Turlock City Council
January 27, 2026

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terminate without further liability to either party unless Buyer waives its objections in writing within ten (10) business days after expiration of Seller’s time period for agreeing to remove exceptions. If Seller shall agree to rem ove any exception objected to by Buyer, Seller shall remove such exception by the Close of Escrow.

3.4 Buyer’s Other Conditions Precedent. Buyer’s obligation to purchase the Property is subject to the satisfaction of the following additional conditions which are for Buyer’s benefit only and if neither satisfied nor expressly waived in writing by Buyer on or before the Outside Closing Date, Buyer may terminate this Agreement by written notice to Seller and Escrow Holder, in which event Buyer shall be responsible for any escrow costs incurred by the Parties:
(a) Buyer’s approval, on or before the date which is ten (10) business days after the Effective Date (“Due Diligence Period”), of the condition of the Property, based on inspections, tests, surveys and other studies, including, but not limited to, environmental assessments of the Property, to be conducted by or on behalf of Buyer at Buyer ’s cost and in Buyer’s sole discretion.

Upon execution of this Agreement by Seller, Buyer’s representatives may enter on the Property to make tests, surveys or other studies of the Property, provided that Buyer pays for all such tests and studies, keeps Seller’s property free and clear of any liens, repairs all damage to the Property with the exception of material removed for testing purposes, and indemnifies and holds Seller harmless from and against all liability, claims, demands, damages or costs of any kind whatsoever arising from or connected with the tests, surveys or studies.
(b) Seller’s not being in default under this Agreement.

3.5 Seller’s Conditions Precedent. Seller’s obligation to sell the Property is subject to the satisfaction of the following conditions which are for Seller ’s benefit only and if neither satisfied nor expressly waived in writing by Seller on or before the Outside Closing Date, Seller may terminate this Agreement by written notice to Buyer and Escrow Holder:
(a) Buyer’s not being in default under this Agreement;

3.6 Further Encumbrances. From and after the date of the Preliminary Title Report, Seller will not further encumber the Property or otherwise cause or permit any additional title exceptions.

3.7 Deposit of Documents and Funds by Seller . Not later than one (1) business day prior to the Close of Escrow, Seller shall deposit the following items with Escrow Holder, each of which shall be duly executed and acknowledged by Seller where appropriate:

3.7.1. A Grant Deed duly executed and acknowledged by Seller conveying the Property to Buyer in the form of Exhibit “B” attached hereto and incorporated herein by this reference;

3.7.2. Any funds required to pay costs under Section 2.4(a) above;

3.7.3. An affidavit executed by Seller to the effect that Seller is not a “foreign person” within the meaning of Internal Revenue Code Section 1445 ( “Certification”) and an executed California Real Estate Withholding Exemption (Form 593-C) (“Form 593-C”);

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3.7.4. A notice to each tenant in forming the tenant of the sale and the transfer of security deposit and directing the tenant to make future rent payments to the Buyer (and including the Buyer’s address for notices) (the “Tenant Notices”).

3.7.5. A counterpart of a Regulatory Agreement in the form attached hereto as Exhibit “D, duly executed and acknowledged (the “Regulatory Agreement”).

3.7.6. Rents and Security deposits to be handled outside of escrow.

3.7.7. Other documents pertaining to Seller’s authority to record the Grant Deed that may reasonably be required by Escrow Holder to close the Escrow in accordance with this Agreement.

3.8 Deposit of Documents and Funds by Buyer . Not later than o ne (1) business day prior to the Close of Escrow, Buyer shall deposit the following items into Escrow:

3.8.1. Any funds required to pay costs under Section 2.4(a) above; ;

3.8.2. A Preliminary Change of Ownership Statement in form suitable for filing with the tax collector for the County; provided, however, that the delivery of this instrument shall not be a condition precedent to the Close of Escrow nor a default by Buyer if not delivered by Buyer;

3.8.3. Executed promissory notes in the amount of the Purchase Price in the form attached hereto as Attachments 6 and 7 (the “Notes”);

3.8.4. Executed and acknowledged Deed s of Trust in the form s attached hereto as Attachments 4 and 5 (the “Deeds of Trust”);

3.8.5. Executed counterparts of the Tenant Notices;

3.8.6. An executed and acknowledged co unterpart of the Regulatory Agreement;

3.8.7. All other funds and documents as may reasonably be required by Escrow Holder to close the Escrow in accordance with this Agreement.

3.9 Closing. At the closing, Escrow Holder shall record the Grant Deed and then the Regulatory Agreement, then the City’s Deed of Trust securing the $395,000 promissory note (the “HOME Deed of Trust”), Then the City’s Deed of Trust securing the $25,000 promissory note (the “PLHA Deed of Trust”), deliver the Notes to Seller, cause the owner’s and lender’s title policies to be issued, and apply deposited sums to costs as applicable.

ARTICLE 4. MISCELLANEOUS.

4.1 Notices. Notices shall be sent by certified mail, return receipt requested, postage prepaid, or sent by reputable overnight delivery service, suc h as Federal Express, addressed as follows:

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Seller: City of Turlock
156 South Broadway Avenue Ste. 140
Turlock, CA 95380
Attention: City Manager
Buyer: Great Valley Housing Development Corporation
1701 Robertson Road
Modesto, CA 95350
Attention: Executive Director

Notices which are mailed shall be deemed to be given on the date of delivery or attempted delivery shown on the return receipt. Notices delivered by overnight messenger shall be deemed delivered on the next business day following delivery to th e messenger service as shown by reasonable evidence.

4.2 Brokers. Each party represents to the other that it (the representing party) is not represented by a broker, agent, finder or salesperson in connection with this transaction.

4.3 Governing Law. This Agreement shall be governed by California law.

4.4 Time of Essence. Time is of the essence of this Agreement.

4.5 Entire Agreement. This Agreement and escrow instructions entered into by the parties contains the entire agreement of the parties hereto, and supersedes any prior written or oral agreements between them concerning the subject matter contained herein. There are no representations, agreements, arrangements or understandings, oral or written, relating to the subject matter, which are not fully expressed herein.

4.6 Additional Assurances. From time to time prior to and after the close of escrow, each party shall execute and deliver such instruments of transfer and other documents as may be reasonably requested by the other party to carry out the purpose and intent of this Agreement.

4.7 Assignment. Buyer may not assign this Agreement.

4.8 City Manager Authority. The City Manager is authorized to execute and deliver all consents and approvals on behalf of Seller hereunder provided they are in writing and to enter into written amendments to this Agreement that do not substantially alter the business terms herein to the detriment of Seller.

ARTICLE 5. “AS IS” SALE; RELEASE.

Buyer acknowledges and agrees that the Property is being sold in its current “as is ” condition, without represen tation or warranty, express or implied , other than as provided in this Agreement.

Buyer and anyone claiming by, through or under Buyer hereby waives its right to recover from and fully and irrevocably releases Seller and its council members, board members,

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employees, officers, directors, representatives, agents, servants, attorneys, successors and assigns (“Released Parties”) from any and all claims, responsibility and/or liability that it may now have or hereafter acquire against any of the Released Partie s for any costs, loss, liability, damage, expenses, demand, action or cause of action arising from or related to (i) the condition (including any defects, errors, omissions or other conditions, latent or otherwise, and the presence in the soil, air, structures and surface and subsurface waters of materials or substances that have been or may in the future be determined to be hazardous materials or otherwise toxic, hazardous, undesirable or subject to regulation and that may need to be specially treated, han dled and/or removed from the Property under current or future federal, state and local laws regulations or guidelines), (ii) valuation, salability or utility of the Property, or its suitability for any purpose whatsoever, and (iii) any information furnished by the Released Parties under or in connection with this Agreement.

This release includes claims of which Buyer is presently unaware or which Buyer does not presently suspect to exist which, if known by Buyer, would materially affect Buyer ’s release to Seller. Buyer specifically waives the provision of California Civil Code Section 1542, which provides as follows:
“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS

WHICH THE CREDITOR OR RELEASING PARTY DOES NOT

KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT

THE TIME OF EXECUTING THE RELEASE AND THAT , IF

KNOWN TO HIM OR HER, WOULD HAVE MATERIALLY

AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR
OR RELEASED PARTY.”
In this connection and to the extent permitted by law, Buyer hereby agrees, represents and warrants that Buyer realizes and acknowledges that factual matters now unknown to it may have given or may hereafter give rise to causes of action, claims, demands, debts, controversies, damages, costs, losses and expenses which are presently unknown, unanticipate d and unsuspected, and Buyer further agrees, represents and warrants that the waivers and releases herein have been negotiated and agreed upon in light of that realization and that Buyer nevertheless hereby intends to release, discharge and acquit Released Parties from any such unknown causes of action, claims, demands, debts, controversies, damages, costs, losses and expenses which might in any way be included as a material portion of the consideration given to Seller by Buyer in exchange for Seller ’s performance hereunder.

Buyer hereby agrees that, if at any time after the Close of Escrow any third party or any governmental agency seeks to hold Buyer responsible for the presence of, or any loss, cost or damage associated with, hazardous materials in, on, above or beneath the Property or emanating therefrom, then Buyer waives any rights it may have against Seller in connection therewith, including, without limitation, under CERCLA and Buyer agrees that it shall not (i) implead the Seller, (ii) bring a contri bution action or similar action against Seller, or (iii) attempt in any way to hold Seller responsible with respect to any such matter. The provisions of this Section shall survive the Close of Escrow.

Seller has given Buyer material concessions regarding this transaction in exchange for Buyer agreeing to the provisions of this Section . Seller and Buyer have eac h initialed this Section to further indicate their awareness and acceptance of each and every provision hereof.

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_____________________ _____________________
SELLER’S INITIALS BUYER’S INITIALS

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the date first written above.

CITY OF TURLOCK, a municipal corporation Great Valley Housing Development Corporation, a California nonprofit public
benefit corporation

By: _______________________________ By: ______________________________ Susan E. Borrego, Print Name: Jim Kruse
Title: Interim City Manager Title: Executive Director

Date: Date: ___________________

By:_____________________________
Print Name: Greg Raynes
Title: Secretary

Date: ___________________________
APPROVED AS TO FORM:

By: _______________________________
George A. Petrulakis,
Title: City Attorney

Date: _

ATTEST:

By: ________________________
Nichole Fiez,
Title: City Clerk

Date: _

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EXHIBIT “A”
Legal Description of The Property

The land referred to herein below is situated Turlock, in the County of Stanislaus, State of California, and is described as follows:

Lot 47 of Reich Estates South No. 2, as per Map Recorded May 19, 1980 in Volume 29 of Maps,

APN: 043-055-049-000

BEFORE THE CITY COUNCIL OF THE CITY OF TURLOCK

IN THE MATTER OF APPROVING THE } RESOLUTION NO. 2026- PURCHASE AND SALE AGREEMENT AND }
JOINT ESCROW INSTRUCTIONS, LOAN }
AGREEMENT, REGULATORY AGREEMENT, }
PROMISSORY NOTE, DEED OF TRUST, AND }
GRANT DEED FOR THE SALE OF THE }
PROPERTY LOCATED 591 BIRCHWOOD WAY, }
TURLOCK, (APN 043-055-048), TO BE SOLD TO }
GREAT VALLEY HOUSING DEVELOPMENT }
CORPORATION, A NON-PROFIT }
ORGANIZATION, IN THE AMOUNT OF $410,000 }
SUBJECT TO THE TERMS AND CONDITIONS }
AS OUTLINED IN ATTACHMENT C AND }
AUTHORIZE THE INTERIM CITY MANAGER TO }
SIGN ALL NECESSARY DOCUMENTS TO }
EFFECTUATE THE TRANSACTION. }
}

WHEREAS, the City of Turlock purchased the property at 591 Birchwood Way, Turlock, a single-family dwelling, in 2021 with Community Development Block Grant (CDBG) funds and rehabilitated the property with CDBG funds for the purpose of implementing the goal of the Consolidated Plan and Annual Action Plan of creating affordable housing; and

WHEREAS, the City of Turlock put out a Request of Proposal (RFP) for the sale of 591 Birchwood Way, to be for affordable rental units to income eligible tenants; and

WHEREAS, Great Valley Housing Development Corporation submitted a RFP Proposal for the acquisition of 591 Birchwood Way; and

WHEREAS, the sale of 591 Birchwood Way will be granted to Great Valley Housing Development Corporation in the amount of $410,000.00; and

WHEREAS, the City will grant Great Valley Housing Development Corporation a first lien in the form of a forgivable loan of $205,000.00 to be forgiven by a percentage annually over the 30-year loan term and a second lien in the form of a deferred loan of $205,000 plus 50% of the amount by which the sales price exceeds the total purchase price of $410,000.00, and

WHEREAS, the City of Turlock has taken steps to provide affordable housing options throughout the community that will assist our nonprofit service providers in building capacity to enhance the affordable housing stock, including providers who can provide services and programs to help prevent and address homelessness in Turlock.

Resolution No. 2026-

NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Turlock does hereby approve the purchase and sale agreement and joint escrow instructions, loan agreement, regulatory agreement, promissory note, deed of trust, and grant deed for the sale of the property located at 591 Birchwood Way, Turlock, (APN 043-055-048), to Great Valley Housing Development Corporation, a nonprofit organization, in the amount of $410,000.00, subject to the terms and conditions as outlined in Attachment B and authorize the Interim City Manager to sign all necessary documents to effectuate the transaction

PASSED AND ADOPTED at a regular meeting of the City Council of the City of Turlock this 27th day of January, 2026, by the following vote:

AYES:

NOES:

NOT PARTICIPATING:

ABSENT:

ATTEST:

__________________________
Nichole Fiez, City Clerk,
City of Turlock, County of Stanislaus,
State of California

10000-0249\1785689v2.doc
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LOAN AGREEMENT
CDBG Funds

Between

CITY OF TURLOCK
and

GREAT VALLEY HOUSING DEVELOPMENT CORPORATION
dated (January 27, 2026)

TABLE OF CONTENTS
Page
-i-
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ARTICLE 1 DEFINITIONS AND EXHIBITS ......................................................................... 2 Section 1.1 Definitions..................................................................................... 2 ARTICLE 2 LOAN PROVISIONS ........................................................................................... 3 Section 2.1 Loan .............................................................................................. 3 Section 2.2 Interest........................................................................................... 3 Section 2.3 Use of Loan Funds ........................................................................ 3 Section 2.4 Security ......................................................................................... 4 Section 2.5 Subordination ................................................................................ 4 Section 2.6 Repayment Schedule ..................................................................... 4 Section 2.7 Reports and Accounting of Residual Receipts.............................. 4 Section 2.8 Non-Recourse ............................................................................... 5 ARTICLE 3 LOAN REQUIREMENTS.................................................................................... 5 Section 3.1 Annual Operating Budget ............................................................. 5 Section 3.2 Information ................................................................................... 5 Section 3.3 Records ......................................................................................... 6 Section 3.4 City and or HUD Audits ............................................................... 6 Section 3.5 Hazardous Materials ..................................................................... 9 Section 3.6 Maintenance and Damage ............................................................. 9 Section 3.7 Fees and Taxes .............................................................................. 9 Section 3.8 Notice of Litigation ..................................................................... 10 Section 3.9 Operation of Development as Affordable Housing .................... 10 Section 3.10 Nondiscrimination....................................................................... 10 Section 3.11 Transfer ....................................................................................... 10 Section 3.12 Insurance Requirements .............................................................. 11

TABLE OF CONTENTS (cont.)
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Section 3.13 Anti-Lobbying Certification ....................................................... 11 Section 3.14 Covenants Regarding Approved Financing ................................ 13 ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF BORROWER ..................... 15 Section 4.1 Representations and Warranties .................................................. 15 ARTICLE 5 DEFAULT AND REMEDIES ............................................................................ 17 Section 5.1 Events of Default ........................................................................ 17 Section 5.2 Remedies ..................................................................................... 18 Section 5.3 Right of Contest .......................................................................... 19 Section 5.4 Remedies Cumulative ................................................................. 19 ARTICLE 6 GENERAL PROVISIONS ................................................................................. 19 Section 6.1 Relationship of Parties ................................................................ 19 Section 6.2 No Claims ................................................................................... 18 Section 6.3 Amendments ............................................................................... 18 Section 6.4 Indemnification ........................................................................... 18 Section 6.5 Non-Liability of City Officials, Employees and Agents ......................................................................................... 18 Section 6.6 No Third Party Beneficiaries ...................................................... 18 Section 6.7 Conflict of Interest ...................................................................... 18 Section 6.8 Notices, Demands and Communications .................................... 19 Section 6.9 Applicable Law ........................................................................... 20 Section 6.10 Parties Bound .............................................................................. 20 Section 6.11 Attorneys’ Fees ........................................................................... 20 Section 6.12 Severability ................................................................................. 20 Section 6.13 Force Majeure ............................................................................. 22

TABLE OF CONTENTS (cont.)
Page
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Section 6.14 City Approval.............................................................................. 20 Section 6.15 Waivers ....................................................................................... 20 Section 6.16 Title of Parts and Sections .......................................................... 20 Section 6.17 Entire Understanding of the Parties ............................................ 21 Section 6.18 Multiple Originals; Counterpart .................................................. 21

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LOAN AGREEMENT
591 Birchwood Way, Turlock, CA – CDBG funds

This CDBG Loan Agreement (the “Agreement”) is dated January 27, 2026, and is between the CITY OF TURLOCK, a municipal corporation (the “City”), and GREAT VALLEY HOUSING DEVELOPMENT CORPORATION, a California nonprofit public benefit corporation (“Borrower”).

RECITALS
A. Defined terms used but not defined in these recitals are as defined in Article 1 of this Agreement.

B. The City acquired that certain property located at 591 Birchwood Way, City of Turlock, County of Stanislaus, State of California more particularly described in Exhibit A (the “Property”) with Community Development Block Grant (“CDBG Funds”) from the United States Department of Housing and Urban Development (“HUD”) created under the National Affordable Housing Act of 1990 (NAFA), as amended. Such funds must be used by the City in accordance with 24 CFR Part 92 et seq.

C. Borrower intends to acquire the Property pursuant to a Purchase and Sale Agreement and Joint Escrow instructions between City and Borrower dated substantially concurrently herewith (“Purchase Agreement”) for Four Hundred Ten Thousand Dollars ($410,000).

D. The Property is the site of a single-family residential home. The building and all other improvements to the Property, including all landscaping, roads and parking spaces, are referred to herein as the “Improvements”, or as the “Development.” Borrower intends to acquire the Development and rent the Development to families or persons with incomes at or below eighty percent (80%) of the median income for Stanislaus County, as defined by HUD.

E. Borrower desires to borrow the purchase price from the City and the City desires to lend the purchase price to Borrower in the form of two loans (reflecting that CDBG funds were used by City to acquire and renovate the Development. The loans shall in the aggregate consist of Four Hundred Ten Thousand Dollars ($410,000) in CDBG Funds (the “Loans”). The Development will maintain the supply of affordable rental housing in the City of Turlock.

F. The Loans will be (i) evidenced by two promissory notes, (ii) conditioned on the parties entering into a Regulatory Agreement, and (iii) loans will be secured by two separate deeds of trust.

G. Due to the assistance provided to Borrower through the Loans, the City is classifying the single- family residence on the Property as an assisted unit (“City Assisted Units”)

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H. The City has concluded that actions contemplated by this Agreement are exempt from the California Environmental Quality Act (Public Resources Code Sections 21000 et seq.) (“CEQA”).

I. In accordance with the National Environmental Policy Act of 1969, as amended (42 U.S.C. 4321-4347) (“NEPA”), the City has completed and approved all applicable environmental review for the activities proposed to be undertaken under this Agreement.

The parties therefore agree as follows:

AGREEMENT
ARTICLE 1

DEFINITIONS AND EXHIBITS
Section 1.1 Definitions.

The following terms have the following meanings:
(a) “Agreement” means this CDBG Loan Agreement.
(b) “Borrower” has the meaning set forth in the first paragraph of this Agreement. (c) “CDBG” has the meaning set forth in Paragraph B of the Recitals. (d) “CEQA” has the meaning set forth in Paragraph H of the Recitals. (e) “City” means the City of Turlock, a municipal corporation. (f) “City-Assisted Unit” has the meaning set forth in Paragraph G of the Recitals. (g) “Deeds of Trust” means the Deeds of Trust with Assignment of Rents, Security Agreement, and Fixture Filing of even date herewith among Borrower, as Trustor, First American Title Company, as trustee, and the City, as beneficiary, that will encumber the Property to secure repayment of the Loans and performance of the covenants of the Loan Documents.
(h) “Default Rate” means the lesser of the maximum rate permitted by law and ten percent (10%) per annum.
(i) “Development” has the meaning set forth in Paragraph D of the Recitals. (j) “Event of Default” has the meaning set forth in Section 5.1. (k) “Hazardous Materials” has the meaning set forth in Section 3.5. (l) “Hazardous Materials Claims” has the meaning set forth in Section 3.5. (m) “Hazardous Materials Law” has the meaning set forth in Section 3.5.

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(n) “HUD” has the meaning set forth in Paragraph B of the Recitals. (o) “Improvements” has the meaning set forth in Paragraph D of the Recitals. (p) “Loans” has the meaning set forth in Paragraph E of the Recitals. (q) “Loan Documents” means this Agreement, the Notes, the Regulatory Agreement, and the Deeds of Trust.
(r) “NEPA” has the meaning set forth in Paragraph I of the Recitals. (s) “Notes” means (i) Promissory Note A of even date herewith that evidences Borrower’s obligation to repay Four Hundred Twenty Thousand Dollars ($420,000) of the Loan and (ii) Promissory Note B of even date herewith that evidences Borrower’s obligation to repay Four Hundred Twenty Thousand Dollars ($420,000) of the Loan. (t) “Property” has the meaning set forth in Paragraph B of the Recitals. (u) “Regulatory Agreement” means the Regulatory Agreement and Declaration of Restrictive Covenants, between the City and Borrower related to the Loan, to be recorded against the Property.
(v) “Tenant” means the tenant household that occupies the unit in the Development. (w) “Transfer” has the meaning set forth in Section 3.11 below. (x) “Term” means the period of the time that commences on the date of this Agreement, and expires, unless sooner terminated in accordance with this Agreement, on the fifty-fifth (55th) anniversary of the date of this Agreement.

ARTICLE 2 LOAN PROVISIONS
Section 2.1 Loan.

Upon acquisition of the Property by the Borrower, the City shall lend to Borrower the Loans for the purposes set forth in Section 2.3 of this Agreement. Borrower’s obligation to repay the Loans is evidenced by the Notes.

Section 2.2 Interest.
(a) Subject to the provisions of Subsection (b) below, interest will not accrue on the outstanding principal balance of the Loans.
(b) Upon the occurrence of an Event of a Default, interest on the Loans will begin to accrue, beginning on the date of such occurrence and continuing until the date the Loans is repaid in full or the Event of Default is cured, at the Default Rate.

Section 2.3 Use of Loan Funds.

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The Loans are purchase money financing for the Borrower’s acquisition of the Property.

Section 2.4 Security.

The Loans shall be secured by the Deeds of Trust which shall be recorded against the Property upon Borrower’s acquisition of the Property. Borrower shall also cause or permit the Regulatory Agreement to be recorded against the Property upon its acquisition of the Property, all as described in the Purchase Agreement.

Section 2.5 Subordination.

The Deeds of Trust and the Regulatory Agreement shall not be subordinated to any other financing or encumbrances on the Property.

Section 2.6 Repayment Schedule.
(a) Annual Payments. Payments on the Loans shall be due as set forth below. (i) Payment on Promissory Note A. In the event of a Transfer of the Property or an Event of Default, the principal amount evidenced by Promissory Note A, Two Hundred Five Thousand Dollars ($205,000.00), plus the City Appreciation Share, as defined below, will be due and payable to the City. For purposes of this Agreement, the City Appreciation Share shall mean fifty-percent (50%) of the amount by which the sales price for the Property received by the Borrower upon Transfer exceeds Four Hundred Ten Thousand Dollars ($4100,000). (ii) Payment on Promissory Note B. One Thirtieth (1/30th) of the principal amount of Promissory Note B shall be forgiven each year on the anniversary date of Promissory Note B provided an Event of Default has not occurred and Borrower has not Transferred the Property. If prior to the expiration of the Term of Promissory Note B, Borrower Transfers the Property, the outstanding principal balance of the Loan evidenced by Promissory Note B at the time of such Transfer plus interest at the Default Rate on such principal shall be due in full at the time of Transfer.
(iii) The principal balance and any interest on the Notes shall be due in full in an Event of Default.
(b) Prepayment. Borrower may prepay the Loans at any time without premium or penalty. However, the Regulatory Agreement and the Deeds of Trust will remain in effect for the entire Term, regardless of any prepayment or Transfer.

Section 2.7 Reports.

On or before December of each calendar year, Borrower shall furnish to the City:
(i) Income eligibility of tenants
(ii) Rent limits calculation sheet

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(iii) All HUD required tenant documents
Section 2.8 Non-Recourse.

Except as provided below, Borrower will not have any direct or indirect personal liability for payment of the principal of, and interest on, the Loans. Following recordation of the Deeds of Trust, the sole recourse of the City with respect to the principal of, or interest on, the Notes will be to the property described in the Deeds of Trust; provided, however, that nothing contained in the foregoing limitation of liability limits or impairs the enforcement of all the rights and remedies of the City against all such security for the Notes, or impairs the right of City to assert the unpaid principal amount of the Notes 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. The foregoing limitation of liability is intended to apply only to the obligation to repay the principal and interest on the Notes. Except as hereafter set forth; nothing contained herein is intended to relieve Borrower of its obligation to indemnify the City under Sections 3.5, and 6.4 of this Agreement, or liability for (i) loss or damage of any kind resulting from waste, fraud or willful misrepresentation; (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 Deeds 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 Borrower other than in accordance with the Deeds of Trust; and (iv) the misappropriation of any proceeds 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 Property.

ARTICLE 3 LOAN REQUIREMENTS
Section 3.1 Information.

Borrower shall provide any information reasonably requested by the City in connection with the Development, including (but not limited to) any information required by HUD in connection with Borrower’s use of the Loan funds or the Property.

Section 3.2 Records.
(a) Borrower shall keep and maintain at the principal place of business of the Borrower set forth in Section 6.8 below, or elsewhere with the City’s written consent, full, complete and appropriate books, records and accounts relating to the Borrower’s compliance with the terms, provisions, covenants and conditions of this Agreement. All such books, records, and accounts are to be open to and available for inspection and copying by HUD, the City, its auditors or other authorized representatives at reasonable intervals during normal business hours. Copies of all tax returns and other reports that Borrower may be required to furnish to any governmental agency are to be open for inspection by the City and or HUD at all reasonable times at the place that the books, records and accounts of Borrower are kept.

Borrower shall preserve such records for a period of not less than five (5) years after the repayment of the Loans and all such records will be maintained in compliance with all HUD records and accounting requirements including. If any litigation, claim, negotiation, audit exception, monitoring, inspection or other action relating to the use of the Loans is pending

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at the end of the record retention period stated herein, then Borrower shall retain the records until such action and all related issues are resolved. The records are to include all invoices, receipts, and other documents related to expenditures from the Loan funds. Borrower shall cause records to be accurate and current and in such a form as to allow the City to comply with the record keeping requirements contained in 24 C.F.R. 570.506. Such records are to include but are not limited to:
(i) Records demonstrating the eligibility of activities under CDBG regulations set forth in 24 CFR 570 et seq. meets one of the national objectives of the CDBG program set forth in 24 CFR 570.208;
(ii) Records demonstrating compliance with the HUD property standards and lead-based paint requirements;
(iii) Records documenting compliance with the fair housing, equal opportunity, and affirmative fair marketing requirements;
(iv) Financial records as required by 24 C.F.R. 570.502, and OMB Circular A- 110 (24 C.F.R. Part 84);
(v) Records demonstrating compliance with local hiring and MBE/WBE requirements;
(vi) Records demonstrating compliance with the Regulatory Agreement; (vii) Records demonstrating compliance with applicable acquisition and relocation requirements, which must be retained for at least five (5) years after the date by which persons displaced from the property have received final payments; (viii) Records demonstrating compliance with labor requirements including certified payrolls from Borrower’s general contractor evidencing that applicable prevailing wages have been paid.
(b) The City shall notify Borrower of any records it deems insufficient. Borrower has fifteen (15) calendar days after the receipt of such a notice to correct any deficiency in the records specified by the City in such notice, or if a period longer than fifteen (15) days is reasonably necessary to correct the deficiency, then Borrower must begin to correct the deficiency within fifteen (15) days and correct the deficiency as soon as reasonably possible.

Section 3.3 City and or HUD Audits.
(a) Each year, Borrower shall provide the City and or HUD with a copy of Borrower’s annual audit, which is to include information on all of Borrower’s activities and not just those pertaining to the Development. Borrower shall also follow audit requirements of the Single Audit Act and OMB Circulars A-122 and 110. (b) In addition, the City and HUD may, at any time, audit all of Borrower’s books, records, and accounts pertaining to the Development. Any such audit is to be conducted

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during normal business hours at the principal place of business of Borrower and wherever records are kept. Immediately after the completion of an audit, the City shall deliver a copy of the results of the audit to Borrower.

Section 3.4 Hazardous Materials.
(a) Borrower shall keep and maintain the Property in compliance with, and may not cause or permit the Property to be in violation of any federal, state or local laws, ordinances or regulations relating to industrial hygiene or to the environmental conditions on, under or about the Property including, but not limited to, soil and ground water conditions. Borrower may not use, generate, manufacture, store or dispose of on, under, or about the Property or transport to or from the Property any flammable explosives, radioactive materials, hazardous wastes, toxic substances or related materials, including without limitation, any substances defined as or included in the definition of “hazardous substances,” hazardous wastes,” “hazardous materials,” or “toxic substances” under any applicable federal or state laws or regulations (collectively referred to hereinafter as “Hazardous Materials”) except such of the foregoing as may be customarily used in construction of projects like the Development or kept and used in and about residential property of this type. (b) Borrower shall immediately advise the City in writing if at any time it receives written notice of (i) any and all enforcement, cleanup, removal or other governmental or regulatory actions instituted, completed or threatened against Borrower or the Property pursuant to any applicable federal, state or local laws, ordinances, or regulations relating to any Hazardous Materials, (“Hazardous Materials Law”), (ii) all claims made or threatened by any third party against Borrower or the Property relating to damage, contribution, cost recovery compensation, loss or injury resulting from any Hazardous Materials (the matters set forth in clauses (i) and (ii) above are hereinafter referred to as “Hazardous Materials Claims”), and (iii) Borrower’s discovery of any occurrence or condition on any real property adjoining or in the vicinity of the Property that could cause the Property or any part thereof to be subject to any restrictions on the ownership, occupancy, transferability or use of the Property under any Hazardous Materials Law.
(c) The City has the right to join and participate in, as a party if it so elects, any legal proceedings or actions initiated in connection with any Hazardous Materials Claims and to have its reasonable attorneys’ fees in connection therewith paid by Borrower. Borrower shall indemnify and hold harmless the City and its council members, directors, officers, employees, agents, successors and assigns from and against any loss, damage, cost, expense or liability directly or indirectly arising out of or attributable to the use, generation, storage, release, threatened release, discharge, disposal, or presence of Hazardous Materials on, under, or about the Property including without limitation: (i) all foreseeable consequential damages, (ii) the costs of any required or necessary repair, cleanup or detoxification of the Property and the preparation and implementation of any closure, remedial or other required plans, and (iii) all reasonable costs and expenses incurred by the City in connection with clauses (i) and (ii), including but not limited to reasonable attorneys’ fees and consultant’s fees. This indemnification applies whether or not any government agency has issued a cleanup order. Losses, claims, costs, suits, liability, and expenses covered by this indemnification provision include, but are not limited to: (1) losses attributable to diminution

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in the value of the Property, (2) loss or restriction of use of rentable space on the Property, (3) adverse effect on the marketing of any rental space on the Property, and (4) penalties and fines levied by, and remedial or enforcement actions of any kind issued by any regulatory agency (including but not limited to the costs of any required testing, remediation, repair, removal, cleanup or detoxification of the Property and surrounding properties). This obligation to indemnify will survive termination of this Agreement. (d) Without the City’s prior written consent, which will not be unreasonably withheld, Borrower may not take any remedial action in response to the presence of any Hazardous Materials on, under or about the Property, nor enter into any settlement agreement, consent decree, or other compromise in respect to any Hazardous Material Claims, which remedial action, settlement, consent decree or compromise might, in the City’s judgment, impair the value of the City‘s security hereunder; provided, however, that the City‘s prior consent is not necessary in the event that the presence of Hazardous Materials on, under, or about the Property either poses an immediate threat to the health, safety or welfare of any individual or is of such a nature that an immediate remedial response is necessary and it is not reasonably possible to obtain the City‘s consent before taking such action, provided that in such event Borrower shall notify the City as soon as practicable of any action so taken. The City agrees not to withhold its consent, where such consent is required hereunder, if (i) a particular remedial action is ordered by a court of competent jurisdiction, (ii) Borrower will or may be subjected to civil or criminal sanctions or penalties if it fails to take a required action, (iii) Borrower establishes to the satisfaction of the City that there is no reasonable alternative to such remedial action which would result in less impairment of the City’s security hereunder, or (iv) the action has been agreed to by the City. (e) Borrower hereby acknowledges and agrees that (i) this Section is intended as the City‘s written request for information (and Borrower’s response) concerning the environmental condition of the Property as required by California Code of Civil Procedure Section 726.5, and (ii) each representation and warranty in this Agreement (together with any indemnity obligation applicable to a breach of any such representation and warranty) with respect to the environmental condition of the Property is intended by the Parties to be an “environmental provision” for purposes of California Code of Civil Procedure Section 736. (f) In the event that any portion of the Property is determined to be “environmentally impaired” (as that term is defined in California Code of Civil Procedure Section 726.5(e)(3)) or to be an “affected parcel” (as that term is defined in California Code of Civil Procedure Section 726.5(e)(1)), then, without otherwise limiting or in any way affecting the City‘s or the trustee’s rights and remedies under the Deeds of Trust, the City may elect to exercise its rights under California Code of Civil Procedure Section 726.5(a) to (i) waive its lien on such environmentally impaired or affected portion of the Property and (ii) exercise (1) the rights and remedies of an unsecured creditor, including reduction of its claim against Borrower to judgment, and (2) any other rights and remedies permitted by law. For purposes of determining the City‘s right to proceed as an unsecured creditor under California Code of Civil Procedure Section 726.5(a), Borrower will be deemed to have will fully permitted or acquiesced in a release or threatened release of Hazardous Materials, within the meaning of California Code of Civil Procedure Section 726.5(d)(1), if the release or threatened release of Hazardous Materials was knowingly or negligently caused or contributed to by any lessee,

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occupant, or user of any portion of the Property and Borrower knew or should have known of the activity by such lessee, occupant, or user which caused or contributed to the release or threatened release. All costs and expenses, including (but not limited to) attorneys’ fees, incurred by the City in connection with any action commenced under this paragraph, including any action required by California Code of Civil Procedure Section 726.5(b) to determine the degree to which the Property is environmentally impaired, plus interest thereon at the lesser of ten percent (10%) and the maximum rate permitted by law, until paid, will be added to the indebtedness secured by the Deeds of Trust and is due and payable to the City upon its demand made at any time following the conclusion of such action.

Section 3.5 Maintenance and Damage.
(a) During the course of operation of the Development, Borrower shall maintain the Development and the Property in good repair and in a neat, clean and orderly condition. If there arises a condition in contravention of this requirement, and if Borrower has not cured such condition within thirty (30) days after receiving a City notice of such a condition, then in addition to any other rights available to the City, the City may perform all acts necessary to cure such condition, and to establish or enforce a lien or other encumbrance against the Property, subject to the provisions provided in subsection (b) below. (b) If economically feasible in the City’s judgment after consultation with Borrower, if any improvement now or in the future on the Property is damaged or destroyed, then Borrower shall, at its cost and expense, diligently undertake to repair or restore such improvement consistent with the plans and specifications approved by the City with such changes as have been approved by the City. Such work or repair is to be commenced no later than the later of one hundred twenty (120) days, or such longer period approved by the City in writing, after the damage or loss occurs or thirty (30) days following receipt of the insurance proceeds, and is to be complete within one (1) year thereafter. Any insurance proceeds collected for such damage or destruction are to be applied to the cost of such repairs or restoration and, if such insurance proceeds are insufficient for such purpose, then Borrower shall make up the deficiency. If Borrower does not promptly make such repairs, then any insurance proceeds collected for such damage or destruction are to be promptly delivered by Borrower to the City as a special pro-rata repayment of the loans.

Section 3.6 Fees and Taxes.

Borrower is solely responsible for payment of all fees, assessments, taxes, charges, and levies imposed by any public authority or utility company with respect to the Property or the Development, and shall pay such charges prior to delinquency. However, Borrower is not required to pay and discharge any such charge so long as (i) the legality thereof is being contested diligently and in good faith and by appropriate proceedings, and (ii) if requested by the City, Borrower deposits with the City any funds or other forms of assurance that the City in good faith from time to time determines appropriate to protect the City from the consequences of the contest being unsuccessful.

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Section 3.7 Notice of Litigation.

Borrower shall promptly notify the City in writing of any litigation that has the potential to materially affect Borrower or the Property and of any claims or disputes that involve a material risk of such litigation.

Section 3.8 Operation of Development as Affordable Housing. (a) Borrower shall operate the Development as an affordable housing development consistent with (i) HUD’s requirements for use of the CBDG Funds, (ii) the Regulatory Agreement, and (iii) any other regulatory requirements imposed on Borrower. (b) Before leasing any unit in the Development, Borrower shall submit its proposed form of lease agreement for the City’s review and approval. The form of lease must at a minimum, comply with the Regulatory Agreement.
(c) Before leasing any unit in the Development, Borrower shall provide the City, for its review and approval, with Borrower’s written tenant selection plan pursuant to the Regulatory Agreement.
(d) Borrower shall evaluate the income eligibility of each Tenant household in City- Assisted Unit pursuant to the City’s approved Tenant certification procedures set forth in the Regulatory Agreement.
(e) Borrower shall maintain all documents setting forth the household income of each household occupying a City -Assisted Unit, and the total amount for rent, utilities, and related services charged to each household occupying the Development, as prescribed by the Regulatory Agreement.

Section 3.9 Nondiscrimination.

Borrower covenants by and for itself and its successors and assigns that, there will be no discrimination against or segregation of a person or of a group of persons on account of race, color, religion, creed, age (except for lawful senior housing in accordance with state and federal law), familial status, disability, sex, sexual orientation, marital status, ancestry, veterans status, or national origin in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property, nor may Borrower or any person claiming under or through Borrower 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 the Property. The foregoing covenant will run with the land.

Section 3.10 Transfer.
(a) For purposes of this Agreement, “Transfer” means any sale, assignment, or transfer, whether voluntary or involuntary, of (i) any rights and/or duties under this Agreement, and/or (ii) any interest in the Development, including (but not limited to) a fee simple interest, a joint tenancy interest, a life estate, a partnership interest, a leasehold interest, a security interest, or an interest evidenced by a land contract by which possession of

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the Development is transferred and Borrower retains title. The term “Transfer” excludes the leasing of any single unit in the Development to an occupant in compliance with the Regulatory Agreement.
(b) No Transfer is permitted without the prior written consent of the City, which the City may withhold in its sole discretion. The Loans will automatically accelerate and be due in full as set forth in Section 2.6 upon any Transfer made without the prior written consent of the City.

Section 3.11 Insurance Requirements.
(a) Borrower shall maintain Commercial General Liability insurance with limits not less than Two Million Dollars ($2,000,000) each occurrence combined single limit for Bodily Injury and Property Damage, including coverages for Contractual Liability, Personal Injury, Broadform Property Damage, Products and Completed Operations. (b) Borrower shall cause any general contractor, agent, or subcontractor working on the Development under direct contract with Borrower or subcontract to maintain insurance of the types and in at least the minimum amounts described above, except that the limit of liability for comprehensive general liability insurance for subcontractors must be One Million Dollars ($2,000,000), and must require that such insurance will meet all of the general requirements of subsections (d) and (e) below.
(c) The required insurance must be provided under an occurrence form, and Borrower shall maintain the coverage described in subsections (a) continuously throughout the Term.

Should any of the required insurance be provided under a form of coverage that includes an annual aggregate limit or provides that claims investigation or legal defense costs be included in such annual aggregate limit, such annual aggregate limit must be three times the occurrence limits specified above.
(d) Comprehensive General Liability, Comprehensive Automobile Liability and Property insurance policies must be endorsed to name as an additional insured the City and its officers, agents, employees and members of the Turlock City Council. (e) All policies and bonds are to contain (i) the agreement of the insurer to give the City at least thirty (30) days’ notice prior to cancellation (including, without limitation, for non-payment of premium) or any material change in said policies; (ii) an agreement that such policies are primary and non-contributing with any insurance that may be carried by the City; (iii) a provision that no act or omission of Borrower shall affect or limit the obligation of the insurance carrier to pay the amount of any loss sustained; and (iv) a waiver by the insurer of all rights of subrogation against the City and its authorized parties in connection with any loss or damage thereby insured against.

Section 3.12 Anti-Lobbying Certification.

Borrower certifies, to the best of Borrower’s knowledge or belief, that:

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(a) No Federal appropriated funds have been paid or will be paid, by or on behalf of it, to any person for influencing or attempting to influence an officer or employee of any agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with the awarding of any Federal contract, the making of any Federal grant, the making of any Federal loan, the entering into of any cooperative agreement, and the extension, continuation, renewal, amendment, or modification of any Federal contract, grant, loan, or cooperative agreement; (b) If any funds other than Federal appropriated funds have been paid or will be paid to any person for influencing or attempting to influence an officer or employee of any agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with the awarding of any Federal contract, grant, loan, or cooperative agreement, it will complete and submit Standard Form-LLL, Disclosure Form to Report Lobbying, in accordance with its instructions.

This certification is a material representation of fact upon which reliance was placed when this Agreement was made or entered into. Submission of this certification is a prerequisite for making or entering into this Agreement imposed by Section 1352, Title 31, U.S. Code. Any person who fails to file the required certification shall be subject to a civil penalty of not less than Ten Thousand Dollars ($10,000) and no more than One Hundred Thousand Dollars ($100,000) for such failure.

Section 3.13 Compliance with Applicable Laws.

Borrower shall comply with all ordinances, resolutions, statutes, rules and regulations of City and any federal, state or local governmental agency having jurisdiction at the time service is rendered. This Agreement is subject to and incorporates the terms of Federal Housing and Community Development Act of 1974 (Pub. L. 93-383), as amended (the “Act”), and the regulations promulgated thereunder (24 CFR Chapter V, Part 570) (“Regulations”), and all amendments or successor regulations or guidelines thereto. Without limiting the foregoing, Borrower shall comply with the following requirements and standards:
(a) OMB Circular No. A-122 “Cost Principles for Non-Profit Organizations”; (b) Attachments A, B, C (except that in lieu of the provisions in paragraph 4, the retention period for records pertaining to individual CDBG activities commences on the date of submission of the annual performance and evaluation report in which the activity is reported on for the final time), F, H, N (excluding paragraph 3 and except that paragraphs 6 and 7 are modified so that [i] when any personal property is sold, the proceeds are program income, and [ii] personal property not needed for CDBG activities must be transferred to City or shall be retained after compensating City) and O of OMB Circular A-110; (c) All federal laws and regulations described in Subpart K of the Regulations, including all affirmative action requirements set forth therein, but excluding City’s environmental responsibilities under 24 CFR § 570.604 and City’s responsibility for initiating the review process under 24 CFR Part 52;

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(d) Borrower shall promptly pay the principal and interest when due on any financing obtained by Borrower related to the Property or the Development. (e) Borrower may not incur any indebtedness of any kind or encumber the Development with any liens without the prior written consent of the City.

Section 3.14 Licenses, Permits, Fees and Assessments. Borrower shall obtain and maintain all licenses, registrations, accreditations and inspections from all agencies governing its performance under this Agreement. Borrower shall insure that its staff shall obtain and maintain all required licenses, registrations, accreditations and inspections from all agencies governing Borrower’s performance under this Agreement.

Section 3.15 Program Income. Borrower agrees that it shall not use funds received from City in any manner that will provide Borrower with program income as set forth in 24 CFR Part 570.504. If program income is generated, at the discretion of City, Borrower shall return all program income to City at the end of the Agreement term.

Section 3.16 Further Responsibilities of Parties. Both parties shall use reasonable care and diligence to perform their respective obligations under this Agreement. Both parties shall act in good faith to execute all instruments, prepare all documents and take all actions as may be reasonably necessary to carry out the purposes of this Agreement. Unless hereafter specified, neither party shall be responsible for the obligations of the other.

Section 3.17 Special Requirements. Additional terms and conditions of this Agreement, if any, which are made a part hereof are set forth in the “Special Conditions” attached hereto as Exhibit A. In the event of a conflict between any provisions of this Agreement, the provisions of Exhibit A shall govern.

ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF BORROWER
Section 4.1 Representations and Warranties.

Borrower hereby represents and warrants to the City as follows and acknowledges, understands, and agrees that the representations and warranties set forth in this Article 4 are deemed to be continuing during all times when any portion of the Loan remains outstanding:
(a) Organization. Borrower is duly organized, validly existing and in good standing under the laws of the State of California and has the power and authority to own its property and carry on its business as now being conducted.
(b) Authority of Borrower. Borrower has full power and authority to execute and deliver this Agreement and to make and accept the borrowings contemplated hereunder, to execute and deliver the Loan Documents and all other documents or instruments executed and delivered, or to be executed and delivered, pursuant to this Agreement, and to perform and observe the terms and provisions of all of the above. (c) Authority of Persons Executing Documents. This Agreement and the Loan Documents and all other documents or instruments executed and delivered, or to be executed

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and delivered, pursuant to this Agreement have been executed and delivered by persons who are duly authorized to execute and deliver the same for and on behalf of Borrower, and all actions required under Borrower’s organizational documents and applicable governing law for the authorization, execution, delivery and performance of this Agreement and the Loan Documents and all other documents or instruments executed and delivered, or to be executed and delivered, pursuant to this Agreement, have been duly taken. (d) Valid Binding Agreements. The Loan Documents and all other documents or instruments executed and delivered pursuant to or in connection with this Agreement constitute or, if not yet executed or delivered, will when so executed and delivered, constitute legal, valid and binding obligations of Borrower enforceable against it in accordance with their respective terms.
(e) No Breach of Law or Agreement. Neither the execution nor delivery of the Loan Documents or of any other documents or instruments executed and delivered, or to be executed or delivered, pursuant to this Agreement, nor the performance of any provision, condition, covenant or other term hereof or thereof, will (i) conflict with or result in a breach of any statute, rule or regulation, or any judgment, decree or order of any court, board, commission or agency whatsoever that is binding on Borrower, or conflict with any provision of the organizational documents of Borrower, or conflict with any agreement to which Borrower is a party, or (ii) result in the creation or imposition of any lien upon any assets or property of Borrower, other than liens established pursuant hereto. (f) Compliance with Laws; Consents and Approvals. The acquisition of the Development will comply with all applicable laws, ordinances, rules and regulations of federal, state and local governments and agencies and with all applicable directions, rules and regulations of the fire marshal, health officer, building inspector and other officers of any such government or agency.
(g) Pending Proceedings. Borrower is not in default under any law or regulation or under any order of any court, board, commission or agency whatsoever, and there are no claims, actions, suits or proceedings pending or, to the knowledge of Borrower, threatened against or affecting Borrower or the Development, at law or in equity, before or by any court, board, commission or agency whatsoever which might, if determined adversely to Borrower, materially affect Borrower’s ability to repay the Loan or impair the security given to the City pursuant hereto.
(h) Financial Statements. The financial statements of Borrower and other financial data and information furnished by Borrower to the City fairly and accurately present the information contained therein. As of the date of this Agreement, there has not been any material adverse change in the financial condition of Borrower from that shown by such financial statements and other data and information.
(i) Sufficient Funds. Borrower holds sufficient funds and/or binding commitments for sufficient funds to complete any repairs of the Property. It is recommended that a minimum of 2% of the property value is to be held as reserves at all times.

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(j) Taxes. Borrower and its subsidiaries have filed all federal and other material tax returns and reports required to be filed, and have paid all federal and other material taxes, assessments, fees and other governmental charges levied or imposed upon them or their income or the Property otherwise due and payable, except those that are being contested in good faith by appropriate proceedings and for which adequate reserves have been provided in accordance with generally accepted accounting principles. There is no proposed tax assessment against Borrower or any of its subsidiaries that could, if made, be reasonably expected to have a material adverse effect on the property, liabilities (actual or contingent), operations, condition (financial or otherwise) or prospects of Borrower and its subsidiaries, taken as a whole, or which could result in (i) a material impairment of the ability of Borrower to perform under any loan document to which it is a party, or (ii) a material adverse effect upon the legality, validity, binding effect or enforceability against Borrower of any Loan Document.

ARTICLE 5 DEFAULT AND REMEDIES
Section 5.1 Events of Default.

Each of the following constitutes an “Event of Default” by Borrower under this Agreement:
(a) Failure to Make Payment. Failure to make any payment when such payment is due pursuant to the Loan Documents.
(b) Breach of Covenants. Failure by Borrower to duly perform, comply with, or observe any of the conditions, terms, or covenants of any of the Loan Documents or the Project Agreement (other than obligations described in subsections (a) and (b) above), and Borrower fails to cure such default within thirty (30) days after receipt of written notice thereof from the City to Borrower; provided, however, that if a different period or notice requirement is specified under any other section of this Article 5, the specific provisions shall control.
(c) Default Under Other Loans. A default is declared under any other financing for the Development by the lender of such financing and such default remains uncured following any applicable notice and cure period.
(d) Insolvency. A court having jurisdiction makes or enters any decree or order (i) adjudging Borrower to be bankrupt or insolvent, (ii) approving as properly filed a petition seeking reorganization of Borrower, or seeking any arrangement for Borrower under the bankruptcy law or any other applicable debtor’s relief law or statute of the United States or any state or other jurisdiction, (iii) appointing a receiver, trustee, liquidator, or assignee of Borrower in bankruptcy or insolvency or for any of their properties, (iv) directing the winding up or liquidation of Borrower if any such decree or order described in clauses (i) to (iv), inclusive, is unstayed or undischarged for a period of ninety (90) calendar days; or (v) Borrower admits in writing its inability to pay its debts as they fall due or will have voluntarily submitted to or filed a petition seeking any decree or order of the nature described in clauses (i) to (iv), inclusive. The occurrence of any of the Events of Default in this

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paragraph will act to accelerate automatically, without the need for any action by the City, the indebtedness evidenced by the Notes.
(e) Assignment; Attachment. Borrower assigns its assets for the benefit of its creditors or suffers a sequestration or attachment of or execution on any substantial part of its property, unless the property so assigned, sequestered, attached or executed upon is returned or released within ninety (90) calendar days after such event or, if sooner, prior to sale pursuant to such sequestration, attachment, or execution. The occurrence of any of the events of default in this paragraph shall act to accelerate automatically, without the need for any action by the City, the indebtedness evidenced by the Notes. (f) Suspension; Termination. Borrower voluntarily suspends its business or, the partnership is dissolved or terminated, other than a technical termination of the partnership for tax purposes.
(g) Liens on Property and the Development. Any claim of lien (other than liens approved in writing by the City) is filed against the Development or any part thereof, or any interest or right made appurtenant thereto, or the service of any notice to withhold proceeds of the Loan and the continued maintenance of said claim of lien or notice to withhold for a period of twenty (20) days, without discharge or satisfaction thereof or provision therefor (including, without limitation, the posting of bonds) satisfactory to the City. (h) Condemnation. The condemnation, seizure, or appropriation of all or the substantial part of the Property and the Development.
(i) Unauthorized Transfer. Any Transfer other than as permitted pursuant to Section

3.10. (j) Representation or Warranty Incorrect. Any Borrower representation or warranty contained in this Agreement, or in any application, financial statement, certificate, or report submitted to the City in connection with any of the Loan Documents, proves to have been incorrect in any material respect when made.

Section 5.2 Remedies.

Upon the occurrence of an Event of Default and until such Even of Default is cured or waived, the City is relieved of any obligation to disburse any portion of the Loan. In addition, upon the occurrence of an Event of Default and following the expiration of all applicable notice and cure periods the City may proceed with any and all remedies available to it under law, this Agreement, and the other Loan Documents. Such remedies include but are not limited to the following:
(a) Acceleration of Notes. The City may demand repayment of all indebtedness of Borrower to the City under this Agreement and the Notes. Borrower waives all right to presentment, demand, protest or notice of protest or dishonor. The City may proceed to enforce payment of the indebtedness and to exercise any or all rights afforded to the City as a creditor and secured party under the law, including the Uniform Commercial Code, including foreclosure under one or both the Deeds of Trust. Borrower is liable to pay the City on

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demand all reasonable expenses, costs and fees (including, without limitation, reasonable attorney’s fees and expenses) paid or incurred by the City in connection with the collection of the Loan and any such foreclosure the preservation, maintenance, protection, sale, or other disposition of the security given for the Loan.
(b) Specific Performance. The City has the right to mandamus or other suit, action or proceeding at law or in equity to require Borrower to perform its obligations and covenants under the Loan Documents or to enjoin acts on things that may be unlawful or in violation of the provisions of the Loan Documents.
(c) Right to Cure at Borrower’s Expense. The City has the right (but not the obligation) to cure any monetary default by Borrower under a loan other than the Loan. Upon demand therefore, Borrower shall reimburse the City for any funds advanced by the City to cure such monetary default, together with interest from the date of expenditure until the date of reimbursement at the Default Rate.

Section 5.3 Right of Contest.

Borrower may contest in good faith any claim, demand, levy, or assessment the assertion of which would constitute an Event of Default hereunder. Any such contest is to be prosecuted diligently and, in a manner, unprejudicial to the City or the rights of the City hereunder.

Section 5.4 Remedies Cumulative.

No right, power, or remedy given to the City by the terms of this Agreement or the other Loan Documents is intended to be exclusive of any other right, power, or remedy; and each and every such right, power, or remedy is cumulative and in addition to every other right, power, or remedy given to the City by the terms of any such instrument, or by any statute or otherwise against Borrower and any other person. Neither the failure nor any delay on the part of the City to exercise any such rights and remedies will operate as a waiver thereof, nor does any single or partial exercise by the City of any such right or remedy preclude any other or further exercise of such right or remedy, or any other right or remedy.

ARTICLE 6 GENERAL PROVISIONS
Section 6.1 Relationship of Parties.

Nothing contained in this Agreement is to be interpreted or understood by any of the Parties, or by any third persons, as creating the relationship of employer and employee, principal and agent, limited or general partnership, or joint venture between the City and Borrower or its agents, employees or contractors, and Borrower will at all times be deemed an independent contractor and to be wholly responsible for the manner in which it or its agents, or both, perform the services required of it by the terms of this Agreement. Borrower has and retains the right to exercise full control of employment, direction, compensation, and discharge of all persons assisting in the performance of services under the Agreement. In regards to the operation of the Development, Borrower is solely responsible for all matters relating to payment of its employees, including compliance with Social Security, withholding, and all other laws and regulations governing such matters, and must include requirements in each contract that

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contractors are solely responsible for similar matters relating to their employees. Borrower is solely responsible for its own acts and those of its agents and employees.

Section 6.2 No Claims.

Nothing contained in this Agreement creates or justifies any claim against the City by any person that Borrower may have employed or with whom Borrower may have contracted relative to the purchase of materials, supplies or equipment, or the furnishing or the performance of any work or services with respect to the purchase of the Property, the operation of the Development, and Borrower shall include similar requirements in any contracts entered into for the operation of the Development.

Section 6.3 Amendments.

No alteration or variation of the terms of this Agreement is valid unless made in writing by the Parties. The City Housing Manager is authorized to execute on behalf of the City amendments to the Loan Documents or amended and restated Loan Documents as long as any discretionary change in the amount or terms of this Agreement is approved by the City Council.

Section 6.4 Indemnification.

Borrower shall indemnify, defend and hold the City and its board members, supervisors, directors, officers, employees, agents, successors and assigns harmless against any and all claims, suits, actions, losses and liability of every kind, nature and description made against it and expenses (including reasonable attorneys’ fees) which arise out of or in connection with this Agreement, including but not limited to the purchase of the Property, and the development, construction, marketing and operation of the Development, except to the extent such claim arises from the grossly negligent or willful misconduct of the City, its agents, and its employees. The provisions of this Section will survive the expiration of the Term and the reconveyance of the Deeds of Trust.

Section 6.5 Non-Liability of City Officials, Employees and Agents.

No member, official, employee or agent of the City is personally liable to Borrower in the event of any default or breach of this Agreement by the City or for any amount that may become due from the City pursuant to this Agreement.

Section 6.6 No Third-Party Beneficiaries.

There are no third-party beneficiaries to this Agreement.

Section 6.7 Conflict of Interest.
(a) Except for approved eligible administrative or personnel costs, no person described in Section 6.7(b) below who exercises or has exercised any functions or responsibilities with respect to the activities funded pursuant to this Agreement or who is in a position to participate in a decision-making process or gain inside information with regard to such activities, may obtain a personal or financial interest or benefit from the activity, or

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have an interest in any contract, subcontract or agreement with respect thereto, or the proceeds thereunder, either for themselves or those with whom they have family or business ties, during, or at any time after, such person’s tenure. Borrower shall exercise due diligence to ensure that the prohibition in this Section 6.7(a) is followed. (b) The conflict-of-interest provisions of Section 6.7(a) above apply to any person who is an employee, agent, consultant, officer, or any immediate family member of such person, or any elected or appointed official of the City, or any person related within the third (3rd) degree of such person.
(c) In accordance with California Government Code Section 1090 and the Political Reform Act, California Government Code section 87100 et seq., no person who is a director, officer, partner, trustee or employee or consultant of Borrower, or immediate family member of any of the preceding, may make or participate in a decision, made by the City or a City board, commission or committee, if it is reasonably foreseeable that the decision will have a material effect on any source of income, investment or interest in real property of that person or Borrower. Interpretation of this section is governed by the definitions and provisions used in the Political Reform Act, California Government Code Section 87100 et seq., its implementing regulations manual and codes, and California Government Code Section 1090. (d) Borrower shall comply with the conflict-of-interest provisions set forth in 24 C.F.R. 570.611.

Section 6.8 Notices, Demands and Communications.

All notices required or permitted by any provision of this Agreement must be in writing and sent by registered or certified mail, postage prepaid, return receipt requested, or delivered by express delivery service, return receipt requested, or delivered personally, to the principal office of the Parties as follows:

City: City of Turlock
Housing Program Services Division
156 South Broadway, Suite 140
Turlock, CA 95380
Attention: City Manager

Borrower: Great Valley Housing Development Corporation 1701 Robertson Road
Modesto, CA 95350
Attn: Executive Director

Such written notices, demands and communications may be sent in the same manner to such other addresses as the affected Party may from time to time designate by mail as provided in this Section. Receipt will be deemed to have occurred on the date shown on a written receipt as the date of delivery or refusal of delivery (or attempted delivery if undeliverable).

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Section 6.9 Applicable Law.

This Agreement is governed by the laws of the State of California.

Section 6.10 Parties Bound.

Except as otherwise limited herein, this Agreement binds and inures to the benefit of the parties and their heirs, executors, administrators, legal representatives, successors, and assigns.

This Agreement is intended to run with the land and to bind Borrower and its successors and assigns in the Property and the Development for the entire Term, and the benefit hereof is to inure to the benefit of the City and its successors and assigns.

Section 6.11 Attorneys’ Fees.

If any lawsuit is commenced to enforce any of the terms of this Agreement, the prevailing Party will have the right to recover its reasonable attorneys’ fees and costs of suit from the other Party.

Section 6.12 Severability.

If any term of this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the provisions will continue in full force and effect unless the rights and obligations of the Parties have been materially altered or abridged by such invalidation, voiding or unenforceability.

Section 6.13 City Approval.

The City has authorized the City Manager to execute the Loan Documents and deliver such approvals or consents as are required by this Agreement, and to execute estoppel certificates concerning the status of the Loan and the existence of Borrower defaults under the Loan Documents.

Section 6.14 Waivers.

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

Section 6.15 Title of Parts and Sections.

Any titles of the sections or subsections of this Agreement are inserted for convenience of reference only and are to be disregarded in interpreting any part of the Agreement’s provisions.

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Section 6.16 Entire Understanding of the Parties
The Loan Documents and the Project Agreement constitute the entire agreement of the Parties with respect to the Loan; provided, however, if there is a conflict between the Project Agreement and the Loan Documents, the terms of the Loan Documents will prevail.

Section 6.17 Multiple Originals; Counterpart.

This Agreement may be executed in multiple originals, each of which is deemed to be an original, and may be signed in counterparts.

Section 6.18 Time of Essence. Time is of the essence of this Agreement.

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WHEREAS, this Agreement has been entered into by the undersigned as of the date first above written.

CITY:

CITY OF TURLOCK
By: _________________________________
Print name: Susan E. Borrego
Title: Interim City Manager
Date: _____________________________
APPROVED AS TO FORM:

Print Name: George A. Petrulakis
Title: City Attorney
Date: _____________________________
ATTEST:

Print Name: Nichole Fiez
Title: City Clerk
Date: _____________________________

BORROWER:

Great Valley Housing Development
Corporation, a California nonprofit public
benefit corporation
By: _______________________________
Print Name: Jim Kruse
Title: Executive Director
Date: _____________________________

By: _________________________________
Print Name: Greg Raynes
Title: Secretary
Date: _____________________________

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SPECIAL CONDITIONS
A. Financial Management

a. Accounting Standards

Borrower agrees to comply with 24 CFR §§ 84.21−28 and agrees to adhere to the accounting principles and procedures required therein, utilize adequate internal controls, and maintain necessary source documentation for all costs incurred.

b. Cost Principles

Borrower shall administer its program in conformance with OMB Circulars A -122, “Cost Principles for Non -Profit Organizations,” or A -21, “Cost Principles for Educational Institutions,” as applicable. These principles shall be applied for all costs incurred whether charged on a direct or indirect basis.

B. Documentation and Record-Keeping

a. Records to be Maintained

Borrower shall maintain all records required by the Federal regulations specified in 24 CFR § 570.506, that are pertinent to the activities to be funded under this Agreement. Such records shall include but not be limited to:

i. Records providing a full description of each activity undertaken; ii. Records demonstrating that each activity undertaken meets one of the National Objectives of the CDBG program;
iii. Records required to determine the eligibility of activities; iv. Records required to document the acquisition, improvement, use or disposition of real property acquired or improved with CDBG assistance; v. Records documenting compliance with the fair housing and equal opportunity components of the CDBG program;
vi. Financial records as required by 24 CFR 570.502, and 24 CFR 84.21−28; and
vii. Other records necessary to document compliance with Subpart K of 24 CFR Part 570.

b. Retention

Borrower shall retain all financial records, supporting documents, statistical records, and all other records pertinent to this Agreement for a period of no less than five (5) years after the full repayment of the loan . The retention period begins on the date of the submission of City’s annual performance and evaluation report to HUD in which the activities assisted under this Agreement are reported on for the final time. Notwithstanding the above, if there is litigation, claims, audits, negotiations or o ther actions that involve any of the records cited and that have started before the expiration of the retention period, then such

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records must be retained until completion of the actions and resolution of all issues, or the expiration of the retention period, whichever occurs later.

c. Client Data

Borrower shall maintain client data demonstrating client eligibility for services provided.

Such data shall include, but not be limited to, client name, address, income level or other basis for determining eligibility, and description of service provided. Such information shall be made available to City monitors or their designees for review upon request.

d. Disclosure

Borrower understands that client information collected under this Agreement is private and the use or disclosure of such information, when not directly connected with the administration of City’s or Borrower’s responsibilities with respect to services provided under this Agreement, is prohibited unless written consent is obtained from such pers on receiving service and, in the case of a minor, that of a responsible parent/guardian.

e. Property Records

Borrower shall maintain real property inventory records that clearly identify properties purchased, improved or sold. Properties retained shall continue to meet eligibility criteria and shall conform with the "changes in use" restrictions specified in 24 CFR § 570.503(b)(8).

f. National Objectives

Borrower agrees to maintain documentation that demonstrates that the activities carried out with funds provided under this Agreement meet one or more of the CDBG program's national objectives 1) benefit low- and moderate-income persons, 2) aid in the prevention or elimination of slums or blight, or 3) meet community development needs having a particular urgency, as defined in 24 CFR Part § 570.208.

g. Audits and Inspections

All Borrower records with respect to any matters covered by this Agreement shall be made available to City, HUD, and the Comptroller General of the United States or any of their authorized representatives, at any time during City’s normal business hours, as often as deemed necessary, to audit, examine, and make excerpts or transcripts of all relevant data.

Any deficiencies noted in audit reports must be fully cleared by Borrower within thirty (30) calendar days after receipt by Borrower. Failure of Borrower to comply with the above audit requirements will constitute a violation of this Agreement and may result in the withholding of future payments. Borrower hereby agrees to have an annual agency audit conducted in accordance with current City policy concerning Borrower audits and OMB Circular A-133.

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C. Reporting and Payment Procedures

a. Budgets

Borrower will submit a detailed Development budget in a form and content prescribed by City for approval by City. City and Borrower may agree to revise the budget from time to time in accordance with existing City policies.

b. Program Income

Borrower shall report quarterly all program income (as defined at 24 CFR § 570.500(a)) generated by activities carried out with CDBG funds made available under this Agreement.

The use of program income by Borrower shall comply with the requirements set forth at 24 CFR § 570.504. By way of further limitations, Borrower may use such income during the term of this Agreement for activities permitted under this Agreement and shall reduce requests for additional funds by the amount of any such program income balances on hand.

All unexpended program income shall be returned to City at the expiration or termin ation of this Agreement. Any interest earned on cash advances from the U.S. Treasury and from funds held in a revolving fund account is not program income and shall be remitted promptly to City.

c. Indirect Costs

If indirect costs are charged, Borrower s hall develop an indirect cost allocation plan for determining the appropriate Borrower’s share of administrative costs and shall submit such plan to City for approval, in a form specified by City.

d. Relocation, Real Property Acquisition and One-For-One Housing Replacement

Borrower shall comply with (a) the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, as amended (URA), and implementing regulations at 49 CFR Part 24 and 24 CFR § 570.606(b); (b) the requirements of 24 CFR § 570.606(c) governing the Residential Anti-displacement and Relocation Assistance Plan under section 104(d) of the HCD Act; (c) the requirements in 24 CFR § 570.606(d) governing optional relocation policies ; and (d) California Government Code Section 7260 et seq. and implementing regulations at 25 California Code of Regulations Sections 6000 et seq..

Borrower shall provide relocation assistance to displaced persons as defined by 24 CFR § 570.606(b)(2) that are displaced as a direct result of acquisition, rehabilitation, demolition or conversion for a CDBG -assisted project. Borrower shall comply with applicable City ordinances, resolutions and policies concerning the displacement of persons from their residences.

D. Personnel & Participant Conditions

a. Civil Rights

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i. Compliance

The Fair Housing Act (42 U.S.C. Section 3601 et seq.) and implementing regulations at 24 C.F.R. Part 100; Title VI of the Civil Rights Act of 1964 as amended; Title VIII of the Civil Rights Act of 1968 as amended; Section 104(b) and Section 109 of Title I of the Housing and Community Development Act of 197 4 as amended; Section 504 of the Rehabilitation Act of 1973 (29 U.S.C. Section 794, et seq.); the Age Discrimination Act of 1975 (42 U.S.C. Section 6101, et seq.); Executive Order 11063 as amended by Executive Order 12259 and implementing regulations at 24 C.F.R. Part 107; Executive Order 11246 as amended by Executive Orders 11375, 12086, 11478, 12107; Executive Order 11625 as amended by Executive Order 12007; Executive Order 12432; Executive Order 12138 as amended by Executive Order 12608; Executive Orders referenced in 24 C.F.R. 570.607, as revised by Executive Order 13279.

ii. Nondiscrimination

Borrower shall comply with the non-discrimination in employment and contracting opportunities laws, regulations, and executive orders referenced in 24 CFR § 570.607, as revised by Executive Order 13279. The applicable non - discrimination provisions in Section 109 of the HCDA are still applicable.

iii. Land Covenants

This Agreement is subject to the requirements of Title VI of the Civil Rights Act of 1964 (Pub. L. 88 -352) and 24 CFR §§ 570.601 and 570.602. In regard to the sale, lease, or other transfer of land acquired, cleared or improved with assistance provided under this Agreement, Borrower shall cause or require a covenant running with the land to be inserted in the deed or lease for such transfer, prohibiting discrimination as herein defined, in the sale, lease or rental, or in the use or occupancy of such land, or in any improvements erected or to be erected thereon, providing that City and the United States are beneficiaries of and entitled to enforce such covenants. Borrower, in undertaking its obligation to carry out the program assisted hereunder, shall take such measures as are necessary to enforce such covenant, and will not itself so discriminate.

iv. Section 504

Borrower shall comply with all Federal regulations issued pursuant to compliance with Section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794), which prohibits discrimination against the individuals with disabilities or handicaps in any Federally assisted program. City shall provide Borrower with any guidelines necessary for compliance with that portion of the regulations in force during the term of this Agreement.

b. Affirmative Action

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i. Women- and Minority-Owned Businesses (W/MBE)

Borrower shall use its best efforts to afford small businesses, minority business enterprises, and women’s business enterprises the maximum practicable opportunity to participate in the performance of this Agreement. As used in this Agreement, the terms “small business” means a business that meets the criteria set forth in section 3(a) of the Small Business Act, as amended (15 U.S.C. § 632), and “minority and women’s business enterprise” means a business at least fifty -one percent (51%) owned and controlled by minority group
members or women. For the purpose of this definition, "minority group members" are Afro -Americans, Spanish -speaking, Spanish surnamed or Spanish -heritage Americans, Asian-Americans and American Indians. Borrower may rely on written representations by businesses regarding their status as minority and female business enterprises in lieu of an independent investigation.

ii. Access to Records

Borrower shall furnish and cause each of its contractors to furnish all information and reports required hereunder and will permit access to its books, records and accounts by City, HUD or its agent, or other authorized Federal officials for purposes of investigation to ascertain compliance with the rules, regulations and provisions stated herein.

iii. Notifications

Borrower shall send to each labor union or representative of workers with which it has a collective bargaining agreement or other contract or understanding, a notice, to be provided by the agency contracting officer, advising the labor union or worker’s representative of Borrower’s commitments hereunder, and shall post copies of the notice in conspicuous places available to employees and applicants for employment.

iv. Equal Employment Opportunity and Affirmative Action (EEO/AA) Statement

Borrower will, in all solicitations or advertisements for employees placed by or on behalf of Borrower, state that it is an Equal Opportunity of Affirmative Action employer.

v. Subcontract Provisions

Borrower shall include the provisions of Paragraphs D.A, Civil Rights, and B, Affirmative Action, in every subcontract or purchase order, specifically or by reference, so that such provisions will be binding upon each of its own contractors.

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c. Employment Restrictions

i. Prohibited Activity

Borrower is prohibited from using personnel employed in the administration of the program for: political activities; inherently religious activities; lobbying; political patronage; and nepotism activities.

ii. OSHA

Where employees are engaged in activities not covered under the Occupat ional Safety and Health Act of 1970, they shall not be required or permitted to work, be trained, or receive services in buildings or surroundings or under working conditions which are unsanitary, hazardous or dangerous to the participant's health or safety.

iii. Right to Know

Participants employed or trained for inherently dangerous occupations, shall be assigned to work in accordance with reasonable safety practices.

iv. Labor Standards

Borrower shall comply with the requirements of the Secretary of Labor in accordance with the Davis -Bacon Act, as amended, the provisions of Contract Work Hours and Safety Standards Act (40 U.S.C. § 327 et seq. ) and all other applicable federal, state and local laws and regulations pertaining to labor standards insofar as those acts apply to the performance of this Agreement. Borrower shall comply with the Copeland Anti -Kick Back Act (18 U.S.C. § 874 et seq.) and its implementing regulations of the U.S. Dep artment of Labor at 28 CFR Part 5.

Borrower shall maintain documentation which demonstrates compliance with hour and wage requirements of this part. Such documentation shall be made available to City for review upon request.

d. Conduct

i. Assignability

Borrower shall not assign or transfer any interest in this Agreement without City’s prior written consent.

ii. Hatch Act

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Borrower agrees that no funds provided, nor personnel employed under this Agreement, shall be in any way or to any extent engaged in the conduct of political activities in violation of Chapter 15 of Title V of the U.S.C.

iii. Conflict of Interest

Borrower agrees to abide by the provisions of 24 CFR §§ 84.42 and 570.611, which include (but are not limited to) the following:

1. Borrower shall maintain a written code or standards of conduct that shall govern the performance of its officers, employees or agents engaged in the award and administration of contracts supported by Federal funds.

2. No employee, officer or agent of Borrower shall participate in the selection, or in the award, or administration of, a contract supported by Federal funds if a conflict of interest, real or apparent, would be involved.

3. No covered persons who exercise or have exercised any functions or responsibilities with respect to CDBG-assisted activities, or who are in a position to participate in a decision-making process or gain inside information with regard to such activities, may obtain a financial interest in any contract, or have a financial interest in any contract, s ubcontract, or agreement with respect to the CDBG - assisted activity, or with respect to the proceeds from the CDBG - assisted activity, either for themselves or those with whom they have business or immediate family ties, during their tenure or for a period of one (1) year thereafter. For purposes of this paragraph, a “covered person” includes any person who is an employee, agent, consultant, officer, or elected or appointed official of City, Borrower, or any designated public agency.

iv. Lobbying

Borrower hereby certifies that:

1. No federal appropriated funds have been paid or will be paid, by or on behalf of it, to any person for influencing or attempting to influence an officer or employee of any agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with the awarding of any federal contract, the making of any federal grant, the making of any federal loan, the entering into of any cooperative agreement, and the extension, continuation, renewal, amendment, or modification of any federal contract, grant, loan or cooperative agreement;

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2. If any funds other than federal appropriated funds have been paid or will be paid to any person for influencing or attempting to influence an officer or employee of any agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with this Agreement, it will complete and submit Standard Form -LLL, “Disclosure Form to Report
Lobbying,” in accordance with its instructions; and

3. It will require that the following language be included in the award documents for all subawards at all tiers (including subcontracts, subgrants, and contracts under grants, loans, and cooperative agreements) and that all Borrowers shall ce rtify and disclose accordingly:

“Lobbying Certification. This certification is a material representation of fact upon which reliance was placed when this transaction was made or entered into. Submission of this certification is a prerequisite for making or entering into this transaction imposed by section 1352, title 31, U.S.C. Any person who fails to file the required certification shall be subject to a civil penalty of not less than $10,000 and not more than $100,000 for each such failure.”

v. Subcontracts

1. Approvals

Borrower shall not enter into any subcontracts with any agency or individual in the performance of this Agreement without the written consent of City prior to the execution of such agreement.

2. Monitoring

Borrower shall monitor all subcontracted services on a regular basis to assure contract compliance. Results of monitoring efforts shall be summarized in written reports and supported with documented evidence of follow-up actions taken to correct areas of noncompliance.

3. Content

Borrower shall cause all of the provisions of this Agreement in its entirety to be included in and made a part of any subcontract executed in the performance of this Agreement.

4. Selection Process

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Borrower shall undertake to insure that all subcontracts let in the performance of this Agreement shall be awarded on a fair and open competition basis in accordance with applicable procurement requirements.

Executed copies of all subcontracts shall be forwarded to City along with documentation concerning the selection process.

5. Copyright

If this Agreement results in any copyrightable material or inventions, City and HUD reserves the right to royalty -free, non-exclusive and irrevocable license to reproduce, publish or otherwise use and to authorize others to use, the work or materials for governmental purposes.

6. Religious Activities

Borrower agrees that funds provided under this Agreement will not be utilized for inherently religious activities prohibited by 24 CFR § 570.200(j), such as worship, religious instruction, or proselytization.

E. Environmental Conditions

a. Air and Water

Borrower shall comply with the following requirements insofar as they apply to the performance of this Agreement:

i. Clean Air Act, 42 U.S.C. 7401 et seq;
ii. Federal Water Pollution Control Act, as amended, 33 U.S.C. 1251 et seq., as amended 1318 relating to inspection, monitoring, entry reports, and information, as well as other requirements specified in said Section 114 and Section 308, and all regulations and guidelines issued thereunder; iii. Environmental Protection Agency (EPA) regulations pursuant to 40 CFR Part 50, as amended;

b. Flood Disaster Protection

In accordance with the requirements of the Flood Disaster Protection Act of 1973 (42 U.S.C. § 4001), Borrower shall assure that for activities located in an area identified by the Federal Emergency Management Agency (FEMA) as having special flood hazards, flood insurance under the National Flood Insurance Program is obtained and maintained as a condition of fi nancial assistance for acquisition or construction purposes (including rehabilitation).

c. Lead-Based Paint

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Borrower agrees that any construction or rehabilitation of residential structures with assistance provided under this Agreement shall be subject to H UD Lead -Based Paint Regulations at 24 CFR § 570.608, and 24 CFR Part 35, Subpart B. Such regulations pertain to all CDBG-assisted housing and require that all owners, prospective owners, and tenants of properties constructed prior to 1978 be properly noti fied that such properties may include lead-based paint. Such notification shall point out the hazards of lead-based paint and explain the symptoms, treatment and precautions that should be taken when dealing with lead-based paint poisoning and the advisab ility and availability of blood lead level screening for children under seven. The notice should also point out that if lead-based paint is found on the property, abatement measures may be undertaken.

The regulations further require that, depending on t he amount of Federal funds applied to a property, paint testing, risk assessment, treatment and/or abatement may be conducted.

d. Historic Preservation

Borrower shall comply with the Historic Preservation requirements set forth in the National Historic Preservation Act of 1966, as amended (16 U.S.C. § 470) and the procedures set forth in 36 CFR Part 800, Advisory Council on Historic Preservation Procedures for Protection of Historic Properties, insofar as they apply to the performance of this agreement.

In general, this requires concurrence from the State Historic Preservation Officer for all rehabilitation and demolition of historic properties that are fifty (50) years old or older or that are included on a Federal, state, or local historic property list.

1 2251\02\4017894.1

PROMISSORY NOTE-A
(591 Birchwood Way– Deferred/Shared Equity Loan)
$205,000 Turlock, California
January 27, 2026
FOR VALUE RECEIVED, the undersigned, GREAT VALLEY HOUSING DEVELOPMENT CORPORATION, a California nonprofit public benefit corporation (“Borrower”) hereby promises to pay to the order of the CITY OF TURLOCK, a municipal corporation (“Holder”), the principal amount of Two Hundred Five Thousand Dollars ($205,000.00) plus interest thereon pursuant to Section 2 below.

All capitalized terms used but not defined in this Note have the meanings set forth in the Loan Agreement.

1. Borrower’s Obligation. This Note evidences Borrower’s obligation to repay Holder the principal amount of Two Hundred Five Thousand Dollars ($205,000.00) with interest for the funds loaned to Borrower by Holder to finance the acquisition of the Development pursuant to the Loan Agreement between Borrower and Holder of even date herewith (the “Loan Agreement”).

2. Interest. If an Event of Default (as defined in the Loan Agreement) occurs, interest will accrue on all amounts due under this Note at the lesser of 10% per annum or the highest rate permitted by law until such Event of Default is cured by Borrower or waived by Holder.

3. Term and Repayment Requirements. Principal and interest plus the City Appreciation Share, as defined below, under this Note are due and payable in the event of a Transfer (as defined in the Loan Agreement) of the Property or an Event of Default (as defined in the Loan Agreement). For purposes of this Note, the City Appreciation Share shall mean fifty percent (50%) of the amount by which the sales price for the Property received by the Borrower upon Transfer exceeds Four Hundred Ten Thousand Dollars ($410,000).

4. No Assumption. This Note is not assumable by the successors and assigns of Borrower without the prior written consent of Holder.

5. Security. This Note is secured by a Deed of Trust that refers to this Note.

6. Terms of Payment.
(a) Borrower shall make all payments due under this Note in currency of the United States of America to Holder at City of Turlock, Housing Program Services Division, 156 S. Broadway, Suite 140, CA 95380, Attention: Housing Manager, or to such other place as Holder may from time to time designate.
(b) All payments on this Note are without expense to Holder. Borrower shall pay all costs and expenses, including re-conveyance fees and reasonable attorney’s fees of

2 2251\02\4017894.1

Holder, incurred in connection with the payment of this Note and the release of any security hereof.
(c) The obligations of Borrower under this Note are absolute and Borrower waives any and all rights to offset, deduct or withhold any payments or charges due under this Note for any reason whatsoever.

7. Event of Default; Acceleration.
(a) Upon the occurrence of an Event of Default, the entire unpaid principal balance, together with all interest thereon, the City Appreciation Amount, and together with all other sums then payable under this Note and the Deed of Trust will, at the option of Holder, become immediately due and payable without further demand. (b) Holder’s failure to exercise the remedy set forth in Subsection 7(a) above or any other remedy provided by law upon the occurrence of an Event of Default does not constitute a waiver of the right to exercise any remedy at any subsequent time in respect to the same or any other Event of Default. The acceptance by Holder of any payment that is less than the total of all amounts due and payable at the time of such payment does not constitute a waiver of the right to exercise any of the foregoing remedies or options at that time or at any subsequent time, or nullify any prior exercise of any such remedy or option, without the express consent of Holder, except as and to the extent otherwise provided by law.

8. Waivers.
(a) Borrower hereby waives diligence, presentment, protest and demand, and notice of protest, notice of demand, notice of dishonor and notice of non-payment of this Note.

Borrower expressly agrees that this Note or any payment hereunder may be extended from time to time, and that Holder may accept further security or release any security for this Note, all without in any way affecting the liability of Borrower. (b) Any extension of time for payment of this Note or any installment hereof made by agreement of Holder with any person now or hereafter liable for payment of this Note must not operate to release, discharge, modify, change or affect the original liability of Borrower under this Note, either in whole or in part.

9. Miscellaneous Provisions.
(a) All notices to Holder or Borrower are to be given in the manner and at the addresses set forth in the Loan Agreement, or to such addresses as Holder and Borrower may therein designate.
(b) Borrower promises to pay all costs and expenses, including reasonable attorney’s fees, incurred by Holder in the enforcement of the provisions of this Note, regardless of whether suit is filed to seek enforcement.
(c) This Note is governed by the laws of the State of California.

3 2251\02\4017894.1

(d) The times for the performance of any obligations hereunder are to be strictly construed, time being of the essence.
(e) The Loan Documents (as defined in the Loan Agreement), of which this Note is a part, contain the entire agreement between the parties as to the loan evidenced by this Note. This Note may not be modified except upon the written consent of the parties.

IN WITNESS WHEREOF, Borrower has executed this Promissory Note as of the day and year first above written.

Great Valley Housing Development
Corporation, a California nonprofit public
benefit corporation

By:

Print Name: Jim Kruse
Title: Executive Director
Witness:

By: __________________________________
Print Name: Greg Raynes
Title: Secretary

1 2251\02\4017899.1

PROMISSORY NOTE-B
(591 Birchwood Way– Forgivable)
$205,000 Turlock, California
January 27, 2026
FOR VALUE RECEIVED, the undersigned, GREAT VALLEY HOUSING DEVELOPMENT CORPORATION, a California nonprofit public benefit corporation (“Borrower”) hereby promises to pay to the order of the CITY OF TURLOCK, a municipal corporation (“Holder”), the principal amount of Two Hundred Five Thousand Dollars ($205,000) plus interest thereon pursuant to Section 2 below.

All capitalized terms used but not defined in this Note have the meanings set forth in the Loan Agreement.

1. Borrower’s Obligation. This Note evidences Borrower’s obligation to repay Holder the principal amount of Two Hundred Five Thousand Dollars ($205,000) with interest for the funds loaned to Borrower by Holder to finance the acquisition of the Development pursuant to the Loan Agreement between Borrower and Holder of even date herewith (the “Loan Agreement”).

2. Interest. If an Event of Default (as defined in the Loan Agreement) occurs, interest will accrue on all amounts due under this Note at the lesser of 10% per annum or the highest rate permitted by law until such Event of Default is cured by Borrower or waived by Holder.

3. Term. This Note shall have a term of thirty (30) years from the date set forth above (“Term”)

4. Repayment Requirements. Each year on the anniversary date of this Note, during the term of this Note, provided an Event of Default has not occurred and Borrower has not Transferred (as that term is defined in the Loan Agreement) the Property, one thirtieth (1/30th) of the principal due under the Note shall be forgiven such that at the end of the Term the full amount of the principal and any interest owed will be forgiven and this Note shall be cancelled.

If during the Term, the Borrower Transfers (as that term is defined in the Loan Agreement) the Property, the outstanding principal amount owed on the Note at the time of such Transfer plus default interest in the amount set forth in Section 2 above accruing from the date of Transfer until full repayment of the owed principal amount shall be due in full at the time of Transfer. If an Event of Default occurs, the Holder is entitled to accelerate the amounts owed under this Note and require the Borrower to repay all principal and any interest owed at the time of such Event of Default.

5. No Assumption. This Note is not assumable by the successors and assigns of Borrower without the prior written consent of Holder.

6. Security. This Note is secured by a Deed of Trust that refers to this Note.

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7. Terms of Payment.
(a) Borrower shall make all payments due under this Note in currency of the United States of America to Holder at City of Turlock, Housing Program Services Division, 156 S. Broadway, Suite 140, CA 95380, Attention: Housing Manager, or to such other place as Holder may from time to time designate.
(b) All payments on this Note are without expense to Holder. Borrower shall pay all costs and expenses, including re-conveyance fees and reasonable attorney’s fees of Holder, incurred in connection with the payment of this Note and the release of any security hereof.
(c) The obligations of Borrower under this Note are absolute and Borrower waives any and all rights to offset, deduct or withhold any payments or charges due under this Note for any reason whatsoever.

8. Event of Default; Acceleration.
(a) Upon the occurrence of an Event of Default, the entire unpaid principal balance, together with all interest thereon, and together with all other sums then payable under this Note and the Deed of Trust will, at the option of Holder, become immediately due and payable without further demand.
(b) Holder’s failure to exercise the remedy set forth in Subsection 8(a) above or any other remedy provided by law upon the occurrence of an Event of Default does not constitute a waiver of the right to exercise any remedy at any subsequent time in respect to the same or any other Event of Default. The acceptance by Holder of any payment that is less than the total of all amounts due and payable at the time of such payment does not constitute a waiver of the right to exercise any of the foregoing remedies or options at that time or at any subsequent time, or nullify any prior exercise of any such remedy or option, without the express consent of Holder, except as and to the extent otherwise provided by law.

9. Waivers.
(a) Borrower hereby waives diligence, presentment, protest and demand, and notice of protest, notice of demand, notice of dishonor and notice of non-payment of this Note.

Borrower expressly agrees that this Note or any payment hereunder may be extended from time to time, and that Holder may accept further security or release any security for this Note, all without in any way affecting the liability of Borrower. (b) Any extension of time for payment of this Note or any installment hereof made by agreement of Holder with any person now or hereafter liable for payment of this Note must not operate to release, discharge, modify, change or affect the original liability of Borrower under this Note, either in whole or in part.

10. Miscellaneous Provisions.

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(a) All notices to Holder or Borrower are to be given in the manner and at the addresses set forth in the Loan Agreement, or to such addresses as Holder and Borrower may therein designate.
(b) Borrower promises to pay all costs and expenses, including reasonable attorney’s fees, incurred by Holder in the enforcement of the provisions of this Note, regardless of whether suit is filed to seek enforcement.
(c) This Note is governed by the laws of the State of California. (d) The times for the performance of any obligations hereunder are to be strictly construed, time being of the essence.
(e) The Loan Documents (as defined in the Loan Agreement), of which this Note is a part, contain the entire agreement between the parties as to the loan evidenced by this Note. This Note may not be modified except upon the written consent of the parties.

IN WITNESS WHEREOF, Borrower has executed this Promissory Note as of the day and year first above written.

Great Valley Housing Development
Corporation, a California nonprofit public
benefit corporation

By:

Print Name: Jim Kruse
Title: Executive Director
Witness:

By: __________________________________
Print Name: Greg Raynes
Title: Secretary

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RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:

City of Turlock
Housing Program Services Division
156 South Broadway, Suite 140
Turlock, CA 95380
Attn: Housing Manager
591 Birchwood Way, Turlock, CA
APNs: 043-055-048-000

This document is exempt from the payment of a recording free pursuant to Government Code Section 27383.

Documentary Transfer Taxes [$ ], based on the consideration or value. Property is in the City of Turlock.

GRANT DEED

FOR VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, CITY OF TURLOCK (“Grantor”), hereby conveys and grants to GREAT VALLEY HOUSING DEVELOPMENT CORPORATION , a California nonprofit public benefit corporation (“Grantee”), the land in the City of Turlock, County of Stanislaus, State of California, more particularly described on Exhibit “A” attached hereto and incorporated herein by this reference, subject to (i) all matters of record; and (ii) all matters that would be revealed by an ALTA survey of the land.

IN WITNESS WHEREOF, Grantor has executed this grant Deed as of the date set forth below.

Date: January 27, 2026 CITY OF TURLOCK
By: _________________________________
Susan E. Borrego
Interim City Manager

{CW097722.1} 2
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State of California )
County of Stanislaus )
On _________________________, before me, ,
(insert name and title of the officer)
Notary Public, personally appeared ,
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

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

WITNESS my hand and official seal.

Signature (Seal)

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.

{CW097722.1} 3
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EXHIBIT “A”
Legal Description of The Property

The land referred to herein below is situated in the State of California, County of Stanislaus, City of Turlock and described as follows:

LOT 48 OF REICH ESTATES SOUTH NO. 2, IN THE CITY OF TURLOCK, COUNTY OF STANISLAUS, STATE OF CALIFORNIA AS PER MAP FILED MAY 19, 1982 IN BOOK 29 OF MAPS, AT PAGE 21, STANISLAUS COUNTY RECORDS.

APN: 043-055-048-000

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RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:

City of Turlock
Housing Program Services Division
156 S. Broadway, Suite 140
Turlock, CA 95380
Attn: Housing Manager
No fee for recording pursuant to
Government Code Section 27383
__________________________________________________________________________

REGULATORY AGREEMENT AND

DECLARATION OF RESTRICTIVE COVENANTS
(591 Birchwood Way, Turlock, CA – CDBG Funds)

This Regulatory Agreement and Declaration of Restrictive Covenants (the “Agreement”) is dated January 27, 2026, and is between the CITY OF TURLOCK, a public entity (the “City “), and GREAT VALLEY HOUSING DEVELOPMENT CORPORATION, a California nonprofit public benefit corporation, (“Borrower”).

RECITALS
A. Defined terms used but not defined in these recitals are as defined in Article 1 of this Agreement.

B. The statutory and regulatory provisions that govern the Community Development Block Grant(“CDBG”) program under Title I of the Housing and Community Development Act of 1974(42 U.S.C. 5301 et seq.), as amended (including those at 24 CFR part 570 subparts A, C, D, J, K, and O, as appropriate), (the “CDBG Regulations”) are applicable to this Agreement.

C. Borrower intends to acquire the real property commonly known as 591 Birchwood Way, located in the City of Turlock, State of California, and more particularly described in Exhibit A (the “Property”). The purchase price of the Property is Four Hundred Ten Thousand Dollars ($410,000.00).,
D. The Property is the site of one single family building. The building and all other improvements to the Property, including all landscaping, roads and parking spaces, are referred to herein as the “Improvements”, or as the “Development.” Borrower intends to acquire the Development and rent the home to Low Income families.

E. Pursuant to a loan agreement of even date herewith between the City and Borrower (the “Loan Agreement”), the City is lending to Borrower Four Hundred Ten Thousand Dollars ($410,000.00) in CDBG Funds for the acquisition of the property (the “Loans”).

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F. The City has the authority to make the Loans to Borrower for programs that will further a City’s public purposes. In addition, the City has the authority to make the Loans pursuant to 24 C.F.R. 570.202 of the CDBG Regulations.

G. The City has agreed to make the Loans on the condition that the Borrower maintain and operate the Development in accordance with restrictions set forth in this Agreement.

In consideration of receipt of the Loans at an interest rate substantially below the market rate, Borrower agrees to observe all the terms and conditions set forth below.

AGREEMENT
ARTICLE 1 DEFINITIONS
Section 1.1 Definitions.

The following terms have the following meanings:
(a) “Actual Household Size” means the actual number of persons in the applicable household.
(b) “Adjusted Income” means the total anticipated annual income of all persons in the Tenant household as calculated pursuant to 24 C.F.R. 92.203(b)(1). (c) “Agreement” has the meaning set forth in the first paragraph of this Agreement.
(d) “Assumed Household Size” means the household size “adjusted for family size appropriate to the unit” as such term is defined in Health & Safety Code Section 50052.5(h). (e) “CDBG” has the meaning set forth in Paragraph B of the Recitals. (f) “CDBG Regulations” has the meaning set forth in Paragraph B of the Recitals.
(g) “City” means the City of Turlock, a municipal corporation. (h) “City-Assisted Units” means the residential Uni within the Development designated as assisted by the City pursuant to this Agreement. (i) “Deed of Trust” means the two Deeds of Trust with Assignment of Rents, Security Agreement and Fixture Filing of even date herewith by and among Borrower, as trustor, First American Title Company, as trustee, and the City, as beneficiary, that will encumber the Property to secure repayment of the Loans and Borrower’s performance of the covenants set forth in the documents evidencing the Loans.
(j) “Development” has the meaning set forth in Paragraph D of the Recitals.

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(k) “Loan Agreement” has the meaning set forth in Paragraph E of the Recitals.
(l) “Loan Documents” means this Agreement, the Notes, the Deeds of Trust, and the Loan Agreement.
(m) “Low Income Household” means a Tenant household with an Adjusted Income that does not exceed eighty percent (80%) of Median Income, with adjustments for smaller and larger families, except that HUD may establish income ceilings higher or lower than eighty percent (80%) of Median Income on the basis of HUD findings that such variations are necessary because of prevailing levels of construction costs or fair market rents, or unusually high or low family incomes, as such definition may be amended pursuant to 24 C.F.R. Section

92.2. (n) “Median Income” means the median gross yearly income, adjusted for Actual Household Size as specified herein, in the City of Turlock, California, as published from time to time by HUD. In the event that such income determinations are no longer published, or are not updated for a period of at least eighteen (18) months, the City shall provide Borrower with other income determinations that are reasonably similar with respect to methods of calculation to those previously published by HUD.
(o) “Note” means the one promissory note of even date herewith executed by Borrower in favor of City that evidences Borrower’s obligation to repay the Loans. (p) “Property” has the meaning set forth in Paragraph C of the Recitals. (q) “Rent” means the total monthly payments by the Tenant of a Unit for the following: use and occupancy of the Unit and land and associated facilities, including parking; any separately charged fees or service charges assessed by Borrower which are required of all Tenants, other than security deposits; an allowance for the cost of an adequate level of service for utilities paid by the Tenant, including garbage collection, sewer, water, electricity, gas and other heating, cooking and refrigeration fuel, but not telephone service or cable TV; and any other interest, taxes, fees or charges for use of the land or associated facilities and assessed by a public or private entity other than Borrower, and paid by the Tenant. (r) “Tenant” means the household that occupies a Unit in the Development. (s) “Term” means the term of this Agreement which commences as of the date of this Agreement and expires on the thirtieth (30th) anniversary of the date of this Agreement.
(t) “Unit(s)” means one (1) or more of the units in the Development.

ARTICLE 2

AFFORDABILITY AND OCCUPANCY COVENANTS

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Section 2.1 Occupancy Requirements.
(a) Low Income Units. During the Term of this Agreement, Borrower shall rent the Unit, and ensure that the Unit is occupied or, if vacant, available for occupancy, by a Low-Income Household.
(b) Disabled Persons Occupancy. Borrower shall cause the Development to be operated at all times in compliance with the provisions of: (i) the Unruh Act, (ii) the California Fair Employment and Housing Act, (iii) Section 504 of the Rehabilitation Act of 1973, (iv) the United States Fair Housing Act, as amended, and (v) the Americans With Disabilities Act of 1990, which relate to disabled persons access. Borrower shall indemnify, protect, hold harmless and defend (with counsel reasonably satisfactory to the City) the City, and its board members, officers and employees, from all suits, actions, claims, causes of action, costs, demands, judgments and liens arising out of Borrower’s failure to comply with applicable legal requirements related to housing for persons with disabilities. The provisions of this subsection will survive expiration of the Term or other termination of this Agreement, and remain in full force and effect.

Section 2.2 Allowable Rent.
(a) Rent. Borrower must maintain affordable rents. Rents will be determined by the City as subject to the provisions of 24 CFR 570.208(a)(3) and 570.483 (b)(3). (b) No Additional Fees. Borrower may not charge any fee, other than Rent, to any Tenant of the City -Assisted Units for any housing or other services provided by Borrower.

All Tenants must have equal access to and enjoyment of all common facilities in the Development.

Section 2.3 Rent Increases; Increased Income of Tenants. (a) Rent Increases. The initial Rents and subsequent Rents for all City- Assisted Units must be approved by the City prior to occupancy and are subject to the CDBG Regulations. All Rent increases for all City-Assisted Units are also subject to City approval.

The Rent for such Units may be increased no more than once annually based upon the annual income certification described in Article 3. Tenants are to be given at least sixty (60) days written notice prior to any Rent increase. The City will provide Borrower with a schedule of maximum permissible Rents for the City-Assisted Units annually. (b) Non-Qualifying Household. If, upon the annual certification of the income a Tenant of a City -Assisted Unit, Borrower determines that the income of a Household has increased above the qualifying limit for the Household, such Tenant shall be permitted to retain the Unit and upon expiration of the Tenant’s lease and upon sixty (60) days written notice, the Rent must be increased to thirty percent (30%) of the actual Adjusted Income of the Tenant or the fair market rent. There is no rent cap for the Units. When the Tenant vacates the Unit, the Borrower shall rent the Unit to a Low-Income Household, to comply with the requirements of Section 2.1 above.

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(c) Termination of Occupancy. Upon termination of occupancy of a Unit by a Tenant, Borrower shall rent such Unit to a Low-Income Household to comply with the requirements of Section 2.1 above.

ARTICLE 3

INCOME CERTIFICATION AND REPORTING
Section 3.1 Income Certification. Borrower shall obtain, complete, and maintain on file, immediately prior to initial occupancy, and annually thereafter, income certifications from each Tenant renting any of the City-Assisted Units. Borrower shall make a good faith effort to verify the accuracy of the income provided by the applicant or occupying household, as the case may be, in an income certification. To verify the information Borrower shall take two or more of the following steps: (i) obtain a pay stub for the most recent pay period; (ii) obtain an income tax return for the most recent tax year; (iii) conduct a credit agency or similar search; (iv) obtain an income verification form from the applicant’s current employer; (v) obtain an income verification form from the Social Security Administration and/or the California Department of Social Services if the applicant receives assistance from either of such agencies; or (vi) if the applicant is unemployed and does not have a tax return, obtain another form of independent verification. Copies of Tenant income certifications are to be available to the City upon request.

Section 3.2 Tenant Selection Plan. Before leasing any Unit in the Development, Borrower shall submit to the City for review and approval, a written tenant selection plan.

Borrower’s tenant selection plan must, at a minimum, meet the requirements for tenant selection set out in 24 C.F.R. 92.253(d) and any modifications thereto. Borrower may not make material modifications to its tenant selection plan without the prior written approval of the City.

Section 3.3 Reporting Requirements. Borrower shall submit to the City (a) not later than the forty-fifth (45th) day after the close of each calendar year, or such other date as may be requested by the City, a statistical report, including income and rent data for all Units, setting forth the information called for therein, and (b) within fifteen (15) days after receipt of a written request, any other information or completed forms requested by the City in order to comply with reporting requirements of HUD, the State of California, and the City .

Section 3.4 Additional Information. Borrower shall provide any additional information reasonably requested by the City.

Section 3.5 Records. Borrower shall maintain complete, accurate and current records pertaining to the Development, and shall permit any duly authorized representative of the City to inspect records, including records pertaining to the selection of Tenants, and income and household size of Tenants. All Tenant lists, applications and waiting lists relating to the Development are to be at all times: (i) separate and identifiable from any other business of Borrower, (ii) maintained as required by the City, in a reasonable condition for proper audit, and (iii) subject to examination during business hours by representatives of the City. Borrower shall retain copies of all materials obtained or produced with respect to occupancy of the Units for a period of at least five (5) years or after the expiration of the Term. The City may examine and make copies of all books, records or other documents of Borrower that pertain to the Development.

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Section 3.6 CDBG Record Requirements. All records maintained by Borrower pursuant to Sections 3.3 and 3.5 above are to be (i) maintained in compliance with all applicable HUD records and accounting requirements, and (ii) open to and available for inspection and copying by HUD and its authorized representatives at reasonable intervals during normal business hours; provided however, records pertaining to Tenant income verifications, Rents, and Development inspections are subject to HUD inspection for five (5) years after expiration of the Term. Borrower is subject to the audit requirements set forth in 24 CFR 570.502 during the Term.

Section 3.7 On-Site Inspection. The City may perform an on-site inspection of the Development at least one (1) time per year. Borrower shall cooperate in such inspection.

ARTICLE 4

OPERATION OF THE DEVELOPMENT
Section 4.1 Residential Use. Borrower shall operate the Development for affordable housing residential use only. No part of the Development may be operated as transient housing.

Section 4.2 Compliance with Loan Documents and Program Requirements.

Borrower’s actions with respect to the Property shall at all times be in full conformity with: (i) all requirements of the Loan Documents; (ii) all requirements imposed on projects assisted with CDBG Funds, and (iii) any other regulatory requirements imposed on the Development.

Section 4.3 Taxes and Assessments. Borrower shall pay all real and personal property taxes, assessments and charges and all franchise, income, employment, old age benefit, withholding, sales, and other taxes assessed against it, or payable by it, 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 Borrower may contest in good faith, any such taxes, assessments, or charges. In the event Borrower exercises its right to contest any tax, assessment, or charge against it, Borrower, on final determination of the proceeding or contest, will immediately pay or discharge any decision or judgment rendered against it, together with all costs, charges and interest.

Section 4.4 Property Tax Exemption. Borrower shall not apply for a property tax exemption for the Property under any provision of law except California Revenue and Taxation Section 214(g) without the prior written consent of the City.

ARTICLE 5

PROPERTY MANAGEMENT AND MAINTENANCE
Section 5.1 Management Responsibilities. Borrower is responsible for all management functions with respect to the Development, 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. The City has no responsibility for management of the Development. Borrower may retain a professional property management company approved by the City in its reasonable discretion to perform Borrower’s management duties hereunder.

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Section 5.2 Periodic Performance Review. The City reserves the right to conduct an annual (or more frequently, if deemed necessary by the City) review of the management practices and financial status of the Development. The purpose of each periodic review will be to enable the City to determine if the Development is being operated and managed in accordance with the requirements and standards of this Agreement. Borrower shall cooperate with the City in such reviews.

Section 5.3 Replacement of Management Agent. If, as a result of a periodic review, the City determines in its reasonable judgment that the Development is not being operated and managed in accordance with any of the material requirements and standards of this Agreement, the City shall deliver notice to Borrower of its intention to cause replacement of the Management Agent, including the reasons therefor. Within fifteen (15) days after receipt by Borrower of such written notice, the City staff and Borrower shall meet in good faith to consider methods for improving the financial and operating status of the Development, including, without limitation, replacement of the Management Agent.

If, after such meeting, City staff recommends in writing the replacement of the Management Agent, Borrower shall promptly dismiss the then-current Management Agent, and shall appoint as the Management Agent a person or entity meeting the standards for a management agent.

Any contract for the operation or management of the Development entered into by Borrower shall provide that the Management Agent may be dismissed and the contract terminated as set forth above. Failure to remove the Management Agent in accordance with the provisions of this Section constitutes a default under this Agreement, and the City may enforce this provision through legal proceedings as specified in Section 6.7 below.

Section 5.4 Approval of Management Policies. Borrower shall submit its written management policies with respect to the Development to the City for its review, and shall amend such policies in any way necessary to ensure that such policies comply with the provisions of this Agreement.

Section 5.5 Property Maintenance. Borrower shall maintain, for the entire Term of this Agreement, all interior and exterior Improvements, including landscaping, on the Property in good condition and repair (and, as to landscaping, in a healthy condition) and in accordance with all applicable laws, rules, ordinances, orders and regulations of all federal, state, City, municipal, and other governmental agencies and bodies having or claiming jurisdiction and all their respective departments, bureaus, and officials, and in accordance with the following maintenance conditions:

The City places prime importance on quality maintenance to protect its investment and to ensure that all City and City-assisted affordable housing projects within the City are not allowed to deteriorate due to below-average maintenance. Normal wear and tear of the Development will be acceptable to the City assuming Borrower agrees to provide all necessary improvements to assure the Development is maintained in good condition. Borrower shall make all repairs and replacements necessary to keep the improvements in good condition and repair.

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In the event that Borrower breaches any of the covenants contained in this section and such default continues for a period of seven (7) days after written notice from the City with respect to graffiti, debris, waste material, and general maintenance or thirty (30) days after written notice from the City with respect to landscaping and building improvements, then the City, in addition to whatever other remedy it may have at law or in equity, has the right to enter upon the Property and perform or cause to be performed all such acts and work necessary to cure the default. Pursuant to such right of entry, the City is permitted (but is not required) to enter upon the Property and to perform all acts and work necessary to protect, maintain, and preserve the improvements and landscaped areas on the Property, and to attach a lien on the Property, or to assess the Property, in the amount of the expenditures arising from such acts and work of protection, maintenance, and preservation by the City and/or costs of such cure, which amount shall be promptly paid by Borrower to the City upon demand.

ARTICLE 6

MISCELLANEOUS
Section 6.1 Lease Provisions. In leasing the Units within the Development, Borrower shall use a form of lease approved by the City. The lease must not contain any provision which is prohibited by 24 C.F.R. Section 92.253(b) and any amendments thereto. The form of lease must comply with all requirements of this Agreement, the other Loan Documents and must, among other matters:
(a) provide for termination of the lease for failure to: (i) provide any information required under this Agreement or reasonably requested by Borrower to establish or recertify the Tenant’s qualification, or the qualification of the Tenant’s household, for occupancy in the Development in accordance with the standards set forth in this Agreement, or (ii) qualify as a Low-Income Household as a result of any material misrepresentation made by such Tenant with respect to the income computation.
(b) be for an initial term of not less than one (1) year, unless by mutual agreement between the Tenant and Borrower, and provide for no increase in Rent during such year. After the initial year of tenancy, the lease may be month-to-month by mutual agreement of Borrower and the Tenant. Notwithstanding the above, any rent increases are subject to the requirements of Section 2.3(a) above.

Section 6.2 Lease Termination. Any termination of a lease or refusal to renew a lease for a City-Assisted Unit within the Development must be in conformance with 24 C.F.R.

92.253(c), and must be preceded by not less than sixty (60) days written notice to the Tenant by Borrower specifying the grounds for the action.

Section 6.3 Nondiscrimination.
(a) All of the Units must be available for occupancy on a continuous basis to members of the general public who are income eligible. Borrower may not give preference to any particular class or group of persons in renting or selling the Units, except to the extent that the Units are required to be leased to income eligible households pursuant to this Agreement.

Borrower herein covenants by and for Borrower, its successors and assigns, and all persons

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claiming under or through Borrower, that there exist no discrimination against or segregation of, any person or group of persons on account of race, color, creed, religion, sex, sexual orientation, marital status, familial status, national origin, source of income (e.g., SSI), ancestry, or disability, in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of any unit nor will Borrower or any person claiming under or through Borrower, 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, sublessees, subtenants, or vendees of any unit or in connection with the employment of persons for the construction, operation and management of any unit.
(b) Borrower shall accept as Tenants, on the same basis as all other prospective Tenants, persons who are recipients of federal certificates for rent subsidies pursuant to the existing housing program under Section 8 of the United States Housing Act, or its successor.

Borrower may not apply selection criteria to Section 8 certificate or voucher holders that is more burdensome than criteria applied to all other prospective Tenants, nor will Borrower apply or permit the application of management policies or lease provisions with respect to the Development which have the effect of precluding occupancy of units by such prospective Tenants.

Section 6.4 Term. The provisions of this Agreement apply to the Property for the Term even if the Loans is paid in full prior to the end of the terms. This Agreement binds any successor, heir or assign of Borrower, whether a change in interest occurs voluntarily or involuntarily, by operation of law or otherwise, except as expressly released by City. City is making the Loans on the condition, and in consideration of, this provision, and would not do so otherwise.

Section 6.5 Notice of Expiration of Term.
(a) At least six (6) months prior to the expiration of the Term, Borrower shall provide by first-class mail, postage prepaid, a notice to all Tenants containing (i) the anticipated date of the expiration of the Term, (ii) any anticipated increase in Rent upon the expiration of the Term, (iii) a statement that a copy of such notice will be sent to the City , and (iv) a statement that a public hearing may be held by the City on the issue and that the Tenant will receive notice of the hearing at least fifteen (15) days in advance of any such hearing. Borrower shall also file a copy of the above-described notice with the City’s Housing Manager. (b) In addition to the notice required above, Borrower shall comply with the requirements set forth in California Government Code Sections 65863.10 and 65863.11. Such notice requirements include: (i) a three (3) year notice to existing tenants, prospective tenants and Affected Public Agencies (as defined in California Government Code Section 65863.10(a)); (ii) a twelve (12) month notice to existing tenants, prospective tenants and Affected Public Agencies (as defined in California Government Code Section 65863.10(a)), prior to the expiration of the Term, (iii) a six (6) month notice requirement to existing tenants, prospective tenants and Affected Public Agencies prior to the expiration of the Term; (iv) a notice of an offer to purchase the Development to “qualified entities” (as defined in California Government Code

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Section 65863.11(d)), if the Development is to be sold within the Term; (iv) a notice of right of first refusal within the one hundred eighty (180) day period that qualified entities may purchase the Development.

Section 6.6 Covenants to Run With the Land. The City and Borrower hereby declare their express intent that the covenants and restrictions set forth in this Agreement run with the land, and bind all successors in title to the Property, provided, however, that on the expiration of the Term of this Agreement said covenants and restrictions expire. Each and every contract, deed or other instrument hereafter executed covering or conveying the Property or any portion thereof, is to be held conclusively to have been executed, delivered and accepted subject to the covenants and restrictions, regardless of whether such covenants or restrictions are set forth in such contract, deed or other instrument, unless the City expressly releases such conveyed portion of the Property from the requirements of this Agreement.

Section 6.7 Enforcement by The City. If Borrower fails to perform any obligation under this Agreement, and fails to cure the default within thirty (30) days after the City has notified Borrower in writing of the default or, if the default cannot be cured within thirty (30) days, fails to commence to cure within thirty (30) days and thereafter diligently pursue such cure and complete such cure within ninety (90) days, the City may enforce this Agreement by any or all of the following actions, or any other remedy provided by law:
(a) Calling the Loans. The City may declare a default under the Notes, accelerate the indebtedness evidenced by the Notes, and proceed with foreclosure under one or both of the Deeds of Trust.
(b) Action to Compel Performance or for Damages. The City may bring an action at law or in equity to compel Borrower’s performance of its obligations under this Agreement, and may seek damages.
(c) Remedies Provided Under Loan Documents. The City may exercise any other remedy provided under the Loan Documents.

Section 6.8 Attorneys’ Fees and Costs. In any action brought to enforce this Agreement, the prevailing party must be entitled to all costs and expenses of suit, including reasonable attorneys’ fees. This section must be interpreted in accordance with California Civil Code Section 1717 and judicial decisions interpreting that statute.

Section 6.9 Recording and Filing. The City and Borrower shall cause this Agreement, and all amendments and supplements to it, to be recorded in the Official Records of the Stanislaus County.

Section 6.10 Governing Law. This Agreement is governed by the laws of the State of California.

Section 6.11 Waiver of Requirements. Any of the requirements of this Agreement may be expressly waived by the City in writing, but no waiver by the City of any requirement of this Agreement extends to or affects any other provision of this Agreement, and may not be deemed to do so.

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Section 6.12 Amendments. This Agreement may be amended only by a written instrument executed by all the parties hereto or their successors in title that is duly recorded in the official records of the County of Stansilaus.

Section 6.13 Notices. Any notice requirement set forth herein will be deemed to be satisfied three (3) days after mailing of the notice first-class United States certified mail, postage prepaid, addressed to the appropriate party as follows:

City: City of Turlock
Housing Program Services Division
156 S. Broadway Street, Suite 140
Turlock, CA 95380
Attn: Housing Manager
Borrower: Great Valley Housing Development Corporation
1701 Robertson Road
Modesto, CA 95350
Attn: Executive Director

Such addresses may be changed by notice to the other party given in the same manner as provided above.

Section 6.14 Severability. If any provision of this Agreement is determined by a court of competent jurisdiction to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining portions of this Agreement will not in any way be affected or impaired thereby.

Section 6.15 Multiple Originals; Counterparts. This Agreement may be executed in multiple originals, each of which is deemed to be an original, and may be signed in counterparts.

Section 6.16 Time of Essence. Time is of the essence of each provision of this Agreement in which time is a factor.

WHEREAS, this Agreement has been entered into by the undersigned as of the date first written above.

CITY:

CITY OF TURLOCK,
a municipal corporation
By:

Print Name: Susan E. Borrego
Title: Interim City Manager

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Date: _____________________________

APPROVED AS TO FORM:

Print Name: George A. Petrulakis
Title: City Attorney

Date: _____________________________

BORROWER:

Great Valley Housing Development
Corporation, a California nonprofit public
benefit corporation

By:

Print Name: Jim Kruse
Title: Executive Director
Date: _____________________________
Witness:

By: _______________________________
Print Name: Greg Raynes
Title: Secretary
Date: ______________________________

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

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

WITNESS my hand and official seal.

Signature (Seal)

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.

2251\02\4017918.1

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

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

WITNESS my hand and official seal.

Signature (Seal)

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.

2251\02\4017918.1
EXHIBIT “A”
Legal Description of The Property

The land referred to herein below is situated Turlock, in the County of Stanislaus, State of California, and is described as follows:

LOT 48 OF REICH ESTATES SOUTH NO. 2, IN THE CITY OF TURLOCK, COUNTY OF STANISLAUS, STATE OF CALIFORNIA AS PER MAPY FILED MAY 19, 1980 IN BOOK 29 OF MAPS, AT PAGE 21, STANISLAUS COUNTY RECORDS.

APN: 043-055-048-000

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PURCHASE AND SALE AGREEMENT

AND JOINT ESCROW INSTRUCTIONS
This PURCHASE AND SALE AGREEMENT AND JOINT ESCROW INSTRUCTIONS (“Agreement”) is dated January 27, 2026, (“Effective Date”), and is entered into by and between the CITY OF TURLOCK, a municipal corporation (“Seller”) and GREAT VALLEY HOUSING DEVELOPMENT CORPORATION, a California nonprofit public benefit corporation (“Buyer”) for the purchase of the property located at 591 Birchwood Way, Turlock, California 95380.

Recitals
A. Seller owns land in the City of Turlock, described on Exhibit “A” and improvements thereon (“Real Property”). Such Real Property and any improvements thereon, and all rights and appurtenances relating thereto (but excluding any public rights of way and easements), are hereinafter collectively referred to as the “Property”.

B. Seller desires to sell the Property to Buyer, and Buyer desires to purchase the Property from Seller upon and subject to the terms and conditions hereafter set forth, including the conditions that Seller lend Buyer the purchase price (with the loan to be secured by the Property).

NOW, THEREFORE, Buyer and Seller hereby agree as follows Agreement
ARTICLE 1. PURCHASE AND SALE.

1.1 Purchase Price. In consideration of the sum of Four Hundred Ten Thousand Dollars ($410,000.00) and the Buyer’s expenditure of funds to pay costs of investigating title to and the physical condition of the Property, Seller agrees to sell the Property to Buyer and Buyer agrees to purchase the Property from Seller on the terms and subject to the conditions hereinafter set forth for a price of Four Hundred Ten Thousand Dollars ($410,000.00) (the “Purchase Price”).

ARTICLE 2. ESCROW.

2.1 Opening. The purchase and sale of the Property shall be consummated by means of an escrow, which is to be opened by the parties promptly after the execution of this Agreement at WFG National Title Insurance Company , 1550 Fulkerth Road, Turlock, California 95380 (“Escrow Holder”), Attn: Reyna Rico (Phone: (209) 664-9723); email: [email protected]. The parties shall promptly deliver a copy of this executed Agreement to Escrow Holder.

2.2 Escrow Instructions. Escrow Holder shall open an escrow ( “Escrow”) for the consummation of the sale of the Property to Buyer pursuant to the terms of this Agreement , and this Agreement shall constitute the joint escrow instructions of Buyer and Seller to Escrow Holder, but each may deliver separate escrow instructions consistent with this Agreement. Upon opening Escrow, Escrow Holder is authorized to act in accordance with the terms of this Agreement. Buyer and Seller shall execute Escrow Holder ’s general escrow instructions upon request; provided, however, that if there is any conflict or inconsistency between such general escrow instructions and this Agreement, this Agreement shall control.

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2.3 Close of Escrow. Escrow shall close no later than February 28, 2026 (the “Outside Closing Date”).

2.4 Costs.
(a) Seller shall pay one hundred percent (100%) of the escrow charges and other fees and costs charged by Escrow Holder, the premium for the Standard Owner’s Policy of title insurance, any transfer taxes, and any recording charges for both the Seller and Buyer. Buyer shall pay for the costs of an Extended Coverage Owner’s Policy of title insurance, if requested by Buyer, and for the Seller’s lenders policy of title insurance.

ARTICLE 3. CONDITIONS TO CLOSE OF ESCROW.

3.1 General. The provisions of this Article are conditions precedent to the close of escrow. If not satisfied or waived in writing by Buyer by the Outside Closing Date, Buyer may terminate this Agreement by written notice to Seller and Escrow Holder in which event Buyer shall be responsible for any escrow costs incurred by the Parties.

3.2 Title. Seller shall cause title to the Property to be conveyed to Buyer, subject only to title exceptions approved by Buyer pursuant to Section 3.3 below (the “Permitted Exceptions”).

At closing, Seller shall cause Escrow Holder to issue a Standard Owner’s Policy of title insurance insuring title to the Property in Buyer with liability in the amount of the Purchase Price at its cost and Buyer may obtain an ALTA extended coverage policy and shall be required to pay the additional cost of the ALTA Extended Policy of title insurance (“Title Policy”). The Title Policy shall include as title exceptions only prorated property assessments (if any), the Permitted Exceptions, and the printed exceptions common to such title policies. At Closing, Buyer shall cause Escrow Holder to issue, at Buyer’s cost, one lender’s title policies to Seller in the amounts of $840,000 for the Seller’s deeds of trust securing the promissory note s evidencing Seller’s purchase money loans to Buyer (aggregating the Purchase Price).

3.3 Approval of Title Exceptions . Buyer shall, upon the signing of this Agreement, order from Escrow Holder for delivery to Buyer a preliminary title report (“Preliminary Title Report”) and legible copies of all documents referred to therein covering or relating to the Property.

Buyer shall have ten (10) business days from the date of this Agreement to perform an ALTA survey (if desired by Buyer) and disapprove the exceptions revealed by the survey or listed in the Preliminary Title Report by written notice to Seller. Failure to give written notice of disapproval to Seller of some or all of the exceptions shall be deemed to be approval of all exceptions, except for monetary liens, including, but not limited to, property taxes. If Buy er disapproves any exceptions, Seller shall have ten (10) business days after receipt of Buyer’s notice within which to agree to remove the exception. Seller’s failure to give timely written notice of such agreement to remove all disapproved exceptions to Buyer shall be deemed to be refusal, except that Seller shall automatically be deemed to agree to remove monetary liens, including, but not limited to, current property taxes. If Seller does not timely and unconditionally agree in writing to remove any other exceptions timely
disapproved by Buyer, this Agreement shall terminate without further liability to either party unless Buyer waives its objections in writing within ten (10) business days after the expiration of

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Seller’s time period for agreeing to remove exceptions . If Seller shall agree to remove any exception objected to by Buyer, Seller shall remove such exception by the Close of Escrow.

3.4 Buyer’s Other Conditions Precedent. Buyer’s obligation to purchase the Property is subject to the satisfacti on of the following additional conditions which are for Buyer ’s benefit only and if neither satisfied nor expressly waived in writing by Buyer on or before the Outside Closing Date, Buyer may terminate this Agreement by written notice to Seller and Escrow Holder in which event Buyer shall be responsible for any escrow costs incurred by the Parties:
(a) Buyer’s approval, on or before the date which is ten (10) business days after the Effective Date (“Due Diligence Period”), of the condition of the Property, based on inspections, tests, surveys and other studies, including, but not limited to, environmental assessments of the Property, to be conducted by or on behalf of Buyer at Buyer ’s cost and in Buyer’s sole discretion.

Upon execution of this Agreement by Seller, Buyer’s representatives may enter on the Property to make tests, surveys or other studies of the Property, provided that Buyer pays for all such tests and studies, keeps Seller’s property free and clear of any liens, repairs all damage to the Property with the exception of material removed for testing purposes, and indemnifies and holds Seller harmless from and against all liability, claims, demands, damages or costs of any kind whatsoever arising from or connected with the tests, surveys or studies.
(b) Seller’s not being in default under this Agreement. (c) Seller’s delivery to Buyer of California and Federal tax withholding certificates that ensure that Seller will not be required to withhold any of the purchase price from Seller (which may be delivered through escrow at the closing).

3.5 Seller’s Conditions Precedent. Seller’s obligation to sell the Property is subject to the satisfaction of the following conditions which are for Seller ’s benefit only and if neither satisfied nor expressly waived in writing by Seller on or before the Outside Closing Date, Seller may terminate this Agreement by written notice to Buyer and Escrow Holder:
(a) Buyer’s not being in default under this Agreement;

3.6 Further Encumbrances. From and after the date of the Preliminary Title Report, Seller will not further encumber the Property or otherwise cause or permit any additional title exceptions.

3.7 Possession. Buyer understands that the Property is occupied by a tenant and that the Buyer is taking title to the Property subject to that tenancy.

3.8 Deposit of Documents and Funds by Seller . Not later than one (1) business day prior to the Close of Escrow, Seller shall deposit the following items with Escrow Holder, each of which shall be duly executed and acknowledged by Seller where appropriate:

3.8.1. A Grant Deed duly executed and acknowledged by Seller conveying the Property to Buyer in the form of Exhibit “B” attached hereto and incorporated herein by this reference;

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3.8.2. Any funds required to pay costs under Section 2.4(a) above;

3.8.3. An affidavit executed by Seller to the effect that Seller is not a “foreign person” within the meaning of Internal Revenue Code Section 1445 ( “Certification”) and an executed California Real Estate Withholding Exemption (Form 593-C) (“Form 593-C”);

3.8.4. A notice to each tenant in forming the tenant of the sale and the transfer of security deposit and directing the tenant to make future rent payments to the Buyer (and including the Buyer’s address for notices) (the “Tenant Notices”).

3.8.5. A counterpart of a Regulatory Agreement in the form attached hereto as Exhibit “D, duly executed and acknowledged (the “Regulatory Agreement”).

3.8.6. Rents and Security deposits to be handled outside of escrow.

3.8.7. Other documents pertaining to Seller’s authority to record the Grant Deed that may reasonably be required by Escrow Holder to close the Escrow in accordance with this Agreement.

3.9 Deposit of Documents and Funds by Buyer . Not later than one (1) business day prior to the Close of Escrow, Buyer shall deposit the following items into Escrow:

3.9.1. Any funds required to pay costs under Section 2.4(a) above;

3.9.2. A Preliminary Change of Ownership Statement in form suitable for filing with the tax collector for the County; provided, however, that the delivery of this instrument shall not be a condition precedent to the Close of Escrow nor a default by Buyer if not delivered by Buyer;

3.9.3. Executed promissory notes in the amount of the Purchase Price in the form attached hereto as Exhibit ”C” and “C-2” (the “Notes”);

3.9.4. Executed and acknowledged Deed s of Trust in the form s attached hereto as Exhibit “E” and “E-2” (the “Deeds of Trust”);

3.9.5. Executed counterparts of the Tenant Notices;

3.9.6. An executed and acknowledged counterpart of the Regulatory Agreement;

3.9.7. All other funds and doc uments as may reasonably be required by Escrow Holder to close the Escrow in accordance with this Agreement.

3.10 Closing. At the closing, Escrow Holder shall record the Grant Deed and then the Regulatory Agreement, then the Deeds of Trust, deliver the Notes to Seller, cause the owner’s and lender’s title policies to be issued, and apply deposited sums to costs as applicable.

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ARTICLE 4. MISCELLANEOUS.

4.1 Notices. Notices shall be sent by certified mail, return receipt requested, postage prepaid, or sent by reputable overnight delivery service, such as Federal Express, addressed as follows:

Seller: City of Turlock
156 South Broadway Avenue Ste. 140
Turlock, CA 95380
Attention: City Manager
Buyer: Great Valley Housing Development Corporation
1701 Robertson Road
Modesto, CA 95350
Attn: Executive Director

Notices which are mailed shall be deemed to be given on the date of delivery or attempted delivery shown on the return receipt. Notices delivered by overnight messenger shall be deemed delivered on the next business day following deliv ery to the messenger service as shown by reasonable evidence.

4.2 Brokers. Each party represents to the other that it (the representing party) is not represented by a broker, agent, finder or salesperson in connection with this transaction.

4.3 Governing Law. This Agreement shall be governed by California law.

4.4 Time of Essence. Time is of the essence of this Agreement.

4.5 Entire Agreement. This Agreement and escrow instructions entered into by the parties contains the entire agreement of the parties hereto, and supersedes any prior written or oral agreements between them concerning the subject matter contained herein. There are no representations, agreements, arrangements or understandings, oral or written, relating to the subject matter, which are not fully expressed herein.

4.6 Additional Assurances. From time to time prior to and after the close of escrow, each party shall execute and deliver such instruments of transfer and other documents as may be reasonably requested by the other party to carry out the purpose and intent of this Agreement.

4.7 Assignment. Buyer may not assign this Agreement.

4.8 City Manager Authority. The City Manager is authorized to execute and deliver all consents and approvals on behalf of Seller hereunder provided they are in writing and to enter into written amendments to this Agreement that do not substantially alter the business terms herein to the detriment of Seller.

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ARTICLE 5. “AS IS” SALE; RELEASE.

Buyer acknowledges and agrees that the Property is being sold in its current “as is ” condition, without representation or warranty, express or implied , other than as provided in this Agreement.

Buyer and anyone claiming by, through or under Buyer hereby waives its right to recover from and fully and irrevocably releases Seller and its council members, board members, employees, officers, directors, representatives, agents, servants, attorneys, successors and assigns (“Released Parties”) from any and all claims, responsibility and/or liability that it may now have or hereafter acquire agains t any of the Released Parties for any costs, loss, liability, damage, expenses, demand, action or cause of action arising from or related to (i) the condition (including any defects, errors, omissions or other conditions, latent or otherwise, and the presence in the soil, air, structures and surface and subsurface waters of materials or substances that have been or may in the future be determined to be hazardous materials or otherwise toxic, hazardous, undesirable or subject to regulation and that may need to be specially treated, handled and/or removed from the Property under current or future federal, state and local laws regulations or guidelines), (ii) valuation, salability or utility of the Property, or its suitability for any purpose whatsoever, and (iii) any information furnished by the Released Parties under or in connection with this Agreement.

This release includes claims of which Buyer is presently unaware or which Buyer does not presently suspect to exist which, if known by Buyer, would materiall y affect Buyer’s release to Seller. Buyer specifically waives the provision of California Civil Code Section 1542, which provides as follows:
“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS

WHICH THE CREDITOR OR RELEASING PARTY DOES NOT

KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT

THE TIME OF EXECUTING THE RELEASE, AND THAT IF

KNOWN TO HIM OR HER, WOULD HAVE MATERIALLY

AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR
OR RELEASED PARTY.”
In this connection and to the extent permitted by law, Buyer hereby agrees, represents and warrants that Buyer realizes and acknowledges that factual matters now unknown to it may have given or may hereafter give rise to causes of action, claims, demands, debts, controversies, damages, costs, losses and expenses which are presently unknown, unanticipated and unsuspected, and Buyer further agrees, represents and warrants that the waivers and releases herein have been negotiated and agreed upon in light of that realization and that Buyer nevertheless hereby intends to release , discharge and acquit Released Parties from any such unknown causes of action, claims, demands, debts, controversies, damages, costs, losses and expenses which might in any way be included as a material portion of the consideration given to Seller by Buye r in exchange for Seller ’s performance hereunder.

Buyer hereby agrees that, if at any time after the Close of Escrow any third party or any governmental agency seeks to hold Buyer responsible for the presence of, or any loss, cost or

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damage associated with, hazardous materials in, on, above or beneath the Property or emanating therefrom, then Buyer waives any rights it may have against Seller in connection therewith, including, without limitation, under CERCLA and Buyer agrees that it shall not (i) implead the Seller, (ii) bring a contribution action or similar action against Seller, or (iii) attempt in any way to hold Seller responsible with respect to any such matter. The provisions of this Section shall survive the Close of Escrow.

Seller has given Buye r material concessions regarding this transaction in exchange for Buyer agreeing to the provisions of this Section . Seller and Buyer have eac h initialed this Section to further indicate their awareness and acceptance of each and every provision hereof. _____________________ _____________________
SELLER’S INITIALS BUYER’S INITIALS

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the date first written above.

CITY OF TURLOCK, a municipal corporation Great Valley Housing Development Corporation, a California nonprofit public
benefit corporation

By: _______________________________ By: ______________________________ Susan E. Borrego Print Name: Jim Kruse
Title: Interim City Manager Title: Executive Director

Date: _____________________________ Date: _____________________________

APPROVED AS TO FORM: By: _____________________________ By: _______________________________ Print Name: Greg Raynes George A. Petrulakis, Title: Secretary
Title: City Attorney

Date:______________________________ Date: _____________________________

ATTEST:

By: _______________________________
Nichole Fiez,
Title: City Clerk

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Date: _______________________________

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2251\02\4033326.1
EXHIBIT “A”
Legal Description of The Property

The land referred to herein below is situated Turlock, in the County of Stanislaus, State of California, and is described as follows:

LOT 48 OF REICH ESTATES SOUTH NO.2, IN THE CITY OF TURLOCK, COUNTY OF STANISLAUS, STATE OF CALIFORNIA AS PER MAP FILED MAY 19, 1980 IN BOOK 29 OF MAPS, AT PAGE 21, STANISLAUS COUNTY RECORDS.

APN: 043-055-048-000

City Council Staff Report
January 27, 2026

From: Isaac Moreno, Acting Deputy City Manager
Prepared by: Isaac Moreno, Acting Deputy City Manager
Agendized by: Susan E. Borrego, Interim City Manager

1. ACTION RECOMMENDED:

Resolution: Adopting reduced Capital Facilities Fees from Commercial, Retail, and Industrial development projects and appropriating Five Hundred Thousand ($500,000) from unrestricted reserves in Fund 120 (Tourism)

2. NARRATIVE:

On November 12, 2013, at a regular City Council Meeting, the City Council, in Resolution No. 2013-202, adopted the Capital Facilities Fee (CFF) Nexus Study (“Nexus Study”) and established Capital Facilities Fees in compliance with the Mitigation Fee Act (Government Code § 66000 et seq.) and all applicable state and federal laws. Impact fees are one-time charges on new development collected and used by jurisdictions (e.g., a City or County) to cover the cost of capital facilities and infrastructure that is required to serve new residential and commercial growth. Impact fees are generally collected upon issuance of a building permit, although some jurisdictions collect them at certificate of occupancy. The City of Turlock currently has an established CFF program with fees that vary by “zone of benefit.” This study is designed to update these existing fees based on new land use and growth projections as well as estimated capital facilities needs and their corresponding costs.

In an attempt to promote business growth in the City of Turlock, staff is requesting a reduction of capital facilities fees by 25% within the following categories:
• Commercial/Retail < 100,000 sq. ft.
• Commercial/Retail ≥ 100,000 sq. ft.
• Gas Station
• Hotel/Motel
• Office
• Medical Office
• Hospital
• Institutional/Assembly
• Industrial <25,000 sq. ft.
• Industrial ≥25,000 sq. ft.
• Warehouse
The proposed new fee amounts are attached as Exhibit A. All current calculation and escalation factors will remain in effect.

To ensure that the City has the funds to construct the public facilities needed to serve new development, the City desires to appropriate Five Hundred Thousand ($500,000) from unrestricted reserves in Fund 120 “Tourism” to expense account number 120-10-120.47367

Agenda Staff Report
1/27/2026

“Economic Development Expenses”, for the current fiscal year, for potential transfer to the Capital Facilities Fees Fund, in an amount equal to the revenue lost from the adoption of reduced Capital Facilities Fees for commercial, retail, and industrial projects.

3. FISCAL IMPACT / BUDGET AMENDMENT:

An appropriation of Five Hundred Thousand ($500,000) from unrestricted reserves in Fund 120 “Tourism” to expense account number 120-10-120.47367 “Economic Development Expenses” is being requested to start this program. During the Fiscal Year 2026-2027 budget review, staff will discuss the success of this program, available funds, and development of a new Capital Facilities Fee nexus study.

4. ENVIRONMENTAL DETERMINATION:

This action is not subject to the provisions of the California Environmental Quality Act (CEQA) in accordance with Section 15378(b)(5) of the CEQA guidelines. This action consists of “organizational or administrative activities of governments that will not result in direct or indirect physical changes in the environment” and therefore is not considered a project.

5. ATTACHMENTS:

1. Draft CFF Business Incentive Program Resolution

BEFORE THE CITY COUNCIL OF THE CITY OF TURLOCK

IN THE MATTER OF ADOPTING REDUCED } RESOLUTION NO. 2026-XXX CAPITAL FACILITIES FEES FOR }
COMMERCIAL, RETAIL, AND INDUSTRIAL }
DEVELOPMENT PROJECTS AND }
APPROPRIATING FIVE HUNDRED THOUSAND }
($500,000) FROM UNRESTRICTED RESERVE }
IN FUND 120 (TOURISM) }
}

WHEREAS , the Turlock Municipal Code Chapter 8-11 imposes u pon all development projects within the City of Turlock (“C ity”) the requirement to pay a Capital Facility Fee (“Capital Facilities Fee”) to defray all or a portion of the cost of public facilities related to the development project and allows the C ity Council to establish the amounts of the Capital Facilities Fee by resolution; and

WHEREAS, Section 8-11-03 of the Turlock Municipal Code defines “development” or “development project” as construction, alteration, or addition of any building, structure, or area, or a change of use of any existing buildin g, structure, or area, or any portion thereof; and

WHEREAS , on November 12, 2013, at a regular City Council M eeting, the City Council, in Resolution No. 2013-202, adopted the Ca pital Facilities Fee Nexus Study (“Nexus Study”) and established Capital Facilities Fees in compliance with the Mitigation Fee Act (Government Code § 66000 et seq.) and all a pplicable state and federal laws; and

WHEREAS , Theme #3 of the Turlock General Plan, seeks to at tract new businesses to create well-paying jobs and maintain a good jobs/housing balance, recognizing that population and economic growth are intertwined, and that new industries boost revenue, competitiveness, new residents, and opportunities for existing ones; and

WHEREAS , a lower economic burden on construction of commer cial, retail, and industrial projects in the City will strengthen the commercial environment, attract unique retail and industrial businesses that promote touri sm and job creation, and create new jobs to bolster the community and economy; and

WHEREAS, more commercial, retail, and industrial developmen t in the City can provide residents with more jobs and more local sho pping, dining, recreation and entertainment opportunities; and

WHEREAS , City desires to reduce Capital Facilities Fees below the maximum fee amounts, as justified by the Nexus Study and increased annually by ENR, for commercial, retail, and industrial development projects to furt her the policies, goals, and programs referenced herein; and

WHEREAS , these reduced fees will apply directly and automa tically to eligible projects without a need for application or discretionary approval; and

Resolution No. 2026-

WHEREAS, to ensure that the City has the funds to construct the public facilities needed to serve new development, the City desires t o appropriate from unrestricted reserves in Fund 120 “Tourism” to expense account n umber 120-10-120.47367 “Economic Development Expenses”, for the current fi scal year, for potential transfer to the Capital Facilities Fee Fund, in an amount equal to the revenue lost from the adoption of reduced Capital Facilities Fees for commercial, retail, and industrial projects; and

WHEREAS, this Capital Facilities Fees reduction is temporar y in nature and will be reviewed annually to confirm that it continues t o serve the City's interests and that sufficient financial means exist to fund associated infrastructure needs; and

WHEREAS , the Nexus Study justifying the current fee amount s and Resolution No. 2013-202, which adopted the current fee amounts , remain fully valid and unaffected by the City’s adoption of the reduced Capital Facilities Fees, and as such, the City Council may restore the Capital Facilities Fees to their fu lly justified amounts without conducting a new Nexus Study or adhering to the processes and procedures required for adopting or increasing fees.

NOW, THEREFORE, BE IT RESOLVED AND ORDERED by the City Council of the City of Turlock, California,

Section 1. Findings. The above recitals are true and correct, and incorp orated herein, by reference, and each is relied upon independently by the City Council for its adoption of this Resolution.

Section 2. Environmental Findings. This action is not subject to the provisions of t he California Environmental Quality Act (CEQA) because this action is not a project within the meaning of the CEQA Guidelines Section 15378 and 15061(b)(3) as it has no potential for physical effects on the environment because it adopts reduced Capital Facilities Fees for certain development but does not commit the Cit y to any specific project, and said fees and/or charges are applicable to future development projects and/or activities, each of which future projects and/or activities will be fully evaluated in full compliance with CEQA when sufficient physical details regarding sai d projects and/or activities are available to permit meaningful CEQA review (see CEQ A Guidelines, Section 15004(b)(1)).

Section 3. Adoption of Reduced Fees. The City Council hereby adopts the reduced Capital Facilities Fees for commercial, retail, and industrial projects in the amounts and according to the schedules as set forth in Exhibit A attached to this resolution and incorporated herein. All other Capital Facilities Fees will remain unchanged. The fees set forth in Exhibit A shall be incorporated into the City’s Master Fee Schedule.

Section 4. Appropriation of Funds . The sum of Five Hundred Thousand ($500,000) is hereby appropriated from unrestricted reserves to F und 120 “Tourism” to expense account number 120-10-120.47367 “Economic Developme nt Expenses” to be allocated for Fiscal Year 2025-2026 to ensure that the infras tructure funded by Capital Facilities Fees continues to have adequate financing. At the end of the fiscal year, the Finance

Resolution No. 2026-

Director shall determine the amount of revenue lost to the Capital Facilities Fee Fund as a result of the City Council’s adoption of this Res olution and transfer that amount to the Capital Facilities Fee Fund. If the amount of lost revenue exceeds the annual amount for Fiscal Year 2025-2026, then the full amount appropriated shall be transferred.

Section 5. Annual Review. The City Council hereby directs the Finance Directo r to conduct an annual review of the reduced Capital Fac ilities Fees adopted by this Resolution to determine: (i) whether it remains des irable for the City’s development objectives to impose reduced Capital Facilities Fee s for retail and industrial projects; (ii) whether the City possesses sufficient financial resources to adequately fund its expanding infrastructure needs; and (iii) whether additional General Fund appropriations are necessary.

Section 6. Reservation of Rights. The City reserves the right to increase the Capital Facilities Fees to the maximum justified by the Nex us Study and adopted by Resolution No. 2013-202, as automatically increased pursuant to Turlock Municipal Code section 8- 11-05(c)(1), at any time and for any reason.

Section 7. Effective Date. This resolution is effective immediately upon adoption.

BE IT FURTHER RESOLVED AND ORDERED the City Clerk shall certify the passage and adoption of this resolution and enter it into the book of original resolutions.

PASSED AND ADOPTED at a regular meeting of the City Council of the City of Turlock this 27
th day of January, 2026, by the following vote:

AYES:

NOES:

NOT PARTICIPATING:

ABSENT:

ATTEST:

__________________________
Nichole Fiez, City Clerk,
City of Turlock, County of Stanislaus,
State of California

Exhibit A
Dates Effective From 27-Jan-26 To 31-Mar-26
Reduction
Charge ENR Index ENR Index Charge 25%

RESIDENTIAL
Single Family Residential[2] Res. 13-202 Per Unit
Downtown/PPA $10,298.97 820.85 1225.28 $15,373.24 No Change Building Permit Master Plan Areas $12,567.03 820.85 1225.28 $18,758.76 No Change Building Permit City Infill $11,233.18 820.85 1225.28 $16,767.73 No Change Building Permit Multifamily Residential[2] Res. 13-202 Per Unit
Downtown/PPA $7,410.85 820.85 1225.28 $11,062.15 No Change Building Permit Master Plan Areas $9,061.94 820.85 1225.28 $13,526.73 No Change Building Permit City Infill $8,062.84 820.85 1225.28 $12,035.37 No Change Building Permit Senior Assisted Living Res. 13-202 Per Unit
Downtown/PPA $2,939.62 820.85 1225.28 $4,387.96 No Change Building Permit Master Plan Areas $3,593.67 820.85 1225.28 $5,364.26 No Change Building Permit City Infill $3,201.24 820.85 1225.28 $4,778.48 No Change Building Permit 2nd Unit/Accessory Unit Res. 13-202 Per Unit
Downtown/PPA $5,722.68 820.85 1225.28 $8,542.22 No Change Building Permit Master Plan Areas $6,931.90 820.85 1225.28 $10,347.22 No Change Building Permit City Infill $6,293.30 820.85 1225.28 $9,393.99 No Change Building Permit Mobile Home Dwelling Res. 13-202 Per Bed
Downtown/PPA $5,456.94 820.85 1225.28 $8,145.56 No Change Building Permit Master Plan Areas $6,664.10 820.85 1225.28 $9,947.48 No Change Building Permit City Infill $5,946.19 820.85 1225.28 $8,875.86 No Change Building Permit NON RESIDENTIAL[3]
Commercial/Retail < 100,000 sq. ft. Per 1,000 sq. ft.

Downtown/PPA $11,091.04 820.85 1225.28 $16,555.56 ($4,138.89) $12,416.67 Building Permit Master Plan Areas $13,366.31 820.85 1225.28 $19,951.85 ($4,987.96) $14,963.89 Building Permit City Infill $12,269.36 820.85 1225.28 $18,314.43 ($4,578.61) $13,735.82 Building Permit Commercial/Retail ≥ 100,000 sq. ft. Per 1,000 sq. ft.

Downtown/PPA $11,044.69 820.85 1225.28 $16,486.37 ($4,121.59) $12,364.78 Building Permit Master Plan Areas $13,304.51 820.85 1225.28 $19,859.60 ($4,964.90) $14,894.70 Building Permit City Infill $12,223.01 820.85 1225.28 $18,245.25 ($4,561.31) $13,683.94 Building Permit Gas Station Per VFP[4]
Downtown/PPA $6,791.82 820.85 1225.28 $10,138.13 ($2,534.53) $7,603.60 Building Permit Master Plan Areas $8,202.92 820.85 1225.28 $12,244.47 ($3,061.12) $9,183.35 Building Permit City Infill $7,498.40 820.85 1225.28 $11,192.84 ($2,798.21) $8,394.63 Building Permit Hotel/Motel Per Room
Downtown/PPA $3,631.78 820.85 1225.28 $5,421.15 ($1,355.29) $4,065.86 Building Permit Master Plan Areas $4,383.68 820.85 1225.28 $6,543.50 ($1,635.88) $4,907.62 Building Permit City Infill $4,010.82 820.85 1225.28 $5,986.94 ($1,496.74) $4,490.20 Building Permit Office Per 1,000 sq. ft.

Downtown/PPA $5,811.26 820.85 1225.28 $8,674.45 ($2,168.61) $6,505.84 Building Permit Master Plan Areas $7,062.71 820.85 1225.28 $10,542.48 ($2,635.62) $7,906.86 Building Permit City Infill $6,375.70 820.85 1225.28 $9,516.99 ($2,379.25) $7,137.74 Building Permit

CAPITAL FACILITY DEVELOPMENT FEES
Transportation, Police, General Government, & Fire
(Vested Rights After November 12th, 2013 or Vested Rights expired Before November 12th, 2013) CAPITAL FACILITY DEVELOPMENT FEES[1]
Land Use Authority Basis Original Effective as of 01-Jan-2026 When DueNew Rate 1

Exhibit A
Dates Effective From 27-Jan-26 To 31-Mar-26
Reduction
Charge ENR Index ENR Index Charge 25%

CAPITAL FACILITY DEVELOPMENT FEES
Transportation, Police, General Government, & Fire
(Vested Rights After November 12th, 2013 or Vested Rights expired Before November 12th, 2013) CAPITAL FACILITY DEVELOPMENT FEES[1]
Land Use Authority Basis Original Effective as of 01-Jan-2026 When DueNew Rate Medical Office Per 1,000 sq. ft.

Downtown/PPA $9,512.05 820.85 1225.28 $14,198.60 ($3,549.65) $10,648.95 Building Permit Master Plan Areas $11,488.62 820.85 1225.28 $17,149.02 ($4,287.26) $12,861.76 Building Permit City Infill $10,498.79 820.85 1225.28 $15,671.51 ($3,917.88) $11,753.63 Building Permit Hospital Per 1,000 sq. ft.

Downtown/PPA $3,800.70 820.85 1225.28 $5,673.29 ($1,418.32) $4,254.97 Building Permit Master Plan Areas $4,626.76 820.85 1225.28 $6,906.35 ($1,726.59) $5,179.76 Building Permit City Infill $4,162.23 820.85 1225.28 $6,212.95 ($1,553.24) $4,659.71 Building Permit Institutional/Assembly Per 1,000 sq. ft.

Downtown/PPA $2,532.77 820.85 1225.28 $3,780.66 ($945.17) $2,835.49 Building Permit Master Plan Areas $3,074.55 820.85 1225.28 $4,589.37 ($1,147.34) $3,442.03 Building Permit City Infill $2,782.03 820.85 1225.28 $4,152.73 ($1,038.18) $3,114.55 Building Permit Industrial <25,000 sq. ft. Per 1,000 sq. ft.

Downtown/PPA $1,855.03 820.85 1225.28 $2,769.00 ($692.25) $2,076.75 Building Permit Master Plan Areas $2,271.15 820.85 1225.28 $3,390.14 ($847.54) $2,542.60 Building Permit City Infill $2,019.83 820.85 1225.28 $3,014.99 ($753.75) $2,261.24 Building Permit Industrial ≥25,000 sq. ft. Per 1,000 sq. ft.

Downtown/PPA $1,444.06 820.85 1225.28 $2,155.54 ($538.89) $1,616.65 Building Permit Master Plan Areas $1,760.27 820.85 1225.28 $2,627.55 ($656.89) $1,970.66 Building Permit City Infill $1,581.05 820.85 1225.28 $2,360.03 ($590.01) $1,770.02 Building Permit Warehouse Per 1,000 sq. ft.

Downtown/PPA $1,346.21 820.85 1225.28 $2,009.48 ($502.37) $1,507.11 Building Permit Master Plan Areas $1,632.55 820.85 1225.28 $2,436.90 ($609.23) $1,827.67 Building Permit City Infill $1,479.08 820.85 1225.28 $2,207.82 ($551.96) $1,655.86 Building Permit This fee is to pay for the construction of Public Facilities and to purchase capital items to allow for the city services to stay at the existing standards due to growth.

Notes:
[1] Fees vary by area of the City. Fees include 3% administration charge. [2] An age-restricted senior housing discount of 50% will be applied to the transportation component of the fee with legal documentation (e.g., deed restriction). [3] If retail of commercial project includes a drive-through, a fee premium of 25% will be added to the transportation component of the fee. [4] Vehicle fueling position
2

City Council Staff Report
January 27, 2026

From: Isaac Moreno, Acting Deputy City Manager
Prepared by: Isaac Moreno, Acting Deputy City Manager
Agendized by: Susan E. Borrego, Interim City Manager

1. ACTION RECOMMENDED:

Motion: Conclude the Agreement for Fire Administrative Services between the City of Modesto and the City of Turlock without executing a two-year extension as of June 30, 2026.

2. NARRATIVE:

On January 25, 2022, the City of Turlock entered into a four-year agreement with the City of Modesto for Fire Administrative Services. The purpose of the agreement was to support the development of a regional fire administrative structure through a shared services model. The contract provided for a unified Fire Chief overseeing multiple jurisdictions, with access to administrative staff and program coordination across specialized areas such as technical rescue, paramedic advanced life support, and hazardous materials response. An Assistant Fire Chief from Modesto was assigned to coordinate daily operations and serve as the primary point of contact for Turlock’s City Manager and senior leadership.

The initial contract term covered the period from February 15, 2022 to June 30, 2026, with an optional two-year extension subject to mutual agreement by both parties. The agreement specifies that an extension must be approved no later than June 30, 2025, unless otherwise agreed to in writing by both governing bodies.

In preparation for potential extension discussions, City staff requested draft amendment language from Modesto in early 2025 to initiate negotiations. After multiple follow-up attempts, Turlock received Modesto’s proposed draft contract on September 12, 2025.

Following review and a request for clarification, a revised version was received on October 16, 2025.

A joint financial analysis of multiple service options was then completed and is attached as Exhibit A. The scenarios analyzed included various combinations of positions such as Deputy Chief, Deputy Fire Marshal, Fire Inspector, and Emergency Medical Services Coordinator. While several of the proposed configurations demonstrate potential cost efficiencies when compared to Turlock managing these services independently, the analysis is not a direct cost-for-cost comparison. For example, under one scenario, Turlock would fund a Deputy Fire Marshal position, whereas the City currently budgets for a full Fire Marshal classification.

Throughout the review process, staff also evaluated operational needs, communication practices, and long-term strategic objectives. The City has experienced multiple changes in Modesto’s leadership team since July 2025, including three transitions in the Fire Chief role, with a fourth change anticipated in June 2026. Turlock staff were not actively involved in discussions regarding these leadership changes or informed of their implications for service delivery within the agreement period.

Agenda Staff Report
1/27/2026

During subsequent discussions, Modesto’s Fire Chiefs and City Manager consistently conveyed their expectation that the City of Turlock would ultimately transition to a full-service contract managed by Modesto Fire Department. Turlock’s leadership has clearly communicated that a full operational transfer of the Turlock Fire Department to Modesto is not a desired or feasible direction for the City.

Although the existing agreement has provided administrative support and insight into regional collaboration, no alternative regionalization models have been presented beyond full-service consolidation. Given the cost implications and operational direction proposed by Modesto, the staff recommends allowing the current agreement to conclude upon its natural expiration and proceeding with recruitment for a permanent Turlock Fire Chief. Recruitment is anticipated to be completed by June 2026. As an alternative to this action, Council could make the recommendation to move forward with the two-year extension. If this option is recommended, the City could terminate at a later date, but the proposed agreement has a one-year notice termination clause that would require a resolution to be executed.

3. FISCAL IMPACT / BUDGET AMENDMENT:

Declining to extend the Modesto Fire Administration Services Agreement will require the City to recruit and hire a full-time Fire Chief. Specific fiscal impacts and any required budget amendments will be presented at a subsequent Council meeting.

4. ENVIRONMENTAL DETERMINATION:

This action is not subject to the provisions of the California Environmental Quality Act (CEQA) in accordance with Section 15378(b)(5) of the CEQA guidelines. This action consists of “organizational or administrative activities of governments that will not result in direct or indirect physical changes in the environment” and therefore is not considered a project.

5. ATTACHMENTS:

1. Exhibit A Financial Analysis

Modesto Fire Contract Extension Cost Analysis
Scenario 1 - Deputy Chief
Modesto Modesto
Deputy Chief 75% 357,705.99 Deputy Chief 75% 392,523.01 Admin Fee 50,000.00 Admin Fee 50,000.00 407,705.99 442,523.01
Turlock Turlock
Chief 452,706.00 Chief 452,706.00
452,706.00 452,706.00
(Savings) / +Cost Increase (45,000.01) (Savings) / +Cost Increase (10,182.99) Scenario 2 - Deputy Chief, Deputy Fire Marshall, and Fire Inspector Modesto Modesto
Deputy Chief 75% 357,705.99 Deputy Chief 75% 392,522.96 Deputy Fire Marshal 75% 193,960.50 Deputy Fire Marshal 75% 204,912.32 Fire Inspector 100% 178,530.83 Fire Inspector 100% 188,492.66 Admin Fee 50,000.00 Admin Fee 50,000.00 780,197.32 835,927.94
Turlock Turlock
Chief 452,706.00 Chief 452,706.00
Fire Marshal (step 5) 302,286.00 Fire Marshal (step 5) 302,286.00 Fire Inspector (Step 5) 154,562.00 Fire Inspector (Step 5) 154,562.00 909,554.00 909,554.00
(Savings) / +Cost Increase (129,356.68) Difference (73,626.06) Scenario 3 - Deputy Chief, Deputy Fire Marshall, Fire Inspector, and EMS Modesto Modesto
Deputy Chief 75% 357,705.99 Deputy Chief 75% 392,522.96 Deputy Fire Marshal 75% 193,960.50 Deputy Fire Marshal 75% 204,912.32 Fire Inspector 100% 178,530.83 Fire Inspector 100% 188,492.83 EMS 13% 113,543.57 EMS 13% 119,865.56
Admin Fee 50,000.00 Admin Fee 50,000.00 893,740.89 955,793.67
Turlock Turlock
Chief 452,706.00 Chief 452,706.00
Fire Marshal (step 5) 302,286.00 Fire Marshal (step 5) 302,286.00 Fire Inspector (Step 5) 154,562.00 Fire Inspector (Step 5) 154,562.00

EMS - -
909,554.00 909,554.00
(Savings) / +Cost Increase (15,813.11) (Savings) / +Cost Increase 46,239.67 Year One (Fiscal Year 2026-2027) Year Two (Fiscal Year 2027-2028) Year One (Fiscal Year 2026-2027) Year Two (Fiscal Year 2027-2028) Year One (Fiscal Year 2026-2027) Year Two (Fiscal Year 2027-2028)

Modesto Fire Contract Extension Cost Analysis
Scenario 4 - Deputy Chief and EMS
Modesto Modesto
Deputy Chief 75% 357,705.99 Deputy Chief 75% 392,522.96 EMS 13% 113,543.57 EMS 13% 119,865.56
Admin Fee 50,000.00 Admin Fee 50,000.00 521,249.56 562,388.52
Turlock Turlock
Chief 452,706.00 Chief 452,706.00

EMS - -
452,706.00 452,706.00
(Savings) / +Cost Increase 68,543.56 (Savings) / +Cost Increase 109,682.52 Scenario 5 - Deputy Chief and Deputy Fire Marshall
Modesto Modesto
Deputy Chief 75% 357,705.99 Deputy Chief 75% 392,522.96 Deputy Fire Marshal 75% 193,960.50 Deputy Fire Marshal 75% 204,912.32 Admin Fee 50,000.00 Admin Fee 50,000.00 601,666.49 647,435.28
Turlock Turlock
Chief 452,706.00 Chief 452,706.00
Fire Marshal (step 5) 302,286.00 Fire Marshal (step 5) 302,286.00 754,992.00 754,992.00
(Savings) / +Cost Increase (153,325.51) (Savings) / +Cost Increase (107,556.72) Scenario 6 - Deputy Chief, Deputy Fire Marshall, and EMS Modesto Modesto
Deputy Chief 75% 357,705.99 Deputy Chief 75% 392,522.96 Deputy Fire Marshal 75% 193,960.50 Deputy Fire Marshal 75% 204,912.32 EMS 13% 113,543.57 EMS 13% 119,865.56
Admin Fee 50,000.00 Admin Fee 50,000.00 715,210.06 767,300.84
Turlock Turlock
Chief 452,706.00 Chief 452,706.00
Fire Marshal (step 5) 302,286.00 Fire Marshal (step 5) 302,286.00

EMS - EMS -
754,992.00 754,992.00
(Savings) / +Cost Increase (39,781.94) (Savings) / +Cost Increase 12,308.84 Year Six (Fiscal Year 2026-2027) Year Seven (Fiscal Year 2027-2028) Year One (Fiscal Year 2026-2027) Year Two (Fiscal Year 2027-2028) Year One (Fiscal Year 2026-2027) Year Two (Fiscal Year 2027-2028)

City Council Staff Report
January 27, 2026

From: Christopher Fisher, Municipal Services Director
Prepared by: Carlos Guerrero, Utilities Division Manager Agendized by: Susan E. Borrego, Interim City Manager

1. ACTION RECOMMENDED:

Motion: Approving an agreement (City Contract No. 2026-119) with Badger Meter, Inc. in a form approved by the City Attorney, in response to RFP No. 25-010, for the purchase of water meters for a period not-to-exceed four (4) years and one (1) optional one-year extension for a total not-to-exceed amount of $6,218,334.28, to be expensed from Fund 420 “Water"

2. NARRATIVE:

The City of Turlock issued a Request for Proposal (RFP) to procure water meters to support the City’s water system operations, improve meter accuracy, enhance water conservation efforts, and ensure compliance with applicable regulations. Following a competitive evaluation process, staff recommends awarding the contract to Badger Meter, Inc. as the proposer provided the best overall value and specifications requested by the City.

The City of Turlock maintains and operates a municipal water distribution system serving residential, commercial, and industrial customers. Existing water meters in portions of the system have reached or are nearing the end of their useful life, and newer metering technology offers improved accuracy, reliability, and data collection capabilities.On December 12, 2025, the City issued RFP No. 25-010 seeking qualified firms to provide a proposal for the purchase of water meters. The RFP was advertised in accordance with City purchasing policies and applicable state requirements.The City received 7 proposals from the following organizations:
• Meter, Valve & Control Inc
• Badger Meter, Inc.
• IFlow Inc
• Ferguson Waterworks
• Next Meters Global LLC
• Matron Farnier LLC
• CAASI Flow Control

An evaluation committee comprised of staff from the Municipal Services Department reviewed and scored the proposals based on the criteria outlined in the RFP, which included:
• Technical qualifications and experience
• Product performance and reliability
• Cost and overall value
• References and past performance

Agenda Staff Report
1/27/2026

After evaluation, Badger Meter, Inc. received the highest overall score. The proposal demonstrated:
• Proven experience with municipal water meter systems of comparable size • Compliance with all RFP technical specifications
• Competitive pricing and favorable long-term cost considerations

3. FISCAL IMPACT / BUDGET AMENDMENT:

The total cost for all components outlined in the contract is $6,218,334.28, which will be expensed to Fund 420 "Water", account number 420-52-551.51291 over the term of the agreement, which is four years with one optional one-year extension. It is anticipated that expenditures in Fiscal Year 2025–26 will total approximately $500,000. Sufficient funds are available in the identified account, and no additional budget appropriation is required. Staff will request sufficient budgeted amounts in this account in future fiscal years, as needed, to support purchases under this agreement. There will be no impact to the General Fund.

4. ENVIRONMENTAL DETERMINATION:

The proposed action is exempt from the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines Section 15301 – Existing Facilities, as it involves the replacement or upgrade of existing water meters with no expansion of use.

5. ATTACHMENTS:

1. City Contract 2026-119 with Badger Meter

Contract No. 2026-119
{PLA 2024}
10/2025

SUPPLIER AGREEMENT BETWEEN THE CITY OF TURLOCK
and
BADGER METER, INC.
for

PURCHASE OF WATER METERS

City Contract No. 2026-119

THIS SUPPLIER AGREEMENT (the “Agreement”) is entered into by and between the CITY OF TURLOCK, a California municipal corporation (“CITY”), and BADGER METER INC., a Wisconsin Corporation (“SUPPLIER”), on this 27 th day of January, 2026 (the “Effective Date”). CITY and SUPPLIER may be collectively refer red to herein as the “Parties” or individually as “Party.” There are no other parties to this Agreement.

RECITALS

WHEREAS , CITY has a need to purchase water meters; and

WHEREAS , SUPPLIER has made a proposal to CITY to provide w ater meters. A description that of which SUPPLIER proposes to provide is included in Exhibit A attached hereto and incorporated herein by reference; and

WHEREAS , CITY desires to purchase water meters from SUPPLIER, subject to the terms and conditions set forth in this Agreement.

NOW, THEREFORE, the parties hereto mutually agree as follows:

AGREEMENT

1. RECITALS: The recitals set forth above (“Recitals”) are true and correct and are hereby incorporated into and made part of this Agre ement by this reference. In the event of any inconsistency between the Recitals and Sections 1 t hrough 37 of this Agreement, Sections 1 through 37 shall prevail.

Contract No. 2026-119
{PLA 2024}
10/2025

2. PURCHASE OF PRODUCT : SUPPLIER agrees to sell, and CITY agrees to purchase water meters, as described in Exhibit A.

3. SAFETY REQUIREMENT: All services and products must comply with California State Division of Industrial Safety orders and O.S.H.A.

4. COMPENSATION: CITY agrees to pay SUPPLIER in accordance with Exhibit A as full remuneration for performing all Services and furnishing all staffing and materials called for in Exhibit A and for performance by SUPPLIER of all of its duties and obligations under this Agreement. In no event shall the total amount of this Agreement exceed Six Million Two Hundred Eighteen Thousand Three Hundred Thirty-Four and 28/100 ths Dollars ($6,218,334.28). SUPPLIER agrees that compensation shall be paid in the manner and at the times set forth below:

(a) Invoices: SUPPLIER shall submit dated invoices to CITY specifying the date, location and service rendered, and the charge therefor.

(b) Payment: All payments by CITY shall be made in arrears, after satisfactory service, as determined and approved by CITY, has been provided. Payment shall be made by CITY no more than thirty (30) days from CITY's receipt of invoice.

5. TERM OF AGREEMENT: The term of this Agreement shall be four (4) year s and will commence on the Effective Date and termina te on the 27 th day of January, 2030 (Term), unless the Parties mutually agree in writing to terminate the Agreement earlier or extend the Term pursuant to this Agreement.

6. EXTENSION OF AGREEMENT: CITY may elect to extend this Agreement for one (1) additional one-year term, on the same terms and conditions, upon issuing an “Election to Extend Agreement” letter executed by the City Manag er and SUPPLIER thirty (30) days prior to the expiration of this Agreement. On each annivers ary date, SUPPLIER will be allowed to increase prices. Increases may not exceed increases in the San Francisco-Oakland Consumer Price Index for all urban consumers or percentage increases in SUPPLIER’s published prices, whichever is lower. In all cases, CITY may cancel the contract if a requested price increase is not acceptable.

7. INSURANCE: SUPPLIER shall not commence work under this Agreement until SUPPLIER has obtained City’s approval regarding all insurance requirements, forms, endorsements, amounts, and carrier ratings, nor sha ll SUPPLIER allow any subcontractor to commence work on a subcontract until all similar in surance required of the subcontractor shall have been so obtained and approved. SUPPLIER shall procure and maintain for the duration of this Agreement insurance against claims for injuries to persons or damages to property which may arise from or in connection with the performance of the work hereunder by SUPPLIER, its agents, representatives, employees or subcontractors. Failure to maintain or renew coverage or to provide evidence of renewal may constitute a material breac h of contract. Any available insurance proceeds in excess of the specified minimum limits and coverage shall be available to CITY.

Contract No. 2026-119
{PLA 2024}
10/2025

(a) Commercial General Liability Insurance: SUPPLIER shall maintain Commercial General Liability Insurance with coverag e at least as broad as Insurance Services Office form CG 00 01, in an amount not less than Tw o Million Dollars ($2,000,000.00) per occurrence, Four Million Dollars ($4,000,000.00) ge neral aggregate, and Two Million Dollars ($2,000,000.00) products and completed operations for bodily injury, personal injury, and property damage. The general aggregate limit shall apply separately to this Project or the general aggregate shall be doubled.

(b) Workers’ Compensation Insurance: SUPPLIER shall maintain Workers’ Compensation Insurance (Statutory Limits) and Emplo yer’s Liability Insurance with limits of at least One Million Dollars ($1,000,000.00) each acci dent or disease. SUPPLIER shall submit to City, along with the certificate of insurance, a Waiver of Subrogation endorsement in favor of City, its officers, agents, employees, and volunteers.

(c) Commercial Automobile Liability Insurance: SUPPLIER shall maintain Commercial Automobile Liability Insurance using ISO Business Auto Coverage form CA 00 01, or the exact equivalent, in the amount of no less t han Two Million Dollars ($2,000,000.00) each accident for owned, leased, hired, non-owned, and borrowed automobiles. The policy shall provide and be endorsed that the City, its officials, officers, agents, employees, and volunteers are included or named as additional insureds. If SUPPLIER owns no vehicles, this requirement may be met through a non-owned auto endorsement to the CGL policy.

(d) Umbrella or Excess Policy: SUPPLIER may use Umbrella or Excess Policies to provide the liability limits as require d in this agreement. This form of insurance will be acceptable provided that all of the Primary and Umbrella or Excess Policies shall provide all of the insurance coverages herein required. The Umbre lla or Excess policies shall be provided on a true “following form” or broader coverage basis, wi th coverage at least as broad as provided on the underlying policies of insurance. No coverage or policies maintained by the City (“Additional Insureds”), whether primary or excess, and which also apply to a loss covered hereunder, shall be called upon to contribute to a loss until the SUPPL IER’s primary and excess liability policies are exhausted.

(e) Deductibles and Self-Insured Retentions: Upon request of City, any deductibles or self-insured retentions must be declared to and approved by City. At the option of City, either: (1) the insurer shall reduce or eliminate such deductibles or self-insured retentions as respects City, its elective and appointive boards, officers, agents, employees, and volunteers; or (2) SUPPLIER shall provide a financial guarantee sa tisfactory to City guaranteeing payment of losses and related investigations, claim administration and defense expenses.

(f) Other Insurance Provisions: The commercial general liability policy shall contain, or be endorsed to contain, the following provisions:

(1) City, its elective and appointive boards, of ficers, agents, employees, and volunteers are to be covered as additional insureds with respect to liability arising out of work

Contract No. 2026-119
{PLA 2024}
10/2025

or operations performed by or on behalf of SUPPLIER , including materials, parts or equipment furnished in connection with such work or operations, which coverage shall be maintained in effect for at least three (3) years following the completion of the work specified in the contract. General liability coverage can be provided in the form of a n endorsement to SUPPLIER’s insurance (at least as broad as CG 20 10 for ongoing operations a nd CG 20 37 for products/completed operations), or as a separate Owners and Contractor s Protective Liability policy providing both ongoing operations and completed operations coverage.

(2) For any claims related to this project, SUPP LIER’s insurance coverage shall be primary insurance as respects Cit y and any insurance or self-insurance maintained by City shall be excess of SUPPLIER’s insurance and shall not contribute with it.

(3) In the event of cancellation, non-renewal, o r material change that reduces or restricts the insurance coverage afforde d to City under this Agreement, the insurer, broker/producer, or SUPPLIER shall provide City wit h thirty (30) days’ prior written notice of such cancellation, non-renewal, or material change.

(4) Coverage shall not extend to any indemnity c overage for the active negligence of the additional insured in any case wh ere an agreement to indemnify the additional insured would be invalid under Subdivision (b) of Section 2782 of the Civil Code.

(g) Acceptability of Insurers: Insurance is to be placed with insurers admitted in California with a current A.M. Best’s rating of no less than A-:VII or with an insurer to which the City has provided prior approval.

(h) Verification of Coverage: SUPPLIER shall furnish City with original certificates and amendatory endorsements or copies of the applicable policy language effecting coverage required by this clause. All certificates and endorsements are to be received and approved by City before work commences. However, failure to obtain the required documents prior to the work beginning shall not waive SUPPLIER’s obligatio n to provide them. City reserves the right, at any time, to require complete, certified copies of all required insurance policies and endorsements.

(i) Waiver of Subrogation: With the exception of professional liability, Contractor hereby agrees to waive subrogation which any insurer of Contractor may acquire from Contractor by virtue of the payment of any loss. Th e commercial general liability policy, automobile liability policy, and workers’ compensat ion policy shall be endorsed to contain a waiver of subrogation in favor of City for all work performed by Contractor, its agents, employees, independent contractors and subcontractors. Contra ctor shall provide written proof of waiver of subrogation in the Certificate of Insurance. Additionally, Contractor agrees to obtain any available endorsements that may be necessary to effectuate this waiver of subrogation.

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(j) Subcontractors: SUPPLIER shall ensure all subcontractors furnish separate certificates and endorsements for each sub contractor. All coverages for subcontractors shall be subject to all of the requirements stated herein.

(k) Additional Insurance Requirements: Within five (5) days of the Effective Date, SUPPLIER shall provide City with certificates of insurance and amendatory endorsements for all of the policies required under this Agreeme nt (“Certificates and Endorsements”). Such Certificates and Endorsements shall be kept current for the Term of the Agreement and SUPPLIER shall be responsible for providing updated copies. With the exception of the workers’ compensation insurance, all of the insurance policies required in this Agreement shall: (a) provide that the policy will not be cancelled, allowed to expire, or materially reduced in coverage without at least thirty (30) days’ prior written notice to City of such cancellation, expiration, or reduction and each policy shall be endorsed to state such. IF a carrier will not provide the required notice of cancellation, the SUPPLIER shall provide written notice to the City no later than ten (10) business days before cancellation; (b) name City, and City’s Agents as additional insureds with respect to liability arising out of Services, work or operatio ns performed by or on behalf of SUPPLIER and shall be endorsed to state such; (c) name City of Turlock as a certificate holder; (d) cover products and completed operations of SUPPLIER, premises owne d, occupied, or used by the SUPPLIER, or automobiles owned, leased, or hired or borrowed by the SUPPLIER; contain no special limitations on the scope of protection afforded to City; (e) allow and be endorsed primary with respect to any insurance or self-insurance programs covering City or City’s Agents and any insurance or self-insurance maintained by City or City’s Agents shall be in excess of SUPPLIER’s insurance and shall not contribute to it; (f) conta in standard separation of insured provisions; and (g) state that any failure to comply with reporting or other provisions of the policy including breaches of warranties shall not affect the coverage provided to City.

8. INDEMNIFICATION: To the full extent permitted by law, SUPPLIER shal l indemnify, defend, and hold harmless City and any a nd all of its elective and appointive boards, officers, officials, agents, employees or volunteer s from and against any liability (including liability for claims, suits, actions, arbitration p roceedings, administrative proceedings, regulatory proceedings, losses, expenses or costs of any kind, whether actual, alleged or threatened, including legal counsel’s fees and costs, court costs, interest, defense costs, and expert witness fees), where the same arise out of, are a consequence of, or are in any way attributable to, in whole or in part, the performance of this Agreement by SUPPLIER or by any individual or agency for which SUPPLIER is legally liable, including, but not limi ted to, officers, agents, employees, or subcontractors of SUPPLIER.

9. INDEPENDENT CONTRACTOR RELATIONSHIP: All acts of SUPPLIER, its agents, officers, and employees and all others acting on behalf of SUPPLIER relating to the performance of this Agreement, shall be performed a s independent contractors and not as agents, officers, or employees of CITY. SUPPLIER, by virtue of this Agreement, has no authority to bind or incur any obligation on behalf of CITY. SUPPLIE R has no authority or responsibility to exercise any rights or power vested in the CITY. No agent, officer, or employee of the CITY is to be considered an employee of SUPPLIER. It is under stood by both SUPPLIER and CITY that

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this Agreement shall not under any circumstances be construed or considered to create an employer-employee relationship or a joint venture.

SUPPLIER, its agents, officers and employees are a nd, at all times during the terms of this Agreement, shall represent and conduct them selves as independent contractors and not as employees of CITY.

SUPPLIER shall determine the method, details and m eans of performing the work and Services to be provided by SUPPLIER under this Agreement. SUPPLIER shall be responsible to CITY only for the requirements and results specified in this Agreement, and, except as expressly provided in this Agreement, shall not be subjected to CITY's control with respect to the physical action or activities of the SUPPLIER in fulfillment of this Agreement. SUPPLIER has control over the manner and means of performing the Service s under this Agreement. SUPPLIER is permitted to provide services to others during the same period service is provided to CITY under this Agreement. If necessary, SUPPLIER has the res ponsibility for employing other persons or firms to assist SUPPLIER in fulfilling the terms and obligations under this Agreement.

If in the performance of this Agreement any third persons are employed by SUPPLIER, such persons shall be entirely and exclus ively under the direction, supervision, and control of SUPPLIER. All terms of employment inclu ding hours, wages, working conditions, discipline, hiring, and discharging or any other term of employment or requirement of law shall be determined by the SUPPLIER.

It is understood and agreed that as an independent contractor and not an employee of CITY neither the SUPPLIER or SUPPLIER'S assigned personnel shall have any entitlement as a CITY employee, right to act on behalf of the CITY in any capacity whatsoever as an agent, or to bind the CITY to any obligation whatsoever.

It is further understood and agreed that SUPPLIER must issue W-2 forms or other forms as required by law for income and employment tax purposes for all of SUPPLIER'S personnel.

As an independent contractor, SUPPLIER hereby inde mnifies and holds CITY harmless from any and all claims that may be made a gainst CITY based upon any contention by any third party that an employer-employee relationship exists by reason of this Agreement.

10. TERMINATION: Either Party may terminate this Agreement without cause or legal excuse by providing thirty (30) days’ written notice to the other party.

11. CONFORMANCE WITH FEDERAL AND STATE LAW: All equipment, supplies and services used by SUPPLIER in the perfo rmance of this Agreement shall conform to the laws of the government of the United States and the State of California.

12. NO CONFLICT OF INTEREST . SUPPLIER represents that no conflict of

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interest will be created under state or federal law by entering into or in carrying out this Agreement.

13. TIME: Time is of the essence in this Agreement for each c ovenant and term of a condition herein.

14. EXCUSABLE DELAYS; NOTICE TO OTHER PARTY OF DELAY.

SUPPLIER shall not be in breach of this Agreement i n the event that performance of Services is temporarily interrupted or discontinued due to a “Force Majeure” event which is defined as: riots, wars, sabotage, civil disturbances, insurrections, explosion, natural disasters such as floods, earthquakes, landslides, fires, strikes, lockouts a nd other labor disturbances or other catastrophic events, which are beyond the reasonable control of SUPPLIER. Force Majeure does not include:
(a) SUPPLIER’s financial inability to perform; (b) SUPPLIER’s failure to obtain any necessary permits or licenses from other governmental agencie s; or (c) SUPPLIER’s failure to obtain the right to use the facilities of any public utility w here such failure is due solely to the acts or omissions of the SUPPLIER.

15. ENTIRE AGREEMENT AND MODIFICATION: This Agreement supersedes all previous Agreements and constitutes the entire understanding of the parties hereto. SUPPLIER shall be entitled to no other benefits than those s pecified herein. No changes, amendments or alterations shall be effective unless in writing and signed by both parties. SUPPLIER specifically acknowledges that in entering into and executing th is Agreement, SUPPLIER relies solely upon the provisions contained in this Agreement and no o thers. Should any conflict exist between the terms and conditions of the Agreement and any and a ll exhibits attached hereto, the terms and conditions of the Agreement shall prevail.

16. AMENDMENTS: Both parties to this Agreement understand that it may become desirable or necessary during the execution of this Agreement, for CITY or SUPPLIER to modify the scope of Services provided for under this Agreement. Any material extension or change in the scope of work shall be discussed with CITY and the change and cost shall be memorialized in a written amendment to the original contract prior to the performance of the additional work.

Until an Amendment is so executed, CITY will not b e responsible to pay any charges SUPPLIER may incur in performing such addit ional services, and SUPPLIER shall not be required to perform any such additional services.

17. EXECUTION AND COUNTERPARTS. This Agreement may be executed simultaneously, and in several counterparts, each of which shall be deemed an original, but which together shall constitute one and the same instrume nt. The Parties agree that this Agreement and any other documents to be delivered in connection herewith may be electronically signed utilizing services such as DocuSign and Nitro Sign, or by tra nsmitting signatures in pdf or similar format, and that any electronic signatures appearing on thi s Agreement or such other documents are the same as handwritten signatures for the purposes of validity, enforceability, and admissibility.

18. PARTIAL INVALIDITY: If any provision in this Agreement is held by a c ourt

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of competent jurisdiction to be invalid, void, or u nenforceable, the remaining provisions shall nevertheless continue in full force without being impaired or invalidated in any way.

19. WAIVER: No covenant, term, or condition or the breach thereof shall be deemed waived, except by written consent of the Par ty against whom the waiver is claimed, and any waiver of the breach of any covenant, term, or condition shall not be deemed to be a waiver of any preceding or succeeding breach of the same or any other covenant, term, or condition.

20. AUDIT: CITY's duly authorized representative shall have access at all reasonable times to all reports, contract records, contract do cuments, contract files, and personnel necessary to audit and verify SUPPLIER'S charges to CITY under this Agreement.

SUPPLIER agrees to retain reports, records, docume nts, and files related to charges under this Agreement for a period of four (4) years following the date of final payment for SUPPLIER Services. CITY's representative shall have the right to reproduce any of the aforesaid documents.

21. GOVERNING LAW: This Agreement shall be governed according to the laws of the State of California.

22. HEADINGS NOT CONTROLLING: Headings used in the Agreement are for reference purposes only and shall not be considered in construing this Agreement.

23. COMPLIANCE WITH LAWS: SUPPLIER shall insure compliance with all safety and hourly requirements for employees, in accordance with federal, state, and county safety and health regulations and laws including, but not limited to, prevailing wage laws, if applicable.

SUPPLIER shall fully comply with all applicable fed eral, state, and local laws, ordinances, regulations and permits.

24. CITY BUSINESS LICENSE: SUPPLIER will have a City of Turlock business license.

25. ASSIGNMENT: This Agreement is binding upon CITY and SUPPLIER and their successors. Except as otherwise provided herein, neither CITY nor SUPPLIER shall assign, sublet, or transfer interest in this Agreement or any part thereof without the prior written consent of the other.

26. NOTICE: Any and all notices permitted or required to be giv en hereunder shall be deemed duly given and effective (1) upon actual delivery, if delivery is by hand; or (2) five (5) days after delivery into the United States mail, if delivery is by postage paid, registered, or certified (return receipt requested) mail. Each such notice shall be sent to the parties at the address respectively indicated below or to any other addres s as the respective parties may designate from time to time:

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To City:

City of Turlock
Attention: Christopher Fisher, Municipal Servi ces Director 156 South Broadway, Suite 270
Turlock, California 95380

With courtesy copy to: City of Turlock, City Attor ney’s Office George A. Petrulakis, City Attorney
156 S. Broadway, Suite 230
Turlock, California 95380-5456

If to Supplier: Badger Meter, Inc.

Attention: Dan Gilliam
4545 W Brown Deer Road
Milwaukee, Wisconsin 53223

27. CITY CONTRACT ADMINISTRATOR: The City’s contract administrator and contact person for this Agreement is:

Will Richards
Municipal Services Deputy Director
156 S. Broadway, Suite 270
Turlock, California 95380
Telephone: (209) 668-5590
E-mail:
[email protected]

28. MODIFICATION: No alteration, amendment, modification, or termination of this Agreement shall be valid unless made in writin g and executed by all of the Parties to this Agreement.

29. AUTHORITY: All Parties to this Agreement warrant and represent that they have the power and authority to enter into this Agreemen t and the names, titles, and capacities herein stated on behalf of any entities, persons, states, or firms represented or purported to be represented by such entities, persons, states or firms and that all former requirements necessary or required by state or federal law in order to enter into the Agr eement have been fully complied with. Further, by entering into this Agreement, neither Party here to shall have breached the terms or conditions of any other contract or agreement to which such Party is obligated, which such breach would have a material effect hereon.

30. VENUE . Venue for all legal proceedings shall be in the Superior Court of the State of California, in and for the County of Stanislaus.

31. SEVERIBILITY: If this Agreement in its entirety is determined by a court to be invalid or unenforceable, this Agreement shall automatically terminate as of the date of final entry

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of judgment. If any provision of this Agreement sha ll be determined by a court to be invalid and unenforceable, or if any provision of this Agreemen t is rendered invalid or unenforceable according to the terms of any federal or state stat ute, which becomes effective after the Effective Date of this Agreement, the remaining provisions sh all continue in full force and effect and shall be construed to give effect to the intent of this Agreement.

32. ENTIRE AGREEMENT: This Agreement, together with its specific referen ces, attachments, and exhibits, constitutes the entire agreement of the Parties with respect to the subject matters hereof and supersedes any and all prior negotiations, understanding, and agreements with respect hereto, whether oral or written.

33. SUPERSEDES PRIOR AGREEMENT : It is the intention of the Parties hereto that this Agreement shall supersede any prior agree ments, discussions, commitments, or representations, whether written, electronic or oral, between the Parties with respect to the subject matter of this Agreement.

34. MANDATORY AND PERMISSIVE : “Shall” and “will” and “agrees” are mandatory. “May” and “can” are permissive.

35. SUCCESSORS AND ASSIGNS : All representations, covenants, and warranties specifically set forth in this Agreement, by or on behalf of, or for the benefit of, any or all of the Parties hereto, shall be binding upon and inure to the benefit of such Party, its successors and assigns.

36. ATTORNEY’S FEES AND COSTS: If any action at law or in equity not resolved pursuant to the “Arbitration of Disputes” section o f this Agreement, including action for declaratory relief, is brought to enforce or interp ret provisions of this Agreement, the prevailing Party shall be entitled to reasonable attorney's fees and costs, which may be set by the court in the same action or in a separate action brought for that purpose, in addition to any other relief to which such Party may be entitled.

37. NECESSARY ACTS AND FURTHER ASSURANCES: The Parties shall at their own cost and expense execute and deliver such further documents and instruments and shall take such other actions as may be reasonably requir ed or appropriate to evidence or carry out the intent and purposes of this Agreement.

[Signatures on Following Page ]

Contract No. 2026-119
{PLA 2024}
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IN WITNESS WHEREOF , the parties have caused this Agreement to be executed by and through their respective officers’ thereunto duly authorized.

CITY OF TURLOCK, a municipal corporation BADGER MET ER, INC. a Wisconsin corporation

By: _______________________________ By: ___________ ___________________ Susan E. Borrego, Interim City Manager
Title: _____________________________
Date: _____________________________
Print name: ________________________
APPROVED AS TO SUFFICIENCY:

Date: _____________________________
By: _______________________________
Christopher Fisher, Municipal Services Director

APPROVED AS TO FORM:

By: _______________________________
George A. Petrulakis, City Attorney

ATTEST:

By: _______________________________
Nichole Fiez, City Clerk

Agreement 2026-119 Exhibit A

Agreement 2026-119 Exhibit A

City Council Staff Report
January 27, 2026

From: Christopher Fisher, Municipal Services Director
Prepared by: Oscar Molina, Assistant Engineer
Agendized by: Susan E. Borrego, Interim City Manager

1. ACTION RECOMMENDED:

Motion: Awarding bid and approving an Agreement with Dynamic Pavement, Inc. of Modesto, California in the amount of $25,472.00 and authorizing a construction contingency amount of $4,000.00 (15.7%) for the construction of City Project No. 25-017 "Speed Lumps at Berkeley Roundabouts" to be funded by Fund 218 "Measure L".

Resolution: Determining the award of bid for construction of City Project No. 25-017 "Speed Lumps at Berkeley Roundabouts" is exempt from the provisions of CEQA in accordance with section 15301 of the CEQA Guidelines

2. NARRATIVE:

The purpose of City Project No. 25-017, “Speed Lumps at Berkeley Roundabouts,” is to install speed lumps at two roundabout locations along N. Berkeley Avenue to reduce traffic speeds while maintaining emergency vehicle access. Residents have reported frequent speeding in the area, and accidents have occurred at the roundabouts.

This project aims to slow drivers before they enter the roundabout to improve safety. The scope of work includes asphalt concrete paving, installation of thermoplastic pavement markings, and placement of new sign posts with accompanying signage.

The main elements of the scope of work for this project consist of:
• Installation of speed lumps at two locations on North Berkeley Avenue • Installation of accompanying signs and posts
• Installation of striping markings on speed lumps

City staff solicited bids from five (5) contractors on October 17th, 2025 through direct emails in accordance with the City's informal bid procedure for public works projects under $75,000 (See Turlock Municipal Code Section 2-9-03). On November 7th, 2025, three (3) bids were received for City Project No. 25-017 "Speed Lumps at Berkeley Roundabouts". Dynamic Pavement, Inc. of Modesto, California, was the lowest responsible bidder with a base bid amount of $25,472.00.

Bidder's Summary:

BIDDER BID AMOUNT
DYNAMIC PAVEMENT $25,472.00
HENSLEY PAVING $55,407.00

Agenda Staff Report
1/27/2026

UNITED PAVEMENT MAINTENANCE $62,118.00

Staff reviewed the bids for bidder responsiveness and responsibility and recommends approval of an Agreement with Dynamic Pavement Inc., of Modesto, California as the lowest responsive, responsible bidder with a bid amount of $25,472.00.

3. FISCAL IMPACT / BUDGET AMENDMENT:

The total estimated project costs are displayed below:

Construction Contractor Bid Cost $25,472.00
Construction Contingency $4,000.00
Preliminary Engineering $4,000.00
Construction Engineering $10,000.00
Materials Testing Services $5,000.00
Estimated Total Project Costs $48,472.00

All project costs are anticipated to be expensed in Fiscal Year 2025-26. The designated project account number for this project is Fund 218 "Measure L" account number 218-40- 462.51270.

4. ENVIRONMENTAL DETERMINATION:

The project is exempt from the California Environmental Quality Act (CEQA) pursuant to Section 15301 (Existing Facilities) as the project involves negligible or no expansion of use in the existing facilities.

5. ATTACHMENTS:

1. Draft Resolution

2. Bidder's Summary

3. Agreement with Dynamic Pavement, Inc. for construction of City Project 25-017 "Speed Lumps at Berkeley Roundabouts"

BEFORE THE CITY COUNCIL OF THE CITY OF TURLOCK

RESOLUTION NO. 2026-

WHEREAS, City Project No. 25-017 “Speed Lumps at Berkeley Roundabouts” consists of installation of speed lumps at two locations on North Berkeley Avenue, accompanying signs and posts, striping marks on speed lumps, and;

WHEREAS, on November 7th, 2025, three (3) bids were received for City Project No. 25-017 “Speed Lumps at Berkeley Roundabouts” with Dynamic Pavement, Inc. of Modesto, California, submitting the lowest responsive bid in the amount of $25,472.00; and

WHEREAS, this project is exempt from the California Environmental Quality Act (CEQA) pursuant to Section 15301 (Existing Facilities) as the project involves negligible or no expansion of use of the existing facilities.

NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Turlock does hereby determine the award of bid for construction of City Project No. 25-017 “Speed Lumps at Berkeley Roundabouts" is exempt from the provisions of CEQA in accordance with section 15301 of the CEQA guidelines.

PASSED AND ADOPTED at a regular meeting of the City Council of the City of Turlock this 27th day of January, 2026, by the following vote:

AYES:

NOES:

NOT PARTICIPATING:

ABSENT: ATTEST:
__________________________
Nichole Fiez, City Clerk,
City of Turlock, County of Stanislaus,
State of California
}
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IN THE MATTER OF DETERMINING THE

AWARD OF BID FOR CONSTRUCTION OF
CITY PROJECT NO. 25-017 “SPEED
LUMPS AT BERKELEY ROUNDABOUTS”

IS EXEMPT FROM THE PROVISIONS OF

CEQA IN ACCORDANCE WITH SECTION
15301 OF THE CEQA GUIDELINES

CITY OF TURLOCK BIDDER'S SUMMARY
PROJECT TITLE: Speed Lumps at Berkeley Roundabouts
PROJECT NUMBER: 25-017
BID OPENING:
5:00 PM
ANTICIPATED COUNCIL AWARD DATE: January 13, 2026
1 2 3
Item Unit of Estimated
No. Item Description Measure Quantity Unit Price Total Unit Price Total Unit Price Total Unit Price Total 1 Mobilization and Demobilization LS 1 7,500.00$ 7,500.00$ 1,815.00$ 1,815.00$ 3,875.00$ 3,875.00$ 8,450.00$ 8,450.00$ 2 Traffic Control LS 1 7,500.00$ 7,500.00$ 5,325.00$ 5,325.00$ 5,075.00$ 5,075.00$ 4,825.00$ 4,825.00$ 3 Speed Lumps Location EA 2 5,000.00$ 10,000.00$ 6,655.00$ 13,310.00$ 9,005.00$ 18,010.00$ 10,500.00$ 21,000.00$ 4 W17-1 Sign and Post EA 4 500.00$ 2,000.00$ 423.00$ 1,692.00$ 413.00$ 1,652.00$ 797.50$ 3,190.00$ 5 Hot Mix Asphalt - Grind and Overlay TON 10 1,000.00$ 10,000.00$ 91.00$ 910.00$ 2,315.00$ 23,150.00$ 1,970.20$ 19,702.00$ 6 Striping and Markings LS 1 2,500.00$ 2,500.00$ 1,210.00$ 1,210.00$ 1,770.00$ 1,770.00$ 4,950.00$ 4,950.00$ 7 All Other Work Not Included in Bid Items LS 1 1,000.00$ 1,000.00$ $1,210.00 1,210.00$ $1,875.00 1,875.00$ $1.00 1.00$ Base Bid Total =
November 7, 2025
ENGINEER'S EST. Dynamic Pavement Hensley Paving
40,500.00$ 25,472.00$ 55,407.00$ UPM
62,118.00$

CITY CONTRACT NO. 2026-071 1
CITY PROJECT NO. 25-017
Rev. 10/2025

AGREEMENT

FOR PUBLIC IMPROVEMENT

City Project No. 25-017

Speed Lumps at Berkeley Roundabouts

THIS PUBLIC IMPROVEMENT AGREEMENT (the “Agreement”) is entered into by and between the CITY OF TURLOCK, a California municipal corporation (“City”), and Dynamic Pavement, Inc., a California (“Contractor”), on this 27th day of January 2026 (the “Effective Date”).

City and Contractor may be collectively referred to herein as the “Parties” or individually as “Party.” There are no other parties to this Agreement.

RECITALS

A. City seeks a duly qualified and licensed firm experienced in the construction of Speed Lumps at Berkeley Roundabouts (the “Project”).

B. The Project involves the expenditure of funds in excess of $5,000 and constitutes a “public project” pursuant to Public Contract Code section 20161.

C. Contractor has made a proposal to City to provide construction services, a copy of which is attached and incorporated hereto as Exhibit A (the “Services”).

D. City has determined it is necessary and desirable to employ the services of Contractor to perform construction work on the Project.

E. City has taken appropriate proceedings to authorize construction of the Project and execution of this contract pursuant to Public Contract Code section 20160 et seq.; specifically, on January 27, 2026, at a duly noticed meeting of the City Council of the City of Turlock, this contract for the construction of the improvements hereinafter described was awarded to Contractor as the lowest responsive and responsible bidder for said improvements.

CITY CONTRACT NO. 2026-071 2
CITY PROJECT NO. 25-017
Rev. 10/2025

NOW, THEREFORE, in consideration of the promises and covenants set forth below, the Parties agree as follows:

AGREEMENT

1. Contract Documents: This Agreement, together with the following documents, are collectively referred to herein as the “Contract Documents”:

i. Notice to Bidders;
ii. Contractor’s Bid or Proposal accepted by City;
iii. Special Provisions of the City of Turlock for Speed Lumps at Berkeley Roundabouts;
iv. Plans and detailed drawings prepared for this Project and approved by City (“Project Plans”);
v. All bonds and insurance required in any of the Contract Documents; vi. Any and all supplemental agreements amending, decreasing, or extending the work contemplated or which may be required to complete the work in a substantial and acceptable manner; and
vii. The current edition of the City of Turlock Standard Specifications and Drawings.

All of the Contract Documents are intended to incorporate the terms of the others so that any work called for in one and not mentioned in the other, or vice versa, is to be executed the same as if mentioned in all said documents. The documents comprising the complete contract will hereinafter be referred to as the “Contract.” In case of any dispute regarding the terms of the Contract, the decision of the City Engineer shall be final.

2. Term. The Contract shall be effective as of the Effective Date first stated above. Contractor shall not commence work on the Project until it has been given notice by City (“Notice to Proceed”).

The Contract shall terminate one (1) year(s) after City accepts Contractor’s performance of the Services by recording a Notice of Completion with the County of Stanislaus Clerk Recorder (the “Term”), unless the Parties mutually agree in writing to terminate the Contract earlier or extend the Term in an agreed writing executed by both Parties.

3. Scope of Work.

(a) Services. Contractor shall perform the Services described in Exhibit A, subject to all terms and conditions in the Contract. Contractor shall not receive additional compensation for the performance of any Services not described therein.

(b) Modification. City, at any time, by written order, may make changes within the general scope of the work under this Agreement or issue additional instructions, require additional work or direct deletion of work. Contractor shall not proceed with any change involving an increase or decrease in the Contract Price, as defined in Section 4 of this Agreement, without prior written authorization from City. Contractor shall not be entitled to compensation for the performance of any such unauthorized work. Contractor further waives any and all right or remedy by way of restitution or quantum meruit for any and all extra or changed work performed without express and prior written

CITY CONTRACT NO. 2026-071 3
CITY PROJECT NO. 25-017
Rev. 10/2025
authorization of City. Notwithstanding the foregoing, Contractor shall promptly commence and diligently complete any change to the work subject to City's written authorization issued pursuant to this Section; Contractor shall not be relieved or excused from its prompt commencement of diligent completion of any change subject to City's written authorization by virtue of the absence or inability of Contractor and City to agree upon the extent of any adjustment to the completion schedule or Contract Price on account of such change. The issuance of a change order pursuant to this Section 3 in connection with any change authorized by City shall not be deemed a condition precedent to Contractor's obligation to promptly commence and diligently complete any such change authorized by City hereunder. City's right to make changes shall not invalidate the Contract nor relieve Contractor of any liability or other obligations under the Contract. Any requirement of notice of changes in the scope of work to Contractor’s surety shall be the responsibility of Contractor.

(c) Specific Materials & Performance of Work. Contractor shall furnish all tools, equipment, facilities, labor, and materials necessary to perform and complete, in good workmanlike manner, the work of general construction as called for and in the manner designated in, and in strict conformity with, the plans and specifications for said work entitled, “Special Provisions for Speed Lumps at Berkeley Roundabouts” The equipment, apparatus, facilities, labor, and material shall be furnished, and said work performed and completed as required by the Contract under the direction and supervision, and subject to the approval, of the City Engineer or City Engineer’s designated agent.

(d) Exhibits. All “Exhibits” referred to below or attached hereto are, by this reference, incorporated into the Contract.

Exhibit Designation Exhibit Title

1. Exhibit A Contractor’s Proposal for Services

2. Exhibit B Payment by Force Account

3. Exhibit C Workers’ Compensation Insurance Certification

4. Exhibit D Performance Bond

5. Exhibit E Payment Bond

4. Contract Price. City shall pay, and Contractor shall accept in full payment for the work set forth above in Section 3, Scope of Work, an amount not to exceed Twenty-Five Thousand Four Hundred Seventy-Two Dollars ($25,472.00) (the “Contract Price”). Said amount shall be paid pursuant to Section 8 of this Agreement. The Contract Price may only be changed by a contract change order. The value of any work covered by a contract change order for an adjustment in the Contract Price will be determined in the sole discretion of City as follows:

(a) If the work performed is on the basis of unit prices contained in the Contract Documents, the change order will be determined in accordance with the provisions in Section 4-1.05, “Changes and Extra Work”, of the Caltrans Standard Specifications, as applicable; or

(b) If the work performed is not included on the engineer’s estimate associated with a unit price, the change order will be by a mutually agreed lump sum; or

(c) If the change order is not determined as described above in either subdivision (a) or (b), the change order will be determined on the basis of force account in accordance with the provisions set forth in Exhibit B, “Payment by Force Account,” attached hereto and incorporated herein by reference.

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5. Time for Performance. The time fixed for the commencement of work under the Contract is within ten (10) working days after the Notice to Proceed has been issued. The work on this project shall be substantially completed on or before the expiration of Fifteen (15) working days (the “Substantial Completion Due Date”) beginning on the first day of work or no later than the tenth day after the Notice to Proceed has been issued. All work on this project, including all punch list items, shall be completed on or before the expiration of Twenty (20) working days (the “Final Completion Due Date”) beginning on the first day of work or no later than the tenth day after the Notice to Proceed has been issued.

(a) Right of City to Increase Working Days: If Contractor fails to complete the Services by the Substantial and Final Completion Due Dates, the City Engineer shall have the right to increase the number of working days in the amount the City Engineer may determine will best serve the interests of City, and if the City Engineer desires to increase said number of working days, the City Engineer shall have the further right to charge Contractor and deduct from the final payment for the work the actual cost of engineering, inspection, superintendence, and other overhead expenses which are directly chargeable to Contractor, and which accrue during the period of such extension, except that the cost of the final service and preparation of the final estimates shall not be included in such charges. No extension of time for completion of Services under the Contract shall be considered unless requested by Contractor at least twenty (20) calendar days prior to the Substantial and Final Completion Due Dates, in writing, to the City Engineer.

The Substantial and Final Completion Due Dates may only be changed by a contract change order.

The value of any work covered by a contract change order for an adjustment in the Substantial and Final Completion Due Dates will be determined as follows:

i. Additional working days will be awarded where the amount of time is mutually agreed upon by Contractor and the City Engineer; or

ii. Additional working days will be awarded where Contractor is prevented from completing any part of the work identified on the critical path and:

1. where the delay is caused by acts of public enemy, fire, floods, tsunamis, earthquakes, epidemics, quarantine restrictions, strikes, labor disputes, shortage of materials and freight embargos, provided that Contractor shall notify Engineer in writing of the causes of delay within fifteen (15) days from the beginning of that delay; or

2. where the delay is caused by actions beyond the control of Contractor; or

3. where the delay is caused by actions or failure to act by the City Engineer.

Contractor shall not be entitled to an adjustment in the Substantial and Final Completion Due Dates for delays within the control of Contractor. Delays resulting from and within the control of a subcontractor or supplier of Contractor shall be deemed to be delays within the control of Contractor.

(b) Excusable Delays. Contractor shall not be in breach of the Contract in the event that performance of Services is temporarily interrupted or discontinued due to a “Force Majeure” event

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which is defined as: riots, wars, sabotage, civil disturbances, insurrections, or explosions; natural disasters, such as floods, earthquakes, landslides, and fires; strikes, lockouts, and other labor disturbances; or other catastrophic events, which are beyond the reasonable control of Contractor.

Force Majeure does not include Contractor’s financial inability to perform, Contractor’s failure to obtain any necessary permits or licenses from other governmental agencies, or Contractor’s failure to obtain the right to use the facilities of any public utility where such failure is due solely to the acts or omissions of Contractor. If Contractor’s performance of the Services is delayed by an excusable delay, the Substantial and Final Completion Due Dates shall be extended for such reasonable time as determined by the City Engineer. Extensions in time must be requested by Contractor within fifteen (15) calendar days of the excusable delay in order to receive consideration.

(c) Emergency - Additional Time for Performance - Procurement of Materials. If, because of war or other declared national emergency, the federal or state government restricts, regulates, or controls the procurement and allocation of labor or materials, or both, and if solely because of said restrictions, regulations or controls, Contractor is, through no fault of Contractor, unable to perform the Services, or the work is thereby suspended or delayed, any of the following steps may be taken:

i. City may, pursuant to resolution of the City Council, grant Contractor additional time for the performance of the Contract, sufficient to compensate in time, for delay or suspension.

To qualify for such extension in time, Contractor within ten (10) days of Contractor's discovering such inability to perform, shall notify the City Engineer in writing thereof, and give specific reasons therefore; the City Engineer shall thereupon have sixty (60) days within which to procure such needed materials or labor as is specified in this agreement, or permit substitution, or provide for changes in the work in accordance with subdivision (b) of this Section.

Substituted materials, or changes in the work, or both, shall be ordered in writing by the City Engineer, and the concurrence of the City Council shall not be necessary. All reasonable expenses of such procurement incurred by the City Engineer shall be defrayed by the Contractor; or

ii. If such materials or labor cannot be procured through legitimate channels within sixty (60) days after the filing of the aforesaid notice, either Party may, upon thirty (30) days' written notice to the other, terminate this agreement. In such event, Contractor shall be compensated for all work executed upon a unit basis in proportion to the amount of the work completed, or upon a cost-plus-ten-percent (10%) basis, whichever is the lesser. Materials on the ground, in process of fabrication or in route upon the date of notice of termination specially ordered for the Project and which cannot be utilized by Contractor, shall be compensated for by City at cost, including freight, provided Contractor shall take all steps possible to minimize this obligation; or

iii. The City Council, by resolution, may suspend the Contract until the cause of inability to perform is removed for a period of not to exceed sixty (60) days.

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If the Contract is not canceled, and the inability of Contractor to perform continues without fault on Contractor's part, beyond the time during which the Contract may have been suspended, as herein above provided, the City Council may further suspend the Contract, or either Party hereto may, without incurring any liability, elect to declare the Contract terminated upon the ground of impossibility of performance. In the event City declares this agreement terminated, such declaration shall be authorized by the City Council by resolution, and Contractor shall be notified in writing thereof within five (5) days after the adoption of such resolution. Upon such termination, Contractor shall be entitled to proportionate compensation at the Contract Price for such portion of the Contract as may have been performed; or

iv. City may terminate the Contract, in which case Contractor shall be entitled to proportionate compensation at the agreed rate for such portion of the Contract as may have been performed. Such termination shall be authorized by resolution of the City Council. Notice thereof shall be forthwith given in writing to Contractor, and the Contract shall be terminated upon receipt by Contractor of such notice.

In the event of the termination provided in this sub-paragraph (iv), none of the covenants, conditions or provisions hereof shall apply to the Services not performed, and City shall be liable to Contractor for the proportionate compensation last herein mentioned.

(d) Delay Damages. In the event Contractor, for any reason, fails to perform the Services to the satisfaction of the City Engineer by the Substantial Completion Due Date, City may, in accordance with Section 7203 of the Public Contract Code, in lieu of any other of its rights authorized by Section 6 of this agreement, deduct from payments or credits due Contractor after such breach a sum equal to Three Hundred Sixty and no/100ths Dollars ($360.00) for each calendar day beyond the Substantial Completion Due Date. Upon Substantial Completion of the work, and in the event Contractor, for any reason, fails to perform the Services to the satisfaction of the City Engineer by the Final Completion Due Date, City may, in accordance with Section 7203 of the Public Contract Code, in lieu of any other of its rights authorized by Section 6 of this agreement, deduct from payments or credits due Contractor after such breach a sum equal to One Hundred Fifty and no/100ths Dollars ($150.00) for each calendar day beyond the Final Completion Due Date. This deduction shall not be considered a penalty but shall be considered as delay damages. The aforementioned rate of deduction is an amount agreed to by the Parties as reasonably representing additional construction engineering costs incurred by City if Contractor fails to complete the Services by the Substantial and Final Completion Due Dates. However, any deduction assessed as delay damages shall not relieve Contractor from liability for any damages or costs resulting from delays to other contractors on the project or other projects caused by a failure of the assessed Contractor to complete the Services by the Substantial and Final Completion Due Dates. Due account shall be taken of any time extensions granted to Contractor by City. Permitting Contractor to continue work beyond the Substantial and Final Completion Due Dates shall not operate as a waiver on the part of City of any of its rights under the Contract nor shall it relieve Contractor from liability for any damages or costs resulting from delays to other contractors on the project or other projects caused by a failure of the assessed Contractor to complete the Services by the Substantial and Final Completion Due Dates.

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6. Termination.

(a) Option of City to Terminate Contract for Failure to Complete Services. If a Party should fail to perform any of its obligations hereunder within the time and in the manner herein provided, or otherwise violates any of the terms of the Contract (the “Defaulting Party”), the other Party shall give notice to the Defaulting Party and allow the Defaulting Party ten (10) days to correct such deficiency. If the Defaulting Party does not correct such deficiency, the other Party may immediately terminate the Contract by giving written notice of such termination, stating the reason for such termination. In such event, Contractor shall be entitled to receive payment for all Services satisfactorily rendered until such termination, provided, however, there shall be deducted from such amount the amount of damage, if any, sustained by virtue of any breach of the Contract by Contractor, including Delay Damages. If payment under the Contract is based upon a lump sum in total or by individual task, payment for Services satisfactorily rendered shall be an amount which bears the same ratio to the total fees specified in this Agreement as the Services satisfactorily rendered hereunder by Contractor to the total services otherwise required to be performed for such total fee, provided, however, that there shall be deducted from such amount the amount of damage, if any sustained by City by virtue of any breach of the Contract by Contractor. Upon termination, Contractor shall deliver copies of all Work Product, as defined in Section 19 of this Agreement, to City. If City terminates the Contract before Contractor commences any Services hereunder, City shall not be obligated to make any payment to Contractor.

(b) If Contractor should be adjudged bankrupt or if it should make a general assignment for the benefit of its creditors, or if a receiver should be appointed on account of its insolvency, or if it or any of its subcontractors should violate any of the provisions of the Contract, City may serve written notice upon it and its surety of its intention to terminate the Contract. Such notice shall contain the reasons for City’s intention to terminate the Contract, and unless such violations shall cease within five (5) calendar days after serving of such notice, the Contract shall cease and terminate upon the expiration of said five (5) calendar days. In the event of any such termination, City shall immediately serve written notice thereof upon the surety and Contractor, and the surety shall have the right to take over and perform the Contract; provided however, that, if the surety does not give City written notice of its intention to take over and perform the Contract or does not commence performance thereof within thirty (30) calendar days from the date of the service of such notice, City may take over the work and prosecute the same to completion by contract or any other method it may deem advisable, for the account and at the expense of Contractor, and Contractor and its surety shall be jointly liable to City for any excess cost occasioned City thereby, and in such event City may, without liability for so doing, take possession of and utilize in completing the work, such materials, appliances, and other property belonging to Contractor as may be on the Project site and necessary thereof.

7. Liability for Breach: Neither Party waives the right to recover direct damages against the other for breach of the Contract, including any amount necessary to compensate City for all detriment proximately caused by Contractor's failure to perform its obligations hereunder or which in the ordinary course of things would be likely to result therefrom. City reserves the right to offset such damages against any payments owed to Contractor. City shall not, in any manner, be liable for special or consequential damages, including but not limited to Contractor's actual or projected lost profits had Contractor completed the Services required by the Contract. In the event of termination by either Party, copies of all finished or unfinished Work Product, as defined in Section 19 of this Agreement, shall become the property of City. Notwithstanding the foregoing, in no event shall City be liable, regardless of whether any claim is based on contract or tort, for any special, consequential, indirect

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or incidental damages, including, but not limited to, lost profits or revenue, arising out of or in connection with the Contract or the Services performed in connection with the Contract.

8. Compensation: City shall make payments to Contractor in accordance with the provisions of Section 9 of the City Standards in legally executed and regularly issued warrants of City, drawn on the appropriate fund or funds as required by law and order of the City Council thereof. Contractor shall be administered a progress payment approximately every thirty (30) calendar days from the time work begins according to the payment schedule furnished by the City Engineer at the time work begins. Contractor shall provide access at all reasonable times to all reports, contract records, contract documents, contract files, and personnel necessary to audit and verify Contractor’s charges to City under this Contract.

Monthly progress payments in the amount of 95 percent (95%) of the value of the work will be made to Contractor based on the Contractor’s estimate and the schedule of prices contained in the accepted bid. The remaining 5 percent (5%) will be retained by City as partial security for the fulfillment of the Contract except that at any time after 50 percent (50%) of the work has been completed, if the City Engineer finds that satisfactory progress is being made and the Project’s critical path of work are on schedule, City may discontinue any further retention. Such discontinuance will only be made upon the written request of Contractor. City may, at any time the City Engineer finds that satisfactory progress is not being made, again institute retention of 5 percent (5%) as specified above. Payment will be made as soon as possible after the preparation of the Contractor’s estimate. City shall pay the remaining 5 percent (5%) of the value of the Services completed under this Contract, if unencumbered by retentions for claims, not sooner than the expiration of thirty-five (35) calendar days from the date of recordation of the Notice of Completion, pursuant to Section 2 of this agreement, and not later than sixty (60) days from the “completion” of the Services as said term is defined in Public Contract Code section 7107(c).

No estimate or payment shall be made if, in the judgment of the City Engineer, the work is not proceeding in accordance with the provisions of the Contract, or when, in his judgment, the total value of the work done since the last estimate amounts to less than $1,000. No progress payments will be made if the time allotted for the job is thirty (30) working days or less. Payment of any progress payment, or the acceptance thereof by Contractor, shall not constitute acceptance of the work performed under this Contractor, or any portion thereof, and shall in no way reduce the liability of Contractor to replace unsatisfactory work or materials, though the unsatisfactory character of such work or materials may not have been apparent or detected at the time such payment was made.

Additionally, as a precondition to City’s progress payments hereunder, Contractor shall provide to City, prior to payment, unconditional waivers and releases of stop notices pursuant to Civil Code section 8128 et seq. from each subcontractor and materials supplier. The form of said waivers and releases shall be as set forth in Civil Code section 3262(d)(2).

Pursuant to Public Contract Code section 22300 et seq., Contractor may request the right to substitute securities for any moneys withheld by City to ensure the performance required of Contractor under the Contract, or that City make payment of retentions earned directly into an escrow account established at the expense of Contractor.

9. Disputes Pertaining to Payment for Work: Should any dispute arise respecting the true value of any work performed, of any work omitted, or of any extra work which Contractor may be

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required to do, or respecting the size of any payment to Contractor during the performance of the Contract, such dispute shall be decided by the City Engineer, and the decision of the latter shall be final and conclusive. The Parties agree to comply with the claims resolution procedures set forth in Public Contract Code section 9204 when applicable.

(a) Claims Processing. Any submission of a claim by Contractor must comply with the requirements of Public Contract Code section 9204. Upon receipt of a claim pursuant to this section, City shall conduct a reasonable review of the claim and, within a period not to exceed forty-five (45) days, shall provide Contractor a written statement identifying what portion of the claim is disputed and what portion is undisputed. Upon receipt of a claim, the Parties may, by mutual agreement, extend the time period provided in this subdivision. Contractor shall furnish reasonable documentation to support the claim. Any payment due on an undisputed portion of the claim shall be processed and made within sixty (60) days after City issues its written statement. If Contractor disputes City’s written response, or if City fails to respond to a claim issued pursuant to this section within the time prescribed, Contractor may demand in writing an informal conference to meet and confer for settlement of the issues in dispute.

(b) Meet-and-Confer Conference. Upon receipt of a demand in writing sent by registered mail or certified mail, return receipt requested, City shall schedule a meet-and-confer conference within thirty (30) days for settlement of the dispute. Within ten (10) business days following the conclusion of the meet-and-confer conference, if the claim or any portion of the claim remains in dispute, City shall provide the claimant a written statement identifying the portion of the claim that remains in dispute and the portion that is undisputed. Any payment due on an undisputed portion of the claim shall be processed and made within sixty (60) days after the City issues its written statement.

(c) Nonbinding Mediation. Any disputed portion of the claim, as identified by Contractor in writing, shall be submitted to nonbinding mediation, with the Parties sharing the associated costs equally. The Parties shall mutually agree to a mediator within ten (10) business days after the disputed portion of the claim has been identified in writing. If the Parties cannot agree upon a mediator, each party shall select a mediator and those mediators shall select a qualified neutral third party to mediate with regard to the disputed portion of the claim. Each Party shall bear the fees and costs charged by its respective mediator in connection with the selection of the neutral mediator. If mediation is unsuccessful, the parts of the claim remaining in dispute shall be subject judicial review pursuant to Section 23 of this Agreement.

Notwithstanding any claim, dispute, or other disagreement between the Parties regarding performance under the Contract, the scope of work hereunder, or any other matter arising out of or related to, in any manner, the Contract, Contractor shall proceed diligently with performance of the Services in accordance with City's written direction, pending any final determination or decision regarding any such claim, dispute, or disagreement.

10. Permits and Care of Work: Contractor shall, at Contractor's expense, obtain all necessary permits and licenses for the construction of each improvement, give all necessary notices and pay all fees and taxes required by law, except those City fees set forth in Section 1 of the Special Provisions.

Contractor has examined the Project site and is familiar with its topography and condition, location of property lines, easements, building lines, and other physical factors and limitations affecting the performance of the Contract. Contractor, at Contractor's expense, shall obtain any permission necessary for any operations conducted off the property owned or controlled by City. Contractor

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shall be responsible for the proper care and protection of all materials delivered and work performed until completion and final acceptance.

11. Public Works and Payment of Prevailing Wage:

(a) Monitoring and Enforcement. In accordance with the provisions of Sections 1725.5, 1771.1, 1771.3, and 1771.4 of the Labor Code, all work performed under the Contract is subject to compliance monitoring and enforcement by the Department of Industrial Relations (“DIR”). All work performed by Contractor or its subcontractors under the Contract is subject to the requirements of Labor Code section 1720 et seq. It is not a violation of this section for an unregistered contractor to submit a bid that is authorized by Section 7029.1 of the Business and Professions Code or by Section 10164 or 20103.5 of the Public Contract Code , provided the contractor is registered to perform public work pursuant to Section 1725.5 of the Labor Code at the time the contract is awarded.

Contractor and its subcontractors shall furnish the records specified in Section 1776 of the Labor Code directly to the Labor Commissioner, at least monthly, in the format prescribed by the Labor Commissioner.

In accordance with the provisions of Section 1773.3 of the Labor Code, City shall provide notice to DIR of the award of this Contract within thirty (30) working days of the award. The notice shall be transmitted electronically in a format specified by DIR and shall include the name of Contractor, any subcontractor listed on the successful bid, the bid and contract award dates, the contract amount, the estimated start and completion dates, Project location, and any additional information DIR specifies that aids in the administration and enforcement of Section 1720 et seq. of the Labor Code.

(b) Wages & Hours of Employment: In the performance of the Services under the Contract, eight (8) hours shall be the maximum hours of labor on any calendar day, and the minimum wages of compensation of persons performing labor in the execution of this agreement shall be the current prevailing scale of wages determined by DIR for the community. Contractor shall forfeit as penalty Twenty-five and no/100ths Dollars ($25.00) to be paid to City for each workman employed in the execution of the Contract by Contractor or its subcontractor(s), for each calendar day during which any workman is required or permitted to labor more than eight (8) hours, in violation of provisions of Labor Code section 1810 et seq. Contractor shall post prevailing wage rates at the Project no later than the first day Contractor commences performance of the Services under the Contract.

12. Superintendence by Contractor: Contractor shall give personal superintendence to the work on the Project or have a competent foreman or superintendent satisfactory to the City Engineer on the Project at all times during construction and performance of work under the Contract, with authority to act for Contractor.

13. Inspection and Testing by City: Contractor shall at all times maintain proper facilities and provide safe access for inspection by City to all parts of the work performed on the Project and to the shops wherein the work is in preparation. Contractor shall notify City with sufficient time in advance of the manufacture of production materials to be supplied by Contractor under the Contract in order for City to arrange for mill or factory inspection and testing of same. Any materials shipped by Contractor from factory prior to having satisfactorily passed such testing and inspection by City's representative or prior to the receipt of notice from such representative that such testing and inspection

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will not be required shall not be incorporated on the Project. Contractor shall also furnish to City, in triplicate, certified copies of all factory and mill test reports upon request.

14. Conformity with Law and Safety: Contractor shall observe and comply with all applicable laws, ordinances, codes, and regulations of governmental agencies, including federal, state, municipal, and local governing bodies having jurisdiction over any or all of the scope of Services, including all provisions of the Occupational Safety and Health Act of 1979 as amended, all California Occupational Safety and Health Regulations, the California Building Code, the American with Disabilities Act, any copyright, patent, or trademark law, and all other applicable federal, state, municipal, and local safety regulations, appropriate trade association safety standards, and appropriate equipment manufacturer instructions. All Services performed by Contractor or its subcontractors must be in accordance with these laws, ordinances, codes, and regulations.

Contractor’s failure to comply with any laws, ordinances, codes, or regulations applicable to the performance of the Services hereunder shall constitute a breach of contract. In cases where standards conflict, the standard providing the highest degree of protection shall prevail.

If a death, serious personal injury or substantial property damage occurs in connection with the performance of the Contract, Contractor shall immediately notify City's risk manager by telephone.

If any accident occurs in connection with the Contract, Contractor shall promptly submit a written report to City, in such form as City may require. This report shall include the following information:
(a) name and address of the injured or deceased person(s); (b) name and address of Contractor’s subcontractor, if any; (c) name and address of Contractor’s liability insurance carrier; and (d) a detailed description of the accident, including whether any of City's equipment, tools, or materials were involved.

If a release of a hazardous material, substance, or waste occurs in connection with the performance of the Contract, Contractor shall immediately notify City. Contractor shall not store hazardous materials or hazardous waste within City limits without a proper permit from City.

15. Other Contracts: City may award other contracts for additional work on the Project, and Contractor shall fully cooperate with such other contractors and carefully fit Contractor's own work to that provided under other contracts as may be directed by the City Engineer. Contractor shall not commit or permit any act which will interfere with the performance of work by any other contractor.

16. Bonds: Concurrently with the execution hereof, Contractor shall furnish, on the forms provided herein as Exhibits D and E, respectively, corporate surety bonds to the benefit of City, issued by a surety company acceptable to City and authorized and admitted to do business in the state of California, as follows:

(a) Faithful Performance Bond. In an amount equal to at least one hundred percent (100%) of the Contract Price as security for the faithful performance of the Contract. The bond shall contain a provision that the surety thereon waives the provisions of Sections 2819 and 2845 of the Civil Code.

(b) Payment Bond. In an amount equal to at least one hundred percent (100%) of the Contract Price as security for the payment of all persons performing labor and furnishing materials in connection with the Contract. The bond shall be in accordance with the provisions of Sections 3225, 3226, and 3247 through 3252, inclusive, of the Civil Code and Section 13020 of the

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Unemployment Insurance Code of California. Said bond shall also contain a provision that the surety thereon waives the provisions of Sections 2819 and 2845 of the Civil Code.

The surety companies shall familiarize themselves with all provisions and conditions of the Contract.

It is understood and agreed that the surety or sureties waive the right of special notification of any modification or alterations, omissions or reductions, extra or additional work, extensions of time, or any other act or acts by City or its authorized agents under the terms of this Contract and failure to so notify the surety or sureties of such changes shall in no way relieve the surety or sureties of their obligations under the Contract.

17. Indemnification:

(a) Indemnity for Professional Liability. When the law establishes a professional standard of care for Contractor’s Services, to the fullest extent permitted by law, Contractor shall indemnify, protect, defend, and hold harmless City and any and all of its elective and appointive boards, officers, officials, agents, employees or volunteers (“City’s Agents”) from and against any and all losses, liabilities, damages, costs, and expenses, including legal counsel’s fees and costs but only to the extent Contractor or its subcontractors are responsible for such damages, liabilities and costs on a comparative basis of fault between Contractor or its subcontractors and City in the performance of professional services under the Contract. Contractor shall not be obligated to defend or indemnify City for City’s own negligence or for the negligence of others.

(b) Indemnity for other than Professional Liability. Other than in the performance of professional services and to the full extent permitted by law, Contractor shall indemnify, defend, and hold harmless City and any and City’s Agents from and against any liability, including liability for claims, suits, actions, arbitration proceedings, administrative proceedings, regulatory proceedings, losses, expenses or costs of any kind, whether actual, alleged or threatened, including legal counsel’s fees and costs, court costs, interest, defense costs, and expert witness fees, where the same arise out of, are a consequence of, or are in any way attributable to, in whole or in part, the performance of the Contract by Contractor or by any individual or agency for which Contractor is legally liable, including, but not limited to, officers, agents, employees, or subcontractors of Contractor.

18. Contractor's Insurance: Concurrently with the execution hereof, Contractor shall furnish City with satisfactory proof of carriage of the insurance required under this section, and that Contractor shall give City at least thirty (30) days prior notice of the cancellation of any policy during the Term of this contract. Contractor shall not commence work under this Agreement until Contractor has obtained City’s approval regarding all insurance requirements, forms, endorsements, amounts, and carrier ratings, nor shall Contractor allow any subcontractor to commence work on a subcontract until all similar insurance required of the subcontractor shall have been so obtained and approved.

Contractor shall procure and maintain for the duration of the Contract insurance against claims for injuries to persons or damages to property which may arise from or in connection with the performance of the Services hereunder by Contractor, its agents, representatives, employees or subcontractors. Failure to maintain or renew coverage or to provide evidence of renewal may constitute a material breach of the Contract. Any available insurance proceeds in excess of the specified minimum limits and coverage shall be available to City. The City of Turlock shall be named as a certificate holder.

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(a) Commercial General Liability Insurance. Contractor shall maintain commercial general liability insurance with coverage at least as broad as Insurance Services Office form CG 00 01, in an amount not less than One Million Dollars ($1,000,000.00) per occurrence, Two Million Dollars ($2,000,000.00) general aggregate, and One Million Dollars ($1,000,000.00) products and completed operations for bodily injury, personal injury, and property damage, including, without limitation, blanket contractual liability and coverage for explosion, collapse, and underground property damage hazards. The general aggregate limit shall apply separately to this Project or the general aggregate shall be doubled. The policy shall contain, or be endorsed to contain, the following provisions:

(1) City, its elective and appointive boards, officers, agents, employees, and volunteers are to be covered as additional insureds with respect to liability arising out of work or operations performed by or on behalf of Contractor, including materials, parts or equipment furnished in connection with such work or operations. The coverage shall be provided in the form of an endorsement to Contractor’s insurance (at least as broad as CG 20 10 for ongoing operations and CG 20 37 for products/completed operations for construction services). The City shall be named as a certificate holder on the Certificate of Insurance.

(2) For any claims related to the Project, Contractor’s insurance coverage shall allow and be endorsed primary insurance as respects City and any insurance or self- insurance maintained by City shall be excess of Contractor’s insurance and shall not contribute with it.

(3) In the event of cancellation, non-renewal, or material change that reduces or restricts the insurance coverage afforded to City under the Contract, the insurer, broker/producer, or Contractor shall provide City with thirty (30) days’ prior written notice of such cancellation, non-renewal, or material change.

(4) Coverage shall not extend to any indemnity coverage for the sole negligence of the additional insured in any case where an agreement to indemnify the additional insured would be invalid under Subdivision (b) of Section 2782 of the Civil Code.

(b) Workers’ Compensation Insurance. Contractor shall maintain Workers’ Compensation Insurance (Statutory Limits) and Employer’s Liability Insurance with limits of at least One Million Dollars ($1,000,000.00) each accident, One Million Dollars ($1,000,000.00) by disease- policy limit, and One Million Dollars ($1,000,000.00) by disease-each employee. Contractor shall submit to City, along with the Certificate of Insurance a Waiver of Subrogation endorsement in favor of the City, its offices, agents, employees, and volunteers.

(c) Commercial Automobile Liability Insurance. Contractor shall maintain commercial automobile liability insurance using ISO Business Auto Coverage form CA 00 01, or the exact equivalent, with a limit of no less than One Million Dollars ($1,000,000.00) each accident for owned, leased, hired, non-owned, and borrowed automobiles. The policy shall provide and be endorsed that the City, its officials, officers, agents, employees, and volunteers are included or named as additional insureds. If Contractor owns no vehicles, this requirement may be met through a non-owned auto coverage or an endorsement to the CGL policy.

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(d) Builder’s Risk Insurance. [Intentionally Omitted]

(e) Contractors Pollution Insurance. [Intentionally Omitted]

(f) Professional Liability Insurance. [Intentionally Omitted]

(g) Umbrella or Excess Policy. Contractor may use Umbrella or Excess Policies to provide the liability limits as required in this agreement. This form of insurance will be acceptable provided that all of the Primary and Umbrella or Excess Policies shall provide all of the insurance coverages herein required. The Umbrella or Excess policies shall be provided on a true “following form” or broader coverage basis, with coverage at least as broad as provided on the underlying policies of insurance. No coverage or insurance policies maintained by the Additional Insureds, whether primary or excess, and which also apply to a loss covered hereunder, shall be called upon to contribute to a loss until the Contractor’s primary and excess liability policies are exhausted.

(h) Deductibles and Self-Insured Retentions. Upon request of City, any deductibles or self-insured retentions must be declared to and approved by City. At the option of City, either: (1) the insurer shall reduce or eliminate such deductibles or self-insured retentions as respects City and City’s Agents; or (2) Contractor shall provide a financial guarantee satisfactory to City guaranteeing payment of losses and related investigations, claim administration, and defense expenses.

(i) Acceptability of Insurers. Insurance is to be placed with insurers admitted in California with a current A.M. Best’s rating of no less than A-:VII or with an insurer to which City has provided prior approval.

(j) Verification of Coverage. Contractor shall furnish City with original certificates and amendatory endorsements or copies of the applicable policy language effecting coverage required by this Section 18. All certificates and endorsements are to be received and approved by City before work commences. However, failure to obtain the required documents prior to the work beginning shall not waive Contractor’s obligation to provide them. City reserves the right, at any time, to require complete, certified copies of all required insurance policies and endorsements.

(k) Waiver of Subrogation. With the exception of professional liability, Contractor hereby agrees to waive subrogation which any insurer of Contractor may acquire from Contractor by virtue of the payment of any loss. The commercial general liability policy, automobile liability policy, and workers’ compensation policy shall be endorsed to contain a waiver of subrogation in favor of City for all work performed by Contractor, its agents, employees, independent contractors and subcontractors. Contractor shall provide written proof of waiver of subrogation in the Certificate of Insurance. Additionally, Contractor agrees to obtain any available endorsements that may be necessary to effectuate this waiver of subrogation.

(l) Subcontractors. Contractor shall ensure all subcontractors furnish separate certificates and endorsements for each subcontractor. All coverages for subcontractors shall be subject to all of the requirements stated herein.

19. Ownership of Work Product: Any and all work, artwork, copy, posters, billboards, photographs, videotapes, audiotapes, systems designs, software, reports, designs, specifications,