Upland City Council
November 14, 2022

BASELINE ST & CENTRAL AV 1 1 80,900
BENSON AV & CORTE SANTANA 1 1 80,900
CAMPUS AV & CUMBERLAND ST 1 1 80,900
CAMPUS AV & VALADEZ ST 1 1 80,900
CAMPUS AV & VIEWPOINT ST 1 1 80,900
CAMPUS AV & WEST ST 1 1 80,900
CASCADE DR & SAN BERNARDINO RD 1 1 80,900
CENTER DR & MOUNTAIN AV 1 1 80,900
CENTRAL AV & HUNTINGTON AV 1 1 80,900
DEBORAH CT & EUCLID AV 1 1 80,900
EDGEWOOD LN & LENWOOD SQUARE 1 1 80,900
EUCLID AV & G ST 1 1 80,900
EUCLID AV & STOWELL ST 1 1 80,900
GROVE AV & SALINA AV 1 1 80,900
HIGHLAND ST & MONTEREY AV 1 1 80,900
HUMMINGBIRD LN & OLD BALDY RD 1 1 80,900
KENWOOD ST & QUINCE AV 1 1 80,900
LOGISTICS WAY & VALLEY BL 1 1 80,900
MAYWOOD & ROSEWOOD ST 1 1 80,900
MESA TERRACE & OCEAN VIEW DR 1 1 80,900
MOUNTAIN AV & NORTH HILLS DR 1 1 80,900

MOUNTAIN SHADOW DR & SAN
GABRIEL RD 1 1 80,900
SAN ANTONIO AV & WINN DR 1 1 80,900
VALLEJO WY & WINN DR 1 1 80,900
8TH ST & GRAYSON WY 3 3 39,900
11TH ST & SPRUCE AV 2 2 26,600
3RD AV & 9TH ST 2 2 26,600
ARROW RT & GROVE AV 2 2 26,600
11TH ST & 6TH AV 1 1 13,300
13TH AV & A ST 1 1 13,300
16TH ST & OMALLEY WY 1 1 13,300
18TH ST & BENSON AV 1 1 13,300
21ST ST & 2ND AV 1 1 13,300
24TH ST & EUCLID AV 1 1 13,300
2ND AV & A ST 1 1 13,300
3RD AV & D ST 1 1 13,300
7TH ST & LAUREL AV 1 1 13,300
8TH AV & 9TH ST 1 1 13,300
8TH ST & BERLYN AV 1 1 13,300
8TH ST & COMET AV 1 1 13,300
8TH ST & SULTANA AV 1 1 13,300
8TH ST & WASHINGTON ST 1 1 13,300
9TH ST & 9TH ST 1 1 13,300
ALTA AV & ANITA ST 1 1 13,300

BASELINE RD & MOUNTAIN SHADOW
DR 1 1 13,300
BENNINGTON ST & COMET AV 1 1 13,300
BENSON AV & SUNRISE CIR 1 1 13,300
BENSON AV & SUNRISE CIR E 1 1 13,300
BLANCHARD ST & CLAREMONT BL 1 1 13,300

CAMPUS AV & CAMPUS AV 1 1 13,300
CAMPUS AV & SAN YSIDRO DR 1 1 13,300
CAMPUS AV & VIEWPOINT 1 1 13,300
CAMPUS AV & WASHINGTON ST 1 1 13,300
DIAMOND CT & VALLEJO WY 1 1 13,300
ELM ST & EUCLID AV 1 1 13,300
FAIRWOOD WY & RANDY ST 1 1 13,300
FREMONT ST & VALLEJO WY 1 1 13,300
GROVE AV & SAN BERNARDINO RD 1 1 13,300
HUNTINGTON DR & LOMA PL 1 1 13,300
KELLY AV & PEPPERTREE LN 1 1 13,300
LAUREL AV & TENNYSON ST 1 1 13,300
LILY AV & TULIP AV 1 1 13,300
MAXWELL ST & SPENCER AV 1 1 13,300
OLIVE ST & SULTANA AV 1 1 13,300
PALM AV & SOUTH ALY 1 1 13,300
POPPY AV & TULIP AV 1 1 13,300

APPENDIX

CITY OF UPLAND | LRSP

Appendix C –
Total Collisions by Midblock

Midblock Collisions
Corridors All Fatal
Severe
Injury
Other
Injury
Complaint
of Pain
Property
Damage
Only (PDO) Crash Costs
FOOTHILL BL 85 4 20 50 11 13,397,300
MOUNTAIN AV 79 1 3 16 47 12 12,598,700
EUCLID AV 36 1 1 14 15 5 6,452,200
16TH ST/BASELINE RD 27 1 9 14 3 4,043,200
ARROW HWY/RT 38 11 25 2 3,614,400
19TH ST 10 1 4 3 2 2,428,500
11TH ST 7 1 3 3 2,259,600
9TH ST 8 1 2 4 1 2,211,500
CENTRAL AV 6 1 4 1 1,926,900
BENSON AV 22 5 12 5 1,748,800
CAMPUS AV 16 7 6 3 1,521,400
SAN ANTONIO AV 10 4 5 1 987,000
7TH ST 8 3 4 1 763,800
8TH ST 8 2 5 1 702,400
SAN BERNARDINO RD 3 2 1 297,900
MONTE VISTA AV 3 1 1 1 236,500
A ST 2 1 1 223,200
BASELINE ST 2 1 1 223,200
13TH AV 1 1 142,300
BOUQUET DR 1 1 142,300
CAMPO AV 1 1 142,300
RICHALAND ST 1 1 142,300
SANTO ANTONIO AV 1 1 142,300
VALLEJO WY 1 1 142,300
13TH ST 2 1 1 94,200
20TH ST 1 1 80,900
22ND ST 1 1 80,900
24TH ST 1 1 80,900
2ND AV 1 1 80,900
5TH AV 1 1 80,900
ALTA AV 1 1 80,900
CAMPUS ST 1 1 80,900
11TH AV 1 1 13,300
14TH ST 1 1 13,300
1ST AV 1 1 13,300
9TH AV 1 1 13,300
AIRPORT DR 1 1 13,300
ALY S SPRINGFIELD 1 1 13,300
COLONIES PKWY 1 1 13,300
GROVE AV 1 1 13,300
GUADALUPE DR 1 1 13,300
HUNTINGTON DR 1 1 13,300
NORTHSTAR LN 1 1 13,300

PINE ST 1 1 13,300
SERVICE RD FOOTHILL BLVD 1 1 13,300
VERNON AV 1 1 13,300

APPENDIX

CITY OF UPLAND | LRSP

Appendix D –
Total Collisions by Segment

Segment Collisions
Corridors All Fatal
Severe
Injury
Visible
Injury
Complaint
of Pain
Property
Damage
Only (PDO)Crash Costs
FOOTHILL BL 279 14 62 170 33 45,274,500
EUCLID AV 288 2 6 105 141 34 39,520,600
MOUNTAIN AV 260 4 6 63 162 25 38,303,200
ARROW HWY/ARROW RT 174 1 47 114 12 17,660,300
CAMPUS AV 148 2 37 90 19 15,978,800
16TH ST/BASELINE RD 132 1 1 47 71 12 15,771,600
9TH ST 64 3 22 26 13 10,176,900
BENSON AV 93 1 29 48 15 9,799,400
SAN ANTONIO AV 68 2 23 38 5 9,593,600
7TH ST 55 1 1 11 32 10 7,467,100
19TH ST 31 2 14 12 3 6,182,900
8TH ST 67 18 40 9 5,917,100
11TH ST 50 1 15 25 9 5,866,700
CENTRAL AV 17 1 1 1 10 4 4,184,500
GROVE AV 10 1 1 1 3 4 3,618,200
13TH ST 19 1 2 12 4 2,898,600
VALLEJO WY 3 1 1 1 1,745,600
2ND AV 15 3 10 2 1,262,500
MONTE VISTA AV 10 5 4 1 1,048,400
21ST ST 10 1 6 3 667,600
A ST 8 3 2 3 628,600
SAN BERNARDINO RD 6 3 2 1 602,000
14TH ST 7 1 5 1 560,100
15TH ST 6 5 1 417,800
MULBERRY AV 4 2 1 1 378,800
18TH ST 3 2 1 365,500
3RD AV 6 1 2 3 344,000
20TH ST 5 4 1 336,900
1ST AV 4 1 2 1 317,400
CAMPO AV 2 2 284,600
CAMPUS ST 3 3 242,700
9TH AV 3 1 1 1 236,500
17TH ST 2 1 1 223,200
25TH ST 2 1 1 223,200
5TH AV 2 1 1 223,200
SILVERWOOD AV 2 1 1 223,200
WINN DR 2 1 1 223,200
COLONIES PKWY 4 2 2 188,400
OLIVE ST 4 2 2 188,400
ALTA AV 3 2 1 175,100
HOSPITAL PKWY 3 2 1 175,100
23RD ST 2 2 161,800
24TH ST 2 2 161,800
C ST 2 2 161,800

WASHINGTON BL 2 2 161,800
RANDY ST 2 1 1 155,600
13TH AV 1 1 142,300
6TH AV 1 1 142,300
BENNINGTON ST 1 1 142,300
BOUQUET DR 1 1 142,300
COTTONWOOD ST 1 1 142,300
JUNIPER AV 1 1 142,300
PALOMINO AV 1 1 142,300
RICHALAND ST 1 1 142,300
SANDRA CT 1 1 142,300
SANTO ANTONIO AV 1 1 142,300
VERNON DR 1 1 142,300
WINSTON AV 1 1 142,300
LAUREL AV 2 1 1 94,200
PALM AV 2 1 1 94,200
100TH AV 1 1 80,900
22ND ST 1 1 80,900
CHAFFEE ST 1 1 80,900
CROSSROADS DR 1 1 80,900
EDGEWOOD LN 1 1 80,900
F ST 1 1 80,900
HIGHLAND ST 1 1 80,900
HUMMINGBIRD LN 1 1 80,900
KENWOOD ST 1 1 80,900
MESA TERRACE 1 1 80,900
ROSEWOOD ST 1 1 80,900
SAN ANTONIO 1 1 80,900
SAN GABRIEL RD 1 1 80,900
SHOPPING CENTER DR 1 1 80,900
STOWELL ST 1 1 80,900
TULARE WY 1 1 80,900
VALLEY BL 1 1 80,900
WEST ST 1 1 80,900
WILSON AV 1 1 80,900
HUNTINGTON DR 3 3 39,900
COMET AV 2 2 26,600
GRAYSON WY 2 2 26,600
SULTANA AV 2 2 26,600
11TH AV 1 1 13,300
AIRPORT DR 1 1 13,300
ALY S SPRINGFIELD 1 1 13,300
CLAREMONT BL 1 1 13,300
CORTE BLANCO 1 1 13,300
FREMONT ST 1 1 13,300
GUADALUPE DR 1 1 13,300
LILY AV 1 1 13,300
NORTHSTAR LN 1 1 13,300
PEPPERTREE LN 1 1 13,300

PINE ST 1 1 13,300
REDDING WY 1 1 13,300
SERVICE RD FOOTHILL BLVD 1 1 13,300
SOUTH ALY 1 1 13,300
SPENCER AV 1 1 13,300
TULIP AV 1 1 13,300
VERNON AV 1 1 13,300

APPENDIX

CITY OF UPLAND | LRSP

Appendix E –
Caltrans Countermeasure List

Caltrans Countermeasures (LRSM)

S T A F F R E P O R T
I T E M N O . 10.L .

D A T E :N ovem b er 1 4, 2 02 2
T O :M A YO R A N D C I T Y C O U N C I L
F R O M : M I C H A E L B L A Y, C I T Y M A N A G E R P R E P A R E D B Y : B R A D E N Y U, P U B L I C W O R K S D I R E C TO R

A L A N F R E N C H , P R I N C I PA L E N G I N E E R

H A R R Y PA R R , A S S I S TA N T E N G I N E E R
S U B J E C T :A C C E P TA N C E O F P U B L I C I M P R O V E M E N T S F O R T R A C T 1 87 07 ,

LO C A T E D O N T H E N O R T H E A S T C O R N E R O F B A S E L I N E R O A D A N D

PA R K V I E W P R O M E N A D E

R E C O M M E N D E D A C T I O N
I t i s recom m en d ed t hat th e C it y C ou ncil ac cep t the p u b l ic im p rovem en ts c ons truc ted b y Taylor-M orrison, located on th e north east corner of Parkview P rom inad e and B aseline Road ; and ap p rove th e release of t h e S ub d ivision Perform an c e B on d s an d Lab or and M aterial B on d s.

G O A L S T A T E M E N T
Th e p rop os ed act ion sup p orts th e C it y's g oal t o ad here to a review sched ule for th e p rocessin g of d evelop m ent p rop osals in an efficient, p rofession ally resp on sive, and cou rteous m an ner.

B A C K G R O U N D
O n J u n e 2 5, 2 00 8, th e P lann in g C om m ission con d i ti on al ly ap p roved Ten tat ive Tract M ap 18 70 7 (TT M 1 87 07 ) for c on d om i n i u m p u rp oses . T hen , at t he S ep t em b er 1 1, 2 0 1 7 C ity C ou ncil m eet in g , b on d s for TT M 18 70 7 w ere ap p roved for rep l acem ent wh ich in clud ed con st ru ct ion of for 14 3 si ng le fam i ly d etached s in g l e fam ily res id en t ial un its on a 16 .26 g ross acre site.

Taylor M orrison was req u ired to p ost p erform ance an d lab or and m aterials b on d s for p ub lic im p rovem en ts i n the am ou nt of $4,1 99 ,00 0 an d $2 ,10 0,0 00 , resp ectively. Th ese b ond s ensured that all th e req uired p u b lic im p rovem en ts for the p roject were com p leted .

At th e Feb ru ary 8 , 2 02 1 C ou n c il m eet in g , th e c ou n ci l red u ced t he b on d am oun ts t o 2 5% of th e orig in al $4 ,19 9,0 00 am ou n t, as constructi on h ad p rog res sed , b u t not c om p let ed . T he rem ain in g Perform an ce B on d am ou nt of $1 ,04 9,7 83 and th e Lab or an d M aterial B on d am oun t of $5 25 ,00 0.

I S S U E S /A N A L Y S I S
I n conform an ce w it h the con d itions of ap p roval con tai ned i n Resol u t ion N o. 4 87 4 b y the P lann in g C om m ission, Taylor-M orrison has com p leted th e im p rovem en ts req uired for the d evelop m ent. Th e C i ty has in sp ect ed t h e com p leted im p rovem en ts an d fou nd th em to b e in com p lian ce with th e ap p roved p lans.

Th e C it y c an n ow ac cep t t he off-si te im p rovem ents and releas e th e rem ai n i n g Perform an ce B on d . Th e work h as b een com p l eted for m ore t han on e year. Th is b on d w ill b e rel eased as no m aterial d efects h ave b een rep orted or foun d .

S im ilarly, th e Lab or an d M at erial B on d will b e releas ed after th is ac ti on is ap p roved as th ere have b een n o c lai m s (e.g . b y ven d ors , su b c on t rac tors, et c.) fi led ag ainst t he p roject in accord ance w ith U p land M u nicip al C od e S ection 1 6.2 0.0 10 .

F I S C A L I M P A C T S
Th e C it y is acc ep t in g ap p roxim atel y $3 ,49 9,2 78 (see att ach ed en g i n eer's est im ate) in p ub lic im p rovem en ts w hich w ill b e m aintain ed b y th e C ity g oin g forw ard .

A L T E R N A T I V E S
P rovid e altern ative d irection to staff.

AT TAC HM E NT S :

Description
T R 18707 Bond and E stimate

S T A F F R E P O R T
I T E M N O . 10.M .

D A T E :N ovem b er 14 , 20 22
T O :M A YO R A N D C I T Y C O U N C I L
F R O M : M I C H A E L B L A Y, C I T Y M A N A G E R P R E P A R E D B Y : R O B E RT D. D A L Q U E S T, D E V E LO P M E N T S E R V I C E S D I R E C TO R

J A C Q U E L I N E S I S K , A S S O C I A T E P L A N N E R S U B J E C T :2 02 2 M I L L S A C T C O N T R A C T S F O R F I V E (5 ) H I S TO R I C

P R O P E R T I E S

R E C O M M E N D E D A C T I O N
I t is recom m end ed that th e C ity C oun cil ap p rove th e M ills A ct con tracts for five (5 ) historic p rop erties an d au th orize the C ity M an ag er to execute th e d ocum ents.

G O A L S T A T E M E N T
Th e p rop osed ac ti on su p p orts t he C it y's efforts to p reserve, p rotec t an d restore th e sites, stru ctures an d d is tric ts w h i ch h ave architectu ral and h i st ori cal sig nificance to t he C it y of Up lan d .

B A C K G R O U N D
O n M ay 2 4 , 1 99 3, t h e C ity C ou n ci l ad op ted U p lan d ’s H ist oric P res ervat ion O rd inan ce (O rd in ance N o. 1 58 0), w h i ch con tains c it yw id e p olicies an d p roced u res for historic p reservation. T he H i st ori c P res ervat ion O rd inan ce (U M C C h ap t er 1 7.2 6) p rom otes th e u s e of ap p rop riate p res ervat ion incentives to encourag e own ers to m ai n t ain their c ul tu ral resou rces th rou g h p reservation incentives, su ch as M ills A ct contracts.

Th e M i ll s A ct , ad op t ed as S tat e L aw in 1 97 2 an d cod ified u n d er C alifornia Revenu e an d Taxation C od e S ecti on 4 39 , created an altern ative m et hod for d eterm i ni ng ass ess ed val u e for certain q u ali fied h i st ori c p rop ert ies . Th is leg is lat ion all ow s own ers of p rop erties listed on Up lan d ’s Local Reg i st er of H i st ori c P laces to ob t ain a red u c ti on of p rop erty taxes i n exchan g e for p reservin g or reh ab i li tat in g t hei r p rop ert ies. Th e M ills A c t p roc ess in volves th e C ou nty Tax A ssessor’s re-evalu ation of p rop erty valu es u sing th e in com e/cap italization m ethod rather th an calcu latin g m arket val u e of t h e p rop erti es. T h i s m et hod i s calcu lat ed b y d eterm in in g w hat the p rop erty c ou l d reas onab ly b e exp ected to yiel d or p rod u ce and d i vid ed b y a cap italization

rate. T h e M ills A c t p roces s could save a p rop erty ow ner an averag e of 4 0 p ercen t on their p rop erty taxes for ap p roved p rop erties.

E ach h istorical p rop erty with in t he C i ty h as b een assig ned a N ati on al Reg ist er of H istorical P laces eli g i b i li ty cod e to d et erm in e t he level of sig nificance an d p oten ti al for l is ti n g on the local, state, or n ational level. S ee Attachm ent 1 for d etails of E lig ib ility C od es.

To b e elig ib le for a M ills A ct cont ract, a p rop erty m u st b e on t h e C ity’s L ocal Reg ister of H istoric P l aces an d b e rat ed at least a 5 D. T h ere are c u rren tl y 5 89 p rop ert ies listed on the C ity’s L ocal Reg ister of H istoric P laces of wh ich, 1 75 p rop erties h ave M ills A ct con tracts.

I S S U E S /A N A L Y S I S
A s s h own in A tt ach m en t 2 , p rop ert y ow n ers of five (5) h i st ori c p rop ert ies are req u est in g the C ity C oun cil’s authorization to enter into M ills A ct con tracts for th eir historic p rop erties.

I n return for red uced p rop erty taxes, th e p rop erty own ers w ould com m it to restoring and /or reh ab ilitatin g th eir p rop erty over a ten -year p eriod . T h ese i m p rovem en t s i nclu d e rest oring or rep lacin g b oth th e in terior and exterior elem en t s of t h e p rop ert y su ch as roofs, floors, w in d ows, ext erior and i n t eri or p ai n t , sid ing , land scap ing , an d fencin g . A li st of sp ecific im p rovem en ts for eac h of th e p rop erti es is att ach ed t o each cont ract. T h e p rop osed im p rovem en ts m eet th e follow in g req u irem en ts:

I m p rovem en ts s hou ld m eet or exceed t h e an nu al savi n g s i n tax d oll ars to th e p rop erty ow ners;
At leas t on e of the im p rovem en ts is t o b e com p l eted ann ually over the ten -year d uration of th e con tract.

Th e p rop osed M ills A ct contracts in clud e th e follow in g g eneral p rovisions:

A ten -year d u rati on wi th aut om at ic ren ew al on an an n u al b as is un les s n otice of n on- ren ew al is filed b y the own er or th e C ity.

Req u irem en ts for restoration i m p rovem en t s or p res ervat ion of t he p rop erty over a m inim u m ten-year p eriod .

Transferab le with no re-assessm en t of the p rop erty up on sale.

C an cellation p rovision s b y th e C ity, if th e con tract term s are b reached .

A p enalty of 1 2.5 % of fu ll p rop erty val ue, as ses sed to th e p rop erty own er for early can cellation .

Th e M ills A ct contract is record ed with the S B C oun ty Record er's O ffice and rem ains with the p rop erty for th e d u rati on of th e c ont rac t, an d w ould keep taxes at a red u ced rate for the b en efit of a fu t u re own er. T herefore, t h e M il ls A ct is a g ood sel li n g p oin t for fut ure b u yers , d ue to the p rosp ect of low er p rop erty taxes.

A ll of th ese p rovis ion s are im p l em en ted t o p rovi d e an in cen ti ve-b ased p rog ram to assist in the con tinu in g im p rovem ent of Up lan d ’s historic d istricts and resources. Th is p rog ram is con sistent with C om m u n it y C h aracter E lem en t G oal C C-9 of t h e G en eral P lan an d is end orsed b y U p land H eritag e, w hos e p u rp ose i s to p rom ote t he p reservat ion of th e h i st ori c h eri tag e of th e C i ty. A tt ach ed , p lease fi n d a sam p le S t an d ard M ills A c t C on tract (Attachm ent 3) th at w ill b e p rep ared for eac h of th e five p rop erti es an d h as b een review ed an d ap p roved b y th e C ity Attorn ey; t he p rop os ed M ills A ct i m p rovem en t list for eac h of th e fi ve ap p lication s (Attach m en t 4 ), as w ell as a letter of su p p ort from U p l and H eri tag e for th e M i ll s A ct ap p lication s (Attachm ent 5).

F I S C A L I M P A C T S
Th e C ity of U p land receives ap p roxim ately 9 .35 % of th e 1% ad valorum tax levied b y the C ou nty of S an B ern ard in o Tax A ssessor. A s shown Tab l e 6 (at tac hed ), th e S an B ernard ino C ou nty Tax A ssessor’s est im ates of an n u al t ax saving s for t he five (5 ) h is toric p rop erti es an d th e estim ated ann ual red uction in p rop erty tax revenu e to the C ity.

A s shown in attach ed Tab le 6, w ith ap p roval of th e p rop osed M ills A ct C ontracts the red uction in C it y tax revenu e wi ll b e ap p roxim ately $2,2 48 . Th e an n u al red u ct ion w ill ch an g e from year to year as p rop erty val uat ion s are reassessed d u e t o fluctu ations in th e econom y, or i f the p rop erties b ec om e ren t als w h i ch are assessed at a h ig her t ax rat e. O n averag e, the C oun ty A ssessor estim at es th at th e t yp i cal or averag e i nc reas e i n p rop erty valuation is 2% p er year; th e m os t allow ed u nd er P rop osition 13 . T he p rop ert ies will b e reassessed in early 2 02 3, w ith th e tax relief for the p rop erty ow ners reflected on the fall 2 02 3 p rop erty tax b ills.

Th e t otal ap p roxim at e fiscal i m p act of all exi st in g M il ls A ct con tract s on th e C it y’s revenu e w as also an al yzed . To estim at e the an n u al p rop erty tax red uction as soc iat ed w it h th e existin g con tracts, st aff u sed an averag e of $2 ,15 0 p er p rop erty p er year. B ecau se the C ity of Up lan d only rec eives $0 .0 9 3 5 for every d ol lar of p rop erty tax col lected , t he averag e loss of reven ue p er p rop ert y is estim ated at $1 72 .00 . C u rrently, a tot al of 17 5 p rop ert ies have act ive M ills A ct C on tracts wh ic h result in an ap p roxim at e total los s of $30 ,10 0. i n p rop erty tax reven u e for the C ity p er year. T he ap p roval of the five (5) ap p lications t hi s year wou ld b ring t he an n u al total of lost revenu e to ap p roxim ately $3 2,3 48 .

A s n oted in th e p reviou s section , i t i s m and ated th at tax d oll ars saved b y t he p rop erty ow ners b e reinvested i n t o th e p rop ert y for th e com p let ion of sp eci fic im p rovem en ts i nclu d ed i n the S tand ard Res id ent ial M ills A c t C ontract. Th e estim ated t ax losses are exp ected t o b e offset b y th e overall en han cem ent, stab ilization , and in creased valu e of th e su rroun d ing p rop erties, w hich cou ld oth erwise ag e and b ecom e a p oten tial b lig h t to th e C ity.

A L T E R N A T I V E S

1. Th e C ity C oun cil cou ld d eny th e M ills A ct cont racts for the p rop erties. T his w ould save th e C it y ap p roxim atel y $2 ,24 8. p er year in lost p rop erty tax revenu e, h ow ever this altern ative is not consisten t w it h th e C it y's g oal of p rom oti n g h is toric p res ervat ion . A lso, th e p rop os ed im p rovem en ts t o t he hist oric hom es an d b u il d i n g s have m u ch g reater valu e to those p rop erties, as w ell as the n eig hb orh ood s in w hich th ey are located .

2. P rovid e altern ative d irection to staff.

AT TAC HM E NT S :

Description
Attachment 1: Eligibility Codes
Attachment 2: Properties Applying for M ills Act
Attachment 3: M ills Act Agreement 2022
Attachment 4: M ills Act Improvement L ists 2022
Attachment 5: M ills Act Support Letter 2022
Table 6 - Annual Tax Savings

Table 1
National Register of Historic Places Eligibility Codes

1 Listed in the National Register
2 Determined eligible for listing in the National Register in a formal process 3 Appears individually eligible for listing in the National Register in the judgment of the person completing or reviewing the inventory.
3D Appears eligible for listing only as a contributor to a potential National Register District 4 May become individually eligible for listing in the National Register when:
 More architectural or historical research is performed;  The property is restored to an earlier appearance;
 More significant examples of the property’s architectural style are demolished; or  The property becomes old enough to meet the Register’s 50 year requirement. 4D May become individually eligible for listing in the National Register (as above) only as a contributor to a district.
5 Is individually listed or is eligible for listing under a local preservation landmark ordinance 5D Is listed or eligible for listing as a contributor to a locally designated district or preservation area
5S3 Is not eligible for separate listing under an existing or likely local ordinance, but is eligible for special consideration in the planning process
5D3 Is a contributor to a district that is unlikely to be designated as a local district, but is eligible for special consideration in the planning process
6 Locally Significant, but not eligible for the Local Register.

Table 2
Properties Applying for Mills Act Contracts
Applicant Address APN District Year Built Code Local Register MA-
22-
0001
Erin Carman
Michael
Carman
1388 N.

Euclid
Ave.
1045-362-30 Euclid Revival 1931 5D 04/28/2004
MA-
22-
0002
Scott F. Leslie
Kelly K. Leslie
637 N.
2nd Ave. 1046-262-12 Magnolia 1895 5/4D 03/26/2003
MA-
22-
0003
Jonathan Sleigh
509 N.

Euclid
Ave.
1046-282-20 Euclid
Craftsman 1909 3D 04/28/2004
MA-
22-
0004
Donavan Price
140 S.

Euclid
Ave.
1046-601-09 Euclid 1902 4 04/28/2004
MA-
22-
0005
Roberta Ann
Lepins
2390 N.

San
Antonio
Ave.
1043-011-02 Individual 1925 5 10/26/22

RECORDING REQUESTED BY

AND WHEN RECORDED MAIL DOCUMENT TO:

NAME

STREET

ADDRESS

CITY, STATE &

ZIP CODE

SPACE ABOVE FOR RECORDER'S USE ONLY

Title of Document

THIS COVER SHEET ADDED TO PROVIDE ADEQUATE SPACE FOR RECORDING INFORMATION ($3.00 Additional Recording Fee Applies)

Historical Agreement Rev 2022 1

HISTORIC PROPERTY PRESERVATION AGREEMENT

THIS AGREEMENT is made and entered into on November 14, 2022, by and between the CITY OF UPLAND, a municipal corporation (hereinafter referred to as the “City”) and [Property Owner as shown on Deed] (hereinafter referred to as the “Owner”).

W I T N E S S E T H:

A. Recitals.
(i) California Government Code Sections 50280, et seq. authorizes cities to enter into contracts with the owners of qualified historical property to provide for the use, maintenance and restoration of such historical property so as to retain its characteristics as a property of historical significance;
(ii) Owner possess fee title in and to certain real property, together with associated structures and improvements thereon, generally located at Address, Upland, California, (hereinafter such property shall be referred to as the “Historic Property”). A legal description of the Historic Property is attached hereto, marked as Exhibit “A”, and is incorporated herein by this reference;
(iii) On Date, the Planning Commission of the City of Upland adopted its Resolution No. XXXX thereby declaring and designating the Historic Property as a historic landmark pursuant to the terms and provisions of the Upland Municipal Code; and, (iv) City and Owner, for their mutual benefit, now desire to enter into this Agreement both to protect and preserve the characteristics of historical significance of the Historic Property and to qualify the Historic Property for an assessment of valuation pursuant to the provisions of Chapter 3, of Part 2, of Division 1 of the California Revenue and Taxation Code.

B. Agreement.

NOW, THEREFORE, City and Owner, in consideration of the mutual covenants and conditions set forth herein, do hereby agree as follows:

1. Effective Date and Term of Agreement. This Agreement shall be effective and commence on November 14, 2022, and shall remain in effect for a term of ten (10) years thereafter “Initial Term”.

Historical Agreement Rev 2022 2

2. Renewal. After the initial ten (10) year term, each year on the anniversary thereafter of the effective date of this Agreement (hereinafter referred to as the “renewal date”), this Agreement shall extend for an additional year unless notice of nonrenewal is mailed as provided herein. If either Owner or City desires in any year following the Initial Term not to renew the Agreement, Owner or City shall serve written notice of nonrenewal of the Agreement on the other party in advance of the first or succeeding annual renewal date of the Agreement within the timeframes set forth herein. In the event Owner does not wish to renew this Agreement, Owner shall provide City written notice at least ninety (90) days prior to the annual renewal date. In the event City does not wish to renew this Agreement, City shall provide written notice to Owner not less than sixty (60) days prior to the annual renewal date. Upon receipt by Owner of a notice of nonrenewal from City, Owner may make a written protest of the notice. City may, at any time prior to the annual renewal date of the Agreement, withdraw its notice to Owner of nonrenewal.

If either City or owner serves notice to the other of nonrenewal in any year, the Agreement shall remain in effect for the balance of the term then remaining, either from its original execution or from the last renewal of the Agreement, whichever may apply.

3. Standards for Historical Property. During the term of this Agreement, the Historic Property shall be subject to the following conditions, requirements and restrictions:
a. Owner shall restore, preserve and maintain the characteristics of historical significance of the Historic Property. Attached hereto, marked as Exhibit "B", and incorporated herein by this reference, is a list of those minimum standards and conditions for maintenance, use and preservation of the Historic Property, which shall apply to such property throughout the term of this Agreement. If this Agreement is renewed after the Initial Term, any modifications of the standards adopted by the City of Upland in Exhibit B shall apply to the Historic Property.
b. Owner shall, where necessary, restore and rehabilitate the Historic Property according to the rules and regulations of the office of the Historic Preservation of the State Department of Parks and Recreation. Attached hereto, marked as Exhibit “C”, and incorporated herein by this reference, is a list of those conditions pertaining to the restoration or rehabilitation of the Historic Property.
c. At least every five (5) years, Owner shall allow reasonable periodic examinations, by prior appointment, of the interior and exterior of the Historic Property by representatives of the County Assessor, State Department of Parks and Recreation, State Board of

Historical Agreement Rev 2022 3
Equalization and City, as may be necessary to determine Owner's compliance with the terms and provisions of this Agreement.
d. Owner shall provide written notice of this Agreement to the Office of Historic Preservation within six months of execution of this Agreement.

4. Provision of Information of Compliance. Owner hereby agrees to furnish City with any and all information requested by City which may be necessary or advisable to determine compliance with the terms and provisions of this Agreement.

5. Cancellation. City, following a duly noticed public hearing as set forth in California Government Code Sections 50280, et seq., may cancel this Agreement if it determines that Owner breached any of the conditions of this Agreement or has allowed the Historic Property to deteriorate to the point that it no longer meets the standards for a qualified historic property.

City may also cancel this Agreement if it determines that Owner has failed to restore or rehabilitate the Historic Property in the manner specified in subparagraph 3(b) of this Agreement. In the event of cancellation, Owner may be subject to payment of those cancellation fees set forth in California Government Code Sections 50280, et seq.

6. Enforcement of Agreement. In lieu of and/or in addition to any provisions to cancel the Agreement as referenced herein, City may specifically enforce, or enjoin the breach of, the terms of this Agreement. In the event of a default under the provisions of this Agreement by owner, City shall give written notice to Owner by registered or certified mail addressed to the address stated in this Agreement, and if such a violation is not corrected to the reasonable satisfaction of City within thirty (30) days thereafter, or if not corrected within such a reasonable time as may be required to cure the breach or default if said breach or default cannot be cured within thirty (30) days (provided that acts to cure the breach or default must be commenced within thirty (30) days and must thereafter be diligently pursued to completion by Owner), then City may, without further notice, declare a default under the terms of this Agreement and may bring any action necessary to specifically enforce the obligations of Owner growing out of the terms of th is Agreement, apply to any court, state or federal, for injunctive relief against any violation by Owner or apply for such other relief as may be appropriate.

City does not waive any claim of default by Owner if City does not enforce or cancel this Agreement. All other remedies at law or in equity which are not otherwise provided for in this Agreement or in City’s regulations governing historic properties are available to the City to pursue in the event that there is a breach of this Agreement. No waiver by City of any breach

Historical Agreement Rev 2022 4
or default under this Agreement shall be deemed to be a waiver of any other subsequent breach thereof or default hereunder.

7. Binding Effect of Agreement. Owner hereby subjects the Historic Property to the covenants, reservations and restrictions as set forth in this Agreement. City and Owner hereby declare their specific intent that the covenants, reservations and restrictions as set forth herein shall be deemed covenants running with the land and shall pass to and be binding upon the owner's successors and assigns in title or interest to the Historic Property. Each and every contract, deed or other instrument hereinafter executed, covering or conveying the Historic Property, or any portion thereof, shall conclusively be held to have been executed, delivered and accepted subject to the covenants, reservations and restrictions expressed in this Agreement regardless of whether such covenants, reservations and restrictions are set forth in such contract, deed or other instrument.

Owner hereby declares its understanding and intent that the burden of the covenants, reservations and restrictions set forth herein touch and concern the land in that Owner's legal interest in the Historic Property is rendered less valuable thereby. City and Owner hereby further declare their understanding and intent that the benefit of such covenants, reservations and restrictions touch and concern the land by enhancing and maintaining the historic characteristics and significance of the Historic Property for the benefit of the public and Owner.

8. Notice. Any notice required to be given by the terms of this Agreement shall be provided at the address of the respective parties as specified below or at any other address as may be later specified by the parties hereto.

To City: City of Upland
460 North Euclid Avenue
P.O. Box 460
Upland, California 91785
Attention: Development Services Director

To Owner: Owner
Street Address
Upland, CA 91786

9. General Provisions.
a. None of the terms, provisions or conditions of this Agreement shall be deemed to create a partnership between the parties hereto and any of their heirs, successors or

Historical Agreement Rev 2022 5
assigns, nor shall such terms, provisions or conditions cause them to be considered a joint venture or members of any joint enterprise.
b. Owner agrees to and shall hold City and its elected officials, officers, agents and employees harmless from liability for damage or claims for damage for personal injuries, including death, and claims for property damage which may arise from the direct or indirect use or operations of Owner or those of any contractor, subcontractor, agent, employee or other person acting on Owner’s behalf which relate to the use, operation and maintenance of the Historic Property. Owner hereby agrees to and shall defend City and its elected officials, officers, agents and employees with respect to any and all actions for damages, or injuries caused by, or alleged to have been caused by, reason of owner's activities in connection with the Historic Property. This hold harmless provision applies to all damages, injuries and claims for damages, or injuries suffered, or alleged to have been suffered, by reason of the operations referred to in this Agreement regardless of whether or not the City prepared, supplied or approved the plans, specifications or other documents for the Historic Property. c. All of the agreements, rights, covenants, reservations and restrictions contained in this Agreement shall be binding upon and shall accrue to the benefit of the parties herein, their heirs, successors, legal representatives, assigns and all persons acquiring any part or portion of the Historic Property, whether by operation of law or in any manner whatsoever.
d. In the event legal proceedings are brought by any party or parties to enforce or restrain a violation of any of the covenants, reservations or restrictions contained herein, or to determine the rights and duties of any party hereunder, the prevailing party in such proceeding may recover all reasonable attorney's fees to be fixed by the court, in addition to court costs and other relief ordered by the court.
e. In the event that any of the provisions of this Agreement are held to be unenforceable or invalid by any court of competent jurisdiction, or by subsequent preemptive legislation, the validity and enforceability of the remaining provisions, or portions thereof, shall not be effected thereby.
f. This Agreement shall be construed and governed in accordance with the laws of the State of California.

Historical Agreement Rev 2022 6

10. Recordation. No later than twenty (20) days after the parties execute and enter into this Agreement, City shall cause this Agreement to be recorded in the Office of the County Recorder of the County of San Bernardino.

11. Amendments. This Agreement may be amended, in whole or in part, only by a written and recorded instrument executed by the parties hereto.

12. Exhibits. The following exhibits are attached:

Exhibit “A” Legal Description.

Exhibit “B” Improvements List.

Exhibit “C” Standards of Rehabilitation.

Historical Agreement Rev 2022 7
IN WITNESS WHEREOF, City and Owner have executed this Agreement on the day and year first written above.

CITY OF UPLAND

Dated: ____________________ By: _____________________________ Michael Blay, City Manager

OWNER

Dated: ____________________ By: _____________________________ Property Owner

Dated: ____________________ By: _____________________________ Property Owner

Dated: ____________________ By: _____________________________ Property Owner

Historical Agreement Rev 2022 8

ALL CAPACITY ACKNOWLEDGMENT

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

STATE OF CALIFORNIA

COUNTY OF SAN BERNARDINO
On , , before me,
(here insert name and title of the officer)
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)

Historical Agreement Rev 2022 9

EXHIBIT “A”

LEGAL DESCRIPTION
FOR

Address, Upland, CA 91786

Legal Description

APN: XXXX-XXX-XX

Historical Agreement Rev 2022 10
EXHIBIT “B”

IMPROVEMENTS LIST
FOR

Address, Upland, CA 91786

YEAR IMPROVEMENTS

1. 2.

3. 4.

5. 6.

7. 8.

9. 10.

Historical Agreement Rev 2022 11
EXHIBIT “C”

Standards of Rehabilitation

1. Every reasonable effort shall be made to provide a compatible use for a property that requires minimal alteration of the building structure, or site and its environment, or to use a property for its originally intended purpose.

2. The distinguishing original qualities or character of a building, structure, or site and its environment shall not be destroyed. The removal or alteration of any historic material or distinctive architectural features should be avoided when possible.

3. All buildings, structures, and sites shall be recognized as products of their own time.

Alterations which have no historical basis and which seek to create an earlier appearance shall be discouraged.

4. Changes, which may have taken place in the course of time, are evidence of the history and development of a building, structure, or site and its environment. These changes may have acquired significance in their own right, and this significance shall be recognized and respected.

5. Distinctive stylistic features or examples of skilled craftsmanship, which characterize a building, structure, or site shall be treated with sensitivity.

6. Deteriorated architectural features shall be repaired rather than replaced, wherever possible. In the event replacement is necessary, the new material should match the material being replaced in composition, design, color, texture, and other visual qualities. Repair or replacement of missing architectural features should be based on accurate duplications of features, substantiated by historical, physical, or pictorial evidence rather than on conjectural designs or the availability of different architectural elements from other buildings or structures.

7. The surface cleaning of structures shall be undertaken with the gentlest means possible.

Sandblasting and other cleaning methods that will damage the historic building materials shall not be undertaken.

8. Every reasonable effort shall be made to protect and preserve archeological resources affected by, or adjacent to any acquisition, protection, stabilization, preservation, rehabilitation, restoration, or reconstruction project.

IMPROVEMENTS LIST

1388 N. Euclid Ave.

YEAR IMPROVEMENTS

1. Restore and repair tiles on roof, tent house for termites, rehabilitate landscaping, power wash exterior, remove old carpet restore and update wood flooring

2. Refinish front door, restore cracked and bubbling stucco on exterior, paint exterior, replace window awnings, fix gate latch, exterior landscaping trees

3. Update mailbox to be architecturally compatible with home, fix garage door, paint garage door, update electrical work, maintenance landscaping

4. Update window screens, restore Spanish style flooring, restore bathroom and laundry room flooring, maintenance landscaping

5. Refinish original wood floors, restore staircase, update AC unit, maintenance landscaping

6. Update Kitchen appliances, update light fixtures, pressure wash exterior, maintenance landscape

7. Repair cracks in interior walls, paint, repair kitchen walls that are bubbling and cracking, Repurpose kitchen cabinets,
maintenance landscaping

8. Exterior patio covering, revitalize downstairs bathroom, replace back gate, maintenance landscaping

9. Update pillar lighting on exterior to be architecturally compatible with home, maintenance landscaping, refinish woof flooring, maintenance landscaping

IMPROVEMENTS LIST

637 N. 2nd Ave.

YEAR IMPROVEMENTS

1. Exterior paint for north, west and south
elevation of home

2. Foundation Support

3. Repair window (east facing 3 guest rooms
windows)

4. Repair windows (living room and office
windows)

5. Repair windows (south facing windows in
office)

6. Repair windows (west facing windows in
laundry room)

7. Repair windows (north facing windows in
bedroom)

8. Replace wood for bottom siding on east and
north side of house and paint exterior

9. Replace wood for the bottom siding on west
and south side of house and paint exterior

10. Replace 4 front porch supports

IMPROVEMENTS LIST

509 N. Euclid Ave.

YEAR IMPROVEMENTS

1. Fix Fence and Paint

2. Paint Interior

3. Plumbing

4. Exterior retain and repair wood siding

5. Retain and repair wood flooring

6. Maintain and restore landscaping

7. Retain and repair garage

8. Restore windows as needed

9. Paint exterior

10. Retain and repair interior wood work

IMPROVEMENTS LIST

140 S. Euclid Ave.

YEAR IMPROVEMENTS

1. Seismic Retrofit

2. Restore Double Hung Windows

3. Update landscaping approved

4. Repaint and plaster exterior

5. Connect building to City Sewer

6. Replace roof

7. Replace waterman service to building

8. Underground electric system

9. Update ADA requirements to parking lot

10. Restore parking area and restripe parking lot

IMPROVEMENTS LIST

2390 N. San Antonio Ave.

YEAR IMPROVEMENTS

1. Replace Upper Roof

2. Replace North Upper Roof/ Deck

3. Replace South Upper Roof/ Deck

4. Repair Exterior Stucco

5. Repair North Lower Entrance Deck

6. Repair Sloping Foundation

7. Replace North Entrance Concrete Stairs

8. Remodel Upstairs Bathroom

9. Repair Interior Ceilings & Walls

10. Maintain Overgrown Trees, Wrought Iron

UPLAND HERITAGE
PO Box 1828 Upland, CA 91785
www.uplandheritage.org
909 981-0280

“Preserving the Past to Enrich our Future”

November 2, 2022

City of Upland
Mayor and City Council Members
460 N Euclid Avenue
Upland, CA 91786
Dear City Council,
The Mills Act has been a huge benefit to homeowners in the City of Upland since it was implemented allowing for the preservation and restoration of Upland’s historic homes. In turn this enhances the Cities property values, which means higher values in the future that will bring in more tax revenue for the City.

Upland Heritage fully supports the Mills Act for the following homes: 509 and 1388 N Euclid Avenue, 637 N 2nd Avenue, 140 S Euclid Avenue, and 2390 N San Antonio Avenue.

The Mills Act is a great tool to entice homeowners to improve their homes as well as their communities. Upland Heritage supports the Mills Act and hopes that the City will continue their support as well. Please approve the above listed Mills Act Applications.

Best Regards,

Kati Parker
Upland Heritage President

Table 6
Annual Tax Savings
Address APN Approximate
Total Tax
Reduction
Approximate
Annual Loss to
Upland
1388 N. Euclid Ave 1045-362-30 6722 629
637 N. 2nd Ave 1046-262-12 4890 457
509 N. Euclid Ave 1046-282-20 2803 262
140 S. Euclid Ave. 1046-601-09 6564 614
2390 N. San Antonio
Ave.
1043-011-02 3068 287

S T A F F R E P O R T
I T E M N O . 10.N .

D A T E :N ovem b er 1 4, 2 02 2
T O :M A YO R A N D C I T Y C O U N C I L
F R O M : M I C H A E L B L A Y, C I T Y M A N A G E R P R E P A R E D B Y : R O B E R T D. D A L Q U E S T, D E V E LO P M E N T S E R V I C E S D I R E C TO R S U B J E C T :C O N S I D E R A T I O N O F A L E A S E A G R E E M E N T W I T H T E S L A M OTO R S C A N A D A F O R A 3 5,0 00 S Q U A R E F O OT A R E A W I T H I N A C I T Y-

O W N E D R E S E R V O I R S I T E LO C A T E D O N T H E N O RT H W E S T C O R N E R O F 15 T H S T R E E T A N D 6 T H A V E N U E (A P N : 1 04 5-0 81 -40 & 55 ); A N D D E T E R M I N I N G T H A T T H E L E A S E A G R E E M E N T I S

E X E M P T F R O M T H E C A L I F O R N I A E N V I R O N M E N TA L Q U A L I T Y A C T (C E Q A )

R E C O M M E N D E D A C T I O N
I t is recom m en d ed t h at t he C i ty C ou ncil ap p rove a L eas e A g reem en t b et w een th e C ity of Up lan d an d Tes la C orp orat ion C an ad a for a 3 5,0 00 sq uare foot area wi th in a city-own ed reservoir s it e t hat is 4.3 1 ac res i n si ze located on th e n ort h wes t corner of 1 5t h S t reet an d 6th Avenu e (A P N : 10 45 -08 1-0 4 & 5 5); authorize th e C ity M anag er t o execu te t h e ag reem en t; d eterm in e th at th e l ease ag reem en t is exem p t from th e C aliforn ia E nviron m en tal Q u ality A ct (C E Q A ) p ursu ant t o G u id eli nes S ect ion 1 50 61 (B )(3 ) and 1 53 11 ; an d d i rec t st aff t o fi le a N otice of E xem p tion p u rsuan t to th e C alifornia E nviron m en tal Q uality A ct.

G O A L S T A T E M E N T
Th e p rop os ed act ion will su p p ort t h e C i ty’s g oal t o en han ce local g overn m en t fun d ing an d p rotect its assets.

B A C K G R O U N D
Tesla M otors C orp orat ion C anad a (“Tesl a”) h as leased t he old C N C M ot ors P rop ert y at 1 01 8 E . 20 th S t reet to op erate a n ew Tesla au t om ob il e d ealership . For t he p ast s everal m on th s, they have b een con st ru ct in g t enan t im p rovem en ts w it h i n t he b uild in g an d are n earing com p letion.

Tesla ap p roach ed staff an d ind icated th ey are lookin g for lan d off-site w ithin the vicinity of the

new d ealersh ip to tem p orari ly p ark/store ad d i ti onal n ew vehi cl es. Th ey are p l ann in g to im p rove t he vacant 1 .3-ac re p arcel to the east of t he n ew d ealersh ip site for p erm anen t vehicle storag e to resolve th is issu e.

S taff id entified the C ity-ow ned reservoir site on the n orthwest corn er of 1 5th S t reet an d 6 th Avenu e as a p ossib le site for Tesla w hich is 1.2 5 m iles away. T he reservoir site is 4 .31 acres in size an d c ont ain s a w ater tan k on t h e w estern p ortion of t h e s it e an d is vac ant w it h no im p rovem en ts on the b alance of th e p rop erty. Th e sit e is zon ed P B -R D istrict (P u b lic - Reservoir) wh ic h al lows su rface p arki n g on t he p rop erty. T he p rop erty i s s urrou nd ed on th ree sid es b y p ub lic streets to th e south (15 th S t.), n ort h (J an e C t.) and east (6 th A ve.). T he su rroun d ing lan d u ses in clud e: a w ater res ervoi r s it e to t h e s ou t h , a n eig h b orh ood com m ercial cen ter t o th e east, an d sin g l e fam ily res id en c es t o th e n ort h , wes t an d sou th w est . Attach m en t 1 p rovid es an aerial of th e site an d the lease area.

I S S U E S /A N A L Y S I S
Un d er t he term s of t h e Lease A g reem en t (S ee A t t achm ent 2), Tesla w ill lease a 35 ,00 0 sq uare foot area with in t h e n ort hwest p ortion of t he reservoir s it e for $9,0 00 a m on t h . T he lease area w ill en ab l e Tesla to p ark/st ore u p to ap p roxim ately 1 00 n ew veh i cl es. T h e Lease is g ood for on e year w it h an op ti on for t w o, 1 -year ext ension s i f Tesla n eed s th e ad d it ion al tim e.

Th e L ease p rovid es Tesla w it h access an d t h e ri g h t to use th e l ease area from 7 :00 am to 6:0 0p m , M on d ay t h rou g h S u nd ay, i nclu d i ng h olid ays. O th er n otab le p rovis ion s in t he L ease A g reem ent in clud e:

Th e C it y wi ll p erform the in it ial work t o p rep are t he si te b y g rad in g th e l ease area an d in stall a 6-inch g ravel b ase. Tesla will reim b urse the C ity for the $19 ,35 0 cost.

Th e C it y is n ot resp onsib le for p rovid ing s ecu ri ty m easu res an d Tesla h as sole resp on sib ility for enacting security m easures it d eem s ap p rop riate for th e p rem ises.

Tesla wi ll assu m e al l risk of d am ag e t o it s p erson al p rop ert y an d i nc id ent al eq u ip m en t and w aives all c lai m s , excep t for c lai m s caused b y g ross n eg l ig en c e or w il lfu l m iscond uct of C ity or its au th orized rep resentatives.

Th e Leas e and all p rovision s w it h i n i t are for th e exclusive b en efit of Tesla an d n ot for the b en efit of any other p arty.

Tesla is req u ired to keep th e p rem ises i n g ood con d i ti on an d rep air, and res tore the p rem ises to a cond ition com m en su rate w ith the cond ition of th e rest of the p rop erty.

Tesla will su b m it a security d ep osit of $10 ,00 0 to th e C ity as security for Tesla’s p erform ance of th e term s i n t h e L ease, an d can b e u sed to cu re an y d efault of Tesla un d er t h e Leas e, or to c om p en s ate t he C ity for any loss or d am ag e incurred as a result of th e d efau lt.

Tesla ag rees to in d em nify, hol d h arm les s and d efen d th e C i ty from all los ses an d liab ilities, in cl ud in g court cos ts , and reason ab l e attorn ey’s fees ag ain st al l third -p arty claim s, d am ag es, exp enses, l iab il it ies , an d ju d g m en ts on accou nt of in ju ry to p erson s, loss of life, or d am ag es to p rop erty occurring on the Lease p rem ises.

D urin g t he t erm of t he L eas e, Tesla is req u ired t o m ai n t ain liab ilit y in su ran ce, w orker’s com p en sation in su ran ce and com m erci al autom ob ile in su ran ce at t he levels req u ired b y th e C ity.

L astly, th e C it y At torn ey h as review ed th e Leas e A g reem ents and i s rec om m en d in g ap p roval as to form and con ten t.

E N V I R O N M E N TA L D E T E R M I N A T I O N

Th e L ease A g reem en t is exem p t from th e C alifornia E nviron m en tal Q uality A ct (C E Q A ) p u rsuan t to S tate C E Q A G u id elines S ect ion 15 06 1(b )(3), w hi ch states t hat C E Q A d oes n ot ap p ly wh ere it can b e s een w it h certaint y that th ere is n o p ossib ility th at th e activit y in q u estion m ay h ave a sig nificant effect on th e environ m en t. T h e p roject onl y con cern s the tem p orary u se of t he s it e for p arki n g /st orag e of u p t o 10 0 n ew Tes la veh ic les on a l ease area of 3 5,0 00 s q u are feet with in a vacan t p art of a 4.3 1-acre C i ty res ervoi r site. Th e p rojec t also in clud es g rad in g th e lease area b y th e C it y an d in st all ati on of a 6-i n c h g ravel b as e. T h e L ease is also exem p t u nd er S ection 15 31 1 of t h e C E Q A G uid elin es (A cc ess ory S tru c tu res ), wh ich exem p ts th e con st ru ct ion , or rep lac em en t, of m i n or structu res acc ess ory to (ap p u rt en an t to) existing com m ercial, ind ustrial, or institu tional facilities wh ich inclu d es a sm all p arkin g lot.

L astly, non e of t h e excep t ion s p rovid ed i n S ection 1 53 00 .2 of th e C E Q A G u id eli n es to the C lass 11 exem p tion ap p ly, as t he p rojec t w ould n ot im p act an en vironm ental resou rc e of hazard ous or c ri ti cal con cern. T h ere are n o cu m u lat ive im p ac ts , as th e tem p orary p arkin g /storag e of vehicles on t h e 4 .31 -acre reservoir si te wou ld n ot b e d evelop ed i n t he sam e p lace over t im e. T h ere are n o u n u su al c ircu m s tan ces su rrou n d i n g th e p roject site an d the p roject wou ld not d am ag e resou rces w it h i n a s tat e scenic h ig hway, is n ot loc ated on a hazard ous w ast e sit e, an d wou ld n ot im p act t h e sig n ifican ce of a h istorical resource as t he site is cu rrent ly wi th in an u rb an i zed area on a C it y-ow n ed p rop erty con taining a w ater res ervoi r on a p ortion of the site.

F I S C A L I M P A C T S
Th e Lease A g reem en t will p rovi d e $9 ,00 0 p er m on th reven u e to th e W ater F u nd an d w il l n ot req uire any C ity resources t o m ain tai n . Tesl a w ill reim b urse th e C it y $19 ,35 0 for th e c ost to p rep are th e site an d install a 6 -in ch g ravel b ase.

A L T E R N A T I V E S
P rovid e altern ative d irection to staff.

AT TAC HM E NT S :

Description
Attachment 1: Aerial of the Reservoir site and L ease Area Attachment 2: L ease Agreement

Lease Area Attachment 1

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PARKING LEASE

This Parking Lease (“Lease”) is made by and between _City of Upland_____________, a __Municipality____________ whose address is 460 N. Euclid Ave. Upland CA 91786______________ (“Landlord”) and Tesla, Inc., a Delaware corporation [CHANGE TO TESLA MOTORS CANADA ULC IF CN] , whose address is 1 Tesla Road, Austin, TX, 78725 Legal/Lease Administration (“Tenant”) as of the date this Lease is fully executed by the parties as of the date last set forth below (“Effective Date”). Tenant and Landlord are each referred to herein as a “Party” and collectively as the “Parties.”

A. Property: The property located at _15th St. west of Campus more particularly described as APNs 1045-081-55 and 1045-081-40(the “Property”).

B. Premises: _35,000 sq.feet shown in Attachment ‘A’___________ (__) full-size parking spaces on the - parking area at the Property as more particularly set forth on Exhibit “A” attached hereto (such designated area, the “Premises”).

C. Commencement Date: The date that Landlord delivers written notice to Tenant that the Initial Site Preparation, defined below, is complete.

D. Expiration Date: ____________ ___, 202_.

E. Rent: The sum of _$9,000__________ Dollars and NO/100 ($_____) per month [________, Dollars and NO/100 ($_____) per parking space. Beginning on the first anniversary of the Commencement Date, and each year of the Term thereafter, Rent and CAM Charges (as such term is defined in Section Error! Reference source not found.) shall increase annually at the end of each 12-month period by any increase in the Consumer Price Index as determined by the U. S. Bureau of Labor Statistics for all Urban Consumers for the Riverside/San Bernardino/Ontario Metropolitan Area over the previous year. Should the CPI be discontinued, the index used for comparison shall be a comparable index as designated by the Bureau. It is recognized by both parties that the Index for any month is not published for approximately two months. Tesla shall, therefore, continue to pay the current rental paid by Tesla until such time as the new rental is calculated and, at that time, Tesla shall pay within ten (10) days of notice of the new Rent the new amount plus arrearages. In no event shall Rent ever decrease below the prior year’s Rent even if the CPI is negative. In such event, the Rent shall remain the same.

1. Property. Landlord, the owner of the Property, leases to Tenant and Tenant leases from Landlord the Premises. The Premises specifically excludes the building and other improvements located on the Property.

2. Term. The term of this Lease shall commence on the Commencement Date and shall terminate on the Expiration Date (the “Term”).

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3. Rent. Tenant shall pay Landlord the Rent as rent for the Premises. Any partial month of Rent will be prorated. Except for the first payment of Rent, which shall be paid within Ten (10) business days from the Effective Date, all Rent shall be due on the first (1st) business day of the month and shall be paid by electronic payment or wire transfer to the order of Landlord in accordance with the bank details provided by Landlord. Landlord acknowledges and agrees that Landlord (or any Landlord’s successor) must create an account in Tenant’s vendor portal, including completing vendor portal forms and uploading documents such as a W9, a bank document (bank issued letter on bank letterhead, bank statement, or a screenshot of bank statement) and a NDA form signed by Landlord, to the extent permitted by law, in order for Tenant to process payment to Landlord. In the event any installment of Rent is not received or postmarked on or before the seventh (7th) day of the month in which it is due after written notice from Landlord, a late payment penalty of Fifty Dollars and NO/100 ($50) shall be assessed and such amount shall be due and payable to Landlord with the next installment of Rent coming due under this Lease. In the event of a Chronic Delinquency (as hereinafter defined), at Landlord’s sole option, Landlord shall have the right, in addition to all other remedies under this Lease and at law, to require that Rent be paid by Tenant quarterly, in advance. This provision shall not limit in any way nor be construed as a waiver of the rights and remedies of Landlord provided herein or by law in the event of delinquency. “Chronic Delinquency” shall mean failure by Tenant to pay Rent, or any other payments required to be paid by Tenant under this Lease as and when due on three (3) or more occasions during the Term.

4. Permitted Use. Tenant may exclusively use the Premises solely as a parking lot and any other purpose or purposes incidental thereto including at Tenant’s reasonable discretion, parking and/or storage of cars, trucks or motorcycles and/or for the storage of Tenant’s materials or equipment (“Incidental Equipment.”) Without limiting the foregoing in this Section 4, Tenant shall not use, or permit the Premises or any part thereof to be used, for any purpose other than the purpose for which the Premises are hereby leased. No uses shall be made or permitted to be made of the Premises, nor acts done in, on, or about the Premises, that will increase the existing rate of insurance on the Premises, or any part thereof, nor shall Tenant sell or permit to be kept, used, or sold, in or about the Premises, any article that may be prohibited by the standard form of fire insurance policies. Tenant shall not commit, or suffer to be committed, any waste on the Premises, or any public or private nuisance, or other act or thing that may injure, annoy, or disturb the quiet enjoyment of any occupant of neighboring properties; nor, without limiting the generality of the foregoing, shall Tenant allow the Premises to be used for any improper, unlawful, or objectionable purpose. Tenant shall not allow motor vehicles to be repaired, serviced, or fueled on the Premises. Tenant shall not place any harmful liquids or Hazardous Materials in the drainage system of the Premises. - All use of the Premises by Tenant shall comply with applicable codes, laws, and ordinances.

5. Security Deposit: Concurrently with Tenant's execution of this Lease, Tenant shall deposit with Landlord the Security Deposit in the amount of $10,000. The Security

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Deposit shall be held by Landlord as security for Tenant's performance of the terms of this Lease. Landlord may (but shall not be required to) use all or any part of the Security Deposit to cure any default of Tenant under the Lease (after any required notice and expiration of any applicable cure period) or to compensate Landlord for any loss or damage which Landlord may incur as a result of Tenant's default. Tenant shall not be entitled to interest on the Security Deposit and Landlord shall not be required to keep the Security Deposit separate from its general funds. Where there have been no defaults by Tenant or where all applicable deductions from Security Deposit have been made as hereinabove provided, Landlord shall refund the then existing balance of the Security Deposit to Tenant within thirty (30) days of expiration or termination of this Lease.

6. Access to Premises. Tenant shall have access to and the right to use the Premises, - from 7am to 6pm, Monday – Sunday, including holidays. Tenant shall have the right in its reasonable discretion, without Landlord’s consent, to maximize exterior parking stalls located on the Premises subject to applicable codes.

Compliance with Legal Requirements. Tenant shall at Tenant’s sole cost and expense comply with all laws, statutes, ordinances, rules or regulations of any governmental entity relating to the Premises or any improvements to the Premises (collectively, “Legal Requirements”), including but not limited to, OSHA; CalOSHA; all provisions of the Americans With Disabilities Act (the “ADA”); the requirements of any federal or state labor board or commission; any direction or occupancy certificate issued by public officers; workers' and unemployment compensation laws; equal employment opportunity laws; and tax withholding laws, insofar as they relate to the condition, use, or occupancy of the Premises or the operation of the Premises. The judgment of any court of competent jurisdiction, or the admission of Tenant in any action or proceeding against Tenant, whether Landlord be a party or not, that Tenant has violated any Legal Requirement in the condition, use, or occupancy of the Premises, shall be conclusive of that fact as between Landlord and Tenant.

8. Construction and Alterations. Landlord shall perform the work to initially prepare the site, including grading and placement of a 6”gravel base (“Initial Site Preparation.”) Tenant shall reimburse Landlord for the entire cost of the the Initial Site Preparation (the cost of which is currently estimated to be $19,350) upon receipt of written invoice from the Landlord.

9. Utilities. Tenant agrees to arrange and pay the charges for all Tenant-related utility services provided or used in or at the Premises during the Term, including connection fees, upgrades, switchgear or any required infrastructure. Tenant shall pay directly to the utility company the cost of installation of any and all such Tenant- related utility services and shall arrange to have the utility service separately metered. Landlord shall not be responsible for any damages suffered by Tenant in connection with the quality, quantity or interruption of utility service, unless the cause of the disruption or damage was the Landlord’s gross negligence or intentional misconduct.

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10. Maintenance. Tenant shall be responsible for maintaining the Premises (including repair and replacement of any Incidental Equipment, as necessary) at its’ sole cost.

Tenant shall keep the Premises in good condition and repair. Landlord shall have no liability for damage to Tenant’s Incidental Equipment, if any, unless caused by Landlord’s sole negligence or intentional misconduct.

Removal. Tenant shall, at its sole cost, remove any Incidental Equipment promptly, and in no event longer than forty five (45) days after Lease expiration or earlier termination of this Lease and restore the Premises to a condition commensurate with the rest of the Property.

12. Indemnification by Tenant. Unless caused by Landlord’s gross negligence or willful misconduct, Tenant shall indemnify and defend Landlord and hold Landlord harmless from all losses and liabilities, including court costs and reasonable attorneys’ fees, on account of or arising out of or alleged to have arisen out of any third party claim directly related to (1) any breach or nonperformance by Tenant of any representation, warranty, covenant or obligation of Tenant contained in this Lease; (2) any bodily injury, death and/or damage to property occurring in or resulting from the use of the Premises and/or Incidental Equipment; (3) any bodily injury, death and/or damage to property that is incident to, arises out of, or caused by Tenant’s operations in the Premises; and (4) any act or omission of Tenant, its employees agents, contractors or its authorized representatives. As used in this Section 11, the term “Landlord” shall include Landlord and its officers, directors, partners, members, managers, shareholders, trustors, trustees, employees, property managers, agents and attorneys. To the extent such claim arises during the Term, the obligations of this Section 11 shall survive the expiration or earlier termination of this Lease.

A.

14. Insurance. Tenant hereby covenants and agrees that, prior to any entry on the Premises, and in any event, on or before the Term Commencement Date, and until expiration or termination of the Term, Tenant will care, at its sole cost:

A. Liability Insurance. Commercial general liability insurance, written on an “occurrence” policy form, with liability limits of One Million and No/100 Dollars ($1,000,000.00) per occurrence and Two Million and No/100 Dollars ($2,000,000.00) in the aggregate, covering bodily injury or third party property damage. Landlord, Landlord’s Lender and Landlord’s management company shall be included as an additional insured on the policy.

B. Workers’ Compensation. Tenant will maintain worker’s compensation insurance in accordance with state and federal law. This requirement may be waived if Tenant is a qualified self-insured in the state where the Premises are located or work is performed.

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C. Commercial Automobile Insurance. Tenant shall during the Term, at its sole cost and expense, procure and maintain commercial automobile insurance with a liability limit of no less than One Million and No/100 Dollars ($1,000,000.00).

D. Form of Policies and Additional Requirements. The insurance requirements set forth above are independent of Tenant’s waiver, indemnification, and other obligations under this Lease and shall not be construed or interpreted in any way to restrict, limit or modify Tenant’s waiver, indemnification and other obligations or to in any way limit Tenant’s liability under this Lease. In addition to the requirements above, the insurance shall be maintained with responsible insurance carriers with a Best Insurance Reports rating of “A-“ or better or through a formal self- insurance mechanism that has either (a) a Best Insurance Reports rating of “A-“ or better; or (b) a financial size category of “VI” or higher, provided, that if such self-insurance program does not meet either (a) or (b), then Tenant’s use of self-insurance for the coverages herein shall be subject to Landlord’s approval, not to be unreasonably withheld, conditioned, or delayed. Upon the execution of this Agreement and upon reasonable request by Landlord, Tenant shall deliver to Landlord a certificate evidencing all policies procured by Tenant in compliance with Tenant’s obligations under this Lease. Tenant or its insurance company shall provide Landlord with thirty (30) days' prior written notice if any coverage hereunder will be canceled (or 10 days' notice with respect to cancellation due to non-payment of premiums).

E. Waiver of Subrogation. Notwithstanding anything in this Agreement to the contrary, subrogation is waived, only as required by contract and where allowed by law, but subject to the terms and conditions of the insurances herein. Waiver of subrogation shall not apply if Landlord is solely or grossly negligent.

F. Self-Insurance. So long as Tenant continues to be the tenant, or an Affiliate of the Tenant or the then Tenant hereunder, and has a tangible net worth equal to or greater than $100,000,000, as reasonably determined using sound accounting principles, Tenant may self-insure for the insurance required under this Lease. Tenant’s obligations and liabilities shall be the same as those that would otherwise exist if Tenant had purchased and maintained the policy or policies of insurance that are otherwise required under the terms of this Agreement.

15. Security. Tenant hereby acknowledges that Landlord is not responsible for providing security for the benefit of Tenant and that Tenant has sole responsibility for enacting any and all security measures that Tenant shall deem appropriate for the Premises,

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at Tenant’s discretion. Tenant shall not be liable for or required to implement any security matters related to any areas outside of the Premises.

16. Casualty; Condemnation. Tenant may immediately terminate this Lease upon 30 days’ written notice if any portion of the Premises is taken for any public or quasi- public use or if the Property is damaged to the extent that Tenant is prevented from accessing the Premises or is prevented from using more than fifty percent (50%) of the Premises. If at any time during the Lease, the Property is destroyed in whole or in part, not in excess of fifty percent (50%), by a casualty, not the fault of Landlord, Tenant, at its own cost and expense, shall repair and restore the damage and all proceeds from the insurance required to be maintained by Tenant shall be made available to Tenant in connection with such repair and restoration. Tenant’s obligation for restoration described in this Section shall exist whether or not funds are available from insurance proceeds or are self-insured by Tenant. Rent shall not abate during any period of partial destruction, notwithstanding any event of Force Majeure.

17. Limitation on Liability: Notwithstanding anything herein to the contrary, the liability of Landlord under this Lease shall be limited and, accordingly, Tenant’s sole source of satisfaction of such liability shall be limited to Landlord’s interest in the Property, including rents and proceeds and any insurance proceeds, and Tenant shall not seek to obtain payment from Landlord or any person comprising Landlord or from any assets of Landlord other than those assets described herein. The limitation of this Section 16 shall not apply to or limit any injunctive or other equitable, declaratory or other forms of relief to which Tenant may be entitled (notwithstanding that such actions are in personam in nature).

18. Default: Each of the following shall constitute an “Event of Default” under this Lease:

A. Breach: The failure by Tenant to (i) make any payment of rent or any other payment required to be made hereunder within, three (3) business days after written notice from the other party that the same is due; or the failure of either party to (ii) perform or observe any material term or condition of this Agreement and such failure continues for a period of thirty (30) days after receipt of written notice thereof from the other Party, provided, however, that if the nature of such default is such that it cannot reasonably be cured within such thirty (30) day period and the defaulting Party commences to cure within the thirty (30) day period and proceeds with diligence and continuity, then such Party shall have additional time to cure as is reasonably required.

B. Bankruptcy; Insolvency: The appointment of a receiver or trustee to take possession of all or substantially all of the assets of Tenant located at the Premises if possession is not restored to Tenant within sixty (60) days; or a general assignment by Tenant for the benefit of creditors; or any action

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or proceeding is commenced by or against Tenant under any insolvency or bankruptcy act, or under any other statute or regulation having as its purpose the protection of creditors and, in the case of actions filed against Tenant, is not discharged within sixty (60) days.

19. Remedies. Landlord and Tenant acknowledge and agree that each Party shall have all remedies available at law or in equity if an Event of Default by the other Party has occurred and is continuing. In addition, if an Event of Default by Tenant has occurred and is continuing, then Landlord, may: (a) continue this Agreement in effect by not terminating Tenant’s right to possession of said Premises and thereby be entitled to enforce all Landlord’s rights and remedies under this Agreement; or (b) bring an action to recover and regain possession of said Premises in the manner provided by the laws of eviction of the state where the Premises are located then in effect.

In addition to any other remedies available to Landlord under this Lease, at law or in equity, Landlord shall have the option to terminate this Lease, provided that Landlord shall send Tenant a 2nd written notice prior to terminating this Lease and if Tenant fails to commence to cure the Event of Default within fifteen (15) days of the 2nd written notice, then Landlord may terminate this Agreement. In the event that Landlord shall elect to so terminate this Lease, pursuant to Section 1951.2 of the California Civil Code, then Landlord may recover from Tenant: (i) the worth at the time of award of any unpaid rent which had been earned at the time of such termination; plus (ii) the worth at the time of the award of the amount by which the unpaid rent which would have been earned after termination until the time of award exceeds the amount of such rental loss that Tenant proves could have been reasonably avoided; plus (iii) the worth at the time of award of the amount by which the unpaid rent for the balance of the Primary Term (or the balance of an Extension Term) after the time of award exceeds the amount of such rental loss that Tenant proves could be reasonably avoided; plus (iv) any other amount necessary to compensate Landlord for all the detriment proximately caused by a Tenant’s Default which in the ordinary course of things, would be likely to result therefrom. As used in this Section 19, the “worth at the time of award” is computed by allowing interest at the Interest Rate (defined below). As used in this Section 19, the “worth at the time of award” is computed by discounting such amount at the discount rate of the Federal Reserve Bank of San Francisco at the time of award plus one percent (1%).

Landlord shall also have the remedy described in California Civil Code Section 1951.4 (Landlord may continue lease in effect after lessee’s breach and abandonment and recover rent as it becomes due, if Tenant has right to sublease or assign, subject only to reasonable limitations). In the event of a Tenant Default, in addition to any other remedies available to Landlord under this Lease, at law or in equity, Landlord shall have the right to continue this Lease in full force and effect, whether or not Tenant shall have abandoned the Premises. In the event Landlord elects to continue this Lease in full force and effect pursuant to this Section, then

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Landlord shall be entitled to enforce all of its rights and remedies under this Lease, including the right to recover rent as it becomes due.

All rights, options and remedies of Landlord contained in this Section and elsewhere in this Lease shall be construed and held to be cumulative, and no one of them shall be exclusive of the other, and Landlord shall have the right to pursue any one or all of such remedies or any other remedy or relief which may be provided by law or in equity, whether or not stated in this Lease. Nothing in this Section shall be deemed to limit or otherwise affect Tenant’s indemnification of Landlord pursuant to any provision of this Lease.

20. Exclusions. Tenant has disclosed that it will assume the risk of damage to its personal property and trade fixtures, and Landlord acknowledges and accepts such assumption. Tenant, as a material part of the consideration to Landlord and as part of its obligations hereunder, assumes all risk of damage to any Incidental Equipment, and Tenant expressly releases Landlord and waives all claims in respect thereof against Landlord, except for such claims that are caused by the gross negligence or willful misconduct of Landlord and its authorized representatives or as otherwise provided for herein. Notwithstanding anything herein to the contrary, each Party expressly releases the other from any claims for, speculative, indirect, consequential or punitive damages, including any lost sales or profits of the other Party.

21. Notices. All notices required by or related to this Lease shall be in writing and shall be sent to the Parties at the email addresses indicated below. Notices shall be deemed delivered upon receipt of the email by recipient.

To Landlord:
[[email protected]
[address]460 N. Euclid Ave
[city, state zip code]Upland, CA
91786
Attn:

Email:[email protected]
Phon909-931-4100
To Tenant:
[email protected]
Tesla, Inc.
901 Page Ave.

Fremont, CA 94538
[email protected],
TRT #______

22. Governing Law. This Lease shall be construed and enforced in accordance with the laws of the State in which the Property is located.

23. Limitation on Liability. Notwithstanding anything to the contrary set forth herein, neither Party shall be liable to the other Party for any consequential, indirect or punitive damages, including, without limitation, loss of rent or loss of profit.

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24. Signage. Subject to applicable laws, Tenant may erect signs on the Premises, subject to Landlord’s written consent, not to be unreasonably withheld, delayed or conditioned.

25. Brokers: Each Party represents to the other Party that it has not dealt with any broker and each Party hereby agrees to indemnify and hold the other Party harmless from all losses and liabilities, including court costs and reasonable attorneys’ fees, arising out of any claims for commissions or fees related to any broker, finder or similar person with whom the indemnifying Party has dealt, or purportedly has dealt, in connection with this Agreement.

26. Prevailing Wages. To the extent the Infrastructure or Incidental Equipment installed by Tenant may be considered a "public work," as defined in Labor Code§ 1720, et. seq., Tenant shall comply with the state prevailing wage law, California Labor Code §§ 1720 et seq. and 8 CCR§ 16000 et seq. for any "public work" (as that term is defined in the statutes) performed pursuant to this Agreement. For purposes of compliance with prevailing wage law, Tenant shall comply with provisions applicable to an awarding body. Compliance with state prevailing wage law includes, without limitation, payment of at least prevailing rates as determined by the Director of Industrial Relations, overtime and working hour requirements, apprenticeship obligations, payroll record-keeping requirements, and other obligations as required by law.

27. Taxes. Tenant understands and acknowledges that the Landlord’s grant of non- exclusive use may be subject to property taxation and that Tenant may be subject to the payment of possessory interest tax levied on the grant of non-exclusive use pursuant to California Revenue and Taxation Code Section 107.6. Tenant shall pay without abatement, deduction, or offset any possessory interest taxes levied on or assessed against the Premises and the Incidental Equipment which are directly attributable to Tenant’s use of the Premises, whether belonging, owned or chargeable against the City. Tenant shall make all such payments directly to the charging authority prior to delinquency and before any fine, interest, or penalt y becomes due or is imposed for Tenant's non-payment. Notwithstanding the foregoing, Tenant shall, at its sole cost and expense, have the right to challenge the assessment. Tenant shall provide Landlord with proof of payment of such tax.

28. Public Records Act. Tenant acknowledges Landlord is subject to the California Public Records Act (Gov. Code, Section 6250, et. seq.). If Landlord receives a request for records related to information obtained from Tenant pursuant to this Lease, Landlord, to the extent permissible under applicable law, agrees to provide Tenant with written notice of such request within seventy-two (72) hours of its receipt of the records request. Tenant shall then have the time period specified in Landlord’s notice to determine whether it considers any of the information confidential proprietary information and whether it will take legal action to prevent disclosure of the requested information. Tenant acknowledges a request for records under the California Public Records Act will require prompt response from Tenant

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given Landlord’s obligation to respond to such request within ten (10) days of its receipt of such request for records. Absent a timely response, Landlord shall release all of the requested records. Landlord shall have no monetary liability whatsoever to Tenant for release of information pursuant to a request under the California Public Records Act or any subpoena; nor shall Landlord be obligated to defend against any challenge related to a California Public Records Act request or a subpoena for records that Tenant asserts are confidential. Tenant further agrees to indemnify, hold Landlord harmless from and against any and all claims, causes of action, damages, and judgments, as well as attorney fees and costs, resulting from a challenge related to a records request or subpoena for records that Tenant asserts are confidential.

Tenant’s indemnity obligations under this Section 28 shall survive the Termination Date..

29. Environmental Matters.

A. Tenant shall comply at all times during the Term with all Environmental Laws relating to Hazardous Materials on the Premises. Tenant shall not bring and shall use commercially reasonable efforts to prevent any licensee or any third-party from bringing any Hazardous Materials onto the Property other than those used customarily in Tenant’s business operations and in all events in the quantities and in the manner prescribed by applicable Environmental Laws. Tenant agrees that it will indemnify and hold Landlord harmless for any and all costs, liabilities, investigations, damages and expenses, including any remediation costs or cleanup or corrective action expenses, associated with environmental contamination to the extent introduced by Tenant Parties. Tenant agrees that it is responsible for remediating environmental contamination to the extent introduced by Tenant Parties and required by the applicable government entity, but only to the extent required by Environmental Law.

C. Landlord Termination Option. If a Hazardous Materials violation occurs during the Term and is caused by a third party, Landlord may, at Landlord's option, either (i) investigate and remediate such Hazardous Substance Condition, if required, as soon as reasonably possible at Landlord's expense, in which event this Lease shall continue in full force and effect, or (ii) if the estimated cost to remediate such condition exceeds fifty thousand dollars ($50,000), give written notice to Tenant of the estimate of the cost of remediation (the “Remediation Notice”) and Landlord’s willingness to proceed with remediation on a 50/50 sharing basis with Tenant for all costs to remediate, provided however, if Tenant does not elect to contribute to the costs of remediation within thirty (30) days receipt of the Remediation Notice, as described above, Landlord or Tenant shall each have the right to terminate this Agreement upon sixty (60) days following the date of the Remediation Notice. Should Tenant elect to contribute to the remediation costs, Tenant shall provide Landlord with said funds or satisfactory assurance thereof within thirty (30) days

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following such commitment. Upon such commitment to remediate between the Parties, this Lease shall continue in full force and effect, and Landlord shall proceed to make such remediation as soon as reasonably possible after the required funds are available.

D. Definitions. The following definitions shall be used in this Section 25. “Environmental Law” means any federal, state or local law pertaining to land use, air, soil, surface water, groundwater (including the protection, cleanup, removal, remediation, or damage thereof), public or employee health or safety or any other environmental matter, including, but not limited to, the following: (a) Clean Air Act (42 U.S.C. § 7401, et seq.); (b) Clean Water Act (33 U.S.C. § 1252, et seq.); (c) Resource Conservation and Recovery Act (42 U S.C. § 6901, et seq.); (d) Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. § 9601, et seq.); (e) Safe Drinking Water Act (42 U.S.C. § 300f, et seq.); (f) Toxic Substances Control Act (15 U.S.C. § 2601, et seq.); (g) Endangered Species Act (16 U.S.C. § 1531, et seq.); (h) Occupational Safety and Health Act (29 U.S.C. § 651, et seq.); (i) Emergency Planning and Community Right-To-Know Act (42 U.S.C. § 11001, et. seq.); and (j) any other applicable laws or regulations for the protection of the environment, human health or safety or regulating Hazardous Materials, or Hazardous Material Activities.

“Hazardous Materials” means (a) any petroleum, crude oil, natural gas, or any fraction, product or derivative thereof, radioactive materials, asbestos in any form that is friable; (b) any chemicals, materials, substances or wastes that are defined as or included in the definition of hazardous substances, hazardous wastes, hazardous materials, extremely hazardous substances, toxic substances, pollutants, contaminants or words of similar import under any Environmental Law; and (c) any other chemical, material, substance, waste or exposure that is limited or regulated by any governmental authority having jurisdiction over the Premises.

“Hazardous Materials Activity” means the handling, transportation, transfer, recycling, storage, use, treatment, manufacture, generation, investigation, removal, remediation, release, exposure of others to, sale or distribution of any Hazardous Material or any product containing a Hazardous Material, and any consulting, management, administrative, monitoring or testing services relating to any of the foregoing.

12 V 4.25.22 Cont. Hold/ST Parking Lot
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30. Sale or Transfer. In the event of a sale or transfer of all or a portion of Landlord’s interest in the Property or Premises while this Lease is in effect, Tenant’s rights shall be conveyed with the Property or Premises and Landlord warrants that any transferee shall be bound by all terms and conditions of this Lease, and shall obtain any necessary documents to confirm such assignment.

31. Subordination: Subject to Section 7 above, this Lease is subject to and subordinate to all ground or superior leases and to all mortgages which may now or hereafter affect such leases or the real property of which the Premises are a part and to all renewals, modifications, consolidations, replacements and extensions of any such ground or superior leases and mortgages; provided that Tenant’s rights under this Lease shall not be disturbed by such subordination so long as no Default by Tenant exists. This Section 31 shall be self-operative and no further instrument of subordination or non-disturbance shall be required by any ground or superior lessor or by any mortgagee, affecting any lease or the Property.

32. Force Majeure: If either Party’s performance of its obligations under this Lease is delayed by Force Majeure, then such Party’s time of performance will be extended by a corresponding number of days, provided that Force Majeure shall not excuse timely payments when due under this Agreement. As used in this Lease, “Force Majeure” means an act, event, condition or requirement beyond such party’s reasonable control, including, without limitation, labor disputes, governmental restrictions, natural disasters, fire, flood, inclement weather, pandemic, disease or other outbreak of infectious disease or any other public health crisis, inclusive of quarantine, shelter order or similar restrictions on employees or travel, declaration of national, regional or local state of emergency, explosion, embargoes, war, terrorism, civil disturbance or other similar events. Notwithstanding the forgoing, in no way shall the occurrence of a Force Majeure excuse the payment of Rent.

33. Entire Agreement. Each of Landlord and Tenant acknowledges and agrees that this Lease has been read and understood, represents the entire agreement and understanding of the Parties with respect to the subject matter herein, and supersedes all prior agreements, communications, or understandings, whether oral or written, of the Parties with respect to the subject matter herein.

34. Successors and Assigns. This Lease shall be binding upon, and inure, to the benefit of, the Parties and their respective permitted successors and assigns. Tenant shall not assign this Agreement voluntarily or by operation of law, or any right hereunder, nor sublet the Premises or any part thereof, without the prior written consent of Landlord, which shall not be unreasonably withheld, conditioned or delayed; provided that the foregoing prohibition shall not limit Tenant’s ability to transfer this Agreement to tenant’s Affiliate. “Affiliate” of a Party is an entity that controls, is controlled by or is under common control with that Party, where “control” means possessing, directly or indirectly, the power to direct or cause the direction of the management, policies or operations of an entity, through ownership of voting securities, by contract or otherwise. Any attempted or purported assignment or delegation of any of the rights

13 V 4.25.22 Cont. Hold/ST Parking Lot
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of obligations by Tenant without the prior written consent of Landlord shall be void and of no force and effect.

35. No Third-Party Beneficiary. This Agreement and every provision herein are for the exclusive benefit of Tenant and Landlord and not for the benefit of any other party.

There will be no incidental or other beneficiaries of any of Tenant’s or Landlord’s obligations under this Agreement.

36. Attorneys’ Fees. In the event of a conflict or dispute between the Parties related to this Agreement, the Parties agree to first meet to discuss in good faith a resolution to such conflict or dispute or a cure the Event of Default without the use of attorneys, whether in-house or outside counsel, in order to quickly resolve the conflict or dispute and avoid attorney fees. If the Parties are unable to amicably resolve the conflict or dispute on their own, and if a lawsuit or other action of any nature is then instituted in connection with such controversy, then it is agreed that the prevailing Party shall be entitled to reasonable and documented attorney’s fees and costs.

37. City Municipal Powers. Landlord is entering this lease in its proprietary capacity and not in its regulatory or governmental capacity. Nothing in this Lease shall be construed as restraining, impairing or restricting the City of Upland in its regulatory capacity, or granting any rights upon the Tenant with respect to the use, occupancy or operation of the Premises in a manner inconsistent with Law. This Lease does not grant any development rights upon the Tenant with respect to the Premises and any such development shall be subject to all applicable provisions of the Upland City Code.

38. Execution; Counterparts. This Lease may be executed in any number of counterparts with the same effect as if the Parties had signed the same document. In place of the transmittal of an original document, such executed counterpart may be transmitted to the other Party by portable document format (PDF) or other electronic signature and such PDF or electronic document shall have the full force and effect of an original document. All fully-executed counterparts, whether original documents, PDF, electronic documents or a combination thereof, shall be construed together and shall constitute one and the same Lease.

[SIGNATURE PAGE FOLLOWS]

46708.00101\40828307.2

V 4.4.22
Doc #10432532.2
IN WITNESS WHEREOF, each Party hereto has caused this Lease to be executed by its authorized representative as of the date shown below.

LANDLORD: TESLA:

[LANDLORD ENTITY], Tesla, Inc.,
a _____________ a Delaware corporation [If CN: Tesla Motors Canada ULC]

By: __________________________ By: __________________________

Name: _______________________

Name: _______________________

Title: _________________________

Date: _________________________

Title: _________________________

Date: _________________________

46708.00101\40828307.2

Exhibit A
V 4.4.22
Doc #10432532.2

EXHIBIT A

The Premises

S T A F F R E P O R T
I T E M N O . 11.A .

D A T E :N ovem b er 1 4, 2 02 2
T O :M A YO R A N D C I T Y C O U N C I L
F R O M : M I C H A E L B L A Y, C I T Y M A N A G E R P R E P A R E D B Y : R O B E R T D. D A L Q U E S T, D E V E LO P M E N T S E R V I C E S D I R E C TO R

J O S H U A W I N T E R , S E N I O R P L A N N E R
S U B J E C T :C O N S I D E R A T I O N O F G E N E R A L P L A N A M E N D M E N T N O. 21 -00 01 A N D Z O N E C H A N G E N O. 2 1-0 00 1 TO A M E N D T H E G E N E R A L P L A N L A N D U S E D E S I G N A T I O N A N D T H E Z O N I N G D I S T R I C T O F A P N :
10 47 -07 2-2 2 (37 1 S. 2 N D A V E N U E ), A P N : 10 47 -07 2-2 3 (3 81 S. 2 N D A V E N U E ), A P N : 1 04 7-0 72 -04 (3 78 S. 1 S T A V E N U E ) A N D A P N :
10 47 -07 2-0 5 (37 0 S . 1 st A V E N U E ); A N D D E T E R M I N E T H E

P R O J E C T I S E X E M P T F R O M T H E C A L I F O R N I A E N V I R O N M E N TA L

Q U A L I T Y A C T (C E Q A )

R E C O M M E N D E D A C T I O N
I t is rec om m en d ed th at t he C it y C oun cil c on d u c t a p u b l ic h earin g and take t h e follow in g action s:

1. A d op t a Resol u t ion ap p rovin g G en eral P lan A m end m en t N o. G PA-21 -00 01 to am en d the G eneral P lan lan d u se d esi g n ati on of four (4) exi st in g l ots from O ffic e/P rofess ion al (O P ) to S i n g le-Fam il y M ed iu m (S F R-M ). Th e p roject site in cl u d es t h e fol lowi ng p arcels A P N :
10 47 -07 2-2 2 (3 71 S. 2n d Aven ue), A P N : 1 04 7-0 72 -23 (38 1 S. 2 nd Avenu e), 10 47 -07 2- 04 (37 8 S. 1s t Avenu e) and A P N : 1 04 7-0 72 -05 (3 70 S . 1 st A venu e). (Attachm ent A – D raft Resolution )

2. D eterm ine t h e p roject i s exem p t from review u n d er th e C ali forn ia E nviron m en tal Q u ality A ct ("C E Q A ") (C alifornia P u b lic Res ou rces C od e S ection 21 00 0, et s eq .), p ursu ant to S tate C E Q A Reg ulation §15 06 1(b )(3).

3. H old fi rs t read i ng b y ti tl e onl y, w aive fu rth er read i ng , and i n t rod u c e an O rd inan ce ad op ting Zoning C h an g e N o. Z C-2 1-0 00 1 t o am end th e Z on i n g C od e D esig nat ion of fou r (4) exis ti n g lot s from O ffic e P rofession al (O P ) t o Resid en tial S i n g le-Fam il y M ed iu m R S -

7.5 A P N : 1 04 7-0 72 -22 (37 1 S . 2 nd A ven u e), A P N : 1 04 7-0 72 -23 (3 81 S . 2 nd Aven ue), A P N : 1 04 7-0 72 -04 (3 78 S. 1 st Aven ue), and A P N : 1 04 7-0 72 -05 (3 70 S. 1s t Aven ue). (Attach m en t B – D raft O rd inan ce).

G O A L S T A T E M E N T
Th e ac ti on i s consisten t with t h e C it y’s g oals of p res ervi n g exis ti ng resid ent ial neig h b orhood s and su p p ortin g the d evelop m en t of n ew hou sing .

B A C K G R O U N D
Th e sub ject s in g l e fam il y d welling s w ere p erm i tt ed an d b u i lt b etw een 19 24 an d 19 56 . O ver tim e, p arcel s al ong E uclid A ven u e and 1st A ven u e, to the w est of th e p rojec t sit e, w ere rezoned t o all ow for office u s es, an d were d evelop ed w ith offic e u s es. T he sub ject p arcels m en tioned ab ove were al so rezon ed t o allow for offi ce u s es in 19 80 . S in ce th e rezon e, t h e u se of t he h om es h as not c h an g ed , and n one of th e p arcels h ave b een u sed for O ffice/P rofession al p u rp oses. (S ee Attachm ent C – P roject S ite A erial)

A p p lication S ub m ittal

I n 20 21 , t he ap p lican t, Leon C art er, acq uired 37 0 S . 1 st A ven u e wi th t he i n t en t ion t o b uild a sing le-fam ily resid en ce and ac ces sory d welling u nit. A rou n d th e sam e ti m e, th e P lann in g D ivision, s eein g th at t h e p arcel h as n ot seen d evel op m en t s in ce th e p reviou s sing le fam ily d welling w as d em oli sh ed i n 1 99 4, ad d ed 37 0 S. 1s t Aven u e t o th e 20 21 -20 29 H ousin g E lem ent S i tes I nven tory, w it h th e in ten ti on of ch ang in g th e G eneral P lan D es ig nat ion an d Zoning D ist rict t o al low for sin g le-fam ily resid ential d evelop m en t. A s s uc h, th e ap p l ic an t , L eon C arter, filed ap p lications to b eg in the p rocess, as staff was not yet p rep ared to p rocess G eneral P lan and Zon in g am en d m ent s for si tes i d en ti fied i n th e p rop osed H ou si n g E l em en t S ites I n ventory.

I n revi ew in g th e ap p lication, s taff id ent ified th at t h e neig h b orin g p arc els , wh ich cu rrently con tain s in g l e-fam i ly d welling s, wou ld also b enefi t from th e chan g e i n th e G eneral P lan D esig n ation an d Zon in g t o allow for si ng le-fam il y res id en t ial u se, as th e leg al non -con form in g statu s on th ese p rop ert ies w ould b e rem oved , an d t h e d w ell in g s w ou l d b e reg u l ated in the sam e m an n er as t h e su rrou n d i n g resi d en ces wi th in t he sam e n eig hb orh ood . To ensure the p rop erty own ers ap p rove of t he p rop osed zon e ch ang e, st aff s ent certified l ett ers t o the p rop erty ow ners of 3 71 S. 2 nd Aven u e, 3 8 1 S. 2n d A venu e an d 3 7 8 S. 1st A venu e, t o notify th em of th e p rop osed c han g es , an d ensure t he p rop erty ow n ers h ad no con cerns with the p rop osed zone chan g e. S taff sp oke with one p rop erty ow ner (37 1 S. 2 nd Avenu e), w ho also in d icated th at h e sp oke on b eh alf of h i s n ei g h b or (38 1 S . 2 n d Avenu e). T hese p rop ert y ow ners d id n ot ob ject to th e zon e chan g e. T h erefore, s taff in clud ed t he n eig h b ori n g p arcels as a p art of th is p roject.

P lann in g C om m ission

At t he S ep t em b er 2 8, 2 02 2 m eetin g , the P lan ning C om m i ssion con si d ered t h e p rojec t, heard p u b lic c om m en t , and en g ag ed in d i sc u s si on reg ard ing t h e chan g es. U lt im atel y, th e P lann in g C om m ission recom m en d ed th at the C i ty C oun cil ad op t a Resolu tion am en d i n g th e G eneral P lan d esig n ation an d an O rd inan ce am end in g t h e Zon in g d esig nat ion for t h e p rop erties. (Attach m en t D – P lann in g C om m ission Resolu tion) .

A fter th e m eeting , staff furth er d iscussed t he ch ang es w it h th e p rop erty own er of 3 78 S. 1st Avenu e. A s a resu lt, th e p rop ert y own er in d icated t h at t hey w ere not op p osed t o chan g es an d ag reed that th e ch ang es wou ld b e b eneficial.

I S S U E S /A N A L Y S I S
Th e p roject inclu d es m od ifi cat ion s to t h e G eneral P lan D es ig nat ion an d Zon in g D istrict for the follow in g p arcels:

1. A P N : 10 47 -07 2-2 2 (3 71 S. 2n d Aven ue)

2. A P N : 10 47 -07 2-2 3 (3 81 S. 2n d Aven ue)

3. A P N : 10 47 -07 2-0 4 (3 78 S. 1st Aven ue)

4. A P N : 10 47 -07 2-0 5 (3 70 S. 1st Aven ue)

Th e p roject site G en eral P lan D esig nation and Zoning D istrict will ch ang e as follows:

Th e G en eral P lan L and Use D es ig nat ion w ill b e m od ified from O ffice/P rofessional (O P ) to S ing le-Fam ily M ed iu m (S F R-M ).

Th e Zon in g D istrict w ill ch ang e from O ffice P rofessional (O P ) to R S -7 .5 Resid en tial S ing le-Fam ily M ed iu m .

Th e p roject is on ly i nc lu si ve of G en eral P l an an d Zoning m ap ch an g es. Th e p roject d oes n ot in clud e any construction or in clud e any chan g es to the p hysical en vironm ent.

C u rrently, the p arcels to the n orth of the p roject site are with in th e G eneral P lan D esig n ation of S F R-M an d Zon in g D i st ri ct of R S -7.5 , an d all ow for s in g l e-fam i ly resi d en ti al uses, con sistent w ith the p rop osed ch ang es. T he ch an g es resu lt in b en efits to t he C it y, p rop erty ow ners an d t o th e su rroun d i ng n ei g h b orh ood b y en cou rag in g d evelop m en t of t h e vacan t p arcel, th e eli m i nat ion of leg al non -con form in g land use st atu s, an d t h e m ain ten an c e of existing h ousin g and p reservation of th e com m un ity character. A s su ch , the P lann in g D ivision su p p orts the p rop osed am en d m ents.

E ncourag em ent of D evelop m en t

A s m en tioned ab ove, 3 70 S. 1 s t Aven ue has sat vacan t for m an y years, w ith no m arket in terest i n d evelop in g offic e uses at the si te. F urth erm ore, offic e d evelop m ent on th is l ot is ch alleng in g d u e to t h e s m al ler lot si ze an d s h ap e, an d g i ven i t i s t he on ly vacant p arcel w ithin th e i m m ed i ate area, t h e d evelop m en t of an office at t h i s locat ion w ou ld p l ace it in th e m id d le of an exist in g resid en tial n eig hb orh ood . T he s ize an d sh ap e c reat e d i ffic u l ti es i n con stru ctin g ad eq uate p arki ng , d ri ve isles, an d land scap ing t hat m eet Zon in g C od e req u irem en ts for com m ercial d evelop m ent . T h e R S -7.5 zon e en cou rag es d evel op m en t of t he si te b ec au s e th ere is a m arket d em and for h ous in g at th e s it e, as evi d en ced b y t h e rec en t ac q u is it ion of th e site.

I n ad d it ion , si nc e th e p arcel on ce c on t ain ed a sing le-fam ily d wel li n g , th e p arcel i s t h e typ ical size and sh ap e of a s in g l e-fam i ly lot, res ul ti ng in ad eq u ate sp ace on th e l ot to m eet all resid ential d evelop m ent stand ard s.

L eg al N on-C onform ing S tatu s

P rop erty O w ners of 37 1 S . 2nd Aven ue, 3 81 S . 2 nd Aven ue and 3 78 S. 1st Avenu e will b enefit from p rop os ed Zone C h ang e b ec au s e t he ch ang e w il l result i n th e elim in ation of th e Leg al N on-C onform ing status. C urren tly, t hese p arc els are “Leg al n on -con form in g ,” m ean in g , the hom es were leg ally est ab lished at t he t im e th ey w ere b u i lt , b u t t h e u n d erl yin g z on e ch ang ed , resulting in t he sing le-fam ily h om es n o lon g er b ein g p erm itt ed . A s a resu lt , t he hom es are p erm itted t o rem ai n in p lace an d p rop ert y own ers can con tinu e to m ai n t ain t he d welling s, b u t are li m i ted in th e ab il it y to chan g e the h om es, an d m ay en cou n t er ot her d ifficulties, wh ich in clud e th e follow in g :

1. Recon stru ction . U M C 1 7.3 1.0 70 req u ires th at “a non -con form in g b ui ld in g or structu re th at i s d est royed b y 50 p ercen t or less of its cu rrent m arket valu e m ay b e recon stru cted su b ject t o th e ap p roval of a con d itional u s e p erm it”. T he p rovis ion of a C ond it ion al U se

Perm it (C U P ) can b e on erou s for sin g le fam ily h om eow n er as the p roces s ad d s tim e an d cost t o t he reconstruction of th e h om e. I n ad d ition, i f a hom e is d est royed b y 5 0% or m ore of its curren t m arket valu e, th e hom e can not b e reb u ilt, resu ltin g in the hom eow ner losin g t hei r h om e, w i th ou t the ab ilit y to reb u il d . W ith t he Zon e C h an g e, the leg al n on-conform ing st atu s w i ll b e rem oved an d t h es e u ses w il l b ecom e p erm itted -b y- rig h t in the zoning d istrict.

2. A lteration or E xp ansion . A s m en tioned ab ove, a leg al non -con form in g hom e can b e ch ang ed , b u t t h e own ers are m ore lim it ed in w h at ch an g es c an b e m ad e. U M C 17 .31 .08 0 al lows leg al non -con form in g resi d en ti al b u ild ing s t o b e exp an d ed b y 20 % of th e cu rren t l ot coverag e, m ean i n g t hat , if th e h om e is 10 00 sq u are feet, t h e hom e could only b e exp an d ed b y 20 0 sq uare feet. W i th the Zon e C han g e, th e h om es w ould b e req uired to com p l y w i th t h e st an d ard s set forth U M C 1 7.0 4 Resid en tial Zones, wh ich ap p ly to all s u rrou n d in g h om e in the neig h b orhood . T hese s tan d ard s g ive th e p rop erty ow ner op p ortu n i ti es for larg er ad d i ti on s or accessory d w ell in g u nits t h at w il l ad d ad d ition al valu e t o t he p rop erty, si m i lar to th ose allow ed b y th eir n eig h b ors t h at are alread y located with in th e R S -7.5 zon e.

3. A m ortization. A Resid ential Use in a N on-Res id ent ial Z on e h as a 1 0 -year am ortization p eriod . T his m ean s, after 10 years from th e ad op tion of th e Zon in g O rd inan ce (S ep tem b er 2 01 5), th e u se w ou l d b e req u ired to leave th e site, and t he b u il d i n g w ould b e req ui red to acc om m od at e a u se that c om p li es with t he Zon in g C od e. T he zone ch ang e w ould elim in ate an am orti zat ion p eriod for th e hom es, as th is u s e w ou l d th en com p ly w ith the u nd erlyin g zoning d esig nation .

4. Refin ancin g and I n su ran ce. W h en a p rop ert y h as a l eg al n on -con form in g statu s, ob tain in g refi nan ci ng and /or in su ran ce can b e p rob lem atic. E ssentially, leg al n on- con form in g p rop ert ies carry m ore risk b ecau se, i n th e cas e of a hom e b ecom in g su b stan tially d estroyed , reb u ild ing w ill n ot b e p ossib le, resulting in p otentially larg er in su ran ce c lai m s , an d a l oss i n p rop erty valu e, wh ich p rovi d es s ecu ri ty for any loan s on th e p rop erty.

M aintain E xisting H ousin g

Th e ch ang es w ill en su re th at t h e exis ti ng h om es w il l b e m ain tai n ed i nt o th e fu tu re, p reservin g need ed h ou s in g in t h e C i ty of U p land . F urth erm ore, t h e ch an g e wi ll p reven t th e estab lish m en t of office uses, or oth er com m ercial p erm itted in the O P zon e, that m ay n ot b e ap p rop riate w ithin th e exis ti ng resid ent ial neig h b orhood . T herefore, t he zone ch an g e w il l p reserve the resid ential ch aracter of th e existing neig h b orhood .

F u tu re D evelop m ent

Up on ap p roval of th e p rop osed zon e ch ang e, th e ap p li can t for 3 70 S. 1st Aven ue i n t en d s to su b m it a b u il d i n g p erm i t ap p li cat ion for th e con stru ction of on e (1 ) s in g l e-fam i ly resid en ce and an A ccessory D welling Un it (A D U ).

F I S C A L I M P A C T S
Th is act ion is n ot an ticip ated t o create any fiscal i m p act s. T h e ap p lican t for an y ad d ition al hou sing con st ru ct ed as a resu lt of th is action will b e req u ired to p ay D evelop m en t I m p act Fees at th e tim e of p erm it issu ance.

A L T E R N A T I V E S
P rovid e altern ative d irection to staff.

AT TAC HM E NT S :

Description
Attachment A - Draft Resolution
Exhibit A to Attachment A - Proposed changes
Attachment B - Draft Ordinance
Exhibit A to Attachment B - P roposed Changes
Attachment C – P roject S ite Aerial
Attachment D_ P C Resolution No. 4975

RESOLUTION NO.

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF

UPLAND, CALIFORNIA APPROVING GENERAL PLAN
AMENDMENT NO. GPA-21-0001 TO AMEND THE GENERAL
PLAN LAND USE DESIGNATION OF FOUR (4) EXISTING

LOTS FROM OFFICE/PROFESSIONAL (OP) TO SINGLE-
FAMILY MEDIUM (SFR-M). THE PROJECT SITE INCLUDES
THE FOLLOWING PARCELS: APN: 1047-072-22 (371 S. 2ND
AVENUE), APN: 1047-072-23 (381 S. 2ND AVENUE), 1047-
072-04 (378 S. 1ST AVENUE) AND APN: 1047-072-05 (370
S. 1ST AVENUE).

WHEREAS, Leon Carter (Applicant) has filed applications requesting approval of the General Plan Amendment No GPA-21-0001 and Zone Change No. ZC-21-0001 for APN: 1047-072-05 (370 S. 1ST Avenue); and
WHEREAS, The City of Upland Planning Division has included APN: 1047-072- 22 (371 S. 2ND Avenue), APN: 1047-072-23 (381 S. 2ND Avenue), 1047-072-04 (378 S. 1ST Avenue) in the request; and

WHEREAS, Upland Municipal Code Section 17.49.050 requires that the City Council take action on General Plan Amendments; and

WHEREAS, Upland Municipal Code Section 17.48.050 requires that the City Council take action on Zone Changes; and

WHEREAS, on September 28, 2022 at 6:30 p.m. the Planning Commission conducted a public hearing for the project and heard and considered both oral and written evidence and recommended that the City Council adopt an Ordinance approving the project; and

WHEREAS, a notice of a public hearing on said application has been given in the manner and for the time required by law; and

WHEREAS, on November 26, 2022 at 7:00 p.m. the City Council conducted a public hearing for the project and heard and considered both oral and written evidence.

NOW, THEREFORE, the City Council of the City of Upland hereby finds, determines and resolves as follows:

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

Section 2. Findings: Upland Municipal Code Section 17.49.060 provides that the City Council, before it may approve a General Plan Map Amendment, shall make a determination to allow the activity based upon the following findings:

1. Finding: The proposed General Plan Amendment is in the public interest.

Resolution No.

Page

Evidence: The proposed General Plan Amendment is in the public interest because the amendment will maintain existing single-family dwellings within a residential neighborhood. The amendment will result in the development of a currently vacant parcel in a way that is consistent with the character of the surrounding neighborhood. The amendment will eliminate legal non-conforming uses.

2. Finding: The proposed General Plan Amendment is consistent and compatible with the rest of the General Plan.

Evidence: The amendment identifies consistency with the General Plan elements including the following goals and polices:

a. Land Use Element Goal LU-2: A community with stable
and livable residential neighborhoods.

Fact: 371 S. 2nd Avenue, 381 S. 2nd Avenue, 378 S. 1st
Avenue will be maintained as single-family residences,
ensuring their future preservation, ensuring a stable
residential community.

b. Focus Areas Element Policy FA-4.7: Housing. Provide a diverse range of housing types in the Southeast Quadrant that meet the needs of residents at all income levels.

Fact: The change will allow the development of 370 S. 1st Avenue into single-family residential housing, providing needed housing in the Southeast Quadrant available to
multiple income levels.

c. Focus Areas Element Policy FA-4.10: Neighborhood
Character. Ensure that new development is sensitive to the character of adjacent structures and the immediate
neighborhood.

Fact: The change will allow the development of 370 S. 1st Avenue into a single-family dwelling, and ensure the
existing dwellings will remain as single-family, preserving the character of adjacent structures and the immediate
neighborhood.

3. Finding: The potential effects of the proposed General Plan Amendment have been evaluated and have been determined not to be detrimental to the public health, safety, or welfare.

Evidence: The proposed General Plan Amendment has been evaluated and determined not to be detrimental to the public health, safety, or welfare. The project will preserve the existing community character as

Resolution No.

Page

the amendment will result in the development if a currently vacant parcel and eliminate legal non-conforming uses. Furthermore, the amendment will prohibit potential commercial uses allowed within the Office/Professional (OP) Zone that could present negative impacts to the existing single-family neighborhood.

4. Finding: The proposed General Plan Amendment has been processed in accordance with the applicable provisions of the California Government Code and CEQA.

Evidence: The proposed General Plan Amendment has been processed in accordance with the applicable provisions of the
California Government Code, including CA Government Code §65352.3 which regulates tribal consultation requirements for General Plan Amendments and CA Government Code §65358 which regulates amendments to General Plans. The project is exempt from review under the California Environmental Quality Act ("CEQA") (California Public Resources Code Section 21000, et seq.), pursuant to State CEQA Regulation §15061(b)(3).

Section 3. Determination. The General Plan Land Use Designation of the following parcels shall be changed from Office/Professional (OP) to Single-Family Medium (SFR-M) as shown in Exhibit A, attached hereto and incorporated herein by reference:

1. APN: 1047-072-22 (371 S. 2nd Avenue)

2. APN: 1047-072-23 (381 S. 2nd Avenue)

3. APN: 1047-072-04 (378 S. 1st Avenue)

4. APN: 1047-072-05 (370 S. 1nd Avenue)

Section 4. Compliance with California Environmental Quality Act. This Ordinance is exempt from review under the California Environmental Quality Act ("CEQA") (California Public Resources Code Section 21000, et seq.), pursuant to State CEQA Regulation §15061(b)(3) (14 Cal. Code Regs. § 15061(b)(3)), the common sense exemption covering activities with no possibility of having a significant effect on the environment.

Section 5. Certification. The City Clerk shall certify to the passage and adoption of this Resolution and enter it into the book of original resolutions.

Section 6. Severability. If any section, subsection, subdivision, sentence, or clause or phrase in this Resolution or any part thereof is for any reason held to be unconstitutional, invalid or ineffective by any court of competent jurisdiction, such decision shall not affect the validity or effectiveness of the remaining portions of this Resolution or any part thereof. The City Council hereby declares that it would have adopted each section irrespective of the fact that any one or more subsections, subdivisions, sentences, clauses, or phrases are declared unconstitutional, invalid, or ineffective.

Resolution No.

Page

Section 7. Effective Date. This Resolution shall become effective immediately.

PASSED, APPROVED and ADOPTED this 14th day of November, 2022.

Bill Velto, Mayor

I, Keri Johnson, City Clerk of the City of Upland, do hereby certify that the foregoing Resolution was adopted at a regular meeting of the City Council held on the 14th day of November 2022, by the following vote:

AYES:

NOES:

ABSENT:

ABSTAINED:

ATTEST:

Keri Johnson, City Clerk

ORDINANCE NO.

AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
UPLAND, CALIFORNIA, APPROVING ZONE CHANGE NO.

ZC-21-0001 TO AMEND THE ZONING DESIGNATION OF
FOUR (4) EXISTING LOTS FROM OFFICE PROFESSIONAL
(OP) TO RESIDENTIAL SINGLE-FAMILY MEDIUM RS-7.5.

THE PROJECT SITE INCLUDES THE FOLLOWING PARCELS:

APN: 1047-072-22 (371 S. 2ND AVENUE), APN: 1047-072-
23 (381 S. 2ND AVENUE), APN: 1047-072-04 (378 S. 1ST
AVENUE) AND APN: 1047-072-05 (370 S. 1ST AVENUE).

WHEREAS, Leon Carter (Applicant) has filed applications requesting approval of Zone Change No. ZC-21-0001 and General Plan Amendment No. GPA-21-0001 for APN: 1047-072-05 (370 S. 1ST Avenue); and
WHEREAS, The City of Upland Planning Division has included APN: 1047-072- 22 (371 S. 2ND Avenue), APN: 1047-072-23 (381 S. 2ND Avenue), 1047-072-04 (378 S. 1ST Avenue) in the request; and

WHEREAS, Upland Municipal Code Section 17.49.050 requires that the City Council take action on General Plan Amendments; and

WHEREAS, Upland Municipal Code Section 17.48.050 requires that the City Council take action on Zone Changes; and

WHEREAS, on September 28, 2022 at 6:30 p.m. the Planning Commission conducted a public hearing for the project and heard and considered both oral and written evidence and recommended that the City Council adopt a Resolution and an Ordinance approving the project; and

WHEREAS, a notice of a public hearing on said application has been given in the manner and for the time required by law; and

WHEREAS, on November 14, 2022 at 7:00 p.m. the City Council conducted a public hearing for the project and heard and considered both oral and written evidence.

NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF UPLAND DOES ORDAIN AS FOLLOWS:

Section 1. The above recitals are true and correct and are hereby incorporated herein by this reference.

Section 2. Findings: Upland Municipal Code Section 17.48.060 provides that the approval body, before it may approve a Zoning Amendment, shall make a determination to allow the amendment based upon the following findings:

1. Finding: The proposed amendment is consistent with the General Plan and any applicable community or specific plan as provided by Government Code Section §65860.

Ordinance No.

Evidence: This Zoning Amendment is to amend the Zoning District of the project site from Office Professional (OP) to RS-7.5 Residential Single-Family Medium. Government Code Section §65860 requires a city's zoning ordinance to be consistent with the General Plan, therefore the project is consistent with Government Code Section §65860.

The amendment identifies consistency with the General Plan elements including the following goals and polices:

a. Land Use Element Goal LU-2: A community with stable
and livable residential neighborhoods.

Fact: 371 S. 2nd Avenue, 381 S. 2nd Avenue, 378 S. 1st
Avenue will be maintained as single-family residences,
ensuring their future preservation, ensuring a stable
residential community.

b. Focus Areas Element Policy FA-4.7: Housing. Provide a diverse range of housing types in the Southeast Quadrant that meet the needs of residents at all income levels.

Fact: The change will allow the development of 370 S. 1st Avenue into single-family residential housing, providing needed housing in the Southeast Quadrant available to
multiple income levels.

c. Focus Areas Element Policy FA-4.10: Neighborhood
Character. Ensure that new development is sensitive to the character of adjacent structures and the immediate
neighborhood.

Fact: The change will allow the development of 370 S. 1st Avenue into a single-family dwelling, and ensure the
existing dwellings will remain as single-family, preserving the character of adjacent structures and the immediate
neighborhood.

2. Finding: The proposed amendment will not be detrimental to the public interest, health, safety, or welfare of the City.

Evidence: The proposed Zoning Amendment will not be detrimental to the public interest, health, safety, or welfare because the amendment will result in residentially zoned land, consistent with the surrounding residential land uses, and the amendment will prohibit potential commercial uses allowed within the Office Professional (OP) zone that could present negative impacts the existing single-family neighborhood.

Furthermore, the project will preserve the existing community character as the amendment will result in the development of a currently vacant

Ordinance No.

parcel and eliminate legal non-conforming status of existing single- family dwellings.

3. Finding: The affected site is physically suitable in terms of design, location, shape, size, and other characteristics to ensure that the proposed uses and development will not endanger, jeopardize, or otherwise constitute a hazard to the property, surrounding properties, and the community at large.

Evidence: Three of the four parcels are currently fully developed with single-family residences, which currently do not endanger, jeopardize, or otherwise constitute a hazard to the property, surrounding properties, and the community at large. The vacant parcel will allow for single-family residential construction consistent with the neighborhood.

The parcel is the typical size and shape of a single-family parcel, resulting adequate space on the lot to meet all residential development standards required for future development.

Section 3. Ordinance: Amending the Zoning Designation. The Zoning Designation of the following parcels shall be changed from Office Professional (OP) to Residential Single-Family Medium (RS-7.5) as shown in Exhibit A, attached hereto and incorporated herein by reference:

1. APN: 1047-072-22 (371 S. 2nd Avenue)

2. APN: 1047-072-23 (381 S. 2nd Avenue)

3. APN: 1047-072-04 (378 S. 1st Avenue)

4. APN: 1047-072-05 (370 S. 1st Avenue)

Section 4. Compliance with California Environmental Quality Act. This Ordinance is exempt from review under the California Environmental Quality Act ("CEQA") (California Public Resources Code Section 21000, et seq.), pursuant to State CEQA Regulation §15061(b)(3) (14 Cal. Code Regs. § 15061(b)(3)), the common sense exemption covering activities with no possibility of having a significant effect on the environment.

Section 5. Severability. If any section, subsection, subdivision, sentence, or clause or phrase in this Ordinance or any part thereof is for any reason held to be unconstitutional, invalid or ineffective by any court of competent jurisdiction, such decision shall not affect the validity or effectiveness of the remaining portions of this Ordinance or any part thereof. The City Council hereby declares that it would have adopted each section irrespective of the fact that any one or more subsections, subdivisions, sentences, clauses, or phrases are declared unconstitutional, invalid, or ineffective.

Section 6. Effective Date. This Ordinance shall become effective thirty (30) days from its adoption.

Section 7. Publication. The City Clerk shall certify to the adoption of this Ordinance and cause it, or a summary of it, to be published in a newspaper of general

Ordinance No.

circulation printed and published within the City of Upland, pursuant to all legal requirements.

PASSED, APPROVED, AND ADOPTED this 28th day of November, 2022.

Bill Velto, Mayor

I, Keri Johnson, City Clerk of the City of Upland, California, do hereby certify that the foregoing Ordinance was introduced at a regular meeting of the City Council of the City of Upland held on the 14th day of November 2022, and was adopted at a regular meeting of the City Council of the City of Upland on the 28th day of November, 2022, by the following roll call vote:

AYES:

NOES:

ABSENT:

ABSTAINED:

ATTEST:

Keri Johnson, City Clerk

Attachment B – Project Site Aerial

S T A F F R E P O R T
I T E M N O . 11.B .

D A T E :N ovem b er 1 4, 2 02 2
T O :M A YO R A N D C I T Y C O U N C I L
F R O M : M I C H A E L B L A Y, C I T Y M A N A G E R P R E P A R E D B Y : R O B E R T D. D A L Q U E S T, D E V E LO P M E N T S E R V I C E S D I R E C TO R

M E L E C I O P I C A Z O, E C O N O M I C D E V E LO P M E N T C O O R D I N A TO R S U B J E C T :C O N S I D E R A T I O N O F A D I S P O S I T I O N A N D D E V E LO P M E N T

A G R E E M E N T A N D R E G U L A TO RY A G R E E M E N T F O R T H E S A L E O F C E RTA I N C I T Y O W N E D R E A L P R O P E R T Y (A P N S : 10 46 -59 1-0 8, 09 , 10 , 11 , 1 2, 1 3) LO C A T E D A T T H E N O RT H W E S T C O R N E R O F A

S T R E E T A N D F I R S T A V E N U E TO C I T Y V E N T U R E S H O M E B U I L D I N G

L LC , A N D F I N D I N G T H E S A M E C A T E G O R I C A L LY E X E M P T F R O M

C A L I F O R N I A E N V I R O N M E N TA L Q U A L I T Y A C T (C E Q A ) R E V I E W

R E C O M M E N D E D A C T I O N
I t i s recom m en d ed th at th e C ity C oun cil h ol d a p ub lic h earin g an d consid er ad op ti on of a Resolution ap p rovi ng of t h e D isp osition and D evelop m ent A g reem ent (“D D A”) an d Reg u latory A g reem ent (“R A”) for t he sal e of C i ty ow n ed s u rp l u s l an d t o C it y Ven tu res H om eb uild in g , L LC ., for a p rop osed resid en tial p roject of 2 9 t ow nh ouse hom es, with at least 15 % of th ose hom es res tric ted for lower-in com e first-tim e h om eb u yers , su b sid ized in p art b y C ity’s C al H O M E an d /or h ous in g set asid e fu n d s, an d find in g the sam e cat eg oric all y exem p t from C alifornia E nvi ron m en tal Q u ality A ct (C E Q A ) Revi ew p ursu ant to G uid elin es S ect ion s 15 31 2, 15 20 6(b )(4), 1 50 60 (c)(2 ), and 15 37 8(b ).

G O A L S T A T E M E N T
Th e p rop os ed act ion sup p orts the C it y’s g oal t o im p rove t h e hi st ori c d own town , revitalize un d erutilized p rop ert ies, create econ om ic d evelop m en t act ivity, red u ce b lig ht, im p rove access to afford ab le h ousin g , and create job s w ithin th e C ity. I n ad d ition , the action sup p orts the C ity's g oal t o c om p ly w it h th e S tate's S u rp lu s L and A ct , G overnm ent C od e S ec ti on s 5 42 20 et seq . for the p urp ose of d isp osing C ity-own ed surp lus lan d .

B A C K G R O U N D
Th e C ity of Up lan d (“C it y”) cu rren t ly ow ns in fee t hat certai n real p rop erty, m easurin g ap p roxim ately 4 2,9 80 s q u are feet (.99 A cres) in area, w it h A s ses sor Parcel N u m b ers: 1 04 6- 59 1-0 8, 0 9, 10 , 1 1, 12 , an d 1 3 and locat ed at t h e n orth w est c orn er of F irst Avenu e an d A S treet i n the H is toric D ow nt ow n (th e “P rop erty”). T h e su b jec t p rop erty i s with in t he H istoric D ow ntow n U p lan d S p eci fic P lan w ith a l an d use d esig n ation of O l d Tow n D is tric t an d w ithin th e F irst Aven ue O verlay.

Th e C ity com p lied w ith th e S urp lus Lan d A ct in the sale of th is P rop erty, as d em on strated b y th e follow in g tim eline:

O n A ug ust 1 0 , 20 20 , th e C it y C ou n c il ad op ted Res olu ti on N o. 65 63 d ec larin g th e si te at F irst Avenu e an d A S treet, with A ssessor Parcel N um b ers (A P N s) 10 46 -59 1-0 8, 09 , 1 0, 11 , 12 , 13 , ow ned b y the C ity, as surp lus lan d an d n ot n ecessary for the C ity’s u se.

O n A u g u st 1 7, 2 02 0, in ac cord an ce with t he p rovis ion s of C al iforni a G overn m en t C od es S ection 5 42 20 an d 5 42 22 , et s eq ., the C it y sen t out a N oti ce of A vail ab i li ty t o the d esig nated en ti ti es, hou sing sp ons ors , an d t he C alifornia D ep artm ent of H ou si ng an d C om m u nity D evelop m ent.

A n oti ce of int erest w as recei ved from R S q u ared H old ing s, L LC , on S ep tem b er 1 , 2 02 0, and on O ct ob er 9 , 2 02 0 from C it y Ven tu res, n ot ifyi n g i ts i nt eres t in p urch asing the p arcels.

O n O ctob er 2 1, 20 20 , t he C i ty n ot ifi ed th e d evelop ers t o s u b m i t th eir p rojec t p rop osals b y n o later than N ovem b er 1 2, 2 02 0, to b eg in neg otiations.

O n N ovem b er 11 , 20 20 , R S q u ared H old in g s p rovid ed a p urch ase offer and p roject scop e for th e p u rc h as e of th e P rop erty. T he p rop osal w as for a 6 6-u ni t m ixed -use com p lex w ith 10 un its, or 15 % of th e un its, to b e m od erate to lower in com e hou sing un its.

O n N ovem b er 1 2 , 2 02 0, C it y Ven tu res p rovid ed a let ter of int ent to acq uire an d d evelop a resid ent ial for-s ale com m u nity on th e site. Th e p rop os al w as for 29 three-story town hom es with 5 low -in com e un its, or 17 .24 % of th e p rop osed tow nh om es.

O n D ecem b er 9 , 2 02 0, t h e C it y n ot ifi ed b oth d evel op ers t hat th e p rop osals m u st b e con sistent w it h t he S u rp l u s Lan d A ct an d p rovid e a m in im u m of 2 5% of t h e total nu m b er of u nits availab le at an afford ab le hou sing cost to low incom e h ousehold s.

O n D ecem b er 1 6 , 2 0 2 0 , th e C i ty’s econ om i c d evelop m en t t eam an d R S q uared H old ing s had a con feren ce cal l t o d iscu ss th eir d evelop m en t p rop osal . T h e d evelop er s tat ed th at th ey wou ld revis it th e n um b ers b u t that i t w ou l d b e d iffi cu lt t o m ake th e p rojec t feasib le w ith 2 5% of the u nits at an afford ab le hou sing cost. A fter th e con feren ce call, no revised su b m ittal w as received b y R S q u ared H old in g s.

O n D ecem b er 2 9, 20 20 , C it y Ven tu res s u b m i tt ed a revis ed let ter of in ten t, red u c ed the offer p rice, an d p rop osed 29 t hree-st ory town h om es w it h 8 low -i n c om e u n it s, or 2 7.5 8% of th e p rop osed tow nh om es.

O n J an uary 7 , 20 21 , C it y Vent ures w it h d rew its revised let ter of i n t en t . A fter reevaluatin g th eir u nd erwritin g associated with the revised p rop osal, it w as d eterm in ed th at t he p rojec t w as n ot feas ib le w hen 25 % of t he t otal u n it s are req u ired for low er- in com e hou seh old s at an afford ab le cost.

S ince no p rop osals w ere received con si st ent with th e req u irem en ts of the S urp l us Lan d A ct d urin g t he n eg ot iat ion p eriod , foll ow in g th at n eg ot iat ion p eriod , th e C i ty w as in a p osition to receive any solicited /un solicited d evelop m en t p rop osals for th e P rop erty p rovid ed th e p roject i nc lu d ed a m in im um of 1 5% of th e d welling u ni ts afford ab le at low- in com e level (80 % of C ou nty M ed ian H ousehold I ncom e).

O n M arch 2 2, 2 02 1, t h e C it y en tered int o an E xc lu si ve N eg ot iat ion A g reem en t w it h C ity Ventures reg ard ing th e P rop erty. S in ce t h en , th e C i ty t eam an d C it y V en t u res h ave b een w orking on d rafti n g a D is p os it ion an d D evelop m en t A g reem ent for t he p u rchase an d d evelop m ent of t h e si te. Th e curren t p rop osal con sist of 2 9 town hom es w it h 5 low- in com e un its, or 17 .24 % of th e p rop osed u nits.

O n M ay 25 , 2 02 2, th e P lan ning C om m ission con sid ered w hether the p rop osed d isp osition w as in c on form i ty with t he C i ty’s G eneral P lan an d fou n d th at it s o con form ed (G overn m en t C od e section 65 40 2).

O n O ctob er 1 0 , 20 22 , th e C it y C ou n c il ap p roved i ts res olu ti on of in ten t to s ell the p arcels t o C ity V en t u res. C ou ncil set N ovem b er 1 4 th , 2 02 2 for c ons id erat ion of t he D D A and R A , and to h ear p rot est on t h e s am e (G overn m en t C od e sec ti on 3 7 4 2 1 ). S uch p rotest h earin g was d u l y not iced in accord ance w i th st ate law n oti ci ng req uirem ents (G overn m en t C od e sec ti on 37 42 2). I f ei th er no p rotests are rec eived or t he leg islative b od y overru l es th e p rot est s b y a four-fift hs vote of i ts m em b ers, th e C it y m ay p roceed w ith the sale with a four-fifths vote of its m em b ers (G overnm ent C od e section 3 74 25 ).

I S S U E S /A N A L Y S I S
Th e sal e, or t ran sfer, of C i ty-own ed lan d is g overn ed b y S tat e reg u lat ion s w hich p rovid e th at th e l eg i sl ati ve b od y m ake a fin d i ng th at th e p u b l ic in terest an d c onven ien ce req u ire t h e sale of p u b lic l an d an d ad op t a resol u t ion g i vin g n oti ce of i ts in ten tion t o sell such p rop erty. Th e C ity noticed such i nt ent on O ctob er 10 , 20 22 an d is h old in g a p u b li c h eari n g for p rotest t o th e sale on N ovem b er 1 4, 2 02 2. T he p rop os ed Res olu ti on wou ld ap p rove the D D A an d R A sub ject to con d u ctin g a p rotest h earing as req u ired b y G overn m en t C od e section s 37 42 0 et seq . T he Resolution s tat es t he effective d ate of t he A g reem en t occu rs i m m ed i atel y up on t he C aliforn ia D ep artm ent of H ou si ng an d C om m u n it y D evel op m en t ’s si g n -off that th e d eal is consisten t w ith the S urp lus L and A ct, a req u irem en t u nd er S tate law for th e site. T he Resolu tion also p rovid es th e C i ty M an ag er, i n consultat ion w ith the C ity At torney, the aut horit y to m ake m in or ed its to the D D A and R A to effectu ate the intent of th e p arties.

Th e D D A and R A follow ed t h e C i ty’s s tan d ard term s with a n u m b er of revisions n eg otiated w ith C ity Ventures to m ake th e p roject, as p rop osed , feasib le for the creation of 2 9 for-sale town hom es, with at l east 1 5% (five cu rrent ly p rop osed ) of t hose hom es d eed -rest ri ct ed for lower-in com e first tim e hom eb u yers . T h os e d eed -restricted afford ab le hom es p rovi d e an op p ortun ity in th e C it y t o g et lower-in com e p ers on s i n t o h om es t h ey can p u rch ase, w it h the assistan ce b y t h e C i ty's F i rs t Ti m e H om eb u yer P rog ram (t he "P rog ram "). T he P rog ram utilizes a S ilent S econd L oan that b rid g es th e g ap in th e p u rchase of th e town hom e b etw een w hat t h e low er-incom e h om eb u yer c an afford rel ati ve to th e m axi m u m F irst Tru st D eed an d th e S al es P ric e M axim um of t h e hom e ($40 0,0 00 ). E xh ib it D of the R A in cl ud es th e C ity’s estim ates for i ts fin ancial c on t ri b u ti on . Th e req uirem ent t hat t h es e hom es b e d eed -restricted for lower-in com e hom eb u yers is an ob l ig ati on u nd er the S u rp lu s Lan d A ct, an d al so h elp s the C ity m eet i ts Reg ional H ou sing N eed s A llocation (R H N A ) n u m b ers . I n ad d it ion t o utilizin g S ilen t S ec ond L oans, t h e C it y h as also ag reed t o p u rchase u p to 2 of t h e 5 p rop osed afford ab le h om es out ri g h t if C it y Ven tu res cann ot s ell t he afford ab le h om es to q u alifyin g lower-in com e h om eb uyers w it h i n 1 80 d ays aft er th e last m arket-rate h om e is sold .

A d d itionally, t he C it y h as offered t o offset t he D evel op m en t I m p ac t Fees associat ed wi th the

p roject b y $40 ,00 0 u sing t he H ou s in g S et-A sid e fu n d s , s o lon g as th at am oun t is l ess th an 2% of total p roject costs.

Th ere are som e other u n i q u e p rovision s with in t h i s D D A and R A . O n e, b ecau se C it y Ventures in ten d s to finan ce the p roject with a $3 25 ,00 0 lin e of cred it from Wells Farg o, the p roject b u d g et will ultim at ely b e in corp orated in to th e D D A b efore t he c onc lu si on of t h e 9 0-d ay d ue d ilig en ce p eriod . S in ce t he t w o sou th erl y p arcel s are on Lon g Ran g e P rop ert y M anag em en t P lan an d i n vol ved w ith t he d eal, th e C ity wi ll b e sen d ing a Taxin g E n tity C om p en s ati on L etter to all affected taxin g entities for their ap p roval. A n d fin ally, b ecau se C ity has offered to p u rchase u p t o t w o of t h e d eed -restricted afford ab le u n i ts ou trig ht if th ey c ann ot b e sold w ithin 6 m ont hs of t h e l ast m arket rat e un it b y C i ty Ven tu res , th e C it y is req uiring C ity Ventures u nd ert ake a seri es of com m ercially reas on ab le efforts t o g et t he afford ab le un its ad eq uately m arketed an d sold .

A s n eg ot iat ion s h ave c onc lu d ed , staff recom m en d s t h at , after h eari n g and p ass in g b y a fou r- fifths vot e on an y p rot est to the p rop os ed d isp osit ion , th e C it y C ou ncil ap p rove th e D D A an d R A .

C ity V ent ures is a fu ll y in teg rat ed res id en t ial and m ixed -use d evelop er an d h om eb u il d er, w ith over 2 50 years of c om b in ed exp erien ce in u rb an d evelop m ent, p roject m an ag em en t , an d hom eb u ild ing th rou g h out C alifornia.

E N V I R O N M E N T A L I M P A C T S

Th ere are n o an ti ci p at ed en vironm ent al im p acts from th e ap p roval of th is resolu ti on. T his resolu tion is exem p t from C E Q A p u rsuan t to S t ate C E Q A G uid elin es S ec ti on 15 31 2 b ecau se ap p roval of th e D D A involves the sale of surp lus g overnm ent p rop erty n ot located in an area of statewid e, reg i on al , or areaw id e concern id en t ifi ed in S ect ion 1 52 06 (b )(4 ). U n d er t he term s of th e D D A (D D A 1 .2.1 .5), t h e ag reem en t d oes not com m i t t h e d evelop er to a p arti cu lar p roject or com m it th e C ity to g ran t in g an y ap p roval. T h e C ity’s ap p roval of th e D D A d oes n ot con stitute ap p roval b y the C it y of any d evelop m en t of the P rop ert y or of ot h er ac ti vit y on the P rop erty t h at w ou ld h ave a d i rec t or reas onab ly foreseeab l e ind irect en vironm ental im p act p u rsuan t to C E Q A . (S ee 14 C .C .R . §§ 15 06 0(c)(2); 15 37 8(b ).) M oreover, D evel op er’s fu tu re use or d evelop m en t of the P rop erty is exp ressly cond ition ed on C E Q A com p lian ce.

F I S C A L I M P A C T S
Th e C ity wi ll rec eive O n e M illion Tw o H un d red N i net y Th ous and D oll ars ($1 ,29 0,0 00 ) in exch ang e for this sale, wh ich w ill b e sp lit b etw een th e fou r (4) p arcels ow ned ou trig ht b y the C ity, wi th tw o-t h i rd s of th e p roceed s d ep osi ted into th e H ou s in g S et -A sid e F u n d , an d t he two (2) L ong Ran g e P rop erty M an ag em ent P lan p arcels, in w hich the net p roceed s of th e sale w ill b e su b m it ted t o t h e C oun ty A u d i tor C on t rol ler to d ist rib u te th e fu n d s t o t he affect ed taxin g entities in p rop orti on to each taxi n g entities p rop ort ion ate sh are of th e g en eral tax l evy. T he C ity wou ld receive 0 .09 35 % of th e one-third p roceed s as a taxing entity.

I n ad d ition, th e C it y h as offered t o offs et th e D evel op m en t I m p act Fees as soc iat ed w it h the p roject b y $4 0 ,0 0 0 . For t h e 5 h om es res tric ted for l ow er-i nc om e first -tim e b u yers, the C ity w ill su b sid ize t h os e un it s, th rou g h th e C it y’s F irst-T im e H om eb u yer P rog ram , u sing t h e C ity’s C al H O M E , H O M E an d /or H ou si ng S et A sid e F u n d s, as shown i n t he Reg u lat ory A g reem en t E xhib it D.

A L T E R N A T I V E S
P rovid e altern ative d irection to staff.

AT TAC HM E NT S :

Description
Attachment 1: Aerial of Project Site
Attachment 2 - Resolution of Approval
Housing and Disposition Development Agreement
Regulatory Agreement

Attachment 1Project Site

RESOLUTION NO. ____

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF

UPLAND, CALIFORNIA, APPROVING A DISPOSITION AND

DEVELOPMENT AGREEMENT AND REGULATORY

AGREEMENT FOR THE SALE OF CERTAIN CITY OWNED
REAL PROPERTY (APNs 1046-591-08, 09, 10, 11, 12, 13)

TO CITY VENTURES HOMEBUILDING LLC, AND FINDING

THE SAME CATEGORICALLY EXEMPT FROM CEQA REVIEW

WHEREAS, the City of Upland (“City”) currently owns in fee that certain real property, measuring approximately 42,980 square feet (0.99 Acres) in area, with Assessor Parcel Numbers: 1046-591-08, 09, 10, 11, 12, and 13 and located at the northwest corner of First Avenue and A Street in the Historic Downtown, more specifically described within Attachment A (“Site”); and WHEREAS, the City adopted Resolution No. 6563 declaring the Site as surplus land and not necessary for the City’s use; and
WHEREAS, California Government Code Section 54220, et seq. (the “Surplus Land Act”) requires that prior to the disposal of any surplus land, unless an exemption applies, a local agency must provide notice to, among others, affordable housing developers and public agencies with jurisdiction over the site, and thereafter negotiate in good faith for ninety (90) days with any parties who submit a notice of interest; and
WHEREAS, two proposals were received during the negotiation period, but neither were financially feasible for the proposer and consistent with the requirements of the Surplus Land Act that 25% of housing units on site be deed- restricted affordable; and
WHEREAS, following the conclusion of the required negotiation period, the City was in a position to receive solicited/unsolicited development proposals for the Site provided the project included a minimum of 15% of total dwelling units affordable at low-income levels (80% or less of County Median Household Income) as required by the Surplus Land Act; and
WHEREAS, the City desires to sell the Site by entering into a Disposition and Development Agreement (“DDA”) with accompanying Regulatory Agreement (“RA”) with City Ventures Homebuilding, LLC, a Delaware Limited Liability Company (“Purchaser”); and
WHEREAS, California Government Code Sections 37420 through 37430 authorize the City to dispose of property; and
WHEREAS, California Government Code Section 37421 provides that when the legislative body of City finds that the public interest and convenience require the sale of public buildings and sites, it may adopt a resolution so finding and giving notice of its intention to sell such property; and
WHEREAS, California Government Code Section 37422 provides that such resolution shall fix a time for hearing protests to the property conveyance, provide

Resolution No.

for publication of notice of the hearing, fix the time when the City will take final action regarding the property conveyance; and contain an accurate description of the property to be conveyed; and
WHEREAS, in accordance with Government Code section 65402, the proposed disposition of the Site under the DDA was presented to the City’s Planning Commission ("Planning Commission") on May 25, 2022. At that meeting, the Planning Commission adopted Resolution No. 4963 finding that the disposition of the City- owned surplus property at the northwest corner of First Avenue and A Street, from City to Purchaser, is in conformity with the City’s General Plan; and WHEREAS, the City declared its intent to dispose of and convey the Site pursuant to the terms of a negotiated DDA and RA, fixed a time for the hearing of any protests to the disposition of Property for November 14, 2022, and published notice of said hearing, and fixed the time for final action on the disposition of the Site and approval of the Disposition and Development Agreement; and WHEREAS, the Purchase Price for the Site is One Million Two Hundred Ninety Thousand Dollars ($1,290,000); and
WHEREAS, the Resolution of Intent to Sell approved on October 10, 2022 evidenced City initiation of the sale process to City Ventures Homebuilding, LLC of the Site, and all that remains is necessary approvals associated with that disposition process, including the November 14, 2022 protest hearing; and WHEREAS, the City, having heard protest, now desires to approve the execution of the DDA and RA; and
WHEREAS, the City Council’s consideration of this Resolution is not a project as defined in CEQA, and even if a project as defined, is categorically exempt from environmental review pursuant to CEQA for the reasons described herein.

NOW THEREFORE, the City Council of the City of Upland does hereby resolve, find, determine, and order as follows:

Section 1. RECITALS. The recitals set forth above are true and correct and are hereby incorporated into this Resolution by this reference.

Section 2. CEQA FINDINGS. This resolution is exempt from CEQA pursuant to State CEQA Guidelines Section 15312 because approval of the DDA and accompanying RA involves the sale of surplus government property not located in an area of statewide, regional, or areawide concern identified in Section 15206(b)(4).

Under the terms of the DDA and RA, the agreement does not commit the developer to a particular project or commit the City to granting any discretionary approval. The City’s approval of the DDA does not constitute approval by the City of any development of the Property or of other activity on the Property that would have a direct or reasonably foreseeable indirect environmental impact pursuant to CEQA. (See 14 C.C.R. §§ 15060(c)(2); 15378(b).) Moreover, Developer’s future use or development of the Property is expressly conditioned on CEQA compliance.

Resolution No.

Section 3. PUBLIC CONVENIENCE AND NECESSITY FINDINGS. The City Council of the City hereby finds and determines that public convenience and necessity require the sale of the Site. The factors demonstrating that the public convenience and necessity require the sale of the Site include but are not limited to the following:
the Site is not suitable for the City’s use, no longer needed by the City, and in excess of its foreseeable needs. Developing the Site for a higher use with a quality residential development, consistent with the Historic Downtown Upland Specific Plan, will revitalize an underutilized property, provide much needed housing in the City, including at least 15% low-income affordable units (5 units of the planned 29 total townhomes) that will assist City meet its Regional Housing Needs Allocation, and create jobs within the City. Further, it will alleviate conditions of economic and physical blight in the City, and potentially create an increase in property taxes by virtue of rising values, all of which benefit the health, safety, and welfare of the City.

Section 4. APPROVAL. The City Council approves the DDA (attached as Attachment “B”) and accompanying RA (attached as Attachment “C”) with an effective date immediately following approval by the California Department of Housing and Community Development (“HCD”) that the City complied with its obligations under the Surplus Land Act consistent with State law, and with respect to the Property to be sold. The City Council authorizes the City Manager or designee, in consultation with the City Attorney, to take all necessary actions to effectuate the execution of the DDA and RA after that time and make any minor revisions to the documents necessary to effectuate the intent of the parties. The City Manager is directed to perform the obligations of the City under the DDA and RA.

Section 5. HEARING. As required by California Government Code section 37423, a duly noticed public hearing was held by the City on November 14, 2022 and the City Council approved the sale by four-fifths vote of its members pursuant to Government Code section 37425.

Section 6. NOTICE OF EXEMPTION. The City Council hereby directs staff to prepare, execute and file with the San Bernardino County Clerk a Notice of Exemption within five working days of the approval of this Resolution.

Section 7. CUSTODIAN OF DOCUMENTS. The custodian of documents constituting the record of proceedings for this matter is the City Clerk’s Office. The documents constituting the record of proceedings for this matter are located at City Hall at 460 N. Euclid Avenue, Upland, CA 91786.

Section 8. SEVERABILITY. If any provision of this Resolution is held invalid, the remainder of this Resolution shall not be affected by such invalidity, and the provisions of this Resolution are severable.

Section 9. EFFECTIVE DATE. This Resolution shall become effective immediately upon its adoption, and the effective date of the DDA and RA condition on approval by HCD as set forth in Section 4 herein.

Resolution No.

PASSED, APPROVED and ADOPTED this 14th day of November, 2022.

Bill Velto, Mayor

I, Keri Johnson, City Clerk of the City of Upland, do hereby certify that the foregoing Resolution was adopted at a regular meeting of the City Council held on the 14th day of November, 2022, by the following vote:

AYES:

NOES:

ABSENT:

ABSTAINED:

ATTEST:

Keri Johnson, City Clerk

Resolution No.

ATTACHMENT “A”

DESCRIPTION OF PROPERTY

City-owned parcels totaling 42,980 square feet or 0.99 Acres located at the northwest corner of First Avenue and A Street in the Historic Downtown with Assessor Parcel Numbers 1046-591-08, 09, 10, 11, 12, 13.

Resolution No.

Legal Description of the Property
Northwest Corner of First Avenue and A Street
UPLAND, CA 91786
APN 1046-591-08, 09, 10, 11, 12, 13

[LEGAL DESCRIPTION]

Resolution No.

ATTACHMENT “B”
Disposition and Development Agreement

Resolution No.

ATTACHMENT “C”
Regulatory Agreement

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HOUSING DISPOSITION

AND DEVELOPMENT AGREEMENT

among

CITY OF UPLAND
a California municipal corporation

and

CITY VENTURES HOMEBUILDING, LLC
a Delaware limited liability company

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1 This HOUSING DISPOSITION AND DEVELOPMENT AGREEMENT (“Agreement”) is dated as of [___ ____, 2022] (“Date of Agreement”), for reference purposes only, and is entered into by and among the City of Upland, a municipal corporation, duly organized and existing under the Constitution and laws of the State of California (“City”), and City Ventures Homebuilding, LLC, a Delaware limited liability company (“Developer”). The City and the Developer are sometimes referred to in this Agreement, each individually, as a “Party,” or collectively, as the “Parties.”

RECITALS
This Agreement is entered into with reference to the following recitals of fact (“Recitals”) that City and Developer believe to be true as of the Effective Date of this Agreement:

A. The City is the owner of that certain real property located approximately at the northwest corner of First Avenue and A Street, Upland, California, with the following San Bernardino County Assessor Parcel Numbers: APNs: 1046-591-08, 09, 10, 11, 12, 13, and more specifically described in Exhibit A attached hereto and incorporated herein by this reference (“Property” or “Site”).

B. On August 10, 2020, the City Council declared the Site as surplus land and not necessary for the City’s use and authorized the sale of the properties. On August 17, 2020, a Notice of Availability was sent to the California Department of Housing and Community Development (HCD) and housing sponsors, consistent with the Surplus Land Act.

C. On October 9, 2020, the Developer submitted a Notice of Interest to the City for the Site and shortly after, submitted a conceptual project proposal on November 12, 2020, to acquire and develop the Site into a residential project. Staff requested the Developer to resubmit their proposal illustrating a development with a minimum of 25% of the total units available at an affordable housing cost to comply with the Surplus Land Act. On December 29, 2020, Developer submitted a revised offer for the Site and proposed 27% of the units to be sold to affordable households, but shortly thereafter withdrew their revised proposal stating that after reevaluating the underwriting it was not financially feasible to move forward with a project containing 25% of the units to be sold at an affordable home value. Since no proposals were received consistent with the Surplus Land Act during the negotiation period, the City was in a position to receive any solicited/unsolicited development proposals, provided the project included a minimum of 15% of the dwelling units affordable to lower-income households. The City entered into an Exclusive Negotiation Agreement (ENA) with the Developer for the Site on March 22, 2021. On May 18, 2021, Developer submitted financial capability documentation and a project proforma to the City relating to the Developer’s written proposal (“Developer Proposal”) to acquire the Property from the City.

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2 D. The May 18, 2021 proposal was for acquisition and redevelopment of the Property as a residential for-sale community consisting of 29 three-story townhomes with an affordable housing component of not less than 15% of the units. The Project will be consistent with the land use designation for the Site under the General Plan, City’s zoning ordinance, and applicable specific plans, as may be amended from time to time. The Site is located within the Historic Downtown Upland Specific Plan with a land use designation of Old Town District and is within the First Avenue Overlay, which allows for the construction of up to 55-units per acre on the Site.

The Project is intended to consist of a residential for-sale community with 29 three-story townhomes, ranging between 1,300 square feet to 1,650 square feet in size and of the 29 units, proposing up to five (5) affordable units subject to a City Regulatory Agreement in the form attached as Exhibit H (“City Regulatory Agreement”) that will restrict up to five (5) of the units to households earning up to 80% of area median income consistent with the Surplus Land Act.

The Project is more particularly described, including the anticipated affordability level distribution, in the Scope of Development attached hereto as Exhibit B. The Project will be constructed on the land described on Exhibit A, which is currently owned by City.

E. City and Developer wish to enter into this Agreement to set forth the terms and conditions relating to City’s disposition of the Site to Developer.

F. The Developer’s proposed acquisition of the Property and subsequent construction and completion of the Project (as defined in Section 1.1.54) on the Property pursuant to the terms of this Agreement is in the best interest of the City and the health, safety and welfare of the City’s taxpayers and residents and is in accordance with the public purposes set forth in applicable law.

Implementation of this Agreement will further the City’s goals and objectives for lower income housing.

NOW, THEREFORE, in consideration of the mutual promises set forth in this Agreement and other good and valuable consideration, the receipt and sufficiency of which is acknowledged by City and Developer, the Parties agree as follows:

TERMS AND CONDITIONS
ARTICLE I.

DEFINITIONS; REPRESENTATIONS AND WARRANTIES;

EFFECTIVE DATE

1.1 Definitions. All initially capitalized terms not otherwise defined in this Agreement shall have the following meanings:

1.1.1 “Additional Insureds” has the meaning ascribed to such term in Section 5.4.

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3 1.1.2 “Affiliate” means and refers to any person or entity, directly or indirectly, Controlling or Controlled by or under common Control with the applicable person or entity, whether by direct or indirect ownership of equity interests, by contract or otherwise.

1.1.3 “Agreement” means this Housing Disposition and Development Agreement.

1.1.4 “CEQA” means the California Environmental Quality Act, Public Resources Code Sections 21000, et seq.

1.1.5 “Certificate of Completion” means the written certification of City that the construction of the Project has been completed in compliance with the terms and conditions of this Agreement, substantially in the form of Exhibit G attached to this Agreement.

1.1.6 “City” means the City of Upland, California, a public body corporate and politic.

1.1.7 “City Manager” means the City Manager of the City or his or her designee or successor in function.

1.1.8 “City Housing Assets Purchase Price” means the purchase price for APNs 1046-591-08, 09, 10 and 11, in the amount of Nine Hundred and Fifty Three Thousand Eight Hundred and Forty Dollars ($953,840.00) , which shall be transferred to the City’s housing fund, and earmarked for housing projects.

1.1.9 “City Regulatory Agreement” means the Regulatory Agreement and Declaration of Restrictive Covenants, Conditions and Restrictions Restricting the Use of Property for Affordable Housing in substantially the form of Exhibit H attached to this Agreement, which shall be recorded against the Property in its entirety which is recorded on or before the date of Close of Escrow.

1.1.10 “City Requirements” has the meaning ascribed to the term in Section 2.6.1.

1.1.11 “City’s Title Notice Response” means the written response of the City to the Developer’s Title Notice, in which the City either (i) elects to cause the removal from the Preliminary Report of any matters shown in Schedule B of the Preliminary Report as exceptions to coverage under the proposed Title Policy that were objected to in the Developer’s Title Notice, or (ii) elects not to cause the removal from the Preliminary Report of any matters shown in Schedule B of the Preliminary Report as exceptions to coverage under the proposed Title Policy that were objected to in the Developer’s Title Notice, provided that the City shall cause monetary liens not resulting from Developer’s Due Diligence Investigations, as shown in Schedule B of the

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4 Preliminary Report, to be removed as exceptions prior to or concurrent with the Close of Escrow, whether or not such monetary liens are included in Developer’s Title Notice.

1.1.12 “Close of Escrow” or “Closing” means the recording of the Grant Deed for the Property in the official records of the Recorder of the County, and completion of each of the actions set forth in ARTICLE III by the Escrow Holder for the City to sell the Property to the Developer and the Developer to purchase the Property from the City.

1.1.13 “Completion of Construction” means the issuance of a Certificate of Completion confirming that the Temporary Certificate of Occupancy for the Project, based on the plans submitted by the Developer to the City, has been issued.

1.1.14 “Construction Financing” means one or more loans that Developer may obtain from one or more Institutional Lenders, the proceeds of which are to be used and applied to pay the reasonable costs of obtaining such loans and either: (a) the Project Costs; or (b) to refinance only the outstanding amount owed under a prior loan obtained by Developer to finance the amount described in “(a)” of this Section 1.1.14 (without any other amounts). Such Construction Financing loans, if any, shall provide for normal and customary disbursement controls for the payment of Project Costs and normal and customary fees and expenses for loans of similar size and purpose.

The Construction Financing, if any, is set forth in the Project Budget.

1.1.15 “Construction Financing Documents” means the various documents and instruments made by and between Developer and one or more Institutional Lenders that evidence or perfect the Construction Financing or the security for repayment of the Construction Financing, including any associated Security Instrument.

1.1.16 “Control” means and refers to possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person or entity, whether by ownership of equity interests, by contract or otherwise.

1.1.17 “Controlling” and “Controlled” mean and refer to exercising or having Control.

1.1.18 “County” means the County of San Bernardino, California.

1.1.19 “Developer” means City Ventures Homebuilding, LLC, a Delaware limited liability company and its successors and assigns that are permitted by this Agreement.

1.1.20 “Developer’s Title Notice” means a written notice from the Developer to the City indicating the Developer’s objection to specific matters shown in Schedule B of the Preliminary Report as exceptions to coverage under the proposed Title Policy for the Property, describing in suitable detail the actions that the Developer reasonably believes are indicated to cure or correct each of the Developer’s objections.

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5 1.1.21 “Due Diligence Investigations” means the Developer’s due diligence investigations of the Property to determine the suitability of the Property for development and operation of the Project, including, without limitation, investigations of the environmental and geotechnical suitability of the Property, as deemed appropriate in the reasonable discretion of the Developer, all at the sole cost and expense of the Developer.

1.1.22 “Due Diligence Investigation Approval Notice” means a written notice of the Developer delivered to the City and the Escrow Holder, prior to the end of the Due Diligence Period, indicating the Developer’s acceptance of the condition of the Property and desire to accept a conveyance of fee title to the Property.

1.1.23 “Due Diligence Period” means the date commencing on the Effective Date and ending at 5:00 p.m. on the ninetieth (90th) day following the Effective Date.

1.1.24 “Effective Date” has the meaning ascribed to the term in Section 1.2.3.

1.1.25 “Environmental Claims” has the meaning ascribed to the term in Section 5.3.

1.1.26 “Environmental Laws” means all federal, state, local, or municipal laws, rules, orders, regulations, statutes, ordinances, codes, decrees, or requirements of any government authority regulating, relating to, or imposing liability of standards of conduct co ncerning any hazardous substance (as later defined), or pertaining to occupational health or industrial hygiene (and only to the extent that the occupational health or industrial hygiene laws, ordinances, or regulations relate to Hazardous Substances on, under, or about the Property), occupational or environmental conditions on, under, or about the Property, as now or may at any later time be in effect, including without limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (“CERCLA”) [42 USC Section 9601 et seq.]; the Resource Conservation and Recovery Act of 1976 (“RCRA”) [42 USC Section 6901 et seq.]; the Clean Water Act, also known as the Federal Water Pollution Control Act (“FWPCA”) [33 USC Section 1251 et seq.]; the Toxic Substances Control Act (“TSCA”) [15 USC Section 2601 et seq.]; the Hazardous Materials Transportation Act (“HMTA”) [49 USC Section 1801 et seq.]; the Insecticide, Fungicide, Rodenticide Act [7 USC Section 6901 et seq.] the Clean Air Act [42 USC Section 7401 et seq.]; the Safe Drinking Water Act [42 USC Section 300f et seq.]; the Solid Waste Disposal Act [42 USC Section 6901 et seq.]; the Surface Mining Control and Reclamation Act [30 USC Section 101 et seq.] the Emergency Planning and Community Right to Know Act [42 USC Section 11001 et seq.]; the Occupational Safety and Health Act [29 USC Section 655 and 657]; the California Underground Storage of Hazardous Substances Act [California Health & Safety Code Section 25288 et seq.]; the California Hazardous Substances Account Act [California Health & Safety Code Section 25300 et seq.]; the California Safe Drinking Water and Toxic Enforcement Act [California Health & Safety Code Section 24249.5 et seq.] the Porter-Cologne Water Quality Act [California Water Code Section 13000 et seq.] together with any amendments of or regulations

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6 promulgated under the statutes cited above and any other federal, state, or local law, statute, ordinance, or regulation now in effect or later enacted that pertains to occupational health or industrial hygiene, and only to the extent the occupational health or industrial hygiene laws, ordinances, or regulations relate to Hazardous Substances on, under, or about the Property, or the regulation or protection of the environment, including ambient air, soil, soil vapor, groundwater, surface water, or land use.

1.1.27 “Environmental Matters” has the meaning ascribed to the term in Section

5.3. 1.1.28 “Escrow” has the meaning ascribed to the term in Section 2.1.

1.1.29 “Escrow Closing Date” means, subject to extension due to Unavoidable Delay, either (a) on or before the 5th business day following the Escrow Holder’s receipt of written confirmation from both City and Developer of the satisfaction or waiver of all conditions precedent to the Close of Escrow; or (b) no later than eighteen (18) months after the Effective Date, whichever is less.

1.1.30 “Escrow Holder” means Fidelity National Title, Attn: Mary Lou Adame, 3237 E. Guasti Road, Suite 105, Ontario, CA 91761 or such other escrow holder mutually agreed upon in writing by both City and Developer.

1.1.31 “Escrow Opening Date” has the meaning ascribed to the term in Section

3.1. 1.1.32 “Event of Default” has the meaning ascribed to the term in Section 7.1.

1.1.33 “FIRPTA Affidavit” means an affidavit complying with Section 1445 of the United States Internal Revenue Code.

1.1.34 “Governmental Agency” means any and all courts, boards, agencies, commissions, offices, or authorities of any nature whatsoever for any governmental unit (federal, state, county, district, municipal, city, or otherwise) whether now or later in existence.

1.1.35 “Governmental Requirements” means all codes, statutes, ordinances, laws, permits, orders, and any rules and regulations promulgated thereunder of any Governmental Agency.

1.1.36 “Grading Permit” means a grading permit to be issued by the City to Developer covering the Property.

1.1.37 “Grant Deed” means a deed in the form of Exhibit D to this Agreement, conveying all of the City’s interest in the Property to the Developer.

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7 1.1.38 “Hazardous Substances” means, without implied limitation, substances defined as “hazardous substances,” “hazardous material,” “toxic substance,” “solid waste,” or “pollutant or contaminate” in the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. Sections 9601, et seq.; the TSCA; the Hazardous Materials Transportation Act, 49 U.S.C. Sections 1801, et seq.; the Resource Conservation and Recovery Act, 42 U.S.C. Sections 6901, et seq.; those substances listed in the United States Department of Transportation (DOT) Table [49 CFR 172.101], or by the EPA, or any successor authority, as hazardous substances [40 CFR Part 302]; and those substances defined as “hazardous waste” in Section 25117 of the California Health and Safety Code or, as “hazardous substances” in Section 25316 of the California Health and Safety Code; other substances, materials, and wastes that are, or become, regulated or classified as hazardous or toxic under federal, state, or local laws or regulations and in the regulations adopted pursuant to said laws, and shall also include manure, asbestos, polychlorinated biphenyl, flammable explosives, radioactive material, petroleum products, and substances designated as a hazardous substance pursuant to 33 USC Section 1321 or listed pursuant to 33 USC Section 1317. Notwithstanding the foregoing, “Hazardous Substances” shall not include such products in quantities as are customarily used in the construction, maintenance, development or management of residential developments or associated buildings and grounds, or typically used in residential activities in a manner generally used in other comparable residential developments, or substances commonly ingested by a significant population living within the Project including, without limitation, alcohol, aspirin, tobacco and saccharine.

1.1.39 “Indemnified Parties” has the meaning ascribed to the term in Section 5.3.

1.1.40 “Institutional Lender” means any of the following: (a) a bank (State, Federal or foreign), trust company (in its individual or trust capacity), insurance company, credit union, savings bank (State or Federal), pension, welfare or retirement fund or system, real estate investment trust (or an umbrella partnership or other entity of which a real estate investment trust is the majority owner), Federal or State agency regularly making or guaranteeing mortgage loans, investment bank or a subsidiary of a Fortune 500 company; or (b) any person or entity that is an Affiliate of or is a combination of any one or more of the persons or entities described in “(a)” of this Section.

1.1.41 “Lender” means the holder of any Security Instrument and its successors and assigns.

1.1.42 “LRPMP Parcels” shall mean APN 1046-591-12 and 13, described within City’s Long Range Property Management Plan.

1.1.43 “LRPMP Purchase Price” means the purchase price for the LRPMP Parcels, in the amount of Three Hundred and Thirty Six Thousand One Hundred and Sixty Dollars

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8 ($336,160.00 ), which shall be transferred to the County Auditor Controller and distributed to affected taxing entities.

1.1.44 “Notice of Agreement” means the notice in the form of Exhibit E to this Agreement to be recorded against the Property at the Close of Escrow to provide constructive record notice of the existence and application of this Agreement to the Property.

1.1.45 “Parties” means, collectively, the City and the Developer.

1.1.46 “Party” means, individually, the City or the Developer, as applicable.

1.1.47 “PCO Statement” means a preliminary change of ownership statement provided for in California Revenue and Taxation Code Section 480.3.

1.1.48 “Permanent Loan” means any loan that the Developer shall obtain from an Institutional Lender, the proceeds of which are to be used and applied solely to pay: (1) the reasonable costs of obtaining such loan; (2) the then current outstanding principal and interest under any Construction Financing; and (3) any reasonable and customary fees or charges of the Institutional Lender providing the Construction Financing relating to pay-off of the Construction Financing. The Permanent Loans are set forth in the Project Budget.

1.1.49 “Permitted Exceptions” means (i) any and all items shown in Schedule B of the Preliminary Report as exceptions to coverage under the proposed Title Policy that the Developer accepts, pursuant to Section 2.4; (ii) any exceptions from coverage under the proposed Title Policy; (iii) non-delinquent property taxes and assessments; (iv) the Grant Deed; (v) the Notice of Agreement; (vi) the City Regulatory Agreement; (vii) the Deed of Trust; (viii) any Permitted Security Instrument; (ix) any agreement restricting occupancy of the Project required by an Institutional Lender or the Subordinate Loan Lender; (x) any encumbrance recorded against the Property with Developer’s consent or as a result of the activities of Developer; and (xi) any other document or encumbrance expressly required or allowed to be recorded against the Property or the Project under the terms of this Agreement.

1.1.50 “Permitted Security Instrument” means any Security Instrument: (a) that encumbers only the Property or any interest in the Property; (b) that is held by a Lender that is an Institutional Lender, subject to the jurisdiction of the courts of the State, not immune from suit and cannot elect to be immune from suit; and (c) only secures: (i) the repayment of money used to pay or reimburse the Project Costs; (ii) a bona fide Permanent Loan; (iii) a delivery assurance fee regarding a Permanent Loan that is refundable to Developer at the close of the Permanent Loan; or (iv) any Refinancing. Promptly after execution, Developer shall promptly delivery a copy of any Security Instrument to the City, with the Lender’s name and notice address.

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9 1.1.51 “Permitted Transfer” means any of the following types of Transfer by Developer, which unless otherwise provided do not require the City’s prior written approval and where, except for a Transfer described in subsections .1, .2, .3, .4, .6, .7 and .9 below, the person or entity to which such Transfer is made expressly and unconditionally assumes in a written assignment and assumption agreement between such person or entity, Developer and City that is in a form reasonably acceptable to City (as evidenced by execution of such assignment and assumption agreement by the City Manager), all obligations of Developer under this Agreement:

1.1.51.1 Any Transfer to Institutional Lender: (1) pursuant to a Permitted Security Instrument as collateral for bona fide Construction Financing to pay all or any part of the Project Costs; or (2) pursuant to a Permitted Security Instrument as collateral for a bona fide Permanent Loan.

1.1.51.2 Any Transfer directly resulting from the foreclosure or deed in lieu of foreclosure of a Permitted Security Instrument for a loan from an Institutional Lender to the Project or as otherwise permitted under Section 6.5.7.

1.1.51.3 Any Transfer of stock or equity in the Party that does not change management or operational Control of the Project, with no material change in beneficial ownership (with the exception of any conveyance to member(s) of the immediate family(ies) of the transferor(s) or trusts for their benefit) and which constitutes a tax-free transaction under Federal income tax law and California real estate transfer tax.

1.1.51.4 The sale of residential units in the Project consistent with the City Regulatory Agreement.

1.1.51.5 Any Transfer of this Agreement and the Property to a limited partnership in which the managing general partner is the Developer or its Affiliate.

1.1.51.6 The Transfer and sale of limited partnership interests in Developer while the Developer is in the form of a limited partnership.

1.1.51.7 In the event that any general partner of the Developer, while the Developer is in the form of a limited partnership, is removed by the limited partner of such limited partnership for cause following default under the partnership agreement, the Transfer of the general partner interest to a 501(c)(3) tax exempt nonprofit corporation or its Affiliate selected by the limited partner and approved by the City, which approval shall not be withheld unreasonably, delayed or conditioned.

1.1.51.8 The Transfer of the Project from Developer, while the Developer is in the form of a limited partnership, to one or more of the general partners of the Developer or their Affiliates; and

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10 1.1.51.9 Any dilution of a general partner’s interest in the Developer while the Developer is in the form of a limited partnership, in accordance with the Developer’s limited partnership agreement.

1.1.51.10 The Transfer to an entity controlled by Developer or is a subsidiary or affiliate of Developer.

1.1.52 “Plans and Specifications” has the meaning ascribed to the term in Section

2.6.1. 1.1.53 “Preliminary Report” means a preliminary report issued by the Title Company in contemplation of the issuance of the Title Policy, accompanied by legible copies of all documents listed in Schedule B of the report as exceptions to coverage under the proposed Title Policy. The Parties acknowledge that they may prepare one (1) or more Preliminary Reports for each parcel, or group of parcels, comprising the Property. In such case, all reports, notices, and objection letters which pertain to the Preliminary Report for the entirety of the Property shall apply separately to each Preliminary Report associated with a parcel or a group of parcels.

1.1.54 “Project” means the construction and redevelopment of the Property as a residential for-sale community with 29 three-story townhomes with an affordable housing component reserved for five (5) lower-income units proposed, but in no instance shall Project contain less than 15% of total units restricted as lower-income units, consistent with Surplus Land Act requirements, and including all required or associated on-site and off-site improvements, all hardscape and all landscaping, all as specifically described in the Scope of Development, and all to be developed in accordance with the Plans and Specifications to be approved by the City and any conditions imposed by the City in its approval of the Plans and Specifications. The Parties acknowledge that the scope of the Project may be modified should site constraints or other unforeseen circumstances arise, so long as the affordability component requiring that 15% of the units be lower-income units is not modified.

1.1.55 “Project Budget” means the initial Project Costs and anticipated sources of funds to pay the Project Costs as set forth in the Project proforma, dated as of May 18, 2021, and approved by the City Manager as of the Effective Date, together with the submitted budget no later than fifteen (15) days prior to the last day of the Due Diligence Period, approved by the City and, upon approval by the City, attached to this Agreement as Exhibit I, as may be modified from time to time pursuant to Section 6.2, and incorporated herein by reference as Exhibit I.

1.1.56 “Project Commencement Date” means no later than the date thirty (30) days after the date that escrow is closed, subject to the issuance of the Grading Permit.

1.1.57 “Project Completion Date” means that date set forth therefor by which a Certificate of Completion shall be issued for the Project, as more particularly provided in the

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11 Schedule of Performance. The Project Completion Date shall be no later than the date which is thirty-six (36) months after the Close of Escrow, subject to Unavoidable Delay.

1.1.58 “Project Costs” means all of the costs of acquisition of the Property and development and construction of the Project.

1.1.59 “Property” means that real property, and all current and future improvements thereon (including, without implied limitation, the Project), legally described in Exhibit A.

1.1.60 “Property Transfer” means and refers to any “change in ownership,” as defined in Revenue and Taxation Code Sections 60, et seq., of all or any portion of the Property.

1.1.61 “Purchase Price” means the total purchase price for the Property, in the amount of One Million Two Hundred Ninety Thousand and 00/100 Dollars ($1,290,000.00), made up of both the LRPMP Purchase Price and the City Housing Assets Purchase Price.

1.1.62 “Record”, “recorded”, “recording” or “recordation” each mean and refer to recordation of the referenced document in the official records of the Recorder of the County of San Bernardino, California.

1.1.63 “Refinancing” means any loan secured by a Permitted Security Instrument that the Developer obtains from an Institutional Lender subsequent to recordation of the Permanent Loan for any of the following purposes: (1) to pay off all or a portion of an existing loan secured by a Permitted Security Instrument where the Lender providing the new loan will disburse loan proceeds to or on behalf of Developer exceeding the amount of principal and interest under the existing loan being paid plus the amount of any reasonable and customary fees and costs associated with obtaining such new loan that are actually paid by Developer and not rebated or refunded to Developer; or (2) any loan extension, modification or equivalent regarding an existing loan to Developer secured by a Permitted Security Instrument that results in the Lender of the existing loan disbursing additional loan proceeds to or on behalf of Developer in excess of the original principal amount of the loan.

1.1.64 “Schedule of Performance” means the schedule for the performance of certain actions by the Parties pursuant to this Agreement, attached to this Agreement as Exhibit C.

1.1.65 “Scope of Development” means the detailed description of the Project attached to this Agreement as Exhibit B.

1.1.66 “Security Instrument” means any security instrument, deed of trust, security deed, contract for deed, deed to secure debt, or other volunt ary real property (including leasehold) security instrument(s) or agreement(s) intended to grant real property (including leasehold) security for any obligation (including a purchase-money or other promissory note)

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12 encumbering the Property, as entered into, renewed, modified, consolidated, increased, decreased, amended, extended, restated, assigned (wholly or partially), collaterally assigned, or supplemented from time to time, unless and until paid, satisfied, and discharged of record. If two or more such security instruments are consolidated or restated as a single lien or held by the same Lender (as applicable), then all such security instruments so consolidated or restated shall constitute a single Security Instrument. A participation interest in a security instrument (or partial assignment of the secured loan) does not itself constitute a Security Instrument.

1.1.67 “Senior” means, referring to multiple Security Instruments, the Security Instrument that is most senior in lien of the same type. Where Senior is used as a comparative term as against any specified Security Instrument, such term refers to any Security Instrument of the same type that is senior in lien to such specified Security Instrument. If only one Security Instrument of a particular type exists, then it shall be deemed the Senior Security Instrument of such type.

1.1.68 [RESERVED].

1.1.69 “State” means the State of California.

1.1.70 “Subordinate Loan” means any loan approved through revisions to the Project Budget by the City Manager pursuant to Section 6.2, and which is secured by a Permitted Security Instrument junior in lien priority to the City Regulatory Agreement.

1.1.71 “Title Company” means Fidelity National Title Insurance Company, Mary Lou Adame, 3237 E. Guasti Road, Suite 105, Ontario, CA 91761

1.1.72 “Title Policy” means a standard CLTA owners’ policy of title insurance issued by the Title Company, with coverage in the full amount of the Purchase Price and insuring fee title to the Property, subject only to the Permitted Exceptions. However, at Developer’s option, Developer may acquire an ALTA extended coverage policy. City shall pay for the standard CLTA policy. Developer shall pay for any additional or ALTA extended coverage policy.

1.1.73 “Title Report” shall mean that certain preliminary report ordered and obtained by Developer promptly after the Effective Date.

1.1.74 “Transfer” means any of the following:

1.1.74.1 Any assignment, conveyance, grant, hypothecation, mortgage, pledge, sale, or other transfer, whether direct or indirect, of all or any part of such property, right or obligation, or of any legal, beneficial, or equitable interest or estate in such property, right or obligation or any part of it (including the grant of any easement, lien, or other encumbrance); or

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13 1.1.74.2 Any conversion, exchange, issuance, modification, reallocation, sale, or other transfer of any direct or indirect equity interest(s) in the owner of such property, right or obligation by the holders of such equity interest(s); or

1.1.74.3 Any merger, consolidation, sale, or lease of all or substantially all of the assets of the Developer or a series of such sales, assignments and the like that, in the aggregate, result in a disposition of more than a 49% interest of all or s ubstantially all of the assets of the Developer; or

1.1.74.4 Any Property Transfer; or

1.1.74.5 The recordation of any deed of trust, mortgage, lien or similar encumbrance against all or any portion of the Property or the Project.

1.1.75 “Unavoidable Delay” means any delay that is caused by the other Party or that is beyond the control of the City or the Developer, including delay caused by strikes, acts of God, weather, inability to obtain labor or materials, inability to obtain governmental permits or approvals, governmental restrictions (including so called “stay at home orders” or similar orders, widespread disease or public health emergencies, civil commotion, fire or similar causes, but excluding circumstances subject to Section 8.7.2).

1.2 Representations and Warranties.

1.2.1 City Representations and Warranties. The representations and warranties of City contained in this Section 1.2.1 shall be based upon the actual knowledge of the City Manager as of the Effective Date. All representations and warranties contained in this Section

1.2.1 are true and correct as of the Effective Date. City’s liability for misrepresentation or breach of warranty, representation or covenant, wherever contained in this Agreement, shall survive the execution and delivery of this Agreement and the Closing. City hereby makes the following representations, covenants and warranties and acknowledges that the execution of this Agreement by Developer has been made in material reliance by Developer on such covenants, representations and warranties:

1.2.1.1 City is a public body corporate and politic, duly formed and operating under the laws of the State of California. City has the legal power, right and authority to enter into this Agreement and to execute the instruments and documents referenced herein, and to consummate the transactions contemplated hereby.

1.2.1.2 The persons executing any instruments for or on behalf of City have been authorized to act on behalf of City and this Agreement is valid and enforceable against City in accordance with its terms and each instrument to be executed by City pursuant hereto or in connection therewith will, when executed, shall be valid and enforceable against City in

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14 accordance with its terms. No approval, consent, order or authorization of, or designation or declaration of any other person, is required in connection with the valid execution and delivery of and compliance with this Agreement by City.

1.2.1.3 City has taken all requisite action and obtained all requisite consents for agreements or matters to which City is a party in connection with entering into this Agreement and the instruments and documents referenced herein and in connection with the consummation of the transactions contemplated hereby. Notwithstanding the foregoing, Developer acknowledges City and Developer entered into an ENA on March 22, 2021 in reliance upon Health and Safety Code Section 54234 and the application of the Surplus Land Act (Gov. Code Section 54220 et. seq.) (“SLA”) as it existed upon that date. Application of the SLA by the California Department of Housing and Community Development requires the City to comply with the SLA prior to selling the Property. As disclosed in this Section 1.2.1.3, the City shall have no liability if the transaction cannot proceed or is delayed as a result of action by the California Department of Housing and Community Development. To the best of City’s knowledge and with no duty to investigate, the City warrants and represents that it has complied with the statutory requirements of the Surplus Land Act with respect to the Project Site before entering into this Agreement.

1.2.1.4 If the City becomes aware of any act or circumstance that would change or render incorrect, in whole or in part, any representation or warranty made by the City under this Agreement, whether as of the date given or any time thereafter, whether or not such representation or warranty was based upon the City’s knowledge and/or belief as of a certain date, the City will give immediate written notice of such changed fact or circumstance to the Developer.

1.2.1.5 The Parties agree that nothing in this Agreement is intended to commit the Developer to completing a particular project or to commit the City to granting any approval. The City’s approval of this Agreement does not constitute approval by the City of any development of the Property or of other activity on the Property that would have a direct or reasonably foreseeable indirect environmental impact pursuant to CEQA. (See 14 C.C.R. §§ 15060(c); 15378(b).) Moreover, Developer’s future use or development of the Property is expressly conditioned on CEQA compliance. City shall conduct an environmental review in accordance with CEQA prior to taking any discretionary action with regard to any proposed development of the Property. Nothing in this Agreement shall be construed to limit the City’s discretion to consider and adopt any mitigation measure or project alternative, including the alternative of rejecting any proposed development of the Property, as provided in Public Resources Code section 21002. Following completion of the City’s environmental review of any proposed development of the Property, the City shall file a notice of such approval as provided in Public Resources Code section 21152.

1.2.2 Developer Representations and Warranties. All representations and warranties contained in this Section 1.2.2 are true and correct as of the Effective Date. The

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15 Developer’s liability for misrepresentation or breach of warranty, representation or covenant, wherever contained in this Agreement, shall survive the execution and delivery of this Agreement and the Closing. The Developer hereby makes the following representations, covenants and warranties and acknowledges that the execution of this Agreement by City has been made in material reliance by City on such covenants, representations and warranties:

1.2.2.1 The Developer is a Delaware limited liability company, lawfully entitled to do business in the State of California and the City. The Developer has the legal right, power and authority to enter into this Agreement and the instruments and documents referenced herein and to consummate the transactions contemplated hereby. The persons executing this Agreement and the instruments referenced herein on behalf of the Developer hereby represent and warrant that such persons have the power, right and authority to bind the Developer.

1.2.2.2 The Developer has taken all requisite action and obtained all requisite consents in connection with entering into this Agreement and the instruments and documents referenced herein and the consummation of the transactions contemplated hereby, and no consent of any other party is required for the Developer’s authorization to enter into Agreement.

1.2.2.3 Neither the execution of this Agreement nor the consummation of the transactions contemplated hereby shall result in a breach of or constitute a default under any other agreement, document, instrument or other obligation to which the Developer is a party or by which the Developer may be bound, or under law, statute, ordinance, rule, governmental regulation or any writ, injunction, order or decree of any court or governmental body applicable to the Developer or to the Property.

1.2.2.4 This Agreement is, and all agreements, instruments and documents to be executed by the Developer pursuant to this Agreement shall be, duly executed by and shall be valid and legally binding upon the Developer and enforceable in accordance with their respective terms. No approval, consent, order or authorization of, or designation or declaration of any other person, is required in connection with the valid execution and delivery of in compliance with this Agreement by the Developer.

1.2.2.5 If the Developer becomes aware of any act or circumstance that would change or render incorrect, in whole or in part, any representation or warranty made by the Developer under this Agreement, whether as of the date given or any time thereafter, whether or not such representation or warranty was based upon the Developer’s knowledge and/or belief as of a certain date, the Developer will give immediate written notice of such changed fact or circumstance to the City.

1.2.3 Effective Date. This Agreement is dated _______, 2022 for reference purposes only. This Agreement shall not become effective until the date on which all of the following are true (“Effective Date”): (a) this Agreement is approved and executed by the

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16 appropriate authorities of Developer and delivered to City; (b) Developer has delivered to City a certified copy of the official action taken by all of the entities comprising the Developer approving this Agreement, substantially in the form attached to this Agreement as Exhibit F; (c) following all legally required notices and hearings, this Agreement is approved by the City Council; and (d) this Agreement is executed by the authorized representatives of City.

1.2.4 Exhibit List. The following is a list of the Exhibits attached to this Agreement. Each of the Exhibits is incorporated by this reference into the text of this Agreement.

Exhibit A Legal Description of Property
Exhibit B Scope of Development
Exhibit C Schedule of Performance
Exhibit D Form of Grant Deed
Exhibit E Form of Notice of Agreement
Exhibit F Form of Official Action of Developer
Exhibit G Form of Certificate of Completion
Exhibit H Form of Regulatory Agreement

ARTICLE II.

PROPERTY DISPOSITION

2.1 Purchase and Sale. In exchange for the Purchase Price and the Developer’s other covenants and undertakings set forth in this Agreement, the City shall sell the Property to the Developer and the Developer shall purchase the Property from the City pursuant to the terms and conditions of this Agreement. City shall ensure, in compliance with applicable law, that the City Housing Asset Purchase Price is properly transferred to City’s housing fund, and the LRPMP Purchase Price is distributed to affected taxing entities. For the purposes of exchanging funds and documents to complete the sale from the City to the Developer and the purchase by the Developer from the City of the Property pursuant to the terms of this Agreement, the City and the Developer agree to open an escrow (“Escrow”) with the Escrow Holder. ARTICLE III of this Agreement constitutes the joint escrow instructions of the Parties to the Escrow Holder for completion of the Escrow for the sale of the Property, as contemplated by this Agreement. The Developer and the City shall execute such further escrow instructions, consistent with the provisions of this Agreement, as may be reasonably requested by the Escrow Holder. In the event of any conflict between the provisions of this Agreement and any other escrow instructions requested by the Escrow Holder, the provisions of this Agreement shall control.

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17 2.2 Payment of Purchase Price. Time of Payment. The Developer shall pay the Purchase Price by depositing the Purchase Price in immediately available funds into the Escrow, at least one (1) business day preceding the Escrow Closing Date.

2.3 Eminent Domain. If any portion of the Property or any interest in any portion of the Property, becomes the subject of any eminent domain proceeding prior to Close of Escrow, other than such a proceeding by the City, including the filing of any notice of intended condemnation or proceedings in the nature of eminent domain commenced by any Governmental Agency, the City shall immediately give the Developer notice of such occurrence, and the Developer shall have the option, exercisable within ten (10) business days after receipt of such notice from the City, to either: (1) cancel the Escrow and terminate this Agreement and the Escrow, in which case the Parties and the Escrow Holder shall proceed in accordance with Section 3.10; or (2) continue with this Agreement in accordance with its terms, in which event the City shall assign to the Developer any right of the City to receive any condemnation award attributable to the Property.

2.4 Title Approval. Developer shall, promptly after the Effective Date, order a preliminary report (with hyperlinks to exception documents) from Fidelity National Title Company, and shall deliver a copy of the Preliminary Report to the City by email to [email protected]. Within thirty (30) days following the Developer’s receipt of a Preliminary Report for the entire Property, the Developer shall deliver the Developer’s Title Notice to the City. If the Developer fails to deliver the Developer’s Title Notice to the City within thirty (30) days following the Developer’s receipt of the Preliminary Report, the Developer will be deemed to approve the status of title to the Property. Within twenty (20) days following receipt by the City of Developer’s Title Notice, if any, the City shall serve City’s Title Notice Response. If the City does not serve City’s Title Notice Response, if necessary, within twenty (20) days following its receipt of Developer’s Title Notice, the City shall be deemed to elect not to remove any matter objected to in Developer’s Title Notice, if any, from the Preliminary Report. If the City elects in City’s Title Notice Response to cause the removal of any matter objected to in Developer’s Title Notice from the Preliminary Report, the City shall cause the removal of each such objectionable matter from the Preliminary Report within sixty (60) days following receipt by the Developer of City’s Title Notice Response or such other period of time that may be agreed to in writing by both the City and the Developer. If the City is unwilling or unable to cause the removal of any matter objected to in Developer’s Title Notice from the Preliminary Report, then, within ten (10) days following the Developer’s receipt of City’s Title Notice Response stating that the City is unwilling to remove or cause the removal of any matter objected to in Developer’s Title Notice or upon the expiration of the above sixty (60) day time period during which the City elected to remove such objectionable matters from the Preliminary Report and was unable to do so, the Developer may either (1) refuse to accept the title to and conveyance of the Property, in which case the Parties shall have the right, subject to Section 2.4.2, to cancel the Escrow and terminate

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18 this Agreement without liability to either Party or any other person, by delivery of a written notice of termination to the Escrow Holder, or (2) be deemed to waive its objection to any items set forth in Developer’s Title Notice, provided that the City shall cause monetary liens not resulting from Developer’s Due Diligence Investigations, as shown in Schedule B of the Preliminary Report, to be removed as exceptions prior to or concurrent with the Close of Escrow.

2.4.1 If at any time prior to the Close of Escrow the Title Company issues an updated Preliminary Report containing any previously undisclosed matter affecting title to the Property, or the City becomes aware of any previously undisclosed matter affecting title to the Property, following the delivery of the Developer’s Title Notice, the City shall provide written notice to the Developer of such matter, together with any updated Preliminary Report related to such matter. The City and the Developer shall have such rights and obligations with respect to such previously undisclosed title matters as they did with respect to any title matters set forth in the original Preliminary Report as set forth in Section 2.4.

2.4.2 Before exercising any right a Party may have under this Section 2.4 to cancel the Escrow and terminate this Agreement, such Party shall notify the non-terminating Parties in writing of its election to terminate and shall, upon a non -terminating Party’s request, which must be delivered, if at all, within three (3) days following its receipt of the terminating Party’s notice of election to terminate, meet and confer with the non -terminating Parties for a period of thirty (30) days. During such time, the Parties shall meet as often as reasonably requested by any Party to negotiate, in good faith, methods and means by which the objectionable title matter may be eliminated or mitigated. Nothing herein shall constitute an agreement, representation, or warranty by any Party that an acceptable resolution of the objectionable title matter will be achieved, nor shall any Party be obligated to expend any funds or undertake any other action whatsoever with respect to such title matter unless such agreement is reduced to a writing which is approved by all Parties, in their sole and absolute discretion. If, at the end of such thirty (30) day period, the Parties have not been able to agree on a mutually acceptable method of resolving such title matter, or if any proposed agreement is disapproved by the City Council, the Escrow shall be cancelled, this Agreement shall be terminated without liability to any Party, and the Parties shall proceed pursuant to Section 3.10.

2.4.3 The City agrees not to place any matters of record against the Property (other than Permitted Exceptions and any matters arising from City’s issuance or exercise of any remedy related to any approval for the Project), prior to the Close of Escrow, without the prior written consent of Developer.

2.5 Developer Investigations.

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19 2.5.1 The Developer shall have until the expiration of the Due Diligence Period to complete all of its Due Diligence Investigations with respect to the entirety of the Property. The Developer shall complete all of its Due Diligence Investigations within the Due Diligence Period and shall conduct all of its Due Diligence Investigations at its sole cost and expense. The Developer shall rely solely and exclusively upon the results of its Due Diligence Investigations of the Property, including, without limitation, investigations regarding geotechnical soil conditions, compliance with applicable laws pertaining to the use of the Property by the Developer and any other matters relevant to the condition or suitability of the Property for the Project, as the Developer may deem necessary or appropriate. City makes no representation or warranty to the Developer relating to the condition of the Property or suitability of the Property for any intended use or development by the Developer. If the Developer approves the condition and suitability of the Project, then the Developer shall deliver a Due Diligence Investigation Approval Notice to the City prior to the end of the Due Diligence Period. If the Developer does not timely deliver its Due Diligence Investigation Approval Notice prior to the end of the Due Diligence Period, the Developer shall be deemed to have disapproved and rejected the Property and this Agreement shall terminate without liability to the other Party or any other person. The Developer shall accept all conditions of the Property, without any liability of the City whatsoever, upon the Developer’s timely delivery of its Due Diligence Investigation Approval Notice. The Developer’s timely delivery of its Due Diligence Investigation Approval Notice shall evidence the acceptance of the condition of the Property by the Developer in its existing “AS IS,” “WHERE IS” and “SUBJECT TO ALL FAULTS” condition, as of the last day of the Due Diligence Period. In its sole discretion, the Developer may accept the Property in its “AS IS,” “WHERE IS” and “SUBJECT TO ALL FAULTS” condition at any time before the end of the Due Diligence Period. The Developer shall conduct during the Due Diligence Period such environmental assessment(s) of the Property as the Developer deems appropriate. If such assessment(s) do reveal the presence of any Hazardous Substances on the Property in levels that exceed applicable Governmental Requirements, then the City and the Developer shall negotiate in good faith in an effort to reach agreement as to the allocation of responsibility and cost of remediation thereof.

2.5.2 Any Due Diligence Investigations of the Property by the Developer shall not unreasonably disrupt any then existing use or occupancy of the Property or the operations of the City. The Developer shall be liable for any damage or injury to any person or property arising from the acts of the Developer, its employees, agents or representatives during the course of any Due Diligence Investigations on the Property and the Developer shall indemnify, defend with counsel reasonably acceptable to the City and hold harmless the City and its elected officials, officers, directors, attorneys, contractors, agents and employees from any and all actual or alleged liens, claims, demands or liability arising from any Due Diligence Investigations by the Developer on the Property other than for discovery of existing conditions on the Property. Prior to commencing any Due Diligence Investigations on the Property, the Developer shall deliver copies

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20 of policies or certificates of insurance to the City evidencing compliance by the Developer with the liability insurance requirements of Section 5.3.

2.5.3 Before exercising any right a Party may have under this Section 2.5 to cancel the Escrow and terminate this Agreement, such Party shall notify the non-terminating Parties in writing of its election to terminate and shall, upon a non -terminating Party’s request, which must be delivered, if at all, within three (3) days following its receipt of the terminating Party’s notice of election to terminate, meet and confer with the non -terminating Parties for a period of thirty (30) days. During such time, the Parties shall meet as often as reasonably requested by any Party to negotiate, in good faith, methods and means by which the objectionable due diligence matter may be eliminated or mitigated. Nothing herein shall constitute an agreement, representation, or warranty by any Party that an acceptable resolution of the objectionable due diligence matter will be achieved, nor shall any Party be obligated to expend any funds or undertake any other action whatsoever with respect to such due diligence matter unless such obligation is reduced to a writing which is approved by all Parties, in their sole and absolute discretion. If, at the end of such thirty (30) day period, the Parties have not been able to agree on a mutually acceptable method of resolving the objectionable due diligence matter, or if any proposed agreement is disapproved by the City Council, the Escrow shall be cancelled, this Agreement shall be terminated without liability to any Party, and the Parties shall proceed pursuant to Section 3.10.

2.6 Developer to Obtain all Project Entitlements.

2.6.1 Developer has developed and presented to City staff and the City Council, for review, the following (collectively, the “Plans and Specifications”):

2.6.1.1 A proposed complete conceptual development plan for the Project on the Property that describes and depicts: (1) the location and placement of proposed buildings and (2) the architecture and elevations of the proposed buildings;

2.6.1.2 Any proposed zoning change, including any necessary changes to the City’s General Plan or Historic Downtown Upland Specific Plan, necessary to accommodate the Project on the Property;

2.6.1.3 The proposed unit mix, showing unit size and affordability levels consistent with the Regulatory Agreement for the Project;

2.6.1.4 A proposed time schedule and cost estimates for the development of the Project on the Property; and

2.6.1.5 A proposed financing plan identifying financing sources for all private and public improvements proposed for the Project.

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21 2.6.2 The City’s zoning, building and land use regulations (whether contained in ordinances, the City’s municipal code, conditions of approval, policies, practice or elsewhere) (collectively, the “City Requirements”), shall be applicable to the use and development of the Project on the Property by the Developer. The Developer acknowledges that all Plans and Specifications and any changes to the Plans and Specifications shall be subject to the City Requirements. No action by the City with reference to this Agreement or any related documents shall be deemed to constitute a waiver of any City Requirements regarding the Property, the Project, the Developer, any successor-in-interest of the Developer or any successor-in-interest to the Property. The City Requirements may only be changed or waived by modification or variance approved by the City and consistent with this Agreement. Under no circumstances shall the Developer commence development of any portion of the Project on the Property prior to the Developer owning fee title to the Property.

2.6.3 The approval of the Scope of Development shall not be binding on the City Council or the Planning Commission of the City regarding any approvals of the Project required by such bodies. The Developer obtains no right to develop the Project on the Property or any portion of the Property by virtue of this Agreement, except that following the Close of Escrow, the Developer shall possess the same rights as any other owner of property within the Property that desires to develop its property in a manner consistent with the City’s General Plan. If any revisions of the Scope of Development are required by a Governmental Agency (other than the City) having jurisdiction over the Property or the Project, the Developer shall promptly make any such revisions that are generally consistent with the Scope of Development.

2.6.4 Notwithstanding any provision to the contrary in this Agreement, following the Close of Escrow, the Developer agrees to accept and comply fully with any and all conditions of approval applicable to all approvals, permits and other governmental actions regarding the development or operation of the Project on the Property, so long as such conditions of approval are consistent with the Scope of Development and this Agreement in all material respects.

2.6.5 Developer to Pay All Costs and Expenses. The Parties agree that the City shall not provide any financial assistance to the Developer in connection with the Project except as may be expressly set forth in this Agreement.

2.6.5.1 The Developer shall be solely responsible for paying for the costs of all design work, construction, labor, materials, fees and permit expenses associated with the Project.

2.6.5.2 The Developer shall pay any and all fees pertaining to the review and approval of the Project by the City, any other Governmental Agency and ut ility service providers, including the costs of preparation of all required construction, planning and other documents reasonably required by a Governmental Agency pertinent to the development or operation of the Project on the Property, including, but not limited to, specifications, drawings,

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22 plans, maps, permit applications, land use applications, zoning applications, environmental review and disclosure documents and design review documents.

2.6.5.3 The Developer shall pay for any and all costs, including, but not limited to, the costs of design, construction, relocation and securing of permits for sewer or utility improvements and connections, that may be required in development of the Project, whether located on or off of the Property.

2.6.5.4 The Developer shall obtain any and all necessary approvals, prior to the commencement of applicable portions of construction, and the Developer shall take reasonable precautions to ensure the safety and stability of surrounding properties during said construction.

2.6.5.5 In accordance with this Section 2.6.5, Developer is responsible for all of its costs associated with development of the Project. Developer must pay all application and process fees, charges and costs, make all deposits and provide all bonds or other security associated with the submission to and processing by the City of any and all applications and other documents and information to be submitted to the City by the Developer under to this Agreement or otherwise associated with the Project. Unless otherwise expressly agreed by the Parties, each Party shall be responsible for its own costs associated with the project.

2.6.6 The Developer shall take such actions in order to obtain all entitlements, permits and other approvals for use and development of the Project on the Property from each Governmental Agency, within the time period for such actions specifically set forth in the Schedule of Performance, subject to any extensions of time authorized by this Agreement upon the occurrence of an Unavoidable Delay.

2.7 Delivery of Property Free of Occupants. At the Close of Escrow, the City will deliver possession of the Property to Developer free and clear of any contractual rights created by or with the consent of the City for any person or entity (other than Developer) to use or occupy the Property, free of all parties in possession and free of all personal property, including, without limitation vehicles, trailers, oil drums and the like (the “Delivery Obligation”).

ARTICLE III.

ESCROW INSTRUCTIONS

3.1 Opening of Escrow. For purposes of this Agreement, the opening of Escrow shall be the first date on which a fully executed copy of this Agreement is deposited with Escrow Holder (“Escrow Opening Date”). The Developer shall cause the Escrow to be opened within five (5) days following the Effective Date and shall deposit the Good Faith Deposit of Twenty Five Thousand Dollars ($25,000.00) which sum shall constitute the Project’s “Earnest Money” of

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23 Twenty-Five Thousand Dollars ($25,000.00), plus ten thousand dollars ($10,000.00) for City’s out of pocket expenses, associated with Parties’ Exclusive Negotiation Agreement on Escrow Opening Date. If Developer delivers an Approval Notice prior to the expiration of the Due Diligence Period, then the Earnest Money shall be nonrefundable to Developer, minus any applicable escrow close costs incurred to date, unless the consummation of the transaction contemplated in this Agreement fails to occur by reason of (i) the non-satisfaction of a condition to the Closing for Developer's benefit or (ii) City’s default in any of its obligations under this Agreement, in which events Escrow Holder shall refund the Earnest Money to Developer. If Developer fails to timely deliver an Approval Notice, then the Earnest Money shall be returned to Developer, minus any escrow costs to date. Escrow Holder shall promptly confirm in writing to each of the Parties the date of the Escrow Opening Date. This ARTICLE III shall constitute the joint escrow instructions of the City and the Developer to Escrow Holder for conduct of the Escrow to complete the purchase and sale of the Property between them, as contemplated in this Agreement. Developer may, at its option, direct Escrow Holder to invest the Earnest Money received to date in an interest bearing account designated by Developer. All interest accruing on the Earnest Money shall become and be a part of the Earnest Money. The Earnest Money shall be held in Escrow to be applied to the Purchase Price, retained by the City, or returned to the Developer as provided in this Agreement.

3.2 Conditions to Close of Escrow. The conditions set forth below shall be satisfied or waived in writing by the respective benefited Party on or before the Escrow Closing Date or the Party benefited by any unsatisfied condition shall not be required to proceed to close Escrow.

3.2.1 Developer’s Conditions to Close of Escrow. The Developer’s obligation to purchase the Property from the City on the Escrow Closing Date shall be subject to the satisfaction of the following conditions precedent, each of which can only be waived in writing by the Developer:

3.2.1.1 The Developer agrees, or is deemed, to accept the title to and conveyance of the Property, pursuant to Section 2.4;

3.2.1.2 The Developer shall have delivered a Due Diligence Investigation Approval Notice to the City prior to the expiration of the Due Diligence Period;

3.2.1.3 The City’s Planning Commission finds, pursuant to Government Code Section 65402, that the Project is consistent with the City’s General Plan;

3.2.1.4 Developer has provided evidence, including submittal of a line of credit 48 hours prior to Close of Escrow, evidencing funds sufficient for Project financing, to City’s reasonable satisfaction;

3.2.1.5 The Title Company is unconditionally committed to issue the Title Policy for the Property, subject to any Permitted Exceptions, to the Developer;

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24 3.2.1.6 Developer approves the Escrow Holder’s estimated Escrow closing/settlement statement;

3.2.1.7 The representations, warranties and covenants of the City set forth in Section 1.2.1 are true and correct in all material respects on the Effective Date and on the Escrow Closing Date;

3.2.1.8 The Developer has obtained all entitlements required in connection with the development of the Property, including any amendment to the Historic Downtown Upland Specific Plan, First Avenue Overlay, to the extent necessary for Project, subject to conditions of approval acceptable to Developer in Developer’s sole discretion, any applicable appeal period has expired without appeal having been filed or, if an appeal is filed, such appeal has been denied, and no legal action has been instituted against Developer or the City alleging the invalidity of such entitlements;

3.2.1.9 The City has completed all of its material obligations required by this Agreement to be completed prior to the Close of Escrow;

3.2.1.10 The City deposits the items into the Escrow required by Section

3.3;

3.2.1.11 The Delivery Obligation shall have been satisfied; and

3.2.1.12 A grading permit for the Property is ready-to-be issued subject only to the Close of Escrow and the payment of the fee to City within 30 days of Close of Escrow.

3.2.2 City’s Conditions to Close of Escrow. The City’s obligation to sell the Property to the Developer on or before the Escrow Closing Date shall be subject to the satisfaction of the following conditions precedent, which can only be waived in writing by the City:

3.2.2.1 The Developer agrees, or is deemed, to accept the title to and conveyance of the Property, pursuant to Section 2.4;

3.2.2.2 The Developer delivers a Due Diligence Investigation Approval Notice to the City prior to the expiration of the Due Diligence Period;

3.2.2.3 The City’s planning commission finds, pursuant to Government Code Section 65402, that the Project is consistent with the City’s General Plan;

3.2.2.4 The Title Company is unconditionally committed to issue the Title Policy for the Property, subject to any Permitted Exceptions, to the Developer;

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25 3.2.2.5 The Developer submits to the City evidence satisfactory to the City, in the City’s reasonable discretion, that the Developer has obtained all entitlements necessary for the development of the Property from each applicable Governmental Agency, including the City;

3.2.2.6 The Developer has completed all of its material obligations required by this Agreement to be completed prior to the Close of Escrow;

3.2.2.7 The Developer submits to the City the Developer’s organizational documents;

3.2.2.8 The Developer submits to the City the marketing plan for the Project pursuant to Section 2.8;

3.2.2.9 The Developer submits to the City a copy of the construction contract for the Project in the form it will use with its subcontractors. Developer or an affiliate of Developer will serve as the general contractor;

3.2.2.10 The Developer submits to the City copies of the Construction Financing Documents in substantially final form, it being understood that Developer intends to fund the construction from its revolving $325,000,000.00 line of credit from Wells Fargo Bank, in which case no Construction Financing Documents will encumber the Property;

3.2.2.11 Compensation Agreement. City shall have forwarded as soon after the Effective Date as is reasonably practicable the Taxing Entity Compensation Letter to all affected taxing entities. This letter shall serve to satisfy the requirement for a compensation agreement described in California Health and Safety Code Section 34180(f) with respect to the LRPMP Parcels. If City receives an objection from an affected taxing entity objecting to the use of the Compensation Letter or the Purchase Price of the LRPMP Parcels and the City, in its reasonable discretion, is unable or unwilling to close this transaction the City shall not be a Default under this agreement and Buyer shall not be entitled to seek specific performance to compel the City to close escrow or monetary damages against the City, but shall be entitled to the return of the Earnest Money minus any escrow costs to date. The City shall use commercially reasonable efforts to satisfy the conditions set forth in this Section 3.2.2.9 prior to the expiration of the Due Diligence Period. The City shall report the status of these efforts to Developer upon Developer’s request.

3.2.2.12 The representations, warranties and covenants of the Developer set forth in Section 1.2.2 are true and correct in all material respects on the Effective Date and on the Escrow Closing Date; and

3.2.2.13 The Developer deposits the items into the Escrow required by Section 3.3.

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26 3.3 Developer’s Escrow Deposits. Following satisfaction or waiver of each of the Developer’s conditions to Close of Escrow set forth in Section 3.2.1, the Developer shall deposit the following funds and documents into Escrow at least one (1) business day prior to the Escrow Closing Date in a writing delivered to the Parties:

3.3.1 PCO Statement. A PCO Statement executed by the authorized representative(s) of the Developer.

3.3.2 Acceptance of Grant Deed. The Certificate of Acceptance of the Grant Deed, in the form attached to the Grant Deed, executed by the authorized representative(s) of the Developer in recordable form.

3.3.3 Notice of Agreement. The Notice of Agreement executed by the authorized representative(s) of the Developer in recordable form, to be recorded against the Property at the Close of Escrow.

3.3.4 City Regulatory Agreement. The City Regulatory Agreement executed by the authorized representative(s) of Developer in recordable form, to be recorded against the Property at the Close of Escrow.

3.3.5 Liquidity and/or Financing. Forty-eight hours prior to Close of Escrow, Developer shall have submitted evidence to the City that liquidity and/or financing which is not secured by the Property is available to Developer to cover the cost of the Project. If Developer provides such evidence, then the provisions of Sections 3.3.6 through 3.3 .9, inclusive, shall not apply.

3.3.6 Construction Financing Security Instrument(s). A Permitted Security Instrument(s) securing repayment of the Construction Financing, executed by the authorized representative(s) of Developer in recordable form, to be recorded against the Property at the Close of Escrow.

3.3.7 Subordinate Loan(s) Security Instrument(s). Permitted Security Instrument(s) securing repayment of the Subordinate Loan(s) executed by the authorized representative(s) of Developer in recordable form, to be recorded against the Property at the Close of Escrow.

3.3.8 Land Use Restriction Agreement(s). Agreement(s) restricting occupancy and rents in the Project as required by any Senior or Subordinate Loans (each a “LURA”), executed by the authorized representative(s) of Developer in recordable form, to be recorded against the Property at the Close of Escrow.

3.3.9 Subordination Agreement. A subordination agreement subordinating the City Regulatory Agreement in the form provided by an Institutional Lender, reasonably approved

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27 by the City and executed by the authorized representative of Developer in recordable form, to be recorded against the Property at the Close of Escrow.

3.3.10 Other Funds and Documents. Such documents required from Developer under the terms of this Agreement to close the Escrow, including funds as required to pay Developer’s Escrow closing costs, or by the Escrow Holder in the performance of the Escrow Holder’s contractual or statutory obligations relating to the Escrow.

3.4 City’s Escrow Deposits. Following satisfaction or waiver of each of the City’s conditions to Close of Escrow set forth in Section 3.2.2, the City shall deposit the following documents into Escrow at least one (1) business day prior to the Escrow Closing Date:

3.4.1 Grant Deed. The Grant Deed executed by the authorized representative(s) of the City in recordable form.

3.4.2 FIRPTA Affidavit (City). The FIRPTA Affidavit completed and executed by the authorized representative(s) of the City.

3.4.3 Notice of Agreement. The Notice of Agreement executed by the authorized representative(s) of the City in recordable form.

3.4.4 City Regulatory Agreement. The City Regulatory Agreement signed by the authorized representative(s) of the City in recordable form, which shall be recorded against the entire Property.

3.4.5 Deposit Funds. Any remaining and refundable portion of the deposit made by Developer to be applied to any costs of Escrow to be borne by Developer and then, if any funds still remain, be returned to the Developer by Escrow Holder.

3.5 Closing Procedure. When each of the Developer’s Escrow required deposits, as set forth in Section 3.3, and each of the City’s Escrow required deposits, as set forth in Section

3.4, are deposited into Escrow, Escrow Holder shall request confirmation in writing from both the City and the Developer that each of their respective conditions to the Close of Escrow, as set forth in Section 3.2, are satisfied or waived. Upon Escrow Holder’s receipt of written confirmation from both the City and the Developer that each of their respective conditions to the Close of Escrow are either satisfied or waived, Escrow Holder shall close the Escrow for the Property by doing al l of the following:

3.5.1 Recordation of Documents. File the documents set forth in Section 3.7 with the Office of the Recorder of the County, for recordation in the order set forth in Section 3.7.

3.5.2 Distribution of Recorded Documents. Distribute each recorded document to the Party or person designated for such distribution in Section 3.7.

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28 3.5.3 PCO Statement. File the PCO Statement with the Office of the Recorder of the County.

3.5.4 FIRPTA Affidavit. File the FIRPTA Affidavit with the United States Internal Revenue Service.

3.5.5 Title Policy. Obtain and deliver the Title Policy to the Developer.

3.5.6 Funds. Deliver the Purchase Price, held by the Escrow Holder for the account of City to City, less any charges to the account of City under the terms of this Agreement, and deliver any funds for the account of Developer to Developer, less any other charges to the account of Developer under the terms of this Agreement.

3.6 Close of Escrow. The Close of Escrow shall occur on or before the Escrow Closing Date. The City and the Developer may mutually agree to change the Escrow Closing Date by joint written instruction to the Escrow Holder. The City Manager is authorized to agree to one or more extensions of the Escrow Closing Date on behalf of the City up to a maximum time period extension of twelve (12) months in the aggregate, in the City Manager’s sole and absolute discretion. If for any reason the Close of Escrow has not occurred by the Escrow Closing Date, then any Party not then in default of this Agreement may cancel the Escrow and terminate this Agreement, subject to the notice and cure provisions of Section 7.1 (to the extent applicable), without liability to any other Party or any other person for such termination and cancellation, by delivering written notice of termination to the other Party(ies) and Escrow Holder and, thereafter, the Parties shall proceed pursuant to Section 3.10 if the non-terminating Party is not in default or pursuant to Section 7.1 or 7.2 (as applicable) if the non-terminating Party is in default. Without limiting the right of any Party to terminate this Agreement, pursuant to the preceding sentence, if Escrow does not close on or before the Escrow Closing Date, and no Party has exercised its contractual right to cancel Escrow and terminate this Agreement before such time, then Escrow shall close as soon as reasonably possible following the first date on which Escrow Holder is in a position to close the Escrow pursuant to the terms and conditions of this Agreement.

3.7 Recordation and Distribution of Documents. As applicable, Escrow Holder shall cause the following documents to be recorded in the official records of the Recorder of the County in the following order of priority at the Close of Escrow: (a) the Grant Deed; (b) the City Regulatory Agreement identified in section 1.1.8 above; (c) the regulatory agreement required by the issuer of tax-exempt bonds for the Project, if applicable; (d) Permitted Security Instruments securing the Construction Financing, if any; (e) any applicable land-use restriction agreement required by any other Project lender, if any; (f) the Notice of Agreement; (g) any applicable land use restriction agreement required by the Lender of the Subordinate Loan(s), if any; (h) the deed of trust securing the Subordinate Loan(s), if any; (i) the Subordination Agreements described in Section 3.3.9, if any; and (j) any other documents to be recorded through the Escrow upon the joint

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29 instructions of the City and the Developer. The Escrow Holder shall deliver conformed copies of all documents filed for recording in the official records of the County through the Escrow to the City, the Developer and any other entity or person designated in the written joint escrow instructions of the Parties to receive an original or conformed copy of each such document. Each copy of a document filed for recording shall show all recording information. The Parties intend and agree that this Section 3.7 shall establish the relative priorities of the documents to be recorded in the official records of the County through the Escrow, by providing for recordation of Senior interests prior in time to junior interests, as provided in this Section 3.7.

3.8 Escrow Closing Costs, Taxes and Title Policy Premium. The Developer shall pay Escrow fees and such other costs as Escrow Holder may charge for the conduct of the Escrow.

The City shall pay the documentary transfer tax, if any. The cost of the Title Policy shall be allocated in accordance with Section 1.1.72. Escrow Holder shall notify the Developer of the costs to be borne at the Close of Escrow by delivering the Escrow Holder’s estimated closing/settlement statement to both the City and the Developer at least four (4) business days prior to the Escrow Closing Date.

3.9 Escrow Cancellation Charges. If the Escrow fails to close due to the City’s material default under this Agreement and the Escrow is cancelled and this Agreement is terminated, the City shall pay all ordinary and reasonable Escrow and title order cancellation charges. If the Escrow fails to close due to the Developer’s material default under this Agreement and the Escrow is cancelled and this Agreement is terminated, the Developer shall pay all ordinary and reasonable Escrow and title order cancellation charges.

3.10 Escrow Cancellation. If this Agreement is terminated and the Escrow cancelled pursuant to a contractual right granted to a Party in this Agreement to terminate this Agreement and cancel the Escrow, other than due to the material default of another Party, the Parties shall do each of the following:

3.10.1 Cancellation Instructions. The Parties shall, within three (3) business days of receipt of Escrow Holder’s written request, execute any reasonable Escrow cancellation instructions requested by Escrow Holder;

3.10.2 Return of Funds and Documents. Within ten (10) days of receipt by the Parties of a settlement statement of Escrow and title order cancellation charges from Escrow Holder: (a) the Developer or Escrow Holder shall return to the City any documents previously delivered by the City to the Developer or Escrow Holder, (b) the City or Escrow Holder shall return to the Developer all documents previously delivered by the Developer to the City or Escrow Holder; (c) Escrow Holder shall return to the Developer any funds deposi ted by Developer into Escrow, less the Developer’s share of customary and reasonable Escrow and title order

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30 cancellation charges, if any; and (d) Escrow Holder shall return to the City any funds deposited by City into Escrow if it has already been deposited, less the City’s share of customary and reasonable Escrow and title order cancellation charges, if any.

3.11 Report to IRS. Following the Close of Escrow and prior to the last date on which such report is required to be filed with the Internal Revenue Service, if such report is required pursuant to Section 6045(e) of the Internal Revenue Code, Escrow Holder shall report the gross proceeds of the purchase and sale of the Property to the Internal Revenue Service on Form 1099 - B, W-9 or such other form(s) as may be specified by the Internal Revenue Service pursuant to Section 6045(e). Upon the filing of such reporting form with the Internal Revenue Service, Escrow Holder shall deliver a copy of the filed form to the City and the Developer.

ARTICLE IV.

PROJECT DEVELOPMENT

4.1 Developer Covenant to Undertake Project. The Developer covenants, for itself, its successors and assigns, to and for the benefit of the City, that the Developer shall commence and complete the development of the Project on the Property within the time period for such actions set forth in the Schedule of Performance. The Developer covenants and agrees for itself, its successors, and assigns, that the Property shall be improved and developed with the Project in substantial conformity with the terms and conditions of this Agreement, the Scope of Development, the Schedule of Performance, any and all plans, specifications and similar development documents required by this Agreement, except for such changes as may be mutually agreed upon in writing by and among the Parties, and all applicable laws, regulations, orders and conditions of each Governmental Agency with jurisdiction over the Property or the Project. The covenants of this Section 4.1 shall run with the land of the Property until the date of recordation of the Certificate of Completion.

4.2 City Approval. Prior to contracting with any general contractor or with any investor in connection with the Project, the Developer shall obtain the City’s written consent, which consent the City may not unreasonably withhold.

4.3 Developer Changes to Plans and Specifications During Course of Construction. The Developer shall have the right during the course of construction of the Project to make “Minor change orders,” without seeking the approval of the City, if such changes do not affect the type of use to be conducted within all or any portion of a structure. “Minor change orders” shall be defined as those changes from the approved Plans and Specifications that have no substantial effect on the Project or are made in order to expedite the work of construction in response to field conditions; provided however, that any changes to the final Project Budget of less

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31 than $150,000 per line item or $500,000 in the aggregate shall be considered “Minor change orders”. The Developer shall submit all other changes, i.e. those changes which are not “Minor change orders”, to the City for its review and approval no less than ten (10) days prior to the date that the Developer intends to implement such changes. The City shall have seven (7) days from its receipt of such proposed changes to review the same and advise the Developer in writing whether such changes are acceptable to the City in its reasonable discretion. Any proposed changes which are not disapproved by the City within such seven (7) day period shall be deemed approved.

Nothing contained in this Section 4.3 shall be deemed to constitute a waiver of or change in the City Requirements governing “Minor change orders” or other changes or in any approvals by the City otherwise required for “Minor change orders.” or other changes.

4.4 Construction Start and Completion of Project. The Developer shall commence construction of the Project no later than the Project Commencement Date and, thereafter, shall diligently proceed to complete the construction of the Project in a good and workmanlike manner in substantial conformity with the approved plans, specifications, and conditions for the Project approved by the City and the Schedule of Performance, subject to Unavoidable Delays. The Developer shall obtain a Certificate of Completion on or before the Project Completion Date, subject to Unavoidable Delays. The Developer will, promptly upon Completion of Construction of the Project, cause the Project to be inspected by each Governmental Agency with jurisdiction over the Project, shall correct any defects and deficiencies that may be disclosed by any such inspection and shall cause to be duly issued all occupancy certificates and other licenses, permits and authorizations necessary for the operation and occupancy of the completed Project. The Developer shall do and perform all of the foregoing acts and things and cause to be issued and executed all such occupancy certificates, licenses, and authorizations for the Project on or before the date set forth therefor in the Schedule of Performance as the completion date for the Project.

After commencement of the work of improvement of the Project, the Developer shall not permit the work of improvement of the Project to cease or be suspended for a time period in excess of thirty (30) consecutive calendar days, subject to Unavoidable Delays.

4.5 Compliance with Laws. All work performed in connection with the development of the Project shall comply with all Governmental Requirements.

4.6 Schedule of Performance. The Schedule of Performance establishes various dates and times for the accomplishment of various tasks assigned to the City and the Developer and the satisfaction of the conditions precedent to the close of the Escrow. The Parties agree that time is of the essence in the performance of such tasks and the satisfaction of conditions precedent, in view of the large investment of resources that all Parties recognize will be required for the undertaking of the Project. If the date or time for the performance of a task or the satisfaction of a condition, as set forth in either the text of this Agreement or in the Schedule of Performance, may not be achieved, then prior to such date or time set forth in the text of this Agreement or the

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32 Schedule of Performance, the Parties shall consider whether a modification to the text of this Agreement or to the Schedule of Performance is indicated. Any decision to approve a modification to a time or date established in either the text of this Agreement or the Schedule of Performance shall be subject to the sole discretion of each Party. Any modification of a time or date for performance of a particular task or satisfaction of a particular condition that does not result in a change of more than one hundred eighty (180) days may be approved on behalf of the City by the City Manager, in his or her reasonable discretion. A modification of a time or date for performance of a task or satisfaction of a condition (or a series of such modifications) that results in an aggregate change of more than one hundred eighty (180) days shall be subject to the approval of the City Council, in its sole and absolute discretion. If performance of a task or satisfaction of a condition in the Schedule Performance is prevented or delayed by Unavoidable Delays, the deadline for completion of such task or satisfaction of such condition shall be extended by the period of such Unavoidable Delays.

4.7 City’s Right to Inspect Project and Property. Officers, employees, agents and representatives of the City shall have the right of reasonable access to the Property, without the payment of charges or fees, during normal construction hours, during the period of construction of the Project. Such officers, employees, agents or representatives of the City shall be those persons who are designated by the City Manager. Any and all officers, employees, agents or representatives of the City who enter the Property shall identify themselves at the construction management office on the Property, upon their entrance on to the Property, and shall at all times be accompanied by a representative of the Developer, while on the Property. The Developer shall make a representative of the Developer available for this purpose at all times during normal construction hours, upon reasonable notice from the City. The City shall indemnify and hold the Developer harmless from injury, property damage or liability arising out of the exercise by the City of the right of access to the Property provided in this Section 4.7, other than injury, property damage or liability arising from the negligence or willful misconduct of the Developer or its officers, agents or employees.

The City shall inspect relevant portions of the Property, prior to issuing any written statements reflecting adversely on the Developer’s compliance with the terms and conditions of this Agreement pertaining to development of the Project. If in the City’s reasonable judgment it is necessary, the City shall have the further right, from time to time, to retain a consultant or consultants to inspect the Project and verify compliance by the Developer with the provisions of this Agreement. The Developer acknowledges and agrees that any such inspections are for the sole purpose of protecting the City’s rights under this Agreement, are made solely for the City’s benefit, that the inspections may be superficial and general in nature, and are for the purposes of informing the City of the progress of the Project and the conformity of the Project with the terms and conditions of this Agreement, and that the Developer shall not be entitled to rely on any such inspection(s) as constituting an approval, satisfaction or acceptance of any materials, workmanship, conformity of the Project with this Agreement or otherwise. The Developer agrees to make its own regular inspections of the work of construction of the Project to determine that the quality of the Project and all other requirements of the work of construction of the Project are being

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33 performed in a manner satisfactory to the Developer. The Developer also agrees to immediately notify the City in writing should the Developer’s inspections show any matters that will prevent the entire Project from being completed by the Project Completion Date set forth therefor in the Schedule of Performance. Without limiting the foregoing, the Developer shall permit the City upon reasonable notice to examine and copy all books and account records and other papers relating to the Property and the construction of the Project. The Developer will use commercially reasonable efforts to cause all contractors, subcontractors and materialmen to cooperate with the City to enable such examination.

4.8 Cost of Construction. The cost and expense of undertaking and completing the Project, including, without limitation, constructing all legally imposed on- and off-site improvements, and providing all utilities therefor, shall be borne by Developer at its sole cost, expense and liability except as otherwise provided in this Agreement. Developer shall be solely responsible for payment of all City land use, construction, inspection, plan check and development impact fees imposed by the City with respect to the development of the Project. Developer shall bear all costs and expenses associated with the processing and obtaining of the entitlements and shall bear all costs and expenses (except to the extent expressly set forth otherwise in this Agreement), associated with any and all terms, conditions, requirements, mitigation measures and other exactions imposed on, or required in connection with, the entitlements.

4.8.1 City Contribution. After the Developer obtains a Certificate of Completion, City shall reimburse the Developer up to $40,000 associated with the development impact fees for Project. Notwithstanding the foregoing, in no event shall the City Contribution exceed two percent (2%) of the total Project Costs for the Project.

4.9 Prevailing Wages. The Developer acknowledges that the City has not made any representation, express or implied, to the Developer or any person associated with the Developer regarding whether or not laborers employed relative to the construction of the Project must be paid the prevailing per diem wage rate for their labor classification, as determined by the State of California, pursuant to Labor Code Sections 1720, et seq. The Developer agrees with the City that the Developer shall assume the responsibility and be solely responsible for determining whether or not laborers employed relative to the construction of the Project must be paid the prevailing per diem wage rate for their labor classification.

4.9.1 The Developer, on behalf of itself, its successors, and assigns, waives and releases the City from any right of action that may be available to it pursuant to Labor Code Sections 1726 and 1781. The Developer acknowledges the protections of Civil Code Section 1542 relative to the waiver and release contained in this Section 4.9.1, which reads as follows:

“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS

THAT THE CREDITOR OR RELEASING PARTY DOES NOT

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34 KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT

THE TIME OF EXECUTING THE RELEASE, AND THAT, IF

KNOWN BY HIM OR HER WOULD HAVE MATERIALLY

AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR
OR RELEASED PARTY.”

BY INITIALING BELOW, THE DEVELOPER KNOW INGLY AND VOLUNTARILY WAIVES THE PROVISIONS OF SECTION 1542 SOLELY IN CONNECTION WITH THE WAIVERS AND RELEASES OF THIS SECTION 4.9.1.
_________________
Developer’s Initials

4.9.2 Additionally, in accordance with Section 7.5, the Developer shall indemnify, defend with counsel acceptable to the City and hold the City harmless against any claims pursuant to Labor Code Sections 1726 and 1781 arising from this Agreement or the construction or operation of the Project.

4.9.3 Notwithstanding any provision of the Agreement to the contrary, if at any time prior to the Close of Escrow, Developer determines, in its good faith discretion, that the prevailing wage laws may be applicable to the Project, then Developer may terminate th is Agreement by delivering a written notice to the City, in which event the Earnest Money shall be returned to Developer minus any incurred escrow costs owed by Developer.

4.9.4 The provisions of Section 4.9 shall survive the termination of this Agreement or the Close of Escrow, and shall not merge into the Grant Deed.

4.10 Certificate of Completion.

4.10.1 Following the substantial Completion of Construction of the Project, and upon written request from the Developer for issuance of a Certificate of Completion for the Project, the City shall inspect the Project to determine whether or not the Project has been substantially completed in compliance with this Agreement. If the City determines that the Project is complete and in compliance with this Agreement, the City Manager shall furnish the Developer with a Certificate of Completion for the Project. If the City determines that the Project is not in compliance with this Agreement, the City Manager shall send written notice of each non - conformity to the Developer. Upon issuance of the final certificate of occupancy for the development of the Project, based on the plans submitted by the Developer to the City, the City shall furnish the Developer with a Certificate of Completion for the Project.

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35 4.10.2 The Certificate of Completion, upon issuance, shall be evidence of the City’s conclusive determination of satisfactory substantial completion of the entirety of the Project pursuant to the terms of this Agreement.

4.10.3 The City shall not unreasonably withhold the issuance of a Certificate of Completion. After the recordation of a Certificate of Completion for the Project, any person then owning or thereafter purchasing, leasing or otherwise acquiring any interest in the Property improved with the Project shall not (because of such ownership, purchase, lease or acquisition) incur any obligation or liability under this Agreement regarding construction or installation of the Project except that such person shall be bound by any reservations, covenants, conditions, restrictions and other interests recorded against the Property pursuant to this Agreement and the Grant Deed.

4.10.4 If the City fails or refuses to issue a Certificate of Completion following written request from the Developer, the City shall, within fifteen (15) calendar days of the Developer’s written request or within three (3) calendar days after the next regular meeting of the City Council, whichever date occurs later, provide the Developer with a written statement setting forth the reasons for the City’s failure or refusal to issue a Certificate of Completion. The statement shall also contain the City’s opinion of the action(s) the Developer must take to obtain a Certificate of Completion from the City. If the reason for the Developer’s failure to complete the Project is confined to the immediate unavailability of specific items or materials for construction or landscaping at a price reasonably acceptable to the Developer or other minor building “punch-list” items, the City may issue its Certificate of Completion upon the posting o f a bond or irrevocable standby letter of credit by the Developer in a form reasonably acceptable to the City in an amount representing the fair value of the work on the Project remaining to be completed, as reasonably determined by the City. If the City fails to provide such written statement, within the specified time period, the Developer shall be deemed conclusively and without further action of the City to have satisfied the requirements of this Agreement with respect to the Project, as if a Certificate of Completion had been issued by the City pursuant to this Agreement.

4.10.5 A Certificate of Completion shall not constitute evidence of compliance with or satisfaction of any obligation of the Developer to any holder of a mortgage, or any insurer of a mortgage securing money loaned to finance the Project, or any parts thereof. A Certificate of Completion shall not be deemed to constitute a notice of completion under Section 3093 of the California Civil Code, nor shall it act to terminate the continuing covenants, restrictions or conditions contained in the Grant Deed or any other instruments recorded against the Property pursuant to this Agreement. A Certificate of Completion is not evidence of the compliance of the Project with any City Requirements or any building code, conditions of approval, land use, zoning or other requirements of the City or any Governmental Agency with jurisdiction over the Property, other than the City.

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36 ARTICLE V.

DEVELOPER COVENANTS

5.1 Obligation to Refrain from Discrimination. The Developer for itself, its successors and assigns to all or any part or portion of the Property and/or Project, covenants and agrees that there shall be no discrimination against or segregation of any person, or group of persons, on account of sex, marital status, race, color, religion, creed, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property nor shall the Developer, itself or any person claiming under or through it, 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, sub-tenants, sub-lessees or vendees of the Property.

With respect to familial status, this Section 5.1 shall not be construed to apply to housing for older persons, as defined in Section 12955.9 of the Government Code. With respect to familial status, nothing in this Section 5.1 hall be construed to affect Section 51.2, 51.3, 51.4, 51.10, 51.11 and 799.5 of the Civil Code relating to housing for senior citizens. Subdivisions (d) of Section 51 and Section 1360 of the Civil Code and subdivision (n), (o), and (p) of Section 12955 of the Government Code shall apply to this Section 5.1. The covenant of this Section 5.1 shall run with the land of the Property and shall be enforceable against the Developer and its successors and assigns in perpetuity and be a covenant in the Grant Deed and the Notice of Agreement.

5.2 Form of Non-Discrimination and Non-Segregation Clauses. The Developer for itself, its successors and assigns to all or any part or portion of the Property and/or Project, covenants and agrees that:

5.2.1 The Developer, such successors and such assigns shall refrain from restricting the sale, lease, sublease, rental, transfer, use, occupancy, tenure or enjoyment of the Property (or any portion thereof) on the basis of sex, marital status, race, color, religion, creed, ancestry or national origin of any person. With respect to familial status, this Section 5.2.1 shall not be construed to apply to housing for older persons, as defined in Section 12955.9 of the Government Code. With respect to familial status, nothing in this Section 5.2.1 shall be construed to affect Section 51.2, 51.3, 51.4, 51.10, 51.11 and 799.5 of the Civil Code relating to housing for senior citizens. Subdivisions (d) of Section 51 and Section 1360 of the Civil Code and subdivision (n), (o), and (p) of Section 12955 of the Government Code shall apply to this Section 5.2.1.

5.2.2 All deeds, leases or contracts pertaining to the Property shall contain or be subject to substantially the following non-discrimination or non-segregation covenants:

5.2.2.1 In deeds: “The grantee herein covenants by and for itself, its successors and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of race, color,

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37 creed, religion, sex, marital status, national origin, or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the premises herein conveyed, nor shall the grantee or any person claiming under or through it, 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, sub-tenants, sub-lessee, or vendees in the premises herein conveyed. The foregoing covenants shall run with the land.

Notwithstanding the foregoing paragraph, with respect to familial status, paragraph 5.2.1.2 shall not be construed to apply to housing for older persons, as defined in Section 12955.9 of the Government Code. With respect to familial status, nothing in the foregoing paragraph shall be construed to affect Section 51.2, 51.3, 51.4, 51.10, 51.11 and 799.5 of the Civil Code relating to housing for senior citizens. Subdivisions (d) of Section 51 and Section 1360 of the Civil Code and subdivision (n), (o), and (p) of Section 12955 of the Government Code shall apply to foregoing paragraph.”

5.2.2.2 In leases: “The lessee herein covenants by and for itself, its successors and assigns, and all persons claiming under or through them, and this lease is made and accepted upon and subject to the following conditions: That there shall be no discrimination against or segregation of any person or group of persons, on account of race, color, creed, religion, sex, marital status, national origin, or ancestry, in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of the premises herein leased nor shall the lessee itself, or any person claiming under or through it, 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, sub-lessee, sub-tenants, or vendees in the premises herein leased.

Notwithstanding the foregoing paragraph, with respect to familial status, the foregoing paragraph shall not be construed to apply to housing for older persons, as defined in Section 12955.9 of the Government Code. With respect to familial status, nothing in the foregoing paragraph shall be construed to affect Section 51.2, 51.3, 51.4, 51.10, 51.11 and 799.5 of the Civil Code relating to housing for senior citizens. Subdivisions (d) of Section 51 and Section 1360 of the Civil Code and subdivision (n), (o), and (p) of Section 12955 of the Government Code shall apply to the foregoing paragraph”

5.2.2.3 In contracts: “There shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, marital status, national origin, or ancestry, in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the premises herein conveyed or leased, nor shall the transferee or any person claiming under or through it, 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, sub-lessees, sub-tenants, or vendees of the premises herein transferred.” The foregoing

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38 provision shall be binding upon and shall obligate the contracting party or parties and any subcontracting party or parties, or other transferees under the instrument. “Notwithstanding the foregoing paragraph, with respect to familial status, the foregoing paragraph shall not be construed to apply to housing for older persons, as defined in Section 12955.9 of the Government Code. With respect to familial status, nothing in the foregoing paragraph shall be construed to affect Section 51.2, 51.3, 51.4, 51.10, 51.11 and 799.5 of the Civil Code relating to housing for senior citizens. Subdivisions (d) of Section 51 and Section 1360 of the Civil Code and subdivision (n), (o), and (p) of Section 12955 of the Government Code shall apply to the foregoing paragraph.”

5.2.3 The covenant of this Section 5.2 shall run with the land of the Property in perpetuity, shall be enforceable against the Developer and its successors and assigns, and shall be covenants set forth in the Grant Deed.

5.3 Environmental Indemnity of the City by the Developer. The Developer agrees, at its sole cost and expense, to fully indemnify, protect, hold harmless, and defend (with counsel selected by the Developer and approved by the City) the City and its commissions, agents, attorneys, officers, employees, and authorized representatives (collectively, the “Indemnified Parties”), from and against any and all claims, demands, damages, losses, liabilities, obligations, penalties, fines, actions, causes of action, judgments, suits, proceedings, costs, disbursements and expenses, including, without limitation, attorney fees, disbursements and costs of attorneys, environmental consultants and other experts, and all foreseeable and unforeseeable damages or costs of any kind or of any nature whatsoever (collectively, “Environmental Claims”) that may, at any time, be imposed upon, incurred or suffered by, or claimed, asserted or awarded against, the Indemnified Parties, directly or indirectly relating to or arising from any of the following “Environmental Matters” occurring during or arising from the Developer’s ownership of the Property or construction or operation of the Project but specifically excluding any Environmental Matters existing as of the Close of Escrow:

5.3.1 The presence of Hazardous Substances on, in, under, from or affecting all or any portion of the Property or the Project.

5.3.2 The storage, holding, handling, release, threatened release, discharge, generation, leak, abatement, removal or transportation of any Hazardous Substances on, in, under, from or affecting the Property or the Project.

5.3.3 The violation of any law, rule, regulation, judgment, order, permit, license, agreement, covenant, restriction, requirement or the like by the Developer, its agents or contractors, relating to or governing in any way Hazardous Substances on, in, under, from or affecting the Property or the Project.

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39 5.3.4 The failure of the Developer, its agents or contractors, to properly complete, obtain, submit and/or file any and all notices, permits, licenses, authorizations, covenants and the like in connection with the Developer’s activities on the Property or regarding the Project.

5.3.5 The implementation and enforcement by the Developer, its agents or contractors of any monitoring, notification or other precautionary measures that may, at any time, become necessary to protect against the release, potential release or discharge of Hazardous Substances on, in, under, from or affecting the Property or the Project.

5.3.6 The failure of the Developer, its agents or contractors, in compliance with all applicable Environmental Laws, to lawfully remove, contain, transport or dispose of any Hazardous Substances existing, stored or generated on, in, under or from the Property or the Project.

5.3.7 Any investigation, inquiry, order, hearing, action or other proceeding by or before any Governmental Agency in connection with any Hazardous Substances on, in, under, from or affecting the Property or the Project or the violation of any Environmental Law relating to the Property or the Project.

5.3.8 The Developer shall pay to the Indemnified Parties all costs and expenses including, without limitation, reasonable attorneys’ fees and costs, incurred by the Indemnified Parties in connection with enforcement of the aforementioned environmental indemnity.

5.3.9 The provisions of Section 5.3 shall be effective as of the Closing, shall survive the Closing and shall not merge in the Grant Deed. Upon the Completion of Construction and the assumption by a homeowner’s association for the Project of the obligations under this Section 5.3 with respect to the ongoing operation of the Project, Developer shall be relieved from its indemnification obligations under this Section 5.3 and which otherwise relate to the operation of the Project.

5.4 Insurance. In order to protect the City and its commissions, agents, attorneys, officers, employees and authorized representatives (collectively, “Additional Insureds”) against any and all claims and liability for death, injury, loss and damage resulting from the Deve loper’s actions in connection with this Agreement, the Property, and the Project, the Developer shall secure and maintain the insurance coverage, described in and required by this Section 5.4. The City shall not have any obligation under this Agreement until the Developer provides the required policies and/or certificates evidencing the insurance required by this Section 5.4 to the City and the City approves such evidence of insurance. The Developer shall pay any deductibles and self- insured retentions under all insurance policies issued in satisfaction of the terms of this Agreement.

Developer shall retain all insurance policies as set forth in this Section 5.4 until recordation of the Certificate of Completion.

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40 5.4.1 Workers’ Compensation Insurance Requirement. The Developer shall submit written proof that the Developer is insured against liability for workers’ compensation in accordance with the provisions of Section 3700 of the Labor Code. By executing this Agreement, the Developer makes the following certification, required by Section 1861 of the Labor Code:
“I am aware of the provisions of section 3700 of the Labor Code which require every employer to be insured against liability for workers’ compensation or to undertake self-insurance in accordance with the provisions of that code, and I will comply with such provisions before commencing the performance of the work of the Agreement.”
The Developer shall require each contractor and sub-contractor performing work on the Project to provide workers’ compensation coverage for all of such contractor’s or sub-contractor’s employees, unless the contractor’s or sub-contractor’s employees are covered by workers’ compensation insurance provided by the Developer. If any class of employees engaged in work or services performed in connection with the Project is not covered by Labor Code Section 3700, the Developer shall provide and/or require each contractor or sub -contractor to provide adequate workers’ compensation insurance covering such employees. Each workers’ compensation policy procured pursuant to this Section 5.4.1 shall contain a full waiver of subrogation clause in favor of the Additional Insureds.

5.4.2 Liability and Permanent Insurance Requirements.

5.4.2.1 The Developer shall maintain in full force and effect, from the Effective Date until the issuance of the Certificate of Completion, subject to Section 5.4.2.4, the following insurance coverage:

5.4.2.1.1 Commercial General Liability Insurance coverage, including, but not limited to, Premises-Operations, Contractual Liability Insurance (specifically covering all indemnity obligations of the Developer pursuant to this Agreement), Products - Completed Operations Hazards, Personal Injury (including bodily injury and death), and Property Damage for liability arising out of the construction of the Project and/or the Developer’s operations concerning the Property or the Project. The commercial general liability insurance coverage shall have minimum limits for Bodily Injury and Property Damage liability of ONE MILLION DOLLARS ($1,000,000) each occurrence and TWO MILLION DOLLARS ($2,000,000) aggregate.

5.4.2.1.2 Automobile Liability Insurance against claims of Personal Injury (including bodily injury and death) and Property Damage covering all owned, leased, hired and non-owned vehicles used by the Developer with minimum limits for Bodily Injury and Property Damage of ONE MILLION DOLLARS ($1,000,000) each occurrence and

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41 ONE MILLION DOLLARS ($1,000,000) aggregate. Such insurance shall be provided by a business or commercial vehicle policy.

5.4.2.1.3 If the Developer hires a consultant to provide design services, such as architectural or engineering services in connection with the Project, or any portion of the Project, the Developer shall require each such consultant to provide Professional Liability (Errors and Omissions) Insurance, for liability arising out of, or in connection with, the performance of such design services, with limits of not less than ONE MILLION DOLLARS ($1,000,000).

5.4.2.1.4 Upon acceptance of the Project or any portion thereof, from each contractor, the Developer shall maintain Fire and Extended Coverage Insurance, excluding earthquake coverage, on the Project on a blanket basis or with an agreed amount clause in amounts not less than 100% of the replacement value of all portions of the Project so accepted.

5.4.2.2 During the construction of the Project, the Developer shall require that each contractor performing work on the Project maintain the following insurance coverage, as specified below, at all times during the performance of said work, or the Developer shall provide for such contractors “wrap” coverage, as specified below, at all times during the performance of said work:

5.4.2.2.1 The Developer shall maintain Builder’s Risk
Insurance to be written on an All Risk Completed Value fo rm, in an aggregate amount equal to 100% of the completed insurable value of the Project or portion of the Project on which such contractor is performing work.

5.4.2.2.2 Each general contractor and, unless covered under the general contractor’s policy, each sub-contractor shall maintain Commercial General Liability Insurance with limits of not less than ONE MILLION DOLLARS ($1,000,000) per occurrence and TWO MILLION DOLLARS ($2,000,000) aggregate to protect the Developer during the construction of the Project from claims involving bodily injury and/or death and damage to the property of others.

5.4.2.2.3 Each general contractor and each sub-contractor shall maintain Automobile Liability Insurance against claims of personal injury (including bodily injury and death) and property damage covering all owned, leased, hired and non-owned vehicles used in the performance of the contractor’s obligations with minimum limits for bodily injury and property damage of ONE MILLION DOLLARS ($1,000,000) each occurrence and TWO MILLION DOLLARS ($2,000,000) aggregate in the case of each general contractor and ONE MILLION DOLLARS ($1,000,000) combined single limit in the case of each subcontractor. Such automobile liability insurance shall be provided by a business or commercial vehicle policy.

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42 5.4.2.3 The insurance required in Section 5.4.2.1.1 above and Section

5.4.2.1.2 above but, as to Section 5.4.2.1.2 only with respect to policies maintained by each general contractor, shall include endorsements naming the Additional Insureds as additional insured for liability arising out of this Agreement and any operation related to this Agreement.

5.4.2.4 Any insurance coverage required under this Agreement shall not be written on a “claims made” basis. The applicable certificate of insurance must clearly provide that the coverage is on an “occurrence” basis. The requirements of this Section 5.4.2.4 shall survive any expiration or termination of this Agreement and the recordation of the Grant Deed and any Certificate of Completion.

5.4.2.5 Receipt by the City of evidence of insurance that does not comply with the above requirements shall not constitute a waiver of the insurance requirements of this Agreement.

5.4.2.6 Subject to Section 5.4.2.4, all of the insurance coverage required under this Section 5.4 shall be maintained by the Developer or its contractors, as required by the terms of this Agreement, until the issuance of the Certificate of Completion and shall not be canceled without, at least, thirty (30) days prior written notice to the City. Also, phrases such as “endeavor to” and “but failure to mail such notice shall impose no obligation or liabili ty of any kind upon the company” shall not be included in the cancellation wording of any certificates of insurance or any coverage for the Additional Insureds. The Developer shall immediately obtain replacement coverage for any insurance policy that is terminated, canceled, non-renewed, or whose policy limits are exhausted or upon insolvency of the insurer that issued the policy.

5.4.2.7 All insurance to be obtained and maintained by the Developer under this Section 5.4 shall be issued by a company or companies listed in the then current “Best’s Key Rating Guide” publication with a minimum of an “A:VII” rating and be admitted to conduct business in the State of California by the State of California Department of Insurance.

5.4.2.8 The City will not accept self-insurance in satisfaction of the insurance requirements of this Section 5.4.

5.4.2.9 All insurance obtained and maintained by the Developer in satisfaction of the requirements of this Agreement shall be primary to and not contributing to any insurance maintained by the Additional Insureds.

5.4.2.10 Insurance coverage in the minimum amounts set forth in this Section 5.4 shall not be construed to relieve the Developer of any liability, whether within, outside, or in excess of such coverage, and regardless of solvency or insolvency of the insurer that issues the coverage; nor shall it preclude the Additional Insureds from taking such other actions as are available to them under any other provision of this Agreement or otherwise at law.

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43 5.4.3 Failure by the Developer to maintain all insurance coverage required by this Section 5.4 in effect shall be an Event of Default by the Developer. The City, at its sole option, may exercise any remedy available to them in connection with such an Event of Default.

Alternatively, the City may, at its sole option, purchase any such required insurance coverage and the City shall be entitled to immediate payment from the Developer for any premiums and associated costs paid by the City for such insurance coverage. Any election by the City to purchase or not to purchase insurance otherwise required to be carried by the Developer shall not relieve the Developer of its obligation to obtain and maintain the insurance coverage required by this Agreement.

ARTICLE VI.

PROJECT FINANCING

6.1 Project Financing. Developer intends to use its own funds to finance the development of the Project in accordance with the Project Budget, and does not intend to obtain third (3rd) party financing in connection therewith. The Project Budget shall be submitted by Developer to the City no later than fifteen (15) days prior to the last day of the Due Diligence Period, approved by the City and, upon approval by the City, attached to this Agreement as Exhibit I – all prior to the expiration the Due Diligence Period. Provided Developer finances and constructs the project consistent with the Project Budget in all material respects, no additional review by the City shall be required. If, however, there is a material modification to the Project Budget, approved financing, or approved lender, if any, Developer shall seek approval from the City as provided herein. Developer acknowledges that the City has a reasonable interest in the Project being developed with commercially reasonable financing. For the purpose of this Section

6.1, “material modification” shall mean a change which exceeds the sum of Two Hundred Thousand and 00/100 Dollars ($200,000.00).

6.2 Project Budget. While the Project Budget will have been prepared based on the best, good faith estimate of Developer of the costs which are likely to be incurred for the Project, the Parties recognize that events and circumstances not currently contemplated, some of which are outside of the control of the Parties, could result in changes in the Project Costs, necessitating changes in the Project Budget. To the extent that Developer makes changes to the Project Budget, Developer shall immediately submit a revised Project Budget to the City Manager for review and approval, which review and approval shall not be unreasonably withheld, conditioned or delayed, as to the sufficiency of the financing secured by Developer to meet the revised Project Costs.

6.3 Only Permitted Exceptions. Developer shall not record and shall not allow to be recorded against the Property any Security Instrument, lien or other encumbrance that is not a Permitted Exception. Developer shall remove or cause to be removed (or providing title insurance

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44 in form and substance reasonably acceptable to the City and issued by a title insurance company reasonably acceptable to the City, insuring the priority of this Agreement as superior to such lien, with such title insurance being in the minimum amount of 125% of the amount of the lien claim or providing a statutory bond resulting in removal of such lien) any non-Permitted Exception made or recorded against the Property or shall assure the complete satisfaction of any such non-Permitted Exception to the satisfaction of the City, in the City’s sole and absolute discretion. The covenants of Developer set forth in this Section regarding the placement of encumbrances on the Property shall run with the land of the Property and bind successive owners of the Property, until recordation (or deemed issuance) of the Certificate of Completion for the Project.

6.4 City Right to Discharge Prohibited Encumbrances. After sixty (60) calendar days’ Notice to Developer of a non-Permitted Exception and provided that Developer has not caused such non-Permitted Exception to be removed pursuant to Section 6.3, the City shall have the right, but not the obligation, to satisfy or remove any non-Permitted Exception against the Property or the Project and receive reimbursement from Developer for any amounts paid or incurred in satisfying or removing any such non-Permitted Exception, upon demand. Any amount expended by the City to discharge a non-Permitted Exception that is not reimbursed to the City by Developer within thirty (30) calendar days following written demand for payment from the City shall accrue interest at an annual rate equal to the lesser of eight percent (8%) per annum or the maximum highest rate of interest allowed by law under the circumstances , until paid in full.

Nothing in this Section 6.4, though, shall require Developer to pay or make provisions for the payment of any tax, assessment, lien or charge that Developer is in the process of contesting the validity or amount thereof, in good faith, and so long as such contest shall not subject all or any portion of the Property to forfeiture or sale.

6.5 Rights of Lender and City Regarding Permitted Security Instruments . Notice of Liens. The Developer shall promptly notify the City of any Security Instrument or lien asserted against or attached to all or any portion of the Project or the Property, other than as listed in Section

3.7, prior to the date of issuance of a Certificate of Completion for the Projec t, whether by voluntary act of Developer or otherwise; provided, however, that no notice of filing of preliminary notices or mechanic’s liens need be given by Developer to the City, prior to suit being filed to foreclose any such mechanic’s lien.

6.6 Notice of Default to Lenders. Whenever the City delivers any notice of default to Developer under this Agreement, the City shall send a copy of such notice of default to each Lender holding a Permitted Security Instrument of which the City has received notice and a contact address for transmittal of such notices. Each Lender receiving a copy of any such notice of default shall have the right, at its option, to commence the cure or remedy of any default of Developer set forth in such notice and to diligently and continuously proceed with such cure or remedy such default, within the cure period allowed to Developer under this Agreement. The City shall accept

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45 such performance by a Lender with the same force and effect as if furnished by Developer. If such default can only be remedied or cured by the Lender upon obtaining possession of the Property, the City shall allow the Lender an opportunity to obtain possession with diligence and continuity through exercise of remedies under such Lender’s Permitted Security Instrument and to remedy or cure such default within ninety (90) days after obtaining possession of the Property. If the default reasonably requires more than ninety (90) days to cure, however, then the time available to a Lender to cure pursuant to this Section 6.6 shall be the reasonable time required to complete such cure, as long as the Lender has commenced the cure of the default within such ninety (90) day period and diligently pursues the cure to completion. During such extension of time, the City shall not terminate this Agreement or exercise other remedies under this Agreement by reason of such default. All Developer specific defaults shall be deemed cured upon Transfer of Developer’s interest in the entire Property to the Lender, its assignee or nominee, pursuant to exercise of remedies under a Permitted Security Instrument. In addition, any Lender properly completing the Project with the consent of the City shall be entitled, upon written request made to the City, to a Certificate of Completion from the City. Nothing contained in this Agreement shall be deemed to permit, authorize or require any Lender to undertake or continue the construction or installation of any portion of the Project (beyond the extent necessary to conserve or protect improvements or construction already made) prior to or after acquiring title to or possession of the entire Property, without expressly assuming Developer’s obligations under this Agreement by written agreement reasonably satisfactory to the City, in which the Lender agrees to complete the Project in the manner provided in this Agreement. Any Lender desiring to complete the Project must provide the City with evidence reasonably satisfactory to the City that the Lender has the qualifications (or will engage one or more licensed contractor(s) or consultant(s) with such qualifications) and financial capability necessary to perform such obligations.

6.7 No Termination of Permitted Security Instruments by Default . An Event of Default by Developer under this Agreement shall not defeat or render invalid the lien of any Permitted Security Instrument made in good faith and for value as to all or any part of the Property, whether or not the Lender is subordinated to this Agreement; but unless otherwise provided in this Agreement or any Subordination Agreement, this Agreement shall be binding and effective against any owner of the Property, whose title thereto is acquired pursuant to exercise of remedies under a Permitted Security Instrument or from a person or entity exercising any such remedies.

6.8 Lender Rights on Termination or Modification . No termination of this Agreement shall be binding upon a Lender unless the termination occurs after notice to such Lender and such Lender’s failure to cure all then existing defaults under this Agreement (except any Developer specific defaults), pursuant to this Section 6.8, or with such Lender’s prior written consent. No modification of this Agreement that materially affects the rights of a Lender shall be binding upon the Lender without its prior written consent.

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46 6.9 No Construction Obligation of Lender. A Lender shall in no way be obligated by the provisions of this Agreement to construct or complete the development of the Project or to guarantee such construction or completion, but may do so pursuant to and in accordance with this Section 6.9 Nothing in this Agreement shall be deemed to construe, permit, or authorize any Lender to devote all or any portion of the Property to any uses, or to construct any improvements thereon, other than those uses or the Project provided for or authorized by this Agreement.

6.10 City Right to Cure Obligations. In the event of a default by Developer under any Permitted Security Instrument, prior to the date of issuance of a Certificate of Completion for the Project, where the Lender has not exercised its option to complete the Project under Section 6.6, the City may cure the default of Developer under the applicable Permitted Security Instrument, but is under no obligation to do so, prior to completion of any sale or foreclosure of all or any portion of the Property under the applicable Permitted Security Instrument. The City shall be entitled to reimbursement from Developer of all costs and reasonable expenses incurred by the City in curing any default of Developer under any Permitted Security Instrument, under demand.

Any amount expended by the City to cure a default of Developer under any Permitted Security Instrument that is not reimbursed to the City, by Developer within thirty (30) calendar days after notice of such amount to Developer, shall accrue interest at an annual rate equal to the lesser of eight percent (8%) per annum or the maximum highest rate of interest allowed by law under the circumstances until paid in full. Notwithstanding the foregoing, in the event of any conflict between the provisions of this Section 6.10 and any Subordination Agreement, the Subordination Agreement shall control.

6.11 Foreclosure of Permitted Security Instrument. Foreclosure of any Permitted Security Instrument, whether by judicial proceedings or by power of sale, or any conveyance by deed in lieu of foreclosure, shall not require the consent of the City.

ARTICLE VII.

DEFAULTS, REMEDIES AND TERMINATION

7.1 Defaults - General. Subject to any extensions of time provided for in this Agreement, failure or delay by any Party to perform any term or provision of this Agreement shall constitute an “Event of Default” under this Agreement; provided, however, that if a Party otherwise in default commences to cure, correct or remedy such default, within thirty (30) calendar days after receipt of written notice from the injured Party specifying such default, and shall diligently and continuously prosecute such cure, correction or remedy to completion (and where any time limits for the completion of such cure, correction or remedy are specifically set forth in this Agreement, then within said time limits), such Party shall not be deemed to be in default under this Agreement and no Event of Default shall be deemed to have occurred.