City ...................................................................................................30 Section 7.1 City to Give Peaceful Possession.............................................................. 30 Section 7.2 City to Lease Project with Marketable Title .............................................30 Section 7.3 Release of City ..........................................................................................30 628 of 11211
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ARTICLE 8 Defaults and Remedies.............................................................................................31 Section 8.1 Events of Default; Remedy of Default by Lessee ..................................... 31 Section 8.2 Cure of Material Breach by Lessee ...........................................................32 Section 8.3 Termination ...............................................................................................32 Section 8.4 Redelivery of Premises .............................................................................32 ARTICLE 9 Miscellaneous...........................................................................................................33 Section 9.1 Instrument Is Entire Agreement................................................................33 Section 9.2 Notices ......................................................................................................33 Section 9.3 Recording ..................................................................................................33 Section 9.4 Non-Waiver of Breach .............................................................................. 33 Section 9.5 Effective Date; Counterparts.....................................................................34 Section 9.6 Lease Binding on Successors....................................................................34 Section 9.7 Relationship of Parties ..............................................................................34 Section 9.8 No Merger.................................................................................................34 Section 9.9 Gender and Number ..................................................................................34 Section 9.10 Titles..........................................................................................................34 Section 9.11 Severability ...............................................................................................35 Section 9.12 Applicable Law and Venue.......................................................................35 Section 9.13 Costs and Attorney Fees............................................................................35 Section 9.14 Mediation ..................................................................................................35 Section 9.15 Litigation ...................................................................................................35 629 of 11211
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GROUND LEASE
This Ground Lease ("Lease"), is entered into effective as of __________, 20__, by and between the City of San Mateo, a California charter city (the "City") and AH Bespoke LP, a California limited partnership (the "Lessee").

RECITALS
A. The City is the fee owner of that certain property located at the corner of E 4th Avenue and N. Railroad Avenue (APNs 034-179-050 and 034-179-060) as more fully described in Exhibit A attached to this Lease and incorporated into this Lease by this reference (collectively, the “Land”).

B. The Lessee will develop, own and operate a seventy-one unit 100% affordable housing building (with one unrestricted manager’s unit) with a nearly 6,000 square feet groundfloor community space (the “Community Space”) to be initially leased to Self-Help Center for the Elderly and a portion of an underground parking garage located on the Land in the City of San Mateo, California defined as the "Improvements" for a period of ninety-nine (99) years pursuant to the terms of the Lease.

C. DTSM Talbots Venture, LLC, a Delaware limited liability company (the “Commercial Developer”) has commenced construction of approximately 163,000 square feet of commercial space, and an underground parking garage, which will provide a concrete podium that can support construction of the residential building and related improvements; D. The Improvements may be financed through one or more alternative construction and permanent lenders and insured or guaranteed by a credit enhancement provider.

E. The City desires to lease the land upon which the Improvements will be constructed for a period of ninety-nine (99) years pursuant to the terms of the Lease.

F. All the property owners and leaseholders of the commercial and residential development will enter into a reciprocal easement agreement that would allocate appropriate responsibilities and cost sharing relating to facilities (e.g., the Underground Parking Garage) to be shared by the Lessee and the adjacent commercial development.

NOW, THEREFORE, in consideration of the promises and the respective covenants and agreements contained in this Lease, the Parties agree as follows:

ARTICLE 1

DEFINITIONS
Section 1.1 Definitions.
(a) "Annual Operating Expenses" with respect to a particular fiscal year shall mean the following costs reasonably and actually incurred for operation and maintenance of the 630 of 11211
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Project to the extent that they are consistent with the annual budget for the Project, approved by the City pursuant to the Regulatory Agreement and with an annual independent audit performed by a certified public accountant, reasonably acceptable to the City, using generally accepted accounting principles:
(1) Property taxes and assessments imposed on the Project; (2) Debt service currently due on a non-optional basis (excluding debt service due from residual receipts or surplus cash of the Project) on loans associated with construction of the Project and approved by the City in the Financing Plan; (3) Property management fees and reimbursements;
(4) Premiums for property damage and liability insurance; (5) Utility services not paid for directly by tenants, including water, electrical, sewer, and trash collection;
(6) Maintenance and repair expenses and services, including pest control, landscaping, grounds maintenance, painting and decorating, cleaning, common systems repair, janitorial supplies and services, including capital replacements, each to the extent not funded by reserves, insurance proceeds, grants, or loans; (7) Any annual license or certificate of occupancy fees required for operation of the Project, and any applicable annual program administration fees; (8) Security services;
(9) Advertising and marketing;
(10) Cash deposited into reserves for capital replacements of the Project;
(11) Cash deposited into an operating reserve;
(12) Resident services;
(13) Any previously unpaid portion of the Developer Fee due (without interest) not exceeding a cumulative amount of the Developer Fee; provided that this shall only apply to any deferred portion of the net cash developer fee (net of any general partner capital contributions) that is approved by the City and County if applicable as payable from development sources (“Net Developer Fee”). For the avoidance of doubt, any deferred Developer Fee remaining after payment of the Net Developer Fee may be paid only from Borrower's share of Residual Receipts;
(14) Current and accrued annual partnership management fee of ______________________________per year and current and accrued annual asset management fee of______________________________ , and other fees approved by Senior Lenders ; 631 of 11211
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(15) Reasonable accounting fees and legal fees;
(16) An annual audit fee;
(17) Extraordinary operating costs specifically approved in writing by the City as part of the annual budget approval process pursuant to this Agreement; (18) Payments of deductibles in connection with casualty insurance claims not normally paid from reserves;
(19) Fidelity bond premiums;
(20) The amount of uninsured losses actually replaced, repaired or restored, and not normally paid from reserves;
(21) Repayment of operating deficits, loans or advances from the general partner of the partnership or an affiliate thereof; (22) Repayment of loans made by the general partner of the partnership or an affiliate thereof to cover eligible basis adjusters required pursuant to the Lessee’s partnership agreement, but excluding any compliance adjusters required pursuant to the Lessee’s partnership agreement;
(23) Extraordinary operating costs specifically approved in writing by the City unless incurred in connection with an emergency; and (24) Other ordinary and reasonable operating expenses approved in the Financing Plan or as otherwise approved in writing by the City and not listed above. (25) Annual Operating Expenses shall exclude the following:
depreciation, amortization, depletion or other non-cash expenses; initial deposits to establish the operating reserve and the replacement reserve and any amount expended from a reserve account; and any capital cost with respect to the Project not otherwise listed above, as determined by the accountant for the Project.
(b) "City" means the City of San Mateo, a California charter city. (c) "City Disposition and Loan Agreement" means the Disposition, Development and Loan Agreement by and between City and Lessee dated___________. (d) "City Loan" shall mean a loan, or loans in the amount of ______________________from City to Lessee as evidenced by the City Disposition and Loan Agreement.
(e) "City Loan Documents" means the City Disposition and Loan Agreement, City Regulatory Agreement, the promissory notes evidencing the City Loan and the deed of trust securing the City Loan.
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(f) "City Regulatory Agreement" means the regulatory agreement by and between City and Lessee, of even date herewith, setting forth the requirement to provide occupancy and certain services to a specified number of low and very low-income households at affordable charges at the Project.
(g) "Effective Date" means the date first written above on which this Lease is effective.
(h) "Financing Plan" means a City approved Financing Plan pursuant to the terms of Section 5.4 of the City Disposition and Loan Agreement, containing the following: (1) a "sources and uses" breakdown of the costs of constructing the Improvement; and (2) an operating proforma for the Development. Such sources and uses breakdown and operating proforma shall reflect the Lessee's then current expectations for funding sources, development costs, and Annual Operating Expenses. The approved Financing Plan is attached hereto as Exhibit B. (i) "Gross Revenue" with respect to a particular fiscal year shall mean all revenue, income, receipts, and other consideration earned from operation and leasing of the Project. Gross Revenue shall include, but not be limited to: all rents, fees and charges paid by tenants, Section 8 payments or other rental subsidy payments received for the dwelling units, deposits forfeited by tenants, interest on tenant security deposits not otherwise required to be paid to tenants, all cancellation fees, price index adjustments and any other rental adjustments to leases or rental agreements; net proceeds from vending and laundry room machines; the proceeds of business interruption or similar insurance and not paid to Senior Lenders; the proceeds of casualty insurance not used to rebuild the Project or replace damaged property and not paid to Senior Lenders; and condemnation awards for a taking of part or all of the Project for a temporary period not paid to Senior Lenders. Gross Revenue shall not include tenants' security deposits, loan proceeds, capital contributions or similar advances. (j) "Improvements" means the buildings, structures, underground parking, landscaping and other improvements, including any building fixtures, now or later located on the Land and generally consisting of seventy-one (71) residential units, including one (1) unrestricted manager unit, of multi-family rental housing for lower income households, approximately 6,000 square feet of ground floor community space and below grade parking as shown in the Lessee’s approved planning application.
(k) "Investor" means the limited partner(s) of Lessee,
_________________________.
(l) "Land" has the meaning set forth in Recital A.
(m) "Lease" has the meaning set forth in the first paragraph of this Agreement. (n) "Lease Term" means the ninety-nine (99) year period set forth in Section

2.2 below, during which this Lease shall be in effect unless terminated earlier in accordance with the provisions of this Lease.
(o) "Lenders" means each and all of the lenders providing the Other Loans to Lessee, or guaranteeing, insuring or credit enhancing Other Loans to the Lessee. 633 of 11211
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(p) "Lessee" means AH Bespoke LP, a California limited partnership. (q) “Other Loan Documents" means all documents executed by the Lessee evidencing, guaranteeing, insuring or securing the Other Loans, including, but not limited to, regulatory agreements, notes, deeds of trust, security agreements, fixture filings, and financing statements.
(r) "Other Loans" shall mean any loans, certificates of participation financing and related credit enhancement now or later obtained by the Lessee as evidenced by promissory notes and secured by deeds of trust recorded against the Project or any installment sales financing (and any related security documents, including regulatory agreements, use agreements, security agreements, fixture filings, and financing statements required of the Lessee) which are given by the Lessee. Other Loans shall not include the City Loan. (s) "Parties" shall mean the City and the Lessee collectively. (t) "Party" shall mean the City or the Lessee individually. (u) "Project" shall mean the Improvements and the Lessee's leasehold interest in the Land.
(v) “Reciprocal Easement Agreement” means that certain Agreement of Easements, Covenants and Restrictions by and between __________ dated as of _______. (w) "Resident" means the resident who is authorized by Lessee to occupy the units.
(x) "Residual Receipts" in a particular fiscal year shall mean the amount by which Gross Revenue exceeds Annual Operating Expenses.

ARTICLE 2
LEASE OF THE LAND; RENTAL PROVISIONS; TAXES AND ASSESSMENTS Section 2.1 Lease of the Land.

For and in consideration of the covenants and agreements to be kept and performed by the Lessee and the City, the City leases the Land to the Lessee, and the Lessee does take, hire and lease the Land from the City pursuant to the terms of this Lease.

Section 2.2 Lease Term.

The term of this Lease shall commence on the Effective Date, and shall continue from such date until the date which is ninety-nine (99) years from the Effective Date, unless terminated earlier in accordance with this Lease.
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Section 2.3 Ground Rent Charges.

The Lessee shall pay to the City rent in the amount of Ninety-Nine Dollars ($99.00), which shall represent payment of rent equal to One Dollar ($1.00) per year for the first ninety-nine (99) years of the Lease Term, payable one time only upon execution of this Lease.

Section 2.4 Use of Project and Assurances of Lessee.

The City and the Lessee understand and agree that the rent has been set at a nominal amount for the specific purpose of assisting the Lessee to operate and maintain the Project. In consideration of the nominal amount of the rent and the other financial assistance from the City to the Lessee, the Lessee shall use the land and operate the Project in accordance with the uses outlined in this Lease.

The Lessee agrees:
(a) To operate the Improvements as affordable multifamily residential housing in accordance with the terms of the City Regulatory Agreement, and this Lease; (b) To lease the ground floor community space (see Exhibit C) to an entity compatible with affordable housing and approved by the City Manager in its sole and reasonable discretion, on a Triple-Net Basis. “Triple Net Basis” means that the lessee is responsible for the property taxes (if any), security, maintenance, cleaning, insurance, gas, electric, internet and any other utility charges associated with the Community Space; (c) To maintain the character of the Project as required by this Lease and any Other Loan Documents or the City Loan Documents for so long as such Other Loan Documents, the City Loan Documents remain in effect;
(d) To select Residents in accordance with a resident selection plan approved by the City;
(e) Not to use the Project for any disorderly or unlawful purpose; (f) To use commercially reasonable efforts to prevent any Resident from committing or maintaining any nuisance or unlawful conduct on or about the Project; (g) To use commercially reasonable efforts to prevent any Resident from violating any of the covenants and conditions of this Lease with respect to the Project; (h) To take commercially reasonable action, if necessary, to abate any violation of this Lease by any Resident upon notice from the City; (i) To provide City with Project annual audited financial statements, copies of the current management plan, and the annual operating budget. Lessee shall also notify City of any financial situation that may result in Lessee's inability to meet the Project's Annual Operating Expenses; and
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(i) To provide approximately 71 housing units in accordance with the City Regulatory Agreement.

Section 2.5 Taxes and Assessments.
(a) Payment by Lessee. Lessee covenants and agrees during the entire Lease Term, at its own cost and expense, to pay the public officers charged with their collection, as the same become due and payable and before any fine, penalty, interest, or other charge may be added to them for nonpayment, all real estate taxes, general and special, ordinary and extraordinary, unforeseen as well as foreseen, of any kind and nature, made, assessed, levied or imposed upon, or due and payable in connection with, or which become a lien upon, the Land, the Improvements, or any part of the Land or Improvements, or upon this Lease, as well as assessments for sidewalks, streets, sewers, water, or any other public improvements and any other improvements or benefits which shall, during the Lease Term, be made, assessed, levied, or imposed upon or become due and payable in connection with, or a lien upon the Land, the Improvements, or any part of the Land or Improvements, or upon this Lease. Notwithstanding the foregoing, nothing in this Lease shall limit the right of Lessee to seek and obtain an exemption from real property taxation pursuant to Section 214(g) of the California Revenue Code and any other provisions of applicable law.
(b) Lessee's Right to Contest. If Lessee disputes any amount or validity of any liens, taxes, assessments, or charges upon the Land or the Improvements, Lessee may contest and defend against the same at its cost, and in good faith diligently conduct any necessary proceedings in connection therewith to prevent and avoid the same; provided, however, that such contest shall be prosecuted to a final conclusion as speedily as possible. City agrees to render to Lessee all reasonable assistance, at no expense to City, in contesting the validity or amount of any such liens, taxes, assessments or charges, including joining in the signing of any protests or pleadings which Lessee may deem advisable to file; provided, however, that to the extent the City is a party whose action is being contested, the City's assistance shall be at the discretion of the City. During any such contest, Lessee shall (by the payment or bonding of such liens, disputed taxes, assessments or charges, if necessary) prevent any advertisement of tax sale, any foreclosure of, or any divesting thereby of City's title, reversion or other interest in or to the Land.

Section 2.6 Transfer Definition.

As used in this Article 2, the term "Transfer" means:
(a) Any total or partial sale, assignment or conveyance, or any trust or power, or any transfer in any other mode or form, of or with respect to this Lease or of the Land or Improvements or any part thereof or any interest therein or any contract or agreement to do any of the same; or
(b) Any total or partial sale, assignment or conveyance, or any trust or power, or any transfer in any other mode or form, of or with respect to any ownership interest in the Lessee or any contract or agreement to do any of the same; or 636 of 11211
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(c) Any merger, consolidation, sale or lease of all or substantially all of the assets of the Lessee; or
(d) The leasing of part or all of the Land or Improvements; provided, however, that leases of the individual units included within the Improvements to Resident occupants or leasing of the Community Space to a City approved tenant shall not be deemed a Transfer for purposes of this Article 2.

Section 2.7 Purpose of Restrictions on Transfer.
(a) This Lease is entered into solely for the purpose of development and operation of the Project and its subsequent use in accordance with the terms of this Lease. The Lessee recognizes that the qualifications and identity of the Lessee are of particular concern to the City, in view of:
(1) The importance of the development of the Land and Improvements as affordable housing to the general welfare of the community; and (2) The leasehold assistance that has been made available by the City for the purpose of making such development possible; and (3) The reliance by the City upon the unique qualifications and ability of the Lessee to serve as the catalyst for development of the Improvements and upon the continuing interest which the Lessee will have in the Land and Improvements to assure the quality of the use, operation and maintenance deemed critical by the City in the development of the Land or Improvements; and
(4) The fact that a change in ownership or control of the Lessee, or of a substantial part thereof, or any other act or transaction involving or resulting in a significant change in ownership or with respect to the identity of the parties in control of the Lessee or the degree thereof is for practical purposes a Transfer or disposition of the Land or Improvements; and
(5) The fact that the Land is not to be acquired or used for speculation, but only for development and operation by the Lessee in accordance with this Lease; and (6) The importance to the City of the standards of use, operation and maintenance of the Land and Improvements.
(b) The Lessee further recognizes that it is because of such qualifications and identity that the City is entering into this Lease with the Lessee and that Transfers are permitted only as provided in this Lease.

Section 2.8 Prohibited Transfers.

The limitations on Transfers set forth in this Article 2 shall apply throughout the Lease Term. Except as expressly permitted in this Lease, the Lessee represents and agrees that the Lessee has not made or created, and will not make or create or suffer to be made or created, any 637 of 11211
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Transfer, either voluntarily or by operation of law without the prior written approval of the City, such approval not to be unreasonably withheld.

Any Transfer made in contravention of this Article 2 shall be void and shall be deemed to be a default under this Lease whether or not the Lessee knew of or participated in such Transfer.

Section 2.9 Permitted Transfers
Notwithstanding other provisions of Article 2, the following Transfers shall be permitted and are hereby approved by the City subject to satisfaction of the requirements of Section 2.10:
(a) Any Transfer creating a lien or trust relationship pursuant to an Other Loan permitted pursuant to this Lease or the City Loan. (b) Any Transfer directly resulting from the foreclosure of an Other Loan Document, including the transfer in lieu of foreclosure to nominees of any Lender, or the granting of a deed in lieu of foreclosure of an Other Loan Document, including the transfer in lieu of foreclosure to the nominees of any Lender and any subsequent transfer, or as otherwise permitted under Article 4;
(c) The leasing of residential units and the Community Space to a Cityapproved tenant within the Project in accordance with this Agreement; (d) The granting of easements, rights of way, or permits to facilitate the development of the Property;
(e) The City hereby approves a Transfer of a limited partnership interest in the Lessee to the Investor, or to an affiliate of the Investor (provided such affiliate provides documentation reasonably acceptable to the City that the affiliate has sufficient financial capability to provide the capital contributions set forth in the Financing Plan) and future transfers of such interest;
(f) Any Transfer to a nonprofit public benefit corporation recognized by the Internal Revenue Service to be an exempt organization pursuant to Section 501(c)(3) of the Internal Revenue Code of 1986, and affiliated with Alta Housing ("Alta"), subject to review by the City to determine that such entity is a tax exempt organization, is affiliated with Alta, and has adequate assets to carry out its obligations under this Lease, and City expressly covenants that such consent shall not be unreasonably or arbitrarily refused; (g) The Parties agree and acknowledge that AH Bespoke LLC, an entity wholly owned by Alta Housing, shall remain the managing general partner of the Lessee throughout the Lease Term. In the event the general partner of the Lessee is removed by the Investor for cause following default under the Lessee's partnership agreement, the City hereby approves the transfer of the general partner interest to an affiliate of the Investor or to a 501(c) (3) tax-exempt nonprofit public benefit corporation that is selected by the Investor and approved in advance and in writing by the City, which approval shall not be unreasonably withheld; 638 of 11211
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(h) Any Transfer to a limited liability company or limited partnership, the managing member or partner of which is Alta Housing, subject to review by the City to determine that such entity is a tax-exempt organization, is affiliated with Alta, and has adequate assets to carry out its obligations under this Lease, and City expressly covenants that such consent shall not be unreasonably or arbitrarily refused. (i) A sublease or subleases of non-residential spaces in the Improvements.

The Lessee shall not, without first obtaining the written consent of the City and City approval of the sublease, sublet the Improvements or any part of such Improvements. (j) The initial tenant for the Community Space shall be Self Help for the Elderly (or an entity wholly owned by Self Help for the Elderly) and the Community Space shall be leased to them at $1 per year (or such other amount as may be approved by the City in its sole and absolute discretion) on a Triple Net Basis.
(k) A loan to refinance the financing identified in Exhibit B. (k) Any other Transfer approved by the City in writing.

Section 2.10 Effectuation of Certain Permitted Transfers No Transfer of this Lease permitted pursuant to Section 2.9 or Section 2.11 (other than a Transfer pursuant to Section 2.9 (a), (b) or (e)), shall be effective unless, at the time of the Transfer, the person or entity to which such Transfer is made, by an instrument in writing reasonably satisfactory to the City and in form recordable among the land records, shall expressly assume the obligations of the Lessee under this Lease and agree to be subject to the conditions and restrictions to which the Lessee is subject arising during this Lease, and or Improvements to the fullest extent that such obligations are applicable to the particular portion of or interest in the Land or Improvements conveyed in such Transfer. Anything to the contrary notwithstanding, the holder of an Other Loan whose interest shall have been acquired by, through or under a Other Loan Document or shall have been derived immediately from any holder thereof shall not be required to give to the City such written assumption until such holder or other person is in possession of the Land or Improvements or entitled to possession thereof pursuant to enforcement of the Other Loan Document.

In the absence of specific written agreement by the City, no such Transfer, assignment or approval by the City shall be deemed to relieve the Lessee or any other party from any obligations under this Lease.

Section 2.11 Other Transfers with City
The City may, in its reasonable discretion, approve in writing other Transfers as requested by the Lessee. In connection with such request, there shall be submitted to the City for review all instruments and other legal documents proposed to affect any such Transfer. If a requested Transfer is approved by the City such approval shall be indicated to the Lessee in writing or denied by the City within ninety (90) days of receipt by the City of Lessee's request 639 of 11211
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for approval of a Transfer. In the event the City does not respond either granting or denying the request within ninety (90) days the request shall be deemed approved.

Section 2.12 Assumptions.

Except as allowed under Section 2.9, the Lease shall not be assumable by successor or assigns of the Lessee without the prior written consent of the City, which consent shall be granted or denied in the City's reasonable discretion. The Lease shall be assumable by a limited partnership, a general partner, or a nonprofit public benefit corporation affiliated with Alta Housing or by any entity pursuant to a permitted or approved transfer as provided in Section 2.10 and 2.11 above.

ARTICLE 3
MAINTENANCE; USE OF PREMISES
Section 3.1 Title to Improvements.

The City grants to the Lessee without warranty, express or implied, any right, title, or interest that the City may have in the Improvements now or later located on the Land. The Improvements on the Land during the Lease Term shall be and remain the property of the Lessee; provided, however, that the Lessee shall have no right to destroy, demolish or remove the Improvements except as specifically provided for in this Lease and in the performance of maintenance obligations set forth in this lease. When the Lease Term expires or, subject to applicable cure rights of any Lenders, when the Lease is otherwise terminated under the terms of this Lease, title to the Improvements shall revert to and vest in the City without cost to the City. It is the intent of the Parties that this Lease shall create a constructive notice of severance of the Improvements from the Land without the necessity of a deed from the City to the Lessee after the Improvements have been constructed. The Lessee agrees to execute, at the request of the City at the end of the Lease Term, a confirmatory quitclaim deed of the Improvements to the City to be recorded at the City's option and expense and any other documents that may be reasonably required by the City or the City's title company to provide the City title to the Improvements. Lessee agrees that it will ensure all reserve funds other than those that are funded by Lessee or its affiliates outside any loan or grant funds will revert to City at the end of the Lease Term.

Section 3.2 Permits, Licenses and Easements.

The City agrees that, within ten (10) days after receipt of written request from the Lessee, it shall (at no expense to the City) join in any and all applications for permits, licenses or other authorizations required by any governmental or other body claiming jurisdiction in connection with any work the Lessee may do pursuant to this Lease, and shall also join in any grants of easements for public utilities useful or necessary to the development of the Land or of the Improvements. City 640 of 11211
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Section 3.3 Use of Project.
(a) The Lessee shall at all times during the Lease Term use or cause the Project to be used as affordable multifamily rental housing and ground floor community space in accordance with the terms and provisions of the City Regulatory Agreement. (b) Lessee shall also use or cause the Project to be used in a manner consistent with all applicable zoning and environmental laws of any governmental authority having jurisdiction over the Project, and with all requirements of any Lenders. Subject to the next sentence, the Lessee agrees to comply with all applicable and lawful statutes, rules, orders, ordinances, requirements and regulations of the United States, the State of California, and of any other governmental authority having jurisdiction over the Project. The Lessee may, in good faith and on reasonable grounds, dispute the applicability of, or the validity of any charge, complaint or action taken pursuant to or under color of, any statute, rule, order, ordinance, requirement or regulation, defend against the same, and in good faith diligently conduct any necessary proceedings to prevent and avoid any adverse consequence of the same.

Section 3.4 Construction of the Improvements.

The Lessee shall commence construction of the Improvements within thirty (30) days after the Effective Date and shall diligently prosecute completion of the Improvements in accordance with the provisions of the Other Loan Documents and the City Loan Documents.

Section 3.5 Maintenance of the Project.
(a) The Lessee agrees, for the entire Term of this Agreement, to maintain all interior and exterior improvements, including landscaping, of the Project in condition, repair and tenantable condition (and, as to landscaping, in a healthy condition) and in accordance with a management plan, as the same may be amended from time to time. The Lessee shall not permit the accumulation of waste or refuse matter on the Land or in the Project. The Lessee shall commit no act of waste and shall take good care of the Project and the fixtures and appurtenances therein, and shall, in the use and occupancy of the Project, conform to and all applicable laws, rules, ordinances, orders, and regulations of all federal, state, municipal, and other governmental agencies and bodies having or claiming jurisdiction and all their respective departments, bureaus, and officials, with the exception of those areas identified in the Reciprocal Easement Agreement. Lessee agrees, for the entire Term of this Agreement, to comply with all requirements of the Reciprocal Easement Agreement, including but not limited to making regular payments in accordance with the cost sharing provisions, and maintenance and repair of improvements located on the residential portion of the garage, as specified in the Reciprocal Easement Agreement. (b) In the event that the Lessee breaches any of the covenants contained in this section and such default continues for a period of fifteen (15) days after written notice from the City with respect to graffiti, debris, waste material, and general maintenance or thirty (30) days after written notice from the City with respect to landscaping and building improvements, then the City, in addition to whatever other remedy it may have at law or in equity, shall have the right to enter upon the Land and perform or cause to be performed all such acts and work necessary to cure the default. Pursuant to such right of entry, the City shall be permitted (but is not required) to enter 641 of 11211
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upon the Land and perform all acts and work necessary to protect, maintain, and preserve the Improvements and landscaped areas on the Land, and to attach a lien on the Land (which shall in all events be subordinate to all Loans), or to assess the Land, in the amount of the expenditures arising from such acts and work of protection, maintenance, and preservation by the City and/or costs of such cure, including a ten percent (10%) administrative charge, which amount shall be promptly paid by the Lessee to the City upon demand.
(c) Not later than the last day of the Lease Term, the Lessee shall, at the Lessee's expense, remove all of the Lessee's personal property and those improvements made by the Lessee that have not become the property of the City; repair all injury done by or in connection with the removal of the Lessee's personal property and improvements, and surrender the Project in good condition. City shall agree to accept the Land with any damage not caused by the misuse or neglect of the Lessee, the Lessee's agents and tenants, the Residents, and the Resident's visitors, including damage related to reasonable wear and tear resulting from the elements or any remaining damage caused by an event for which insurance coverage was not required under this Lease or the insurance coverage did not allow a complete restoration. The Lessee shall remove all personal property by the last day of the Lease Term if this Lease, unless agreed otherwise by the City. All property of the Lessee remaining after the last day of the Lease Term shall be conclusively deemed abandoned and may be removed by the City, and the Lessee shall reimburse the City for the cost of such removal.

The City shall provide the Lessee with five (5) days prior notice before disposing of any such items. (d) During the Lease Term, the Lessee shall not, without first obtaining the written consent of the City, abandon the Project, or allow the Project to become vacant or deserted.

Section 3.6 Public Sidewalk and Streetlight
The Land includes a public sidewalk and portion of city streetlights along 4th Avenue and S.

Railroad Avenue, which are shown in Exhibit D. In accordance with Section 3.5(a), with the exception of those areas identified in the Reciprocal Easement Agreement, Lessee is responsible for maintaining the sidewalk, provided, however, that City reserves the right to construct, reconstruct, replace, remove, access, inspect, and maintain the sidewalk. City shall maintain the streetlight, the streetlight box and the streetlight’s appurtenances (the “Streetlight Improvements”) and, accordingly, reserves the right to construct, reconstruct, replace, remove, access, and inspect such Streetlight Improvements. Lessee shall not be liable to the City or its employees, agents, invitees or any third party, for any injury loss or damage arising out of or in connection with the access to and use of the Streetlight Improvements, except to the extent arising from Lessee's active negligence or willful misconduct. Furthermore, Lessee shall not construct or install any Streetlight Improvements within the Land without prior approval from the City, a grant of public utility easement, and an amendment to this Agreement defining the ownership and maintenance responsibilities of such Streetlight Improvements.

Section 3.7 Property Management.
(a) The Project shall at all times be managed by an experienced Management Agent reasonably acceptable to the City, with demonstrated ability to operate residential facilities like the Project in a manner that will provide decent, safe, and sanitary housing. The Lessee shall retain a property management agent that is acceptable to the City to manage the 642 of 11211
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Project (the "Management Agent"). The City agrees that Alta Housing is acceptable to the City as Management Agent. For any change in the Management Agent, the Lessee shall submit for the City's approval the identity of any proposed Management Agent. The Lessee shall also submit such additional information about the background, experience and financial condition of any proposed Management Agent as is reasonably necessary for the City to determine whether the proposed Management Agent meets the standard for a qualified Management Agent set forth above. If the proposed Management Agent meets the standard for a qualified Management Agent set forth above, the City shall approve the proposed Management Agent by notifying the Lessee in writing.
(b) Each year during the Term, Lessee shall provide to City an annual report which shall include the following information for the fiscal year; unaudited financial statements, a report on unit vacancies and turnover, copies of material indicating significant procedural or policy changes affecting services and admissions, copies of significant complaints related to services including marketing and the applicant qualification and income certification of the affordable units, and a variance report showing actual versus budgeted expenses provided in the approved Annual Operating Expenses.

Section 3.8 Utilities.

The Lessee shall be responsible for the cost of all utilities, including water, heat, gas, electricity, waste removal, sewers, and other utilities or services supplied to the Project, and the Lessee shall pay or cause same to be paid currently and as due.

Section 3.9 Inspection.

Lessee shall permit and facilitate, and shall require its contractors to permit and facilitate, observation and inspection of the Project and Land by the City and by public authorities with reasonable prior written notice during reasonable business hours for the purposes of determining compliance with this Agreement.

Section 3.10 Subordination.
(a) Upon written request by the Lessee, the City agrees to provide the subordination of its deed of trust securing the City loan, subject to the conditions described below, including the following:
(1) The liability of the City under any documents executed in connection with any Other Loan shall be limited by the express terms of the instrument of subordination. The limitations shall include: the limitation of the City's liability solely to the interest or interests subordinated, and the City's right not to execute any instrument which would obligate City for the payment of the Other Loan secured by a deed of trust to which the fee is subordinated.
(2) The Lessee shall not be in Material Default under the terms of this Lease at the time of a request for subordination. "Material Default" shall mean any material breach by the Lessee under this Lease, including, without limitation, the failure to pay rent then 643 of 11211
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due and payable, or, the filing of a bankruptcy petition by or against the Lessee. The Lessee shall not be in Material Default if the Lessee has commenced to cure the Material Default at the time in question and diligently pursues such cure to completion. (b) Provided the conditions of this Section are satisfied, the City shall, within ten (10) business days after written request by the Lessee, execute, acknowledge and deliver an instrument of subordination, together with other documents as may be reasonably required by a Lender from the City to effectuate the provisions of this Section, subject to the terms and conditions contained in Section 4.10(a). The agreement of subordination contained in this Lease shall be self-operative and no further instrument of subordination shall be necessary unless it be required by a Lender, or a title insurance company insuring any interest of a Lender. If any proceeds are made payable to both the City and the Lessee, the City shall immediately sign any papers necessary to transfer the proceeds to the Lessee.

Section 3.11 Non-Discrimination.
(a) There shall be no discrimination against or segregation of any person or group of persons, on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of the premises herein leased nor shall the Lessee, or any person claiming under or through the Lessee, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy, of tenants, lessees, sub lessees, subtenants, or vendees in the premises herein leased.
(b) To the maximum extent permitted by law and applicable tax credit rules and regulations, the Lessee shall comply with the City's adopted affordable housing marketing policies, as such may apply to the Project, and as they may be amended from time to time.

Notwithstanding anything to the contrary herein, nothing in this section shall require that the preference be based on a minimum duration for residency or employment. To the extent the preferences required under this Section are in conflict with the requirements of Section 42 of the Internal Revenue Code and implementing guidelines, the requirements of Section 42 will supersede.

ARTICLE 4

MORTGAGE LOANS
Section 4.1 Loan Obligations.

Nothing contained in this Lease shall relieve the Lessee of its obligations and responsibilities under any Other Loans to operate the Project as set forth in the Other Loan Documents. Nothing contained in this Lease shall relieve the Lessee of its obligations and responsibilities under the City Loan to operate the Project as set forth in the City Loan Documents. 644 of 11211
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Section 4.2 Liens and Encumbrances against Lessee's Interest in the Leasehold Estate. (a) The Lessee shall have the right to encumber the leasehold estate created by this Lease and the Improvements with the deeds of trust or mortgages of the Other Loans. (b) For as long as the Project is subject to the Other Loan Documents or there is any lien securing any Other Loans:
(1) The City shall not agree to any mutual termination or accept any surrender of this Lease, nor shall the City consent to any amendment or modification of this Lease without the consent of any Lenders which have an outstanding Other Loan. In the event that the City receives competing or conflicting offers to cure any default, the City shall accept the offers to cure in the following order: First, the Lessee then each Lender in the same relative priority as their respective deeds of trust.
(2) Notwithstanding any default by the Lessee under this Lease, the City shall have no right to terminate this Lease unless the City shall have given any Lenders which have an outstanding Other Loan written notice of such default pursuant to Section

4.2(b)(7) of this Lease, and such Lenders shall have failed to remedy such default or acquire the Lessee's leasehold estate created by this Lease or commence foreclosure or other appropriate proceedings as set forth in, and within the time specified by, this Section. (3) Any Lender which has an outstanding Other Loan shall have the right, but not the obligation, at any time to pay any or all of the rental due pursuant to the terms of this Lease, and do any other act or thing required of the Lessee by the terms of this Lease, to prevent termination of this Lease. Each Lender shall have ninety (90) days after receipt of notice from the City describing such default to cure the default. All payments so made and all things so done shall be as effective to prevent a termination of this Lease as the same would have been if made and performed by the Lessee instead of by any Lender. (4) In addition to the cure period provided in paragraph (3) above, if the default is such that possession of the Land may be reasonably necessary to remedy the default, or any Lender which has an outstanding Other Loan shall have a reasonable time after the expiration of such ninety (90)-day period within which to remedy such default, provided that:
(i) such Lender shall have fully cured any default in the payment of any monetary obligations of the Lessee under this Lease within such ninety (90)-day period and shall continue to pay currently such monetary obligations when the same are due; and (ii) such Lender shall have acquired the Lessee's leasehold estate under this Lease or commenced foreclosure or other appropriate proceedings prior to or within such period, and shall be diligently prosecuting the same.
(5) Any default under this Lease which by its nature cannot be remedied by any Lender shall be deemed to be remedied if: (i) within ninety (90) days after receiving written notice from the City describing the default, or prior thereto, any Lender shall have acquired the Lessee's leasehold estate or commenced foreclosure or other appropriate proceedings; (ii) the Lender shall diligently prosecute any such proceedings to completion; (iii) the Lender shall have fully cured any default in the payment of any monetary obligations of the 645 of 11211
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Lessee under this Lease which does not require possession of the Land; and (iv) after gaining possession of the Land, the Lender shall perform all other obligations of the Lessee under this Lease capable of performance by the Lender when the obligations are due. (6) If the Lenders are prohibited, stayed or enjoined by any bankruptcy, insolvency or other judicial proceedings involving the Lessee from commencing or prosecuting foreclosure or other appropriate proceedings, the times specified for commencing or prosecuting such foreclosure or other proceedings shall be extended for the period of such prohibition; provided that any Lender shall have fully cured any default in the payment of any monetary obligations of the Lessee under this Lease and shall continue to pay currently such monetary obligations when the same fall due; provided, further, that such Lender shall not interfere with the City's efforts to seek compliance by the Lessee with any non-monetary obligation under this Lease.
(7) The City shall mail or deliver to any Lenders which have any outstanding Other Loan, whose addresses will be provided to City by Lessee, a duplicate copy of all notices which the City may from time to time give to the Lessee pursuant to this Lease, including without limitation notices of an Event of Default. No notice by the City to the Lessee under this Lease shall be effective unless and until a copy of the notice shall have been mailed or delivered to such Lenders as set forth in this Section. Absent City's written notice to Lenders with delivery confirmation of all defaults by Lessee under this Lease, City may not exercise any remedies for such defaults.
(8) In the event any Lender becomes the Lessee under this Lease by means of foreclosure or deed in lieu of foreclosure or pursuant to any new lease obtained under subsection (9) below, that Lender shall be personally liable under this Lease or such new lease only for the period of time that the Lender remains the Lessee under this Lease. Any such Lender shall have the right, without City's consent, to assign the leasehold estate following acquisition of the leasehold estate by a foreclosure or granting of a deed in lieu of foreclosure.

Nothing in this Section shall be construed to obligate any Lender to remedy any default of the Lessee, and any failure of any Lender to complete any such cure after commencing the same shall not give rise to any liability of any Lender to the City or the Lessee. (9) In the event a Lender, its designee or another purchaser in foreclosure, bankruptcy or other proceedings becomes the legal owner of the leasehold estate, and upon written request by the Lender given within sixty (60) days after becoming the legal owner of the leasehold estate, the City shall enter into a new lease of the Land with the Lender, or its nominee, purchaser, assignee or transferee, for the remainder of the Lease Term with the same agreements, covenants, reversionary interests and conditions (except for any requirements which have been fulfilled by the Lessee prior to termination) as are contained in this Lease and with priority equal to this Lease; provided, however, that the Lender shall promptly cure any defaults by the Lessee susceptible to cure by the Lender. In the event Lender, or its nominee, purchaser, assignee or transferee becomes the legal owner of the leasehold estate, such Lender, nominee, purchaser, assignee or transferee shall only be liable for acts or omissions of the tenant under the Lease taking place during the period in which it had record title to the leasehold estate and such liability is limited to the value of its interest in the leasehold interest and the Lease. 646 of 11211
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(10) The City shall cooperate in including in this Lease by suitable amendment from time to time any provision which may reasonably be requested by any proposed Lender for the purpose of implementing the mortgagee-protection provisions contained in this Lease and allowing such proposed Lender reasonable means to protect or preserve the lien of the leasehold mortgage and the value of its security. The City agrees to execute and deliver (and to acknowledge, if necessary, for recording purposes) any agreement necessary to effect any such amendment; provided, however, that any such amendment shall not in any way affect the Lease Term or rent under this Lease;
Section 4.3 Cost of Other Loans to be Paid by Lessee.

The Lessee shall bear all of the costs and expenses in connection with: (a) the preparation and securing of the Other Loans; (b) the delivery of any instruments and documents and their filing and recording, if required; and (c) all taxes and charges payable in connection with the Other Loans.

Section 4.4 Proceeds of Loans.

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

Section 4.5 Notice and Right to Cure Defaults Under Loans.

Upon the recording of a Memorandum of Lease or this Lease, the City may record in the office of the Recorder of the County in which the land is situated, a request for notice of any default under each Other Loan. In the event of default by the Lessee under an Other Loan, the City shall have the right, but not the obligation, to cure the default. Any payments made by the City to cure a default shall be treated as rent due from the Lessee which shall be paid, with interest which shall equal the City's Local Agency Investment Fund Rate (established pursuant to Section 16429.1 of the California Government Code) within thirty (30) days of the date on which the payment was made by the City. If Lessee is not able to cure a default under the Other Loan, Lessee agrees to work cooperatively with City if City seeks to cure the default, pay any amounts due under the Other Loan if accelerated, or assume the Other Loan.

ARTICLE 5
INSURANCE; DAMAGE AND DESTRUCTION OF IMPROVEMENTS
Section 5.1 Required Insurance Coverage.

Coverage during the Ground Lease Term, Lessee shall, at its own cost and expense, maintain insurance as required in Exhibit E.

Section 5.2 No Termination of Lease; Obligation to Restore Except as otherwise provided in Section 5.3, no loss or damage by fire or any other cause resulting in either partial or total destruction of any buildings or the Improvements now or 647 of 11211
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hereafter located in, upon or on the Land, or any fixtures, equipment or machinery used or intended to be used in connection with the Improvements shall operate to terminate this Lease, or to relieve or discharge the Lessee from the payment of any rent or other amounts payable under this Lease, as rent or otherwise, as and when they become due and payable, or from the performance and observance of any of the agreements, covenants and conditions herein contained to be performed and observed by the Lessee. The Lessee hereby waives the provisions of Section 1932, subsection 2, and of Section 1933, subsection 4, of the California Civil Code, as either or both may from time to time be amended, replaced, or restated. Except as provided in Section 5.5 and 5.7, the Lessee shall promptly repair, or cause the prompt repair of, any damage or destruction caused to the Improvements and restore the Improvements to at least as good a condition as existed prior to the damage or destruction, as more specifically provided in Section

5.6. The Lessee's failure to make such full repair and restoration under any conditions in which it has elected or is required so to do shall constitute a Lessee Event of Default under this Lease.

Section 5.3 Damage or Destruction Occurring Prior to Final Years of Term Subject to the provisions of Section 5.1, if at any time after the Effective Date and during the Term, all or any part of the Land or Improvements are damaged or destroyed by any cause (“Casualty”), Lessee shall, at Lessee’s sole cost and expense, repair, restore, and reconstruct the Land and Improvements to substantially the same condition that existed immediately prior to the Casualty in substantial conformance with the previously approved final plans and specifications for the Improvements (as may be modified pursuant to this Lease), subject to any changes necessary to comply with then applicable federal, state, and local laws and regulations and with any upgrades or improvements proposed by Lessee and reasonably approved by City. All such work shall be promptly constructed in a good and workmanlike manner according to and in conformance with all laws and the requirements of this Lease.

In the event of a Casualty, all insurance proceeds shall be applied first to fully repair, restore, and reconstruct the Land and Improvements, and any insurance proceeds remaining after completion of all such repair, restoration, and reconstruction in accordance with this Lease shall be paid to Lessee. If the insurance proceeds are insufficient to pay all costs to fully repair, restore, and reconstruct the Land and Improvements as required under this Lease, Lessee shall pay the deficiency and shall proceed to complete the repair, restoration and reconstruction of the Land and Improvements and pay the costs of completing the repair, restoration and reconstruction, or shall be in default under this Lease.

Section 5.4 Damage or Destruction During Final Years of Term.

In the event of major damage or destruction to the Improvements on the Land during the last five (5) years of the Term, the Lessee shall have the right, at the Lessee's election, to either make full repair of such damage and fully restore the Improvements on the Land in accordance with the provisions of Section 5.3 or to terminate this Lease, and provided that if the Lessee elects to terminate this Lease, the Lessee shall comply with all of the following conditions:
(a) The Lessee shall give the City written notice of the damage or destruction within ten (10) days after the event causing such damage or destruction; 648 of 11211
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(b) There shall not then exist an Event of Default (or an event which, after notice and the passage of time as required by this Lease without cure of such event, would constitute an Event of Default);
(c) As promptly as is feasible, the Lessee shall repair or restore the damaged Improvements to the extent necessary to preserve them and make them safe from immediate danger to the public; and
(d) The Lessee shall deliver possession of the Land and the Improvements thereon to the City and shall quitclaim to the City all right, title and interest in the Land and the Improvements thereon.

Major damage or destruction to the Improvements on the Land (as used in this Section) means damage or destruction where the cost to make full repair of such damage and restore the Improvements in accordance with the provisions of Section 5.1 would be fifty percent (50%) or more of the replacement cost of all of the Improvements on the Land in their entirety. The calculation of such percentage shall be based upon the replacement cost of the Improvements on the Land as of the date of the damage or destruction. The determination of whether any particular damage or destruction constitutes major damage or destruction within the meaning of this paragraph shall be determined and certified by a professional cost estimator experienced in such matters and mutually designated by the City and the Lessee within ten (10) days of the occurrence of such damage or destruction. If the Parties are unable to designate a mutually acceptable cost estimator within such period, either party may apply to the presiding judge of the Superior Court of San Mateo County who shall appoint such cost estimator.

Section 5.5 Procedures for Repair and Restoration
The provisions of this Section shall apply whenever the Improvements on the Land are to be repaired or restored under the provisions of this Article. (a) In the event of any damage or destruction to the Land or the Improvements, the Lessee shall promptly give the City written notice of such damage or destruction, setting forth the cause (if known), the date on which such damage or destruction occurred, and the estimated cost of repair and restoration as certified by a professional cost estimator experienced in such matters. Whenever any part of the Land or the Improvements shall have been damaged or destroyed, the Lessee shall promptly make proof of loss and shall proceed promptly to collect, or cause to be collected, all valid claims which the Lessee may have against insurers or others based upon any such damage or destruction. Except as otherwise provided below, sums of money received as payments for any losses pursuant to said insurance policies shall be used and expended for the purpose of fully repairing or reconstructing the portions of the Land or the Improvements which have been destroyed or damaged in accordance with the procedures of subsections (b) and (c) below, unless the Lessee has established alternate procedures that, in the City's reasonable judgment, will accomplish the use and expenditure of the insurance proceeds to effectuate full repair or reconstruction of the portions of the Land or the Improvements which have been destroyed or damaged in a more effective manner than the procedures set forth in subsections (b) and (c).
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The provisions of subsection (d) below shall apply regardless of the procedure employed for the use and expenditure of insurance proceeds.
(b) Within one hundred eighty (180) days after the event of damage or destruction, the Lessee shall make available to the Insurance Trustee, described in subsection (c) below, the difference, if any, between the certified estimated cost of repair and restoration and the amount of insurance proceeds anticipated to be received for such repair and restoration (such amount is hereinafter referred to as the "Lessee Contribution"). (c) All proceeds of insurance together with the Lessee Contribution, if any, shall be paid by the Lessee to the insurance trustee, which insurance trustee shall be a commercial bank or trust company experienced in such matters and designated by the City and approved by Lessee and the Other Loan holders (the "Insurance Trustee"). The Insurance Trustee shall hold such proceeds in trust and shall disburse same to the Lessee as follows: from time to time as the work of restoration progresses, the Lessee shall submit to the Insurance Trustee a certificate of the Lessee, signed by an authorized officer or representative thereof, and approved by an architect selected by the Lessee and approved by the City (the "Architect"), which certificate shall:
(1) accurately describe the work for which the Lessee is requesting payment and the cost incurred by the Lessee in connection therewith, (2) certify that the Lessee has not theretofore received payment for such work, and
(3) conditional lien releases based upon payment executed by all persons or entities supplying labor or materials in connection with such work; and (4) contain or be accompanied by a statement by the Lessee that the work for which the Lessee is requesting payment has been performed substantially in accordance with plans and specifications therefor approved by the City.

Within five (5) days after receipt of any such certificate, the Insurance Trustee shall pay to the Lessee, from the funds on hand, an amount equal to ninety percent (90%) of the amount of the cost of the work for which the Lessee is requesting payment, as shown on such certificate. Upon completion of such work, the remainder of such cost (to the extent of the balance of the funds held by the Insurance Trustee) and all other insurance proceeds held by the Insurance Trustee shall be paid to the Lessee within five (5) days after the delivery to the Insurance Trustee of a certificate of the Lessee, signed by an authorized officer or representative thereof and approved by the Architect for the work, stating that the work has been completed and setting forth the total cost thereof, which certificate shall: (1) contain or be accompanied by a statement by the Lessee that the work has been completed substantially in accordance with plans and specifications therefor approved by the City; and (2) be accompanied by either (A) an unconditional waiver or release of mechanics' and materialmen's liens executed by all persons or entities supplying labor or materials in connection with such work or (B) other evidence reasonably satisfactory to the City that the period for filing any such lien has expired and no such 650 of 11211
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lien has been filed, or, if filed, has been bonded by the Lessee to the reasonable satisfaction of the City and the Insurance Trustee. The Insurance Trustee shall not be required to invest or pay interest on any funds held by such trustee, except in accordance with any agreement between the Lessee and the Insurance Trustee.

The Lessee shall promptly commence and complete, in a good and workmanlike manner and in accordance with Article 3 the reconstruction or repair of any part of the Property or the Improvements thereon damaged or destroyed after (1) the City has approved the Lessee's plans, drawings, specifications and construction schedule for such reconstruction or repair as such approval may be required under Article 5, and (2) the proceeds of insurance, if any, applicable to such reconstruction or repair have been made available for such purpose.

Section 5.6 Procedures Upon Permitted Termination
Upon termination of this Lease pursuant to Section 5.5, insurance proceeds for the Improvements not used in repair or restoration shall be distributed as follows:
(a) First, to any Lenders with then outstanding Other Loan. (b) Second, at the option of the City, to the City in the amount necessary to raze the remaining Improvements, clear the Land, make it safe, and return the Land to the condition of a developable pad.
(c) Third, any balance shall be divided between the City and the Lessee on the following basis: Proceeds for Improvements having a remaining useful life less than the remaining Term as of the termination date shall be paid to the Lessee. A proportionate share of proceeds for the Improvements having a remaining useful life greater than the remaining Term as of the termination date, calculated by the ratio that the remaining Term bears to the remaining useful life, shall be paid to the Lessee, and the balance of such proceeds for such Improvements shall be paid to the City.

All other insurance proceeds shall be paid to and become the sole property of the Lessee.

Section 5.7 Prosecution of Claims
In connection with and as a condition of any termination pursuant to Section 5.5 the Lessee shall make proof of loss and proceed to collect or commence collection of all valid claims which the Lessee may have against insurers or others based upon such damage or destruction, and shall assign and transfer to the City all rights under insurance policies and against others and proceeds of insurance and other claims resulting from the casualty. 651 of 11211
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Upon termination of this Lease, the Lessee shall deliver possession of the Land and the Improvements thereon to the City and quitclaim to the City all right, title and interest in the Property and the Improvements thereon.

Section 5.8 Indemnification.

Lessee shall indemnify, defend, hold harmless City, and its supervisors, employees, agents, volunteers, successors, and assigns against any and all suits, actions, claims, causes of actions, whether actual or alleged, administrative proceedings, arbitrations or enforcement actions which arise out of or in connection with directly or indirectly, in whole or in part, Lessee's ownership, occupancy, development, or operation of the Improvements or construction, maintenance, rehabilitation or repair on the Land by Lessee or Lessee's contractors, subcontractors, agents, employees or tenants and all damages (direct or consequential), costs, losses, injuries, fines, penalties, liens, encumbrances, charges, liabilities, demands, judgments, remedial action requirements, obligations, and all costs and expenses incurred in connection therewith (including, but not limited to, attorney fees and costs); provided, however, that this indemnity shall not extend to (i) any claim arising solely from City's failure to perform its obligations under this Lease or solely from the gross negligence or willful misconduct of City, or its supervisors, employees, agents, volunteers, successors, and assigns or (ii) any claim arising from the actions or inaction of the Commercial Developer, or its supervisors, employees, agents, volunteers, successors, and assigns. The provisions of this section shall survive expiration of the Term or other termination of this Lease and shall remain in full force and effect and are not limited by the amount of insurance as may be required.

Section 5.9 Hazardous Materials Indemnification.
(a) No Hazardous Materials Activities. The Lessee hereby represents and warrants to the City that, at all times from and after the Closing Date, the Lessee shall not cause or permit the Land or the Improvements thereon to be used as a site for the use, generation, manufacture, storage, treatment, release, discharge, disposal, transportation or presence of any Hazardous Materials, except to the extent such Hazardous Materials were present on or about the site prior to the Closing Date. Without the City's prior written consent, which shall not be unreasonably withheld or delayed, the Lessee shall not take any remedial action in response to the presence of any Hazardous Materials on, under, or about the Development (other than in emergency situations or as required by governmental agencies having jurisdiction), nor enter into any settlement agreement, consent decree, or other compromise in respect to any Hazardous Materials Claims
(b) Definition of Hazardous Material or Hazardous Substances. As used in this Section, "Hazardous Materials" or "Hazardous Substances" shall mean the following:
hazardous substance, hazardous waste, infectious waste, or hazardous material as defined in any federal, state or local statute, ordinance, regulation, or rule applicable to the Land, including the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42 U.S.C.

Section 9601 et seq.) or Sections 25280 et seq., 25310 et seq., 25110 et seq., or 25500 et seq. of the California Health and Safety Code at such time; any other waste, substance or material designated or regulated in any way as "toxic" or "hazardous" in the Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.), Federal Water Pollution Control Act (33 U.S.C. 652 of 11211
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Section 1251 et seq.), Safe Drinking Water Act (42 U.S.C. Section 300f et seq.), Toxic Substances Control Act (15 U.S.C. Section 2601 et seq.), Clean Air Act (42 U.S.C. Section 7401 et seq.), California Health and Safety Code (Section 25100 et seq.), or California Water Code (Section 13000 et seq.) at such time; and any additional wastes, substances or material which at such time are classified, considered or regulated as hazardous or toxic under any other present or future environmental or other similar laws relating to the Land, including asbestos, asbestoscontaining materials, radon gas, oil or any fraction thereof of petroleum products, but excluding any substances or materials used in the construction, development, maintenance or operation of the Improvements, so long as the same are used in accordance with all applicable laws. (c) Definition of Hazardous Materials Law: As used in this Section, Hazardous Materials Law shall mean: All federal, state, and local laws, ordinances, regulations, orders and directives pertaining to Hazardous Materials in, on or under the leased premises or any portion thereof.
(d) Indemnity. Lessee agrees to indemnify, protect, hold harmless and defend (by counsel reasonably satisfactory to City) City, its board members, officers, and employees from and against any and all claims, losses, damages, liabilities, fines, penalties, charges, administrative and judicial proceedings and orders judgments, remediation action requirements, enforcement actions of any kind, and all costs and expenses incurred in connection therewith (including, but not limited to, attorney's fees and expenses), arising directly or indirectly, in whole or in part, out of: (1) the failure during the Lease Term of Lessee or any employees, agents, contractors or subcontractors of the Lessee, other than any indemnitee, to comply with any Hazardous Materials Law relating in any way whatsoever to the handling, treatment, presence, removal, storage, decontamination, cleanup, transportation or disposal of Hazardous Materials into, on, under or from the Land; (2) any releases or discharges of any Hazardous Materials by Lessee or any employees, agents, contractors or subcontractors of the Lessee, other than any indemnitee, occurring during the Lease Term into, on, under or from the Land, except for Hazardous Materials that existed in , on, or under the Land prior to the execution of this Lease; (3) any activity carried on or undertaken on or off the Land during the Lease Term by Lessee or any employees, agents, contractors or subcontractors of Lessee, in connection with the handling, treatment, removal, storage, decontamination, cleanup, transport or disposal of any Hazardous Materials at any time located or present on or under the Land. The provisions of this subsection shall survive expiration of the Lease Term, as set forth in Section 2.2, or other termination of this Lease, and shall remain in full force and effect. Notwithstanding the foregoing, Lessee's duty to indemnify City under the provisions of this Section shall not include any claims arising from any acts, omissions or events occurring subsequent to a Transfer approved by City pursuant to this Lease. This indemnity obligation shall not extend to any claim arising from City's sole negligence or willful misconduct.

Section 5.10 "As Is" Conveyance.
(a) Lessee hereby agrees and acknowledges that except in the event of any fraud, misrepresentation, or withholding of information by City: (1) neither City, nor anyone acting for or on behalf of City, has made any representation, statement, warranty or promise to Lessee concerning the development potential or condition of the Land; (2) in entering into this Lease, Lessee has not relied on any representation, statement or warranty of City, or anyone 653 of 11211
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acting for or on behalf of City, other than as may expressly be contained in writing in this Lease; (3) all matters concerning the Land have been or shall be independently verified by Lessee and that Lessee shall purchase or lease the Land on Lessee's own prior examination thereof; and (4) THAT LESSEE IS PURCHASING OR LEASING THE LAND, AS APPLICABLE, IN AN "AS IS" PHYSICAL CONDITION AND IN AN "AS IS" STATE OF REPAIR. (b) General Release. Subject to subsection (a) above and all other indemnities provided by the City to Lessee in this Lease and/or in the City Disposition and Loan Agreement, Lessee and its owners, employees, agents, assigns and successors agree that upon the execution of the Lease, Lessee shall be deemed conclusively to have released and discharged City and its agents, employees, trustees, assigns and successors, from any and all damages, losses, demands, claims, debts, liabilities, obligations, causes of action and rights, whether known or unknown, by Lessee regarding the Land, including, but not limited to, the environmental condition of the Land.
(c) Waiver of Civil Code §1542. Lessee agrees that, with respect to the General Release contained in subsection (b) above, the General Release extends to all matters regarding the Land, whether or not claimed or suspected, to and including the date of execution hereof, and constitutes a waiver of each and all the provisions of the California Civil Code §1542, which reads as follows:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS

WHICH 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, MUST HAVE MATERIALLY

AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR
OR RELEASED PARTY"
________ Initial
Lessee acknowledges that the effect and import of the provisions of Civil Code §1542 have been explained to it by its own counsel. Lessee understands and acknowledges the significance and the consequence of such specific waiver of unknown claims and hereby assumes full responsibility for any injuries, damages, losses or liabilities that it may hereinafter incur from the waiver of these unknown claims.

ARTICLE 6

CONDEMNATION
Section 6.1 Condemnation.

If the Project or the fee interest in the Land or any part of them shall be taken or condemned, for any public or quasi-public purpose or use by any competent entity in appropriate proceedings, or by any right of eminent domain, the City and the Lessee shall request that awards and other 654 of 11211
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payments on account of a taking of the Project or the fee interest in the Land (less costs, fees and expenses incurred by the City and the Lessee in connection with the collection of such awards and other payments) shall be divided by the presiding court between loss of value of the fee interest in the Land and loss of value of the Project. In any case, such awards and payments shall be applied as follows:
(a) Net awards and payments received on account of a partial taking of the Project, other than a taking for a temporary use not exceeding one (1) year, shall be paid to the Insurance Trustee referred to in Section 5.5 above to be held and disbursed in the same manner as insurance proceeds, except that any such remaining after completion of any restoration shall be divided between the City and the Lessee and disbursed by the Insurance Trustee in the manner provided in Section 5. 6.
(b) Net awards and payments received on account of a partial or total taking of only the City's fee interest in the Land or the reversionary interest in the Improvements (that is, a taking of City's fee interest in the Land or the City's reversionary interest in the Improvements that has no effect on the value of the Lessee's leasehold interest in the Land or the Lessee's fee interest in the Improvements), including severance damages, shall be paid to the City, which amount shall be free and clear of any claims of the Lessee, or any other persons claiming rights to the Land through or under the Lessee. (c) Net awards and payments received on account of a taking for temporary use not exceeding one (1) year and relating to a period during the Lease Term shall be paid to the Lessee and first applied to pay the cost of relocation of Residents and lessee of ground floor community space and restoration of any damage to or destruction of the Project if the Lessee determines that restoration is feasible. If the Lessee determines that such restoration is not feasible, the Lessee and the City shall petition the court to determine the relative damages to the Lessee and the City, and net awards and payments shall be made as the court determines. Net awards and payments received on account of a taking for temporary use not exceeding one (1) year and relating to a period beyond the Lease Term shall be paid to the City. (d) Net awards and payments received on account of a total taking of the Project shall be allocated and paid in the following order of priority:
(1) First, to any Lenders with then-outstanding Other Loans or the City with an outstanding City Loan secured by the Project (in the order of their respective lien priority, if there is more than one Lender), an amount equal to the unpaid balance secured by their respective Other Loan or City Loan (as applicable) to the extent there are sufficient funds to make such payments;
(2) The balance, if any, shall be divided between the City and the Lessee in the manner specified in subparagraph (e) below; provided, however, if the taking has no effect on the value of the City's fee interest in the Land or reversionary interest in the Improvements, the balance shall be paid exclusively to the Lessee. (e) The Lessee shall receive reimbursement for any funds it has reasonably expended for repair and/or reconstruction of the Project (other than funds received from Lenders 655 of 11211
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or the City) pursuant to Article 6. The value of the Lessee's and City's interest in the Lease, the residual value of the Land, and the Improvements shall be determined by an MAI or SRI appraiser selected by the Lessee.
(f) The Lessee shall receive any award granted for or allocated to trade fixtures, moving expenses or loss of business.
(g) If the Project is taken or condemned during the last five (5) years of the Lease Term under circumstances described in subparagraph (a) above, the Lessee may elect to terminate the Lease and proceeds of any payment or award shall be distributed in accordance with the provisions of subparagraphs (d) and (e) above.

Section 6.2 Administration of Construction Fund in the Event of Condemnation, or Damage or Destruction of Project.

In the event that the Other Loans and the City Loan have been paid in full, and if the Project or any part of it is to be repaired or reconstructed, after damage or destruction of the Project or its condemnation, all proceeds collected under any and all policies of insurance referred to in Article V above covering such damage or destruction, or all compensation received by Lessee for such taking by the exercise of the power of eminent domain, shall be paid into a special fund to be created and held by the Lessee and to be designated as the construction fund, during such repairing or reconstructing. Any surplus of such insurance or condemnation proceeds remaining after the completion of all payments for such repairing or reconstructing shall be held or applied by the Lessee in a manner consistent with the applicable provision of Article V or this Article VI.

Section 6.3 Lessee, City, Lenders to be Made Parties in Legal Proceedings. (a) In the event proceedings shall be instituted: (1) for the exercise of the power of eminent domain; or (2) as a result of any damage to or destruction of the Project, the Lessee, the City, and any Lender with a then-outstanding Other Loan shall be made parties to those proceedings, and if not made parties by the petitioning party, shall be brought into the proceedings by appropriate proceedings of other parties so that adjudication may be made of the damages, if any, to be paid to the Lessee, the City and the Lenders as compensation for loss of their rights in the Improvements or the Land, or for damage to or destruction of the Project.

Should the City or the Lessee receive notice of institution of any proceedings subject to Section

6.1, the Party receiving such notice shall notify the other in accordance with Section 9.2 of this Lease, not later than thirty (30) days after receiving such notice. (b) The City and the Lessee shall cooperate and consult with each other in all matters pertaining to the settlement, compromise, arbitration, or adjustment of any and all claims and demands for damages on account of damage to or destruction of the Project, or for damages on account of the taking or condemnation of the Project, the Improvements or the Land. 656 of 11211
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ARTICLE 7

ASSURANCES OF CITY
Section 7.1 City to Give Peaceful Possession.

The City covenants that it owns in fee simple, and that it has good and marketable title to the Land and that the Land is free of all easements, covenants, conditions and restrictions except for permitted exceptions as reasonably accepted by Lessee as of the Effective Date. The City has the full right and authority to make this Lease. The City covenants and warrants that the Lessee and its Residents shall have, hold and enjoy, during the Lease Term, peaceful, quiet and undisputed possession of the Land leased without hindrance or molestation by or from anyone so long as the Lessee is not in default under this Lease.

Section 7.2 City to Lease Project with Marketable Title.

The City covenants and warrants that there are no outstanding liens and encumbrances on the Land, other than permitted exceptions as reasonably accepted by Lessee as of the Effective Date.

Section 7.3 Release of City.

The City may sell, assign, transfer or convey (but not encumber), with the prior written consent of any Lenders, all or any part of City's interest in the Land, reversionary interest in the Improvements or this Lease without obtaining the Lessee's consent, provided that the purchaser, assignee, or transferee expressly assumes all of the obligations of the City under this Lease by a written instrument in a form reasonably satisfactory to the Lessee and recordable in the Official Records of the jurisdiction in which the Land is located. In the event the City intends to sell, assign, transfer, or convey all or any part of the Land, the City shall notify the Lessee of such intention and the terms of such sale not later than ninety (90) days before anticipated close of escrow. The Lessee shall then have sixty (60) days after the receipt of notice from the City to exercise a right of first refusal on the same terms as are included in the City's notice to the Lessee. In the event of a sale, assignment, transfer or conveyance by City of the Land or its rights under this Lease, the same shall operate to release the City from any future liability upon any of the covenants or conditions of this Lease, expressed or implied, in favor of Lessee, and in such event the Lessee shall look solely to the successor in interest of the City in and to the Land or this Lease. This Lease shall not be affected by any such sale, and the Lessee agrees to attorn to any such purchaser or assignee.

ARTICLE 8

DEFAULTS AND REMEDIES
Section 8.1 Events of Default; Remedy of Default by Lessee. (a) Any one or more of the following events shall constitute an "Event of Default":
(1) Failure to pay rent, as required pursuant to Section 2.3 of this Lease, or any other payment required under this Lease, and continuance of such failure for a 657 of 11211
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period of thirty (30) days after receipt by the Lessee of written notice specifying the nonpayment;
(2) Failure of the Lessee to observe and perform any covenant, condition or agreement hereunder on its part to be performed, and (i) continuance of such failure for a period of thirty (30) days after receipt by the Lessee of written notice specifying the nature of such default, or (ii) if by reason of the nature of such default the same cannot be remedied within said thirty (30) days, the Lessee fails to proceed with reasonable diligence after receipt of said notice to cure the same; or
(3) A general assignment by the Lessee for the benefit of creditors; or (4) The filing of a voluntary petition by the Lessee, or the filing of an involuntary petition by any of the Lessee's creditors seeking the rehabilitation, liquidation or reorganization of the Lessee under any law relating to bankruptcy, insolvency or other relief of debtors, provided that in the case of an involuntary petition Lessee shall have sixty (60) days to cause such petition to be withdrawn or dismissed; or
(5) The appointment of a receiver or other custodian to take possession of substantially all of the Lessee's assets or of this leasehold which appointment is not withdrawn or dismissed within sixty (60) days; or
(6) The Lessee becomes insolvent or declares it is unwilling to pay its debts as they become due; or any court enters a decree or order directing the winding up or liquidation of the Lessee or of substantially all of its assets; or the Lessee takes any action toward the dissolution or winding up of its affairs or the cessation or suspension of its use of the Project; or
(7) Attachment, execution or other judicial seizure of substantially all of the Lessee's assets or this leasehold, which is not dismissed, bonded, or stayed within sixty (60) days.
(b) Whenever any default shall have occurred and be continuing and upon expiration of any applicable cure periods provided in this Lease, and subject to the cure rights of Lenders of the Lessee set forth in this Lease, the City may take whatever action at law or in equity as may appear reasonably necessary to enforce performance or observance of any obligations, agreements, or covenants of the Lessee under this Lease, including without limitation, termination of this Lease, provided, however, that for so long as an Other Loan encumbers this Project, this lease shall not be terminated. In the event of such default, the City's remedies shall be cumulative, and no remedy expressly provided for in this Section shall be deemed to exclude any other remedy allowed by law. Notwithstanding the foregoing, the City shall not terminate this Lease prior to the end of the Compliance Period (as defined in Section 42(i)(1) of the Internal Revenue Code).

Section 8.2 Cure of Material Breach by Lessee
If the Lessee defaults under the Lease, the City shall give the Lessee, the Investor and the Lenders written notice requiring that the default is to be remedied by the Lessee. If the default is 658 of 11211
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not cured within the time set forth by the City (which shall be a reasonable time for curing the default and shall in any event be at least ninety (90) days), the City, the Investor or the Lenders may take any action as may be necessary to protect their respective interests. Such action, in the event that the Lessee shall fail to perform any of its obligations under this Lease and such failure shall continue after the expiration of the cure period specified in this Section, shall include the right of the City, the Investor or the Lenders to cure such default and receive any expenditure with interest thereon (at the reference rate then in effect at Bank of America, N.A. or any successor institution) from the Lessee within thirty (30) days after sending to the Lessee a statement for such expenditure and interest.

Section 8.3 Termination.

In the event of a total taking or in the event of damage, destruction, or a partial taking, other than a temporary taking of the Project, which the Lessee reasonably determines renders continued operation of the Project infeasible both as a whole and in substantial part, this Lease shall terminate (except if the Lessee is rebuilding the Project in accordance with the terms of this Lease), and in such event any proceeds shall be allocated pursuant to Section 5.3 or Article 6, as appropriate. In the event of a partial taking that does not result in termination pursuant to this Section, this Lease shall remain in full force and effect as to the portion of the Project remaining. Notwithstanding the preceding sentences, for so long as (i) an Other Loan encumbers this Project and/or the Project remains within the Compliance Period (as defined in Section 42(i)(1) of the Internal Revenue Code), this lease shall not be terminated.

Section 8.4 Redelivery of Premises.

At the expiration or sooner termination of this Lease, the Lessee will peaceably and quietly quit and surrender the premises to the City in good order and condition, subject to the other provisions of this Lease.

ARTICLE 9

MISCELLANEOUS
Section 9.1 Instrument Is Entire Agreement.

This Lease and the attached Exhibits constitute the entire agreement between the Parties with respect to the matters set forth in this Lease. This Lease shall completely and fully supersede all other prior understandings or agreements, both written and oral, between the City and the Lessee relating to the lease of the Land by the City to the Lessee.

Section 9.2 Notices.

All notices under this Lease shall be in writing signed by Authorized Officer(s) and shall be sufficient if sent by United States first class, certified mail, postage prepaid, or reputable private delivery service with a receipt showing the date of delivery, addressed:

If to the City: City of San Mateo
320 W. 20th Avenue
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San Mateo, CA 99403
Attn: City Manager
If to the Lessee: AH Bespoke LP
c/o Alta Housing
3460 West Bayshore Road, Suite 104
Palo Alto, CA 94303
Attn: President
With copy to:
or any other address as either Party may have furnished to the other in writing pursuant to the requirements of this Section as a place for service of notice. Any notice so mailed shall be deemed to have been given on the delivery date, the date that delivery is refused by the addressee or the date shown on the delivery receipt as the date delivery was attempted if undeliverable, as shown on the delivery receipt.

Section 9.3 Recording.

A Memorandum of Lease shall be executed by the Parties in recordable form and shall be recorded in the official records of the jurisdiction in which the Land is located. In the event this Lease is amended or assigned a memorandum of such amendment or assignment shall also be executed by the Parties in recordable form and shall be recorded in the official records of the jurisdiction in which the Land is located.

Section 9.4 Non-Waiver of Breach.

Neither the failure of the City or the Lessee to insist upon strict performance of any of the covenants and agreements of this Lease nor the failure by the City or the Lessee to exercise any rights or remedies granted to such Party under the terms of this Lease shall be deemed a waiver or relinquishment: (a) of any covenant contained in this Lease or of any of the rights or remedies of the Lessee or the City under this Lease; or (b) or the right in the future of the City or the Lessee to insist upon and to enforce by any appropriate legal remedy a strict compliance with all of the covenants and conditions of this Lease.

Section 9.5 Effective Date; Counterparts.

This Lease shall become effective upon the commencement of the Lease Term. This Lease may be executed in counterparts, each of which shall be an original and all of which shall constitute the same instrument.
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Section 9.6 Lease Binding on Successors.

This Lease and all of its provisions and attached Exhibits shall inure to the benefit of, and shall be binding upon, the City, the Lessee, and their respective permitted successors and permitted assigns and, as provided in this Lease, the Lenders.

Section 9.7 Relationship of Parties.

Nothing contained in this Lease shall be deemed or construed by the Parties or by any third party to create the relationship of principal or agent or of partnership, joint venture or association or of buyer and seller between the City and the Lessee, it being expressly understood and agreed that neither the computation of any payments and other charges under the terms of this Lease nor any other provisions contained in this Lease, nor any act or acts of the Parties, shall be deemed to create any relationship between the City and the Lessee other than the relationship of landlord and tenant.

Section 9.8 No Merger.

There shall be no merger of this Lease or any interest in this Lease nor of the leasehold estate created by this Lease, with the fee estate in the Land, by reason of the fact that this Lease or such interest in the Lease, or such leasehold estate may be directly or indirectly held by or for the account of any person who shall hold the fee estate in the Land, or any interest in such fee estate, nor shall there be such a merger by reason of the fact that all or any part of the leasehold estate created by this Lease may be conveyed or mortgaged in a leasehold mortgage to a leasehold mortgagee who shall hold the fee estate in the Land or any interest of the City under this Lease.

Section 9.9 Gender and Number.

Words of any gender used in this Lease shall be held to include any other gender, and any words in the singular number shall be held to include the plural (and vice versa), when the sense requires.

Section 9.10 Titles.

The titles and article or paragraph headings are inserted only for convenience, and are in no way to be construed as a part of this Lease or as a limitation on the scope of the particular provisions to which they refer.

Section 9.11 Severability.

If any provision of this Lease or the application of any provision to any person or circumstances shall be invalid or unenforceable to any extent, the remainder of this Lease, or the application of such provision to persons or circumstances other than those as to which it is invalid or unenforceable, shall not be affected, and each provision of this Lease shall be valid and be enforced to the fullest extent permitted by law.

Section 9.12 Applicable Law and Venue.
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This Lease shall be governed by and construed in accordance with the laws of the State of California. In the event any legal action is commenced to interpret or to enforce the terms of this Agreement or to collect damages as a result of any breach thereof, the venue for such action shall be the Superior Court of the County of San Mateo, or where otherwise appropriate, exclusively in the United District Court, Northern District, San Francisco, California.

Section 9.13 Costs and Attorney Fees.

Attorney fees in total amount not to exceed Five Thousand Dollars ($5,000), shall be recoverable as costs (by the filing of a cost bill) by the prevailing party in any action or actions to enforce the provisions of this Agreement. The above dollar limit is the total of attorney fees recoverable whether in the trial court, appellate court, or otherwise, and regardless of the number of attorneys, trials, appeals, or actions. It is the intent of this provision that neither party shall have to pay the other more than Five Thousand Dollars ($5,000) for attorney fees arising out of an action, or actions, to enforce the provisions of this Agreement.

Section 9.14 Mediation.

Should any dispute arise out of this Agreement, any party may request that it be submitted to mediation. The parties shall meet in mediation with thirty days (30) days of a request, and such mediation shall be limited to one (1) day of mediation. The mediator shall be agreed to by the mediating parties. In the absence of an agreement, the parties shall each submit one name from mediators listed by either the American Arbitration Association, the State Mediation and Conciliation Service, or other agreed-upon service. The mediator shall be selected by a blind draw. The cost of mediation (other than attorneys' fees of each party) shall be borne equally by the parties. Neither party shall be deemed the prevailing party. No party shall be permitted to file a legal action without first meeting in mediation and making a good faith attempt to reach a mediated settlement. The mediation process, once commenced by a meeting with the mediator, shall last until agreement is reached by the parties, but not more than sixty (60) days from when such process is commenced, unless the maximum time is extended by mutual written agreement executed by both parties.

Section 9.15 Litigation.

Lessee may at the reasonable request testify at City's request, if litigation is brought against City in connection with this Agreement, to the extent the Lessee is considered a material witness to the action being litigated. Unless the action is brought by Lessee, or is based upon Lessee's wrongdoing, City shall compensate Lessee for preparation for all reasonable attorneys' fees, and for preparation of testimony and travel at Lessee's standard hourly rates at the time of actual testimony.
[Signature Page Follows]
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IN WITNESS WHEREOF, the Parties have executed this Lease effective as of the day and year first above written.

CITY:

CITY OF SAN MATEO, a California charter
city
By: ______________________________
Name: Alex Khojikian
Its: City Manager
Approved to as form and legality
__________________________________
Mazarin Vakharia, Assistant City Attorney
LESSEE:

AH Bespoke LP,
a California limited partnership
By: AH Bespoke LLC,
a California limited liability
company
its managing general partner
By: Alta Housing, a California
nonprofit public benefit
corporation, its manager
By:
_____________________
Name: __________________
Title: ___________________
(Note: All of the Exhibits that follow have been revised to include the latest information.) 663 of 11211
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EXHIBIT A
LEGAL DESCRIPTION OF APN 034-179-050 and 034-179-060

THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF SAN MATEO, COUNTY OF SAN MATEO, STATE OF CALIFORNIA AND IS DESCRIBED AS FOLLOWS:

LOTS 2, 3 AND 4, BLOCK 10, AS DELINEATED UPON THAT CERTAIN MAP ENTITLED "MAP OF THE TOWN OF SAN MATEO", FILED FOR RECORD IN THE OFFICE OF THE

RECORDER OF THE COUNTY OF SAN MATEO, STATE OF CALIFORNIA, ON JANUARY 24TH, 1867 IN BOOK 2 OF MISCELLANEOUS RECORDS, PAGE 95 AND A COPY ENTERED INTO BOOK 1 OF MAPS, PAGE 45.

APN: 034-179-050, JPN: 034-017-179-05.00, 034-179-060, JPN: 034-017-179-06.00 664 of 11211
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EXHIBIT B

FINANCING PLAN

TO BE INSERTED
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EXHIBIT C

GROUND FLOOR COMMUNITY SPACE
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EXHIBIT D

SIDEWALK AREA
City sidewalk along Railroad Avenue and 4th Avenue, as identified in diagrams below, will be located within Property. Area of sidewalk within Property is approximately __TO BE INSERTED________.
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EXHIBIT E

INSURANCE REQUIREMENTS
Developer will maintain the insurance coverage described below for itself and its applicable Improvements:

1. Construction Coverage - Minimum Scope and Limits of Insurance Developer shall procure and maintain for the duration of the project construction until issuance of certificate of occupancy insurance against claims for injuries to persons or damages to property which may arise from or in connection with the performance of the construction work hereunder by the Developer, its agents, representatives, or employees.

Coverage shall be at least as broad as:
a. Commercial General Liability (CGL): Insurance Services Office (ISO) Form CG 00 01 covering CGL on an “occurrence” basis, including products and completed operations, property damage, bodily injury and personal & advertising injury with limits no less than $5,000,000 per occurrence. If a general aggregate limit applies, either the general aggregate limit shall apply separately to this project/location (ISO CG 25 03 or 25 04) or the general aggregate limit shall be twice the required occurrence limit. The $5,000,000 per occurrence limit can also be met with an umbrella liability policy in the amount of at least $5,000,000.
b. Automobile Liability: Insurance Services Office Form CA 0001 covering Code 1 (any auto), with limits no less than $2,000,000 per accident for bodily injury and property damage..
c. Workers’ Compensation insurance as required by the State of California, with Statutory Limits, and Employers’ Liability insurance with a limit of no less than $1,000,000 per accident for bodily injury or disease.
d. Builder’s Risk (Course of Construction) insurance utilizing an “All Risk” (Special Perils) coverage form, with limits equal to the completed value of the project and no coinsurance penalty provisions.
e. Developer shall cause its Contractor to maintain Contractors’ Pollution Legal Liability with limits no less than $2,000,000 per occurrence or claim, and $4,000,000 policy aggregate and Developer’s contract with its Contractor will require the Contractor to indemnify the City and name the City as an additional insured on Pollution policy. f. Umbrella liability policy: Developer shall maintain an umbrella liability policy in the amount of $5,000,000.
g. If developer maintains broader coverage and/or higher limits than the minimums shown above, the City requires and shall be entitled to the broader coverage and/or the higher limits maintained by the developer. Any available insurance proceeds in excess of the specified minimum limits of insurance and coverage shall be available to the City.

2. Post Coverage – Minimum Scope and Limits of Insurance 668 of 11211
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Coverage shall be at least as broad as:
a. Commercial General Liability (CGL): Developer shall maintain Insurance Services Office Form CG 00 01 covering CGL on an “occurrence” basis, including products and completed operations, property damage, bodily injury and personal & advertising injury with limits no less than $3,000,000 per occurrence. If a general aggregate limit applies, either the general aggregate limit shall apply separately to this project/location (ISO CG 25 03 or 25 04) or the general aggregate limit shall be twice the required occurrence limit.
b. Automobile Liability: Insurance Services Office Form CA 0001 covering Code 1 (any auto), with limits no less than $1,000,000 per accident for bodily injury and property damage.
c. Workers’ Compensation insurance as required by the State of California, with Statutory Limits, and Employer’s Liability Insurance with limits of no less than $1,000,000 per accident for bodily injury or disease.
c. Property insurance against all risks of loss (other than with respect to loss resulting from Earthquake) to the commercial and residential buildings including the parking garageat full replacement cost with no coinsurance penalty provision. d. Pollution Legal Liability with limits no less than $2,000,000 per occurrence or claim, and $2,000,000 policy aggregate.

3. Additional Insurance Provisions Applicable to Construction and Post Coverage a. Broader Coverage: If the Developer maintains broader coverage and/or higher limits than the minimums shown above, the City requires and shall be entitled to the broader coverage and/or the higher limits maintained by the developer. Any available insurance proceeds in excess of the specified minimum limits of insurance and coverage shall be available to the City.
b. Self-insured retentions: Self-insured retentions for insurance required herein must be declared to and approved by the City. At the option of the City, either: the developer shall cause the insurer shall to reduce or eliminate such self-insured retentions as respects the City, its elected and appointed officials, employees, and agents; or the developer shall provide a financial guarantee satisfactory to the City guaranteeing payment of losses and related investigations, claim administration, and defense expenses. The policy language shall provide, or be endorsed to provide, that the self-insured retention may be satisfied by either the named insured or City.
c. Endorsements: The insurance policies are to contain, or be endorsed to contain, the following provisions:

1. The City, its elected and appointed officials, employees, and agents are to be covered as additional insureds on the CGL policy with respect to liability arising out of work or operations performed by or on behalf of the Developer including materials, parts, or equipment furnished in connection with such work or operations and automobiles owned, leased, hired, or borrowed by or on behalf of the Developer. General liability coverage can be provided in the form of an endorsement to the Developer’s insurance (at least as broad as ISO Form CG 20 10, CG 11 85 or both CG 20 10, CG 20 26, CG 20 33, or CG 20 38; and CG 20 37 forms if later revisions used). 669 of 11211
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2. For any claims related to this project, the Developer’s insurance coverage shall be primary insurance coverage at least as broad as ISO CG 20 01 04 13 as respects the City, its elected and appointed officials, employees, and agents. Any insurance or self-insurance maintained by the City, its elected and appointed officials, employees, or agents shall be excess of the Developer’s insurance and shall not contribute with it.

3. Each insurance policy required by this clause shall provide that coverage shall not be canceled, except with notice to the City.
d. Acceptability of Insurers: Insurance is to be placed with insurers authorized to conduct business in the state with a current A.M. Best rating of no less than A: VII, unless otherwise acceptable to the City.
e. Waiver of Subrogation: Developer hereby agrees to waive rights of subrogation which any insurer of Developer may acquire from Developer by virtue of the payment of any loss. Developer agrees to obtain any endorsement that may be necessary to affect this waiver of subrogation. The Workers’ Compensation policy shall be endorsed with a waiver of subrogation in favor of the City for all work performed by the Developer, its employees, or agents.
f. Verification of Coverage: Developer shall furnish the City with original Certificates of Insurance including all required amendatory endorsements (or copies of the applicable policy language effecting coverage required by this clause) and a copy of the Declarations and Endorsement Page of the CGL policy listing all policy endorsements to City before work begins. However, failure to obtain the required documents prior to the work beginning shall not waive the Developer’s obligation to provide them. The City reserves the right to require complete, certified copies of all required insurance policies, including endorsements, required by these specifications, at any time. g. Developer shall require and verify that its contractor and all subcontractors maintain insurance meeting all requirements stated herein, and Contractor shall ensure that Entity is an additional insured on insurance required from subcontractors. For CGL coverage, subcontractors shall provide coverage with a form at least as broad as CG 20 38 04 13. h. If any coverage required is written on a claims-made coverage form:

1. The retroactive date must be shown, and this date must be before the execution date of the contract or the beginning of contract work.

2. Insurance must be maintained and evidence of insurance must be provided for at least five (5) years after completion of contract work.

3. If coverage is cancelled or non-renewed, and not replaced with another claims-made policy form with a retroactive date prior to the contract effective, or start of work date, the Contractor must purchase extended reporting period coverage for a minimum of five (5) years after completion of contract work.

4. A copy of the claims reporting requirements must be submitted to the Entity for review.

5. If the services involve lead-based paint or asbestos identification/remediation, the Contractors Pollution Liability policy shall not contain lead-based paint or asbestos exclusions. If the services involve mold identification/remediation, the Contractors 670 of 11211
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Pollution Liability policy shall not contain a mold exclusion, and the definition of Pollution shall include microbial matter, including mold. 671 of 11211
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EXHIBIT F

LOT TIE

COVENANT FOR BUILDING AND OPERATION OF

SUBTERRANEAN PARKING STRUCTURE

ACROSS MULTIPLE PARCELS
(Lot Tie)

THIS COVENANT FOR BUILDING AND OPERATION SUBTERRANEAN
PARKING STRUCTURE ACROSS MULTIPLE PARCELS (Lot Tie) (“Covenant”) is made this _____ day of ______________, 2024, by and among MOORE TALBOT PARTNERS, LP, a California limited partnership (“Lot 1 Owner”), ____________________, a __________________ (“Lot 1 Ground Lessee”), ____________________________ (“Lot 5 Owner”) ____________________________ (“Lot 6 Owner” and collectively with the Lot 1 Owner, Lot 1 Ground Lessee, and the Lot 5 Owner, the “Commercial Property Owners”), and the City of San Mateo (“City”). Lot 1 Owner, Lot 1 Ground Lessee, Lot 5 Owner, Lot 6 Owner and City are referred to herein each individually as a “Party” and collectively as the “Parties.”

R E C I T A L S
This Covenant is made with reference to the following facts:

A. Lot 1 Owner is the fee owner of that certain land commonly known as 415 and 445 South B Street, in the City of San Mateo, County of San Mateo, State of California, being Lot 1 of the property described in Exhibit A attached to this Covenant (“Lot 1”). Lot 1 Ground Lessee is the ground lessee of Lot 1 pursuant and subject to that certain ground lease between Lot 1 Owner, as Lessor, and Lot 1 Ground Lessee, as Lessee, dated ________________________, a memorandum of which was recorded on ________________________, as Document No. __________________, in the Official Records of the said County.

B. Lot 5 Owner is the owner of that certain real property commonly known as 302 E. 4 th Avenue, in the City of San Mateo, County of San Mateo, State of California, being Lot 5 of the property described in Exhibit A attached to this Covenant (“Lot 5”).

C. Lot 6 Owner is the owner of that certain real property commonly known as 407 South B Street, in the City of San Mateo, County of San Mateo, State of California, being Lot 6 of the property described in Exhibit A attached to this Covenant (“Lot 6” and collectively with Lot 1 and Lot 5, the “Commercial Property”).

D. City is the owner of that certain real property located in the City of San Mateo, County of San Mateo, State of California, described in Exhibit B attached to this Covenant (“City 672 of 11211
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Property”). The southeastern and southwestern boundaries of City Property are adjacent to and contiguous with the Commercial Property.

E. Lot 1, Lot 5, Lot 6 and the City Property are referred herein each individually as a “Property” and collectively as the “Properties.”
F. The Lot 1 Ground Lessee, Lot 5 Owner and Lot 6 Owner mutually intend to develop, hold, operate and maintain on Lot 1, Lot 5 and Lot 6 an office and retail building and related structures (“Commercial Building”). City intends to enter into a ground lease of the City Property with an affordable housing developer for the purpose of developing and operating an affordable residential apartment building on the City Property (“Residential Building”).

G, The Commercial Building and the Residential Building are to be constructed above, and be structurally supported by, a single, open and continuous subterranean parking structure and podium that will extend to the exterior perimeter of the collective Properties, bounded by Fourth Avenue, Fifth Avenue, Railroad Avenue and B Street, San Mateo (“Subterranean Parking Structure”) that would be constructed in conjunction with construction of the Commercial Building. The Subterranean Parking Structure is intended to include openings across the property lines between each of the Commercial Properties and the City Property for purposes of general ingress, egress and circulation of vehicles and pedestrians. The Parties further intend to enter into a separate reciprocal easement and maintenance agreement for purposes of ensuring common and reciprocal use and unified maintenance and operation of shared portions of the Subterranean Parking Structure (“Project REA”).

H. The Parties intend by this Covenant to establish certain covenants, binding upon the Properties, to ensure that the Subterranean Parking Structure is operated as a joint improvement of the Properties (and not partially or entirely demolished or materially modified by an owner or ground lessee of any one of the Properties), thereby allowing for development of the Subterranean Parking Structure as a single, integrated structure across the property lines of the respective City Property and the Commercial Property.

NOW THEREFORE, in consideration for, and as an express condition of the issuance by the City of a building permit for the construction of the Subterranean Parking Structure over and across the properties of the Properties, the Lot 1 Owner, Lot 1 Ground Lessee, Lot 5 Owner, Lot 6 Owner and City, and each of them, covenant and agree as follows:

1. Single Development. Notwithstanding that the Properties consist of separate legal lots or parcels, the airspace encompassing the Subterranean Parking Structure will be treated for zoning, entitlement, development, operation and management purposes as if it were a single legal parcel consisting of the subterranean portions of both the City Property and the Commercial Property. The airspace encompassed by the Subterranean Parking Structure will at all times be subject to the reciprocal easements and rights set forth in the Project REA and this Covenant.

2. No Demolition. For the term of this Covenant, no owner or ground lessee of the Commercial Property, or any portion thereof, and no owner or ground lessee of the City Property, or any portion thereof, shall remove or demolish all or substantially all of the Subterranean Parking 673 of 11211
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Structure located on its Property, except in connection with joint demolition of the Subterranean Parking Structure with the consent of all owners and ground lessees of the Properties.

3. Single Structure. This Covenant is executed for the purpose of creating a single Subterranean Parking Structure across legal property lines.

4. Binding Effect. This Covenant shall run with and burden the Commercial Property and the City Property, and each of them, shall be binding on each person or entity having or acquiring any right, title or interest in the Properties or any part thereof, and shall inure to the benefit of, and be enforceable by, the City by any legal or equitable means against any person or entity in actual possession of the Properties or any portion of who directly or through an agent violates this Covenant.

5. Term. This Covenant shall remain in effect for the terms of (i) the Project REA, and (ii) any amended, restated or replacement reciprocal easement and maintenance agreement established for purposes of shared or coordinated use, maintenance and operation of the Subterranean Parking Structure entered into and recorded by the then Owners within thirty (30) days of termination of the Project REA (“Replacement REA”), and shall terminate automatically on termination of the Project REA or Replacement REA, as applicable; provided, however, that this Covenant shall remain in effect (and the Subterranean Parking Structure may remain in place) after termination of the Project REA or Replacement REA, as applicable, if, and so long as, the fee interests in the Properties are commonly owned by the same Owner(s). If at any time following termination of both the Project REA and any Replacement REA the fee interests in the Properties are not commonly owned by the same Owner(s), the Subterranean Parking Structure is to be razed and demolished in accordance with the Project REA.
[Remainder of page left intentionally blank]
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IN WITNESS WHEREOF, the undersigned Lot 1 Owner has executed this Covenant on the date first above written.

LOT 1 OWNER:
, a
By:

Name (Printed):

Title:

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.

STATE OF CALIFORNIA )
) ss:

COUNTY OF ______________________ )
On ______________, 20__ before me, _____________________________________________, (insert name and title of the officer),
Notary Public personally appeared____________________________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

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

WITNESS my hand and official seal.

Signature: _______________________________________
[Seal]
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IN WITNESS WHEREOF, the undersigned Lot 1 Ground Lessee has executed this Covenant on the date first above written.

LOT 1 GROUND LESSEE:
, a
By:

Name (Printed):

Title:

STATE OF CALIFORNIA )
) ss:

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

WITNESS my hand and official seal.

Signature: _______________________________________
[Seal]
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IN WITNESS WHEREOF, the undersigned Lot 5 Owner has executed this Covenant on the date first above written.

LOT 5 OWNER:
, a
By:

Name (Printed):

Title:

STATE OF CALIFORNIA )
) ss:

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

WITNESS my hand and official seal.

Signature: _______________________________________
[Seal]
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IN WITNESS WHEREOF, the undersigned Lot 6 Owner has executed this Covenant on the date first above written.

LOT 6 OWNER:
, a
By:

Name (Printed):

Title:

STATE OF CALIFORNIA )
) ss:

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

WITNESS my hand and official seal.

Signature: _______________________________________
[Seal]
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IN WITNESS WHEREOF, the undersigned City has executed this Covenant on the date first above written.

CITY:

THE CITY OF SAN MATEO
By:

Name (Printed):

Title:

APPROVED AS TO FORM
[Acknowledgments attached]
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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.

STATE OF CALIFORNIA )
) ss:

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

WITNESS my hand and official seal.

Signature: _______________________________________
[Seal]
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.

STATE OF CALIFORNIA )
) ss:

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

WITNESS my hand and official seal.

Signature: _______________________________________
[Seal]
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EXHIBIT A

COMMERCIAL PROPERTY
The “Commercial Property” under this Covenant is that certain real property located in the City of San Mateo, County of San Mateo, State of California, described as follows:
“Lot 1”
PARCEL 1 AS DESIGNATED ON THAT CERTAIN MAP ENTITLED, "PARCEL MAP NO. 325 LANDS OF MOORE FOR LOT MERGER PURPOSES FOR THE MERGER OF LOTS 1, 7 AND 8, BLOCK 10, AS SHOWN ON THE MAP ENTITLED, ‘MAP OF THE TOWN OF SAN MATEO, SAN MATEO COUNTY, CALIFORNIA’,” WHICH PARCEL MAP WAS

FILED IN THE OFFICE OF THE RECORDER OF THE COUNTY OF SAN MATEO, STATE OF CALIFORNIA ON FEBRUARY 11, 1991, IN BOOK 64 OF PARCEL MAPS AT PAGE

54. “Lot 5”
LOT 5, BLOCK 10, AS DESIGNATED ON THE MAP ENTITLED, "MAP OF THE TOWN OF SAN MATEO, SAN MATEO COUNTY, CALIFORNIA", FILED IN THE OFFICE OF THE RECORDER OF THE COUNTY ON JANUARY 24, 1963, IN BOOK 2 OF MISCELLANEOUS RECORDS, AT PAGE 95, AND A COPY ENTERED IN BOOK 1 OF MAPS AT PAGE 45.
“Lot 6”
LOT 6, BLOCK 10, AS DESIGNATED ON THE MAP ENTITLED, "MAP OF THE TOWN OF SAN MATEO, SAN MATEO COUNTY, CALIFORNIA", FILED IN THE OFFICE OF THE RECORDER OF THE COUNTY ON JANUARY 24, 1963, IN BOOK 2 OF MISCELLANEOUS RECORDS, AT PAGE 95, AND A COPY ENTERED IN BOOK 1 OF MAPS AT PAGE 45.
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EXHIBIT B

CITY PROPERTY
The “City Property” under this Covenant is that certain real property located in the City of San Mateo, County of San Mateo, State of California, described as follows:

LOTS 2, 3 AND 4, BLOCK 10, AS DELINEATED UPON THAT CERTAIN MAP ENTITLED "MAP OF THE TOWN OF SAN MATEO", FILED FOR RECORD IN THE OFFICE OF THE

RECORDER OF THE COUNTY OF SAN MATEO, STATE OF CALIFORNIA, ON JANUARY 24TH, 1867 IN BOOK 2 OF MISCELLANEOUS RECORDS, PAGE 95 AND A COPY ENTERED INTO BOOK 1 OF MAPS, PAGE 45.

EXCEPTING THEREFROM: THAT PORTION OF THE ABOVE DESCRIBED PROPERTY LYING BELOW A DEPTH OF 500 FEET, MEASURED VERTICALLY, FROM THE

CONTOUR OF THE SURFACE OF SAID PROPERTY, AS CONTAINED IN THE DEED

FROM SOUTHERN PACIFIC TRANSPORTATION COMPANY, A DELAWARE

CORPORATION TO CITY OF SAN MATEO, A MUNICIPAL CORPORATION, RECORDED NOVEMBER 27, 1985 IN THE OFFICIAL RECORDS OF THE COUNTY OF SAN MATEO, AS RECORDER'S SERIAL NUMBER 85128380.
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EXHIBIT G

FORM OF REA
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RECORDING REQUESTED BY
AND WHEN RECORDED RETURN TO:

CITY OF SAN MATEO
Housing Division
330 W. 20th Avenue
San Mateo, CA 94403
Space Above This Line Reserved for Recorder’s Use
Exempt from Recording Fee Per
Government Code Section 27383 and 6103

AGREEMENT OF EASEMENTS,

COVENANTS AND RESTRICTIONS
FOR
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TABLE OF CONTENTS

AGREEMENT OF

EASEMENTS, COVENANTS AND RESTRICTIONS
FOR

ARTICLES PAGES
ARTICLE 1 RECITALS..................................................................................................................1

1.1. PROPERTY SUBJECT TO AGREEMENT .................................................................1

1.2. DEVELOPMENT OF PROPERTIES ...........................................................................2

1.3. INTENTION OF AGREEMENT ..................................................................................2

1.4. NO COMMON INTEREST DEVELOPMENT............................................................2 ARTICLE 2 DEFINITIONS............................................................................................................3 ARTICLE 3 EASEMENTS .............................................................................................................8

3.1. DRIVEWAY AND PARKING EASEMENTS.............................................................9

3.2. PEDESTRIAN INGRESS AND EGRESS..................................................................12

3.3. EASEMENT FOR UTILITIES....................................................................................13

3.4. MAINTENANCE EASEMENTS................................................................................13

3.5. STRUCTURAL SUPPORT EASEMENT ..................................................................13

3.6. GENERAL ENCROACHMENT EASEMENT ..........................................................13

3.7. COVENANTS REGARDING EASEMENTS ............................................................14 ARTICLE 4 MANAGEMENT AND MAINTENANCE..............................................................15

4.1. MAINTENANCE OF SEPARATE IMPROVEMENTS ............................................15

4.2. SHARED GARAGE MAINTENANCE AREAS .......................................................15

4.3. ALTERATIONS TO PARKING STRUCTURE AND GARAGE .............................17

4.4. SELF HELP MAINTENANCE REMEDIES..............................................................17

4.5. MECHANICS’ LIENS ................................................................................................18 ARTICLE 5 SHARED EXPENSES..............................................................................................18

5.1. COVENANT TO CONTRIBUTE TO SHARED EXPENSES...................................18

5.2. COLLECTION OF SHARED EXPENSES.................................................................20

5.3. ENFORCEMENT OF MONETARY OBLIGATIONS ..............................................23 ARTICLE 6 INSURANCE AND INDEMNITY ..........................................................................26

6.1. CONSTRUCTION PERIOD INSURANCE ...............................................................26

6.2. POST CONSTRUCTION INSURANCE BY INDIVIDUAL OWNERS...................26

6.3. INSURANCE BY MANAGING OWNER .................................................................28

6.4. MINIMUM INSURANCE REQUIREMENTS...........................................................28

6.5. RECIPROCAL INDEMNITIES..................................................................................28

6.6. DAMAGE AND DESTRUCTION OF GARAGE IMPROVEMENTS .....................29 ARTICLE 7 INTENTIONALLY DELETED ...............................................................................31 685 of 11211
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ARTICLE 8 AMENDMENTS, DEFAULT, AND ENFORCEMENT.........................................31

8.1. AMENDMENTS .........................................................................................................31

8.2. EVENTS OF DEFAULT.............................................................................................31

8.3. REMEDIES FOR DEFAULT......................................................................................32

8.4. ALTERNATIVE DISPUTE RESOLUTION ..............................................................32

8.5. REMEDIES CUMULATIVE......................................................................................32

8.6. NONWAIVER.............................................................................................................32

8.7. ESTOPPEL CERTIFICATES .....................................................................................33 ARTICLE 9 MORTGAGEES AND GROUND LESSOR............................................................33

9.1. GROUND LESSOR AS PARTY ................................................................................33

9.2. MORTGAGEE/GROUND LESSOR RIGHTS AND PROTECTIONS .....................33

9.3. RESTRICTIONS ON AMENDMENTS TO AGREEMENT .....................................34

9.4. MISCELLANEOUS RIGHTS OF MORTGAGEES AND CITY ..............................35 ARTICLE 10 MISCELLANEOUS PROVISIONS.......................................................................36

10.1. TERM OF AGREEMENT...........................................................................................36

10.2. CONSTRUCTION OF PROVISIONS........................................................................36

10.3. AGREEMENT IS BINDING ......................................................................................36

10.4. SEVERABILITY OF PROVISIONS ..........................................................................36

10.5. JOINT AND SEVERAL LIABILITY OF COMMERCIAL PROPERTY OWNERS.....................................................................................................................36

10.6. GENDER, NUMBER AND CAPTIONS....................................................................36

10.7. EXHIBITS ...................................................................................................................36

10.8. CONFLICT..................................................................................................................36 686 of 11211
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AGREEMENT OF

EASEMENTS, COVENANTS AND RESTRICTIONS
FOR

THIS AGREEMENT OF EASEMENTS, COVENANTS AND RESTRICTIONS FOR _______________________________ (“Agreement”) is made this _____ day of ______________, 20___, by and among ____________________, a __________________ (“[Commercial Lot 1 Owner]”), ____________________________ (“[Commercial Lot 5 Owner]” ____________________________ (“[Commercial Lot 6 Owner]” and collectively with the Commercial Lot 1 Owner and the Commercial Lot 5 Owner, the “Commercial Property Owners”), the City of San Mateo (“City”), and, for the limited purposes described in Section ____, as set MOORE TALBOT PARTNERS, LP, a California limited partnership, as fee owner of Commercial Lot 1, as defined herein (the “Commercial Lot 1 Fee Owner”).

San Mateo City CouncilMay 18, 2026

San Mateo City Council
May 18, 2026