South El Monte City Council
July 15, 2025

EXHIBIT A

MASTER AGREEMENT

1 APN: 8102-037-020, 8102-037-022, 8102-037-024 &
8102-035-017
AREA ABOVE FOR RECORDER’S USE ONLY
Exempt from recording fees per Govt. Code § 6103

MASTER AFFORDABLE HOUSING COVENANT

AND DENSITY BONUS AGREEMENT
This MASTER AFFORDABLE HOUSING COVENANT AND DENSITY BONUS AGREEMENT (“Agreement”) is entered into as of the day of , 2025 (“Effective Date”) by and between CITY OF SOUTH EL MONTE, a municipal corporation (“City”) and KB HOME GREATER LOS ANGELES INC., a California corporation (“Developer”).

RECITALS
A. Developer owns and is developing that certain real property in City of South El Monte, County of Los Angeles, California (APNs 8102-037-020, 8102-037-022, 8102-037-024 & 8102-035- 017) legally described on Exhibit A attached hereto (“Property”).

B. City has granted a density bonus (“Density Bonus”) pursuant to Chapter 17.83 (Density Bonus Provisions) of City’s Municipal Code and Government Code Section 65915 (collectively, the “Density Bonus Law”) and South El Monte Planning Commission Resolution No. 21-19 (“Planning Commission Resolution”). The Density Bonus allows Developer to construct up to two hundred seven (207) total residential dwelling units on the Property (“Project”).

C. In order to obtain the Density Bonus, Developer has agreed to restrict the sale and occupancy of fifteen (15) single family dwelling units and six (6) townhome dwelling units as affordable pursuant to the Density Bonus Law as provided in this Agreement. The layout of the Project and all the residential units are depicted and their locations identified on Exhibit B attached hereto (“Project Layout”).

D. This Agreement shall satisfy Developer’s obligation to enter into a written agreement with City as required by Section 17.83.050 of City’s Municipal Code and as required by General Condition 22 of Planning Commission Resolution No. 21-19. In consideration of Developer’s covenants hereunder, and on the condition subsequent that Developer performs its obligations hereunder, City hereby agrees that Developer has satisfied City’s requirements with the provision of the Affordable Units as described herein to qualify for the Density Bonus for the Property, pursuant to the Planning Commission Resolution and the Density Bonus Law.

NOW, THEREFORE, in consideration of the above Recitals, which are incorporated herein by this reference, and of the mutual covenants hereinafter contained and for other good and valuable

RECORDING REQUESTED BY AND
WHEN RECORDED MAIL TO:

City of South El Monte
1415 Santa Anita Avenue
South El Monte, CA 91733
Attn: City Clerk
_ _ _

ATTACHMENT C

2 consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:

ARTICLE 1. DEFINITIONS AND EXHIBITS

1.1 Definitions. The following terms when used in this Agreement shall be defined as follows:

1.1.1 Applicable Affordable Housing Cost shall mean the maximum costs that can be borne by purchasers of the applicable Restricted AH Units under the requirements imposed by HSC Section 50052.5. The pertinent calculations are:
(a) Affordable Housing Cost for Low Income Household means a Total Housing Cost which does not exceed thirty percent (30%) of seventy percent (70%) of Area Median Income.
(b) Affordable Housing Cost for Very Low Income Household means a Total Housing Cost which does not exceed thirty percent (30%) of fifty percent (50%) of Area Median Income.
(c) Affordable Housing Cost for Moderate Income Household means a Total Housing Cost which does not exceed thirty-five percent (35%) of one hundred ten percent (110%) of Area Median Income.

1.1.2 Applicable AH Household Income shall have the following meanings, as applicable for the Restricted AH Unit:
(a) Low Income Household means a Household whose Gross Income meets the standards defined in HSC Section 50079.5. The maximum household income shall be the amount published by the California Department of Housing and Community Development (HCD) as adjusted to reflect the actual size of the Household purchasing a particular AH Restricted Unit.
(b) Moderate Income Household means a Household whose Gross Income meets the standards defined in HSC Section 50093. The maximum household income shall be the amount published by HCD as adjusted to reflect the actual size of the Household purchasing a particular AH Restricted Unit.
(c) Very Low Income Household shall mean a Household whose Gross Income meets the standards defined in HSC Section 50105. The maximum household income shall be the amount published by HCD as adjusted to reflect the actual size of the Household purchasing a particular AH Restricted Unit.

1.1.3 Area Median Income means the Los Angeles County area median income, adjusted for household size, as established by the United States Department of Housing and Urban Development (HUD), and as published periodically by HCD pursuant to Section 50093 et seq. of California Health and Safety Code and applicable regulations.

1.1.4 Benchmark Down Payment shall be set at 5% of the Purchase Price for Restricted AH Unit. This shall solely be used for the purpose of calculating the Purchase Price for Restricted AH Unit.

1.1.5 Covenant Agreement for Restricted AH Unit means the “Affordability

3 Covenants and Restrictions Affecting Real Property with Option to Purchase Secured by Deed of Trust” substantially in the form attached hereto as Exhibit D to be adjusted to the Affordable AH Household Income for the applicable Restricted AH Unit and to be recorded against the Restricted AH Unit as provided in Article 2 which shall bind the Restricted AH Unit for fifty-five (55) years. The Fannie Mae Shared Equity Amendment (Form 2200), shall be attached and included as part of each Covenant Agreement for Restricted AH Unit.

1.1.6 Covenant Deed of Trust shall mean a deed of trust in the form attached as Exhibit E to be executed by the applicable Eligible Purchaser which shall secure the Covenant Agreement for Restricted AH Unit for the applicable Restricted AH Unit being purchased to be recorded against the Restricted AH Unit concurrently with the Covenant Agreement as provided in Article 2.

1.1.7 Eligible Purchaser shall mean a person who is purchasing one of the Restricted AH Units who meets with all income and asset verification requirements in this Agreement for the applicable Restricted AH Unit and who is not an Ineligible Purchaser.

1.1.8 FMV of the Restricted AH Unit shall mean the fair market value of the Restricted AH Unit determined as provided in Section 2.7.1.

1.1.9 Gross Income means all income from whatever sources for all adult Household members, which is anticipated to be received during the 12-month period following the date of the determination of Gross Income. The applicable sources of income are defined in California Code of Regulations Title 25 Housing and Community Development Section 6914.

1.1.10 Household means all persons residing in a Restricted AH Unit.

1.1.11 HSC means California Health and Safety Code.

1.1.12 Ineligible Purchaser shall have the meaning defined in Section 2.5.

1.1.13 Market Rate Units means the Units within the Project which are not Restricted AH Units.

1.1.14 Purchase Price for Restricted AH Unit means the purchase price for the sale of the applicable Restricted AH Unit to an Eligible Purchaser which shall be calculated pursuant to HSC Section 50052.5 and Section 2.1 of this Agreement. The Purchase Price for a Restricted AH Unit shall be equal to the sum of the Supportable Mortgage plus the Benchmark Down Payment.

1.1.15 Required Marketing Efforts means marketing efforts that Developer is required to make with respect to the Restricted AH Units (as set forth in Section 2.3(a), below).

1.1.16 Restricted AH Units shall mean the following Units which are restricted for sale to Eligible Purchasers for the applicable affordability level as follows:
(SEE FOLLOWING PAGE)

4 Affordability Level Single Family Units1 Townhome Units1 Totals Very Low Income 187, 196 & 202 3
Low Income 186, 197 & 201 3
Moderate Income 26, 36, 51, 55, 67, 83,
89, 93, 105, 121, 127,
131, 158, 164 & 167
15 Totals 15 6 21

1.1.17 Supportable Mortgage means the mortgage amount that can be supported by an Eligible Purchase of a Restricted AH Unit based on the Affordable Housing Cost calculations.

The mortgage calculation is based on the prevailing market interest rate for a 30-year fully amortizing mortgage with a fixed interest rate.

1.1.18 Total Housing Cost means the total monthly or annual recurring expenses required of a household to obtain shelter, and includes the mortgage payment (principal and interest, based on a fixed interest rate mortgage with a thirty (30) year term), and household-paid utilities, homeowner association dues, real estate taxes, mortgage insurance and any other related assessments.

1.1.19 Unit means a residential unit in the Project.

1.2 Exhibits. The following documents are attached to, and by this reference are incorporated herein and made a part of, this Agreement:

Exhibit A Legal Description of the Property
Exhibit B Project Layout Plan
Exhibit C 2024 Household Income Information Published by HCD and Sample Computations of Purchase Prices for
Restricted AH Units
Exhibit D Covenant Agreement for Restricted AH Units
Exhibit E Covenant Deed of Trust
ARTICLE 2. RESTRICTED AH UNITS

2.1 Purchase Price for Restricted AH Unit.

2.1.1 Determination. Developer shall sell each of the Restricted AH Units to an Eligible Purchaser for an amount that does not exceed the applicable Purchase Price for the Restricted AH Unit.
1 As located on the Project Layout attached as Exhibit B.

5 2.1.2 Example Computation of Purchase Price. Example computations of the Purchase Prices for Restricted AH Units are provided on Exhibit C.

2.1.3 Loan. The maximum home loan amount for a Restricted AH Unit shall not exceed ninety-five percent (95%) of the Purchase Price for Restricted AH Unit. The maximum home loan amount for the Restricted AH Unit shall be submitted by Developer and approved or rejected by City within ten (10) business days from receipt.

2.1.4 Actual Down Payment. The maximum down payment contributed by an Eligible Purchaser shall not exceed 20% of the Purchase Price for the Residential AH Unit.

2.2 Purchase Price Ranges for Restricted AH Units. Prior to listing the Restricted AH Units, Developer shall calculate the applicable Purchase Prices for each Restricted AH Unit based on the number of bedrooms included in the applicable Restricted AH Unit and the with the range for the Applicable AH Household Income level. City shall reasonably cooperate to provide such confirmation to Developer within ten (10) business days of written request therefore.

2.3 Marketing and Selection of Eligible Purchasers.
(a) Developer shall conduct, “Required Marketing Efforts” in connection with the initial sales of the Restricted AH Units, which shall include: (i) production of specific marketing information highlighting the Restricted AH Units, including the specific affordability features for each Restricted AH Unit and the eligibility requirements and restrictions applicable to each Restricted AH Unit; and (ii) utilization of typical web-based outreach methods that can reasonably ensure an effective and efficient means of reaching the broadest range of potential Eligible Purchasers, including best efforts to contact nonprofit organizations and business associations that serve South El Monte residents in housing-related issues, and affordable housing advocacy groups, with the intent of reaching community based organizations serving people in the appropriate income levels.

The City agrees, at no cost to City, to use its best efforts to identify, and reasonably assist the Developer with contacting, nonprofit organizations and business associations that serve South El Monte residents in housing-related issues, and affordable housing advocacy groups. Required Marketing Efforts will additionally include those marketing efforts that are typical customary practice and expected for the sale of real estate in the County of Los Angeles, including, a website marketing the Restricted AH Units in detail (sizes, locations, prices) and the criteria used to purchase them, as well as a form for interested parties to complete online indicating their interest in being notified about the availability of the Restricted AH Units.
(b) The Restricted AH Units may be sold to Eligible Purchasers selected by Developer who meet the income and affordability requirements provided in this Agreement and subject to the written approval of City. The City acknowledges the challenging nature of selling Restricted AH Units and agrees, at no cost to City, to reasonably assist the Developer with the advertising and marketing of the Restricted AH Units, which shall include a link on the City’s website directing potential purchasers to the Developer’s website for the Project. Developer is not required to sell a Restricted AH Unit to an Eligible Purchaser referred by City, but Developer shall accept or reject any such Eligible Purchaser based upon the same evaluation criteria that Developer applies to buyers of other Restricted AH Units. Upon City’s request, Developer shall provide to City a written response detailing the reasons for rejection of an Eligible Purchaser referred by City.

2.4 Income and Assets of Eligible Purchasers. Prior to the sale of the Restricted AH Unit, Developer shall submit to City a completed income computation and certification form acceptable to or otherwise provided by City certifying that the Gross Income of the Eligible Purchaser

6 (including any co-purchaser) does not exceed the limit established for the Restricted AH Unit.

Developer shall obtain an income certification form from the proposed Eligible Purchaser certifying that (i) the income of the proposed Eligible Purchaser is truthfully set forth in the income certification form; (ii) the proposed Eligible Purchaser does not own any real estate; and (iii) the proposed Eligible Purchase is not an Ineligible Purchaser.

Developer shall verify the income certification of the proposed Eligible Purchaser by providing the following documents:
▪ Signed copies of the two most recent years of federal income tax returns (with all schedules and attachments) for all Household members and persons who will appear on title to the Restricted AH Unit. If self-employed, four most recent quarterly tax filings must be provided.
▪ Copies of three most recent months of checking, savings, and other investment account statements for all Household members and persons who will appear on title to the Restricted AH Unit.
▪ If applicable:
• Copy of separation agreement, divorce decree evidencing dissolution of marriage and/or alimony.
• Paycheck stubs from the proposed Eligible Purchaser’s three (3) most recent pay periods.
• Copy of pension statements.
• Income verification certification from the Social Security Administration and/or the California Department of Social Services if the proposed Eligible Purchaser receives assistance from such agencies.

Developer shall provide copies of all verification documentation to City.

2.5 Ineligible Purchaser. No Relative (as defined below) of (a) any employee, officer, board member or shareholder of Developer (or any successor Developer of the Project) or any of its members, affiliates or subsidiaries, or (b) any employee or official of City, may purchase a Restricted AH Unit. “Relative” shall mean a parent, children, sibling, spouse, uncle, aunt, cousin, niece, nephew, grandparent, and grandchild and shall also extend to any of the foregoing persons related through marriage (i.e., in-laws or step relationships).

2.6 Covenant Agreement for Restricted AH Unit. In accordance with Section 2.7 below, each Restricted AH Unit shall be subject to the Covenant Agreement for Restricted AH Unit which shall be effective for a period of fifty-five (55) years (unless terminated pursuant to such Covenant Agreement for Restricted AH Unit) commencing on the date of the recordation of (i) the grant deed from Developer to the Eligible Purchaser of the Restricted AH Unit; together with (ii) the Covenant Agreement for Restricted AH Unit and the Covenant Deed of Trust.

2.7 Close of Escrow for Restricted AH Unit.

2.7.1 FMV for Restricted AH Unit. Developer shall determine the FMV of the Restricted AH Unit which would be the sale price of the Unit if it was not restricted. Developer

7 may determine the FMV for the Restricted AH Unit based on its sale prices within the Project for comparable Units which shall be confirmed by a written broker opinion. Developer shall provide such information to City regarding the determination of the FMV of the Restricted AH Unit. The FMV of the Restricted AH Unit shall be inserted in the Covenant Agreement for Restricted AH Unit prior to execution by the Eligible Purchaser and City.

2.7.2 Process for Sale of Restricted AH Unit. The sale of the Restricted AH Unit to the Eligible Purchaser shall comply with the following requirements. (a) A full copy of the executed sale agreement between Developer and the Eligible Purchaser shall be provided to City.
(b) The Covenant Agreement for Restricted AH Unit and Fannie Mae Shared Equity Amendment (Form 2200) shall be executed and acknowledged by the Eligible Purchaser and City. Concurrently the Eligible Purchaser shall also execute and acknowledge the Covenant Deed of Trust. The Covenant Agreement for Restricted AH Unit and Fannie Mae Shared Equity Amendment (Form 2200) and Covenant Deed of Trust shall be recorded in the Official Records, subordinate to the First Deed of Trust (as defined in the Covenant Agreement for Restricted AH Unit).
(c) A Request for Notice (as to the First Trust Deed) which shall be recorded at the closing.
(d) A Request for Notice of Delinquency executed by the Eligible Purchaser and City as to the First Trust Deed which shall be recorded at the closing. (e) The Eligible Purchaser shall provide a certification in a form acceptable to City declaring under penalty of perjury that it is an Eligible Purchaser and such other information as requested by City.
(f) Developer shall provide a certification in a form acceptable to City declaring under penalty of perjury with respect to compliance with this Agreement as to the sale of the Restricted AH Unit.
(g) City shall execute a release of this Agreement from the Restricted AH Unit to be recorded at the close of escrow in accordance with Section 2.9. (h) Upon close of escrow, escrow holder shall promptly deliver to City (i) conformed copies of all recorded documents, (ii) a copy of the escrow closing statement, (iii) complete final copies of all executed loan documents for the senior loan; and (iv) the Title Policy pursuant to Section 2.8.

2.8 Title Insurance Policy. At the close of the escrow for each Restricted AH Unit, an ALTA loan policy of title insurance shall be provided to City insuring the Covenant Deed of Trust subordinate only to the First Trust Deed in the amount of one hundred twenty percent (120%) of the difference between the FMV of the Restricted AH Unit less the purchase price of that Restricted AH Unit (“Title Policy”). The cost of the Title Policy shall be paid by Developer.

2.9 Release. At the close of escrow for each Restricted AH Unit, this Agreement shall terminate AS TO THAT SPECIFIC RESTRICTED AH UNIT ONLY. City shall execute, acknowledge and deliver to escrow in time for close of escrow, such documentation as reasonably required by the title company to confirm the release of this Agreement as to the applicable Restricted AH Unit.

8 2.10 Use of Qualified Third Party. City may elect to retain a third party who is qualified to provide the financial analysis and verification of each Eligible Purchaser as well as the calculation of the applicable Purchase Price for a Restricted AH Unit. Developer shall reimburse City for the cost of the qualified third party reasonably acceptable to Developer. Keyser Marston Associates is approved as such a qualified third party to provide such services.

ARTICLE 3. SALES AND RELEASES

3.1 Timing of Sale of Restricted AH Units. Developer shall use diligent efforts to market and sell the Restricted AH Units concurrently with the sale of the Market Rate Units. For the issuance of certificates of occupancy for the market rate Units in each phase, Developer must obtain certificates of occupancy for the Restricted AH Units in each phase (which may occur concurrently with issuance of the certificates of occupancy for the market rate Units). Compliance with this requirement may be enforced by City not issuing additional certificates of occupancy for the Market Rate Units until Developer is in compliance. Notwithstanding the foregoing, in accordance with General Condition 21 of the Planning Commission Resolution: (i) in the event any of the Very Low Income Restricted AH Units have not been sold to Very Low Income Households within 6 months of being marketed for sale and provided Developer has made reasonable and customary efforts to sell those Very Low Income Restricted AH Units to Very Low Income Households, then those (formerly) Very Low Income Restricted AH Units may be sold to Low Income Households for an amount that does not exceed the Purchase Price for Restricted AH Unit for Low Income Restricted AH Units; (ii) in the event any of the (formerly) Very Low Income Restricted AH Units, as described in the immediately preceding clause, have not been sold to Low Income Households within 12 months of being marketed for sale and provided Developer has made reasonable and customary efforts to sell those (formerly) Very Low Income Restricted AH Units to Low Income Households, then those (formerly) Very Low Income Restricted AH Units may be sold to Moderate Income Households for an amount that does not exceed the Purchase Price for Restricted AH Unit for Moderate Income Affordable Units; and (iii) in the event any of the Low Income Restricted AH Units have not been sold to Low Income Households within 6 months of being marketed for sale and provided Developer has made reasonable and customary efforts to sell those Low Income Restricted AH Units to Low Income Households, then those (formerly) Low Income Restricted AH Units may be sold to Moderate Income Households for an amount that does not exceed the Purchase Price for Restricted AH Unit for Moderate Income Affordable Units.

3.2 Release of Market Rate Units. Provided Developer is in compliance with the requirements in Section 3.1, upon transfer of any Market Rate Unit to an individual owner in conformity with the California Department of Real Estate issued public report (“White Report”), the provisions of this Agreement shall terminate with respect to that Market Rate Unit. City shall cooperate with providing any documents which the title company may require to affect the foregoing.

3.3 Common Area Property. Upon transfer of common area within the Project to the homeowners association which governs the Project in accordance with the White Report, this Agreement shall automatically terminate with respect to the common area so transferred. City shall cooperate with providing any documents which the title company may require to affect the foregoing.

ARTICLE 4. DUTIES AND RIGHTS

4.1 Construction of Project. As required by the Density Bonus Law, the Restricted AH Units shall be constructed concurrently with the Market Rate Units and the Restricted AH Units shall be dispersed through the Project and are highlighted on the Project Layout.

4.2 Maintenance. Until fee title of a Restricted AH Unit is transferred to an Eligible Purchaser, Developer shall, at its sole cost and expense, maintain the interiors and exteriors of the

9 Restricted AH Units in good, decent, safe and sanitary manner, in accordance with the standard of maintenance of the other Units in the Project.

4.3 Monitoring. Representatives of City shall be entitled to inspect and copy any and all records of Developer relating to sales of the Restricted AH Units to Eligible Purchasers at any time, upon reasonable notice, and to conduct an audit of such records. City shall pay the cost of the audit, provided, however, that if the audit discloses a default by Developer, the cost of the audit shall be borne by Developer who shall, upon demand, promptly reimburse City for the cost of the audit. Until a Restricted AH Unit is occupied by an Eligible Purchaser, representatives of City shall, upon reasonable notice to Developer, be entitled to enter the Restricted AH Unit to monitor compliance with this Agreement. City shall have the right to transfer this Agreement and the Covenant Agreement for Restricted AH Unit to any other public agency in its sole discretion.

ARTICLE 5. ENFORCEMENT

5.1 Enforcement & Remedies. This Agreement, without regard to technical classification or designation, shall be binding for the benefit of the City, and its successors and assigns for the entire period during which such covenants shall be in force and effect, without regard to whether the City, or its successors and assigns are or remain the owner of any land or interest therein to which such covenants relate. In the event of any breach of any such covenants, City, or its successors or assigns, shall be entitled to all rights and remedies available under the law upon the default of the terms of this Agreement by Developer, including to the extent applicable: (a) specific performance of the terms of this Agreement; (b) disgorgement of any amounts of sales proceeds which exceed the Purchase Price for Restricted AH Unit; (c) an award of its reasonable attorneys’ fees, specifically including the cost to City of time expended by the office of City Attorney and reasonable expert and attorneys’ fees; (iv) damages; (v) right to revoke certificates of occupancy; (vi) record a lien against the Property; and (vii) any other remedies available at law or equity. The rights and remedies are cumulative, and the exercise of one or more of such rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default.

5.2 Indemnification. Developer shall defend, indemnify and hold harmless City, its elected and appointed officials, officers, agents and employees, from all liability from loss, damage or injury to persons or property, including the payment by Developer of any and all reasonable legal costs and attorneys’ fees, in any manner arising out of the acts and/or omissions of Developer pursuant to this Agreement. The indemnification obligations of Developer under this Agreement shall survive the expiration or earlier termination of this Agreement.

5.3 Agreement Appurtenant to Property. This Agreement is appurtenant to and shall run with the Property as an equitable servitude and covenant in favor of City and shall be binding on all successors of the Property until this Agreement is otherwise terminated.

5.4 Term. This Agreement shall terminate and be of no further force or effect (except as specified below) upon the last to occur (i) all Restricted AH Units have been sold to qualified Eligible Purchasers in accordance with this Agreement as evidenced by a recorded grant deed; and (ii) the Covenant Agreement for Restricted AH Unit and Covenant Deed of Trust have been executed by the Eligible Purchaser of each of the Restricted AH Units and recorded against the Restricted AH Unit concurrently with the grant deed. Notwithstanding the termination of this Agreement of record, the provisions of Sections 5.1, 5.2 and 6.1 shall remain in full force and effect as the personal obligation of Developer to City or City to Developer, as applicable.

5.5 Further Assurances; City Manager Authority. The parties shall execute any further documents in recordable form consistent with the terms of this Agreement as may from time to time

10 be reasonably necessary or appropriate to effectuate the purpose of this Agreement. Except as otherwise expressly provided in this Agreement, approvals or consents required of City shall be deemed granted by the written approval of City Manager or his/her designee. City Manager is also authorized to execute any further documents on behalf of City, including the Covenant Agreement for Restricted AH Unit and any subordination agreements for the sale of the Restricted AH Unit.

Notwithstanding the foregoing, City Manager or designee may, in his or her sole and absolute discretion, refer to City Council any item requiring City approval.

5.6 Cooperation Covenant. The parties agree to cooperate with each other to effectuate the intent of this Agreement including, but not limited to, modifying some provisions in this Agreement (and the Covenant Agreement for Restricted AH Unit) as may be reasonably required by the California Department of Real Estate or other applicable governmental agencies.

5.7 Applicable Law. The laws of the State of California shall govern the interpretation and enforcement of this Agreement.

ARTICLE 6. GENERAL PROVISIONS

6.1 Attorney’s Fees and Costs. If any action or proceeding is brought by either party against the other under this Agreement, whether for interpretation, enforcement or otherwise, whether or not a final court judgment is entered, the prevailing party shall be entitled to reimbursement of all reasonable costs and expenses incurred by the prevailing party in such legal proceeding, including reasonable attorneys’ fees, court costs and expenses and consultant and expert witness fees and expenses.

6.2 Severability. Invalidation of any one of these covenants or restrictions by judgment or court order shall in no way affect any other provisions which shall remain in all force and effect.

6.3 Construction. The provisions of this Agreement shall be liberally construed for the purpose of effecting the intent under the Density Bonus Law and Planning Commission Resolution to increase the number of affordable dwellings in City. The article and section headings have been inserted for convenience only and shall not be considered or referred to in resolving questions of interpretation or construction.

6.4 Amendments. This Agreement may only be amended or modified by written agreement executed by Developer and City and recorded in the Official Records of Los Angeles County.

6.5 Notices. Formal notices, demands and communications between City and Developer shall be sufficiently given if delivered personally, or dispatched by registered or certified mail, postage prepaid, return receipt requested, to the respective addresses of City and Developer. Such notices, demands and communications, if given in person, shall be deemed given when delivered, and, if given by mail, shall be deemed given three (3) business days after deposit in the mail. If delivered by national overnight carrier service, it shall be deemed to have been delivered the following business day. Such written notices, demands and communications may be sent to the following addresses unless either party designates by notice a different address:

11 To Developer: KB Home Greater Los Angeles, Inc.
25152 Springfield Court, Suite 180
Valencia, CA 91355
Attn: Mr. Ron Mertzel
With copy to: KB Home
10990 Wilshire Blvd., 7th Floor
Los Angeles, CA 90024
Attn: Phil Darrow, Esq.

To City: City of South El Monte
1415 Santa Anita Avenue
South El Monte, CA 91733
Attn: City Manager
With a copy to: Susie Altamirano, City Attorney
Olivarez Madruga Law
Organization, LLP
500 S. Grand Avenue
12th Floor
Los Angeles, CA 90071

6.6 Conflicts of Interest.

6.6.1 No member, official or employee of City shall have any personal interest, direct or indirect, in this Agreement; nor shall any such member, official or employee participate in any decision relating to this Agreement which affects his personal interests or the interests of any corporation, partnership or association in which he is, directly or indirectly, interested.

6.6.2 Developer warrants that it has not paid or given, and will not pay or give, any person any money or other consideration for obtaining this Agreement, other than normal fees paid to Developer’s independent contractors, attorneys, and consultants.

6.7 Non-liability. No member, official, employee, attorney or consultant of City shall be personally liable to Developer, or any successor in interest of Developer, in the event of any default or breach by City or for any amount which may become due to Developer or to its successor, or on any obligations under the terms of this Agreement. No director, officer, employee, attorney or consultant of Developer shall be personally liable to City, or any successor in interest of City, in the event of any default or breach by Developer or for any amount which may become due to City or to its successor, or on any obligations under the terms of this Agreement.

6.8 Qualification; Authority. Each individual executing this Agreement on behalf of Developer, represents, warrants and covenants to City that (a) Developer is duly formed and authorized to do business in the state of its incorporation, (b) such person is duly authorized to execute and deliver this Agreement on behalf of Developer in accordance with authority granted under the organizational documents of such entity, and (c) Developer is bound under the terms of this

12 Agreement.

6.9 Assignment Prohibited. Developer shall not assign or transfer any portion of this Agreement without the prior express written consent of City, which consent may be given or withheld in City’s sole discretion. However, if any such assignment or transfer is to a purchaser of the entire Project, City shall not unreasonably withhold or delay its consent of the assignment provided that the purchaser shall assume all obligations under this Agreement in a form satisfactory to City.

6.10 No Waiver. The failure of City to enforce any term, covenant, or condition of this Agreement on the date it is to be performed shall not be construed as a waiver of City’s right to enforce this, or any other, term, covenant, or condition of this Agreement at any later date or as a waiver of any term, covenant, or condition of this Agreement.

IN WITNESS WHEREOF, the parties have executed this Agreement as indicated below.

CITY: DEVELOPER:

CITY OF SOUTH EL MONTE,
a municipal corporation
By:

Gloria Olmos, Mayor
ATTEST:

Adrian Garcia, MMC
City Clerk
APPROVED AS TO FORM:

By:

Susie Altamirano
City Attorney

KB HOME GREATER LOS ANGELES
INC., a California corporation
By:

Keltie B. Cole, President

STATE OF CALIFORNIA )
)

COUNTY OF )
On 2024, before me, , Notary
Public, personally appeared ,who proved to
me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument, the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

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

WITNESS my hand and official seal.
[SEAL]
A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.

STATE OF CALIFORNIA )
)

COUNTY OF )
On 2024, before me, , Notary
Public, personally appeared ,who proved to
me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument, the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

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

WITNESS my hand and official seal.
[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.

01257.0013/917740.4 1

EXHIBIT A
Legal Description of the Property
That certain real property in City of South El Monte,
County of Los Angeles,
State of California legally described as follows:

01257.0013/917740.4 1

EXHIBIT B

PROJECT LAYOUT

187
197
202
186
196
201
105 67 36
158 121 83
167
131 93 55 26
164 127 89 51
November 25, 2024
StarliteSitePlan
411
40 2
146 109 108 71 70 42 39
3 147 145 110 107 72 69 43 38
4 148
144 111 106 73 68 44 37
5 149
143 112 74 45
6 150
142 113 104 75 66 46 35
78 Starlite Dr
9 34
151 141 114 103 76 65
170 10 204
172 173 33 203
205 171 152 140 115 102 77 64
200 11
32 206 199
ParamountSt 153 139 116 101 78 63
12 31 207 198 176
154 138 117 100 79 62 175 174
177
155 137 118 99 80 61
178 192 193 194 195 Cinema Dr
180 181
156 136 119 98 81 60 179
PresleySt
VinelandSt
157 135 120 97 82 59 30 13
191 190 189 188 184 134 96 58 29 14
183 182
185
159 133 122 95 84 57 28 15
16 AstaireDr
17 169 160 132 123 94 85 56 47 27 18
168 161 124 86 48 19
AffordableUnit 162 130 125 92 87 54 49 25 20
166 163 129 126 91 88 53 50 24 21
165 128 90 52 23 22 Hepburn St Iconice St Harlow Dr Warner St Bonbay St Stage St Reel St Dorris St Spotlight St Curtain St Silver Moon St Screenplay St Everly St Projection St Starr St Applause St Avalon St Pantages Dr
Academy St

EXHIBIT C
Sample Computation of Purchase Price for Restricted AH Units 01257.0013/917740.4 1

Prepared by: Keyser Marston Associates, Inc.

File name: 12 2 24 Exh C 4th Qtr Inc Aff
TABLE 1

MAXIMUM HOUSEHOLD INCOMES

INCOME QUALIFICATION TESTS
OCTOBER 1 - DECEMBER 31, 2024

SOUTH EL MONTE, CALIFORNIA
Very Low Income
Households Low Income Households
Moderate Income
Households
H&SC§50105 H&SC§50079.5 H&SC§50093
1 Person Household $48,550 $77,700 $82,500
2 Person Household $55,450 $88,800 $94,300
3 Person Household $62,400 $99,900 $106,050
4 Person Household $69,350 $110,950 $117,850
5 Person Household $74,900 $119,850 $127,300
6 Person Household $80,450 $128,750 $136,700
7 Person Household $86,000 $137,600 $146,150
8 Person Household $91,550 $146,500 $155,550

Prepared by: Keyser Marston Associates, Inc.

File name: 12 2 24 Exh C 4th Qtr Inc Aff
TABLE 2
AFFORDABLE SALES PRICE CALCULATIONS 1
H&SC SECTION 50052.5 CALCULATION METHODOLOGY
OCTOBER 1 - DECEMBER 31, 2024

SOUTH EL MONTE, CALIFORNIA
Townhomes Single Family Homes
Very Low Income
Two-Bedroom Units
Low Income
Two-Bedroom Units
Moderate Income
Three-Bedroom Units
I. Income Information
Benchmark Household Size 3 3 4
Area Median Income (AMI) 2 $88,400 $88,400 $98,200
Percentage of AMI Used for Calculations 50% 70% 110%
Household Income Used for Calculations $44,200 $61,880 $108,020 % of Income Allocated to Housing 30% 30% 35%
Household Income Allotted to Housing $13,260 $18,560 $37,810 II. Ongoing Expenses
Annual Utilities Allowance 3 $3,120 $3,120 $3,804
Annual HOA Dues 4 4,740 4,740 2,952
Annual Maintenance Allowance 5 600 600 600
Property Taxes @ 1.15% of ASP 6 684 1,440 4,339
Total Expenses $9,144 $9,900 $11,695
III. Income Available for Mortgage $4,116 $8,660 $26,115 IV. Affordable Sales Price
Supportable Mtg @ 6.12% Interest 7 $56,500 $118,800 $358,400 Benchmark Down Payment @ 5% ASP 3,000 6,300 18,900
Maximum Affordable Sales Price $59,500 $125,100 $377,300 1 2
3 4
5 6
7 The Affordable Sales Price are updated on the first day of each calendar quarter to reflect changes in the Area Median Income, the utilities allowances, and mortgage interest rates.

Based on the 2024 Area Median Income published by HCD.

Based on the based on the LACDA All Electric Single Family Home utility allowance schedule effective as of 7/1/24. Monthly Utilities Allowance @ $260 for the Two-Bedroom Units and $317 for the Three-Bedroom Units.

Monthly HOA Dues @ $395 for the Townhomes and $246 for the Single Family Homes.

Monthly Maintenance Allowance @ $50.

Based on the assumption that the units are subject to long-term income and affordability covenants.

Based on the average interest rate for a 30-year fixed interest rate fully amortizing mortgage loan published by Freddie Mac for the week of October 3, 2024.

EXHIBIT D
Covenant Agreement for Restricted AH Unit
01257.0013/917740.4 1

APN: SPACE ABOVE FOR RECORDER’S USE ONLY
Exempt from recording fee per Gov. Code §§ 27383 & 6103

AFFORDABILITY COVENANTS AND RESTRICTIONS AFFECTING REAL PROPERTY AND

OPTION TO PURCHASE PROPERTY SECURED BY DEED OF TRUST
Owner:

Residence:

South El Monte, California

THIS AFFORDABILITY COVENANTS AND RESTRICTIONS AFFECTING REAL

PROPERTY AND OPTION TO PURCHASE PROPERTY SECURED BY DEED OF TRUST (“Agreement”) is entered into as of this day of , 2025 (“Agreement Date”) by and between CITY OF SOUTH EL MONTE, a California municipal corporation (“City”), and (jointly and severally “Owner”). City and Owner are
sometimes referred to as a “Party” and jointly as the “Parties.”

RECITALS
A. Concurrently with the recordation of this Agreement, Owner has acquired that certain residence located at in City of South El Monte, County of Los Angeles, State of California, and legally described in Exhibit A attached hereto and incorporated by reference (“Residence”).

B. The Residence is part of that certain residential development commonly known as “ ” (“Project”) which was developed by KB HOME GREATER LOS ANGELES INC., a California corporation (“Developer”).

C. As a condition to developing the Project, Developer was required to record covenants to designate and restrict twenty-one (21) of the units in the Project as affordable housing.

Developer and City entered into that certain Master Affordable Housing Covenant and Density Bonus Agreement dated , 2025 recorded on , 2025 as Instrument No.

Agreement”).
in the Official Records of Los Angeles County (“Developer D. Pursuant to the Developer Agreement, the use, occupancy and transfer of the Residence is restricted to qualified _-Income purchasers to ensure its continued availability to Income Households (as defined below) for a period of at least fifty-five (55) years. The term “ Income Household” means a household whose Gross Income, as defined in California Code of Regulations Title 25 Housing and Community Development Section 6914, meets the standards defined in Section_______ of the California Health &Safety Code Section and

RECORDING REQUESTED BY AND
WHEN RECORDED MAIL TO:

City of South El Monte
1415 Santa Anita Avenue
South El Monte, CA 91711
Attn: City Clerk

2 applicable regulations adopted by HCD, including Subchapter 2 of Division 1 of Title 25 of the California Code of Regulation (beginning at Section 6910) (“HCD Laws/Regulations”).

E. Owner is acquiring the Residence pursuant to the Developer Agreement for a purchase price of Dollars ($ ) (“Original Sales Price”) which amount is less than the fair market value of the Residence which is agreed to be Dollars ($ ) as of the Effective Date
(“Original Fair Market Value”). In consideration for acquiring the Residence at less than its Original Fair Market Value, Owner agrees that the Residence shall be restricted by the covenants and restrictions as set forth in this Agreement.

F. This Agreement is secured by a deed of trust executed by Owner and recorded concurrently with this Agreement in the Official Records (“Deed of Trust”).

NOW, THEREFORE, in consideration for Owner acquiring the Residence for less than the Original Fair Market Value, Owner agrees to the following covenants and restrictions which shall run with the Residence in favor of the City.

1. DEFINITIONS.

The following terms shall have the definitions below which can be found in the referenced sections:
“Agreement” – Preamble (page 1).
“Agreement Date” – Preamble (page 1).
“Alternative Sale” – Section 10(b).
“Base Price” – Section 12.1.
“Breach Notice” – Section 14.
“City” – Preamble (page 1).
“City’s Share of Appreciation” – Section 13.2.
“Deed of Trust” – Recital F.
“Default Interest” – Section 13.2.
“Default Purchase Exercise Notice” – Section 15.1.
“Default Purchase Option” – Section 15.1.
“Effective Date” – Section 2.
“Eligible Purchaser” – Section 11.2.
“Eligible Transfer” – Section 11.
“Exercise Notice” – Section 8.

3 “Exercise Price” – Section 8.
“Fair Market Value” – Section 9.1.
“First Lender” – Section 21.1.
“First Deed of Trust” – Section 21.1.
“Gross Income – Recital D.
“HCD Laws/Regulations” – Recital D.
“Increased Base Price” – Section 12.1.
“Ineligible Purchaser” – Section 10(b).
“Initial Subsidy” – Section 13.2.
“ Income Household” – Recital D.
“Notice of Default” – Section 14.
“Official Records” – Section 2.
“Option” – Section 8.
“Original Fair Market Value” – Recital E.
“Owner” – Preamble (page 1).
“Owner’s Share of Appreciation” – Section 13.3.
“Project” – Recital B.
“Proposed Purchaser” – Section 10.
“Relative” – Section 3.
“Residence” – Recital A.
“Restricted Sales Price” – Section 12.
“Restrictive Covenants” – Section 11.1(e).
“Subordination Agreement” – Section 21.2.
“Term” – Section 2.
“Total Appreciation” – Section 13.4.
“Transfer” – Section 5.
“Transfer Notice” – Section 7.

4 “Value of Capital Improvements” – Section 12.2.

2. TERM OF AGREEMENT. The covenants, restrictions and equitable servitudes in this Agreement shall burden the Residence and run in favor of and for the benefit of, City. The term of this Agreement shall commence on the date this Agreement is recorded (“Effective Date”) in the Official Records of Los Angeles County (“Official Records”) and shall continue for a term of fiftyfive (55) years, unless otherwise terminated as set forth in this Agreement including, but not limited to, Sections 8, 13 and/or 17 (“Term”).

3. OWNER CERTIFICATIONS. Owner certifies to City that (i) the financial and other information previously provided in order to qualify to purchase the Residence was true, correct and complete; (ii) Owner does not own any other residential property as of the Agreement Date; (iii) Owner intends to occupy the Residence as Owner’s principal place of residence; and (iv) Owner is not a Relative (as defined below) of any employee, officer, board member or shareholder of Developer (or any successor Developer of the Project) or any of its members, affiliates, or subsidiaries, or of any employee or official of City. “Relative” shall mean a parent, child, sibling, spouse, uncle, aunt, cousin, niece, nephew, grandparent and grandchild and shall also extend to any of the foregoing persons related through marriage (i.e. in-laws or step relationships).

4. LEASING AND OCCUPANCY OF RESIDENCE; ANNUAL CERTIFICATION.

4.1. Occupancy of Residence. Owner shall continuously occupy the Residence as his/her/their principal residence and the Residence shall be used as the primary residence of the Owner and Owner’s household and for no other purpose. City may grant a temporary written waiver of this occupancy requirement for good cause in its reasonable discretion. No more than ( ) persons shall occupy the Residence, not including children born after the Effective Date.

4.2. Leasing of Residence. Owner may not lease any portion of the Residence.

4.3. Annual Certification. On an annual basis, Owner shall provide a certification in a form required by City that the Residence is owned and occupied by Owner.

5. TRANSFER OF RESIDENCE. “Transfer” means any sale, assignment or transfer, voluntary or involuntary, of any interest in the Residence, including, but not limited to, a fee simple interest, a joint tenancy interest, a life estate, a leasehold interest, or an interest under a land sale contract by which possession of the Residence is transferred and Owner retains title. Any Transfer without satisfaction of the provisions of this Agreement is prohibited. Transfers by devise, or inheritance to an existing spouse, children, surviving joint tenant, or a spouse as part of a dissolution proceeding or in connection with marriage, shall not be considered a Transfer for the purposes of this Agreement.

6. REFINANCE OF RESIDENCE.

6.1 Refinancing of First Deed of Trust. Subject to Section 6.3, Owner may refinance a loan secured by a First Deed of Trust (defined in Section 20.1) encumbering the Residence provided that City has previously reviewed and approved in writing the terms and conditions thereof including, but not limited to, the principal amount of the proposed loan, the interest rate, the terms of repayment, the identity of the maker of the proposed loan, any documentation pertaining to the subordination or enforcement of this Agreement, and the costs and fees associated with the making of the proposed loan. Owner must have received the written approval of the proposed loan by City prior to the date of its closing. In the event of a proposed refinance that includes a principal amount in excess of that needed to repay the loan secured by the First Deed

5 of Trust, any approval by City shall include conditions which, in the sole discretion of City, are warranted in order to insure the continued affordability of the Residence. Any refinancing of a First Deed of Trust that has not been previously approved by City shall constitute a default under this Agreement.

6.2 Junior Liens. Subject to Section 6.3, Owner may enter into a loan secured by a lien junior and subordinate to this Agreement provided that (i) the proceeds of each loan shall be used solely to pay for repairs or the construction of improvements to the Residence which improvements are consistent with all applicable covenants and restrictions of the Project; (ii) City has previously reviewed and approved the terms and conditions thereof, including, but not limited to, the principal amount of the proposed loan, the interest rate, the terms of repayment, the identity of the maker of the proposed loan, the costs and fees associated with the making of the proposed loan, and the nature and costs of the proposed repairs or the construction of improvements, to be paid with the proceeds thereof; and (iii) Owner shall have received the written approval of the proposed loan by City prior to the date of its closing. Without limiting the foregoing, the proceeds of the proposed loan shall not be used to pay for the construction of improvement of a luxury nature such as ground pools, spas, or interior or exterior decorative items, or improvements with an unreasonable useful life. The failure of Owner to comply fully with the provisions of this subsection when entering into a loan that is secured by a lien junior and subordinate to this Agreement shall constitute a default under this Agreement.

6.3 Notification Prior to Encumbrance or Hypothecation. If Owner desires to refinance a First Deed of Trust pursuant to Section 6.1, or to borrow funds for a new loan to be secured by a junior lien encumbering the Residence the proceeds of which are to be used to pay for repairs or the construction of improvements to the Residence pursuant to Section 6.2, prior written approval of City is required. Owner must request such approval in writing at least thirty (30) days prior to the recordation of a lien securing any such refinancing or loan, Owner shall submit in writing the following information and the applicable documents:
i. Name and address of lender.
ii. Terms of the loan, including, but not limited to, principal, interest rate, term, and loan fees.
iii. Closing date of the loan.
iv. Copy of all proposed escrow instructions, loan applications, security agreement, loan documents, and other agreements between Owner and the lender.
v. Written documentation of compliance with the conditions for City approval as set forth in Section 6.1 and 6.2, as applicable. vi. Other written documentation reasonably requested by City.

City shall have fifteen (15) business days after its receipt of all of such information to approve or disapprove the proposed refinancing or loan. If the City does not issue its written approval within the fifteen (15) business day period, the loan shall be deemed disapproved.

6 7. NOTICE OF INTENDED TRANSFER. In the event Owner intends to Transfer or vacate the Residence, Owner shall promptly notify City in writing of such intent delivered at least ninety (90) days prior to the actual date of the proposed Transfer or vacation of the Residence (“Transfer Notice”).

8. CITY PURCHASE OPTION. Upon City’s receipt of a Transfer Notice, City shall have the option, but not the obligation, to purchase the Residence for the Exercise Price (defined below) (“Option”). City may exercise its Option to purchase the Residence by delivering written notice of exercise to Owner within thirty (30) days of receipt of the Transfer Notice (“Exercise Notice”). Within ninety (90) days of the date of the Exercise Notice, City shall purchase the Residence at the lesser of: (i) the Fair Market Value of the Residence, or (ii) Restricted Sales Price calculated pursuant to Section 12 (“Exercise Price”). City may assign its right to purchase the Residence to an Eligible Purchaser or to a governmental agency or nonprofit organization that is devoted to developing or preserving low and moderate income housing. After a Transfer, if the City does not exercise the Option, the Option rights set forth herein shall remain in full force and effect and apply to any future Transfer of the Residence during the Term.

9. FAIR MARKET VALUE.

9.1. After the Effective Date, the term “Fair Market Value” shall have the meaning ascribed in Section 1263.320 of the California Code of Civil Procedure, as it now exists or may subsequently be amended and shall be determined by a real estate appraiser selected by City. The appraiser shall have been previously approved by the Federal National Mortgage Association or the Federal Housing Administration and at the time of the appraisal shall be on the list of approved single-family housing appraisers. If possible, the appraisal shall be based upon properties sold in the market during the three (3) month period prior to the date of the Transfer Notice. The cost of the appraisal shall be divided equally between City and Owner. In the event that improvements to the Residence have been made by Owner that increase the value of the Residence, or if damage to the Residence has occurred or deferred maintenance while Owner owned the Residence has decreased the value of the Residence, the appraisal shall specifically ascribe a value to these adjustment factors and state what the Fair Market Value of the Residence would be without such adjustments. Nothing in this Section shall preclude Owner and City from establishing the Fair Market Value of the Residence by mutual written agreement in lieu of an appraisal pursuant to this Section.

9.2. If no appraisal has been conducted pursuant to Section 9.1, and it is necessary to determine the Value of Capital Improvements made to the Residence by Owner, such determination shall be made by a real estate appraiser selected by City. The cost of the appraisal shall be divided equally between City and Owner.

10. TRANSFER BY OWNER. If City does not exercise its Option under Section 8, Owner may sell the Residence to a person of Owner’s choosing (“Proposed Purchaser”) subject to the following limitations:
a. Transfer to Eligible Purchaser: If Owner transfers the Residence in a transaction that meets the Eligible Transfer requirements in Section 11, the maximum amount that Owner may receive for the Transfer shall be the Restricted Sales Price and the transfer shall comply with the requirements in Section 11.
b. Transfer by Alternative Sale: If Owner transfers the Residence in a transaction that does not meet the Eligible Transfer requirements of Section 11, or is in Ineligible Purchaser as defined in Section 2.5, or fails to provide Transfer Notice as required by Section 7(“Alternative Sale”), the gross proceeds of such sale shall be divided between Owner and City pursuant

7 to Section13.

11. ELIGIBLE TRANSFER. A Transfer of the Residence that meets the requirements set forth in this Section 11 shall qualify as an approved Transfer to an Eligible Purchaser (as defined below) (“Eligible Transfer”).

11.1. Disclosures and Submittals. Owner and the Proposed Purchaser shall provide the following information in writing and documents to City:
a. The name, address and telephone number of the Proposed Purchaser. b. Financial information certified by the Proposed Purchaser in a form acceptable to City and any other supporting documentation requested by City which shall include authorization for City to verify the information provided. The financial information shall be used by City to determine the income eligibility of the Proposed Purchaser as a Income Household in accordance with HCD Laws/Regulations. c. The proposed sales contract, escrow instructions and all other related documents that shall set forth the terms of the sale of the Residence. d. A written certification from Owner and the Proposed Purchaser in a form acceptable to City that the sale shall be closed in accordance with the terms of the sales contract and other documents submitted to and approved by City. The certification shall also provide that the Proposed Purchaser or any other party has not paid and will not pay to Owner, and Owner has not received and will not receive from the Proposed Purchaser or any other party, money or other consideration, including personal property, in addition to what is set forth in the sales contract and documents submitted to City. The written certification shall also include a provision that in the event a Transfer is made in violation of the terms of this Agreement or false or misleading statements are made in any documents or certification submitted to City, City shall have the right to file an action at law or in equity to make the parties terminate and/or rescind the sale contract and/or declare the sale void or pursue damages, notwithstanding the fact that the sale may have closed and become final as between Owner and the Proposed Purchaser. In any event, any costs, liabilities or obligations incurred by Owner and the Proposed Purchaser for the return of any monies paid or received in violation hereunder or for any costs and legal expenses, shall be borne by Owner and/or the Proposed Purchaser and they shall hold City and its designee harmless and reimburse their expenses, legal fees and costs for any action they reasonably take in good faith in enforcing the terms of this Agreement. e. Restrictive Covenants in favor of the City executed and acknowledged by the Proposed Purchaser with substantially the same terms as the terms of this Agreement in a form acceptable to the City (“Restrictive Covenants”). City’s approval of the proposed sale shall be effective upon the recordation in the Official Records of both the Restrictive Covenants and a request for notice of default under the First Deed of Trust in favor of City. City may require the Proposed Purchaser to pay a reasonable fee to City and reimburse it for out-of-pocket costs to cover the costs of administering its right and obligations under this Agreement. f. Upon the close of the proposed sale, the escrow must provide to City a conformed copy of the recorded Restrictive Covenants, a Request for Notice of

8 Delinquency and the Request for Notice, a copy of the final sales contract, settlement statement, escrow instructions, an endorsement updating the City’s loan title insurance policy and any other document that City may reasonably request.

11.2. Eligibility of Purchaser. A Proposed Purchaser who meets the following requirements shall be an “Eligible Purchaser”:
a. Each Proposed Purchaser shall certify to City in a form acceptable to City that he or she will occupy the Residence as his or her principal residence; b. Each Proposed Purchaser shall not own any other real property; and c. The combined Gross Income for all household members of the Proposed Purchaser qualifies as a Laws/Regulations.

Income Household in accordance with HCD.

12. DETERMINATION OF SALES PRICE. The maximum sales price (“Restricted Sales Price”) that Owner shall receive for an Eligible Transfer of the Residence shall be the Increased Base Price as adjusted by Section 12.2, but, in no event, shall the sales price exceed the amount specified in Section 50052.5 of the Health & Safety Code and HCD Laws/Regulations.

12.1. Increased Base Price. The “Base Price” of the Residence means the purchase price paid by Owner (which is set forth in Recital E for the initial Owner), inclusive of closing costs actually paid by Owner. The “Increased Base Price” of the Residence means the Base Price, increased by the percentage of increase for a ____ Income Household adjusted for family size, for Los Angeles County as published by the California Department of Housing and Community Development as determined by California Health & Safety Code Section 50000 et seq. and applicable regulations adopted from time to time. The increase in household income shall be computed from the date of the original purchase of the Residence by Owner to the date of Transfer Notice. In the event that such income determination is no longer published, or has not been updated for a period of at least eighteen (18) months, City may use or develop such other reasonable method as it may choose in order to determine such increase in income.

12.2. Adjusted Increased Base Price. The Increased Base Price shall also be adjusted for the Value of Capital Improvements. The “Value of Capital Improvements” shall mean the value of substantial structural or permanent fixed improvements that cannot be removed without substantial damage to the Residence or substantial or total loss of value of the improvements.

No such valuation shall be made except for improvements (i) made or installed by or under the direction of Owner and permitted by the covenants restricting the Project; (ii) approved in advance by City or its designee; and (iii) with an initial cost of Two Thousand Dollars ($2,000) or more. The value of such improvements to be taken into account in calculation of the Increased Base Price shall be the increase in value of the Residence by reason of the improvements, and shall be determined by agreement of City and Owner, or, in the event of failure to agree, by appraisal pursuant to Section 9.2.

13. ALTERNATIVE SALE & PAYMENT TO CITY. If a Transfer is not to an Eligible Purchaser (i.e., an Alternative Sale), Owner and City shall each receive a portion of the proceeds of the sale pursuant to this Section.

13.1. Disclosures and Submittals. Owner and Proposed Purchaser shall deliver to City the same information and documents as required by Section 11.1, except that (i) the financial

9 statement of the Proposed Purchaser described in Section 11.1(b), and (ii) the Restrictive Covenants described in Section 11.1(e) and 11.1(f), shall not be required.

13.2. Amount Paid to City. City shall be entitled to receive the lesser of (i) its Initial Subsidy (defined below) plus the City’s proportionate share of appreciation, and (ii) the sales price (provided the sales price is equal to Fair Market Value). The City’s proportionate share of the Total Appreciation (defined in Section 13.4) shall be equal to the ratio of the City’s Initial Subsidy to the Fair Market Value at the time of the initial sale to Owner (“City’s Share of Appreciation”). City’s Initial Subsidy means the Original Fair Market Value (as defined in Recital E) minus the Original Sales Price (as defined in Recital E), plus any down payment assistance from City (“Initial Subsidy”).

City’s share of sale proceeds shall be paid to City directly from escrow upon close of the Alternative Sale. In the event the amount due to City is not paid when due, the amount due to City shall accrue interest at the rate of ten percent (10%) per annum but not to exceed the (maximum amount permitted by law, commencing on the date said amount should have been paid to City until said amount is actually paid to City (“Default Interest”).

13.3. Amount Paid to Owner. Owner shall be entitled to receive the sum of (i) his/her/their down payment, (ii) the Value of Capital Improvements, if any, plus (iii) the Owner’s Share of Appreciation, but less (a) any amounts to pay off the First Lender and any other liens, and (b) closing costs to be paid by Owner. “Owner’s Share of Appreciation” shall be the Total Appreciation of the Residence less the City’s Share of Appreciation.

13.4. “Total Appreciation” shall mean Fair Market Value (as defined in Section 9.1) at the time of the sale, less the sum of (i) the Fair Market Value at the time of original acquisition and (ii) the Value of Capital Improvements.

14. DEFAULTS AND REMEDIES. Upon a breach of this Agreement or the Deed of Trust by Owner, City shall give written notice to Owner specifying in reasonable detail the nature of the breach (“Breach Notice”). If the breach is not cured to the satisfaction of City within (i) ten (10) days after delivery of the Breach Notice for failure to pay any sums due to the City under this Agreement; (ii) within thirty (30) days after delivery of the Breach Notice for failure to cure any non-monetary breach, and (iii) within thirty (30) days after recordation of a notice of default under any senior note or trust deed, City may thereafter elect to declare Owner in default under this Agreement by delivering a notice of default to Owner and First Lender (“Notice of Default”).

Immediately following the Notice of Default, City may apply to a court of competent jurisdiction for specific performance of this Agreement, or for any such other relief at law or in equity as may be appropriate, including foreclosure of the Deed of Trust for the amount the amounts to be paid to City pursuant to this Agreement including its attorney’s fees.

15. NON-LIABILITY OF CITY. City shall not be liable or obligated to Owner or any successorin-interest to Owner by reason of its option to purchase under Section 8 or for any failure to exercise its option to purchase under those Sections.

16. FANNIE MAE REQUIREMENTS.

16.1 Insurance Settlements and Condemnation Proceeds. The holder of the First Deed of Trust shall have first claim to insurance settlements and condemnation proceeds.

16.2 Termination Upon Foreclosure or Deed in Lieu of Foreclosure. The provisions

10 of this Agreement shall automatically terminate and be of no further force and effect upon a foreclosure or deed in lieu of foreclosure. Any mortgagee who forecloses or accepts a deed in lieu of foreclosure shall take title free and clear of this Agreement and the covenants, conditions and restrictions set forth herein, and the City shall not be entitled to any proceeds from future sales or transfer of the property after foreclosure or acceptance of a deed in lieu of foreclosure.

16.3 Non-Applicability to Private Loans. To the extent Owner obtains a loan from a private individual, the provisions of this Section 16 shall not apply. Notwithstanding the foregoing, the provisions of this Section 16 are intended to fully comply with all requirements of Fannie Mae and nothing contained in this Section 16.3 shall be deemed to supersede any requirements of 16.1 or 16.2 as to any Fannie Mae loan.

17. RESTRICTIONS OF FORECLOSURE PROCEEDS. If a creditor acquires title to the Residence through a deed in lieu of foreclosure, a trustee’s deed upon foreclosure sale, or otherwise, Owner shall not be entitled to the proceeds of sale to the extent that such proceeds otherwise payable to Owner when added to the proceeds paid or credited to the creditor exceed the amount Owner would have received by a sale in accordance with Section 11. Owner hereby irrevocably instructs the holder of such excess proceeds to pay such proceeds to City as consideration for the regulatory requirements of City allowing the Residence to be sold to a household that would not otherwise have been able to afford it.

18. COVENANTS RUN WITH THE LAND. Notwithstanding any other provision of law, this Agreement shall run with the land and shall be enforceable against Owner and successors-in-interest by the City..

19. SUPERIORITY OF RESTRICTIVE COVENANT. Owner covenants that he/she/they have not, and will not, execute any other agreement with provisions contradictory to or in opposition to the provisions hereof, and that, in any event, this Agreement is controlling as to the rights and obligations between Owner (and its successors) and City.

20. RIGHTS OF BENEFICIARIES UNDER FIRST DEED OF TRUST.

20.1 This Agreement shall not diminish or affect the rights of the First Lender under the First Deed of Trust or any subsequent First Deed of Trust recorded against the Residence after the Effective Date in accordance with Section 6. For purposes of this Agreement, “First Lender” shall be the lender of a purchase money loan used for purchase of the Residence which loan is secured by a deed of trust in first position on record title to the Residence as well as a permitted refinancing permitted under Section 6 (“First Deed of Trust”).

20.2 Upon written request from Owner, City shall execute a subordination agreement in a form reasonably required by the First Lender subordinating this Agreement to the lien of a First Deed of Trust provided that the First Lender agrees (i) to provide notice of any default to City concurrently with such notice being provided to Owner, and (ii) to permit the City to cure any default under the First Deed of Trust (“Subordination Agreement”). Any Subordination Agreement shall only run to the benefit of the First Lender and any subsequent holder of the First Deed of Trust but shall not affect the rights and obligations of City and Owner under this Agreement including, but not limited to, Section 15.

11 21. INVALID PROVISIONS. If any one or more of the provisions contained in this Agreement shall be held to be invalid, illegal or unenforceable in any respect, such provision or provisions shall be deemed severable from the remaining provisions contained in this Agreement, and this Agreement shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein.

22. GOVERNING LAW. This Agreement shall be interpreted under the laws of the State of California.

23. NOTICES. All notices required herein shall be sent by certified mail, return receipt requested or express delivery service with a delivery receipt and shall be deemed to be effective as date received or the date delivery was refused as indicated on the return receipt as follows:

To Owner: At the address of the Residence
To City: City of South El Monte
1415 Santa Anita Avenue
South El Monte, CA 91733
Attn: City Manager
With copy to: City of South El Monte
1415 Santa Anita Avenue
South El Monte, CA 91733
Attn: City Attorney
To First Lender: At the address shown on the First Deed of Trust.

A Party may subsequently change addresses by providing written notice of the change in address to the other parties in accordance with this Section 23.

24. ATTORNEY’S FEES. Should either Party incur attorney’s fees in seeking the enforcement of this Agreement, whether or not a final court judgment is entered, the prevailing Party shall be entitled to reimbursement of all reasonable costs and expenses incurred by the prevailing Party in such legal proceeding, including reasonable attorneys’ fees, court costs and expenses and consultant and expert witness fees and expenses.

25. AGREEMENT APPURTENANT TO RESIDENCE. This Agreement is appurtenant to and shall run with the Residence as a covenant and equitable servitude in favor of City and shall be binding on all subsequent owners of the Residence.

26. FURTHER ASSURANCES. The Parties shall execute any further documents in recordable form consistent with the terms of this Agreement as may from time to time be necessary or appropriate to effectuate the purpose of this Agreement. The City Manager is authorized to execute any further documents on behalf of City.

27. AMENDMENT OR MODIFICATION. No modification, rescission, waiver, release or amendment of any provision of this Agreement shall be made except by a written agreement executed by Developer and City.

28. CONSTRUCTION. This Agreement shall be construed according to its fair meaning as if prepared by both Parties to this Agreement. Headings used in this Agreement are provided for convenience only and shall not be used to construe meaning or intent.

12 29. NO WAIVER. The failure of City to enforce any term, covenant, or condition of this Agreement on the date it is to be performed shall not be construed as a waiver of City’s right to enforce this, or any other, term, covenant, or condition of this Agreement at any later date or as a waiver of any term, covenant, or condition of this Agreement.

30. ENTIRE AGREEMENT. This Agreement, together with its specific references, attachments, Exhibits incorporated here and all documents executed pursuant hereto, constitute the entire understanding and agreement of the Parties and supersedes all prior negotiations, discussions and previous agreements between City and Owner concerning all or any part of the subject matter of this Agreement. The Recitals are incorporated herein and made a part of this Agreement.

31. AUTHORITY. All Parties to this Agreement warrant and represent that they have the power and authority to enter into this Agreement and the names, titles, and capacities herein stated on behalf of any entities, persons, states, or firms represented or purported to be represented by such entities, persons, states or firms and that all former requirements necessary or required by state or federal law in order to enter into this Agreement had been fully complied with. Further, by entering into this Agreement no Party hereto shall have breached the terms or conditions of any other contract or agreement to which such Party is obligated, which such break would have a material effect herein.

32. GOOD FAITH COVENANT. The Parties agree to cooperate in good faith to effectuate the intent of this Agreement.

33. NO THIRD PARTY BENEFICIARIES. This Agreement and all provisions hereof are made and entered into for the sole protection and benefit of the City and Owner and their successors and assigns as may be approved in accordance with this Agreement. No other person shall have a right of action based upon any provision of this Agreement.

34. COUNTERPARTS. This Agreement may be signed in counterparts, each of which shall constitute an original.
[SIGNATURES APPEAR ON THE FOLLOWING PAGE]
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the Effective Date. “OWNER” “CITY”

13 Name:

Name:

CITY OF SOUTH EL MONTE,
a municipal corporation
By:

ATTEST:

City Clerk
APPROVED AS TO FORM:

By:

Susie Altamirano, City
Attorney

01257.0013/917740.4 1

EXHIBIT E
Covenant Deed of Trust

1 Exempt from payment of recording fees pursuant to Government Code § 6103.

DEED OF TRUST WITH ASSIGNMENT OF RENTS
(Securing Affordable Housing Covenants)
THIS DEED OF TRUST WITH ASSIGNMENT OF RENTS (“Deed of Trust”) is made as of the _ day of , 202_, by _ _ (as “Trustor”), whose address is
South El Monte, California , to FIDELITY NATIONAL TITLE INSURANCE COMPANY (as “Trustee”), for the benefit of the CITY OF SOUTH EL MONTE, a California municipal corporation (as “Beneficiary”), whose address is 1415 Santa Anita Avenue, South El Monte, CA 91711.

WITNESSETH: That Trustor grants to Trustee in trust, with power of sale, that property in the City of South El Monte, County of Los Angeles, State of California, described as set forth on Exhibit A attached hereto and hereby incorporated herein by reference (“Property”) together with rents, issues and profits thereof, subject, however, to the right, power and authority hereinafter given to and conferred upon Beneficiary to collect and apply such rents, issues and profits for the purpose of securing (1) that certain Affordability Covenants and Restrictions Affecting Real Property and Option to Purchase Property Secured by Deed of Trust of even date herewith between Trustor and Beneficiary, and extensions of modifications thereof which is being recorded concurrently herewith (“Affordable Housing Agreement”); (2) the performance of each agreement of Trustor incorporated by reference or contained herein; and (3) payment of any and all sums and interest thereon which may hereafter be loaned to Trustor, or his or her successors or assigns, when evidenced by a promissory note or notes reciting that they are secured by this Deed of Trust.

THIS DEED OF TRUST IS HEREBY MODIFIED/SUPPLEMENTED BY THE TERMS OF THAT CERTAIN

RIDER TO DEED OF TRUST WHICH IS ATTACHED TO THIS DEED OF TRUST AND HEREBY INCORPORATED BY REFERENCE.

To protect the security of this Deed of Trust, and with respect to the Property, Trustor expressly makes each and all of the agreements, and adopts and agrees to perform and be bound by each and all of the terms and provisions set forth in subdivision A, and it is mutually agreed that each and all of the terms and provisions set forth in subdivision B of the fictitious deed of trust recorded in Orange County August 17, 1964, and in all other counties August 18, 1964, in the book and at the page of Official Records in the office of the county recorder of the county where said property is located, noted below opposite the name of such county, namely:

COUNTY BOOK PAGE COUNTY BOOK PAGE COUNTY BOOK PAGE COUNTY BOOK PAGE Alameda 1288 556 Kings 858 713 Placer 1028 379 Sierra 38 187 Alpine 3 130-31 Lake 437 110 Plumas 166 1307 Siskiyou 506 762 Amador 133 438 Lassen 192 367 Riverside 3778 347 Solano 1287 621 Butte 1330 513 Los Angeles T-3878 874 Sacramento 5039 124 Sonoma 2057 427 Calaveras 185 338 Madera 911 136 San Benito 300 405 Stanislaus 1970 56 Colusa 323 391 Marin 1849 122 San Bernardino 6213 768 Sutter 655 585 Contra Costa 4684 1 Mariposa 90 453 San Francisco A-804 596 Tehama 457 183 Del Norte 101 549 Mendocino 667 99 San Joaquin 2855 283 Trinity 108 595 El Dorado 704 635 Merced 1660 753 San Luis Obispo 1311 137 Tulare 2530 108 Fresno 5052 623 Modoc 191 93 San Mateo 4778 175 Tuolumne 177 160 Glenn 469 76 Mono 69 302 Santa Barbara 2055 881 Ventura 2607 237 Humboldt 801 83 Monterey 357 239 Santa Clara 6626 664 Yolo 769 16 Imperial 1189 701 Napa 704 742 Santa Cruz 1638 607 Yuba 398 693

RECORDING REQUESTED BY AND
WHEN RECORDED MAIL TO:

City of South El Monte
1415 Santa Anita Avenue
South El Monte, CA 91711
Attn: City Clerk

2 Inyo 165 672 Nevada 363 94 Shasta 800 633
Kern 3756 690 Orange 7182 18 San Diego SERIES 5 Book 1964, Page 149774 shall inure to and bind the parties hereto, with respect to the property above described. Said agreements, terms and provisions contained in said subdivision A and B (identical in all counties, and printed on pages 3 and 4 hereof) are by the within reference thereto, incorporated herein and made a part of this Deed of Trust for all purposes as fully as if set forth at length herein, and Beneficiary may charge for a statement regarding the obligation secured hereby, provided the charge therefor does not exceed the maximum allowed by law.

TRUSTOR
_
_ _

3 DO NOT RECORD
The following is a copy of Subdivisions A and B of the fictitious Deed of Trust recorded in each county in California as stated in the foregoing Deed of Trust and incorporated by reference in said Deed of Trust as being a part thereof as if set forth at length therein.

A. To protect the security of this Deed of Trust, Trustor agrees:
1) To keep said property in good condition and repair, not to remove or demolish any building thereon; to complete or restore promptly and in a good and workmanlike manner any building which may be constructed, damaged or destroyed thereon and to pay when due all claims for labor performed and materials furnished therefor, to comply with all laws affecting said property or requiring any alterations or improvements to be made thereon; not to commit or permit waste thereof; not to commit, suffer or permit any act upon said property in violation of law; to cultivate, irrigate, fertilize, fumigate, prune and do all other acts which from the character or use of said property may be reasonably necessary, the specific enumerations herein not excluding the general. 2) To provide, maintain and deliver to Beneficiary fire insurance satisfactory to and with loss payable to Beneficiary. The amount collected under any fire or other insurance policy may be applied by Beneficiary upon any indebtedness secured hereby and in such order as Beneficiary may determine, or at the option of Beneficiary the entire amount so collected or any part thereof may be released to Trustor. Such application or release shall not cure or waive any default or notice of default hereunder or invalidate any act done pursuant to such notice.
3) To appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee; and to pay all costs and expenses, including cost of evidence of title and attorney's fees in a reasonable sum, in any such action or proceeding in which Beneficiary or Trustee may appear, and in any suit brought by Beneficiary to foreclose this Deed.
4) To pay: at least ten days before delinquency all taxes and assessments affecting said property, including assessments on appurtenant water stock; when due, all encumbrances, charges and liens, with interest, on said property or any part thereof, which appear to be prior or superior hereto; all costs, fees and expenses of this Trust.

Should Trustor fail to make any payment or to do any act as herein provided, then Beneficiary of Trustee, but without obligation so to do and without notice to or demand upon Trustor and without releasing Trustor from any obligation hereof, may: make or do the same is such manner and to such extent as either may deem necessary to protect the security hereof, Beneficiary or Trustee being authorized to enter upon said property for such purposes; appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee; pay, purchase, contest or compromise any encumbrance, charge or lien which in the judgment of either appears to be prior or superior hereto; and, in exercising any such powers, pay necessary expenses, employ counsel and pay his reasonable fees. 5) To pay immediately and without demand all sums so expended by Beneficiary or Trustee, with interest from the date of expenditure at the amount allowed by law in effect at the date hereof, and to pay for any statement provided for by law in effect at the date hereof regarding the obligation secured hereby any amount demanded by the Beneficiary not to exceed the maximum allowed by law at the time when said statement is demanded.

B. It is mutually agreed:
1) That any award in connection with any condemnation for public use of or injury to said property or any part thereof is hereby assigned and shall be paid to Beneficiary who may apply or release such moneys received by him in the same manner and with the same effect as above provided for disposition of proceeds of fire or other insurance. 2) That by accepting payment of any sum secured hereby after its due date, Beneficiary does not waive his right either to require prompt payment when due of all other sums so secured or to declare default for failure so to pay. 3) That at any time or from time to time, without liability therefor and without notice, upon written request of Beneficiary and presentation of this Deed and said note for endorsement, and without affecting the personal liability of any person for payment of the indebtedness secured hereby, Trustee may: reconvey any part of said property; consent to the making of any map or plat thereof; join in granting any easement thereon, or join in any extension agreement or any agreement subordinating the lien or charge hereof.
4) That upon written request of Beneficiary stating that all sums secured hereby have been paid, and upon surrender of this Deed and said note 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 in 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.”
5) That as additional security, Trustor hereby gives to and confers upon Beneficiary the right, power and authority, during the continuance of these Trusts, to collect the rents, issues and profits of said property, reserving unto Trustor the right, prior to any default by Trustor in payment of any indebtedness secured hereby or in the performance of any agreement hereunder, to collect and retain such rents, issues and profits as they become due and payable. Upon any such default, Beneficiary may at any time without notice, either in person, by agent, or be a receiver to be appointed by a court, and without regard to the adequacy of any security for the indebtedness hereby secured, enter upon and take possession of said property or any part thereof, in his own name sue for or otherwise collect such rents, issues, and profits, including those past due and unpaid, and apply the same, less costs and expenses of operation and collection, including reasonable attorney's fees, upon any indebtedness secured hereby, and in such order as Beneficiary may determine. The entering upon and taking possession of said property, the collecting of such rents, issues and profits and the application thereof as aforesaid, shall not cure or waive any default or notice of default hereunder or invalidate any act done pursuant to such notice.
6) That upon default by Trustor in payment of any indebtedness secured hereby or in the performance of any agreement hereunder, Beneficiary may declare all sums secured hereby immediately due and payable by delivery to Trustee of written declaration of default and demand for sale and of written notice of default and of election to cause to be sold said property, which

4 notice Trustee shall cause to be filed for record. Beneficiary also shall deposit with Trustee this Deed, said note and all documents evidencing expenditures secured hereby.

After the lapse of such time as may then be required by law following the recordation of said notice of default, and notice of sale having been given as then required by law, Trustee, without demand on Trustor, shall sell said property at the time and place fixed by it in said notice of sale, either as a whole or in separate parcels, and in such order as it may determine, at public auction to the highest bidder for cash in lawful money of the United States, payable at time of sale. Trustee may postpone sale of all or any portion of said property by public announcement at such time and place of sale, and from time to time thereafter may postpone such sale by public announcement at the time fixed by the preceding postponement. Trustee shall deliver to such purchaser its deed conveying the property so sold, but without any covenant or warranty, express or implied. The recitals in such deed of any matters or facts shall be conclusive proof of the truthfulness thereof. Any person, including Trustor, Trustee, or Beneficiary as hereinafter defined, may purchase at such sale.

After deducting all costs, fees and expenses of Trustee and of this Trust, including cost of evidence of title in connection with sale, Trustee shall apply the proceeds of sale to payment of: all sums expended under the terms hereof, not then repaid, with accrued interest at the amount allowed by law in effect at the date hereof; all other sums then secured hereby; and the remainder, if any, to the person or persons legally entitled thereto.
7) 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 said 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 is recorded and the name and address of the new Trustee.
8) That this Deed 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 note secured hereby, whether or not named as Beneficiary herein. In this Deed, whenever the context so requires, the masculine gender includes the feminine and/or neuter, and the singular number includes the plural. 9) That Trustee accepts this Trust when this Deed, 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.

DO NOT RECORD

REQUEST FOR FULL RECONVEYANCE
TO _ , TRUSTEE:

The undersigned is the legal owner and holder of the note or notes and of all indebtedness secured by the foregoing Deed of Trust. Said note or notes, together with all other indebtedness secured by said Deed of Trust, have been fully paid and satisfied; and you are hereby requested and directed, on payment to you of any sums owing to you under the terms of said Deed of Trust, to cancel said note or notes above mentioned, an all other evidences of indebtedness secured by said Deed of Trust delivered to you herewith, together with the said Deed of Trust, and to reconvey, without warranty, to the parties designated by the terms of said Deed of Trust, all the estate now held by you under the same.

Dated _
Please mail Deed of Trust,
Note and Reconveyance to _ _
Do Not lose or destroy this Deed of Trust OR THE NOTE which it secures. Both must be delivered to the Trustee for cancellation before reconveyance will be made.

RIDER TO DEED OF TRUST WITH ASSIGNMENT OF RENTS
THIS RIDER TO DEED OF TRUST WITH ASSIGNMENT OF RENTS (“Rider”) is attached to and incorporated by reference to that certain Deed of Trust With Assignment of Rents, executed by _ as “Trustor,” in which FIDELITY NATIONAL TITLE INSURANCE COMPANY is “Trustee,” in favor of the CITY OF SOUTH EL MONTE, a California municipal corporation, as “Beneficiary.” The Deed of Trust, as hereby modified/supplemented by this Rider, is hereinafter referred to as the “Deed of Trust.”
All terms which are not defined in this Deed of Trust shall have the meaning given in the Affordable Housing Agreement.

The parties hereto agree:

1. Obligations Secured. Trustor makes this grant and assignment for the purpose of securing the following obligations:
a. Payment and performance of all obligations of Trustor under this Deed of Trust recorded as Instrument No. __________________;
b. Payment of all obligations of Trustor under the Master Affordable Housing Agreement; c. Payment of all future advances and other obligations of Trustor or any other person, firm, or entity with the approval of Trustor, may agree to pay and/or perform (whether as principal, surety or guarantor) for the benefit of Beneficiary, when the obligation is evidenced by a writing which recites that it is secured by this Deed of Trust; and d. All modifications, extensions and renewals of any of the obligations secured hereby, however evidenced.

2. No Renting or Leasing. Trustor acknowledges and agrees that Trustor shall occupy the Property as Trustor's principal residence in accordance with the Affordable Housing Agreement and shall not rent or lease any portion of the Property. Nothing in the Deed of Trust including the assignment of rents shall be interpreted or construed to permit the Trustor to rent or lease any portion of the Property.

3. Mortgagee-in-Possession. Neither the assignment of rents set forth in the Deed of Trust nor the exercise by Beneficiary of any of its rights or remedies hereunder shall be deemed to make Beneficiary a “mortgagee-in-possession” or otherwise liable in any manner with respect to the Property, unless Beneficiary, in person or by agent, assumes actual possession thereof. Nor shall appointment of a receiver for the Property by any court at the request of Beneficiary or by agreement with Trustor, or the entering into possession of the Property by such receiver, be deemed to make Beneficiary a “mortgageein-possession” or otherwise liable in any manner with respect to the Property.

4. Restriction on Transfer of Property; Beneficiary’s Right to Accelerate. In no event shall Borrower transfer any portion of the Property in violation of the Affordable Housing Agreement without the prior express written consent of Beneficiary which consent shall be given by Beneficiary only in the event that Beneficiary determines that the assignee or transferee is an Eligible Purchaser, that the assignee's or transferee's monthly housing payments are at, or less than, an Affordable Housing Cost, and that the assignee or transferee has expressly assumed the Note and the Affordable Housing Agreement by execution of a written assignment document to be provided by the Beneficiary. Violation of the transfer restrictions can result in the acceleration of Note as provided in the Affordable Housing Agreement.

5. No Cure. In the event Beneficiary collects and receives any rents under the Deed of Trust upon any default hereof, such collection or receipt shall in no way constitute a curing of the default.

6. Waiver. No delay or omission by Beneficiary in exercising any right or power accruing upon the compliance or failure of performance by Trustor hereto under the provisions of this Deed of Trust

shall impair any such right or power or be construed to be a waiver thereof. A waiver by Beneficiary of a breach, default or any other failure of performance by Trustor of any of the covenants, conditions or agreements hereof to be performed by Trustor shall not be construed as a waiver of any succeeding breach of the same or other covenants, agreements, restrictions or conditions hereof.

7. Default. Any default under the Affordable Housing Agreement shall be deemed a default under this Deed of Trust.

IN WITNESS WHEREOF, Trustor has executed this Rider to be effective for all purposes as of the day and year first set forth above.

TRUSTOR:
_ _
_ _

City Council Agenda Report
Agenda Item No. 10.e.

DATE: July 15, 2025
TO: Honorable Mayor and Members of the City Council
APPROVED BY: Rene Salas, City Manager
SUBMITTED BY: Susie Altamirano, City Attorney
SUBJECT: DISCUSSION AND CONSIDERATION OF RESOLUTION NO. 25-071, APPROVING THE FORMATION OF THE SOUTH EL

MONTE COMMUNITY BENEFIT FOUNDATION
SUMMARY: Discussion and consideration of a Resolution approving the formation of the South El Monte Community Benefit Foundation by the South El Monte City Council.

RECOMMENDED ACTION: Staff recommends City Council:

1. Discuss and consider the formation of the City of South El Monte Community Benefit Foundation (Foundation);

2. Adopt Resolution No. 25-071;

3. Authorize the City Clerk or designee to draft any and all documents necessary to form the Foundation;

4. Direct Staff to develop a process for selecting the first Board of Directors of the Foundation for review and approval;

5. Work with the City Attorney to draft the Foundation’s Bylaws and Articles of Incorporation to reflect a community-led governance structure; and

6. Provide additional direction to Staff.

FISCAL/FINANCIAL IMPACT: The fiscal impact anticipated from the formation of the Foundation would be the additional cost of staff time, legal and accounting costs, and other administrative overhead costs.

An advance of not less than $2,000 is requested from the General Fund to cover the following expenses:

1. The Foundation must file its Articles of Incorporation with the California Secretary of State, with a $30 filing fee.

2. The Foundation must file IRS Form 1023, Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code, with a $600 filing fee.

3. The Foundation must file FTB 3500A, Submission of Exemption Request, with the State of California Franchise Tax Board, with $25 filing fee.

The filing fees will be reimbursed by the Foundation upon receiving grants and donations.

DISCUSSION: The attached Resolution approves the formation of a public benefit corporation called the South El Monte Community Foundation. The Foundation will be established for the purpose of managing funds received by the Foundation through grants, donations, and corporate support, and for directing such funds towards the benefit of the South El Monte community. The Resolution authorizes and directs the City Manager and other City staff to take actions necessary to form the Foundation and to obtain tax-exempt status for the Foundation.

The Resolution specifies the composition of the Foundation’s Board of Directors, proposing a Board to be composed of five (5) members, who shall be appointed by the City Council. The individuals under consideration must demonstrate an ability and/or expertise to effectively direct resources to areas of need in the South El Monte community, including the ability to select appropriate projects and coordinate with participating organizations and the ability to garner further financial support for the Foundation’s projects. The Resolution authorizes the City Manager to develop Board member descriptions and work with staff to conduct outreach to attract a qualified and diverse applicant pool. The City Council would retain full discretion to review all applications and determine which applicants to invite for an interview with the City Council.

All meetings of the Board of Directors, or any committee thereof, shall be called, noticed, held and conducted in accordance with the applicable provisions of the Ralph M. Brown Act. (California Government Code section 54950, et seq.) ENVIRONMENTAL ANALYSIS: The action proposed herein is not a project subject to the California Environmental Quality Act (CEQA) in accordance with Section 21065 of CEQA and State CEQA Guidelines Sections 15060(c)(2), 15060(c)(3), and 15378.

Approving and allocating funds for eligible housing projects is an administrative action that would not cause either a direct physical change in the environment or a reasonably foreseeable indirect physical change in the environment. Therefore, the proposed action is not a “project” subject to CEQA, as defined in Section 21065 of CEQA and Section 15378 of the State CEQA Guidelines. Since the action is not a project subject to CEQA, no environmental document is required.

ATTACHMENT(S):

A. Resolution No. 25-071

RESOLUTION NO. 25-071

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF

SOUTH EL MONTE, CALIFORNIA, APPROVING AND

ESTABLISHING THE FORMATION OF THE SOUTH EL

MONTE COMMUNITY FOUNDATION
WHEREAS, the City of South El Monte (“City”) has on occasion in the past received financial support for charitable, cultural, recreational, educational purposes or community activities to benefit the South El Monte community; and
WHEREAS, the solicitation and management of these contributions can be complicated and time-consuming, and therefore the City desires to streamline the solicitation and management of these funds and to have the ability to direct them toward projects that will best serve the South El Monte community through a tax-exempt public benefit corporation with a board composed of community members who have demonstrated an ability and willingness to support the interests of the City of South El Monte and its residents; and
WHEREAS, such purpose is an exempt purpose under Section 501(c)(3) of the Internal Revenue Code; and
WHEREAS, the City desires that such public benefit corporation shall be called the “South El Monte Community Foundation” (“Foundation”); and
WHEREAS, the City Council desires to approve the Articles of Incorporation of the Foundation in order to form the Foundation; and
WHEREAS, the City Council further desires to direct and authorize City staff to take all actions necessary to form the Foundation and obtain tax-exempt status on its behalf; and WHEREAS, the City Council desires to specify the initial members of the Foundation’s Board of Directors, as well as define the overall structure and composition of the Board; and WHEREAS, the City Council desires to appropriate sufficient funds to cover required state and federal filings necessary to obtain nonprofit status for the Foundation, with the expectation that such costs will be reimbursed by the Foundation.

NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SOUTH EL MONTE HEREBY FINDS, DETERMINES AND RESOLVES AS FOLLOWS:

SECTION 1. The above recitals are true and correct and are incorporated herein by reference.

SECTION 2. The City Council hereby approves the formation of a public benefit corporation to be known as the “South El Monte Community Foundation.” SECTION 3.. The City Manager, or his or her designee, is hereby authorized and directed to do any and all tasks necessary to carry out, perform, implement, and consummate the tax-exempt application process of the Foundation, including but not limited to filing all state and federal taxexempt applications.

2 of 3
SECTION 4. The City Manager and all appropriate City staff are hereby authorized to develop Board member and officer job descriptions, conduct outreach to attract a qualified and diverse application pool, and develop an application process to review and enable City Council to select five (5) Board members, based on a consideration of the following criteria:
a) The individual’s contributions to the City of any kind; b) The individual’s demonstrated ability and/or expertise to effectively direct resources to areas of need in the South El Monte community, including ability to select appropriate projects and coordinate with participating organizations; ability to garner further financial support for the Foundation’s projects.

The City Manager and/or designee(s) shall retain review all applications and determine which applicants are eligible to invite for an interview with City Council.

SECTION 5. The City Manager and all appropriate City staff are hereby authorized and directed to work with the City Attorney’s Office to draft the bylaws and Articles of Incorporation for the formation of the Foundation, to be approved by the Foundation at a later date.

SECTION 6. The City Council hereby appropriates Two Thousand Dollars ($2,000.00) for payment of fees for obtaining non-profit status for the Foundation and any other incidental expenses, which shall be reimbursed by the Foundation upon receiving grants and donations.

PASSED, APPROVED, and ADOPTED this 15th day of July 2025.

Gloria Olmos, Mayor
ATTEST:
___________________________
Adrian Garcia, MMC, City Clerk

STATE OF CALIFORNIA )
COUNTY OF LOS ANGELES ) SS:

CITY OF SOUTH EL MONTE )
I, Adrian Garcia, City Clerk of the City of South El Monte, hereby certify that the foregoing Resolution, being Resolution No. 25-071, was duly passed and approved by the City Council of the City of South El Monte at a regular meeting of said Council held on the 15th day of July 2025, and that said Resolution was adopted by the following vote:

AYES:

NOES:

ABSTAIN:

ABSENT:
________________________________
Adrian Garcia, MMC, City Clerk

City Council Agenda Report
Agenda Item No. 13.a.

DATE: July 15, 2025
TO: Honorable Mayor and Members of the City Council
APPROVED BY: Rene Salas, City Manager
SUBMITTED BY:

SUBJECT: COUNCILMEMBER MANUEL ACOSTA

1. Update on Commercial and Home Developments in
South El Monte

2. Discussion/Action: South El Monte Emergency
Preparedness – Flood Preparedness!
SUMMARY:

1. Update on Commercial and Home Developments in South El Monte A report on the city’s empty properties and the point of progress on their development.

2. Discussion/Action: South El Monte Emergency Preparedness – Flood Preparedness!
Floods are becoming more intense due to heavier rainfall driven by a changing climate. As the atmosphere becomes warmer, the ocean becomes warmer releasing more moisture in the air. The warming atmosphere now holds more water creating larger and denser clouds. Consequently, storms are having greater rainfall, challenging the natural channels which direct the water to the ocean.

South El Monte is located in one of the lowest points in the San Gabriel Valley, as evident by the two rivers that flow into it, the Rio Hondo River on the west, and the San Gabriel River on the east, and the Whittier Narrows Dam to the south. The historical 100-year storm can have a rainfall of 2 - 4 inches per hour or 10 inches over a 24-hour period. The possibility of a torrential flood should be included in South El Monte’s Emergency Plan and include the contact points during on and off-hours, how will the community be notified, and where is higher ground?

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