Commercial Lot 1 Owner, Commercial Lot 5 Owner, Commercial Lot 6 Owner, City, Commercial Lot 1 Fee Owner, and any future Residential Property Owner as defined herein are referred to herein individually as a “Party” and collectively as the “Parties.” ARTICLE 1
RECITALS
This Agreement is made with reference to the following facts:
1.1. PROPERTY SUBJECT TO AGREEMENT:
1.1.1. Commercial Lot 1: Commercial Lot 1 Owner is the ground lessee of that certain land, and owner of the Improvements thereon, 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 Commercial Property as described in Exhibit A attached to this Agreement (“Commercial Lot 1”), pursuant and subject to that certain ground lease between Commercial Lot 1 Fee Owner, as Lessor, and Commercial Lot 1 Owner, as Lessee, dated ________________________, a memorandum of which was recorded on ________________________, as Document No. __________________, in the Official Records of the said County (“Commercial Lot 1 Ground Lease”).
1.1.2. Commercial Lot 5: Commercial Lot 5 Owner is the owner of that certain real property commonly known as 302 E. 4th Avenue, in the City of San Mateo, County of San Mateo, State of California, being Lot 5 of the Commercial Property described in Exhibit A attached to this Agreement (“Commercial Lot 5”).
1.1.3. Commercial Lot 6: Commercial 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 Commercial Property described in Exhibit A attached to this Agreement (“Commercial Lot 6” and collectively with Commercial Lot 1 and Commercial Lot 5, the “Commercial Property”).
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1.1.4. Residential Property: City is the fee owner of that certain land, and owner of the Improvements thereon, located in the City of San Mateo, County of San Mateo, State of California, described in Exhibit B attached to this Agreement (“Residential Property”).
1.1.5. The Properties: The Commercial Property and the Residential Property are referred to herein collectively as the “Properties.”
1.2. DEVELOPMENT OF PROPERTIES. The Commercial Property Owners intend to develop the subterranean shared Parking Structure and Garage on both the Commercial and Residential Properties, to develop the Commercial Building on the Commercial Property, and to hold and operate the Commercial Property as an office and retail project. City intends to enter into a ground lease (“Residential Property Ground Lease”) of the Residential Property with an affordable housing developer, to be referred to herein as the “Residential Property Owner,” for the purpose of development and operation of an affordable residential apartment project on the Residential Property. The two separate projects are to be served by a central subterranean Parking Structure and Garage, as defined herein.
1.3. INTENTION OF AGREEMENT. By this Agreement, the Parties, with the consent of the Commercial Lot 1 Fee Owner, intend to grant and reserve reciprocal easements for circulation within the Garage and to establish a plan for the operation, maintenance and cost sharing with respect to the Shared Maintenance Areas as defined in this Agreement. To accomplish this, the Parties desire to impose on the Commercial Property and the Residential Property these mutually beneficial easements, covenants and restrictions under a comprehensive plan of improvement and development for the benefit of the Commercial Property and the Residential Property.
1.4. NO COMMON INTEREST DEVELOPMENT: Neither the Commercial Property nor the Residential Property, nor the Properties combined, is or shall be considered a common interest development within the meaning California Davis-Stirling Common Interest Development Act (California Civil Code Section 4000 et seq.) or the California Commercial and Industrial Common Interest Development Act (California Civil Code Section 6500 et seq.).
NOW, THEREFORE, with reference to the foregoing recitals, in consideration of the premises, covenants and agreements set forth in this Agreement and for other good and valuable consideration, receipt of which is hereby acknowledged, each of the Parties and Commercial Lot 1 Fee Owner agree that the Properties are subject to the provisions of this Agreement. The Commercial Property and Residential Property shall each be held, improved, developed, sold, conveyed, hypothecated, encumbered, leased, rented, used, operated and occupied subject to the easements, covenants, and restrictions stated in this Agreement. The provisions of this Agreement shall run with and burden the Commercial Property and the Residential Property, and each of them, shall be binding upon and, as applicable, inure to the benefit of the Properties and each Person having or acquiring any right, title or interest in the Properties or any part thereof, or any Improvements thereon, and upon and to the benefit of their respective successors and assigns.
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ARTICLE 2
DEFINITIONS
Unless the context clearly indicates a different meaning, the terms used in this Agreement shall have the meanings specified in this Article. Definitions of term relating specifically to Article 7 are set forth in Section 7.1
“ADR” means the alternative dispute provisions and procedures set forth in Exhibit D. “Additional Charges” has the meaning ascribed to it in Section 5.3.6. “Agreement” means this AGREEMENT OF RECIPROCAL EASEMENTS, COVENANTS AND RESTRICTIONS FOR _______________________________ and any amendments hereto.
“City” means the City of San Mateo, County of San Mateo, State of California. “City Parking Agreement” means the agreement entered into, or to be entered into, by and between the City and the Commercial Property Owners whereby the Commercial Property Owners has granted or will grant to the City a non-exclusive access for use of certain parking spaces within the Commercial Parking Area during specified days and times. “Commercial Building” means the commercial office and retail building constructed or to be constructed on surface of the Commercial Property, and all related Improvements, including elevators, elevator equipment room, elevator shafts, stairwells, trash chutes, and trash receptacles that extend from the building to and from the Garage Level. The Commercial Building shall also be deemed to include all structural components of the Garage and other Improvements within the Commercial Property.
“Commercial Lot 1” has the meaning ascribed to it in Section 1.1.1. “Commercial Lot 1 Fee Owner” means MOORE TALBOT PARTNERS, LP, a California limited partnership, its successors and assign, and any successor owner of the fee interest in Lot 6 or any portion thereof.
“Commercial Lot 1 Ground Lease” has the meaning ascribed to it in Section 1.1.1. “Commercial Lot 5” has the meaning ascribed to it in Section 1.1.2. “Commercial Lot 6” has the meaning ascribed to it in Section 1.1.3. “Commercial Parking Area” means those areas of the Garage that are not the Residential Parking Area.
“Commercial Property” means, collectively, Commercial Lot 1, Commercial Lot 5 and Commercial Lot 6, as defined in Exhibit A, and all Improvements thereon. 689 of 11211
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“County” means the County of San Mateo, State of California. “Dispute” has the meaning ascribed to it in Section 8.4. “Eligible Holder” means a Mortgagee or Ground Lessor who has delivered to both the Residential Property Owner and the Managing Owner a written notice (a) containing its name and address, (b) identifying the Property or portion thereof encumbered by its Mortgage or Ground Lease, and (c) requesting delivery to it of written notices under this Agreement. “Fixed Contribution Expenses” is defined in the definition of “Shared Expenses” in this Article.
“Flex Parking Hours” has the meaning ascribed to it in 3.1.5. “Garage” means the area bounded by the interior unfinished surfaces of the foundation, structural walls, structural columns and structural ceiling (Podium) of the Parking Structure, and includes all non-structural Improvements therein, including the surface of the Garage Ramp and all drive aisles, parking areas, non-loadbearing walls, utility rooms, mechanical rooms, fire pump rooms, entry and exit doors, stairwells, all as shown on the Garage Level Site Plan. “Garage Level” means that subsurface portion of the Properties located below the structural Podium, as depicted on the Garage Level Site Plan. “Garage Ramp” means the vehicular ramp connecting the Garage to the South Railroad Avenue right-of-way at grade level, including sidewalk and curb cut. The Garage Ramp is located within the Residential Property, except for the southeasterly six feet, more or less, which is located within the Commercial Property, as more particularly shown on the Garage Level Site Plan.
“Garage Level Site Plan” means the Garage Level Site Plan attached to this Agreement as Exhibit C and incorporated herein by this reference. “Ground Leases” means, collectively, the Residential Property Ground Lease and the Commercial Lot 1 Ground Lease.
“Ground Lessor” means, as the context applies, either the City, its successors and assigns, as fee owner and ground lessor under the Residential Property Ground Lease, or MOORE TALBOT PARTNERS, LP, a California limited partnership, its successors and assigns, as fee owner and ground lessor under the Commercial Lot 1 Ground Lease, as applicable. The term “Ground Lessor” shall also include any future fee owner and ground lessor, from time to time, under any ground lease of any lot or parcel within the Residential Property or the Commercial Property.
“Garage Reserves” means reserves to cover the replacement of material components of the Shared Garage Maintenance Areas upon the expiration of their estimated useful lives, including but not limited to commonly used HVAC and fire pump systems in the Garage. “Improvements” means buildings, facilities, ramps, drives, walls, paving, wires, utilities, 690 of 11211
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grading, fixtures, all other structures, and all other works of improvement constructed or to be constructed upon or within the Properties, excluding only those Improvements or portions thereof which are dedicated to the public or a public or quasi-public entity or utility company, and accepted for maintenance by the public or by such entity or utility company. “Invitee” means any person whose presence within the Properties is approved by or is at the request of a particular Owner or its Tenants, including, but not limited to the family, guests, licensees or invitees of Owners or their Tenants.
“Main Entry Gate” has the meaning ascribed to it in 3.1.5(a). “Main Entry System” has the meaning ascribed to it in 3.1.5(a). “Managing Owner” means the Commercial Lot 1 Owner, its successors and assigns, and any Property Manager to which it shall have assigned or delegated any of its rights or duties under this Agreement. For any successor or assignee of the “Managing Owner” to be deemed the “Managing Owner” under the terms of this Agreement, the then Managing Owner shall record in the County an assignment designating such successor or assignee as “Managing Owner,” together with an assumption by the new “Managing Owner” of the obligations of the Managing Owner under this Agreement.
“Monetary Obligation” has the meaning ascribed to it in Section 5.3. “Mortgage” means any duly recorded mortgage, deed of trust, assignment of rents, issues and profits or other proper instrument given as security for the repayment of a loan or other financing which encumbers an Owner’s Property, made in good faith and for value. “Mortgagee” means a mortgagee under any duly recorded mortgage, beneficiary under any duly recorded deed of trust, and any assignee under an assignment of rents, issues and profit or other proper instrument, where such mortgage, deed of trust or assignment is a “Mortgage” as defined herein.
“Owner” means, individually, each of the Commercial Lot 1 Owner, the Commercial Lot 5 Owner, the Commercial Lot 6 Owner and the Residential Property Owner, their successors and assigns under the applicable Ground Lease, and any successor owner of the applicable fee or ground leasehold interest in either the Residential Property or the Commercial Property, or any portion thereof. Without limiting the foregoing, the Ground Lessor under and Ground Lease of a Parcel reserves for itself the right, by written notice to the Owners of the other Parcels, to have the Ground Lessee under such Ground Lease be considered the “Owner” of such Parcel for purposes of this Agreement rather than the Ground Lessor; provided, however, such designation shall not impact the burdens or benefits of any of the easements granted and/or reserved in this Agreement.
“Parking Structure” means the structural components of the subterranean parking structure and podium constructed by the Commercial Property Owners on the Properties, from the bottom of the foundation to the upper surface of the podium supporting the surface Buildings on the Properties.
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“Person” means a natural individual or any legal entity recognized under California law.
When the word “person” is not capitalized, the word refers only to natural persons. “Property” means either (i) the Residential Property, or (ii) each lot or parcel comprising the Commercial Property, as the context indicates.
“Property Manager” means the person or entity appointed or hired by an Owner to manage and operate Residential or Commercial Building on such Owner’s Property. “Proportionate Share” means the following:
Residential Property: 30%
Commercial Property: 70%
“Residential Building” means the multi-family residential building constructed or to be constructed on Parking Structure podium within the Residential Property, and all related Improvements, including elevators, elevator equipment room, elevator shafts, stairwells, trash chutes, and trash receptacles that extend from the building to and from the subterranean Garage level.
“Residential Fixed Contribution Amount” has the meaning ascribed to it in Section
5.1.5. “Residential Flex Spaces” has the meaning ascribed to it in 3.1.5. “Residential Gate” has the meaning ascribed to it in Section 3.1.6. “Residential Parking Area” means that area shown on the Garage Level Site Plan as area of the Garage dedicated to the exclusive use for parking by the Residential Property Owner, its Tenants and Invitees.
“Residential Parking Encroachment” means that portion of the Garage Level consisting of the northeasterly 6 feet of Commercial Lots 5 and 6 from the interior unfinished surface of the northwesterly wall of the Garage to northwesterly edge of the Garage Ramp, as shown on the Garage Level Site Plan.
“Residential Placed-in-Service Date” means the first day of the first calendar month following the date upon which a temporary or final certificate of occupancy is issued for all or any portion of the Residential Building.
“Residential Property” has the meaning ascribed to it in Section 1.1.4. “Residential Property Ground Lease” has the meaning ascribed to it in Section 1.1.4. “Residential Property Ground Lessee” means the lessee pursuant to the Residential Property Ground Lease.
“Residential Property Ground Lease Possession Date” means the date upon which the 692 of 11211
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Residential Property Ground Lessee has the right to occupy the Residential Property pursuant to the Residential Property Ground Lease.
“Residential Property Owner” shall, until the Residential Property Ground Lease Possession Date, be the City. From and after the Residential Property Ground Lease Possession Date, through the term of the Residential Property Ground Lease, the “Residential Property Owner” shall be the Residential Property Ground Lessee. The Residential Property Ground Lessee, by accepting its leasehold interest in and to the Residential Property, shall be deemed to have assumed all of the obligations and liability of the Residential Property Owner under this Agreement arising on or after such Residential Property Ground Lease Possession Date, and the City shall thereupon be released from any obligations or liability under this Agreement arising on or after the Residential Property Ground Lease Possession Date; provided, however, that the City will be deemed to be a consenting fee owner to the terms of this Agreement. “Shared Garage Maintenance Areas” means the following building areas and systems if and to the extent located on the Garage Levels and serving those portions of the Garage located on both the Residential and Commercial Properties:
• the Garage Ramp and other shared drive aisles within the Garage; • Shared Utility Facilities, if any;
• Shared HVAC Systems, if any;
• the portions, if any, of the Garage fire suppression systems, pipes, and fire system control rooms that serve both the Residential Parking Area and the Commercial Parking Area; and
• Garage Stair 016 and Garage Stair 003, as shown on the Garage Level Site Plan. “Shared Expenses” means the cost to the Managing Owner of:
• regular inspection, maintenance, repair and replacement of Shared Maintenance Areas and Improvements therein (“Regular Maintenance Costs”); • reasonable Garage Reserves as deemed appropriate by the Managing Owner or otherwise required pursuant to this Agreement;
• reasonable overhead and administrative charges as allocated to management and maintenance of the Shared Maintenance Areas pursuant to this Agreement, not to exceed fifteen percent (15%) of Regular Maintenance Costs (“Administrative Costs”);
• premiums for property insurance maintained by the Managing Owner and reasonably allocated to the Parking Structure and Garage, pursuant to this Agreement; and
• Unforeseen Costs and Extraordinary Expenses associated with maintenance or 693 of 11211
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restoration of Shared Maintenance Areas;
Regular Maintenance Costs, Garage Reserves and Administrative Costs are referred to in this Agreement as “Fixed Contribution Expenses.” All other Shared Expenses are referred to in this Agreement as “Variable Contribution Expenses.”
“Shared HVAC Systems” means heating, air conditioning, air circulation and related systems, if any, serving both the Residential Property and the Commercial Property, to the point of connection to the separate Improvements within each Property, including all associated mechanical equipment, chillers, pumps, motors, air handling units, ducts, fans, insulation, common meters, irrigation or other common water meters, exhaust fans, and such other associated equipment and machinery.
“Shared Utility Facilities” means those portions of any public and private utilities within the Properties that serve both Properties, including but not limited to common water, electric, gas, telephone, telecommunications, cable, information technology facilities, and sanitary sewer, if any. Shared Utility Facilities shall include Garage lighting and electrical systems and control rooms, if any, including common meters (if any), shared electrical panels, conduit and lighting systems, but excluding lighting fixtures except within shared drive aisles and the area of the Garage Ramp.
“Tenant” means shall mean each tenant, lessee, or sublessee, under a lease or rental agreement for space in the Commercial Building or the Residential Building, which lease gives such Tenant the right to use and access to one or more parking spaces in the Garage (whether under a pay-for-use, unbundled or bundled arrangement). ”Vapor Mitigation Plan” means that certain Vapor Mitigation Plan dated __________________, prepared by ______________________, on file with and approved by the County Environmental Health Department, which includes vapor mitigation strategies, if and as appropriate, that are protective of the occupants of the Parking Structure and Improvements, including post construction monitoring/verification sampling as required by the County Environmental Health Department.
“Variable Contribution Expenses” is defined in the definition of “Shared Expenses” in this Article.
ARTICLE 3
EASEMENTS
Each of the Owners shall be entitled to the benefits of the easements granted and reserved in this Agreement, and such Owner’s respective interest in its respective Property shall be subject to the easements granted and reserved in favor of the other Owners as set forth below.
Each of the easements reserved or granted herein shall be enforceable as covenants running with the land for the benefit of the Owners and their Tenants and Invitees, superior to all other encumbrances applied against the Owners’ interests in their respective Properties. The Owners’ respective easement interests in the Garage shall be appurtenant to, and shall not be separated or separately conveyed from, their respective interests in the Commercial Property and Residential 694 of 11211
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Property.
3.1. DRIVEWAY AND PARKING EASEMENTS:
3.1.1. Ramp and Drive Aisles on Residential Property: Subject to the terms, conditions and restrictions set forth in this Agreement, the Residential Property Owner hereby grants and conveys to the Commercial Property Owners, and each of them, a non-exclusive easement, appurtenant to the Commercial Property, over and across:
(a) the grade level driveway entry from the public street to the subterranean Garage Level, as shown on the Grade Level Site Plan; (b) the portion of the Garage Ramp located within the Residential Property as shown on the Garage Level Site Plan; and
(c) Garage Level drive aisles within the Residential Property that provide access to Commercial Property parking spaces (not including drive aisles located on the Residential Property side of the Residential Gate), as shown on the Garage Level Site Plan; all for purposes of (i) vehicular and pedestrian ingress and egress by the Commercial Property Owners and their respective Tenants and Invitees to and from those parking areas and other portions of the Garage located within the Commercial Property, and (ii) installation, operation, maintenance, repair and replacement of the Main Entry Gate in accordance with this Agreement.
3.1.2. Ramp and Drive Aisles on Commercial Property: Subject to the terms, conditions and restrictions set forth in this Agreement, including but not limited to those set forth in this Article 3, the Commercial Property Owners, and each of them hereby grant and convey to the Residential Property Owner non-exclusive easements, appurtenant to the Residential Property, over and across:
(a) that portion of the Garage Ramp located within the Commercial Property as shown on the Garage Level Site Plan; and
(b) drive aisles within the Commercial Property providing access to the Residential Gate and to parking areas within the Residential Property; for purposes of vehicular and pedestrian ingress and egress by the Residential Property Owner and its Tenants and Invitees to and from (i) those parking areas and other portions of the Garage located within the Residential Property, and (ii) other parking spaces within the Commercial Property to which the Residential Property Owner, its Tenants and Invitees are allowed access by easement or license under this Agreement.
3.1.3. Residential Parking Encroachment: The Commercial Property Owners, and each of them, hereby grant and convey to the Residential Property Owner an exclusive easement, appurtenant to the Residential Property, over and across the area of the Residential Parking Encroachment for purposes of access to, use and maintenance of residential parking spaces (including mechanical stacking systems) and pedestrian ingress and egress, and for purposes of installation, operation, maintenance, repair and replacement of the Residential Gate 695 of 11211
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as set forth in Section 3.1.7.
3.1.4. License for Residential Flex Parking: Effective upon the Residential Placed-in-Service Date, the Commercial Property Owners hereby grant to the Residential Property Owner an irrevocable license for non-exclusive access and use by the Residential Property Owner, its Tenants and Invitees of the [twenty-five] parking spaces in the Commercial Parking Area identified on the Garage Level Site Plan as parking space numbers ___________________________ (the “Residential Flex Spaces”), which access and use shall be limited to the following times: between the hours of 6pm to 7am weekdays, and 24 hours on Saturdays, Sundays and public holidays recognized by the United States Government and/or the State of California (the “Flex Parking Hours”). The use of the Residential Flex Spaces by the Residential Property Owner or its Tenants or Invitees shall be subject to the parking restrictions set forth in Section 3.7.3 and such reasonable and non-discriminatory rules and regulations (the “Flex Parking Rules”) as may be established (with the consent of Residential Property Owner not to be unreasonably denied, conditioned or delayed) and enforced by the Managing Owner.
Use of the Residential Flex Spaces by the Residential Property Owner or its Tenants or Invitees either (i) in violation of this Agreement or the Flex Parking Rules, or (ii) outside of Flex Parking Hours, may be enforced by the Managing Owner or its Manager pursuant to Section 3.7.3(c); provided, however, that the Managing Owner may not cause removal of a Residential Property Tenant’s or Invitee’s vehicle from a Flex Parking Space for violating Flex Parking Hours until placement of a written infraction notice or tag on the same vehicle at least three (3) times for separate violations of the Flex Parking Hours restriction. Where a vehicle remains in a Flex Parking Space after being tagged, each 24-hour period may be treated as a separate violation, and the vehicle may be re-tagged. To ensure this restriction on enforcement is followed by the Managing Owner, the Residential Property Owner shall use commercially reasonable efforts to provide the Managing Owner an accurate list of makes, models and license plate numbers of all vehicles that qualify as Residential Tenant’s vehicles and shall periodically provide the Managing Owner with written updates of the Residential Tenant vehicle list as appropriate.
3.1.5. Main Entry Gate:
(a) The Commercial Property Owners’ easement over and across the Garage Ramp under Section 3.1.1(a), above, shall include the exclusive right to install, maintain, repair and replace a main entry gate on the Garage Ramp and near the entry to the Garage (“Main Entry Gate”), including but not limited to control arms, electrical power for the gate, sensors or other controlled access systems to monitor access to the Garage. The Main Entry Gate may include metering, card systems, or similar technology to enable the Managing Owner to control, monitor and receive payment for use of parking within the Commercial Property (“Main Entry System”).
(b) The Commercial Property Owners or the Managing Owner may employ, at its sole expense and not as a Shared Expense, a commercial parking operator to operate and manage the Main Entry Gate and Main Entry System. At all times, the Commercial Property Owners or their parking operator may restrict access to, or sell or issue permits for, access and use of parking spaces in the Commercial Property portion of the Garage. Nothing stated herein shall allow the Commercial Property Owners to take any action that conflicts with the City Parking Agreement. The Commercial Property Owner shall be entitled to all revenue 696 of 11211
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generated by operation of the Main Entry Gate and Main Entry System. Such revenue shall not be considered in the calculation of or constitute a credit toward the Residential Property Owner’s share of Shared Expenses for the Garage.
(c) The foregoing notwithstanding, the Residential Property Owner and its Tenants and Invitees shall be provided access, without charge, through the Main Entry Gate to and from the Residential Gate and the Residential Property parking areas. The Commercial Property Owner shall issue key cards or provide other means of electronic access, at no charge to the Residential Property Owner, its Tenants or Invitees, to Persons designated by the Residential Property Owner to be Tenants of the Residential Property Owner or otherwise to be allowed unrestricted access to the Residential Property. (d) The Commercial Property Owners shall bear the full cost of maintenance, repair, replacement and operation of the Main Entry Gate and Main Entry System, and such cost shall not be a Shared Expense under this Agreement. (e) The Managing Owner and Residential Property Owner shall establish reasonable and mutually acceptable procedures to address instances in which the Main Entry Gate and/or the Main Entry System does not properly operate to ensure the Residential Property Owner and its Tenants and Invitees shall have continuous access to and from the Residential Gate and the Residential Property Parking Area, which procedures shall include the ability of the Residential Property Owner to override the Main Entry System and manually open the Main Entry Gate if the Main Entry Gate is inoperable for more than two (2) consecutive hours after Residential Property Owner has notified Managing Owner that the Main Entry Gate is inoperable. The Residential Property Owner shall have no liability to the Managing Owner, any Commercial Property Owner and/or any Tenant or Invitee for leaving the Main Entry Gate open during any period in which the Main Entry Gate is inoperable.
3.1.6. Residential Gate:
(a) The Residential Property Owner’s easement for the Residential Parking Encroachment under Section 3.1.3 shall include the exclusive right to install, maintain, repair and replace a residential garage entry gate within the Residential Parking Encroachment as shown on the Garage Level Site Plan (“Residential Gate”), including but not limited to control arm or gate mechanisms, electrical power for the gate, and sensors or other controlled systems to monitor access to the portion of the Garage located in the Residential Property. The Residential Gate may include metering, card systems, or similar technology to enable the Residential Property Owner to control, monitor and receive payment for use of parking in the Residential Area, and to provide for security for the residential portion of the Garage (“Residential Entry System”).
(b) The Residential Property Owner shall bear the full cost of maintenance, repair, replacement and operation of the Residential Gate and Residential Entry System, and such cost shall not be a Shared Expense under this Agreement.
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to install and maintain within the portion of the Garage located on its Property (or Residential Parking Encroachment) automated parking stackers, electric vehicle charging stations, charging meters (including time of use meters) and other parking automation systems (each a “Parking Automation System”), so long as (a) the installation and maintenance of the Parking Automation System, including electrical systems therefor, do not impede access to the shared drive aisles or impact the structure of the Garage or other Improvements on the Properties and otherwise comply with the architectural and design standards applicable to the Improvements on the Properties; (b) the Party installing the Parking Automation Systems engages a qualified licensed contractor to install the same; and (c) all Parking Automation Systems are properly insured in accordance with all applicable laws, rules and regulations, and (for the Residential Property) the requirements of the Residential Property Ground Lease. The Owner and each successive Owner of a Parking Automation System shall be solely responsible for all of the following: (1) costs for damage to the Parking Automation System or the Garage resulting from the installation, maintenance or repair of the Parking Automation System; (2) costs for the maintenance, repair, and replacement of the Parking Automation System until it has been removed and for the restoration of the Garage after removal; and (3) the cost of electricity associated with the Parking Automation System. If Parking Automation Systems within a Property are not separately metered, the Managing Owner shall have the right to treat power and electricity to Parking Automation Systems as a Shared Expense and to allocate it reasonably based on estimated usage by the Parties. All revenues from Parking Automation Systems shall be the property of the respective Owner thereof.
3.1.8. Temporary Residential Parking Area License: Following completion of construction of the Garage Improvements located on the Residential Property, the Commercial Property Owners shall have an exclusive license over and across the completed Garage and podium surface located on the Residential Property for purposes of parking of vehicles by agents, contractors and Invitees of the Commercial Property Owner, which license shall remain in effect until the earlier of (i) the Residential Placed In Service Date, (ii) thirty (30) days following written notice by the Residential Property Owner to the Commercial Owners that the Residential Property Owner has elected to take possession of the Garage Improvements located on the Residential Property. Further, the license granted by this Section shall be predicated on the Commercial Property Owners bearing all costs of maintenance and upkeep of the Garage Improvements located on the Residential Property during the term of the license in accordance with Section 4.1. Notwithstanding the foregoing, Residential Property Owner may access the completed Garage and podium surface located on the Residential Property for pre-construction due diligence, non-destructive inspections of the Residential Property, and other reasonable temporary visits or viewing related to the City's or Residential Property Ground Lessee's future use and occupancy of the Residential Property upon forty-eight (48) hours' notice to Commercial Property Owner. . The Commercial Property Owners shall exercise its rights under this Section
3.1. in cooperation with the construction activities of the City and Residential Property Owner in constructing the Residential Building, including related construction staging, subterranean facilities, and services appurtenant and necessary for the Residential Building.
3.2. PEDESTRIAN INGRESS AND EGRESS: There is hereby reserved and granted to each Owner a reciprocal non-exclusive easement, appurtenant to each Property, over and across the stairwells connecting the Garage Level to the grade level public rights of way, specifically identified as Garage Stair 003 on the Garage Level Site Plan, for purposes of 698 of 11211
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pedestrian ingress and egress to and from the Garage by the Owners, their Tenants and Invitees.
The Managing Owner shall have the right to install locks and other security systems to the stairwells provided that permitted access is preserved to the Owners, Tenants and Invitees.
3.3. EASEMENT FOR UTILITIES: There is reserved and granted to each Property a non-exclusive easement for access to, use and maintenance of sewer lines, water, utilities, pipes, conduits, lines columns, structural supports, and foundations, as originally constructed by Commercial Property Owners throughout the Garage Level, as necessary for providing services and utilities to the Residential Building, Commercial Building, Garage and other portions of the Properties.
3.4. MAINTENANCE EASEMENTS: Each Owner, as grantor, hereby grants to the other Owners, their authorized representatives, contractors and agents, as grantees, a nonexclusive easement, appurtenant to each Property, to enter upon the Garage Level of the grantor Owner’s Property to access all Shared Garage Maintenance Areas as necessary to perform the maintenance duties and obligations of the grantee Owner, and to exercise the rights and privileges of the grantee Owner (including self-help maintenance rights), as set forth in this Agreement. Such entry shall be upon reasonable notice under the circumstances and shall be undertaken with as little disturbance and inconvenience to the Tenants and other occupants and patrons of the grantor Owner’s Property as reasonably possible.
3.5. STRUCTURAL SUPPORT EASEMENT: There is hereby reserved and granted to each Owner, appurtenant to its Property, non-exclusive easements and rights in and to all structural members, columns, beams and other supporting elements within and upon the Parking Structure for structural support of the Parking Structure, podium and above-ground Improvements within such Property. No Owner shall take any action which would adversely affect the structural integrity or safety of the Improvements situated on another Owner’s Property.
3.6. GENERAL ENCROACHMENT EASEMENT: Without limiting Section
3.1.3, there is hereby established, reserved and granted in favor of each Property, as dominant tenement, an easement over each adjoining Property, as servient tenement, for the purpose of accommodating any encroachment due to the actual physical location of the Parking Structure and Garage built in accordance with the original design, plans and specifications for the parking Structure and Garage, or due to engineering errors, errors or field adjustments during the course of original construction, settlement or shifting of the Improvements, or similar causes. There shall be valid easements for the maintenance of said encroachments so long as they shall exist, and the rights and obligations of Owners shall not be altered in any way by said encroachment, settlement or shifting; provided, however, that in no event shall an easement for encroachment be created if said encroachment occurred due to the intentional misconduct of the Owner claiming the encroachment easement. In the event the Parking Structure and/or Garage is partially or totally destroyed, and then repaired or rebuilt, the Owners agree that minor encroachments between the Properties shall be permitted and that there shall be valid easements for the maintenance of said encroachments so long as they shall exist. 699 of 11211
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3.7. COVENANTS REGARDING EASEMENTS:
3.7.1. No Interference: Each Owner’s use of the easements reserved and granted herein shall not unreasonably interfere with or interrupt the operations of the servient tenement, and shall not damage, injure or otherwise adversely affect Improvements on the servient tenement. All due care shall be exercised not to disturb tenants in possession. Further use of all easements shall be subject to the reasonable security, health and safety, requirements of the servient tenement.
3.7.2. Repair of Damage: Except as otherwise set forth herein, each dominant tenement Owner, at its expense, shall promptly repair, replace or restore any and all of the Improvements on the servient tenement which have been disturbed, damaged or destroyed by the dominant tenement Owner or its Invitees in exercising their rights with respect to the easements granted under this Article 3 to substantially the same condition as before such exercise commenced.
3.7.3. Parking Restrictions:
(a) Vehicles shall not be parked anywhere in the Garage except wholly within parking spaces as designated in the Garage. No vehicle that would extend beyond the boundaries of a parking space as marked, shall be parked or stored anywhere in the Garage. No part of the Garage shall be used for repair, construction or reconstruction of any vehicle or any other item or thing except in an emergency as determined by the Owners. (b) The following vehicles are prohibited in the Garage (“Prohibited Vehicles”) (a) recreational vehicles (e.g., motorhomes, travel trailers, camper vans, boats, etc.); (b) commercial-type vehicles (e.g., tank trucks, dump trucks, and concrete trucks unless actively engaged in construction and/or maintenance activities) although limousines and other commercial vehicles that the fit within parking spaces shall be allowed; (c) buses or vans designed to accommodate more than ten (10) people (other than in connection with providing resident and/or social services to the Tenants of the Residential Building so long as such vehicle is park exclusively within the Residential Parking Area); (d) vehicles having more than two (2) axles; (e) trailers; (f) inoperable vehicles or parts of vehicles; and (g) aircraft. Prohibited Vehicles may not be parked, stored or kept anywhere within the Garage. (c) The Managing Owner may establish additional rules regarding use of the Commercial Parking Areas, including the Residential Flex Spaces. Parking rules may concern use of the Garage entrance, garage ramps, drive-aisles and/or other areas located in the Commercial Parking Areas, provided any such rules shall not interfere or be inconsistent with the easements reserved and granted herein and other rights of the Residential Property Owner set forth in this Agreement as to such areas of the Garage. In this regard, the Managing Owner shall be entitled to contract with any private security patrol company, carpool or vanpool service or any transportation management association or organization at the sole cost and expense of the Commercial Property Owners and not as a Shared Expense, to administer or regulate parking use of the Commercial Parking Areas, including the Residential Flex Spaces in accordance with rules adopted in accordance with this Agreement. The Managing Owner may take all actions necessary to enforce parking restrictions set forth in this Agreement and in any reasonable 700 of 11211
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parking rules and regulations established for Commercial Parking Areas (including Residential Flex Spaces subject to Section 3.1.4), including removing violating vehicles from the Commercial Parking Areas pursuant to California Vehicle Code Section 22658.2 or applicable law.
(d) The Residential Property Owner may establish additional rules regarding use of the Residential Parking Area. The Residential Property Owner shall be entitled to contract with any private security patrol company, carpool or vanpool service or any transportation management association or organization, at the sole cost and expense of the Residential Property Owner and not as a Shared Expense, to administer or regulate parking use of the Residential Parking Area. The Residential Property Owner may take all actions necessary to enforce parking restrictions applicable to the Residential Parking Area, including removing violating vehicles from the Residential Parking Area pursuant to California Vehicle Code Section 22658.2 or applicable law.
ARTICLE 4
MANAGEMENT AND MAINTENANCE
4.1. MAINTENANCE OF SEPARATE IMPROVEMENTS: Except for Shared Garage Maintenance Areas, (a) the Commercial Property Owners shall be responsible for the repair, maintenance, and upkeep of all Improvements located in the Commercial Parking Areas as well as the Garage Ramp located on Residential Property and adjacent sidewalk, and (b) the Residential Property Owner shall be responsible for the repair, maintenance, and upkeep of all Improvements located in the Residential Parking Areas. The foregoing notwithstanding, the Commercial Property Owners shall be solely responsible for maintenance and upkeep of the Improvements in the Residential Parking Areas until its exclusive license set forth in Section
3.1.8 has terminated, and so long as the Commercial Property owner retains exclusive access thereto under any temporary construction easement entered into between the Commercial Property Owner and the City for purposes of construction of the Garage Improvements. All Garage Improvements shall be maintained in good repair and condition in accordance with the standards set forth in each respective Ground Lease, or in the absence of a Ground Lease, in accordance with commonly accepted maintenance practices for first-class multi-family and commercial projects in the City. The Owners may, but shall not be obligated to, engage maintenance companies or personnel jointly as appropriate for purposes of cost savings and convenience.
4.2. SHARED GARAGE MAINTENANCE AREAS:
4.2.1. In General: The Managing Owner, subject to reimbursement as set forth in this Agreement (if applicable), shall be responsible for the management, maintenance, repair, replacement, and upkeep of the Shared Garage Maintenance Areas. The Shared Garage Maintenance Areas shall be maintained in good repair and operating condition in accordance with all applicable laws, rules, regulations, the provisions of this Agreement, the standards set forth in any Ground Lease, and in accordance with commonly accepted maintenance practices for first class multi-family projects and commercial projects in the City. 701 of 11211
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4.2.2. Security Cameras: Each Owner acknowledges that security cameras are not a guaranty against criminal activity. Each Owner may, but shall not be obligated to, install security cameras, employ security personnel, or implement other security measures on its own Property. The Managing Owner may, but shall have no obligation to, install and maintain security cameras or place security personnel in the Shared Garage Maintenance Areas, but the same shall not be a Shared Expense unless the Residential Property Owner participates in the decision to employ such security measures and agrees to participate in the cost. Any election to do so does not constitute an agreement to provide security or security services for any portion of the Garage, the Residential Building or Commercial Building. Installation of security cameras and use of security personnel or other security measures shall be done in compliance with the City’s Municipal Code and the requirements and conditions of project development entitlements for the Parking Structure and Garage. Neither the Managing Owner nor any Property Manager, agent, employee, representative or successor of Managing Owner shall have any liability to the Residential Property Owner or the other Commercial Property Owners, their employees, agents, contractors, Tenants, Invitees, successors or assigns for criminal activity undertaken or caused by others within the Properties, whether or not security systems are installed or security personnel are employed.
4.2.3. Vapor Mitigation System: The Managing Owner, shall be responsible for compliance with the Vapor Mitigation Plan, including periodic inspection, testing, monitoring and maintenance of vapor mitigation systems serving and protecting the Parking Structure.
Residential Property Owner shall cooperate with such inspections, testing, monitoring and maintenance.
4.2.4. Management Decisions: The Managing Owner or its Property Manager shall have the right and the obligation to make all day-to-day management decisions relating to maintenance and repair of the Shared Garage Maintenance Areas, subject to (i) reasonable consultation with the other Owners or their Property Managers, and (ii) the self-help rights of the Residential Property Owner as set forth in Section 4.4, below. The foregoing notwithstanding, Major Decisions (as defined below) regarding Shared Garage Maintenance Areas shall require the prior written consent of the Residential Property Owner. A “Major Decision” means a decision to undertake any of the following:
(a) the destruction, elimination or major alteration of a Shared Garage Maintenance Area, or of equipment or fixtures constituting a Shared Garage Maintenance Area; (b) any closure of more than 24 cumulative hours of the Garage within a period of seven days; or
(c) a change in the maintenance or repair program or an unanticipated capital improvement, in either case resulting in an increase in reimbursement obligations beyond the limits established in Section 5.2.7, below.
4.2.5. Regular Inspections: The Managing Owner or its Property Manager shall conduct inspections of the Shared Garage Maintenance Areas periodically to determine the useful life of the common HVAC and fire pump systems in the Garage to re-establish reasonable Garage Reserves for the repair and replacement of the same. 702 of 11211
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4.3. ALTERATIONS TO PARKING STRUCTURE AND GARAGE: Alterations to the Parking Structure may be made only with the prior written approval of the Managing Owner and any other Owner whose portion of the Parking Structure (including the structural integrity thereof or access thereto) would be impacted by such alterations, which approval shall not be unreasonably withheld or delayed. Any such alterations to the Parking Structure shall be undertaken, in any event, in strict compliance with the applicable provisions of the Ground Leases, and each of them. Each Owner may, without approval of the Managing Owner and the Residential Property Owner, alter the interior of the Garage located on its own Property or Residential Parking Encroachment area, including striping, branding, directional signage and other interior improvements, and each Owner shall be allowed to install, operate and maintain within its own Property and/or Residential Parking Encroachment Area, without prior approval of the other Owner, electric vehicle charging stations, vehicle stacking systems, and other improvements and fixtures relating to the parking and storage of vehicles, so long as the same does not adversely affect the structural components of the Parking Structure and otherwise in accordance with Section 3.1.7 hereof. The foregoing notwithstanding, the Owners acknowledge the importance of aesthetic continuity and the desire that the Garage Improvements support the value of the collective Properties and Improvements. To this end, the Owners agree to utilize a common program of materials specification for any alteration of the Garage, subject to City approval in its regulatory capacity.
4.4. SELF HELP MAINTENANCE REMEDIES:
4.4.1. Rights of Claiming Owner: In the event any Owner (“Claiming Owner”) in good faith believes that (i) any other Owner, including the Managing Owner with respect to Shared Garage Maintenance Areas (“Responsible Owner”) has failed in any material respect to comply with the Responsible Owner’s maintenance responsibilities under this Article 4, and (ii) such failure to properly maintain the Garage and/or Shared Garage Maintenance Areas is impeding the use and enjoyment of the Claiming Owner’s Property and/or is causing or will cause damage or adversely affect the value or marketability of the Claiming Owner’s Property or Improvements, then such Claiming Owner may give thirty (30) days’ notice to the Responsible Owner that the applicable Garage or Shared Garage Maintenance Area is in need of maintenance or repair; provided, however, that in the event of an emergency, reasonable notice shall be given as the circumstances dictate. If the Responsible Owner or its Property Manager fails to perform the repair or maintenance deemed necessary by the Claiming Owner within such thirty (30) day period (or such shorter period in the event of an emergency which shall include the failure of the Main Entry Gate to properly operate), the Claiming Owner or its Property Manager, representatives or contractors shall have the right to enter upon Garage area or Shared Garage Maintenance Area in question for the sole purpose of performing such work, and the Claiming Owner may obtain reimbursement from the Responsible Owner for the Responsible Owner’s share of the cost thereof in accordance with Section 4.4.4, below.
4.4.2. Rights of Responding Owner: In the event the Responding Owner (including the Managing Owner if the claim involves Shared Garage Maintenance Areas) responds to the Claiming Owner within such thirty (30) day period and indicates its belief that no repair or maintenance work is necessary, or if the Owners cannot agree upon the nature and extent of repair or maintenance work necessary, then any Owner may submit the matter as a Dispute to ADR under Section 8.4. Nothing herein shall prevent the Claiming Owner from 703 of 11211
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entering onto the Garage of the other Owner or, if applicable, the Shared Garage Maintenance Areas, after receipt of such notice of disagreement for the sole purpose of correcting, repairing or maintaining a dangerous or emergency situation, subject to an arbitrator’s final determination of whether such correction, repair or maintenance is necessary and whether reimbursement of the Claiming Owner is appropriate.
4.4.3. Licensed Contractors Only: Any repair, maintenance, and/or replacement initiated by a Claiming Owner pursuant to this Section 4.4 shall be performed by an independent, qualified and bonded contractor licensed to do business in California. Maintenance shall be performed with as little damage to Improvements as possible, and all such Improvements shall be restored to their same condition following the maintenance or repair work.
4.4.4. Contribution: Within thirty (30) days after receiving notice from the Claiming Owner performing or contracting the repair, maintenance, or replacement work, that such work has been undertaken under subparagraph 4.4.1, above, the other Owners shall remit and contribute their respective shares of the cost set forth in such notice. Disputes regarding an Owners’ share or the amount of contribution may, at the election of either Owner, be submitted to ADR under Section 8.4 and Exhibit D.
4.5. MECHANICS’ LIENS: If a notice of mechanic’s lien is filed against any Property for, or purporting to be for, labor or material alleged to have been furnished to or delivered for Improvements on such Property, the Owner of such Property shall immediately cause the lien to be discharged by payment, bond or otherwise. If another Owner, including the Managing Owner, is responsible for the existence of the lien, such other Owner shall, immediately upon demand, reimburse the Owner of the Property on which the lien has been filed for the costs of causing the lien to be removed or bonded, and shall indemnify, hold harmless and defend such Owner against any and all costs, expenses, claims and/or liability relating thereto, including but not limited to attorneys’ fees and the cost of collection of such amounts from the Owner responsible for the existence of the lien. Discharge of a lien may be treated as a Shared Expense (subject to the provisions of section 5.1.5 hereof) if related to costs associated with maintenance, repair, replacement or upkeep of Shared Garage Maintenance Areas other than the Main Entry Gate.
ARTICLE 5
SHARED EXPENSES
5.1. COVENANT TO CONTRIBUTE TO SHARED EXPENSES:
5.1.1. In General: Subject to Section 5.1., each Owner agrees to contribute to and reimburse the Managing Owner for such Owner’s share of funds necessary to defray Shared Expenses. An Owner’s obligation to contribute toward Shared Expenses shall run with the land so that each successive Owner shall in turn become liable for such obligation. No Owner may waive or otherwise escape personal liability from such obligation by non-use of a Garage or by any other attempt to renounce rights in the Garage. No assumption of personal liability by a successor Owner or other Owner (including a contract purchaser under an installment contract) shall relieve an Owner from personal liability for its share of Shared Expenses arising during 704 of 11211
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such Owner’s ownership of a Property.
5.1.2. Negligence or Willful Misconduct: Maintenance or replacement costs made necessary by the negligence or willful misconduct of an Owner or its Tenants or Invitees shall not be a Shared Expense but shall be borne by that Owner or its insurance; provided, however, any maintenance or replacement costs in the Shared Garage Maintenance Areas arising from damage caused by the vehicle of a tenant or invitee of an Owner shall not be the obligation solely of such Owner but shall be a Shared Expense in the absence of evidence to a reasonable certainty of the damage having been caused by the vehicle of such Owner’s tenant or invitee.
5.1.3. No Offsets: No offsets against any monetary obligation hereunder shall be permitted for any reason, including, without limitation, any claim that the Managing Owner is not properly discharging its duties.
5.1.4. Commencement of Shared Expense Obligation. No Owner shall be required to pay or contribute toward Shared Expenses until the Garage is completed and the earlier of the following dates (the “Shared Expense Commencement Date”): (i) the Residential Placed In Service Date, or (ii) the date the Residential Property Owner takes taken possession of the Garage Improvements located on the Residential Property pursuant to Section 3.1.8. Until the Shared Expense Commencement Date, the Commercial Property Owners shall be responsible for cost of the maintenance of the Shared Garage Maintenance Areas, subject, however, to Section 5.1.2. The Residential Property Owner’s obligation to contribute toward its share of Shared Expenses shall commence on the Shared Expense Commencement Date.
5.1.5. Allocation of Shared Expenses. The Owners’ responsibility for Shared Expenses shall be allocated as between the Residential Property Owner and the Commercial Property Owners as follows:
(a) Except in the case of an Extraordinary Expense for which contribution by the Residential Property Ground Lessee is required by Section 5.2.8, below, the Residential Ground Lessee’s responsibility for Shared Expenses shall be equal to the sum of (i) the Residential Fixed Contribution Amount as defined and determined under this Section
5.1.5(a), and (ii) the Residential Property Ground Lessee’s share of Variable Contribution Expenses as determined pursuant to subsection (d). The Residential Property Ground Lessee may at any time send the Managing Owner notice that the Residential Property Ground Lessee or its designee intend to apply for an allocation of federal and/or state low income housing tax credit in connection with the financing of the Residential Building and desires to establish the Residential Fixed Contribution Amount (a “Tax Credit Application Notice”). Upon the delivery of the Tax Credit Application Notice the Managing Owner and the Residential Property Ground Lessee shall work in good faith to establish a budget for the Shared Expenses and the Fixed Contribution Expenses. The “Residential Fixed Contribution Amount” established following delivery of the Tax Credit Application Notice shall be equal to (___%) of the mutually agreeable budgeted Fixed Contribution Expenses. If the Managing Owner and the Residential Property Ground Lessee are unable to agree upon the Residential Fixed Contribution Amount after working in good faith for sixty (60) days after the delivery of a Tax Credit Application Notice, the matter will be submitted to ADR in accordance with Section 8.4 and Exhibit D. The Residential Fixed Contribution Amount for the calendar year in which the Residential Placed-In705 of 11211 20 660\14\4184108.5
Service Date occurs shall be prorated to the Shared Expense Commencement Date. Within sixty (60) days following the Shared Expense Commencement Date, the Managing Owner and the Residential Property Ground Lessee shall jointly execute, notarize and record a supplement or amendment to this Agreement establishing the Residential Fixed Contribution Amount for that initial calendar year. Commencing with the first calendar year following establishment of the Residential Fixed Contribution Amount, the Residential Fixed Contribution Amount shall increase as of January 1 of each calendar year by two percent (2%) over the Residential Fixed Contribution Amount for the immediately preceding calendar year. Except as set forth in Section
5.2.8, below, the Commercial Property Owners shall be responsible for all Fixed Contribution Expenses that exceed the Residential Fixed Contribution Amount. (b) Except in the case of an Extraordinary Expense for which contribution by the Commercial Property Owner is required by Section 5.2.8, below, the Commercial Property Owner’s responsibility for Shared Expenses shall be equal to the sum of (i) the Fixed Contribution Expenses in excess of the Residential Fixed Contribution Amount, and (ii) the Commercial Owner’s Proportionate Share of Variable Contribution Expenses as determined pursuant to subsection (d).
(c) Subsections (a) and (b) notwithstanding, if the Residential Property is placed into use or service as other than affordable housing, all Shared Expenses shall be deemed Variable Contribution Expenses, to be budgeted and allocated as set forth in subsection (d). If the Residential Property Owner has taken possession of the Garage Improvements located on the Residential Property pursuant to Section 3.1.8, whether or not for affordable housing purposes, Residential Property Owner and Managing Owner shall work in good faith to establish a Shared Expense Budget in accordance with Article 5.
(d) All Variable Contribution Expenses shall be allocated to the Commercial Property Owners and the Residential Property Owner based on their respective Proportionate Shares, pursuant to the approved annual Shared Expense Budget for each year.
5.2. COLLECTION OF SHARED EXPENSES
5.2.1. Shared Expense Budgets. The Managing Owner or its Property Manager shall prepare a budget each year for Shared Expenses (an “Shared Expense Budget”) and shall deliver the same to the other Owners within thirty (30) days prior to the beginning of each calendar year. Failure to deliver a Shared Expense Budget shall not relieve any Owner from the obligation to reimburse its share of Shared Expenses to the Managing Owner. The Shared Expense Budget shall identify and allocate Fixed Contribution Expenses and Variable Contribution Expenses consistent with this Agreement. At any point in a calendar year, if the Managing Owner or its Property Manager determines that its Shared Expense Budget for Shared Expenses should be adjusted, the Managing Owner or its Property Manager shall submit an updated Shared Expense Budget to other Owners for review and approval pursuant to section
5.2.2 hereof. The Managing Owner shall keep accurate books and records with respect to Shared Expenses. It shall use commercially reasonable efforts to hold Shared Expenses to a reasonable level consistent with the maintenance, repair and replacement costs of similar first-class multifamily and commercial office/retail projects in the San Mateo area. The Managing Owner shall not make any non-discretionary expenditure which materially exceeds the amount contemplated 706 of 11211
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for such expense in the most recently approved Shared Expense Budget without the prior written consent of the other Owners, not to be unreasonable withheld, conditioned or delayed.
5.2.2. Review of Shared Expense Budget. The Residential Property Owner shall have the right, within thirty (30) days following receipt of the Shared Expense Budget to review the Shared Expense Budget and send written notice to the Managing Owner of its approval or its disapproval of the Shared Expense Budget, provided that any disapproval shall set forth in reasonable detail the reasons for such disapproval and the changes required for approval (“Budget Disapproval Notice”). Approval of the Shared Expense Budget shall not be unreasonably withheld, delayed or conditioned. If the Residential Property Owner has a reasonable objection to the Shared Expense Budget and delivers a Budget Disapproval Notice, then the Managing Owner shall, within ten (10) business days after receipt of the Budget Disapproval Notice, deliver to the Residential Property Owner either (i) a rejection of Budget Disapproval Notice, together with a reasonable explanation for such rejection, or (ii) a revised Shared Expense Budget addressing the objections in the Budget Disapproval Notice. The Residential Property Owner shall have ten (10) business days from receipt of the revised Shared Expense Budget to respond by written notice in the same manner as provided above with respect to the original Shared Expense Budget. The Residential Property Owner and the Managing Owner shall mutually cooperate in good faith to promptly resolve any disapproved items in a proposed Shared Expense Budget and generate a Shared Expense Budget reasonably acceptable to the Owners.
5.2.3. Resolution of Objections to Shared Expense Budget. The requirement of mutual cooperation in resolving Disputes regarding the Shared Expense Budget pursuant to Section 5.2.1 shall include, if necessary, instituting Dispute resolution procedures under Section
8.4. Until resolution of the Dispute, the Shared Expense Budget for the immediately preceding fiscal year shall continue to be used for the new calendar year, and payments shall be adjusted accordingly when the new Shared Expense Budget is established.
5.2.4. Payment of Budgeted Amounts: The Managing Owner shall reasonably estimate the amount of Shared Expenses, including Fixed Contribution Expenses and Variable Contribution Expenses as applicable, payable by each Owner based on the approved Shared Expense Budget. The Managing Owner shall bill the other Owners for their respective Proportionate Shares in equal amounts for the calendar year. The Owners shall pay the estimated payment, in advance, to the Managing Owner on the first day of each year, half year, calendar quarter or calendar month, as reasonably determined by the Managing Owner. Payments by each Owner of its Proportionate Share of Shared Expenses shall be held in trust by the Managing Owner for the benefit of the Owners but may be deposited in the general property operating account or accounts of the Managing Owner. Such funds shall be used solely to fund the operation, management, maintenance and repair (including reasonable Garage Reserves) of the Shared Garage Maintenance Areas for which the Managing Owner is responsible.
5.2.5. Reconciliation: Within one hundred twenty (120) days after the close of each calendar year, the Managing Owner shall provide a written reconciliation to the Owners of the actual Variable Contribution Expenses incurred in the past calendar year and the budgeted Variable Contribution Expenses paid by the Owners for such year (the “Reconciliation”). The difference between the budgeted Variable Contribution Expenses and the Variable Contribution 707 of 11211
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Expenses actually paid or incurred by each Managing Owner for the year shall be paid by the other Owners or credited to the other Owners, as appropriate, within thirty (30) days after delivery of the Reconciliation; provided, however, that any reconciliation that includes an increase over estimated Variable Contribution Expenses shall be subject to the limitations set forth in Section 5.2.8. If requested in writing by an Owner, the Managing Owner shall provide invoices or other reasonable documentation of any Shared Expenses incurred with respect to the Shared Garage Maintenance Areas.
5.2.6. Audit Rights: If the Residential Property Owner disputes the amount set forth in any annual Reconciliation provided by a Managing Owner with respect to the Shared Expenses, the Residential Property Owner shall have the right, but not more than once annually, upon written notice given not later than sixty (60) days following receipt of such annual Reconciliation and upon the condition that the Residential Property Owner shall first deposit with the Managing Owner the full amount asserted by the Managing Owner to be the Residential Property Owner’s share of Shared Expenses, to cause the Managing Owner’s books and records with respect to Shared Expenses for such calendar year to be audited by an independent certified public accountant (who are not compensated on a contingency basis) selected by the Residential Property Owner and subject to the Managing Owner’s reasonable right of approval. If, as a result of the audit, the Residential Property Owner becomes entitled to a refund or credit in an amount greater than five percent (5%) of the Residential Property Owner’s share of the Shared Expenses charged by the Managing Owner as stated in the annual Reconciliation, the reasonable cost of the audit shall be borne by the Managing Owner (but in an amount not to exceed $2,500); otherwise the cost of such audit shall be paid by the Residential Property Owner. If the Residential Property Owner does not request an audit in accordance with the provisions of this Section within sixty (60) days after receipt of the annual Reconciliation, the Reconciliation shall be final and binding for all purposes. If a timely objection cannot be resolved, the Dispute may be submitted by either Party to ADR in accordance with Section 8.4 and Exhibit D.
5.2.7. Unanticipated and Extraordinary Expenses:
(a) Unanticipated Shared Expenses that are not within the Shared Expense Budget may arise due to emergency, casualty, unusually extreme weather, unanticipated capital improvements, or other causes that could not be reasonably anticipated at the time the Shared Expense Budget was prepared for the Shared Garage Maintenance Areas (“Unanticipated Costs”). Notwithstanding the foregoing, Unanticipated Costs shall not include (i) increased utility usage resulting from unusually extreme weather, changes in law or other factors, (ii) increased maintenance and/or operating costs due to changes in law, rule and/or regulation, and/or (iii) costs arising from the actions or inactions of the Managing Owner. (b) The Managing Owner shall give the other Owners at least ten (10) days prior written notice (or such shorter period as is reasonable in an emergency) before expending any Unanticipated Cost along with reasonable justification thereof. Except as set forth below, the Managing Owner may seek reimbursement from the other Owners for their respective Proportionate Shares of Unanticipated Costs, subject to subparagraph (c), below.
Payment of any invoice for Unanticipated Costs shall be made by each Owner within thirty (30) days after receipt.
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(c) The foregoing notwithstanding, except for Extraordinary Expenses, without the prior written consent of the Residential Property Owner, which consent shall not be unreasonably withheld or delayed, the Managing Owner may not seek reimbursement for an Unanticipated Cost that would exceed five percent (5%) of the Shared Expense Budget for the calendar year in which the Unanticipated Cost is incurred. “Extraordinary Expenses” include:
(i) an Unanticipated Cost required by an order of a court not arising from (i) a defect in the original construction and/or design of the Garage, or (ii) the negligence or willful misconduct of Managing Owner in connection with its maintenance responsibilities under this Agreement, or (iii) the failure of the Garage to comply with a law which was in effect as of the Residential Placed-In-Service Date; (ii) an Unanticipated Cost made necessary by the negligent act or omission of the Residential Property Owner, its Tenants or Invitees (other than arising from damage allegedly caused by the vehicle of a Tenant or Invitee of the Residential Property Owner unless there exists evidence to a reasonable certainty thereof); and (iii) an emergency Unanticipated Cost incurred to with regard to the Shared Garage Maintenance Areas in order to address or otherwise correct an imminent danger or threat to personal or public safety, other than arising from (i) a defect in the original construction and/or design of the Garage, (ii) the negligence or willful misconduct of Managing Owner in connection with its maintenance responsibilities under this Agreement, or (iii) the failure of the Garage to comply with a law which was in effect as of the Residential Placed-InService Date.
5.2.8. Garage Reserves: The Managing Owner may establish and maintain one or more Garage Reserve accounts for the payment of replacement costs as contemplate in this Agreement; provided that Garage Reserves shall be a Fixed Contribution Expense included in the Residential Fixed Contribution Amount.
5.3. ENFORCEMENT OF MONETARY OBLIGATIONS: Any installment of a reimbursement obligation under this Article 5 is delinquent if not paid within thirty (30) days of the due date established by the Managing Owner in accordance with the terms of this Agreement.
All monetary obligations between the Parties under this Agreement (each a “Monetary Obligation”), shall incur Additional Charges, as defined herein, which shall commence and accrue from the date of the delinquency until paid. Each Owner (“Delinquent Owner”) vests in the each other Owner that is not themselves delinquent in the payment of Monetary Obligations hereunder (“Non-Defaulting Owner”) the right and power to bring all actions at law and in equity and exercise such other remedies provided herein against the Delinquent Owner for the collection of Monetary Obligations and Additional Charges. Except for the right of an Owner to institute ADR with respect to any Dispute concerning (A) an Owners’ Proportionate Share or (B) the underlying enforceability of the Monetary Obligation, ADR shall not apply to collection of Monetary Obligations, and the Non-Defaulting Owner may enforce a Monetary Obligation of the Delinquent Owner in any manner provided by law or in equity, including without limitation any or all of the following procedures:
5.3.1. Enforcement by Suit: By commencement and maintenance of a suit at law 709 of 11211
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or equity against any Delinquent Owner to enforce the Monetary Obligation. Such suit may be maintained by the Non-Defaulting Owner or the Managing Owner. Any judgment rendered in any such action may include the amount of the delinquency, interest thereon at the maximum legal rate per annum from the date of the delinquency, court costs and reasonable attorneys’ fees in such amount as the court may adjudge against the Delinquent Owner.
5.3.2. Enforcement by Lien:
(a) With respect to any delinquent Monetary Obligation in excess of the statutory limit for small claims actions in California, the Non-Defaulting Owner or Managing Owner may file and record a notice of claim of lien (“Notice of Claim of Lien”) against the Property of the Delinquent Owner in the office of the County Recorder of the County (except that a Notice of Claim of Lien may only be recorded against the leasehold interest and fee-owned improvements of Residential Property Ground Lessee and not the City’s fee interest), and the amount of delinquency, plus any Additional Charges, shall be a lien on the Delinquent Owner’s Property and the Improvements located thereon prior and superior to all other liens except (a) all taxes, bonds, assessments and other levies which, by law, would be superior thereto, (b) the fee interest of the Ground Lessor of such Property, and (c) the lien or charge of any Mortgage of record made in good faith and for value. Any Notice of Claim of Lien prepared with respect to any Monetary Obligation levied pursuant to this Agreement shall be a statement under oath and shall describe the amount of the delinquency and Additional Charges, the date on which demand for payment was made, a description of the Delinquent Owner’s Property, the name of the Delinquent Owner, the name and address of the claimant, and a statement that such Monetary Obligation is due and owing under this Agreement. Such Notice of Claim of Lien shall be executed and acknowledged by a person having authority to execute deeds on behalf of the claimant. If the delinquent Monetary Obligation (including Additional Charges) is paid or otherwise satisfied in full, the Owner recording such notice shall record a notice of satisfaction and release of lien.
(b) The Non-Defaulting Owner or Managing Owner recording such Notice of Claim of Lien may enforce such lien established hereunder in any manner permitted by law, including by filing an action for judicial foreclosure or by recording a notice of default in the form described in the California Civil Code to commence a nonjudicial foreclosure under power of sale. Any non-judicial foreclosure under power of sale shall be conducted in accordance with the requirements of California Civil Code that are applicable to nonjudicial foreclosures of Mortgages, under power of sale, provided that the Owner recording the Notice of Claim of Lien may appoint its attorney, any officer or director, or any title insurance company authorized to do business in California to conduct the sale in the role of trustee. Any Owner, including the Owner recording the Notice of Claim of Lien, may bid on the Property at the sale.
5.3.3. Waiver of One Form of Action Restriction: No Non-Defaulting Owner or Managing Owner shall be limited to any single form of action in enforcing and collecting Monetary Obligations. Each Non-Defaulting Owner or Managing Owner may commence and maintain a lawsuit directly on the debt without waiving its right to enforce its lien against the Owner’s Property for the delinquent Monetary Obligation.
5.3.4. Attorneys Fees: In any action instituted by any Non-Defaulting Owner or 710 of 11211
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Managing Owner to collect delinquent Monetary Obligations, the prevailing Owner shall be entitled to Additional Charges, including reasonable attorneys’ fees. The foregoing notwithstanding, in any action in which the City is a named party, attorney fees in total amount not exceeding $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 said $5,000 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 Agreement that, in connection with any action or actions between the City and another Party to enforce the provisions of this Agreement, neither the City nor such other Party shall have to pay the other more than $5,000 for attorney fees and costs arising out of such action or actions.
5.3.5. Statement of Lien: Within ten (10) days of a request from an Owner liable for a reimbursement obligation under this Article 5, the Managing Owner shall furnish to that Owner a signed certificate stating the amount of any Monetary Obligation secured by the lien upon such Owner’s Property. A charge, not to exceed the reasonable costs of preparation and reproduction of the certificate, may be levied by the Managing Owner for the issuance of such certificate. The information contained in the certificate shall be presumed conclusively to be correct in favor of anyone who relies upon it in good faith.
5.3.6. Additional Charges: In addition to any other amounts due or any other relief or remedy obtained against an Owner who has failed to comply with a Monetary Obligation under this Agreement, each Delinquent Owner agrees to pay such additional costs, fees, charges and expenditures (“Additional Charges”) as the Managing Owner or other Owners may incur or levy in the process of collecting from the Delinquent Owner. All Additional Charges shall be included in any judgment in any suit or action brought to enforce collection of delinquent sums. Additional Charges shall include, but not be limited to, the following:
(a) Attorneys’ Fees: Subject to section 5.3.4, reasonable attorneys’ fees and costs incurred in the event an attorney(s) is employed to collect any amounts due, whether by suit or otherwise;
(b) Costs of Suit: Costs of suit and court costs incurred as are allowed by the court;
(c) Interest: Interest on all sums not paid when due, including reasonable costs of collection and reasonable attorneys’ fees, in the amount of the lesser of ten percent (10%) per annum or the highest interest rate as may, from time to time, be allowed by law, commencing thirty (30) days after the monetary obligation becomes due; and (d) Other: Any such other additional costs that the Managing Owner or any other Owner may incur in the process of collecting delinquent sums.
5.3.7. Limitation of Liability: Notwithstanding anything to the contrary herein, commencing on the Residential Placed in Service Date, and so long as the Residential Property Ground Lease remains in effect or the City otherwise does not have possession of the Residential Property, (i) the City shall not be liable for any defaults or claims related to Shared Expenses, and (ii) Residential Property Ground Lessee shall indemnify City against any and all expenses, 711 of 11211
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judgments, fines, settlements and other amounts actually and reasonably incurred in connection with any claims and proceeding related to Shared Expenses.
ARTICLE 6
INSURANCE AND INDEMNITY
6.1. CONSTRUCTION PERIOD INSURANCE. During the course of any construction on the Properties, the party engaging in that construction shall at all times procure and maintain or cause to be procured and maintained on its Property and require and verify that its contractor and all subcontractors maintain insurance meeting all requirements stated below:
6.1.1. Builders Risk: Builder’s Risk coverage in an amount at least equal to the amount of the completed value of the project and no coinsurance penalty, at a minimum.
6.1.2. Liability Insurance: Single limit comprehensive general liability insurance comparable to that required by Section 6.2.1. Construction project exposures, including but not limited to hard cost and construction type should be considered in determining the appropriate limits of insurance. Limits shall be no less than $5,000,000 per occurrence. If a general aggregate limit applies the general aggregate limit shall be twice the required occurrence limit.
Engaging party must ensure contractors procure and maintain the insurance as required by the respective construction agreements.
6.1.3. Automobile Liability: Automobile liability will be on 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.
6.1.4. Workers Compensation: Workers Compensation Insurance as required by the State of California, with statutory limits, and employer's liability insurance with a limit of no less than $1,000,000 per accident for bodily injury or disease.
6.1.5. Pollution Legal Liability: Pollution Legal Liability with limits no less than $2,000,000 per occurrence or claim, and $4,000,000 policy aggregate. If the service involves lead-based paint or asbestos identification/remediation, the Pollution Liability policy shall not contain lead-based paint or asbestos exclusions. If the service involves mold identification/remediation the Pollution policy shall not contain a mold exclusion, and the definition of Pollution shall include microbial matter, including mold. The party engaging in construction shall require the contractor constructing the Improvements to indemnify the City and name the City as an additional insured on the pollution policy.
6.2. POST CONSTRUCTION INSURANCE BY INDIVIDUAL OWNERS: Each Owner shall carry such insurance as may be required under its respective Ground Lease, as dictated by its respective Mortgagees, and as required by this Article 6. Without limiting the foregoing, each Owner shall, at a minimum, procure and maintain at all times (or as otherwise indicated below) insurance, in the amounts and with the minimum coverage requirements, set 712 of 11211
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forth in this Section 6.2. During the term of the Commercial Lot 1 Ground Lease, Commercial Lot 1 Owner, as the ground lessee thereunder, shall name the City as an additional insured on the insurance policies it must obtain pursuant to the Commercial Lot 1 Ground Lease.
Notwithstanding anything to the contrary set forth herein, Residential Property Owner shall have no obligation to maintain any insurance set forth herein prior to commencement of construction of Improvements by the Residential Property Owner unless otherwise required pursuant to the Residential Property Ground Lease.
6.2.1. Liability Insurance: Each Owner shall obtain and keep in force at all times while this Agreement remains in effect, at its sole cost and expense, commercial general liability insurance, in the broadest form available, insuring against any and all claims and liabilities arising out of use of the Garage by the insuring Owner and its tenants and Invitees.
The minimum limit of coverage of such policy shall be in the amount of not less than Three Million Dollars ($3,000,000.00) per occurrence and Six Million Dollars ($6,000,000.00) annual aggregate, or such other greater coverage amounts as may be required by an Owner’s lender(s).
The required liability limits may be satisfied through a combination of commercial general liability and umbrella/excess liability policies. No policy maintained by an Owner under this Section shall be cancelable or subject to reduction of coverage without thirty (30) days prior written notice to the other Owners (except for nonpayment which shall require not less than ten (10) days’ notice). Such policies of insurance shall be issued as primary policies and not contributing with or in excess of coverage that the other Owners may carry. Each Owner agrees that provisions of this Section as to maintenance of insurance shall not be construed as limiting in any way the extent to which such Owner may be held responsible for the indemnification of any other Owner or Owners under Section 6.5, below, and such insurance policies shall not exclude claims under such contractual indemnity from coverage.
6.2.2. Property Insurance: Each Owner shall carry property insurance covering all fixtures, equipment and internal portions of the Garage Improvements within such Owner’s Property, in accordance with its respective Ground Lease and the requirements of its applicable Mortgagees, or in the absence of a Ground Lease, to the same standards as set forth in the Ground Leases in effect as of the commencement of this Agreement; provided, however, that the obligation of the Commercial Property Owners to maintain property insurance on the Commercial Property Improvements may be assigned to and assumed by the Managing Owner.
Without limiting the foregoing, such property insurance meet the following minimum requirements:
(a) The policy shall be all risk form, written on the broadest available special causes of loss form, on a “Replacement Cost" (as defined below) basis in the full amount of the full replacement cost (without deduction for depreciation) of the Improvements on the Owner’s Property with no coinsurance penalty provision. (b) The policy shall include a Full Replacement Cost endorsement and no coinsurance penalty provision.
(c) The policy shall include coverage or endorsements for increased construction costs due to changes in building codes, regulations and similar Laws. 713 of 11211
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(d) The policy shall otherwise meet the requirements of Section 6.4, below.
6.2.3. Workers’ Compensation Insurance: Each Owner shall carry workers compensation insurance to insure employers against liability for compensation under the workers’ compensation laws now in force in California, or any laws hereafter enacted as an amendment or supplement thereto or in lieu thereof, which workers’ compensation insurance shall cover all persons employed by the Owner performing the development work requiring use of the easement areas granted or reserved in this Agreement, and employer's liability with limits not less than One Million Dollars ($1,000,000).
6.2.4. 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.
6.2.5. Pollution Legal Liability: Each Owner shall carry pollution legal liability no less than $2,000,000 per occurrence or claim and $4,000,000 policy aggregate. If the service involves lead-based paint or asbestos identification/remediation, the Pollution Liability policy shall not contain lead-based paint or asbestos exclusions. If the service involves mold identification/remediation the Pollution policy shall not contain a mold exclusion, and the definition of Pollution shall include microbial matter, including mold.
6.3. INSURANCE BY MANAGING OWNER: Without limiting the requirements of Section 6.2, the Managing Owner shall at all times procure and maintain a policy or policies of all risk property insurance for all insurable portions of the completed Parking Structure, including fixtures and building service equipment that are part of the Shared Garage Maintenance Areas, if any, against loss or damage by fire or other casualty, in an amount equal to one hundred percent (100%) of the current full replacement cost with no coinsurance penalty provision (without respect to depreciation) of the Parking Structure. A replacement cost endorsement shall be part of the policy. The policy shall meet the same requirements as for Owners’ property policies under Section 6.2.2.
6.4. MINIMUM INSURANCE REQUIREMENTS. All insurance policies required hereunder shall meet the following minimum standards, where applicable:
6.4.1. Underwriter: All policies shall be written with a company legally qualified to do business in the State of California and holding a rating of A-VIII or better in the financial category as established by Best’s Insurance Reports, if such a company is available, or, if not available, the best rating possible or its equivalent.
6.4.2. Named and Additional Insured: Such policy or policies shall be for the benefit of Owner and its Mortgagees, as their interests may appear, and shall name the other Owners and their Mortgagees, and the City, as additional insureds. The insurance policies are to contain, or be endorsed to contain, the following provision:
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 Owner including materials, parts, or equipment 714 of 11211
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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).
6.4.4. Certificate of Insurance: Provision shall be made for the issuance of a certificate of insurance to the other Owners and their Mortgagees, and the City, which shall specify the amount of such insurance maintained pursuant hereto.
6.4.5. Deductibles: The deductible on any insurance may not exceed $250,000 if available at commercially reasonable rates.
6.4.6. Loss Payee Endorsement: All property casualty policies must include a lender’s loss payable endorsement (CP 1218 or equivalent) naming the Mortgagee of the insuring Owner’s Property as mortgagee or lender loss payee and naming the City. Liabilities policies must name the Mortgagee of the applicable Property as an additional insured. Notice of Cancellation: All policies must provide that at least thirty (30) days advance notice shall be given to the other Owners and their Mortgagee, and the City, as applicable, of any cancellation, non-renewal or modification.
6.4.8. Broader Coverage: If an Owner maintains broader coverage and/or higher limits than the minimums shown above, the other Owners and City shall be entitled to the broader coverage and/or higher limits maintained by that Owner. Any available insurance proceeds in excess of the specified minimum limits of insurance and coverage shall be available to the other Owners and City.
6.4.9. Claims made Coverage: If any coverage required is written on a claimsmade coverage form, the following is required:
(a) The retroactive date must be shown, and this date must be before the execution date of the contract or beginning of the contract work. (b) Insurance must be maintained and evidence of insurance must be provided for at least five (5) years after completion of the contract work (c) 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 stat of work date, the Owner must purchase extended reporting period coverage for a minimum of five (5) years after completion of contract work,
(d) A copy of the claims requirements must be submitted to the other Owner and the City for review.
6.5. RECIPROCAL INDEMNITIES:
Each Owner (as “Indemnitor”) shall defend, indemnify, protect, save and hold harmless each other Owner and its respective managers, officers, members, directors, shareholders, 715 of 11211
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employees, agents, Property Managers and attorneys, and each of their respective successors and assigns (individually, an “Indemnitee” or collectively, the “Indemnitees”) from and against any and all claims, liability, damages and costs (including reasonable attorneys’ fees and expenses) to the extent arising from personal injury, death or property damage and occurring from the exercise by the Indemnitor or any of its tenants or Invitees of the easement and license rights granted under this Agreement, or the breach of any provision of this Agreement by such Indemnitor, except to the extent arising from the gross negligence or willful misconduct of the Indemnitee.
Notwithstanding the foregoing, Commercial Lot 1 Owner, Commercial Lot 5 Owner, Commercial Lot 6 Owner, Managing Owner, and, from and after the Residential Property Ground Lease Possession Date, Residential Property Owner (each an “Indemnifying Party”) each (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 Indemnifying Party's performance or non-performance under this Agreement or any other agreement executed by such Indemnifying Party pursuant to this Agreement, or to the extent arising out of acts or omissions of any of such Indemnifying Party's contractors, subcontractors, or persons claiming under any of the Indemnifying Party’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.
6.6. DAMAGE AND DESTRUCTION OF GARAGE IMPROVEMENTS:
6.6.1. Agreement to Restore: If fire or other casualty damage extends to any portion of the Garage Improvements, the Owner of the damaged portion of the Parking Structure or other Improvements on the Garage Level within such Owner’s Property, subject to the terms of any applicable Ground Lease and the Mortgages encumbering such Owner’s Property, shall be responsible to restore and rebuild the damaged Improvements located within such portion of the Garage; provided, however, that (i) if the Managing Owner is the primary insured party with respect to the Parking Structure property insurance, the provisions of Section 6.6.3 shall apply, and (ii) provided, further, that the Residential Property Owner shall have no obligation to restore damage prior to the Parking Structure or Garage Improvements prior to issuance of a building permit for, and commencement of construction of, the Residential Building. The term “restore” shall mean repairing, rebuilding or reconstructing damaged Improvements, including Shared Garage Maintenance Areas, to substantially the same condition in which they existed prior to fire or other casualty damage, with each Improvement, to the extent possible, having the same vertical and horizontal boundaries, appearance and location as before, or with such changes or alterations as may be approved by the Owners jointly and as are in conformity with the provisions of the Ground Leases relating to changes or alterations. Lack of funds shall not be deemed a reasonable excuse for either Owner’s failure to commence or complete the rebuilding, except as otherwise may be allowed under the Ground Leases or under the Mortgage or Mortgages encumbering the damaged Property.
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6.6.2. Waiver of Election Not to Restore: Each Owner and Commercial Lot 1 Fee Owner acknowledges that the Parking Structure and Garage are critical to the structural and operational viability of the Buildings on the Commercial Property and the Residential Property.
If fire or other casualty damage extends to any portion of the Parking Structure or other Garage Level Improvements, each Owner hereby waives, and covenants and agrees that it shall not invoke, any right not to repair and restore the Parking Structure and Garage Level Improvements, unless all Owners, their Mortgagees and Ground Lessors have in fact jointly elected in writing not to restore or repair the damaged or destroyed Improvements on the all of the Properties. This Section 6.6 shall be binding upon the fee interests in the Properties, however acquired, and shall not be subordinated to any Mortgage.
6.6.3. Restoration by Managing Owner.
(a) If the Managing Owner is the primary insured party under the property insurance policy covering the entire Garage and Parking Structure, then in the event of any damage or destruction to the Garage or Parking Structure other than by ordinary wear and tear, whether resulting from an insured or uninsured casualty, the Managing Member shall promptly cause such to be Restored as nearly as may be possible to its condition immediately prior to such damage or destruction. The Managing Owner shall obtain firm bids from two (2) or more responsible contractors to rebuild such damaged or destroyed portion of the Parking Structure or Garage as nearly as possible to its condition immediately prior to such damage or destruction and shall accept the bid it considers most favorable. If a bid is accepted, the Managing Member shall levy a reconstruction assessment (“Reconstruction Assessment”) on all of the Owners to make up any deficiencies between the total insurance proceeds and the contract price for such repair and rebuilding (the “Reconstruction Shortfall”), such reconstruction assessment to be treated as a recoverable Extraordinary Expense under Section 5.2.8. The allocation of the Reconstruction Assessment shall be based on Proportionate Shares. (b) Notwithstanding the foregoing, if the loss, damage or destruction was caused by the intentional or negligent act or failure to act of any Owner its invitees, the cost of such repair shall be the responsibility of such Owner (or its liability insurance carrier) to the extent such loss, damage or destruction is not covered by the property insurance. The insurance proceeds available to the Owner responsible for the damage shall be paid to the Managing Owner and held for the purpose of the Restoration of the Parking Structure and Garage. All insurance monies recovered on account of such damage or destruction, less the cost, if any, of such recovery, shall be applied to the payment of the cost of such Restoration and shall be paid out from time to time by the Managing Owner as such work progresses upon the written certification of the architect or engineer if applicable, or the contractor in charge of such work, stating that the sum requested is justly due to those persons rendering services or furnishing materials in connection with such work.
(c) In the event that the Reconstruction Shortfall exceeds fifty percent (50%) of the budgeted amount of Shared Maintenance Expenses for such Fiscal Year, the Reconstruction Assessment shall not be levied without the Consent of the Owners. If such Reconstruction Assessment is not so approved or if no action is taken with respect to such Reconstruction Assessment within sixty (60) days following the date of such damage or destruction, and in the event either (i) the Garage and/or the Properties cannot be safely occupied 717 of 11211
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or operated without Restoration of the Parking Structure, or (ii) the Properties or Parking Structure, or any portion thereof, shall be taken by eminent domain by reason of such damage, this Declaration shall terminate under Section 10.1, in which event the Improvements shall be demolished (unless acquired or owned by a single common Owner). In the event of a joint sale of the Properties in eminent domain or under threat of eminent domain due to damage or destruction of the Parking Structure, together with any insurance proceeds or condemnation proceeds received as a result of such damage, destruction or condemnation (collectively, the “Proceeds”), shall be distributed to the Owners in accordance with the condemnation agreement or order, or if such Proceeds are not allocated by the by condemnation agreement or order, then based on the fair market values of the Properties at the time of the condemnation agreement or order.
ARTICLE 7
INTENTIONALLY DELETED
ARTICLE 8
AMENDMENTS, DEFAULT, AND ENFORCEMENT
8.1. AMENDMENTS: This Agreement may be amended only with the written consent of all Owners. Any amendment shall be effective upon the recordation in the Official Records of the County of an instrument setting forth the terms of the amendment, duly executed by all of the parties required for approval of such amendment as set forth herein.
8.2. EVENTS OF DEFAULT: An Owner will be in default under this Agreement if it:
(a) fails to repay the full amount of any Monetary Obligation under this Agreement when due, subject to the delivery to the defaulting Owner of ten (10) days’ notice that such Monetary Obligation has become delinquent; or (b) substantially and materially fails to perform any of its other obligations or covenants pursuant to this Agreement and such failure continues for a period of thirty (30) days after notice of such failure is given by any other Owner; provided, however, that if such failure is of such a nature that it cannot with due diligence be cured within said time period, said failure shall not be regarded as a default hereunder if said Owner shall have commenced the curing of such failure within said thirty (30) day time period and shall thereafter proceed diligently to complete the curing of such failure within one hundred twenty (120) days; and the time within which such failure may be cured shall be extended for such period as may be necessary to complete the same; or
(c) institutes proceedings to be adjudicated a voluntary bankrupt, or consents to the filing of a bankruptcy proceeding against it or files a petition or answer of consent seeking reorganization under the Bankruptcy Code of the United States (11 U.S.C. §101, et seq.) or any similar applicable federal or state law and such decree shall have continued undischarged or unstayed for a period of ninety (90) days; or 718 of 11211
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(d) Shall have made an assignment for the benefit of creditors, shall have admitted in writing its inability to pay its debts general and concurrently as they become due, or shall consent to the appointment of a receiver or liquidator or trustee or assignee in bankruptcy or insolvency of it or of all or substantially all of its property.
8.3. REMEDIES FOR DEFAULT:
8.3.1. Failure to Pay Monetary Obligations: For all monetary obligations between the Parties under this Agreement, remedies are set forth in Section 5.3.
8.3.2. Self-Help. For events of default relating to the Managing Owner’s failure to maintain Shared Garage Maintenance Areas, the rights and remedies set forth in Section 4.4 shall apply.
8.3.3. Other Rights of Enforcement: Subject to the ADR requirements under Exhibit D, any Owner shall have the power to enforce the other provisions of this Agreement in any manner provided by law or in equity and in any manner provided in this Agreement, including but not limited to injunctive and other equitable relief. Notwithstanding anything to the contrary contained in this Agreement, no Owner shall have the power to cause a forfeiture or abridgment of another Owner’s easement rights as set forth in this Agreement.
8.4. ALTERNATIVE DISPUTE RESOLUTION:
8.4.1. Disputes: It is the desire and intention of the Parties to agree upon a mechanism and procedure under which any claim, controversy, breach or dispute arising out of this Agreement, including, without limitation, the interpretation of any term or provision of a this Agreement, or any claim, controversy, breach or dispute arising out of the work, services or obligations performed under this Agreement (individually, referred to as a “Dispute”, and collectively referred to as “Disputes”) will be resolved in a prompt and expeditious manner.
Accordingly, any and all such Disputes, except (i) actions for the collection on Monetary Obligations as set forth in Section 5.3 of the Agreement, and (ii) Disputes involving the City, shall be subject to the ADR procedures set forth Exhibit D, the terms of which are incorporated herein by this reference. Disputes involving the City may be resolved through the mediation procedures set forth in Exhibit D, but not the arbitration procedures.
8.4.2. Waiver of Right to Jury Trial: BY SIGNING THIS AGREEMENT, OR
BY ACCEPTING DEED, GROUND LEASEHOLD OR OTHER INTEREST IN THE
PROPERTIES OR ANY PORTION THEREOF, EACH OWNER, EXCEPT FOR THE CITY,
AGREES TO HAVE ANY AND ALL DISPUTES DECIDED BY ARBITRATION IN
ACCORDANCE WITH THE CALIFORNIA ARBITRATION ACT, AND EACH OWNER
UNDERSTANDS AND ACKNOWLEDGES THAT IT IS GIVING UP ANY RIGHTS IT MIGHT POSSESS TO HAVE THE DISPUTE RESOLVED BY A JURY TRIAL.
8.5. REMEDIES CUMULATIVE: Each remedy provided by this Agreement is cumulative and not exclusive.
8.6. NONWAIVER: The failure to enforce the provisions of any covenant, condition or restriction contained in this Agreement shall not constitute a waiver of any right to enforce 719 of 11211
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any such provisions or any other provisions of this Agreement.
8.7. ESTOPPEL CERTIFICATES: Each Owner (“Providing Owner”), within twenty (20) days of its receipt of a written request from any other Owner or any Mortgagee (“Requesting Owner”) shall from time to time provide the Requesting Owner, a certificate binding upon such Providing Owner stating: (a) to such Providing Owner’s knowledge, whether any Owner to this Agreement is in default or violation of this Agreement and if so identifying such default or violation; (b) that this Agreement is in full force and effect and identifying any amendments to the Agreement as of the date of such certificate; and (c) that there is no current outstanding amount owed by such Providing Owner, or to the best of such Providing Owner’s knowledge, owed from any other Owner pursuant to the terms of this Agreement (except as otherwise set forth in the certificate).
ARTICLE 9
MORTGAGEES AND GROUND LESSOR
9.1. GROUND LESSOR AS PARTY: Any Ground Lessor who executes this Agreement as a Party, including (a) the Commercial Lot 1 Fee Owner, and (b) the City (from and after commencement of the Residential Property Ground Lease), does so solely for the purpose of consenting to and joining in the grant and reservation of various easements established by this Agreement and for other purposes as set forth in this Agreement specifically referencing such Ground Lessor as an obligor. The foregoing notwithstanding, the fee interests of any such Ground Lessor shall be subject and subordinate to the rights, obligations, easements, covenants and restrictions set forth in the Agreement, subject to the Ground Lessor protections set forth in this Article 9 and elsewhere in this Agreement.
9.2. MORTGAGEE/GROUND LESSOR RIGHTS AND PROTECTIONS:
9.2.1. Enforcement of Defaults and Liens: No breach of any covenant and/or restriction, or the enforcement of any lien provision, contained in this Agreement shall render invalid the lien of any Mortgage made in good faith and for value. Subject to 5.3.6, above, all of the covenants, conditions and restrictions herein contained shall be binding upon and effective against any Owner whose title is derived through termination of a Ground Lease, or by foreclosure, trustee sale, deed in lieu thereof, or otherwise under a Mortgage.
9.2.2. Obligations of Mortgagees; Subordination of Lien:
(a) Nothing contained in this Agreement shall require any Mortgagee to cure any default of a Party hereunder prior to its acquisition of title to a Property pursuant to a foreclosure of its Mortgage or trustee sale thereunder. Upon acquisition of title to a Property by foreclosure or power of sale, such Mortgagee or the purchaser or grantee, as applicable, shall only be liable and responsible for defaults first arising after the date of such acquisition, and neither any Mortgagee nor successor thereof shall be liable for any damages, costs, liabilities or expenses, and such Party’s Property shall not be subject to a lien under this Agreement for any amounts due hereunder, based upon the actions, defaults or violations taken or suffered by any Owner hereunder prior to the date of such foreclosure or trustee sale. 720 of 11211
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(b) Notwithstanding any provision to the contrary, the liens for Monetary Obligations created by this Agreement shall be subject and subordinate to and shall not affect the Ground Leases or the rights of the holder of any Mortgage made in good faith and for value. Upon termination of a Ground Lease or the foreclosure of any Mortgage on a Property, any lien for Monetary Obligation under this Agreement which became due prior to such Ground Lease termination or Mortgage foreclosure shall be extinguished; provided, however, that after such termination or foreclosure there shall be a lien on the interest of the fee title holder (other than the City or Redevelopment Agency) or purchaser at the foreclosure sale to secure all future Monetary Obligation arising under this Agreement after the date of such Ground Lease termination or foreclosure sale, which lien shall have the same effect and shall be enforced in the same manner as provided herein. For purposes of this Subsection, a Mortgage may be given in good faith or for value even though the Mortgagee has constructive or actual knowledge of the lien provisions of this Agreement.
9.3. RESTRICTIONS ON AMENDMENTS TO AGREEMENT:
Notwithstanding any provision to the contrary contained elsewhere herein, without the prior written consent of the Mortgagees and the Ground Lessor, which consent shall be exercised in good faith and in a timely manner, this Agreement may not be amended so as to change any provision which, by its terms, is specifically for the benefit of Mortgagees or a Ground Lessor, respectively, or specifically confers rights on Mortgagees or any Ground Lessor. Without limiting the foregoing, the written consent of each Eligible Holder shall be required to add to, amend or modify any material provision of this Agreement which establishes, governs or regulates any of the following subjects, where such amendment or modification would directly impact the Property encumbered by the Eligible Holder’s Mortgage:
(a) the priority of liens for Monetary Obligations arising under this Agreement;
(b) allocation of Proportionate Shares with respect to Shared Expenses;
(c) insurance requirements;
(d) obligations for restoration or repair of the Garage after casualty; or (e) this Article 9.
Any amendment to this Agreement regarding any of the foregoing subjects shall not be considered material and need not be approved by Eligible Holders if the amendment or addition is solely for the purposes of correcting technical errors or for clarification. Any Eligible Holder who receives a written request to approve an addition or amendment and who does not deliver or have its response postmarked within sixty (60) days of the date contained within the written request shall be deemed to approve the addition or amendment. All notices or other communications made pursuant hereto shall be in writing and shall be deemed properly delivered, given or served when (i) personally delivered against receipted copy; or (ii) mailed by certified or registered mail, postage prepaid, in either case (i) or (ii) to the parties at their last known address.
721 of 11211
36 660\14\4184108.5
9.4. MISCELLANEOUS RIGHTS OF MORTGAGEES AND CITY:
9.4.1. General Rights: In addition to the foregoing, each Eligible Holder shall have the right to:
(a) receive copies of any or all Shared Expense Budgets, Reconciliations or other financial statements concerning the Garage and Shared Expenses prepared by any Owner or its Property Manager in accordance with Article 5, at the same time and in the same manner as the Owners, upon written request therefor to the Managing Owner; (b) to the extent permitted in the applicable Mortgage or Ground Lease, participate in negotiations regarding the value and extent of any loss affecting the Garage:
(i) under a policy of insurance carried by the applicable Owner of the Garage; or (ii) in any proceedings incident to any condemnation affecting such Garage; and (c) Receive copies of all notices of default, Notices of Claim of Lien, given under this Agreement at the same time such notice is given to an Owner.
9.4.2. Effect of Action Without Consent: Whenever the consent of a Mortgagee is required by this Agreement, any action taken without such consent shall not bind such Mortgagee or its successor. Whenever the consent of a Ground Lessor is required by this Agreement or the Ground Leases, any action taken without such consent shall not bind the Ground Lessor or its successor as Ground Lessor under the Ground Leases.
9.4.3. Title by Foreclosure or Termination of Ground Lease: Except to the extent otherwise expressly provided herein, all of the provisions contained in this Agreement shall be binding on and effective against any Owner whose title to any Property or any portion thereof or interest therein is acquired by foreclosure, trustee’s sale, deed in lieu of foreclosure, enforcement of the remedies under the Ground Lease(s) or otherwise.
9.4.4. Right to Cure Default: A Mortgagee and the Ground Lessor shall have the right to cure any default in performance of obligations under this Agreement or delinquency in the payment of reimbursement owed by an Owner of a Property that is subject to the Mortgage or Ground Lease, as applicable. The Mortgagee and Ground Lessor shall each have the right to cure such default or delinquency until: (a) thirty (30) days after the expiration of any cure period given to the defaulting Owner with respect to monetary defaults; and (b) sixty (60) days after the expiration of any cure period given to the defaulting Owner with respect to non-monetary defaults; provided, however, with respect to any non-monetary default that a Mortgagee or Ground Lessor cannot under the terms of its loan document or the Ground Lease cure without obtaining possession of the Owner’s Property, and provided further that the Mortgagee or Ground Lessor has promptly commenced and diligently pursues to completion proceedings to acquire such Owner’s interest in its Property, such Mortgagee’s or Ground Lessor’s cure period shall be extended by the amount of time reasonably necessary for such Mortgagee or Ground Lessor, as applicable, to acquire possession up to an additional six (6) months. 722 of 11211
37 660\14\4184108.5
ARTICLE 10
MISCELLANEOUS PROVISIONS
10.1. TERM OF AGREEMENT. This Agreement shall (a) be coterminous with the termination of both (but not one) of the Ground Leases; provided, however, that if, upon expiration or earlier termination of the Ground Leases, the Properties are not commonly owned by the same owner(s), then this Agreement shall be automatically extended for successive periods of ten (10) years until the all of the Owners determines by written agreement that this Agreement shall terminate; and (b) terminate in the event that all of the fee interest in the Properties become owned by the same fee Owner and all of the Properties are merged into a single legal lot or parcel. In the event of such termination under subpart (a), above, and if the fee interests in the Properties are not commonly owned by the same Owner(s), all of the Improvements, including the Garage, are to be razed and demolished.
10.2. CONSTRUCTION OF PROVISIONS: The provisions of this Agreement shall be liberally construed to effect its purpose of creating a uniform plan for the development and operation of the Properties under California law.
10.3. AGREEMENT IS BINDING: This Agreement shall be for the benefit of and be binding upon all Owners, their respective successors, purchasers, tenants, encumbrancers, donees, grantees, mortgagees, lienors and assigns.
10.4. SEVERABILITY OF PROVISIONS: The provisions hereof shall be deemed independent and severable, and the invalidity or unenforceability of any one provision shall not affect the validity or enforceability of any other provision hereof.
10.5. JOINT AND SEVERAL LIABILITY OF COMMERCIAL PROPERTY OWNERS: The obligations and liabilities of the Commercial Property Owners pursuant to this Agreement shall at all times be joint and several.
10.6. GENDER, NUMBER AND CAPTIONS: As used herein, the singular shall include the plural and masculine pronouns shall include feminine pronouns, where appropriate.
The title and captions of each paragraph hereof are not a part thereof and shall not affect the construction or interpretation of any part hereof.
10.7. EXHIBITS All exhibits attached to this Agreement are incorporated by this reference as though fully set forth herein.
10.8. CONFLICT: In the event of a conflict, the provisions of this Agreement shall prevail over any Rules adopted by the Owners.
[SIGNATURES ON FOLLOWING PAGES]
723 of 11211
Signature Pages
660\14\4184108.5 089642\16883546v13
IN WITNESS WHEREOF, the undersigned has executed this Agreement on the date first above written.
COMMERCIAL 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]
724 of 11211
Signature Pages
660\14\4184108.5 089642\16883546v13
IN WITNESS WHEREOF, the undersigned has executed this Agreement on the date first above written.
COMMERCIAL LOT 1 FEE OWNER:
MOORE TALBOT PARTNERS, LP, a California
limited partnership
By: ,
its General Partner
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]
725 of 11211
Signature Pages
660\14\4184108.5 089642\16883546v13
IN WITNESS WHEREOF, the undersigned has executed this Agreement on the date first above written.
COMMERCIAL LOT 5 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]
726 of 11211
Signature Pages
660\14\4184108.5 089642\16883546v13
IN WITNESS WHEREOF, the undersigned has executed this Agreement on the date first above written.
COMMERCIAL LOT 6 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]
727 of 11211
Signature Pages
660\14\4184108.5 089642\16883546v13
IN WITNESS WHEREOF, the undersigned has executed this Agreement on the date first above written.
RESIDENTIAL PROPERTY OWNER
(INITIALLY THE CITY):
THE CITY OF SAN MATEO
By:
Name (Printed):
Title:
APPROVED AS TO FORM
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]
728 of 11211
Exhibit A Page 1
660\14\4184108.5 089642\16883546v13
EXHIBIT A
COMMERCIAL PROPERTY
The “Commercial Property” under this Agreement is that certain real property located in the City of San Mateo, County of San Mateo, State of California, described as follows:
“Commercial 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. “Commercial 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.
“Commercial 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.
(Attached)
729 of 11211
Exhibit B Page 1
660\14\4184108.5 089642\16883546v13
EXHIBIT B
RESIDENTIAL PROPERTY
The “Residential Property” under this Agreement 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.
(Attached)
730 of 11211
Exhibit C Page 1
660\14\4184108.5 089642\16883546v13
EXHIBIT C
GARAGE LEVEL SITE PLAN
(To be Attached)
731 of 11211
Exhibit D Page 1
660\14\4184108.5 089642\16883546v13
EXHIBIT D
ALTERNATIVE DISPUTE RESOLUTION (“ADR”) PROVISIONS
1. Introduction. Any and all such Disputes, as defined in the Agreement, between or among the Owners, except actions for the collection of Monetary Obligations as set forth in Section 5.3 of the Agreement, shall be subject to the procedures set forth in this Exhibit D.
2. Mediation. Any and all Disputes between or among the Owners shall be first submitted to nonbinding mediation as set forth herein:
a. Selection of Mediator. The parties to the Dispute shall select one (1) mediator. If the parties to the Dispute cannot agree upon a mediator, any party may request a mediator be appointed by JAMS Arbitration, Mediation and ADR Services (“JAMS”) or another dispute resolution service if another can be mutually agreed upon by the parties. No mediator shall have any financial or personal interest in the result of the mediation. Prior to accepting any appointment, the prospective mediator shall disclose any potential or actual conflicts of interest.
b. Mediation Proceedings. The mediator has discretion to conduct the mediation in the manner in which the mediator believes is most appropriate for reaching a settlement of any or all Disputes. The mediator does not have the authority to impose a settlement on the parties to the Dispute. c. Allocation of Expenses. Expenses of the mediation, including required traveling and other expenses of the mediator, the expenses of any witnesses requested by the mediator, and the cost of any proofs or expert advice produced at the direct request of the mediator, shall be borne equally by the parties to the Dispute unless they agree otherwise.
3. Appealable Arbitration. Any Disputes that remain unresolved after mediation and that do not involve the City as a party to the Dispute shall be determined by Arbitration and as set forth in this section:
a. California Arbitration Act. This agreement to arbitrate shall be governed by the California Arbitration Act (“CAA” or “the Act”) (California Code of Civil Procedure § 1280, et seq.) including, without limitation, issues relating to consolidation and joinder of parties to the arbitration, and notwithstanding any choice of law provision(s) in any other agreement between the Owners. If a conflict exists between the provisions of the Act and this Agreement, the language of this Agreement controls. b. Demand for Arbitration. Any party a Dispute may serve a Demand for Arbitration (“Demand”) setting forth the allegations against another Owner, and the party served shall serve a Response to Demand for Arbitration (“Response”) setting forth a response to such allegations, including affirmative defenses, if any, within fifteen (15) days of service of the Demand. Any party may serve a Cross-Demand for Arbitration.
These pleadings shall be, in all respects, as required under California law for a Complaint, an Answer, and a CrossComplaint, respectively. c. Selection of Arbitrator. The parties to the Dispute shall use their best efforts to agree upon the selection of an arbitrator and/or arbitration service. If the parties are unable to agree upon an arbitrator within fifteen (15) calendar days after service of the Demand, then any party may petition JAMS to appoint an arbitrator. The person so appointed shall be a retired judge or a lawyer experienced in the subject matter of the dispute.
d. Location of Arbitration. The arbitration shall be conducted in San Mateo County, California. An award may be entered against a party to the Dispute who fails to appear at a duly noticed arbitration hearing.
732 of 11211
Exhibit D Page 2
660\14\4184108.5 089642\16883546v13
e. Arbitration Rules. Except as otherwise set forth in these dispute resolution procedures, the arbitration and all preliminary proceedings shall be conducted pursuant to the JAMS Arbitration Rules. f. Applicable law. The arbitrator shall apply California substantive, evidentiary and procedural law to the arbitration proceeding. The arbitrator shall give effect to statutes of limitation in determining any claim.
g. Disputes to be Arbitrated. Any controversy concerning whether an issue is subject to these ADR procedures shall be determined by the arbitrator. The arbitrator shall decide all issues of fact and law submitted by the parties to the Dispute for decision in the same manner as required for a trial by court, including all law and motion matters, ex parte matters and discovery disputes. h. Demurrers and Motions for Summary Judgment. The parties to the Dispute shall be permitted to file, and the arbitrator shall hear and rule upon, demurrers and motions for summary judgment. i. Power to Grant Relief. The arbitrator shall have the power to grant all appropriate legal and equitable relief (both by way of interim relief and as a part of its final award), as may be granted by any court of the State of California, to carry out the terms of this Agreement (e.g., declaratory and injunctive relief and damages). j. Discovery. The parties to the Dispute may conduct any discovery permitted under the California Discovery Act. The arbitrator shall adjudicate any disputes with regard to discovery. k. Evidence and Expert Testimony. The California Evidence Code shall govern the arbitration. Expert testimony shall be permitted according to the same standard as allowed in a court of law. l. Court Reporter. A certified court reporter shall report the proceedings at all hearings and, at the request of a party, prepare a certified Reporter’s Transcript. The arbitrator shall maintain all documents normally provided to a court in a Clerk’s Transcript and, upon request, shall prepare an Arbitrator’s Transcript containing all documents that would normally be in a Clerk’s Transcript. All reviewing courts shall treat the Arbitrator’s Transcript as if it were a Clerk’s Transcript. m. Joinder. Any party to the Dipute, at its sole discretion, may include by joinder persons or entities substantially involved in common question of law or fact whose presence is required if complete relief is to be accorded in arbitration, provided that the party sought to be joined consents in writing to such joinder. Consent to arbitration involving an additional person or entity shall not constitute consent to arbitration of any claim, dispute or other matter in question not described in the written consent. The parties grant to any person or entity made a party to an arbitration conducted under this Agreement, whether by joinder or consolidation, the same rights of joinder and consolidation as the parties under this Agreement.
n. Reasoned Arbitrator’s Award. The arbitrator shall hear and determine the matter, and shall execute and acknowledge the award in writing and cause a copy thereof to be delivered to each of the parties to the Dispute. The award shall include factual findings, conclusions of law, and the reasons on which the decision is based. The decision of the arbitrator shall be final, binding, and conclusive, except to the extent the decision may be submitted for judicial review as provided herein. The award of the arbitrator may be confirmed by the Superior Court in San Mateo County, and such Court may vacate, modify, or correct the award in accordance with the prevailing sections of the Act and in accordance with the terms and conditions herein. The decision of the arbitrator may be entered and enforced as a final judgment in any court of competent jurisdiction. o. Limit on Arbitrator’s Power and Right to Judicial Review. The arbitrator shall not have the power to commit (a) errors of law or legal reasoning, (b) errors of fact, (c) errors with regard to mixed questions of law and fact. In addition, the arbitrator shall not have the power to render an award (d) not based on substantial evidence, (e) based on evidence not presented at the hearing, or (f) not in conformity with the substantive and procedural law of the state of California. The parties to the Dispute unequivocally agree that any of the preceding errors and acts is an excess of arbitral authority that is reviewable by the courts. If the arbitrator exceeds any of the foregoing specific powers, the award may be vacated or corrected by filing a petition pursuant to 733 of 11211
Exhibit D Page 3
660\14\4184108.5 089642\16883546v13
the Act in the Superior Court in and for the county of San Mateo. In reviewing the award, the Superior Court shall sit as if it were an appellate court, in all material respects, including but not limited to the scope of review and the award may be reviewed de novo for any such error. The decision of the Superior Court is, itself, subject to review by the California appellate courts.
p. Non-Waiver. The institution and maintenance of an action for judicial relief or pursuit of a provisional or ancillary remedy shall not constitute a waiver of the right of any party to the Dispute, including the plaintiff, to submit the controversy or claim to arbitration. q. Allocation of Costs. Costs and fees payable in advance shall be advanced equally by the Parties, subject to ultimate payment by the non-prevailing party in accordance with the Agreement. r. Cooperation. The parties to the Dispute shall diligently cooperate with one another and the person appointed as arbitrator to resolve each and every Dispute and shall perform such acts as may be necessary to obtain a prompt and expeditious resolution of all such Disputes. If either party refuses to diligently cooperate, and the other party, after first giving notice of its intent to rely on the provisions of this section, incurs additional expenses or attorneys’ fees solely as a result of such failure to diligently cooperate, the Arbitrator may award such additional expenses and attorneys’ fees to the party giving such notice, even if such party is not the prevailing party in the Dispute
4. Severance Clause. In the event that any provision (or any portion thereof) of this Dispute Resolution Process, including, but not limited to the agreement to arbitrate is held to be void, voidable, or unenforceable, the remaining portions shall remain in full force and effect. 734 of 11211
36 Bikes
12 Bikes 16 Bikes
24 Bikes
DN
DN
UP
FEC
UP
FEC
4TH AVENUE5TH AVENUE
S B STREET
S RAILROAD AVE
1 PROPOSED BUILDING FOOTPRINT
30,834 SF
PROPOSED RESIDENTAIL BUILDING
SEE AR SERIES
2 3
4 4
4 4
5 5
40' - 2"
15' - 6"
38' - 2 5/8"
34' - 2 1/4"
9' - 8 1/8"
11' - 6 7/8"
51% OF FRONTAGE
115' - 5 3/8"
15% OF FRONTAGE
33' - 0"
34% OF FRONTAGE
78' - 0"
100%
OF FR
ONTA
GE
109' - 9"
FFE 101.00
FFE 99.96
FFE 100.82 FFE 100.63 FFE 100.44 FFE 100.34
FFE 98.37
FFE 97.33
FFE 97.12FFE 97.23FFE 97.39
+/- 100.80
+/- 99.72
+/- 99.75
+/- 96.38
10' - 0"
5' - 0"
1 2
6 29' - 3"
7 12' - 11 3/4"
18' - 8 1/4"
3 77' - 11 5/8"
3 144' - 9 1/2"
3 108' - 3 1/4"
3 6' - 11 3/4"
3 86' - 6 3/4" 36' - 4" 86' - 9 5/8"
3 3
3 4' - 0"
3 RMW
Architecture
Interiors
30 E Santa Clara St.
Suite 200
San Jose
California 95113
Office
408 294-8000
Fax
408 294-1747
rmw.com
SHEET NUMBER:
STAMP:
plot date :
REVISIONS :
NOT FOR
CONSTRUCTION
ISSUE:
ISSUE DATE:
SCALE:
PROJECT NUMBER:
CHECKED BY:
DRAWN BY:
SHEET NAME:
CLIENT:
PROJECT NAME & ADDRESS:
6/17/2024 2:56:06 PM
3/32" = 1'-0"
A1.1
PROPOSED SITE PLAN
PLANNING APPLICATION RESUBMITTAL
#3
06.10.24 2202017.3
Checker
Author
445 S B STREET
SAN MATEO, CA, 94401
BESPOKE
3/32" = 1'-0" 1
SITE PLAN
KEYNOTES
# KEYNOTE DESCRIPTION
1 PROPOSED BUILDING
2 PROPOSED RESIDENTIAL BUILDING, SEE AR SERIES
3 PROPOSED OUTDOOR PLAZA
4 PROPOSED PLANTING AREAS. REFER TO LANDSCAPE AND CIVIL DRAWINGS 5 PROPOSED IMPROVEMENTS TO PUBLIC R.O.W. REFER TO CIVIL DRAWINGS 6 PROPOSE CITY OF SAN MATEO ACCESS EASEMENT
7 PROPOSED PUBLIC ART LOCATION
# DESCRIPTION DATE
PLANNING APPLICATION 02/01/2023
1 PLANNING APPLICATION RESUBMITTAL 10/10/2023
2 PLANNING APPLICATION RESUBMITTAL #2 01/29/2024
3 PLANNING APPLICATION RESUBMITTAL #3 06/10/2024
2 735 of 11211
EXHIBIT I
TEMPORARY CONSTRUCTION EASEMENT
TO BE APPROVED BY CITY COUNCIL AT A FUTURE MEETING
736 of 11211
660\14\4211785.1
EXHIBIT J
MEMORANDUM OF DDA
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
MEMORANDUM OF
DISPOSITION AND DEVELOPMENT AGREEMENT
THIS MEMORANDUM OF DISPOSITION AND DEVELOPMENT
AGREEMENT (the "Memorandum of DDA") is made as of ______, 2026, 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,” to confirm that the City, Residential Developer and Commercial Developer have entered into that certain Disposition and Development Agreement dated as of _____, 2026 (the "DDA"). The DDA imposes certain conditions (including but not limited to, construction requirements, operating covenants, and transfer restrictions) on the real property described in Exhibit A attached hereto and incorporated herein (the "Property"). The DDA is a public document and may be reviewed at the principal office of the City.
This Memorandum of DDA incorporates all of the terms and provisions of the DDA as though fully set forth herein.
Should there be any inconsistency between the terms of this Memorandum of DDA and the DDA, the terms of the DDA shall prevail. This Memorandum of DDA is prepared for the purpose of recordation, and it in no way modifies the provisions of the DDA.
This Memorandum of DDA may be executed simultaneously or in counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same document.
737 of 11211
660\14\4211785.1
Remainder of Page Left Intentionally Blank
738 of 11211
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The parties are entering into this Memorandum of DDA as of the last date set forth below.
COMMERCIAL DEVELOPER:
DTSM Housing, LLC , a Delaware limited liability
company
By:
Its:
RESIDENTIAL DEVELOPER:
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:
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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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: ______________________________
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. 740 of 11211
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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: ______________________________
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. 741 of 11211
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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: ______________________________
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. 742 of 11211
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EXHIBIT A
Legal Description of the Property
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EXHIBIT K
PREDEVELOPMENT LOAN AGREEMENT
by and between
CITY OF SAN MATEO
and
AH BESPOKE LLC,
a California limited liability company
(Bespoke)
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TABLE OF CONTENTS
Page
1 660\14\4020881.7
ARTICLE 1 DEFINITIONS AND EXHIBITS Error! Bookmark not defined.
Section 1.1 Definitions. 2
Section 1.2 Exhibits. 3
ARTICLE 2 PREDEVELOPMENT LOAN PROVISIONS Error! Bookmark not defined.
Section 2.1 Predevelopment Loan. 4
Section 2.2 Interest. 4
Section 2.3 Use of Funds. Error! Bookmark not defined.
Section 2.4 Security. 4
Section 2.5 Repayment of the Predevelopment Loan. Error! Bookmark not defined.
Section 2.6 Conditions to Funding. 5
Section 2.7 Termination of Agreement for Infeasibility. Error! Bookmark not defined.
Section 2.8 Forgiveness of Predevelopment Loan in Certain Circumstances. Error! Bookmark not defined.
ARTICLE 3 DEVELOPER OBLIGATIONS Error! Bookmark not defined.
Section 3.1 Predevelopment Tasks and Schedule. Error! Bookmark not defined.
Section 3.2 Insurance. 6
Section 3.3 Transfers. 7
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF DEVELOPERError! Bookmark not defined.
Section 4.1 Representations and Warranties. 7
ARTICLE 5 DEFAULT AND REMEDIES Error! Bookmark not defined.
Section 5.1 Events of Default. Error! Bookmark not defined.
Section 5.2 Remedies. Error! Bookmark not defined.
Section 5.3 Right of Contest. Error! Bookmark not defined.
Section 5.4 Remedies Cumulative. Error! Bookmark not defined.
ARTICLE 6 GENERAL PROVISIONS Error! Bookmark not defined.
Section 6.1 No Further Rights or Obligations. 10
Section 6.2 Relationship of Parties. Error! Bookmark not defined.
Section 6.3 Indemnification. 10
Section 6.4 No Claims. 11
Section 6.5 Amendments. 11
Section 6.6 Non-Liability of Lender Officials, Employees and Agents. 11 Section 6.7 No Third Party Beneficiaries. 11
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TABLE OF CONTENTS
(continued)
Page
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Section 6.8 Notices, Demands and Communications. 12
Section 6.9 Applicable Law. 12
Section 6.10 Parties Bound. 12
Section 6.11 Attorneys' Fees. 13
Section 6.12 Severability. 13
Section 6.13 Gender and Number. 13
Section 6.14 Titles. 13
Section 6.15 Waivers. 13
Section 6.16 Entire Understanding of the Parties. 14
Section 6.17 Survival. 14
Section 6.18 Records. 14
Section 6.19 Further Assurances. 14
Section 6.20 Multiple Originals; Counterparts. 14
Exhibit A Legal Description
Exhibit B Predevelopment Budget
Exhibit C Form of Predevelopment Note
Exhibit D Insurance Requirements
Exhibit E Form of Assignment Agreement
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PREDEVELOPMENT LOAN AGREEMENT
THIS PREDEVELOPMENT LOAN AGREEMENT (the "Agreement") is entered into as of ______, 2026 (the "Effective Date"), by and between City of San Mateo, a California charter city (the "Lender"), and AH Bespoke LLC, a California limited liability company (the "Developer"), with reference to the following facts, purposes and intentions.
RECITALS
A. These Recitals refer to and utilize certain capitalized terms which 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. Lender is the owner of that certain real property located at 4th and Railroad Avenue, as more particularly described in Exhibit A attached to this Agreement (the “Property”).
C. Lender and AH Bespoke LP, a California limited partnership (the “Project Owner”) have entered into negotiations of a Disposition and Development Agreement pursuant to which Lender intends to make a loan to the Project Owner and ground lease the Property to the Project Owner to facilitate the development by the Project Owner of approximately seventy-one (71) units of multi-family affordable rental housing, excluding one manager’s unit, and approximately 5,000 square feet of ground floor community space to be leased to a nonprofit entity, with the initial tenant being Self Help for the Elderly or an affiliate thereof. The development will also include improvements consisting of approximately 150,000 square feet of commercial office space and 12,000 square feet of ground floor retail space, and an underground parking garage, to be constructed by the Commercial Developer. Developer is the sole general partner of Project Owner.
D. Pursuant to this Agreement, the Lender intends to provide the Developer the Predevelopment Loan to fund certain predevelopment activities related to the Development on the Property. The Parties intend that the Predevelopment Loan be evidenced by the Predevelopment Note and secured by the Assignment of Plans executed by Project Owner and Developer. Timely completion of such predevelopment activities are necessary to enable the Developer to prepare initial analyses and investigations of the Property and enable the Developer to apply for land use approvals for the Development.
NOW, THEREFORE, in consideration of the recitals hereof and the mutual promises and covenants set forth in this Agreement, the parties agree as follows:
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ARTICLE 1
DEFINITIONS AND EXHIBITS
Section 1.1 Definitions.
The following capitalized terms have the meanings set forth in this Section 1.1 wherever used in this Agreement, unless otherwise provided:
(a) "Agreement" means this Predevelopment Loan Agreement. (b) "Assignment of Plans" means that certain assignment agreement pursuant to which the Developer assigns to the Lender the Developer's rights and obligations with respect to the Documents, substantially in the form of Exhibit D.
(a) "CEQA" means the California Environmental Quality Act and its implementing guidelines and regulations.
(c) “Commercial Developer” means DTSM Talbots 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. (d) “Commencement of Construction” means the date upon which Project Owner closes its construction financing for the Project and issues a notice to proceed to the contractor building the Project.
(e) "Default" has the meaning set forth in Section 5.1. (f) "Developer" means AH Bespoke LLC, a California limited liability company. (g) "Development" means the approximately seventy-one (71) units of multi-family rental housing and a minimum of approximately 5,000 square feet of ground floor community space.
(h) "DDA" means the Disposition and Development Agreement which is to be entered into between Lender and the Project Owner concurrently with this Agreement, under which the Lender would make a construction and permanent loan to Project Owner and lease the Property to the Project Owner pursuant to the Ground Lease. (i) "Documents" means all reports, surveys, materials, architectural drawings and specifications, and any information related to the Development obtained by the Developer. (j) "Effective Date" means the date first set forth above. 748 of 11211
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(k) "Ground Lease" means a ground lease by and between Lender, as lessor, and Project Owner, as lessee, that may be entered into concurrently with the closing of any construction financing, pursuant to which Project Owner shall lease the Property from the Lender for the purpose of constructing, developing, and operating the Development. (l) "Indemnified Party" has the meaning set forth in Section 6.4. (m) "Lender" means the City of San Mateo.
(b) "Predevelopment Budget" means the budget including uses of funds for the predevelopment activities, attached hereto as Exhibit B. (n) "Predevelopment Costs" means the cost of performing the predevelopment activities as shown in the Predevelopment Budget incurred by the Developer. (o) "Predevelopment Loan" means the Lender's loan to the Developer in the total principal amount of Two Million Nine Hundred Thousand Dollars ($2,900,000) pursuant to this Agreement, to fund certain predevelopment activities related to the Development on the Property.
(p) "Predevelopment Loan Documents" means this Agreement, the Assignment of Plans, and the Predevelopment Note.
(q) "Predevelopment Note" means the promissory note that will evidence the Developer's obligation to repay the Predevelopment Loan, substantially in the form of Exhibit C, attached hereto.
(r) "Property" that certain real property located at 4th and Railroad Avenues in the City of San Mateo, as more particularly described in Exhibit A, attached hereto. (s) "Term" means the term of this Agreement, which shall commence on the Effective Date and shall terminate on the Commencement of Construction, unless earlier terminated in accordance with Section 2.7.
(t) "Transfer" means a sale, encumbrance or other transfer of Developer's right, title, and interest in this Agreement or the Development.
Section 1.2 Exhibits.
The following exhibits are attached to this Agreement and incorporated into this Agreement by this reference:
Exhibit A Legal Description
Exhibit B Predevelopment Budget
Exhibit C Form of Predevelopment Note
Exhibit D Insurance Requirements
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Exhibit E Form of Assignment Agreement
ARTICLE 2
PREDEVELOPMENT LOAN PROVISIONS
Section 2.1 Predevelopment Loan.
Subject to satisfaction of the conditions set forth in Section 2.6, and only to the extent funds have been provided to City by the Commercial Developer in accordance with the DDA, the Lender shall lend to the Developer the principal sum not to exceed Two Million Nine Hundred Thousand Dollars ($2,900,000) for the purposes set forth in Section 2.3 of this Agreement. The Predevelopment Loan shall be evidenced by the Predevelopment Note, which shall be executed by the Developer concurrently herewith.
Section 2.2 Interest.
(a) Subject to the provisions of Section 2.2(b) below, the outstanding principal balance of the Predevelopment Loan shall bear simple interest at the rate of zero percent (0%) per annum commencing with the date of first disbursement. (b) In the event of a Default, interest on the Predevelopment Loan shall begin to accrue, as of the date of Default and continue until such time as the Predevelopment Loan funds are repaid in full or the Default is cured, at the default rate of the lesser of three percent (3%), compounded annually, or the highest rate permitted by law.
Section 2.3 Use of Funds.
(a) The Developer shall use the proceeds of the Predevelopment Loan only to fund Predevelopment Costs as set forth in the Predevelopment Budget. The Developer shall not use the Predevelopment Loan for any other purpose without the prior written consent of the Lender. (b) The Developer shall submit any revisions to the Predevelopment Budget to the Lender for approval within thirty (30) days after the date Developer receives information indicating that actual Predevelopment Costs in any line item in the Predevelopment Budget will materially vary from the costs for such line item shown on the Predevelopment Budget. The City Manager of Lender may approve or disapprove any revisions to the Predevelopment Budget to adjust line items or allow the payment of additional Predevelopment Costs as long as the total Predevelopment Budget amount does not increase.
Section 2.4 Security.
As security for the Predevelopment Loan, and as part of the consideration for entering into this Agreement, the Developer hereby assigns to the Lender its rights and obligations with respect to 750 of 11211
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certain agreements, plans and specifications, and approvals, pursuant to the terms of the Assignment of Plans, which shall be executed concurrently herewith. The assignments shall become effective upon an uncured event of Default of the Developer as defined in Section 5.1 below, or upon termination of this Agreement pursuant to Section 2.7 below. The Lender shall not have any obligation under any contracts or agreements assigned pursuant to the Assignment of Plans until it expressly agrees in writing to be bound by such contracts or agreements. Upon an event of Default that has not been cured pursuant to this Agreement or upon termination of this Agreement pursuant to Section 2.7 below, the Lender may use any of the foregoing assigned Documents for any purpose for which the Developer could have used them for development of the Development, and the Developer shall cooperate with the Lender to implement the Assignment of Plans and immediately deposit with the Lender for the Lender's use all the Documents.
Section 2.5 Repayment of the Predevelopment Loan.
(a) Subject to Section 2.5(b), Developer shall pay all outstanding principal and accrued interest on the Predevelopment Loan, in full, on the earliest to occur: (i) a Default, and (ii) the expiration of the Term.
(b) Lender shall forgive the Predevelopment Loan upon Commencement of Construction or upon termination of this Agreement pursuant to Section 2.7, provided that no Default has occurred and is continuing under this Agreement and Developer has taken all actions necessary to implement the Assignment of Plans and deposits the Documents with the Lender.
In the event of forgiveness at Commencement of Construction, this Agreement will terminate.
Section 2.6 Conditions to Funding.
The Lender shall fund the Predevelopment Loan upon satisfaction of the following conditions:
(a) There exists no Default nor any act, failure, omission or condition that would constitute an event of Default under the Predevelopment Loan Documents. (b) Execution by the Developer and delivery to the Lender of the Predevelopment Note and the Assignment of Plans.
(c) Receipt of a written draw request from the Developer setting forth the proposed use of funds and the amount of funds needed, and attaching (i) a copy of the bill or invoice covering the costs incurred, or (ii) an estimate of costs to be incurred. (d) The Developer has delivered to the Lender a copy of Developer's organizational documents and a corporate authorizing resolution authorizing Developer's execution of this Agreement, the Predevelopment Note, the Assignment of Plans, and the transactions contemplated by the Predevelopment Loan Documents.
(e) The Developer has furnished the Lender with evidence of the insurance coverage meeting the requirements of Section 3.2 below.
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Upon satisfaction of these conditions, the Lender shall from time to time disburse the Predevelopment Loan (or so much thereof as is required), for Predevelopment Costs, generally consistent with those shown in the Predevelopment Budget. Notwithstanding any other provisions of this Agreement, the Lender shall have no further obligation to disburse any portion of the Predevelopment Loan to the Developer following: (i) termination of this Agreement; or (ii) notification by the Lender to the Developer of a Default under the terms of this Agreement until said Default has been cured.
Section 2.7 Termination of Agreement for Infeasibility.
Provided that the Developer is not in Default under this Agreement, this Agreement may be terminated by the parties under the circumstances set forth below by giving written notice of such termination to the parties:
(a) The mutual determination by the parties, in their commercially reasonable discretion, that any remediation work with respect to hazardous materials or addressing other physical conditions of the Property exceeds financing available, making the Development financially infeasible; or
(b) Prior to the date set forth in the DDA, the Developer does not receive commitments of all projected financial assistance or reasonable substitutions therefor, including grants and loans, necessary to acquire and construct the Development despite the Developer's commercially reasonable efforts to obtain such funding.
This Section 2.7 is only applicable until the date that is identified in the DDA Schedule of Performance, or the date the Developer enters into the Ground Lease. Following termination of this Agreement under this Section 2.7, neither party shall have any rights or obligations under this Agreement, except that the provisions of Section 6.3 of this Agreement, unless otherwise limited, shall survive such termination and remain in full force and effect.
ARTICLE 3
DEVELOPER OBLIGATIONS
Section 3.1 Predevelopment Tasks and Schedule.
The Developer shall perform the following tasks, among others, with the proceeds of the Predevelopment Loan (i) cause preparation of architectural designs and drawings; and (ii) cause preparation of engineering studies and drawings. The Developer may not use any proceeds of the Loan for any other purposes without the prior written consent of Lender. Upon reasonable notice, as from time to time requested by the Lender, the Developer shall submit to the Lender a written progress report advising the Lender on progress made and next steps to be taken by the Developer in the performance of the predevelopment tasks.
Section 3.2 Insurance.
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The Developer shall, at Developer's sole cost and expense, maintain and keep in force throughout the Term, the insurance at set forth in Exhibit D in a form acceptable to the Lender with evidence of such coverage provided to the Lender within ten (10) days of execution of this Agreement, but in no event later than the initial disbursement of Predevelopment Loan funds pursuant to this Agreement. The Developer shall provide the Lender with immediate written notice in the event of cancellation or reduction of coverage of the Developer's insurance policies maintained in connection with this Agreement.
Section 3.3 Transfers.
The Developer shall not cause or permit a Transfer without the prior written approval of the Lender, which, the Lender may grant or deny in its sole discretion.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF DEVELOPER
Section 4.1 Representations and Warranties.
The Developer hereby represents and warrants to the Lender as follows:
(a) Organization. The Developer is a duly organized, validly existing California limited liability company and is in good standing under the laws of the State of California and has the power and authority to own its property and carry on its business as now being conducted.
(b) Authority of Developer. The Developer has full power and authority to execute and deliver this Agreement and to make and accept the borrowings contemplated hereunder, to execute and deliver the Predevelopment Loan Documents and all other documents or instruments executed and delivered, 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 the Predevelopment Loan Documents and all other documents or instruments executed and delivered, or to be executed and delivered by the Developer, 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 the 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 the Predevelopment Loan Documents and all other documents or instruments executed and delivered, or to be executed and delivered, pursuant to this Agreement, have been duly taken (to the extent such actions are required as of the date of execution and delivery of the above-named documents).
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(d) Valid Binding Agreements. This Agreement and the Predevelopment Loan Documents and all other documents or instruments which have been executed and delivered by the Developer 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 by and against it in accordance with their respective terms, subject to bankruptcy, insolvency, reorganization, moratorium, and other similar laws affecting the rights of creditors generally and general principles of equity. (e) No Breach of Law or Agreement. Neither the execution nor delivery of this Agreement and the Predevelopment Loan Documents by the Developer or of any other documents or instruments executed and delivered, or to be executed or delivered by the Developer, pursuant to this Agreement, nor the performance by the Developer 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 Development 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) Financial Statements. The financial statements of the Developer and other financial data and information furnished by the Developer to the Lender fairly present the information contained therein. As of the date of this Agreement, there has been no adverse material change in the financial condition of the Developer from that shown by such financial statements and other data and information.
ARTICLE 5
DEFAULT AND REMEDIES
Section 5.1 Events of Default.
Each of the following shall constitute a "Default" by the Developer under this Agreement:
(a) Failure to Make Payment. Failure by the Developer to repay the principal and any interest on the Predevelopment Loan within ten (10) days of receipt of written notice from the Lender that such payment is due pursuant to the Predevelopment Loan Documents. (b) Breach of Covenants. Failure by the Developer to duly perform, comply with, or observe any of the conditions, terms, or covenants of any of the Predevelopment Loan 754 of 11211
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Documents, and such failure having continued uncured for thirty (30) days after receipt of written notice thereof from the Lender to the Developer or, if the breach cannot be cured within thirty (30) days, the Developer shall not be in breach so long as the Developer is diligently undertaking to cure such breach and such breach is cured within ninety (90) days; provided, however, that if a different period or notice requirement is specified under any other section of this Article 5, the specific provisions shall control.
(c) Assignments. Failure by the Developer to take all actions necessary to implement the Assignment of Plans and deposit the Documents with the Lender upon an occurrence and continuation of Default hereunder.
(d) Unauthorized Transfer. Transfer by the Developer other than as permitted by Section 3.3.
(e) Representation or Warranty Incorrect. Any representation or warranty of the Developer contained in this Agreement, or in any application, financial statement, certificate, or report submitted to the Lender in connection with any of the Predevelopment Loan Documents, proves to have been incorrect in any material and adverse respect when made.
Section 5.2 Remedies.
The occurrence of any Default hereunder following the expiration of all applicable notice and cure periods will, either at the option of the Lender or automatically where so specified, relieve the Lender of any obligation to make or continue the Predevelopment Loan and shall give the Lender the right to proceed with any and all remedies set forth in this Agreement and the Predevelopment Loan Documents, including but not limited to the following:
(a) Acceleration of Note. The Lender shall have the right to cause all indebtedness of the Developer to the Lender under this Agreement and the Predevelopment Note, together with any accrued interest thereon, to become immediately due and payable. The Developer waives all right to presentment, demand, protest or notice of protest or dishonor. The Lender may proceed to enforce payment of the indebtedness and to exercise any or all rights afforded to the Lender as a creditor and secured party under the law including the Uniform Commercial Code. The Developer shall be liable to pay the Lender on demand all reasonable expenses, costs and fees (including, without limitation, reasonable attorneys' fees and expenses) paid or incurred by the Lender in connection with the collection of the Predevelopment Loan and the preservation, maintenance, protection, sale, or other disposition of the security given for the Predevelopment Loan.
(b) Assignment Agreement. The Lender shall have the right to exercise all rights under the Assignment of Plans.
(c) Specific Performance. The Lender shall have the right to mandamus or other suit, action or proceeding at law or in equity to require the Developer to perform its obligations and covenants under the Assignment of Plans or to enjoin acts or things which may be unlawful or in violation of the provisions of the Assignment of Plans. 755 of 11211
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(d) Right to Cure at the Developer's Expense. The Lender shall have the right (but not the obligation) to cure any monetary default by the Developer under a loan other than the Predevelopment Loan. The Developer agrees to reimburse the Lender for any funds advanced by the Lender to cure a monetary default by the Developer upon demand therefore, together with interest thereon at the lesser of the maximum rate permitted by law or ten percent (10%) per annum from the date of expenditure until the date of reimbursement.
Section 5.3 Right of Contest.
Developer shall have the right to contest in good faith any claim, demand, levy, or assessment the assertion of which would constitute a Default hereunder. Any such contest shall be prosecuted diligently and in a manner not prejudicial to the Lender or the rights of the Lender hereunder.
Section 5.4 Remedies Cumulative.
Subject to the non-recourse provisions contained in the Predevelopment Note, no right, power, or remedy given to the Lender by the terms of this Agreement or the Loan Documents 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 to the Lender by the terms of any such instrument, or by any statute or otherwise against the Developer and any other person. Neither the failure nor any delay on the part of the Lender to exercise any such rights and remedies shall operate as a waiver thereof, nor shall any single or partial exercise by the Lender of any such right or remedy preclude any other or further exercise of such right or remedy, or any other right or remedy.
ARTICLE 6
GENERAL PROVISIONS
Section 6.1 No Further Rights or Obligations.
This Agreement does not obligate either the Lender or Project Owner to enter the DDA or Ground Lease or any other agreement in furtherance of the proposed Development. The parties acknowledge that this Agreement creates no rights of the Developer and/or Project Owner with respect to the Property or the proposed Development.
Section 6.2 Relationship of Parties.
Nothing contained in this Agreement shall be interpreted or understood by any of the parties, or by any third persons, as creating the relationship of employer and employee, principal and agent, limited or general partnership, or joint venture between the Lender and Developer. Developer shall be solely responsible for its own acts and those of its agents and employees.
Section 6.3 Indemnification.
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Developer shall indemnify, protect, hold harmless and defend (by counsel reasonably satisfactory to the Lender) the Lender, and its elected and appointed officials, officers, directors, representatives, consultants, employees, attorneys and agents (each an "Indemnified Party") harmless against any and all claims, suits, actions, losses and liability of every kind, nature and description made against it and expenses (including reasonable attorneys' fees) ("Loss"), which arise out of or in connection with this Agreement or Developer's, or its agents’ or representatives’ (“Developer Parties”) activities on the Property during the Term of this Agreement, including but not limited to the development, construction, marketing and operation of the Development, except to the extent such claim arises solely from the gross negligence or willful misconduct of Lender; provided, however, that nothing herein shall obligate the Developer to cure, remove or remediate in any manner any environmental contamination or condition discovered or uncovered by the Developer Parties during the Developer’s investigation of the Property, unless specified otherwise in the DDA or Ground Lease, and Lender releases Developer from and against any Loss arising from or related to the Developer Parties’ mere discovery or uncovering of an existing environmental contamination during site investigation including invasive subsurface sampling. For the avoidance of doubt, the Lender's release contained in this Section 6.3 shall not extend to any activity related to the handling, disposal or remediation of any environmental contamination by Developer. The provisions of this Section shall survive the expiration of the Term.
Section 6.4 No Claims.
Nothing contained in this Agreement shall create or justify any claim against the Lender by any person that Developer may have employed or with whom Developer may have contracted relative to the furnishing or the performance of any work or services with respect to the Property or the proposed Development.
Section 6.5 Amendments.
This Agreement shall not be modified or amended in any respect, except by written instrument specifically referencing such a modification or amendment which is executed by or on behalf of the parties in the same manner as this Agreement is executed.
Section 6.6 Non-Liability of Lender Officials, Employees and Agents.
No member, official, employee or agent of the Lender shall be personally liable to Developer in the event of any default or breach by the Lender or for any amount which may become due to Developer or its successor or on any obligation under the terms of this Agreement.
Section 6.7 No Third Party Beneficiaries.
Nothing in this Agreement (either express or implied) is intended to, or shall be construed to, confer upon or give any person or entity, other than the Parties hereto, any rights or remedies under or by reason of this Agreement.
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Section 6.8 Notices, Demands and Communications.
Formal notices, demands, and communications between the parties shall be sufficiently given if and shall not be deemed given unless: (a) dispatched by registered or certified mail, postage prepaid, return receipt requested; (b) delivered by express delivery service, return receipt requested; (c) delivered personally; or (d) sent by electronic mail using an established provider of registered e-mail services with headquarters in the United States that furnishes unmodifiable proof (i) that the message was sent, (ii) that the message was delivered to the recipient's e-mail server, and (iii) of the time and date the message was delivered to the recipient. All such notices shall be delivered to the principal office of the parties as follows:
Lender: City of San Mateo
330 W. 20th Ave
San Mateo, CA 94403
Attention: City Manager
With a copy to: City of San Mateo
330 W. 20th Ave
San Mateo, CA 94403
Attention: City Attorney
Developer: AH Bespoke LLC
c/o Alta Housing
3460 West Bayshore Road, Suite 104
Palo Alto, CA 94303
Attention: President
With a copy to: Bocarsly Emden Cowan Esmail & Arndt LLP 633 W. Fifth Street, Suite 5880
Los Angeles, CA 90071
Attention: Kyle Arndt
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. Receipt shall be deemed to have occurred on the date shown on a written receipt as the date of delivery or refusal of delivery (or attempted delivery if undeliverable) except that any electronic mail received after 5:00 p.m. shall be deemed to have been received on the next Business Day.
Section 6.9 Applicable Law.
This Agreement shall be governed by and construed in accordance with California law.
Section 6.10 Parties Bound.
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Except as otherwise limited herein, the provisions of this Agreement shall be binding upon and inure to the benefit of the parties and their heirs, executors, administrators, legal representatives, successors, and assigns. This Agreement is intended to run with the land and shall bind Developer and its successors and assigns in the Property and the Development for the entire Term, and the benefit hereof shall inure to the benefit of Lender and its successors and assigns.
Section 6.11 Attorneys' Fees.
If any lawsuit is commenced to enforce any of the terms of this Agreement, the prevailing party will have the right to recover its reasonable attorneys' fees and costs of suit from the other party in a total amount not exceeding $5,000. The $5,000 limit is the total of attorney fees recoverable whether in the trail court, appellate court, or otherwise, and regardless of the number of attorneys, trials, appeals, or actions. It is the intent of this Agreement that neither party shall have to pay the other more than $5,000 for attorney fees arising out of an action, or actions, to enforce the provisions of this Agreement.
Section 6.12 Severability.
If any term 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 6.13 Gender and Number.
Words of any gender used in this Agreement 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 6.14 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 Agreement or as a limitation on the scope of the particular provisions to which they refer.
Section 6.15 Waivers.
Any waiver by the Lender of any obligation or condition in this Agreement must be in writing.
No waiver will be implied from any delay or failure by the Lender to take action on any breach or Default of Developer or to pursue any remedy allowed under this Agreement or applicable law. Any extension of time granted to Developer to perform any obligation under this Agreement shall not operate as a waiver or release from any of its obligations under this Agreement. Consent by the Lender to any act or omission by Developer shall not be construed 759 of 11211
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to be a consent to any other or subsequent act or omission or to waive the requirement for the Lender's written consent to future waivers.
Section 6.16 Entire Understanding of the Parties.
The terms and provisions of this Agreement and Predevelopment Loan Documents supersede any inconsistent terms and conditions of any term sheet, commitment letter, or similar document issued by Lender to Developer. This Agreement and the attached exhibits constitute the entire agreement of the parties with respect to the matters set forth in this Agreement. This Agreement supersedes any prior agreement and understandings between the parties as to such matters, oral or written, all of which are hereby cancelled. This Agreement shall not be construed as if it had been prepared by one of the parties, but rather as if both parties had prepared it. The parties have read and reviewed this Agreement and agree that any rule of construction to the effect that ambiguities are to be resolved against the drafting party (including but not limited to California Civil Code Section 1654 as may be amended from time to time, or any other state law, or common law principle) shall not apply to the interpretation of this Agreement.
Section 6.17 Survival.
All of the representations and warranties in this Agreement shall survive until the expiration of the Term of this Agreement and payment of the Predevelopment Note, except to the extent that a representation or warranty expressly provides otherwise.
Section 6.18 Records.
The outstanding principal balance of the Predevelopment Loan and the unpaid interest accrued thereon shall at all times be ascertained from the records of Lender, which shall be conclusive evidence thereof, absent manifest error.
Section 6.19 Further Assurances.
At any time upon, and from time to time upon request by Lender, Developer shall do any acts and execute and deliver any documents as may be reasonably requested by Lender to accomplish the purposes of this Agreement or normally required for similar loans by prudent lenders in accordance with reasonable commercial standards, including but not limited to, executing any additional assignments or documents deemed reasonably necessary by the Lender to provide further security for the Predevelopment Loan, in connection with any agreements entered into by or on behalf of the Developer in connection with the supply, development, manufacture, design, or construction of the proposed modular units in the Development.
Section 6.20 Multiple Originals; Counterparts.
This Agreement may be executed in multiple originals, each of which is deemed to be an original, and may be signed in counterparts.
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[Signatures on following page.]
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660\14\3965661.1
WHEREFORE, this Agreement has been entered into by the undersigned as of Effective Date.
LENDER:
CITY OF SAN MATEO,
a California charter city
By: __________________________
Alex Khojikian, City Manager
Dated: __________________________
DEVELOPER:
AH BESPOKE LLC, a California limited
liability company
By: Alta Housing, a California nonprofit
public benefit corporation, its manager
Name: ________________________
Title: ________________________
By: ___________________________
Name:
Its:
Dated:______________________
APPROVED AS TO FORM:
By: __________________________
Prasanna W. Rasiah, City Attorney
Dated: __________________________
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EXHIBIT A
CITY PROPERTY LEGAL DESCRIPTION
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: 034-017-179-06.00 763 of 11211
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EXHIBIT B
PREDEVELOPMENT BUDGET
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EXHIBIT C
PROMISSORY NOTE
AH BESPOKE LLC
PREDEVELOPMENT LOAN
$2,900,000 San Mateo, California
DATE 2026
FOR VALUE RECEIVED, AH BESPOKE LLC, a California limited liability company (the "Borrower"), promises to pay to the City of San Mateo, a California charter city (the "City"), the principal sum of up to Two Million Nine Hundred Thousand Dollars ($2,900,000) (the "Predevelopment Loan"), or so much as is disbursed to Borrower, plus interest thereon pursuant to Section 2 below.
1. Borrower's Obligation.
This promissory note (the "Note") evidences the Borrower's obligation to pay the City the principal amount of up to Two Million Nine Hundred Thousand Dollars ($2,900,000), for the funds loaned to the Borrower by the City to be used to fund Predevelopment Costs as set forth in the Predevelopment Loan Agreement. All capitalized terms not otherwise defined in this Note shall have the meanings set forth in the Predevelopment Loan Agreement.
2. Interest.
(a) Interest Rate. Subject to the provisions of Section (b) below, the outstanding principal balance of the Predevelopment Loan shall accrue interest at the rate of zero percent (0%) simple interest.
(b) Default Rate. In the event of a Default, interest on the Predevelopment Loan shall begin to accrue, as of the date of Default and continuing until such time as the Predevelopment Loan funds are repaid in full or the Default is cured, at the default rate of the lesser of three percent (3%), compounded annually, or the highest rate permitted by law.
3. Term and Repayment Requirements.
(a) The term of the Predevelopment Loan shall commence on the date of this Note and shall terminate on the Commencement of Construction, unless earlier terminated in accordance with the Predevelopment Loan Agreement.
(b) All principal and accrued interest on the Predevelopment Loan shall be due in full on the earlier to occur of: (i) the date of any Default, or (ii) the expiration of the Term; provided, 765 of 11211
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however, that the Predevelopment Loan shall be forgiven upon expiration of the Term in accordance with Section 2.5(b) of the Predevelopment Loan Agreement.
4. No Assumption.
This Note shall not be assumable by the successors and assigns of Borrower without the prior written consent of the City.
5. Security.
Concurrently with Borrower's execution of this Note, Borrower will execute the Assignment Agreement as security for this Note.
6. Terms of Payment.
(a) All payments due under this Note shall be paid in currency of the United States of America, which at the time of payment is lawful for the payment of public and private debts.
(b) All payments on this Note shall be paid to the City of San Mateo, 330 W. 20th Avenue, San Mateo, CA 94403 Attention: Housing Manager or to such other place as the City may from time to time designate in writing.
(c) All payments on this Note shall be without expense to the City, and the Borrower agrees to pay all costs and expenses, including re-conveyance fees and reasonable attorney's fees of the City, incurred in connection with the payment of this Note and the release of any security hereof.
(d) Notwithstanding any other provision of this Note, or any instrument securing the obligations of the Borrower under this Note, if, for any reason whatsoever, the payment of any sums by the Borrower pursuant to the terms of this Note would result in the payment of interest which would exceed the amount that the City may legally charge under the laws of the State of California, then the amount by which payments exceed the lawful interest rate shall automatically be deducted from the principal balance owing on this Note, so that in no event shall the Borrower be obligated under the terms of this Note to pay any interest which would exceed the lawful rate.
7. Default.
(a) Any of the following shall constitute an Event of Default under this Note:
(1) Any failure to pay, in full, any payment required under this Note when due following written notice by the City of such failure and fifteen (15) days opportunity to cure;
(e)
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(2) Any failure in the performance by the Borrower of any term, condition, provision or covenant set forth in this Note, subject to the cure periods set forth in Section 5.1(b) of the Predevelopment Loan Agreement; (3) The occurrence of any Event of Default under the Predevelopment Loan Agreement, or other instrument securing the obligations of Borrower under this Note subject to notice and cure periods as set forth therein; and (b) Upon the occurrence of such an Event of Default, the entire unpaid principal balance, together with all interest thereon, and together with all other sums then payable under this Note shall at the option of the City become immediately due and payable upon written notice by the City to the Borrower without further demand. (c) The failure to exercise the remedy set forth in Subsection 7(b) above or any other remedy provided by law upon the occurrence of one or more of the foregoing events of default shall not constitute a waiver of the right to exercise any remedy at any subsequent time in respect to the same or any other default. The acceptance by City hereof of any payment which is less than the total of all amounts due and payable at the time of such payment shall not constitute a waiver of the right to exercise any of the foregoing remedies or options at that time or at any subsequent time, or nullify any prior exercise of any such remedy or option, without the express consent of the City, except as and to the extent otherwise provided by law.
8. Waivers.
(a) The Borrower hereby waives diligence, presentment, protest and demand, and notice of protest, notice of demand, and notice of dishonor of this Note. The Borrower expressly agrees that this Note or any payment hereunder may be extended from time to time, and that the City may accept further security or release any security for this Note, all without in any way affecting the liability of the Borrower.
(b) No extension of time for payment of this Note or any installment hereof made by agreement by the City with any person now or hereafter liable for payment of this Note shall operate to release, discharge, modify, change or affect the original liability of the Borrower under this Note, either in whole or in part.
(c) The obligations of the Borrower under this Note shall be absolute and the Borrower waives any and all rights to offset, deduct or withhold any payments or charges due under this Note for any reason whatsoever.
9. Non-recourse Obligation.
The Predevelopment Loan is a non-recourse obligation of the Borrower. Neither the Borrower nor any of its general or limited partners, nor any other party shall have any personal liability for repayment of the Loan. The sole recourse of the City with respect to the principal of, or interest on, the Promissory Note and defaults by the Borrower in the performance of its covenants under 767 of 11211
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the Assignment Agreement shall be to the property described in the Assignment Agreement; provided, however, that nothing contained in the foregoing limitation of liability shall: (a) limit or impair the enforcement against all such security for the Promissory Note of all the rights and remedies of the City thereunder; or (b) be deemed in any way to impair the right of the City to assert the unpaid principal amount of the Promissory Note as demand for money within the meaning and intendment of Section 431.70 of the California Code of Civil Procedure or any successor provision thereto.
10. Miscellaneous Provisions.
(a) All notices to the City or the Borrower shall be given in the manner and at the addresses set forth in the Predevelopment Loan Agreement, or to such addresses as the City and the Borrower may hereinafter designate.
(b) The Borrower promises to pay all costs and expenses, including reasonable attorney's fees, incurred by the City in the enforcement of the provision of this Note, regardless of whether suit is filed to seek enforcement.
(c) This Note may not be changed orally, but only by an agreement in writing signed by the party against whom enforcement of any waiver, change, modification or discharge is sought.
(d) This Note shall be governed by and construed in accordance with the laws of the State of California.
(e) The times for the performance of any obligations hereunder shall be strictly construed, time being of the essence.
(f) This document, together with the Predevelopment Loan Agreement and Assignment Agreement, contains the entire agreement between the parties as to the Predevelopment Loan. It may not be modified except upon written consent of the parties. [Signature Page Follows]
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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the Effective Date.
BORROWER:
AH BESPOKE LLC, a California limited liability company
By: Alta Housing, a California nonprofit public benefit corporation, its manager Name: ________________________
Title: ________________________
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EXHIBIT D
INSURANCE REQUIREMENTS
(a) Developer shall maintain the following insurance coverage throughout the Term of the Loan:
1) Workers' Compensation insurance to the extent required by law, including Employer's Liability coverage, with limits not less than One Million Dollars ($1,000,000) each accident.
2) Commercial General Liability insurance with limits not less than Two Million Dollars ($2,000,000) each occurrence combined single limit for Bodily Injury and Property Damage, including coverages for Contractual Liability, Personal Injury, Broadform Property Damage, Products and Completed Operations.
3) Automobile Liability insurance with limits not less than One Million Dollars ($1,000,000) each occurrence combined single limit for Bodily Injury and Property Damage, including coverages for owned, non-owned and hired vehicles, as applicable. 4) Builders' Risk insurance during the course of construction and upon completion, property insurance covering the Development, in a form appropriate for the nature of such property, covering all risks of loss, excluding earthquake, for one hundred percent (100%) of the replacement value, with deductible, if any, acceptable to the City, naming the City as a Loss Payee, as its interests may appear. Flood insurance must be obtained if required by applicable federal regulations.
5) Commercial crime insurance covering all officers and employees, for loss of Loan proceeds caused by dishonesty, in an amount approved by the City, naming the City a Loss Payee, as its interests may appear which insurance shall be maintained only until the entire balance of the Loan has been disbursed.
(b) Developer shall cause any general contractor, agent, or subcontractor working on the Development under direct contract with Developer or subcontract to maintain insurance of the types and in at least the minimum amounts described in subsections (1), (2), and (3) above, except that the limit of liability for commercial general liability insurance for subcontractors must be One Million Dollars ($1,000,000), and must require that such insurance will meet all of the general requirements of subsections (d) and (e) below.
(c) The required insurance must be provided under an occurrence form, and Developer shall maintain the coverage described in subsection (a) continuously throughout the Term. Should any of the required insurance be provided under a form of coverage that includes an annual aggregate limit or provides that claims investigation or legal defense costs be included in such annual aggregate limit, such annual aggregate limit must be three times the occurrence limits specified above.
Commercial General Liability, Automobile Liability and Property insurance policies must be endorsed to name as an additional insured the City and its officers, agents, employees and 770 of 11211
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members of the City Council.
(d) All policies and bonds are to contain: (i) the agreement of the insurer to give the City at least thirty (30) days' notice prior to cancellation (including, without limitation, for non-payment of premium) or any material change in said policies; (ii) an agreement that such policies are primary and noncontributing with any insurance that may be carried by the City; (iii) a provision that no act or omission of Developer shall affect or limit the obligation of the insurance carrier to pay the amount of any loss sustained; and (iv) a waiver by the insurer of all rights of subrogation against the City and its authorized parties in connection with any loss or damage thereby insured against. (e) Broader Coverage: If the Developer maintains broader coverage and/or (f) 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.
(g) Endorsements: The insurance policies are to contain, or be endorsed to contain, the following provisions:
a. The City, its elected and appointed officials, employees, volunteers 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 l 0, CG 20 26, CG 20 33, or CG 20 38; and CG 20 37 fohns if later revisions used).
b. 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, volunteers, and agents. Any insurance or self-insurance maintained by the City, its elected and appointed officials, employees, volunteers, or agents shall be excess of the Developer's insurance and shall not contribute with it. (h) Each insurance policy required by this clause shall provide that coverage shall not be canceled, except with notice to the City.
(i) 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.
(j) 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. 771 of 11211
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(k) 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.
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EXHIBIT E
ASSIGNMENT OF AGREEMENTS, PLANS AND SPECIFICATIONS, AND APPROVALS (Bespoke)
FOR VALUE RECEIVED, the undersigned, AH Bespoke LLC, a California limited liability company (the "Developer"), hereby assigns and transfers to the City of San Mateo, a California charter city (the "City"), all of its right, title and interest in and to (if any):
(1) All consulting, architectural, design, engineering, and construction contracts and development agreements, and any and all amendments, modifications, supplements, addenda and general conditions thereto (collectively "Agreements"), heretofore or hereafter entered into by any Contractor (as defined below);
(2) All studies and analyses, surveys, plans and specifications, shop drawings, working drawings, amendments, modifications, changes, supplements, general conditions and addenda thereto (collectively "Studies, Plans and Specifications") heretofore or hereafter prepared by any Contractor (as defined below); and
(3) All land use approvals, building permits, and other governmental approvals of any nature obtained for the Development by Developer (collectively, the "Land Use Approvals").
This Assignment is made pursuant to the terms of the Predevelopment Loan Agreement, dated as of ______, 2026, entered into between Developer and the City (the "Loan Agreement"). Capitalized terms used but not defined in this Assignment shall have the meanings set forth in the Loan Agreement. The Property with respect to which the Predevelopment Loan has been made is more particularly described in Exhibit A attached to the Predevelopment Loan Agreement.
For purposes of this Assignment, the term "Contractor" means any consultant, architect, construction contractor, engineer or other person or entity entering into Agreements with the Developer and/or preparing Studies, Plans and Specifications for the Developer with respect to the Development.
The Developer hereby irrevocably appoints the City as its attorney-in-fact (which agency is coupled with an interest) to, upon the occurrence and continuation of a Default (after notice and opportunity to cure) or an event which, with notice or the passage of time or both would constitute a Default (after notice and opportunity to cure) under and as defined in the Loan Agreement or if pursuant to Section 3.5 the City acquires the Property, demand, receive, and enforce any and all of the Developer's rights with respect to the Studies, Plans and Specifications, Agreements and Land Use Approvals, and perform any and all acts in the name of the Developer or in the name of the City with the same force and effect as if performed by the Developer in the absence of this Assignment.
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The Developer represents and warrants to the City that no previous assignment(s) of its rights or interest in or to the Studies, Plans and Specifications, Agreements, and/or Land Use Approvals, has or have been made by Developer, and the Developer agrees not to assign, sell, pledge, transfer, mortgage, or hypothecate its rights or interest therein (without prior written approval of the City Manager) so long as the City holds or retains any security interest under the Loan Agreement. Developer further represents and warrants that all Agreements, Studies, Plans and Specifications and Land Use Approvals for the Property are and will be in the name of Developer and that Developer has the full power and authority to execute this Assignment and perform its obligations hereunder.
This Assignment is made to secure: (1) payment to the City of all sums now or hereafter owing under the Predevelopment Note dated as of the date hereof made by the Developer to the order of the City, and any and all additional advances, modifications, extensions, renewals and amendments thereof; and (2) payment and performance by Developer of all its obligations under the Predevelopment Loan Agreement.
This Assignment shall be governed by the laws of the State of California, except to the extent that Federal laws preempt the laws of the State of California, and the Developer consents to the jurisdiction of any Federal or State Court within the State of California having proper venue for the filing and maintenance of any action arising hereunder and agrees that the prevailing party in any such action shall be entitled, in addition to any other recovery, to reasonable attorneys' fees and costs.
This Assignment shall be binding upon and inure to the benefit of the heirs, legal representatives, assigns, and successors-in-interest of the Developer and the City; provided, however, this shall not be construed and is not intended to waive the restrictions on assignment, sale, transfer, mortgage, pledge, hypothecation or encumbrance by the Developer contained in the Loan Agreement.
Executed by the Developer on __________.
DEVELOPER:
AH Bespoke LLC,
a California limited liability company,
its sole member/manager
By: Alta Housing, a California nonprofit
public benefit corporation, its manager
By: ___________________________
Name: _____________________
Its: _____________________
Dated:______________________
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ARCHITECT'S/ENGINEER'S CONSENT
The undersigned architect and/or engineer (collectively referred to as "Architect") hereby consents to the foregoing Assignment of Agreements, Plans and Specifications, and Approvals ("Assignment"), of which this Architect's/Engineer's Consent ("Consent") is a part, and acknowledges that there presently exists no unpaid claims presently due to the Architect except as disclosed to the City arising out of the preparation and delivery of the Plans and Specification to the Developer and/or the performance of the Architect's obligations under the Agreements, as the term "Agreements" is defined in the Assignment.
Architect agrees that if, at any time, the City shall become the owner of said Property, following an uncured Default or the termination of the Loan Agreement, or, pursuant to its rights under the Loan Agreement, elects to undertake or cause the completion of construction of the Development on any of the Property, in accordance with the Plans and Specifications, and gives Architect written notice of such election; then so long as the Architect has received, receives or continues to receive the compensations called for under the Agreements, the City may, at its option, use and rely on the Plans and Specifications for the purposes for which they were prepared, and Architect will continue to perform its obligations under the Agreements for the benefit and account of the City in the same manner as if performed for the benefit or account of the Developer in the absence of this Assignment, so long as the City agrees to perform all of the obligations of the owner as outlined in the contract.
Architect further agrees that, in the event of a breach by the Developer of the Agreements, or any agreement entered into with Architect in connection with the Plans and Specifications, so long as the Developer's interest in the Agreements and Plans and Specifications is assigned to the City, Architect will give written notice to the City at the address shown below of such breach. The City shall have thirty (30) days from the receipt of such written notice of Default to remedy or cure said Default; provided, however, nothing herein shall require the City to cure said Default or to undertake completion of construction of the Development.
Architect warrants and represents that it/he/she has no knowledge of any prior assignment(s) of any interest in either the Plans and Specifications and/or the Agreements. Except as otherwise defined herein, the terms used herein shall have the meanings given them in the Assignment or the Predevelopment Loan Agreement, as applicable.
Executed by the Architect on ___________.
Address of City: Address of Architect:
950 Howard Street
San Francisco, CA 94103
City of San Mateo
330 W. 20th Ave
San Mateo, CA 94403
Attn: City Manager
Architect: BDE Architecture
By: _______________________________
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Its: _________________________
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LOAN AGREEMENT
BETWEEN
CITY OF SAN MATEO
AND
AH Bespoke LP,
a California limited partnership
Dated as of __, 20__
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TABLE OF CONTENTS
Page
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#4020883v4<IMANDB> - Bespoke Permanent Loan Agreement (final for City Council) 660\14\4020883.2
#4020883v4<IMANDB> - Bespoke Permanent Loan Agreement (final for City Council) ARTICLE 1. DEFINITIONS AND EXHIBITS..............................................................................2 Section 1.1 Definitions....................................................................................................2 Section 1.2 Exhibits. .....................................................................................................10 ARTICLE 2. PRECONSTRUCTION REQUIREMENTS............................................................11 Section 2.1 Conditions Precedent to Conveyance of Property. ....................................11 Section 2.2 Governmental Approvals...........................................................................11 Section 2.3 Review and Approval of Design and Construction Documents. ................................................................................................12 Section 2.4 Financing Plan. ..........................................................................................13 Section 2.5 Tax Credit Reservation; Financing. ...........................................................14 Section 2.6 Other Approved Financing. .......................................................................14 Section 2.7 Other Governmental Approvals.................................................................15 Section 2.8 Management Plan and Procedures. ............................................................15 Section 2.9 Construction Contract. ...............................................................................15 Section 2.10 Construction Bonds....................................................................................16 Section 2.11 Insurance....................................................................................................16 Section 2.12 Resident Selection Plan..............................................................................16 Section 2.13 Condition of Title.......................................................................................16 ARTICLE 3. LOAN PROVISIONS..............................................................................................17 Section 3.1 Loan Amount. ............................................................................................17 Section 3.2 Interest........................................................................................................17 Section 3.3 Use of Loan................................................................................................17 Section 3.4 Security; Subordination of Deed of Trust and Regulatory Agreement..................................................................................................18 Section 3.5 Repayment Schedule..................................................................................19 Section 3.6 Conditions Precedent to Disbursement of Loan. .......................................20 Section 3.7 Reports and Accounting of Residual Receipts...........................................21 Section 3.8 Developer Fee. ...........................................................................................22 Section 3.9 Assumption. ...............................................................................................22 Section 3.10 Non-Recourse. ...........................................................................................23 Section 3.11 Assignment of Collateral Documents. .......................................................23 ARTICLE 4. CONSTRUCTION OF IMPROVEMENTS ............................................................24 Section 4.1 Construction Pursuant to Plans. .................................................................24 Section 4.2 Change in Construction of Improvements. ................................................24 Section 4.3 Commencement of Improvements.............................................................24 Section 4.4 Completion of the Improvements. .............................................................25 Section 4.5 Equal Opportunity......................................................................................25 Section 4.6 Compliance with Applicable Law; Prevailing Wage Requirement...............................................................................................25 Section 4.7 Progress Report..........................................................................................27 Section 4.8 Construction Responsibilities. ...................................................................27 Section 4.9 Mechanics Liens, Stop Notices, and Notices of Completion.....................27 Section 4.10 Inspections. ................................................................................................28 778 of 11211
TABLE OF CONTENTS
(Continued)
Page
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#4020883v4<IMANDB> - Bespoke Permanent Loan Agreement (final for City Council) Section 4.11 Information. ...............................................................................................28 Section 4.12 Records. .....................................................................................................28 Section 4.13 Relocation. .................................................Error! Bookmark not defined.
Section 4.14 Bid Package. ..............................................Error! Bookmark not defined.
Section 4.15 Financial Accounting and Post-Completion Audits. .................................28 ARTICLE 5. ONGOING DEVELOPER OBLIGATIONS...........................................................29 Section 5.1 Applicability. .............................................................................................29 Section 5.2 Use. ............................................................................................................29 Section 5.3 Maintenance...............................................................................................30 Section 5.4 Taxes and Assessments..............................................................................30 Section 5.5 Mandatory Language in All Subsequent Deeds, Leases and Contracts. ...................................................................................................31 Section 5.6 Hazardous Materials Indemnification........................................................32 Section 5.7 Management Agent; Periodic Reports.......................................................33 Section 5.8 Approval of Management Plan Modifications...........................................34 Section 5.9 Resident Services Plan and Resident Services Budget..............................35 Section 5.10 Insurance Requirements.............................................................................35 Section 5.11 Audits.........................................................................................................35 Section 5.12 Notice of Litigation....................................................................................36 ARTICLE 6. ASSIGNMENT AND TRANSFERS.......................................................................36 Section 6.1 Definitions..................................................................................................36 Section 6.2 Purpose of Restrictions on Transfer...........................................................36 Section 6.3 Prohibited Transfers...................................................................................37 Section 6.4 Permitted Transfers....................................................................................37 Section 6.5 Effectuation of Certain Permitted Transfers..............................................38 Section 6.6 Other Transfers with City Consent. ...........................................................39 ARTICLE 7. DEFAULT AND REMEDIES.................................................................................39 Section 7.1 General Applicability.................................................................................39 Section 7.2 Fault of City. ..............................................................................................39 Section 7.3 Fault of Developer. ....................................................................................40 Section 7.4 Remedies....................................................................................................41 Section 7.5 Option to Purchase, Enter and Possess. .....................................................42 Section 7.6 Acceleration of Note..................................................................................42 Section 7.7 Right to Cure at Developer's Expense. ......................................................42 Section 7.8 Delivery of Collateral Documents. ............................................................42 Section 7.9 Rights of Mortgagees.................................................................................43 Section 7.10 Remedies Cumulative. ...............................................................................43 Section 7.11 Waiver of Terms and Conditions...............................................................43 ARTICLE 8. SECURITY FINANCING AND RIGHTS OF HOLDERS ....................................43 Section 8.1 No Encumbrances Except for Development Purposes. .............................43 Section 8.2 Holder Not Obligated to Construct............................................................44 Section 8.3 Notice of Default and Right to Cure..........................................................44 779 of 11211
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#4020883v4<IMANDB> - Bespoke Permanent Loan Agreement (final for City Council) Section 8.4 Failure of Holder to Complete Improvements...........................................44 Section 8.5 Right of City to Cure..................................................................................44 Section 8.6 Right of City to Satisfy Other Liens. .........................................................45 Section 8.7 Holder to be Notified. ................................................................................45 ARTICLE 9. GENERAL PROVISIONS ......................................................................................45 Section 9.1 Notices, Demands and Communications. ..................................................45 Section 9.2 Non-Liability of Public Officials, Employees and Agents. .......................46 Section 9.3 Forced Delay..............................................................................................46 Section 9.4 Inspection of Books and Records. .............................................................47 Section 9.5 Title of Parts and Sections. ........................................................................47 Section 9.6 General Indemnification. ...........................................................................47 Section 9.7 Applicable Law..........................................................................................47 Section 9.8 No Brokers.................................................................................................47 Section 9.9 Severability. ...............................................................................................48 Section 9.10 Legal Actions, Venue.................................................................................48 Section 9.11 Binding Upon Successors. .........................................................................48 Section 9.12 Parties Not Co-Venturers...........................................................................48 Section 9.13 Time of the Essence...................................................................................48 Section 9.14 Action by the City......................................................................................48 Section 9.15 Representations and Warranties.................................................................48 Section 9.16 Entry by the City........................................................................................50 Section 9.17 Operating Memoranda; Implementation Agreements. ..............................51 Section 9.18 Amendments. .............................................................................................51 Section 9.19 Multiple Originals; Counterparts. ..............................................................51 Section 9.20 Complete Understanding of the Parties. ....................................................51 780 of 11211
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#4020883v4<IMANDB> - Bespoke Permanent Loan Agreement (final for City Council)
EXHIBITS
Exhibit A: Legal Description of the Property
Exhibit B: Development Schedule
Exhibit C: Scope of Development
Exhibit D: Financing Plan
Exhibit E: Form of Regulatory Agreement
Exhibit F: Form of Promissory Note
Exhibit G: Form of Deed of Trust
Exhibit H: Form of Notice of Affordability Restrictions on Transfer of Property Exhibit I: Insurance Requirements
Exhibit J: Reserved
Exhibit K: Assignment of Collateral Documents
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#4020883v4<IMANDB> - Bespoke Permanent Loan Agreement (final for City Council)
LOAN AGREEMENT
(Bespoke Affordable Housing Development)
This Loan Agreement (the "Agreement") is entered into as of ___________, 20__ (the "Effective Date"), by and between the City of San Mateo, a California charter city (the "City"), and AH Bespoke LP, a California limited partnership (the "Developer"), 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 of San Mateo, as the successor to the Housing Assets of the former Redevelopment Agency of the City of San Mateo (“Redevelopment Agency”) pursuant to Part
1.85 of Division 24 of the Health and Safety Code, in particular Section 34176 thereof, owns that certain real property generally located at the corner of E. 4th Avenue and N. Railroad Avenue (APNs 034-179-050 and 034-179-060) in San Mateo, California, as further described in the attached Exhibit A and incorporated herein by reference (the “Property”).
C. Developer will develop, own and operate a seventy-one (71) unit 100% affordable housing building (with one unrestricted manager’s unit) with a nearly 6,000 square-foot groundfloor community space (the “Community Space”) to be initially leased to Self-Help for the Elderly and a portion of an underground parking garage located on the Property in the City of San Mateo, California, defined as the "Development," for a period of ninety-nine (99) years pursuant to the terms of that certain Ground Lease, dated ________.
D. The Developer’s construction and operation of the Development for individuals and families of Lower Income are not financially feasible without financial assistance from the City.
The City therefore desires to provide the Developer with the Loan to provide funding in consideration for construction and operating the Development consistent with this Agreement, the Disposition, Development and Loan Agreement, and the Ground Lease Agreement, including (without limitation) the occupancy and affordability restrictions. The amount of the Loan provided pursuant to this Agreement does not exceed the amount of City's assistance necessary to make the Developer's operation of the Development, as restricted by this Agreement, financially feasible.
E. Subject to the terms and conditions of this Agreement, the City will make a Loan to the Developer (“Loan”) for construction of the Development which will be funded with money from the City's ______________ Fund established pursuant to California Health and Safety Code Section 34176(d), City ___________ Funds, and City _____________ Funds.
F. The Developer intends to finance the remainder of the costs of the development of the Improvements with public and private sources as more particularly set forth in Exhibit B 782 of 11211
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#4020883v4<IMANDB> - Bespoke Permanent Loan Agreement (final for City Council) attached to this Agreement, which provides the Developer's Financing Plan for the anticipated financing of the construction of the Improvements.
G. The City has determined that the Developer has the necessary expertise, skill and ability to carry out the commitments set forth in this Agreement and that this Agreement will increase the supply of low income housing available at affordable housing cost.
H. Pursuant to the California Environmental Quality Act and its implementing guidelines, the City (in its capacity as "lead agency"), prepared an Initial Study/Mitigated Negative Declaration (State Clearing House #2024100181). On _________, the City Council reviewed and certified as adequate and complete the Initial Study/Mitigated Negative Declaration by Resolution No.___ and adopted written findings and approved the MMRP.
THEREFORE, the City and the Developer agree as follows:
ARTICLE 1.
DEFINITIONS AND EXHIBITS
Section 1.1 Definitions.
In addition to the terms defined elsewhere in this Agreement, the following definitions shall apply throughout this Agreement.
(a) "Agreement" means this Loan Agreement, including the attached exhibits and all subsequent operating memoranda and amendments to this Agreement. (b) "Annual Operating Expenses" with respect to a particular Fiscal Year means the following costs reasonably and actually incurred for operation and maintenance of the Development to the extent that they are consistent 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 Development, as applicable;
(2) Debt service currently due on a non-optional basis (excluding debt service due from residual receipts) on loans associated with the construction and operation of the Development and approved by the City in the approved Financing Plan pursuant to Section 2.4; (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 pursuant to the terms of Sections 2.8 and 6.7 of this Agreement; (4) Insurance premiums for property damage and liability insurance; 783 of 11211
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#4020883v4<IMANDB> - Bespoke Permanent Loan Agreement (final for City Council) (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);
(7) Any annual license or certificate of occupancy fees required for operation of the Development;
(8) Security services;
(9) Advertising and marketing costs;
(10) Cash deposited into reserves for capital replacements of the Development in an amount of ____________ per Unit per Year ($____.00), increasing by 3% per annum, or such other amount approved by the City as part of the approved Financing Plan or as otherwise required by Developer’s senior lender and/or tax credit equity investor; (11) Cash deposited into the "Operating Reserve" to replenish the Operating Reserve (initially capitalized by the Developer in the approximate amount of __________________ approved by the City as part of the approved Financing Plan and annual operating budgets or as otherwise required by Developer’s senior lender and/or tax credit equity investor);
(12) Resident services fees and expenses;
(13) Asset management fee and, through the expiration of the tax credit compliance period for the initial tax credit investment, including the limited partner partnership management fee in the amount of _______________ per year which amount may increase annually by up to three percent (3%) and for the entire Term a general partner partnership management fee in the amount of ______________ per year which amount may increase annually by up to three percent (3%);
(14) Social services fees and expenses up to __________ per year which amount may increase annually by up to three and one/half percent (3.5%); (15) Annual audit fees, inspection fees, or monitoring fees required in relation to any Approved Financing;
(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, the amount of uninsured losses actually replaced, repaired or restored, and not normally paid from reserves,
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#4020883v4<IMANDB> - Bespoke Permanent Loan Agreement (final for City Council) (18) Reasonable accounting fees and legal fees;
(19) Fidelity bond premiums;
(20) Payments made toward the outstanding balance of the deferred Developer Fee, but only for up to the first fifteen (15) years of operation of the Development (measured from the date of issuance of a certificate of occupancy or equivalent document for the Development); and
(21) Other ordinary and reasonable operating expenses approved by the City in its reasonable discretion and not listed above. (22) 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. (c) "Approved Financing" means the loans, grants, and other financing to be secured by the Developer, and approved by the City for the purpose of financing the costs of the Development which shall be consistent with the approved Financing Plan, and is anticipated to include:
(1) A construction and permanent loan from a bank reasonably approved by the City in the amount shown in the approved Financing Plan (the "Bank Loan"); (2) Low Income Housing Tax Credit investor limited partner capital contribution in the approved Financing Plan (the "Tax Credit Investor Equity"); (3) A _________________ loan from _________________
(4) A ____________________ loan from ___________________ (d) "Area Median Income" means the median gross yearly income, adjusted for household size, in the County of San Mateo, California, as determined by the United States Department of Housing and Urban Development and the California Department of Housing and Community Development. 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 State.
(e) "Assignment Agreement" means the agreement pursuant to which the Developer assigns to the City its rights and obligations with respect to certain agreements, Plans and Specifications, and approvals, executed by the Developer and the City with regards to the Loan and as a precondition to the making of the Loan, in the form attached hereto as Exhibit K, incorporated herein by this reference.
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#4020883v4<IMANDB> - Bespoke Permanent Loan Agreement (final for City Council) (f) "Bid Package" means the package of documents Developer's general contractor is required to distribute to potential bidders as part of the process of selecting subcontractors for the Development. The Bid Package is to include the following: (i) an invitation to bid; (ii) copy of the proposed construction contract; and (iii) all Construction Plans. (g) "CEQA" means the California Environmental Quality Act, California Public Resources Code §21000- §21177, as amended.
(h) "Certificate of Occupancy" means the final certificate of occupancy issued by the City, or comparable City sign-off on the completion of construction and occupancy of the Improvements.
(i) "Certified Access Specialist" means a certified access specialist registered with the State of California Department General Services Division of State Architect and who has met the requirements of Government Code Section 4459.5.
(j) "City" means the City of San Mateo, a California charter city and its successor and assigns.
(k) "City Council" means the City Council of the City.
(l) "City Documents" shall mean, collectively, this Agreement, the Promissory Note, the Deed of Trust, the Regulatory Agreement, the Notice of Affordability Restrictions on Transfer of Property, and all other documents required to be executed by the Developer in connection with the transaction contemplated by this Agreement.
(m) "City Event of Default" has the meaning set forth in Section 8.3(a). (n) "Close of Escrow" means the date of recording of the Deed and the recordation of the Deed of Trust, the Regulatory Agreement, and the Notice of Affordability Covenants. (o) "Collateral Documents" means the Developer's right, title and interest to all project agreements, including but not limited to development reports, all contracts, architect's agreements, engineer's agreements, management agreements, and all other contracts and agreements which concern the development and/or operation of the Development, all "Governmental Approvals" (including but not limited to all permits and licenses), plans, specifications, drawings, franchises, utility agreements and similar materials not yet obtained, and any other documents and information related to the Development, reports, Plans and Specifications, and general documents associated with the Development. For purposes of clarifying the foregoing, "Collateral Documents" shall expressly exclude any documents that, pursuant to applicable law, the Developer does not have the right to pledge and assign as contemplated by this Agreement.
(p) "Concept Drawings" means the basic site plan, elevations and sections of the Improvements.
(q) "Construction Plans" means all construction documentation, developed pursuant to Section 2.3 of this Agreement, upon which the Developer, and the Developer's several contractors, shall rely in building each and every part of the Improvements (including landscaping, 786 of 11211
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#4020883v4<IMANDB> - Bespoke Permanent Loan Agreement (final for City Council) parking, and common areas) and shall include, but not necessarily be limited to, the Concept Drawings, the Schematic Design Drawings and Final Construction Drawings, the final architectural drawings, landscaping plans and specifications, final elevations, building plans and specifications (also known as "working drawings") and a time schedule for construction. (r) "Conventional Loans" means a construction loan and/or permanent loans from private lending institutions and public lenders, approved by the City in the Financing Plan. (s) "County" means the County of San Mateo, California, a political subdivision. (t) "DDA” means that certain Disposition and Development Agreement entered into between City and DTSM Housing, LLC , dated ______, 2026. (u) “Deed of Trust" means the leasehold deed of trust that will encumber the Developer's leasehold interest in the Property to secure repayment of the Promissory Note, substantially in the form attached hereto as Exhibit D. (v) "Developer" means AH Bespoke LP, a California limited partnership and its successors and assigns as permitted by this Agreement.
(w) "Developer Event of Default" has the meaning set forth in Section 7.4(a). (x) "Developer Fee" means that amount of developer fee in the amount and for the purposes set forth in Section 3.8.
(y) "Development" means the Property and the Improvements. (z) "Development Schedule" means the summary schedule of actions to be taken by the Parties pursuant to this Agreement to achieve disposition of the fee interest in the Property to the Developer and the development of the Improvements, subject to the provisions of Section 9.3 of this Agreement. The Development Schedule is attached to this Agreement as Exhibit B. (aa) "Effective Date" means the date of this Agreement is entered into by the Parties as first written above.
(bb) "Escrow" means the escrow established with the Title Company for the purpose of closing the construction financing.
(cc) "Extremely Low Income Household" means a household with an adjusted income that does not exceed thirty percent (30%) of area median income, adjusted for actual household size
(dd) "Financing Plan" means the Developer's plan for financing the development of the Improvements in the form approved by City and attached hereto as Exhibit D, approved by the City pursuant to Section 2.4, as such may be amended from time to time. (ee) "Fiscal Year" shall mean the Developer's fiscal year which ends on December 31, except as the Developer otherwise notifies the City in writing. 787 of 11211
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#4020883v4<IMANDB> - Bespoke Permanent Loan Agreement (final for City Council) (ff) “Final Cost Certification” means the final cost certification for the Project as prepared by Developer’s accountant and as approved by TCAC. (gg) "Former Agency" has the meaning set forth in the first paragraph of this Agreement.
(hh) “Ground Lease” shall mean that certain Ground Lease dated as of _______ 20__, and as such may be further amended from time to time. (ii) "Gross Revenue" with respect to a particular Fiscal Year, means all revenue, income, receipts, and other consideration actually received from operation and leasing of the Development, including but not limited to:
(1) all rents, fees and charges paid by tenants, payments or other rental subsidy payments received for the dwelling units, deposits forfeited by tenants, all cancellation fees, price index adjustments and any other rental adjustments to leases or rental agreements resulting in actual income; (2) The proceeds of business interruption or similar insurance (less any deductibles associated therewith not paid from Operating Expenses); (3) Any payment received in consideration for the leasing or other use of any portion of the Development;
(4) Subject to the rights of Senior Lenders, the proceeds of casualty insurance to the extent not utilized to repair or rebuild the Development (or applied toward the cost of recovering such proceeds);
(5) Subject to the rights of Senior Lenders, condemnation awards for a taking of part or all of the Development for a temporary period; and (6) Gross Revenue shall exclude tenants' security deposits, loan proceeds, capital contributions or other similar advances.
(jj) "Hazardous Materials" means:
(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.), Clean Air Act (42 U.S.C. Section 7401 et seq.), California Health and Safety Code (Section 25100 et seq., Section 788 of 11211
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#4020883v4<IMANDB> - Bespoke Permanent Loan Agreement (final for City Council) 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, including asbestos, asbestos-containing 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.(5) 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, maintenance, rehabilitation, or management of commercial properties, buildings and grounds, or typically used in household activities, or (ii) certain substances which may contain chemicals listed by the State of California pursuant to California Health & Safety Code Section 25249.8 et seq., which substances are commonly used by a significant portion of the population living within the region of the Improvements, including, but not limited to, alcoholic beverages, aspirin, tobacco products, nutrasweet and saccharine, so long as such materials and substances are stored, used and disposed of in compliance with all applicable Hazardous Materials Laws. (kk) "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.
(ll) "Housing Asset Fund" means the Low and Moderate Income Housing Asset Fund created pursuant to Health and Safety Code Section 34176. (mm) "HUD" means the United States Department of Housing and Urban Development.
(nn) "Improvements" means the seventy-one (71) affordable housing units (including one manager’s unit) to be constructed by the Developer together with all common areas, amenities, plans, entitlements, appurtenances, improvement easements, buildings and fixtures, and landscaping associated with the Property.
(oo) "Investor Limited Partner" means a reputable equity investor, reasonably acceptable to the City, committed to purchasing a membership interest in the Developer. (pp) "Loan" shall mean: A construction and permanent loan in an amount not to exceed Three Million Dollars ($3,000,000) made from the City to the Developer pursuant to the terms of this Agreement, consisting of approximately __________ of _____Funds and ________ of _________ Funds.
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#4020883v4<IMANDB> - Bespoke Permanent Loan Agreement (final for City Council) (qq) "Leasehold Interest" shall mean the Developer’s leasehold interest in the Property from the City for a period of ninety-nine (99) years pursuant to the Ground Lease. (rr) "Lender's Share of Residual Receipts" means fifty percent (50%) of the Residual Receipts.
(ss) "Low Income Household" means a household with an adjusted income that does not exceed eighty percent (80%) of area median income, adjusted for actual household size, as published by the California Tax Credit Allocation Committee (“TCAC”). (tt) "Management Agent" means a management agent retained by the Developer and approved by the City in accordance with the provisions of Sections 2.7 and 5.7 to manage the Development.
(uu) "Management Plan" shall have the meaning specified in Section 2.7. (vv) "Net Proceeds of Permanent Financing" means the surplus, if any between the total development sources set forth on the Final Cost Certification and the total development uses. (ww) "Notice of Affordability Restrictions" means the Notice of Affordability Restrictions on Transfer of Property that will be recorded in the Official Records against the Developer's leasehold interest of the Property at the Close of Escrow and will restrict the development and operation of the Property to affordable housing, the form of which is attached hereto as Exhibit H, pursuant to Sections 33334.3 and/or 33413(c)(5) of the Community Redevelopment Law, or successor provisions.
(xx) "Official Records" means the official land records of the County. (yy) "Operating Memorandum" has the meaning given in Section 9.17(a) below (zz) "Parties" means the City and the Developer and the term Party shall refer to each of them individually.
(aaa) "Permanent Closing" means the date that all deeds of trust (or assignments of deeds of trust) associated with Approved Financing necessary for the permanent financing of the Development as shown on the approved Financing Plan that have been recorded in the Official Records against the Property are converted to permanent loans deeds of trust, which shall also be referenced as the "Conversion Date".
(bbb) "Permanent Financing" means the sources of approved permanent financing as listed in the approved Financing Plan.
(ccc) "Promissory Note" means the promissory note that will evidence the Developer's obligation to repay the Loan as set forth in this Agreement, substantially in the form attached hereto as Exhibit F.
(ddd) "Property" has the meaning set forth in Recital E. 790 of 11211
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#4020883v4<IMANDB> - Bespoke Permanent Loan Agreement (final for City Council) (eee) "Regulatory Agreement" or "Financing Regulatory Agreement" means the Regulatory Agreement and Declaration of Restrictive Covenants that will be recorded in the Official Records against the Developer's leasehold interest of the Property upon the Close of Escrow and will restrict the development of the Property to affordable housing, substantially in the form attached hereto as Exhibit E.
(fff) "Resident Services Budget" shall have the meaning specified in Section 5.9(a). (ggg) "Resident Services Plan" shall have the meaning specified in Section 5.9(a). (hhh) "Residual Receipts" in a particular Fiscal Year shall mean the amount by which Gross Revenue exceeds Annual Operating Expenses.
(iii) "Scope of Development" means the description of the basic physical characteristics of the Development, including a basic site plan, which will serve as a basis for the Developer's application for the governmental approvals and for the preparation of the Construction Plans. The Scope of Development is attached to this Agreement as Exhibit C. (jjj) "Security Financing Interest" has the meaning set forth in Section 8.1. (kkk) "Sponsor" or "Sponsors" means the general partners of the Partnership. (lll) "Tax Credit Funds" means the proceeds from the sale of a partnership interest in the Developer to the Investor Limited Partner in the amount approved by the City in the approved Financing Plan.
(mmm)"Tax Credit Reservation" means a preliminary reservation of Tax Credits from TCAC.
(nnn) "Tax Credits" means federal low-income housing tax credits established pursuant to Section 42 of the Internal Revenue Code of 1986, as amended. (ooo) "TCAC" means the California Tax Credit Allocation Committee. (ppp) "Term" means the term of this Agreement, which commences as of the Effective Date and, unless terminated earlier or extended by the Parties pursuant to this Agreement, ends fifty-seven (57) years from the Close of Escrow (the date the Regulatory Agreement is recorded against the Property).
(qqq) "Title Company" means First American Title Company. (rrr) "Title Report" means that certain title report dated ________, Order Number ____________, issued by the Title Company for the Property. (sss) "Transfer" has the meaning set forth in Section 6.1 (ttt) "Unit" means one of the units to be constructed on the Property.
Section 1.2 Exhibits.
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#4020883v4<IMANDB> - Bespoke Permanent Loan Agreement (final for City Council) The following exhibits are attached to and incorporated in the Agreement:
Exhibit A: Legal Description of the Property
Exhibit B: Development Schedule
Exhibit C: Scope of Development
Exhibit D: Financing Plan
Exhibit E: Form of Regulatory Agreement
Exhibit F: Form of Promissory Note
Exhibit G: Form of Deed of Trust
Exhibit H: Form of Notice of Affordability Restrictions on Transfer of Property Exhibit I: Insurance Requirements
Exhibit J: Reserved
Exhibit K: Assignment of Collateral Documents
ARTICLE 2. PRECONSTRUCTION REQUIREMENTS
Section 2.1 Conditions Precedent to Conveyance of Property.
The requirements set forth in this Article 2 are conditions precedent to the City's obligation to make the Loan. The City shall have no obligation to disburse any of the Loan unless the Developer has satisfied the conditions precedent set forth in this Article 2 in the manner set forth below and within the timeframe set forth in the Development Schedule. To the extent they do not conflict with the Schedule of Performance in the DDA, the Developer may request extensions to the time periods and dates set forth in the Development Schedule and the City may grant such requests in its sole and absolute discretion. In no event shall the City be obligated to provide such extensions.
Section 2.2 Governmental Approvals.
(a) No later than the date set forth in the Development Schedule, the Developer shall obtain all governmental approvals necessary for development and operation of the Improvements, including but not limited to necessary entitlements, grading plans, infrastructure plans and a building permit or permits. No later than the date set forth in the Development Schedule, the Developer shall deliver evidence to the City that the Developer is entitled to issuance of a building permit for the Improvements upon payment of permit fees or that Developer has obtained a permit-ready letter in place of a building permit. Only upon delivery to the City of such evidence in form reasonably satisfactory to the City shall the precondition of this Section be deemed met. If such evidence is not delivered within the time set forth in the Development Schedule, this Agreement may be terminated pursuant to Section 7.3. (b) The Developer acknowledges that execution of this Agreement by the City does not constitute approval by the City or the City of any required entitlements, building permits, 792 of 11211
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#4020883v4<IMANDB> - Bespoke Permanent Loan Agreement (final for City Council) or other construction approvals, and in no way limits the discretion of the City or the City in the permit allocation and approval process.
Section 2.3 Review and Approval of Design and Construction Documents. (a) In designing and constructing the Development, Developer shall cause all design documents to be substantially consistent with the Scope of Development and Concept Drawings attached as Exhibit C. The Scope of Development, the Concept Drawing shall establish the baseline design standards from which Developer shall prepare all subsequent Construction Plans. The Construction Plans shall incorporate any applicable mitigation measures, reasonably imposed on the Development by the City. Within the times set forth in the Development Schedule, Developer shall submit to the City the Construction Plans in the following stages:
(1) Final Construction Drawings. The Final Construction Drawings shall Logically Evolve from the approved Concept Drawings. The Final Construction Drawings must provide all the detailed information necessary to obtain a building permit to build the Improvements including complete building, mechanical systems, site, landscape, exterior signage and construction details, requirements, standards, and plans and specifications. (2) Approval of Construction Plans. The purpose of the City's review of the Construction Plans under this Agreement is to ensure consistency with the Scope of Development, the provisions of this Agreement, and the provisions of the DDA. Provided that the submittals meet the requirements of this Section, the City shall be required to approve those Construction Plans which Logically Evolve from concepts set forth in previously approved Construction Plans. For purposes of this Section, the phrase "Logical Evolution" or "Logically Evolve" means a refinement or amplification of the previously approved drawings into subsequently approved drawings. If the City reasonably determines that there are material changes which are not Logical Evolutions from previously approved Construction Plans or which raise material concerns that were not reviewable in previously approved Construction Plans, in approving or disapproving such Construction Plans, the City shall act in its reasonable discretion.
Any disapproval of the new Construction Plans shall be in writing and shall state in detail the reasons for the City's disapproval. The City shall approve or disapprove submittals under this Section within twenty (20) days of receipt of the submittal from Developer. In the event the City disapproves a submittal of the Construction Plans pursuant to this Section, the City shall submit a list of reasons for such disapproval to Developer, together with its notice of disapproval. Upon receipt of such notice from the City, Developer shall have fifteen (15) business days to resubmit a revised submittal. Upon the City's receipt of a revised submittal, the City shall have seven (7) business days to reasonable approve or disapprove of the revised design. The process for revision and review of revisions shall be repeated until the City has approved the applicable submittals; provided, however that if the City's approval of the drawings has not been obtained by one hundred twenty (120) days following the date of the Developer's initial submission then the City may terminate this Agreement pursuant to Section 8.4.
(b) The Developer acknowledges that the City's right to review and approve the Construction Plans under this Agreement are in addition to, and shall not be limited by, the City's obligation and right to review the Construction Plans for consistency with applicable building code requirements and other State and local rules and regulations. The Developer further acknowledges 793 of 11211
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#4020883v4<IMANDB> - Bespoke Permanent Loan Agreement (final for City Council) that the City shall have no obligation to approve Construction Plans, pursuant to this Agreement, in the event that the Developer fails to incorporate the City's commercially reasonable requested changes or modifications to the proposed Construction Plans (even in the event that such requested changes or modifications exceed the minimum thresholds set forth in the applicable building code and have not been required by the City's building department so long as the request is consistent with the Logical Evolution of previously approved drawings under subsection (a)(3) above). The Developer further acknowledges that approval of the Construction Plans by the City under this Agreement does not constitute approval by the City as required for issuance of a building permit or other approvals.
Section 2.4 Financing Plan.
(a) As of the Effective Date, the City has approved the Financing Plan attached to this Agreement as Exhibit D. The Developer shall promptly submit any proposed material amendments to the Financing Plan, including but not limited to any material amendments or modifications to the development budget, or the commitment letter from any other lender, to the City. Written consent of the City shall be required to amend the Financing Plan; provided that the City shall consent to any amendment of the Financing Plan that increases the cost of the construction of the Improvements if such amendment also demonstrates that there is Approved Financing (or any source other than assistance from the City or the City) available to pay for such increases. The updates to the Financing Plan shall include:
(1) An estimated operating proforma for the Development for fiftyseven (57) years, which shall show debt service on all loans (including, but not limited to the Loan);
(2) An estimated sources and uses, including a cost breakdown for costs of constructing the Improvements. The sources and uses shall include all assumptions for all debt and equity financing, shall show the timing of uses of each source of financing and shall break down which expenses each source of financing is funding. The sources and uses shall detail the amount of the Developer Fee, if any, which cannot exceed the amount set forth in Section 4.8, and shall provide a proposed schedule of payments of the fees paid to the Developer, if any, based on performance milestones as to be mutually agreed to by the Developer and the City. (3) A description of any joint ventures (including, but not limited to the admission of any additional members to the Developer) or partnerships the Developer proposes to enter into in order to provide funds for construction of the Improvements and acquisition of the Property including copies of the proposed joint venture or partnership agreements; (4) A copy of the commitment or commitments obtained by the Developer for any loans, grants, or other financial assistance (including, but not limited to, a Tax Credit Reservation letter from TCAC, and construction and permanent loans from private lenders) to assist in financing the construction of the Improvements certified by the Developer to be true and correct copies thereof. The Developer shall submit evidence of its efforts to receive competitive pricing on the Tax Credits and proof of application for other Conventional Loans as required under Section 2.6; and
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#4020883v4<IMANDB> - Bespoke Permanent Loan Agreement (final for City Council) (5) A certified financial statement or other financial statement in such form reasonably satisfactory to the City evidencing other sources of capital sufficient to demonstrate that the Developer has adequate funds available and is committing such funds to cover the difference, if any, between costs of development and construction of the Improvements and the amount available to the Developer from external sources. (a) The City shall reasonably approve or disapprove the revised Financing Plan in writing within fifteen (15) calendar days after the City's receipt. Upon City approval, the Developer's revised Financing Plan shall be referred to as the Financing Plan. (b) If the revised Financing Plan is disapproved by the City, the City shall provide a detailed written explanation of the reason(s) for the disapproval and the Developer shall have fifteen (15) calendar days from the date of the Developer's receipt of the City's notice of disapproval to submit a revised Financing Plan. The provisions of this Section relating to time periods for approval, disapproval and resubmission of a new Financing Plan shall continue to apply until the revised Financing Plan has been approved by the City; provided, however, that if the City's approval of the revised Financing Plan has not been obtained by the date set forth in the Development Schedule, the City may terminate this Agreement pursuant to Section 7.4. (c) The Parties agree that notwithstanding the time requirements set forth in this Section for submission and resubmission to the City by the Developer of revisions to the Financing Plan or approved Financing Plan and review and approval of the revised Financing Plan or Financing Plan by the City, the Developer is responsible for assuring that a Financing Plan or Financing Plan in approvable form is submitted to the City in a timely manner such that the City may have the time permitted by this Section to review and approve a Financing Plan no later than the date set forth in the Development Schedule.
(d) Prior to the issuance of the Certificate of Occupancy for the Improvements, any material change, modification, revision or alteration of the approved Financing Plan must first be submitted to and approved by the City for conformity to the provisions of this Agreement, which approval shall not be unreasonably withheld, conditioned, or delayed. If not so approved, the approved Financing Plan shall continue to control.
Section 2.5 Tax Credit Reservation; Financing.
(a) The Developer intends to utilize Tax Credit Funds to partially finance the development of the Improvements. The Developer shall exercise diligent good faith efforts to obtain a funding commitment from the Investor Limited Partner for the Tax Credit Funds. Such funding commitment shall be in a form reasonably acceptable to the City. Procurement of the Tax Credit Reservation and an acceptable funding commitment for the Tax Credit Funds is a condition precedent to the City's obligation to fund the Loan.
Section 2.6 Other Approved Financing.
(a) Project Based Housing Vouchers. (placeholder if needed) (b) Other Financing. As set forth in the Development Schedule, in addition to the Tax Credit Funds all other financing necessary to construct the Improvements, as required and 795 of 11211
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#4020883v4<IMANDB> - Bespoke Permanent Loan Agreement (final for City Council) approved by the City in the Financing Plan, shall be closed by the Developer prior to, or simultaneously with the Close of Escrow. The 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 Improvements have been met or will be met by the Close of Escrow and subject to the Developer's satisfaction of standard disbursement preconditions required to be satisfied on a periodic basis, for constructing the Improvements. Submission by the Developer, and approval by the City, of such evidence of funds availability shall be a condition precedent to the City's obligation to convey the Property to the Developer.
Section 2.7 Other Governmental Approvals.
(a) No later than the date set forth in the Development Schedule, the Developer shall apply for a building permit allowing for the construction of the Improvements called for in the Construction Plans. After submitting the application for a building permit, the Developer shall diligently pursue and obtain a building permit for the Improvements, and (b) The Developer acknowledges that execution of this Agreement by the City does not constitute approval by the City of any required permits, applications, or allocations, and in no way limits the discretion of the City in the permit allocation and approval process.
Section 2.8 Management Plan and Procedures.
(a) The Developer shall submit to the City an initial proposed Management Plan no later than six (6) months after the commencement of construction of the Development as set forth in the Development Schedule. The Developer shall submit to the City for approval the name and qualifications of a proposed management agent (as required under Section 6.7 hereof), a proposed management agreement and written guidelines or procedures for tenant selection (in compliance with the Tenant Selection Plan approved pursuant to Section 2.13 below), operation and management of the Development, and implementation of the income certification and reporting requirements of the Regulatory Agreement (collectively, the "Management Plan"). (b) The City shall approve or disapprove the Management Plan in writing within fifteen (15) calendar days following the City's receipt of the complete Management Plan, which approval shall not be unreasonably denied. If the Management Plan is disapproved by the City, the City shall deliver a written notice to the Developer setting forth, in reasonable detail, the reasons for such disapproval. The Developer shall have fifteen (15) calendar days following the receipt of such notice to submit a revised Management Plan. The provisions of this Section relating to time periods for approval, disapproval, and resubmission of the new Management Plan shall continue to apply until the Management Plan has been approved by the City; provided, however, that if the City's reasonable approval of the Management Plan has not been obtained by the date set forth in the Development Schedule the City may terminate this Agreement pursuant to Section 8.4.
Section 2.9 Construction Contract.
(a) No later than the date set forth in the Development Schedule, the Developer shall submit to the City for its limited approval the proposed construction contract for the 796 of 11211
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#4020883v4<IMANDB> - Bespoke Permanent Loan Agreement (final for City Council) 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 construction contract is consistent with the approved Financing Plan; (2) the construction contract contains provisions consistent with the requirements of this Agreement; and (3) the construction contract requires a retention of five percent (5%) of costs until completion (with release for certain early trades) of the Improvements or as approved by the City at is sole discretion. The City's approval of the construction contract shall in no way be deemed to constitute approval of or concurrence with any other term or condition of the construction contract.
(b) Upon receipt by the City of the proposed construction contract, the City shall promptly review same and approve it within ten (10) days if it satisfies the limited criteria set forth above. If the construction contract is not approved by the City, the City shall set forth in writing and notify the Developer of the City's reasons for withholding such approval. The Developer shall thereafter submit a revised construction contract for City approval, which approval shall be granted or denied in ten (10) days in accordance with the criteria and procedures set forth above. Any construction contract executed by the Developer for the Improvements shall be in a form approved by the City, which approval shall not be unreasonably withheld, conditioned, or delayed.
Section 2.10 Construction Bonds.
No later than the date set forth in the Development Schedule, the Developer shall obtain one (1) labor and material bond and one (1) performance bond for construction of the Improvements, each in an amount equal to one hundred percent (100%) of the scheduled cost of construction.
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 form of the labor and material bond and the performance bond shall be subject to the City's prior review and written approval, which shall not be unreasonably withheld.
Section 2.11 Insurance.
The Developer shall furnish to the City evidence of the insurance coverage meeting the requirements set forth in Exhibit I, attached hereto and incorporated herein by this reference, no later than the date set forth in the Development Schedule.
Section 2.12 Resident Selection Plan.
The Developer and the City hereby agree to meet and confer to formulate a resident selection plan (the "Tenant Selection Plan"), which among other things, must address marketing and outreach to local community organizations. If and to the extent the parties cannot agree on a mutually acceptable Tenant Selection Plan within thirty (30) days prior to the close of financing as described in the Schedule of Performance, the City at its sole and absolute discretion may terminate this Agreement, and thereafter neither party shall have any rights against or liability to the other under this Agreement.
Section 2.13 Condition of Title.
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#4020883v4<IMANDB> - Bespoke Permanent Loan Agreement (final for City Council) Upon the Close of Escrow, the Developer shall have insurable leasehold interest in the Improvements which shall be free and clear of all liens, encumbrances, clouds and conditions, rights of occupancy or possession, except for the following:
(a) applicable building and zoning laws and regulations; (b) the provisions of this Agreement;
(c) the provisions of the Regulatory Agreement;
(d) the Deed of Trust;
(e) the Notice of Affordability Restrictions;
(f) any lien for current taxes and assessments or taxes and assessments accruing subsequent to recordation of the Regulatory Agreement;
(g) the liens of any loan approved by the City in the Financing Plan; and (h) exceptions _____________, as listed in the Title Report.
ARTICLE 3.
LOAN PROVISIONS
Section 3.1 Loan Amount.
Subject to the terms and conditions set forth in the City Documents, the City hereby agrees to make a loan (“Loan”) to the Developer:
a) A loan of up to Three Million Dollars ($3,000,000) for construction of the Improvements.
b) The Developer's obligation to pay the Loan shall be evidenced by the Promissory Note.
Section 3.2 Interest.
Simple interest at three percent (3%) per annum shall accrue on the principal amount of the Loan except in a Developer Event of Default, whereupon and during the continuation of which interest shall accrue from and after the date of the Promissory Note until paid at the rate of ten percent (10%) compounded annually, or the highest rate permitted by law.
Section 3.3 Use of Loan.
The Loan shall be used solely for the construction and permanent financing of the Improvements in accordance with the Financing Plan approved by the City. The Developer may not use any proceeds of the Loan for any other purpose without the prior written consent of the City.
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#4020883v4<IMANDB> - Bespoke Permanent Loan Agreement (final for City Council) Section 3.4 Security; Subordination of Deed of Trust and Regulatory Agreement. (a) The City agrees to subordinate the Deed of Trust and any financing related regulatory agreement (a “Financing Regulatory Agreement”) to other Approved Financing (in each case, a "Senior Lien"), but only on condition that all of the following conditions are satisfied:
(1) All the proceeds of the proposed Senior Lien, less any transaction costs, must be used to provide acquisition, construction or permanent financing for the Development, or any combination thereof.
(2) The proposed lender (each, a "Senior Lender") must be a state or federally chartered financial institution, publicly traded company, qualified bond purchaser, a nonprofit corporation or a public entity that is not affiliated with the Developer or any of Developer's affiliates, other than as a depositor or a lender. (3) Developer must demonstrate to the City's reasonable satisfaction that subordination of the Deed of Trust and/or Financing Regulatory Agreement is necessary to secure adequate construction, rehabilitation and/or permanent financing to ensure the viability of the Development, including the operation of the Development as affordable housing, as required by this Agreement. To satisfy this requirement, the Developer must provide to the City, in addition to any other information reasonably required by the City, evidence demonstrating that the proposed amount of the Senior Loan is necessary to provide adequate construction, rehabilitation and/or permanent financing to ensure the viability of the Development, and adequate financing for the Development would not be available without the proposed subordination. (4) The subordination agreement(s) must be structured to minimize the risk that the Deed of Trust and/or Financing Regulatory Agreement would be extinguished as a result of a foreclosure by the Senior Lender or other holder of the Senior Lien. To satisfy this requirement, the subordination agreement must provide the City with adequate rights to cure any defaults by Developer, including: (i) providing the City or its successor with copies of any notices of default at the same time and in the same manner as provided to Developer; and (ii) providing the City with a cure period of at least sixty (60) days to cure any default. (5) The subordination(s) described in this Section may be effective only during the original term of the Senior Loan and any extension of its term or refinancing approved in writing by the City, and to any refinancing of the Senior Loan as approved by the City, in its reasonable discretion, subject to the City's ability to make the findings required under Health and Safety Code Section 33334.14(a).
(6) Unless otherwise agreed to by the City, no subordination may limit the effect of the Deed of Trust and/or Financing Regulatory Agreement before a foreclosure. (7) Upon a determination by the City Manager that the conditions in this Section have been satisfied, the City Manager or his/her designee will be authorized to execute the approved subordination agreement without the necessity of any further action or approval. 799 of 11211
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#4020883v4<IMANDB> - Bespoke Permanent Loan Agreement (final for City Council) (b) In no event shall the City subordinate a regulatory agreement or other housing affordability covenant required as a condition of land use entitlement approval.
Section 3.5 Repayment Schedule.
The Loan shall be repaid as follows:
(a) Term. The Loan shall have a term that expires on the date fifty-seven (57) years from the Close of Escrow (the date on which the Regulatory Agreement is recorded against the Property).
(b) Payments. Commencing on the May 1 first occurring after the Fiscal Year in which the Improvements are completed pursuant to this Agreement, and on each May 1 thereafter throughout the term of the Loan, the Developer shall make repayments of the Loan equal to its pro-rata share of the Lender's Share of Residual Receipts (based upon the principal balance of all residual receipt loans), if any. The Developer shall provide the City in a form to be provided by the City, within sixty (60) days following the end of each of the Developer's Fiscal Year, a report showing the actual income and expenditures with respect to the Development for the immediately preceding Fiscal Year, the calculation of Annual Operating Expenses, Gross Revenue, and Residual Receipts and the status of all reserve funds, including without limitation, an annual audited financial statement for the Development prepared by a certified public accountant reasonably approved by the City. Payments made shall be credited first against accrued interest and then against outstanding principal.
(c) Special Repayments from Net Proceeds of Permanent Financing. Subject to the rights of Senior Lenders (or other lenders of Approved Financing) and the rules and regulations of TCAC, and to the extent of additional subordinate loan proceeds, equity or surplus development sources following as set forth in the Final Cost Certification, no later than ten (10) days after the date Developer receives its final Tax Credit Investor Equity contribution, Developer shall pay to the City one hundred percent (100%) of the Net Proceeds of Permanent Financing, as a special repayment of the Loan. Notwithstanding anything to the contrary, the Developer may request a deduction from the Net Proceeds of Permanent Financing to reduce the outstanding balance of the Deferred Developer Fee (subject to the restriction in Section 3.8 hereof) upon approval from the City, which approval shall not be unreasonably withheld. (d) Payment in Full. Subject to the provisions of subsection (e) below, all principal and interest, if any, on the Loan shall, at the option of the City, be due and payable upon the earliest of: (1) a Transfer other than a Transfer permitted or approved by the City as provided in Article 6 below; (2) the occurrence of an uncured Developer Event of Default for which the City exercises its right to cause the Loan indebtedness to become immediately due and payable; or (3) the expiration of the Term specified in (a) above.
(e) Prepayment. The Developer shall have the right to prepay the Loan at any time. However, this Agreement and the Regulatory Agreement shall remain in effect for their entire respective terms, regardless of any prepayment or timely payment of the Loan. 800 of 11211
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#4020883v4<IMANDB> - Bespoke Permanent Loan Agreement (final for City Council) Section 3.6 Conditions Precedent to Disbursement of Loan. (a) The disbursements made pursuant to this Section may not exceed the amount of the Loan. The City shall disburse the Loan into Escrow subject to the conditions set forth in subsection (b) below (but in no event before the Close of Escrow):
(b) The City shall not be obligated to make any disbursements of the Loan proceeds unless the conditions precedent set forth in Article 2 have been satisfied and the following conditions precedent are satisfied:
(1) There exists no Developer Event of Default nor any act, failure, omission or condition that would constitute a Developer Event of Default under this Agreement; (2) The Developer shall have executed and delivered to the City the Promissory Note, the Deed of Trust, the Regulatory Agreement, the Notice of Affordability Restrictions, the Assignment Agreement and any other documents and instruments required to be executed and delivered, all in a form and substance reasonably satisfactory to the City; (3) The Deed of Trust, the Regulatory Agreement, and the Notice of Affordability Restrictions shall have been recorded in the Official Records against the Developer's leasehold interest in the Property as a lien subject only to the exceptions authorized by the City; (4) The City has approved the Financing Plan and the undisbursed proceeds of the Loan, together with other funds or firm commitments for funds that the Developer has obtained in connection with the construction of the Improvements are not less than the amount that the City determines is necessary to pay for construction of the Improvements and to satisfy all of the covenants contained in this Agreement;
(5) The Developer shall have obtained issuance of a building permit, or evidence that the Developer is entitled to issuance of a building permit for the Improvements by paying the required building permit fees;
(6) The City has received and approved the general contractor's construction contract that Developer has entered or proposed to enter for construction of the Development as required pursuant to Section 2.8 above;
(7) The City has reasonably approved: (i) the copy of the labor and material (payment) bond; and (ii) the copy of the performance bond from the Developer for the construction of the Improvements as required pursuant to Section 2.9 above; (8) The Developer shall have furnished the City with evidence of the insurance coverage meeting the general insurance requirements set forth in Exhibit I; (9) The Developer has closed all construction financing for the Development and has provided evidence reasonably acceptable to the City that the Developer is prepared to commence construction of the Improvements no later than the date set forth in the Development Schedule;
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#4020883v4<IMANDB> - Bespoke Permanent Loan Agreement (final for City Council) (10) A title insurer reasonably acceptable to the City is unconditionally and irrevocably committed to issuing a ALTA 2021 Lender's Policy of insurance insuring the lien priority of the Deed of Trust in the amount of the Loan subject only to such liens approved by the City in the Financing Plan as prior to the lien of the Deed of Trust and such exceptions and exclusions as may be reasonably acceptable to the City and containing such endorsements as the City may reasonably require;
(11) The City has received a written draw request from the Developer, including certification that the condition set forth in Section 3.6(b)(1) continues to be satisfied, and setting forth the proposed uses of funds consistent with the Financing Plan as required under Section 2.4, the amount of funds needed, and, where applicable, a copy of the bill or invoice covering a cost incurred or to be incurred; and
(12) When a disbursement is requested to pay any contractor in connection with the Improvements, the written request must be accompanied by: (i) certification by Developer's architect reasonably acceptable to the City that the work for which disbursement is requested has been completed (although the City reserves the right to inspect the Development and make an independent evaluation); and (ii) lien releases and/or mechanics lien title insurance endorsements reasonably acceptable to the City.
Section 3.7 Reports and Accounting of Residual Receipts. (a) Audited Financial Statement. In connection with the annual repayment of the Loan, the Developer shall furnish to the City an audited statement duly certified by an independent firm of certified public accountants reasonably approved by the City, setting forth in reasonable detail the computation and amount of Residual Receipts during the preceding calendar year.
(b) Books and Records. The Developer shall keep and maintain at the Development, or elsewhere with the City's written consent, full, complete and appropriate books, record and accounts relating to the Development, including all such books, records and accounts necessary or prudent to evidence and substantiate in full detail the Developer's calculation of Residual Receipts. Books, records and accounts relating to the Developer's compliance with the terms, provisions, covenants and conditions of this Agreement shall be kept and maintained in accordance with generally accepted accounting principles consistently applied, and shall be consistent with requirements of this Agreement which provide for the calculation of Residual Receipts on a cash basis. All such books, records, and accounts shall be open to and available for inspection by the City, its auditors or other authorized representatives at reasonable intervals during normal business hours on reasonable prior notice to the Developer. Copies of all tax returns and other reports that the Developer may be required to furnish any governmental agency shall at all reasonable times be open for inspection by the City at the place that the books, records and accounts of the Developer are kept. The Developer shall preserve records on which any statement of Residual Receipts is based for a period of not less than five (5) years after such statement is rendered, and for any period during which there is an audit undertaken pursuant to subsection (c) below then pending.
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#4020883v4<IMANDB> - Bespoke Permanent Loan Agreement (final for City Council) (c) City Audits. The receipt by the City of any statement pursuant to subsection (a) above or any payment by the Developer or acceptance by the City of any loan repayment for any period shall not bind the City as to the correctness of such statement or such payment. Within three (3) years after the receipt of any such statement, the City or any designated agent or employee of the City at any time shall be entitled to audit the Residual Receipts and all books, records, and accounts pertaining thereto. Such audit shall be conducted during normal business hours at the principal place of business of the Developer and other places where records are kept. Immediately after the completion of an audit, the City shall deliver a copy of the results of such audit to the Developer. If it shall be determined as a result of such audit that there has been a deficiency in a loan repayment to the City, then such deficiency shall become immediately due and payable with interest at the default rate set forth in Section 3.2 above, determined as of and accruing from the date that said payment should have been made. In addition, if the Developer's auditor's statement for any calendar year shall be found to have understated Residual Receipts by more than five percent (5%) and the City is entitled to any additional Loan repayment as a result of said understatement, then the Developer shall pay, in addition to the interest charges referenced hereinabove, all of the City's reasonable costs and expenses connected with any audit or review of the Developer's accounts and records.
Section 3.8 Developer Fee.
The amount and the terms of the Loan, as provided in this Article 3, have been established by taking into account the anticipated costs of development, including a maximum "Developer Fee,” not to exceed _________________________ Dollars ($_________), to be paid for development and construction management services of which all or a portion of the Developer Fee may be deferred, and in no event may exceed the amount allowed by TCAC and as approved by the City. A minimum amount of __________________________ ($___________) of the Developer Fee shall be deferred, and shall accrue simple interest at a rate not to exceed three percent (3%) per year. At Project completion (measured from the date of issuance of a certificate of occupancy, or equivalent document, for the Development) the Developer may make an initial payment from Net Proceeds of Permanent Financing pursuant to Section 3.5(c) above. For the first fifteen (15) years of operation of the Development (measured from the date of issuance of a certificate of occupancy, or equivalent document, for the Development), the Developer shall be allowed to make payments on the outstanding balance of the Developer Fee as an Annual Operating Expense pursuant to the approved Financing Plan. From and after the sixteenth (16th) year of Operation of the Development, the Developer may not make payments on the outstanding balance of the Developer Fee from Annual Operating Expenses, but shall instead make payments on the outstanding balance of the Developer Fee from the Developer's fifty percent (50%) share of Residual Receipts. Notwithstanding anything to the contrary, the Developer Fee may be reduced, or deferred, as necessary so that these funds may be utilized to pay Development cost-overruns.
Except for the Developer Fee and reasonable asset management, property management or partnership management fees that are approved in advance by the City, no compensation from any source shall be received by or be payable to the Developer, any entity Controlled by the Developer, any General Partner, or any other entity or organization in connection with the provision of development and construction management services for the acquisition and construction of the Improvements.
Section 3.9 Assumption.
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#4020883v4<IMANDB> - Bespoke Permanent Loan Agreement (final for City Council) The Promissory Note shall not be assumable by successors and assigns of the Developer without the prior written consent of the City, which consent shall be granted or denied in the City's sole discretion, subject to the terms of Section 6.5 when applicable.
Section 3.10 Non-Recourse.
(a) Following recordation of the Deed of Trust, and except as provided below, the Developer shall not have any direct or indirect personal liability for payment of the principal of, or interest on, the Loan or the performance of the covenants of the Developer under the Deed of Trust.
The sole recourse of the City with respect to the principal of, or interest on, the Promissory Note and defaults by the Developer in the performance of its covenants under the Deed of Trust shall be to the property described in the Deed of Trust; provided, however, that nothing contained in the foregoing limitation of liability shall: (1) limit or impair the enforcement against all such security for the Promissory Note of all the rights and remedies of the City thereunder; or (2) be deemed in any way to impair the right of the City to assert the unpaid principal amount of the Promissory Note as demand for money within the meaning and intendment of Section 431.70 of the California Code of Civil Procedure or any successor provision thereto.
(b) The foregoing limitation of liability is intended to apply only to the obligation for the repayment of the principal of, and payment of interest on the Promissory Note and the performance of the Developer's obligations under the Deed of Trust, except as hereafter set forth; nothing contained herein is intended to relieve the Developer of its waiver of liability in Section 3.6 and the Developer's indemnification obligations under this Agreement, or liability for: (1) fraud or willful misrepresentation; (2) the failure to pay taxes, assessments or other charges which may create liens on the Developer's interest in the Property that are payable or applicable prior to any foreclosure under the Deed of Trust (to the full extent of such taxes, assessments or other charges); (3) the fair market value of any personal property or fixtures removed or disposed of by the Developer other than in accordance with the Deed of Trust; and (4) the misappropriation of any proceeds under any insurance policies or awards resulting from condemnation or the exercise of the power of eminent domain or by reason of damage, loss or destruction to any portion of the Development.
Section 3.11 Assignment of Collateral Documents.
(a) The Developer will grant to the City, pursuant to the Assignment Agreement, a valid, second priority (or such lower priority if approved by the City in writing), continuing security interest in all of the Developer's right, title, and interest presently existing and after-acquired or arising Collateral Documents in order to secure prompt, full and complete payment of any and all of Developer's obligations to the City under this Agreement and in order to secure prompt, full and complete performance by Developer of each of its covenants and duties under this Agreement and the Affordability Covenant. For purposes hereof, the Collateral Documents subject to the Assignment Agreement shall expressly exclude any document that, pursuant to applicable law, the Developer does not have the right to pledge and assign as contemplated by this Agreement. The City shall not have any obligation under any Collateral Documents assigned pursuant to the Assignment Agreement until it expressly agrees in writing to be bound by such contracts or agreements. Upon the Developer Event of Default that has not been cured pursuant to this Agreement, in accordance with the Assignment Agreement, the City may use any of the Collateral Documents for any purpose for which 804 of 11211
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#4020883v4<IMANDB> - Bespoke Permanent Loan Agreement (final for City Council) the Developer could have used them for construction of the Development, and the Developer shall cooperate with the City to implement the Assignment Agreement and immediately deposit with the City, for the City's use, all the Collateral Documents.
ARTICLE 4.
CONSTRUCTION OF IMPROVEMENTS
Section 4.1 Construction Pursuant to Plans.
Unless modified by operation of Section 4.2, the Improvements shall be constructed substantially in accordance with the Construction Plans and the terms and conditions of the land use permits and approvals and building permits, including any variances granted.
Section 4.2 Change in Construction of Improvements.
(a) If the Developer desires to make any material change in the Improvements which are not substantially consistent with the Final Construction Plans, the 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 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, the City shall approve the change by notifying the Developer in writing within ten (10) business days. For purposes of this Section, a material change shall mean any change which is expected to substantially alter the external appearance of the 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 Fifty Thousand Dollars ($250,000), or more, in the cost of construction of the Improvements (determined from the Financing Plan approved following the completion of the Construction Plans ).
(b) Unless a proposed change is rejected by the City within ten (10) business days, it shall be deemed approved. If rejected within such time period, the previously approved Construction Plans shall continue to remain in full force and effect. If the City rejects a proposed change, it shall provide the Developer with the specific reasons therefore. (c) The approval of changes in the Construction Plans 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. Approval of changes in the Construction Plans by the City shall not constitute City approval pursuant to building permit requirements, and such approval shall in no way limit the City's discretion in approving changes to the Construction Plans.
Section 4.3 Commencement of Improvements.
The Developer shall commence construction of the Improvements no later than the date set forth in the Development Schedule.
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#4020883v4<IMANDB> - Bespoke Permanent Loan Agreement (final for City Council) Section 4.4 Completion of the Improvements.
The Developer shall diligently prosecute to completion the construction of the Improvements no later than the date set forth in the Development Schedule.
Section 4.5 Equal Opportunity.
During the construction of the Improvements, the Developer, and its successors, assigns and subcontractors shall not discriminate against any employee or applicant for employment in connection with the construction of the Improvements because of race, color, religion, ethnic group identification, sex, sexual preference, marital status, ancestry or national origin. Each of the following activities shall be conducted in a non-discriminatory manner: hiring; upgrading; demotion and transfers; recruitment and recruitment advertising; layoff and termination; rate of pay and other forms of compensation; and selection for training including apprenticeship.
Section 4.6 Compliance with Applicable Law; Prevailing Wage Requirement. (a) The Developer shall cause all construction to be performed in compliance with:
(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, and
(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 the Developer shall be responsible to the City for the procurement and maintenance thereof, as may be required of the Developer and all entities engaged in work on the Property.
(a) If required by applicable law, the Developer shall pay and shall cause the contractor 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"). If required by applicable law, Developer shall and shall cause the contractor and subcontractors to comply with the other applicable provisions of California Labor Code Sections 1720 et seq., 1777.5 et seq., and implementing regulations of the DIR. If required by applicable law, Developer shall and shall cause the contractor and subcontractors to keep and retain such records as are necessary to determine if such prevailing wages have been paid as required pursuant to California Labor Code Section 1720 et seq., and apprentices have been employed as required by California Labor Code Section 1777.5 et seq. Copies of the currently applicable per diem prevailing wages are available from DIR. If required by applicable law, during the construction of the Development, Developer 806 of 11211
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#4020883v4<IMANDB> - Bespoke Permanent Loan Agreement (final for City Council) shall or shall cause the contractor to post at the Property the applicable prevailing rates of per diem wages. Developer shall cause its respective contractors and subcontractors to be registered as set forth in Labor Code Section 1725.5. If required by applicable law, the Developer shall cause its respective contractors and subcontractors to do all the following:
(1) all calls for bids, bidding materials and the construction contract documents for the Development must specify that (i) no contractor or subcontractor may be listed on a bid proposal nor be awarded a contract for the Development unless registered with the DIR pursuant to Labor Code Section 1725.5; and (ii) the Development is subject to compliance monitoring and enforcement by the DIR;
(2) The 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 two (2) days of the award of the contract (https://www.dir.ca.gov/pwc100ext/);
(3) The Developer shall cause its respective contractors to post job site notices, as prescribed by regulation by the DIR; and
(4) The 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.
(b) The Developer shall indemnify, hold harmless and defend (with counsel reasonably acceptable to the City) the City, its council members, officers, agents and employees (together, the "Indemnified Parties") 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 Developer, its contractor and subcontractors), if required by applicable law, to pay prevailing wages 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., to meet the conditions of Section 1771.4 of the Labor Code as set forth above and the implementing regulations of the DIR in connection with the construction of the Development or any other work undertaken or in connection with the Property. This Section shall survive the repayment of the Loan, the reconveyance of the Deed of Trust and the expiration of the Loan Term.
(c) The Developer shall construct the Improvements 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 ("UFAS"). To the extent required by the funding sources for the Developer, in compliance with Section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794, et seq.), a minimum of eleven (11) units in the Development shall be constructed to be readily accessible and usable by households with a mobility impaired member and a minimum of eight (8) units shall be constructed and to be readily accessible and usable by households with 807 of 11211
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#4020883v4<IMANDB> - Bespoke Permanent Loan Agreement (final for City Council) a hearing or visually impaired member. The Developer shall deliver to the City, a certification from a Certified Access Specialist certifying that the Development (as constructed) meets the requirements of this subsection (d).
Section 4.7 Progress Report.
Until such time as the Developer has completed construction of the Improvements, as evidenced by issuance of final Certificates of Occupancy by the City for all buildings in the Development, the Developer shall provide the City with quarterly progress reports, or more frequent updates if City reasonably requires, regarding the status of the construction of the Development, including a certification that the actual construction costs to date conform to the Financing Plan.
Section 4.8 Construction Responsibilities.
(a) It shall be the responsibility of the Developer to coordinate and schedule the work to be performed so that commencement and completion of construction will take place in accordance with this Agreement.
(b) The Developer shall be solely responsible for all aspects of the Developer's conduct in connection with the Development, including (but not limited to) the quality and suitability of the plans and specifications, the supervision of construction work, and the qualifications, financial condition, and performance of all architects, engineers, contractors, subcontractors, suppliers, consultants, and property managers. Any review or inspection undertaken by the City with reference to the Development is solely for the purpose of determining whether the Developer is properly discharging its obligations to the City, and should not be relied upon by the Developer or by any third parties as a warranty or representation by the City as to the quality of the design or construction of the Development.
Section 4.9 Mechanics Liens, Stop Notices, and Notices of Completion. (a) If any claim of lien is filed against the Property or the Improvements or a stop notice affecting the Loan is served on the City or any other lender or other third party in connection with the Development, then the Developer shall, within twenty (20) days after such filing or service, either pay and fully discharge the lien or stop notice, effect the release of such lien or stop notice by delivering to the 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 provided, however, that Developer shall have the right to contest in good faith any such liens or stop notice.
(b) If the 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 Developer's expense. Alternatively, the City may require the 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 Developer.
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#4020883v4<IMANDB> - Bespoke Permanent Loan Agreement (final for City Council) (c) The 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 Improvements. The 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 Development and Property.
Section 4.10 Inspections.
The Developer shall permit and facilitate, and shall require its contractors to permit and facilitate, observation and inspection at the 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 4.11 Information.
The Developer shall provide any information reasonably requested by the City in connection with the Development.
Section 4.12 Records.
(a) Developer shall maintain complete, accurate, and current records pertaining to its interests in the 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 Developer. Such records shall include all invoices, receipts, and other documents related to expenditures from the Loan funds. Records must be kept accurate and current.
(b) The City shall notify the Developer of any records it deems insufficient.
The 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 Developer shall begin to correct the deficiency within thirty (30) days and complete the correction of the deficiency as soon as reasonably possible.
Section 4.13 Relocation.
The parties acknowledge that the Property and all improvements currently located thereon are vacant or will be vacant and free of any relocation responsibilities by the Close of Escrow. If and to the extent the construction of the Improvements by the Developer result in the permanent or temporary displacement of residential tenants, homeowners, or businesses, then the Developer shall comply with all applicable local, state, and federal statutes and regulations, (including without limitation California Government Code Section 7260 et seq., and accompanying regulations) with respect to relocation planning, advisory assistance, and payment of monetary benefits. The Developer shall be solely responsible for payment of any relocation benefits to any displaced persons and any other obligations associated with complying with such relocation laws. 809 of 11211
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#4020883v4<IMANDB> - Bespoke Permanent Loan Agreement (final for City Council) The Developer shall defend (with counsel reasonably acceptable to the City), the Indemnified Parties against any claim for damages, compensation, fines, penalties, relocation payments or other amounts arising out of the failure or alleged failure of any person or entity (including the Developer and City) to satisfy relocation obligations related to the development of the Development. This obligation to indemnify shall survive termination of this Agreement.
Section 4.14 Bid Package
(a) The Developer shall cause Developer's General Contractor to provide the Bid Package to all subcontractors.
(b) All calls for bids, bidding materials, and the construction contract documents for the Development must specify that: (1) No contractor or subcontractor may be listed on a bid proposal nor be awarded a contract for the Development unless registered with the DIR pursuant to Labor Code Section 1725.5, and (2) the Development is subject to compliance monitoring and enforcement by DIR.
Section 4.15 Financial Accounting and Post-Completion Audits. (a) No later than one hundred fifty (150) days following completion of construction of the Development and issuance of the Certificate of Occupancy, the Developer shall provide to City with a draft of the Final Cost Certification. No later than two hundred ten (210) days following completion of construction of the Development, the Developer shall submit to the City a copy of the Final Cost Certification..
(b) The Developer shall make available for examination at reasonable intervals and during normal business hours to City all books, accounts, reports, files, and other papers or property with respect to all matters covered by this Agreement, and shall permit City to audit, examine, and make excerpts or transcripts from such records upon reasonable prior notice to the Developer. The City, in its reasonable discretion, may make audits of any records related to the development or operation of the Development or the Developer's compliance with the City Documents.
ARTICLE 5.
ONGOING DEVELOPER OBLIGATIONS
Section 5.1 Applicability.
The conditions and obligations set forth in this Article 5 shall apply throughout the Term, unless a different period of applicability is specified for a particular condition or obligation.
Section 5.2 Use.
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#4020883v4<IMANDB> - Bespoke Permanent Loan Agreement (final for City Council) (a) The Developer hereby agrees that, for the entire Term, the Development will be used for residential use consistent with the Regulatory Agreement and Community Space use, as approved by the City.
(b) The Regulatory Agreement shall require that a portion of the Units shall be affordable to and occupied by Extremely Low Income Households and Lower Income Households as further specified in the Regulatory Agreement.
Section 5.3 Maintenance.
(a) The Developer agrees, for the entire Term of this Agreement, to maintain all interior and exterior improvements, including landscaping, of the Development in first-class condition, repair and sanitary condition (and, as to landscaping, in a healthy condition, subject to any restrictions on water use) and in accordance with a Management Plan approved pursuant to Section
2.7 of this Agreement (including without limitation any landscape and signage plans), 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) The Developer acknowledges the great emphasis the City places on quality maintenance to protect its investment and to provide quality low-income housing for area residents and to ensure that City-assisted affordable housing projects are not allowed to deteriorate due to deficient maintenance. In addition, the Developer shall keep the Development free from all graffiti, and any accumulation of shopping carts, debris or waste material. The Developer shall promptly make all repairs and replacements necessary to keep the Development in first-class condition and repair and shall promptly eliminate all graffiti and replace dead and diseased plants and landscaping with comparable approved materials.
(c) In the event that the Developer breaches any of the covenants contained in this section and such default continues for a period of seven (7) 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 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 Property and perform all acts and work necessary to protect, maintain, and preserve the improvements and landscaped areas on the Property, and to attach a lien on the Property, or to assess the 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 Developer to the City upon demand.
Section 5.4 Taxes and Assessments.
The 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 Developer's leasehold interest 811 of 11211
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#4020883v4<IMANDB> - Bespoke Permanent Loan Agreement (final for City Council) in the Property; provided, however, that the Developer shall have the right to contest in good faith any such taxes, assessments, or charges. In the event the Developer exercises its right to contest any tax, assessment, or charge against it, the 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.
Section 5.5 Mandatory Language in All Subsequent Deeds, Leases and Contracts.
(a) Basic Requirement. The Developer covenants by and for itself, its successors and assigns that there shall be no discrimination against or segregation of a person or of a group of persons on account of race, color, creed, religion, sex, sexual orientation, marital status, national origin, ancestry, age, source of income, or disability in the sale, lease, sublease transfer, use, occupancy, tenure or enjoyment of the Development nor shall the Developer or any person claiming under or through the Developer establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in the Development. The foregoing covenant shall run with the land.
(b) Provisions in Conveyance Documents. All deeds, leases or contracts made or entered into by Developer, its successors or assigns, as to any transfer or conveyance of any portion of the Property shall contain therein the following language or language otherwise required by state law:
(1) In Deeds:
"(1) Grantee herein covenants by and for itself, its successors and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of any basis listed in subdivision (a) and (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955 and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the property herein conveyed, nor shall the grantee or any person claiming under or through the grantee, establish or permit any practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in the property herein conveyed. The foregoing covenant shall run with the land.
(2) Notwithstanding paragraph (1), with respect to familial status, paragraph (1) shall not be construed to apply to housing for older persons, as defined in Section 12955.9 of the Government Code. With respect to familial status, nothing in paragraph (1) shall be construed to affect Sections 51.2, 51.3, 51.4, 51.10, 51.11, and 799.5 of the Civil Code, relating to housing for senior citizens. Subdivision (d) of Section 51 and Section 1360 of the Civil Code and subdivisions (n), (o), and (p) of Section 12955 of the Government Code shall apply to paragraph (1)."
(2) In Leases:
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#4020883v4<IMANDB> - Bespoke Permanent Loan Agreement (final for City Council) "(1) Lessee herein covenants by and for itself, its successors and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of any basis listed in subdivision (a) and (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, sublessees, subtenants, or vendees in the premises herein leased. (2) Notwithstanding paragraph (1), with respect to familial status, paragraph (1) shall not be construed to apply to housing for older persons, as defined in Section 12955.9 of the Government Code. With respect to familial status, nothing in paragraph (1) shall be construed to affect Sections 51.2, 51.3, 51.4, 51.10, 51.11, and 799.5 of the Civil Code, relating to housing for senior citizens. Subdivision (d) of Section 51 and Section 1360 of the Civil Code and subdivisions (n), (o), and (p) of Section 12955 of the Government Code shall apply to paragraph (1)."
(3) In Contracts:
"(1) There shall be no discrimination against or segregation of, any person or group of persons on account of any basis listed in subdivision (a) and (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955 and Section 12955.2 of the Government Code in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the property nor shall the transferee or any person claiming under or through the transferee establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the land. (2) Notwithstanding paragraph (1), with respect to familial status, paragraph (1) shall not be construed to apply to housing for older persons, as defined in Section 12955.9 of the Government Code. With respect to familial status, nothing in paragraph (1) shall be construed to affect Sections 51.2, 51.3, 51.4, 51.10, 51.11, and 799.5 of the Civil Code, relating to housing for senior citizens. Subdivision (d) of Section 51 and Section 1360 of the Civil Code and subdivisions (n), (o), and (p) of Section 12955 of the Government Code shall apply to paragraph (1)."
Section 5.6 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 813 of 11211
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#4020883v4<IMANDB> - Bespoke Permanent Loan Agreement (final for City Council) Hazardous Materials, except to the extent such Hazardous Materials were present on or about the site prior to the Closing Date.
(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. 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, asbestos-containing 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) .
Section 5.7 Management Agent; Periodic Reports.
(a) Management Agent. The 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 Development in a manner that will provide decent, safe, and sanitary housing. The City hereby preapproves ALTA Housing as the initial management agent for the Development. For any change in the Management Agent, the Developer shall submit for the City's reasonable approval the identity of any proposed Management Agent. The Developer 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 Developer in writing.
(b) Performance Review. The City reserves the right to conduct a periodic review of the management practices and financial status of the Development within thirty (30) days after each anniversary of the issuance of the Certificate of Occupancy. The purpose of each periodic review will be to enable the City to determine if the Development is being operated and managed 814 of 11211
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#4020883v4<IMANDB> - Bespoke Permanent Loan Agreement (final for City Council) in accordance with the requirements and standards of this Agreement. The Developer shall cooperate with the City in such reviews.
(c) Books, Records and Reports. For purposes of such periodic reviews, the Developer and the Management Agent shall make available to the City for inspection all nonlegally privileged books and records with respect to the Development. In addition, the Developer shall provide the City with: (1) by not later than thirty (30) days prior to commencement of each Fiscal Year, the annual budget for the upcoming Fiscal Year; (2) within ninety (90) days following the end of each Fiscal Year, a report showing the actual income and expenditures with respect to the Development for the immediately preceding Fiscal Year and the status of all reserve funds; and (3) a copy of the Developer's federal income tax filings for the Fiscal Year within ten (10) days of filing.
(d) Replacement of Management Agent. If, as a result of a periodic review, the City determines in its reasonable judgment that the Development is not being operated and managed in accordance with any of the requirements and standards of the Management Plan, the Management Agreement, or the City Documents, the City shall deliver notice to the Developer, the Senior Lender and Investor Limited Partner, of its intention to cause replacement of the Management Agent along with a detailed explanation of the deficiencies in the management of the Project. Within thirty (30) days of receipt by the Developer of such written notice, if the deficiencies remain uncured, City staff and the Developer shall meet in good faith to consider methods for improving the financial and operating status of the Development, including, without limitation, replacement of the Management Agent. The Senior Lenders and Investor Limited Partner, at their discretion may elect to join the meeting between the City and the Developer, if they desire to do so.
If, after such meeting, City staff recommends in writing the replacement of the Management Agent, the Developer shall promptly dismiss the then Management Agent, and shall appoint as the Management Agent a person or entity meeting the standards for a Management Agent set forth in subsection (a) above and approved by the City pursuant to subsection (a) above. (e) Any contract for the operation or management of the Development entered into by the Developer shall provide that the contract can be terminated as set forth above. Failure to remove the Management Agent in accordance with the provisions of this Section shall constitute a Developer Event of Default under this Agreement, and the City may enforce this provision through legal proceedings as specified in Article 8. The approval of the Senior Lenders and Investor Limited Partner shall be required for the City to enforce its rights hereunder.
Section 5.8 Approval of Management Plan Modifications.
Pursuant to Section 2.7, the City is to review and approve the written Management Plan for the Development no later than six (6) months after commencement of construction of the Development pursuant to the Development Schedule. Each year thereafter, within sixty (60) days of the end of the Developer's Fiscal Year, the Developer shall submit to the City any proposed changes to the Management Plan. The City shall approve or disapprove the proposed changes to the Management Plan in writing within fifteen (15) calendar days following the City's receipt of the request to amend the Management Plan, which approval shall not be unreasonably denied. If the change to the Management Plan is disapproved by the City, the City shall deliver a written 815 of 11211
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#4020883v4<IMANDB> - Bespoke Permanent Loan Agreement (final for City Council) notice to the Developer setting forth, in reasonable detail, the reasons for such disapproval. The Developer shall have fifteen (15) calendar days following the receipt of such notice to submit a revised Management Plan modification in any way necessary to ensure that such policies comply with the provisions of this Agreement. The City's approval of the amendments to the Management Plan shall not be unreasonably withheld, conditioned or delayed.
Section 5.9 Resident Services Plan and Resident Services Budget. (a) Developer hereby agrees to contract for a resident services coordinator at least one (1) month prior to completion of the Improvement pursuant to Section 4.4 above. The Developer shall submit to the City an initial proposed Resident Services Plan and Resident Services Budget no later than six (6) months after the commencement of construction of the Development pursuant to the Development Schedule as set forth in Section 4.3 above. Each year thereafter, within sixty (60) days of the end of the Developer's fiscal year, the Developer shall furnish to the City a draft Resident Services Plan and Resident Services Budget. Upon receipt by the City of the proposed Resident Services Plan and Resident Services Budget, the City shall promptly review the same and approve or disapprove the Resident Services Plan and the Resident Services Budget within ten (10) business days. If the Resident Services Plan or Resident Services Budget are not approved by the City, the City shall set forth in writing and notify the Developer of the City's reasons for withholding such approval, which may include a request by the City for a change in the nature or scope of resident services or a change in service provider. The Developer shall thereafter submit a revised Resident Services Plan and Resident Services Budget for City approval, which approval shall be granted or denied within five (5) business days in accordance with the procedures set forth above.
(b) The Resident Services Budget shall show required expenditures from Annual Operating Expenses, and may include an annual sum of _____________________ for Resident Services, provided however the Operating Expenses line item for Resident Services may be increased in such amount approved by the City prior to commencement of the Fiscal Year, pursuant to the procedure for submission and approval of the Resident Services Plan and Resident Services Budget as set forth in Section 5.9(a).
Section 5.10 Insurance Requirements.
Required Coverage. Concurrently with execution of this Agreement, the Developer shall furnish to the City evidence of the insurance coverage meeting the requirements set forth in Exhibit G, attached hereto and incorporated herein by this reference. For the term of the Agreement, the Developer shall maintain and keep in force, at the Developer's sole cost and expense, the insurance applicable to the Development set forth in Exhibit G.
Section 5.11 Audits.
The Developer shall make available for examination at reasonable intervals and during normal business hours and upon twenty-four hours prior written notice 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. 816 of 11211
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#4020883v4<IMANDB> - Bespoke Permanent Loan Agreement (final for City Council) Section 5.12 Notice of Litigation.
The Developer shall promptly notify the City in writing of any litigation materially affecting Developer, the Developer's ability to perform its obligations under this Agreement, or the Property and of any claims or disputes that involve a material risk of such litigation.
ARTICLE 6.
ASSIGNMENT AND TRANSFERS
Section 6.1 Definitions.
As used in this Article, 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 Agreement, the Ground Lease, or of the Development 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 Developer or any contract or agreement to do any of the same; or
(c) Any merger, consolidation, sale or lease of all or substantially all of the assets of the Developer; or
(d) The leasing of part or all of the Property or the Improvements thereon; provided, however, that leasing of the Units included within the Improvements to tenant occupants or leasing of the Community Space to a City approved tenant in accordance with the Regulatory Agreement and Ground Lease shall not be deemed a Transfer for purposes of this Article.
Section 6.2 Purpose of Restrictions on Transfer.
(a) This Agreement is entered into solely for the purpose of development and operation of the Development and its subsequent use in accordance with the terms hereof. The Developer recognizes that the qualifications and identity of the Developer are of particular concern to the City, in view of:
(1) The importance of the development of the Improvements to the general welfare of the community;
(2) The public aid that has 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 development of the Property and upon the continuing interest which the Developer will have in the 817 of 11211
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#4020883v4<IMANDB> - Bespoke Permanent Loan Agreement (final for City Council) Property 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 Property, 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 used for speculation, but only for development and operation by the Developer in accordance with the Agreement; and
(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 6.3 Prohibited Transfers.
(a) The limitations on Transfers set forth in this Section shall apply throughout the Term. Except as expressly permitted in this Agreement, the Developer represents and agrees that the 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 6.4 Permitted Transfers.
Notwithstanding the provisions of Section 6.3, the following Transfers shall be permitted and are hereby approved by the City.
(a) Any Transfer creating a Security Financing Interest permitted pursuant to the approved Financing Plan.
(b) 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 7.
(c) The leasing of residential units within the Development in accordance with the Regulatory Agreement.
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#4020883v4<IMANDB> - Bespoke Permanent Loan Agreement (final for City Council) (d) The granting of easements or permits to facilitate the development or rehabilitation of the Property.
(e) The removal, or withdrawal in lieu of removal, of Developer’s general partner for cause pursuant to the Partnership Agreement shall not require the City's consent or constitute a default under this Agreement. Notwithstanding anything to the contrary set forth in this Agreement or any of the City Documents, in the event that the general partner of Developer is removed by the limited partner of Developer, or withdraws in lieu of being removed, for cause following default under the Developer’s Partnership Agreement, the City hereby approves the transfer of the general partner interest to an affiliate of the Investor Limited Partner of Developer (which affiliate is not a 501(c)(3) tax-exempt public benefit corporation and does not meet the requirements of Section 4.6(c) or 5.1(b) hereof) to act as the interim replacement general partner for a period of time not longer than one hundred twenty (120) days, with the understanding and agreement that the replacement general partner following the interim general partner shall be approved in advance and in writing by the City, which approval shall not be unreasonably withheld, provided that: (i) all documents associated with the removal of the general partner, including the Partnership Agreement, are submitted to the City for review and approval, which approval shall not be unreasonably withheld or delayed; (ii) that the Partnership Agreement and other partnership documents are consistent with and do not conflict with the City Documents and the approved Financing Plan.
(f) The City also hereby approves future Transfers of the limited partner interest provided that: (1) such Transfers do not affect the timing and amount of the limited partner capital contributions provided for in the Partnership Agreement approved by the City. (g) The City also hereby approves Transfer of the Property from the Developer to either of the Sponsors or a nonprofit affiliate of the Sponsors, and an assumption of the Loan by such transferee, provided that: (1) the transferee expressly assumes the obligations of the Developer under the City Documents, utilizing a form of assignment and assumption agreement in the form attached hereto as Exhibit J, incorporated herein by this reference; and (2) all funds maintained in the Operating Reserve and the Replacement Reserve are transferred to the transferee with the Development and continue to be reserved solely to pay operating costs or replacement costs of the Development.
Section 6.5 Effectuation of Certain Permitted Transfers. (a) No Transfer of this Agreement permitted pursuant to Section 5.4 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 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. Anything to the contrary notwithstanding, the holder of a Security Financing Interest whose interest shall have been acquired by, through or under a Security Financing Interest 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 entitled to possession thereof pursuant to enforcement of the Security Financing Interest.
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#4020883v4<IMANDB> - Bespoke Permanent Loan Agreement (final for City Council) (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 Developer or any other party from any obligations under this Agreement.
Section 6.6 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 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 7.
DEFAULT AND REMEDIES
Section 7.1 General Applicability.
The provisions of this Article shall govern the parties' remedies for breach or failure of this Agreement.
Section 7.2 Fault of City.
(a) The following events each constitute a "City Event of Default" and a basis for the Developer to take action against the City:
(1) :The City breaches any material provision of this Agreement (including failure to timely respond to performance time frames set forth in this Agreement).
(b) Upon the happening of any of the above-described events, the Developer 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 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 complete such cure within a reasonable time thereafter but in no event later than one hundred twenty (120) days, then the Developer shall be afforded all of its rights at law or in equity, by taking all or any of the following remedies: (1) terminating in writing this Agreement (provided, however, that the indemnification provisions of this Agreement shall survive such 820 of 11211
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#4020883v4<IMANDB> - Bespoke Permanent Loan Agreement (final for City Council) termination and remain in full force and effect); and (2) prosecuting an action for damages or specific performance.
Section 7.3 Fault of Developer.
(a) The following events each constitute a "Developer Event of Default" and a basis for the City to take action against the Developer:
(1) The Developer fails to exercise good faith and diligent efforts to satisfy, within the time set forth in the Development Schedule and in the manner set forth in Article 2, one or more of the conditions precedent to the City's obligation to make the Loan to the Developer;
(2) The Developer constructs or attempts to construct the Improvements in violation of Article 4;
(3) The Developer has not satisfied all preconditions set forth in this Agreement to commencement of construction of the Improvements by the Close of Escrow, or fails to commence or complete construction of the Improvements within the times set forth in Article 4, or abandons or suspends construction of the Improvements prior to completion of all construction for a period of sixty (60) days after written notice by the City of such abandonment or suspension;
(4) The Developer fails to comply with any obligation or requirement set forth in Article 4 or Article 5;
(5) A Transfer occurs, either voluntarily or involuntarily, in violation of Article 6;
(6) Any representation or warranty contained in this Agreement or in any application, financial statement, certificate or report submitted to the City by Developer or Sponsor in connection with this Agreement proves to have been incorrect in any material and adverse respect when made; (7) An uncured event of default occurs under the Deed of Trust, the Promissory Note, or the Regulatory Agreement, subject to all applicable notice and cure periods;
(8) A court having jurisdiction shall have made or entered any decree or order: (i) adjudging the Developer or its Sponsors to be bankrupt or insolvent; (ii) approving as properly filed a petition seeking reorganization of the Developer or its Sponsors, or seeking any arrangement for the Developer or its Sponsors, under the bankruptcy law or any other applicable debtor's relief law or statute of the United States or any state or other jurisdiction; (iii) appointing a receiver, trustee, liquidator, or assignee of the Developer or its Sponsors, in 821 of 11211
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#4020883v4<IMANDB> - Bespoke Permanent Loan Agreement (final for City Council) bankruptcy or insolvency or for any of their properties; or (iv) directing the winding up or liquidation of the Developer or its Sponsors, if any such decree or order described in clauses (i) to (iv), 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 (i) as well; or the Developer or its Sponsors, 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 (i) to (iv), inclusive; (9) The 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 (10) as well) or prior to sooner sale pursuant to such sequestration, attachment, or execution;
(10) The Developer or its Sponsors shall have been dissolved or shall have voluntarily suspended their business; or
(11) There shall occur any default declared by any lender under any loan document related to any loans, secured by a deed of trust on the Development after the expiration of all applicable cure periods which remains uncured; or
(12) The Developer breaches any other material provision of this Agreement or any material provision in any of the other City Documents which remains uncured after expiration of any applicable cure periods.
Section 7.4 Remedies
(a) Upon the happening of any of the above-described events in Section 7.3, the City shall first notify the Developer in writing of its purported breach, failure or act above described, giving the 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 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, 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) Prosecuting an action for damages or specific performance; and 822 of 11211
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#4020883v4<IMANDB> - Bespoke Permanent Loan Agreement (final for City Council) (2) Any of the remedies specified in Section 7.5 through Section 7.7. (a) Notwithstanding the notice and cure periods set forth above, with respect to a Developer Event of Default described in subsection 7.3(a)(5), (6), or (7) above, the City may initiate enforcement action, without the provision of any notice, or the passage of any cure period.
Section 7.5 Reserved.
(3)
(1)
Section 7.6 Acceleration of Note.
Following occurrence and continuation of an uncured Developer Event of Default, the City shall have the right to cause all indebtedness of the Developer to the City under this Agreement and the Promissory Note, together with any accrued interest thereon, to become immediately due and payable. The Developer waives all right to presentment, demand, protest or notice of protest or dishonor. The City may proceed to enforce payment of the indebtedness and to exercise any or all rights afforded to the City as a creditor and secured party under the law including the Uniform Commercial Code, including foreclosure under the Deed of Trust or exercise of its rights under the Assignment Agreement. The Developer shall be liable to pay the City on demand all expenses, costs and fees (including, without limitation, reasonable attorney's fees and expenses) paid or incurred by the City in connection with the collection of the Loan and the preservation, maintenance, protection, sale, or other disposition of the security given for the Loan.
Section 7.7 Right to Cure at Developer's Expense.
The City shall have the right to cure any monetary default by the Developer under a loan in connection with the Development. However, if the Developer is in good faith contesting a claim of default under a loan and the City's interest under this Agreement is not imminently threatened by such default, in the City's sole judgment, the City shall not have the right to cure such default.
The Developer agrees to reimburse the City for any funds advanced by the City to cure a monetary default by Developer upon demand therefore, together with interest thereon at the lesser of the rate of ten percent (10%) per annum or the maximum rate permitted by law from the date of expenditure until the date of reimbursement.
Section 7.8 Delivery of Collateral Documents.
If this Agreement is terminated pursuant to Section 7.4, then the Developer shall promptly deliver to the City, within ten (10) days of such termination, copies of all Collateral Documents.
The delivery of the documents specified in this Section shall be accompanied by the Assignment Agreement; provided however, that any use of the Collateral Documents by the City or any other person shall be without liability of any kind to the Developer and without any representation or warranty of the Developer or its employees as to the quality, validity, or usability of the Collateral Documents.
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#4020883v4<IMANDB> - Bespoke Permanent Loan Agreement (final for City Council) Section 7.9 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 7.10 Remedies Cumulative.
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.
Section 7.11 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 herein 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. The exercise of any right, power, or remedy shall in no event constitute a cure or a waiver of any default under this Agreement, or the Regulatory Agreement, nor shall it invalidate any act done pursuant to notice of default, or prejudice the City in the exercise of any right, power, or remedy hereunder or under this Agreement, unless in the exercise of any such right, power, or remedy all obligations of the Developer to City are paid and discharged in full.
ARTICLE 8.
SECURITY FINANCING AND RIGHTS OF HOLDERS
Section 8.1 No Encumbrances Except for 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 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.
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#4020883v4<IMANDB> - Bespoke Permanent Loan Agreement (final for City Council) Section 8.2 Holder Not Obligated to Construct.
The holder of any Security Financing Interest authorized by this Agreement is not obligated to construct or complete any improvements or to guarantee such construction or completion.
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 or the Regulatory Agreement.
Section 8.3 Notice of Default and Right to Cure.
Whenever the City pursuant to its rights set forth in Article 7 of this Agreement delivers any notice or demand to the Developer with respect to the commencement, completion, or cessation of the construction of the Improvements, the City shall at the same time deliver to each holder of record of any Security Financing Interest creating a lien upon the Developer's fee interest in the Property or any portion thereof, and the Investor Limited Partner, 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. Nothing contained in this Agreement shall be deemed to permit or authorize such holder to undertake or continue the construction or completion of the Improvements (beyond the extent necessary to conserve or protect such improvements or construction already made) without first having expressly assumed in writing the Developer's obligations to the City relating to such Improvements under this Agreement. The holder in that event must agree to complete, in the manner provided in this Agreement, the Improvements to which the lien or title of such holder relates. Any such holder properly completing such Improvements pursuant to this paragraph shall assume all rights and obligations of Developer under this Agreement and shall be entitled, upon completion and written request made to the City, to a Certificate of Occupancy from the City, in a form acceptable by the City.
Section 8.4 Failure of Holder to Complete Improvements.
In any case where six (6) months after default by the Developer in completion of construction of the 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 Developer under this Agreement.
Section 8.5 Right of City to Cure.
In the event of a default or breach by the Developer of a Security Financing Interest prior to the completion of development, and the holder has not exercised its option to complete the development called for on the Property, 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 Developer of 825 of 11211
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#4020883v4<IMANDB> - Bespoke Permanent Loan Agreement (final for City Council) 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 Developer to effect such subordination.
Section 8.6 Right of City to Satisfy Other Liens.
After the Close of Escrow, and after the 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 Developer to pay or make provision for the payment of any tax, assessment, lien or charge so long as the 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 8.7 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.
ARTICLE 9.
GENERAL PROVISIONS
Section 9.1 Notices, Demands and Communications.
Formal notices, demands, and communications between the City and the Developer shall be sufficiently given if and shall not be deemed given unless dispatched by registered or certified mail, postage prepaid, return receipt requested or delivered personally, to the principal office of the City and the Developer as follows:
City: City of San Mateo
330 W. 20th Ave.
San Mateo, CA 94403
Attn: City Manager
With a copy to:
City of San Mateo
330 W. 20th Ave.
San Mateo, CA 94403
Attention: City Attorney
Developer: AH Bespoke LP
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#4020883v4<IMANDB> - Bespoke Permanent Loan Agreement (final for City Council) c/o Alta Housing
3460 West Bayshore Road, Suite 104
Palo Alto, CA 94303
Attn: Randal Tsuda
With a copy to:
Bocarsly Emden Cowan Esmail & Arndt LLP
633 W. Fifth Street, Suite 5880
Los Angeles, CA 90071
Attn: Kyle Arndt
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.
Section 9.2 Non-Liability of Public Officials, Employees and Agents.
No board member, official, employee or agent of the City, the Former Agency, the Successor Agency, 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.
No board member, official, employee or agent of the Developer shall be personally liable to the City, the Former Agency, the Successor Agency, or 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, the Former Agency, the Successor Agency, or the City or successor or on any obligation under the terms of this Agreement.
Section 9.3 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. In order to claim a delay under this Section 9.3, 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 eight (180) days, unless otherwise agreed to by the Parties in writing, or unless to the extent that physical damage to the Improvements caused by a Force Majeure Event cannot reasonably be repaired within the remaining days within the 180-day 827 of 11211
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#4020883v4<IMANDB> - Bespoke Permanent Loan Agreement (final for City Council) cumulative limit as reasonably determined by the applicable Developer and its contractor. If a Force Majeure Event occurs, 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.
Section 9.4 Inspection of Books and Records.
Upon request, the Developer shall permit the City to inspect at reasonable times and on a confidential basis those books, records and all other documents of the Developer necessary to determine the Developer's compliance with the terms of this Agreement. The Developer also has 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 9.5 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 9.6 General Indemnification.
The Developer agrees to indemnify, protect, hold harmless and defend (by counsel reasonably satisfactory to the City) the City, its council members, officers, agents and employees (together, the “Indemnified Parties”) from all suits, actions, claims, causes of action, costs, demands, judgments and liens arising out of the Developer's performance or non-performance under this Agreement, or any other agreement executed pursuant to this Agreement, or arising out of acts or omissions of any of the Developer's contractors, subcontractors, or persons claiming under any of the aforesaid, except as directly caused by the City's 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.
Section 9.7 Applicable Law.
This Agreement shall be interpreted under and pursuant to the laws of the State of California.
Section 9.8 No Brokers.
Each party represents to the other 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 the Developer. If any broker or finder makes a claim for a commission or finder's fee based upon a contact, dealings, or communications, 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. 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. 828 of 11211
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#4020883v4<IMANDB> - Bespoke Permanent Loan Agreement (final for City Council) Section 9.9 Severability.
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 9.10 Legal Actions, 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. 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 party prevailing in any such action shall be entitled to recover against the party not prevailing all reasonable attorney's fees and costs incurred in such action.
Section 9.11 Binding Upon Successors.
(a) 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 9.12 Parties Not Co-Venturers.
Nothing in this Agreement is intended to or does establish the Parties as partners, coventurers, or principal and agent with one another.
Section 9.13 Time of the Essence.
In all matters under this Agreement, the parties agree that time is of the essence.
Section 9.14 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 Developer by the City Manager, without further approval by the City Council. Any such action shall be in writing.
Section 9.15 Representations and Warranties.
(a) The Developer hereby represents and warrants to the City as follows:
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#4020883v4<IMANDB> - Bespoke Permanent Loan Agreement (final for City Council) (1) Organization. The Developer is a duly organized, validly existing California limited partnership and is in good standing under the laws of the State of California and has the power and authority to own its property and carry on its business as now being conducted. (2) 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.
(3) 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.
(4) 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.
(5) 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.
(6) Compliance with Laws; Consents and Approvals. The construction of the Improvements 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.
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#4020883v4<IMANDB> - Bespoke Permanent Loan Agreement (final for City Council) (7) 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 Improvements.
(8) Title to Improvements. Developer holds good and marketable leasehold title to the Improvements and there will exist thereon or with respect thereto no mortgage, lien, pledge or other encumbrance of any character whatsoever other than those liens approved by the City, liens for current real property taxes and assessments not yet due and payable, and liens in favor of the City or approved in writing by the City. (9) Financial Statements. The financial statements of the Developer and other financial data and information furnished by the Developer to the City fairly present the information contained therein. As of the date of this Agreement, there has not been any adverse, material change in the financial condition of the Developer from that shown by such financial statements and other data and information.
(10) Sufficient Funds. The Developer holds sufficient funds or binding commitments for sufficient funds to complete the construction and operation of the Improvements in accordance with this Agreement. (b) The City hereby represents and warrants to the Developer as follows:
(1) Authority. City is a California charter city, which has been authorized to transact business pursuant to action of the City and pursuant to the applicable sections of Community Redevelopment Law and the Dissolution Statutes. To the best of the City's knowledge, the City has full right, power and lawful authority to make the Loan as provided herein and the execution, performance and delivery of this Agreement by City has been fully authorized by all requisite actions.
(2) FIRPTA. City is not a "foreign person" as defined by FIRPTA or any similar state statute, or is exempt from the provisions of FIRPTA and any similar state statute.
Section 9.16 Entry by the City.
The Developer shall permit the City, through its officers, agents, or employees, at all reasonable times, and upon forty-eight hours' prior written notice, to enter into the Development:
(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, to inspect the ongoing operation and management of the Development to determine that the same is in conformance with the requirements of this Agreement. The Developer acknowledges that the City 831 of 11211
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#4020883v4<IMANDB> - Bespoke Permanent Loan Agreement (final for City Council) is under no obligation to supervise, inspect, or inform the Developer of the progress of construction, or operations and the Developer shall not rely upon the City therefore. Any inspection by the City during the construction is entirely for its purposes in determining whether the Developer is in compliance with this Agreement and is not for the purpose of determining or informing the Developer of the quality or suitability of construction. The 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 9.17 Operating Memoranda; Implementation Agreements. (a) 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, each an "Operating Memorandum". This Agreement describes some, but not all, of the circumstances in which the preparation and execution of operating memoranda or implementation agreements may be appropriate.
(b) Operating memoranda or implementation agreements may be executed on the City's behalf by the City Manager, or the City Manager's designee. In the event a particular subject requires notice or hearing, such notice or hearing shall be appropriately given. Any significant modification to the terms of performance under this Agreement shall be processed as an amendment of this Agreement in accordance with this Section and must be approved by the City Council.
Section 9.18 Amendments.
The parties can amend this Agreement only by means of a writing executed by the Developer and the City.
Section 9.19 Multiple Originals; Counterparts.
This Agreement may be executed in multiple originals, each of which is deemed to be an original, and may be signed in counterparts.
Section 9.20 Complete Understanding of the Parties.
This Agreement constitutes the entire understanding and agreement of the parties. All prior discussions, understandings and written agreements are superseded by this Agreement. The Developer and the Developer's counsel have read and reviewed this Agreement and agree that any rule of construction (including, but not limited to Civil Code Section 1654, as may be amended from time to time) to the effect that ambiguities are to be resolved against the drafting party shall not apply to the interpretation of this Agreement.
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#4020883v4<IMANDB> - Bespoke Permanent Loan Agreement (final for City Council) [Signatures on following page]
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IN WITNESS WHEREOF, the City and the Developer have executed this Agreement in triplicate on or as of the date first above written.
DEVELOPER:
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: ________________________________
Date: ________________________________
CITY:
CITY OF SAN MATEO, a California charter city
By: ________________________________
Alex Khojikian, City Manager
Approved as to Form:
By: ________________________________
Prasanna W. Rasiah
City Attorney
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EXHIBIT A
LEGAL DESCRIPTION OF THE PROPERTY
The Property referred to is situated in the State of California, City of San Mateo and described as follows:
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EXHIBIT B
DEVELOPMENT SCHEDULE
TO BE INSERTED
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EXHIBIT C
SCOPE OF DEVELOPMENT
EXHIBIT D
FINANCING PLAN
TO BE INSERTED
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EXHIBIT E
FORM OF REGULATORY AGREEMENT
TO BE INSERTED
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EXHIBIT F
FORM OF PROMISSORY NOTE
TO BE INSERTED
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EXHIBIT G
FORM OF DEED OF TRUST
TO BE INSERTED
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EXHIBIT H
FORM OF NOTICE OF AFFORDABILITY RESTRICTIONS ON TRANSFER OF
PROPERTY
TO BE INSERTED
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EXHIBIT I
INSURANCE REQUIREMENTS
TO BE INSERTED
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EXHIBIT J
RESERVED
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EXHIBIT K
ASSIGNMENT OF COLLATERAL DOCUMENTS
TO BE INSERTED
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CITY PROPERTY LEGAL DESCRIPTION
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.
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EXHIBIT B
DEVELOPMENT SCHEDULE
TO BE INSERTED
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EXHIBIT C
SCOPE OF DEVELOPMENT
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 D
FINANCING PLAN
TO BE INSERTED
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RECORDING REQUESTED BY
AND WHEN RECORDED RETURN TO:
CITY OF SAN MATEO
Housing Division
330W. 20thAvenue
San Mateo, CA 94403
APN(s): 034-179-050 and 034-179
060
Space Above This Line Reserved for Recorder’s Use
This Regulatory Agreement is recorded at the request and for the benefit of the City of San Mateo and is exempt from the payment of a recording fee pursuant to Government Code Sections 27383.
REGULATORY AGREEMENT AND
DECLARATION OF RESTRICTIVE COVENANTS
(Bespoke, San Mateo)
This REGULATORY AGREEMENT AND DECLARATION OF RESTRICTIVE COVENANTS (the “Agreement”) is made and entered into as of _____________________________, by and between the City of San Mateo, a California charter city, acting on its own behalf and in its capacity as the housing successor to the former Redevelopment Agency of the City of San Mateo (“City”), and AH Bespoke LP, a California limited partnership (“Developer”).
RECITALS
A. These Recitals refer to and utilize certain capitalized terms which 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 is the owner of the Property, as more particularly described in Exhibit A attached hereto and incorporated herein by this reference. On January 7, 2021, the City declared the Property to be surplus property, issued a notice of availability, and selected Developer to construct the Project. In accordance with Government Code Section 54222.5, not less than twenty-five percent (25%) of the total number of units shall be available at an affordable rent to lower income households, as defined in Health and Safety Code Section 50079.5 for a minimum of fifty-five (55) years. These requirements shall be covenants or restrictions running with the leasehold interest and shall be enforceable against any ground lessee who violates a covenant or restriction and each successor in interest who continues the violation by an of the entities 850 of 11211
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described in subdivisions (a) to (f), inclusive, of Section 54222.5 of the California Government Code.
C. The City and the Developer have entered into that certain Ground Lease dated as of __________________________, and as such may be further amended from time to time (collectively, the "Ground Lease"), pursuant to which the Developer will acquire a leasehold interest in the Property from the City for a period of ninety-nine (99) years (the "Leasehold Interest"). The Developer intends to construct 71 multifamily housing units on the Property for rental to extremely low, very low, and low income households, including one (1) unrestricted manager unit, and attendant site improvements (the "Improvements"). The Developer's Leasehold Interest and the Developer's fee interest in the Improvements, are collectively herein after referred to as the "Development."
D. The Development is subject to that certain Affordable Housing Agreement and Density Bonus Affordability Restriction (the "Density Bonus Regulatory Agreement"), dated ______________________, and implementing: (1) the City's Below Market Rate (Inclusionary) Program (“Inclusionary Program”), which is set forth in Resolution 14 (2020), augmented by the City’s Marketing Policies as adopted by City Resolution 22 (2009); and (2) the State density bonus law (California Government Code section 65915) which requires that cities provide density bonuses and waiver, incentives and concessions for projects that provide affordable housing. The restrictions in the Density Bonus Regulatory Agreement are unrelated to the affordability restrictions under this Agreement and intended to be exclusive of and not inclusive of the Extremely Low Income Units, Very Low Income Units, and Low Income Units.
E. The City, DTS Housing, LLC, a Delaware limited liability company (“Commercial Developer”) and the Developer executed that certain Disposition and Development Agreement dated as of _______________________, (the "DDA").
F. The City and the general partner of Developer executed that certain Predevelopment Loan Agreement dated as of ________________________, to partially fund the predevelopment costs for the Development.
G. The City and the Developer executed that certain Loan Agreement dated as of ________________________, to partially fund the construction costs for the Development.
H. Pursuant to the DDA and the Loan Agreements, the City will provide to Developer the "City Loans" totaling Five Million Nine Hundred Thousand Dollars ($5,900,000) from the following sources:
1. Two Million Nine Hundred Thousand Dollars for predevelopment costs, funded by the Developer Equity Contribution, as described in the DDA (“Predevelopment Loan”)
2. Three Million Dollars ($3,000,000) from the City’s _______ fund (“Permanent Loan”) I. This Agreement imposes occupancy and affordability restrictions on the Development, in accordance with Health and Safety Code Sections 33334.2 et seq and 34176.1.
J. The City is requiring the execution of this Agreement in order to implement the requirements of Health and Safety Code Section 33334.3.
K. In order to ensure that the entire Development will be used and operated in accordance with these conditions and restrictions, the City and Developer wish to enter into this Agreement. 851 of 11211
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THEREFORE, the City and Developer hereby agree as follows:
ARTICLE 1.
DEFINITIONS
Section 1.1 Definitions.
When used in this Agreement, the following terms shall have the respective meanings assigned to them in this Article 1.
A. “Actual Household Size” means the actual number of persons in the applicable household.
B. "Adjusted Income" means the total anticipated annual income of all persons in a household, as calculated in accordance with 25 California Code of Regulations Section 6914 or pursuant to a successor State housing program that utilizes a reasonably similar method of calculation of adjusted income.
C. “Assumed Household Size” shall be set by multiplying 1.5 by the number of bedrooms in unit. The definition is utilized to calculate affordable rent and is not intended to be a limit on the number of persons occupying a Unit.
D. "City" means the City of San Mateo, a California charter city, and its successors and assigns.
E. "City Deed of Trust” means the Leasehold Deed of Trust with Assignment of Rents, Security Agreement, and Fixture Filing dated of even date herewith, among Developer, as trustor, Old Republic Title Company, as trustee, and the City, as beneficiary, that will encumber the Developer's leasehold interest in the Property to secure repayment of the City Loans and performance of the covenants of the Loan Documents.
F. "City Loans" has the meaning set forth in Recital H, above.
G. "Completion of Construction" means the date the construction of the Improvements is completed as evidenced by the issuance of a certificate of occupancy or notice of completion or equivalent document issued by the City, to certify completion of the construction of the Improvements.
H. "County" means the County of San Mateo.
I. "CTCAC" means the California Tax Credit Allocation Committee.
J. "Dissolved RDA" means the former Redevelopment Agency of the City of San Mateo, a public body, corporate and politic.
K. "Extremely Low Income Household” means a household with an Adjusted Income that does not exceed the qualifying limits for extremely low income households, adjusted for Actual Household Size, as established and amended from time to time pursuant to Section 8 of the United States Housing Act of 1937, and as published by the State of California Department of Housing and Community Development.
L. "Extremely Low Income Rent" means the rent permitted to be charged for an Extremely Low Income Unit.
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M. "Extremely Low Income Unit" means the Units, which are required to be occupied by Extremely Low Income Households.
N. "HCD" means the California Department of Housing and Community Development.
O. "Housing Fund Proceeds" means any of the funds transferred to the City, together with any funds generated from housing assets, maintained in the Low and Moderate Income Housing Asset Fund, created in the accounts of the City pursuant to Health and Safety Code Section 34176(d).
P. “HUD” means the United States Department of Housing and Urban Development.
Q. "Improvements" means the approximately seventy-one (71) units of affordable rental housing to be constructed on specified portions of the Property, including one manager’s unit, all common areas, amenities, plans, entitlements, appurtenances, improvement easements, buildings and fixtures associated with the Property.
R. "Investor Limited Partner" means the tax credit limited partner or partners, and their respective successors and assigns, admitted to the Developer in connection with the allocation of low income housing tax credits to the Development, which admission will occur concurrent with closing of construction financing for development of the Development Improvements.
S. “Loan Documents” means this Agreement, the Notes that evidence the City Loans, the DDA, the City Deed of Trust, and the Notice of Affordability Restrictions.
T. "Low Income Household" means a household with an Adjusted Income that does not exceed the qualifying limits for lower income households, adjusted for Actual Household Size, as established and amended from time to time pursuant to Section 8 of the United States Housing Act of 1937, and as published by HCD.
U. "Low Income Rent" means the maximum allowable rent for a Low Income Unit.
V. "Low Income Units" means the Units which are allowed to be occupied by Low Income Households.
W. "Management Agent" means the management agent retained by Developer and approved by the City in accordance with the provisions of Section 5.2 to manage the Development.
X. "Median Income" means the median gross yearly income adjusted for Actual Household Size (to qualify residents) or Assumed Household Size (to calculate rents), as applicable, in the County of San Mateo, California, as published from time to time by HCD. 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 HCD and/or HUD and/or TCAC.
Y. “Middle Income Household” means a household with an income that does not exceed 100% of Median Income, adjusted for Actual Household Size, as established and amended from time to time pursuant to Section 8 of the United States Housing Act of 1937, and as published by HCD.
Z. "Middle Income Rent" means the rent permitted to be charged for a Middle Income Unit pursuant to Section 2.2(c) below.
AA. "Middle Income Unit" means the means the Units, which, pursuant to Section 2.1(D) below, are required to be occupied by Middle Income Households. 853 of 11211
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BB."Notice of Affordability Restrictions" means the Notice of Affordability Restrictions on Transfer of Property, in a form to be provided by the City, between the City and the Developer to be recorded against the Property pursuant to Sections 33334.3 and/or 33413(c)(5) of the Community Redevelopment Law, or successor provision.
CC. “Notes” means the promissory notes from Developer to the City evidencing the Permanent Loan.
DD.“Property” means the property that is subject to the terms and provisions of this Agreement, as referenced in Recital B, above, and comprises (1) the leasehold estate of Developer in the Property and (2) the ownership interests of Developer in the Development constructed on the Property.
EE. “Rent” means the total monthly payments by the Tenant of a Unit (other than the manager's Unit) for the following: (1) use and occupancy of the Unit and land and associated facilities; (2) any reasonable and customary separately charged fees or service charges assessed by Developer which are required of all Tenants, including garbage collection, sewer, water, electricity, gas and other heating, cooking and refrigeration fuel, but not cable or telephone service; and any other interest, taxes, fees or charges for use of the land or associated facilities and assessed by a public or private entity other than Developer, and paid by the Tenant. In no event shall the Rent of a Unit exceed the amount permitted by the City pursuant to Section 2.2 hereof.
FF. "Restricted Units" means the Extremely Low Income Units, the Very Low Income Units, the Low Income Units, and the Middle Income Units collectively, and each shall be referred to as a "Restricted Unit".
GG. “Tenant” means a household occupying a Unit.
HH. “Term” means the term of this Agreement which commences as of the date of this Agreement, and unless sooner terminated pursuant to the terms of this Agreement, expires on the ninety-nineth (99th) anniversary of the date that the City Deed of Trust is recorded.
II. “Unit” means one of the rental units included in the Development.
JJ. "Very Low Income Household" means a household with an Adjusted Income that does not exceed the qualifying limits for very low income households, adjusted for Actual Household Size, as established and amended from time to time pursuant to Section 8 of the United States Housing Act of 1937, and as published by the State of California Department of Housing and Community Development.
KK. "Very Low Income Rent" means the rent permitted to be charged for a Very Low Income Unit pursuant to Section 2.2(b) below.
LL. "Very Low Income Units" means the Units, which, pursuant to Section 2.1(b) below, are required to be occupied by Very Low Income Households.
ARTICLE 2.
AFFORDABILITY AND OCCUPANCY COVENANTS
Section 2.1 Occupancy Requirements.
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A. Extremely Low-Income Units. Not less than six (6) of the Units shall be rented to and occupied by or, if vacant, available for occupancy by Extremely Low Income Households, including two (2) studio Units, two (2) one-bedroom Units, and two (2) three-bedroom Units.
B. Low Income Units. Not less than six (6) of the Units shall be rented to and occupied by or, if vacant, available for occupancy by for households whose income does not exceed that of Low Income Households, including three (3) two-bedroom Units and three (3) three-bedroom Units.
C. Very Low Income Not less than eighteen (18) of the Units shall be rented to and occupied by or, if vacant, available for occupancy by for households whose income does not exceed that of Very Low Income Households, including one (1) studio Unit, eight (8) one-bedroom Units, five (5) two-bedroom Units, and four (4) three-bedroom Units.
D. Middle Income Units. All of Units that are not required to be Extremely Low, Very Low, or Low Income Units shall be rented to and occupied by or, if vacant, available for occupancy by Middle Income Households (the “Middle Income Units”).
E. Managers Unit. One (1) unit shall be designated for managers unit that is not income restricted.
F. Foreclosure or Loss of Subsidy Occupancy Requirements. In the event of a foreclosure of the senior lien or the loss of subsidy described in Section 2.2(j) below, then the City and the entity acquiring the Development at foreclosure, or after the loss of subsidy, shall apportion the affordability targeting in a manner consistent with Health and Safety Code Section 34176.1. In no event will the occupancy requirements imposed after a foreclosure of the Construction Loan or deed in lieu of foreclosure, or a loss of subsidy described in Section 2.2(j) below, require the Developer's successor in interest to provide more than ________ ( ) Very Low Income Units, which the City has determined is the maximum affordability feasible post foreclosure or loss of subsidy described in Section 2.2(j). The terms of this Section 2.1(g) shall survive termination of this Agreement.
Section 2.2 Allowable Rent.
A. Extremely Low Income Rent. Per California Health and Safety Code 50053, the maximum Rent charged to residents of the Extremely Low Income Units shall not exceed onetwelfth (1/12th) of thirty percent (30%) of thirty percent (30%) of Median Income, adjusted for Assumed Household Size.
B. Low Income Rent. Per Health & Safety Code Section 50053 (D), the maximum Rent charged to Tenants of Low Income Units shall not exceed one twelfth (1/12) of thirty percent (30%) of sixty percent (60%) of the Median Income, adjusted for family size appropriate for the unit..
C. Middle Income Rent. The Rent charged to Tenants of the Middle Income Units shall not exceed one-twelfth (1/12th) of thirty percent (30%) of one hundred percent (100%) of Median Income, adjusted for Assumed Household Size.
D. Very Low Income Rent. Per Health & Safety Code Section 50053 (C), the maximum Rent charged to Tenants of Low Income Units shall not exceed one twelfth (1/12) of thirty percent (30%) of fifty percent (50%) of the Median Income, adjusted for family size appropriate for the unit.
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E. In calculating the allowable Rent for the Restricted Units, the Assumed Household Size shall be determined pursuant to the terms of Health and Safety Code Section 50052.5(h). To the extent the Project receives an award of Federal Low Income Housing Tax Credits the provisions of Section 50053(b)(2) shall govern the calculation of Rents.
F. Approval of Rents. Initial Rents for all Restricted Units shall be approved by the City prior to occupancy. All proposed Rent increases for Restricted Units shall be submitted to City for review and approval at least thirty (30) days prior to Developer providing written notice to Tenants. Notwithstanding the foregoing, City’s review and approval of Rents and Rent increases shall be limited to determining that such Rents and Rent increases comply with the requirements of this Regulatory Agreement. No later than thirty (30) days after HUD publishes Median Income for the County of San Mateo for each calendar year, the City shall provide the Developer with a schedule of permissible maximum Extremely Low Income Rents, Very Low Income Rents, Low Income Rents, and Middle Income Rents, as applicable, for the succeeding year (the "Rent Schedule"). The Rent Schedule for each calendar year shall reflect the increase in maximum permissible rents which corresponds directly to any increase in Median Income for the County of San Mateo from the Median Income for the County of San Mateo published for the previous calendar year. Under no circumstance may the Developer raise rents above the permissible maximum rents as allowed under the annual rent schedule provided by the City.
G. Rent Increases. Rent for the Restricted Units shall be increased no more than once annually based upon income recertifications described in Article 3. Tenants shall be given at least sixty (60) days’ written notice prior to any Rent increase.
1. Notwithstanding anything to the contrary set forth herein, in the event that Median Incomes decrease in any given calendar year, Developer is permitted to apply the "hold harmless" policy (“Policy”) implemented by CTCAC pursuant to the Housing and Economic Recovery Act of 2008 (H.R. 3221). The Policy states that, as of the date of placed-inservice, (or rent floor election date, available after CTCAC award/reservation), rent limits for a given calendar year cannot be lower than the highest amount of rent limits for each calendar year since placed-in-service.
2. Subject to Section 2.1(g) above, if the project is receiving any rental subsidies (“PBVs”) and such PBVs are terminated, rents for any rent-restricted units losing PBVs may be increased to the federally permitted maximums in accordance with current California Tax Credit Allocation Committee (“CTCAC”) Regulations.
Section 2.3 Increased Income of Tenants.
If, upon recertification of the income of a Tenant, the Developer determines that a former Extremely Low Income Household, Very Low Income Household, Low Income Household or Middle Income Household's Adjusted Income has increased and exceeds the maximum qualifying income for that unit by 10% or less, then the Tenant shall not be considered ineligible and may remain in the Restricted Unit at the allowable rent.
If, at the time of recertification of the income of a Tenant, the Tenant’s Adjusted Income exceeds the maximum for that Restricted Unit by more than 10%, then the Developer may take one of the following actions:
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1. The Restricted Unit lease shall be terminated effective six (6) months from the date of recertification.
2. Increase the rent payable by such Tenant to market rate effective six (6) months from the date of recertification. When the Affordable Unit is Vacated, it shall be rented to an Eligible Tenant pursuant to the terms and conditions of this Agreement.
However, in both cases, if the Tenant provides to Developer evidence which re-establishes Eligible Tenant status no later than thirty (30) days prior to the lease termination date, then the Eligible Tenant’s Lease as to the Affordable Unit shall not be so terminated, and the rent payable by the Tenant shall not exceed the Allowable Rent for the Affordable Unit.
Notwithstanding anything to the contrary set forth herein, Developer shall have no obligation to take any action pursuant to this Section 2.3 to the extent such action would violate the rules or regulations to CTCAC.
Section 2.4 Termination of Occupancy.
Upon termination of occupancy of a Unit by a Tenant, such Unit will be deemed to be continuously occupied by a household of the same income level (e.g., Extremely Low Income Household, Very Low Income Household, Low Income Household, or Middle Income Household) as the initial income level of the vacating Tenant, until such Unit is reoccupied, at which time categorization of the Unit will be established based on the occupancy requirements of Section 2.1.
Section 2.5 Tenant Protections.
For the entire Term the Restricted Units shall be subject to and comply with tenant protection requirements of all Project funding sources.
Section 2.6 Lease Provisions.
The Developer shall include in leases for all Restricted Units provisions which authorize the Developer to immediately terminate the tenancy of any household one or more of whose members misrepresented any fact material to the household's qualification as an Extremely Low Income Household, Very Low Income Household, Low Income Household, or Middle Income Household, as applicable. Each lease or rental agreement shall also provide that the household is subject to annual certification in accordance with Section 3.1 below, and that, if the household's income increases above the applicable limits for an Extremely Low Income Household, Very Low Income Household, Low Income Household, or Middle Income Household as applicable, such household's Rent may be subject to increase.
Section 2.7 Condominium Conversion.
The Developer shall not convert the Development units to condominium or cooperative ownership or sell condominium or cooperative conversion rights to the Property during the Term of this Agreement.
Section 2.8 Units Available to the Disabled.
Developer shall construct the Development in compliance with all applicable federal and state disabled persons accessibility requirements including but not limited to the Federal Fair Housing Act; Section 504 of the Rehabilitation Act of 1973; Title II and/or Title III of the Americans with Disabilities Act of 1973 (29 U.S.C. 794 et seq,); and Title 24 of the California Code of Regulations. 857 of 11211
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ARTICLE 3.
INCOME CERTIFICATION AND REPORTING
Section 3.1 Income Certification.
A. Developer shall obtain, complete, and maintain on file, immediately prior to initial occupancy and annually thereafter, income certifications from each Tenant renting any of the Restricted Units. Developer shall make a good faith effort to verify the accuracy of the income provided by all applicants or all members of the occupying household (for all adults age eighteen (18) or older), as the case may be, in the income certification. To verify the information, Developer shall take one or more of the following steps as part of the verification process: (1) obtain a minimum of the three most current pay stubs for all adults age eighteen (18) or older; (2) obtain an income tax return for the most recent tax year; (3) conduct a credit agency or similar search; (4) obtain an income verification form from the applicant's current employer verifying employment for the last two months; (5) obtain the three (3) most current savings and checking account bank statements; (6) obtain an income verification form from the Social Security Administration and/or the California Department of Social Services if the applicant receives assistance from either of such agencies, verifying assistance for the last two months (as available from those agencies); or (7) if the applicant is unemployed and does not have a tax return, obtain another form of independent verification. Copies of Tenants' income certifications shall be available to the City upon reasonable written request.
The City hereby pre-approves the CTCAC tenant income certification form as an acceptable alternative to the form attached as Exhibit C.
Section 3.2 Tenant Selection.
(a) No later than six (6) months prior to the date of construction is to be completed, the Developer must provide the City for its review and approval its plan for marketing the Development to income-eligible households as required pursuant to this Agreement, including information on affirmative marketing efforts and compliance with fair housing laws (the "Marketing Plan"). (b) Except as otherwise permitted in the City Loan Documents, the Developer shall not discriminate against any applicants for tenancy on the basis of source of income or rent payment (for example, without limitation, Temporary Assistance for Needy Families (TANF) or Section 8), and the Developer shall consider a prospective Tenant's previous rent history of at least one (1) year, or such other time period the Developer deems reasonable, as evidence of the prospective Tenant's ability to pay the applicable Rent. The ability to pay shall be demonstrated if the prospective Tenant can document that the prospective Tenant's gross income is at least two (2) times the prospective rent at the prospective Tenant's income level. The Developer, in the reasonable exercise of its discretion, may waive the requirement that the prospective Tenant's gross income equal at least two (2) times the prospective rent at the prospective Tenant's income level, and admit prospective Tenants with lower gross incomes.
Section 3.3 Annual Report to City.
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A. Developer shall submit to City: (1) not later than the forty-fifth (45th) day after the close of each calendar year, or such other date as may be requested by City, a statistical report, in a form acceptable to the City, including income and rent data for all Restricted Units, an assessment of compliance with the approved Management Plan, and an evaluation of the Management Agent. The Annual Report shall, at a minimum, include the following most recent information for each dwelling unit in the Project, but is not limited to: (i) unit number; (ii) number of bedrooms; (iii) current rent and other charges; (iv) dates of any vacancies during the previous year; (v) number of people residing in the unit; (vi) total gross household income of residents; (vii) documentation of source of household income; (viii) lease commencement and termination dates, (ix) initial move-in date, and (x) the information required by Section 3.1, any other information or completed forms reasonably requested by the City, and (2) within fifteen (15) days after receipt of a written request, any other information or completed forms requested by City in order to comply with reporting requirements of the State of California, or the City. In addition to the information described above, the Annual Report shall include the following:
1. A Project income and expense statement for the reporting period;
2. Proposed annual budget for the next fiscal year in accordance with Section 3.5 below;
3. A report on maintenance and other issues anticipated to affect the current budget needs of the Project as well as the amount in the Project’s reserve accounts and the amount expected to be needed for major repairs or other needs during the new fiscal year;
4. Information on the status of the waiting list for residential units; and
5. A financial audit of the books and records of the Project prepared in accordance with generally accepted auditing standards by an independent certified public accountant.
City may require the audit to be accompanied by a supplemental report prepared in accordance with City’s requirements.
Section 3.4 Additional Information.
Developer shall provide any additional information reasonably requested by City. City shall have the right to examine and make copies of all books, records or other documents of Developer which pertain to the Development.
Section 3.5 Records.
The Owner shall keep and maintain at the Development, or elsewhere with the City's written consent, complete, accurate and current records pertaining to the Development, and shall permit any duly authorized representative of the City to inspect records, including records pertaining to income and household size of Residents, Rent charged Residents and affirmative marketing requirements. All Resident lists, applications and waiting lists relating to the Development shall at all times be kept separate and identifiable from any other business of the Owner and shall be maintained as required by the City, in a reasonable condition for proper audit and subject to examination during business hours by representatives of the City. The Owner shall retain copies of all materials obtained or produced with respect to occupancy of the Units for a period of at least five (5) years.
Section 3.6 Annual Operating Budget.
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The Developer, at least sixty (60) days prior to the end of each of the Developer's fiscal year, shall furnish the City an Annual Operating Budget. Upon receipt by the City of the proposed Annual Operating Budget, the City shall promptly review the same and approve or disapprove it within ten (10) business days. If the Annual Operating Budget is not approved by the City, the City shall set forth in writing and notify the Developer of the City's reasons for withholding such approval. The Developer shall thereafter submit a revised Annual Operating Budget for City approval, which approval shall be granted or denied within ten (10) business days in accordance with the procedures set forth above. If no written comments from the City are received within ten (10) business days, the Annual Operating Budget will be deemed approved.
Section 3.7 Resident Services Plan.
A. Not less than six (6) months prior to completion and not less than sixty (60) days prior to the end of the Developer's fiscal year thereafter, Developer shall furnish to the City a draft "Resident Services Plan." Upon receipt by the City of the proposed Resident Services Plan, the City shall promptly review the same and approve or disapprove it within ten (10) business days.
If the Resident Services Plan is not approved by the City, the City shall set forth in writing and notify the Developer of the City's reasons for withholding such approval, which may include a request by the City for a change in the nature or scope of resident services or a change in service provider, consistent with applicable low income housing tax credit regulations. The Developer shall thereafter submit the revised Resident Services Plan within ten (10) business days of notification of disapproval. The City shall either approve or disapprove the submitted revised Resident Services Plan within ten (10) business days of the date such revised Resident Services Plan is received by the City, and shall approve the revised Resident Services Plan if the requested changes have been made.
B. If, as a result of a periodic review, the City determines, in its reasonable judgment, that the Residents of the Development are not receiving material services and/or there is a failure to achieve outcomes identified in the approved Resident Services Plan, the City shall deliver notice to the Developer of its intention to, in addition to any other remedies available to the City hereunder, require the Developer to: (1) replace the resident service coordinator or resident services provider; or (2) meet in good faith to consider methods for improving the resident services being offered to Residents of the Development; or (3) deliver notice to the Developer requiring the Developer to cause the replacement of the resident services coordinator or resident services provider with a resident services coordinator or resident services provider selected by the City.
C. If, after the above procedure, the City requires in writing the replacement of the resident services coordinator or the resident services provider, the Developer shall promptly dismiss the then resident services coordinator or resident services provider, as applicable, and shall appoint as the resident services coordinator or resident services provider, as applicable, a person or entity capable of meeting the standards for a resident services coordinator or resident services provider, as applicable, under the Resident Services Plan and approved by the City at the City's reasonable discretion.
D. Any contract for the resident services coordinator or resident services provider, as applicable, for the Development entered into by the Developer shall provide that the contract can be terminated as set forth above. Failure to remove the resident services coordinator or the resident services provider, as applicable, in accordance with the provisions of this Section 860 of 11211
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shall constitute default under this Agreement, and the City may enforce this provision through legal proceedings as specified in Section 6.5 below.
Section 3.8 On-Site Inspection.
The City may perform, or cause to be performed, during normal business hours, an on-site inspection of the Development (including Restricted Units, subject to the rights of Tenants) at least one (1) time per year upon no less than five (5) business days' prior written notice to Developer to monitor compliance with this Agreement. Developer shall cooperate in making the Development available for such inspection.
ARTICLE 4.
OPERATION OF THE DEVELOPMENT
Section 4.1 Residential Use.
The Development shall be operated only for residential use. No part of the Development shall be operated as transient housing. No part of the Development shall be operated as transient housing in which the term of Tenant occupancy is less than thirty (30) days. No part of the Development may be operated as an emergency shelter (including shelter for disaster victims) or facilities such as nursing homes, convalescent homes, hospitals, residential treatment facilities, correctional facilities, halfway houses, housing for students, or dormitories (including farmworker dormitories). Nothing herein shall limit the use and/or operation of any non-residential commercial space withing the Development.
Section 4.2 Compliance with Loan Documents.
Developer shall comply with and at all times be in full conformity with: (a) all requirements imposed on projects assisted with Housing Asset Fund monies under California Health and Safety Code Section 33334.2 et seq.; and (b) any other regulatory requirements imposed on the Development.
Section 4.3 Taxes and Assessments.
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 Developer’s interest therein; provided, however, that Developer shall have the right to contest in good faith, any such taxes, assessments, or charges. In the event Developer exercises its right to contest any tax, assessment, or charge against it, 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.
Section 4.4 Property Tax Exemption.
Developer shall be allowed to apply to the State Board of Equalization for or obtain a welfare exemption from property taxes under any provision of law, including California Revenue and Taxation Section 214(g).
Section 4.5 Allowable Preferences.
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A. To the extent permitted by other Project funding sources and to the extent permitted by applicable law including fair housing laws, and unless prohibited by the regulations of the HCD or the US Department of Housing and Urban Development, the Developer shall grant the a preference in rental of ____ of the units to otherwise qualified households that live, work or have been offered work (and who subsequently accept such offer) in the City. The Developer shall grant an additional preference in rental of units to otherwise qualified households that have been displaced by activity of the City, the City's code enforcement activities, or as provided in Health and Safety Code Section 33411.3
B. Notwithstanding anything to the contrary contained herein, 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.
C. In addition, the City acknowledges that, to the extent permitted by other Project funding sources and to the extent permitted by applicable law including fair housing laws, and unless prohibited by the regulations of the HCD or the US Department of Housing and Urban Development, the Developer may also give preference for ________.
Section 4.6 Nondiscrimination.
A. Except as otherwise permitted under this Agreement, all of the Restricted Units shall be available for occupancy on a continuous basis to members of the general public who are income eligible. Developer shall not give preference to any particular class or group of persons in renting the Restricted Units, except to the extent that the Units are required to be leased to Extremely Low Income Households, Very Low Income Households, Low Income Households, or Middle Income Households. All deeds, leases or contracts made or entered into by Developer, its successors or assigns, as to any portion of the Property or the Improvements shall contain the following language:
1. "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 himself or herself, or any person claiming under or through him or her, 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, sublessees, subtenants, or vendees in the premises herein leased. The foregoing covenant shall run with the land.
2. Notwithstanding the preceding paragraph, with respect to familial status, the preceding paragraph shall not be construed to apply to housing for older persons, as defined in Section 12955.9 of the Government Code. With respect to familial status, nothing in the preceding paragraph shall be construed to affect Sections 51.2, 51.3, 51.4,
51.10, 51.11, and 799.5 of the Civil Code, relating to housing for senior citizens.
Subdivision (d) of Section 51 and Section 1360 of the Civil Code and subdivisions (n), (o), and (p) of Section 12955 of the Government Code shall apply to the preceding paragraph."
3. The provisions of this Section shall run with the land and survive termination of this Agreement.
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Section 4.7 Section 8 Certificate Holders.
The Developer will accept as residents, on the same basis as all other prospective residents, persons who are recipients of federal certificates or vouchers for rent subsidies pursuant to the existing housing program under Section 8 of the United States Housing Act, or its successor. The Developer shall not apply selection criteria to Section 8 certificate or voucher holders that are more burdensome than criteria applied to all other prospective residents, nor shall the Developer apply or permit the application of management policies or lease provisions with respect to the Development which have the effect of precluding occupancy of units by such prospective Tenants.
In determining a Section 8 certificate or voucher holders ability to pay rent, the Developer shall determine the prospective Tenants ability to make only the prospective Tenant's portion of the rent.
Section 4.8 Notice of Litigation.
Developer shall promptly notify the City in writing of any litigation materially affecting Developer or the Development and of any claims or disputes that involve a material risk of such litigation.
Section 4.9 Lease Termination.
Any termination of a lease of a Restricted Unit (other than for a default by the Tenant) or refusal to renew must be preceded by not less than sixty (60) days written notice to the Tenant by Developer specifying the grounds for the action. Any termination of a lease for a default of the Tenant shall be in accordance with applicable law.
ARTICLE 5.
PROPERTY MANAGEMENT AND MAINTENANCE
Section 5.1 Management Responsibilities. Developer is responsible for all management functions with respect to the Development, including without limitation the selection of tenants, certification and recertification of household size and income, evictions, collection of rents and deposits, maintenance, landscaping, routine and extraordinary repairs, replacement of capital items, and security. City shall have no responsibility over management of the Development.
Developer shall retain a professional property management company approved by City in its reasonable discretion to perform its management duties hereunder. The Developer shall submit to the City for approval an initial proposed "Management Plan" no later than six (6) months after the commencement of construction of the Development. The City shall approve or disapprove (with written explanation for disapproval) of the proposed management plan by notifying the Developer in writing within sixty (60) days of the date of submission to the City.
Section 5.2 Management Agent.
The Development shall at all times be managed by an experienced management agent reasonably acceptable to City, with demonstrated ability to operate residential facilities like the Development in a manner that will provide decent, safe, and sanitary housing (as approved, the “Management Agent”). Developer shall submit for City’s approval the identity of any proposed Management Agent. Developer shall also submit such additional information about the background, experience, policies, and financial condition of any proposed management agent as is 863 of 11211
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reasonably necessary for City to determine whether the proposed management agent meets the standard for an experienced management agent set forth above. If the proposed management agent meets the standard for an experienced management agent set forth above, City shall approve the proposed management agent by notifying Developer in writing. Unless the proposed management agent is disapproved by City within thirty (30) days, which disapproval shall state with reasonable specificity the basis for disapproval, it shall be deemed approved. The City hereby pre-approves Alta Housing Management and Services as the initial property management company.
Section 5.3 Performance Review.
City reserves the right to conduct an annual (or more frequently, if deemed necessary by City) review of the management practices and financial status of the Development. The purpose of each periodic review will be to enable City to determine if the Development is being operated and managed in accordance with the requirements and standards of this Agreement. Developer shall cooperate with City in such reviews.
Section 5.4 Replacement of Management Agent.
(a) If, as a result of a periodic review, City determines in its reasonable judgment that the Development is not being operated and managed in accordance with any of the material requirements and standards of this Agreement, City shall deliver notice to Developer of its determination that the Development is not being operated and managed in accordance with the material requirements and standards of this Agreement along with a detailed list of matters the City requires to be remedied to bring the Development into compliance with this Agreement (the “City Management Deficiency Notice”). Upon receipt of a City Management Deficiency Notice, Developer shall cause the Management Agent to promptly implement the measures set forth in the City Management Deficiency Notice. To the extent the matters set forth in the City Management Deficiency Notice have not been cured within 30 days after delivery of the City Management Deficiency Notice, or such later period as is reasonably necessary to cure the matter set forth in the City Management Deficiency Notice, City staff and Developer shall meet in good faith to consider additional methods for improving the financial and operating status of the Development, including, without limitation, replacement of the Management Agent.
(b) If, after such meeting, City staff recommends in writing the replacement of the Management Agent, Developer shall promptly dismiss the current Management Agent, and shall appoint as the Management Agent a person or entity meeting the standards for a management agent set forth in Section 5.2 above and approved by City pursuant to Section 5.2 above.
(c) Any contract for the operation or management of the Development entered into by Developer shall provide that the contract can be terminated as set forth above. Failure to remove the Management Agent in accordance with the provisions of this Section shall constitute a default under this Agreement, and City may enforce this provision through legal proceedings as specified in Section 6.8 below.
Section 5.5 Marketing.
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Developer and the Management Agent shall be responsible for the promotion and other marketing efforts for rental of the Restricted Units. Prior to the initial lease up of the Restricted Units, Developer and the Management Agent shall develop a marketing plan in order to affirmatively market the Restricted Units with the goal of attracting all qualified persons without regard to race, color, creed, religion, sex, sexual orientation, age, marital status, national origin, source of income (e.g. SSI), ancestry, or disability, except as otherwise permitted in the City Loan Documents. The marketing plan shall be submitted to and approved by the City prior to marketing the Restricted Units. Developer and the Management Agent shall comply with the provisions of Exhibit B, attached hereto, entitled “Affirmative Marketing Strategy.” Developer and the Management Agent shall select tenants on a non-discriminatory basis, consistent with the provisions of Section 6.3 of this Agreement and the “Marketing Policies Regulating Leasing and Sales of Subsidized Affordable Housing Units” adopted by the City in March 2009 and as amended from time to time.
Section 5.6 Property Maintenance.
(a) Developer agrees, for the entire Term of this Agreement, to maintain all interior and exterior improvements, including landscaping, comprising the Development in good condition and repair (and, as to landscaping, in a healthy condition) and in accordance with all applicable laws, rules, ordinances, orders and regulations of all federal, state, City, municipal, and other governmental agencies and bodies having or claiming jurisdiction and all their respective departments, bureaus, and officials, and in accordance with the following maintenance conditions:
(b) Landscaping. Developer agrees to have landscape maintenance performed at least every other week, including replacement of dead or diseased plants with comparable plants.
Developer agrees to adequately water the landscaping on the Development in compliance with City policies. No improperly maintained landscaping on the Development shall be visible from public streets and/or rights of way.
(c) City places prime importance on quality maintenance to protect its investment and to ensure that all City and City-assisted affordable housing projects within City are not allowed to deteriorate due to below-average maintenance. Normal wear and tear of the Development will be acceptable to City assuming Developer agrees to provide all necessary improvements to assure the Development is maintained in good condition. Developer shall make all repairs and replacements necessary to keep the improvements in good condition and repair. (d) In the event that 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 City with respect to graffiti, debris, waste material, and general maintenance or thirty (30) days after written notice from City with respect to landscaping and building improvements, then City, in addition to whatever other remedy it may have at law or in equity, shall have the right to enter upon the Property and perform or cause to be performed all such acts and work necessary to cure the default. Pursuant to such right of entry, City shall be permitted (but is not required) to enter upon the Development and perform all acts and work necessary to protect, maintain, and preserve the improvements and landscaped areas comprising the Development, and to attach a lien thereon, or to assess the Development, in the amount of the expenditures arising from such acts and work of protection, maintenance, and preservation by City and/or costs of such cure, which amount shall be promptly paid by Developer to City upon demand.
(e) Safety Conditions.
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(a) Developer acknowledges that City places a prime importance on the security of City assisted projects and the safety of the residents and surrounding community. The Owner agrees to implement and maintain throughout the Term the following security measures in the Development:
(1) to the extent feasible employ defensible space design principles and crime prevention measures in the operation of the Development including but not limited to maintaining adequate lighting in parking areas and pathways; (2) provide added security including dead-bolt locks for every entry door, and where entry doors are damaged, replace them with solid-core doors. (b) City shall have the right to enter on the Development and/or contact the San Mateo Police Department if it becomes aware of or is notified of any conditions that pose a danger to the peace, health, welfare or safety of the Residents and/or the surrounding community, and to perform or cause to be performed such acts as are necessary to correct the condition.
ARTICLE 6.
MISCELLANEOUS
Section 6.1 Term. The provisions of this Agreement apply to the Development for the entire Term even if the City Loans are paid in full prior to the end of the Term. This Agreement binds any successor, heir or assign of Developer, whether a change in interest occurs voluntarily or involuntarily, by operation of law or otherwise, except as expressly released by City. City is making the City Loans on the condition, and in consideration of, this provision, and would not do so otherwise.
Section 6.2 Lease Provisions.
(a) In leasing the Units, Developer shall use a form of Tenant lease approved by the City. The form of Tenant lease shall also comply with all requirements of this Agreement and the Loan Documents, and shall, among other matters:
a. Provide for termination of the lease and consent by the Tenant to immediate eviction for failure: (1) to provide any information required under this Agreement or reasonably requested by Developer to establish or recertify the Tenant’s qualification, or the qualification of the Tenant’s household for occupancy in the Development in accordance with the standards set forth in this Agreement, or (2) to qualify as a, Extremely Low Household, Very Low Income Household, Low Income Household or Middle Income Household, as applicable, as a result of any material misrepresentation made by such Tenant with respect to the income computation or certification;
b. Require the Tenant to occupy the Unit as the Tenant’s principal residence and prohibit the subleasing of the Unit;
c. Require the Tenant to maintain the Unit in good repair and in a neat, clean and sanitary condition;
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d. Prohibit the Unit from being utilized contrary to any law; e. Provide for an increase in the Tenant’s Rent should the Tenant’s annual income exceed the income limit allowed for the Unit, pursuant to the terms outlined in Section 2.3;
f. Be for an initial term of not less than one (1) year, unless by mutual agreement between the Tenant and Developer; and
g. Provide for no increase in Rent during the initial year. After the initial year of tenancy, the lease may be month to month by mutual agreement of Developer and the Tenant, however Rent may not be raised more often than once a year. Developer will provide each Tenant with at least sixty (60) days’ written notice of any increase in Rent applicable to such Tenant, and with such further notice as may be required by Section 2.3 above.
Section 6.3 Compliance with Loan Documents and Program Requirements.
Developer’s actions with respect to the Development shall at all times be in full conformity with:
(a) all requirements of the Loan Documents; and (b) all requirements of the City Deed of Trust; and (c) all requirements imposed on projects assisted with Housing Fund Proceeds under California Health and Safety Code Section 33334.2 et seq.
Section 6.4 Notice of Expiration of Term.
a. Prior to the termination of the Term, the Developer shall comply with the requirements set forth in California Government Code Sections 65863.10 and 65863.11, as such may be amended from time to time.
Such notice requirements may include: (1) a twelve (12) month notice to existing tenants, prospective tenants and Affected Public Agencies (as defined in California Government Code Section 65863.10(a), which would include the City's Community Development and Housing Director, prior to the expiration of the Term; (2) a six (6) month notice requirement to existing Tenants, prospective tenants and Affected Public Agencies prior to the expiration of the Term; (3) a notice of an offer to purchase the Development to "qualified entities" (as defined in California Government Code Section 65863.11(d)), if the Development is to be sold within five (5) years of the end of the Term; and (4) a notice of right of first refusal within the one hundred eighty (180) day period that qualified entities may purchase the Development.
Section 6.5 Covenants to Run With the Land.
City and Developer hereby declare their express intent that the covenants and restrictions set forth in this Agreement shall run with the land, and shall bind all successors in title to the Development, provided, however, that on the expiration of the Term of this Agreement said covenants and restrictions shall expire Each and every contract, deed or other instrument hereafter executed covering or conveying the Development or any portion thereof shall be held conclusively to have been executed, delivered and accepted subject to such covenants and restrictions, regardless of whether such covenants or restrictions are set forth in such contract, deed or other instrument, unless City expressly releases such conveyed portion of the Development from the requirements of this Agreement.
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Section 6.6 Enforcement by City.
If Developer fails to perform any obligation under this Agreement, and fails to cure the default within thirty (30) days after City has notified Developer in writing of the default or, if the default cannot be cured within thirty (30) days, failed to commence to cure within thirty (30) days and thereafter diligently pursue such cure and complete such cure within ninety (90) days, City shall have the right to enforce this Agreement by any or all of the following actions, or any other remedy provided by law:
(a) Calling the City Loans. City may declare a default on the Notes of any of the City Loans, accelerate the indebtedness evidenced by the Notes, and proceed with foreclosure under the City Deed of Trust.
(b) Action to Compel Performance or for Damages. City may bring an action at law or in equity to compel Developer’s performance of its obligations under this Agreement, and/or for damages.
(c) Remedies Provided Under Loan Documents. City may exercise any other remedy provided under the Loan Documents.
(d) Cure by Investor Limited Partner. City hereby agrees to accept a cure of any default made or tendered hereunder by Investor Limited Partner on the same terms and conditions as if such cure was made or tendered by Developer.
Section 6.7 Rights of Third Parties to Enforce Covenants.
Notwithstanding any other provisions of law, all covenants and restrictions contained herein which implement Health and Safety Code Sections 33334.3 and/or 33413(b)(4), or successor provisions, shall run with the land and shall be enforceable by the City, the City, and any of the parties listed in Health and Safety Code Section 33334.3(f)(7), so long as such provision or successor provision remains in effect.
Section 6.8 Listing of Development in Database.
The Developer hereby acknowledges and agrees that Health and Safety Code Section 33418(c) requires that the Development be listed in a database that shall be made available to the public on the internet and which will include the street address, assessor's parcel number, and other information about the Development.
Section 6.9 Attorneys’ Fees and Costs.
In any action brought to enforce this Agreement, the prevailing party shall be entitled to recover attorney fees in a total amount not exceeding $5,000 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 said $5,000 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 Agreement that, in connection with any action or actions between the City and Developer to enforce the provisions of this Agreement, neither the City nor the Developer shall have to pay the other more than $5,000 for attorney fees and costs arising out of such action or actions.
Section 6.10 Recording and Filing.
City and Developer shall cause this Agreement, and all amendments and supplements to it, to be recorded in the Official Records of the County of San Mateo. 868 of 11211
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Section 6.11 Governing Law.
This Agreement shall be governed by the laws of the State of California. Any action brought by either of the Parties for the purpose of enforcing a right or rights provided for by this Agreement will be tried in a court of competent jurisdiction in the County of San Mateo, State of California. The Parties waive all provisions of law providing for a change of venue in any proceeding to any other county
Section 6.12 Waiver of Requirements Any of the requirements of this Agreement may be expressly waived by City in writing, but no waiver by City of any requirement of this Agreement shall, or shall be deemed to, extend to or affect any other provision of this Agreement.
Section 6.13 Amendments.
This Agreement may be amended only by a written instrument executed by all the parties hereto or their successors in title, and duly recorded in the real property records of County of San Mateo.
Section 6.14 Notices.
Any notice requirement set forth herein shall be deemed to be satisfied three (3) days after mailing of the notice first-class United States certified mail, postage prepaid addressed to the appropriate party as follows:
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660\14\4032279.6 21
Developer:
Name/Title: Randal Tsuda
President & Chief Executive Officer
AH Bespoke LP c/o Alta Housing
Address: 3640 West Bayshore Rd., Ste. 104
Palo Alto, CA 94303
Telephone: 650-321-9709
Facsimile: 650-802-5049
Email: [email protected]
With copy to:
Lender to be added
And:
City:
City of San Mateo
330 W. 20th Avenue
San Mateo, CA 94403
Attention: Housing Manager
Such addresses may be changed by notice to the other party given in the same manner as provided above. Receipt will be deemed to have occurred on the date shown on a written receipt as the date of delivery or refusal of delivery (or attempted delivery if undeliverable).
Section 6.15 Severability.
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If any provision of this Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining portions of this Agreement shall not in any way be affected or impaired thereby.
Section 6.16 Waiver of Requirements. No waiver of the requirements of this Agreement shall occur unless expressly waived by the City in writing. No waiver will be implied from any delay or failure by the City to take action on any breach or default of the Developer or to pursue any remedy permitted under this Agreement or applicable law. Any extension of time granted to the Developer to perform any obligation under this Agreement shall not operate as a waiver or release from any of its obligations under this Agreement. Consent by the City to any act or omission by the Developer shall not be construed to be a consent to any other or subsequent act or omission or to waive the requirement for the City's written consent to future waivers.
Section 6.17 Multiple Originals; Counterparts.
This Agreement may be executed in multiple originals, each of which is deemed to be an original, and may be signed in counterparts.
Section 6.18 Hold Harmless.
Developer will indemnify and hold harmless (without limit as to amount) City, its council members, officers, employees and agents in their official capacity (hereinafter collectively referred to as "Indemnitees"), and any of them, from and against all loss, all risk of loss and all damage (including expense) sustained or incurred because of or by reason of any and all claims, demands, suits, actions, judgments and executions for damages of any and every kind and by whomever and whenever made or obtained, allegedly caused by, arising out of or relating in any manner to the Development, the Restricted Unit, or the Developer's performance or non-performance under this Agreement, and shall protect and defend Indemnitees, and any of them with respect thereto, except to the extent caused by the gross negligence or willful misconduct of the Indemnitees, as applicable. The provisions of this Section shall survive expiration or other termination of this Agreement or any release of part or all of the Property from the burdens of this Agreement, and the provisions of this section shall remain in full force and effect.
Section 6.19 Revival of Agreement after Foreclosure.
This Agreement shall be revived according to its original terms if, during the original Term, the owner of record before the foreclosure, or deed in lieu of foreclosure, or any entity that includes the former owner or those with whom the former owner has or had family or business ties, obtains an ownership interest in the Development or the Property.
Section 6.20 Action and Approval.
Whenever action and/or approval by City is required under this Agreement, the City Manager or the City Manager’s designee may act on and/or approve such matter unless specifically provided otherwise, or unless the City Manager or the City Manager's designee determine in their discretion that such action or approval requires referral to City Council for consideration.
Section 6.21 No Third Party Beneficiaries.
Except as expressly set forth herein, nothing contained in this Agreement is intended to or shall be deemed to confer upon any person, other than the Parties and their respective successors and assigns, any rights or remedies hereunder.
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Section 6.22 Tax Credit Program.
Notwithstanding anything contained herein to the contrary, for as long as the Property is subject to the requirements of the California and/or Federal Low-Income Housing Tax Credit Program under the provisions of Section 42 of the Code and Section 23610.5 of the California Revenue and Taxation Code, as applicable (collectively, the "Tax Credit Program") and there is a conflict between the requirements of the Tax Credit Program and either the affordability provisions set forth in 2.3 above or the preferences set forth in Section 4.5 above, inclusive, then the provisions of the Tax Credit Program shall prevail. That notwithstanding, the fact that this Agreement and the Tax Credit Program provide for greater, lesser or different obligations or requirements shall not be deemed a conflict unless the applicable provisions are inconsistent and could not be simultaneously enforced or performed.
Section 6.23 Subordination.
This Agreement shall not be subordinated with respect to the Extremely Low Income Households in accordance with Section 2.1(g).
Section 6.24 No Claims.
Nothing contained in this Agreement shall create or justify any claim against the City by any person that the Developer may have employed or with whom the Developer may have contracted relative to the purchase of materials, supplies or equipment, or the furnishing or the performance of any work or services with respect to the Property or the construction or operation of the Improvements.
Section 6.25 Titles of Parts and Sections.
Any titles of the sections or subsections of this Agreement are inserted for convenience of reference only and shall be disregarded in interpreting any part of the Agreement's provisions.
Section 6.26 Assignment by the City.
The City may assign its rights and obligations under this Agreement to any instrumentality of the City or other public entity without the consent of, but upon prior written notice to, the Developer.
[Signature Pages Follow.]
872 of 11211
WHEREAS, this Agreement has been entered into by the undersigned as of the date first above written.
DEVELOPER:
AH BESPOKE LP,
a California limited partnership
By: AH Bespoke LLC,
a California limited liability company, its General Partner By: Alta Housing,
a California nonprofit public benefit corporation,
its sole member/manager
By: ___________________________________
Name: ___________________________________
Its: ___________________________________
[Signature must be notarized.]
873 of 11211
CITY:
City of San Mateo, a California charter city
By: ___________________________________
Alex Khojikian, City Manager
APPROVED AS TO FORM:
By: _______________________________________
Prasanna Rasiah, City Attorney
[Signature must be notarized.]
874 of 11211
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 t
e 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: ____________________________________
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. 875 of 11211
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 t
e 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: ____________________________________
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. 876 of 11211
EXHIBIT A
Legal Description of the Low-Income Housing Parcel
The Property referred to is situated in the State of California, City of San Mateo and 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: 034-017-179-06.00 877 of 11211
EXHIBIT B
Form of Certification of Tenant Eligibility
Rental Unit
Street Address
Unit No.
City
Zip Code
I/We, the undersigned, being first duly sworn, state that I/we have read and answered fully and truthfully each of the following questions for all persons who are to occupy the unit in the above Development for which application is made, all of whom are listed below:
1. 2. 3. 4. 5.
Name of
Members
in the Household
Relationship to
Head of Household Age Ethnicity Place of Employment
Ethnicity: ❑ White ❑ Black or African American ❑ Asian ❑ Asian & White ❑ American Indian or Alaska Native
❑ Native Hawaiian or Other Pacific Islander ❑ American Indian or Alaska Native & White ❑ Black or African American & White
❑ American Indian or Alaska Native & Black or African American ❑ Other Multi Race ❑ Hispanic
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Date of Occupancy of Rental Unit by Tenant:
Date of Lease Signed for Rental Unit by Tenant:
Amount of Rent Paid Per Month:
Certification Date (Earlier of Date of Occupancy or Date Lease signed):
6. Anticipated Annual Income. The anticipated total annual income from all sources of each person listed in Section 1 for the twelve (12) month period beginning on the Certification Date listed above, including income described in (a) below, but excluding all income described in (b) below, is $ .
(a) The amount set forth above includes all of the following income (unless such income is described in (b) below): all wages and salaries, overtime pay, commissions, fees, tips and bonuses before payroll deductions; net income from the operation of a business or profession or from the rental of real or personal property (without deducting expenditures for business expansion or amortization of capital indebtedness or any allowance for depreciation of capital assets); interest and dividends (including income from assets as set forth in item 7(b) below); full amount of periodic payments received from Social security, annuities, insurance policies, retirement funds, pensions, disability or death benefits and other similar types of periodic receipts; payments in lieu of earnings, such as unemployment and disability compensation, worker's compensation and severance pay; the maximum amount of public assistance available to the above persons; periodic and determinable allowances, such as alimony and child support payments and regular contributions and gifts received from persons not residing in the dwelling; all regular pay, special pay and allowances of a member of the Armed Forces (whether or not living in the dwelling) who is the head of the household or spouse; and any earned income tax credit to the extent it exceeds income tax liability.
(b) The following income is excluded from the amount set forth above: casual, sporadic or irregular gifts; amounts that are specifically for or in reimbursement of medical expenses; lump sum additions to family assets, such as inheritances, insurance payment (including payments under health and accident insurance and worker's compensation), capital gains and settlement for personal or property losses; amounts of educational scholarships paid directly to student or educational institution, and amounts paid by the government to a veteran for use in meeting the costs of tuition, fees, books and equipment, but in either case only to the extent used for such purposes; hazardous duty pay to a member of the household in the armed forces who is away from home and exposed to hostile fire; relocation payments under Title II of the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970; income from employment of children (including foster children) under the age of eighteen (18) years; foster child care payments; the value of coupon allotments under the Food Stamp Act of 1977; payments to volunteers under the Domestic Volunteer Service Act of 1973; payments received under the Alaska Native Claims Settlement Act; income derived from certain submarginal land of the United States that is held in trust for certain Indian tribes; payments on allowances made under the Department of Health and Human Services' Low-Income Home Energy Assistance Program; and payments received from the Workforce Innovation and
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(c) Opportunity Act.
7. Net Family Assets. If any of the persons described in item 1 above (or any person whose income or contributions were included in item 6) has any savings, stocks, bonds, equity in real property or other form of capital investment (excluding interests in Indian trust lands), provide:
(a) the total value of all such assets owned by all such persons: $ , and (b) the amount of income expected to be derived from such assets in the twelve (12) month period commencing this date: $ .
8. Students
(a) Will any of the persons listed in item 1 above be or have they been full-time students during five (5) calendar months of this calendar year at an educational institution (other than a correspondence school) with regular faculty and students? Yes No
(b) (Complete only if the answer to Question 8(a) is "Yes"). Is any such person (other than nonresident aliens) married and eligible to file a joint federal income tax return, a veteran of the U.S. military?
Yes No
The above information is full, true, and complete to the best of my knowledge. I have no objections to inquiries being made for the purpose of verifying the statements made herein.
Signature: Date
(Signature Must be Notarized)
880 of 11211
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 t
e 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: ____________________________________
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. 881 of 11211
FOR COMPLETION BY DEVELOPMENT OWNER ONLY:
A. Calculation of eligible income:
(1) Enter amount entered for entire household in 6 above: $ (2) If the amount entered in 7(a) above is greater than $5,000, enter $ (i) the product of the amount entered in 7(a) above
multiplied by the current passbook savings rate as determined by HUD: $ (ii) the amount entered in 7(b) above: $
(iii) enter the greater of line (i) or line (ii): $
(3) TOTAL ELIGIBLE INCOME (Line A(1) plus line A(2)(iii)): $ B. Enter number of family members listed in item 1 above:
C. The amount entered in A(3) (Total Eligible Income) is: $ Less than $__________ of median income for the area in which the Development is located, which is the maximum income at which a household may be determined to be a qualifying tenant as that term is defined in the Agreement.
More than the above-mentioned amount.
D. Number of units assigned:
E. Monthly rent: $
F. This unit (was/was not) last occupied for a period of thirty-one (31) consecutive days by a person or persons whose Adjusted Annual Income, as certified in the above 882 of 11211
manner, was equal to or less than the amount at which a person would have qualified as a qualifying tenant under the terms of the Agreement.
G. Applicant:
Qualifies as a qualifying tenant.
Does not qualify as a qualifying tenant.
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1 EXHIBIT F
FORM OF PROMISSORY NOTE
PROMISSORY NOTE
(Bespoke)
$3,000,000 San Mateo, California
[Date]
FOR VALUE RECEIVED, the undersigned AH Bespoke LP, a California limited partnership ("Borrower") hereby promises to pay to the order of the City of San Mateo, a California charter city ("Holder"), the principal amount of Three Million Dollars ($3,000,000) plus interest thereon pursuant to Section 2 below.
All capitalized terms used but not defined in this Note have the meanings set forth in the Loan Agreement between Borrower and Holder of even date herewith (the "Loan Agreement").
1. Borrower's Obligation. This promissory note (the "Note") evidences Borrower's obligation to repay Holder the principal amount of Three Million Dollars ($3,000,000) with interest for the funds loaned to Borrower by Holder to finance the construction of the Development pursuant to the Loan Agreement.
2. Interest.
(a) Subject to the provisions of Subsection (b) below, the Loan will bear interest at three percent (3%) per annum, simple.
(b) If an Event of Default occurs, interest will accrue on all amounts due under this Note at the rate of ten percent (10%) compounded annually, or the highest rate permitted by law, until such Event of Default is cured by Borrower or waived by Holder.
3. Term and Repayment Requirements. Principal and interest under this Note is due and payable as set forth in Section 3.5 of the Loan Agreement. The unpaid principal balance hereunder, together with accrued interest thereon, is due and payable no later than the date that is the fifty-seven (57
th) anniversary of the Close of Escrow (the date on which the Regulatory Agreement is recorded against the Property).
4. No Assumption. This Note is not assumable by the successors and assigns of Borrower without the prior written consent of Holder, except as provided in the Loan Agreement.
5. Security. This Note, with interest, is secured by the Leasehold Deed of Trust.
Upon execution, the Leasehold Deed of Trust will be recorded in the official records of San Mateo County, California. Upon recordation of the Leasehold Deed of Trust, this Note will 884 of 11211
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2 become nonrecourse to Borrower, pursuant to and except as provided in Section 3.10 of the Loan Agreement which Section 3.10 is hereby incorporated into this Note. The terms of the Deed of Trust are hereby incorporated into this Note and made a part hereof.
6. Terms of Payment.
(a) Borrower shall make all payments due under this Note in currency of the United States of America, which at the time of payment is lawful for the payment of public and private debts.
(b) All payments on this Note shall be paid to the City of San Mateo, 330 W. 20th Avenue, San Mateo, CA 99403 Attention: Housing Manager, or to such other place as Holder may from time to time designate.
(c) All payments on this Note are without expense to Holder.
Borrower shall pay all costs and expenses, including re-conveyance fees and reasonable attorney's fees of Holder, incurred in connection with the enforcement of this Note and the release of any security hereof.
(d) Notwithstanding any other provision of this Note, or any instrument securing the obligations of Borrower under this Note, if, for any reason whatsoever, the payment of any sums by Borrower pursuant to the terms of this Note would result in the payment of interest that exceeds the amount that Holder may legally charge under the laws of the State of California, then the amount by which payments exceed the lawful interest rate will automatically be deducted from the principal balance owing on this Note, so that in no event is Borrower obligated under the terms of this Note to pay any interest that would exceed the lawful rate.
(e) The obligations of Borrower under this Note are absolute and Borrower waives any and all rights to offset, deduct or withhold any payments or charges due under this Note for any reason whatsoever.
7. Event of Default; Acceleration.
(a) Upon the occurrence and during the continuation of an Event of Default, the entire unpaid principal balance, together with all interest thereon, and together with all other sums then payable under this Note and the Deed of Trust will, at the option of Holder, become immediately due and payable without further demand. (b) Holder's failure to exercise the remedy set forth in Subsection 7(a) above or any other remedy provided by law upon the occurrence and during the continuation of an Event of Default does not constitute a waiver of the right to exercise any remedy at any subsequent time in respect to the same or any other Event of Default. The acceptance by Holder of any payment that is less than the total of all amounts due and payable at the time of such payment does not constitute a waiver of the right to exercise any of the foregoing remedies or options at that time or at any subsequent time, or nullify any prior exercise of any such remedy 885 of 11211
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3 or option, without the express consent of Holder, except as and to the extent otherwise provided by law.
(c) The notice and cure rights of Borrower's limited partner are set forth in Section 7.7 of the Loan Agreement.
8. Waivers.
(a) Borrower hereby waives diligence, presentment, protest and demand, and notice of protest, notice of demand, notice of dishonor and notice of non-payment of this Note. Borrower expressly agrees that this Note or any payment hereunder may be extended from time to time, and that Holder may accept further security or release any security for this Note, all without in any way affecting the liability of Borrower. (b) Any extension of time for payment of this Note or any installment hereof made by agreement of Holder with any person now or hereafter liable for payment of this Note must not operate to release, discharge, modify, change or affect the original liability of Borrower under this Note, either in whole or in part.
9. Miscellaneous Provisions.
(a) All notices to Holder or Borrower are to be given in the manner and at the addresses set forth in the Loan Agreement, or to such addresses as Holder and Borrower may therein designate.
(b) Borrower promises to pay all costs and expenses, including reasonable attorney's fees, incurred by Holder in the enforcement of the provisions of this Note, regardless of whether suit is filed to seek enforcement. (c) This Note may not be changed orally, but only by an agreement in writing signed by the party against whom enforcement of any waiver, change, modification or discharge is sought.
(d) This Note is governed by the laws of the State of California. (e) The times for the performance of any obligations hereunder are to be strictly construed, time being of the essence.
(f) The Loan Documents, of which this Note is a part, contain the entire agreement between the parties as to the Loan. This Note may not be modified except upon the written consent of the parties.
signature on following page
886 of 11211
660\14\5000845.1 S-1
PROMISSORY NOTE
(Bespoke)
IN WITNESS WHEREOF, Borrower is executing this Promissory Note as of the day and year first above written.
BORROWER:
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: ________________________________
Date: ________________________________
887 of 11211
660\14\5000738.3
1 RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
City of San Mateo
320 W. 20th Avenue
San Mateo, CA 99403
Attention: City Manager
No fee for recording pursuant to
Government Code Sections 27383 and 27388.1
LEASEHOLD DEED OF TRUST WITH ASSIGNMENT OF RENTS,
SECURITY AGREEMENT, AND FIXTURE FILING
(Bespoke)
THIS LEASEHOLD DEED OF TRUST WITH ASSIGNMENT OF RENTS,
SECURITY AGREEMENT, AND FIXTURE FILING ("Deed of Trust") is made as of ____, by and among AH Bespoke LP, a California limited partnership ("Trustor"), ______ Title Company, a California corporation ("Trustee"), for the benefit of the City of San Mateo, a California charter city ("Beneficiary").
FOR GOOD AND VALUABLE CONSIDERATION, including the indebtedness herein recited and the trust herein created, the receipt of which is hereby acknowledged, Trustor hereby irrevocably grants, transfers, conveys and assigns to Trustee, IN TRUST, WITH POWER OF SALE, for the benefit and security of Beneficiary, under and subject to the terms and conditions hereinafter set forth, Trustor's leasehold interest in the property located in the City of San Mateo, County of San Mateo, State of California, that is described in the attached Exhibit A, incorporated herein by this reference, as such leasehold interest is created pursuant to that certain Ground Lease defined below (the "Property").
TOGETHER WITH all interest, estates or other claims, both in law and in equity which Trustor now has or may hereafter acquire in the Property and the rents; TOGETHER WITH all easements, rights-of-way and rights used in connection therewith or as a means of access thereto, including (without limiting the generality of the foregoing) all tenements, hereditaments and appurtenances thereof and thereto; TOGETHER WITH any and all buildings and improvements of every kind and description now or hereafter erected thereon, and all property of Trustor now or hereafter affixed to or placed upon the Property;
TOGETHER WITH all building materials and equipment now or hereafter delivered to said property and intended to be installed therein;
TOGETHER WITH all right, title and interest of Trustor, now owned or hereafter acquired, in and to any land lying within the right-of-way of any street, open or proposed, 888 of 11211
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2 adjoining the Property, and any and all sidewalks, alleys and strips and areas of land adjacent to or used in connection with the Property;
TOGETHER WITH all estate, interest, right, title, other claim or demand, of every nature, in and to such property, including the Property, both in law and in equity, including, but not limited to, all deposits made with or other security given by Trustor to utility companies, the proceeds from any or all of such property, including the Property, claims or demands with respect to the proceeds of insurance in effect with respect thereto, which Trustor now has or may hereafter acquire, any and all awards made for the taking by eminent domain or by any proceeding or purchase in lieu thereof of the whole or any part of such property, including without limitation, any awards resulting from a change of grade of streets and awards for severance damages to the extent Beneficiary has an interest in such awards for taking as provided in Paragraph 4.1 herein;
TOGETHER WITH all of Trustor's interest in all articles of personal property or fixtures now or hereafter attached to or used in and about the building or buildings now erected or hereafter to be erected on the Property which are necessary to the complete and comfortable use and occupancy of such building or buildings for the purposes for which they were or are to be erected, including all other goods and chattels and personal property as are ever used or furnished in operating a building, or the activities conducted therein, similar to the one herein described and referred to, and all renewals or replacements thereof or articles in substitution therefor, whether or not the same are, or will be, attached to said building or buildings in any manner; and
TOGETHER WITH all of Trustor's interest in all building materials, fixtures, equipment, work in process and other personal property to be incorporated into the Property; all goods, materials, supplies, fixtures, equipment, machinery, furniture and furnishings, signs and other personal property now or hereafter appropriated for use on the Property, whether stored on the Property or elsewhere, and used or to be used in connection with the Property; all rents, issues and profits, and all inventory, accounts, accounts receivable, contract rights, general intangibles, chattel paper, instruments, documents, notes drafts, letters of credit, insurance policies, insurance and condemnation awards and proceeds, trade names, trademarks and service marks arising from or related to the Property and any business conducted thereon by Trustor; all replacements, additions, accessions and proceeds; and all books, records and files relating to any of the foregoing.
All of the foregoing, together with the Property, is herein referred to as the "Security." To have and to hold the Security together with acquittances to Trustee, its successors and assigns forever.
FOR THE PURPOSE OF SECURING THE FOLLOWING OBLIGATIONS (together, the "Secured Obligations"):
A. Payment to Beneficiary of all sums at any time owing under or in connection with (i) the Note (defined in Section 1.8 below) until paid in full or cancelled, and (ii) any other amounts owing under the Loan Documents (defined in Section 1.7 below). Principal and other payments are due and payable as provided in the Note or other Loan Documents, as applicable. 889 of 11211
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3 The Note and all its terms are incorporated herein by reference, and this conveyance secures any and all extensions thereof, however evidenced;
B. Payment of any sums advanced by Beneficiary to protect the Security pursuant to the terms and provisions of this Deed of Trust following a breach of Trustor's obligation to advance said sums and the expiration of any applicable cure period, with interest thereon as provided herein;
C. Performance of every obligation, covenant or agreement of Trustor contained herein and in the Loan Documents; and
D. All modifications, extensions and renewals of any of the Secured Obligations (including without limitation, (i) modifications, extensions or renewals at a different rate of interest, or (ii) deferrals or accelerations of the required principal payment dates or interest payment dates or both, in whole or in part), however evidenced, whether or not any such modification, extension or renewal is evidenced by a new or additional promissory note or notes.
AND TO PROTECT THE SECURITY OF THIS DEED OF TRUST, TRUSTOR COVENANTS AND AGREES:
ARTICLE 1
DEFINITIONS
In addition to the terms defined elsewhere in this Deed of Trust, the following terms have the following meanings in this Deed of Trust:
Section 1.1 The term "Default Rate" means the lesser of the maximum rate permitted by law and ten percent (10%) per annum.
Section 1.2 The term "Ground Lease" means that certain Ground Lease Agreement by and between Trustor as lessee and Beneficiary as ground lessor pertaining to the Property, as evidenced by a memorandum of ground lease recorded in the Office of the Recorder of the County of San Mateo, pursuant to which Beneficiary has granted Trustor a leasehold interest in the Property continuing for a period of ninety-nine (99) years from the date of the recordation of the Ground Lease.
Section 1.3 The term "Loan" means the loan made by Beneficiary to Trustor in the amount of Three Million Dollars ($3,000,000).
Section 1.4 The term "Loan Agreement" means that certain Permanent Loan Agreement between Trustor and Beneficiary, of even date herewith, as such may be amended from time to time, providing for Beneficiary to loan to Trustor the Loan.
Section 1.5 The term "Loan Documents" means this Deed of Trust, the Note, the Loan Agreement, the Regulatory Agreement, and any other agreements, debt, loan or security instruments between Trustor and Beneficiary relating to the Loan. 890 of 11211
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4 Section 1.6 The term "Note" means the promissory note of even date herewith, executed by Trustor in favor of Beneficiary, as it may be amended or restated in the amount of the Loan, the payment of which is secured by this Deed of Trust. The terms and provisions of the Note are incorporated herein by reference.
Section 1.7 The term "Principal" means the amounts required to be paid under the Note.
Section 1.8 The term "Regulatory Agreement" means the Regulatory Agreement and Declaration of Restrictive Covenants of even date herewith by and between Beneficiary and Trustor and recorded concurrently herewith.
ARTICLE 2
MAINTENANCE AND MODIFICATION OF THE PROPERTY
AND SECURITY
Section 2.1 Maintenance and Modification of the Property by Trustor.
Trustor agrees that at all times prior to full payment and performance of the Secured Obligations, Trustor will, at Trustor's own expense, maintain, preserve and keep the Security or cause the Security to be maintained and preserved in good condition, reasonable wear and tear excepted. Trustor will from time to time make or cause to be made all repairs, replacements and renewals deemed proper and necessary by it. Beneficiary has no responsibility in any of these matters or for the making of improvements or additions to the Security.
Trustor agrees to pay fully and discharge (or cause to be paid fully and discharged) all claims for labor done and for material and services furnished in connection with the Security, diligently to file or procure the filing of a valid notice of cessation upon the event of a cessation of labor on the work or construction on the Security for a continuous period of thirty (30) days or more, and to take all other reasonable steps to forestall the assertion of claims of lien against the Security or any part thereof. Trustor irrevocably appoints, designates and authorizes Beneficiary as its agent (said agency being coupled with an interest) with the authority, but without any obligation, to file or record any notices of completion or cessation of labor or any other notice that Beneficiary deems necessary or desirable to protect its interest in and to the Security or the Loan Documents; provided, however, that Beneficiary exercises its rights as agent of Trustor only in the event that Trustor fails to take, or fails to diligently continue to take, those actions as hereinbefore provided.
Upon demand by Beneficiary, Trustor shall make or cause to be made such demands or claims as Beneficiary specifies upon laborers, materialmen, subcontractors or other persons who have furnished or claim to have furnished labor, services or materials in connection with the Security. Nothing herein contained requires Trustor to pay any claims for labor, materials or services which Trustor in good faith disputes and is diligently contesting provided that Trustor shall, within thirty (30) days after the filing of any claim of lien, record in the Office of the Recorder of San Mateo County, a surety bond in an amount 100% of the amount of such claim item to protect against a claim of lien.
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5 Section 2.2 Granting of Easements.
Trustor may not grant easements, licenses, rights-of-way or other rights or privileges in the nature of easements with respect to any property or rights included in the Security except those required or desirable for installation and maintenance of public utilities including, without limitation, water, gas, electricity, sewer, telephone and telegraph, or those required by law, and as approved, in writing, by Beneficiary.
Section 2.3 Assignment of Rents.
As part of the consideration for the indebtedness evidenced by the Note, Trustor hereby absolutely and unconditionally assigns and transfers to Beneficiary all the rents and revenues of the Property including those now due, past due, or to become due by virtue of any lease or other agreement for the occupancy or use of all or any part of the Property, regardless of to whom the rents and revenues of the Property are payable, subject to the rights of senior lenders that are approved by Beneficiary pursuant to the Loan Agreement. Trustor hereby authorizes Beneficiary or Beneficiary's agents to collect the aforesaid rents and revenues and hereby directs each tenant of the Property to pay such rents to Beneficiary or Beneficiary's agents; provided, however, that prior to written notice given by Beneficiary to Trustor of the breach by Trustor of any covenant or agreement of Trustor in the Loan Documents, Trustor shall collect and receive all rents and revenues of the Property as trustee for the benefit of Beneficiary and Trustor to apply the rents and revenues so collected to the Secured Obligations with the balance, so long as no such breach has occurred and is continuing, to the account of Trustor, it being intended by Trustor and Beneficiary that this assignment of rents constitutes an absolute assignment and not an assignment for additional security only. Upon delivery of written notice by Beneficiary to Trustor of the breach by Trustor of any covenant or agreement of Trustor in the Loan Documents (subject to applicable notice and cure periods), and without the necessity of Beneficiary entering upon and taking and maintaining full control of the Property in person, by agent or by a courtappointed receiver, Beneficiary shall immediately be entitled to possession of all rents and revenues of the Property as specified in this Section 2.3 as the same becomes due and payable, including but not limited to, rents then due and unpaid, and all such rents will immediately upon delivery of such notice be held by Trustor as trustee for the benefit of Beneficiary only; provided, however, that the written notice by Beneficiary to Trustor of the breach by Trustor contains a statement that Beneficiary exercises its rights to such rents. Trustor agrees that commencing upon delivery of such written notice of Trustor's breach by Beneficiary to Trustor, each tenant of the Property shall make such rents payable to and pay such rents to Beneficiary or Beneficiary's agents on Beneficiary's written demand to each tenant therefor, delivered to each tenant personally, by mail or by delivering such demand to each rental unit, without any liability on the part of said tenant to inquire further as to the existence of a default by Trustor.
Trustor hereby covenants that Trustor has not executed any prior assignment of said rents, other than as security to lenders approved by Beneficiary pursuant to the Loan Agreement, that Trustor has not performed, and will not perform, any acts or has not executed and will not execute, any instrument which would prevent Beneficiary from exercising its rights under this Section 2.3, and that at the time of execution of this Deed of Trust, there has been no anticipation or prepayment of any of the rents of the Property for more than two (2) months prior to the due dates of such rents. Trustor covenants that Trustor will not hereafter collect or accept payment 892 of 11211
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6 of any rents of the Property more than two (2) months prior to the due dates of such rents.
Trustor further covenants that, so long as the Secured Obligations are outstanding, Trustor will execute and deliver to Beneficiary such further assignments of rents and revenues of the Property as Beneficiary may from time to time request.
Upon Trustor's breach of any covenant or agreement of Trustor in the Loan Documents (subject to applicable notice and cure periods), Beneficiary may in person, by agent or by a court-appointed receiver, regardless of the adequacy of Beneficiary's security, enter upon and take and maintain full control of the Property in order to perform all acts necessary and appropriate for the operation and maintenance thereof including, but not limited to, the execution, cancellation or modification of leases, the collection of all rents and revenues of the Property, the making of repairs to the Property and the execution or termination of contracts providing for the management or maintenance of the Property, all on such terms as are deemed best to protect the security of this Deed of Trust. In the event Beneficiary elects to seek the appointment of a receiver for the Property upon Trustor's breach of any covenant or agreement of Trustor in this Deed of Trust, Trustor hereby expressly consents to the appointment of such receiver. Beneficiary or the receiver will be entitled to receive a reasonable fee for so managing the Property.
All rents and revenues collected subsequent to delivery of written notice by Beneficiary to Trustor of the breach by Trustor of any covenant or agreement of Trustor in the Loan Documents are to be applied first to the costs, if any, of taking control of and managing the Property and collecting the rents, including, but not limited to, attorney's fees, receiver's fees, premiums on receiver's bonds, costs of repairs to the Property, premiums on insurance policies, taxes, assessments and other charges on the Property, and the costs of discharging any obligation or liability of Trustor as lessor or landlord of the Property and then to the sums secured by this Deed of Trust. Beneficiary or the receiver is to have access to the books and records used in the operation and maintenance of the Property and will be liable to account only for those rents actually received. Beneficiary is not liable to Trustor, anyone claiming under or through Trustor or anyone having an interest in the Property by reason of anything done or left undone by Beneficiary under this Section 2.3.
If the rents of the Property are not sufficient to meet the costs, if any, of taking control of and managing the Property and collecting the rents, any funds expended by Beneficiary for such purposes will become part of the Secured Obligations pursuant to Section 3.3 hereof. Unless Beneficiary and Trustor agree in writing to other terms of payment, such amounts are payable by Trustor to Beneficiary upon notice from Beneficiary to Trustor requesting payment thereof and will bear interest from the date of disbursement at the Default Rate.
If Beneficiary or the receiver enters upon and takes and maintains control of the Property, neither that act nor any application of rents as provided herein will cure or waive any default under this Deed of Trust or invalidate any other right or remedy available to Beneficiary under applicable law or under this Deed of Trust. This assignment of rents of the Property will terminate at such time as this Deed of Trust ceases to secure the Secured Obligations. 893 of 11211
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7 ARTICLE 3
TAXES AND INSURANCE; ADVANCES
Section 3.1 Taxes, Other Governmental Charges and Utility Charges.
Trustor shall pay, or cause to be paid, prior to the date of delinquency, all taxes, assessments, charges and levies imposed by any public authority or utility company that are or may become a lien affecting the Security or any part thereof; provided, however, that Trustor is not required to pay and discharge any such tax, assessment, charge or levy so long as (a) the legality thereof is promptly and actively contested in good faith and by appropriate proceedings, and (b) Trustor maintains reserves adequate to pay any liabilities contested pursuant to this Section 3.1. With respect to taxes, special assessments or other similar governmental charges, Trustor shall pay such amount in full prior to the attachment of any lien therefor on any part of the Security; provided, however, if such taxes, assessments or charges can be paid in installments, Trustor may pay in such installments. Except as provided in clause (b) of the first sentence of this paragraph, the provisions of this Section 3.1 may not be construed to require that Trustor maintain a reserve account, escrow account, impound account or other similar account for the payment of future taxes, assessments, charges and levies.
In the event that Trustor fails to pay any of the items required by this Section to be paid by Trustor, Beneficiary may (but is under no obligation to) pay the same, after Beneficiary has notified Trustor of such failure to pay and Trustor fails to fully pay such items within seven (7) business days after receipt of such notice. Any amount so advanced therefor by Beneficiary, together with interest thereon from the date of such advance at the maximum rate permitted by law, will become part of the Secured Obligations secured hereby, and Trustor agrees to pay all such amounts.
Section 3.2 Provisions Respecting Insurance.
Trustor agrees to provide insurance conforming in all respects to that required under the Loan Documents during the course of construction and following completion, and at all times until all amounts secured by this Deed of Trust have been paid, all Secured Obligations secured hereunder have been fulfilled, and this Deed of Trust has been reconveyed.
All such insurance policies and coverages are to be maintained at Trustor's sole cost and expense. Certificates of insurance for all of the above insurance policies, showing the same to be in full force and effect, are to be delivered to Beneficiary upon demand therefor at any time prior to Trustor's satisfaction of the Secured Obligations.
Section 3.3 Advances.
In the event Trustor fails to maintain the full insurance coverage required by this Deed of Trust or fails to keep the Security in accordance with the Loan Documents, Beneficiary, after at least seven (7) days prior notice to Trustor, may (but is under no obligation to) (i) take out the required policies of insurance and pay the premiums on the same, and (ii) make any repairs or replacements that are necessary and provide for payment thereof. All amounts so advanced by 894 of 11211
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8 Beneficiary will become part of the Secured Obligations (together with interest as set forth below) and will be secured hereby, which amounts Trustor agrees to pay on the demand of Beneficiary, and if not so paid, will bear interest from the date of the advance at the Default Rate.
ARTICLE 4
DAMAGE, DESTRUCTION OR CONDEMNATION
Section 4.1 Awards and Damages.
Subject to the rights of senior lenders, all judgments, awards of damages, settlements and compensation made in connection with or in lieu of (1) the taking of all or any part of or any interest in the Property by or under assertion of the power of eminent domain, (2) any damage to or destruction of the Property or any part thereof by insured casualty, and (3) any other injury or damage to all or any part of the Property (collectively, the "Funds") are hereby assigned to and are to be paid to Beneficiary by a check made payable to Beneficiary. Beneficiary is authorized and empowered (but not required) to collect and receive any Funds and is authorized to apply them in whole or in part to any indebtedness or obligation secured hereby, in such order and manner as Beneficiary determines at its sole option, subject to the provisions of Section 4.7 of the Loan Agreement regarding restoration of improvements following damage or destruction.
Beneficiary is entitled to settle and adjust all claims under insurance policies provided under this Deed of Trust and may deduct and retain from the proceeds of such insurance the amount of all expenses incurred by it in connection with any such settlement or adjustment. Application of all or any part of the Funds collected and received by Beneficiary or the release thereof will not cure or waive any default under this Deed of Trust.
ARTICLE 5
AGREEMENTS AFFECTING THE PROPERTY; FURTHER
ASSURANCES; PAYMENT OF PRINCIPAL AND INTEREST
Section 5.1 Other Agreements Affecting Property.
Trustor shall duly and punctually perform all terms, covenants, conditions and agreements binding upon it under the Loan Documents and any other agreement of any nature whatsoever now or hereafter involving or affecting the Security or any part thereof.
Section 5.2 Agreement to Pay Attorneys' Fees and Expenses.
In the event of any Event of Default (as defined in Section 7.1) hereunder, and if Beneficiary employs attorneys or incurs other expenses for the collection of amounts due hereunder or the enforcement of performance or observance of an obligation or agreement on the part of Trustor in this Deed of Trust, Trustor agrees that it will, on demand therefor, pay to Beneficiary the reasonable fees of such attorneys and such other reasonable expenses so incurred by Beneficiary. Any such amounts paid by Beneficiary will be added to the Secured Obligations, and will bear interest from the date such expenses are incurred at the Default Rate. 895 of 11211
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9 Section 5.3 Payment of the Principal.
Trustor shall pay to Beneficiary the Principal and any other payments as set forth in the Note in the amounts and by the times set out therein.
Section 5.4 Personal Property.
To the maximum extent permitted by law, the personal property subject to this Deed of Trust is deemed to be fixtures and part of the real property and this Deed of Trust constitutes a fixtures filing under the California Commercial Code. As to any personal property not deemed or permitted to be fixtures, this Deed of Trust constitutes a security agreement under the California Commercial Code.
Section 5.5 Financing Statement.
Trustor shall execute and deliver to Beneficiary such financing statements pursuant to the appropriate statutes, and any other documents or instruments as are required to convey to Beneficiary a valid perfected security interest in the Security. Trustor shall perform all acts that Beneficiary reasonably requests so as to enable Beneficiary to maintain a valid perfected security interest in the Security in order to secure the payment of the Note in accordance with its terms.
Beneficiary is authorized to file a copy of any such financing statement in any jurisdiction(s) as it deems appropriate from time to time in order to protect the security interest established pursuant to this instrument.
Section 5.6 Operation of the Security.
Trustor shall operate the Security (and, in case of a transfer of a portion of the Security subject to this Deed of Trust, the transferee shall operate such portion of the Security) in full compliance with the Loan Documents. Notwithstanding anything to the contrary, leases to tenants in accordance with the Regulatory Agreement shall not be considered a transfer of any portion of the Security.
Section 5.7 Inspection of the Security.
At any and all reasonable times upon seventy-two (72) hours' notice and subject to the rights of tenants under their respective leases, Beneficiary and its duly authorized agents, attorneys, experts, engineers, accountants and representatives, may inspect the Security, without payment of charges or fees.
Section 5.8 Nondiscrimination.
Trustor herein covenants by and for itself, its heirs, executors, administrators, and assigns, and all persons claiming under or through them, that there will be no discrimination against or segregation of, any person or group of persons on account of race, color, creed, religion, age, sex, sexual orientation, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Security, nor will Trustor itself or any person claiming under or through it establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy 896 of 11211
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10 of tenants, lessees, subtenants, sublessees or vendees in the Security. The foregoing covenants run with the land.
Section 5.9 Ground Lease Covenants.
Trustor hereby represents, warrants, covenants and agrees that:
(a) This Deed of Trust is duly executed and delivered in conformity with, and does not violate or breach any term of covenant of, the Ground Lease. (b) Trustor will cause the Ground Lease or a memorandum of the Ground Lease to be recorded against the Property that provides notice of the existence of the Ground Lease.
(c) Trustor shall fully, diligently, and timely perform, and comply with, all covenants, terms, and provisions under the Ground Lease that are applicable to the "lessee" thereunder;
(d) Trustor will not do or permit to be done or omit to do or permit the omission of any act, which would impair the security of this Deed of Trust, or would constitute grounds for the termination of the Ground Lease or would entitle the Ground Lessor to declare a forfeiture or termination of the Ground Lease.
(e) Trustor will promptly notify Beneficiary in writing of any default (including the expiration of all notice and cure periods) by Ground Lessor or Trustor in the performance or observance of any of the terms, covenants, conditions on the part of Ground Lessor or Trustor, as applicable, to be performed or observed under the Ground Lease. (f) Trustor will not, without the prior written consent of Beneficiary (which may be granted or withheld in the sole and absolute discretion of Beneficiary) terminate, amend, modify, assign, or surrender, or suffer or permit any termination, amendment, modification, assignment, or surrender of the Ground Lease.
(g) Trustor will not consent to any waiver of Beneficiary's obligations under the Ground Lease, nor to the subordination of the Ground Lease to any mortgage of the fee interest of the Beneficiary.
(h) Trustor will not acquire the fee interest in the Property under the Ground Lease without the express prior written approval of Beneficiary. In the event that Trustor acquires fee title to the Property, such interest will be deemed to be subject to and covered by this Deed of Trust, and Trustor shall promptly: (i) provide Beneficiary with notice of such further title interest of Trustor to the Property and (ii) execute, acknowledge, and deliver such instruments, documents, and agreements as may be required by Beneficiary to ratify, confirm, reaffirm, and perfect Beneficiary’s interest in such Property, including without limitation, any additional mortgage or amendment requested by Beneficiary to confirm Trustor's right, title and interest in and to the fee title of Trustor to the Property. Without the express prior written approval of Beneficiary, Trustor shall not merge the leasehold estate created by the Ground 897 of 11211
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11 Lease with the fee estate of the Property, and such leasehold estate must always remain separate and distinct, notwithstanding any union of such estates in Beneficiary or Trustor by purchase, operation of law, or otherwise. In the event that Beneficiary acquires the leasehold estate by foreclosure of this Deed of Trust (or by conveyance or assignment in lieu thereof) or otherwise, then such estates will not merge but will remain separate and distinct for all purposes after such acquisition unless and until Beneficiary elects in writing to merge such estates.
ARTICLE 6
HAZARDOUS WASTE
Trustor shall keep and maintain the Property (including, but not limited to, soil and ground water conditions) in compliance with all Hazardous Materials Laws and shall not cause or permit the Property to be in violation of any Hazardous Materials Law (defined below).
Trustor may not cause or permit the use, generation, manufacture, storage or disposal of on, under, or about the Property or transportation to or from the Property of (i) any substance, material, or waste that is petroleum, petroleum-related, or a petroleum by-product, asbestos or asbestos-containing material, polychlorinated biphenyls, flammable, explosive, radioactive, freon gas, radon, or a pesticide, herbicide, or any other agricultural chemical, and (ii) any waste, substance or material defined as or included in the definition of "hazardous substances," "hazardous wastes," "hazardous materials," "toxic materials", "toxic waste", "toxic substances," or words of similar import under any Hazardous Materials Law (collectively referred to hereinafter as "Hazardous Materials"), except such of the foregoing as may be customarily used in construction or operation of a multi-family residential development.
Trustor shall immediately advise Beneficiary in writing if at any time it receives written notice of: (i) any and all enforcement, cleanup, removal or other governmental or regulatory actions instituted, completed or threatened against Trustor or the Property pursuant to any applicable federal, state or local laws, ordinances, or regulations relating to any Hazardous Materials, health, industrial hygiene, environmental conditions, or the regulation or protection of the environment, and all amendments thereto as of this date and to be added in the future and any successor statute or rule or regulation promulgated thereto ("Hazardous Materials Law"); (ii) all claims made or threatened by any third party against Trustor or the Property relating to damage, contribution, cost recovery compensation, loss or injury resulting from any Hazardous Materials (the matters set forth in clauses (i) and (ii) above are hereinafter referred to as "Hazardous Materials Claims"); and (iii) Trustor's discovery of any occurrence or condition on any real property adjoining or in the vicinity of the Property that could cause the Property or any part thereof to be subject to any restrictions on the ownership, occupancy, transferability or use of the Property under any Hazardous Materials Law including but not limited to the provisions of California Health and Safety Code, Section 25220 et seq., or any regulation adopted in accordance therewith.
Beneficiary has the right to join and participate in, as a party if it so elects, and be represented by counsel acceptable to Beneficiary (or counsel of its own choice if a conflict exists with Trustor) in, any legal proceedings or actions initiated in connection with any Hazardous Materials Claims, and to have its reasonable attorneys' fees in connection therewith paid by Trustor.
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12 Trustor shall indemnify and hold harmless Beneficiary and its elected and appointed officials, directors, officers, employees, agents, successors and assigns from and against any loss, damage, cost, fine, penalty, judgment, award, settlement, expense or liability, directly or indirectly arising out of or attributable to: (i) any actual or alleged past or present violation of any Hazardous Materials Law; (ii) any Hazardous Materials Claim; (iii) any actual or alleged past or present use, generation, manufacture, storage, release, threatened release, discharge, disposal, transportation, or presence of Hazardous Materials on, under, or about the Property; (iv) any investigation, cleanup, remediation, removal, or restoration work of site conditions of the Property relating to Hazardous Materials (whether on the Property or any other property); and (v) the breach of any representation of warranty by or covenant of Trustor in this Article, and Section 5.1(l) of the Loan Agreement. Such indemnity must include, without limitation: (x) all consequential damages; (y) the costs of any required or necessary investigation, repair, cleanup or detoxification of the Property and the preparation and implementation of any closure, remedial or other required plans; and (z) all reasonable costs and expenses incurred by Beneficiary in connection with clauses (x) and (y), including but not limited to reasonable attorneys' fees and consultant fees. This indemnification applies whether or not any government agency has issued a cleanup order. Losses, claims, costs, suits, liability, and expenses covered by this indemnification provision include, but are not limited to: (1) losses attributable to diminution in the value of the Property; (2) loss or restriction of use of rentable space on the Property; (3) adverse effect on the marketing of any rental space on the Property; and (4) penalties and fines levied by, and remedial or enforcement actions of any kind issued by any regulatory agency (including but not limited to the costs of any required testing, remediation, repair, removal, cleanup or detoxification of the Property and surrounding properties). This obligation to indemnify will survive reconveyance of this Deed of Trust and will not be diminished or affected in any respect as a result of any notice, disclosure, knowledge, if any, to or by Beneficiary of Hazardous Materials. This indemnity shall not apply to any claims, losses or damages arising from Beneficiary’s sole negligence or willful misconduct.
Without Beneficiary's prior written consent, which may not be unreasonably withheld, Trustor may not take any remedial action in response to the presence of any Hazardous Materials on, under or about the Property, nor enter into any settlement agreement, consent decree, or other compromise in respect to any Hazardous Material Claims, which remedial action, settlement, consent decree or compromise might, in Beneficiary's reasonable judgment, impairs the value of Beneficiary's security hereunder; provided, however, that Beneficiary's prior consent is not necessary in the event that the presence of Hazardous Materials on, under, or about the Property either poses an immediate threat to the health, safety or welfare of any individual or is of such a nature that an immediate remedial response is necessary and it is not reasonably possible to obtain Beneficiary's consent before taking such action, provided that in such event Trustor notifies Beneficiary as soon as practicable of any action so taken. Beneficiary agrees not to withhold its consent, where such consent is required hereunder, if (i) a particular remedial action is ordered by a court of competent jurisdiction; (ii) Trustor will or may be subjected to civil or criminal sanctions or penalties if it fails to take a required action; (iii) Trustor establishes to the reasonable satisfaction of Beneficiary that there is no reasonable alternative to such remedial action which would result in less impairment of Beneficiary's security hereunder; or (iv) the action has been agreed to by Beneficiary.
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13 Trustor hereby acknowledges and agrees that (i) this Article is intended as Beneficiary's written request for information (and Trustor's response) concerning the environmental condition of the Property as required by California Code of Civil Procedure Section 726.5, and (ii) each representation and warranty in this Deed of Trust or any of the other Loan Documents (together with any indemnity applicable to a breach of any such representation and warranty) with respect to the environmental condition of the property is intended by Beneficiary and Trustor to be an "environmental provision" for purposes of California Code of Civil Procedure Section 736.
In the event that any portion of the Property is determined to be "environmentally impaired" (as that term is defined in California Code of Civil Procedure Section 726.5(e)(3) or to be an "affected parcel" (as that term is defined in California Code of Civil Procedure Section 726.5(e)(1), then, without otherwise limiting or in any way affecting Beneficiary's or Trustee's rights and remedies under this Deed of Trust, Beneficiary may elect to exercise its rights under California Code of Civil Procedure Section 726.5(a) to (1) waive its lien on such environmentally impaired or affected portion of the Property and (2) exercise (a) the rights and remedies of an unsecured creditor, including reduction of its claim against Trustor to judgment, and (b) any other rights and remedies permitted by law. For purposes of determining Beneficiary's right to proceed as an unsecured creditor under California Code of Civil Procedure Section 726.5(a), Trustor will be deemed to have willfully permitted or acquiesced in a release or threatened release of hazardous materials, within the meaning of California Code of Civil Procedure Section 726.5(d)(1), if the release or threatened release of hazardous materials was knowingly or negligently caused or contributed to by any lessee, occupant, or user of any portion of the Property and Trustor knew or should have known of the activity by such lessee, occupant, or user which caused or contributed to the release or threatened release. All costs and expenses, including (but not limited to) attorneys' fees, incurred by Beneficiary in connection with any action commenced under this paragraph, including any action required by California Code of Civil Procedure Section 726.5(b) to determine the degree to which the Property is environmentally impaired, plus interest thereon at the Default Rate until paid, will be added to the indebtedness secured by this Deed of Trust and will be due and payable to Beneficiary upon its demand made at any time following the conclusion of such action.
Trustor is aware that California Civil Code Section 2955.5(a) provides as follows: No lender shall require a borrower, as a condition of receiving or maintaining a loan secured by real property, to provide hazard insurance coverage against risks to the improvements on that real property in an amount exceeding the replacement value of the improvements on the property." ARTICLE 7
EVENTS OF DEFAULT AND REMEDIES
Section 7.1 Events of Default.
The following are events of default following the expiration of any applicable notice and cure periods (each an "Event of Default"): (i) failure to make any payment to be paid by Trustor under the Loan Documents; (ii) failure to observe or perform any of Trustor's other covenants, agreements or obligations under the Loan Documents, including, without limitation, the provisions concerning discrimination; (iii) failure to make any payment or observe or perform 900 of 11211
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14 any of Trustor's other covenants, agreements, or obligations under any Secured Obligations, which default is not cured within the times and in the manner provided therein; (iv) failure to observe or perform any of Trustor's covenants, agreement or obligations under the Ground Lease, and (v) failure to make any payments or observe or perform any of Trustor's other covenants, agreements or obligations under any other debt instrument or regulatory agreement secured by the Property, which default is not cured within the time and in the manner provided therein.
Beneficiary shall provide notices of an Event of Default in the manner set forth in the Loan Agreement.
Section 7.2 Acceleration of Maturity.
If an Event of Default has occurred and is continuing, then at the option of Beneficiary, the amount of any payment related to the Event of Default and all unpaid Secured Obligations are immediately due and payable, and no omission on the part of Beneficiary to exercise such option when entitled to do so may be construed as a waiver of such right.
Section 7.3 Beneficiary's Right to Enter and Take Possession.
If an Event of Default has occurred and is continuing, Beneficiary may:
(a) Either in person or by agent, with or without bringing any action or proceeding, or by a receiver appointed by a court, and without regard to the adequacy of its security, enter upon the Property and take possession thereof (or any part thereof) and of any of the Security, in its own name or in the name of Trustee, and do any acts that it deems necessary or desirable to preserve the value or marketability of the Property, or part thereof or interest therein, increase the income therefrom or protect the security thereof. The entering upon and taking possession of the Security will not cure or waive any Event of Default or Notice of Sale (as defined in Section 7.3(c), below) hereunder or invalidate any act done in response to such Event of Default or pursuant to such Notice of Sale, and, notwithstanding the continuance in possession of the Security, Beneficiary will be entitled to exercise every right provided for in this Deed of Trust, or by law upon occurrence of any Event of Default, including the right to exercise the power of sale;
(b) Commence an action to foreclose this Deed of Trust as a mortgage, appoint a receiver, or specifically enforce any of the covenants hereof; (c) Deliver to Trustee a written declaration of an Event of Default and demand for sale, and a written notice of default and election to cause Trustor's interest in the Security to be sold ("Notice of Sale"), which notice Trustee or Beneficiary shall cause to be duly filed for record in the Official Records of San Mateo County; or (d) Exercise all other rights and remedies provided herein, in the instruments by which Trustor acquires title to any Security, or in any other document or agreement now or hereafter evidencing, creating or securing all or any portion of the Secured Obligations. 901 of 11211
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15 Section 7.4 Foreclosure By Power of Sale.
Should Beneficiary elect to foreclose by exercise of the power of sale herein contained, Beneficiary shall deliver to Trustee the Notice of Sale and shall deposit with Trustee this Deed of Trust which is secured hereby (and the deposit of which will be deemed to constitute evidence that the Secured Obligations are immediately due and payable), and such receipts and evidence of any expenditures made that are additionally secured hereby as Trustee may require. (a) Upon receipt of the Notice of Sale from Beneficiary, Trustee shall cause to be recorded, published and delivered to Trustor such Notice of Sale as is then required by law and by this Deed of Trust. Trustee shall, without demand on Trustor, after the lapse of that amount of time as is then required by law and after recordation of such Notice of Sale as required by law, sell the Security, at the time and place of sale set forth in the Notice of Sale, whether as a whole or in separate lots or parcels or items, as Trustee deems expedient and in such order as it determines, unless specified otherwise by Trustor according to California Civil Code Section 2924g(b), at public auction to the highest bidder, for cash in lawful money of the United States payable at the time of sale. Trustee shall deliver to such purchaser or purchasers thereof its good and sufficient deed or deeds conveying the property so sold, but without any covenant or warranty, express or implied. The recitals in such deed or any matters of facts will be conclusive proof of the truthfulness thereof. Any person, including, without limitation, Trustor, Trustee or Beneficiary, may purchase at such sale.
(b) After deducting all reasonable costs, fees and expenses of Trustee, including costs of evidence of title in connection with such sale, Trustee shall apply the proceeds of sale to payment of: (i) the unpaid Principal amount of the Note; (ii) all other Secured Obligations owed to Beneficiary under the Loan Documents; (iii) all other sums then secured hereby; and (iv) the remainder, if any, to Trustor.
(c) Trustee may postpone sale of all or any portion of the Property by public announcement at such time and place of sale, and from time to time thereafter, and without further notice make such sale at the time fixed by the last postponement, or may, in its discretion, give a new Notice of Sale.
Section 7.5 Receiver.
If an Event of Default occurs and is continuing, Beneficiary, as a matter of right and without further notice to Trustor or anyone claiming under the Security, and without regard to the then value of the Security or the interest of Trustor therein, may apply to any court having jurisdiction to appoint a receiver or receivers of the Security (or a part thereof), and Trustor hereby irrevocably consents to such appointment and waives further notice of any application therefor. Any such receiver or receivers will have all the usual powers and duties of receivers in like or similar cases, and all the powers and duties of Beneficiary in case of entry as provided herein, and will continue as such and exercise all such powers until the date of confirmation of sale of the Security, unless such receivership is sooner terminated.
Section 7.6 Remedies Cumulative.
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16 No right, power or remedy conferred upon or reserved to Beneficiary by this Deed of Trust is intended to be exclusive of any other right, power or remedy, but each and every such right, power and remedy will be cumulative and concurrent and will be in addition to any other right, power and remedy given hereunder or now or hereafter existing at law or in equity.
Section 7.7 No Waiver.
(a) No delay or omission of Beneficiary to exercise any right, power or remedy accruing upon any Event of Default will exhaust or impair any such right, power or remedy, and may not be construed to be a waiver of any such Event of Default or acquiescence therein; and every right, power and remedy given by this Deed of Trust to Beneficiary may be exercised from time to time and as often as may be deemed expeditious by Beneficiary.
Beneficiary's express or implied consent to breach, or waiver of, any obligation of Trustor hereunder will not be deemed or construed to be a consent to any subsequent breach, or further waiver, of such obligation or of any other obligations of Trustor hereunder. Failure on the part of Beneficiary to complain of any act or failure to act or to declare an Event of Default, irrespective of how long such failure continues, will not constitute a waiver by Beneficiary of its right hereunder or impair any rights, power or remedies consequent on any Event of Default by Trustor.
(b) If Beneficiary (i) grants forbearance or an extension of time for the payment or performance of any Secured Obligation, (ii) takes other or additional security or the payment of any sums secured hereby, (iii) waives or does not exercise any right granted in the Loan Documents, (iv) releases any part of the Security from the lien of this Deed of Trust, or otherwise changes any of the terms, covenants, conditions or agreements in the Loan Documents, (v) consents to the granting of any easement or other right affecting the Security, or (vi) makes or consents to any agreement subordinating the lien hereof, any such act or omission will not release, discharge, modify, change or affect the original liability under this Deed of Trust, or any other obligation of Trustor or any subsequent purchaser of the Security or any part thereof, or any maker, co-signer, endorser, surety or guarantor (unless expressly released); nor will any such act or omission preclude Beneficiary from exercising any right, power or privilege herein granted or intended to be granted in any Event of Default then made or of any subsequent Event of Default, nor, except as otherwise expressly provided in an instrument or instruments executed by Beneficiary, will the lien of this Deed of Trust be altered thereby.
Section 7.8 Suits to Protect the Security.
Beneficiary has the power to (a) institute and maintain such suits and proceedings as it may deem expedient to prevent any impairment of the Security and the rights of Beneficiary as may be unlawful or any violation of this Deed of Trust, (b) preserve or protect its interest (as described in this Deed of Trust) in the Security, and (c) restrain the enforcement of or compliance with any legislation or other governmental enactment, rule or order that may be unconstitutional or otherwise invalid, if the enforcement for compliance with such enactment, rule or order would impair the Security thereunder or be prejudicial to the interest of Beneficiary.
Section 7.9 Trustee May File Proofs of Claim.
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17 In the case of any receivership, insolvency, bankruptcy, reorganization, arrangement, adjustment, composition or other proceedings affecting Trustor, its creditors or its property, Trustee or Beneficiary, to the extent permitted by law, will be entitled to file such proofs of claim and other documents as may be necessary or advisable in order to have the claims of Beneficiary allowed in such proceedings and for any additional amount that becomes due and payable by Trustor hereunder after such date.
Section 7.10 Waiver.
Trustor waives presentment, demand for payment, notice of dishonor, notice of protest and nonpayment, protest, notice of interest on interest and late charges, and diligence in taking any action to collect any Secured Obligations or in proceedings against the Security, in connection with the delivery, acceptance, performance, default, endorsement or guaranty of this Deed of Trust.
ARTICLE 8
MISCELLANEOUS
Section 8.1 Amendments.
This Deed of Trust cannot be waived, changed, discharged or terminated orally, but only by an instrument in writing signed by Beneficiary and Trustor.
Section 8.2 Reconveyance by Trustee.
Upon written request of Beneficiary stating that all Secured Obligations have been paid or forgiven, and all obligations under the Loan Documents have been performed in full, and upon surrender of this Deed of Trust to Trustee for cancellation and retention, and upon payment by Trustor of Trustee's reasonable fees, Trustee shall reconvey the Security to Trustor, or to the person or persons legally entitled thereto.
Section 8.3 Notices.
If at any time after the execution of this Deed of Trust it becomes necessary or convenient for one of the parties hereto to serve any notice, demand or communication upon the other party, such notice, demand or communication must be in writing and is to be served personally or by depositing the same in the registered United States mail, return receipt requested, postage prepaid and (1) if intended for Beneficiary is to be addressed to:
City of San Mateo
320 W. 20th Avenue
San Mateo, CA 94403
Attn: City Manager
and (2) if intended for Trustor is to be addressed to:
AH Bespoke LP
904 of 11211
660\14\5000738.3
18 c/o Alta Housing
3460 West Bayshore Road, Suite 104
Palo Alto, CA 94303
Attn: President and Chief Executive Officer
with a copy to:
Any notice, demand or communication will be deemed given, received, made or communicated on the date personal delivery is effected or, if mailed in the manner herein specified, on the delivery date or date delivery is refused by the addressee, as shown on the return receipt. Either party may change its address at any time by giving written notice of such change to Beneficiary or Trustor as the case may be, in the manner provided herein, at least ten (10) days prior to the date such change is desired to be effective.
Section 8.4 Successors and Joint Trustors.
Where an obligation created herein is binding upon Trustor, the obligation also applies to and binds any transferee or successors in interest. Where the terms of the Deed of Trust have the effect of creating an obligation of Trustor and a transferee, such obligation will be deemed to be a joint and several obligation of Trustor and such transferee. Where Trustor is more than one entity or person, all obligations of Trustor will be deemed to be a joint and several obligation of each and every entity and person comprising Trustor.
Section 8.5 Captions.
The captions or headings at the beginning of each Section hereof are for the convenience of the parties and are not a part of this Deed of Trust.
Section 8.6 Invalidity of Certain Provisions.
Every provision of this Deed of Trust is intended to be severable. In the event any term or provision hereof is declared to be illegal or invalid for any reason whatsoever by a court or other body of competent jurisdiction, such illegality or invalidity will not affect the balance of the terms and provisions hereof, which terms and provisions will remain binding and enforceable. If the lien of this Deed of Trust is invalid or unenforceable as to any part of the debt, or if the lien is invalid or unenforceable as to any part of the Security, the unsecured or partially secured portion of the debt, and all payments made on the debt, whether voluntary or under foreclosure or other enforcement action or procedure, will be considered to have been first paid or applied to the full payment of that portion of the debt that is not secured or partially secured by the lien of this Deed of Trust.
Section 8.7 Governing Law.
This Deed of Trust is governed by the laws of the State of California.
Section 8.8 Gender and Number.
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19 In this Deed of Trust the singular includes the plural and the masculine includes the feminine and neuter and vice versa, if the context so requires.
Section 8.9 Deed of Trust, Mortgage.
Any reference in this Deed of Trust to a mortgage also refers to a deed of trust and any reference to a deed of trust also refers to a mortgage.
Section 8.10 Actions.
Trustor shall appear in and defend any action or proceeding purporting to affect the Security.
Section 8.11 Substitution of Trustee.
Beneficiary may from time to time substitute a successor or successors to any Trustee named herein or acting hereunder to execute this Trust. Upon such appointment, and without conveyance to the successor trustee, the latter will be vested with all title, powers, and duties conferred upon any Trustee herein named or acting hereunder. Each such appointment and substitution is to be made by written instrument executed by Beneficiary, containing reference to this Deed of Trust and its place of record, which, when duly recorded in the proper office of the county or counties in which the Property is situated, will be conclusive proof of proper appointment of the successor trustee.
Section 8.12 Statute of Limitations.
The pleading of any statute of limitations as a defense to any and all obligations secured by this Deed of Trust is hereby waived to the full extent permissible by law.
Section 8.13 Acceptance by Trustee.
Trustee accepts this Trust when this Deed of Trust, duly executed and acknowledged, is made public record as provided by law. Except as otherwise provided by law, Trustee is not obligated to notify any party hereto of a pending sale under this Deed of Trust or of any action or proceeding in which Trustor, Beneficiary, or Trustee is a party unless brought by Trustee.
Section 8.14 Tax Credit Provisions.
Notwithstanding anything to the contrary contained herein or in any documents secured by this Deed of Trust or contained in any subordination agreement, and to the extent applicable, Beneficiary acknowledges and agrees that in the event of a foreclosure or deed-in-lieu of foreclosure (collectively, "Foreclosure") with respect to the Security encumbered by this Deed of Trust, the following rule contained in 26 U.S.C. Section 42(h)(6)(E)(ii), as amended, applies:
For a period of three (3) years from the date of Foreclosure, with respect to an existing tenant of any low-income unit, (i) such tenant may not be subject to eviction or termination of their tenancy (other than for good cause), (ii) nor may such tenant's gross rent with respect to 906 of 11211
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20 such unit be increased, except as otherwise permitted under Section 42 of the Internal Revenue Code.
Section 8.15 Venue. In the event of litigation, venue will be in the County of San Mateo.
[signatures on following page]
907 of 11211
660\14\5000738.3 S-1
LEASEHOLD DEED OF TRUST
(Bespoke)
IN WITNESS WHEREOF, Trustor has executed this Deed of Trust as of the day and year first above written.
TRUSTOR:
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: _________________________________
Its: _________________________________
908 of 11211
660\14\5000738.3
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: ______________________________
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. 909 of 11211
660\14\5000738.3
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: ______________________________
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. 910 of 11211
660\14\5000738.3 A-1
1169\94\3678891.2
EXHIBIT A
LEGAL DESCRIPTION
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: 034-017-179-06.00 911 of 11211
1199\09\2723507.2
660\14\5000847.2
EXHIBIT H
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
City of San Mateo
330 W. 20th Avenue
San Mateo, CA 94403
Attention: City Manager
NO FEE FOR RECORDING PURSUANT
TO GOVERNMENT CODE
SECTIONS 6103 AND 27383
APN: 034-179-050 and 034-179-060
(Space above this line for Recorder's Use)
NOTICE OF AFFORDABILITY RESTRICTIONS
ON TRANSFER OF PROPERTY
NOTICE IS HEREBY GIVEN, that the City of San Mateo, a California charter city (the "City") has required AH Bespoke LP, a California limited partnership (the "Owner") to enter into certain affordability covenants and restrictions entitled, Regulatory Agreement and Declaration of Restrictive Covenants (the "Restrictions"), with reference to a housing development (the "Development") to be constructed on that certain real property (the "Property") located at the corner of E. 4th Avenue and N. Railroad Avenue in the City of San Mateo, San Mateo County, Assessor's Parcel Nos. 034-179-050 and 034-179-060, and further described in Exhibit A incorporated herein by reference.
The affordability covenants and restrictions contained in the Restrictions include without limitation and as further described in the Restrictions:
1. Seventy (70) Units, shall be rented to and occupied by or, if vacant, available for occupancy by households whose gross income does not exceed one hundred percent (100%) of Area Median Income as adjusted by household size for San Mateo County, and at least forty-nine percent (49%) of those units shall be further rent-restricted for occupancy by lower income households as follows: not less than six (6) Units shall be rented and occupied by Extremely Low Income Households, including two (2) studio Units, two (2) one-bedroom Units, and two (2) three-bedroom Units; not less than six (6 ) Units shall be rented and occupied by Low Income Households, including three (3) two-bedroom Units and three (3) three-bedroom units; not less than eighteen (18) Units shall be rented and occupied by Very Low Income Households, including one 912 of 11211
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660\14\5000847.2
(1) studio Unit, eight (8) one-bedroom Units, five (5) two-bedroom Units, and four (4) three-bedroom Units.
2. Manager's Unit. One (1) Unit shall be available for designation as the manager's unit and shall not be income restricted;
3. Additional requirements concerning operation, management, and maintenance of the Development are also imposed by the Restrictions.
In the event of any conflict between this Notice of Affordability Restrictions on Transfer of Property (the "Notice") and the Restrictions, the terms of the Restrictions shall prevail.
The Restrictions have been recorded concurrently herewith, and shall remain in effect for ninetynine (99) years from the date the Regulatory Agreement is recorded with the Office of the San Mateo County Recorder.
[Remainder of Page Left Intentionally Blank]
913 of 11211
660\14\5000847.2
IN WITNESS WHEREOF, the parties have executed this Notice of Affordability Restrictions on Transfer of Property on or as of December __, 20___.
CITY:
CITY OF San Mateo, a California charter city
By: _______________________________
Alex Khojikian, City Manager
914 of 11211
660\14\5000847.2
OWNER:
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: ________________________________
Date: ________________________________
915 of 11211
1199\09\2723507.2
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: ______________________________
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. 916 of 11211
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: ______________________________
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. 917 of 11211
EXHIBIT A
LEGAL DESCRIPTION
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: 034-017-179-06.00 918 of 11211
1 EXHIBIT I
INSURANCE REQUIREMENTS
(a) Developer shall maintain the following insurance coverage throughout the Term of the Loan:
(1) Workers' Compensation insurance to the extent required by law, including Employer's Liability coverage, with limits not less than One Million Dollars ($1,000,000) each accident. (2) Commercial General Liability insurance with limits not less than Two Million Dollars ($2,000,000) each occurrence combined single limit for Bodily Injury and Property Damage, including coverages for Contractual Liability, Personal Injury, Broadform Property Damage, Products and Completed Operations.
(3) Automobile Liability insurance with limits not less than One Million Dollars ($1,000,000) each occurrence combined single limit for Bodily Injury and Property Damage, including coverages for owned, non-owned and hired vehicles, as applicable. (4) Builders' Risk insurance during the course of construction and upon completion, property insurance covering the Development, in a form appropriate for the nature of such property, covering all risks of loss, excluding earthquake, for one hundred percent (100%) of the replacement value, with deductible, if any, acceptable to the City, naming the City as a Loss Payee, as its interests may appear. Flood insurance must be obtained if required by applicable federal regulations.
(5) Commercial crime insurance covering all officers and employees, for loss of Loan proceeds caused by dishonesty, in an amount approved by the City, naming the City a Loss Payee, as its interests may appear which insurance shall be maintained only until the entire balance of the Loan has been disbursed.
(b) Developer shall cause any general contractor, agent, or subcontractor working on the Development under direct contract with Developer or subcontract to maintain insurance of the types and in at least the minimum amounts described in subsections (1), (2), and (3) above, except that the limit of liability for commercial general liability insurance for subcontractors must be One Million Dollars ($1,000,000), and must require that such insurance will meet all of the general requirements of subsections (d) and (e) below. (c) The required insurance must be provided under an occurrence form, and Developer shall maintain the coverage described in subsection (a) continuously throughout the Term. Should any of the required insurance be provided under a form of coverage that includes an annual aggregate limit or provides that claims investigation or legal defense costs be included in such annual aggregate limit, such annual aggregate limit must be three times the occurrence limits specified above. Commercial General Liability, Automobile Liability and Property insurance policies must be endorsed to name as an additional insured the City and its officers, agents, employees and members of the City Council.
919 of 11211
2 (d) All policies and bonds are to contain: (i) the agreement of the insurer to give the City at least thirty (30) days' notice prior to cancellation (including, without limitation, for non-payment of premium) or any material change in said policies; (ii) an agreement that such policies are primary and non-contributing with any insurance that may be carried by the City; (iii) a provision that no act or omission of Developer shall affect or limit the obligation of the insurance carrier to pay the amount of any loss sustained; and (iv) a waiver by the insurer of all rights of subrogation against the City and its authorized parties in connection with any loss or damage thereby insured against.
(e) 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.
(f) Endorsements: The insurance policies are to contain, or be endorsed to contain, the following provisions:
(1) The City, its elected and appointed officials, employees, volunteers 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 l 0, CG 20 26, CG 20 33, or CG 20 38; and CG 20 37 fohns if later revisions used).
(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, volunteers, and agents. Any insurance or self-insurance maintained by the City, its elected and appointed officials, employees, volunteers, or agents shall be excess of the Developer's insurance and shall not contribute with it.
(g) Each insurance policy required by this clause shall provide that coverage shall not be canceled, except with notice to the City.
(h) 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.
(i) 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 920 of 11211
3 subrogation in favor of the City for all work performed by the Developer, its employees, or agents.
(j) 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.
921 of 11211
EXHIBIT J
RESERVED
922 of 11211
EXHIBIT K
ASSIGNMENT OF COLLATERAL DOCUMENTS
TO BE INSERTED
923 of 11211
Disposition and Development Agreement - Exhibit L Insurance 660\14\4222726.3
Exhibit L
Insurance
Each Developer will maintain the insurance coverage described below for itself and its applicable Improvements; provided, that notwithstanding the foregoing or anything to the contrary contained in the Agreement to which this is an Exhibit, the Commercial Developer shall (i) only be required to provide the insurance identified in Section 1 below during (and provide certificates of insurance with respect to) the period commencing with the commencement of construction of the Underground Parking Garage and ending on the date of Podium Completion and (ii) not be required to (1) provide the insurance identified in Section 2 below or (2), to the extent applicable to the period following the date of Podium Completion, satisfy the requirements under Section 3 below. :
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.
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Disposition and Development Agreement - Exhibit L Insurance 660\14\4222726.3
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 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 garage at 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 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:
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Disposition and Development Agreement - Exhibit L Insurance 660\14\4222726.3
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).
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, 926 of 11211
Disposition and Development Agreement - Exhibit L Insurance 660\14\4222726.3
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 Pollution Liability policy shall not contain a mold exclusion, and the definition of Pollution shall include microbial matter, including mold. 927 of 11211
CITY OF SAN MATEO
RESOLUTION NO. _______(2026)
APPROVING A SITE PLAN AND ARCHITECTURAL REVIEW (SPAR), A SITE DEVELOPMENT PLANNING APPLICATION (SDPA), AND A SPECIAL USE PERMIT (SUP), FOR CONSTRUCTION OF ONE SEVEN-STORY, 71-UNIT
RESIDENTIAL AFFORDABLE HOUSING BUIDLING AND ONE SIX-STORY 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); AND ADOPTING AN INITIAL STUDY/MITIGATED NEGATIVE DECLARATION AND MITIGATION
MONITORING AND REPORTING PROGRAM
(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 “Talbot’s Lot”) 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) with DTSM Housing, LLC for the redevelopment of the Talbot’s Lot; and WHEREAS, on October 11, 2022, the Planning Commission held a public study session to receive public comments on, and provide input to, DTSM Talbots Ventures, LLC, (herein referred to as the “Applicant”) and staff on a Preliminary Planning Application (PA-2022-023) to demolish all existing structures on the block bounded by East 4th Avenue, Railroad Ave, East 5th Avenue and South B Street, referred to as “Bespoke,” and construct a new commercial, office and residential mixed-use development 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 construction of a new mixed-use 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 (collectively referred to as “Project”) in the City of San Mateo (“City”); and WHEREAS, the San Mateo City Charter and Municipal Code Section 27.06.050 authorizes the City Council to take final action on the Site Plan and Architectural Review, Special Use Permit, and Site Development Planning Application; and
WHEREAS, approval of the applicant’s proposal is considered a “Project” for purposes of the California Environmental Quality Act, Pub. Resources Code §21000, et seq. (“CEQA”); and WHEREAS, in accordance with the provisions of CEQA, the City of San Mateo, as lead agency, prepared a Notice of Intent (NOI) to adopt a Mitigated Negative Declaration (MND) on October 4, 2024 and circulated an Initial Study and MND from October 4, 2024 to November 4, 2024 to assess environmental impacts in accordance with CEQA Guideline 15070; and
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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 proposed Project is located within the Downtown Area Plan study area; and WHEREAS, the City finds the Project consistent with the applicable policies of the 2030 General Plan and other applicable policies as detailed within this Resolution; and WHEREAS, all applicable Conditions of Approval have been attached as Exhibit A; and WHEREAS, the Initial Study/Mitigated Negative Declaration has been attached to the Agenda Report, and the Mitigation Monitoring and Reporting Program (MMRP) has been attached as Exhibit B; 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 unanimously 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.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SAN MATEO, CALIFORNIA HEREBY FINDS AND RESOLVES THAT:
1. On the basis of the whole record before it, there is no substantial evidence that the Project will have a significant effect on the environment, and the Initial Study/Mitigated Negative Declaration reflects the lead agency’s independent judgment and analysis.
2. The custodian of the documents or other material that constitute the record of the proceeding upon which this decision is based is the Community Development Department, located at City Hall, 330 West 20th Avenue, San Mateo, California.
3. The Initial Study/Mitigated Negative Declaration for the Project attached to the Agenda Report and the Mitigation Monitoring and Reporting Program (MMRP) included as Exhibit B are adopted.
BE IT FURTHER RESOLVED, THE CITY COUNCIL OF THE CITY OF SAN MATEO, CALIFORNIA HEREBY FINDS THAT:
1. The Project conforms to applicable policies of the Land Use, Circulation, Urban Design, Housing, Conservation and Open Space, and Noise Elements of the City’s General Plan. a. Land Use Element. The Project conforms to Policies LU 1.8, LU 1.10, LU 2.4 and 3.1 of the Land Use Element, which encourage a balance of high intensity, mixed-use developments in nonresidential land use categories to promote housing production and complement the greater downtown area. Specifically, LU 1.8 encourages allowance of mixed-use developments that include multi-family dwellings in non-residential land use categories. The Project combines both retail/commercial and office uses that complement the existing commercial uses in the vicinity 929 of 11211
and in the adjacent downtown core. LU 1.10: Commercial Development, encourages industrial, service, retail, and office development that is compatible with the desired character of the area and with adjacent residential areas in terms of intensity of use, height, bulk and design. Adjacent uses are mixed with commercial, residential and parking lot uses, and the surrounding neighborhood consists of a variety of land uses that include other mixed-use buildings that are substantially similar and compatible with adjacent uses. In conformance with Policies LU 2.4 and LU 3.1, the Project proposes these uses to further the downtown area as the social, cultural, and economic center of the City. b. Circulation Element. In conformance with Policies C 2.5, C 2.10, and C 2.12 of the Circulation Element, a Transportation Impact Analysis and Transportation Demand Management Plan have been prepared for the Project. The Transportation Impact Analysis concludes that the Project will not result in a significant impact caused by increased Vehicle Miles Traveled (VMT). The Applicant has agreed to implement a Transportation Demand Management Plan that includes specific tripreduction measures for the life of the Project. The Project will also install new pedestrian enhancements such as improved sidewalks, crosswalk visibility improvements, ramps, and streetlights in conformance with Policies C 4.4, C 4.5, C 4.6 and C 4.7. Lastly, the project is subject to Assembly Bill 2097, which prohibits the City from imposing minimum parking requirements, including the City’s parking in-lieu fee, for projects within one-half mile of San Mateo Downtown Caltrain Station, a major public transit stop.
c. Urban Design Element. The building materials conform to Policy UD 2.3 in that the materials complement the style of the Project and incorporate common materials of the area, including brick veneer, metal cladding, tiled wainscotting and painted cement plaster. d. Conservation and Open Space Element. Policy C/OS 6.6 of the Conservation and Open Space Element requires that new developments provide street trees, which this Project conforms to in that twenty (20) new street trees are proposed, an increase in street trees over existing conditions. The Project will conform to Policy C/OS 7.1 with the incorporation of mitigation measures to protect and preserve to the extent feasible archaeological resources that might be present in the subsurface areas of the site.
e. Noise Element. The Project conforms to Policies N 1.1 and N 1.2 of the Noise Element in that an acoustical analysis will be required for the Project at the building permit stage of the process to ensure that operational noise levels will not exceed noise limits. In addition, the Project shall conform to Policy N 2.1 in that noise measures and monitoring during construction have been included as conditions of approval.
f. Housing Element. The Project conforms to Policies H1.2 – Utilize Public Funding and Properties for New Affordable Housing and H1.3 – Increase Affordable Housing Production in that the Project includes 70 below-market rate rental housing units.
g. Noise Element. The Project conforms to Policies N1.1 and N1.2 of the Noise Element in that an acoustical analysis will be required for the Project at the building permit stage of the process to 930 of 11211
ensure that interior noise levels will not exceed noise limits. In addition, the Project shall conform to Policy N2.1 in that noise measures and monitoring during construction have been included as conditions of approval.
2. The Project conforms to applicable policies of the City’s Downtown Area Plan. a. While the Project does not meet the minimum required retail frontage requirements and requested a waiver pursuant to the State Density Bonus Law, the Project integrates a significant amount of retail on the ground floor. The proposed retail frontages are in substantial conformance to Policies II.1 and II.2, which encourages preserving the downtown core shopping area, supports retail frontages to enhance the pedestrian scale, and allows for a compact walking environment.
b. The Project conforms to Policies II.5, II.6, II.8, and II.10 in that the Project integrates retail, office, and residential uses in the CBD/R zoning district that complement the downtown CBD zone.
Additionally, the Project further conforms to Policies III.1, III.2, and III.8 because the Project will widen the sidewalk and add pedestrian amenities such as benches, improve pedestrian safety with the addition of curb extensions and high visibility crosswalk enhancements, and plant new street trees to further the pedestrian connectivity to the downtown core at the pedestrian level along both frontages.
c. The Project conforms to Policy II.9 in that the Project provides 71 residential units that will support downtown businesses and are in close proximity to the transit station to help reduce vehicle trips and vehicle ownership.
d. In conformance with Policy IV.3 the Project proposes high quality, contemporary building design with traditional materials and appropriate building scale and massing that further promotes 4th Avenue and B Street as main connection to the downtown core. e. While the Project exceeds the maximum bulk and building height provisions of the Zoning Code via State Density Bonus Law, the Project integrates building stepbacks and open spaces on several upper floors in substantial conformance with Policy III.3. f. A Parking Demand Study has been prepared for the project, which conforms to Policy V.8 in that the Project, which is within one-half mile of the Downtown Transit Center, and while not required to meet minimum parking requirements, does provide on-site parking, and will participate in Transportation Demand Management (TDM) measures.
NOW, THEREFORE, BE IT FURTHER RESOLVED THAT THE CITY COUNCIL OF THE CITY OF SAN MATEO, CALIFORNIA DOES HEREBY APPROVE THE MIXED USE DEVELOPMENT APPLICATION (PA-2023-012) REFFERRED TO AS “BESPOKE” AT 445 SOUTH B STREET, APPROVING A SPECIAL USE PERMIT (SUP), SITE PLAN AND
ARCHITECTURAL REVIEW (SPAR) AND SITE DEVELOPMENT PLANNING APPLICATION (SDPA) BASED UPON THE
FOLLOWING FINDINGS FOR APPROVAL, THE CONDITIONS OF APPROVAL INCLUDED IN EXHIBIT A TO THIS 931 of 11211
RESOLUTION, AND THE MITIGATION MONITORING AND REPORTING PROGRAM INCLUDED IN EXHIBIT B TO THIS RESOLUTION:
1. The Site Plan and Architectural Review (Municipal Code Section 27.08.030) application for construction of a mixed-use building and associated Conditions of Approval are approved based on the following findings:
a. The structures, site plan, and landscaping are in scale and harmonious with the character of the neighborhood as conditioned in that:
i. The Project employs a high-quality mixture of a contemporary building design with traditional materials that enhance the existing architectural character of the surrounding area including brick veneer; and
ii. The Project is compatible with the scale of the seven-story residential buildings to the west and the anticipation of further intensification of new buildings located in the downtown area, including seven-story mixed use buildings located at Block 20, Block 21, and seven-story residential building located at the block bounded by 3rd, 4th Avenue, and Eldorado and Delaware Street; and
iii. The pedestrian improvements create a walkable and inviting pedestrian realm that substantially conform with the City’s guidelines relating to sidewalks by providing active ground-level retail frontage and widened sidewalks with ADA compliant improvements; and
iv. The Project incorporates new landscaping including street trees and in-ground planters along street frontages to further enhance the pedestrian realm. b. The development will not be detrimental to the harmonious and orderly growth of the City in that:
i. The Project provides retail/commercial and office uses, as well as residential uses, that together complement existing commercial uses in the vicinity and in the downtown core; and
ii. The Project is in conformance with the 2030 General Plan policies and consistent with Zoning Code development standards; and
iii. The Project is in substantial conformance with the Downtown Area Plan, Bicycle Master Plan, and Citywide Pedestrian Master Plan.
c. The development will not impair the desirability of investment or occupation in the vicinity, and otherwise is in the best interests of the public health, safety, or welfare in that:
i. The Project consists of new buildings with both residential and retail/commercial and office uses in an area well-served by public transit; and ii. The Project optimizes the project vicinity’s development potential for commercial uses furthering the downtown as the economic center of the City; and 932 of 11211
iii. The Project provides new, well-designed housing units, particularly rental housing that provides opportunities for those unable to manage the expense of ownership housing; and
d. The development meets all applicable standards as adopted by the Planning Commission and City Council, conforms with the 2030 General Plan, and will correct any violations of the zoning ordinance, building code, or other municipal codes that exist on the site. i. The Project complies with the General Plan policies in terms of land use and densities, and all applicable development standards of the Zoning Code, subject to application of State Density Bonus Law (SDBL) in accordance with Government Code Section 65915, allowable incentives/concessions and requested waivers. Application of SDBL allows the Project’s two requested concessions/incentives: 1) to exceed the standard FAR maximum from 3.0 to 4.90 to allow for additional commercial square footage intended to help subsidize, and thereby provide for, the affordable housing units; and 2) to reduce the total amount of amount of common open space from 8,520 to 4,000 square feet to provide actual and identifiable cost reductions in that it will allow for the construction of the affordable residential units.
ii. Application of SDBL further allows the Project’s six (6) requested waivers from the City’s otherwise standard development regulations, including street wall area limitations, bulk dimensions above 55 feet, commercial and residential building heights, maximum FAR, and streetwall setbacks. The Project’s Transportation Demand Management Plan (TDM) results in an overall trip reduction of 25 percent, which meets the minimum as required by the City/County Association of Governments (C/CAG) of San Mateo County and has been added as conditions of approval. No violations of the Zoning Ordinance or Building Code were identified on the site. Therefore, the development meets all applicable standards as adopted by the Planning Commission and City Council and conforms with the General Plan and other applicable plans and policies. e. The development will not adversely affect matters regarding police protection, crime prevention, and security in that the buildings, paths of travel, and parking facilities will be required to conform to the City’s current Security Ordinance through conditions of approval, including adequate lighting to ensure nighttime visibility and installation of surveillance camera.
2. The Site Development Planning Application (Municipal Code Section 23.40.040(a)(4)) for the removal of major vegetation and associated Conditions of Approval are recommended for approval based on the finding that all concerns relating to landscaping and tree removal have been addressed as follows:
a. The Project will result in the removal of 23 existing trees, all of which are Protected Trees. The removal of these trees is necessary to accommodate the development of the proposed Project.
All trees will be removed and replaced with appropriate landscaping to enhance the site and pedestrian realm including planting of new street trees along B Street and 4th and 5th Avenue frontages of the Project.
b. All concerns regarding tree removal on the site have been addressed as conditions of approval requiring conformance to the City's landscape regulations through the provision of extensive 933 of 11211
landscaping, including planting of 29 trees at ground level, with an additional 10 trees planted at the 6th floor commercial building rooftop patio and 14 trees located on the second floor outdoor space for the residential building, as shown on the project plans, and/or through the payment of a fee to the City’s tree planting fund.
3. The Special Use Permit (Municipal Code Sections 27.74) application to allow ground floor community service/non-profit use in required retail frontage area and associated Conditions of Approval are approved based on the following findings:
a. The use of the ground floor as a community service/non-profit use will not adversely affect the general health, safety and/or welfare of the community as the surrounding neighborhood contains a mix of commercial and residential land uses that are compatible with the proposed ground floor use and can accommodate a mix of other uses. b. The project will not cause injury or disturbance to adjacent property traffic or excessive noise, smoke, odor or noxious gas, dust, glare, heat or fumes, or industrial waste as documented in the prepared Mitigated Negative Declaration as attached to the Agenda Report, which concludes any related physical impacts to these environmental conditions can be mitigated to a level of insignificance through implementation of the mitigation measures specified in the Mitigation Monitoring and Reporting Program.
4. The Site Plan and Architectural Review Permit (Municipal Code Sections 27.64.390) application for modifications to the off-street loading berth and associated Conditions of Approval are approved based on the following findings:
1. Adequate on-street parking is available along a parcel frontage to accommodate a loading berth.
2. The on-street parking intended for temporary loading purposes is located at least 50 feet from any intersections and provides convenient access to building entrances.
3. The street width is adequate to accommodate loading vehicles without impeding use of the sidewalk or local traffic circulation or otherwise being detrimental to public safety.
5. This resolution shall go into effect as of the effective date of the ordinance approving the Development Agreement for the Project.
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EXHIBIT A
CITY OF SAN MATEO PLANNING APPLICATION
CONDITIONS OF APPROVAL
PA-2023-012 “BESPOKE”, 445 S. B ST., SPAR + SUP + SDPA
445 S B ST, SAN MATEO, CA 94401-4118; 302 E 4TH AVE, SAN MATEO, CA 94401-4035; 407 S B ST, SAN MATEO, CA 94401-4118; 415 S B ST B, SAN MATEO, CA 94401 PARCEL # 034179050, 034179020, 034179030, 034179060, 034179010, 034179040 AS APPROVED BY THE CITY COUNCIL ON __________
The following conditions of approval apply to the project referenced above. The conditions of approval are grouped under specific headings that relate to the timing of required compliance.
Additional language within a condition may further define the timing of required compliance. Types of Building permits include Demolition, Shoring/Excavation, Foundation, and Superstructure. To the extent these conditions are inconsistent with the terms of the project Development Agreement, the Development Agreement shall control. These conditions apply to the Residential Developer (RES) and Commercial Developer (COM) separately. Where conditions apply to both the Residential Developer and Commercial Developer as noted by a “(COM/RES)”, the condition will be completed by each Developer separately and the incompletion by one Developer shall not hold up the other Developers completion and associated milestone.
The following conditions shall be satisfied prior to issuance of a DEMOLITION PERMIT, BUILDING PERMIT FOR SHORING OR FOUNDATION, or SITE DEVELOPMENT PERMIT, whichever is issued first, or prior to the deadline specified in that condition.
Planning Division (PA)
1 APPROVED PLANNING APPLICATION CONFORMANCE (RES/COM)– All building permit plans, details, and subsequent construction shall substantially conform with the approved planning application. This includes but is not limited to plans, materials, project description, and other items submitted as part of the approved planning application. Any proposed modifications to the approved planning application shall be reviewed and approved by the Community Development Director, or his/her designee, prior to construction of the proposed modifications. The Community Development Director, or his/her designee, shall determine whether the proposed modifications substantially conform with the approved planning application, or whether a planning application modification is required to be submitted to permit the proposed modifications, as required by Municipal Code Section 27.08.080 Modifications. (PLANNING)
2 AUTOMATED PARKING FACILITY OPERATIONS PLAN (COM)– The applicant shall submit an operations plan that at minimum includes details on how the facility will be accessed, retrieval efficiency, and operational details, schematic or technical 936 of 11211
drawings, and the location and specifications of an emergency back-up power source shall be required upon building permit application submittal of the parking garage, subject to the satisfaction of the Community Development and Public Works Directors, or their designee. (PLANNING/PUBLIC WORKS)
3 AUTOMATED PARKING FACILITY PARKING AGREEMENT –(COM/RES) The Residential and Commercial applicants shall each enter into and record an “Agreement Guaranteeing Maintenance of Mechanical Parking Facility” with the mechanical or automated facility manufacturer or other qualified service professional to provide on-call maintenance services to ensure that mechanical and/or automated parking facilities to be fully operational and usable with limited downtime. The agreement shall be valid immediately after installation and operation of the facility and shall be valid for as long as the use is on the property. A copy of the recorded agreement shall be provided to the Planning Division prior to the issuance of certificate of occupancy of the parking garage. (PLANNING)
4 CONDITIONS OF APPROVAL – (COM/RES) This complete list of Conditions of Approval shall be reproduced onto the second sheet of all building permit plan sets. (PLANNING)
5 PAYMENT OF OUTSTANDING PLANNING APPLICATION FEES – (COM) The applicant shall pay all outstanding planning application fees prior to the issuance of a building permit. (PLANNING)
6 SITE DEVELOPMENT PERMIT FOR TREE REMOVAL – (COM) Prior to the issuance of a building permit, the applicant shall obtain a Site Development Permit for tree removal from the Planning Division for removal of existing trees with a diameter of 6 inches or larger at 54” above grade. The Site Development Permit for tree removal shall authorize the applicant to replace on-site and street trees equivalent or greater than the Landscape Unit (LU) value of trees to be removed by planting on-site and street trees, pay a fee in lieu of planting trees at the rate established in the annual Comprehensive Fee Schedule upon permit issuance and subject to the limitations articulated in the Development Agreement, or a combination of both. (PLANNING) 7 VECTOR CONTROL PLAN – (COM) The applicant shall enter into a contract with a pest control specialist and develop a vector control plan to be submitted for review and approval by the Community Development Director and the San Mateo County Mosquito and Vector Control District prior to the issuance of a building permit. The plan shall describe measures which shall be taken by the applicant to prevent rodent and pest infestation to adjacent sites, specify pest control measures, cover all phases of demolition, landscaping removal, and construction plus for a minimum period of six months after the completion of construction. The plan shall also specify that modifications will be developed and implemented should additional pest control measures be required during construction or demolition activity, subject to approval 937 of 11211
by the Community Development Department Director or his/her designee. (PLANNING)
Building Division (PA)
8 A VAPOR INTRUSION MITIGATION PLAN (COM) shall be prepared that includes a Vapor Mitigation System (VMS) that will minimize the risk of exposure of future employees and residents to VOCs in indoor air as a result of vapor intrusion. The Vapor Intrusion Mitigation Plan will require the project applicant to design the foundation features and mechanical systems serving interior spaces with appropriate engineering features to reduce risk of vapor intrusion into the building. The Vapor Intrusion Mitigation Plan shall be submitted to San Mateo County Health for review and approval. Alternative designs may be acceptable if approved in writing by the San Mateo County Health. The applicant shall provide proof of San Mateo County Health approval for the Vapor Intrusion Mitigation Plan to the City's Building Division and Planning Division, prior to building permit issuance for the subterranean garage. (BUILDING)
9 ADDRESS ASSIGNMENT – (COM/RES) The applicant shall submit an address assignment application for the proposed buildings, subject to the review and approval by the Building Division prior to the issuance of a building permit. (BUILDING)
10 APPLICABLE BUILDING STANDARDS AND LOCAL CODES – (COM/RES) All building permit plans shall demonstrate compliance with the applicable California Building Standards Codes and local amendments as adopted by the Building Division at the time of filing the building permit application. (BUILDING) 11 BAAD JOB NUMBER – (COM) (use for projects demolishing a full structure) The applicant shall submit an asbestos demolition and renovation notification job number (J#) from Bay Area Air Quality Management District prior to the issuance of a demolition permit. (BAAD). (BUILDING)
12 DEMOLITION – (COM) A building permit for demolition shall be issued in accordance with Section 23.06.100 of the San Mateo Municipal Code, to the satisfaction of the Building Official or his/her designee. (BUILDING)
13 LOT TIE AGREEMENT – (COM/RES) The applicant shall submit an AMMR Request (Alternative Means and Method of Construction Request) for Code Modification and Alternate Methods according to California Building Code Section 104.11, and shall receive written approval, from the Building Official and Fire Marshall if a lot tie agreement is to be executed between the property owner(s) and City of San Mateo, and if the buildings are to be built across lot lines. The Lot Tie Agreement shall be 938 of 11211
recorded with the County of San Mateo. AMMR Request shall be approved prior to any building permit issuance. (BUILDING)
14 PRE-CONSTRUCTION CONFERENCE FOR LARGE PROJECTS- (COM/RES) A preconstruction conference shall be held at a time and location agreed upon by the City and applicant for the purpose of reviewing Conditions of Approval and constructionsite procedures. The applicant shall be represented by his design and construction staffs, which include any sub-contractors. Departments having conditions of approval for the project will represent the City. This meeting shall be held prior to issuance of the Demolition Permit, Building Permit or Site Development Permit, and shall be satisfied prior to issuance of whichever permit is issued first. (BUILDING) 15 SITE SURVEY – (COM/RES) The applicant shall provide a full site survey stamped and signed by a Land Surveyor licensed by the State of California prior to the issuance of a building permit. The survey shall include, but not be limited to: location and dimensions of property lines, location of streets and easements, existing buildings, topographic contour lines, trees/landscape, and other structures. (BUILDING) 16 SOILS REPORT AND INVESTIGATION LETTER – (COM/RES) The applicant shall submit a stamped, signed, and dated soils investigation report containing design recommendations and integrate recommendations into the plans as-appropriate, to the satisfaction of the Building Official or his/her designee prior to the issuance of a building permit. The applicant shall also submit a letter stamped and signed by the Geotechnical engineer of-record stating the plans and specifications substantially conform to the recommendations in the soil report, subject to the satisfaction of the Building Official or his/her designee prior to the issuance of a building permit. (BUILDING)
Fire Department (PA)
17 FIRE FLOW – ( COM/RES) The applicant shall provide fire flow information to the Fire Plan Checker, which is subject to the review and approval of the Fire Marshal or his/her designee prior to the issuance of a building permit. (FIRE) Public Works Department (PA)
18 CHARGES FOR PUBLIC WORKS SERVICES – (COM/RES) Prior to plan checking, the applicant shall be required to pay associated fees per the Fee schedule in effect at the time of the submittal. Public Works plan checking of the plans submitted with the building permit plans cannot proceed until the fee is paid. (PUBLIC WORKS) 939 of 11211
19 ENCROACHMENT PERMITS, BONDS, AND INSURANCE – (COM/RES) The applicant shall obtain an encroachment permit, post the required bonds and insurance, and provide a one (1) year warranty for all work to be done in the City's right of way or easements prior to any work being done. (PUBLIC WORKS)
20 EROSION CONTROL - (COM/RES)The project shall include erosion control measures in the building permit plans including silt fences, fiber rolls, proposed cribbing (retaining walls or riprap), terraces, and/or surface protection, required for drainage and erosion control of the property in accordance with Municipal Code section