Att 1 - Draft Ordinance — San Mateo City Council, June 1, 2026

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

APPROVING A DEVELOPMENT AGREEMENT FOR
445 SOUTH B. STREET, “BESPOKE” MIXED USE DEVELOPMENT
(PA-2023-012)

WHEREAS, on January 4, 2021, the City Council approved Resolution No. 3 (2021) declaring the City-owned parking lot at East 4th Avenue and South Railroad Avenue as “surplus land” and subsequently released a Notice of Surplus Lands Availability to all housing developers that have registered with the State Department of Housing and Community Development (HCD); and

WHEREAS, on April 19, 202 1, the City received four proposals for the acquisition and development of Talbot's Lot, including a proposal from the three-party Development Team composed of Prometheus Real Estate Group, Harvest Properties, and Alta Housing; and

WHEREAS, on October 4, 2021, the City Council approved the City entering into an Exclusive Negotiating Agreement (ENA) for the redevelopment of this City-owned surface parking lot located at 4th and South Railroad Avenues, with amendments to the ENA approving extensions to July 14, 2026; and

WHEREAS, DTSM Talbots Ventures, LLC, (herein referred to as the “Applicant”) submitted a planning application (PA-2023-012) on February 24, 2023 associated with the construction of a new mixed -use development totaling 239,628 square feet and consisting of one seven -story affordable housing building approximately 76,072 square feet in area and one six -story building totaling 162,926 square f eet of office/commercial area located at 445 South B Street (collectively referred to as “Project”) in the City;

WHEREAS, the Applicant has requested a Development Agreement with the City (the “Agreement”); and

WHEREAS, the applicant wishes assurance that it may proceed with the Project under the laws, regulations, and policies as specified in the Agreement, in effect on the date of the approval; and

WHEREAS, the state legislature has authorized cities to enter into Development Agreements in order to provide assurance to developers that they may proceed with projects in reliance on existing laws, regulations, and policies; and

WHEREAS, the City, in Resolution No. 120 (1990), has adopted procedures for reviewing and entering into such Development Agreements; and

WHEREAS, the Planning Commission considered the application on April 28, 2026, and recommended adoption of the Mitigated Negative Declaration and Mitigation Monitoring and Reporting Program for the Project (PA-2023-012); and

WHEREAS, the Planning Commission recommended approval of the construction of a new mixed-use development consisting of two new buildings, a subterrain parking garage, landscaping, roadway and other public improvements and common areas, subject to the Findings for Approval and Conditions of Approval; and

WHEREAS, the City Council held a duly noticed public hearing on __________, 2026, at which time all public comments were considered.

NOW, THEREFORE BE IT RESOLVED, THAT THE CITY COUNCIL OF THE CITY OF SAN MATEO, CALIFORNIA, FINDS THAT:

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

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

3. The Agreement is compatible with the requirements of the City’s Zoning Ordinance for the reasons set forth in the Findings for Approval, as included in City Council Resolution N o. ___ attached in the Administrative Report accompanying this Ordinance, and

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

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

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

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

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

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

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

Section 6. Legislative History and Effective Date. This ordinance was introduced on ___________, 2026 and adopted on ____________, and shall be effective 30 days after its second reading and adoption.

[0:00 AM] DRAFT

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RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:

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

DEVELOPMENT AGREEMENT
by and between

THE CITY OF SAN MATEO
and
DTSM TALBOTS VENTURE, LLC, a Delaware limited liability company and
MOORE TALBOT PARTNERS, LP, a California limited partnership

City of San Mateo, California

TABLE OF CONTENTS

Page

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ARTICLE I. DEFINITIONS ....................................................................................................... 3

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

6.4 No Waiver. ............................................................................................................ 15

TABLE OF CONTENTS

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

13.11 Counterparts. ......................................................................................................... 22

TABLE OF CONTENTS

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

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

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

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

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

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

E. Developer desires to develop the real property through a public-private partnership, in accordance with the provisions of this Agreement, the Development Approvals (defined below), a Disposition and Development Agreement between City, AH Bespoke LP, and DTSM Housing, LLC, of even date herewith (the "Disposition and Development Agreement"), and other applicable regulations of the City of San Mateo and other governmental agencies having jurisdiction over the Property.

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F. On ____, 20__, City’s Planning Commission held a duly noticed public hearing on this Agreement and (i) determined that this Agreement complies in all respects with CEQA, (ii) determined that this Agreement is consistent with the City’s General Plan, and (iii) recommended that the City Council approve this Agreement.

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

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

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

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

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

M. City, Developer, and Property Owner may each be referred to herein individually as a “Party” or collectively as the “Parties”.

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

ARTICLE I.

DEFINITIONS

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

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

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

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

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

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

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

1.1.7 “City Law” shall mean, individually, the San Mateo Municipal Code, the City Charter, and other ordinances, resolutions, rules, regulations, standards, policies, conditions, or specifications of the City.

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1.1.8 “Compliance Letter” shall mean a letter submitted by Developer describing Developer’s compliance with the terms of the Development Approvals and this Agreement.

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

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

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

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

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

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

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

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

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

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

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

1.1.20 “Property” is defined in Recital D.

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

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1.1.22 “Residential Developer” shall mean the developer that enters into the ground lease with the City to develop the Residential Development.

1.1.23 “Term” is defined in Section 2.3.

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

1.1.25 “Subsequent Approvals” is defined in Recital K.

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

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

1.4 Exhibits.

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

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

ARTICLE II.

GENERAL PROVISIONS

2.1 Parties.

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

2.1.2 Developer Representations and Warranties.

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

2.1.3 Relationship of City and Developer.

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

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

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2.2 Recording.

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

2.3 Term.

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

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

2.4 Force Majeure.

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

ARTICLE III.

DEVELOPMENT OF THE PROPERTY

3.1 Use of the Property and Applicable Law.

3.1.1 Subject to Agreement.

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

3.1.2 Permitted Uses.

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

3.2 No Conflicting Enactments.

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

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

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

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

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

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

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

3.3 Reservations of Authority.

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

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

3.3.1 All taxes and assessments imposed by the City which are in force and effect within the jurisdiction of the City for a broadly based class of land, projects, discretionary or ministerial approvals, or taxpayers, as applicable, on which they are imposed.

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3.3.2 Processing fees and charges of every kind and nature imposed by the City, including application, inspection, and monitoring fees, which are in force and effect within the jurisdiction of the City for the class of Subsequent Approvals being applied for.

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

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

3.4 Subsequently Enacted Rules and Regulations.

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

3.5 Nexus/Reasonable Relationship Waiver.

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

3.6 Initiatives and Referenda.

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

3.6.2 Without limiting the generality of any of the foregoing, no City-adopted moratorium or other limitation (whether relating to the rate, timing, phasing or sequencing of development) affecting subdivision maps, building permits, or other Subsequent Approvals shall

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apply to the Project. Developer agrees and understands that the City does not have authority or jurisdiction over another public agency’s authority to grant a moratorium or impose any other limitation that may affect the Project.

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

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

3.7 Compliance With Requirements of Other Governmental Entities.

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

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

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

3.7.3 As provided in California Government Code § 65869.5, this Agreement shall not preclude the application to the Property and Project of changes in laws, regulations, plans, or policies, to the extent that such changes are specifically mandated and required by changes in State or Federal laws or regulations. In the event changes in the law prevent or preclude compliance with one or more provisions of this Agreement, this Agreement shall be modified or suspended as may be necessary to comply with such State or Federal laws or regulations. The parties shall meet and confer in good faith in order to determine whether such provisions of this Agreement shall be modified or suspended as may be necessary to comply with changes in the law, and City and Developer shall agree to such action as may be reasonably required. It is the intent of the parties that any such modification or suspension be limited to that which is necessary and to preserve to the extent possible the original intent of the parties in entering into this Agreement. This Agreement shall remain in full force and effect to the extent it is not inconsistent with such laws or regulations. Nothing in this Agreement shall preclude the City or Developer from contesting by any available means (including administrative or judicial proceedings) the applicability to the Property or Project of any such State or Federal laws or regulations.

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3.7.4 To the extent that any actions of Federal or State agencies (or actions of other governmental agencies, including City, required by Federal or State agencies, or actions of City taken in good faith to prevent adverse impacts upon City by actions of Federal, State or other governmental agencies) have the effect of preventing, delaying, or modifying development of the Property or any portion thereof, City shall not in any manner be liable for any such prevention, delay, or modification. Such actions include, but are not limited to, flood plain or wetlands designations and actions of City or other governmental agencies as a result; the imposition of air quality or transportation measures or sanctions and actions of City or other governmental agencies as a result; or changes to CEQA and actions of City or other governmental agencies as a result. As a condition to being able to proceed with development, Developer may be required, at its cost, to participate in such regional or local programs and to be subject to such development restrictions as may be necessary or appropriate by reason of actions of Federal, State or other governmental agencies (or action of City taken in order to prevent adverse impacts upon City by actions of Federal, State, or other governmental agencies).

3.8 City’s Police Power.

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

3.9 Subsequent Approvals for the Property.

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

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

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

3.10 Life of Approvals and City Permits.

The terms of (a) any future tentative or parcel map (including vesting maps, map amendments, and lot line adjustments) which may be approved for the Property (as provided for in the Subdivision Map Act, Government Code Sections 66410 et seq.), or (b) the Development

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Approvals and Subsequent Approvals, shall automatically be extended for the longer of the duration of this Agreement (including any Extensions) or the term otherwise applicable to such Development Approval if this Agreement is no longer in effect.

3.11 Developer Obligations.

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

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

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

3.12 City Obligations.

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

ARTICLE IV.

COMMUNITY BENEFITS

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

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

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

4.1.3 Residential Developer will offer ground floor space in the affordable housing building at a substantially subsidized rent to Self-Help for the Elderly or other nonprofit entity as reasonably approved by the Director.

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4.1.4 Project construction will be subject to the prevailing wage and Department of Industrial Relations (DIR) registry requirements.

ARTICLE V.

AMENDMENT OF AGREEMENT AND APPROVALS

5.1 Amendment or Cancellation Procedure.

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

5.2 Minor Amendments to Project.

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

5.3 Requirement for a Writing.

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

5.4 Amendments to Development Agreement Legislation.

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

5.5 Amendment of Development Approvals.

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

5.6 Effect of Termination on Developer’s Obligations.

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

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

ARTICLE VI.

ANNUAL REVIEW

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

6.2 Compliance Letter.

Before each anniversary of the Effective Date, Developer shall submit a letter (“Compliance Letter”), along with all necessary supporting documentation, to the Director

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describing Developer’s compliance with the terms of the Development Approvals and this Agreement during the preceding year. The Compliance Letter shall include a statement that the Compliance Letter is submitted to the City pursuant to the requirements of Government Code Section 65865.1 and of the City’s regulations on Development Agreements.

6.3 Determination of Good Faith Compliance.

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

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

6.4 No Waiver.

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

ARTICLE VII.

DEFAULT, REMEDIES, AND TERMINATION

7.1 Notice of Breach.

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

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hereunder and thereafter diligently completes performance. Written notice hereunder shall specify in detail the nature of the obligation to be performed by the party receiving notice.

7.2 Remedies for Breach.

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

7.3 Termination by Mutual Consent.

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

ARTICLE VIII.

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

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

ARTICLE IX.

TRANSFERS, ASSIGNMENTS

9.1 Agreement Runs With the Land.

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

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and shall inure to the benefit of the parties and their respective heirs, successors (by merger, consolidation or otherwise) and assigns.

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

9.2 Right to Assign.

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

9.3 Partial Assignment of Development Agreement.

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

9.4 Release Upon Assignment.

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

ARTICLE X.

MORTGAGEE PROTECTION

10.1 Mortgage Protection.

This Agreement shall be superior and senior to any lien placed upon the Property or any portion of the Property after the date of recording of this Agreement, including the lien of any

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

10.2 Mortgagee Not Obligated.

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

10.3 Notice of Default to Mortgagee.

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

10.4 No Supersedure.

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

ARTICLE XI.

INDEMNIFICATION

11.1 No Duty of City; Hold Harmless.

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

11.2 Indemnification.

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

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

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

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ARTICLE XII.

NOTICES

12.1 Notices.

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

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

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

DEVELOPER:

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

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

PROPERTY OWNER:

Moore Talbot Partners, LP,
2628 Sunset Terrace

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San Mateo, California 94403.

Attn:

With copy to :

ARTICLE XIII.

MISCELLANEOUS

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

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

13.2 Invalidity.

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

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

13.4 Applicable Law and Venue.

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

13.5 Severability.

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

13.6 Nondiscrimination.

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

13.7 Headings.

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

13.8 Agreement is Entire Understanding.

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

13.9 Interpretation.

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

13.10 Recordation of Termination.

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

Signatures on the Following Page

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IN WITNESS HEREOF, the parties have executed this Agreement as of the Effective Date.

CITY:

CITY OF SAN MATEO,
a California charter city

By:

Alex Khojikian, City Manager