Scotts Valley City Council
December 4, 2024

AGENDA ITEM 7.

DATE: 12/4/2024
City of Scotts Valley

CITY COUNCIL STAFF REPORT
DATE: 12/4/2024
TO: Honorable Mayor and City Council
FROM: Kendra Reed, Finance Manager
APPROVED: Mali LaGoe, City Manager
SUBJECT: Investment Report for the Quarter Ended September 30, 2024

SUMMARY OF ISSUE
Attached is the portfolio performance status report for the City and Supplemental Law Enforcement Fund ("SLESF") investment report for the quarter ended September 30, 2024.

This information is for review only. No action is required by the Council.

The City’s investment report submitted herein complies with the City’s investment policy and evidence that there is adequate cash flow to meet the City’s needs for the next six months.

The City traditionally invests excess operating portfolio funds in Local Agency Investment Fund ("LAIF") and to the California Asset Management Program (“CAMP”). CAMP is a California Joint Powers Authority (“JPA”) established in 1989. Investments offered through the Cash Reserve Portfolio (the “Pool” or the “CAMP Pool”) and CAMP Term are permitted for all local agencies under California Government Code Section 53601(p). CAMP is directed by a board of trustees, which is made up of experienced local government finance directors and treasurers.

The revised Investment Policy, which was reviewed and adopted by the City Council June 12, 2024, allows the City to invest an unlimited amount of funds in Joint Powers Authority Pool (JPAP), which operates similarly to LAIF. The updated policy removed the previous 30% limit on investments in JPAP, allowing for an unlimited amount of funds to be invested. This flexibility provides the City with a strategic advantage in responding to changes in interest rates between these two investment options.

In the first quarter of FY24/25, the City determined that CAMP offered more favorable interest rates compared to LAIF. With the policy now permitting an unlimited investment in JPAP, the decision was made to move a significant portion of the City’s funds from LAIF into CAMP. By transferring funds into CAMP, the City is projected to earn a higher return on its short-term investments, compared to the rates available in LAIF.

The SLESF investment report reflects the latest information available concerning how these monies provided by the State of California for front line police services were invested as of September 30, 2024.

Additional information on the Pooled Money Investment Account (PMIA) and Local Agency Investment Fund (LAIF) are provided from the State Treasurer’s site.

FISCAL IMPACT
There is no fiscal impact of receiving and filing the report.

STAFF RECOMMENDATION
Receive and file an Investment Report for the Quarter Ended September 30, 2024.

TABLE OF CONTENTS

1. FY2425_Investment Report

TRUSTEE TYPE OF INVESTMENT ISSUER MATURITY DATE FACE VALUE COST MARKET VALUE VALUATION YIELD General Pooled Investments
State of California Local Agency Investment Fund (LAIF) State of California Demand - 1 day 5, $ 5,004,771 004,771 $ 5,015,086 $ * LAIF 4.710%Board of Trustees California Asset Management Program (CAMP) CAMP Demand - 1 day 14,404,539 $ 14,404,539 $ 14,404,539 $ CAMP 5.290% Weighted Average Rate for General Pooled Investments 5.140% Section 115 Trust
Charles Schwab Trust Bank Mutual Fund Schwab Demand - 1 day 2,088,402 2,088,402 2,191,776 $ Schwab 4.670% Investments of Bond Proceeds
Bank of New York Mellon US Treasury Notes Bank of New York Mellon Demand - 1 day 387 $ 387 $ 387 $ Bank of New York 4.410%Bank of New York Mellon US Treasury Notes Bank of New York Mellon Demand - 1 day 356,833 $ 356,833 $ 356,833 $ Bank of New York 4.357% **Bank of New York Mellon US Treasury Notes Bank of New York Mellon Demand - 1 day 34,983 $ 34,983 $ 34,983 $ Bank of New York 0.000%* Interest is paid at maturity. Market Value based on latest factor of 1.002061084 provided by LAIF on 9/30/2024, which has been applied to face value.** Weighted average for all accounts.

City of Scotts Valley
Quarterly Investment Report
September 30, 2024
23%
67%
10%
City's Investment Portfolio Allocation
Local Agency Investment Fund CAMP Section 115 Trust Mutual Funds

FACE VALUE TRUSTEE/INVESTMENT TYPE YIELD
$ 211,101 210,667 $ * California Local Agency Investment Fund (LAIF) 4.710%$ 211,101 210,667 $ * Interest is paid at maturity. Market Value includes accrued interest.

Supplemental Law Enforcement Fund (SLESF)
Quarterly Investment Report
September 30, 2024

MARKET VALUE

MONTHLY PERFORMANCE
Pooled Money Investment Account
September 2024
12 Months

HIGH LOW
Average Life (days) 231 221 250 212
Certificates of Deposit & Bank Notes 8.76% 8.17% 10.04% 7.72% Commercial Paper 6.08% 5.79% 6.84% 5.32%
Treasuries 55.49% 58.85% 61.60% 54.92%
MARKET VALUE (%) of BOOK VALUE
Dec-2022 98.6926 Dec-2023 100.2054
Mar-2023 99.3005 Mar-2024 100.2851
Jun-2023 99.2503 Jun-2024 100.5652
Sep-2023 99.4272 Sep-2024 101.2007
9/30/2024 8/31/2024
Percentages may not total 100%, due to rounding.

97.5 98.0

98.5 99.0

99.5 100.0
100.5
101.0
101.5
102.0
102.5
103.0
103.5
12/22 3/23 6/23 9/23 12/23 3/24 6/24 9/24
Market Value (%) of Book Value

PMIA MARKET VALUATION
PMIA
Market Value BV=100
Treasuries

55.49%
Agencies

25.71%
Certificates of
Deposit / Bank
Notes

8.76%
Time Deposits

3.19%
Commercial
Paper

6.08%
Corporate
Bonds
Loans 0.51%

0.26%
PMIA Portfolio Composition - 09/30/2024
$161.6 billion

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%
9/2019
12/2019
3/20206/20209/2020
12/2020
3/20216/20219/2021
12/2021
3/20226/20229/2022
12/2022
3/20236/20239/2023
12/2023
3/20246/20249/2024
Average Monthly Yield Comparison - 09/2019 through 09/2024 PMIA

S&P GIP
Fed Funds
September Yields
PMIA 4.575%
S&P GIP 5.420%
Fed Funds 5.128%

September 4.575
August 4.579
July 4.516
June 4.480
May 4.332
April 4.272
PMIA Average Life(1): 231
LAIF Fair Value Factor(1): 1.002061084
PMIA Daily(1): 4.58
PMIA Quarter to Date(1): 4.56
LAIF Apportionment Rate(2): 4.71
LAIF Earnings Ratio(2): 0.00012912073474208
LAIF Administrative Cost(1)*: 0.26
Treasuries

55.49%
Agencies

25.71%
Certificates of
Deposit/Bank Notes

8.76%
Time
Deposits

3.19%
Commercial
Paper

6.08%
Corporate
Bonds

0.51%
Loans

0.26%
Notes: The apportionment rate includes interest earned on the CalPERS Supplemental Pension Payment pursuant to Government Code 20825 (c)(1) and interest earned on the Wildfire Fund loan pursuant to Public Utility Code 3288 (a). *The percentage of administrative cost equals the total administrative cost divided by the quarterly interest earnings. The law provides that administrative costs are not to exceed 5% of quarterly EARNINGS of the fund. However, if the 13-week Daily Treasury Bill Rate on the last day of the fiscal year is below 1%, then administrative costs shall not exceed 8% of quarterly EARNINGS of the fund for the subsequent fiscal year.

Source:
(1) State of California, Office of the Treasurer
(2) State of Calfiornia, Office of the Controller
PMIA Average Monthly
Effective Yields(1)
PMIA/LAIF Performance Report
as of 10/23/24
Daily rates are now available here. View PMIA Daily Rates Quarterly Performance
Quarter Ended 09/30/24
Chart does not include $1,343,000.00 in mortgages, which equates to 0.001%. Percentages may not total 100% due to rounding.

Pooled Money Investment Account
Monthly Portfolio Composition (1)
9/30/24
$161.6 billion

AGENDA ITEM 1.

DATE: 12/4/2024
City of Scotts Valley

CITY COUNCIL STAFF REPORT
DATE: 12/4/2024
TO: Honorable Mayor and City Council
FROM: Mali LaGoe, City Manager
APPROVED: Mali LaGoe, City Manager
SUBJECT: Consideration of Purchase and Sale Agreement for the purchase of real property commonly referred to as Assessor's Parcel Numbers 022-721-07, -08, and -09, otherwise known as the "Town Center" land.

SUMMARY OF ISSUE
The City of Scott's Valley's long standing dream of building a Town Center on the vacant land between Kings Village Road, Mount Hermon Road and Skypark has been progressing in the last few years. The City has achieved several milestones including previously acquiring a total of six acres of the vacant land area, cleaning up surface level environmental contamination, securing the property with fencing to prevent illegal dumping, engaging with the community to update the vision for the layout and amenities to be included in the Town Center, completing a retail analysis, updating the City's Housing Element and now, negotiating a purchase and sale agreement with the City of Santa Cruz to gain site control of the remaining eight acres formerly used as the City of Santa Cruz's municipal airport until 1983. On August 8, 2024, the Planning Commission reviewed the proposed acquisition of the City of Santa Cruz owned property and determined the acquisition was consistent with the Scotts Valley General Plan as required by Government Code Section 65402(a). A copy of the resolution making that determination is attached to this report.

Securing full site control of the 14 acre core area is an important step in removing barriers that have previously prevented the Town Center from coming to fruition. The City applied for Community Project Funding in the amount of $3,000,000 to Congressman Panetta in 2023, and was awarded $1,000,000 to aid in the purchase of the property. The use of Federal funds for land acquisition required the City to complete a NEPA analysis before the Purchase and Sale Agreement could be executed by the City Council. On November 20, 2024, the NEPA analysis was approved by Housing and Urban Development (HUD) allowing the City to proceed with the purchase.

The negotiated purchase price, based on appraised value and current condition, is $7,750,000.

The City of Scotts Valley paid a total of $270,885 for the environmental clean-up, which will be credited towards the purchase price. The City of Santa Cruz has agreed to finance the sale with a fixed interest rate of 4.5%. Additional terms include a $100,000 deposit due within 3 days following the effective date and in conjunction with opening escrow, and a $1,000,000

down payment due upon close of escrow. The City intends to utilize the secured federal funding for the down payment. The balance of approximately $6,379,115 will be financed over eight years. The City of Scotts Valley has two options for how to structure the payment of the remaining balance; a 15-year amortization rate over eight years, with a balloon payment due at eight years from the close of escrow, or an 8-year amortization rate over eight years, with equal annual payments. Staff recommends the 15-year amortization resulting in annual payments of approximately $650,000 and a final lump sum of approximately $3,800,000.

As the City intends for a significant number of affordable housing units to be included in the Town Center development, it is appropriate for the City to utilize its Affordable Housing Fund to pay the annual loan payments until such time that Scotts Valley sells the property to a private developer. The Affordable Housing Fund has a current fund balance of $3,475,805. With the current development timeline, the City anticipates selling the property and paying the loan balance with the sale proceeds sooner than the eight year schedule. The affordable housing fund would then be replenished, or the investment of affordable housing dollars would be contributed to the construction of the affordable housing component of the Town Center.

Once the City acquires the property, any sale of the property will be subject to the Surplus Lands Act. Both the Town Center Specific Plan and the new design layout, which will be considered at the December 3rd City Council meeting, envision the core area being developed as a mixed use project with at least 300 residential units. Such a project is exempt from the requirements of the Surplus Lands Act if the project is a one acre or larger mixed use development, with a minimum of 300 residential units, at least 25% of which are reserved for lower income households and the project is put out to competitive bid.

FISCAL IMPACT
The purchase price of the three parcels is $7,750,000. The City has already paid $270,885 for environmental clean up which will be deducted from the purchase price. A few small outstanding invoices related to the cleanup will also be deducted from the final purchase price.

The City secured $1,000,000 in federal grant funding to fund the down payment and anticipated utilizing its Affordable Housing fund to finance the annual payments until the property is sold to a private developer.

STAFF RECOMMENDATION
Staff recommends approving Resolution No. 2057 authorizing the City Manager to execute the Purchase and Sale Agreement to acquire APNs 022-721-07, -08, and -09 otherwise known as the "Town Center" land, along with modifications of a non-substantive or conforming nature, in a form to be approved by the City Attorney, and the City Manager or her designee is authorized to take any further actions and execute any other related documents necessary to conclude the sale.

TABLE OF CONTENTS

1. Resolution No. 2057 Town Center Purchase

2. Skypark Purchase and Sale Agreement Santa Cruz and Scotts Valley

3. PCTownCenterResolution No. 1799 - Signed (002)

4. Santa Cruz RESO NS-30,323

RESOLUTION NO. 2057

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SCOTTS

VALLEY AUTHORIZING THE CITY MANGER TO EXECUTE THE
PURCHASE AND SALE AGREEMENT TO ACQUIRE APNS 022-721-
07, -08, AND -09 OTHERWISE KNOWN AS THE "TOWN CENTER"

LAND AND TO TAKE ANY FURTHER ACTIONS AND EXECUTE

ANY OTHER RELATED DOCUMENTS NECESSARY

TO CONCLUDE THE SALE
WHEREAS, the Scotts Valley City Council intends to acquire real property located at the northwest corner of Mount Hermon Road and Kings Village Road in Scotts Valley (APN 022-721-07, 022721-08 And 022-721-09) (the “Property”); and WHEREAS, the City is authorized to acquire the Property under Government Code section 37350; and
WHEREAS, a written offer to acquire the Property has been negotiated; and WHEREAS, the intended purpose of this acquisition is to assemble property for the Scotts Valley Town Center and sell the property for development of a mixed use project which includes 300 housing units, 25% of which are affordable to lower income households; and
WHEREAS, the purchase is consistent with the General Plan as it will enable the City to assemble the parcels with City-owned parcels and sell the properties for development as a mixed-use project consistent with the Plan. In addition, the assemblage of the properties is consistent with the Housing Element which contemplates the development of housing, including affordable housing, in the Town Center.

NOW, THEREFORE, the City Council of the City of Scotts Valley does hereby resolve as follows:

SECTION 1. Recitals. The Recitals are true and correct and are hereby incorporated and adopted as findings and determinations by the City Council as if fully set forth herein.

SECTION 2. Approval of Acquisition. The City Council authorizes the acquisition of the Property, to be used for assemblage of the Property with other City owned properties and then sold for a mixed-use development which includes 300 housing units, 25% of which are affordable to lower income households, in accordance with the Surplus Lands Act.

SECTION 3. Authorization to Execute Sale and Escrow Documents. The City Council authorizes the City Manager or her designee to execute the Purchase and Sale

Agreement, along with modifications of a non-substantive or conforming nature, in a form to be approved by the City Attorney, and the City Manager or her designee is authorized to take any further actions to execute any other related documents necessary to conclude the sale of the Property.

SECTION 4. Authorization to Execute Certificate of Acceptance. The City Council authorizes the City Manager or her designee to execute all documents necessary for the close of escrow and a certificate of acceptance on behalf of the City.

SECTION 5. CEQA and NEPA. The City's acquisition of the Property is not a “project” pursuant to the California Environmental Quality Act (CEQA) Guidelines Section 15378 as it is an administrative activity of government that will not result in any direct or indirect physical change in the environment. Any development or sale of the Property will be subject to additional CEQA review. In addition, the acquisition of the Property is exempt pursuant to Code of Federal Regulations Title 24 Section 578.34(a)(12) because it does not require any mitigation for compliance with any listed statutes or authorities nor require any formal permit or license.

The above and foregoing resolution was duly and regularly adopted by the City Council of the City of Scotts Valley at a regular meeting held on the 4th day of December, 2024 by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

Approved:____________________________
Randy Johnson, Mayor
Attest: ______________________________
Cathie Simonovich, City Clerk

82811.00004\42187080.1

PURCHASE AND SALE AGREEMENT AND JOINT ESCROW INSTRUCTIONS

THIS PURCHASE AND SALE AGREEMENT AND JOINT ESCROW
INSTRUCTIONS (this “Agreement”) is made and entered into as of ______________, 2024 for reference purposes only, by and between the City of Santa Cruz, a California municipal corporation (“Seller”), and the City of Scotts Valley, a California municipal corporation (“Buyer”). The date by which both Buyer and Seller have executed this Agreement and delivered the same to one another, shall hereinafter be referred to as the “Effective Date”.

IN CONSIDERATION of the respective agreements hereinafter set forth, Seller and Buyer hereby agree as follows:

1. Purchase and Sale of Property. Seller hereby agrees to sell “AS-IS” and convey to Buyer, and Buyer hereby agrees to purchase from Seller “AS-IS”, subject to the terms and conditions set forth herein, the following (collectively, the “Property”):
(a) That certain real property located at the northwest corner of Mount Hermon Road and Kings Village Road in the City of Scotts Valley, County of Santa Cruz, California, commonly referred to as Assessor's Parcel Numbers 022-721-07, 022-721-08, and 022-721-09, all as more fully described in Exhibit A (the “Land”), together with all rights, privileges, easements or appurtenances to or affecting the Land (collectively, the “Appurtenances”). (b) Vacant Property. The Land is vacant and does not contain any personal property.

2. Purchase Price.
(a) The purchase price for the Property (“Purchase Price”) shall be Seven Million Seven Hundred Fifty Thousand Dollars ($7,750,000.00). (b) The Purchase Price shall be paid as follows:
(i) Within three (3) days following the Effective Date, Seller and Buyer shall open an escrow in connection herewith (“Escrow”) at First American Title, 4450 Capitola Road #103, Capitola, CA 95010, Attn: Joyce Avila (“Escrow Holder”), and Buyer shall deposit into Escrow the amount of One Hundred Thousand Dollars ($100,000.00) (“Deposit”) in cash or other immediately available funds.
(ii) The Deposit shall be held by Escrow Holder in an interest-bearing account for the benefit of Buyer in accordance with this Agreement. Notwithstanding anything herein to the contrary, One Hundred Dollars ($100.00) of the Deposit (the “Independent Consideration”) shall not be refundable to Buyer, but shall represent consideration for this Agreement and shall be paid to Seller. The Independent Consideration shall be paid to Seller within three (3) days of the Effective Date. The Independent Consideration shall serve as

82811.00004\42187080.1
2 consideration for the granting of the time periods herein contained for Buyer to exercise Buyer's right to satisfy and approve all of Buyer's conditions herein contained. (iii) The Deposit (less the Independent Consideration) are referred to herein from time to time as the “Earnest Money.” The Earnest Money shall be held by Escrow Holder in an interest-bearing account for the benefit of Buyer in accordance with this Agreement. (iv) If the Closing (as defined herein) as contemplated hereunder should occur, then the Earnest Money will be paid by the Escrow Holder to Seller at the Closing, and the Earnest Money and any interest accrued thereon will be credited against the Purchase Price payable by Buyer to Seller at the Closing.
(v) If this Agreement is not terminated prior to the expiration of the Feasibility Period, the Earnest Money and any interest accrued thereon shall be nonrefundable to Buyer, except that if this Agreement is terminated prior to the Closing due to Seller's default or the failure of any of the Conditions Precedent (as defined herein) or as expressly set forth herein, then the Earnest Money together with any interest accrued thereon shall be returned to Buyer. The Earnest Money together with all interest accrued thereon shall be applied to the Purchase Price at the Closing.
(vi) On or before the Closing, if this Agreement has not been earlier terminated, Buyer shall deposit into Escrow cash or other immediately available funds in the amount of One Million Dollars (the “Down Payment”).
(vii) After Closing, Buyer shall pay the remainder of the Purchase Price (after the Deposit and Down Payment, an amount equal to $6,650,000.00 (the “Loan Amount”)) in accordance with the Promissory Note executed by Buyer in favor of Seller, which is attached hereto as Exhibit F and incorporated herein by reference (the “Note”). The Note shall bear interest of four and one-half percent (4.5%) per annum.
(viii) The Note shall be secured by a Deed of Trust to be recorded in the official records of the County of Santa Cruz, which is attached hereto as Exhibit G and incorporated herein by reference (the “Deed of Trust”). (c) Buyer and Seller agree to the following regarding environmental remediation on the Property:
(i) The Purchase Price reflects Seller’s agreement to a reduction in price from the appraised value of the Property in the amount of Two Hundred Fifty Thousand Dollars ($250,000.00). In consideration of this price reduction, Buyer agrees that Seller shall have no further responsibility for the cost of a vapor barrier and any other cost relating to remediation of underground contamination, including but not limited to all remediation of groundwater contamination (“Underground Contamination”). Buyer shall be solely and exclusively responsible for any and all costs of Underground Contamination, and shall comply with all legal requirements arising from or related to the underground contamination. (ii) Buyer and Seller agree that the Property requires surface-level environmental remediation that includes: limited non-hazardous soil removal, off hauling and

82811.00004\42187080.1
3 import of clean, quarry sourced fill (“Surface Remediation”). Prior to this Agreement, Buyer and Seller jointly conducted the Surface Remediation and are currently awaiting a closure order from the County of Santa Cruz. Seller agrees to reduce the Loan Amount based on Surface Remediation costs that are actually incurred and paid, subject to Seller’s review and approval of such Surface Remediation cost documentation by Seller, provided that the total reduction of the Loan Amount shall not exceed Two Hundred Seventy Five Thousand Dollars ($2750,000.00). If the estimated costs for Surface Remediation exceeds this amount, then Seller’s written consent to any additional costs shall be a condition precedent to Closing for the benefit of Seller as set forth in Section 6 below.

3. Title to the Property. At the Closing, Seller shall cause to be conveyed to Buyer fee simple title to the Property by duly executed and acknowledged grant deed substantially in the form attached hereto as Exhibit B and incorporated herein by this reference (the “Deed”) as well as a duly executed Bill of Sale for the Personal Property, if any. As used in this Agreement, Closing (the “Closing”) shall be deemed to occur upon the recording of the Deed. Evidence of delivery of fee simple title shall be the issuance by Escrow Holder to Buyer of an ALTA standard coverage owner's policy of title insurance in the amount of the Purchase Price, insuring fee simple title to the Property in Buyer, subject only to such exceptions as Buyer shall have approved as provided below (the “Title Policy”). The Title Policy shall provide full coverage against mechanics' and materialmen's liens and shall contain such special endorsements as Buyer may reasonably require, including, without limitation, any endorsements required as a condition to Buyer's approval of any title exceptions (the “Endorsements”). Within five (5) business days following the opening of Escrow, Seller shall order the issuance of a preliminary title report with respect to the Property, together with copies of all underlying documents referenced therein and a map containing a plotting of all easements capable of being plotted (collectively, the “Preliminary Report”), to be prepared by the Escrow Holder and delivered to Buyer. No later than thirty (30) business days after receipt of the Preliminary Report, Buyer shall give written notice to Seller of any items contained in the Preliminary Report which Buyer disapproves (“Buyer's Disapproval Notice”). Failure of Buyer to notify Seller of Buyer's disapproval of all or any item on the Preliminary Report shall be deemed to be an approval by Buyer of such item(s). In any event, Seller covenants to remove as exceptions to title prior to the Closing, any mortgages, deeds of trust, and other monetary encumbrances (collectively, “Disapproved Liens”) shown on the Preliminary Report except for real property taxes not delinquent. Seller shall notify Buyer no later than five (5) business days after receipt of Buyer's Disapproval Notice whether it elects to remove such other items disapproved by Buyer. If by the expiration of the Feasibility Period, there remain exceptions to title which have not been modified to the satisfaction of Buyer and/or removed prior to the Closing Date, then Buyer may elect to do either of the following by the expiration of the Feasibility Period: (i) accept such exceptions and proceed to take title to the Real Property subject to such exception(s); or (ii) this Agreement may be terminated in accordance with Section 4(b).

In the event Buyer elects to terminate this Agreement pursuant to this Section 3, neither party shall have any further obligations to the other hereunder (except under provisions of this Agreement which specifically state that they survive termination).

4. Feasibility.
(a) From and after the Effective Date until the Closing or earlier termination of this Agreement, Seller shall afford authorized representatives of Buyer access to the Property,

82811.00004\42187080.1
4 upon reasonable prior notice to Seller, and so long as such access does not unreasonably interfere with the conduct of business on or use of the Property, for purposes of conducting such physical inspections and investigations of the Property as Buyer deems necessary (the “Inspections”).

Seller's representative shall be present with Buyer or Buyer's representative for any access to the Property. The Inspections and investigations may include, without limitation, (i) a review of existing zoning, entitlement, planning or similar issues applicable to the Property; (ii) a review of the physical condition of the Property and the systems serving the Property; (iii) a review of the environmental condition of the Property, including a Phase I environmental site assessment and any proposal regarding a Phase II environmental site assessment. Buyer agrees not to conduct or cause to be conducted a Phase II environmental site assessment without the prior written consent of Seller. Buyer's Inspections and investigations shall be governed by Section 14. (b) As used herein, the term (“Feasibility Period”) shall refer to a period of time to expire at 5:00 p.m., California time, on the thirtieth (30th) calendar day following the Effective Date; provided, however, that if the 30th day is a Saturday, Sunday or holiday on which banking institutions are closed in the State of California, then the Feasibility Period shall expire on the following business day. Buyer may elect, by written notice to Seller at any time prior to the expiration of the Feasibility Period, to terminate this Agreement, which election shall be in Buyer's sole and absolute discretion. If Buyer desires to terminate this Agreement pursuant to this Section 4(b) then before the expiration of the Feasibility Period, Buyer shall deliver written notice to Seller of Buyer's election to terminate (the “Buyer's Notice to Terminate”). If Buyer desires to proceed with the purchase of the Property subject to the remaining conditions set forth in this Agreement, then on or before the expiration of the Feasibility Period, Buyer shall deliver written notice to Seller of such election to proceed (the “Buyer's Notice to Proceed”), electing to waive Buyer's right of termination pursuant to this Section 4(b) and proceed with the Closing subject to the remaining conditions set forth in this Agreement. If Buyer fails to deliver either Buyer's Notice to Terminate or Buyer's Notice to Proceed to Seller prior to the expiration of the Feasibility Period, then Buyer shall be deemed to have elected to proceed with this Agreement and the Closing. In the event of the termination of this Agreement pursuant to this Section 4(b), neither party shall have any further obligations to the other hereunder (except under provisions of this Agreement which specifically state that they survive termination). (c) In the event Buyer elects to terminate this Agreement pursuant to Section 4(b), or if Closing does not occur for any reason, Buyer shall return all Seller's Deliveries to Seller. Buyer further agrees that prior to Closing, Buyer shall provide Seller with copies of all studies, reports, appraisals and other materials commissioned by or prepared for Buyer relating to or regarding the Property (“Buyer's Reports”), at no cost to Seller.

5. Seller's Deliveries. Within five (5) business days following the Effective Date, Seller shall deliver to Buyer, whether electronically or otherwise, the materials described on Exhibit E, which shall contain copies of documents in Seller's possession or control, or to which Seller has access (collectively, the “Seller's Deliveries”). Seller makes no representation whatsoever about the content, accuracy, completeness or value of any of Seller's Deliveries. All Seller's Deliveries will be provided to Buyer without warranty from Seller regarding the accuracy or completeness of the information contained therein, and such documents may or may not be assignable to Buyer. The delivery of such reports and studies shall be subject to the proprietary rights of any engineer or other consultant preparing the same and any limitations on use imposed

82811.00004\42187080.1
5 by them. Buyer assumes all risk of reviewing and understanding any and all information contained in Seller's Deliveries. Seller shall deliver a Natural Hazards Disclosure Report with Seller's Deliveries.

6. Conditions to Seller's Obligations. Seller's obligations hereunder, including, but not limited to, its obligation to consummate the purchase transaction provided for herein, are subject to the satisfaction of each of the following conditions, each of which is for the sole benefit of Seller and may be waived by Seller in writing in Seller’s sole and absolute discretion:
(a) Buyer shall not be in default under this Agreement. (b) Each representation and warranty made in this Agreement by Buyer shall be true and correct in all material respects at the time as of which the same is made and as of the Close of Escrow.
(c) Seller agrees to credit the cost of Surface Remediation as required under Section 2(c)(ii) of this Agreement, or Seller and Buyer mutually agree to an alternative cost sharing arrangement.
(d) Escrow Holder shall be unconditionally committed to issue a Lender’s Policy to Seller upon the Closing in the form and with such exceptions and endorsements as have been approved, or are deemed approved, by Seller.
(e) Buyer shall have delivered a Certificate of Acceptance or documented authorization to execute the Certificate of Acceptance. (f) Buyer shall have complied with all of Buyer’s duties and obligations contained in this Agreement and all of Buyer's representations and warranties contained in or made pursuant to this Agreement shall have been true and correct when made and shall be true and correct as of the Closing Date.

7. Conditions Precedent to Closing. The following are conditions precedent to Buyer's obligation to purchase the Property (the “Conditions Precedent”). The Conditions Precedent are intended solely for the benefit of Buyer and may be waived only by Buyer in writing in Buyer’s sole and absolute discretion. In the event any Condition Precedent is not satisfied, Buyer may, in its sole and absolute discretion, terminate this Agreement, subject to the provisions of Section 8.
(a) Buyer's inspection, review and approval, within the Feasibility Period, of all of the following:
(i) The physical characteristics and condition of the Property (including without limitation the condition of the soils); and
(ii) Seller's Deliveries.

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6 (b) Escrow Holder shall be unconditionally committed to issue the Title Policy to Buyer upon the Closing in the form and with such exceptions and endorsements as have been approved, or are deemed approved, by Buyer as provided in Section 3 above. (c) Seller shall have complied with all of Seller's duties and obligations contained in this Agreement and all of Seller's representations and warranties contained in or made pursuant to this Agreement shall have been true and correct when made and shall be true and correct as of the Closing Date.

8. Default; Remedies.
(a) Default by Seller. In the event any of the specific representations or warranties of Seller contained in this Agreement proves to be untrue in any material respect, or if Seller refuses to perform its obligations at Closing after Buyer tenders its performance of its obligations or to materially comply with any of the provisions hereof at or prior to Closing, then, at Buyer's option, Buyer may elect to (a) terminate this Agreement, receive a refund of the all deposits required by Buyer, including the non-refundable Deposit, from Title Company within five (5) business days of written receipt by Title Company of a written request from Buyer (with a copy going to Seller), and the parties shall have no further liability to each other, or (b) proceed with the equitable remedies available to Buyer. If Seller has withdrawn the Deposit from Escrow, Seller shall fund the withdrawn amounts to Escrow within 3 business days of notice from Title Company.

Buyer's remedies for Seller default shall be limited to the right of specific performance and the remedies contained within this Section 8(a). To the extent permitted by law, Buyer waives all right to seek consequential, punitive or other damages against Seller for Seller’s default. (b) Default by Buyer; LIQUIDATED DAMAGES. IF THE SALE OF THE

PROPERTY PURSUANT TO THIS AGREEMENT IS NOT CONSUMMATED SOLELY

BECAUSE OF A DEFAULT UNDER THIS AGREEMENT ON THE PART OF BUYER, THE INITIAL DEPOSIT AND ANY EXTENSION DEPOSIT (THE “DEPOSITS”), AND ALL BUYER'S REPORTS, SHALL BE RETAINED BY SELLER AS LIQUIDATED DAMAGES.

THE PARTIES HAVE AGREED THAT SELLER'S ACTUAL DAMAGES, IN THE EVENT OF

A DEFAULT BY BUYER, WOULD BE EXTREMELY DIFFICULT OR IMPRACTICABLE TO DETERMINE. THEREFORE, BY PLACING THEIR INITIALS BELOW, THE PARTIES

ACKNOWLEDGE THAT THE EARNEST MONEY AND BUYER'S REPORTS HAVE BEEN

AGREED UPON, AFTER NEGOTIATION, AS THE PARTIES' REASONABLE ESTIMATE

OF SELLER'S DAMAGES AND AS SELLER'S SOLE AND EXCLUSIVE REMEDY

AGAINST BUYER, AT LAW OR IN EQUITY, IN THE EVENT OF A DEFAULT UNDER THIS AGREEMENT ON THE PART OF BUYER. UPON THE OCCURRENCE OF ANY SUCH DEFAULT BY BUYER, BUYER SHALL DELIVER WITHIN 2 BUSINESS DAYS OF

SELLER'S REQUEST ALL BUYER'S REPORTS AND APPROPRIATE DOCUMENTS ASSIGNING SAME TO SELLER. SELLER HEREBY WAIVES ANY AND ALL BENEFITS IT MAY HAVE UNDER CALIFORNIA CIVIL CODE SECTION 3389. FURTHERMORE,

THE PAYMENT AND RETENTION OF SUCH EARNEST MONEY AS LIQUIDATED

DAMAGES IS NOT INTENDED AS A FORFEITURE OR PENALTY WITHIN THE MEANING OF CALIFORNIA CIVIL CODE SECTIONS 3275 AND 3369, BUT IS INTENDED

TO CONSTITUTE LIQUIDATED DAMAGES TO SELLER PURSUANT TO CALIFORNIA CIVIL CODE SECTIONS 1671, 1676 AND 1677. UPON BUYER'S DEFAULT, SELLER MAY

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7 INSTRUCT ESCROW HOLDER TO CANCEL THE ESCROW, AND PROMPTLY UPON RECEIPT OF SAID INSTRUCTIONS, ESCROW HOLDER SHALL (i) CANCEL THE ESCROW, (ii) PAY ALL OF ESCROW HOLDER'S CHARGES FROM THE EARNEST MONEY, AND (iii) DISBURSE TO SELLER THE EARNEST MONEY PURSUANT TO THIS SECTION 8.

INITIALS: Seller _________ Buyer __________

9. Escrow; Closing, Prorations.
(a) Upon mutual execution of this Agreement, the parties hereto shall deposit an executed counterpart of this Agreement with Escrow Holder and this Agreement shall serve as instructions to Escrow Holder for consummation of the purchase contemplated hereby. Seller and Buyer shall execute such supplemental Escrow instructions as may be appropriate to enable Escrow Holder to comply with the terms of this Agreement, provided such supplemental Escrow instructions are not in conflict with this Agreement as it may be amended in writing from time to time. In the event of any conflict between the provisions of this Agreement and any supplementary Escrow instructions signed by Buyer and Seller, the terms of this Agreement shall control. (b) The Closing shall take place (the “Closing Date”) on or before the date that is ninety (90) days following the expiration of the Feasibility Period or as may be extended as provided below.
(c) At or before the Closing, Seller shall deliver to Escrow Holder or Buyer the following:
(i) the duly executed and acknowledged Grant Deed for the Property and the duly executed Bill of Sale;
(ii) a duly executed affidavit that Seller is not a “foreign person” within the meaning of Section 1445(f)(3) of the Internal Revenue Code of 1986 in the form attached as Exhibit D and incorporated herein by this reference together with a duly executed non-foreign person affidavit and evidence that Seller is exempt from the withholding obligations imposed by California Revenue and Taxation Code Sections 18805, 18815, and 26131; (iii) evidence reasonably acceptable to Escrow Holder that the documents delivered by Seller have been duly authorized and executed on behalf of Seller and constitute valid and binding obligations of Seller.
(iv) any other documents which the Escrow Holder may reasonably require from Seller in order to close Escrow which do not increase Seller's liability or obligations hereunder;
(v) a closing statement in form and content satisfactory to Buyer and Seller (the “Closing Statement”) duly executed by Seller; and (vi) any other instruments, records or correspondence called for hereunder which have not previously been delivered.

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8 (d) At or before the Closing, Buyer shall deliver to Escrow Holder or Seller the following:
(i) the Closing Statement, duly executed by Buyer;
(ii) the balance owed for the Purchase Price, less amounts paid pursuant to the Note; and
(iii) evidence reasonably acceptable to Escrow Holder that the documents delivered by Buyer have been duly authorized and executed on behalf of Buyer and constitute valid and binding obligations of Buyer.
(e) Seller and Buyer shall each deposit such other instruments as are reasonably required by Escrow Holder or otherwise required to close the Escrow and consummate the purchase of the Property in accordance with the terms hereof, including but not limited to: the Note, the Deed of Trust, and a Certificate of Acceptance executed by the duly authorized representative of the City Council for the City of Scotts Valley. (f) The following are to be paid by Buyer or Seller or apportioned as of the Closing Date, as follows:
(i) General real property taxes for the year in which Closing occurs together with assessments, property operating expenses, utilities and other recurring costs relating to the Property shall be apportioned as of the Closing Date on the basis of a thirty (30)-day month. (ii) Costs and expenses of Escrow incurred in this transaction shall be paid as follows:
(1) Seller and Buyer shall each pay one-half (1/2) shall pay all sales, use and documentary transfer taxes;
(2) Seller shall pay the cost for a standard ALTA Lender’s policy and any extended coverage if desired;
(3) Buyer shall pay the cost for a standard ALTA coverage owner's policy of title insurance and any extended ALTA coverage if desired; (4) Seller and Buyer shall each pay one-half (1/2) of the Escrow fees, recording fees and related expenses;
(5) Seller and Buyer shall each pay one-half (1/2) of any city or county transfer taxes due;
(6) all other costs of escrow shall be paid equally by Buyer and Seller.
(iii) The provisions of this Subparagraph (g) shall survive the Closing.

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9 10. Representations, Warranties and Covenants of Seller. As of the date hereof and again as of Closing, Seller represent and warrants to Buyer as follows:
(a) This Agreement and all documents executed by Seller which are to be delivered to Buyer at the Closing are and at the time of Closing will be duly authorized, executed and delivered by Seller, are and at the time of Closing will be legal, valid and binding obligations of Seller enforceable against Seller in accordance with their respective terms. Seller has obtained all necessary authorizations, approvals and consents to the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby. (b) No Action. No attachments, execution proceedings, assignments for the benefit of creditors, insolvency, bankruptcy, reorganization or other proceedings are pending against Seller, nor are any such proceedings contemplated by Seller. (c) No Representations as to Property. There are no representations, agreements, arrangements, or circumstances, oral or written, between the parties relating to the subject matter contained in this Agreement that are not fully expressed in the Agreement, and Seller has not made and does not make any representation or warranty concerning any matter or thing affecting or relating to the Property, including but not limited to its fitness for a particular use, its physical condition or any other matter.
(d) Seller’s Obligations for Cost of Surface Remediation. During the Escrow Period, Seller will cooperate with Buyer in preparing for an updated estimate for the cost of the Surface Remediation, and that Seller agrees to the provisions of Section 2(c)(ii) of this Agreement regarding a reduction of the Loan Amount.
(e) Sale “AS-IS”. Subject to Seller's representations and warranties contained herein, Buyer's election to purchase the Property will be based upon and will constitute evidence of Buyer's independent investigation of the Property, its use, development potential and suitability for Buyer's intended use, including (without limitation) the following: the feasibility of developing the Property for the purposes intended by Buyer and the conditions of approval for any subdivision map; the size and dimensions of the Property; the availability, cost and adequacy of water, sewerage and any utilities serving or required to serve the Property; the presence and adequacy of current or required infrastructure or other improvements on, near or affecting the Property; any surface, soil, subsoil, fill or other physical conditions of or affecting the Property, such as climate, geological, drainage, air, water or mineral conditions; the condition of title to the Property; the existence of governmental laws, statutes, rules, regulations, ordinances, limitations, restrictions or requirements concerning the use, density, location or suitability of the Property for any existing or proposed development thereof including but not limited to zoning, building, subdivision, environmental or other such regulations; the necessity or availability of any general or specific plan amendments, rezoning, zoning variances, conditional use permits, building permits, environmental impact reports, parcel or subdivision maps and public reports, requirements of any improvement agreements; requirements of the California Subdivision Map Act, and any other governmental permits, approvals or acts (collectively “Permits”); the necessity or existence of any dedications, taxes, fees, charges, costs or assessments which may be imposed in connection with any governmental regulations or the obtaining of any required Permits; the presence of endangered plant or animal species upon the Property; and all of the matters concerning the condition, use,

82811.00004\42187080.1
10 development or sale of the Property. Seller will not be liable for any loss, damage, injury or claim to any person or property arising from or caused by the development of the Property by Buyer.

Except with respect to a default by Seller hereunder (including a breach of Seller's warranties and representations), Buyer at the Close of Escrow expressly waives its rights granted under California Civil Code Section 1542, which provides as follows:
“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS

WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO

EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING

THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST

HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT
WITH THE DEBTOR.”
Buyer's Initials: ________ Seller's Initials: ________.

11. Representations, Warranties and Covenants of Buyer. Buyer hereby represents and warrants to Seller as follows:
(a) This Agreement and all documents executed by Buyer which are to be delivered to Seller at the Closing are and at the time of Closing will be duly authorized, executed and delivered by Buyer, are and at the time of Closing will be legal, valid and binding obligations of Buyer enforceable against Buyer in accordance with their respective terms, and do not and at the time of Closing will not violate any provision of any agreement or judicial order to which Buyer is subject. Buyer has obtained all necessary authorizations, approvals and consents to the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby.
(b) Buyer warrants that Buyer is a sophisticated owner and buyer of real property, familiar and experienced with requirements for the development of real property. Buyer has examined the Property or will have done so by Closing, is or will be familiar with its physical condition, and accepts the Property in an “AS-IS” condition. (c) Buyer has conducted or will conduct an independent investigation with respect to zoning and subdivision laws, ordinances, resolutions, and regulations of all governmental authorities having jurisdiction over the Property, and the use, disposition and improvement of the Property and is, or at Closing will be, satisfied with the results of such investigation.
(d) The Property is being sold “AS-IS” and with all faults. Buyer acknowledges and agrees that the Purchase Price reflects Seller’s agreement to a price reduction in the amount of Two Hundred Fifty Thousand Dollars ($250,000.00) from the appraised value of the Property for the cost of remediation set forth in Section 2(c)(i) of this Agreement. (e) Buyer acknowledges and agrees that the Property requires the Surface Remediation and that Seller’s financial responsibility for the Surface Remediation shall not exceed the amount set forth in Section 2(c)(ii), which shall only be satisfied as a reduction of the Loan Amount in accordance with the Note.

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11 (f) Buyer acknowledges and agrees that the Property will be subject to a deed restriction imposed by the County of Santa Cruz, or other responsible government agency, as a result of environmental contamination of the Property, including but not limited to the Surface Remediation, and that Buyer will take all necessary steps to comply with any requirement for a deed restriction imposed by the County of Santa Cruz or other responsible government agency with jurisdiction over any environmental remediation required at the Property. This obligation shall survive the expiration of this Agreement.
(g) If Buyer seeks to perform any additional remediation work on the Property prior to Close of Escrow, Buyer shall request Seller’s written consent. Buyer shall make any such request in writing, and allow Seller at least ten (10) days to respond to the request. Seller shall have the sole and absolute discretion to approve or deny the request.

12. Environmental Matters/Release. As used in this Agreement, “Hazardous Materials” includes petroleum, asbestos, radioactive materials or substances defined as '“hazardous substances,” “hazardous materials” or “toxic substances” (or words of similar import) in the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (42 U.S.C. Section 9601, et seq.), the Hazardous Materials Transportation Act (49 U.S.C. Section 1801, et seq.), the Resource Conservation and Recovery Act (42 U.S.C.

Section 6901, et seq.), and under the applicable laws of California. Buyer must rely on its own investigation and not on any representation by Seller regarding Hazardous Materials. Buyer shall rely solely upon its own investigation and inspection of the Property and the improvements thereon and upon the aid and advice of Buyer's independent expert(s) in purchasing the Property, and shall take title to the Property without any warranty, express or implied, by Seller or any employee or agent of Seller. Seller makes no representations regarding Hazardous Materials in, on or under the Property. Seller's knowledge and disclosures regarding Hazardous Materials are limited to the contents of Seller's Deliveries.

Accordingly, Buyer hereby expressly waives and relinquishes any and all rights and remedies Buyer may now or hereafter have against Seller, whether known or unknown, with respect to any past present, or future presence of Hazardous Materials on, under or about the Property or with respect to any past, present or future violations of any rules, regulations or laws, now or hereinafter enacted, regulating or governing use, handling, storage or disposable of Hazardous Materials, including, without limitation (i) any and all remedies Buyer may now or hereafter have under the Comprehensive Environmental Response Compensation and Liability Act of 1980 (“CERCLA”), as amended, and any similar law, rule or regulation, (ii) any and all rights Buyer may now or hereafter have against Seller under the Carpenter-Presley-Tanner Hazardous Substance Account Act (California Health and Safety Code, Section 25300 et seq.), as amended and any similar law, rule or regulation, and (iii) any and all claims, whether known or unknown, now or hereafter existing, with respect to the Property under Section 107 of CERCLA (42 U.S. C.A. § 9607).

BUYER HEREBY ACKNOWLEDGES THAT IT HAS READ AND IS
FAMILIAR WITH THE PROVISIONS OF CALIFORNIA CIVIL CODE SECTION 1542 (“SECTION 1542”), WHICH IS SET FORTH BELOW

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12 “A GENERAL RELEASE DOES NOT EXTEND TO

CLAIMS WHICH THE CREDITOR DOES NOT

KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT

THE TIME OF EXECUTING THE RELEASE, WHICH

IF KNOWN BY HIM MUST HAVE MATERIALLY

AFFECTED HIS SETTLEMENT WITH THE
DEBTOR”

BY INITIALING BELOW, BUYER HEREBY WAIVES THE
PROVISIONS OF SECTION 1542 SOLELY IN CONNECTION WITH

THE MATTERS WHICH ARE THE SUBJECT OF THE FOREGOING
WAIVERS AND RELEASES.
_______________
(Buyer's Initials)

13. Continuation and Survival. All representations, warranties and covenants by the respective parties contained herein or made in writing pursuant to this Agreement are intended to and shall be deemed made as of the date of this Agreement or such writing and again at the Closing, shall be deemed to be material, and unless expressly provided to the contrary shall survive the execution and delivery of this Agreement, the Deed and the Closing.

14. Indemnity.

Buyer agrees to indemnify Seller and the Property against, and to hold and save Seller and the Property harmless from, all claims, demands, suits, actions, damages, obligations, liabilities, losses, costs and expenses, including but not limited to attorneys' fees and court costs, as a result of the Inspections and any remediation work performed on the Property by Buyer, its agents, employees, contractors, or subcontractors; provided, however, that Buyer will not be obligated to indemnify Seller with respect to its own negligence. The foregoing indemnity shall survive termination of this Agreement. Buyer shall not suffer or permit any mechanic's or materialmen's or other lien to stand against the Property in connection with any labor, materials or services furnished or claimed to have been furnished by or on behalf of Buyer in connection with or as a result of any Inspections. If any such lien shall be filed against the Property, Buyer shall cause such lien to be discharged or bonded within thirty (30) days after such filing. Following any Inspections Buyer shall restore the Property to substantially its physical condition as existed prior to such inspection (except for any changes to the Property caused by Seller, or its agents or employees). Prior to any entry on the Property Buyer or its consultant shall at its sole cost obtain a policy of liability insurance with a combined single limit in an amount not less than One Million Dollars ($1,000,000); Seller shall each be named an additional insured on said policy; and Buyer or its consultants shall furnish to Seller a certificate of insurance confirming such coverage.

15. Condemnation.
(a) In the event a governmental entity commences eminent domain proceedings to take any portion of the Property after the date hereof and prior to the Closing, then Buyer shall have the option to terminate this Agreement by written notice to Seller within ten (10) business

82811.00004\42187080.1
13 days after Buyer first learns of such commencement. In the event of any such termination, the Earnest Money, together with all interest, shall be returned to Buyer. Buyer and Seller shall each be liable for one-half of any escrow fees or charges, and neither party shall have any further liability or obligation under this Agreement.
(b) In the event a governmental entity commences eminent domain proceedings to take any part of the Property after the date hereof and prior to the Closing and this Agreement is not terminated pursuant to Section 15(a), then the Closing shall occur as scheduled notwithstanding such proceeding; provided, however, that Seller's interest in all awards arising out of such proceedings (except for any award attributable to the loss of Seller's business or income, Seller's personal property, or the property of any tenant of the Property) shall be assigned to Buyer as of the Closing or credited to Buyer if previously received by Seller. Seller's obligations pursuant to this Section 15(b) shall survive the Closing.

16. Possession. Possession of the Property shall be delivered to Buyer on the Closing Date free of any occupant or property not being conveyed to Buyer as provided hereunder.

17. Seller's Cooperation with Buyer. At no cost to Seller, Seller shall cooperate and do all acts as may be reasonably required or requested by Buyer, at no additional cost to Seller, with regard to the fulfillment of any Condition Precedent. Seller hereby authorizes Buyer and its agents to make all inquiries with and applications to any third party, including any governmental authority, as Buyer may reasonably require to complete its due diligence and satisfy the Conditions Precedent.

18. Brokers and Finders. Neither party has 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 in connection with the sale contemplated herein. In the event that any such broker or finder claims a commission or finder's fee based upon any contact, dealings or communication, the party through whom the broker or finder makes its claim shall be responsible for said commission or fee and all costs and expenses (including, without limitation, reasonable attorneys' fees) incurred by the other party in defending against the same. The party through whom any such other broker or finder makes a claim shall hold harmless, indemnify and defend the other party hereto, its successors and assigns, agents, employees, officers and directors, and the Property from and against any and all obligations, liabilities, claims, demands, liens, encumbrances and losses (including, without limitation, attorneys' fees), arising out of, based on, or incurred as a result of such claim. The provisions of this Section 18 shall survive the Closing or termination of this Agreement.

19. Legal Fees. In the event legal action is commenced to enforce or interpret any of the terms or provisions of this Agreement, the prevailing party in such action shall be entitled to an award of reasonable attorney's fees and costs incurred in connection with the prosecution or defense of said action.

20. Publicity and Confidentiality. Buyer acknowledges that Seller is a public entity and that this Agreement shall be a matter of public record and available to the public under the Public Records Act. Notwithstanding the foregoing, Buyer agrees to not make any public announcements regarding the Property prior to Closing.

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14 21. Miscellaneous.
(a) Notices. Any notice, consent or approval required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been given upon (i) hand delivery, (ii) one business day after being deposited with Federal Express or another reliable overnight courier service for next day delivery, (iii) upon facsimile transmission (except that if the date of such transmission is not a business day or if such transmission is made after 5:00 p.m. on a business day, then such notice shall be deemed to be given on the first business day following such transmission), or (iv) two business days after being deposited in the United States mail, registered or certified mail, postage prepaid, return receipt required, and addressed as follows (or such other address as either party may from time to time specify in writing to the other in accordance herewith):

If to Seller: City of Santa Cruz
337 Locust Street
Santa Cruz, CA 95060
Attn: Bonnie Lipscomb
Email: [email protected]
With a copy to: Anthony P. Condotti
City Attorney
Atchison, Barisone & Condotti
333 Church Street
Santa Cruz, CA 95060
Email: [email protected]
If to Buyer: _______________________________
Attn: __________________________
_______________________________
_______________________________
Email ___________________________
With a copy to: _______________________________
Attn: __________________________
_______________________________
_______________________________
Email ___________________________
To Escrow Holder: _______________________________
Attn: __________________________
_______________________________
_______________________________
Phone: _________________________
Email ___________________________

82811.00004\42187080.1
15 (b) Successors and Assigns. Buyer shall have the right to assign this Agreement to any entity controlling, controlled by or under common control with Buyer without Seller's consent or approval, and otherwise Buyer shall have the right to assign this Agreement to any entity subject to Seller's prior approval, which approval shall not be unreasonably withheld, conditioned or delayed. Any such assignee shall assume all obligations of Buyer hereunder; however, Buyer shall remain liable for all obligations hereunder. Seller shall have the right to assign this Agreement. Except as otherwise permitted by this paragraph, neither this Agreement nor the rights of either party hereunder may be assigned by either party. This Agreement shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors, heirs, administrators and assigns.
(c) Amendments. This Agreement may be amended or modified only by a written instrument executed by Seller and Buyer.
(d) Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California.
(e) Construction. Headings at the beginning of each Section and subparagraph are solely for the convenience of the parties and are not a part of the Agreement. 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 the same. Unless otherwise indicated, all references to Sections and subparagraphs are to this Agreement. All exhibits referred to in this Agreement are attached and incorporated by this reference.
(f) No Joint Venture. This Agreement shall not create a partnership or joint venture relationship between Buyer and Seller.
(g) Merger of Prior Agreements. This Agreement and the exhibits attached hereto constitute the entire agreement between the parties and supersede all prior agreements and understandings between the parties relating to the subject matter hereof, including without limitation, any letters of intent previously executed or submitted by either or both of the parties hereto, which shall be of no further force or effect upon execution of this Agreement. (h) Time of the Essence. Time is of the essence of this Agreement. As used in this Agreement, a “business day” shall mean a day which is not a Saturday, Sunday or recognized federal or state holiday. If the last date for performance by either party under this Agreement occurs on a day which is not a business day, than the last date for such performance shall be extended to the next occurring business day.
(i) Severability. If any provision of this Agreement, or the application thereof to any person, place, or circumstance, shall be held by a court of competent jurisdiction to be invalid, unenforceable or void, the remainder of this Agreement and such provisions as applied to other persons, places and circumstances shall remain in full force and effect. (j) Further Assurances. Each of the parties shall execute and deliver any and all additional papers, documents and other assurances and shall do any and all acts and things reasonably necessary in connection with the performance of their obligations hereunder and to carry out the intent of the parties.

82811.00004\42187080.1
16 (k) Exhibits. All exhibits attached hereto and referred to herein are incorporated herein as though set forth at length.
(l) Captions. The captions appearing at the commencement of the sections and paragraphs hereof are descriptive only and for convenience in reference. Should there be any conflict between any such caption and the section at the head of which it appears, the section and paragraph and not such caption shall control and govern in the construction of this Agreement. (m) No Obligation To Third Parties. Execution and delivery of this Agreement shall not be deemed to confer any rights upon, directly, indirectly or by way of subrogation, nor obligate either of the parties hereto to, any person or entity other than each other. (n) Waiver. The waiver by any party to this Agreement of the breach of any provision of this Agreement shall not be deemed a continuing waiver or a waiver of any subsequent breach, whether of the same or another provision of this Agreement. (o) Interpretation. This Agreement has been negotiated at arm's length and between persons (or their representatives) sophisticated and knowledgeable in the matters dealt with in this Agreement. Accordingly, any rule of law (including California Civil Code § 1654 and any successor statute) or legal decision that would require interpretation of any ambiguities against the party that has drafted it is not applicable and is waived. The provisions of this Agreement shall be interpreted in a reasonable manner to effect the purpose of the parties and this Agreement. (p) Counterparts/Facsimile/.PDF Signatures. This Agreement may be executed in counterparts and when so executed by the Parties, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument that shall be binding upon the Parties, notwithstanding that the Parties may not be signatories to the same counterpart or counterparts. The Parties may integrate their respective counterparts by attaching the signature pages of each separate counterpart to a single counterpart. In order to expedite the transaction contemplated herein, facsimile or .pdf signatures may be used in place of original signatures on this Agreement. Seller and Buyer intend to be bound by the signatures on the facsimile or .pdf document, are aware that the other party will rely on the facsimile or .pdf signatures, and hereby waive any defenses to the enforcement of the terms of this Agreement based on the form of signature.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date written below.

SELLER:
_____________________. a __________________
By:_______________________________________
Name: ___________________________________

82811.00004\42187080.1
17 Its: ______________________________________
Date: ____________________________________

APPROVED AS TO FORM
______________________________
Tony Condotti
City Attorney
BUYER:

By:_______________________________________
Name: ___________________________________
Its: ______________________________________
Date: ____________________________________

82811.00004\42187080.1

EXHIBIT A

LEGAL DESCRIPTION

82811.00004\42187080.1

EXHIBIT B

FORM OF DEED

RECORDING REQUESTED BY AND

WHEN RECORDED MAIL TO, AND
MAIL TAX STATEMENTS TO:
[buyer address or attorney]
__________________________________________________________________________ A.P.N.: _________________________ (Space Above Line for Recorder's Use Only)

EXEMPT FROM RECORDING FEES AND TRANSFER TAX
GOV. CODE § 27383; R&T CODE § 11922

GRANT DEED
FOR VALUE RECEIVED, _______________________________________ (“Grantor”), grants to ____________________________ (“Grantee”), all that certain real property situated in the County of ________________, State of California, described on Schedule 1 attached hereto and by this reference incorporated herein (the “Property”).

IN WITNESS WHEREOF, Grantor has executed this Grant Deed as of ________________, 20__.

GRANTOR:
__________________________________________
By:_______________________________________
Name: ___________________________________
Its: ______________________________________

82811.00004\42187080.1
2 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 )
)
COUNTY OF ________________ )
On ___________________, before me, _____________________________, a Notary Public, personally appeared _____________________________________________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

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

WITNESS my hand and official seal.

Signature _____________________________ (Seal)

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EXHIBIT C

PERSONAL PROPERTY

82811.00004\42187080.1

EXHIBIT D

TRANSFEROR'S CERTIFICATION OF NON-FOREIGN STATUS
This form is provided so that the Buyer and/or Seller in this transaction can certify compliance with the Foreign Investment in Real Property Tax Act to the Escrow Agent and/or Buyer. Buyer (“Transferee”) must retain a copy of this document until after the fifth taxable year following the transfer.

Section 1445 of the Internal Revenue Code of 1986, as amended (“Code”) provides that a transferee of a U.S. real property interest must withhold tax if the transferor is a foreign person.

For U.S. tax purposes (including section 1445), the owner of a disregarded entity (which has legal title to a U.S. real property interest under local law) will be the transferor of the property and not the disregarded entity. To inform Transferee that withholding of tax is not required upon the disposition of a U.S. real property interest, the undersigned hereby certifies the following on behalf of _________________________________ (“Transferor”):

1. The Transferor is not a foreign corporation, foreign partnership, foreign trust, foreign estate or foreign person (as those terms are defined in the Code and the Income Tax Regulations promulgated thereunder).

2. The Transferor is not a disregarded entity as defined in Income Tax Regulation Section 1.1445-2(b)(2)(iii).

3. The Transferor's U.S. employer or tax identification number is ______________.

4. The Transferor's office address is
The Transferor understands that this Certification may be disclosed to the Internal Revenue Service by the Transferee and that any false statement contained herein could be punished by fine, imprisonment, or both.

Under penalties of perjury I declare that I have examined this Certification and to the best of my knowledge and belief it is true, correct and complete, and I further declare that I have authority to sign this document on behalf of the Transferor.

Date:______________, 20__ TRANSFEROR:
__________________________________________
By:_______________________________________
Name: ___________________________________
Its: ______________________________________

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EXHIBIT E

SELLER DELIVERIES

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2 EXHIBIT F

FORM OF PROMISSORY NOTE

PROMISSORY NOTE
(SKYPARK PROPERTIES)
Principal Sum Not to Exceed _______, 2023
$6,650,000.00 Santa Cruz, California
FOR VALUE RECEIVED, the City of Scotts Valley, a California municipal corporation (the “Maker” or “Borrower”), having an address at _____________________, promises to pay the City of Santa Cruz, a California municipal corporation (“Payee” or “City”), the principal sum not to exceed SIX MILLION SIX HUNDRED FIFTY THOUSAND DOLLARS ($6,650,000.00) (the “Loan Amount”), or so much of such principal as may be advanced, together with interest thereon accruing from the date of this Note at a rate of 4.5% simple interest.

1. Purpose. This Note is made and delivered pursuant to and in implementation of the Purchase and Sale Agreement entered into by and between City and Borrower, of even date herewith, which provides for the acquisition by the Maker of the Property described in Section 3 below. The term “Property” means that real property described in the Deed of Trust securing this Note. Capitalized terms used in this Note that are not defined herein have the meaning set forth in the Loan Agreement.

2. Security. Payment of this Note is secured by a Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing of even date herewith (the “Deed of Trust”) from Maker to Payee recorded upon the Property in the official records of Santa Cruz County.

3. Property. Maker will acquire the Property located at the northwest corner of Mount Hermon Road and Kings Village Road in the City of Scotts Valley, County of Santa Cruz, California, commonly referred to as Assessor's Parcel Numbers 022-721-07, 022-721-08, and 022- 721-09 , all as more fully described in the Purchase and Sale Agreement (collectively, the “Property”).

4. Maturity Date. This Note shall be due and payable in full at the earlier of (i) sale of the Property any other person or entity; (ii) an uncured Default under the Loan Agreement or (iii) the expiration of the Term of Payment, as determined by Section 5.

5. Payment.
(A) Loan Amount After Reductions. The Loan Amount at Close of Escrow shall be adjusted for any reduction based on the costs of Surface Remediation, as required by the Purchase and Sale Agreement.
(B) Maker’s Payment Options. Prior to Close of Escrow, Maker shall elect to make payments of principal on the Loan Amount and interest thereon in accordance with one of the following Payment Options by giving written notice to Payee. The following payment amounts do not reflect any reductions pursuant to sub-paragraph (A) of this Section 5.

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3 (i) 15-Year Amortization Payment Option: Maker shall make annual payments of principal and interest in the amount of Six Hundred Fifty One Thousand Seven Hundred Ninety Seven Thousand ($651,797.00) for a period of fifteen (15) years and an additional balloon payment of Three Million Eight Hundred Forty Thousand Eight Hundred Forty Three ($3,840,843.00) on the date that is eight (8) years from the Close of Escrow. (ii) 8-Year Amortization Payment Option: Maker shall make annual payments of principal and interest in the amount of One Million Sixty One Thousand Two Hundred Sixty Seven Dollars ($1,061,267.00) for a period of eight (8) years. 6 Payment Location. Payment shall be made in lawful money of the United States to the City of Santa Cruz, 337 Locust Street, Santa Cruz, CA 95060. The place of payment may be changed from time to time as the Payee may from time to time designate in writing.

7. Default. The occurrence of any of the following shall constitute an event of default under this Note:

A. Maker fails to pay any amount due hereunder within thirty (30) days of its due date; or
B. Any default by Maker under this Note, the Deed of Trust, or other material terms and conditions of the Purchase and Sale Agreement after the expiration of all applicable cure periods; or
C. Any default by Maker under any other obligation of Maker recorded against the Property after the expiration of all applicable cure periods.

Maker shall not be considered in default under this Note until the expiration of all notice and cure periods provided to Maker. Upon the occurrence of any uncured event of default, or at any time thereafter, at the option of the Payee hereof, the entire unpaid principal and interest owing on this Note shall become immediately due and payable. This option may be exercised at any time following any such event, and the acceptance of one or more installments thereafter shall not constitute a waiver of Payee’s option. Payee’s failure to exercise such option shall not constitute a waiver of such option with respect to any subsequent event. Payee’s failure in the exercise of any other right or remedy hereunder or under any agreement which secures the indebtedness or is related thereto shall not affect any right or remedy and no single or partial exercise of any such right or remedy shall preclude any further exercise thereof.

8. Default Interest Rate. At all times when Maker is in default hereunder by reason of Maker’s failure to pay any amounts due under this Note within applicable cure periods, the interest rate on the sums as to which Maker is in default (including principal, if Payee has elected to declare it immediately due and payable), shall be the highest rate then allowed by law as of the date of the default or 8% per annum, whichever is lower.

9. Waivers. Maker and any endorsers hereof and all others who may become liable for all or any part of this obligation, severally waive presentment for payment, demand and protest and notice of protest, and of dishonor and nonpayment of this Note, and expressly consent to any

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4 extension of the time of payment hereof or of any installment hereof, to the release of any party liable for this obligation, and any such extension or release may be made without notice to any of said parties and without any way affecting or discharging this liability.

10. Costs. Maker agrees to pay immediately upon demand all reasonable costs and expenses of Payee actually incurred including reasonable attorneys’ fees:

A. If after default and the expiration of all notice and cure periods this Note is placed in the hands of an attorney or attorneys for collection; B. If after a default hereunder or under the Deed of Trust or Purchase and Sale Agreement and after the expiration of all notice and cure periods Payee finds it necessary or desirable to secure the services or advice of one or more attorneys with regard to collection of this Note against Maker, any guarantor or any other party liable therefor or to the protection of its rights under this Note, the Deed of Trust, or the Purchase and Sale Agreement; or C. If Payee seeks to have the Property abandoned by or reclaimed from any estate in bankruptcy, or attempts to have any stay or injunction prohibiting the enforcement or collection of this Note or prohibiting the enforcement of the Deed of Trust or any other agreement evidencing or securing this Note lifted by any bankruptcy or other court.

D. If Payee shall be made a party to or shall reasonably intervene in any action or proceeding, whether in court or before any governmental entity, affecting the Property or the title thereto or the interest of the Payee under the Deed of Trust, including, without limitation, any form of condemnation or eminent domain proceeding, Payee shall be reimbursed by Maker immediately upon demand for all costs, charges and reasonable attorneys” fees incurred by Payee in any such case, and the same shall be secured by the Deed of Trust as a further charge and lien upon the Property.

11. Notices. Any notices provided for in this Note shall be given by mailing such notice by certified mail, return receipt requested at the address stated in this Note or at such address as either party may designate by written notice.

12. Successors. This Note shall be binding upon Maker, its successors and assigns.

13. California Law. This Note shall be construed in accordance with and be governed by the laws of the State of California.

14. Severability. If any provision of this Note shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions hereof shall not in any way be affected or impaired thereby.

15. Nonrecourse. This Note is a nonrecourse obligation of Maker. Neither Maker nor any of its officers, directors or agents shall have any personal liability for repaying the principal or interest of the Note. In any action brought to enforce the obligations of Maker under this Note, the Deed of Trust or any other instrument or agreement evidencing, securing or relating to the indebtedness evidenced by this Note, the judgment or decree shall be enforceable against Maker solely and only to the extent of its interest in the property described in the Deed of Trust or its interest in any other

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5 security loaned by Maker as security for this Note, and Payee shall not seek any deficiency judgment against the Maker. The foregoing provisions shall not prevent recourse to the collateral security for the loan or constitute a waiver, release or discharge of or otherwise affect the obligation to pay, any indebtedness evidenced by the loan documents executed in connection with the Development or limit the right of any person to name the Maker or any other person claiming an interest in or right to such collateral as party defendant in any action or suit for judicial foreclosure or in the exercise of any other remedy, including injunctive or other equitable relief, under any of the loan documents executed in connection with this Development so long as no deficiency judgment shall be sought against the Maker.

The foregoing limitation shall not apply to any and all loss, damage, liability, action, cause of action, cost or expense (including without limitation, reasonable attorneys’ fees and expenses) to the extent incurred by Payee as a result of any:

A. Fraud or material misrepresentation under or in connection with the loan or any loan document executed in connection with the Development; B. Intentional bad faith waste of the Property by the Maker; C. Losses resulting from Maker’s failure to maintain insurance as required under the Deed of Trust; or
D. Misappropriation of any rents, security deposits, insurance proceeds, condemnation awards or any other proceeds derived from the collateral security by the Maker.

If any of the events listed in the foregoing (A) through (D) occurs, Payee shall have the right to proceed directly against Maker at the time the event giving rise to the recourse liability occurred to recover any and all loss, damage, liability, action, cause of action, cost or expense (including without limitation, reasonable attorneys’ fees and expenses) incurred by Payee.

16. Nonliability of Maker and Payee Officials and Employees.

A. No partner, official or employee of the Payee shall be personally liable to the Maker in the event of any default or breach by the Agency or on any obligations under the terms of this Note.

B. No member, official or employee of the Maker shall be personally liable to the Payee in the event of any default or breach by the Maker or for any amount which may become due to the Payee or on any obligations under the terms of this Note.

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6 MAKER / BORROWER:

CITY OF SCOTTS VALLEY, A CALIFORNIA MUNICIPAL

CORPORATION
By: ___________________________
Name:

Title:

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7 EXHIBIT G

FORM OF DEED OF TRUST

RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:

City of Santa Cruz
337 Locust Street
Santa Cruz, CA 95060
Attn: City Clerk
Space above line for Recorder’s use only
Exempt from Recording Fees pursuant to Govt. Code § 27383

CITY OF SANTA CRUZ

DEED OF TRUST, ASSIGNMENT OF RENTS, SECURITY AGREEMENT AND

FIXTURE FILING
(SKYPARK PROPERTIES)
This Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing (“Deed of Trust”) is made as of ___________, 2023, among the City of Scotts Valley, a California Municipal Corporation (“TRUSTOR”), whose address is ______________________; [INSERT TRUSTEE INFORMATION] (“TRUSTEE”); and the City of Santa Cruz, California, a California Municipal Corporation (“BENEFICIARY”), whose address is 337 Locust Street, Santa Cruz, CA 95060.

Trustor irrevocably grants, conveys, transfers, and assigns to Trustee in trust, with power of sale and right of entry and possession, all of Trustor’s estate, right, title, and interest in, to and under the following property (collectively, the “Property”): (a) the real property in Contra Costa County, California, described on Exhibit A attached hereto and incorporated herein by this reference, together with all existing and future easements and rights affording access to it (the “Land”), (b) together with all buildings, structures, and improvements now existing or hereafter constructed thereon (the “Improvements”), (c) together with all articles of personal property now or hereafter attached to, placed upon for an indefinite term, or used in connection with the Land and/or Improvements, together with all goods and other property that are, or at any time become, so related to the Property that an interest in them arises under real estate law, or they are otherwise adjudged to be a “fixture” under applicable law (each a “Fixture,” collectively “Fixtures”), (d) together with all other property and interests of any kind or character which may be reasonably necessary or desirable to promote the present and future beneficial use and enjoyment of such real property and improvements.

1. Secured Obligations. Trustor makes the grant, conveyance, transfer, and assignment herein for the purpose of securing the following obligations (the “Secured Obligations”): (a) payment of the sum of Six Million Six Hundred Fifty Thousand Dollars ($6,650,000.00), reduced for any credits as set forth in the Promissory Note between the parties,

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8 executed on even date herewith, with interest thereon according to the terms of a promissory note (the “Note”) of even date herewith, executed by Trustor in favor of Beneficiary or order and any extension or renewals thereof; (b) payment of such further sums as the then record owner of the Property may borrow from Beneficiary, when evidenced by a promissory note or notes reciting that they are secured by this Deed of Trust; and (c) performance of each agreement and obligation of Trustor under that certain Purchase and Sale Agreement executed by Trustor and Beneficiary dated _________, 2023 (the “Purchase and Sale Agreement”), providing for the acquisition of the Property; and (d) obligations imposed by regulatory authorities for environmental remediation on the Property.

2. Maintenance and Repair. Trustor shall (a) keep the Property in good condition and repair and not remove or demolish any building; (b) complete or restore promptly and in good and workmanlike manner any building which may be constructed, damaged or destroyed; (c) pay when due all claims for labor performed and materials furnished; (d) comply with all laws affecting the Property or requiring any alterations or improvements to be made; (e) not commit or permit waste; and (f) cultivate, irrigate, fertilize, fumigate, prune, and do all other acts which from the character or use of the Property may be reasonably necessary.

3. Insurance. Trustor shall maintain hazard insurance against loss by fire, hazards included with the term “extended coverage,” and any other hazards for which Beneficiary requires insurance, and liability insurance as reasonably required by Beneficiary. The policies shall name Beneficiary as a loss payee or an additional insured, as applicable, the policies shall include Beneficiary as an additional insured, as applicable.

4. Defense of Security. Trustor shall appear in and defend any action or proceeding purporting to affect the security or the rights or powers of Beneficiary or Trustee. Trustor shall pay all costs and expenses, including costs of evidence of title and attorneys’ fees, in any such action or proceeding in which Trustee or Beneficiary may appear, and in any suit brought by Beneficiary to foreclose this Deed of Trust.

5. Payment of Taxes and Liens. Trustor shall pay (a) at least 10 days before delinquency, all non-abated taxes and assessments affecting the Property, including water stock assessments; (b) when due, all encumbrances, charges, and liens, with interest, on the Property, which are or appear to be prior or superior to this Deed of Trust; and (c) upon demand all reasonable and documented costs, fees, and expenses of this Deed of Trust. If Trustor fails to make any payment or to do any act provided for in this Deed of Trust after written notice of such failure by Beneficiary and a reasonably opportunity to cure, then Beneficiary or Trustee may, without obligation to do so, and with or without notice to or demand upon Trustor, and without releasing Trustor from any obligation under this Deed of Trust: (a) make or do the same in such manner and to such extent as either may deem necessary to protect the security, Beneficiary or Trustee being authorized to enter upon the Property for such purposes; (b) appear in or commence any action or proceeding purporting to affect the security, or the rights or powers of Beneficiary or Trustee; (c) pay, purchase, contest or settle any encumbrance, charge or lien which in the judgment of either appears to be senior to this Deed of Trust; and (d) in exercising any such powers, pay allowable expenses, including attorneys’ fees.

6. Reimbursement of Costs. Trustor shall pay upon demand all reasonable and

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9 documented sums expended by Beneficiary or Trustee provided for in this Deed of Trust or allowed by law, with interest from date of expenditure at the maximum rate provided in the Note.

7. No Waiver. By accepting payment of any sum after its due date, Beneficiary does not waive its right either to require prompt payment when due of all other sums or declare a default for failure to pay.

8. Reconveyance. That upon written request of Beneficiary stating that all sums secured hereby have been paid, and upon surrender of this Deed of Trust and said note or notes to Trustee for cancellation and retention or other disposition as Trustee in its sole discretion may choose and upon payment of its fees, Trustee shall reconvey, without warranty, the property then held hereunder. The recitals of such reconveyance of any matters or facts shall be conclusive proof of the truthfulness thereof. The grantee in such reconveyance may be described as “the person or persons legally entitled thereto.”

9. Assignment of Rents. Subject to the rights of senior lenders, Trustor hereby absolutely and unconditionally assigns to Beneficiary all of the rents, issues, profits, royalties, revenues, income, and other benefits (collectively, the “Rents”) derived from the Property, whether now due, past due or to become due, and hereby gives to and confers upon Beneficiary, either directly or through a receiver, the right, power, and authority, but not the obligation, to collect the Rents, and to sue, either in the name of Trustor or Beneficiary, for all such Rents and to apply the same to the indebtedness secured hereby in such order as Beneficiary may determine in its sole discretion. This assignment of Rents is intended to create and shall be construed to create an absolute assignment to Beneficiary of all of Trustor’s right, title, and interest in the Rents.

So long as no default exists by Trustor in the payment of any indebtedness secured hereby, or in any other covenant contained herein, or in said note or notes or in any other document evidencing or securing such indebtedness, Trustor shall have the right to collect all Rents from the Property and to retain, use, and enjoy the same. Upon the occurrence of such a default beyond any applicable notice and cure periods, without the necessity of demand or other notice to Trustor or any other act to enforce Beneficiary’s interest pursuant to this assignment, Trustor shall have no interest whatsoever in the Rents that are received by Trustor after a default, and all such Rents shall be received and held by Trustor in constructive trust for Beneficiary and delivered promptly to Beneficiary, or to a court-appointed receiver for the Property, without the necessity for further notice to, or demand upon, Trustor. Upon the occurrence of such a default, beyond any applicable notice and cure periods, and at any time thereafter during the continuance thereof, Beneficiary may, at its option, send any tenant of the Property a notice to the effect that: (a) a default has occurred; (b) Beneficiary has elected to exercise its rights under this assignment; and (c) such tenant is thereby directed to thereafter make all payments of Rents to or for the benefit of Beneficiary or as Beneficiary shall direct. Any such tenant shall be entitled to rely upon any notice from Beneficiary and shall be protected with respect to any payment of Rents made pursuant to such notice, irrespective of whether a dispute exists between Trustor and Beneficiary with respect to the existence of a default or the rights of Beneficiary hereunder. Any such tenant shall not be required to investigate or determine the validity or accuracy of such notice or the validity or enforceability of this assignment. Trustor hereby agrees to indemnify, defend, and hold any such tenant harmless from and against any and all losses, claims, damages or liabilities arising from or related to any payment of Rents by such tenant made in reliance on and pursuant to such notice.

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10 10. Default and Foreclosure. Upon default by Trustor in payment or performance of any Secured Obligation, subject to any applicable notice and cure period, Beneficiary may declare all sums secured immediately due and payable by delivery to Trustee of a declaration of default and demand for sale and of a notice of default and of a notice of sale, which notice Trustee shall cause to be filed for record. Beneficiary also shall deposit with Trustee this Deed of Trust, said note or notes, and all documents evidencing expenditures secured by this Deed of Trust. Upon default of any obligation secured by this Deed of Trust and acceleration of all sums due, Beneficiary may instruct Trustee to proceed with a sale of the Property under the power of sale granted in this Deed of Trust, noticed and held in accordance with California Civil Code Sections 2924, et seq., as such statutes may be amended from time to time. Trustor waives all rights it may have to require marshaling of assets or to require sales of assets in any particular order, including any rights under California Civil Code Sections 2899 and 3455.

11. Substitution of Trustee. Beneficiary, or any successor in ownership of any indebtedness secured hereby, may from time to time, by instrument in writing, substitute a successor or successors to any Trustee named herein or acting hereunder, which instrument executed by the Beneficiary and duly acknowledged and recorded in the office of the recorder of the county or counties where the Property is situated, shall be conclusive proof of proper substitution of such successor Trustee or Trustees, who shall, without conveyance from the Trustee predecessor, succeed to all its title, estate, rights, powers, and duties. Said instrument must contain the name of the original Trustor, Trustee, and Beneficiary hereunder, the book and page where this Deed of Trust is recorded, and the name and address of the new Trustee.

12. Successors and Assigns. This Deed of Trust applies to, inures to the benefit of, and binds all parties hereto, their heirs, legatees, devisees, administrators, executors, successors, and assigns. The term “Beneficiary” shall mean the owner and holder, including pledgees, of the secured note or notes, whether or not named as Beneficiary herein.

13. Trustee Acceptance. Trustee accepts this trust when this Deed of Trust, duly executed and acknowledged, is made a public record as provided by law. Trustee is not obligated to notify any party hereto of pending sale under any other deed of trust or of any action or proceeding in which Trustor, Beneficiary or Trustee shall be a party unless brought by Trustee.

14. Further Assurances. Trustor shall, at its own cost and expense, do, execute, acknowledge, and deliver all and every such further acts, deeds, conveyances, mortgages, assignments, notices of assignments, transfers, and assurances as Trustee or Beneficiary shall from time to time reasonably require, for better assuring, conveying, assigning, transferring, and confirming unto Trustee the Property and rights hereby conveyed or assigned or intended now or hereafter so to be, or which Trustor may be or may hereafter become bound to convey or assign to Trustee, or for carrying out the intention or facilitating the performance of the terms of this Deed of Trust, or for filing, registering, or recording this Deed of Trust. Trustor shall, on demand, execute and deliver, and hereby authorizes Trustee and Beneficiary, or either of them, to execute in the name of Trustor, to the extent it may lawfully do so, one or more financing statements, chattel mortgages, or comparable security instruments, to evidence more effectively the lien hereof. Immediately upon the execution and delivery of this Deed of Trust, and thereafter from time to time, Trustor shall cause this Deed of Trust, and any security instruments creating a lien or evidencing the lien hereof upon any personal property and each instrument of further assurance,

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11 to be filed, registered, or recorded in such manner and in such places as may be required by any present or future law in order to publish notice of and fully to protect the lien hereof upon, and the title of Trustee to, the Property encumbered hereby.

15. Condemnation and Insurance Proceeds. Immediately upon obtaining knowledge of the institution of any proceedings for the condemnation or other taking of all or any portion of the Property, or knowledge of any casualty damage to the Property, or damage in any other manner, Trustor shall immediately notify Beneficiary thereof. Trustor hereby authorizes and empowers Beneficiary as attorney-in-fact for Trustor to make proof of loss, to adjust and compromise any claim under the insurance policies covering the Property, to appear in and prosecute any action arising from such insurance policies, to collect and receive insurance proceeds, and to deduct therefrom Beneficiary’s expenses incurred in the collection of such proceeds; provided, however, that nothing contained in this Section shall require Beneficiary to incur any expense or take any action hereunder. Trustor hereby authorizes and empowers Beneficiary, at Beneficiary’s option, as attorney-in-fact for Trustor, to commence, appear in, and prosecute, in Beneficiary’s or Trustor’s name, any action or proceeding relating to any condemnation or other taking of all or any part of the Property, whether direct or indirect, and to settle or compromise any claim in connection with such condemnation or other taking. The proceeds of any award payment or claim for damages, direct or consequential, in connection with any condemnation or other taking, whether direct or indirect, of the Property, or any part thereof, or for conveyances in lieu of the Property, or any part thereof, shall be paid to Beneficiary. The foregoing powers of attorney are coupled with an interest and are irrevocable. Trustor hereby authorizes Beneficiary to apply such awards, payments, proceeds or damages relating to condemnation of the Property and insurance covering the Property, after the deduction of Beneficiary’s expenses incurred in the collection of such amounts, subject to the requirements of applicable law and the provisions hereof, to restoration or repair of the Property or to payment of the sums secured by this Deed of Trust. Beneficiary shall be under no obligation to question the amount of any compensation, awards, proceeds, damages, claims, rights of action, and payments relating to condemnation or other taking of the Property or insured casualty affecting the Property, and may accept the same in the amount in which the same shall be paid. Trustor shall execute such further evidence of assignment of any awards, proceeds, damages or claims arising in connection with such condemnation or taking or such insurance as Beneficiary may require.

Notwithstanding the above, the Beneficiary shall release all insurance and condemnation proceeds to Trustor to be used to reconstruct the improvements on the Property provided that Beneficiary reasonably determines that such restoration, repair or rebuilding is economically feasible. If such insurance proceeds shall be insufficient for such purposes, Trustor shall make up the deficiency.

If the Project is subject to a partial condemnation or taking, then the proceeds received therefrom shall be applied to restore the Project taken, provided the Beneficiary determines that such restoration is economically feasible and no default exists under the Loan Documents following the expiration of all applicable cure periods. If the Project is subject to a total condemnation, or if Beneficiary determines that restoration of the Project is not feasible following a partial condemnation, or if a default exists then the proceeds from any condemnation award or claim for damages shall be used first to repay all sums under the Note, with the excess, if any, paid to Trustor, subject to the rights of the senior lender.

16. Severability. If any one or more of the provisions contained in this Deed of Trust shall for any reason be held to be invalid, illegal, or unenforceable in any respect, such invalidity,

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12 illegality, or unenforceability shall not affect any other provisions of this Deed of Trust, but this Deed of Trust shall be construed as if such invalid, illegal, or unenforceable provision had never been contained herein or therein, but only to the extent of such invalidity.

17. Estoppel Certificate. Trustor shall, within thirty (30) days of a written request from Beneficiary, furnish Beneficiary with a written statement, duly acknowledged, setting forth the sums secured by this Deed of Trust and any right of set-off, counterclaim or other defense which exists against such sums and the obligations of this Deed of Trust.

18. California Uniform Commercial Code Security Agreement; Fixture Filing.

Trustor hereby grants Beneficiary a security interest in all personal property of Trustor located on the Property and wherever located and used in any way in connection with or in any way relating to the Property, and whether now owned or hereafter in existence, acquired or created (including equipment, inventory, goods, documents, instruments, general intangibles, chattel paper, accounts, accounts receivable, deposit accounts, and contract rights), and all fixtures of Trustor now owned or hereafter in existence, acquired or created on, of or relating to the Property, and all substitutions, replacements, additions, accessions, and proceeds (including insurance proceeds) of all of the foregoing (collectively, the “Personal Property”). Beneficiary may file this Deed of Trust, or a reproduction hereof, in the real estate records or other appropriate index, as a financing statement for the Personal Property. Any reproduction of this Deed of Trust or of any other security agreement or financing statement shall be sufficient as a financing statement. In addition, Trustor shall execute and deliver to Beneficiary, upon Beneficiary’s request, any financing statements, as well as extensions, renewals, and amendments thereof, and reproductions of this Deed of Trust in such form as Beneficiary may require to perfect a security interest with respect to the Personal Property. Trustor shall pay all costs of filing such financing statements and any extensions, renewals, amendments, and releases thereof, and shall pay all reasonable costs and expenses of any record searches for financing statements Beneficiary may reasonably require. Upon Trustor’s breach of any covenant or agreement of Trustor contained in this Deed of Trust, including the covenants to pay when due all sums secured by this Deed of Trust, Beneficiary shall have the remedies of a secured party under the California Uniform Commercial Code and, at Beneficiary’s option, may also invoke any remedies provided in this Deed of Trust as to the Personal Property.

In exercising any of such remedies, Beneficiary may proceed against the Property and any of the Personal Property separately or together and in any order whatsoever, without in any way affecting the availability of Beneficiary’s remedies under the California Uniform Commercial Code or the remedies provided in the Deed of Trust. This Deed of Trust also covers goods which are or which are to become fixtures on the Property and constitutes and is filed as a fixture filing under the California Uniform Commercial Code.

19. Due-On-Sale or Encumbrance. If all or any part of the Property, or any interest therein, or any beneficial interest in Trustor (if Trustor is not a natural person or persons but is a corporation, partnership, trust, limited liability company or other legal entity), is sold, transferred, mortgaged, assigned, pledged, or further encumbered, whether directly or indirectly, whether voluntarily or involuntarily, or by operational law, Beneficiary may, at Beneficiary’s option, declare all of the sums secured by this Deed of Trust to be immediately due and payable, and Beneficiary may invoke any remedies permitted by this Deed of Trust. [CONTINUED ON NEXT PAGE]

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13

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14 The undersigned Trustor requests that a copy of any Notice of Default and of any Notice of Sale hereunder be mailed to Trustor at Trustor’s address hereinbefore set forth.

TRUSTOR:

CITY OF SCOTTS VALLEY, a California Municipal Corporation By:

Name:

Title:

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15 EXHIBIT A

LEGAL DESCRIPTION OF THE PROPERTY

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16 ACKNOWLEDGEMENTS
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 Section is true and correct.

WITNESS my hand and official seal.

Signature ____________________________ (Seal)
* * * * *

ACKNOWLEDGEMENTS
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 Section is true and correct.

WITNESS my hand and official seal.

Signature ____________________________ (Seal)
A notary public or other officer completing this
certificate verifies only the identity of the
individual who signed the document to which this
certificate is attached, and not the truthfulness,
accuracy, or validity of that document.

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.

82811.00004\42187080.1
17

RESOLUTION NO. 1799

RESOLUTION OF THE CITY OF SCOTTS VALLEY PLANNING COMMISSION

MAKING A GENERAL PLAN CONFORMITY DETERMINATION CONSISTENT WITH CALIFORNIA GOVERNMENT CODE SECTION 65402(a) FOR THE PURPOSES OF

ACQUIRING THE SANTA CRUZ OWNED PROPERTY LOCATED AT THE

NORTHWEST CORNER OF MOUNT HERMON ROAD AND KINGS VILLAGE ROAD APNS 022-721-07, 022-721-08, AND 022-721-09
WHEREAS, the City of Santa Cruz owns certain real property located at the Northwest Corner of Mount Hermon Road and Kings Village Road in the City of Scotts Valley, APNs 022-721-07, 022-721-08, and 022-721-09 (the “Property”); and WHEREAS, the Property has long been an integral part of the City of Scotts Valley’s Town Center Specific Plan which envisions a mixed-use development creating an environment where people can live, work and play; and WHEREAS, the City of Scotts Valley (“City”) desires to purchase the Property for sale and development in accordance with the Town Center Specific Plan; and WHEREAS, the purchase of the Property will enable the City to consolidate parcels integral to the development of the Town Center; and WHEREAS, Government Code section 65402(a) regulates government acquisition of real property, mandating that prior to the acquisition of property, a jurisdiction’s Planning Commission report on the conformity of that action with the jurisdiction’s General Plan; and
WHEREAS, the acquisition of the Property is consistent with the objective goals and policies of the General Plan and facilitates the development of the Town Center; and
WHEREAS, further environmental review will be conducted by the City for any improvements on the acquired property; and
WHEREAS, the Planning Commission finding that the acquisition of the Property is in conformance with the City’s General Plan is not a “project” pursuant to the California Environmental Quality Act (CEQA) Guidelines Section 15378 in that it is an administrative activity of government that will not result in any direct or indirect physical change in the environment; and
WHEREAS, the Planning Commission held a duly noticed public meeting on August 8, 2024, at which time all interested parties were given full opportunity to be heard and to be present; and
Docusign Envelope ID: 46E54B80-4E3B-4EDE-B821-A26E8A6CF07E

WHEREAS, the Planning Commission has reviewed the proposed acquisition and has determined that the land acquisition conforms to the General Plan.

NOW, THEREFORE, BE IT RESOLVED, that the Planning Commission of the City of Scotts Valley hereby finds, based on substantial evidence in the record, that:

1. The foregoing recitals are true and accurate and are incorporated into this Resolution as findings.

2. Acquisition of the Property is in conformance with the City’s General Plan and is not a “project” pursuant to the California Environmental Quality Act (CEQA) Guidelines Section 15378 as it is an administrative activity of government that will not result in any direct or indirect physical change in the environment. If the Planning Commission finds that the acquisition of the Property is in conformance with the General Plan, the City Council will have its own review for compliance with CEQA in determining whether to acquire the Property. Further environmental review will be conducted by the City for any improvements on the Property.

3. The acquisition of the Property complies with the objective goals and policies of the General Plan, and it would support the development of the City’s Town Center.

4. Specifically, the acquisition of the Property is in compliance with the following General Plan Goals, Policies, and Programs:

GED-1 Pursue a balanced approach to future development that supports housing, employment, and commercial needs and services in balance with these other guiding principles.

GED-2 Target future growth within existing commercial corridors of Scotts Valley Drive and Mount Hermon Road so as to not adversely impact residential neighborhoods.

GED-4 Support the development of the town center.

ED-4.4 Mixed-Use Development- Support mixed-use development with residential densities that will help support a vibrant and active commercial corridor and Town Center for Scotts Valley.

LU-3.2 Jobs / Housing Balance- Work with the County and other agencies to develop strategies for improving the region’s jobs/housing balance and matching employment opportunities with housing costs.

LU-3.3 Balanced Land Use Patterns- Foster land use patterns that balance economic, housing, community, and environmental needs and promote social diversity.

Docusign Envelope ID: 46E54B80-4E3B-4EDE-B821-A26E8A6CF07E

LU-3.4 Zoning Densities- Zone highest densities along transportation corridors.

LU-3.5 Lot Consolidation- In areas where the existing lot pattern or size makes development difficult, the City shall encourage lot consolidation to promote planned commercial development.

LU-3.6 Economic Viability- Ensure that land use patterns and new development enhance Scotts Valley’s long-term economic viability and promotes sustainable businesses.

LU-3.11 Infill Development- Support well-designed infill development on vacant and underutilized sites that enhances Scotts Valley’s quality of life.

LU-4.6 Neighborhood Connections- Provide pedestrian and bicycle improvements along Mount Hermon Road and Scotts Valley Drive that complement and connect with adjacent residential neighborhoods.

LU-4.7 Intensity- Within the Commercial Shopping Center (C-SC), Commercial Service (C-S) and Commercial Professional (C-P) land use designation, consider additional density on sites only when the project provides substantial benefits to the community (as demonstrated through consistency with other policies in this Plan) and minimizes or mitigates adverse impacts on adjacent properties.

Goal H-1 Promote a balanced mix of housing types, prices, and opportunities by increasing the number of housing units to accommodate population and employment growth.

Policy H-1.1 Housing Variety- Encourage the production of new residential development which provides a choice of housing type, density, and cost to meet the housing needs of all segments of the community.

Policy H-1.2 Appropriate Infrastructure- Ensure that new residential sites have appropriate community services and public facilities, including streets and roadways, water, sewer, and other needed infrastructure.

Policy H-1.2 Mixed-Use Development- Facilitate and encourage the development of mixed-use residential and commercial projects at appropriate locations along major corridors, within established design guidelines.

Policy H-1.5 Town Center Specific Plan- Continue to support the development of the Town Center to provide a range of housing types, retail, commercial uses, public facilities, and open space that serve as a focal point for the community.

Docusign Envelope ID: 46E54B80-4E3B-4EDE-B821-A26E8A6CF07E

Policy H-2.2- Access to Infrastructure- Continue to support the repair and upgrade of infrastructure, services, and public facilities in existing neighborhoods.

Policy H-2.3- High Quality Residential Design- Continue to ensure residential projects are of high quality and thoughtful design through the implementation of architectural and design standards.

Goal H-3- Expand and protect a range of housing opportunities for all demographic, economic, and special needs groups in the community.

5. If any section, subsection, paragraph, sentence, clause, or phrase of this Resolution or any part thereof or any exhibit hereto is for any reason held to be invalid, such decision shall not affect the validity of the remaining portions of this Resolution or any part thereof or exhibit thereto. The Planning Commission declares that it would have adopted this Resolution, and each section, subsection, paragraph, sentence, clause, and phrase thereof, irrespective of the fact that any one or more sections, subsections, paragraphs, sentences, clauses, or phrases may be declared invalid.

6. This Resolution shall be effective immediately upon its passage and adoption.

The above and foregoing resolution was duly and regularly adopted by the Planning Commission of the City of Scotts Valley at a meeting held on the 8th day of August 2024 by the following vote:

AYES: Maffia, Hodgin, Mosley, Simonovich
NOES: None
ABSENT: Gentile
ABSTAIN: None
___________________________
Chuck Maffia, Vice Chair
_________________________
Taylor Bateman, Community
Development Director
Docusign Envelope ID: 46E54B80-4E3B-4EDE-B821-A26E8A6CF07E

AGENDA ITEM 2.

DATE: 12/4/2024
City of Scotts Valley

CITY COUNCIL STAFF REPORT
DATE: 12/4/2024
TO: Honorable Mayor and City Council
FROM: Mali LaGoe, City Manager
APPROVED: Mali LaGoe, City Manager
SUBJECT: Review and approval of the updated preferred vision of the future Town Center development

SUMMARY OF ISSUE
The City's Town Center Specific Plan, adopted in 2008, includes an illustrative layout, or vision, for the future Town Center. Despite several attempts over two decades, past development efforts failed for a number of reasons, including dispersed land ownership, unknown costs for environmental clean up, and a vision that included mostly retail and less housing, making the project a high risk for private developers and resulting in proposed projects that looked nothing like the illustrative layout in the plan.

Town Center Specific Plan Area 2008 Specific Plan Illustrative Layout In 2022 the City committed to removing as many development barriers as possible to ensure the Town Center is built. One such barrier was to update the Specific Plan and illustrative layout to address current housing, retail and commercial office market conditions. The purpose of the illustrative layout, now being called the "preferred vision," is to guide interested developers to submit proposals that reflect the City and community of Scotts Valley's vision for the future Town Center. The City engaged with Good City Company to assist in the Specific Plan update process and in 2023 engaged with Urban Field Studio, an architecture firm, to update the illustrative layout to reflect the current community's ideas, market conditions and respond to new state law housing requirements.

Over the last year, input has been gathered from the City Council, neighboring shopping center owners, and the general community to update the vision for the future Town Center.

The updated vision, shown below, includes a new Downtown with a commercial area and sense of place; street parking fronting retail, wide sidewalks, bike paths, and parking lots behind buildings; community gathering places for special events; new public streets and connections between the existing surrounding community and the site; and, 300 housing units minimum, with both market rate as well as a significant amount of affordable housing.

The street grid is designed to be buildable on publicly owned land only, with the option of future connections on privately held land to the west to connect to Skypark Drive. The vision allows for a future pedestrian connection to Scotts Valley Square and facilitates pedestrian and vehicle connections to the Kings Village Shopping Center. It creates and expands shared parking for the Hanger, and creates a park-once walkable commercial district.

The design features two large flexible parcels for housing or mixed use development with associated parking, two new streets anchored by businesses with on and off-street parking for that Downtown feel. A small side street can easily be closed for weekly farmers markets or street fairs, while two plazas provide opportunities for outdoor dining and social gatherings.

The main street features a view to Skypark and a new permanent amphitheater for small and large performance events. A new intersection at Mt. Hermon Road will draw interest to the new retail area while new streets improve circulation throughout the area.

At the City Council meeting, Urban Field Studio architects Jane Lin and Ryan Call will present the vision in more detail along with a summary of the community feedback process that led to this design. The preferred vision is not a plan; it is not set in stone. Rather, it is a tool to guide interested developers, letting them know what the community is looking for, in order to streamline their evaluation of the development opportunity and reduce risk and cost in the design process. Objective design standards will further communicate the architectural style and features expected, and the environmental analysis will expose potential costs, further removing "unknowns" and reducing development risk.

Next Steps:

With the City Council's approval of this updated preferred vision, staff and Good City Company will move on to the next phase of updating the Specific Plan including developing objective design standards and conducting an environmental review based on the preferred vision. The fully updated Specific Plan will be brought to the City Council at a future date for approval.

Later in 2025, staff will prepare a Request for Proposals from private developers, in accordance with the Surplus Lands Act exception for mixed use projects with at least 300 housing units. The preferred vision leaves room for interested developers to determine construction method, specific number, type and size of units, affordability, and many other cost driving details provided the development includes at least 300 housing units, at least 25% of which are affordable to lower income households. The selection of the future development partner and their proposal will determine the actual project design. Selection criteria will include the proposed design's resemblance to the City's preferred vision, among other factors.

The final selection and project approval will be made by the City Council, with further opportunities for public input along the way. More information on the history and timeline of the Town Center can be found at www.scottsvalley.gov/towncenter.

FISCAL IMPACT
There is no fiscal impact associated with the approval of the Town Center preferred vision as this work was included in previously approved contracts. As next steps develop that require additional funding, staff will bring those items to the City Council at future council meetings.

STAFF RECOMMENDATION
Staff recommends the City Council approve the preferred vision for the updated Town Center Specific Plan.

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