FIRST AMENDMENT TO AMENDED AND RESTATED
DISPOSITION AND DEVELOPMENT AGREEMENT
This FIRST AMENDMENT TO AMENDE D AND RESTATED DISPOSITION AND DEVELOPMENT AGREEMENT (“ ARDDA First Amendment ”) is made and entered into effective as of March ____, 2024 (“ARDDA First Amendment Date”), by and between the CITY OF SAN PABLO, a California municipal corporation (“City”), and DANCO COMMUNITIES, a California corporation (“Developer”).
Recitals
A. The City and the Developer entered into that certain Amended and Restated Disposition and Development Agreement dated March 23, 2023 (“ ARDDA”) providing for the sale and development of a portion (“Site”) of that certain real property more commonly known as the former San Pablo City Hall located at 13831 San Pablo Avenue, San Pablo, California. The Site consists of two parcels identified as the “Phase 1 Parcel” and the “Phase 2 Parcel,” as more particularly described in the ARDDA.
B. The Developer has taken title to the Phase 1 Parcel and has commenced construction. Under the DDA, the Developer is re quired to close escrow fo r the purchase of the Phase 2 Parcel no later than March 23, 2023.
C. The Developer has submitted multiple applications for tax credits for the development of the Phase 2 Parcel, but has so far been unsuccessful due to the substantial competition for this funding source. The Develo per has requested an additional contribution of funding from the City and a 2-year extension of the deadline for the close of escrow on the Phase 2 Parcel. The City desires to provide the additio nal funding and the 2-year extension as set forth herein.
Agreement
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual covenants contained herein, and for other good and valuable consideration, the recei pt and sufficiency of which are hereby acknowledged, the City and the Developer hereby agree as follows:
1. Recitals. The Recitals are true and correc t and incorporated herein by this reference.
2. Terms. All undefined terms when used here in shall have the same respective meanings as are given such terms in the ARD DA unless expressly provided otherwise in this ARDDA First Amendment.
3. Amendment to Timing for Close of Escrow . The date to complete paragraph number 27, titled “Close of Escrow” set forth in the Schedule of Performance, Attachment No. 3 of the ARDDA, is hereby amended to read as follows:
“As soon as practicable after the sati sfaction of all conditions precedent to close of escrow, but in no event later than one (1) year from the Effective Date of this Agreement March 23, 2026, except that if tax credits are awarded, the close of escrow shall be no later than 180 days from the tax credit reservation date provided by TCAC.”
4. Phase 2 Project Development Fee . In consideration of the 2-year extension to close escrow and associated costs to the City, the Developer shall pay a fee in the amount of TWO MILLION DOLLARS ($2,000,000.00) (the “Phase 2 Project Development Fee”).
The Phase 2 Project Development Fee shall be paid to the City at and as a condition to the close of escrow for the purchase of the Phase 2 Parcel by a promissory note (the “Phase 2 Project Development Fee Note”) in form substantially similar to the “Form of Purchase Money Loan Promissory Note” attached to the ARDDA as A ttachment No. 8, which pr omissory note shall be secured by a deed of trust (the “Phase 2 Project Development Fee Deed of Trust”) to be recorded against the Phase 2 Parcel in fo rm substantially similar to the “Form of Purchase Money Loan Deed of Trust” attached to the ARDDA as Atta chment No. 9. The Phase 2 Project Development Fee Note shall bear simple interest per annum at the rate of three percent (3%). Payments on the Phase 2 Project Development Note shall be paid from eighty percent (80%) of the residual receipts from the development on the Phase 2 Parcel, as more fully described in the Phase 2 Project Development Note. The outstanding principal and all accrued and unpaid interest on the Phase 2 Project Development Note shall be due and payable in full fifty-fi ve (55) years from the date of the Phase 2 Project Development Note. The Phase 2 Project Development Fee Deed of Trust shall be subject and subordinate onl y to the terms of the Phase 2 Purchase Money Loan and a construction and/or permanent loan, as follows:
a. The City agrees that the Phase 2 Project Development Fee Deed of Trust shall be subject and subordinate to the term s and conditions of a cons truction loan deed of trust securing a construction lo an given by a lender approved by the City (the “Construction Lender”) not to exceed a sum that would cause the total of all permitted liens against the Phase 2 Parcel (not including liens for residual receipts loans), to excee d ninety percent (90%) of the projected development value including land and construction (the “Construction Loan”), provided that the Construction Lender agrees to include in its deed of trust or in a separately recorded subordination agreement with the City the following conditions: (a) the City shall receive copies of any notices of default issued by the Construc tion Lender to the Develope r; (b) the City shall have the right to cure any default by the Developer within ninety (90) days after a notice of default; and (c) the City shall have the right to exercise any and all remedies under the Phase 2 Project Development Fee Deed of Trust following the expiration of ninety (90) days after delivery of notice from the City to the Construction Lender of a default under the Phase 2 Project Development Fee Note or the Phase 2 Project Development Fee Deed of Trust; and
b. The City agrees that the Phase 2 Project Development Fee Deed of Trust shall also be subject and subordinate to the terms and conditions of a deed of trust securing a permanent loan given by a lender reasonably approved by the City (the “Permanent Lender”) not to exceed a sum that would cause the total of all permitted liens against the Phase 2 Pracel (not including liens for residual receipt s loans) to exceed ninety per cent (90%) of the Project value
including land and improvements (the “Permanent Loan”), provi ded that the Permanent Lender agrees to include in its deed of trust or in a separately recorded subordination agreement with the City the conditions described in subparagraph a. above.
Prior to the close of escrow for the Phase 2 Parcel:
(1) The Developer shall have obtained and delivered to the City an ALTA Lender's Policy of Title Insurance (the “Title Policy”), insuring the validity and the priority of the lien of the Phase 2 Project Development Fee Deed of Trust upon the Phase 2 Parcel, subject only to the Phase 2 Purchase Money Loan, and the C onstruction and/or Permanent Loan described above to which the City has agreed the Phase 2 Project Development Fee Deed of Trust will be subordinate and other matters of record approved by the City in wr iting, and showing fee simple title to the Phase 2 Parcel in the name of the Developer; and
(2) The Developer shall have executed and delivered the Phase 2 Project Development Fee Note and the Phase 2 Project Development Fee Deed of Trust,; and
(3) The Developer shall not then be in default of any of its obligations under this Agreement, the Phase 1 Purchase Money Loan Note, the Phase 1 Purchase Money Loan Deed of Trust or the Affordable Housing Regulatory Agreement.
5. Payment of Purchase Price and Recordation of Documents. Section 2.10 of the ARDDA is hereby amended to read as follows:
“The Developer shall deposit the Phas e 1 Parcel Purchase Price and the Phase 2 Parcel Purchase Price (less th e applicable amount of the Deposit), the applicable Purchase Money Loan Note a nd Deed of Trust, the Phase 2 Project Development Fee promissory note and d eed of trust, and other sums required hereunder with the Escrow Agent prior to the date for conveyance of the respective parcel, provided that the Escrow Agent shall have notified the Developer in writing that the grant deed for the respective parcel, properly executed and acknowledged by the City, has been delivered to the Escr ow Agent and that the condition of title is as required by Section 2.6 of this Agreement. The City and the Developer shall also deliver to the Escrow Agent their respective counterparts of the Affordable Housing Regulatory Agreement and, in c onnection with the development of the Phase 2 Parcel, the Reciprocal Easeme nt Agreement, properly executed and acknowledged. Upon the close of escrow, the Escrow Ag ent shall file the grant deed, Purchase Money Loan Deed of Trust, Affordable Housing Regulatory Agreement and, only in conne ction with the Phase 2 Pa rcel, the Phase 2 Project Development Fee deed of trust and Reciprocal Ea sement Agreement, for recordation among the land records in the Office of the County Recorder of Contra Costa County, shall deliver the Phase 1 Parcel Purchase Price or the Phase 2 Parcel Purchase Price, as applicable, and Purcha se Money Loan Note and, if applicable, Phase 2 Parcel Project Development Fee Note to the City, together with an ALTA Lender's Policy of Title Insurance insuring the validity and the priority of the lien of the Purchase Money Loan Deed of Tr ust upon the respectiv e parcel and, if applicable, the Phase 2 Project Developmen t Fee Deed of Trust as set forth in Section 2.16.c.(1), and shall deliver to the Developer a title insurance policy insuring title in conformity with Section 2.11 of this Agreement.”
5. Purchase Money Loans. Subsection a. of Section 2.16 of the ARDDA is hereby amended to read as follows:
“a. In consideration of the agreemen ts and covenants of the Developer hereunder, the City agrees to loan to the Devel oper the total sum of TWO MILLION DOLLARS ($2,000,000.00) FIVE MILLION FOUR HUNDRED THIRTY-TWO TWO HUNDRED SIXTY-TWO DOLLARS ($5,432,262.00) (the “Purchase Money Loans”). ONE MILLION FIVE HUNDRED THOUSAND DOLLARS ($1,500,000.00) shall be used for the acquisition of the Phase 1 Parcel (the “Phase 1 Parcel Purchase Money Loan”), and FIVE HUNDRED THOUSAND DOLLARS ($500,000.00) THREE MILLION NINE HUNDRED THIRTY-TWO THOUSAND TWO HUNDRED SIXT Y-TWO DOLLARS ($3,932,262.00) shall be used for the acquisition of Phase 2 Parcel (the “Phase 2 Parcel Purchase Money Loan”). Subject to satisfaction of all c onditions precedent thereto set forth in this Agreement, the Phase 1 Parcel Purchase Money Loan and the Phase 2 Parcel Purchase Money Loan shall each be disbursed to the Developer in connection with the close of escrow for the respective parcel.”
6. No Other Modifications. Except as otherwise provided herein, all other terms and provisions of the ARDDA shall remain in full force and effect, unmodified by this ARDDA First Amendment. To the extent of any inconsistency with the te rms and conditions of the ARDDA, the terms and conditions of this ARDDA First Amendment shall govern. Nothing in this ARDDA First Amendment shall be deemed to reduce the rights and remedies under the ARDDA.
7. Binding Effect. The provisions of this ARDDA First Amendment shall be binding upon and inure to the benefit of the heirs, representatives, successors and permitted assigns of the City and the Developer.
8. Governing Law. The provisions of this AR DDA First Amendment shall be construed and enforced in accordance with the laws of the State of California.
9. Authority. The City and the Developer represent and warrant that they have the requisite authority to bind the entity on whose behalf they are signing.
10. Counterparts. This ARDDA First Amendment ma y be executed in any number of counterparts. Any such counterpart, when executed, shall constitute an original of this ARDDA First Amendment, and all such counterparts when appropriately delivered between the City and the Developer shall constitute one and the same final ARDDA First Amendment.