South Lake Tahoe City Council
June 7, 2022

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City of South Lake Tahoe
Agenda Item Executive Summary
Joe Irvin, City Manager
Meeting Date: June 7, 2022
Agenda Item #: 13
Agenda Item: Final Subdivision Map Approval for 906 Emerald Bay Road Residential Project Executive Summary: On April 20, 2021, City Council approved the Tentative Map for 906 Emerald Bay Residential Project. The City adheres to the California Subdivision Map Act. as provided in Government Code Sections 66410-66499.58. Under the Subdivision Map Act, a property owner is required to submit a final map application whenever a subdivision of 5 or more parcels are proposed.

Requested Action / Suggested Motions: Pass a Resolution approving Final Subdivision Map for the 906 Emerald Bay Road Residential Project.

Responsible Staff Member: Faye-Marie Pekar, Engineering Technician Responsible Staff Member: Faye-Marie Pekar, Engineering Technician-(530) 542-6070 Reviewed and Approved By:

Aunsh Nejad, Public Works Director
Susan Blankenship, City Clerk
Olga Tikhomirova, Director of Finance
Heather Stroud, City Attorney
Attachments:
01-Staff Report - Final Subdivision Map 906 Emerald Bay Rd.docx 02-Location Map.pdf
03-Resolution-Approving Final Subdivision Map 906 Emerald Bay Rd.docx 04 -Resolution 2021-024 - 906 Emerald Bay Rd Tentative Map Approval 174
Council Agenda Report- June 7, 2022 Page 1 of 2
City of South Lake Tahoe
Report to City Council
Meeting Date: June 7, 2022
Title: Final Subdivision Map for 906 Emerald Bay Road Residential Project Location: 906 Emerald Bay Road (APN 023-182-028)
Responsible Staff Member: Faye-Marie Pekar, Engineering Technician - (530) 542-6070 Background: On March 18, 2021, the Planning Commission approved Major Design Review and Special Use Permit # 20-202 for the Emerald Bay Multi-Family Residential Project and recommended City Council approval of the tentative subdivision map.

On April 20, 2021, City Council held a public hearing and approved the Tentative Subdivision Map for Emerald Bay Road Residential Project for 906 Emerald Bay Road in Resolution 2021-024 (see Attachment 4). On April 5, 2022, Feldman Thiel LLP (representative of Eric Barstad) submitted a Final Map application to Public Works Department to create six detached individual condominiums on a common lot (air space condominiums).

Issue and Discussion: The Subdivision Map Act (SMA) Section §66456 states that after approval or conditional approval of a Tentative Map, the sub-divider may prepare a Final Map in accordance with the approved Tentative Map. The SMA Section §66458 states the legislative body shall approve the Final Map if it conforms to all the requirements of the Subdivision Map Act and Conditions of Approval. The resolution to formally approve 906 Emerald Bay Road Residential Project Final Subdivision Map is included with this staff report (Attachment 3).

Concurrences:

City Planning and Engineering staff concur that the Final Subdivision Map is consistent with the Tentative Map and all conditions of approval on the Tentative Map have been met.

Public Notice:

The Planning Commission conducted a public hearing on March 18, 2021, for the purpose of considering the Tentative Subdivision Map; City Council adopted resolution 2021-024 approving the Tentative Map with conditions on April 20, 2021. The applicant submitted a Final Parcel Map and all information required by the conditions of approval in the Tentative Map.

Financial Implications: Development of the parcel is expected to result in beneficial financial impacts to the City through an increase in property taxes and sales tax revenue.

Environmental Considerations: The approved project that is the subject of this final subdivision map is categorically exempt from CEQA pursuant to Section 15332 for infill development projects. 175
Council Agenda Report- June 7, 2022 Page 2 of 2
The final subdivision map is further exempt from CEQA pursuant to Section 15301 for the division of multi-family dwelling into common-interest ownership where no physical changes occur which are not otherwise exempt.

Policy Implications: The Project support the City Strategic Priority 1.3-Housing. The project facilitates development of housing within the City for a broad-spectrum of housing needs, through the construction of six new market rate housing units.

The property is within the Tahoe Valley Plan Area, Town Center Gateway District. 176
Location Map
906 Emerald Bay Road
(APN 023-182-028)
906 Emerald
Bay Rd.
177
Resolution 2022-XXX June 7, 2022 Page 1 of 2
Resolution 2022-XXX
Adopted by the City of South Lake Tahoe
City Council
June 7, 2022
Approving the Final Subdivision Map for 906 Emerald Bay Road

BACKGROUND
A. The Planning Commission of the City of South Lake Tahoe conducted a public hearing and approved a Major Design Review and Special Use Permit on March 18, 2021 for the Emerald Bay Road Residential project located at 906 Emerald Bay Road.

B. The Planning Commission reviewed the Tentative Subdivision Map for the Emerald Bay Road Residential Project and adopted Planning Commission Resolution 2021-07 recommending approval of the tentative subdivision map.

C. The City Council of the City of South Lake Tahoe Conducted a public hearing on April 20, 2021 and approved the Tentative Subdivision Map under Resolution 2021-024.

D. The City Council made the findings of Government Code Section 66474.02 as grounds to approve a Tentative Subdivision Map in a High Fire Severity Zone.

E. The City Council of the City of South Lake Tahoe conducted a public hearing on June 7, 2021 to consider the approval of the Final Subdivision Map.

F. The City’s contract surveyor found the Final Subdivision Map technically correct and ready for recording.

BASED ON THE FACTS SET FORTH IN THE BACKGROUND, BE IT RESOLVED, that the City Council of the City of South Lake Tahoe:

1. Does hereby approve the Final Subdivision Map for 906 Emerald Bay Road, APN 023- 182-028, dated May 2022 contingent on the approval of the technical survey documents by the City surveyor.

Adopted by the City of South Lake Tahoe City Council on June 7, 2022 by the following vote:

Yes:

No:

Absent:

Abstain:
________________________ Date:_________
Devin Middlebrook, Mayor
Attest:
178
Resolution 2022-XXX June 7, 2022 Page 2 of 2
________________________
Susan Blankenship, City Clerk
The presence of electronic signature certifies that the foregoing is a true and correct copy as approved by the South Lake Tahoe City Council.
179
Resolution 2021-024
Adopted bytheCityofSouthLakeTahoe
CityCouncil
April20, 2021
Approving theTentative Subdivision MapfortheEmeraldBayRoadResidential Project, 906EmeraldBayRoad, APN023-182-028

BACKGROUND
A.ThePlanning Commission oftheCityofSouthLakeTahoeconducted apublichearingandapproved a MajorDesignReviewandSpecialUsePermitonMarch18, 2021fortheEmeraldBayRoadResidential projectlocatedat906EmeraldBayRoad.

B. ThePlanningCommission reviewed theTentativeSubdivision MapfortheEmeraldBayRoad Residential ProjectandadoptedPlanning Commission Resolution 2021-07recommending approvalof thetentative subdivision map.

C. TheCityCounciloftheCityofSouthLakeTahoeConducted apublichearingonApril20, 2021to considertheTentativeSubdivision Map.

D. TheCityCouncildidnotmakeanyofthefindings inGovernment CodeSection66474asgrounds for denialofaTentativeSubdivision Map.

E. TheCityCouncilmadethefindingsofGovernment CodeSection66474.02asgrounds toapprovea TentativeSubdivision MapinaHighFireSeverityZone.

BASEDONTHEFACTSSETFORTHINTHEBACKGROUND, BEITRESOLVED, thattheCityCouncilof theCityofSouthLakeTahoe:

1. Doesherebyapprove theTentativeSubdivision Mapfor906EmeraldBayRoad, APN023-182-028, datedFebruary 2021.

Adopted bytheCityofSouthLakeTahoeCityCouncilonApril20, 2021bythefollowing vote:

Yes: Bass, Creegan, Friedrich, Middlebrook andWallace
Date:_________
Tamara Wallace, Mayor
Attest:

SusanBlankenship, CityClerk
Thepresence ofelectronic signature certifies thattheforegoing isatrueandcorrectcopyasapproved bythe SouthLakeTahoeCityCouncil.

Resolution 2021-024 April20, 2021 Page1of1
Res2021-024 180

TENTATIVEMAP
LOT 1

SUBJECT PROPERTY

OWNER & APPLICANTMAILINGADDRESSPROJECTAREA LANDSURVEYING TURNER & ASSOCIATES, INC.
2021-024
Res181
City of South Lake Tahoe
Agenda Item Executive Summary
Joe Irvin, City Manager
Meeting Date: June 7, 2022
Agenda Item #: 14
Agenda Item: American Rescue Plan Act Appropriation for Ski Run Park ADA Parking and Access Upgrades
Executive Summary: On March 11, 2021 the American Rescue Plan Act (ARPA) was signed into law and established the Coronavirus State and Local Fiscal Recovery Funds (SLFRF). On August 17, 2021 City Council discussed the results of a community survey representing a variety of projects and programs to assist the City in providing economic assistance from the negative impacts of the Covid-19 pandemic. Ski Run Park infrastructure improvements at 1195 Ski Run Blvd was chosen by City Council as a viable use of ARPA funding.

Requested Action / Suggested Motions: Pass a Resolution appropriating ARPA funds in the amount of $150,000 for civil design and construction of ADA parking and access upgrades along frontage of future Ski Run Park.

Responsible Staff Member: Faye-Marie Pekar, Engineering Technician Responsible Staff Member: Faye-Marie Pekar, Engineering Technician (530) 542-6070 Reviewed and Approved By:

Anush Nejad, Public Works Director
Susan Blankenship, City Clerk
Olga Tikhomirova, Director of Finance
Heather Stroud, City Attorney
Attachments:
01-Staff_Report_-_Ski_Run_Park_ADA_Compliance.docx
02-Resolution - Ski Run Park ADA Appropriation.docx
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Council Agenda Report- June 7, 2022 Page 1 of 2
City of South Lake Tahoe
Report to City Council
Meeting Date: June 7, 2022
Title: American Rescue Plan Act Appropriation for Ski Run Park ADA Parking and Access Upgrades
Location: 1195 Ski Run Blvd
Responsible Staff Member: Faye-Marie Pekar, Engineering Technician, (530) 542-6070 Background: On March 11, 2021 the American Rescue Plan Act (ARPA) was signed into law and established the Coronavirus State and Local Fiscal Recovery Funds (SLFRF). This program is intended to provide support to State, territorial, local, and Tribal governments in responding to the economic and public health impacts of COVID-19 in the efforts to contain impacts on communities, residents, and businesses.

On August 17,2021 City Council discussed the results of a community survey representing a variety of projects and programs to assist the city in providing economic assistance from the negative impacts of the Covid-19 pandemic. The list of projects included among others; the development of the Ski Run Park Infrastructure in the amount of $150,000.

On January 6th, 2022, the U.S. Department of the Treasury issued the Final Rule for the SLFRF program. The final rule provides state and local governments with increased flexibility to pursue a wider range of uses, as well as greater simplicity so the government can focus on responding to the crisis in the communities and maximizing the impact of their funds. On February 1, 2022, the City Council through Resolution 2022-019, elected the provision of a "standard allowance" for the allocated amount to the City of $5,309,994 to spend on government services through the period of performance.

Issue and Discussion: City staff has partnered with the Friends of Ski Run and local community members to assist with the creation of Ski Run Park. The action contemplated herein is a formal budget appropriation of SLFRF funds for the civil design and construction of an ADA parking stall and access upgrades on Ski Run Blvd within the City right-of-way and additional access infrastructure improvements for Ski Run Park (1195 Ski Run Blvd.).

Financial Implications: On May 17, 2022 the City Council approved a resolution appropriating and transferring the remainder of the ARPA funding first tranche, $662,497, from the City’s Local Fiscal Recovery fund to the General Fund under the provision of revenue loss consistent with the election of “standard allowance” to replace lost public sector revenue to pay for “Government services”.
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Council Agenda Report- June 7, 2022 Page 2 of 2
The attached Resolution (Attachment 02) details the budget appropriation as outlined below:
 $150,000 SLFRF funds to support the civil design and construction of one ADA Parking stall and additional required ADA access improvements along Ski Run Blvd fronting the future Ski Run Park.

Capital Improvement account (301 funds) will need to be developed for the budget appropriations and project development.

Given inflationary trends in Public Works construction costs, the proposed project work of civil design and construction for an ADA parking stall and additional access improvements for Ski Run Park has the potential to exceed the proposed appropriation of $150,000. Additional funds may be requested from undesignated General Funds for the project once the city receives the construction bids to ensure compliance with ADA requirements.

Environmental Considerations: The appropriation of funds to Ski Run Park Infrastructure is Categorically Excluded from the California Environmental Quality Act (CEQA) under Section 15301 of the CEQA Guidelines. Section 15301 exempts the operation, maintenance, repair or minor alteration of existing public facilities.

Policy Implications: The proposed project supports Strategic Plan 2 -Recreation and Equitable Access that strives to promote equitable access to recreation for underserved and under resourced populations by implementing recreation programs for inclusion. Support active and health lifestyles and strive to develop parks in every neighborhood. 184
Resolution 2022-XXX June 7, 2022 Page 1 of 2
Resolution 2022-XXX
Adopted by the City of South Lake Tahoe
City Council
June 7, 2022
Appropriating $150,000 of American Rescue Plan Act (ARPA) funds for Required ADA Access Improvements for the Future Ski Run Park

BACKGROUND
A. The American Rescue Plan Act (ARPA) (Public Law No. 117-2) was signed into law by the President of the United States on March 11, 2021.

B. The Act appropriated Coronavirus State and Local Fiscal Recovery Funds for allocation by the U.S. Department of the Treasury to states, counties, metropolitan cities, and small cities with a population under 50,000 (referred to as non-entitlement units of local government) C. On June 15, 2021, the City Council adopted Resolution 2021-052 establishing the special fund “Local Fiscal Recovery Fund” and authorizing the Director of Finance to accept all funds received under the American Rescue Plan Act and deposit them in the Local Fiscal Recovery Fund.

D. On August 17, 2021, the City Council considered a list of potential projects for ARPA funding, Ski Run Park Infrastructure was chosen by City Council as a viable use of ARPA funding and directed staff to move forward in developing and implementing the projects.

E. On January 6th, 2022, the U.S. Department of the Treasury issued the Final Rule for the SLFRF program. The final rule provides state and local governments with increased flexibility to pursue a wider range of uses, as well as greater simplicity so the government can focus on responding to the crisis in the communities and maximizing the impact of their funds.

F. On February 1, 2022, the City Council through Resolution 2022-019, elected the provision of a "standard allowance" for the allocated amount to the City of $5,309,994 to spend on government services through the period of performance and on May 17, 2022 appropriated and transferred the remainder of ARPA funding from the first tranche into the General Fund.

BASED ON THE FACTS SET FORTH IN THE BACKGROUND, BE IT RESOLVED, that the City Council of the City of South Lake Tahoe:

1. Finds that the civil design and construction of an ADA parking stall and access improvements to Ski Run Park Infrastructure is a suitable use of ARPA funds under category A, to respond to the public health emergency or its negative economic impacts, 185
Resolution 2022-XXX June 7, 2022 Page 2 of 2
including assistance to households, small businesses, and nonprofits, or aid to impacted industries such as tourism, travel, and hospitality;

2. Authorizes the establishment of capital improvement project account (301) and appropriates $150,000 from the General Fund into the Capital Improvement Ski Run Infrastructure project account 301-60078-48030, Construction, for implementation of the project.

Adopted by the City of South Lake Tahoe City Council on June 7, 2022 by the following vote:

Yes:

No:

Absent:

Abstain:
________________________ Date:_________
Devin Middlebrook, Mayor
Attest:
________________________
Susan Blankenship, City Clerk
The presence of electronic signature certifies that the foregoing is a true and correct copy as approved by the South Lake Tahoe City Council.
186
City of South Lake Tahoe
Agenda Item Executive Summary
Joe Irvin, City Manager
Meeting Date: June 7, 2022
Agenda Item #: 15
Agenda Item: Permanent Local Housing Allocation (PLHA) Grant Loan Agreement and Budget Appropriation for the Sugar Pine Village Affordable Housing Project Executive Summary: The City was awarded $5,000,000 in PLHA funds for the Sugar Pine Village project on February 2, 2022. The City Council is requested to appropriate the funds in the City budget and authorize the City Manager to execute a loan agreement and related documents with Sugar Pine Housing Partners, L.P. to loan $4,750,000 in PLHA funds for use in the construction of Phase 1A of the Sugar Pine Affordable Housing Project.

Requested Action / Suggested Motions: 1) Pass a Resolution appropriating $5,000,000 of PLHA funds into the City budget for use in developing the Sugar Pine Village Affordable Housing Project; and 2) Pass a Motion authorizing and directing the City Manager to execute a loan agreement, promissory note, deed of trust and regulatory agreement with Sugar Pine Housing Partners, L.P. to loan $4,750,000 of PLHA funds for use in the construction of Phase 1A of the Sugar Pine Village Affordable Housing Project, all in substantially the form attached hereto including any changes required to comply with the PLHA grant agreement, and to be approved as to form by the City Attorney.

Responsible Staff Member: Zach Thomas, Housing Manager, Housing Manager Responsible Staff Member: Zach Thomas, Housing Manager (530) 542-7400 Reviewed and Approved By:

Hilary Roverud, Director of Development Service
Susan Blankenship, City Clerk
Olga Tikhomirova, Director of Finance
Heather Stroud, City Attorney
Attachments:
01-Staff Report - Sugar Pine Village Loan Agreement.docx 02-Resolution-Budget Appropriation Sugar Pine Village Loan Agreement.docx 03_Sugar Pine PLHA Loan Agreement.docx
04-Sugar Pine Village Promissory Note Agreement.docx
05-Sugar Pine Village Deed of Trust.docx
06_City Regulatory Agreement_Sugar Pine Village PLHA Loan.docx 07 - Reso. No. 2021-071 PHLA Grant Application.pdf
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Council Agenda Report June 7, 2022 Page 1 of 4
City of South Lake Tahoe
Report to City Council
Meeting Date: June 7, 2022
Title: Permanent Local Housing Allocation (PLHA) Grant Loan Agreement and Budget Appropriation for the Sugar Pine Village Affordable Housing Project Location: 1888 Lake Tahoe Boulevard and 1029 Tata Lane
Responsible Staff Member: Zach Thomas, Housing Manager
(530) 542-7400
Background: The Sugar Pine Village project is a proposed 248-unit affordable housing project, with onsite community service facilities on 11.6 acres of land owned by the State of California and managed by the California Tahoe Conservancy (Conservancy). This project is a result of the Governor’s Executive Order N-06-19, which directed the California Department of General Services (DGS) to identify excess state properties as potential affordable housing development sites. In July 2020, the Conservancy announced the State had selected Related Companies of California LLC in partnership with the St. Joseph Community Land Trust to construct and manage the Sugar Pine Village project.

Since June 2020, the City of South Lake Tahoe has been an active partner in the development of the project. As a first step of financial commitment, the City Council at its November 17th, 2020 meeting authorized a $566,629 loan for predevelopment costs (Resolution 2020-109) and a $1,250,000 loan to purchase banked land coverage at the airport (Resolution 2020-110). The loans were funded by Program Income from repayments of loans from the Redevelopment Agency (RDA) Low- and Moderate-Income Housing Fund and the City’s undesignated reserve fund, respectively. At its October 19, 2021 meeting the City Council also approved a $627,626 loan of HOME Program Income. This brings the City’s total commitment toward the project to $2,444,255.

In addition to direct City commitments, the City has partnered with Related Development to secure $17,359,470 in Affordable Housing and Sustainable Communities (AHSC) grant funds, $5,000,000 in Permanent Local Housing Allocation (PLHA) grant funding.

Related California has also secured $20,000,000 in Multifamily Housing Program (MHP) funding and $3,195,900 in Infill Infrastructure Grant (IIG) funding so far in the financing phase of the project.

To date, approximately $40,000,000 in tax credits and grant applications have been applied for and secured using the City’s initial approximate $1.8 million commitment as a local match.

Related California is phasing the financing and construction of the project into four phases. Phase 1A includes 68 residential units and a community building, Phase 1B 60 units, Phase 2A 60 units 188
Council Agenda Report June 7, 2022 Page 2 of 4
and Phase 2B 60 units. The table below summarizes the financing strategy for the first three phases and shows how the City contributions pair with other funding sources.

Issue and Discussion: On September 7, 2021 the City Council adopted a resolution authorizing the City Manager to submit a joint application with Related Companies of California, LLC under the PLHA non-entitlement competitive Program for an amount not to exceed $5,000,000. The $5,000,000 grant was awarded to the City on February 2, 2022. Up to 5 percent ($250,000) can be used for reimbursement of administrative costs incurred by the City.

It is recommended that the City Council adopt a resolution appropriating the funds in the City budget. It is also recommended that the City Council authorize the City Manager to enter into a Loan Agreement, Promissory Note, Deed of Trust and Regulatory Agreement with Sugar Pine Housing Partners, L.P. to loan $4,750,000 of PLHA funds for use in the construction of Phase 1A of the Sugar Pine Village Affordable Housing Project. Staff requests authorization for the City Manager to execute the Loan Agreement and related documents in substantially the form attached hereto including any changes required to comply with the Housing and Community Development Standard Agreement, to be approved as to form by the City Attorney.

Financial Implications: While the City carries primary responsibility for administering the grant, the Loan Agreement will require that the borrower, Sugar Pine Housing Partners, L.P. comply with all requirements of the Standard Agreement between the City and the State. In addition, up to 5 percent ($250,000) of the grant may be used to cover costs associated with administering the grant.

Staff is recommending that the PLHA funds be appropriated, consistent with the Standard Agreement, as follows:

Account Number 250-06024 Work-Force Housing
Revenue (33244): $5,000,000
Loans to Borrowers (47060): $4,750,000
Source Phase 1A Phase 1B Phase 2A Total
City RDA Loan 566,629 - - 566,629
City Coverage Loan 254,487 995,513 1,250,000
HOME PI Loan 625,000 625,000
Total City Funds 821,116 625,000 995,513 2,441,629
Federal Tax Credit Equity 17,651,379 21,744,524 15,716,202 55,112,105 State Tax Credit Equity 5,722,864 - 7,672,662 13,395,526 State MHP 12,127,500 7,448,016 - 19,575,516
State AHSC - - 10,551,967 10,551,967
State IIG 3,195,900 - - 3,195,900
State PLHA 4,750,000 - - 4,750,000
State HOME - 5,162,446 - 5,162,446
State LGMG 4,000,000 6,000,000 10,000,000
Total Leveraged Funds 47,447,643 34,354,986 39,940,831 121,743,460 Committed Applied For Identified N/A
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Council Agenda Report June 7, 2022 Page 3 of 4
Administration Costs (50011): $250,000
Environmental Considerations: For projects that satisfy criteria specified by SB 35, the guidelines issued by HCD specify that the California Environmental Quality Act (CEQA) does not apply to actions taken by a local government to provide financial assistance to a development that receives streamlined approval and that is to be used for housing for persons and families of very low, low, or moderate income, as defined in Section 50093 of the Health and Safety Code.

Policy Implications: The recommended actions are consistent with the City Strategic Plan, which identified supporting the Sugar Pine Village Project as a Tier 1 priority. The Sugar Pine Village project was also identified in the South Shore Housing Action plan as partnership action strategy.

The recommended action is consistent with the following adopted policies and programs:

City General Plan Housing Element
Policy 1-1 The City shall adopt programs, ordinances, incentives, land use plans and other regulatory mechanisms that provide opportunities for the private sector to address the housing needs of citizens of all economic levels.

Policy 2-2 The City shall enable opportunities for deed-restricted affordable ownership housing to ensure long-term affordability.

Policy 2-5 The City shall recognize that it will become difficult to attract employees if they cannot afford to purchase or rent housing in South Lake Tahoe. The City shall encourage and support programs and activities that create a robust local economy that provides residents with good paying employment and the means to purchase and/or rent housing in the city.

Program 2-1 PURSUE STATE AND FEDERAL FUNDS
To support the creation of quality, affordable housing options for extremely low-, very low-, and low-income households, the City shall seek and when appropriate and feasible pursue grant opportunities for state and federal funds.

Program 2-6 ANALYSIS OF FEDERAL AND STATE LANDS
The City shall continue discussing the potential for developing quality workforce and affordable housing on non-environmentally sensitive lands owned by the California Tahoe Conservancy (CTC) and the United States Forest Service (USFS). The City shall ensure that important natural resources are protected and only pursue surplus lands that these agencies have determined do not have a clear and compatible conservation or recreation purpose consistent with agency goals.

Tahoe Valley Area Plan
Policy H-1.1 – Housing Options
Provide for a range of housing options that include affordable, moderate-income, and workforce housing so that people can live and work in the City.

Policy H-1.5 – Redirection of Development
Direct high density residential development to areas of Tahoe Valley that are within walking 190
Council Agenda Report June 7, 2022 Page 4 of 4
distance of public transit and services.

Policy H-1.7 – Tahoe Livable Communities Program
Collaborate and support efforts of the California Tahoe Conservancy to remove blighted properties and repurpose associated development commodities. Encourage the use of residential commodities for affordable housing in Tahoe Valley area.

Policy H-2.1 – General
Encourage the creation of residential uses to support and add vitality to commercial and public service projects in the Tahoe Valley area.
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Resolution 2022-XXX June 7, 2022 Page 1 of 2
Resolution 2022-XXX
Adopted by the City of South Lake Tahoe
City Council
June 7, 2022
Budget Appropriation of Permanent Local Housing Allocation Non-Entitlement Local Government Competitive Component funds for construction of the Sugar Pine Village Affordable Housing Project

BACKGROUND
A. The City General Plan Housing Element (2014) identified a general disparity between wages and the cost of housing in South Lake Tahoe. There is a need for new housing construction to serve low, very low, and extremely low income residents due to 36.1 percent of City residents in these income categories having a cost burden greater than 30 percent and 19.8 percent having a cost burden greater than 50 percent between 2006 and 2010.

B. To address the shortage of housing for Californians, Governor Newsom ordered the Department of General Services (DGS) and the Department of Housing and Community Development (HCD) to identify and prioritize excess state-owned property and aggressively pursue sustainable, innovative, cost-effective housing projects (Executive Order N-06-19).

C. Through a competitive Request for Proposal process, the State of California has selected The Related Companies of California (“Related California”) and Saint Joseph Community Land Trust team to develop the Sugar Pine Village project (“Project”) located at 1888 Lake Tahoe Blvd and 1029 Tata Lane in South Lake Tahoe. The Project will include 248 rental units available to low and very low income households.

D. The City has been an active partner in the development and financing of the Project by both contributing local money and being joint applicants on a numerous of grants.

E. On September 7, 2021, the City Council Adopted Resolution 2021-071 authorizing the application for the Permanent Local Housing Allocation (PLHA) Program Non-Entitlement Local Government Competitive Component in an amount not to exceed $5,000,000.

F. On February 2, 2022 the City of South Lake Tahoe was awarded $5,000,000 in PLHA funds for use in the development of the Project and subject to the terms and conditions as specified in the Standard Agreement.

G. Related California has made a request on behalf of the project team, for the City to loan funds to cover predevelopment expenses associated with the design and entitlement of the Project.
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Resolution 2022-XXX June 7, 2022 Page 2 of 2
H. Related California is a real estate firm with 30 years of experience delivering affordable housing, mixed-income housing, and mixed-use developments across California. The company has more than 16,000 residences completed or under construction, 13,000 of which are affordable for either low or very low income households.

I. Related California and SJCLT, or their affiliates, have formed a limited partnership or LLC to advance the development of the Sugar Pine Village project and this LLC or limited partnership would be the recipient of the financial assistance requested for the project.

J. Related California has provided a financing strategy for the development of the Sugar Pine Village, a 248 unit housing project affordable to low and very low income households, which includes a combination of tax credit equity, private loan financing, and state and federal housing program sources.

BASED ON THE FACTS SET FORTH IN THE BACKGROUND, BE IT RESOLVED, that the City Council of the City of South Lake Tahoe:

1. Appropriate budgeting on the PLHA funds into account number 250-06024 as follows:

Revenue (33244) $5,000,000
Loan to Project (47060) $4,750,000
Administrative Costs (50011) $250,000
Adopted by the City of South Tahoe City Council on June 7, 2022 by the following vote:

Yes:

No:

Absent:

Abstain:
________________________ Date:_________
Devin Middlebrook, Mayor
Attest:
________________________
Susan Blankenship, City Clerk
193
50286841.3
OAK #4861-5658-7547 v5

LOAN AGREEMENT
by and between

THE CITY OF SOUTH LAKE TAHOE,
a municipal corporation
and
SUGAR PINE HOUSING PARTNERS, L.P.,
a California limited partnership
June 1, 2022
194
50286841.3
OAK #4861-5658-7547 v5
THIS LOAN AGREEMENT (this “Agreement”) is entered into effective as of June 1, 2022 (“Effective Date”) by and between the CITY OF SOUTH LAKE TAHOE, a municipal corporation (“City”) and SUGAR PINE HOUSING PARTNERS, L.P., a California limited partnership (“Developer”). City and Developer are hereinafter collectively referred to as the “Parties.”

RECITALS
A. Developer has or will acquire a leasehold interest in that real property located in South Lake Tahoe, California(the "Property"), as more particularly described on Exhibit A attached hereto and incorporated herein by this reference.

B. Developer has proposed to develop a sixty-eight (68) unit multifamily residential apartment building rented at an affordable housing cost to low, very-low, and extremely-low income households (the “Project”).

C. The City has received grant funding from the California Department of Housing and Community Development (“HCD”) under the Permanent Local Housing Allocation (“PLHA”) program pursuant to a Standard Agreement between the City and HCD (the “PLHA Grant”).

D. Developer has requested, and City has agreed, to provide a loan to Developer in the amount of Four Million Seven Hundred Fifty Thousand Dollars ($4,750,000). from the City’s PLHA allocation (the “Loan”) to assist in the development of the Project pursuant to the terms and conditions set forth herein.

E. A material inducement to City to enter into this Agreement is the agreement by Developer to develop the Property within the time periods specified herein and in accordance with the provisions hereof, and the City would be unwilling to enter into this Agreement in the absence of an enforceable commitment by Developer to complete the Project in accordance with such provisions and within such time periods.

F. Concurrently herewith: (i) Developer shall execute a secured promissory note (the “Note”) in the amount of the Loan and a Leasehold Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing (“Deed of Trust”), which shall provide City with a security interest in the Property and the Project, and (ii) Developer and City shall execute an Affordable Housing Regulatory Agreement and Declaration of Restrictive Covenants (the “Regulatory Agreement”), which shall be recorded against the Property and which shall require Project rents to be affordable to low, very low, and extremely-low income households for a term of not less than 55 years. The Note, the Regulatory Agreement and Deed of Trust are collectively hereinafter referred to as the “City Documents.” NOW, THEREFORE, in consideration of the mutual covenants contained herein and good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows.
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ARTICLE I

DEFINITIONS

1. Definitions. The following terms shall have the meanings set forth in the Sections referenced below whenever used in this Agreement and the Exhibits attached hereto. Additional terms are defined in the Recitals and text of this Agreement.

1.1 “Certificate of Completion” is defined in Section 3.15.

1.2 “City Documents” is defined in Recital F.

1.3 “Claims” is defined in Section 3.17.

1.4 “Conditions of Approval” is defined in Section 3.2.

1.5 “Construction Plans” is defined in Section 3.11.

1.6 “Environmental Laws” is defined in Section 9.4.

1.7 “Hazardous Materials” is defined in Section 9.3.

1.8 “Improvements” is defined in Section 3.9.

1.9 “Indemnitees” is defined in Section 3.17.

1.10 “Loan” is defined in Recital C and Article 4.

1.11 “Note” is defined in Article 4.

1.12 “Project” is defined in Recital B and further described in Section 3.2.

1.13 “Regulatory Agreement” is defined in Recital F.

ARTICLE II
REPRESENTATIONS; EFFECTIVE DATE AND TERM

2.1 Developer's Representations. Developer represents and warrants as follows, and Developer covenants that until the expiration or earlier termination of this Agreement, upon learning of any fact or condition which would cause any of the warranties and representations in this Section 2.1 not to be true, Developer shall immediately give written notice of such fact or condition to City. Developer acknowledges that City shall rely upon Developer’s representations made herein notwithstanding any investigation made by or on behalf of City. 196
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(i) Authority. Developer is a California limited partnership duly organized and in good standing under the laws of the State of California. Developer has the full right, power and authority to undertake all obligations of Developer as provided herein, and Developer’s execution, performance and delivery of this Agreement, the Regulatory Agreement, and the other City Documents have been duly authorized by all requisite actions. (ii) No Conflict. Developer's execution, delivery and performance of its obligations under this Agreement will not constitute a default or a breach under any contract, agreement or order to which Developer is a party or by which it is bound. (iii) No Litigation or Other Proceeding. No litigation or other proceeding (whether administrative or otherwise) is outstanding or has been threatened which would prevent, hinder or delay the ability of Developer to perform its obligations under this Agreement. (iv) No Developer Bankruptcy. Developer is not the subject of a bankruptcy or insolvency proceeding.

2.2 City Representations. City represents and warrants to Developer and covenants that until the expiration or earlier termination of this Agreement, upon learning of any fact or condition which would cause any of the warranties and representations in this Section 2.2 not to be true, City shall immediately give written notice of such fact or condition to Developer. City acknowledges that Developer shall rely upon City’s representations made herein notwithstanding any investigation made by or on behalf of Developer.
(i) Authority. City is a California municipal corporation, duly organized and in good standing under the laws of the State of California. City has the full right, power and authority to undertake all of the respective obligations as provided herein, and the execution, performance and delivery of this Agreement by City has been duly authorized by all requisite actions on the part of each such entity. The persons executing this Agreement on behalf of City has been duly authorized to do so. This Agreement constitutes a valid and binding obligation of City.
(ii) No Conflict. City’s execution, delivery and performance of their respective obligations under this Agreement will not constitute a default or a breach under any contract, agreement or order to which City is a party or by which either is bound. (iii) No Litigation or Other Proceeding. No litigation or other proceeding (whether administrative or otherwise) is outstanding or has been threatened which would prevent, hinder or delay the ability of City to perform their obligations under this Agreement. (iv) No Bankruptcy. City is not the subject of a bankruptcy or insolvency proceeding.

2.3 Effective Date. The obligations of Developer and City hereunder shall be effective as of the Effective Date.
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ARTICLE III

DEVELOPMENT OF THE PROJECT

3.1 The Property. Developer represents and warrants that as of the Effective Date:
(i) Developer possesses leasehold title to the Property, and (ii) to the best knowledge of Developer after reasonable inquiry, the Property is subject to no covenant, condition, restriction or agreement that would hinder or prevent Developer’s performance of its obligations under this Agreement, the Regulatory Agreement, and the other City Documents. If at any time the foregoing statements become untrue, the City shall have the right to terminate this Agreement upon written notice to Developer.

3.2 Affordable Housing. Developer covenants and agrees for itself, its successors and assigns that thirty-three (33) of the residential units developed within the Project shall be occupied by low, very-low, or extremely-low income households and rented at an affordable rent to households of low, very low, and extremely low-income in accordance with the terms hereof and the Regulatory Agreement which the Parties shall execute substantially in the form attached hereto as Exhibit C concurrently with the execution of this Agreement, and which shall be recorded in the Official Records of El Dorado County (“Official Records”) on the date that Developer acquires the Property.

3.3 Project Approvals. Developer covenants that it shall: (i) obtain all necessary permits and approvals which may be required by City and any other governmental agency having jurisdiction over the construction of the Project or the development of the Property, (ii) comply with all Conditions of Approval, (iii) comply with all mitigation measures, if any, imposed in connection with any environmental review of the Property or the Project, and (iv) not commence construction of the Project prior to issuance of building permits.

3.4 Fees. Developer shall be solely responsible for, and shall promptly pay when due, all customary and usual fees and charges of City in connection with obtaining building permits and other approvals for the Project, including without limitation, those related to the processing and consideration of amendments, if any, to the current entitlements, any related approvals and permits, environmental review, architectural review, historic review, and any subsequent approvals for the Project or the development of the Property.

3.5 Cost of Acquisition and Construction. Except as expressly set forth herein, Developer shall be solely responsible for all direct and indirect costs and expenses incurred in connection with the acquisition of the Property, the design, development and construction of the Project and compliance with the Conditions of Approval, including without limitation the installation and construction of all off-site or on-site improvements required by City in connection therewith, and none of such costs and expenses shall be the obligation of the City.

3.6 Rights of Access; Books and Records. For the purpose of ensuring that the Project is developed in compliance with this Agreement, Developer shall permit representatives of the City to enter upon the Property to inspect the Project following 48-hours’ written notice (except in the case of emergency in which case such notice as may be practical under the circumstances shall be provided). Upon request, Developer shall permit the City to inspect at 198
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reasonable times and on a confidential basis those books, records and all other documents of Developer necessary to determine Developer's compliance with the terms of this Agreement.

3.7 City Disclaimer. Developer acknowledges that the City is under no obligation, and neither City undertakes or assumes any responsibility or duty to Developer or to any third party, to in any manner review, supervise, or inspect the progress of construction or the operation of the Project. Developer and all third parties shall rely entirely upon its or their own supervision and inspection in determining the quality and suitability of the materials and work, the performance of architects, subcontractors, and material suppliers, and all other matters relating to the construction and operation of the Project. Any review or inspection undertaken by the City is solely for the purpose of determining whether Developer is properly discharging its obligations under this Agreement, and shall not be relied upon by Developer or any third party as a warranty or representation by the City as to the quality of the design or construction of the Project and other improvements constructed on the Property (collectively, the “Improvements”) or otherwise.

3.8 Financing Plan. As set forth in the attached Exhibit F, Developer has provided City with a preliminary financing plan for the Project (“Financing Plan”) which describes (i) the estimated costs of Project development, including acquisition costs, and hard and soft construction costs, (ii) an operating pro forma which describes projected revenue and expenses for the Project, and (iii) identification of sources of construction and permanent financing.

Prior to the commencement of initial construction of the Project, Developer shall provide evidence to City that all sources of funds for Project construction and permanent financing have been firmly committed by Developer, equity investors or lending institutions, subject only to commercially reasonable conditions.

3.9 Equal Opportunity. During the construction of the Project, there shall be no discrimination on the basis of race, color, religion, creed, sex, sexual orientation, marital status, ancestry or national origin in the hiring, firing, promoting or demoting of any person engaged in construction of the Project, and Developer shall direct its contractors and subcontractors to refrain from discrimination on such basis.

3.10 Prevailing Wage Requirements. To the extent, and only if required by applicable federal and state laws, rules and regulations, Developer and its contractors and agents shall comply with California Labor Code Section 1720 et seq. and applicable federal labor laws and standards, and the regulations adopted pursuant thereto (“Prevailing Wage Laws”), and shall be responsible for carrying out the requirements of such provisions. .

3.11 Compliance with Laws. Developer shall carry out and shall cause its contractors to carry out the construction of the Project in conformity with all applicable federal, state and local laws, rules, ordinances and regulations, including without limitation, all applicable federal and state labor laws and standards, applicable provisions of the California Public Contracts Code, the City zoning and development standards, building, plumbing, mechanical and electrical codes, all other provisions of the City's Municipal Code, and all applicable disabled and handicapped access requirements, including without limitation, the Americans with Disabilities 199
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Act, 42 U.S.C. Section 12101, et seq., Government Code Section 4450, et seq., Government Code Section 11135, et seq., and the Unruh Civil Rights Act, Civil Code Section 51, et seq..

3.12 Liens and Stop Notices. Until the expiration of the term of the Regulatory Agreement and full repayment of the Loan, Developer shall not allow to be placed on the Property or any part thereof any lien or stop notice on account of materials supplied to or labor performed on behalf of Developer. If a claim of a lien or stop notice is given or recorded affecting the Project, Developer shall within thirty (30) days of such recording or service: (a) pay and discharge (or cause to be paid and discharged) the same; or (b) effect the release thereof by recording and delivering (or causing to be recorded and delivered) to the party entitled thereto a surety bond in sufficient form and amount or provide other assurance satisfactory to City that the claim of lien or stop notice will be paid or discharged.

3.13 Right of City to Satisfy Liens on the Property. If Developer fails to satisfy or discharge any lien or stop notice on the Property pursuant to Section 3.19 above, the City shall have the right, but not the obligation, to satisfy any such liens or stop notices at Developer’s expense and without further notice to Developer. In such event Developer shall be liable for and shall immediately reimburse City for such paid lien or stop notice. Alternatively, the City may require Developer to immediately deposit with City the amount necessary to satisfy such lien or claim pending resolution thereof. The City may use such deposit to satisfy any claim or lien that is adversely determined against Developer. Developer shall file a valid notice of cessation or notice of completion upon cessation of construction of the Improvements for a continuous period of thirty (30) days or more, and shall take all other reasonable steps to forestall the assertion of claims or liens against the Property or the Improvements. The City may (but has no obligation to) record any notices of completion or cessation of labor, or any other notice that the City deems necessary or desirable to protect its interest in the Property and the Improvements.

3.14 Performance and Payment Bond(s).
(a) Prior to commencement of construction of the Project, Developer shall deliver to the City copies of payment bond(s) and performance bond(s) issued by a reputable insurance company licensed to do business in California, each in a penal sum of not less than one hundred percent (100%) of the scheduled cost of construction of the Project. (b) In lieu of such performance and payment bonds, Developer may submit evidence satisfactory to the City of the Developer's ability to commence and complete construction of the Project in the form of an irrevocable letter of credit, pledge of cash deposit, certificate of deposit, or other marketable securities held by a broker or other financial institution, with signature authority of the City required for any withdrawal, or a completion guaranty in a form and from a guarantor acceptable to City. Such evidence must be submitted in approvable form in sufficient time to allow the City to review and approve the information within prior to the scheduled construction start date.

ARTICLE IV

CITY FINANCIAL ASSISTANCE
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4.1 Loan. Using PLHA funds, the City shall provide a loan in the amount of Four Million Seven Hundred Fifty Thousand Dollars ($4,750,000) (the “Loan”) to Developer upon the terms and conditions and for the purposes set forth in this Agreement. The Loan shall be evidenced by a promissory note (the “Note”) substantially in the form attached hereto as Exhibit D, and shall be secured by a leasehold deed of trust (the “Deed of Trust”) executed by Developer as Trustor substantially in the form attached hereto as Exhibit E and recorded against the Property subordinate only to such liens as City shall approve in writing. The outstanding principal balance of the Note will accrue zero percent (0%) simple annual interest commencing upon the date of disbursement.

Provided that Developer has complied with all conditions precedent to disbursement of the Loan set forth in Section 4.5, the proceeds of the Loan (“Loan Proceeds”) shall be disbursed in accordance with Section 4.4 hereof. The Parties agree that City shall disburse Loan Proceeds only for the purposes set forth in Section 4.4.

4.2 Payment Dates; Maturity Date. All payments on the loan shall be deferred until the Maturity Date. The entire outstanding principal balance of the Loan together with accrued interest and (except as otherwise provided herein or in the other City Documents) all other sums due under the City Documents shall be payable in full on the fifty-fifth (55th) anniversary of the date that City issues the final certificate of occupancy for the Project (the “Maturity Date”).

4.3 Security. As security for repayment of the Note, Developer shall execute the Deed of Trust pursuant to which City shall be provided a lien against the Property and the Improvements. The Deed of Trust shall be recorded in the Official Records on the date that Developer acquires the Property. The Deed of Trust may be subordinated only to such liens and subject only to such title exceptions as City may approve in writing. The City acknowledges that Developer’s construction and permanent lender(s) may require the subordination of the Deed of Trust and the City shall subordinate the Deed of Trust to deeds of trust or other security instruments approved by the City.

4.4 Use and Disbursement of Proceeds. The Loan Proceeds shall be used solely to fund acquisition of the Property and/or construction of the Project, and closing, escrow and other costs approved by the City.

4.5 Conditions to Disbursement of Loan Proceeds. City’s obligation to fund the Loan and disburse the proceeds thereof is conditioned upon the satisfaction of all of the following conditions:
(a) Developer’s delivery to City of each of the following: (i) certificate of good standing, certified by the Secretary of State indicating that Developer is properly organized, in good standing, and authorized to do business in the State of California, and (ii) a certified resolution indicating that Developer has authorized this transaction and that the persons executing this Agreement, the Regulatory Agreement, and the City Documents on Developer’s behalf have been duly authorized to do so. 201
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(b) Developer’s delivery to the City of evidence of insurance coverage in accordance with the requirements set forth in Section 11.2. (c) Developer’s delivery of the Regulatory Agreement and each of the City Documents, each fully-executed and acknowledged as applicable. (d) Recordation of the Regulatory Agreement, and the Deed of Trust, in the Official Records.
(e) The issuance by an insurer satisfactory to City of an A.L.T.A. lender’s policy of title insurance (“Title Policy”) for the benefit of City in the amount of the Loan, insuring that the lien of the Deed of Trust is subject only to such defects, liens, conditions, encumbrances, restrictions, easements and exceptions as City may approve in writing and containing such endorsements as City may reasonably require, with the cost of the Title Policy to be paid by Developer.
(f) Reasonable written confirmation that all other Project acquisition and construction costs required by the Financing Plan (or otherwise) are (or will be subject to the closing and funding of the Loan) available to Developer. (g) The City’s receipt of a written requisition for disbursement of funds from Developer specifying the amount and use of the requested funds, accompanied by the title company’s estimated settlement statement showing the acquisition price, closing costs and all other amounts due in escrow for Developer’s acquisition of the Property.

4.6 No Obligation to Disburse Proceeds Upon Default. Notwithstanding any other provision of this Agreement, the City shall have no obligation to disburse or authorize the disbursement of any portion of the Loan Proceeds following:
(i) the failure of any of Developer’s representations and warranties made in this Agreement or in connection with the Loan to be true and correct in all material respects;
(ii) the termination of this Agreement by mutual agreement of the Parties; (iii) the conditions to disbursement of the Loan set forth in Section 4.5 have not been satisfied within the time frame set forth in Section 3.1, unless an extension of such date is approved by City in writing; or (iv) the occurrence of an Event of Default under this Agreement, the Regulatory Agreement, any of the City Documents which remains uncured beyond any applicable cure period.

4.7 Prepayment; Acceleration
(a) Prepayment. Developer shall have the right to prepay the Loan at any time and from time to time, without penalty or premium, provided that any prepayment of principal must 202
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be accompanied by interest accrued but unpaid to the date of prepayment. Prepayments shall be applied first to accrued but unpaid interest and then to principal. Any such prepayment shall have no effect upon Developer’s obligations under the Regulatory Agreement which shall survive for the full term of the Regulatory Agreement.
(b) Due On Sale or Encumbrance. Unless City agrees otherwise in writing, the entire unpaid principal balance and all interest and other sums accrued under the Note shall be due and payable upon the Transfer (as defined in Section 7.2) absent the prior written consent of City of all or any part of or interest in the Property except for a Transfer permitted under Section 7.3 of this Agreement or as otherwise permitted pursuant to this Agreement.

4.8 Nonrecourse. Except as expressly provided in this Section 4.8, Developer shall have no personal liability for payment of the principal of, or interest on the Note, and the sole recourse of City with respect to the payment of the principal of, and interest on the Note shall be to the Property and the Improvements and any other collateral held by City as security for the Note; provided however, nothing contained in the foregoing limitation of liability shall: (i) limit or impair the enforcement against all such security for the Note of all the rights and remedies of the City thereunder; (ii) be deemed in any way to impair the right of the City to assert the unpaid principal amount of the Note as demand for money within the meaning and intendment of Section 431.70 of the California Code of Civil Procedure or any successor provision thereto; or (iii) be deemed in any way to limit the rights of the City to obtain specific performance by the Developer of its covenants under the City Documents, other than the covenants to pay the City principal and interest due under the Note.

The foregoing limitation of liability is intended to apply only to the obligation for the repayment of the principal of, and payment of interest on the Note; nothing contained herein is intended to relieve the Developer of its obligation to indemnify the City under this Agreement, or liability for: (i) fraud or willful misrepresentation by the Developer; (ii) the failure to pay taxes, assessments or other charges which may create liens on the Property that are payable or applicable prior to any foreclosure under the Deed of Trust (to the full extent of such taxes, assessments or other charges); (iii) the fair market value of any personal property or fixtures removed or disposed of by the Developer other than in accordance with the Deed of Trust; and/or (iv) the misappropriation of any proceeds by the Developer under any insurance policies or awards resulting from condemnation or the exercise of the power of eminent domain or by reason of damage, loss or destruction to any portion of the Development

ARTICLE V

INTENTIONALLY OMITTED

ARTICLE VI

USE OF THE PROPERTY

6.1 Use; Affordable Housing. Developer covenants and agrees for itself and its successors and assigns that the Property shall be used for the development and operation of the Project in accordance with the terms and conditions of this Agreement and the Regulatory Agreement.
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6.2 Maintenance. Developer shall at its own expense, maintain the Property, the Improvements and related landscaping and common areas in good physical condition, in good repair, and in decent, safe, sanitary, habitable and tenantable living conditions in conformity with all applicable state, federal, and local laws, ordinances, codes, and regulations. Without limiting the foregoing, Developer agrees to maintain the Project and the Property (including without limitation, the residential units, common areas, landscaping, driveways, parking areas and walkways) in a condition free of all waste, nuisance, debris, unmaintained landscaping, graffiti, disrepair, abandoned vehicles/appliances, and illegal activity, and shall take all reasonable steps to prevent the same from occurring on the Property or at the Project. Developer shall prevent and/or rectify any physical deterioration of the Property and the Project and shall make all repairs, renewals and replacements necessary to keep the Property and the Improvements in good condition and repair.

6.3 Taxes and Assessments. Developer shall pay all real and personal property taxes, assessments and charges and all franchise, income, payroll, withholding, sales, and other taxes assessed against the Property and payable by Developer, at such times and in such manner as to prevent any penalty from accruing, or any lien or charge from attaching to the Property; provided, however, that Developer shall have the right to contest in good faith, any such taxes, assessments, or charges. In the event the Developer exercises its right to contest any tax, assessment, or charge, the Developer, on final determination of the proceeding or contest, shall immediately pay or discharge any decision or judgment rendered against it, together with all costs, charges and interest. Developer shall have the right to apply for all applicable tax exemptions, including, without limitation, the welfare exemption from property tax for lowincome housing.

6.4 Obligation to Refrain from Discrimination. Developer shall not restrict the rental, sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property, or any portion thereof, on the basis of race, color, religion, creed, sex, sexual orientation, disability, marital status, ancestry, or national origin of any person. Developer covenants for itself and all persons claiming under or through it, and this Agreement is made and accepted upon and subject to the condition that there shall be no discrimination against or segregation of any person or group of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property or part thereof, nor shall Developer or any person claiming under or through Developer establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in, of, or for the Property or part thereof. Developer shall include such provision in all deeds, leases, contracts and other instruments executed by Developer, and shall enforce the same diligently and in good faith.
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ARTICLE VII

LIMITATIONS ON CHANGE IN OWNERSHIP, MANAGEMENT

AND CONTROL OF DEVELOPER

7.1 Change Pursuant to this Agreement. Developer has represented that it possess the necessary expertise, skill and ability to carry out the development of the Project on the Property pursuant to this Agreement. The qualifications, experience, financial capacity and expertise of Developer is of particular concern to the City. It is because of these qualifications, experience, financial capacity and expertise that the City has entered into this Agreement with Developer.

No voluntary or involuntary successor, assignee or transferee of Developer shall acquire any rights or powers under this Agreement, except as expressly provided herein.

7.2 Prohibition on Transfer. Prior to the expiration of the term of the Regulatory Agreement, Developer shall not, except as expressly permitted by this Agreement, directly or indirectly, voluntarily, involuntarily or by operation of law make or attempt any total or partial sale, transfer, conveyance, assignment or lease (collectively, “Transfer”) of the whole or any part of the Property, the Project, the Improvements, or this Agreement, without the prior written approval of City. Any such attempt to assign this Agreement without the City’s consent shall be null and void and shall confer no rights or privileges upon the purported assignee. In addition to the foregoing, prior to the expiration of the term of the Regulatory Agreement, except as expressly permitted by this Agreement, Developer shall not undergo any significant change of ownership without the prior written approval of City. For purposes of this Agreement, a “significant change of ownership” shall mean a transfer of the beneficial interest of more than forty-nine percent (49%) in aggregate of the present ownership and /or control of Developer, taking all transfers into account on a cumulative basis; provided however, neither the admission of an investor limited partner(s), nor the transfer by the investor limited partner(s) to subsequent limited partner(s) shall be restricted by this provision.

7.3 Permitted Transfers. Notwithstanding any contrary provision hereof, the prohibitions set forth in this Article shall not be deemed to prevent: (i) the granting of utility easements or permits to facilitate development of the Property; (ii) the dedication of any property required pursuant to this Agreement; (iii) the lease of individual units to tenants for occupancy as their principal residence in accordance with the Regulatory Agreement; (iv) assignments creating security interests for the purpose of financing the acquisition, construction or permanent financing of the Project or the Property in accordance with the approved Financing Plan and subject to the requirements of Article VIII, or Transfers directly resulting from the foreclosure of, or granting of a deed in lieu of foreclosure of, such a security interest; (v) a Transfer to entity which is under the direct control or under common control with The Related Companies of California LLC or in which The Related Companies of California LLC is the sole member or the general partner (“Controlled Affiliate”); and (vi) any permitted transfer or assignment of Developer’s leasehold interest in the Property or any portion thereof under the ground lease whereby Developer obtained its leasehold interest in the Property. Notwithstanding any provision of this Section 7.3, no permitted transaction under this Section 7.3 will alter any obligation under the Regulatory Agreement.
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7.4 Requirements for Proposed Transfers. The City may, in the exercise of its sole discretion, consent to a proposed Transfer of this Agreement, the Property or portion thereof if all of the following requirements are met (provided however, the requirements of this Section 7.4 shall not apply to Transfers described in Section 7.3):
(i) The proposed transferee demonstrates to the City’s satisfaction that it has the qualifications, experience and financial resources necessary and adequate as may be reasonably determined by the City to competently complete construction of the Project and to otherwise fulfill the obligations undertaken by the Developer under this Agreement.
(ii) The Developer and the proposed transferee shall submit for City review and approval all instruments and other legal documents proposed to effect any Transfer of this Agreement, the Property or interest therein together with such documentation of the proposed transferee’s qualifications and development capacity as the City may reasonably request.
(iii) The proposed transferee shall expressly assume all of the rights and obligations of the Developer under this Agreement, the Regulatory Agreement, the City Documents arising after the effective date of the Transfer and all obligations of Developer arising prior to the effective date of the Transfer (unless Developer expressly remains responsible for such obligations) and shall agree to be subject to and assume all of Developer’s obligations pursuant to the Conditions of Approval and all other conditions, and restrictions set forth in this Agreement and the Regulatory Agreement. (iv) The Transfer shall be effectuated pursuant to a written instrument satisfactory to the City in form recordable in the Official Records.

Consent to any proposed Transfer may be given by the City Manager unless the City Manager, in his or her discretion, refers the matter of approval to the City Council. If the City rejects a proposed Transfer, the City, as applicable, shall provide the reasons for such rejection in writing within thirty (30) days following receipt of written request by Developer, and representatives of the City shall meet with Developer and the proposed transferee to discuss in good faith the reasons for the rejection and Developer’s and transferee’s responses thereto.

7.5 Effect of Transfer without City Consent.

7.5.1 In the absence of specific written agreement by the City, no Transfer by Developer shall be deemed to relieve the Developer or any other party from any obligation under this Agreement or the Regulatory Agreement.

7.5.2 Without limiting any other remedy City may have under this Agreement, or under law or equity, this Agreement may be terminated by City if without the prior written approval of the City, Developer assigns or Transfers this Agreement or the Property prior to the City’s issuance of a Certificate of Completion. This Section 7.5.2 shall not apply to Transfers described in clauses (i) through (iv) of Section 7.3).
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7.6 Recovery of City Costs. Developer shall reimburse City for all costs, including but not limited to attorneys’ fees, incurred in reviewing instruments and other legal documents proposed to affect a Transfer under this Agreement and in reviewing the qualifications and financial resources of a proposed successor, assignee, or transferee within ten days following City’s delivery to Developer of an invoice detailing such costs. This Section 7.6 shall not apply to Transfers described in Section 7.3.

ARTICLE VIII

SECURITY FINANCING AND RIGHTS OF MORTGAGEES

8.1 Mortgages and Deeds of Trust for Development. Mortgages and deeds of trust, or any other reasonable security instrument are permitted to be placed upon the Property only for the purpose of securing loans approved pursuant to the approved Financing Plan for the purpose of financing the acquisition of the Property, the design and construction of the Improvements, other expenditures reasonably necessary for development of the Property pursuant to this Agreement, and the rehabilitation and/or refinancing of the Project. Developer shall not enter into any conveyance for such financing without the prior written approval of the City Manager or his or her designee. As used herein, the terms “mortgage” and “deed of trust” shall mean any security instrument used in financing real estate acquisition, construction and land development.

8.1.1 Regulatory Agreement to be Senior to Mortgages. City agree that if required by construction and/or permanent lenders the Memorandum of this Agreement, the Deed of Trust, and the Regulatory Agreement may be subordinated to deeds of trust or other security instruments approved by the City pursuant to a written instrument conforming to the requirements of California Health and Safety Code Section 33334.14(a)(4) and including without limitation, the provisions set forth in Section 8.4 below.

8.2 Holder Not Obligated to Construct. The holder of any mortgage, deed of trust authorized by this Agreement shall not be obligated to construct or complete the Improvements or to guarantee such construction or completion. Nothing in this Agreement shall be deemed to permit or authorize any such holder to devote the Property or any portion thereof to any uses, or to construct any improvements thereon, other than those uses or improvements provided for or authorized by this Agreement.

8.3 Notice of Default and Right to Cure. Whenever City delivers any notice of default hereunder, City shall concurrently deliver a copy of such notice to each holder of record of any mortgage or deed of trust secured by the Property provided that City has been provided with the address for delivery of such notice. City shall have no liability to any such holder for any failure by the City to provide such notice to such holder. Each such holder shall have the right, but not the obligation, at its option, to cure or remedy any such default or breach.

8.4 City Right to Cure Defaults. In the event of a breach or default by Developer under a mortgage or deed of trust secured by the Property, City may (but has no obligation to) cure the default, without acceleration of the subject loan, following prior notice thereof to the holder of such instrument and Developer. In such event, Developer shall be liable for, and City 207
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shall be entitled to reimbursement from Developer for all costs and expenses incurred by City associated with and attributable to the curing of the default or breach and such sum shall constitute a part of the indebtedness secured by the Deed of Trust.

8.5 Holder to be Notified. Developer, for itself, its successors and assigns hereby warrants and agrees that each term contained herein dealing with security financing and rights of holders shall be either inserted into the relevant deed of trust or mortgage or acknowledged by the holder prior to its creating any security right or interest in the Property.

8.6 Modifications to Agreement. City shall not unreasonably withhold is consent to modifications of this Agreement requested by Project lenders or investors provided such modifications do not alter City’s substantive rights and obligations under this Agreement.

8.7 Estoppel Certificates. Any Party shall, at any time, and from time to time, within thirty (30) days after receipt of written request from the other Party, execute and deliver to such Party a written statement certifying that, to the knowledge of the certifying Party: (i) this Agreement is in full force and effect and a binding obligation of the Parties (if such be the case), (ii) this Agreement has not been amended or modified, or if so amended, identifying the amendments, and (iii) the requesting Party is not in default in the performance of its obligations under this Agreement, or if in default, describing the nature of any such defaults.

ARTICLE IX

ENVIRONMENTAL MATTERS

9.1 No City Liability; Developer’s Covenants. City shall not be responsible for the cost of any soil, groundwater or other environmental remediation or other response activities for any Hazardous Materials, if any, existing or occurring on the Property or any portion thereof, and Developer shall be solely responsible for all actions and costs associated with any such activities required by any regulatory agency with jurisdiction over the Property and/or required for the development of the Project, the Property, or any portion thereof. Upon receipt of any notice regarding the presence, release or discharge of Hazardous Materials in, on or under the Property, or any portion thereof, Developer (as long as Developer owns the property which is the subject of such notice) agrees to timely initiate and diligently pursue and complete all appropriate response, remediation and removal actions for the presence, release or discharge of such Hazardous Materials within such deadlines as specified by applicable Environmental Laws.

Developer hereby covenants and agrees that:
(1) Developer shall not knowingly permit the Project or the Property or any portion of either to be a site for the use, generation, treatment, manufacture, storage, disposal or transportation of Hazardous Materials or otherwise knowingly permit the presence or release of Hazardous Materials in, on, under, about or from the Project or the Property with the exception of any previously disclosed existing conditions on the Property and cleaning supplies and other materials customarily used in construction, rehabilitation, use or maintenance of residential property and used, stored and disposed of in compliance with Hazardous Materials Laws, and
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(2) Developer shall keep and maintain the Project and the Property and each portion thereof in compliance with, and shall not cause or permit the Project or the Property or any portion of either to be in violation of, any Hazardous Materials Laws.

9.2 Environmental Indemnification. Developer shall indemnify, defend (with counsel approved by City) and hold the Indemnitees harmless from and against any and all Claims including without limitation any expenses associated with the investigation, assessment, monitoring, response, removal, treatment, abatement or remediation of Hazardous Materials and administrative, enforcement or judicial proceedings resulting, arising, or based directly or indirectly in whole or in part, upon (i) the presence, release, use, generation, discharge, storage or disposal or the alleged presence, release, discharge, storage or disposal of any Hazardous Materials on, under, in or about, or the transportation of any such Hazardous Materials to or from, the Property, or (ii) the failure of Developer, Developer’s employees, agents, contractors, subcontractors, or any person acting on behalf of any of the foregoing to comply with Hazardous Materials Laws or the covenants set forth in Section 9.1. The foregoing indemnity shall further apply to any residual contamination in, on, under or about the Property or affecting any natural resources, and to any contamination of any property or natural resources arising in connection with the generation, use, handling, treatment, storage, transport or disposal of any such Hazardous Materials, and irrespective of whether any of such activities were or will be undertaken in accordance with Hazardous Materials Laws. The provisions of this Section 9.2 shall survive the issuance of a Certificate of Completion for the Project and the expiration or earlier termination of this Agreement. Developer’s indemnification obligation under this Section 9.2 shall not apply to acts described in clause (i) above caused by the gross negligence or willful misconduct of an Indemnitee.

9.2.1 No Limitation. Developer hereby acknowledges and agrees that Developer’s duties, obligations and liabilities under this Agreement, including, without limitation, under Section 9.2 above, are in no way limited or otherwise affected by any information the City may have concerning the Property and/or the presence in, on, under or about the Property of any Hazardous Materials, whether the City obtained such information from the Developer or from its own investigations. It is further agreed that City do not and shall not waive any rights against Developer that they may have by reason of this indemnity and hold harmless agreement because of the acceptance by City, or the deposit with City by Developer, of any of the insurance policies described in this Agreement.

9.3 Hazardous Materials. As used herein, the term “Hazardous Materials” means any substance, material or waste which is or becomes regulated by any federal, state or local governmental authority, and includes without limitation (i) petroleum or oil or gas or any direct or indirect product or by-product thereof; (ii) asbestos and any material containing asbestos; (iii) any substance, material or waste regulated by or listed (directly or by reference) as a “hazardous substance”, “hazardous material”, “hazardous waste”, “toxic waste”, “toxic pollutant”, “toxic substance”, “solid waste” or “pollutant or contaminant” in or pursuant to, or similarly identified as hazardous to human health or the environment in or pursuant to, the Toxic Substances Control Act [15 U.S.C. 2601, et seq.]; the Comprehensive Environmental Response, Compensation and Liability Act [42 U.S.C. Section 9601, et seq.], the Hazardous Materials Transportation Authorization Act [49 U.S.C. Section 5101, et seq.], the Resource Conservation and Recovery 209
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Act [42 U.S.C. 6901, et seq.], the Federal Water Pollution Control Act [33 U.S.C. Section 1251], the Clean Air Act [42 U.S.C. Section 7401, et seq.], the California Underground Storage of Hazardous Substances Act [California Health and Safety Code Section 25280, et seq.], the California Hazardous Substances Account Act [California Health and Safety Code Section 25300, et seq.], the California Hazardous Waste Act [California Health and Safety Code Section 25100, et seq.], the California Safe Drinking Water and Toxic Enforcement Act [California Health and Safety Code Section 25249.5, et seq.], and the Porter-Cologne Water Quality Control Act [California Water Code Section 13000, et seq.], as they now exist or are hereafter amended, together with any regulations promulgated thereunder; (iv) any substance, material or waste which is defined as such or regulated by any “Superfund” or “Superlien” law, or any Environmental Law; or (v) any other substance, material, chemical, waste or pollutant identified as hazardous or toxic and regulated under any other federal, state or local environmental law, including without limitation, asbestos, polychlorinated biphenyls, petroleum, natural gas and synthetic fuel products and by-products.

9.4 Environmental Laws. As used herein, the term “Environmental Laws” means all federal, state or local statutes, ordinances, rules, regulations, orders, decrees, judgments or common law doctrines, and provisions and conditions of permits, licenses and other operating authorizations regulating, or relating to, or imposing liability or standards of conduct concerning (i) pollution or protection of the environment, including natural resources; (ii) exposure of persons, including employees and agents, to Hazardous Materials (as defined above) or other products, raw materials, chemicals or other substances; (iii) protection of the public health or welfare from the effects of by-products, wastes, emissions, discharges or releases of chemical substances from industrial or commercial activities; (iv) the manufacture, use or introduction into commerce of chemical substances, including without limitation, their manufacture, formulation, labeling, distribution, transportation, handling, storage and disposal; or (iv) the use, release or disposal of toxic or hazardous substances or Hazardous Materials or the remediation of air, surface waters, groundwaters or soil, as now or may at any later time be in effect, including but not limited to the Toxic Substances Control Act [15 U.S.C. 2601, et seq.]; the Comprehensive Environmental Response, Compensation and Liability Act [42 U.S.C. Section 9601, et seq.], the Hazardous Materials Transportation Authorization Act [49 U.S.C. Section 5101, et seq.], the Resource Conservation and Recovery Act [42 U.S.C. 6901, et seq.], the Federal Water Pollution Control Act [33 U.S.C. Section 1251], the Clean Air Act [42 U.S.C. Section 7401, et seq.], the California Underground Storage of Hazardous Substances Act [California Health and Safety Code Section 25280, et seq.], the California Hazardous Substances Account Act [California Health and Safety Code Section 25300, et seq.], the California Hazardous Waste Act [California Health and Safety Code Section 25100, et seq.], the California Safe Drinking Water and Toxic Enforcement Act [California Health and Safety Code Section 25249.5, et seq.], and the PorterCologne Water Quality Control Act [California Water Code Section 13000, et seq.], as each of the foregoing now exist or are hereafter amended, together with any regulations promulgated thereunder.

ARTICLE X

DEFAULTS, REMEDIES AND TERMINATION
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10.1 Event of Developer Default. The following events shall constitute an event of default on the part of Developer (“Event of Developer Default”):
(a) Developer fails to commence or complete construction of the Project within the times set forth in Section 3.6, or subject to force majeure, abandons or suspends construction of the Project prior to completion for a period of sixty (60) days or more; (b) Developer fails to pay when due the principal and interest (if any) payable under the Note and such failure continues for thirty (30) days after City notifies Developer thereof in writing;
(c) A Transfer occurs, either voluntarily or involuntarily, in violation of Article VII; (d) Developer fails to maintain insurance on the Property and the Project as required pursuant to this Agreement, and Developer fails to cure such default within ten (10) days; (e) Subject to Developer’s right to contest the following charges pursuant to Section

6.3, if Developer fails to pay prior to delinquency taxes or assessments due on the Property or the Project or fails to pay when due any other charge that may result in a lien on the Property or the Project, and Developer fails to cure such default within 30 days of date of delinquency, but in all events upon the imposition of any such tax or other lien; (f) A default is declared in writing under any loan secured by a mortgage, deed of trust or other security instrument recorded against the Property and remains uncured beyond any applicable cure period such that the holder of such security instrument has the right to accelerate repayment of such loan;
(g) Any representation or warranty contained in this Agreement or in any financial statement, certificate or report submitted to the City in connection with this Agreement or Developer’s request for the Loan proves to have been false in any material and adverse respect when made and continues to be materially adverse to the City; (h) If, pursuant to or within the meaning of the United States Bankruptcy Code or any other federal or state law relating to insolvency or relief of debtors ("Bankruptcy Law"), Developer (i) commences a voluntary case or proceeding; (ii) consents to the entry of an order for relief against Developer in an involuntary case; (iii) consents to the appointment of a trustee, receiver, assignee, liquidator or similar official for Developer; (iv) makes an assignment for the benefit of its creditors; or (v) admits in writing its inability to pay its debts as they become due; (i) A court of competent jurisdiction shall have made or entered any decree or order (1) adjudging the Developer to be bankrupt or insolvent, (2) approving as properly filed a petition seeking reorganization of the Developer or seeking any arrangement for Developer under bankruptcy law or any other applicable debtor's relief law or statute of the United States or any state or other jurisdiction, (3) appointing a receiver, trustee, liquidator, or assignee of the Developer in bankruptcy or insolvency or for any of its properties, or (4) directing the winding up or liquidation of the Developer;
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(j) Developer shall have assigned its assets for the benefit of its creditors (other than pursuant to a mortgage loan) or suffered a sequestration or attachment of or execution on any substantial part of its property, unless the property so assigned, sequestered, attached or executed upon shall have been returned or released within sixty (60) days after such event (unless a lesser time period is permitted for cure under any other mortgage on the Property, in which event such lesser time period shall apply under this subsection as well) or prior to any sooner sale pursuant to such sequestration, attachment, or execution;
(k) The Developer shall have voluntarily suspended its business or Developer shall have been dissolved or terminated;
(l) An event of default arises under this Agreement, the Regulatory Agreement, or any City Document and remains uncured beyond any applicable cure period; or (m) Developer defaults in the performance of any term, provision, covenant or agreement contained in this Agreement other than an obligation enumerated in this Section 10.1 and unless a shorter cure period is specified for such default, the default continues for ten (10) days in the event of a monetary default or thirty (30) days in the event of a nonmonetary default after the date upon which City shall have given written notice of the default to Developer; provided however, if the default is of a nature that it cannot be cured within 30 days, a Developer Event of Default shall not arise hereunder if Developer commences to cure the default within thirty (30) days and thereafter prosecutes the curing of such default with due diligence and in good faith to completion and in no event later than ninety (90) days after receipt of notice of the default or such longer period as the City may allow.

10.2 City Default. An event of default on the part of City (“Event of City Default”) shall arise hereunder if City fails to keep, observe, or perform any of its covenants, duties, or obligations under this Agreement, and the default continues for a period of thirty (30) days after written notice thereof from Developer to City, or in the case of a default which cannot with due diligence be cured within thirty (30) days, City fails to commence to cure the default within thirty (30) days of such notice and thereafter fails to prosecute the curing of such default with due diligence and in good faith to completion.

10.3 City’s Right to Terminate Agreement. If an Event of Developer Default shall occur and be continuing beyond any applicable cure period, then City shall, in addition to other rights available to it under law or this Agreement, have the right to terminate this Agreement. If City makes such election, City shall give written notice to Developer and to any mortgagee entitled to such notice specifying the nature of the default and stating that this Agreement shall expire and terminate on the date specified in such notice, and upon the date specified in the notice, this Agreement and all rights of Developer under this Agreement, shall expire and terminate.

10.4 City’s Remedies and Rights Upon an Event of Developer Default. Upon the occurrence of an Event of Developer Default and the expiration of any applicable cure period, City shall have all remedies available to them under law or equity, including, but not limited to 212
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the following, City may, at its election, without notice to or demand upon Developer, except for notices or demands required by law or expressly required pursuant to this Agreement, the Regulatory Agreement, or the City Documents, exercise one or more of the following remedies:
(a) Accelerate and declare the balance of the Note and interest accrued thereon immediately due and payable;
(b) Seek specific performance to enforce the terms of the Regulatory Agreement; (c) Foreclose on the Property pursuant to the Deed of Trust; (d) Pursue any and all other remedies available under law to enforce the terms of the this Agreement, the Regulatory Agreement, and the City Documents and City’s rights thereunder.

10.5 Developer’s Remedies Upon an Event of City Default. Upon the occurrence of an City Event of Default, in addition to pursuing any other remedy allowed at law or in equity or otherwise provided in this Agreement, Developer may bring an action for equitable relief seeking the specific performance of the terms and conditions of this Agreement, and/or enjoining, abating, or preventing any violation of such terms and conditions, and/or seeking to obtain any other remedy consistent with the purpose of this Agreement.

10.6 Remedies Cumulative; No Consequential Damages. Except as otherwise expressly stated in this Agreement, the rights and remedies of the Parties are cumulative, and the exercise by any Party of one or more of such rights or remedies shall not preclude the exercise by it, at the same or different time, of any other rights or remedies for the same or any other default by the other Party. Notwithstanding anything to the contrary set forth herein, a party’s right to recover damages in the event of a default shall be limited to actual damages and shall exclude consequential damages.

10.7 Inaction Not a Waiver of Default. No failure or delay by any Party in asserting any of its rights and remedies as to any default shall operate as a waiver of such default or of any such rights or remedies, nor deprive any Party of its rights to institute and maintain any action or proceeding which it may deem necessary to protect, assert or enforce any such rights or remedies in the same or any subsequent default.

ARTICLE XI
INDEMNITY AND INSURANCE.

11.1 Indemnity. Developer shall indemnify, defend (with counsel approved by City) and hold Indemnitees harmless from and against any and all Claims, including without limitation, Claims arising directly or indirectly, in whole or in part, as a result of or in connection with Developer’s or Developer’s contractors, subcontractors, agents or employees development, construction, improvement, operation, ownership or maintenance of the Project or the Property, or any part thereof or otherwise arising out of or in connection with Developer’s performance under this Agreement. Developer’s indemnification obligations under this Section 11.1 shall not 213
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extend to Claims resulting from the gross negligence or willful misconduct of Indemnitees. The provisions of this Section 11.1 shall survive the issuance of a Certificate of Completion for the Project and the expiration or earlier termination of this Agreement. It is further agreed that City do not and shall not waive any rights against Developer that they may have by reason of this indemnity and hold harmless agreement because of the acceptance by City, or the deposit with City by Developer, of any of the insurance policies described in this Agreement.

11.2 Liability and Workers Compensation Insurance.
(a) Developer and all contractors working on behalf of Developer on the Project shall maintain a commercial general liability policy in the amount of Two Million Dollars ($2,000,000) combined single limit, Four Million Dollars ($4,000,000) annual aggregate, or such other policy limit as City may require in their reasonable discretion, including coverage for bodily injury, property damage, products, completed operations and contractual liability coverage. Such policy or policies shall be written on an occurrence basis and shall name the Indemnitees as additional insureds.
(b) Developer and all contractors working on behalf of Developer shall maintain a comprehensive automobile liability coverage in the amount of One Million Dollars ($1,000,000), combined single limit including coverage for owned and non-owned vehicles and shall furnish or cause to be furnished to City evidence satisfactory to City that Developer and any contractor with whom Developer has contracted for the performance of work on the Property or otherwise pursuant to this Agreement carries workers' compensation insurance as required by law.

Automobile liability policies shall name the Indemnitees as additional insureds. (c) Upon commencement of construction and continuing until issuance of a Certificate of Completion, Developer and all contractors working on behalf of Developer shall maintain a policy of builder's all-risk insurance in an amount not less than the full insurable cost of the Project on a replacement cost basis naming City as a loss payee. (d) Developer shall maintain property insurance covering all risks of loss (other than earthquake), including flood (if required) for 100% of the replacement value of the Project with deductible, if any, in an amount acceptable to City, naming City as a loss payee. (e) Companies writing the insurance required hereunder shall be licensed to do business in the State of California. Insurance shall be placed with insurers with a current A.M.

Best's rating of no less than A-VIII. The Commercial General Liability and comprehensive automobile policies required hereunder shall name the Indemnitees as additional insureds.

Builder’s Risk and property insurance shall name City as a loss payee. (f) Prior to closing of the Loan, Developer shall furnish City with certificates of insurance in form acceptable to City evidencing the required insurance coverage and duly executed endorsements evidencing such additional insured status. The certificates shall contain a statement of obligation on the part of the carrier to notify City of any material adverse change, cancellation, termination or non-renewal of the coverage at least thirty (30) days in advance of the effective date of any such material adverse change, cancellation, termination or non-renewal. 214
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(g) If any insurance policy or coverage required hereunder is canceled or reduced, Developer shall, within fifteen (15) days after receipt of notice of such cancellation or reduction in coverage, but in no event later than the effective date of cancellation or reduction, file with City a certificate showing that the required insurance has been reinstated or provided through another insurance company or companies. Upon failure to so file such certificate, City may, without further notice and at its option, procure such insurance coverage at Developer’s expense, and Developer shall promptly reimburse City for such expense upon receipt of billing from City. (h) Coverage provided by Developer shall be primary insurance and shall not be contributing with any insurance, or self-insurance maintained by City, and the policies shall so provide. The insurance policies shall contain a waiver of subrogation for the benefit of the City.

Developer shall furnish the required certificates and endorsements to City prior to the commencement of construction of the Project, and shall provide City with certified copies of the required insurance policies upon request of City.

ARTICLE XII

MISCELLANEOUS PROVISIONS

12.1 No Brokers. Each Party warrants and represents to the other that no person or entity can properly claim a right to a real estate commission, brokerage fee, finder's fee, or other compensation with respect to the transactions contemplated by this Agreement. Each Party agrees to defend, indemnify and hold harmless the other Party from any claims, expenses, costs or liabilities arising in connection with a breach of this warranty and representation. The terms of this Section shall survive the expiration or earlier termination of this Agreement.

12.2 Enforced Delay; Extension of Times of Performance. Subject to the limitations set forth below, performance by any Party shall not be deemed to be in default, and all performance and other dates specified in this Agreement shall be extended where delays are due to: war, insurrection, strikes, lockouts, riots, floods, earthquakes, fires, casualties, acts of God, acts of the public enemy, epidemics, quarantine restrictions, freight embargoes, governmental restrictions or priority, litigation, including court delays, unusually severe weather, acts or omissions of the other Parties, acts or failures to act of any other public or governmental agency or entity (other than the acts or failures to act of City which shall not excuse performance by City), or any other cause beyond the affected Party’s reasonable control. An extension of time for any such cause shall be for the period of the enforced delay and shall commence to run from the time of the commencement of the cause, if notice by the Party claiming such extension is sent to the other Parties within thirty (30) days of the commencement of the cause and such extension is not rejected in writing by the other Parties within ten (10) days of receipt of the notice. None of the Parties shall unreasonably withhold consent to an extension of time pursuant to this Section.

Times of performance under this Agreement may also be extended in writing by the mutual agreement of Developer and City (acting in the discretion of its City Manager unless he or she determine in his or her discretion to refer such matter to the City Council). City and Developer acknowledge that adverse changes in economic conditions, either of the affected Party specifically or the economy generally, changes in market conditions or demand, and/or inability 215
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to obtain financing to complete the work of Improvements shall not constitute grounds of enforced delay pursuant to this Section. Each Party expressly assumes the risk of such adverse economic or market changes and/or financial inability, whether or not foreseeable as of the Effective Date.

12.3 Notices. Except as otherwise specified in this Agreement, all notices to be sent pursuant to this Agreement shall be made in writing, and sent to the Parties at their respective addresses specified below or to such other address as a Party may designate by written notice delivered to the other parties in accordance with this Section. All such notices shall be sent by:
(i) personal delivery, in which case notice is effective upon delivery; (ii) certified or registered mail, return receipt requested, in which case notice shall be deemed delivered on receipt if delivery is confirmed by a return receipt; (iii) nationally recognized overnight courier, with charges prepaid or charged to the sender’s account, in which case notice is effective on delivery if delivery is confirmed by the delivery service;
City:

City of South Lake Tahoe
1901 Lisa Maloff Way
South Lake Tahoe, CA 96150
Attention: City Manager
With a copy to:

City Attorney
City of South Lake Tahoe
1901 Lisa Maloff Way, Suite 300
South Lake Tahoe, CA 96150
Developer:

Sugar Pine Housing Partners, L.P.
c/o Related California
44 Montgomery Street, Suite 1300
San Francisco, California 94104
Attention: Ann Silverberg
With a copy to:

St. Joseph Sugar Pine Village LLC
c/o St. Joseph Community Land Trust
312 Dorla Court, Suite 205
PO Box 12032
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Zephyr Cove, NV 89448
Attn: Executive Director
With a copy to: c/o Red Stone Equity Partners, LLC
1100 Superior Ave., Suite 1640
Cleveland, OH 44114
Attention: Managing Director & General Counsel
Fax No.: (216) 820-4751
With a copy to: Applegate & Thorne-Thomsen, P.C.
425 South Financial Place, Suite 1900
Chicago, Illinois 60605
Attention: Bennett P. Applegate
Fax No.: (312) 491-4411

12.4 Attorneys’ Fees. If any Party fails to perform any of its obligations under this Agreement, or if any dispute arises between the Parties concerning the meaning or interpretation of any provision hereof, then the prevailing party in any proceeding in connection with such dispute shall be entitled to the costs and expenses it incurs on account thereof and in enforcing or establishing its rights hereunder, including, without limitation, court costs and reasonable attorneys' fees and disbursements.

12.5 Waivers; Modification. No waiver of any breach of any covenant or provision of this Agreement shall be deemed a waiver of any other covenant or provision hereof, and no waiver shall be valid unless in writing and executed by the waiving party. An extension of time for performance of any obligation or act shall not be deemed an extension of the time for performance of any other obligation or act, and no extension shall be valid unless in writing and executed by the waiving party. This Agreement may be amended or modified only by a written instrument executed by the Parties.

12.6 Binding on Successors. Subject to the restrictions on Transfers set forth in Article VII, this Agreement shall bind and inure to the benefit of the Parties and their respective permitted successors and assigns. Any reference in this Agreement to a specifically named party shall be deemed to apply to any permitted successor and assign of such party who has acquired an interest in compliance with this Agreement or under law.

12.7 Construction. The section headings and captions used herein are solely for convenience and shall not be used to interpret this Agreement. The Parties acknowledge that this Agreement is the product of negotiation and compromise on the part of both Parties, and the Parties agree, that since all of the Parties have participated in the negotiation and drafting of this Agreement, this Agreement shall not be construed as if prepared by one of the Parties, but rather according to its fair meaning as a whole, as if all Parties had prepared it. 217
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12.8 Action or Approval. Whenever action and/or approval by City is required under this Agreement, the City Manager or his or her designee may act on and/or approve such matter unless specifically provided otherwise, or unless the City Manager determines in his or her discretion that such action or approval requires referral to the City Council for consideration.

12.9 Entire Agreement. This Agreement, including the exhibits listed below, which are attached hereto and incorporated herein by this reference, together with the Regulatory Agreement, and the other City Documents contains the entire agreement between the Parties with respect to the subject matter hereof, and supersedes all prior written or oral agreements, understandings, representations or statements between the Parties with respect to the subject matter hereof.

Exhibit A Legal Description of Property
Exhibit B Form of Certificate of Completion
Exhibit C Form of Regulatory Agreement
Exhibit D Form of Promissory Note
Exhibit E Form of Leasehold Deed of Trust
Exhibit F Financing Plan

12.10 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be an original and all of which taken together shall constitute one instrument. The signature page of any counterpart may be detached therefrom without impairing the legal effect of the signature(s) thereon provided such signature page is attached to any other counterpart identical thereto having additional signature pages executed by the other Parties. Any executed counterpart of this Amendment may be delivered to the other Parties by facsimile and shall be deemed as binding as if an originally signed counterpart was delivered.

12.11 Severability. If any term, provision, or condition of this Agreement is held by a court of competent jurisdiction to be invalid or unenforceable, the remainder of this Agreement shall continue in full force and effect unless an essential purpose of this Agreement is defeated by such invalidity or unenforceability.

12.12 No Third Party Beneficiaries. Nothing contained in this Agreement is intended to or shall be deemed to confer upon any person, other than the Parties and their respective successors and assigns, any rights or remedies hereunder.

12.13 Parties Not Co-Venturers. Nothing in this Agreement is intended to or shall establish the Parties as partners, co-venturers, or principal and agent with one another.

12.14 Non-Liability of Officials, Employees and Agents. No officer, official, employee or agent of City shall be personally liable to Developer or its successors in interest in the event of any default or breach by City or for any amount which may become due to Developer or its successors in interest pursuant to this Agreement.
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12.15 Time of the Essence; Calculation of Time Periods. Time is of the essence for each condition, term, obligation and provision of this Agreement. Unless otherwise specified, in computing any period of time described in this Agreement, the day of the act or event after which the designated period of time begins to run is not to be included and the last day of the period so computed is to be included, unless such last day is not a business day, in which event the period shall run until the next business day. The final day of any such period shall be deemed to end at 5:00 p.m., local time at the Property. For purposes of this Agreement, a “business day” means a day that is not a Saturday, Sunday, a federal holiday or a state holiday under the laws of California.

12.16 Governing Law; Venue. This Agreement shall be governed by and construed in accordance with the laws of the State of California without regard to principles of conflicts of laws. Any action to enforce or interpret this Agreement shall be filed in the Superior Court of El Dorado County, California or in the Federal District Court for the Northern District of California.

12.17 Financial and Governmental Capacities. Developer agrees that the capacity of the City in this Agreement, the Regulatory Agreement, and the other City Documents shall be only as a lender (“Financial Capacity”), and that nothing herein or therein shall waive, supersede, condition, limit, modify or affect the City's rights to take (or not take) any action in a governmental capacity, including without limitation enacting laws, inspecting structures, reviewing and issuing permits, and all other legislative, administrative, or enforcement functions pursuant to federal, state or local law (“Governmental Capacity”). In addition, nothing in this Agreement, the Regulatory Agreement, and the other City Documents shall supersede or waive any discretionary or regulatory approvals required to be obtained from the City under applicable law.

SIGNATURES ON FOLLOWING PAGE.
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IN WITNESS WHEREOF, the Parties have entered into this Agreement effective as of the date first written above.

CITY:

City of South Lake Tahoe
By: _______________________________
______________i, City Manager
ATTEST:

By: ___________________________
, City Clerk
APPROVED AS TO FORM:

By: ___________________________
a, City Attorney
DEVELOPER:

Sugar Pine Housing Partners, L.P., a California
limited partnership
By: Sugar Pine Housing Development Co.,
LLC, a California limited liability company,
its administrative general partner
By: ________________________________
Ann Silverberg
President
By: St. Joseph Sugar Pine Village LLC, its
managing general partner
By: St. Joseph Community Land Trust, a
California nonprofit public benefit
corporation, its manager
By: __________________________
Jean Diaz, Executive Director

EXHIBIT A

LEGAL DESCRIPTION
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EXHIBIT B

FORM OF CERTIFICATE OF COMPLETION

CERTIFICATE OF COMPLETION
Recording requested by
and when recorded mail to:

EXEMPT FROM RECORDING FEES PER
GOVERNMENT CODE §§6103, 27383
Space above this line for Recorder’s use.

CERTIFICATE OF COMPLETION
This Certificate of Completion (this “Certificate”) is made by the City of South Lake Tahoe, a municipal corporation (“City”) effective as of ___________.

RECITALS
A. City and SUGAR PINE HOUSING PARTNERS, L.P., a California limited partnership (“Owner”) entered into that certain Loan Agreement dated as of _________, 2022 (the “Loan Agreement”) regarding the development of a residential housing project on those certain leasehold premises located in South Lake Tahoe, California, as more particularly described on Exhibit A attached hereto and incorporated herein (the “Property”). Capitalized terms used herein without definition shall have the meaning ascribed to such terms in the Loan Agreement.

B. Pursuant to Section 3.15 of the Loan Agreement, the City is required to furnish the Owner or its successors with a Certificate of Completion upon completion of construction of the Project, issuance of a final Certificate of Occupancy by the City, and written request in accordance with the Loan Agreement.

C. The City has determined that construction of the Project has been satisfactorily completed in accordance with the Loan Agreement.

NOW, THEREFORE, Agency hereby certifies as follows:

1. Development of the Project has been satisfactorily completed in conformance with the Loan Agreement.

2. All use, maintenance and nondiscrimination covenants contained in the Loan Agreement shall remain in effect and enforceable in accordance with the Loan Agreement. This Certificate does not constitute evidence of Owner’s compliance with those covenants in the Loan Agreement that survive the issuance of this Certificate, including without limitation, compliance 222
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with the Affordable Housing Regulatory Agreement and Declaration of Restrictive Covenants entered into pursuant to the Loan Agreement and recorded in the Official Records as Instrument No. __________

3. This Certificate does not constitute evidence of compliance with or satisfaction of any obligation of Owner to any holder of a deed of trust securing money loaned to finance the development of the Property, Improvements or any part thereof and does not constitute a notice of completion under California Civil Code Section 3093.

4. Nothing contained in this instrument shall modify any provisions of the Loan Agreement or any other document executed in connection therewith.

IN WITNESS WHEREOF, Agency has executed and issued this Certificate of Completion as of the date first written above.

CITY OF SOUTH LAKE TAHOE, a municipal corporation
By: ______________________________
Name: _______________________________
City Manager
ATTEST:

By: _______________________________
City Clerk
APPROVED AS TO FORM:

By: _______________________________
City Attorney
CITY MANAGER SIGNATURE MUST BE NOTARIZED.
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EXHIBIT C

FORM OF REGULATORY AGREEMENT
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EXHIBIT D

FORM OF SECURED PROMISSORY NOTE
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EXHIBIT E

FORM DEED OF TRUST
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EXHIBIT F

FINANCING PLAN
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SECURED PROMISSORY NOTE
(PLHA Loan)
$4,750,000 South Lake Tahoe, California
June 1, 2022
FOR VALUE RECEIVED, Sugar Pine Housing Partners, L.P., a California limited partnership (“Borrower”), promises to pay to the South Lake Tahoe, a California charter city (“City”), in lawful money of the United States of America, the principal sum of Four Million Seven Hundred Fifty Thousand Dollars ($4,750,000) so much thereof as may be advanced by City pursuant to the Loan Agreement referred to below, together with interest on the outstanding principal balance in accordance with the terms and conditions described herein.

Interest shall accrue on the outstanding principal balance at a rate equal to zero percent (0%) simple interest per annum, commencing upon the date of disbursement thereof. Interest shall be calculated on the basis of a year of 365 days, and charged for the actual number of days elapsed.

This Secured Promissory Note (this “Note”) has been executed and delivered pursuant to and in accordance with an Loan Agreement executed by and between Borrower and City, dated as of June 1, 2022 (the “Loan Agreement”), and is subject to the terms and conditions of the Loan Agreement, which is by this reference incorporated herein and made a part hereof. Capitalized terms used but not defined herein shall have the meaning ascribed to such terms in the Loan Agreement.

This Note is secured by a Leasehold Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing (“Deed of Trust”) dated as of the date hereof, executed by Borrower for the benefit of City and encumbering the property described therein. City shall be entitled to the benefits of the security provided by the Deed of Trust and shall have the right to enforce the covenants and agreements contained herein, in the Regulatory Agreement, and the Loan Agreement. The Regulatory Agreement shall remain effective for the full term thereof and shall survive the repayment of this Note.

PAYMENTS

1.1 PAYMENT DATES; MATURITY DATE. All payments on this Note shall be deferred until the Maturity Date. The entire outstanding principal balance of this Note, together with interest accrued thereon and any other sums accrued hereunder shall be payable in full on the fifty-fifth (55th) anniversary of the date upon which City issues a final certificate of occupancy for the Project (“Maturity Date”).

1.2 DUE ON SALE. The entire unpaid principal balance and all interest and other sums accrued hereunder shall be due and payable upon the Transfer (as defined in Section 7.2 of the Loan Agreement) absent City consent, of all or any part of the Project or the Property or any interest therein other than a Transfer permitted without City consent pursuant to the Loan Agreement. Without limiting the generality of the foregoing, this Note shall not be assumable without City’s prior written consent, which consent may be granted or denied in City’s sole discretion; provided however, this Note may be assumed in connection with a permitted transfer as described in Section 7.3 of the Loan Agreement.

1.3 PREPAYMENT. Borrower may, without premium or penalty, at any time and from time to time, prepay all or any portion of the outstanding principal balance due under 228
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this Note, provided that each such prepayment is accompanied by accrued interest on the amount of principal prepaid calculated to the date of such prepayment. Prepayments shall be applied first to any unpaid late charges and other costs and fees then due, then to accrued but unpaid interest, and then to principal.

1.4 MANNER OF PAYMENT. All payments of principal and interest on this Note shall be made to City at 1901 Lisa Maloff Way, South Lake Tahoe, CA 96150 or such other place as City shall designate to Borrower in writing, or by wire transfer of immediately available funds to an account designated by City in writing.

2. DEFAULTS AND REMEDIES.

2.1 EVENTS OF DEFAULT. The occurrence of any one or more of the following events shall constitute an event of default hereunder ("Event of Default"):
(A) Borrower fails to pay when due the principal and interest payable hereunder and such failure continues for thirty (30) days after City notifies Borrower thereof in writing, provided no notice shall be required for any payment otherwise due on final maturity of this Note.
(B) Pursuant to or within the meaning of the United States Bankruptcy Code or any other federal or state law relating to insolvency or relief of debtors ("Bankruptcy Law"), Borrower or any general partner thereof (i) commences a voluntary case or proceeding; (ii) consents to the entry of an order for relief against Borrower or any general partner thereof in an involuntary case; (iii) consents to the appointment of a trustee, receiver, assignee, liquidator or similar official for Borrower or any general partner thereof; (iv) makes an assignment for the benefit of its creditors; or (v) admits in writing its inability to pay its debts as they become due.
(C) A court of competent jurisdiction enters an order or decree under any Bankruptcy Law that (i) is for relief against Borrower or any general partner thereof in an involuntary case, (ii) appoints a trustee, receiver, assignee, liquidator or similar official for Borrower or any general partner thereof or substantially all of such entity’s assets, (iii) orders the liquidation of Borrower or any general partner thereof, or (iv) issues or levies a judgment, writ, warrant of attachment or similar process against the Property or the Project, and in each case the order or decree is not released, vacated, dismissed or fully bonded within 90 days after its issuance.
(D) The occurrence of a Transfer in violation of Article VII of the Loan Agreement.
(E) A default is declared under any debt instrument secured by a mortgage or deed of trust on the Project or the Property and remains uncured beyond any applicable cure period such that the holder of such instrument has the right to accelerate payment thereunder. (F) Borrower fails to maintain insurance on the Property and the Project as required pursuant to the City Documents and Borrower fails to cure such default within 20 days.
(G) Subject to Borrower’s right to contest the following charges pursuant to the City Documents, if Borrower fails to pay taxes or assessments due on the Property or the 229
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Project or fails to pay any other charge that may result in a lien on the Property or the Project, and Borrower fails to cure such default within 10 days. (H) If any representation or warranty contained in any City Document, or any certificate furnished in connection therewith, or in connection with any request for disbursement of the proceeds of the Loan (the “Loan Proceeds”) proves to have been false or misleading in any material adverse respect when made and continues to be materially adverse to the City.
(I) An Event of Default shall have been declared under the Regulatory Agreement or any City Document, and remains uncured beyond the expiration of any applicable cure period.

2.2 REMEDIES. Upon the occurrence of an Event of Default hereunder, City may, at its option (i) by written notice to Borrower, declare the entire unpaid principal balance of this Note, together with all accrued interest thereon and all sums due hereunder, immediately due and payable regardless of any prior forbearance, (ii) exercise any and all rights and remedies available to it under applicable law, and (iii) exercise any and all rights and remedies available to City under this Note and the other City Documents, including without limitation the right to pursue foreclosure under the Deed of Trust. Borrower shall pay all reasonable costs and expenses incurred by or on behalf of City including, without limitation, reasonable attorneys' fees, incurred in connection with City's enforcement of this Note and the exercise of any or all of its rights and remedies hereunder and all such sums shall be a part of the indebtedness secured by the Deed of Trust. The rights and remedies of City under this Note shall be cumulative and not alternative.

2.3 DEFAULT RATE. Upon the occurrence of an Event of Default, interest shall automatically be increased without notice to the rate of ten percent (10%) per annum (the “Default Rate"); provided however, if any payment due hereunder is not paid when due, the Default Rate shall apply commencing upon the due date for such payment. When Borrower is no longer in default, the Default Rate shall no longer apply, and the interest rate shall once again be the rate specified in the first paragraph of this Note. Notwithstanding the foregoing provisions, if the interest rate charged exceeds the maximum legal rate of interest, the rate shall be the maximum rate permitted by law. The imposition or acceptance of the Default Rate shall in no event constitute a waiver of a default under this Note or prevent City from exercising any of its other rights or remedies.

3. MISCELLANEOUS

3.1 WAIVERS; BORROWER’S WAIVERS. No waiver by City of any right or remedy under this Note shall be effective unless in a writing signed by City. Neither the failure nor any delay in exercising any right, power or privilege under this Note will operate as a waiver of such right, power or privilege, and no single or partial exercise of any such right, power or privilege by City will preclude any other or further exercise of such right, power or privilege or the exercise of any other right, power or privilege. No waiver that may be given by City will be applicable except in the specific instance for which it is given. No notice to or demand on Borrower will be deemed to be a waiver of any obligation of Borrower or of the right of City to take further action without notice or demand as provided in this Note.
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To the maximum extent permitted by applicable law Borrower hereby waives presentment, demand, protest, notices of dishonor and of protest and all defenses and pleas on the grounds of any extension or extensions of the time of payment or of any due date under this Note, in whole or in part, whether before or after maturity and with or without notice.

3.2 NOTICES. Any notice required or permitted to be given hereunder shall be given in accordance with Section 12.3 of the Loan Agreement.

3.3 SEVERABILITY. If any provision in this Note is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Note will remain in full force and effect. Any provision of this Note held invalid or unenforceable only in part or degree will remain in full force and effect to the extent not held invalid or unenforceable.

3.4 GOVERNING LAW; VENUE. This Note shall be governed by the laws of the State of California without regard to principles of conflicts of laws. Any legal action filed in connection with this Note shall be filed in the Superior Court of Alameda County, California, or in the Federal District Court for the Northern District of California.

3.5 PARTIES IN INTEREST. This Note shall bind Borrower and its successors and assigns and shall accrue to the benefit of City and its successors and assigns.

3.6 SECTION HEADINGS, CONSTRUCTION. The headings of Sections in this Note are provided for convenience only and will not affect its construction or interpretation.

3.7 RELATIONSHIP OF THE PARTIES. The relationship of Borrower and City under this Note is solely that of borrower and lender, and the loan evidenced by this Note and secured by the Deed of Trust will in no manner make City the partner or joint venturer of Borrower.

3.8 TIME IS OF THE ESSENCE. Time is of the essence with respect to every provision of this Note.

3.9 NONRECOURSE. Except as expressly provided in this Section 3.9, neither Borrower nor its partners shall have personal liability for payment of the principal of, or interest on, this Note, and the sole recourse of City with respect to the payment of the principal of, and interest on, this Note shall be to the Project, the Property and any other collateral held by City as security for this Note; provided however, nothing contained in the foregoing limitation of liability shall: (i) limit or impair the enforcement against all such security for the Note of all the rights and remedies of the City thereunder; (ii) be deemed in any way to impair the right of the City to assert the unpaid principal amount of the Note as demand for money within the meaning and intendment of Section 431.70 of the California Code of Civil Procedure or any successor provision thereto; or (iii) be deemed in any way to limit the rights of the City to obtain specific performance by the Borrower of its covenants under the City Documents, other than the covenants to pay the City principal and interest due under the Note.

The foregoing limitation of liability is intended to apply only to the obligation for the repayment of the principal of, and payment of interest on the Note; nothing contained herein is intended to relieve the Borrower of its obligation to indemnify the City under this Agreement, or liability for: (i) fraud or willful misrepresentation by the Borrower; (ii) the 231
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failure to pay taxes, assessments or other charges which may create liens on the Property that are payable or applicable prior to any foreclosure under the Deed of Trust (to the full extent of such taxes, assessments or other charges); (iii) the fair market value of any personal property or fixtures removed or disposed of by the Borrower other than in accordance with the Deed of Trust; and/or (iv) the misappropriation of any proceeds by the Borrower under any insurance policies or awards resulting from condemnation or the exercise of the power of eminent domain or by reason of damage, loss or destruction to any portion of the Development
IN WITNESS WHEREOF, Borrower has executed and delivered this Note as of the date first written above.

BORROWER:

Sugar Pine Housing Partners, L.P., a California
limited partnership
By: Sugar Pine Housing Development Co.,
LLC, a California limited liability company,
its administrative general partner
By: ________________________________
Ann Silverberg
President
By: St. Joseph Sugar Pine Village LLC, its
managing general partner
By: St. Joseph Community Land Trust, a
California nonprofit public benefit
corporation, its manager
By: __________________________
Jean Diaz, Executive Director
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Recording requested by and when recorded mail
to:

City of South Lake Tahoe
1901 Lisa Maloff Way
South Lake Tahoe, CA 96150

EXEMPT FROM RECORDING FEES PER
GOVERNMENT CODE §§6103, 27383
Space above this line for Recorder’s use.

LEASEHOLD DEED OF TRUST, ASSIGNMENT OF RENTS,

SECURITY AGREEMENT AND FIXTURE FILING
(PLHA Loan)

THIS LEASEHOLD DEED OF TRUST, ASSIGNMENT OF RENTS, SECURITY AGREEMENT AND FIXTURE FILING (this “Deed of Trust”) is made as of June 1, 2022, by SUGAR PINE HOUSING PARTNERS, L.P., a California limited partnership (“Trustor”) to OLD REPUBLIC TITLE COMPANY (“Trustee”), for the benefit of the City of South Lake Tahoe, a municipal corporation (“Beneficiary”).

RECITALS
A. Trustor owns a leasehold interest in the land described in Exhibit A attached hereto and incorporated herein by this reference (the “Land”). Trustor intends to construct a 68- unit multifamily residential development on the Land and related improvements (the “Project”).

B. Beneficiary and Trustor have entered into an Loan Agreement dated as of June 1, 2022 (the “Loan Agreement”) pursuant to which Beneficiary will provide a loan to Trustor in the amount of up to Four Million Seven Hundred Fifty Thousand Dollars ($4,750,000) (“Loan”) for the purpose of partially financing the Project. Trustor has issued to Beneficiary a secured promissory note dated as of the date hereof (the “Note”) to evidence Trustor’s obligation to repay the Loan. This Deed of Trust, the Loan Agreement, the Note and the Regulatory Agreement (defined below) are collectively referred to herein as the “City Documents.” C. As a condition precedent to the making of the Loan, Beneficiary has required that Trustor enter into this Deed of Trust and grant to Trustee for the benefit of Beneficiary, a lien and security interest in the Project and in Trustor’s leasehold interest in the Land to secure repayment of the Note and performance of Trustor’s obligations under the Loan Agreement and the other City Documents.

NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, it is agreed as follows.

1. Grant in Trust. In consideration of the foregoing and for the purpose of securing payment and performance of the Secured Obligations defined and described in Section 2, Trustor hereby irrevocably and unconditionally grants, conveys, transfers and assigns to Trustee, in trust for the benefit of Beneficiary, with power of sale and right of entry and possession, all estate, right, title 233
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and interest which Trustor now has or may later acquire in and to the Land, and all of the following, whether presently owned or hereafter acquired:
a. The leasehold estate (“Leasehold Estate”) in the land created by that certain Development Ground Lease between Trustor, as Lessee, and the State of California (“State”), dated as of June [___], 2022, recorded substantially concurrently herewith in the Official Records of El Dorado County, California (“Ground Lease”); b. All buildings, structures, and improvements, now or hereafter located or constructed on the Land (“Improvements”);
c. All appurtenances, easements, rights of way, pipes, transmission lines or wires and other rights used in connection with the Land or the Improvements or as a means of access thereto, whether now or hereafter owned or constructed or placed upon or in the Land or Improvements and all existing and future privileges, rights, franchises and tenements of the Land, including all minerals, oils, gas and other commercially valuable substances which may be in, under or produced from any part of the Land, and all water rights, rights of way, gores or strips of land, and any land lying in the streets, ways, and alleys, open or proposed, in front of or adjoining the Land and Improvements (collectively, “Appurtenances”); d. All machinery, equipment, fixtures, goods and other personal property of the Trustor, whether moveable or not, now owned or hereafter acquired by the Trustor and now or hereafter located at or used in connection with the Land, the Improvements or Appurtenances, and all improvements, restorations, replacements, repairs, additions or substitutions thereto (collectively, “Equipment”);
e. All existing and future leases, subleases, licenses, and other agreements relating to the use or occupancy of all or any portion of the Leasehold Estate, Land or Improvements (collectively, “Leases”), all amendments, extensions, renewals or modifications thereof, and all rent, royalties, or other payments which may now or hereafter accrue or otherwise become payable thereunder to or for the benefit of Trustor, including but not limited to security deposits (collectively, “Rents”);
f. All insurance proceeds and any other proceeds from the Leasehold Estate, Land, Improvements, Appurtenances, Equipment, Leases, and Rents, including without limitation, all deposits made with or other security deposits given to utility companies, all claims or demands relating to insurance awards which the Trustor now has or may hereafter acquire, including all advance payments of insurance premiums made by Trustor, and all condemnation awards or payments now or later made in connection with any condemnation or eminent domain proceeding (“Proceeds”);
g. All revenues, income, rents, royalties, payments and profits produced by the Leasehold Estate, Land, Improvements, Appurtenances and Equipment, whether now owned or hereafter acquired by Trustor (“Gross Revenues”);
h. All architectural, structural and mechanical plans, specifications, design documents and studies produced in connection with development of the Land and construction of the Improvements (collectively, “Plans”); and
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i. All interests and rights in any private or governmental grants, subsidies, loans or other financing provided in connection with development of the Leasehold Estate, Land and construction of the Improvements (collectively, “Financing”).

All of the above-referenced interests of Trustor in the Leasehold Estate, Land, Improvements, Appurtenances, Equipment, Leases, Rents, Proceeds, Gross Revenues, Plans and Financing as hereby conveyed to Trustee or made subject to the security interest herein described are collectively referred to herein as the “Property.”

2. Obligations Secured. This Deed of Trust is given for the purpose of securing payment and performance of the following (collectively, the “Secured Obligations”): (i) all present and future indebtedness evidenced by the Note and any amendment thereof, including principal, interest and all other amounts payable under the terms of the Note; (ii) all present and future obligations of Trustor to Beneficiary under the Loan Agreement, the Affordable Housing Regulatory Agreement and Declaration of Restrictive Covenants dated as of the date hereof, executed by and between City and Trustor and recorded substantially concurrently herewith (the “Regulatory Agreement”) or the other City Documents; (iii) all additional present and future obligations of Trustor to Beneficiary under any other agreement or instrument acknowledged by Trustor (whether existing now or in the future) which states that it is or such obligations are, secured by this Deed of Trust; (iv) all obligations of Trustor to Beneficiary under all modifications, supplements, amendments, renewals, or extensions of any of the foregoing, whether evidenced by new or additional documents; and (v) reimbursement of all amounts advanced by or on behalf of Beneficiary to protect Beneficiary’s interests under this Deed of Trust or any other City Document as such may be modified, supplemented, amended, renewed or extended.

3. Assignment of Rents, Issues, and Profits. Trustor hereby irrevocably, absolutely, presently and unconditionally assigns to Beneficiary the Rents, royalties, issues, profits, revenue, income and proceeds of the Property. This is an absolute assignment and not an assignment for security only. Beneficiary hereby confers upon Trustor a license to collect and retain such Rents, royalties, issues, profits, revenue, income and proceeds as they become due and payable prior to any Event of Default hereunder. Upon the occurrence of any such Event of Default, Beneficiary may terminate such license without notice to or demand upon Trustor and without regard to the adequacy of any security for the indebtedness hereby secured, and may either in person, by agent, or by a receiver to be appointed by a court, enter upon and take possession of the Property or any part thereof, and 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 attorneys’ fees, to any indebtedness secured hereby, and in such order as Beneficiary may determine. Beneficiary’s right to the rents, royalties, issues, profits, revenue, income and proceeds of the Property does not depend upon whether or not Beneficiary takes possession of the Property. The entering upon and taking possession of the Property, the collection 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. If an Event of Default occurs while Beneficiary is in possession of all or part of the Property and/or is collecting and applying Rents as permitted under this Deed of Trust, Beneficiary, Trustee and any receiver shall nevertheless be entitled to exercise and invoke every right and remedy afforded any of them under this Deed of Trust and at law or in equity, 235
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including the right to exercise the power of sale granted hereunder. Regardless of whether or not Beneficiary, in person or by agent, takes actual possession of the Land or the Improvements, Beneficiary shall not be deemed to be a “mortgagee in possession,” shall not be responsible for performing any obligation of Trustor under any Lease, shall not be liable in any manner for the Property, or the use, occupancy, enjoyment or operation of any part of it, and shall not be responsible for any waste committed by Trustor, lessees or any third parties, or for dangerous or defective condition of the Property or any negligence in the management, repair or control of the Property. Absent Beneficiary’s written consent, Trustor shall not accept prepayment of Rents for any rental period exceeding one month.

4. Security Agreement. The parties intend for this Deed of Trust to create a lien on the Property, and an absolute assignment of the Rents and Leases, all in favor of Beneficiary, subject to the rights of any beneficiaries under deeds of trust senior in priority to this Deed of Trust permitted under the Loan Agreement and Ground Lease (“Senior Deeds of Trust”). The parties acknowledge that some of the Property may be determined under applicable law to be personal property or fixtures. To the extent that any Property may be or be determined to be personal property, Trustor as debtor hereby grants to Beneficiary as secured party a security interest in all such Property to secure payment and performance of the Secured Obligations. This Deed of Trust constitutes a security agreement under the California Uniform Commercial Code, as amended or recodified from time to time (the “UCC”), covering all such Property. To the extent such Property is not real property encumbered by the lien granted above, and is not absolutely assigned by the assignment set forth above, it is the intention of the parties that such Property shall constitute "proceeds, products, offspring, rents, or profits" (as defined in and for the purposes of Section 552(b) of the United States Bankruptcy Code, as such section may be modified or supplemented) of the Land and Improvements.

5. Financing Statements. Pursuant to the UCC, Trustor, as debtor, hereby authorizes Beneficiary, as secured party, to file such financing statements and amendments thereof and such continuation statements with respect thereto as Beneficiary may deem appropriate to perfect and preserve Beneficiary's security interest in the Property and Rents, without requiring any signature or further authorization by Trustor. If requested by Beneficiary, Trustor shall pay all fees and costs that Beneficiary may incur in filing such documents in public offices and in obtaining such record searches as Beneficiary may reasonably require. If any financing statement or other document is filed in the records normally pertaining to personal property, that filing shall not be construed as in any way derogating from or impairing this Deed of Trust or the rights or obligations of the parties under it.

Everything used in connection with the Property and/or adapted for use therein and/or which is described or reflected in this Deed of Trust is, and at all times and for all purposes and in all proceedings both legal or equitable shall be regarded as part of the estate encumbered by this Deed of Trust irrespective of whether (i) any such item is physically attached to the Improvements, (ii) serial numbers are used for the better identification of certain equipment items capable of being thus identified in a recital contained herein or in any list filed with Beneficiary, or (iii) any such item is referred to or reflected in any such financing statement so filed at any time. Similarly, the mention in any such financing statement of (1) rights in or to the proceeds of any fire and/or hazard insurance policy, or (2) any award in eminent domain proceedings for a taking or for lessening of value, or (3) Trustor's interest as lessor in any present 236
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or future lease or rights to income growing out of the use and/or occupancy of the property conveyed hereby, whether pursuant to lease or otherwise, shall not be construed as in any way altering any of the rights of Beneficiary as determined by this instrument or impugning the priority of Beneficiary’s lien granted hereby or by any other recorded document. Such mention in any financing statement is declared to be solely for the protection of Beneficiary in the event any court or judge shall at any time hold, with respect to the matters set forth in the foregoing clauses (1), (2), and (3), that notice of Beneficiary's priority of interest is required in order to be effective against a particular class of persons, including but not limited to the federal government and any subdivisions or entity of the federal government.

6. Fixture Filing. Subject to the rights of beneficiaries under Senior Deeds of Trust, this Deed of Trust is intended to be and constitutes a fixture filing pursuant to the provisions of the UCC with respect to all of the Property constituting fixtures, is being recorded as a fixture financing statement and filing under the UCC, and covers property, goods and equipment which are or are to become fixtures related to the Land and the Improvements. Trustor covenants and agrees that this Deed of Trust is to be filed in the real estate records of El Dorado County and shall also operate from the date of such filing as a fixture filing in accordance with Section 9502 and other applicable provisions of the UCC. This Deed of Trust shall also be effective as a financing statement covering minerals or the like (including oil and gas) and accounts subject to the UCC, as amended. Trustor shall be deemed to be the "debtor" and Beneficiary shall be deemed to be the "secured party" for all purposes under the UCC.

7. Trustor’s Representations, Warranties and Covenants; Rights and Duties of the Parties.

7.1 Representations and Warranties. Trustor represents and warrants that: (i) Trustor lawfully possesses and holds the Leasehold Estate in the Land and title to the Improvements, (ii) Trustor has good and marketable title to all of the Property; (iii) Trustor has the full and unlimited power, right and authority to encumber the Property and assign the Rents; (iv) subject only to encumbrances of record and senior liens permitted pursuant to the City Documents or otherwise approved in writing by Beneficiary (“Permitted Encumbrances”), this Deed of Trust creates a valid first lien on Trustor’s entire interest in the Property; (v) except with respect to Permitted Encumbrances, Trustor owns the Property free and clear of any deeds of trust, mortgages, security agreements, reservations of title or conditional sales contracts, (vi) there is no financing statement affecting the Property on file in any public office other than as disclosed in writing to Beneficiary; and (vii) the correct address of Trustor’s chief executive office is specified in Section 10.2.

Trustor further represents and warrants that this Deed of Trust and all other documents delivered or to be delivered by Trustor in connection herewith: (a) have been duly authorized, executed, and delivered by Trustor; (b) are binding obligations of Trustor; and (c) do not violate the provisions of any agreement to which Trustor is a party or which affects the Property.

Trustor further represents and warrants that there are no pending, or to Trustor’s knowledge, threatened actions or proceedings before any court or administrative agency which may adversely affect Trustor’s ownership of the Property.

7.2 Payment and Performance of Secured Obligations. Trustor shall promptly pay when due the principal and any interest due on the indebtedness evidenced by the Note, and shall 237
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promptly pay and perform all other obligations of Trustor arising in connection with the Secured Obligations or the City Documents in accordance with the respective terms thereof.

7.3 Use of Loan Proceeds; Preservation and Maintenance of Property; Compliance with Laws. Trustor covenants that it shall use the proceeds of the Loan (the “Loan Proceeds”) solely for purposes authorized by the City Documents. Trustor shall keep the Land and Improvements in good repair and condition, and from time to time shall make necessary repairs, renewals and replacements thereto so that the Property shall be preserved and maintained.

Trustor covenants to comply with all federal, state and local laws, regulations, ordinances and rules applicable to the Property and the Project, including without limitation all applicable requirements of state and local building codes and regulations, and all applicable statutes and regulations relating to accessibility for the disabled. Trustor shall not remove, demolish or materially alter any Improvement without Beneficiary’s consent, shall complete or restore promptly and in good and workmanlike manner any building, fixture or other improvement which may be constructed, damaged, or destroyed thereon, and shall pay when due all claims for labor performed and materials furnished therefor. Trustor shall use the Land and Improvements solely for purposes authorized by the City Documents, shall not commit or allow waste of the Property, and shall not commit or allow any act upon or use of the Property which would violate any applicable law or order of any governmental authority, nor shall Trustor bring on or keep any article on the Property or cause or allow any condition to exist thereon which could invalidate or which would be prohibited by any insurance coverage required to be maintained on the Property pursuant to the City Documents.

7.4 Restrictions on Conveyance and Encumbrance; Acceleration. It shall be an Event of Default hereunder if any Transfer (as defined in the Loan Agreement) of the Property, any part thereof or any interest therein occurs in violation of the requirements of the City Documents.

If any such Transfer occurs in violation of such requirements, without limiting the provisions of Section 8 hereof, all obligations secured by this Deed of Trust, irrespective of the maturity dates of such obligations, shall at the option of Beneficiary, and without demand, immediately become due and payable, subject to any applicable cure period.

7.5 Inspections; Books and Records. Beneficiary and its agents and representatives shall have the right at any reasonable time upon reasonable notice to enter upon the Land and inspect the Property to ensure compliance with the City Documents. Trustor shall maintain complete and accurate books of account and other records (including copies of supporting bills and invoices) adequate to document the use of the Loan Proceeds and the operation of the Property, together with copies of all written contracts, Leases and other instruments which affect the Property. The books, records, contracts, Leases and other instruments shall be subject to examination and inspection at any reasonable time by Beneficiary following two business days prior notice.

7.6 Charges, Liens, Taxes and Assessments. Trustor shall pay before delinquency all taxes, levies, assessments and other charges affecting the Property that are (or if not paid may become) a lien on all or part of the Property. Trustor may, at Trustor’s expense, contest the validity or application of any tax, levy, assessment or charge affecting the Property by appropriate legal proceedings promptly initiated and conducted in good faith and with due diligence, provided that (i) Beneficiary is reasonably satisfied that neither the Property nor any 238
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part thereof or interest therein will be in danger of being sold, forfeited, or lost as a result of such contest, and (ii) Trustor shall have posted a bond or furnished other security as may reasonably be required from time to time by Beneficiary; and provided further that Trustor shall timely make any payment necessary to prevent a lien foreclosure, sale, forfeiture or loss of the Property.

7.7 Subrogation. Beneficiary shall be subrogated to the liens of all encumbrances, whether released of record or not, which are discharged in whole or in part by Beneficiary in accordance with this Deed of Trust.

7.8 Hazard, Liability and Workers’ Compensation Insurance. At all times during the term hereof, Trustor shall at Trustor’s expense, maintain insurance policies in accordance with the requirements set forth in the City Documents. Trustor shall file with Beneficiary prior to the commencement of the term hereof, certificates (or such other proof as Beneficiary may reasonably require, including without limitation copies of the required insurance policies) evidencing each of the insurance policies and endorsements thereto as required pursuant to the City Documents, and such certificates (or policies) shall provide that at least thirty (30) days’ prior written notice shall be provided to Beneficiary prior to the expiration, cancellation or change in coverage under each such policy. If any insurance policy required pursuant to the City Documents is canceled or the coverage provided thereunder is reduced, Trustor shall, within ten (10) days after receipt of written notice of such cancellation or reduction in coverage, but in no event later than the effective date of cancellation or reduction, file with Beneficiary a certificate showing that the required insurance has been reinstated or provided through another insurance company or companies. Upon failure to so file such certificate, Beneficiary may, without further notice and at its option (and without any obligation to do so), procure such insurance coverage at Trustor’s expense, and Trustor shall promptly reimburse Beneficiary for such expense upon receipt of billing from Beneficiary.

7.9 Condition of Property. Trustor represents and warrants that except as disclosed to Beneficiary in writing, as of the date hereof: (i) Trustor has not received any notice from any governmental authority of any threatened or pending zoning, building, fire, or health code violation or violation of other governmental regulations concerning the Land that has not previously been corrected, and no condition on the Land violates any health, safety, fire, environmental, sewage, building, or other federal, state or local law, ordinance or regulation; (ii) no contracts, licenses, leases or commitments regarding the maintenance or use of the Property or allowing any third party rights to use the Property are in force; (iii) there are no threatened or pending actions, suits, or administrative proceedings against or affecting the Property or any portion thereof or the interest of Trustor in the Property; (iv) there are no threatened or pending condemnation, eminent domain, or similar proceedings affecting the Land or any portion thereof; (v) Trustor has not received any notice from any insurer of defects of the Property which have not been corrected; (vi) there are no natural or artificial conditions upon the Land or any part thereof that could result in a material and adverse change in the condition of the Land; (vii) all information that Trustor has delivered to Beneficiary, either directly or through Trustor's agents, is accurate and complete; and (viii) Trustor or Trustor’s agents have disclosed to Beneficiary all material facts concerning the Property.

7.10 Hazardous Materials. Trustor represents and warrants that except as disclosed to Beneficiary in writing, as of the date hereof to the best knowledge of Trustor: (i) the Land is 239
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free and has always been free of Hazardous Materials (as defined below) and is not and has never been in violation of any Environmental Law (as defined below); (ii) there are no buried or partially buried storage tanks located on the Land; (iii) Trustor has received no notice, warning, notice of violation, administrative complaint, judicial complaint, or other formal or informal notice alleging that conditions on the Land are or have ever been in violation of any Environmental Law or informing Trustor that the Land is subject to investigation or inquiry regarding Hazardous Materials on the Land or the potential violation of any Environmental Law; (iv) there is no monitoring program required by the Environmental Protection Agency or any other governmental agency concerning the Land; (v) no toxic or hazardous chemicals, waste, or substances of any kind have ever been spilled, disposed of, or stored on, under or at the Land, whether by accident, burying, drainage, or storage in containers, tanks, holding areas, or any other means; (vi) the Land has never been used as a dump or landfill; and (vii) Trustor has disclosed to Beneficiary all information, records, and studies in Trustor’s possession or reasonably available to Trustor relating to the Land concerning Hazardous Materials.

Trustor shall not cause or permit any Hazardous Material (as defined in Section 9.3 of the Loan Agreement) to be brought upon, kept, stored or used in, on, under, or about the Land by Trustor, its agents, employees, contractors or invitees except for incidental supplies ordinarily used in the construction and operation of residential developments in compliance with all applicable laws, and shall not cause any release of Hazardous Materials into, onto, under or through the Land. If any Hazardous Material is discharged, released, dumped, or spilled in, on, under, or about the Land and results in any contamination of the Land or adjacent property, or otherwise results in the release or discharge of Hazardous Materials in, on, under or from the Land, Trustor shall promptly take all actions at its sole expense as are necessary to comply with all Environmental Laws (as defined below).

Trustor shall indemnify, defend (with counsel reasonably acceptable to Beneficiary), and hold Beneficiary and its elected and appointed officials, officers, agents and employees (collectively, “Indemnitees”) harmless from and against any and all loss, claim, liability, damage, demand, judgment, order, penalty, fine, injunctive or other relief, cost, expense (including reasonable fees and expenses of attorneys, expert witnesses, and other professionals advising or assisting Beneficiary), action, or cause of action (all of the foregoing, hereafter individually “Claim” and collectively “Claims”) arising in connection with the breach of Trustor’s covenants and obligations set forth in this Section 7.10 or otherwise arising in connection with the presence or release of Hazardous Materials in, on, under, or from the Property. The foregoing indemnity includes, without limitation, all costs of investigation, assessment, containment, removal, remediation of any kind, and disposal of Hazardous Materials, all costs of determining whether the Land is in compliance with Environmental Laws, all costs associated with bringing the Land into compliance with all applicable Environmental Laws, and all costs associated with claims for damages or injury to persons, property, or natural resources.

Without limiting the generality of the foregoing, Trustor shall, at Trustor’s own cost and expense, do all of the following:
a. pay or satisfy any judgment or decree that may be entered against any Indemnitee or Indemnitees in any legal or administrative proceeding incident to any matters against which Indemnitees are entitled to be indemnified under this Deed of Trust; 240
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b. reimburse Indemnitees for any expenses paid or incurred in connection with any matters against which Indemnitees are entitled to be indemnified under this Deed of Trust; and c. reimburse Indemnitees for any and all expenses, including without limitation outof-pocket expenses and fees of attorneys and expert witnesses, paid or incurred in connection with the enforcement by Indemnitees of their rights under this Deed of Trust, or in monitoring and participating in any legal or administrative proceeding.

Trustor’s obligation to indemnify the Indemnitees shall not be limited or impaired by any of the following, or by any failure of Trustor to receive notice of or consideration for any of the following: (i) any amendment or modification of any City Document; (ii) any extensions of time for performance required by any City Document; (iii) any provision in any of the City Documents limiting Beneficiary's recourse to property securing the Secured Obligations, or limiting the personal liability of Trustor, or any other party for payment of all or any part of the Secured Obligations; (iv) the accuracy or inaccuracy of any representation and warranty made by Trustor under this Deed of Trust or by Trustor or any other party under any City Document, (v) the release of Trustor or any other person, by Beneficiary or by operation of law, from performance of any obligation under any City Document; (vi) the release or substitution in whole or in part of any security for the Secured Obligations; and (vii) Beneficiary’s failure to properly perfect any lien or security interest given as security for the Secured Obligations.

The provisions of this Section 7.10 shall be in addition to any and all other obligations and liabilities that Trustor may have under applicable law, and each Indemnitee shall be entitled to indemnification under this Section without regard to whether Beneficiary or that Indemnitee has exercised any rights against the Property or any other security, pursued any rights against any guarantor or other party, or pursued any other rights available under the City Documents or applicable law. The obligations of Trustor to indemnify the Indemnitees under this Section shall survive any repayment or discharge of the Secured Obligations, any foreclosure proceeding, any foreclosure sale, any delivery of any deed in lieu of foreclosure, and any release of record of the lien of this Deed of Trust.

Without limiting any of the remedies provided in this Deed of Trust, Trustor acknowledges and agrees that each of the provisions in this Section 7.10 is an environmental provision (as defined in Section 736(f)(2) of the California Code of Civil Procedure) made by Trustor relating to real property security (the “Environmental Provisions”), and that Trustor's failure to comply with any of the Environmental Provisions will be a breach of contract that will entitle Beneficiary to pursue the remedies provided by Section 736 of the California Code of Civil Procedure (“Section 736”) for the recovery of damages and for the enforcement of the Environmental Provisions. Pursuant to Section 736, Beneficiary's action for recovery of damages or enforcement of the Environmental Provisions shall not constitute an action within the meaning of Section 726(a) of the California Code of Civil Procedure or constitute a money judgment for a deficiency or a deficiency judgment within the meaning of Sections 580a, 580b, 580d, or 726(b) of the California Code of Civil Procedure. “Environmental Law” means all federal, state or local statutes, ordinances, rules, regulations, orders, decrees, judgments or common law doctrines, and provisions and conditions of permits, licenses and other operating authorizations regulating, or relating to, or imposing 241
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liability or standards of conduct concerning (i) pollution or protection of the environment, including natural resources; (ii) exposure of persons, including employees and agents, to any Hazardous Material (as defined above) or other products, raw materials, chemicals or other substances; (iii) protection of the public health or welfare from the effects of by-products, wastes, emissions, discharges or releases of chemical substances from industrial or commercial activities; (iv) the manufacture, use or introduction into commerce of chemical substances, including without limitation, their manufacture, formulation, labeling, distribution, transportation, handling, storage and disposal; or (iv) the use, release or disposal of toxic or hazardous substances or Hazardous Materials or the remediation of air, surface waters, groundwaters or soil, as now or may at any later time be in effect, including but not limited to the Toxic Substances Control Act [15 U.S.C. 2601, et seq.]; the Comprehensive Environmental Response, Compensation and Liability Act [42 U.S.C. Section 9601, et seq.], the Hazardous Materials Transportation Authorization Act [49 U.S.C. Section 5101, et seq.], the Resource Conservation and Recovery Act [42 U.S.C. 6901, et seq.], the Federal Water Pollution Control Act [33 U.S.C. Section 1251], the Clean Air Act [42 U.S.C. Section 7401, et seq.], the California Underground Storage of Hazardous Substances Act [California Health and Safety Code Section 25280, et seq.], the California Hazardous Substances Account Act [California Health and Safety Code Section 25300, et seq.], the California Hazardous Waste Act [California Health and Safety Code Section 25100, et seq.], the California Safe Drinking Water and Toxic Enforcement Act [California Health and Safety Code Section 25249.5, et seq.], and the Porter-Cologne Water Quality Control Act [California Water Code Section 13000, et seq.], as they now exist or are hereafter amended, together with any regulations promulgated thereunder.

7.11 Notice of Claims; Defense of Security; Reimbursement of Costs. a. Notice of Claims. Promptly upon obtaining knowledge of the institution of any proceedings for the condemnation or other taking of all or any portion of the Property, or knowledge of any casualty damage to the Property, or damage in any other manner, Trustor shall immediately notify Beneficiary thereof. Trustor hereby authorizes and empowers Beneficiary as attorney in fact for Trustor to make proof of loss, to adjust and compromise any claim under the insurance policies covering the Property, to appear in and prosecute any action arising from such insurance policies, to collect and receive insurance proceeds, and to deduct therefrom Beneficiary’s expenses incurred in the collection of such proceeds; provided, however, that nothing contained in this Section shall require Beneficiary to incur any expense or take any action hereunder. Trustor hereby authorizes and empowers Beneficiary, at Beneficiary’s option, as attorney in fact for Trustor, to commence, appear in and prosecute, in Beneficiary’s or Trustor’s name, any action or proceeding relating to any condemnation or other taking of all or any part of the Property, whether direct or indirect, and to settle or compromise any claim in connection with such condemnation or other taking. The proceeds of any award payment or claim for damages, direct or consequential, in connection with any condemnation or other taking, whether direct or indirect, of the Property, or any part thereof, or for conveyances in lieu of the Property, or any part thereof, shall be paid to Beneficiary. The foregoing powers of attorney are coupled with an interest and are irrevocable. Trustor hereby authorizes Beneficiary to apply such awards, payments, proceeds or damages relating to condemnation of the Property and insurance covering the Property, after the deduction of Beneficiary’s expenses incurred in the collection of such amounts, at Beneficiary’s option, subject to the requirements of applicable law and the provisions hereof, to restoration or repair of the Property or to payment of the sums 242
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secured by this Deed of Trust. Beneficiary shall be under no obligation to question the amount of any compensation, awards, proceeds, damages, claims, rights of action, and payments relating to condemnation or other taking of the Property or insured casualty affecting the Property, and may accept the same in the amount in which the same shall be paid. Trustor shall execute such further evidence of assignment of any awards, proceeds damages or claims arising in connection with such condemnation or taking or such insurance as Beneficiary may require. Trustor’s obligations and Beneficiary’s rights under this Section are subject to the requirements of the Senior Deeds of Trust (if any)..
b. Defense of Security. At Trustor's sole expense, Trustor shall protect, preserve and defend the Property and title to and right of possession of the Property, the security of this Deed of Trust and the rights and powers of Beneficiary and Trustee created under it, against all adverse claims.
c. Compensation; Reimbursement of Costs. Trustor agrees to pay all reasonable fees, costs and expenses charged by Beneficiary or Trustee for any service that Beneficiary or Trustee may render in connection with this Deed of Trust, including without limitation, fees and expenses related to provision of a statement of obligations or related to a reconveyance. Trustor further agrees to pay or reimburse Beneficiary for all costs, expenses and other advances which may be incurred or made by Beneficiary or Trustee in any efforts to enforce any terms of this Deed of Trust, including without limitation any rights or remedies afforded to Beneficiary or Trustee or both of them under Sections 7.17 and 8.2, whether or not any lawsuit is filed, or in defending any action or proceeding arising under or relating to this Deed of Trust, including reasonable attorneys’ fees and other legal costs, costs of any disposition of the Property under the power of sale granted hereunder or any judicial foreclosure, and any cost of evidence of title. d. Notice of Changes. Trustor shall give Beneficiary prior written notice of any change in the address of Trustor and the location of any Property, including books and records pertaining to the Property.

7.12 Indemnification. Trustor shall indemnify, defend (with counsel reasonably acceptable to Beneficiary), and hold harmless the Indemnitees (as defined in Section 7.10) from and against all Claims arising directly or indirectly in any manner in connection with or as a result of (a) any breach of Trustor’s covenants under any City Document, (b) any representation by Trustor in any City Document which proves to be false or misleading in any material respect when made, (c) injury or death to persons or damage to property or other loss occurring on the Land or in any improvement located thereon, whether caused by the negligence or any other act or omission of Trustor or any other person or by negligent, faulty, inadequate or defective design, building, construction or maintenance or any other condition or otherwise, (d) any claim, demand or cause of action, or any action or other proceeding, whether meritorious or not, brought or asserted against any Indemnitee which relates to or arises out of the Property, or any City Document or any transaction contemplated thereby, or any failure of Trustor to comply with all applicable state, federal and local laws and regulations applicable to the Property, provided that no Indemnitee shall be entitled to indemnification under this Section for matters caused by such Indemnitee's gross negligence or willful misconduct. The obligations of Trustor under this Section shall survive the repayment of the Loan and shall be secured by this Deed of Trust.

Notwithstanding any contrary provision contained herein, the obligations of Trustor under this 243
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Section shall survive any foreclosure proceeding, any foreclosure sale, any delivery of a deed in lieu of foreclosure, and any release or reconveyance of this Deed of Trust.

7.13. Limitation of Liability. Beneficiary shall not be directly or indirectly liable to Trustor or any other person as a consequence of any of the following: (i) Beneficiary's exercise of or failure to exercise any rights, remedies or powers granted to Beneficiary in this Deed of Trust; (ii) Beneficiary's failure or refusal to perform or discharge any obligation or liability of Trustor under any agreement related to the Property or under this Deed of Trust; (iii) any waste committed by Trustor, the lessees of the Property or any third parties, or any dangerous or defective condition of the Property; or (iv) any loss sustained by Trustor or any third party resulting from any act or omission of Beneficiary in managing the Property after an Event of Default, unless the loss is caused by the willful misconduct, gross negligence, or bad faith of Beneficiary. Trustor hereby expressly waives and releases all liability of the types described in this Section 7.13, and agrees that Trustor shall assert no claim related to any of the foregoing against Beneficiary.

7.14 Insurance and Condemnation Proceeds. Subject to the rights of any senior lienholders, and notwithstanding anything contained in any of the City Documents, unless Beneficiary and Trustor otherwise agree in writing, any award of damages in connection with any condemnation for public use of, or injury to the Property or any part thereof shall be applied to restoration or repair of the Property, provided Trustor determines that such restoration or repair is economically feasible and there is no default under any City Document that is continuing beyond the expiration of all applicable cure periods. If Trustor determines that such restoration or repair is not economically feasible or if a default exists after expiration of all applicable cure periods, the insurance proceeds shall be applied to the sums secured by this Deed of Trust, with the excess, if any, paid to Trustor. In the event funds for such work are insufficient, Beneficiary may, in its sole discretion and subject to the approval of Beneficiary’s governing board, advance such additional funds as may be necessary to allow the Property to be repaired or restored, and may add the amount thereof to the principal balance of the Note. If the Property is abandoned by Trustor, or if Trustor fails to respond to Beneficiary within 30 days from the date notice is mailed by Beneficiary to Trustor that the insurance carrier offers to settle a claim for insurance benefits, Beneficiary is authorized to collect and apply the insurance proceeds at Beneficiary's option either to restoration or repair of the Property or to the sums secured by this Deed of Trust

7.15 Release, Extension, Modification. At any time and from time to time, without liability therefor and without notice, upon written request of Beneficiary and presentation of this Deed of Trust and the Note for endorsement, Trustee may release or reconvey all or any part of the Property, consent to the making of any map or plat of the Land or part thereof, join in granting any easement or creating any restriction affecting the Property, or join in any extension agreement or other agreement affecting the lien or charge hereof. At any time and from time to time, without liability therefor and without notice, Beneficiary may (i) release any person liable for payment of any Secured Obligation, (ii) extend the time for payment or otherwise alter the terms of payment of any Secured Obligation; (iii) accept additional real or personal property of any kind as security for any Secured Obligation, or (iv) substitute or release any property securing the Secured Obligations.
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7.16 Reconveyance. Upon written request of Beneficiary stating that all of the Secured Obligations have been satisfied in full, and upon surrender of this Deed of Trust, and the Note, Trustee shall reconvey, without warranty, the Property or so much of it as is then held under this Deed of Trust. The recitals in any reconveyance executed under this Deed of Trust of any matters or facts shall be conclusive proof of the truthfulness thereof. Trustor shall pay all fees of Trustee and all recordation fees related to such reconveyance.

7.17 Cure; Protection of Security. Beneficiary may cure any breach or default of Trustor, and if it chooses to do so in connection with any such cure, Beneficiary may also enter the Property and/or do any and all other things which it may in its reasonable discretion consider necessary and appropriate to protect the security of this Deed of Trust. Such other things may include: appearing in and/or defending any action or proceeding which purports to affect the security of, or the rights or powers of Beneficiary or Trustee under, this Deed of Trust; paying, purchasing, contesting or compromising any encumbrance, charge, lien or claim of lien which in Beneficiary’s sole judgment is or may be senior in priority to this Deed of Trust, such judgment of Beneficiary to be conclusive as among Beneficiary, Trustee and Trustor; obtaining insurance and/or paying any premiums or charges for insurance required to be carried hereunder; otherwise caring for and protecting any and all of the Property; and/or employing counsel, accountants, contractors and other appropriate persons to assist Beneficiary. Beneficiary may take any of the actions permitted under this Section 7.17 either with or without giving notice, except for notices required under applicable law. Any amounts disbursed by Beneficiary pursuant to this paragraph shall become additional indebtedness secured by this Deed of Trust. Beneficiary shall have no obligation to take any action described in this Section.

7.18 Subordination. Beneficiary hereby acknowledges and agrees that this Deed of Trust and the promissory note and all rights of Beneficiary thereunder shall be subordinate to the following liens and encumbrances:
[insert senior encumbrances and Senior Deeds of Trust]

8. Default and Remedies.

8.1 Events of Default. Trustor acknowledges and agrees that an Event of Default shall occur under this Deed of Trust upon the occurrence of any one or more of the following events:
a. Beneficiary’s declaration of an Event of Default under any City Document, subject to the expiration of any applicable cure period set forth in such document; b. Trustor fails to perform any monetary obligation which arises under this Deed of Trust, and does not cure that failure within ten (10) days following written notice from Beneficiary or Trustee;
c. If Trustor’s interest in the Property or any part thereof is voluntarily or involuntarily sold, transferred, leased, encumbered, or otherwise conveyed in violation of Section 7.4 hereof or if any other Transfer occurs in violation of the Loan Agreement; d. Trustor fails to maintain the insurance coverage required under the City 245
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Documents or otherwise fails to comply with the requirements of Section 7.8 hereof and Trustor fails to cure such default within the time specified in Section 7.8; e. Subject to Trustor’s right to contest such charges as provided herein, Trustor fails to pay taxes or assessments due on the Land or the Improvements or fails to pay any other charge that may result in a lien on the Land or the Improvements, and Trustor fails to cure such default within ten (10) days.
f. Any representation or warranty of Trustor contained in or made in connection with the execution and delivery of this Deed of Trust or in any certificate or statement furnished pursuant hereto or in any other City Document proves to have been false or misleading in any material adverse respect when made;
g. If, pursuant to or within the meaning of the United States Bankruptcy Code or any other federal or state law relating to insolvency or relief of debtors (“Bankruptcy Law”), Trustor or any general partner thereof (i) commences a voluntary case or proceeding; (ii) consents to the entry of an order for relief against Trustor or any general partner thereof in an involuntary case; (iii) consents to the appointment of a trustee, receiver, assignee, liquidator or similar official for Trustor or any general partner thereof; (iv) makes an assignment for the benefit of its creditors; or (v) admits in writing its inability to pay its debts as they become due. h. If a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that (i) is for relief against Trustor or any general partner thereof in an involuntary case, (ii) appoints a trustee, receiver, assignee, liquidator or similar official for Trustor or any general partner thereof or substantially all of such entity’s assets, (iii) orders the liquidation of Trustor or any general partner thereof, or (iv) issues or levies a judgment, writ, warrant of attachment or similar process against the Property or the Project, and in each case the order or decree is not released, vacated, dismissed or fully bonded within 60 days after its issuance.
i. The holder of any other debt instrument secured by a mortgage or deed of trust on the Property or part thereof declares an event of default thereunder and exercises a right to declare all amounts due under that debt instrument immediately due and payable, subject to the expiration of any applicable cure period set forth in such holder’s documents; or j. Trustor fails to perform any obligation arising under this Deed of Trust other than one enumerated in this Section 8.1, and does not cure that failure either within ten (10) days after written notice from Beneficiary or Trustee in the event of a monetary default, or within thirty (30) days after such written notice in the event of a nonmonetary default, provided that in the case of a nonmonetary default that in Beneficiary’s reasonable judgment cannot reasonably be cured within thirty (30) days, an Event of Default shall not arise hereunder if Trustor commences to cure such default within thirty (30) days and thereafter prosecutes such cure to completion with due diligence and in good faith and in no event later than ninety (90) days, or such longer period as the City may approve, following receipt of notice of default.

8.2 Remedies. Subject to the applicable notice and cure provisions set forth herein, at any time after an Event of Default, Beneficiary and Trustee shall be entitled to invoke any and all 246
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of the rights and remedies described below, and may exercise any one or more or all, of the remedies set forth in any City Document, and any other remedy existing at law or in equity or by statute, subject to the nonrecourse provisions set forth in the Note. All of Beneficiary’s rights and remedies shall be cumulative, and the exercise of any one or more of them shall not constitute an election of remedies. Beneficiary shall be entitled to collect all expenses incurred in pursuing the remedies provided hereunder, including without limitation reasonable attorneys’ fees and costs.
a. Acceleration. Beneficiary may declare any or all of the Secured Obligations, including without limitation all sums payable under the Note and this Deed of Trust, to be due and payable immediately.
b. Receiver. Beneficiary may apply to any court of competent jurisdiction for, and obtain appointment of, a receiver for the Property. c. Entry. Beneficiary, in person, by agent or by court-appointed receiver, may enter, take possession of, manage and operate all or any part of the Property, and may also do any and all other things in connection with those actions that Beneficiary may in its sole discretion consider necessary and appropriate to protect the security of this Deed of Trust. Such other things may include: taking and possessing copies of all of Trustor’s or the then owner's books and records concerning the Property; entering into, enforcing, modifying, or canceling Leases on such terms and conditions as Beneficiary may consider proper; obtaining and evicting tenants; fixing or modifying Rents; collecting and receiving any payment of money owing to Trustor; completing any unfinished construction; and/or contracting for and making repairs and alterations. If Beneficiary so requests, Trustor shall assemble all of the Property that has been removed from the Land and make all of it available to Beneficiary at the site of the Land. Trustor hereby irrevocably constitutes and appoints Beneficiary as Trustor's attorney-in-fact to perform such acts and execute such documents as Beneficiary in its sole discretion may consider to be appropriate in connection with taking these measures, including endorsement of Trustor's name on any instruments.
d. UCC Remedies. Beneficiary may exercise any or all of the remedies granted to a secured party under the UCC.
e. Judicial Action. Beneficiary may bring an action in any court of competent jurisdiction to foreclose this Deed of Trust in the manner provided by law for foreclosure of mortgages on real property and/or to obtain specific enforcement of any of the covenants or agreements of this Deed of Trust.
f. Power of Sale. Under the power of sale hereby granted, Beneficiary shall have the discretionary right to cause some or all of the Property, including any Property which constitutes personal property, to be sold or otherwise disposed of in any combination and in any manner permitted by applicable law.

Trustor’s limited partners (the “Limited Partners”) shall have the right to cure any default of Trustor hereunder upon the same terms and conditions afforded to Trustor. Provided that Beneficiary has been given written notice of the address for delivery of notices to the Limited 247
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Partners, Beneficiary shall provide any notice of default hereunder to the Limited Partners concurrently with the provision of such notice to Trustor, and as to the Limited Partners, the cure periods specified herein shall commence upon the date of delivery of such notice in accordance with Section 10.2.

8.3 Power of Sale. If Beneficiary elects to invoke the power of sale hereby granted, Beneficiary shall execute or cause the Trustee to execute a written notice of such default and of its election to cause the Property to be sold to satisfy the obligations hereof, and shall cause such notice to be recorded in the office of the Recorder of each County wherein the Property or some part thereof is situated as required by law and this Deed of Trust.

Prior to publication of the notice of sale, Beneficiary shall deliver to Trustee this Deed of Trust and the Note or other evidence of indebtedness which is secured hereby, together with a written request for the Trustee to proceed with a sale of the Property, pursuant to the provisions of law and this Deed of Trust.

Notice of sale having been given as then required by law, and not less than the time then required by law having elapsed after recordation of such notice of default, Trustee, without demand on Trustor, shall sell the Property at the time and place fixed by it in the 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, and at Beneficiary’s request shall, postpone sale of all or any portion of the Property by public announcement at such time and place of sale, and from time to time thereafter may postpone such sale by public announcement at the time and place fixed by the preceding postponement. Trustee shall deliver to the 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, may purchase at such sale.

After deducting all costs, fees, and expenses of Trustee and of the trust hereby created, including reasonable attorneys’ fees in connection with sale, Trustee shall apply the proceeds of sale to payment of all sums advanced or expended by Beneficiary or Trustee under the terms hereof and all outstanding sums then secured hereby, and the remainder, if any, to the person or persons legally entitled thereto.

Without limiting the generality of the foregoing, Trustor acknowledges and agrees that regardless of whether or not a default has occurred hereunder, if an Event of Default has occurred under the City Documents, and if in connection with such Event of Default Beneficiary exercises its right to foreclose on the Property, then: (i) Beneficiary shall be entitled to declare all amounts due under the Note immediately due and payable, and (ii) the proceeds of any sale of the Property in connection with such foreclosure shall be used to pay all Secured Obligations, including without limitation, the outstanding principal balance and all other amounts due under the Note.

At any foreclosure sale, any person, including Trustor, Trustee or Beneficiary, may bid for and acquire the Property or any part of it to the extent permitted by then applicable law.

Instead of paying cash for such property, Beneficiary may settle for the purchase price by 248
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crediting the sales price of the property against the following obligations:
a. First, the portion of the Secured Obligations attributable to the expenses of sale, costs of any action and any other sums for which Trustor is obligated to pay or reimburse Beneficiary or Trustee under Section 7.11(c); and
b. Second, the remaining balance of all other Secured Obligations in any order and proportions as Beneficiary in its sole discretion may choose.

8.4 Trustor’s Right to Reinstate. Notwithstanding Beneficiary’s acceleration of the sums secured by this Deed of Trust, Trustor shall have the right to have any proceedings begun by Beneficiary to enforce this Deed of Trust discontinued at any time prior to five days before sale of the Property pursuant to the power of sale contained in this Deed of Trust or at any time prior to entry of a judgment enforcing this Deed of Trust if: (a) Trustor pays Beneficiary all sums which would be then due under the Loan Documents if the Secured Obligations had no acceleration provision; (b) Trustor cures all breaches of any other covenants or agreements of Trustor contained in this Deed of Trust; (c) Trustor pays all reasonable expenses incurred by Beneficiary and Trustee in enforcing the covenants and agreements of Trustor contained in this Deed of Trust, and in enforcing Beneficiary’s and Trustee’s remedies as provided herein, including, but not limited to, reasonable attorney’s fees; and (d) Trustor takes such action as Beneficiary may reasonably require to assure that the lien of this Deed of Trust, Beneficiary’s interest in the Property and Trustor’s obligation to pay the sums secured by this Deed of Trust shall continue unimpaired. Upon such payment and cure by Trustor, this Deed of Trust and the obligations secured hereby shall remain in full force and effect as if no acceleration had occurred.

Nothing contained in Sections 8.3 and 8.4 is intended to expand upon or limit the rights of Trustor and Beneficiary under California law regarding Beneficiary’s exercise of the power of sale or Trustor’s reinstatement rights.

9. Trustor's Waivers. To the fullest extent permitted by law, Trustor waives: (a) all statutes of limitations as a defense to any action or proceeding brought against Trustor by Beneficiary; (b) the benefit of all laws now existing or which may hereafter be enacted providing for any appraisement, valuation, stay, extension, redemption or moratorium; (c) all rights of marshalling in the event of foreclosure; and (d) all presentments, demands for performance, notices of nonperformance, protests, notices of protest, notices of dishonor, notices of acceptance of this Deed of Trust and of the existence, creation, or incurring of new or additional indebtedness, and demands and notices of every kind.

10. Miscellaneous Provisions.

10.1 Additional Provisions. The City Documents grant further rights to Beneficiary and contain further agreements and affirmative and negative covenants by Trustor which apply to this Deed of Trust and the Property.

10.2 Notices. Trustor requests that a copy of notice of default and notice of sale be 249
50287123.3
mailed to Trustor at the address set forth below. That address is also the mailing address of Trustor as debtor under the UCC. Beneficiary’s address set forth below is the address for Beneficiary as secured party under the UCC. Except for any notice required under applicable law to be given in another manner, all notices to be sent pursuant to this Deed of Trust shall be made in writing, and sent to the parties at their respective addresses specified below or to such other address as a party may designate by written notice delivered to the other parties in accordance with this Section. All such notices shall be sent by:
a. personal delivery, in which case notice shall be deemed delivered upon receipt;
b. certified or registered mail, return receipt requested, in which case notice shall be deemed delivered two (2) business days after deposit, postage prepaid in the United States mail;
c. nationally recognized overnight courier, in which case notice shall be deemed delivered one (1) day after deposit with such courier; or d. facsimile transmission, in which case notice shall be deemed delivered on transmittal, provided that a transmission report is generated reflecting the accurate transmission thereof.

Beneficiary:

City of South Lake Tahoe
1901 Lisa Maloff Way
South Lake Tahoe, CA 96150
Attention: City Manager
With a copy to:

City Attorney
City of South Lake Tahoe
1901 Lisa Maloff Way, Suite 300
South Lake Tahoe, CA 96150
Trustor:

Sugar Pine Housing Partners, L.P.
c/o Related California
44 Montgomery Street, Suite 1300
San Francisco, California 94104
Attention: Ann Silverberg
With a copy to:
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St. Joseph Sugar Pine Village LLC
c/o St. Joseph Community Land Trust
312 Dorla Court, Suite 205
PO Box 12032
Zephyr Cove, NV 89448
Attn: Executive Director
With a copy to: c/o Red Stone Equity Partners, LLC
1100 Superior Ave., Suite 1640
Cleveland, OH 44114
Attention: Managing Director & General Counsel
Fax No.: (216) 820-4751
With a copy to: Applegate & Thorne-Thomsen, P.C.
425 South Financial Place, Suite 1900
Chicago, Illinois 60605
Attention: Bennett P. Applegate
Fax No.: (312) 491-4411

10.3 Binding on Successors. The terms, covenants and conditions of this Deed of Trust shall be binding upon and inure to the benefit of the heirs, administrators, executors, successors in interest, transferees, and assigns of the Trustor, Beneficiary and Trustee; provided however this Section 10.3 does not waive the provisions of Section 7.4.

10.4 Substitution of Trustee. Beneficiary may from time to time or at any time substitute a trustee or trustees to execute the trust hereby created, and when any such substitution has been filed for record in the office of the Recorder of El Dorado County, it shall be conclusive evidence of the appointment of such trustee or trustees, and such new trustee or trustees shall succeed to all of the powers and duties of the Trustee named herein.

10.5 Attorneys’ Fees and Costs. In any action or proceeding to foreclose this Deed of Trust or to enforce any right of Beneficiary or of Trustee, Trustor shall pay to Beneficiary and Trustee all costs of such action or proceeding, including reasonable attorneys’ fees.

10.6 Governing Law; Severability; Interpretation. This Deed of Trust shall be governed by the laws of the State of California without regard to principles of conflicts of laws.

Trustor agrees that any controversy arising under or in relation to this Deed of Trust shall be litigated exclusively in the jurisdiction where the Land is located (the “Property Jurisdiction”).

The state and federal courts and authorities with jurisdiction in the Property Jurisdiction shall have exclusive jurisdiction over all controversies which shall arise under or in relation to the City Documents. Trustor irrevocably consents to service, jurisdiction, and venue of such courts for any such litigation, and waives any other venue to which it might be entitled by virtue of domicile, habitual residence or otherwise. If any provision of this Deed of Trust is held unenforceable or void, that provision shall be deemed severable from the remaining provisions, 251
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and shall in no way affect the validity of this Deed of Trust. The captions used in this Deed of Trust are for convenience only and are not intended to affect the interpretation or construction of the provisions herein contained. In this Deed of Trust, whenever the context so requires, the singular number includes the plural.

10.7 Waiver, Modification and Amendment. Any waiver by Beneficiary of any obligation of Trustor hereunder must be in writing, and no waiver shall be construed as a continuing waiver. No waiver shall be implied from any delay or failure by Beneficiary or Trustee to take action on account of any default of Trustor. Consent by Beneficiary or Trustee to any act or omission by Trustor shall not be construed as a consent to any other or subsequent act or omission or to waive the requirement for Beneficiary’s or Trustee’s consent to be obtained in any future or other instance. No amendment to or modification of this Deed of Trust shall be effective unless and until such amendment or modification is in writing, executed by Trustor and Beneficiary. Without limiting the generality of the foregoing, Beneficiary’s acceptance of payment of any sum secured hereby after its due date shall not constitute a waiver by Beneficiary of its right either to require prompt payment when due of all other sums so secured or to declare default for failure so to pay.

10.8 Action By Beneficiary. Except as may be otherwise specifically provided herein, whenever any approval, notice, direction, or consent by the Beneficiary is required or permitted under this Agreement, such action shall be in writing, and such action may be given, made or taken by Beneficiary’s Executive Director or by any person who shall have been designated by Beneficiary’s Executive Director, without further approval by the governing board of Beneficiary. Beneficiary shall use reasonable best efforts to respond to requests for any such approval, notice, direction, or consent in a timely manner. In any approval, consent, or other determination by Beneficiary required hereunder, Beneficiary shall act reasonably and in good faith.

10.9 Joint and Several Liability. If Trustor consists of more than one person or entity, each shall be jointly and severally liable for the faithful performance of all of Trustor’s obligations under this Deed of Trust.

10.10 Time is of the Essence. Time is of the essence for each provision of this Deed of Trust.

SIGNATURES ON FOLLOWING PAGE.
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IN WITNESS WHEREOF, Trustor has executed this Deed of Trust as of the date first written above.

TRUSTOR:

Sugar Pine Housing Partners, L.P., a California
limited partnership
By: Sugar Pine Housing Development Co.,
LLC, a California limited liability company,
its administrative general partner
By: ________________________________
Ann Silverberg
President
By: St. Joseph Sugar Pine Village LLC, its
managing general partner
By: St. Joseph Community Land Trust, a
California nonprofit public benefit
corporation, its manager
By: __________________________
Jean Diaz, Executive Director
SIGNATURES MUST BE NOTARIZED.
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EXHIBIT "A"

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

I certify under penalty of perjury under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

Signature_____________________________
5056720.1
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RECORDING REQUESTED BY:

WHEN RECORDED MAIL TO:

City of South Lake Tahoe
1901 Lisa Maloff Way
South Lake Tahoe, CA 96150
Attn: City Manager
APN: _____________ (Space above for Recorder’s use only)

AFFORDABLE HOUSING REGULATORY AGREEMENT
(Sugar Pine Village Phase 1A)
This Affordable Housing Regulatory Agreement (the “Agreement”) is made this ____ day of June, 2022, by and between the CITY OF SOUTH LAKE TAHOE, a municipal corporation (“City”), and SUGAR PINE HOUSING PARTNERS, L.P., a California limited partnership (“Developer”).

RECITALS
A. Developer is, pursuant to a Ground Lease (as defined below), acquiring a long-term lease of certain land (“Land”) in the City of South Lake Tahoe, California, and under the Ground Lease will become the owner of certain improvements to be constructed on the Land (“Improvements”). Developer’s leasehold in the Land, together with the Improvements, as more particularly described in Exhibit A, is the “Development.” B. Developer intends to operate the Development as an affordable housing project (the “Project”) comprised of a 68 unit (including one manager's unit) housing project (the “Improvements”), located on the Development.

C. This Agreement is the Regulatory Agreement” and one of the “City Documents” as described in that certain Loan Agreement, dated on or about June __, 2022 between the City and Developer (“Loan Agreement”), which provides for a $4,750,000 loan from the City to the Developer (“City Loan”). This Agreement is, in part, to comply with the City’s obligations to HCD under the PLHA Grant (as defined in the Loan Agreement).

D. As required by the PLHA Grant, as further consideration for the City Loan, and to further the interests of City, Developer has agreed to enter into and record this Agreement. The purpose of this Agreement is to regulate and restrict the occupancy, rents, operation, ownership, and management of the Development and the Project for affordable housing and related uses. The covenants in this Agreement are intended to run with the land and be binding on Developer and its successors and assigns in the Development, notwithstanding payoff of the Loan.

NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Developer and City hereby agree as follow:
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A. Definitions.

The following terms have the meanings and content set forth in this section wherever used in this Agreement or attached exhibits.
“Affordable Rent” means the total charges for rent and utilities to each Qualifying Household as allowed based on household size, income level and unit size pursuant to Fair Market Rents and Income Limits published annually by HUD.
“City” is the City of South Lake Tahoe.
“City Documents” is defined in Recital C.
“City Loan” is defined in Recital C.
“County” is the County of El Dorado, California.
“Developer” means SUGAR PINE HOUSING PARTNERS, L.P, a California limited partnership, and its officers, officials, directors, employees, agents and authorized representatives. “Development” is defined in Recital A.
“Ground Lease” means that certain Ground Lease between the State of California (“Landlord”), acting by and through the Director of the Department of General Services, with the consent of HCD, and Developer (as Lessee), dated on or about ____________, 2022 as memorialized by a Memorandum of Ground Lease of the Development dated ________________, 202__, and recorded in the Official Records of the County, substantially concurrently herewith, as amended from time to time.
“HCD” means the California Department of Housing and Community Development. “HUD” means the Federal Department of Housing and Urban Development, or successor. “Loan Agreement” is defined in Recital C.
“Lower Income Household” means a household whose annual income does not exceed [sixty percent (60%)] of the Area Median Income as determined for the [Insert applicable area] HUD Metro FMR Area annually by HUD and adjusted for household size.

In the event that such income determinations are no longer published by HUD, “Median Income” shall mean the median gross yearly income for households in the County, as published periodically by HCD. In the event that such income determinations are no longer published by HCD, or are not updated for a period of at least eighteen months, Lessor shall provide Lessee with other income determinations which are reasonably similar with respect to method of calculation to these previously published by HCD or HUD.
“PLHA Grant” is defined in Recital C.

Project” means the Units on the Development and any supportive services and programs provided to tenants of the Development.
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“Qualifying Household” means a household that qualifies as a Lower Income Household. “Restricted Units” is defined in C.1, below.
“TCAC” means the California Tax Credit Allocation Committee. “Term” means the term of this Agreement described herein. “Unit” means any one of the units in the Project.

B. DEVELOPER'S OBLIGATIONS

1. Compliance with Loan Agreement and PLHA Grant. Developer's actions with respect to the Development shall at all times be in full conformity with all of the requirements of the Loan Agreement and PLHA Grant, including but not limited to the insurance requirements contained therein.

2. Use For Affordable Housing. Developer agrees that, at all times during the Term of this Agreement, a minimum of [67] Units in the Project will be used as affordable housing for Lower Income Households.

3. Term of Agreement. This Agreement shall commence upon completion of the construction of the Project [(as evidenced by issuance of a final Certificate of Occupancy)] and shall remain in full force and effect for [55-years thereafter, or such other time as may be required to comply with the PLHA Grant, whichever is less].

C. OCCUPANCY AND RENTS

1. Occupancy of Units. During the term of this Agreement, [67] Units in the Project will be used as affordable housing for Lower Income Households (“Restricted Units”).

2. Tenant Selection. Developer shall adopt written tenant selection policies for the Restricted Units that: (i) are reasonably related to program eligibility and the applicant’s ability to perform the obligations of the lease; (ii) are consistent with the purpose of providing housing for Qualifying Households; and (iii) give prompt written notification to any rejected applicant of the grounds for rejection.

3. Nondiscrimination. Developer shall not discriminate or segregate in the use, enjoyment, occupancy, conveyance, lease, sublease, or rental of any units in the Project on the basis of race, color, ancestry, national origin, religion, sex, sexual preference, age, marital status, family status, source of income, physical or mental disability, Acquired Immune Deficiency Syndrome (AIDS) or AIDS-related conditions (ARC), or any other arbitrary basis. Developer shall include a statement in all advertisements, notices and signs for the availability of Units for rent to the effect that Developer is an Equal Housing Opportunity Provider.

4. Income Certification and Increases In Tenant Income. Developer shall certify the incomes of all prospective tenants in the Restricted Units prior to their initial occupancy of a Unit and shall recertify their incomes annually. If upon recertification, a tenant’s income exceeds the maximum designated for a Lower Income Household, Developer may increase the rent for such tenants to no more than 30% of the tenant’s income and the tenant may be permitted to 258
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continue to occupy a Unit in the Project. Developer shall provide City an annual report on the income recertification evidencing that Project occupants meet the requirements of Qualified Households.

5. Rental Charges. Total charges for rent, utilities and related services for each Unit in the Project shall not exceed the Affordable Rent for that Unit. If upon recertification, a tenant’s income exceeds the Qualifying Household limit for the applicable Unit type, Developer may increase the rent for such tenants to no more than 30% of the Tenant’s monthly income less utility and other mandatory charges.

6. Conflicts With Other Regulatory Requirements. If any other regulatory agreement executed by Developer enforces the requirements of any loan program or low income housing tax credits as a means of providing financing or equity for the Development or Project are more restrictive than the rent and income restrictions contained in this Agreement, compliance with the rent and income restrictions of any such regulatory agreements shall be deemed compliance with this Agreement.

D. PROPERTY MANAGEMENT.

1. Management Responsibilities. Developer is responsible for all management functions with respect to the Project, including without limitation the selection of tenants, certification and recertification of household size and income, evictions, collection of rents and deposits, maintenance, landscaping, routine and extraordinary repairs, replacement of capital items, and security. City shall have no responsibility over management of the Development or the Project.

2. Review of Management Policies. Developer shall submit its written management policies with respect to the Project and Program to City for its review, and shall amend such policies in any way necessary to insure that such policies comply with the provisions of this Agreement and the requirements of all parties providing financing for the Development and/or the Project.

3. Inspection and Records. Developer shall maintain records that clearly document Developer's performance of its obligations to operate the Development under the terms of this Agreement. Developer shall submit any records to City within ten business days of City's request.

Developer shall permit City to enter and inspect the Project for compliance with obligations under this Agreement upon 72 hours advance notice of such visit by City to Developer or Developer's management agent and to tenants of any Units.

4. Annual Report. Developer shall submit to City each year, on or prior to the date such report is required to be submitted to TCAC, a report for the preceding calendar year showing the necessary information to allow City to determine Developer's compliance with this Agreement, and within 30 days after receipt of a written request, any other information or completed forms requested by City in order to comply with City reporting requirements.

E. GENERAL PROVISIONS

1. Default and Remedies. In the event of any Developer breach of any agreement or obligation under this Agreement, City shall provide written notice to Developer and Developer’s limited partner of such breach. Developer shall have an opportunity to cure the breach within 30 days from Developer's receipt of such written notice or such longer period of time as City 259
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determines is necessary to cure the breach if Developer diligently undertakes to cure. If Developer fails to perform a timely cure, City may proceed with any remedy provided under the City Documents (subject to any subordination agreement) allowed by law to enforce the terms and conditions of this Agreement. A cure by any other Project lender or Developer’s limited partner shall be accepted or rejected on the same basis as if made or tendered by Developer.

2. Binding Upon Successors. All provisions of this Agreement shall be binding upon and inure to the benefit of the heirs, administrators, executors, successors-in-interest, transferee, and assigns of Developer and City, and shall run with the land for the full term of this Agreement, regardless of any subordination, cancellation, surrender, amendment or modification of the Ground Lease, assignment or any conveyance or transfer of the Development or Project or portion thereof, or any payment, prepayment, modification or expiration of any other City Documents.

3. Non-Liability of Officials, Employees and Agents. No officers, directors, employees and agents of City shall be personally liable to Developer for any obligation created under the terms of this Agreement.

4. Indemnity. Developer shall indemnify and hold City free and harmless against any losses, damages, liabilities, claims, demands, judgments, actions, court costs, and legal or other expenses (including reasonable attorneys' fees) which City may incur as a direct or indirect consequence of Developer's failure to perform any obligations as and when required by this Agreement. This indemnity obligation shall not extend to any claim arising solely from the gross negligence or willful acts of City, its agents, and its employees. Developer's duty to indemnify City shall survive the term of this Agreement. Notwithstanding the foregoing or anything else to the contrary contained herein, no foreclosing lender or its successors and/or assigns shall be responsible or liable for any indemnity obligations that accrue hereunder prior to the completion of foreclosure (or acceptance of a deed in lieu thereof).

5. Intentionally Deleted.

6. Governing Law. This Agreement shall be interpreted under and be governed by the laws of the State of California applicable to contracts executed and wholly performed in that State, except for those provisions preempted by federal law.

7. Agreement Controls. Notwithstanding any provisions of the Loan Agreement, in the event that any provisions of this Agreement and Loan Agreement conflict, the terms of this Agreement shall control.

8. Consents and Approvals. Any consent or approval of City required under this Agreement shall not be unreasonably withheld. Any approval must be in writing and executed by an authorized representative of City.

9. Notices, Demands and Communication. Formal notices, demands and communications between Developer and City shall be sufficiently given and shall not be deemed given unless dispatched by (i) delivered personally or by courier, (ii) sent by overnight express delivery, or (iii) mailed by registered or certified mail (return receipt requested), postage prepaid, to the principal offices of Developer and City as follows:

City: Developer:
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City of South Lake Tahoe
1901 Lisa Maloff Way
South Lake Tahoe, CA 96150
Attention: City Manager
With a copy to:

City Attorney
City of South Lake Tahoe
1901 Lisa Maloff Way, Suite 300
South Lake Tahoe, CA 96150
Sugar Pine Housing Partners, L.P
c/o Related California
44 Montgomery Street, Suite 1300
San Francisco, California 94104
Attention: Ann Silverberg
With a copy to
St. Joseph Sugar Pine Village LLC
c/o St. Joseph Community Land Trust
312 Dorla Court, Suite 205
PO Box 12032
Zephyr Cove, NV 89448
Attn: Executive Director
and
With a copy to
c/o Red Stone Equity Partners, LLC
1100 Superior Ave., Suite 1640
Cleveland, OH 44114
Attention: Managing Director & General
Counsel
Fax No.: (216) 820-4751
Applegate & Thorne-Thomsen, P.C.
425 South Financial Place, Suite 1900
Chicago, Illinois 60605
Attention: Bennett P. Applegate
Fax No.: (312) 491-4411

10. Relationship of Parties. The relationship of Developer and City during the term of this Agreement is solely that of borrower and lender and shall not be construed as a joint venture, equity venture, or partnership.

11. Waiver. Any waiver by City of any obligation in this Agreement must be in writing. No waiver will be implied from any delay or failure by City to take action on any breach or default of Developer or to pursue any remedy allowed under this Agreement, the Loan Agreement or applicable law. Any extension of time granted to Developer to perform any obligation under this Agreement shall not operate as a waiver or release from any of its obligations under this Agreement. Consent by City to any act or omission by Developer shall not be construed to be consent to any other or subsequent act or omission or to waive the requirement for City's written consent to future waivers.

12. Amendments and Modifications. Any amendments or modifications to this Agreement must be in writing, and shall be made only if executed by both Developer and City. 261
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13. Severability. Every provision of this Agreement is intended to be severable. If any provision of this Agreement shall be held invalid, illegal, or unenforceable by a court of competent jurisdiction, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired.

IN WITNESS WHEREOF, City and Developer have caused this Regulatory Agreement to be executed by their duly authorized representatives.
[SIGNATURE PAGES FOLLOW]
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City

CITY OF SOUTH LAKE TAHOE,
a municipal corporation
By: ____________________________________
[City Manager Name], City Manager
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Developer:

SUGAR PINE HOUSING PARTNERS, L.P.
a California limited partnership
By: Sugar Pine Housing Development Co., LLC,
a California limited liability company,
its administrative general partner
By:

Ann Silverberg,
President
By: St. Joseph Sugar Pine Village LLC,
a California limited liability company
its managing general partner
By:St. Joseph Community Land Trust,
a California nonprofit public benefit corporation,
its manager
By:

Jean Diaz,
Executive Director
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A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.

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

I certify under penalty of perjury under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

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

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

I certify under penalty of perjury under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

Signature_____________________________
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ORDER NO. : ____________

EXHIBIT A

LEASEHOLD LEGAL DESCRIPTION
APN: _______________
266
267
268
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City of South Lake Tahoe
Agenda Item Executive Summary
Joe Irvin, City Manager
Meeting Date: June 7, 2022
Agenda Item #: 16
Agenda Item: Amendment to Predevelopment Loan Agreement for the Sugar Pine Village Affordable Housing Project
Executive Summary: City Council will consider amendments to the previously approved Predevelopment Loan for the Sugar Pine Village Affordable Housing Project authorized by Resolution 2020-109. The amendment does not change the structure of the loan but rather amends the loan to be consistent with the terms and requirements of other loans associated with the project.

Requested Action / Suggested Motions: Pass a Motion authorizing and directing the Mayor to execute the Amendment to the Predevelopment Loan Agreement for the Sugar Pine Village Affordable Housing Project to make minor changes for consistency with terms and requirements of other lenders.

Responsible Staff Member: Jessica Wackenhut, Associate Housing Planner and Zachary Thomas, Housing Manager
Responsible Staff Member: Jessica Wackenhut, Associate Housing Planner (530) 542-6158 Zach Thomas, Housing Manager (530) 542-7400
Reviewed and Approved By:

Hilary Roverud, Development Services Director
Susan Blankenship, City Clerk
Olga Tikhomirova, Director of Finance
Heather Stroud, City Attorney
Attachments:
01-Staff_Report_RDA_Loan_Amendment__final__1_.docx
02-Agreement Amendment Sugar Pine Housing LLC.doc
03-C-120-2021 Sugar Pine Housing LLC
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City of South Lake Tahoe
Report to City Council
Meeting Date: June 7, 2022
Title: Amendment to Predevelopment Loan Agreement for the Sugar Pine Village Affordable Housing Project
Location: 1888 Lake Tahoe Boulevard and 1029 Tata Lane
Responsible Staff Member: Jessica Wackenhut Lomeli, Associate Housing Planner Zach Thomas, Housing Manager
Background:

The Sugar Pine Village project is a proposed 248-unit affordable housing project, with onsite community service facilities on 11.6 acres of land owned by the State of California and managed by the California Tahoe Conservancy (Conservancy). This project is a result of the Governor’s Executive Order N-06-19, which directed the California Department of General Services (DGS) to identify excess state properties as potential affordable housing development sites. In July 2020, the Conservancy announced the State had selected Related Companies of California LLC in partnership with the St. Joseph Community Land Trust to construct and manage the Sugar Pine Village project.

Since June 2020, the City of South Lake Tahoe has been an active partner in the development of the project. As a first step of financial commitment, the City Council at its November 17th, 2020 meeting authorized a $566,629 loan for predevelopment costs (Resolution 2020-109) and a $1,250,000 loan to purchase banked land coverage at the airport (Resolution 2020-110). The loans were funded by Program Income from repayments of loans from the Redevelopment Agency (RDA) Low- and Moderate-Income Housing Fund and the City’s undesignated reserve fund, respectively. At its October 19, 2021 meeting the City Council also approved a $627,626 loan of HOME Program Income. This brings the City’s total commitment toward the project to $2,444,255.

To date, approximately $40,000,000 in tax credits and grant applications have been applied for and secured using the City’s initial approximate $1.8 million commitment as a local match.

Related California is phasing the financing and construction of the project into four phases. Phase 1A includes 68 residential units and a community building, Phase 1B 60 units, Phase 2A 60 units and Phase 2B 60 units.

Issue and Discussion:

Since City Council adoption of Resolution 2020-109 on November 17, 2020, committing to the RDA loan, the loan documents have been executed with Sugar Pine Housing LLC. 271
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The Predevelopment Loan Agreement was completed prior to several other grants and loans for Sugar Pine Village. The proposed amendment was anticipated and serves to ensure that the predevelopment loan is inclusive of the language and terms of the documents associated with other loans and funding sources. This amendment does not change the structure of the loan but rather provides alignment and consistency with the terms and requirements of the other lenders.

It is recommended that the City Council adopt an amendment to the Predevelopment Loan Agreement authorized by Resolution 2020-109. A new section is added to the Loan Agreement,

2.07 to include the following:

1. Clearly defines what a “Phase” is;

2. If all or substantially all of the Predevelopment Costs relate to a single Phase, there may only be a single Assignment and Assumption Agreement, etc., and;

3. Will ensure alignment of the loan term with other Phase lenders, investors, etc., as approved by Borrower and Lender.

Financial Implications:

The approved $566,629 loan for predevelopment costs is funded by the in Low and Moderate Income Housing Fund program income (account # 25106015).

Use of the RDA program income for the project will require ongoing monitoring for compliance with affordability covenants similar to obligations associated with other affordable housing funding sources.

Environmental Considerations:

For projects that satisfy criteria specified by SB 35, the guidelines issued by HCD specify that the California Environmental Quality Act (CEQA) does not apply to actions taken by a local government to provide financial assistance to a development that receives streamlined approval and that is to be used for housing for persons and families of very low, low, or moderate income, as defined in Section 50093 of the Health and Safety Code.

Policy Implications:

The recommended action is consistent with the City Strategic Plan which identifies supporting the Sugar Pine Village Project as Action Item 1.3.2.

The recommended action is also consistent with the following adopted policies and programs:

City General Plan Housing Element
Policy 1-1 The City shall adopt programs, ordinances, incentives, land use plans and other regulatory mechanisms that provide opportunities for the private sector to address the housing needs of citizens of all economic levels.

Policy 2-2 The City shall enable opportunities for deed-restricted affordable ownership housing to ensure long-term affordability.

Policy 2-5 The City shall recognize that it will become difficult to attract employees if they cannot afford to purchase or rent housing in South Lake Tahoe. The City shall encourage and support 272
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programs and activities that create a robust local economy that provides residents with good paying employment and the means to purchase and/or rent housing in the city.

Program 2-1 PURSUE STATE AND FEDERAL FUNDS
To support the creation of quality, affordable housing options for extremely low-, very low-, and low-income households, the City shall seek and when appropriate and feasible pursue grant opportunities for state and federal funds.

Program 2-6 ANALYSIS OF FEDERAL AND STATE LANDS
The City shall continue discussing the potential for developing quality workforce and affordable housing on non-environmentally sensitive lands owned by the California Tahoe Conservancy (Conservancy) and the United States Forest Service (USFS). The City shall ensure that important natural resources are protected and only pursue surplus lands that these agencies have determined do not have a clear and compatible conservation or recreation purpose consistent with agency goals.

Tahoe Valley Area Plan
Policy H-1.1 – Housing Options
Provide for a range of housing options that include affordable, moderate-income, and workforce housing so that people can live and work in the City.

Policy H-1.5 – Redirection of Development
Direct high density residential development to areas of Tahoe Valley that are within walking distance of public transit and services.

Policy H-1.7 – Tahoe Livable Communities Program
Collaborate and support efforts of the California Tahoe Conservancy to remove blighted properties and repurpose associated development commodities. Encourage the use of residential commodities for affordable housing in Tahoe Valley area.

Policy H-2.1 – General
Encourage the creation of residential uses to support and add vitality to commercial and public service projects in the Tahoe Valley area.
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AMENDMENT TO PREDEVELOPMENT LOAN AGREEMENT
(SUGAR PINE VILLAGE)

THIS AMENDMENT TO PREDEVELOPMENT LOAN AGREEMENT
(“Amendment”) is made and entered into as of the _____ day of June, 2022 (“Amendment Date”) by and between CITY OF SOUTH LAKE TAHOE, a municipal corporation in its capacity as Housing Successor to the South Tahoe Redevelopment Agency, a redevelopment agency organized and existing under the Laws of the State of California (“Lender”), and SUGAR PINE HOUSING, LLC, a California limited liability company (“Borrower”).

RECITALS
A. Lender is the “City” or “Lender” and Borrower is the “Borrower” or “Master Developer” under that certain Master Predevelopment Loan Agreement, effective as of August 23, 2021 (the “Loan Agreement”).

B. Under the Predevelopment Loan Agreement, that certain Non-Negotiable Predevelopment Loan Promissory Note dated July 22, 2021 (“Note”), and one or more associated documents (together with the Loan Agreement and Note, the “Loan Documents”), Lender agreed to loan Borrower up to $566,629.00 (the “Predevelopment Loan”) from the Lender’s Low and Moderate Income Housing Fund (the “Fund”) to cover certain predevelopment costs incurred by the Borrower in connection with a planned development to include 248 units on two separate property sites, being approximately 10-acres at 1860 Lake Tahoe Boulevard, and approximately 1.6-acres at 1029 Tata Lane, all in the City of South Lake Tahoe, California (“Development”).

C. The Loan Documents contemplate, among other things, that on the formation of one or more specific limited partnership affiliates of the Borrower to own, operate and manage phases of the Development (each, an “Owner Entity”), and an Owner Entity acquiring title (or a long-term lease) to the property associated with the phase and entering into one or more construction loans with other lenders for that phase, the Owner Entity would assign the applicable portion of the Predevelopment Loan to an Owner Entity, all as provided by the Loan Documents.

D. Lender and Borrower desire by this Amendment to modify certain terms of the Predevelopment Loan Documents relating to the assignment to an Owner Entity, all as set forth below.

NOW, THEREFORE, pursuant to the foregoing and in consideration of the mutual promises set forth herein, and for other good and valuable consideration, the receipt of which is hereby acknowledged, Lender and Borrower hereby agree as follows:

AGREEMENT

1. Capitalized Terms. Capitalized terms used herein and not otherwise defined shall have the meanings given to such terms in the Predevelopment Loan Agreement. 274
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2. New Section 2.07. The following is added as a new Loan Agreement Section

2.07:

2.07 Additional Matters Regarding Sections 2.05 and 2.06. (a) For purposes of Sections 2.05 and 2.06, “Phase” means either (i) a “Phase” as defined in Sections 1.01(h) and 1.01(v) above or (ii) any portion of such a Phase approved by Borrower and Lender.
(b) If all or substantially all of the Predevelopment Costs relate to a single Phase (as defined in 2.07(a)), there may be only a single Assignment and Assumption Agreement, etc.
(c) In connection with any transaction under Sections 2.05, 2.06 and

2.07, the payment terms of the Note (or assigned and assumed portion) may be modified to the extent required by other Phase lenders, investors, etc., as reasonably approved by Borrower and Lender.

3. Authorization. Each individual or entity executing this Amendment on behalf of Lender or Borrower represents and warrants that he or she or it is duly authorized to execute and deliver this Amendment on behalf of Lender and Borrower, respectively, and that such execution is binding upon Lender and Borrower, as applicable.

4. Modifications and Waivers. No modification, waiver, amendment, discharge, change or termination of this Amendment shall be valid unless the same is in writing and signed by Lender and Borrower.

5. Counterparts. This Amendment may be executed in counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument. Electronic, .pdf, and facsimile signatures shall constitute original signatures under this Amendment.

6. Governing Law. This Amendment shall be governed by the laws of the State of California, including its statutes of limitation but excluding its choice of law rule.

7. Severability. If any provision of this Amendment is held by a court of competent jurisdiction to be invalid, void or unenforceable to any extent, the remaining provisions shall remain in full force and effect and shall not be affected, impaired or invalidated. [SIGNATURES FOLLOW ON NEXT PAGE]
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IN WITNESS WHEREOF, this Amendment is made as of the day and year first above written:

LENDER: CITY OF SOUTH LAKE TAHOE, a municipal
corporation
By: ____________________________________
Devin Middlebrook, Mayor
APPROVED AS TO FORM:

By: ____________________________________
Heather Stroud, City Attorney
ATTEST:

By: ____________________________________
Susan Blankenship, City Clerk
BORROWER: SUGAR PINE HOUSING, LLC, a California limited liability company
By: _________________________
Ann Silverberg, Vice President
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NON-NEGOTIABLE

PREDEVELOPMENT LOAN PROMISSORY NOTE
FOR

SUGAR PINE VILLAGE
$566,629.00 South Lake Tahoe, California
July 22, 2021
FOR VALUE RECEIVED, the undersigned SUGAR PINE HOUSING, LLC,a California Limited Liability Company (the “Maker”) promises to pay to the order of the CITY OF SOUTH LAKE TAHOE, a municipal corporation in its capacity as Housing Successor to the South Tahoe Redevelopment Agency, a redevelopment agency organized and existing under the Laws of the State of California (“Holder,” or “Lender”) at City of South Lake Tahoe, 1901 Lisa Maloff Way, South Lake Tahoe, CA 96150 or at such other place as Lender may from time to time designate in writing, the principal sum of Five Hundred Sixty-Six Thousand Six Hundred Twenty-Nine and 00/100 Dollars ($566,629.00) or so much thereof as may be advanced and outstanding, in lawful money of the United States.

1. This Note evidences the “Predevelopment Loan” as defined and described in that certain Master Predevelopment Loan Agreement, dated of even date herewith, between Maker and Lender (the “Loan Agreement”). Collectively this Note, the Loan Agreement and associated documents constitute the “Loan Documents.” The principal amount of this Note will be disbursed as contemplated and controlled by the Loan Agreement.

All terms used herein that are not otherwise defined are defined in the Loan Agreement and the provisions of the Loan Agreement relating to the Predevelopment Loan are hereby incorporated herein by this reference.

2. Principal amount of this Note shall bear interest prior to maturity at the Interest Rate and, during an uncured Event of Default, the Default Rate. The principal amount of this Note in the sum of Five Hundred Sixty-Six Thousand Six Hundred Twenty-Nine Dollars ($566,629), or so much thereof as may be advanced and outstanding, shall be repayable as follows:
(a) Unless Closings have occurred for all Phases of the Development, all principal and accrued interest shall be due and payable on the Drop-Dead Date. In such event, Lender’s remedies shall be limited as provided in Loan Agreement Section

2.04 and the Assignment of Project Documents.
(b) For each Phase where there has been a Closing, unless there is a New Loan or the City’s City Council approves different terms, the Phase Related Amount-shall be due and payable as follows:

C-120-2021
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i. Commencing the first full year following the issuance of a Certificate of Occupancy and payment of deferred
developer fee for the first Phase, a prorata amount with other lenders from 50% of each Phase’s residual receipts; and
ii. All remaining amounts, 55 years after the date hereof. (c) Except in the case of an uncured Event of Default under Section

6.01 of the Loan Agreement, if the loan has not been repaid in full by the Maturity Date, then the Lender’s sole recourse shall be limited to any assets assigned to Lender and any additional security granted to Lender under the Loan Documents, including, but not limited to, Borrower’s right, title and interest in all documents and work product relating to the Project that have been paid for in whole or in part by the Lender as assigned pursuant to the Assignment of Project Documents. The Lender, in its sole discretion, may accelerate repayment if an Event of Default occurs under any Loan Documents after the expiration of the applicable cure periods therein.
(d) Any and all sums not paid, which are required to be paid, on the Maturity Date as required hereunder shall bear interest at the Default Rate of five percent (5%) from the Maturity Date until the date paid;
(e) This Note may be prepaid in whole or in part at any time, and from time to time without premium or penalty.

3. It is expressly agreed that time is of the essence in this Note and in the event of:
(a) any default in the full and punctual payment of all or part of any installment of principal or interest hereunder as and when the same become due and payable; or
(b) upon the occurrence of any “Event of Default” under the Loan Agreement and the expiration of any applicable period of grace within which the Maker may cure the same, there shall be an Event of Default under this Note; then, in any such event, the Holder hereof, at its option, may declare the entire outstanding principal balance hereof, together with all costs, fees, expenses, charges for collection, including reasonable attorneys’ fees (which shall include outside counsel fees and all allocated costs of Holder’s in-house counsel), and costs for declaratory relief, arbitration, prosecution or defense of any action related to this Note, to be immediately due and payable in full, without further demand or notice to Maker or to any other party.

4. Failure of the Holder to exercise any rights hereunder with respect to any default shall not excuse such default and shall not constitute the Holder’s waiver of the DocuSign Envelope ID: 4209C2BB-5A4F-4577-98DF-7CA7252C6B4C 278
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right to the latter exercise thereof, in the absence of a written agreement to the contrary executed and delivered by the Holder hereof and subsequent to such default.

5. All payments hereunder shall be paid in lawful money of the United States, which, at the time of payment, shall be legal tender for the payment of all debts and dues, public and private.

6. All sums received hereunder shall be applied in the following order: first, upon an Event of Default to costs and expenses of the Lender incurred in connection with the Loan, including costs of collection and reasonable attorney’s fees, second, to interest, and then to principal.

7. Maker, all endorsers and guarantors hereof, and all others who may become liable for all or any part of the indebtedness evidenced hereby: (i) agree to be jointly and severally bound hereby, as primary obligors; (ii) jointly and severally waive and renounce any and all exception rights, including that of homestead, and the benefit of all valuation and appraisement privileges available to them or any of them pursuant to the Constitution or the laws of the United States or of any state, territory or jurisdiction, as against this debt or any renewal or extension thereof; and (iii) jointly and severally waive presentment for payment, demand, notice of protest, and any and all lack of diligence or delays in collection or enforcement hereof or in bringing suit for the collection hereof or in taking any other action hereunder. Maker and all others who may become liable for all or any part of the indebtedness evidenced hereby further agree with the Holder thereof that said Holder may, without notice, in such manner, on such terms and for such times(s) as the Holder may see fit, increase, extend, or renew this Note, and/or release any maker hereof, and/or substitute or add guarantors, and/or substitute or release all or any part of the collateral (real, personal or mixed) securing this Note, all without any way affecting, impairing, limiting, releasing or foregoing the joint and several liability of Maker and all endorsers and guarantors hereof not so released. The foregoing shall in all events be subject to the limitations on recourse set forth in Section 8 hereof.

8. The recourse of the Lender shall be limited as set forth in this Note and the Loan Agreement. It is agreed that the agreements limiting the exercise of remedies against Borrower or any general partner or managing member of Borrower, shall not:
a. constitute a release, discharge or waiver of the indebtedness evidenced by the Note and the indebtedness evidenced by the Note shall continue until satisfied or paid in full;
b. limit or be construed to limit the personal liability of the Borrower or any general partner of Borrower, for the performance of the covenants and obligations under the Loan Documents, other than the covenant to personally pay the indebtedness evidenced by the Note; or
c. affect any additional remedies or liens which the Lender has for DocuSign Envelope ID: 4209C2BB-5A4F-4577-98DF-7CA7252C6B4C 279
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the indebtedness evidenced by the Note and for the enforcement of any rights which the Lender has under the Loan Documents.

Except as provided above, no general or limited partner or member of Borrower, or any affiliate thereof, nor any officer, director, shareholder or employee of any of said entities, shall have any personal liability hereunder.

9. Maker hereby represents and warrants to, and covenants with, Lender that the entire proceeds hereof have been or will be used for the purpose of eligible predevelopment costs incurred by Maker for the Development pursuant to the Loan Agreement.

10. The rights and obligations created hereunder shall be construed and enforced according to, and shall be governed by, the laws of the State of California.

11. The unenforceability or invalidity of any provision or provisions hereof shall not render any other provision or provisions hereof invalid or unenforceable.

12. Lender shall not have the right to assign this Note without the prior written consent of Maker. Maker shall not have the right to assign this Note without the prior written notice of Lender.

WITNESS the following signatures and seals.

MAKER:

SUGAR PINE HOUSING, LLC, A
Manager-Managed California Limited
Liability Company
By:

Ann Silverberg, Vice President
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1 OAK #4832-3678-4346 v6

MASTER PREDEVELOPMENT LOAN AGREEMENT
This MASTER PREDEVELOPMENT LOAN AGREEMENT (“Loan
Agreement”) is effective as of August 23, 2021 (“Effective Date”) by and between the CITY OF SOUTH LAKE TAHOE, a municipal corporation in its capacity as Housing Successor to the South Tahoe Redevelopment Agency, a redevelopment agency organized and existing under the Laws of the State of California (the "City" and "Lender") and SUGAR PINE HOUSING, LLC, a California Limited Liability Company (the “Borrower” and “Master Developer”).

RECITALS
A. The City has funds available from its Low and Moderate Income Housing Fund (the "Fund"), whose use is restricted to affordable housing purposes pursuant to Section 33334.2 et seq. of the California Community Redevelopment Law ("CRL", Health and Safety Code Section 33000, et seq.).

B. WHEREAS, in order to help achieve financial feasibility for the Development (as hereinafter defined) and to increase the supply of affordable rental housing in the City of South Lake Tahoe, the Lender intends to lend up to Five Hundred Sixty-Six Thousand Six Hundred Twenty-Nine Dollars ($566,629) from the Fund to the Borrower (the “Predevelopment Loan”) to cover of predevelopment costs incurred by the Borrower related to the Development.

C. WHEREAS, because predevelopment activities are of extreme importance to the success of the Development, the Lender is willing to make this Predevelopment Loan to the Borrower upon the terms and subject to the conditions hereinafter set forth.

NOW, THEREFORE, in consideration of the promises and the mutual covenants herein contained, the receipt and sufficiency of which are hereby acknowledged, the parties hereto covenant and agree as follows:

ARTICLE 1

DEFINITIONS

1.01 Definitions. The following terms are defined as follows for purposes of this Loan Agreement and each shall have the meaning given it unless the context clearly indicates otherwise:
(a) “Architect” means the architect or architects, if any, with whom the Borrower contracts to design and oversee certain Predevelopment Work, and subsequent construction of the Project.

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(b) “Assignment of Project Documents” means the instrument executed in connection with this Predevelopment Loan of approximately even date herewith as security for this Predevelopment Loan.
(c) “Borrower” means Master Developer.
(d) “Closing” means an Owner Entity (i) acquiring title (or a long-term lease) to the Property associated with a particular Phase and (ii) entering into one or more construction loans with other lenders for that Phase. (e) “Contractors” mean the Architect, and other contractors and consultants, required for the performance of the Predevelopment Work. (f) “Cost Ceiling Commitment” means the maximum amount Lender shall lend for Predevelopment Costs, which shall not exceed Five Hundred Sixty-Six Thousand Six Hundred Twenty-Nine Dollars ($566,629) unless otherwise approved by the Lender in its sole and absolute discretion. (g) “Default Rate” means the rate of interest to be charged on all sums due under the Note following an uncured Event of Default, which rate shall be the short-term applicable federal rate in effect on the effective date hereof, plus three percent (3%) per annum.
(h) “Development” or “Project” means 248 units on two separate Property sites and constructed in two phases (each a “Phase”): 1) Approximately 10-acre Sugar Pine Village West (“West Village”) at 1860 Lake Tahoe Boulevard, and 2) Approximately 1.6-acre Sugar Pine Village East (“East Village”) at 1029 Tata Lane, all in the City of South Lake Tahoe, California.
(i) “Drop-Dead Date” is defined in Section 2.04 of this Loan Agreement. (j) “Event of Default” is defined in Article 6 of this Loan Agreement. (k) “Force Majeure” is defined in Section 8.18 of this Loan Agreement. (l) “Fund” is defined in the Recitals.
(m) “Individual Developer” means The Related Companies of California LLC in partnership with the St. Joseph Community Land Trust. (n) “Interest Rate” means two percent (2%) simple interest and, during an uncured Event of Default, the Default Rate.
(o) “Lender” means the City or its successor in interest.

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(p) “Loan Amount” means the amount not to exceed an outstanding principal balance of Five Hundred Sixty-Six Thousand Six Hundred Twenty-Nine Dollars ($566,629) to be provided to the Borrower pursuant to this Loan Agreement for Predevelopment Work.
(q) “Loan Documents” means all documents identified in Article 4 herein. (r) “Master Developer” means Borrower.
(s) “New Loan” is defined in Section 2.06 of this Loan Agreement. (t) “Note” means the promissory note to be executed by the Borrower evidencing the Predevelopment Loan made pursuant to this Loan Agreement.
(u) “Owner Entity” means the limited partnership affiliates of the Master Developer or Borrower will form to own, operate and manage each Phase of the Development, and before any transactions described in Sections

2.05 or 2.06 of this Loan Agreement Borrower will deliver to Lender copies of all LP-1’s, limited partnership agreements and other documents to confirm the same.
(v) “Phase” is defined in the definition of Development above. (w) “Phase-Related Loan Amount” is defined in Section 2.05 of this Loan Agreement
(x) “Phase-Related Predevelopment Property” is defined in Section 2.05 of this Loan Agreement.
(y) “Predevelopment Loan” is defined in the Recitals.
(z) “Predevelopment Budget” means the budget attached as Exhibit 3 hereto, as the same may be amended or revised from time to time with the consent of the parties hereto. The Borrower may submit written requests for amendments to line items within the Predevelopment Budget at the same time Borrower submits draw requests pursuant to this Agreement.

The City shall approve or deny such requests for amendments in writing upon disbursement of the Predevelopment Loan proceeds.
(aa) “Predevelopment Costs” means costs for the Predevelopment Work. (bb) “Predevelopment Loan” is defined in the Recitals.
(cc) “Predevelopment Property” means all drawings, tracings, plans, specifications, studies and other documents prepared by the Borrower, its DocuSign Envelope ID: 4209C2BB-5A4F-4577-98DF-7CA7252C6B4C 283
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individual members, or any Contractor resulting from performance of the Predevelopment Work.
(dd) “Predevelopment Schedule” means the schedule attached as Exhibit 2 hereto, as the same may be amended or revised from time to time with the consent of the parties hereto, and subject to Force Majeure. (ee) “Predevelopment Work” means all services and work contemplated in the Predevelopment Schedule and the Predevelopment Budget. (ff) “Project” is defined in in the definition of Development above. (gg) “Property” means fee title or a long-term leasehold interest in the two separate land sites on which each Phase of the Development is expected to be located, as more specifically defined in Exhibit 1.
(hh) “Request Letter” means that certain letter from Meea Kang, Senior Vice President of Related California to Hilary Roverud, Director of Development Services of the City, October 22, 2020 which, among other things, asked the City to make a loan for certain Project predevelopment expenses.
(ii) “State” means the State of California.

ARTICLE 2

LOAN AGREEMENT TO CONSTRUCT, LEND AND REPAY

2.01 Predevelopment Loan. Subject to the terms and conditions of this Loan Agreement and the Note, and so long as no Event of Default exists, the Lender shall make advances to Borrower, provided that the aggregate principal amount of the advances outstanding at any time after giving effect to any proposed borrowing shall not exceed the Cost Ceiling Commitment. This credit shall be a revolving credit and Borrower may borrow, repay, and re-borrow as provided herein and in the Note, provided that at no time shall the aggregate principal amount outstanding exceed the Cost Ceiling Commitment.

2.02 Use of Predevelopment Loan Proceeds. The proceeds of the Predevelopment Loan shall be used solely for the payment of the eligible, City-approved and budgeted Predevelopment Costs for to Predevelopment Work as such costs are incurred. Further, the Predevelopment Loan may be used only for eligible predevelopment activities in the manner presented in the Request Letter and in accordance with California Health and Safety Code sections 33334.2 through Section 33334.4.

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2.03 Pre-Payment Permitted. Borrower agrees to repay the outstanding principal according to the terms outlined in the Note. The Borrower may, at its option, prepay all or any portion of the unpaid principal balance of the Note, together with interest accrued through the date of such prepayment, without charge or penalty.

2.04 Term. Lender’s obligation to make advances to Borrower and Borrower’s right to request advances under this Loan Agreement shall commence on the effective date hereof and continue until the sooner of December 31, 2025 (the “Drop-Dead Date”) and (ii) the Closing of the last Phase. If by the Drop-Dead Date either (x) the Note has not been repaid in full, or (y) Closings have not occurred for all Project Phases, then the Lender’s sole recourse shall be limited to the Predevelopment Property as provided in this Loan Agreement and the Assignment of Project Documents.

2.05 Partial Assignment of Predevelopment Loan. To the extent any Predevelopment Costs relate to a particular Phase, Borrower shall, on or prior to the Drop-Dead Date, have the right to assign the portion of the Predevelopment Loan used to finance such Predevelopment Costs (together with accrued and unpaid interest on such amount, the “Phase-Related Loan Amount”) to that Phase’s Owner Entity pursuant to a Partial Assignment and Assumption Agreement in form and substance approved by the Borrower and Lender (a “Partial Assignment Agreement”). Concurrently therewith, Borrower shall assign all of its rights in the Predevelopment Property related to that Phase (“Phase-Related Predevelopment Property”) to the Owner Entity pursuant to such documents (including without limitation consents of the applicable Contractors) approved by Borrower and Lender and, if not previously provided copies of all LP-1’s, limited partnership agreements and other documents to confirm that the Owner Entity qualifies as such pursuant to the definition thereof.. To the extent any Predevelopment Costs do not relate to a particular Phase, Borrower may allocate them between Phases in any reasonable manner approved by Lender and Borrower.

2.06 Additional Actions at a Closing; New Loan. If, on or before the DropDead Date, a partial assignment of the Predevelopment Loan described in Section 2.05 coincides with a Closing on a Phase then, in addition to the actions described in Section

2.05: (i) the Partial Assignment Agreement shall be terminated with respect to that Phase; and (ii) the Owner Entity shall secure repayment of the Phase-Related Loan Amount by executing and recording against the applicable portion of the Property a deed of trust and assignment of rents in favor of the Lender and in form and substance approved by Borrower and Lender, and by executing and delivering (or causing to be executed and delivered) to the Lender a title policy and such other documents as may be approved by Borrower and Lender; or (iii) in lieu of the actions described in (ii), if a new loan and loan agreement for a particular Phase (a “New Loan”) are subsequently approved by the City Council and executed by the City and the owner of such Phase, and if the closing conditions for the New Loan are satisfied: (x) the Partial Assignment Agreement shall be terminated; and (y) the Phase-Related Loan Amount shall bear interest and be repaid in accordance with the terms of the documents evidencing the New Loan.

ARTICLE 3
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COVENANTS

3.01 Performance of the Predevelopment Work. The Borrower represents, warrants and covenants that the Predevelopment Work will be conducted in accordance with the Predevelopment Budget, the Predevelopment Schedule, all applicable permits and approvals, and any title or other restrictions or conditions affecting the Development.

3.02 Responsibility for Costs Exceeding Predevelopment Loan Amount and Cost Ceiling Commitment; Changes in Predevelopment Budget. The Borrower acknowledges that the Lender is not obligated to advance funds that would cause the outstanding principal balance of the Predevelopment Loan to exceed the Predevelopment Loan Amount and the Cost Ceiling Commitment. Borrower, however, may request changes in any individual Predevelopment Budget line item that is offset by a corresponding decrease in one or more other line items such that the total Predevelopment Budget is not increased, so long as the integrity and quality of the Development are not materially adversely affected. Such request must be submitted to Lender promptly upon Borrower’s knowledge of the need to revise the Predevelopment Budget and no later than five (5) business days before any request for disbursement of funds that will cover such revised costs. Lender’s approval of such requests shall not be unreasonably withheld.

3.03 Contractor Agreements. The Borrower shall retain the Architect under a binding contract or contracts to provide all architectural services necessary for the Predevelopment Work and to begin the design and construction of the Development. The Borrower shall retain the other Contractors under a binding contract or contracts to provide all other services to be paid for from the Predevelopment Loan. The Borrower shall obtain the Architect and other Contractors’ written consents to collaterally assign the Predevelopment Property pursuant to the Assignment of Project Documents in form and substance approved by Borrower and Lender.

3.04 Contracts. The Borrower shall make available for review by the Lender copies of all contracts for Predevelopment Work, or any portion thereof, in accordance this Loan Agreement. The Borrower agrees that all its interest in the Predevelopment Property shall be collaterally assigned to the Lender pursuant to the Assignment of Project Documents. The Borrower also agrees to deliver copies of all Predevelopment Property to Lender without representation or warranty..

3.05 Monitoring Contractors; Correction of Defects. The Borrower shall monitor the performance of the Contractors and all other persons and entities providing materials, equipment or services to the Predevelopment Work and shall take such actions as are necessary to maintain adherence to quality standards, safety standards, production schedules, shipping dates, and job-site requirements. The Borrower shall use reasonable efforts to guard against defects and deficiencies in design and construction that is performed as part of the Predevelopment Work.

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3.06 Inspection by the Lender. The Lender, its authorized agents may inspect the Project and any work in progress for the purpose of protecting or furthering the Lender’s interest under this Loan Agreement. The Lender shall have no obligation to make any such inspection of the Project. Such inspections are for the Lender’s information only, and any such inspection shall not relieve the Borrower of its obligation to complete the Predevelopment Work in accordance with this Loan Agreement, the Predevelopment Budget and the Predevelopment Schedule. In no event shall the Lender’s inspection of the work be deemed acceptance of all or any of the work, equipment, or materials or a waiver of any right the Lender has under this Loan Agreement.

3.07 Compliance with Law. All Predevelopment Work shall comply with all applicable federal, state and local laws, rules and regulations, including without implied limitation those pertaining to zoning, environmental, subdivision, building, health, safety and sanitary conditions.

3.08 Entity Matters. The Borrower represents and warrants that it is a limited liability company organized and validly existing under the laws of the State of California and duly authorized to enter into this Loan Agreement.

3.09 No Default. Borrower represents and warrants that the consummation and performance of the transaction contemplated by the Loan Documents will not constitute a default under any agreement or obligation to which the Borrower is a party or any obligation by which the same may be bound.

3.10 Insurance. The Borrower will obtain and maintain, and require its contractors to obtain and maintain, the insurance policies and coverages set forth on Exhibit 5 attached hereto.

3.11 Notices. The Borrower shall, with reasonable promptness, but in any event within fourteen (14) calendar days after it has actual knowledge thereof, notify the Lender in writing of the occurrence of any act, event or condition that constitutes, or that after notice or lapse of time or both would constitute, an Event of Default by the Borrower. Such notification shall include a written statement of any remedial or curative actions that the Borrower proposes to undertake to cure or remedy such default.

3.12 Encumbrances. Borrower covenants to, and shall cause its contractors to, keep the Predevelopment Property free from any and all liens and/or encumbrances, including stop work notices, arising out of the Predevelopment Work, materials furnished, or obligations incurred by or for Borrower and/or its contractors. Borrower shall be jointly and severally responsible for discharging and releasing any lien or encumbrance from the Predevelopment Property caused by Borrower, its contractors, or assigns in connection with the Predevelopment Work, and for all costs associated therewith.

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ARTICLE 4

CONDITIONS ON ADVANCES

4.01 Conditions on Advances. The obligation of the Lender to make this Predevelopment Loan or any advance is subject to the compliance by the Borrower with its covenants, agreements, representations and warranties contained in the Loan Documents and to the satisfaction before making the Predevelopment Loan or any such advance, of the following
(a) The Borrower shall have incurred costs or expended
funds in accordance with the Predevelopment Budget and Predevelopment Schedule;
(b) The following documents (together with this Loan
Agreement and any UCC financing statements, “Loan Documents”) shall have been duly executed and delivered by the parties thereto and shall be in full force and effect and, to the extent required by the Lender, all lien documents securing this Predevelopment Loan shall have been duly recorded:

1. the Note;

2. the Assignment of Project Documents;

3. such other documents, instruments, and/or papers, which may evidence or secure the Predevelopment Loan;
(c) The Borrower shall have provided consents by the
Architect and other Contractors to the Assignment of Project Documents, all by instruments acceptable to the Lender in the Lender’s reasonable discretion;
(d) The Borrower shall have provided prior to the initial disbursement an opinion issued to the Lender by counsel acceptable to the Lender that: (i) the Borrower is a validly existing business entity under the laws of the state in which it is organized with full power and authority to consummate and perform the transaction contemplated by this Loan Agreement and the other Loan Documents, as applicable; (ii) members or partners in the Borrower are validly existing business entities with full power and authority to consummate and perform the transaction contemplated by this Loan Agreement and the other Loan Documents; and (iii) this Loan Agreement and the other Loan Documents, as applicable, have been duly authorized, executed and delivered to the Lender and are valid, binding and enforceable according to their terms, subject only to customary exceptions regarding enforcement of creditors rights generally and equitable remedies being discretionary;
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(e) The Borrower shall have provided such other
evidence as the Lender reasonably may require that the Predevelopment Work complies with the Predevelopment Budget, the Predevelopment Schedule and with all applicable federal, state and municipal laws; (f) No Event of Default shall exist and no event exists that, with the passage of time or giving of notice by the Lender, constitutes an Event of Default;
(g) Borrower has delivered to Lender current financial
statements prior to the execution of this Agreement;
(h) Borrower shall have the required insurance in effect and shall have provided certificates evidencing such insurance; and (i) Such other documents and certifications as Lender
or its counsel may reasonably request.

ARTICLE 5

DISBURSEMENTS

5.01 Borrower Representations and Warranties with Each Disbursement.

Each request by the Borrower for a disbursement under this Loan Agreement: (a) shall constitute the Borrower’s affirmation that the representations and warranties contained in this Loan Agreement remain true and correct as of the date of such request; (b) shall constitute the Borrower’s representation and warranty that the information set forth in each such request and any certification by the Borrower, the Architect or any other Contractor supplied in connection therewith is true and correct and omits no material fact necessary to make the same not misleading; (c) shall constitute Borrower’s affirmation that this disbursement shall not cause Lender to exceed its Cost Ceiling Commitment; and (d) shall constitute the Borrower’s affirmation of compliance with the covenants contained in this Loan Agreement.

5.02 Requests for Disbursements. The proceeds of the Loan shall be disbursed as the work to be paid for by the Loan proceeds is performed. The Borrower shall submit draw requests to the City not more frequently than one time each calendar month. The City will make a good faith effort to disburse the Loan proceeds under each draw request within thirty (30) calendar days after the request. (a) Each request for a disbursement shall be made to the Lender in writing, and disbursements shall not be requested more frequently than monthly. Each request for disbursement shall be funded within thirty (30) days after it has been properly DocuSign Envelope ID: 4209C2BB-5A4F-4577-98DF-7CA7252C6B4C 289
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submitted and when conditions on advances under Section 4.01 have been satisfied.

Each request for a disbursement must contain the following:
(b) a letter from the Borrower requesting a disbursement, which should contain any special funding instructions and an executed Certification of Request for Payment of Predevelopment Costs in a form attached hereto as Exhibit 4; (c) as requested by Lender, invoices, cancelled checks, and any additional supporting documentation for Predevelopment Costs previously paid by Lender and invoices and supporting documentation for the current disbursement request; (d) [reserved]; and
(e) such other certificates, documents, information, or instruments the Lender shall reasonably require to substantiate the same.

5.03 Disbursements Contingent on Lender’s Satisfaction. The Lender shall not be obligated to make any disbursements unless the Lender is satisfied in its reasonable judgment that the conditions precedent to the making of such disbursements, have been satisfied by the Borrower, Lender is in compliance with its Cost Ceiling Commitment, and Borrower is in compliance with its obligations under the Loan Documents.

5.04 Lender’s Right to Withhold Disbursements. The Lender shall have the right to withhold disbursements, in whole or in part, if: (a) Predevelopment Work is in any material respect not in accordance with the Loan Documents, including the Predevelopment Budget, and Predevelopment Schedule or (b) the Borrower Individual Developer or Master Developer, as applicable, is in default (after any applicable notice and cure period) under any obligations to the Lender as described in the Loan Documents.

ARTICLE 6

EVENTS OF DEFAULT AND REMEDIES

6.01 Events of Default. Each of the following shall constitute an “Event of Default” for purposes of this Loan Agreement:
(a) The failure by the Borrower to pay the Note when due; (b) The failure of the Borrower to make any other payment required under the terms of this Loan Agreement, or any of the other Loan Documents or any of the Exhibits hereto, within thirty (30) days after receipt of written notice from the Lender; (c) Except as otherwise provided herein, the failure of the Borrower, DocuSign Envelope ID: 4209C2BB-5A4F-4577-98DF-7CA7252C6B4C 290
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or Individual Developer, as applicable, to promptly and accurately perform any other covenant or agreement contained in this Loan Agreement and any of the other Loan Documents or any of the Exhibits hereto, and the additional failure to cure or remedy such within a period of thirty (30) days after written notice thereof; provided, however, that if such failure cannot be remedied in such time, the Borrower shall have such additional time needed to remedy such failure as long as the Borrower commences efforts to cure within thirty (30) days and, in the determination of the Lender, diligently and in good faith pursues such cure or remedy;
(d) Subject to Force Majeure, Borrower abandons Predevelopment Work, or ceases Predevelopment Work for a period of more than sixty (60) consecutive days;
(e) Any representation, warranty or certificate given or furnished by the Borrower, or the members or partners in the Borrower, or Individual Developer shall prove to be materially false as of the date on which the representation, warranty or certification was given and shall prove to have a material adverse effect on the Lender; provided, however, that if any representation, warranty or certification that proves to be materially false is due to the Borrower’s inadvertence, then Borrower shall have a thirty (30) day opportunity beginning upon the earlier of (1) Borrower’s knowledge of the breach or (2) written notice thereof from Lender, to: (a) cause such representation, warranty or certification to be full, true and complete in every respect; and (b) cure the harm caused to the Lender by the falsity of such representation, warranty or certification; (f) The Borrower, or Individual Developer shall file, or have filed against it, a petition of bankruptcy, insolvency or similar action pursuant to state or federal law, or shall file any petition or answer seeking, consenting to, or acquiescing in, any reorganization, arrangement readjustment, liquidation, dissolution or similar relief; or shall be adjudicated bankrupt or insolvent, under any present or future statute, law, regulation, either state or federal, and such judgment or decree is not vacated or set aside; provided, however, that in the event of an involuntary bankruptcy proceeding, Borrower, or the members or partners in the Borrower, shall have ninety (90) days to have such petition, judgment or decree set aside or vacated;
(g) The Borrower, or Individual Developer shall make an assignment for the benefit of creditors, or shall submit in writing its inability to pay its debts generally as they become due;
(h) There is a change in the ownership interests or a change in the control of the Borrower, the members or partners in the Borrower, or any Owner Entity, without prior notice to or approval by the Lender(other than the Lender approved admission of limited partners or members in a mixed-finance rental transaction); or (i) The Borrower fails to maintain, or fails to cause to be maintained, insurance as required by this Loan Agreement.

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6.02 Remedies Upon Events of Default.
(a) Upon the occurrence of an Event of Default, at its option and without notice, the Lender may (but shall not be required to) (i) terminate this Loan Agreement and the Lender’s commitment to make any disbursement hereunder; (ii) declare the indebtedness evidenced by the Note to be immediately due and payable, and pursue the Lender’s other remedies under the other Loan Documents; or (iii) institute any action, suit, or other proceeding at law or in equity, which the Lender shall deem necessary or proper for the protection of its interest. (b) [Reserved].
(c) At any time after the occurrence of an Event of Default and during its duration, the Lender may revoke Borrower’s right to use the Predevelopment Property and may use the Predevelopment Property as provided in the Loan Agreement and Assignment of Project Documents.

6.03 Remedies Cumulative. Upon the occurrence of an Event of Default, the rights, powers, and privileges provided in this Article 6 and all other remedies available to the Lender under this Loan Agreement or any of the Loan Documents may be exercised by the Lender at any time and shall not constitute a waiver of any of the Lender’s other rights and remedies thereunder, whether or not the indebtedness shall become due and payable, and whether or not the Lender shall have instituted action for the enforcement of its rights under any of the Loan Documents.

6.04 Borrower’s Waiver of Presentment, Etc. The Borrower hereby waives, to the extent permitted by applicable law: (a) all presentments, demands for performance, notices of nonperformance (unless required by the terms hereof or any other Loan Document), protests, and/or notices of dishonor; (b) any requirement of diligence or promptness on the Lender’s part in the enforcement of its rights under this Loan Agreement or any Loan Document; and (c) any and all notice of every kind and description that may be required to be given by any statute or rule of law.

6.05 Course of Dealing Not Operative as Waiver. No course of dealing between the Borrower, on the one hand, and the Lender, on the other hand, shall operate as a waiver of the Lender’s rights under any Loan Document. A waiver on one occasion shall not be deemed a waiver of such right or any other right hereunder. Any waiver by the Lender must be in writing and signed by the Lender to be effective. The making of a disbursement during the existence of an Event of Default shall not constitute a waiver of such Event of Default.

ARTICLE 7

RESERVED
ARTICLE 8

MISCELLANEOUS
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8.01 Assignment. Except as set forth herein, the Borrower may not assign this Loan Agreement or the monies due under this Loan Agreement without the Lender’s prior written consent, which the Lender in its sole discretion may grant or withhold.

Notwithstanding the foregoing, Borrower shall have the right to assign this Loan Agreement or the monies due under this Loan Agreement without the Lender’s prior written consent to any entity to one or more limited partnerships formed by Related California and Saint Joseph Community Land Trust (or their affiliates) .

8.02 Further Assurances. Whenever the Lender requests, the Borrower shall execute, acknowledge and deliver such further instruments or documents that the Lender may reasonably require to further perfect its rights and remedies under this Loan Agreement, the Note and any other Loan Document and in all collateral therefor, provided that, without the consent of Borrower, no greater rights or remedies are granted to the Lender thereunder, nor shall any greater burden be imposed on Borrower, than is contained herein.

8.03 Subordination. There is no agreement, contract or instrument to which Borrower is a party or by which Borrower may be bound that requires the subordination in right or payment of any of Borrower’s obligation subject to this Agreement to any other obligation of Borrower.

8.04 Construction of Documents. To the extent that there may be any inconsistency or conflict between the terms of any other Loan Document and this Loan Agreement, this Loan Agreement shall govern.

8.05 No Waiver. This Loan Agreement may be amended, waived or discharged only by writing signed by the party against whom enforcement of the amendment, waiver or discharge is sought. Any oral waiver, change or discharge of any provision of this Loan Agreement by any representative of a party shall be without City and of no force or effect.

8.06 Parties Bound. This Loan Agreement shall bind upon and inure to the benefit of each party and their permitted successors and assigns. This Loan Agreement is a contract by and between the Borrower and Lender for their mutual benefit, and no third person shall have any right, claim or interest against any party hereto by virtue of any provision hereof.

8.07 Time of the Essence. The parties agree that time is of the essence in this Loan Agreement.

8.08 Severability. If any term or provision of this Loan Agreement or the application thereof to any person or circumstances shall be invalid or unenforceable, the remainder of this Loan Agreement, or the application of such term or provision to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby, and each term and provision of this Loan Agreement shall DocuSign Envelope ID: 4209C2BB-5A4F-4577-98DF-7CA7252C6B4C 293
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be valid and be enforced to the fullest extent permitted by law.

8.09 Choice of Law. This Loan Agreement and the rights and obligations of the Lender and the Borrower under this Loan Agreement and under all documentation executed incident to the Loan Agreement shall be construed in accordance with, and governed by the law of, the State of California, including its statutes of limitation but excluding its choice of law rules. Borrower hereby consents and submits to personal jurisdiction in any state or federal court located within the State of California.

8.10 Notices. All notices, requests, demands, approvals, or other communications given hereunder or in connection with this Loan Agreement shall be in writing and shall be deemed given when delivered by hand or sent by registered or certified mail, return receipt requested, or nationally recognized overnight courier service, addressed as follows; provided that failure to deliver additional copies shall not invalidate the notice:

If to Lender:

City of South Lake Tahoe
1901 Lisa Maloff Way,
South Lake Tahoe, CA 96150
Attention: Joseph D. Irvin, City Manager
With a copy to: City Attorney
City of South Lake Tahoe
1901 Lisa Maloff Way, Suite 300
South Lake Tahoe, CA 96150
If to Borrower: c/o The Related Companies of California LLC 44 Montgomery Street, Suite 1300
San Francisco, California 94104
And to: Bocarsly, Emden, Cowan, Esmail and Arndt, LLP
633 West Fifth Street, 64th Floor
Los Angeles, CA 90071
Attn: Lance Bocarsly
And to: c/o St. Joseph Community Land Trust
1041 Lyons Avenue
South Lake Tahoe, CA 96150

8.11 Headings and Titles. The headings and titles of the articles, sections, and subsections used in this Loan Agreement are for convenience purposes only and shall not be used to interpret any of the provisions of this Loan Agreement.

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8.12 Interpretive Provisions. “Discretion,” “sole discretion,” “option,” “election” or words of similar import in these Loan Documents denote the Lender’s privilege to act in furtherance of the Lender’s interest to preserve the value of the collateral as security for, and otherwise to further repayment and performance of, all obligations without obligation or liability to the Borrower. “Reasonable judgment” in the Loan Documents denotes an objective standard obligating the Lender in good faith to act in a manner that is consistent with the usual and customary practices of public lenders in the metropolitan area.

8.13 Amendments. No part of this Loan Agreement or any other Loan Document may be amended unless there is a written instrument executed by the party to be charged. Lender agrees that if in the future Borrower requests an additional predevelopment loan to the Project, and Lender, in its sole and absolute discretion agrees, Borrower will be permitted to assign the same Predevelopment Property to the Lender as collateral for the additional loan and will not be required to provide further collateral.

8.14 Exhibits. All Exhibits annexed to this Loan Agreement are incorporated herein as if fully set forth.

8.15 Recitals. The recitals and/or whereas clauses are hereby incorporated as part of this Loan Agreement.

8.16 Counterparts. This Loan Agreement may be executed in several counterparts, each of which shall be fully effective as an original and all of which shall together constitute this Loan Agreement.

8.17 Entire Agreement. This Loan Agreement, the Exhibits hereto, and agreements referenced herein, embody the entire agreement and understanding between the Lender and the Borrower relating to the Predevelopment Loan and supersede all and any prior verbal or written agreements by and among the parties unless specifically referenced in this Loan Agreement.

8.18 Effective Date. Upon execution, this Loan Agreement shall be effective upon the date indicated in the first paragraph hereof.

8.19 Force Majeure. If the Borrower is delayed in performing any covenant hereunder (other than the payment of money to Lender) due to causes beyond the control and without intentional misconduct or negligence of the Borrower, then the time for performing the applicable covenant shall be extended for a period of time corresponding to the period of delay, with a reasonable adjustment to any applicable performance schedule affected by the delay. Such causes shall comprise “Force Majeure Events”.

8.20 Lender Consent. Whenever this Agreement calls for City approval, consent, or waiver, the written approval, consent, or waiver of the City Manager of the City shall constitute the approval, consent, or waiver of the City, without further authorization required from the City Council. The City hereby authorizes the City DocuSign Envelope ID: 4209C2BB-5A4F-4577-98DF-7CA7252C6B4C 295
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Manager to deliver such approvals or consents as are required by this Agreement, or to waive requirements under this Agreement, on behalf of the City. Any consents or approvals required under this Agreement shall not be unreasonably withheld or made, except where it is specifically provided that a sole discretion standard applies. The City Manager is also hereby authorized to approve, on behalf of the City, requests by Borrower for reasonable extensions of time deadlines set forth in this Agreement. The City shall not unreasonably delay in reviewing and approving or disapproving any proposal by Borrower made in connection with this Agreement.

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IN WITNESS WHEREOF, the Lender and Borrower have each duly executed, or caused to be duly executed, this Loan Agreement as of the date first written below.

LENDER: CITY OF SOUTH LAKE TAHOE, a municipal
corporation
By: ____________________________________
Tamara Wallace, Mayor
APPROVED AS TO FORM:

By: ____________________________________
Heather Stroud, City Attorney
ATTEST:

By: ____________________________________
Susan Blankenship, City Clerk
BORROWER: SUGAR PINE HOUSING, LLC, a California
limited liability company
By:
_________________________
Ann Silverberg, Vice President
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EXHIBIT 1

DEVELOPMENT PROPERTY
EXHIBIT 1

DEVELOPMENT PROPERTY
1860 Lake Tahoe Boulevard South Lake Tahoe, CA 96150
The land referred to is situated in the County of El Dorado, City of South Lake Tahoe, State of California, and is described as follows:

Lot 5, as shown on the Official Map of Tahoe Valley Center Unit No. 3, filed in the Office of the County Recorder of said County, on November 21, 1962 in Map Book C, Map No. 109.

EXCEPTING THEREFROM, that portion described as follows:

BEGINNING at a 1-1/2 inch capped iron pipe on the Westerly line of Tata Lane also being a point on the East line of said Lot 5, from which the most Easterly corner of Lot 5 bears South 31° 22' 30" East 584.76 feet; thence from the point of beginning along said East line North 31° 22' 30" West 106.68 feet, a similar pipe; thence along a curve to the left with a radius of 20 feet the chord of which bears North 79° 08' 45" West 29.62 feet, a similar pipe; thence along the Northwesterly line of said Lot 5, South 53° 05' West 186.68 feet, a similar pipe; thence leaving said line South 31° 22' 30" East 208.71 feet, a similar pipe; thence North 53° 05' East 208.71 feet to the point of beginning.

ALSO EXCEPTING THEREFROM, that portion described as follows:

BEGINNING at the most Easterly corner of the parcel of land herein described, a 3/4 inch capped iron pipe set on the Northeasterly line of said Lot 5 from which the most Easterly corner of said Lot 5 bears South 31° 22' 30" East 353.67 feet; thence from point of beginning and leaving said line South 53° 05' West 208.71 feet to a similar pipe; thence North 31° 22' 30" West 231.09 feet to a one and one half inch capped iron pipe; thence North 53° 05' East 208.71 feet to a similar pipe set on the Southwesterly line of Tata Lane; thence along said line South 31° 22' 30" East 231.09 feet to the point of beginning.

ALSO EXCEPTING THEREFROM, that portion described as follows:

BEGINNING at the most Easterly corner of the parcel herein described, a point on the Northeasterly boundary of said Lot 5, from which the most Easterly corner of said Lot 5 bears South 31° 22' 30" East, 200.00 feet; thence from point of beginning, South 63° 42' West, 208.54 feet; thence North 31° 22' 30" West, 115.07 feet, a 3/4 inch capped iron pipe; thence North 53° 05' East, 208 71 feet, a similar pipe on the Northeasterly boundary DocuSign Envelope ID: 4209C2BB-5A4F-4577-98DF-7CA7252C6B4C 298
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of said Lot 5; thence along said boundary, South 31° 22' 30" East, 153.67 feet to the point of beginning.

APN: 032-291-028-000
1029 Tata Lane South Lake Tahoe, CA 96150
The land referred to is situated in the County of El Dorado, City of South Lake Tahoe, State of California, and is described as follows:

All that portion of Lot 4, of Tahoe Valley Center Unit No. 3, filed November 11, 1962, in Map Book C, Map No. 109, described as follows:

Parcel 2, as said parcel is designated and delineated on that certain Parcel Map entitled “Portion of Lot 4, of the Tahoe Valley Center Unit No. 3”, filed November 10, 1972, in the Office of the County Recorder of said County in Book 2 of Parcel Maps at Page 52.

APN.: 032-291-031-000
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EXHIBIT 2

PREDEVELOPMENT SCHEDULE
Phases 1A/1B
- July 2022 – Phase 1B 9% Application
- September 2022 – Phase 1A 4% Application
- September/October 2022 Phase 1B 9% Award
- December 2022 – Phase 1A 4% Award
- March 2023 – Phase 1B 9% Closing Deadline; Phase 1B Construction Start - June 2023 – Phase 1A Closing Deadline (Target Closing March 2023 to align with Phase 1B closing deadline and Tahoe construction season start) - September 2024 – Phase 1A/1B Target Completion
Phases 2A/2B
- July 2023 – Phase 2B 9% Application
- September 2023 – Phase 2A 4% Application
- September/October 2023 – Phase 2B 9% Award
- December 2023 – Phase 2A 4% Award
- March 2024 – Phase 2B 9% Closing Deadline; Phase 2B Construction Start - June 2024 – Phase 2A Closing Deadline (Target Closing March 2024 to align with Phase 2B closing deadline and Tahoe construction season start) - September 2025 – Phase 2A/2B Target Completion
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EXHIBIT 3

PREDEVELOPMENT BUDGET
Predevelopment Deliverable Cost/Value
Architecture Plans and Drawings $700,000
Survey $13,000
Arborist Report $5,500
Traffic and Parking Study $30,956
Civil Engineer Reports and Studies $59,000
Landscape Architecture Plans and Studies $100,600
TRPA/Environmental Analysis and Project
Description
$40,000
Geotechnical Study $50,000
Appraisal and Market Study $20,000
Total $1,019,056
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EXHIBIT 4

CERTIFICATION OF REQUEST FOR PAYMENT OF PREDEVELOPMENT
COSTS
Along with each request to Lender for funds relating to Predevelopment Costs under the Predevelopment Loan, the Borrower shall furnish the following certification or the advance shall not be made. All terms used herein shall have the meaning given to them in the Predevelopment Loan Agreement.

I hereby certify, to the best of my knowledge and belief that:
(a) The amounts requested are only for performance in accordance with the terms of the Loan Agreement, the Predevelopment Budget, and the Predevelopment Schedule,.

All amounts included in this request for disbursement are outlined in the summary chart as required by Section 5.02(b) of the Loan Agreement and in the form attached hereto at Attachment 1.
(b) All amounts previously paid by Lender and Borrower on Predevelopment Costs for Predevelopment Work, including the each Parties’ share of the costs, are outlined in the summary chart as required by Section 5.02(b) of the Loan Agreement and in the form attached hereto at Attachment 1.
(c) Certain payments to Architect or other Contractor(s) have been made by Borrower, and Borrower is requesting reimbursement for such costs in the amount of $___________. Evidence of payment of such costs, including Contractor Certifications as described herein, is included with the request for disbursement accompanying this Certification. Borrower has delivered a Contractor Certification in the form attached hereto at Attachment 2, confirming that Contractor has been paid in full for services performed as of the date of the Contractor Certification. (d) This request for funds does not include any amounts that the Borrower intends to withhold or retain from a Contractor.
[SIGNATURE PAGE FOLLOWS]
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By: _____________________________
Name:

Title:

Date:

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EXHIBIT 5

INSURANCE REQUIREMENTS
(a) Commercial General Liability. Borrower shall procure and maintain commercial general liability on an occurrence form with limits not less than $1,000,000 per occurrence and $2,000,000 aggregate for bodily injury and property damage liability naming the State of California, its officers, agents and employees as additional insured.

The certificate of insurance and endorsements shall be delivered to the Development Services Director. Said certificate of insurance and endorsements shall be issued by an insurance company with a rating of not less than A-VII in Best's Insurance Guide. Lender reserves the right to review and reasonably adjust insurance requirements as necessary during the term of this Agreement.
(b) Workers’ Compensation and Employers’ Liability. Borrower shall maintain statutory workers' compensation and employer's liability coverage for all its employees who will be engaged in the performance of the Permitted Activities, including special coverage extensions where applicable, with employer's liability limits of ONE MILLION AND NO/100 DOLLARS ($1,000,000.00). The policy shall contain a waiver of subrogation in favor of the City.
(c) Automobile Liability. Borrower shall maintain motor vehicle liability with limits not less than $1,000,000 combined single limit per accident. Such insurance shall cover liability arising out of a motor vehicle including owned, hired and non-owned motor vehicles. The same additional insured designation and endorsement required for general liability is to be provided for this coverage. (d) General Requirements. Borrower shall ensure that the following general requirements are met:
(i) Insurance companies must be acceptable to the City
Attorney.
(ii) The certificates of insurance shall provide that the insurer will not cancel the insured's coverage without thirty (30) days prior written notice to Lender.
(iii) All required insurance shall be in effect at all times during the term of this Agreement, all extensions thereof, holdover periods or any other occupancy of the Property by Borrower.
(iv) If insurance expires during the term of the Agreement, a new certificate must be received by Lender within thirty (30) days of the expiration date of the existing policy. This new insurance must still meet the terms of this Agreement. (v) Borrower shall notify the Lender within five business days of Borrower’s receipt of any notice of cancellation or non-renewal of any insurance required by this Agreement.
(vi) Borrower is responsible for any deductible or self-insured retention contained within the insurance program.

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(vii) In the event Borrower fails to keep in effect at all times the required insurance coverages, the Lender may, in addition to any other remedies it may have, declare an Event of Default and terminate this Agreement upon the occurrence of such event.
(viii) Any insurance required to be carried shall be primary, and not excess, to any other insurance carried by Lender, and without any contribution by Lender.
(ix) If Borrower is self-insured in whole or in part as to any of the above described types and levels of coverage, Borrower shall provide Lender with written acknowledgment of this fact at the time of the execution of this Agreement.

Lender may require financial information to justify Borrower’s self-insured status. If, at any time after the execution of this Agreement, Borrower abandons its self-insured status, Borrower shall immediately notify Lender of this fact and shall comply with all of the terms and conditions of this Insurance clause pertaining to policies of insurance in regard to those types and levels of insurance.
(x) It is agreed that Lender shall not be liable for the payment of any premiums or assessments on the required insurance coverage.

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ASSIGNMENT OF PROJECT DOCUMENTS

SUGAR PINE VILLAGE
THIS ASSIGNMENT OF PROJECT DOCUMENTS (the “Assignment”) is made as of July 22, 2021 by SUGAR PINE HOUSING, LLC, a a California limited liability company (the “Borrower”) in favor of the CITY OF SOUTH LAKE TAHOE in its capacity as Housing Successor to the South Tahoe Redevelopment Agency, a redevelopment agency organized and existing under the Laws of the State of California (the “City” or “Lender”).

WHEREAS, pursuant to terms more specifically described in a loan agreement between Lender and Borrower of even date herewith (the “Loan Agreement”), Lender intends to lend to Borrower up to Five Hundred Sixty-Six Thousand Six Hundred Twenty-Nine and 00/100 Dollars ($566,629.00) (the “Predevelopment Loan”) to cover City-approved, and budgeted predevelopment costs (the “Predevelopment Work”) and related to Sugar Pine Village ( the “Project”);
WHEREAS, the execution and delivery of this Assignment is a condition precedent to the performance by Lender of its obligations under the Loan Agreement; NOW, THEREFORE, in consideration of the recitals set forth above and incorporated herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Borrower agrees as follows:

1. Unless expressly defined herein, all capitalized terms used herein shall have the meanings ascribed to such terms in the Loan Agreement.

2. As security for the Predevelopment Loan, Borrower hereby grants, transfers and assigns to Lender, all the right, title and interest of Borrower in any and all other contracts, agreements, plans, licenses, permits or other items, whether now or hereafter executed, granted, received, acquired or issued to or by Borrower in connection with the Predevelopment Work and paid for using proceeds of the Predevelopment Loan (all of the foregoing being hereinafter sometimes referred to collectively as the “Project Documents”).

3. This Assignment is given for the purpose of securing the payment of all sums, now or at any time due Lender under any of the Loan Documents and any extensions, modifications, amendments and renewals thereof, and the performance and discharge of the obligations, covenants, conditions and agreements of Borrower contained in any of the Loan Documents. Borrower hereby consents to the Lender filing one (or more) financing statements, from time to time, with the California Secretary of State to evidence the assignment of the Project Documents. Lender does not assume any of Borrower obligations or duties under any Project Documents, including, but not limited to, the obligation to pay for the preparation of any Project Documents unless and until the Lender exercises its rights pursuant to this Assignment.

4. Borrower hereby irrevocably appoints Lender as its attorney-in-fact, which power is coupled with an interest, so that Lender shall have the right to demand, receive, and DocuSign Envelope ID: 4209C2BB-5A4F-4577-98DF-7CA7252C6B4C 306
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enforce any and all of Borrower's rights with respect to the Project Documents, and to perform any and all acts in the name of Borrower or in the name of Lender with the same force and effect as if performed by Borrower in the absence of this Assignment, upon the occurrence and during the continuance of an event which, with notice or the passage of time or both, would constitute an Event of Default under the Loan Documents. Until such occurrence and upon Borrower’s cure of any Event of Default permitted by the Loan Documents, Borrower shall be entitled to exercise all rights pertaining to the Project Documents.

4. Borrower agrees as follows:
(a) Borrower will faithfully abide by, perform and discharge each and every obligation, covenant, condition and agreement of the Project Documents to be performed by Borrower and in accordance with the exercise of prudent business judgment, to enforce performance by the other parties thereto of each and every obligation, covenant, condition and agreement to be performed by each such other party. (b) During the continuance of an Event of Default under the Loan Documents, Lender may use Project Documents for any lawful purpose without restriction except (if any) as may be provided in the Loan Agreement or the documents evidencing the Project Documents.
(c) During the continuance of an Event of Default under the Loan Documents, Lender may, at its option, without notice and without regard to the adequacy of security for the indebtedness hereby secured, either in person or by agent, with or without bringing any action or proceeding, or by a receiver to be appointed by a court at any time hereafter, enforce for its own benefit any one or all of the Project Documents.

The exercise of any rights under this Assignment shall not be deemed to cure or waive any default under any of the Loan Documents or waive, modify or affect any notice of default under any of the Loan Documents or invalidate any act done by Lender pursuant to or following such notice.
(d) Each of the parties to any of the Project Documents other than Borrower, upon written notice from Lender of the continuance of an Event of Default under the Loan Documents, shall be and hereby is authorized by Borrower to perform their respective agreements for the benefit of Lender in accordance with the terms and conditions thereof without any obligation to determine whether or not such an Event of Default under the Loan Documents has in fact occurred and continues.

5. Borrower hereby covenants and represents to Lender that: (a) Borrower has not previously assigned, sold, pledged, transferred, mortgaged, hypothecated or otherwise encumbered the Project Documents or any of them or its right, title and interest therein; (b) Borrower shall not assign, sell, pledge, transfer, mortgage, hypothecate or otherwise encumber its interests in the Project Documents or any of them except that Borrower may do so in connection with the financing of the Project (or Phase thereof) in connection with a partial or complete termination of this Assignment; (c) Borrower has not performed any act that might prevent Borrower from performing its undertakings DocuSign Envelope ID: 4209C2BB-5A4F-4577-98DF-7CA7252C6B4C 307
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hereunder or that might prevent Lender from operating under or enforcing any of the terms and conditions hereof or that would limit Lender in such operations or enforcement; (d) Borrower is not in default under any of the Project Documents, and to the best knowledge of Borrower, no other party to the respective Project Documents is in default thereunder; (e) except as provided in the Loan Agreement (if any), no amendments to any material terms of the Project Documents will be made without the prior written consent of Lender, which consent shall not be unreasonably withheld, delayed or conditioned; and (f) upon delivery of any of the Project Documents, Borrower will deliver a copy of such Project Documents (or the original at the Lender’s request) to Lender and will require each of the parties thereto as Lender may designate to execute and deliver to Lender a consent to this Assignment.

6. All notices, demands or documents that are required or permitted to be given or served hereunder shall be in writing and shall be deemed sufficiently given when delivered or mailed in the manner set forth in the Loan Agreement.

7. Any provision in the Loan Agreement that pertains to this Assignment shall be deemed to be incorporated herein as if such provision were fully set forth in this Assignment. In the event of any conflict between the terms of this Assignment and the terms of the Loan Agreement, the terms of the Loan Agreement shall prevail. A provision in this Assignment shall not be deemed to be inconsistent with the Loan Agreement by reason of the fact that no provision in the Loan Agreement covers such provision in this Assignment.

8. This Assignment is made for collateral purposes only (i.e., as concurrent security for the obligations evidenced in the Loan Documents), and the duties and obligations of Borrower under this Assignment shall terminate when all sums due Lender under the Loan Documents are paid in full and all obligations, covenants, conditions and agreements of Borrower contained in the Loan Documents are performed and discharged.

9. This Assignment shall be governed by the laws of the State of California.

To the greatest extent permitted by law, Borrower hereby waives any and all rights to require marshaling of assets by Lender.

10. It is expressly intended, understood and agreed that this Assignment and the other Loan Documents are made and entered into for the sole protection and benefit of Borrower and Lender and their respective successors and assigns (but in the case of assigns of Borrower, only to the extent of assignments thereof to affiliates of Borrower which are to undertake the development and financing of the Project as permitted in the Loan Agreement); that no other person or persons shall have any right at any time to action hereon or rights to the proceeds of the loan evidenced and secured by the Loan Documents; that such loan proceeds do not constitute a trust fund for the benefit of any third party; that no third party shall under any circumstances be entitled to any equitable lien on any such undisbursed loan proceeds at any time and that Lender shall have a lien DocuSign Envelope ID: 4209C2BB-5A4F-4577-98DF-7CA7252C6B4C 308
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upon and right to direct application of any such undisbursed loan proceeds as provided in the Loan Documents.

11. The relationship between Lender and Borrower is solely that of a lender and borrower, and nothing contained herein or in any of the Loan Documents shall in any manner be construed as making the parties hereto partners, joint venturers or any other relationship other than lender and borrower.

12. Borrower and Lender intend and believe that each provision in this Assignment comports with all applicable local, state or federal laws and judicial decisions. However, if any provision or provisions or if any portion of any provision or provisions in this Assignment is found by a court of law to be in violation of any applicable local, state or federal ordinance, statute, law, administrative or judicial decision or public policy, and if such court should declare such portion, provision or provisions of this Assignment to be illegal, invalid, unlawful, void or unenforceable as written, then it is the intent both of Borrower and Lender that such portion, provision or provisions shall be given force to the fullest possible extent that they are legal, valid and enforceable, that the remainder of this Assignment shall be construed as if such illegal, invalid, unlawful, void or unenforceable portion, provision or provisions were not contained therein and that the rights, obligations and interests of Borrower and Lender under the remainder of this Assignment shall continue in full force and effect.

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IN WITNESS WHEREOF, Borrower has duly executed this Assignment on the day and year first above written.

SUGAR PINE HOUSING, LLC, a California
limited liability company
By: _______________________________
Ann Silverberg, Vice President
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Schedule 1
Form of Contractor’s Consent (including Architect)

CONSENT AND AGREEMENT OF CONTRACTOR
The undersigned Contractor hereby acknowledges and consents to the assignment to the City of South Lake Tahoe, a municipal corporation, (the “City”) of its contract with _[PHASE-RELATED OWNER ENTITY]_, entitled “ _____________ ____,” dated _______________ ____, 201_ (the “Contract”), pursuant to that certain Assignment of Project Documents (the “Assignment”) that serves as security for a loan from the City (“Lender”) to _[PHASE-RELATED OWNER ENTITY]_ (“Borrower”).

Contractor agrees to recognize, honor and be bound by the terms, provisions and conditions of the Assignment.

1. The Contractor agrees:
a. to furnish to Lender copies of all written notices of default given by Contractor to Borrower with respect to any failure of Borrower to perform under the Contract, and, anything in the Contract to the contrary notwithstanding, Borrower shall never be treated as being in breach of its obligations under the Contract unless and until notice of the claimed breach has been given to Lender and Lender has been given a reasonable opportunity to cure any such breach after receipt of said notice from the Contractor;
b. to accept any such performance by Lender as performance by the Borrower; and
c. so long as Lender commences to cure or cause to be cured any such breach, and the cure is carried on with due diligence (or in the case of a breach of Borrower’s payment obligations to the Contractor, so long as Lender pays or causes to be paid any sums payable from time to time by Borrower to Contractor under the Contract within a reasonable time after the same become due), then Contractor will continue to meet its obligations fully under the Contract and will not terminate the Contract, suspend work thereunder or place a lien or encumbrance on the Project.

2. The Contractor acknowledges and agrees that Lender shall have no obligation to commence or continue the cure of any such breach or to pay or perform any obligation of Borrower to the Contractor except to the extent provided in the foregoing Assignment.

3. The Contractor waives all recourse against Lender for all claims, whether DocuSign Envelope ID: 4209C2BB-5A4F-4577-98DF-7CA7252C6B4C 311
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for amounts due or otherwise, which it may have against Borrower first accruing or arising prior to any Event of Default under the Borrower's Loan Documents with Lender.

4. The Contractor hereby expressly waives all provisions in the Contract that would impair, hinder or prevent the making of the Assignment by Borrower or the enforcement thereof by Lender.

5. The Contractor hereby represents and warrants to Lender that the Contract is in full force and effect on the date hereof and has not been amended or modified and that there are no uncured breaches thereof by any party thereto.

6. The Contractor further agrees that:
a. Without the prior written approval of Lender, the Contractor will not enter into any agreement terminating, amending or modifying the terms, provisions or conditions of the Contract in any material respect;
b. Without the prior written approval of Lender, the Contractor will not transfer or assign the Contract;
c. Contractor will deliver simultaneously to Lender copies of all change order requests delivered to Borrower;
d. Upon any Event of Default shall occur under any of the Loan Documents between Borrower and Lender, Lender shall have an absolute right to use and copy all drawings, plans, work products, including all copyrights and other rights relating thereto, and/or specifications and other materials prepared by or for the Contractor with respect to the Project; and
e. Upon Lender’s request, the Contractor will provide Lender a schedule showing all amounts earned by the Contractor under the Contract.

7. All notices, requests, demands, approvals, or other communications given hereunder or in connection with this Agreement shall be in writing and shall be deemed given when delivered by hand or sent by registered or certified mail, return receipt requested, addressed as follows:

If to Contractor:
[INSERT NAME AND ADDRESS]
If to Lender: City of South Lake Tahoe
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1901 Lisa Maloff Way,
South Lake Tahoe, CA 96150
Attention: Joseph D. Irvin, City Manager
With a copy to: City Attorney
City of South Lake Tahoe
1901 Lisa Maloff Way, Suite 300
South Lake Tahoe, CA 96150
A copy of all notices under this Agreement shall also be delivered to the Borrower.

If to Borrower: [PHASE-RELATED OWNER ENTITY]

8. This Consent and Agreement of Consultant shall bind the Consultant and its representatives, successors and assigns, and shall inure to the benefit of Lender and Lender’s successors and assigns, including, without limitation, any subsequent holder of the Note.

9. All capitalized terms used herein shall have the meanings ascribed such terms in the Loan Agreement unless otherwise expressly defined herein.

Executed as an instrument under seal this ____ day of _________________, 2021.

CONSULTANT:
[NAME OF CONSULTANT]
By: ________________________________
Name: ________________________________
Title: ________________________________
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City of South Lake Tahoe
Agenda Item Executive Summary
Joe Irvin, City Manager
Meeting Date: June 7, 2022
Agenda Item #: 17
Agenda Item: Revised Resolution for the Grant Application to the State Department of Parks and Recreation Rural Recreation and Tourism Program Towards Construction of the City of South Lake Tahoe Recreation and Aquatics Center
Executive Summary: On June 15, 2021 City Council approved a resolution to submit an application to the State Department of Parks and Recreation through Proposition 68 Rural Recreation and Tourism Program in the amount of $3,000,000 towards construction costs of the new Recreation and Aquatics Center. On January 20, 2022 the application was submitted. On May 24, 2022 staff received an email from the Department of Parks and Recreation stating our application is under review and requires a few revisions or additional documentation. One of the revisions is an updated Resolution naming the proposed project in the Resolution. This item is before City Council to authorize the revised formal resolution originally approved on June 15, 2021 to include the proposed project name in the title of the Resolution.

Requested Action / Suggested Motions: Pass a Revised Resolution approving the grant application to the State Department of Parks and Recreation Rural Recreation and Tourism Program for $3,000,000 towards construction of the City of South Lake Tahoe Recreation and Aquatics Center.

Responsible Staff Member: Lori Marino, Principal Management Analyst Responsible Staff Member: Lori Marino, Principal Management Analyst (530) 542-7410 Reviewed and Approved By:

Olga Tikhomirova, Director of Finance
Susan Blankenship, City Clerk
Heather Stroud, City Attorney
Attachments:
01-Staff Report - Revised Resolution Recreation Center Grant Funds.docx 02-Resolution - Revised Resolution Recreation Center Grant Funds.docx 03- Original Resolution 2021-047 RRT.pdf
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City of South Lake Tahoe
Report to City Council
Meeting Date: June 07, 2022
Title: Revised Resolution for the Grant Application to the State Department of Parks and Recreation Rural Recreation and Tourism Program Grant Funds Towards Construction of the South Lake Tahoe Recreation and Aquatics Center.

Location: 56 Acres Property / 1000 Rufus Allen Blvd.

Responsible Staff Member: Lori Marino, Principal Management Analyst (530) 542- 7410 Background:

On June 15, 2021 City Council approved a resolution to submit an application to the State Department of Parks and Recreation through Proposition 68 Rural Recreation and Tourism Program in the amount of $3,000,000 towards construction costs of the new Recreation and Aquatics Center.

On January 20, 2022 the application was submitted.

Issue and Discussion:

On May 24, 2022 staff received an email from the Department of Parks and Recreation stating our application is under review and requires a few revisions or additional documentation. One of the revisions is an updated Resolution naming the proposed project in the Resolution. This item is before City Council to authorize the revised formal resolution originally approved on June 15, 2021 to include the proposed project name in the title of the Resolution. Staff also submitted the final CEQA Notice of Determination, and final approved 56-Acre Agreement for Development, Operation, and Maintenance between the City and El Dorado County, along with updated Cost Estimate Form and Project Timeline Form. After a site visit by the State on June 2, 2022 and submittal of this revised Resolution, the State will continue the application review and consideration for funding.

Financial Implications:

If grant funds are awarded, the City will be better positioned to reduce the bond amount originally anticipated for construction costs thereby better positioning the City to leverage Measure P funds for future recreation projects. There are no additional match requirements necessary for this application, as the cost of the project far exceeds the grant request.

Environmental Considerations:

On January 18, 2022, the City Council adopted the Initial Study/Mitigated Negative Declaration (IS/MND) for the 56 Acres Master Plan and South Lake Tahoe Recreation and Aquatics Center 315
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Project, and determined that under the California Environmental Quality Act (CEQA), the IS/MND adequately addresses the environmental impacts of the proposed project and no further environmental analysis is required.

Policy Implications:

Per Financial Management- Grant Funding and Compliance Policy approved by City Council on Sept. 8, 2020; section 2.3 City Council Approval to Apply: City Council approval to apply is required for ALL Grant Applications. A detailed staff report and a resolution (if required) should be brought forth to City Council for Council approval/adoption.
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Resolution 2022-XXX June 07, 2022 Page 1 of 2
Resolution 2022-XXX
Adopted by the City of South Lake Tahoe
City Council
June 07, 2022
Approving the application to the State Department of Parks and Recreation Rural Recreation and Tourism Program Grant Funds towards construction of the new City of South Lake Tahoe Recreation and Aquatics Center (Replacing Resolution 2021-047)

BACKGROUND
A. The State Department of Parks and Recreation has been delegated the responsibility by the Legislature of the State of California for the administration of the Rural Recreation and Tourism Grant Program, setting up necessary procedures governing the application(s).

B. Procedures established by the State Department of Parks and Recreation require the Applicant’s City Council to certify by resolution the approval of the application before submission of said application to the State.

C. The successful applicant will enter into a contract with the State of California to complete the Grant Scope project which is funding towards the construction of the new City of South Lake Tahoe Recreation and Aquatics Center.

BASED ON THE FACTS SET FORTH IN THE BACKGROUND, BE IT RESOLVED, that the City Council of the City of South Lake Tahoe:

1. Approves the filing of an application for the construction of the new City of South Lake Tahoe Recreation and Aquatics Center through the Rural Recreation and Tourism Program Grant Funds, and:

2. Certifies that said Applicant has or will have available, prior to commencement of any work on the project included in this application, the sufficient funds to complete the project.

3. Certifies that if the project is awarded, the Applicant has or will have sufficient funds to operate and maintain the project.

4. Certifies that the Applicant has reviewed understands and agrees to the General Provisions contained in the contract shown in the Grant Administration Guide.

5. Delegates the authority to the City Manager, or designee to conduct all negotiations, sign and submit all documents, including, but not limited to applications, agreement, amendments, and payment requests, which may be necessary for the completion of the grant scope.
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Resolution 2022-XXX June 07, 2022 Page 1 of 2

6. Agrees to comply with all applicable federal, state and local laws, ordinances, rules, regulations, and guidelines.

7. Will consider promoting inclusion per Public Resource Code §80001(b)(8 A-G).

Adopted by the City of South Lake Tahoe City Council on June 07, 2022 by the following vote:

Yes:

No:

Absent:

Abstain:
______________________________________ Date: _________
Devin Middlebrook, Mayor
Attest:
____________________________________
Susan Blankenship, City Clerk
The presence of electronic signature certifies that the foregoing is a true and correct copy as approved by the South Lake Tahoe City Council.
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Resolution 2021- 047
June 15, 2021 Page 1 of 2
Resolution 2021- 047
Adopted by the City of South Lake Tahoe
City Council
June 15, 2021
Approving the application for the State Department of Parks and Recreation Rural Recreation and Tourism Program Grant Funds

BACKGROUND
A. The State Department of Parks and Recreation has been delegated the responsibility by the Legislature of the State of California for the administration of the Rural Recreation and Tourism Grant Program, setting up necessary procedures governing the application( s).

B. Procedures established by the State Department of Parks and Recreation require the Applicant’ s City Council to certify by resolution the approval of the application before submission of said application to the State.

C. The successful applicant will enter into a contract with the State of California to complete the Grant Scope project.

BASED ON THE FACTS SET FORTH IN THE BACKGROUND, BE IT RESOLVED, that the City Council of South Lake Tahoe Approves the filing of project application for the Rural Recreation and Tourism Program Grant Funds, and:

1. Certifies that said Applicant has or will have available, prior to commencement of any work on the project included in this application, the sufficient funds to complete the project.

2. Certifies that if the project is awarded, the Applicant has or will have sufficient funds to operate and maintain the project.

3. Certifies that the Applicant has reviewed understands and agrees to the General Provisions contained in the contract shown in the Grant Administration Guide.

4. Delegates the authority to the City Manager, or designee to conduct all negotiations, sign and submit all documents, including, but not limited to applications, agreement, amendments, and payment requests, which may be necessary for the completion of the grant scope.

5. Agrees to comply with all applicable federal, state and local laws, ordinances, rules, regulations, and guidelines.

6. Will consider promoting inclusion per Public Resource Code § 80001( b)(8 A-G).

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Resolution 2021- 047
June 15, 2021 Page 1 of 2
Passed & Adopted by the City of South Lake Tahoe City Council on June 15, 2021 by the following vote:

Yes: Bass, Middlebrook and Wallace
Recused: Creegan and Friedrich
Date: _________
Tamara Wallace, Mayor
Attest:

Susan Blankenship, City Clerk
The presence of electronic signature certifies that the foregoing is a true and correct copy as approved by the South Lake Tahoe City Council.

DocuSign Envelope ID: F887CB16- DBC4- 48B6-B122-183803FD1319 6/ 16/ 2021
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City of South Lake Tahoe
Agenda Item Executive Summary
Joe Irvin, City Manager
Meeting Date: June 7, 2022
Agenda Item #: 18
Agenda Item: Tahoe Resource Conservation District, Tahoe Network of Fire Adapted Communities Sub-Recipient Grant Application
Executive Summary: The TRCD has again approached the city to be a sub-recipient for the 2022 season to assist the city with our defensible space program. The TRCD requires submittal of a sub-recipient grant application for approval to initiate a grant award. This is non-competitive funding.

Staff is seeking City Council approval to submit a grant application in the amount of $101,693.58 to the TRCD to hire three part-time/ grant funded, Defensible Space Inspectors for a term of seven months, and authorize the City Manager or designee to sign and submit all documents, including but not limited to applications, agreement amendments, payment requests, and necessary documents for the completion of the grant scope.

Requested Action / Suggested Motions: Pass a Resolution authorizing submittal of a sub-recipient grant application to the Tahoe Recourse Conservation District in the amount of $101,693.58 for the hiring of three part-time/grant funded, Defensible Space Inspectors for a term of seven months.

Responsible Staff Member: Jay Manning, Battalion Chief and Lori Marino, Principal Management Analyst
Responsible Staff Member: Jay Manning, Battalion Chief (530) 542-6164, and Lori Marino, Principal Management Analyst (530) 542-7410
Reviewed and Approved By:

Susan Blankenship, City Clerk
Olga Tikhomirova, Director of Finance
Heather Stroud, City Attorney
Attachments:
01-Staff Report TRCD Defensible Space Inspector Funding.docx 02-Resolution TRCD Defensible Space Inspector Funding.docx 321
Council Agenda Report June 7, 2022 1
City of South Lake Tahoe
Report to City Council
Meeting Date: June 7, 2022
Title: Tahoe Recourse Conservation District, Tahoe Network of Fire Adapted Communities Sub-Recipient Grant Application
Location: Citywide
Responsible Staff Members: Jay Manning, Battalion Chief (530) 542-6164, and Lori Marino, Principal Management Analyst (530) 542-7410
Background: Tahoe Resource Conservation District (TRCD) was awarded a grant in the amount of $5,826,125.00 from the Bureau of Land Management, through round 16 of the Southern Nevada Public Land Management Act (SNPLMA) for fire fuels reductions and similar services as a collaborative effort within the Tahoe Network of Fire Adapted Communities (TNFAC).

In February 2021, TRCD approached SLTFR regarding funding available as a subrecipient through this round 16 SNPLMA funding to assist in the City’s efforts within the TNFAC. The funding approved in 2021 to the City, funded the hiring of two, temporary, part-time Defensible Space Inspectors, whose salaries were paid from the grant funding.

Funding created a Defensible Space Inspection Program for the City of South Lake Tahoe that allowed us to inspect 2,279 properties for defensible space of which 1,034 were compliant and interacted 88 times with residents sharing information about proper defensible space around homes through this unique grant opportunity.

The TRCD has again approached the city to be a sub-recipient for the 2022 season to assist the city with our defensible space program. The TRCD requires submittal of a subrecipient grant application for approval to initiate a grant award. This is non-competitive funding. Staff is seeking City Council approval to submit a grant application in the amount of $101,693.58 to the TRCD to hire three temporary, part-time/ grant funded, Defensible Space Inspectors for a term of seven months, and authorize the City Manager, or Fire Chief to sign and submit all documents, including but not limited to applications, agreement amendments, payment requests, and necessary documents for the completion of the grant scope.

Issue and Discussion: South Lake Tahoe Fire Rescue intends to utilize three Defensible Space Inspectors to carry out TNFAC operations within the City of South Lake Tahoe city limits. During inspections, the Defensible Space Inspectors will provide information on defensible space compliance, free curbside chipping as well as engage 322
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and identify neighborhood leaders and look to prioritize community assistance funds to the community. They will also follow up with re-inspections of properties to confirm and track compliance across parcels.

South Lake Tahoe Fire Rescue will be identifying target hazard areas annually where they plan to inspect whole neighborhoods within the city. SLTFR will be working closely with the California Tahoe Conservancy and look to align and prioritize work with their staff.

SLTFR Defensible Space Inspectors will coordinate outreach and education to target neighborhood leaders and establish Fire Adapted Communities within the targeted neighborhoods within the community. South Lake Tahoe Fire Rescue will also be encouraging these FAC’s to become recognized FIREWISE communities as well.

SLTFR is only requesting a seven-month grant at this time to assist the TRCD with remaining grant funds available for the final seven months of the grant period. The TRCD has been notified that the SNPLMA round 18 funding for the next five years has been awarded and will begin funding in March of 2023. City staff will be bringing back this new grant next year for a multi-year award to continue the defensible space inspection efforts within the city.

Financial Implications: Application submitted will be in an amount of $101,693.58 to fund the following costs:

Salaries: $74,775.39
Benefits (13%): $11,173.32
Mileage: $1,500.00
Supplies: $5,000.00
TRCD Grant Admin Cost: $9,244.87
Funds will be reimbursed in arrears on a quarterly basis.

Upon award, funds should be appropriated into the Fiscal Year 2021-22 budget as follows:

Account# 100 02240
Revenue 33320: TRCD $92,448.71 (grant amount less TRCD Grant Admin cost) Expense 41020: Temporary/Part time $74,775.39
41XXX: PR Benefits $11,173.32
Add other costs $6,500.00
Environmental Considerations: Defensible space provides a fuel buffer for structures and other flammable fuels as well as
provides firefighters access from which to defend a threatened area. The proposed action of applying for the grant funds is not a “project” under the California Environmental Quality Act (CEQA) under CEQA Guidelines section 15378(b)(2) because it is a continuing administrative or maintenance activity such as purchases for supplies and personnelrelated actions.

Policy Implications: Per Financial Management- Grant Funding and Compliance Policy approved by City Council on Sept. 8, 2020; section 2.3 City Council Approval to Apply:

City Council approval to apply is required for ALL Grant Applications. A detailed staff report and a resolution (if required) should be brought forth to City Council for Council approval/adoption.
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Resolution 2022-XXX
Adopted by the City of South Lake Tahoe
City Council
June 07, 2022
TRCD Tahoe Network of Fire Adapted Communities Sub-Recipient Grant Application

BACKGROUND
A. Tahoe Resource Conservation District (TRCD) was awarded a grant in the amount of $5,826,125.00 from the Bureau of Land Management, through round 16 of the Southern Nevada Public Land Management Act (SNPLMA) for fire fuels reductions and similar services as a collaborative effort within the Tahoe Network of Fire Adapted Communities (TNFAC).

B. The TRCD has available funding to pass-through to South Tahoe Fire Rescue as a Sub-recipient to fund the hiring of three, temporary, part-time Defensible Space Inspectors, whose salaries will be paid from the grant funding.

C. The South Tahoe Fire Rescue will enter into an agreement with the Tahoe Resource Conservation District to carry out City of South Lake Tahoe, Defensible Space Inspection Program.

BASED ON THE FACTS SET FORTH IN THE BACKGROUND, BE IT RESOLVED, that the City Council of the City of South Lake Tahoe:

1. Approves the filing of an application in the amount of $101,693.58 for “Defensible Space Inspection Program”

2. Certifies that the City of South Lake Tahoe has or will have sufficient funds to operate and maintain the project.

3. Certifies that if approved, funds under the jurisdiction of The City of South Lake Tahoe are available to begin the project.

4. Certifies that said applicant will expend grant funds in accordance with Grant Sub-Recipient Agreement Between Tahoe Resource Conservation District and the City of South Lake Tahoe.

5. Appoints City Manager or a designee to conduct all negotiations, execute and submit all documents including, but not limited to applications, agreements, amendments, payment requests and so on, which may be necessary for the completion of the aforementioned project.

6. Accepts the grant funds and authorize the Finance Director to appropriate the funds into the Fiscal Year 2021-2022 budget as described in the staff report.

Adopted by the City of South Lake Tahoe City Council on June 07, 2022 by the following vote:

Yes:

No:

Absent:

Abstain:
________________________ Date:_________
Mayor Devin Middlebrook
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Attest:
_________________________
Susan Blankenship, City Clerk
The presence of electronic signature certifies that the foregoing is a true and correct copy as approved by the South Lake Tahoe City Council.
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City of South Lake Tahoe
Agenda Item Executive Summary
Joe Irvin, City Manager
Meeting Date: June 7, 2022
Agenda Item #: 19
Agenda Item: Acceptance of Grant Award from CalRecycle for SB 1383 Local Assistance Grant Program
Executive Summary: CalRecycle has offered noncompetitive grants to municipalities in support of Senate Bill 1383 "Short Lived Climate Pollutants" compliance through their SB 1383 Local Assistance Grant Program. The funds will be used for staff in working with commercial food waste generators on diversion efforts, and necessary outreach and education pertaining to the new mandate. The City applied for $31,700 grant and was offered an award of $34,005.

Requested Action / Suggested Motions: Pass a Resolution accepting a grant award in the amount of $34,005 from CalRecycle's SB 1383 Local Assistance Grant Program to be used towards sustainability education, outreach and related personnel costs.

Responsible Staff Member: Sara Letton, Sustainability Coordinator Responsible Staff Member: Sara Letton, Sustainability Coordinator, 530-542-6175 Reviewed and Approved By:

Susan Blankenship, City Clerk
Olga Tikhomirova, Finance Director
Heather Stroud, City Attorney
Attachments:
01-Staff Report CalRecycle Grant Acceptance.docx
02-Resolution CalRecycle Grant Final Acceptance.docx
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City of South Lake Tahoe
Report to City Council
Meeting Date: June 7, 2022
Title: Acceptance of Grant Award from CalRecycle for SB 1383 Local Assistance Grant Program
Location: Citywide
Responsible Staff Member: Sara Letton, Sustainability Coordinator, 530-542-6175 Background: In September 2016, Governor Edmund Brown Jr. set methane emissions reduction targets for California (SB 1383 Lara, Chapter 395, Statutes of 2016) in a statewide effort to reduce emissions of short-lived climate pollutants (SLCP). SB 1383 sets targets to reduce organic waste disposal by 50 percent by 2020 and 75 percent by 2025. at the law also includes a target to recover at least 20 percent of currently disposed of surplus food by 2025 for human consumption.

The Department of Resources Recycling and Recovery (CalRecycle) is administering a one-time grant program meant to provide aid in the implementation of regulations adopted by CalRecycle pursuant to SB 1383 and SB170 Budget Act of 2021. This non-competitive grant program provides $57,000,000 of funding to local jurisdictions to assist with the implementation of regulatory requirements associated with SB 1383, including but not limited to:
 Capacity Planning
 Collection
 Edible Food Recovery
 Education and outreach (for organic waste & edible food recovery requirements)  Enforcement and Inspection
 Program Evaluation/Gap Analysis
 Procurement Requirements
 Record Keeping
Issue and Discussion: The City of South Lake Tahoe is eligible for the CalRecycle grant because we have adopted an enforceable ordinance implementing SB 1383 (City Council Ord. No. 2021-1157). The grant amount is based on agency population. The City is initially told we were eligible to receive $31,700 and we were recently notified that we were eligible for $34,005. There is no requirement for matching funds. The grant originally grant application was submitted by February 1, and a Resolution supporting the application was submitted by March 1, 2022.

Staff met with staff from South Tahoe Refuse to determine the best use of the grant funds. The City intends to use these grant funds towards education and outreach and related personnel costs.

Education and outreach will focus on commercial generators of organic waste and on visitors to our City, as both groups have been identified as needing more assistance with the new 327
Council Agenda Report June 7, 2022 Page 2 of 2
requirements than residential generators. Personnel responsible for this program will include our Sustainability Coordinator, with support from Park Rangers (formerly Youth Ambassadors), a seasonal program that the City initiated in Summer 2021 and plans to continue this year. The Park Ranger program is a collaboration with Lake Tahoe Community College and South Tahoe High School to provide job opportunities to local youth with a focus on interacting with park users in heavily used recreational sites within the City to encourage good stewardship of our natural surroundings, including proper trash disposal.

The City of South Lake Tahoe received a high-elevation waiver from the requirement to separate and recover food waste and food-soiled paper starting January 1, 2022. However, this grant can assist with the overall program goal and public education.

Financial Implications: There are no matching grant fund requirements. If awarded, funds should be appropriated into the FY 2021/2022 budget, account 100-01967 Sustainable South Lake Tahoe, as follows:

Cal Recycle Revenue 33243: $34,005
Sustainability Expenses 44039: $6,700
Operating Transfer out for Staff Time Reimbursement 50001: $27,305 Environmental Considerations: The appropriation of funds for the above-mentioned projects is not a project requiring review under the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines section 15378(b)(4) (creation of government funding mechanisms or other government fiscal activities which do not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment).

Policy Implications: The grant application will support the City’s solid waste management efforts and support the SB 1383 organics diversion program. 328
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Resolution 2022-XXX
Adopted by the City of South Lake Tahoe
City Council
June 7, 2022
Authorizing Acceptance of Grant Award from CalRecycle for Senate Bill 1383 Local Assistance Grant Program

BACKGROUND
A. Public Resources Code sections 48000 et seq., 14581, and 42023.1(g), authorize the Department of Resources Recycling and Recovery (CalRecycle) to administer various grant and payment programs in furtherance of the State of California’s (state) efforts to reduce, recycle and reuse solid waste generated in the state thereby preserving landfill capacity and protecting public health and safety and the environment.

B. In furtherance of this authority, CalRecycle is required to establish procedures governing the administration of the payment programs and administration of the application, awarding, and management of the grant programs.

C. CalRecycle’s procedures for administering payment and grant programs require, among other things, an applicant’s governing body to declare by resolution certain authorizations related to the administration of CalRecycle grants and payment programs.

D. CalRecycle has released a Notice of Funds Available for a one-time grant program to provide aid to local jurisdictions in implementing regulations adopted by CalRecycle under Senate Bill (SB) 1383 regarding organic waste.

E. The City of South Lake Tahoe is eligible for the first round of funding under this grant because the City Council adopted an enforceable ordinance to implement SB 1383 (City Council Ord. No. 2021-1157), which became effective on January 1, 2022.

F. CalRecycle offered to award the grant in excess of the original estimate described in the February 1, 2022 resolution to Council authorizing ratification of the grant application, increasing the offer from $31,700 to $34,005.

BASED ON THE FACTS SET FORTH IN THE BACKGROUND, BE IT RESOLVED, that the City Council of the City of South Lake Tahoe:
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Resolution 2022-XXX June 7, 2022 Page 2 of 2

1. Authorizes acceptance of the award from CalRecycle for SB 1383 local assistance grant funding in the amount of $34,005, with no local match required.

2. Authorizes and empowers City Manager or designee to execute in the name of the City of South Lake Tahoe all documents, including but not limited to, applications, agreements, amendments, and requests for payment, necessary to secure funds and implement the approved grant.

3. Authorizes a budget amendment for the CalRecycle grant of $34,005 with funds to be appropriated into the FY 2021/2022 budget account 100-01967 Sustainable South Lake Tahoe, as follows:

Cal Recycle Revenue 33243: $34,005
Sustainability Expenses 44039: $6,700
Operating Transfer Out for Staff Time Reimbursement 50001: $27,305 Adopted by the City of South Lake Tahoe City County on June 7, 2022, by the following vote:

Yes:

No:

Absent:
__________________________ Date: ____________
Devin Middlebrook, Mayor
Attest:
__________________________
Susan Blankenship, City Clerk
The presence of electronic signature certifies that the foregoing is a true and correct copy as approved by the South Lake Tahoe City Council.
330
City of South Lake Tahoe
Agenda Item Executive Summary
Joe Irvin, City Manager
Meeting Date: June 7, 2022
Agenda Item #: 20
Agenda Item: Sugar Pine Village Building Permit Fee Reduction Executive Summary: The Sugar Pine Village project is a proposed 248-unit affordable housing project, with onsite community service facilities on 11.6 acres of land owned located at 1888 Lake Tahoe Blvd and 1029 Tata Lane. The project developer is Related Companies of California, LLC. Since June 2020, the City of South Lake Tahoe has been an active partner in the development of the project. City has contributed $1,194,255 in Redevelopment Agency and HOME program income, a $1,250,000 loan for the purchase of land coverage, and partnered with the developer on multiple grant applications totaling $45,555,370. The developer is proposing to utilize factory built modular construction for the residential units and is requesting a reduction in building permit fees, justified by the reduced number of required onsite inspections and workload for City inspection staff. The recommended reduction is equal to 20 percent of the building permit fees associated with the modular construction valuation.

Requested Action / Suggested Motions: Pass a Resolution approving a 20 percent reduction in building permit fees for the Sugar Pine Village affordable housing project.

Responsible Staff Member: Hilary Roverud, Director of Development Services Responsible Staff Member: Hilary Roverud, Director of Development Services (530) 542-6024 Reviewed and Approved By:

Susan Blankenship, City Clerk
Olga Tikhomirova, Director of Finance
Heather Stroud, City Attorney
Attachments:
01-Staff Report - Sugar Pine Village Fee Reduction.docx 02-Resolution - Sugar Pine Village Fee Reduction.docx
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City of South Lake Tahoe
Report to City Council
Meeting Date: June 7, 2022
Title: Sugar Pine Village building permit fee reduction Location: 1888 Lake Tahoe Blvd and 1029 Tata Lane
Responsible Staff Member: Hilary Roverud, Director of Development Services Background: The Sugar Pine Village project is a proposed 248-unit affordable housing project, with onsite community service facilities on 11.6 acres of land owned by the State of California and managed by the California Tahoe Conservancy (Conservancy). This project is a result of the Governor’s Executive Order N-06-19, which directed the California Department of General Services (DGS) to identify excess state properties as potential affordable housing development sites. In July 2020, the Conservancy announced the State had selected Related Companies of California LLC in partnership with the St. Joseph Community Land Trust to construct and manage the Sugar Pine Village project.

Since June 2020, the City of South Lake Tahoe has been an active partner in the development of the project. As a first step of financial commitment, the City Council at its November 17th, 2020 meeting authorized a $566,629 loan for predevelopment costs (Resolution 2020-109) and a $1,250,000 loan to purchase banked land coverage at the airport (Resolution 2020-110).

The loans were funded by Program Income from repayments of loans from the Redevelopment Agency (RDA) Low- and Moderate-Income Housing Fund and the City’s undesignated reserve fund, respectively. At its October 19, 2021 meeting the City Council also approved a $627,626 loan of HOME Program Income (Resolution 2021-081). This brings the City’s total commitment toward the project to $2,444,255.

In addition to direct City commitments, the City has partnered with Related Development to secure $17,359,470 in Affordable Housing and Sustainable Communities (AHSC) grant funds and $5,000,000 in Permanent Local Housing Allocation (PLHA) grant funding.

Related California has also secured $20,000,000 in Multifamily Housing Program (MHP) funding and $3,195,900 in Infill Infrastructure Grant (IIG) funding so far in the financing phase of the project.

To date, approximately $40,000,000 in tax credits and grant applications have been applied for and secured using the City’s initial approximate $1.8 million commitment as a local match.

Related California is phasing the financing and construction of the project into four phases.

Phase 1A includes 68 residential units and a community building, Phase 1B 60 units, Phase 2A 60 units and Phase 2B 60 units. The table below summarizes the financing strategy for the first three phases and shows how the City contributions pair with other funding sources. 332
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of 4
Issue and Discussion: Sugar Pine Housing Partners, L.P. submitted a building permit application and construction plans for Phase 1a to the City on April 1, 2022. The City completed the plan review (Building, Planning, Fire, and Public Works) and provided corrections to the Sugar Pine design team on April 22nd. A revised set of plans was submitted by Sugar Pine Housing Partners, L.P. on May 9th and is currently (at this time of this report) under review. City staff is working with the Sugar Pine design team to ensure that construction plans and supplemental documentation is adequate for issuance of a building permit prior to the close of financing (June 13th).

Sugar Pine Housing Partners, L.P. is proposing to utilize factory built modular construction for the residential units. The majority of modular unit components are inspected during construction at the factory and certified by the Department of Housing and Community Development before they are transported to the construction site, which reduces the number of inspections required by the local jurisdiction. In addition, with several modular units being installed in a day during construction several inspections will be required throughout the day.

To avoid delay in construction due to City staff inspection capacity, the applicant will be contracting with a third-party special inspector (deputy inspectors), approved by the City Building Official, to conduct those inspections. Local jurisdiction inspection is still required for all construction that takes place outside of the modular units and for their installation (i.e. site work, foundation, underground utilities, fire lines, weatherproofing, common areas, roofing, accessibility, etc.).

Building permit fees are calculated as 2% of a project construction valuation. For Phase 1a building permit fees are estimated to total approximately $620,000. This does not include fees collected by the City on behalf of the school district and state agencies. Due to reduced inspections required by the local jurisdiction, staff is recommending a reduction in building Sugar Pine Village
City Leveraged Funding
Source Phase 1A Phase 1B Phase 2A Total
City RDA Loan 566,629 - - 566,629
City Coverage Loan 254,487 995,513 1,250,000
HOME PI Loan 625,000 625,000
Total City Funds 821,116 625,000 995,513 2,441,629
Federal Tax Credit Equity 17,651,379 21,744,524 15,716,202 55,112,105 State Tax Credit Equity 5,722,864 - 7,672,662 13,395,526 State MHP 12,127,500 7,448,016 - 19,575,516
State AHSC - - 10,551,967 10,551,967
State IIG 3,195,900 - - 3,195,900
State PLHA 4,750,000 - - 4,750,000
State HOME - 5,162,446 - 5,162,446
State LGMG 4,000,000 6,000,000 10,000,000
Total Leveraged Funds 47,447,643 34,354,986 39,940,831 121,743,460 Committed Applied For Identified N/A
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permit fees for all phases of the project equal to 20% of the project valuation associated with the modular units. This reduction in fees is approximately $55,020 for Phase 1a and $49,075 for each subsequent phase for a total of approximately $202,245. Although inspection workload will be reduced due to the modular component of the project, a project of this size still requires significant City resources for plan review and inspection services. A resolution approving the reduction in building permit fees is included as Attachment 02.

Financial Implications: The attached resolutions, if adopted, would result in a reduction in building permit revenue by approximately $202,245. These funds would be considered local contribution to the Sugar Pine Village project and leveraged to obtain additional state and federal funding.

Environmental Considerations: For projects that satisfy criteria specified by SB 35, the guidelines issued by HCD specify that the California Environmental Quality Act (CEQA) does not apply to actions taken by a local government to provide financial assistance to a development that receives streamlined approval and that is to be used for housing for persons and families of very low, low, or moderate income, as defined in Section 50093 of the Health and Safety Code.

Policy Implications: The recommended actions are consistent with the City Strategic Plan which identifies supporting the Sugar Pine Village Project as Action Item 1.3.2.

The recommended action is also consistent with the following adopted policies and programs:

City General Plan Housing Element
Policy 1-1 The City shall adopt programs, ordinances, incentives, land use plans and other regulatory mechanisms that provide opportunities for the private sector to address the housing needs of citizens of all economic levels.

Policy 2-2 The City shall enable opportunities for deed-restricted affordable ownership housing to ensure long-term affordability.

Policy 2-5 The City shall recognize that it will become difficult to attract employees if they cannot afford to purchase or rent housing in South Lake Tahoe. The City shall encourage and support programs and activities that create a robust local economy that provides residents with good paying employment and the means to purchase and/or rent housing in the city.

Program 2-1 PURSUE STATE AND FEDERAL FUNDS
To support the creation of quality, affordable housing options for extremely low-, very low-, and low-income households, the City shall seek and when appropriate and feasible pursue grant opportunities for state and federal funds.

Program 2-6 ANALYSIS OF FEDERAL AND STATE LANDS
The City shall continue discussing the potential for developing quality workforce and affordable housing on non-environmentally sensitive lands owned by the California Tahoe Conservancy (CTC) and the United States Forest Service (USFS). The City shall ensure that important natural resources are protected and only pursue surplus lands that these agencies have 334
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determined do not have a clear and compatible conservation or recreation purpose consistent with agency goals.

Tahoe Valley Area Plan
Policy H-1.1 – Housing Options
Provide for a range of housing options that include affordable, moderate-income, and workforce housing so that people can live and work in the City.

Policy H-1.5 – Redirection of Development
Direct high density residential development to areas of Tahoe Valley that are within walking distance of public transit and services.

Policy H-1.7 – Tahoe Livable Communities Program
Collaborate and support efforts of the California Tahoe Conservancy to remove blighted properties and repurpose associated development commodities. Encourage the use of residential commodities for affordable housing in Tahoe Valley area.

Policy H-2.1 – General
Encourage the creation of residential uses to support and add vitality to commercial and public service projects in the Tahoe Valley area.
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Resolution 2022-XXX
Adopted by the City of South Lake Tahoe
City Council
June 7, 2022
Approving a reduction in building permit fees for the Sugar Pine Village affordable housing project

BACKGROUND
A. The City General Plan Housing Element (2014) identified a general disparity between wages and the cost of housing in South Lake Tahoe. There is a need for new housing construction to serve low, very low, and extremely low income residents due to 36.1 percent of City residents in these income categories having a cost burden greater than 30 percent and 19.8 percent having a cost burden greater than 50 percent between 2006 and 2010.

B. To address the shortage of housing for Californians, Governor Newsom ordered the Department of General Services (DGS) and the Department of Housing and Community Development (HCD) to identify and prioritize excess state-owned property and aggressively pursue sustainable, innovative, cost-effective housing projects (Executive Order N-06-19).

C. Through a competitive Request for Proposal process, the State of California has selected the Related California and Saint Joseph Community Land Trust team to develop the Sugar Pine Village project (“Project”) located at 1860 Lake Tahoe Blvd and 1029 Tata Lane in South Lake Tahoe. The Project will include 248 rental units available to low and very low income households.

D. Related California is a real estate firm with 30 years of experience delivering affordable housing, mixed-income housing, and mixed-use developments across California. The company has more than 16,000 residences completed or under construction, 13,000 of which are affordable for either low or very low income households.

E. Related California has provided a financing strategy for the development of the Sugar Pine Village, a 248 unit housing project affordable to low and very low income households, which includes a combination of tax credit equity, private loan financing, local government contributions and state and federal housing program sources.

F. Related California has made a request on behalf of the project team, for a reduction in building permit fees as a local contribution to the Project. Local contributions reduce project costs and are used to leverage funding from other sources.

G. Related California is proposing to utilize factory built modular construction for the residential units which reduces the number of required onsite inspections. 336
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BASED ON THE FACTS SET FORTH IN THE BACKGROUND, BE IT RESOLVED, that the City Council of the City of South Lake Tahoe:

1. Affirms that the above recitals are true and correct,

2. Approves the reduction in building permit fees for the Sugar Pine Village affordable housing project equal to 20% of total building permit fees associated with the construction valuation of the modular units.

Adopted by the City of South Lake Tahoe City Council on June 7, 2022 by the following vote:

Yes:

No:

Absent:

Abstain:
________________________ Date:_________
Devin Middlebrook, Mayor
Attest:
________________________
Susan Blankenship, City Clerk
The presence of electronic signature certifies that the foregoing is a true and correct copy as approved by the South Lake Tahoe City Council.
337
City of South Lake Tahoe
Agenda Item Executive Summary
Joe Irvin, City Manager
Meeting Date: June 7, 2022
Agenda Item #: 21
Agenda Item: Discussion of Single-Use Plastics Regulations Executive Summary: Single-use plastics are a significant source of waste and pollution and can have environmental impacts including on water quality. Consistent with the 2021-2026 Strategic Plan, City Council is asked to provide direction on possible actions to increase regulation of single-use plastics, including: (1) increasing outreach and enforcement on existing City regulations; (2) adopting an ordinance to take on a City enforcement role in the new state law on single-use foodware; (3) amending the City's current Polystyrene and Plastic Food Packaging Ordinance to make it more stringent; and/or (4) adopting an ordinance to prohibit the sale of certain single-use plastic items, such as utensils and beverage bottles.

Requested Action / Suggested Motions: Receive report and provide direction to staff on potential actions.

Responsible Staff Member: Heather Stroud, City Attorney Responsible Staff Member: Heather Stroud, City Attorney (530) 542-6046 Reviewed and Approved By:

Susan Blankenship, City Clerk
Olga Tikhomirova, Finance Director
Attachments:
01 - Staff Report on Single Use Plastics.docx
02 - Letter from League to Save Lake Tahoe.pdf
03 - Single-Use Plastics Presentation.pptx
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City of South Lake Tahoe
Report to City Council
Meeting Date: June 7, 2022
Title: Discussion of Single-Use Plastic Regulations
Location: Citywide
Responsible Staff Member: Heather L. Stroud, City Attorney (530) 542-6046 Background: Single-use plastics are a significant source of waste and pollution because of the sheer volume of these products produced and used by consumers and the long amount of time they exist in the environment after their short useful life ends. Single-use plastics are generally defined as goods made primarily from petrochemicals that are meant to be disposed of right after use. These include items such as plastic straws, coffee stir sticks, shopping bags, beverage bottles, and packaging. Discarded plastics are particularly damaging to water quality because they don’t really break down or decompose; they just break apart eventually into microplastics that end up washed downstream into waterbodies.

The City’s location in the Lake Tahoe Basin makes us stewards of this internationally treasured resource. The City Council has recognized waste management and stewardship as priority Goal

3.4 in the 2021-2026 Strategic Plan, which includes Action Item 4, to “evaluate the option to ban certain single-use plastics, especially water bottles.” The City has already taken significant steps in regulating single-use plastics:
 In 2013, the City Council became one of the first cities in California to regulate single-use plastic bags, by adopting Ordinance No. 1061.
 In 2018, the City Council adopted the Polystyrene and Plastic Food Packaging Ordinance, codified at South Lake Tahoe City Code chapter 4.175. This ordinance prohibits “food providers” from providing plastic utensils, straws, or stirrers except upon request, and from providing polystyrene food containers. It also prohibits vendors from selling polystyrene products including coolers, cups, bowls, plates, and packing peanuts, and prohibits the use of polystyrene at City facilities and special events.
 In 2021, the City Council repealed its single-use plastic bag regulations to instead follow state law adopted in 2016, which is applicable to more types of establishments.

Additionally, the California Legislature has been active in regulating single-use plastics in recent years:
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 In 2016, the state implemented a single-use plastic bag ban, codified in Public Resources Code sections 42280-42288. This law prohibits most grocery stores, large retail stores with a pharmacy, and convenience stores that sell food and alcoholic beverages from providing their customers with bags designed for a single use only, unless those bags are made with recycled paper. These stores may provide customers with certified reusable grocery bags and must charge at least 10 cents for each reusable plastic or recycled paper bag. Cities may enforce the state law with civil penalties up to $1,000 per day. As mentioned above, the City follows this law.
 In 2021, the Legislature passed the Single-Use Foodware Accessories and Condiments law, codified at Public Resources Code sections 42270-42273, which became effective on January 1, 2022. This law prohibits a “food facility” from providing single-use plastic items except on request. This covers items such as utensils, straws, stirrers, and condiment cups and packets. This law requires cities to designate an enforcement agency with $25 fines for each day in violation, up to $300 per year. The law includes a savings clause that allows cities to adopt stricter regulations.
 Senate Bill 54, titled the Plastic Pollution Producer Responsibility Act, was first introduced in 2020 and is pending in the Legislature. This bill would prohibit the sale, distribution, or importing into California any single-use, non-recyclable or non-compostable disposable packaging and food ware service products manufactured after January 1, 2032.

In September 2021, the League to Save Lake Tahoe sent a letter to the City proposing a ban on single-use plastic water bottles with examples from other cities, which is attached to this agenda item for reference.

Issue and Discussion: Consistent with Strategic Plan Action Item 4, this item is being brought forward to discussion to get direction from City Council on desired further actions.

Staff, with the assistance South Tahoe High School Senior Darby Creegan (as part of her senior project) have identified the following potential actions for City Council discussion, in order from least to most resource-intensive to implement:
 Increase outreach and enforcement on existing City regulations. The League to Save Lake Tahoe has assisted with outreach efforts in the past.
 Adopt ordinance to take on City enforcement role for state Single-Use Foodware Accessories and Condiments law.
 Adopt ordinance to prohibit single-use plastics, including water bottles, at City facilities and special events.
 Modify Polystyrene and Plastic Food Packaging Ordinance to make it more stringent.

Possibilities include: removing exceptions for hardship and raw food packaging; prohibiting single-use plastics at food providers even when requested; and/or include plastic beverage bottles in the ban applicable to food providers.
 Adopt ordinance to prohibit sale of certain single-use plastic items, such as utensils and beverage bottles.
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Council Agenda Report- June 7, 2022 Page 3 of 3
Financial Implications: None.

Environmental Considerations: Providing direction to staff on possible future regulations is not a “project” subject to environmental review under the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines section 15307 (actions by regulatory agencies for protection of natural resources) and 15308 (actions by regulatory agencies for protection of the environment).

Policy Implications: This item advances progress on Strategic Plan Goal 3.4, Waste Management and Stewardship, Action Item 4 “Evaluate the option to ban certain single-use plastics, especially water bottles.”
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