Watsonville City Council
August 27, 2024

4873-0267-0218 v3 7

12. Amendments and Modifications. Any amendments or modifications to this Agreement must be in writing, and shall be made only if executed by both Developer and City.

13. Severability. Every provision of this Agreement is intended to be severable. If any provision of this Agreement shall be held invalid, illegal, or unenforceable by a court of competent jurisdiction, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired.
[Signature Pages Follow]
Attachment 1

4873-0267-0218 v3 8
IN WITNESS WHEREOF, City and Developer have caused this Regulatory Agreement to be executed by their duly authorized representatives.

CITY:

CITY OF WATSONVILLE,
a California municipal corporation
By:
_____________,
City Manager
ATTEST:

By:
_____________,
City Clerk
APPROVED AS TO FORM:

By:
_____________,
City Attorney
DEVELOPER:

EDEN FREEDOM INVESTORS, L.P.,
a California limited partnership
By: Eden Freedom, LLC,
a California limited liability company,
its general partner
By: Eden Investments, Inc.,
a California nonprofit public benefit corporation,
its sole member/manager
By:

Andrea Osgood,
Chief of Real Estate Development
Attachment 1

4873-0267-0218 v3
A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.

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

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

WITNESS my hand and official seal.

Signature_____________________________
Attachment 1

4873-0267-0218 v3
A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.

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

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

WITNESS my hand and official seal.

Signature_____________________________
Attachment 1

4873-0267-0218 v3 Exhibit A

EXHIBIT A

LEGAL DESCRIPTION
That land in the City of Watsonville, County of Santa Cruz, State of California, and more particularly described as follows:

BEING A PART OF THE RANCHO BOLSA DEL PAJARO AND BEGINNING ON THE

NORTHEASTERN SIDE OF THE WATSONVILLE SANTA CRUZ HIGHWAY AND ON THE

BOUNDARY LINE BETWEEN THE SAID RANCHO BOLSA DEL PAJARO AND THE RANCHO CORRALITOS; SAID POINT OF BEGINNING BEING THE SOUTHWESTERN CORNER OF LANDS OF ONE GEORGE WHITE; AND RUNNING THENCE FROM SAID

POINT OF BEGINNING ALONG THE SAID NORTHEASTERN SIDE OF SAID HIGHWAY 38° 18’ EAST 168.00 FEET; THENCE LEAVING HIGHWAY NORTH 56° 38’ EAST 466.70 FEET TO THE LANDS OF ONE HART; THENCE ALONG THE BOUNDARY OF SAID LANDS OF HART NORTH 25° 23’ WEST 248.00 FEET TO THE AFORESAID RANCHO BOUNDARY; AND THENCE ALONG SAID RANCHO BOUNDARY SOUTH 48° WEST 521.40 FEET TO THE PLACE OF BEGINNING.

EXCEPTING THEREFROM THE LAND DEEDED TO THE COUNTY OF SANTA CRUZ PURSUANT TO DEED RECORDED IN VOLUME 341 OF OFFICIAL RECORDS OF THE

COUNTY RECORDER OF THE COUNTY OF SANTA CRUZ, STATE OF CALIFORNIA, AT PAGE 171 THEREOF.

ALSO EXCEPTING THEREFROM THE LANDS CONVEYED TO THE CITY OF WATSONVILLE BY DEED RECORDED JULY 29, 1980 IN VOLUME 3219 PAGE 211 OFFICIAL RECORDS COUNTY OF SANTA CRUZ.

ALSO EXCEPTING THEREFROM THE LANDS CONVEYED TO THE CITY OF WATSONVILLE BY DEED RECORDED MARCH 28, 2006 AS DOCUMENT NO. 2006-17265 OFFICIAL RECORDS, AND AS CORRECTED BY GRANT DEED RECORDED APRIL 10, 2017 AS DOCUMENT NO. 2017-0011836 OFFICIAL RECORDS COUNTY OF SANTA CRUZ.

APN: 019-226-41
Attachment 1

4863-9670-0554 v3 1

LOAN AGREEMENT
by and between

THE CITY OF WATSONVILLE,
a California municipal corporation
and
EDEN FREEDOM INVESTORS, L.P.,
a California limited partnership
________________________, 2024
Attachment 2

4863-9670-0554 v3 2
THIS LOAN AGREEMENT (“Agreement”) is entered into effective as of _________________________, 2024 (“Effective Date”) by and between the CITY OF WATSONVILLE, a municipal corporation (“City”) and EDEN FREEDOM INVESTORS, L.P., a California limited partnership (“Developer”). City and Developer are hereinafter collectively referred to as the “Parties” and individually as a “Party”

RECITALS
A. Developer owns a fee interest in that real property located in in the City of Watsonville, County of Santa Cruz, State of California (“Property”), as more particularly described on Exhibit A attached hereto and incorporated herein by this reference.

B. Developer is developing a fifty-three (53) unit multifamily residential apartment building rented at an affordable housing cost to low, very-low, and extremely-low income households (“Project”).

C. City has received grant funding from the California Department of Housing and Community Development (“HCD”) under the Permanent Local Housing Allocation (“PLHA”) program pursuant to a Standard Agreement between City and HCD dated June 13, 2023 (Contract No. 22-PLHA-17794) (“PLHA Grant”).

D. Developer has requested, and City has agreed, to provide a loan to Developer in the amount of One Million and 00/100 Dollars ($1,000,000) from City’s PLHA Grant (“Loan”) to assist in the development of the Project pursuant to the terms and conditions set forth herein.

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

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

Attachment 2

4863-9670-0554 v3 3

ARTICLE I

DEFINITIONS

1.1. Definitions. The following terms shall have the meanings set forth in the Sections referenced below whenever used in this Agreement and the Exhibits attached hereto. Additional terms are defined in the Recitals and text of this Agreement. (a) “City Documents” is defined in Recital F.
(b) “Claims” is defined in Section 7.10.
(c) “Commence”, “Commencement” and the like are defined in Section

3.14. (d) “Complete”, “Completion” and the like are defined in Section 3.15. (e) “Conditions of Approval” is defined in Section 3.3. (f) “Construction Plans” means those plans and specifications prepared by Developer and approved in writing by City pursuant to which Developer will construct the Improvements and Project.
(g) “Environmental Laws” is defined in Section 9.4.
(h) “Financial Capacity” is defined in Section 12.17.
(i) “Governmental Capacity” is defined in Section 12.17. (j) “Hazardous Materials” is defined in Section 9.3.
(k) “Improvements” is defined in Section 3.7.
(l) “Indemnitees” is defined in Section 7.10.
(m) “Loan” is defined in Recital D .
(n) “Note” is defined in Recital F.
(o) “Project” is defined in Recital B and further described in Section 3.2. (p) “Regulatory Agreement” is defined in Recital F.

ARTICLE II
REPRESENTATIONS; EFFECTIVE DATE AND TERM

2.1. Developer’s Representations. Developer represents and warrants as follows, and Developer covenants that until the expiration or earlier termination of this Agreement, upon learning of any fact or condition which would cause any of the warranties and representations in this Section 2.1 not to be true, Developer shall immediately give written notice of such fact or Attachment 2

4863-9670-0554 v3 4
condition to City. Developer acknowledges that City shall rely upon Developer’s representations made herein notwithstanding any investigation made by or on behalf of City. (a) Authority. Developer is a California limited partnership duly organized and in good standing under the laws of the State of California. Developer has the full right, power and authority to undertake all obligations of Developer as provided herein, and Developer’s execution, performance and delivery of this Agreement, the Regulatory Agreement, and the other City Documents have been duly authorized by all requisite actions. (b) No Conflict. Developer’s execution, delivery and performance of its obligations under this Agreement will not constitute a default or a breach under any contract, agreement or order to which Developer is a party or by which it is bound. (c) No Litigation or Other Proceeding. No litigation or other proceeding (whether administrative or otherwise) is outstanding or has been threatened which would prevent, hinder or delay the ability of Developer to perform its obligations under this Agreement. (d) No Developer Bankruptcy. Developer is not the subject of a bankruptcy or insolvency proceeding.
(e) Payment and Performance Bonds. The performance and payment bonds or letter of credit delivered to City by Developer prior to commencement of construction of the Project remain in effect and continue to secure one hundred percent (100%) of the currently scheduled cost of construction of the Project.

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

Attachment 2

4863-9670-0554 v3 5
(d) No Bankruptcy. City is not the subject of a bankruptcy or insolvency proceeding.

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

ARTICLE III

DEVELOPMENT OF THE PROJECT

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

3.2. Affordable Housing. Developer covenants and agrees for itself, its successors and assigns that fifty-two (52) of the residential units developed within the Project shall be occupied by low, very-low, or extremely-low income households and rented at an affordable rent to households of low, very low, and extremely low-income in accordance with the terms hereof and the Regulatory Agreement which the Parties shall execute concurrently with the execution of this Agreement, and which shall be recorded in the Official Records of Santa Cruz County (“Official Records”) on the date that Developer acquires the Property.

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

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

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

Attachment 2

4863-9670-0554 v3 6

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

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

3.8. Financing Plan. City acknowledges that Developer provided City with a preliminary financing plan for the Project (“Financing Plan”) which described (i) the estimated costs of Project development, including acquisition costs, and hard and soft construction costs, (ii) an operating pro forma which describes projected revenue and expenses for the Project, and (iii) identification of sources of construction and permanent financing. In connection with this Agreement, Developer shall deliver to City an update of such Financing Plan reflecting all material changes to the prior Financing Plan.

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

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

3.11. Compliance with Laws. Developer shall carry out and shall cause its contractors to carry out the construction of the Project in conformity with all applicable federal, state and local laws, rules, ordinances and regulations, including without limitation, all applicable federal and state labor laws and standards, applicable provisions of the California Public Contracts Code, City zoning and development standards, building, plumbing, mechanical and electrical codes, all other provisions of City’s Municipal Code, and all applicable disabled and handicapped access requirements, including without limitation, the Americans with Disabilities Attachment 2

4863-9670-0554 v3 7
Act, 42 U.S.C. Section 12101, et seq., Government Code Section 4450, et seq., Government Code Section 11135, et seq., and the Unruh Civil Rights Act, Civil Code Section 51, et seq..

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

3.13. Right of City to Satisfy Liens on the Property. If Developer fails to satisfy or discharge any lien or stop notice on the Property pursuant to Section 3.12 above, City shall have the right, but not the obligation, to satisfy any such liens or stop notices at Developer’s expense and without further notice to Developer. In such event Developer shall be liable for and shall immediately reimburse City for such paid lien or stop notice. Alternatively, City may require Developer to immediately deposit with City the amount necessary to satisfy such lien or claim pending resolution thereof. City may use such deposit to satisfy any claim or lien that is adversely determined against Developer. Developer shall file a valid notice of cessation or notice of completion upon cessation of construction of the Improvements for a continuous period of thirty (30) days or more, and shall take all other reasonable steps to forestall the assertion of claims or liens against the Property or the Improvements. City may (but has no obligation to) record any notices of completion or cessation of labor, or any other notice that City deems necessary or desirable to protect its interest in the Property and the Improvements.

3.14. Commencement and Completion of Construction. Developer agrees that it has Commenced construction of the Improvements and Project and shall Complete construction of the Improvements and Project by no later than June 30, 2024. As used herein, the terms “Commence”, “Commencement” and the like shall mean that Developer commenced rough grading of the Project and the terms “Complete”, “Completion” and the like shall mean that Developer has obtained a Certificate of Occupancy (“COO”) issued by City.

ARTICLE IV

CITY FINANCIAL ASSISTANCE

4.1. Loan. Using PLHA funds, the City shall provide the Loan in the amount of One Million and 00/100 Dollars ($1,000,000) to Developer upon the terms and conditions and for the purposes set forth in this Agreement. The Loan shall be evidenced by the Note secured by the Deed of Trust executed by Developer as Trustor and recorded against the Property subordinate only to such liens as City shall approve in writing. The outstanding principal balance of the Note will accrue three percent (3%) simple annual interest commencing upon the date of disbursement. Provided that Developer has complied with all conditions precedent to disbursement of the Loan set forth in Section 4.5, the proceeds of the Loan (“Loan Proceeds”) shall be disbursed in accordance with Section 4.4 hereof. The Parties agree that City shall disburse Loan Proceeds only for the purposes set forth in Section 4.4.

Attachment 2

4863-9670-0554 v3 8

4.2. Payment Dates; Maturity Date. All payments on the loan shall be made in accordance with the terms of the Note, and shall be due on the Maturity Date as defined in the Note.

4.3. Security. As security for repayment of the Note, Developer shall execute the Deed of Trust pursuant to which City shall be provided a lien against the Property and the Improvements. The Deed of Trust shall be recorded in the Official Records on the date of the Loan Closing (as defined in Section 4.5). The Deed of Trust may be subordinated only to such liens and subject only to such title exceptions as City may approve in writing. City acknowledges that Developer’s construction and permanent lender(s) may require the subordination of the Deed of Trust and City shall subordinate the Deed of Trust to deeds of trust or other security instruments approved by City.

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

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

Attachment 2

4863-9670-0554 v3 9
(g) City’s receipt of a written requisition for disbursement of funds from Developer specifying the amount and use of the requested funds, accompanied by the title company’s estimated settlement statement showing the acquisition price, closing costs and all other amounts due in escrow for Developer’s acquisition of the Property.

4.6. No Obligation to Disburse Proceeds Upon Event of Developer Default.

Notwithstanding any other provision of this Agreement, City shall have no obligation to disburse or authorize the disbursement of any portion of the Loan Proceeds at Closing following:
(a) the failure of any of Developer’s representations and warranties made in this Agreement or in connection with the Loan to be true and correct in all material respects; (b) the termination of this Agreement by mutual agreement of the Parties; (c) the conditions to disbursement of the Loan set forth in Section 4.5 have not been satisfied within the time frame set forth in Section 3.1, unless an extension of such date is approved by City in writing; or
(d) the occurrence of an Event of Developer Default (as defined in Section

10.1) under this Agreement, the Regulatory Agreement, any of the City Documents which remains uncured beyond any applicable cure period.

4.7. Prepayment; Acceleration.
(a) Prepayment. Developer shall have the right to prepay the Loan at any time and from time to time, without penalty or premium, provided that any prepayment of principal must be accompanied by interest accrued but unpaid to the date of prepayment. Prepayments shall be applied first to accrued but unpaid interest and then to principal. Any such prepayment shall have no effect upon Developer’s obligations under the Regulatory Agreement which shall survive for the full term of the Regulatory Agreement.
(b) Due On Sale or Encumbrance. Unless City agrees otherwise in writing, such agreement not to be unreasonably withheld, the entire unpaid principal balance and all interest and other sums accrued under the Note shall be due and payable upon the Transfer (as defined in Section 7.2) absent the prior written consent of City of all or any part of or interest in the Property except for a Transfer permitted under Section 7.3 of this Agreement or as otherwise permitted pursuant to this Agreement.

4.8. Nonrecourse. Except as expressly provided in this Section 4.8, Developer and its partners shall have no personal liability for payment of the principal of, or interest on the Note, and the sole recourse of City with respect to the payment of the principal of, and interest on the Note shall be to the Property and the Improvements and any other collateral held by City as security for the Note; provided however, nothing contained in the foregoing limitation of liability shall: (i) limit or impair the enforcement against all such security for the Note of all the rights and remedies of City thereunder; (ii) be deemed in any way to impair the right of City to assert the unpaid principal amount of the Note as demand for money within the meaning and intendment of Section 431.70 of the California Code of Civil Procedure or any successor provision thereto; or (iii) be deemed in any way to limit the rights of City to obtain specific Attachment 2

4863-9670-0554 v3 10
performance by Developer of its covenants under City Documents, other than the covenants to pay City principal and interest due under the Note.

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

4.9. PLHA Grant Matters. In addition to all of its other commitments in City Documents, and whether or not Developer directly signs the PLHA Grant, Developer:
(a) shall comply with all applicable obligations in the PLHA Grant; (b) shall timely provide City with all documents and information (to the extent in the possession of or reasonably obtainable by Developer) to permit City to comply with the applicable City’s obligations under the PLHA Grant; (c) agrees that a Developer default under the PLHA Grant is an Event of Developer Default under this Agreement; and
(d) acknowledges that City is executing the PLHA Grant and entering into the City Documents in reliance on Developer’s commitments in this Section 4.9, and would not do so in the absence of this Section 4.9.

ARTICLE V

INTENTIONALLY OMITTED

ARTICLE VI

USE OF THE PROPERTY

6.1. Use; Affordable Housing. Developer covenants and agrees for itself and its successors and assigns that the Property shall be used for the development and operation of the Project in accordance with the terms and conditions of this Agreement and the Regulatory Agreement.

6.2. Maintenance. Developer shall at its own expense, maintain the Property, the Improvements and related landscaping and common areas in good physical condition, in good repair, and in decent, safe, sanitary, habitable and tenantable living conditions in conformity with all applicable state, federal, and local laws, ordinances, codes, and regulations. Without limiting the foregoing, Developer agrees to maintain the Project and the Property (including without Attachment 2

4863-9670-0554 v3 11
limitation, the residential units, common areas, landscaping, driveways, parking areas and walkways) in a condition free of all waste, nuisance, debris, unmaintained landscaping, graffiti, disrepair, abandoned vehicles/appliances, and illegal activity, and shall take all reasonable steps to prevent the same from occurring on the Property or at the Project. Developer shall prevent and/or rectify any physical deterioration of the Property and the Project and shall make all repairs, renewals and replacements necessary to keep the Property and the Improvements in good condition and repair.

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

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

ARTICLE VII

LIMITATIONS ON CHANGE IN OWNERSHIP, MANAGEMENT AND CONTROL OF

DEVELOPER

7.1. Change Pursuant to this Agreement. Developer has represented that it possesses the necessary expertise, skill and ability to carry out the development of the Project on the Property pursuant to this Agreement. The qualifications, experience, financial capacity and expertise of Developer is of particular concern to City. It is because of these qualifications, experience, financial capacity and expertise that City has entered into this Agreement with Developer. No voluntary or involuntary successor, assignee or transferee of Developer shall acquire any rights or powers under this Agreement, except as expressly provided herein.

Attachment 2

4863-9670-0554 v3 12

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

7.3. Permitted Transfers. Notwithstanding any contrary provision hereof, the prohibitions set forth in this Article shall not be deemed to prevent: (i) the granting of utility easements or permits to facilitate development of the Property; (ii) the dedication of any property required pursuant to this Agreement; (iii) the lease of individual units to tenants for occupancy as their principal residence in accordance with the Regulatory Agreement; (iv) assignments creating security interests for the purpose of financing the acquisition, construction or permanent financing of the Project or the Property in accordance with the updated Financing Plan and subject to the requirements of Article VIII, or Transfers directly resulting from the foreclosure of, or granting of a deed in lieu of foreclosure of, such a security interest; (v) a Transfer to entity which is under the direct control or under common control with Eden Investments, Inc., which includes but is not limited to Eden Housing, Inc. and Baywood Apartments, Inc. (“Controlled Affiliate”); additionally, City hereby consents to any transfers, sales or assignments of limited partnership interests in Developer to U.S. Bancorp Community Development Corporation, its successors and assigns (collectively, “USBCDC”) and any affiliate of USBCDC, and any entity in which USBCDC, or an affiliate, is the manager or managing general partner and agrees that such transfers shall not constitute defaults under the Loan Documents; and (vi) any transfer or assignment of Developer’s fee interest in the Property if permitted by City in writing as described in Section 7.4. Notwithstanding anything the above or anything to the contrary in this Agreement, the replacement of Developer’s general partner in accordance with the terms of Developer’s partnership agreement shall not be prohibited and shall not constitute a default under any of the Loan Documents or accelerate the maturity of the Loan. Notwithstanding any provision of this Section 7.3, no permitted transaction under this Section 7.3 will alter any obligation under the Regulatory Agreement.

7.4. Requirements for Proposed Transfers. City may, in the exercise of its sole discretion, consent to a proposed Transfer of this Agreement, the Property or portion thereof if all of the following requirements are met (provided however, the requirements of this Section 7.4 shall not apply to Transfers described in Sections 7.3(i) through (v) or the last sentence of Section 7.2):

Attachment 2

4863-9670-0554 v3 13
(a) The proposed transferee demonstrates to City’s satisfaction that it has the qualifications, experience and financial resources necessary and adequate as may be reasonably determined by City to competently complete construction of the Project and to otherwise fulfill the obligations undertaken by Developer under this Agreement. (b) Developer and the proposed transferee shall submit for City review and approval all instruments and other legal documents proposed to effect any Transfer of this Agreement, the Property or interest therein together with such documentation of the proposed transferee’s qualifications and development capacity as City may reasonably request. (c) The proposed transferee shall expressly assume all of the rights and obligations of Developer under this Agreement, the Regulatory Agreement, City Documents arising after the effective date of the Transfer and all obligations of Developer arising prior to the effective date of the Transfer (unless Developer expressly remains responsible for such obligations) and shall agree to be subject to and assume all of Developer’s obligations pursuant to the Conditions of Approval and all other conditions, and restrictions set forth in this Agreement and the Regulatory Agreement.
(d) The Transfer shall be effectuated pursuant to a written instrument satisfactory to City in form recordable in the Official Records.

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

7.5. Effect of Transfer without City Consent.
(a) No Relief. In the absence of specific written agreement by City, no Transfer by Developer shall be deemed to relieve Developer or any other party from any obligation under this Agreement or the Regulatory Agreement. (b) Termination. Without limiting any other remedy City may have under this Agreement, or under law or equity, this Agreement may be terminated by City if without the prior written approval of City, Developer assigns or Transfers this Agreement or the Property prior to City’s issuance of a COO. This Section 7.5.2 shall not apply to Transfers described in clauses (i) through (iv) of Section 7.3).

7.6. Recovery of City Costs. Developer shall reimburse City for all costs, including but not limited to attorneys’ fees, incurred in reviewing instruments and other legal documents proposed to affect a Transfer under this Agreement and in reviewing the qualifications and financial resources of a proposed successor, assignee, or transferee within ten (10) days following City’s delivery to Developer of an invoice detailing such costs. This Section 7.6 shall not apply to Transfers described in clauses (i) through (iv) of Section 7.3.

Attachment 2

4863-9670-0554 v3 14

ARTICLE VIII

SECURITY FINANCING AND RIGHTS OF MORTGAGEES

8.1. Mortgages and Deeds of Trust for Development. Mortgages and deeds of trust, or any other reasonable security instrument are permitted to be placed upon the Property only for the purpose of securing loans approved by City for the purpose of financing the acquisition of the Property, the design and construction of the Improvements, other expenditures reasonably necessary for development of the Property pursuant to this Agreement, and the rehabilitation and/or refinancing of the Project. Developer shall not enter into any conveyance for such financing without the prior written approval of the City Manager or his or her designee. As used herein, the terms “mortgage” and “deed of trust” shall mean any security instrument used in financing real estate acquisition, construction and land development. (a) Regulatory Agreement to be Senior to Mortgages. City agree that if required by construction and/or permanent lenders, this Agreement, the Deed of Trust, and the Regulatory Agreement may be subordinated to deeds of trust or other security instruments approved by City pursuant to a written instrument conforming to the requirements of California Health and Safety Code Section 33334.14(a)(4) and including without limitation, the provisions set forth in Section 8.4.

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

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

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

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

Attachment 2

4863-9670-0554 v3 15

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

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

ARTICLE IX

ENVIRONMENTAL MATTERS

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

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

9.2. Environmental Indemnification. Developer shall indemnify, defend (with counsel approved by City) and hold the Indemnitees harmless from and against any and all Claims including without limitation any expenses associated with the investigation, assessment, monitoring, response, removal, treatment, abatement or remediation of Hazardous Materials and administrative, enforcement or judicial proceedings resulting, arising, or based directly or indirectly in whole or in part, upon (i) the presence, release, use, generation, discharge, storage or disposal or the alleged presence, release, discharge, storage or disposal of any Hazardous Attachment 2

4863-9670-0554 v3 16
Materials on, under, in or about, or the transportation of any such Hazardous Materials to or from, the Property, or (ii) the failure of Developer, Developer’s employees, agents, contractors, subcontractors, or any person acting on behalf of any of the foregoing to comply with Hazardous Materials Laws or the covenants set forth in Section 9.1. The foregoing indemnity shall further apply to any residual contamination in, on, under or about the Property or affecting any natural resources, and to any contamination of any property or natural resources arising in connection with the generation, use, handling, treatment, storage, transport or disposal of any such Hazardous Materials, and irrespective of whether any of such activities were or will be undertaken in accordance with Hazardous Materials Laws. The provisions of this Section 9.2 shall survive the issuance of a COO for the Project and the expiration or earlier termination of this Agreement. Developer’s indemnification obligation under this Section 9.2 shall not apply to acts described in clause (i) above caused by the gross negligence or willful misconduct of an Indemnitee.

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

9.4. Hazardous Materials. As used herein, the term “Hazardous Materials” means any substance, material or waste which is or becomes regulated by any federal, state or local governmental authority, and includes without limitation (i) petroleum or oil or gas or any direct or indirect product or by-product thereof; (ii) asbestos and any material containing asbestos; (iii) any substance, material or waste regulated by or listed (directly or by reference) as a “hazardous substance”, “hazardous material”, “hazardous waste”, “toxic waste”, “toxic pollutant”, “toxic substance”, “solid waste” or “pollutant or contaminant” in or pursuant to, or similarly identified as hazardous to human health or the environment in or pursuant to, the Toxic Substances Control Act [15 U.S.C. 2601, et seq.]; the Comprehensive Environmental Response, Compensation and Liability Act [42 U.S.C. Section 9601, et seq.], the Hazardous Materials Transportation Authorization Act [49 U.S.C. Section 5101, et seq.], the Resource Conservation and Recovery Act [42 U.S.C. 6901, et seq.], the Federal Water Pollution Control Act [33 U.S.C. Section 1251], the Clean Air Act [42 U.S.C. Section 7401, et seq.], the California Underground Storage of Hazardous Substances Act [California Health and Safety Code Section 25280, et seq.], the California Hazardous Substances Account Act [California Health and Safety Code Section 25300, et seq.], the California Hazardous Waste Act [California Health and Safety Code Section 25100, et seq.], the California Safe Drinking Water and Toxic Enforcement Act [California Health and Safety Code Section 25249.5, et seq.], and the Porter-Cologne Water Quality Control Act [California Water Code Section 13000, et seq.], as they now exist or are hereafter amended, together with any regulations promulgated thereunder; (iv) any substance, material or waste which is defined as such or regulated by any “Superfund” or “Superlien” law, or any Environmental Law; or (v) any other substance, material, chemical, waste or pollutant identified as hazardous or toxic and regulated under any other federal, state or local environmental law, Attachment 2

4863-9670-0554 v3 17
including without limitation, asbestos, polychlorinated biphenyls, petroleum, natural gas and synthetic fuel products and by-products.

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

ARTICLE X

DEFAULTS, REMEDIES AND TERMINATION

10.1. Event of Developer Default. The following events shall constitute an event of default on the part of Developer (“Event of Developer Default”):
(a) Developer fails Complete construction of the Project within the time set forth in Section 3.14, or subject to force majeure, abandons or suspends construction of the Project prior to Completion for a period of sixty (60) days or more; (b) Developer fails to construct and Complete the Improvements in substantial conformance with the Construction Plans.
(c) Developer fails to pay when due the principal and interest (if any) payable under the Note and such failure continues for thirty (30) days after City notifies Developer thereof in writing;
Attachment 2

4863-9670-0554 v3 18
(d) A Transfer occurs, either voluntarily or involuntarily, in violation of Article VII;
(e) Developer fails to maintain insurance on the Property and the Project as required pursuant to this Agreement, and Developer fails to cure such default within ten (10) days;
(f) Subject to Developer’s right to contest the following charges pursuant to Section 6.3, if Developer fails to pay prior to delinquency taxes or assessments due on the Property or the Project or fails to pay when due any other charge that may result in a lien on the Property or the Project, and Developer fails to cure such default within 30 days of date of delinquency, but in all events upon the imposition of any such tax or other lien; (g) A default is declared in writing under any loan secured by a mortgage, deed of trust or other security instrument recorded against the Property and remains uncured beyond any applicable cure period such that the holder of such security instrument has the right to accelerate repayment of such loan;
(h) Any representation or warranty contained in this Agreement or in any financial statement, certificate or report submitted to City in connection with this Agreement or Developer’s request for the Loan proves to have been false in any material and adverse respect when made and continues to be materially adverse to City; (i) If, pursuant to or within the meaning of the United States Bankruptcy Code or any other federal or state law relating to insolvency or relief of debtors (“Bankruptcy Law”), Developer (i) commences a voluntary case or proceeding; (ii) consents to the entry of an order for relief against Developer in an involuntary case; (iii) consents to the appointment of a trustee, receiver, assignee, liquidator or similar official for Developer; (iv) makes an assignment for the benefit of its creditors; or (v) admits in writing its inability to pay its debts as they become due;
(j) A court of competent jurisdiction shall have made or entered any decree or order (1) adjudging Developer to be bankrupt or insolvent, (2) approving as properly filed a petition seeking reorganization of Developer or seeking any arrangement for Developer under bankruptcy law or any other applicable debtor’s relief law or statute of the United States or any state or other jurisdiction, (3) appointing a receiver, trustee, liquidator, or assignee of Developer in bankruptcy or insolvency or for any of its properties, or (4) directing the winding up or liquidation of Developer;
(k) Developer shall have assigned its assets for the benefit of its creditors (other than pursuant to a mortgage loan) or suffered a sequestration or attachment of or execution on any substantial part of its property, unless the property so assigned, sequestered, attached or executed upon shall have been returned or released within sixty (60) days after such event (unless a lesser time period is permitted for cure under any other mortgage on the Property, in which event such lesser time period shall apply under this subsection as well) or prior to any sooner sale pursuant to such sequestration, attachment, or execution; Attachment 2

4863-9670-0554 v3 19
(l) Developer shall have voluntarily suspended its business or Developer shall have been dissolved or terminated;
(m) An event of default arises under this Agreement, the Regulatory Agreement, or any City Document and remains uncured beyond any applicable cure period; or (n) Developer defaults in the performance of any term, provision, covenant or agreement contained in this Agreement other than an obligation enumerated in this Section 10.1 and unless a shorter cure period is specified for such default, the default continues for thirty (30) days in the event of a monetary default or thirty (30) days in the event of a nonmonetary default after the date upon which City shall have given written notice of the default to Developer; provided however, if the default is of a nature that it cannot be cured within thirty (30) days, an Event of Developer Default shall not arise hereunder if Developer commences to cure the default within thirty (30) days and thereafter prosecutes the curing of such default with due diligence and in good faith to completion and in no event later than ninety (90) days after receipt of notice of the default or such longer period as City may allow.

Developer’s limited partners, as described in the applicable Limited Partnership Agreement (the “Limited Partners”) shall have the right to cure any default of Developer hereunder and any of the Loan Documents upon the same terms and conditions afforded to Developer. Provided that City has been given written notice of the address for delivery of notices to the Limited Partners, City shall provide any notice of default hereunder to the Limited Partners concurrently with the provision of such notice to Developer, and as to the Limited Partners, the cure periods specified herein shall commence upon the date of delivery of such notice in accordance with Section 12.3.

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

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

10.4. City’s Remedies and Rights Upon an Event of Developer Default. Upon the occurrence of an Event of Developer Default and the expiration of any applicable cure period, City shall have all remedies available to it under law or equity, including, but not limited to the following, City may, at its election, without notice to or demand upon Developer, except for Attachment 2

4863-9670-0554 v3 20
notices or demands required by law or expressly required pursuant to this Agreement, the Regulatory Agreement, or City Documents, exercise one or more of the following remedies:
(a) Accelerate and declare the balance of the Note and interest accrued thereon immediately due and payable;
(b) Seek specific performance to enforce the terms of the Regulatory Agreement;
(c) Foreclose on the Property pursuant to the Deed of Trust; and (d) Pursue any and all other remedies available under law to enforce the terms of the this Agreement, the Regulatory Agreement, and City Documents and City’s rights thereunder.

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

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

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

ARTICLE XI
INDEMNITY AND INSURANCE.

11.1. Indemnity. Developer shall indemnify, defend (with counsel approved by City) and hold Indemnitees harmless from and against any and all Claims, including without limitation, Claims arising directly or indirectly, in whole or in part, as a result of or in connection with Developer’s or Developer’s contractors, subcontractors, agents or employees development, construction, improvement, operation, ownership or maintenance of the Project or the Property, or any part thereof or otherwise arising out of or in connection with Developer’s performance under this Agreement. Developer’s indemnification obligations under this Section 11.1 shall not extend to Claims resulting from the gross negligence or willful misconduct of Indemnitees. The Attachment 2

4863-9670-0554 v3 21
provisions of this Section 11.1 shall survive the issuance of a COO for the Project and the expiration or earlier termination of this Agreement. It is further agreed that City do not and shall not waive any rights against Developer that they may have by reason of this indemnity and hold harmless agreement because of the acceptance by City, or the deposit with City by Developer, of any of the insurance policies described in this Agreement.

11.2. Liability and Workers Compensation Insurance.
(a) Developer and all contractors working on behalf of Developer on the Project shall maintain a commercial general liability policy in the amount of Two Million Dollars ($2,000,000) combined single limit, Four Million Dollars ($4,000,000) annual aggregate, or such other policy limit as City may require in their reasonable discretion, including coverage for bodily injury, property damage, products, completed operations and contractual liability coverage. Such policy or policies shall be written on an occurrence basis and shall name the Indemnitees as additional insureds.
(b) Developer and all contractors working on behalf of Developer shall maintain a comprehensive automobile liability coverage in the amount of One Million Dollars ($1,000,000), combined single limit including coverage for owned and non-owned vehicles and shall furnish or cause to be furnished to City evidence satisfactory to City that Developer and any contractor with whom Developer has contracted for the performance of work on the Property or otherwise pursuant to this Agreement carries workers’ compensation insurance as required by law. Automobile liability policies shall name the Indemnitees as additional insureds. (c) Upon commencement of construction and continuing until issuance of a COO, Developer and all contractors working on behalf of Developer shall maintain a policy of builder’s all-risk insurance in an amount not less than the full insurable cost of the Project on a replacement cost basis naming City as a loss payee.
(d) Developer shall maintain property insurance covering all risks of loss (other than earthquake), including flood (if required) for 100% of the replacement value of the Project with deductible, if any, in an amount acceptable to City, naming City as a loss payee. (e) Companies writing the insurance required hereunder shall be licensed to do business in the State of California. Insurance shall be placed with insurers with a current A.M.

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

Builder’s Risk and property insurance shall name City as a loss payee. (f) Prior to closing of the Loan, Developer shall furnish City with certificates of insurance in form acceptable to City evidencing the required insurance coverage and duly executed endorsements evidencing such additional insured status. The certificates shall contain a statement of obligation on the part of the carrier to notify City of any material adverse change, cancellation, termination or non-renewal of the coverage at least thirty (30) days in advance of the effective date of any such material adverse change, cancellation, termination or non-renewal. (g) If any insurance policy or coverage required hereunder is canceled or reduced, Developer shall, within fifteen (15) days after receipt of notice of such cancellation or Attachment 2

4863-9670-0554 v3 22
reduction in coverage, but in no event later than the effective date of cancellation or reduction, file with City a certificate showing that the required insurance has been reinstated or provided through another insurance company or companies. Upon failure to so file such certificate, City may, without further notice and at its option, procure such insurance coverage at Developer’s expense, and Developer shall promptly reimburse City for such expense upon receipt of billing from City.
(h) Coverage provided by Developer shall be primary insurance and shall not be contributing with any insurance, or self-insurance maintained by City, and the policies shall so provide. The insurance policies shall contain a waiver of subrogation for the benefit of City.

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

ARTICLE XII

MISCELLANEOUS PROVISIONS

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

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

Times of performance under this Agreement may also be extended in writing by the mutual agreement of Developer and City (acting in the discretion of its City Manager unless he or she determine in his or her discretion to refer such matter to City Council). City and Developer acknowledge that adverse changes in economic conditions, either of the affected Party specifically or the economy generally, changes in market conditions or demand, and/or inability to obtain financing to complete the work of Improvements shall not constitute grounds of enforced delay pursuant to this Section 12.2. Each Party expressly assumes the risk of such adverse economic or market changes and/or financial inability, whether or not foreseeable as of the Effective Date.

Attachment 2

4863-9670-0554 v3 23

12.3. Notices. Except as otherwise specified in this Agreement, all notices to be sent pursuant to this Agreement shall be made in writing, and sent to the Parties at their respective addresses specified below or to such other address as a Party may designate by written notice delivered to the other parties in accordance with this Section. All such notices shall be sent by:
(i) personal delivery, in which case notice is effective upon delivery; (ii) certified or registered mail, return receipt requested, in which case notice shall be deemed delivered on receipt if delivery is confirmed by a return receipt; (iii) nationally recognized overnight courier, with charges prepaid or charged to the sender’s account, in which case notice is effective on delivery if delivery is confirmed by the delivery service;
City: 275 Main Street,
Watsonville, CA 95076
Attention: City Manager
With a copy to: City of Watsonville
275 Main Street,
Watsonville, CA 95076
Attention: City Attorney
Developer: Eden Freedom Investors, L.P.
c/o Eden Investment’s Inc.
22645 Grand Street
Hayward, CA 94541
Attention: Chief of Real Estate Development
With a copy to: Gubb & Barshay LLP.
235 Montgomery Street
San Francisco, CA 94104
Attention: Evan Gross, Esq.

With a copy to:

U.S. Bancorp Community Development Corporation
1307 Washington Avenue, Suite 300
Mail Code: SL MO RMCD
St. Louis, MO 63103
Attn.: Director of LIHTC Asset Management
Phone: (314) 335-2600
With a copy to: Kutak Rock LLP
1650 Farnam Street
Omaha, Nebraska 68102
Attn: Jill H. Goldstein, Esq.

12.4. Attorneys’ Fees. If any Party fails to perform any of its obligations under this Agreement, or if any dispute arises between the Parties concerning the meaning or interpretation of any provision hereof, then the prevailing party in any proceeding in connection with such dispute shall be entitled to the costs and expenses it incurs on account thereof and in enforcing or Attachment 2

4863-9670-0554 v3 24
establishing its rights hereunder, including, without limitation, court costs and reasonable attorneys’ fees and disbursements.

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

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

12.7. Construction. The section headings and captions used herein are solely for convenience and shall not be used to interpret this Agreement. The Parties acknowledge that this Agreement is the product of negotiation and compromise on the part of both Parties, and the Parties agree, that since all of the Parties have participated in the negotiation and drafting of this Agreement, this Agreement shall not be construed as if prepared by one of the Parties, but rather according to its fair meaning as a whole, as if all Parties had prepared it.

12.8. Action or Approval. Whenever action and/or approval by City is required under this Agreement, the City Manager or his or her designee may act on and/or approve such matter unless specifically provided otherwise, or unless the City Manager determines in his or her discretion that such action or approval requires referral to the City Council for consideration.

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

Exhibit A Legal Description of Property

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

Attachment 2

4863-9670-0554 v3 25

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

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

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

12.14. Non-Liability of Officials, Employees and Agents. No officer, official, employee or agent of City shall be personally liable to Developer or its successors in interest in the event of any default or breach by City or for any amount which may become due to Developer or its successors in interest pursuant to this Agreement.

12.15. Time of the Essence; Calculation of Time Periods. Time is of the essence for each condition, term, obligation and provision of this Agreement. Unless otherwise specified, in computing any period of time described in this Agreement, the day of the act or event after which the designated period of time begins to run is not to be included and the last day of the period so computed is to be included, unless such last day is not a business day, in which event the period shall run until the next business day. The final day of any such period shall be deemed to end at 5:00 p.m., local time at the Property. For purposes of this Agreement, a “business day” means a day that is not a Saturday, Sunday, a federal holiday or a state holiday under the laws of California.

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

12.17. Financial and Governmental Capacities. Developer agrees that the capacity of City in this Agreement, the Regulatory Agreement, and the other City Documents shall be only as a lender (“Financial Capacity”), and that nothing herein or therein shall waive, supersede, condition, limit, modify or affect City’s rights to take (or not take) any action in a governmental capacity, including without limitation enacting laws, inspecting structures, reviewing and issuing permits, and all other legislative, administrative, or enforcement functions pursuant to federal, state or local law (“Governmental Capacity”). In addition, nothing in this Agreement, the Regulatory Agreement, and the other City Documents shall supersede or waive any discretionary or regulatory approvals required to be obtained from City under applicable law. [Signature Pages Follow]
Attachment 2

4863-9670-0554 v3 26
IN WITNESS WHEREOF, the Parties have entered into this Agreement effective as of the date first written above.

CITY:

CITY OF WATSONVILLE,
a California municipal corporation
By:
_____________,
City Manager
ATTEST:

By:
_____________,
City Clerk
APPROVED AS TO FORM:

By:
_____________,
City Attorney
DEVELOPER:

EDEN FREEDOM INVESTORS, L.P.,
a California limited partnership
By: Eden Freedom, LLC,
a California limited liability company,
its general partner
By: Eden Investments, Inc.,
a California nonprofit public benefit corporation,
its sole member/manager
By:

Andrea Osgood,
Chief of Real Estate Development
Attachment 2

4863-9670-0554 v3

EXHIBIT A

LEGAL DESCRIPTION
That land in the City of Watsonville, County of Santa Cruz, State of California, and more particularly described as follows:

BEING A PART OF THE RANCHO BOLSA DEL PAJARO AND BEGINNING ON THE

NORTHEASTERN SIDE OF THE WATSONVILLE SANTA CRUZ HIGHWAY AND ON THE

BOUNDARY LINE BETWEEN THE SAID RANCHO BOLSA DEL PAJARO AND THE RANCHO CORRALITOS; SAID POINT OF BEGINNING BEING THE SOUTHWESTERN CORNER OF LANDS OF ONE GEORGE WHITE; AND RUNNING THENCE FROM SAID

POINT OF BEGINNING ALONG THE SAID NORTHEASTERN SIDE OF SAID HIGHWAY 38° 18’ EAST 168.00 FEET; THENCE LEAVING HIGHWAY NORTH 56° 38’ EAST 466.70 FEET TO THE LANDS OF ONE HART; THENCE ALONG THE BOUNDARY OF SAID LANDS OF HART NORTH 25° 23’ WEST 248.00 FEET TO THE AFORESAID RANCHO BOUNDARY; AND THENCE ALONG SAID RANCHO BOUNDARY SOUTH 48° WEST 521.40 FEET TO THE PLACE OF BEGINNING.

EXCEPTING THEREFROM THE LAND DEEDED TO THE COUNTY OF SANTA CRUZ PURSUANT TO DEED RECORDED IN VOLUME 341 OF OFFICIAL RECORDS OF THE

COUNTY RECORDER OF THE COUNTY OF SANTA CRUZ, STATE OF CALIFORNIA, AT PAGE 171 THEREOF.

ALSO EXCEPTING THEREFROM THE LANDS CONVEYED TO THE CITY OF WATSONVILLE BY DEED RECORDED JULY 29, 1980 IN VOLUME 3219 PAGE 211 OFFICIAL RECORDS COUNTY OF SANTA CRUZ.

ALSO EXCEPTING THEREFROM THE LANDS CONVEYED TO THE CITY OF WATSONVILLE BY DEED RECORDED MARCH 28, 2006 AS DOCUMENT NO. 2006-17265 OFFICIAL RECORDS, AND AS CORRECTED BY GRANT DEED RECORDED APRIL 10, 2017 AS DOCUMENT NO. 2017-0011836 OFFICIAL RECORDS COUNTY OF SANTA CRUZ.

APN: 019-226-41
Attachment 2

4871-3489-8058 v3 1

SECURED PROMISSORY NOTE
(PLHA Loan)
$1,000,000.00 Watsonville, California
______________________, 2024
FOR VALUE RECEIVED, EDEN FREEDOM INVESTORS, L.P., a California limited partnership (“Borrower”), promises to pay to the CITY OF WATSONVILLE, a California municipal corporation (“City”), in lawful money of the United States of America, the principal sum of ONE MILLION AND 00/100 DOLLARS ($1,000,000.00), as further discussed in the Loan Agreement referred to below, together with interest on the outstanding principal balance in accordance with the terms and conditions described herein. Interest shall accrue on the outstanding principal balance at a rate equal to three percent (3%) simple interest per annum, commencing upon the date of disbursement thereof. Interest shall be calculated on the basis of a year of three hundred sixty-five (365) days, and charged for the actual number of days elapsed.

This Secured Promissory Note (“Note”) has been executed and delivered pursuant to and in accordance with a Loan Agreement executed by and between Borrower and City, dated of or about even date herewith (“Loan Agreement”), and is subject to the terms and conditions of the Loan Agreement, which is by this reference incorporated herein and made a part hereof.

Capitalized terms used but not defined herein shall have the meaning ascribed to such terms in the Loan Agreement.

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

1. PAYMENTS.

1.1 PAYMENT DATES; MATURITY DATE. Except in the event of a default and acceleration as described below, the term of the Loan expires fifty-five (55) years after the date the Project receives a final certificate of occupancy (“COO”), but in no event later than March 1, 2079 (“Maturity Date”). Commencing on June 1st of the year following the date upon which City issues a COO for the Project, and on June 1st of each year thereafter until the Maturity Date, Borrower shall make a loan payment in an amount equal to City’s Prorata Percentage of Residual Receipts (as such terms are defined herein). a. City’s Prorata Percentage of Residual Receipts. “City’s Prorata Percentage of Residual Receipts” means City’s prorata percentage of the fifty percent (50%) portion of Residual Receipts payable to public agencies, which prorata percentage is determined by dividing the Loan funds disbursed to Borrower in accordance with this Agreement by the sum of all public agency residual receipts loans. b. Residual Receipts. Residual Receipts means for each calendar year until the Maturity Date, the amount by which Gross Revenue (defined below) exceeds Attachment 3

4871-3489-8058 v3 2
Annual Operating Expenses (defined below). Borrower shall at all reasonable times allow City or its agents access to Borrower’s books and records for the purpose of verifying the amount of Residual Receipts received by Borrower.
c. Gross Revenue. Gross Revenue means for each calendar year until the Maturity Date, all revenue, income, receipts, and other consideration actually received from operation and leasing of the Project, including all rents, fees, and charges paid by tenants.
d. Annual Operating Expenses. Annual Operating Expenses means for each calendar year until the Maturity Date, the following costs reasonably and actually incurred for operation and maintenance of the Project:
(i) property taxes and assessments imposed on the Project, excluding any late fees or changes;
(ii) debt service and associated fees currently due on a nonoptional basis (excluding debt service due from residual receipts or surplus cash of the Project and any late fees or changes) on loans associated with development of the Project and approved in writing by the City;
(iii) property management fees and reimbursements due and payable to Eden Housing Management Inc., and its successors and assigns, pursuant to that certain Management Agreement dated March 14, 2022, as such agreement may be amended and or replaced upon approval in advance and in writing by City, such approval not to be unreasonably withheld;
(iv) fees for accounting, audit, and legal services incurred by Borrower’s general partner in the management of the Project, not to exceed amounts that are standard in the industry;
(v) premiums for property damage and liability insurance not to exceed amounts that are standard in the industry; (vi) utility services not paid for directly by tenants, including water, sewer, and trash collection;
(vii) maintenance and repair;
(viii) any annual license or certificate of occupancy fees required for operation of the Project;
(ix) security services;
(x) advertising and marketing;
(xi) cash deposited into an operating reserve capped at six (6) months gross rent from the Project;
(xii) extraordinary operating costs specifically approved in writing by the City; and
Attachment 3

4871-3489-8058 v3 3
(xiii) payments of deductibles in connection with casualty insurance claims not normally paid from reserves, the amount of uninsured losses actually replaced, repaired or restored (so long as Borrower did not fail to obtain and maintain reasonable and appropriate insurance coverage(s)), and not normally paid from reserves, and other ordinary and reasonable operating expenses approved in writing by the City and not listed above;
(xiv) Asset Management Fees, which means an annual fee to be paid by the Borrower to its Special Limited Partner in the amount of $7,500 and escalating at 3.0% per annum, to be paid in arrears in accordance with the terms of the Limited Partnership Agreement;
(xv) Partnership Management Fees, which means an annual fee to be paid by the Borrower to its General Partner for services rendered in managing the Partnership in the amount of $25,000 and escalating at 3.0% per annum, to be paid in arrears in accordance with the Limited Partnership Agreement; and (xvi) Deferred Developer Fees, which means the balance of any Developer Fee that has not been paid to Borrower by the date of its Investor Limited Partner’s (as identified in the Limited Partnership Agreement) final Capital Contribution (as defined under the Limited Partnership Agreement).

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

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

1.4 MANNER OF PAYMENT. All payments of principal and interest on this Note shall be made to City at 250 Main Street, Watsonville, CA 95076 or such other place as City shall designate to Borrower in writing, or by wire transfer of immediately available funds to an account designated by City in writing.

1.5 PAYMENT IN FULL. Borrower shall pay all outstanding principal and accrued interest on the Loan, in full, on the earliest to occur of: (1) an Event of Default; and (2) the Maturity Date.

2. DEFAULTS AND REMEDIES.

2.1 EVENTS OF DEFAULT. The occurrence of any one or more of the following events shall constitute an event of default hereunder (“Event of Default”):

Attachment 3

4871-3489-8058 v3 4
a. Borrower fails to pay when due the principal and interest payable hereunder and such failure continues for thirty (30) days after City notifies Borrower thereof in writing, provided no notice shall be required for any payment otherwise due on final maturity of this Note.
b. Pursuant to or within the meaning of the United States Bankruptcy Code or any other federal or state law relating to insolvency or relief of debtors (“Bankruptcy Law”), Borrower or any general partner thereof (i) commences a voluntary case or proceeding; (ii) consents to the entry of an order for relief against Borrower or any general partner thereof in an involuntary case; (iii) consents to the appointment of a trustee, receiver, assignee, liquidator or similar official for Borrower or any general partner thereof; (iv) makes an assignment for the benefit of its creditors; or (v) admits in writing its inability to pay its debts as they become due.
c. A court of competent jurisdiction enters an order or decree under any Bankruptcy Law that (i) is for relief against Borrower or any general partner thereof in an involuntary case, (ii) appoints a trustee, receiver, assignee, liquidator or similar official for Borrower or any general partner thereof or substantially all of such entity’s assets, (iii) orders the liquidation of Borrower or any general partner thereof, or (iv) issues or levies a judgment, writ, warrant of attachment or similar process against the Property or the Project, and in each case the order or decree is not released, vacated, dismissed or fully bonded within 90 days after its issuance.
d. The occurrence of a Transfer in violation of Article VII of the Loan Agreement.
e. A default is declared under any debt instrument secured by a mortgage or deed of trust on the Project or the Property and remains uncured beyond any applicable cure period such that the holder of such instrument has the right to accelerate payment thereunder.
f. Borrower fails to maintain insurance on the Property and the Project as required pursuant to the City Documents and Borrower fails to cure such default within twenty (20) days.
g. Subject to Borrower’s right to contest the following charges pursuant to the City Documents, if Borrower fails to pay taxes or assessments due on the Property or the Project or fails to pay any other charge that may result in a lien on the Property or the Project, and Borrower fails to cure such default within ten (10) days. h. If any representation or warranty contained in any City Document, or any certificate furnished in connection therewith, or in connection with any request for disbursement of the proceeds of the Loan (the “Loan Proceeds”) proves to have been false or misleading in any material adverse respect when made and continues to be materially adverse to the City.
i. An Event of Default shall have been declared under the Regulatory Agreement or any City Document, and remains uncured beyond the expiration of any applicable cure period.

Attachment 3

4871-3489-8058 v3 5

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

2.3 DEFAULT RATE. Upon the occurrence of an Event of Default, interest shall automatically be increased without notice to the rate of ten percent (10%) per annum (the “Default Rate”); provided however, if any payment due hereunder is not paid when due, the Default Rate shall apply commencing upon the due date for such payment.

When Borrower is no longer in default, the Default Rate shall no longer apply, and the interest rate shall once again be the rate specified in the first paragraph of this Note.

Notwithstanding the foregoing provisions, if the interest rate charged exceeds the maximum legal rate of interest, the rate shall be the maximum rate permitted by law. The imposition or acceptance of the Default Rate shall in no event constitute a waiver of a default under this Note or prevent City from exercising any of its other rights or remedies.

3. MISCELLANEOUS

3.1 WAIVERS; BORROWER’S WAIVERS. No waiver by City of any right or remedy under this Note shall be effective unless in a writing signed by City. Neither the failure nor any delay in exercising any right, power or privilege under this Note will operate as a waiver of such right, power or privilege, and no single or partial exercise of any such right, power or privilege by City will preclude any other or further exercise of such right, power or privilege or the exercise of any other right, power or privilege. No waiver that may be given by City will be applicable except in the specific instance for which it is given.

No notice to or demand on Borrower will be deemed to be a waiver of any obligation of Borrower or of the right of City to take further action without notice or demand as provided in this Note.

To the maximum extent permitted by applicable law Borrower hereby waives presentment, demand, protest, notices of dishonor and of protest and all defenses and pleas on the grounds of any extension or extensions of the time of payment or of any due date under this Note, in whole or in part, whether before or after maturity and with or without notice.

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

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

Attachment 3

4871-3489-8058 v3 6

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

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

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

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

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

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

The foregoing limitation of liability is intended to apply only to the obligation for the repayment of the principal of, and payment of interest on the Note; nothing contained herein is intended to relieve Borrower of its obligation to indemnify City under this Agreement, or liability for: (i) fraud or willful misrepresentation by Borrower; (ii) the failure to pay taxes, assessments or other charges which may create liens on the Property that are payable or applicable prior to any foreclosure under the Deed of Trust (to the full extent of such taxes, assessments or other charges); (iii) the fair market value of any personal property or fixtures removed or disposed of by Borrower other than in accordance with the Deed of Trust; and/or (iv) the misappropriation of any proceeds by Borrower under any insurance policies or awards resulting from condemnation or the exercise of the power of eminent domain or by reason of damage, loss or destruction to any portion of the Project. [Signature Page Follows]
Attachment 3

4871-3489-8058 v3 7
IN WITNESS WHEREOF, Borrower has executed and delivered this Note as of the date first written above.

BORROWER:

EDEN FREEDOM INVESTORS, L.P.,
a California limited partnership
By: Eden Freedom, LLC,
a California limited liability company,
its general partner
By: Eden Investments, Inc.,
a California nonprofit public benefit corporation,
its sole member/manager
By:

Andrea Osgood,
Chief of Real Estate Development
Attachment 3

4875-3755-1242 v3 1
Recording requested by
the City of Watsonville
and when recorded mail to:

City of Watsonville
250 Main Street,
Watsonville, CA 95076

EXEMPT FROM RECORDING FEES PER
GOVERNMENT CODE §§6103, 27383
APN: 019-226-41 (Space above for Recorder’s use only)

DEED OF TRUST, ASSIGNMENT OF RENTS,

SECURITY AGREEMENT AND FIXTURE FILING
(PLHA Loan)

THIS DEED OF TRUST, ASSIGNMENT OF RENTS, SECURITY AGREEMENT AND FIXTURE FILING (this “Deed of Trust”) is made as of ______________________ , 2024, by EDEN FREEDOM INVESTORS, L.P., a California limited partnership (“Trustor”), to ______________________ (“Trustee”), for the benefit of the CITY OF WATSONVILLE, a municipal corporation (“Beneficiary”).

RECITALS
A. Trustor is the fee owner of certain land described in Exhibit A attached hereto and incorporated herein by this reference (“Land”). Trustor intends to construct a 53-unit multifamily residential development on the Land, including related improvements (the “Project”).

B. Beneficiary and Trustor have entered into a Loan Agreement dated of or about even date herewith (“Loan Agreement”) pursuant to which Beneficiary will provide a loan to Trustor in the amount of up to One Million and 00/100 Dollars ($1,000,000.00) (“Loan”) for the purpose of partially financing the Project. Trustor has issued to Beneficiary a secured promissory note dated of or about even date herewith (“Note”) to evidence Trustor’s obligation to repay the Loan.

This Deed of Trust, the Loan Agreement, the Note and the Regulatory Agreement (defined below) are collectively referred to herein as the “City Documents.” C. As a condition precedent to the making of the Loan, Beneficiary has required that Trustor enter into this Deed of Trust and grant to Trustee for the benefit of Beneficiary, a lien and security interest in the Project and in Trustor’s fee interest in the Land to secure repayment of the Note and performance of Trustor’s obligations under the Loan Agreement and the other City Documents.

NOW THEREFORE, in consideration of the foregoing, which are incorporated herein by reference, and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, it is agreed as follows.

1. Grant in Trust. In consideration of the foregoing and for the purpose of securing payment Attachment 4

4875-3755-1242 v3 2
and performance of the Secured Obligations defined and described in Section 2, Trustor hereby irrevocably and unconditionally grants, conveys, transfers and assigns to Trustee, in trust for the benefit of Beneficiary, with power of sale and right of entry and possession, all estate, right, title and interest which Trustor now has or may later acquire in and to the Land, and all of the following, whether presently owned or hereafter acquired:
a. Estate. The fee estate (“Estate”) in the land created by that certain grant deed, dated as of April 30, 2020, and recorded May 15, 2020 in the Official Records of Santa Cruz County, California as document number 2020-0016693;
b. Improvements. All buildings, structures, and improvements, now or hereafter located or constructed on the Land (“Improvements”);
c. Appurtenances. All appurtenances, easements, rights of way, pipes, transmission lines or wires and other rights used in connection with the Land or the Improvements or as a means of access thereto, whether now or hereafter owned or constructed or placed upon or in the Land or Improvements and all existing and future privileges, rights, franchises and tenements of the Land, including all minerals, oils, gas and other commercially valuable substances which may be in, under or produced from any part of the Land, and all water rights, rights of way, gores or strips of land, and any land lying in the streets, ways, and alleys, open or proposed, in front of or adjoining the Land and Improvements (collectively, “Appurtenances”); d. Equipment. All machinery, equipment, fixtures, goods and other personal property of the Trustor, whether moveable or not, now owned or hereafter acquired by the Trustor and now or hereafter located at or used in connection with the Land, the Improvements or Appurtenances, and all improvements, restorations, replacements, repairs, additions or substitutions thereto (collectively, “Equipment”);
e. Leases/Rents. All existing and future leases, subleases, licenses, and other agreements relating to the use or occupancy of all or any portion of the Estate, Land or Improvements (collectively, “Leases”), all amendments, extensions, renewals or modifications thereof, and all rent, royalties, or other payments which may now or hereafter accrue or otherwise become payable thereunder to or for the benefit of Trustor, including but not limited to security deposits (collectively, “Rents”);
f. Proceeds. All insurance proceeds and any other proceeds from the Estate, Land, Improvements, Appurtenances, Equipment, Leases, and Rents, including without limitation, all deposits made with or other security deposits given to utility companies, all claims or demands relating to insurance awards which the Trustor now has or may hereafter acquire, including all advance payments of insurance premiums made by Trustor, and all condemnation awards or payments now or later made in connection with any condemnation or eminent domain proceeding (“Proceeds”);
g. Gross Revenue. All revenues, income, rents, royalties, payments and profits produced by the Estate, Land, Improvements, Appurtenances and Equipment, whether now owned or hereafter acquired by Trustor (“Gross Revenues”);
h. Plans. All architectural, structural and mechanical plans, specifications, design Attachment 4

4875-3755-1242 v3 3
documents and studies produced in connection with development of the Land and construction of the Improvements (collectively, “Plans”); and
i. Financing. All interests and rights in any private or governmental grants, subsidies, loans or other financing provided in connection with development of the Estate, Land and construction of the Improvements (collectively, “Financing”).

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

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

3. Assignment of Rents, Issues, and Profits. Trustor hereby irrevocably, absolutely, presently and unconditionally assigns to Beneficiary for the benefit of Beneficiary the Rents, royalties, issues, profits, revenue, income and proceeds of the Property. This is an absolute assignment and not an assignment for security only. Beneficiary hereby confers upon Trustor a license to collect and retain such Rents, royalties, issues, profits, revenue, income and proceeds as they become due and payable prior to any Event of Default hereunder. Upon the occurrence of any such Event of Default, Beneficiary may terminate such license without notice to or demand upon Trustor and without regard to the adequacy of any security for the indebtedness hereby secured, and may either in person, by agent, or by a receiver to be appointed by a court, enter upon and take possession of the Property or any part thereof, and sue for or otherwise collect such rents, issues, and profits, including those past due and unpaid, and apply the same, less costs and expenses of operation and collection, including reasonable attorneys’ fees, to any indebtedness secured hereby, and in such order as Beneficiary may determine. Beneficiary’s right to the rents, royalties, issues, profits, revenue, income and proceeds of the Property does not depend upon whether or not Beneficiary takes possession of the Property. The entering upon and taking possession of the Property, the collection of such rents, issues, and profits, and the application thereof as aforesaid, shall not cure or waive any default or notice of default hereunder or invalidate any act done pursuant to such notice. If an Event of Default occurs while Beneficiary is in possession of all or part of the Property and/or is collecting and applying Rents as permitted under this Deed of Trust, Beneficiary, Trustee Attachment 4

4875-3755-1242 v3 4
and any receiver shall nevertheless be entitled to exercise and invoke every right and remedy afforded any of them under this Deed of Trust and at law or in equity, including the right to exercise the power of sale granted hereunder. Regardless of whether or not Beneficiary, in person or by agent, takes actual possession of the Land or the Improvements, Beneficiary shall not be deemed to be a “mortgagee in possession,” shall not be responsible for performing any obligation of Trustor under any Lease, shall not be liable in any manner for the Property, or the use, occupancy, enjoyment or operation of any part of it, and shall not be responsible for any waste committed by Trustor, lessees or any third parties, or for dangerous or defective condition of the Property or any negligence in the management, repair or control of the Property. Absent Beneficiary’s written consent, Trustor shall not accept prepayment of Rents for any rental period exceeding one month.

4. Security Agreement. The parties intend for this Deed of Trust to create a lien on the Property, and an absolute assignment of the Rents and Leases, all in favor of Beneficiary, subject to the rights of any beneficiaries under deeds of trust senior in priority to this Deed of Trust permitted under the Loan Agreement (“Senior Deeds of Trust”). The parties acknowledge that some of the Property may be determined under applicable law to be personal property or fixtures.

To the extent that any Property may be or be determined to be personal property, Trustor as debtor hereby grants to Beneficiary as secured party a security interest in all such Property to secure payment and performance of the Secured Obligations. This Deed of Trust constitutes a security agreement under the California Uniform Commercial Code, as amended or recodified from time to time (the “UCC”), covering all such Property. To the extent such Property is not real property encumbered by the lien granted above, and is not absolutely assigned by the assignment set forth above, it is the intention of the parties that such Property shall constitute “proceeds, products, offspring, rents, or profits” (as defined in and for the purposes of Section 552(b) of the United States Bankruptcy Code, as such section may be modified or supplemented) of the Land and Improvements.

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

Everything used in connection with the Property and/or adapted for use therein and/or which is described or reflected in this Deed of Trust is, and at all times and for all purposes and in all proceedings both legal or equitable shall be regarded as part of the estate encumbered by this Deed of Trust irrespective of whether (i) any such item is physically attached to the Improvements, (ii) serial numbers are used for the better identification of certain equipment items capable of being thus identified in a recital contained herein or in any list filed with Beneficiary, or (iii) any such item is referred to or reflected in any such financing statement so filed at any time. Similarly, the mention in any such financing statement of (1) rights in or to the proceeds of any fire and/or hazard insurance policy, or (2) any award in eminent domain proceedings for a taking or for lessening of Attachment 4

4875-3755-1242 v3 5
value, or (3) Trustor’s interest as lessor in any present or future lease or rights to income growing out of the use and/or occupancy of the property conveyed hereby, whether pursuant to lease or otherwise, shall not be construed as in any way altering any of the rights of Beneficiary as determined by this instrument or impugning the priority of Beneficiary’s lien granted hereby or by any other recorded document. Such mention in any financing statement is declared to be solely for the protection of Beneficiary in the event any court or judge shall at any time hold, with respect to the matters set forth in the foregoing clauses (1), (2), and (3), that notice of Beneficiary’s priority of interest is required in order to be effective against a particular class of persons, including but not limited to the federal government and any subdivisions or entity of the federal government.

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

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

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

Trustor further represents and warrants that this Deed of Trust and all other documents delivered or to be delivered by Trustor in connection herewith: (a) have been duly authorized, executed, and delivered by Trustor; (b) are binding obligations of Trustor; and (c) do not violate the provisions of any agreement to which Trustor is a party or which affects the Property. Trustor further represents and warrants that there are no pending, or to Trustor’s knowledge, threatened actions or proceedings before any court or administrative agency which may adversely affect Trustor’s ownership of the Property.

7.2 Payment and Performance of Secured Obligations. Trustor shall promptly pay when due the principal and any interest due on the indebtedness evidenced by the Note, and shall promptly pay and perform all other obligations of Trustor arising in connection with the Secured Attachment 4

4875-3755-1242 v3 6
Obligations or the City Documents in accordance with the respective terms thereof.

7.3 Use of Loan Proceeds; Preservation and Maintenance of Property; Compliance with Laws. Trustor covenants that it shall use the proceeds of the Loan (the “Loan Proceeds”) solely for purposes authorized by the City Documents. Trustor shall keep the Land and Improvements in good repair and condition, and from time to time shall make necessary repairs, renewals and replacements thereto so that the Property shall be preserved and maintained. Trustor covenants to comply with all federal, state and local laws, regulations, ordinances and rules applicable to the Property and the Project, including without limitation all applicable requirements of state and local building codes and regulations, and all applicable statutes and regulations relating to accessibility for the disabled. Trustor shall not remove, demolish or materially alter any Improvement without Beneficiary’s written consent, shall complete or restore promptly and in good and workmanlike manner any building, fixture or other improvement which may be constructed, damaged, or destroyed thereon, and shall pay when due all claims for labor performed and materials furnished therefor. Trustor shall use the Land and Improvements solely for purposes authorized by the City Documents, shall not commit or allow waste of the Property, and shall not commit or allow any act upon or use of the Property which would violate any applicable law or order of any governmental authority, nor shall Trustor bring on or keep any article on the Property or cause or allow any condition to exist thereon which could invalidate or which would be prohibited by any insurance coverage required to be maintained on the Property pursuant to the City Documents.

7.4 Restrictions on Conveyance and Encumbrance; Acceleration. It shall be an Event of Default (as defined in Section 8) hereunder if any Transfer (as defined in the Loan Agreement) of the Property, any part thereof or any interest therein occurs in violation of the requirements of the City Documents. If any such Transfer occurs in violation of such requirements, without limiting the provisions of Section 8 hereof, all obligations secured by this Deed of Trust, irrespective of the maturity dates of such obligations, shall at the option of Beneficiary, and without demand, immediately become due and payable, subject to any applicable cure period.

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

7.6 Charges, Liens, Taxes and Assessments. Trustor shall pay before delinquency all taxes, levies, assessments and other charges affecting the Property that are (or if not paid may become) a lien on all or part of the Property. Trustor may, at Trustor’s expense, contest the validity or application of any tax, levy, assessment or charge affecting the Property by appropriate legal proceedings promptly initiated and conducted in good faith and with due diligence, provided that (i) Beneficiary is reasonably satisfied that neither the Property nor any part thereof or interest therein will be in danger of being sold, forfeited, or lost as a result of such contest, and (ii) Trustor shall have posted a bond or furnished other security as may reasonably be required from time to Attachment 4

4875-3755-1242 v3 7
time by Beneficiary; and provided further that Trustor shall timely make any payment necessary to prevent a lien foreclosure, sale, forfeiture or loss of the Property.

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

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

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

7.10 Hazardous Materials. Trustor represents and warrants that except as disclosed to Beneficiary in writing, as of the date hereof to the best knowledge of Trustor: (i) the Land is free and has always been free of Hazardous Materials (as defined below) and is not and has never been in violation of any Environmental Law (as defined below); (ii) there are no buried or partially buried storage tanks located on the Land; (iii) Trustor has received no notice, warning, notice of violation, administrative complaint, judicial complaint, or other formal or informal notice alleging Attachment 4

4875-3755-1242 v3 8
that conditions on the Land are or have ever been in violation of any Environmental Law or informing Trustor that the Land is subject to investigation or inquiry regarding Hazardous Materials on the Land or the potential violation of any Environmental Law; (iv) there is no monitoring program required by the Environmental Protection Agency or any other governmental agency concerning the Land; (v) no toxic or hazardous chemicals, waste, or substances of any kind have ever been spilled, disposed of, or stored on, under or at the Land, whether by accident, burying, drainage, or storage in containers, tanks, holding areas, or any other means; (vi) the Land has never been used as a dump or landfill; and (vii) Trustor has disclosed to Beneficiary all information, records, and studies in Trustor’s possession or reasonably available to Trustor relating to the Land concerning Hazardous Materials.
a. Prohibition of Hazardous Materials. Trustor shall not cause or permit any Hazardous Material (as defined in Section 9.3 of the Loan Agreement) to be brought upon, kept, stored or used in, on, under, or about the Land by Trustor, its agents, employees, contractors or invitees except for incidental supplies ordinarily used in the construction and operation of residential developments in compliance with all applicable laws, and shall not cause any release of Hazardous Materials into, onto, under or through the Land. If any Hazardous Material is discharged, released, dumped, or spilled in, on, under, or about the Land and results in any contamination of the Land or adjacent property, or otherwise results in the release or discharge of Hazardous Materials in, on, under or from the Land, Trustor shall promptly take all actions at its sole expense as are necessary to comply with all Environmental Laws (as defined below). b. Indemnity. Trustor shall indemnify, defend (with counsel reasonably acceptable to Beneficiary), and hold Beneficiary and its elected and appointed officials, officers, agents and employees (collectively, “Indemnitees”) harmless from and against any and all loss, claim, liability, damage, demand, judgment, order, penalty, fine, injunctive or other relief, cost, expense (including reasonable fees and expenses of attorneys, expert witnesses, and other professionals advising or assisting Beneficiary), action, or cause of action (all of the foregoing, hereafter individually “Claim” and collectively “Claims”) arising in connection with the breach of Trustor’s covenants and obligations set forth in this Section 7.10 or otherwise arising in connection with the presence or release of Hazardous Materials in, on, under, or from the Property; provided that no Indemnitee shall be entitled to indemnification under this Section for matters caused by such Indemnitee’s gross negligence or willful misconduct. The foregoing indemnity includes, without limitation, all costs of investigation, assessment, containment, removal, remediation of any kind, and disposal of Hazardous Materials, all costs of determining whether the Land is in compliance with Environmental Laws, all costs associated with bringing the Land into compliance with all applicable Environmental Laws, and all costs associated with claims for damages or injury to persons, property, or natural resources.
c. Duties. Without limiting the generality of the foregoing, Trustor shall, at Trustor’s own cost and expense, do all of the following:
(i) pay or satisfy any judgment or decree that may be entered against any Indemnitee or Indemnitees in any legal or administrative proceeding incident to any matters against which Indemnitees are entitled to be indemnified under this Deed of Trust; (ii) reimburse Indemnitees for any expenses paid or incurred in connection with Attachment 4

4875-3755-1242 v3 9
any matters against which Indemnitees are entitled to be indemnified under this Deed of Trust; and (iii) reimburse Indemnitees for any and all expenses, including without limitation out-of-pocket expenses and fees of attorneys and expert witnesses, paid or incurred in connection with the enforcement by Indemnitees of their rights under this Deed of Trust, or in monitoring and participating in any legal or administrative proceeding. d. No Limitation. Trustor’s obligation to indemnify the Indemnitees shall not be limited or impaired by any of the following, or by any failure of Trustor to receive notice of or consideration for any of the following: (i) any amendment or modification of any City Document; (ii) any extensions of time for performance required by any City Document; (iii) any provision in any of the City Documents limiting Beneficiary’s recourse to property securing the Secured Obligations, or limiting the personal liability of Trustor, or any other party for payment of all or any part of the Secured Obligations; (iv) the accuracy or inaccuracy of any representation and warranty made by Trustor under this Deed of Trust or by Trustor or any other party under any City Document, (v) the release of Trustor or any other person, by Beneficiary or by operation of law, from performance of any obligation under any City Document; (vi) the release or substitution in whole or in part of any security for the Secured Obligations; and (vii) Beneficiary’s failure to properly perfect any lien or security interest given as security for the Secured Obligations. e. Rights of Beneficiary/Indemnitees. The provisions of this Section 7.10 shall be in addition to any and all other obligations and liabilities that Trustor may have under applicable law, and each Indemnitee shall be entitled to indemnification under this Section without regard to whether Beneficiary or that Indemnitee has exercised any rights against the Property or any other security, pursued any rights against any guarantor or other party, or pursued any other rights available under the City Documents or applicable law. The obligations of Trustor to indemnify the Indemnitees under this Section shall survive any repayment or discharge of the Secured Obligations, any foreclosure proceeding, any foreclosure sale, any delivery of any deed in lieu of foreclosure, and any release of record of the lien of this Deed of Trust. f. Environmental Provisions. Without limiting any of the remedies provided in this Deed of Trust, Trustor acknowledges and agrees that each of the provisions in this Section 7.10 is an environmental provision (as defined in Section 736(f)(2) of the California Code of Civil Procedure) made by Trustor relating to real property security (the “Environmental Provisions”), and that Trustor’s failure to comply with any of the Environmental Provisions will be a breach of contract that will entitle Beneficiary to pursue the remedies provided by Section 736 of the California Code of Civil Procedure (“Section 736”) for the recovery of damages and for the enforcement of the Environmental Provisions. Pursuant to Section 736, Beneficiary’s action for recovery of damages or enforcement of the Environmental Provisions shall not constitute an action within the meaning of Section 726(a) of the California Code of Civil Procedure or constitute a money judgment for a deficiency or a deficiency judgment within the meaning of Sections 580a, 580b, 580d, or 726(b) of the California Code of Civil Procedure. g. Environmental Law. “Environmental Law” means all federal, state or local statutes, ordinances, rules, regulations, orders, decrees, judgments or common law doctrines, and provisions and conditions of permits, licenses and other operating authorizations regulating, or relating to, or imposing liability or standards of conduct concerning (i) pollution or protection of Attachment 4

4875-3755-1242 v3 10
the environment, including natural resources; (ii) exposure of persons, including employees and agents, to any Hazardous Material (as defined above) or other products, raw materials, chemicals or other substances; (iii) protection of the public health or welfare from the effects of by-products, wastes, emissions, discharges or releases of chemical substances from industrial or commercial activities; (iv) the manufacture, use or introduction into commerce of chemical substances, including without limitation, their manufacture, formulation, labeling, distribution, transportation, handling, storage and disposal; or (iv) the use, release or disposal of toxic or hazardous substances or Hazardous Materials or the remediation of air, surface waters, groundwaters or soil, as now or may at any later time be in effect, including but not limited to the Toxic Substances Control Act [15 U.S.C. 2601, et seq.]; the Comprehensive Environmental Response, Compensation and Liability Act [42 U.S.C. Section 9601, et seq.], the Hazardous Materials Transportation Authorization Act [49 U.S.C. Section 5101, et seq.], the Resource Conservation and Recovery Act [42 U.S.C. 6901, et seq.], the Federal Water Pollution Control Act [33 U.S.C. Section 1251], the Clean Air Act [42 U.S.C. Section 7401, et seq.], the California Underground Storage of Hazardous Substances Act [California Health and Safety Code Section 25280, et seq.], the California Hazardous Substances Account Act [California Health and Safety Code Section 25300, et seq.], the California Hazardous Waste Act [California Health and Safety Code Section 25100, et seq.], the California Safe Drinking Water and Toxic Enforcement Act [California Health and Safety Code Section 25249.5, et seq.], and the Porter-Cologne Water Quality Control Act [California Water Code Section 13000, et seq.], as they now exist or are hereafter amended, together with any regulations promulgated thereunder.

7.11 Notice of Claims; Defense of Security; Reimbursement of Costs. a. Notice of Claims. Promptly upon obtaining knowledge of the institution of any proceedings for the condemnation or other taking of all or any portion of the Property, or knowledge of any casualty damage to the Property, or damage in any other manner, Trustor shall immediately notify Beneficiary thereof. Trustor hereby authorizes and empowers Beneficiary as attorney in fact for Trustor to make proof of loss, to adjust and compromise any claim under the insurance policies covering the Property, to appear in and prosecute any action arising from such insurance policies, to collect and receive insurance proceeds, and to deduct therefrom Beneficiary’s expenses incurred in the collection of such proceeds; provided, however, that nothing contained in this Section shall require Beneficiary to incur any expense or take any action hereunder. Trustor hereby authorizes and empowers Beneficiary, at Beneficiary’s option, as attorney in fact for Trustor, to commence, appear in and prosecute, in Beneficiary’s or Trustor’s name, any action or proceeding relating to any condemnation or other taking of all or any part of the Property, whether direct or indirect, and to settle or compromise any claim in connection with such condemnation or other taking. The proceeds of any award payment or claim for damages, direct or consequential, in connection with any condemnation or other taking, whether direct or indirect, of the Property, or any part thereof, or for conveyances in lieu of the Property, or any part thereof, shall be paid to Beneficiary. The foregoing powers of attorney are coupled with an interest and are irrevocable. Trustor hereby authorizes Beneficiary to apply such awards, payments, proceeds or damages relating to condemnation of the Property and insurance covering the Property, after the deduction of Beneficiary’s expenses incurred in the collection of such amounts, at Beneficiary’s option, subject to the requirements of applicable law and the provisions hereof, to restoration or repair of the Property or to payment of the sums secured by this Deed of Trust.

Beneficiary shall be under no obligation to question the amount of any compensation, awards, Attachment 4

4875-3755-1242 v3 11
proceeds, damages, claims, rights of action, and payments relating to condemnation or other taking of the Property or insured casualty affecting the Property, and may accept the same in the amount in which the same shall be paid. Trustor shall execute such further evidence of assignment of any awards, proceeds damages or claims arising in connection with such condemnation or taking or such insurance as Beneficiary may require. Trustor’s obligations and Beneficiary’s rights under this Section are subject to the requirements of the Senior Deeds of Trust (if any). b. Defense of Security. At Trustor’s sole expense, Trustor shall protect, preserve and defend the Property and title to and right of possession of the Property, the security of this Deed of Trust and the rights and powers of Beneficiary and Trustee created under it, against all adverse claims.
c. Compensation; Reimbursement of Costs. Trustor agrees to pay all reasonable fees, costs and expenses charged by Beneficiary or Trustee for any service that Beneficiary or Trustee may render in connection with this Deed of Trust, including without limitation, fees and expenses related to provision of a statement of obligations or related to a reconveyance. Trustor further agrees to pay or reimburse Beneficiary for all costs, expenses and other advances which may be incurred or made by Beneficiary or Trustee in any efforts to enforce any terms of this Deed of Trust, including without limitation any rights or remedies afforded to Beneficiary or Trustee or both of them under Sections 7.17 and 8.2, whether or not any lawsuit is filed, or in defending any action or proceeding arising under or relating to this Deed of Trust, including reasonable attorneys’ fees and other legal costs, costs of any disposition of the Property under the power of sale granted hereunder or any judicial foreclosure, and any cost of evidence of title. d. Notice of Changes. Trustor shall give Beneficiary prior written notice of any change in the address of Trustor and the location of any Property, including books and records pertaining to the Property.

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

Attachment 4

4875-3755-1242 v3 12

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

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

7.15 Release, Extension, Modification. At any time and from time to time, without liability therefor and without notice, upon written request of Beneficiary and presentation of this Deed of Trust and the Note for endorsement, Trustee may release or reconvey all or any part of the Property, consent to the making of any map or plat of the Land or part thereof, join in granting any easement or creating any restriction affecting the Property, or join in any extension agreement or other agreement affecting the lien or charge hereof. At any time and from time to time, without liability therefor and without notice, Beneficiary may (i) release any person liable for payment of any Secured Obligation, (ii) extend the time for payment or otherwise alter the terms of payment of any Secured Obligation; (iii) accept additional real or personal property of any kind as security for any Secured Obligation, or (iv) substitute or release any property securing the Secured Obligations.

7.16 Reconveyance. Upon written request of Beneficiary stating that all of the Secured Obligations have been satisfied in full, and upon surrender of this Deed of Trust, and the Note, Trustee shall reconvey, without warranty, the Property or so much of it as is then held under this Deed of Trust. The recitals in any reconveyance executed under this Deed of Trust of any matters Attachment 4

4875-3755-1242 v3 13
or facts shall be conclusive proof of the truthfulness thereof. Trustor shall pay all fees of Trustee and all recordation fees related to such reconveyance.

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

8. Default and Remedies.

8.1 Events of Default. Trustor acknowledges and agrees that an “Event of Default” shall occur under this Deed of Trust upon the occurrence of any one or more of the following events:
a. Beneficiary’s declaration of an Event of Default under any City Document, subject to the expiration of any applicable cure period set forth in such document; b. Trustor fails to perform any monetary obligation which arises under this Deed of Trust, and does not cure that failure within thirty (30) days following written notice from Beneficiary or Trustee;
c. If Trustor’s interest in the Property or any part thereof is voluntarily or involuntarily sold, transferred, leased, encumbered, or otherwise conveyed in violation of Section 7.4 hereof or if any other Transfer occurs in violation of the Loan Agreement; d. Trustor fails to maintain the insurance coverage required under the City Documents or otherwise fails to comply with the requirements of Section 7.8 hereof and Trustor fails to cure such default within the time specified in Section 7.8;
e. Subject to Trustor’s right to contest such charges as provided herein, Trustor fails to pay taxes or assessments due on the Land or the Improvements or fails to pay any other charge that may result in a lien on the Land or the Improvements, and Trustor fails to cure such default within ten (10) days;
f. Any representation or warranty of Trustor contained in or made in connection with the execution and delivery of this Deed of Trust or in any certificate or statement furnished Attachment 4

4875-3755-1242 v3 14
pursuant hereto or in any other City Document proves to have been false or misleading in any material adverse respect when made;
g. If, pursuant to or within the meaning of the United States Bankruptcy Code or any other federal or state law relating to insolvency or relief of debtors (“Bankruptcy Law”), Trustor or any general partner thereof (i) commences a voluntary case or proceeding; (ii) consents to the entry of an order for relief against Trustor or any general partner thereof in an involuntary case; (iii) consents to the appointment of a trustee, receiver, assignee, liquidator or similar official for Trustor or any general partner thereof; (iv) makes an assignment for the benefit of its creditors; or (v) admits in writing its inability to pay its debts as they become due; h. If a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that (i) is for relief against Trustor or any general partner thereof in an involuntary case, (ii) appoints a trustee, receiver, assignee, liquidator or similar official for Trustor or any general partner thereof or substantially all of such entity’s assets, (iii) orders the liquidation of Trustor or any general partner thereof, or (iv) issues or levies a judgment, writ, warrant of attachment or similar process against the Property or the Project, and in each case the order or decree is not released, vacated, dismissed or fully bonded within sixty (60) days after its issuance; i. The holder of any other debt instrument secured by a mortgage or deed of trust on the Property or part thereof declares an event of default thereunder and exercises a right to declare all amounts due under that debt instrument immediately due and payable, subject to the expiration of any applicable cure period set forth in such holder’s documents; or j. Trustor fails to perform any obligation arising under this Deed of Trust other than one enumerated in this Section 8.1, and does not cure that failure either within ten (10) days after written notice from Beneficiary or Trustee in the event of a monetary default, or within thirty (30) days after such written notice in the event of a nonmonetary default, provided that in the case of a nonmonetary default that in Beneficiary’s reasonable judgment cannot reasonably be cured within thirty (30) days, an Event of Default shall not arise hereunder if Trustor commences to cure such default within thirty (30) days and thereafter prosecutes such cure to completion with due diligence and in good faith and in no event later than ninety (90) days, or such longer period as the City may approve, following receipt of notice of default.

8.2 Remedies. Subject to the applicable notice and cure provisions set forth herein, at any time after an Event of Default, Beneficiary and Trustee shall be entitled to invoke any and all of the rights and remedies described below, and may exercise any one or more or all, of the remedies set forth in any City Document, and any other remedy existing at law or in equity or by statute, subject to the nonrecourse provisions set forth in the Note. All of Beneficiary’s rights and remedies shall be cumulative, and the exercise of any one or more of them shall not constitute an election of remedies. Beneficiary shall be entitled to collect all expenses incurred in pursuing the remedies provided hereunder, including without limitation reasonable attorneys’ fees and costs. a. Acceleration. Beneficiary may declare any or all of the Secured Obligations, including without limitation all sums payable under the Note and this Deed of Trust, to be due and payable immediately.

Attachment 4

4875-3755-1242 v3 15
b. Receiver. Beneficiary may apply to any court of competent jurisdiction for, and obtain appointment of, a receiver for the Property.
c. Entry. Beneficiary, in person, by agent or by court-appointed receiver, may enter, take possession of, manage and operate all or any part of the Property, and may also do any and all other things in connection with those actions that Beneficiary may in its sole discretion consider necessary and appropriate to protect the security of this Deed of Trust. Such other things may include: taking and possessing copies of all of Trustor’s or the then owner’s books and records concerning the Property; entering into, enforcing, modifying, or canceling Leases on such terms and conditions as Beneficiary may consider proper; obtaining and evicting tenants; fixing or modifying Rents; collecting and receiving any payment of money owing to Trustor; completing any unfinished construction; and/or contracting for and making repairs and alterations. If Beneficiary so requests, Trustor shall assemble all of the Property that has been removed from the Land and make all of it available to Beneficiary at the site of the Land. Trustor hereby irrevocably constitutes and appoints Beneficiary as Trustor’s attorney-in-fact to perform such acts and execute such documents as Beneficiary in its sole discretion may consider to be appropriate in connection with taking these measures, including endorsement of Trustor’s name on any instruments. d. UCC Remedies. Beneficiary may exercise any or all of the remedies granted to a secured party under the UCC.
e. Judicial Action. Beneficiary may bring an action in any court of competent jurisdiction to foreclose this Deed of Trust in the manner provided by law for foreclosure of mortgages on real property and/or to obtain specific enforcement of any of the covenants or agreements of this Deed of Trust.
f. Power of Sale. Under the power of sale hereby granted, Beneficiary shall have the discretionary right to cause some or all of the Property, including any Property which constitutes personal property, to be sold or otherwise disposed of in any combination and in any manner permitted by applicable law.

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

8.3 Power of Sale. If Beneficiary elects to invoke the power of sale hereby granted, Beneficiary shall execute or cause Trustee to execute a written notice of such default and of its election to cause the Property to be sold to satisfy the obligations hereof, and shall cause such notice to be recorded in the office of the Recorder of each County wherein the Property or some part thereof is situated as required by law and this Deed of Trust. a. Request to Sell. Prior to publication of the notice of sale, Beneficiary shall deliver to Trustee this Deed of Trust and the Note or other evidence of indebtedness, which is secured Attachment 4

4875-3755-1242 v3 16
hereby, together with a written request for Trustee to proceed with a sale of the Property, pursuant to the provisions of law and this Deed of Trust.
b. Sale of Property. Notice of sale having been given as then required by law, and not less than the time then required by law having elapsed after recordation of such notice of default, Trustee, without demand on Trustor, shall sell the Property at the time and place fixed by it in the notice of sale, either as a whole or in separate parcels and in such order as it may determine, at public auction to the highest bidder for cash in lawful money of the United States, payable at time of sale. Trustee may, and at Beneficiary’s request shall, postpone sale of all or any portion of the Property by public announcement at such time and place of sale, and from time to time thereafter may postpone such sale by public announcement at the time and place fixed by the preceding postponement. Trustee shall deliver to the purchaser its deed conveying the property so sold, but without any covenant or warranty, express or implied. The recitals in such deed of any matters or facts shall be conclusive proof of the truthfulness thereof. Any person, including Trustor, Trustee, or Beneficiary, may purchase at such sale.
c. Application of Proceeds. After deducting all costs, fees, and expenses of Trustee and of the trust hereby created, including reasonable attorneys’ fees in connection with sale, Trustee shall apply the proceeds of sale to payment of all sums advanced or expended by Beneficiary or Trustee under the terms hereof and all outstanding sums then secured hereby, and the remainder, if any, to the person or persons legally entitled thereto. d. Acceleration. Without limiting the generality of the foregoing, Trustor acknowledges and agrees that regardless of whether or not a default has occurred hereunder, if an Event of Default has occurred under the City Documents, and if in connection with such Event of Default Beneficiary exercises its right to foreclose on the Property, then: (i) Beneficiary shall be entitled to declare all amounts due under the Note immediately due and payable, and (ii) the proceeds of any sale of the Property in connection with such foreclosure shall be used to pay all Secured Obligations, including without limitation, the outstanding principal balance and all other amounts due under the Note.
e. Bidding at Sale. At any foreclosure sale, any person, including Trustor, Trustee or Beneficiary, may bid for and acquire the Property or any part of it to the extent permitted by then applicable law. Instead of paying cash for such property, Beneficiary may settle for the purchase price by crediting the sales price of the property against the following obligations:
(i). First, the portion of the Secured Obligations attributable to the expenses of sale, costs of any action and any other sums for which Trustor is obligated to pay or reimburse Beneficiary or Trustee under Section 7.11(c); and
(ii). Second, the remaining balance of all other Secured Obligations in any order and proportions as Beneficiary in its sole discretion may choose.

8.4 Trustor’s Right to Reinstate. Notwithstanding Beneficiary’s acceleration of the sums secured by this Deed of Trust, Trustor shall have the right to have any proceedings begun by Beneficiary to enforce this Deed of Trust discontinued at any time prior to five (5) days before sale of the Property pursuant to the power of sale contained in this Deed of Trust or at any time prior Attachment 4

4875-3755-1242 v3 17
to entry of a judgment enforcing this Deed of Trust if: (a) Trustor pays Beneficiary all sums which would be then due under the Loan Documents if the Secured Obligations had no acceleration provision; (b) Trustor cures all breaches of any other covenants or agreements of Trustor contained in this Deed of Trust; (c) Trustor pays all reasonable expenses incurred by Beneficiary and Trustee in enforcing the covenants and agreements of Trustor contained in this Deed of Trust, and in enforcing Beneficiary’s and Trustee’s remedies as provided herein, including, but not limited to, reasonable attorney’s fees; and (d) Trustor takes such action as Beneficiary may reasonably require to assure that the lien of this Deed of Trust, Beneficiary’s interest in the Property and Trustor’s obligation to pay the sums secured by this Deed of Trust shall continue unimpaired. Upon such payment and cure by Trustor, this Deed of Trust and the obligations secured hereby shall remain in full force and effect as if no acceleration had occurred. Nothing contained in Sections 9.3 and

9.4 is intended to expand upon or limit the rights of Trustor and Beneficiary under California law regarding Beneficiary’s exercise of the power of sale or Trustor’s reinstatement rights.

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

10. Miscellaneous Provisions.

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

10.2 Notices. Trustor requests that a copy of notice of default and notice of sale be mailed to Trustor at the address set forth below. That address is also the mailing address of Trustor as debtor under the UCC. Beneficiary’s address set forth below is the address for Beneficiary as secured party under the UCC. Except for any notice required under applicable law to be given in another manner, all notices to be sent pursuant to this Deed of Trust shall be made in writing, and sent to the parties at their respective addresses specified below or to such other address as a party may designate by written notice delivered to the other parties in accordance with this Section. All such notices shall be sent by:
a. personal delivery, in which case notice shall be deemed delivered upon receipt; b. certified or registered mail, return receipt requested, in which case notice shall be deemed delivered two (2) business days after deposit, postage prepaid in the United States mail; c. nationally recognized overnight courier, in which case notice shall be deemed delivered one (1) day after deposit with such courier; or d. facsimile transmission, in which case notice shall be deemed delivered on transmittal, provided that a transmission report is generated reflecting the accurate transmission Attachment 4

4875-3755-1242 v3 18
thereof.

City: 275 Main Street,
Watsonville, CA 95076
Attention: City Manager
With a copy to: City of Watsonville
275 Main Street,
Watsonville, CA 95076
Attention: City Attorney_
Developer: Eden Freedom Investors, L.P.
c/o Eden Investment’s Inc.
22645 Grand Street
Hayward, CA 94541
Attention: Chief of Real Estate Development
With a copy to: Gubb & Barshay LLP.
235 Montgomery Street
San Francisco, CA 94104
Attention: Evan Gross, Esq.

With a copy to:

U.S. Bancorp Community Development Corporation
1307 Washington Avenue, Suite 300
Mail Code: SL MO RMCD
St. Louis, MO 63103
Attn.: Director of LIHTC Asset Management
Phone: (314) 335-2600
With a copy to: Kutak Rock LLP
1650 Farnam Street
Omaha, Nebraska 68102
Attn: Jill H. Goldstein, Esq.

10.3 Binding on Successors. The terms, covenants and conditions of this Deed of Trust shall be binding upon and inure to the benefit of the heirs, administrators, executors, successors in interest, transferees, and assigns of the Trustor, Beneficiary and Trustee; provided however this Section 11.3 does not waive the provisions of Section 7.4.

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

10.5 Attorneys’ Fees and Costs. In any action or proceeding to foreclose this Deed of Attachment 4

4875-3755-1242 v3 19
Trust or to enforce any right of Beneficiary or of Trustee, Trustor shall pay to Beneficiary and Trustee all costs of such action or proceeding, including reasonable attorneys’ fees.

10.6 Governing Law; Severability; Interpretation. This Deed of Trust shall be governed by the laws of the State of California without regard to principles of conflicts of laws. Trustor agrees that any controversy arising under or in relation to this Deed of Trust shall be litigated exclusively in the jurisdiction where the Land is located (the “Property Jurisdiction”). The state and federal courts and authorities with jurisdiction in the Property Jurisdiction shall have exclusive jurisdiction over all controversies which shall arise under or in relation to the City Documents.

Trustor irrevocably consents to service, jurisdiction, and venue of such courts for any such litigation, and waives any other venue to which it might be entitled by virtue of domicile, habitual residence or otherwise. If any provision of this Deed of Trust is held unenforceable or void, that provision shall be deemed severable from the remaining provisions, and shall in no way affect the validity of this Deed of Trust. The captions used in this Deed of Trust are for convenience only and are not intended to affect the interpretation or construction of the provisions herein contained.

In this Deed of Trust, whenever the context so requires, the singular number includes the plural.

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

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

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

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

10.11 Partial Subordination to Section 42 Extended Use Commitment. Notwithstanding Attachment 4

4875-3755-1242 v3 20
anything herein to the contrary, if the Beneficiary takes title to the Project through foreclosure or deed of lieu of foreclosure, the Property shall remain subject to the provisions of Section 42(h)(6)(E)(ii) of the Internal Revenue Code or any similar successor provision of the Code. This section shall apply notwithstanding the order of recording of any of the Loan Documents and the Extended Low-Income Housing Commitment (as defined in Section 42 of the Internal Revanue Code), executed in connection with the allocation of federal low income housing tax credits to the Trustor for the Project pursuant to Section 42 of such Code. [Signature Pages Follow]
Attachment 4

4875-3755-1242 v3 21
IN WITNESS WHEREOF, Trustor has executed this Deed of Trust as of the date first written above.

TRUSTOR:

EDEN FREEDOM INVESTORS, L.P.,
a California limited partnership
By: Eden Freedom, LLC,
a California limited liability company,
its general partner
By: Eden Investments, Inc.,
a California nonprofit public benefit corporation,
its sole member/manager
By:

Andrea Osgood,
Chief of Real Estate Development
Attachment 4

Exhibit A
4875-3755-1242 v3

EXHIBIT A

LEGAL DESCRIPTION
That land in the City of Watsonville, County of Santa Cruz, State of California, and more particularly described as follows:

BEING A PART OF THE RANCHO BOLSA DEL PAJARO AND BEGINNING ON THE

NORTHEASTERN SIDE OF THE WATSONVILLE SANTA CRUZ HIGHWAY AND ON THE

BOUNDARY LINE BETWEEN THE SAID RANCHO BOLSA DEL PAJARO AND THE RANCHO CORRALITOS; SAID POINT OF BEGINNING BEING THE SOUTHWESTERN CORNER OF LANDS OF ONE GEORGE WHITE; AND RUNNING THENCE FROM SAID

POINT OF BEGINNING ALONG THE SAID NORTHEASTERN SIDE OF SAID HIGHWAY 38° 18’ EAST 168.00 FEET; THENCE LEAVING HIGHWAY NORTH 56° 38’ EAST 466.70 FEET TO THE LANDS OF ONE HART; THENCE ALONG THE BOUNDARY OF SAID LANDS OF HART NORTH 25° 23’ WEST 248.00 FEET TO THE AFORESAID RANCHO BOUNDARY; AND THENCE ALONG SAID RANCHO BOUNDARY SOUTH 48° WEST 521.40 FEET TO THE PLACE OF BEGINNING.

EXCEPTING THEREFROM THE LAND DEEDED TO THE COUNTY OF SANTA CRUZ PURSUANT TO DEED RECORDED IN VOLUME 341 OF OFFICIAL RECORDS OF THE

COUNTY RECORDER OF THE COUNTY OF SANTA CRUZ, STATE OF CALIFORNIA, AT PAGE 171 THEREOF.

ALSO EXCEPTING THEREFROM THE LANDS CONVEYED TO THE CITY OF WATSONVILLE BY DEED RECORDED JULY 29, 1980 IN VOLUME 3219 PAGE 211 OFFICIAL RECORDS COUNTY OF SANTA CRUZ.

ALSO EXCEPTING THEREFROM THE LANDS CONVEYED TO THE CITY OF WATSONVILLE BY DEED RECORDED MARCH 28, 2006 AS DOCUMENT NO. 2006-17265 OFFICIAL RECORDS, AND AS CORRECTED BY GRANT DEED RECORDED APRIL 10, 2017 AS DOCUMENT NO. 2017-0011836 OFFICIAL RECORDS COUNTY OF SANTA CRUZ.

APN: 019-226-41
Attachment 4

4875-3755-1242 v3

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

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

WITNESS my hand and official seal.

Signature_____________________________
Attachment 4

2689/014742-1414
19926697

RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:

U.S. Bank National Association
[CHECK – BANK TO CONFIRM]
(Space Above This Line For Recorder's Use)
US Bank – Eden Freedom Investors, L.P.
1482 Freedom Boulevard, Watsonville, CA
(APN: 019-226-41)

SUBORDINATION AGREEMENT
NOTICE: THIS SUBORDINATION AGREEMENT RESULTS IN YOUR RIGHTS UNDER

CERTAIN AGREEMENTS RELATING TO CERTAIN REAL PROPERTY BECOMING

SUBJECT TO, AND OF LOWER PRIORITY THAN, THE LIEN OF A SECURITY INTEREST.

THIS SUBORDINATION AGREEMENT (this “Agreement”), made as of the [__] day of [_________], 2024, by and between CITY OF WATSONVILLE, a municipal corporation and charter law city (“Subordinating Party”), whose address is 250 Main Street, Watsonville, CA 95076, Attn: City Manager, and U.S. BANK NATIONAL ASSOCIATION, successor-in-interest to MUFG Union Bank, N.A. (“Bank”), whose address is [___________] [CHECK], is made with reference to the following facts:

A. Unless expressly defined herein, all capitalized terms used herein shall have the meanings ascribed to them in Appendix I or Exhibit “B” attached hereto and made a part hereof.

B. Borrower is the owner (or, concurrently with the recording of this Agreement, will be the owner) of the Property, which Property is more particularly described in Exhibit “A” attached hereto and made a part hereof (the “Property”).

C. Borrower and Subordinating Party have heretofore entered into or, concurrently herewith, are entering into, those certain loan documents more particularly described in Exhibit “B” attached hereto (“Subordinating Party’s Loan Documents”), pursuant to the terms of which Subordinating Party shall make a loan to Borrower of One Million Dollars ($1,000,000) (“Subordinating Party’s Loan”) which Subordinating Party’s Loan is secured by that certain Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing (PLHA Loan) (“Subordinating Party’s Deed of Trust”) dated [_________], executed by Borrower for the benefit of Subordinating Party, and recorded substantially concurrently herewith in the Official Records of Santa Cruz County, California (“Official Records”), and encumbering the Property and all Improvements to be constructed thereon. As a condition of Subordinating Party’s Loan, the Property is also being encumbered with that certain Affordable Housing Regulatory Agreement (PLHA Loan) (“Subordinating Party’s Restrictions”) dated [_________], and recorded substantially concurrently herewith in the Official Records, pursuant which Borrower agreed, among other things, for itself and its successors and assigns, to operate the Project as a low income apartment complex in accordance with the terms and conditions set forth therein. Subordinating Party’s Deed of Trust and the Subordinating Party’s Restrictions are sometimes hereinafter collectively referred to as “Subordinating Party’s Security Documents”.

D. Borrower and Bank, as successor-in-interest to MUFG Union Bank, N.A., have entered into the Loan Agreement, pursuant to the terms of which Bank has made the Loan to Borrower to pay a portion of the cost of constructing the Improvements and certain other costs related thereto, which Loan is evidenced by the Note, made by Borrower to the order of Bank, as successor-in-interest to MUFG Union Bank, N.A., and secured by, among other things, the Deed of Trust, executed by Borrower for the benefit of Bank, as successor-in-interest to MUFG Union Bank, N.A., dated as of March 1, 2022 and recorded on Attachment 5

2689/014742-1414
19926697 -2-
March 24, 2022 in the Official Records as Document No. 2022-0009669, and encumbering the Property and all Improvements to be constructed thereon. The Loan Agreement, the Note, the Deed of Trust and all other documents evidencing, securing or pertaining to the Loan are sometimes hereinafter collectively referred to as the “Loan Documents.”
E. Bank requires that the Deed of Trust shall unconditionally be and remain at all times a lien or charge upon the Project, which is prior and superior to the liens or charges of Subordinating Party’s Security Documents.

NOW, THEREFORE, in consideration of the foregoing, which are incorporated herein by reference, Bank’s making the Loan to Borrower, and in consideration of the mutual promises and agreements hereinafter contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Subordinating Party and the Bank (collectively, the “Parties”) do hereby agree as follows:

1. SUBORDINATION OF SUBORDINATING PARTY’S SECURITY DOCUMENTS. Subject to the terms and conditions of this Agreement, the Deed of Trust, and any and all renewals or extensions thereof and all amendments and modifications hereafter made thereto, and any and all disbursements made by Bank to or for the account or benefit of Borrower the repayment of which is secured thereunder, shall unconditionally be and remain at all times a lien or charge against the Project that is prior and superior to the liens or charges of Subordinating Party’s Security Documents, to the same extent and purpose as though Subordinating Party’s Security Documents had been executed and recorded subsequent to the recording of the Deed of Trust and the making of each disbursement or advance made by Bank to Borrower the repayment of which is secured by the Deed of Trust, regardless of whether Borrower, at the time of any such disbursement or advance, may have been in default under the Loan Agreement, the Deed of Trust, or any of the other the Loan Documents and regardless of whether Bank was obligated to make any such disbursement or advance. Notwithstanding the foregoing, Bank shall not amend or modify the terms of the Loan and/or the Loan Documents without the prior written consent of the Subordinating Party if such amendment or modification has the effect of: (i) increasing or decreasing the amount of the Loan, except in the case of sums advanced by Bank in exercising its rights and remedies under the Loan Documents or as otherwise provided in Paragraph 2 of this Agreement; (ii) increasing the annual interest rate(s), including the default rate, above the rate(s) described in the Note; or (iii) modifying the maturity date to be sooner than the stated maturity date of the Note.

2. ALL DISBURSEMENTS UNDER THE LOAN SECURED BY THE DEED OF TRUST.

Notwithstanding anything to the contrary set forth in the Loan Agreement or any other agreement between Bank and Borrower with respect to the disbursement of all or any portions of the proceeds of the Loan, any and all disbursements made by Bank to or for the account or benefit of Borrower or the Project in connection with the following, whether or not Bank is obligated to make such disbursements pursuant to the Loan Documents: (a) any costs or expenses incurred in complying with any laws, rules, regulations, or statutes or any directives of any governmental agencies or authorities having or exercising jurisdiction over the Project; (b) any sums advanced to pay for the cost of completing the construction of the Project, Project cost overruns and/or to lease-up and stabilize the Project made by Bank; and (c) any sums advanced by Bank for the payment of real estate taxes or assessments or insurance premiums, or any other sums advanced or obligations incurred by Bank in connection with the protection or preservation of any security given to Bank with respect to the Loan, including, without limitation, interest thereon shall be deemed to be, and in all events shall be, secured by the Deed of Trust and, as so secured, and regardless of whether Borrower at the time of any such disbursements may have been in default under the Loan Documents and regardless of whether Bank was obligated to make any such disbursements, shall be and remain a lien or charge against the Project that is unconditionally prior and superior to the lien and effect of Subordinating Party’s Security Documents.

3. APPLICATION OF PAYMENTS UNDER SUBORDINATING PARTY’S LOAN. Until such time as all amounts outstanding under the Loan have been indefeasibly paid in full, prior to the occurrence of an Event of Default (as such term is defined in the Loan Documents), Subordinating Party shall be entitled to receive and retain payments made pursuant to and in accordance with Subordinating Party’s Loan Attachment 5

2689/014742-1414
19926697 -3-
documents; provided, however, that no such payment is made more than ninety (90) days in advance of its scheduled due date. Upon the occurrence of an Event of Default under the Loan Documents which remains uncured, all amounts (including, without limitation, all insurance proceeds and condemnation awards) received by Subordinating Party from, or for the account of, Borrower under Subordinating Party’s Loan after written notice of such fact from Bank to Subordinating Party shall be immediately remitted to Bank at the address set forth above to be applied by Bank in reduction of amounts outstanding under the Loan, in such amounts and in such order as Bank shall determine. In the event that any payment is made to Subordinating Party which is not permitted under this Agreement, such payment shall be held by Subordinating Party in trust for the benefit of Bank and shall be paid immediately to Bank for application to the payment of all of indebtedness and obligations remaining unpaid under the Loan. Without limiting the complete subordination of Subordinating Party’s Loan to the payment in full of the Loan, in any bankruptcy, insolvency, receivership or similar proceeding, upon any payment or distribution to creditors, the Loan shall be paid in full first in cash before Subordinating Party shall be entitled to receive any payment or other distribution on account of or in respect to Subordinating Party’s Loan and, until the entire Loan is paid in full in cash, any payment or distribution to which Subordinating Party will be entitled but for this Agreement (whether in cash, property or other assets) shall be paid to Bank.

4. SUBORDINATION TO MODIFICATION OF LOAN. If Bank extends or otherwise modifies the terms of the Loan (including any amendment or modification which requires the Subordinating Party’s prior written consent pursuant to Paragraph 1 and for which Subordinating Party has granted such consent), as soon as practicable but in no event more than forty-five (45) days after Subordinating Party’s receipt of written notice thereof from Bank, Subordinating Party shall execute a new subordination agreement, in the form of this Agreement, confirming Subordinating Party’s subordination of the effect of Subordinating Party’s Security Documents against the Project to the lien or charge of the Deed of Trust. The execution of such new subordination agreement, however, shall not be a condition to the effectiveness of the subordination of Subordinating Party’s Security Documents against the Project to the lien or charge of the Deed of Trust, which subordination shall be automatic.

5. SUBORDINATING PARTY’S RIGHT TO CURE DEFAULTS. Upon the occurrence of an Event of Default, Bank shall: (a) concurrently with notifying Borrower of the occurrence of such event of default, notify Subordinating Party at its address set forth above of the occurrence of such event of default; (b) permit Subordinating Party to cure or correct (provided that such event of default is curable) any such event of default within thirty (30) calendar days after receipt of such notice, except where such cure cannot reasonably be completed within thirty (30) days in which event Subordinating Party shall have an additional thirty (30) days to cure, so long as it promptly commences the cure and diligently proceeds with such cure until completion (“Subordinating Party Cure Period”); provided, however, that Bank has the continuing right to commence to pursue its remedies under the Loan Documents on account of such default during the Subordinating Party Cure Period, including but not limited to the right to accelerate the Loan, record a notice of default and to obtain a receiver; provided further, that if the cure is completed during the Subordinating Party Cure Period, Bank will rescind any notice of default after reimbursement of all of its costs incurred in connection with the default, including, without limitation, attorneys’ fees and court costs; and (c) accept all payments and all acts done by Subordinating Party on behalf of Borrower within the Subordinating Party’s Cure Period as though the same had been timely done and performed by Borrower, so that such acts and payments shall fully and totally cure and correct all such defaults, breaches, failures or refusals for all purposes. Subordinating Party shall not be subrogated to the rights of Bank under the Loan Documents by reason of Subordinating Party having cured any default under the Loan Documents; however, Bank acknowledges that, to the extent so provided in the Subordinating Party’s Security Documents, amounts advanced or expended by Subordinating Party to cure an event in default under the Loan Documents may be added to and become a party of the Subordinating Party’s Loan. In the event that an Event of Default occurs and Bank has recorded a notice of default, then for the period from the date of recordation of the notice of default, until the date of recordation of a notice of sale, so long as the noticed default continues, Subordinating Party shall have the right, but not the obligation, in lieu of curing any default under the Loan Documents, to purchase the Loan. Such purchase will be accomplished by Subordinating Party paying to Bank the outstanding principal amount of the Loan, plus all accrued and unpaid interest thereon and any prepayment premium, together with reasonable expenses incurred by Bank in connection therewith (including reasonable attorneys’ fees and costs), in exchange for the assignments of the Loan Documents Attachment 5

2689/014742-1414
19926697 -4-
without recourse or warranty except that Bank will warrant that it owns and has all requisite authority to transfer the Loan at the time of the transfer. Borrower acknowledges and agrees, by executing the joinder attached hereto, that after the Loan has been assigned to Subordinating Party or its nominee, Bank shall be relieved from all liability to Borrower under or in connection with the Loan Documents.

6. BANK’S RIGHT TO CURE DEFAULT UNDER SUBORDINATING PARTY’S LOAN. Upon the occurrence of a default under Subordinating Party’s Loan, Subordinating Party shall: (a) concurrently with notifying Borrower of the occurrence of such event of default, notify Bank at its address set forth above of the occurrence of such default or event of default; (b) permit Bank to cure or correct (provided that such event of default is curable) any such event of default within thirty (30) calendar days after receipt of such notice (“Bank Cure Period”); provided, however, that Subordinating Party has the continuing right to commence to pursue its remedies under the Subordinating Party’s Loan Documents on account of such default during the Bank Cure Period, including but not limited to the right to accelerate the Subordinating Party’s Loan, record a notice of default and to obtain a receiver; provided further, that if the cure is completed during the Bank Cure Period, Subordinating Party will rescind any notice of default after reimbursement of all of its costs incurred in connection with the default, including, without limitation, attorneys fees and court costs; and (c) accept all payments and all acts done by Bank on behalf of Borrower within the Bank Cure Period as though the same had been timely done and performed by Borrower, so that such acts and payments shall fully and totally cure and correct all such defaults, breaches, failures or refusals for all purposes.

7. INTENTIONALLY OMITTED.

8. RECEIPT AND APPLICATION OF INSURANCE PROCEEDS AND CONDEMNATION AWARDS; RECEIPT AND APPLICATION OF PROCEEDS FROM BONDS. (a) Receipt and Application of Insurance Proceeds and Condemnation Awards.

Notwithstanding anything stated to the contrary in any of Subordinating Party’s Security Documents, so long as the Deed of Trust continues to encumber all or portions of the Project, all insurance proceeds that may become available from time to time as a result of damage or destruction to all or portions of the Improvements and all condemnation awards that may become available from time to time as a result of the condemnation of all or portions of the Project shall be held by Bank, disbursed by Bank and applied by Bank in accordance with the terms and conditions of the Deed of Trust and the other Loan Documents and, until the outstanding balance of the Loan has been repaid in full, Subordinating Party shall have no right to hold, disburse or apply any of such proceeds and/or awards; provided if the Loan is fully repaid, any remaining proceeds/and or awards may be applied to repayment of Subordinating Party's Loan. Without limiting the generality of the foregoing, so long as the Deed of Trust continues to encumber all or any portion of the Project, the Bank shall have all approval, consent and oversight rights in connection with any insurance claims or condemnation proceedings related to the Property and any decision regarding the use of insurance proceeds after a casualty loss or condemnation awards and, until the outstanding balance of the Loan has been repaid in full, Subordinating Party shall have no right to object to any such action or approval taken by Bank and shall consent thereto and be bound thereby. (b) Receipt and Application of Proceeds from Bonds. With respect to all labor and material bonds and/or completion bonds that are issued from time to time to assure payment and completion of the Improvements and which name Bank and Subordinating Party (or any other party) as dual obligees, all proceeds that may become available from time to time under such bonds shall be held by Bank and disbursed by Bank and Subordinating Party shall have no right to hold or disburse any of such proceeds; provided that if the Loan is fully repaid, any remaining proceeds under such bonds may be applied to repayment of Subordinating Party’s Loan.

9. NOTICES. Any notice, demand or request required or permitted to be delivered hereunder shall be deemed to have been duly and properly given at the time of such delivery if personally delivered (which shall include delivery by means of professional overnight courier service which confirms receipt in writing or refusal of delivery (or attempted delivery if undeliverable) or if mailed, forty-eight (48) hours after Attachment 5

2689/014742-1414
19926697 -5-
deposit in United States registered or certified mail, postage prepaid, return receipt requested, addressed to Subordinating Party or Bank, as the case may be, at their addresses set forth above.

10. ENTIRE AGREEMENT. This Agreement shall be the whole and only agreement with respect to the subordination of the effect of Subordinating Party’s Security Documents to the lien or charge of the Deed of Trust and all disbursements and advances made thereunder, and shall supersede and cancel any prior agreements as to such subordination, including without limitation any provisions contained in Subordinating Party’s Security Documents that provide for the subordination of the effect thereof to one or more deeds of trust.

11. SUBORDINATING PARTY’S REPRESENTATIONS, WARRANTIES, COVENANTS, CONSENTS, APPROVALS AND ACKNOWLEDGEMENTS. Subordinating Party hereby warrants, represents, declares, agrees and acknowledges as follows:
(a) For purposes of this Agreement, Subordinating Party acknowledges that Subordinating Party has been provided the opportunity to review the Loan Documents before executing this Agreement;
(b) Bank, in making disbursements pursuant to the Loan Agreement, is under no obligation or duty to insure, nor has Bank represented that it will insure, the proper application of such proceeds by the person(s) to whom Bank disburses such proceeds, and any application or use of such proceeds for purposes other than as provided in any such agreement shall not defeat or render invalid, in whole or in part, the subordination provided for in this Agreement; (c) Bank has not made any warranty or representation of any kind or nature whatsoever to Subordinating Party with respect to (i) the application of the proceeds of the Loan being made by Bank to Borrower upon the security of the Deed of Trust, (ii) the value of the Property, the Improvements to be constructed thereon pursuant to the Loan Agreement, or the marketability or value thereof upon completion of such construction, or (iii) the ability of Borrower to honor its covenants and agreements with Bank or Subordinating Party;
(d) Bank’s release of any security for the Loan, including, without limitation, the reconveyance of any portion(s) of the Project from the lien of the Deed of Trust shall not constitute a waiver or relinquishment of Subordinating Party’s unconditional subordination of the liens or charges of Subordinating Party’s Security Documents against the Project to the lien or charge of the Deed of Trust; (e) Bank would not make the Loan to Borrower absent the execution of this Agreement by Subordinating Party;
(f) Bank has no duty to disclose to Subordinating Party any facts Bank may now know or hereafter know about Borrower or the partners or successors of Borrower, regardless of whether (i) Bank has reason to believe that any such facts may increase materially the risk beyond that which Subordinating Party intends to assume, (ii) Bank may have reason to believe that such facts are unknown to Subordinating Party, or (iii) Bank has a reasonable opportunity to communicate such facts to Subordinating Party, it being understood and agreed that Subordinating Party is fully responsible for being and keeping informed of the financial condition of Borrower and/or any partners or successors of Borrower and of all circumstances bearing on the risk of non-payment of any indebtedness of Borrower to Bank described in this Agreement; (g) Subordinating Party has made such independent legal and factual inquiries and examinations as Subordinating Party deems necessary or desirable, and Subordinating Party has relied solely on said independent inquiries and examinations in entering into this Agreement; (h) The Subordinating Party’s Loan Documents as described in Exhibit “B” attached hereto are all of the documents evidencing, securing or pertaining to Subordinating Party’s Loan, true, Attachment 5

2689/014742-1414
19926697 -6-
correct and complete copies thereof have been delivered to Bank and the Subordinating Party’s Loan Documents have not been amended or modified except as reflected thereon; (i) As of the date set forth above, to the best of Subordinating Party’s knowledge, Subordinating Party has no offset, defense, deduction or claim against Borrower under any of Subordinating Party’s Loan Documents, Borrower is not in default under any of Subordinating Party’s Loan Documents and Subordinating Party knows of no event that has occurred or is continuing which, with the passage of time or the giving of notice, or both would constitute a default under any of the Subordinating Party’s Loan Documents;
(j) To the best of Subordinating Party’s knowledge, each and every covenant, condition and obligation contained in the Subordinating Party’s Loan Documents required to be performed or satisfied as of the date hereof, and each and every matter required to be approved by Subordinating Party as of the date hereof, has been satisfied and/or approved and/or waived as applicable, including, without limitation, all conditions precedent to Borrower’s right to commence construction of the Improvements and those matters listed in Section 4.5 of Subordinating Party’s Loan Agreement, all of which conditions have been satisfied and/or approved and/or waived, as applicable, as of the date set forth above; (k) Borrower has commenced construction of the Improvements, and construction of the Improvements need not be completed until June 30, 2024; (l) As of the date set forth above, Subordinating Party’s Loan has been fully funded and to the best of Subordinating Party’s knowledge, Borrower’s use of Subordinating Party’s Loan funds complies with the provisions of the budget attached to the Subordinating Party’s Loan Agreement; (m) Notwithstanding anything stated to the contrary in the Subordinating Party’s Loan Documents, (i) the limited partner in Borrower shall have the right at any time and from time to time, without the approval or consent of Subordinating Party, to assign, sell or otherwise transfer to any third party its limited partnership interest in Borrower, provided that Borrower provides notice to Subordinating Party of such assignment, sale or transfer concurrently with such assignment, sale or transfer, and (ii) the general partner in Borrower shall have the right, without the approval or consent of Subordinating Party, to pledge or otherwise encumber its partnership interest in Borrower to Bank and the foreclosure of such pledge by Bank shall not cause an event of default under the Subordinating Party’s Loan Documents; (n) Notwithstanding anything stated to the contrary in Subordinating Party’s Loan Documents, Subordinating Party’s interest in the plans and specifications and all data, drawings, contracts and agreements relating thereto and all contracts and agreements relating to the construction of the Improvements shall be subject and subordinate to Bank’s interest in the same; (o) Notwithstanding anything stated to the contrary in Subordinating Party’s Loan Documents, Subordinating Party’s rights in and to the leases and rents of the Property shall be subject and subordinate to the rights of Bank to same;
(p) Notwithstanding anything stated to the contrary in Subordinating Party’s Loan Documents, the occurrence of an Event of Default under the Loan Documents shall not in and of itself constitute a default or an event of default under any of Subordinating Party’s Loan Documents unless the occurrence of such event shall constitute a separate default under the Subordinating Party’s Loan Documents;
(q) The subordination of Subordinating Party’s Loan shall continue in the event that any payment with respect to any Loan Document (whether by or on behalf of Borrower, as proceeds of security or enforcement of any right of set-off or otherwise) is for any reason repaid or returned to Borrower or its insolvent estate, or avoided, set aside or required to be paid to Borrower, a trustee, a receiver or other similar party under any bankruptcy, insolvency or receivership or similar law under any bankruptcy, insolvency, receivership or similar proceeding. In such event, the Loan or any part thereof originally Attachment 5

2689/014742-1414
19926697 -7-
intended to be satisfied shall be deemed to be reinstated and outstanding to the extent of any repayment, return or other action, as if such payment on account of the Loan had not been made; and (r) So long as the Deed of Trust continues to encumber all or portions of the Project, Subordinating Party shall not commence in or join with any other creditor in commencing any bankruptcy, insolvency, receivership or similar proceeding involving Borrower and Subordinating Party shall not initiate any action, motion or request in any such proceeding involving any other person or entity, which seeks the consolidation of some or all of the assets of Borrower into such proceeding. In the event of any such proceeding relating to Borrower or the Property or, in the event of any such proceeding relating to any other person or entity into which (notwithstanding the covenant in the first sentence of this clause) the assets or interests of Borrower are consolidated, then in either event, the Loan shall first be paid in full before Subordinating Party shall be entitled to receive or retain any payment or distribution with respect to the Subordinating Party’s Loan received after commencement of such proceeding. Subordinating Party agrees that (i) Bank shall receive all payments and distributions of every kind or character in respect of Subordinating Party’s Loan to which Subordinating Party would otherwise be entitled, before the subordination provisions of this Agreement (including, without limitation, any payments or distributions during the pendency of any bankruptcy, insolvency, receivership or similar proceeding involving Borrower or the Property) until the Loan is repaid in full, and (ii) the subordination of the Subordinating Party’s Loan and Subordinating Party’s Security Documents shall not be affected in any way by the Bank electing, under Section 1111(b) of the Federal Bankruptcy Code, to have its claim treated as being a fully secured claim.

In addition, Subordinating Party hereby covenants and agrees that, in connection with such a proceeding involving Borrower, neither Subordinating Party nor any of its affiliates shall (i) make or participate in a loan facility to or for the benefit of Borrower on a basis that is senior to or pari passu with the liens and interests held by Bank pursuant to the Loan Documents and (ii) not contest the continued accrual of interest on the Loan, in accordance with and at the rate specified in the Loan Documents, both for periods before and for periods after commencement of such proceedings.

12. ATTORNEYS’ FEES. If either Subordinating Party or Bank shall bring an action against the other by reason of the breach of any covenant, provision, or condition of this Agreement, or otherwise arising out of this Agreement, the unsuccessful party shall pay to the prevailing party reasonable attorneys’ fees, which fees shall be payable whether or not any action is prosecuted to judgment. The term “prevailing party” shall include, without limitation, a party who brings an action against the other by reason of the other’s breach or default and obtains substantially the relief sought, whether by compromise, settlement, or judgment.

13. ESTOPPEL CERTIFICATES. Either party shall, within twenty (20) days following the other party’s written request therefor, execute and deliver to such requesting party an estoppel certificate in form and substance reasonably satisfactory to the requesting party provided such estoppel certificate does not change the terms of this Agreement, the Loan Documents, or Subordinating Party's Loan Documents.

14. GOVERNING JURISDICTION. This Agreement shall be governed by the laws of the State of California and shall be binding upon, and shall inure to the benefit of, the parties to this Agreement and their respective successors and assigns.

15. SEVERABILITY. In case one or more of the provisions contained in this Agreement shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions hereof and this Agreement shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein unless the effect thereof would materially alter the benefits or burdens hereof to the Parties hereto.

16. THIRD PARTIES. Subordinating Party recognizes that Bank may show copies of this Agreement to other institutional lenders who are interested in the matters covered in this Agreement and Subordinating Party agrees that such other institutional lenders may also materially rely upon the representations, warranties and agreements made by the Subordinating Party in this Agreement.

Attachment 5

2689/014742-1414
19926697 -8-

17. COUNTERPARTS. This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original but all of which together shall constitute but one and the same instrument.
[SIGNATURE PAGE FOLLOWS]
Attachment 5

2689/014742-1414
19926697 -9-
WHEREAS, this Subordination Agreement has been executed by the Parties as of the date first written above.

BANK:

U.S. BANK NATIONAL ASSOCIATION,
a national banking association
By:
[_____________]
“SUBORDINATING PARTY”

CITY OF WATSONVILLE,
a municipal corporation and charter law city
By:

Name: Rene Mendez
Title: City Manager
ATTEST:

By:

Name: Irwin Ortiz
Title: City Clerk
APPROVED AS TO FORM:

BURKE, WILLIAMS & SORENSON, LLP,
a California limited liability partnership
By:

Name: Samantha Zutler
Title: City Attorney
Attachment 5

2689/014742-1414
19926697

JOINDER
Unless expressly defined herein, all capitalized terms used herein shall have the same meanings ascribed to them in the Subordination Agreement (the “Subordination Agreement”) to which this Joinder is attached.

The undersigned hereby acknowledges receipt of a copy of the Subordination Agreement and, as fee owner of the Property, hereby consents to, approves and agrees to be bound by all of the terms and conditions set forth in the Subordination Agreement.

EDEN FREEDOM INVESTORS, L.P.,
a California limited partnership
By: Eden Freedom LLC,
a California limited liability company,
its general partner
By: Eden Investments, Inc.,
a California nonprofit public benefit corporation,
its sole member/manager
By:

Name: Andrea Osgood
Its: Chief of Real Estate Development
Attachment 5

2689/014742-1414
19926697
A Notary Public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.

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

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

WITNESS my hand and official seal.

Signature (Seal)
Attachment 5

2689/014742-1414
19926697
A Notary Public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.

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

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

WITNESS my hand and official seal.

Signature (Seal)
Attachment 5

2689/014742-1414
19926697
A Notary Public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.

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

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

WITNESS my hand and official seal.

Signature (Seal)
Attachment 5

EXHIBIT “A”
2689/014742-1414
19926697
EXHIBIT “A”

LEGAL DESCRIPTION
Real Property in the City of Watsonville, County of Santa Cruz, State of California, described as follows:

BEING A PART OF THE RANCHO BOLSA DEL PAJARO AND BEGINNING ON THE NORTHEASTERN

SIDE OF THE WATSONVILLE SANTA CRUZ HIGHWAY AND ON THE BOUNDARY LINE BETWEEN THE SAID RANCHO BOLSA DEL PAJARO AND THE RANCHO CORRALITOS; SAID POINT OF BEGINNING BEING THE SOUTHWESTERN CORNER OF LANDS OF ONE GEORGE WHITE; AND

RUNNING THENCE FROM SAID POINT OF BEGINNING ALONG THE SAID NORTHEASTERN SIDE OF SAID HIGHWAY 38° 18’ EAST 168.00 FEET; THENCE LEAVING HIGHWAY NORTH 56° 38’ EAST 466.70 FEET TO THE LANDS OF ONE HART; THENCE ALONG THE BOUNDARY OF SAID LANDS OF HART NORTH 25° 23’ WEST 248.00 FEET TO THE AFORESAID RANCHO BOUNDARY; AND THENCE ALONG SAID RANCHO BOUNDARY SOUTH 48° WEST 521.40 FEET TO THE PLACE OF BEGINNING.

EXCEPTING THEREFROM THE LAND DEEDED TO THE COUNTY OF SANTA CRUZ PURSUANT TO DEED RECORDED IN VOLUME 341 OF OFFICIAL RECORDS OF THE COUNTY RECORDER OF THE COUNTY OF SANTA CRUZ, STATE OF CALIFORNIA, AT PAGE 171 THEREOF.

ALSO EXCEPTING THEREFROM THE LANDS CONVEYED TO THE CITY OF WATSONVILLE BY DEED RECORDED JULY 29, 1980 IN VOLUME 3219 PAGE 211 OFFICIAL RECORDS COUNTY OF SANTA CRUZ.

ALSO EXCEPTING THEREFROM THE LANDS CONVEYED TO THE CITY OF WATSONVILLE BY DEED RECORDED MARCH 28, 2006 AS DOCUMENT NO. 2006-17265 OFFICIAL RECORDS, AND AS CORRECTED BY GRANT DEED RECORDED APRIL 10, 2017 AS DOCUMENT NO. 2017-0011836 OFFICIAL RECORDS COUNTY OF SANTA CRUZ.

APN: 019-226-41
Attachment 5

EXHIBIT “B”
2689/014742-1414
19926697
EXHIBIT “B”
SUBORDINATING PARTY’S LOAN DOCUMENTS

1. Loan Agreement dated [________], by and between Subordinating Party and Borrower (the “Subordinating Party’s Loan Agreement”).

2. Secured Promissory Note (PLHA Loan) dated [______], in the principal amount of $1,000,000, by Borrower in favor of Subordinating Party.

3. Subordinating Party’s Deed of Trust.

4. Subordinating Party’s Restrictions.

Attachment 5

2689/014742-1414
19926697

APPENDIX I
As used in the agreement to which this Appendix I is attached, and as used in this Appendix I, the following terms shall have the indicated meanings:
“Bank” shall mean U.S. Bank, National Association, as successor-in-interest to MUFG Union Bank, N.A.
“Borrower” shall mean Eden Freedom Investors, L.P., a California limited partnership. “Deed of Trust” shall mean that certain Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing (Construction and Permanent Trust Deed) of even date of the Note, executed by Borrower for the benefit of Bank, as successor-in-interest to MUFG Union Bank, N.A., dated March 1, 2022 and recorded on March 24, 2022 as Instrument No. 2022-0009669 in the Official Records, and encumbering the Property.
“Improvements” shall mean the fifty-three (53) unit apartment project building, including one (1) manager’s unit, located at 1482 Freedom Boulevard, Watsonville, California. “Loan” shall mean the $30,827,222 construction and permanent loan made by Bank, as successorin-interest to MUFG Union Bank, N.A. to Borrower. “Loan Agreement” shall mean the Construction and Permanent Loan Agreement dated March 1, 2022, executed by Borrower and Bank, as successor-in-interest to MUFG Union Bank, N.A. “Note” shall mean, collectively, the Promissory Note A-1 Secured by Deed of Trust (Construction Term Note) in the amount of $16,687,222 dated March 1, 2022 and executed by Borrower in favor of Bank, as successor-in-interest to MUFG Union Bank, N.A., and the Promissory Note A-2 Secured by Deed of Trust (Construction and Permanent Term) in the amount of $14,140,000 dated March 1, 2022 and executed by Borrower in favor of Bank, as successor-in-interest to MUFG Union Bank, N.A. “Project” shall mean the Property and the Improvements.

Attachment 5

Reso No. ______ (CM)
Meeting Date: 082724 SWZ ______ TV ______ CDD ______
1 RESOLUTION NO. (CM)

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
WATSONVILLE (1) APPROVING THE FINANCING LOAN DOCUMENTS

FOR THE PERMANENT LOCAL HOUSING ALLOCATION PROGRAM
(PLHA) FINANCING FOR TABASA GARDENS AFFORDABLE
HOUSING PROJECT LOCATED AT 1482 FREEDOM BOULEVARD
(APN: 019-226-41) WATSONVILLE, CALIFORNIA; (2) APPROPRIATING $1,000,000 IN GRANT MONEY AWARDED FOR THE PROJECT; (3)

AUTHORIZING AND DIRECTING THE CITY MANAGER TO NEGOTIATE

AND EXECUTE THE LOAN DOCUMENTS AND SUBORDINATION

AGREEMENTS WHICH WILL CONTAIN TERMS OF THE USE OF THE
LOAN FOR THE PROJECT; AND (4) AUTHORIZING A BUDGET
APPROPRIATION OF $1,000,000 FROM THE CITY’S PLHA SPECIAL

REVENUE FUND
WHEREAS, in 2017, Governor Newsom signed a 15-bill housing package aimed at addressing the state’s housing shortage and high housing costs, which included the Building Homes and Jobs Act (SB 2), which established a $75 recording fee on real estate documents to increase the supply of affordable homes in California; and WHEREAS, SB 2 directs the California Department of Housing and Community Development (State HCD) to use seventy percent (70%) of the annual revenue collected for locally administered affordable housing programs beginning in calendar year 2019, which establishes the Permanent Local Housing Allocation Program (PLHA); and WHEREAS, on October 11, 2022, the City Council of the City of Watsonville adopted its PLHA Guidelines and Five-Year Plan (Resolution No. 209-22 (CM)); and WHEREAS, Tabasa Gardens, a 53-unit multi-family affordable housing development by Eden Freedom Investors, L.P. located at 1482 Freedom Blvd., satisfies the PLHA guidelines requirements.

NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF WATSONVILLE, CALIFORNIA, AS FOLLOWS:

Reso No. ______ (CM)
Meeting Date: 082724
2 1. This action does not meet CEQA’s definition of a “project”, because the action does not have the potential for resulting in either a direct physical change in the environment or a reasonably foreseeable indirect physical change in the environment.

2. That the City Council hereby approves the PLHA financing loan documents for the Permanent Local Housing Allocation Program (PLHA) financing for Tabasa Gardens affordable housing project and a funding commitment in the amount of $1,000,000 000 in grant money awarded for the project from the California Department of Housing and Community Development (HCD) to Eden Freedom Investors, L.P., in which they will participate, for the development of Tabasa Gardens, a 53-unit multi-family affordable housing development, located at 1482 Freedom Boulevard (APN: 019-226-41) Watsonville, California.

3. That the Council authorizes and directs the City Manager to negotiate and execute the loan documents and subordination agreements and to subordinate the City loans to the construction lender and to HCD, and all related documents necessary for the implementation of the PLHA Program for and on behalf of the City of Watsonville, subject to legal approval.

4. That the budget appropriation of $1,000,000 from the City’s PLHA Special Revenue Fund is hereby authorized.

5. That the City hereby directs the City Clerk to incorporate the loan documents to this resolution.
********************************************

8/22/2024 4:55:26 PM
C:\Program Files\eSCRIBE\TEMP\16552294926\16552294926,,,Report - Grant Application Electric Vehicle Chargers.docx Agenda Report
MEETING DATE: Tuesday, August 27, 2024
TO: City Council
FROM: PUBLIC WORKS & UTILITIES DIRECTOR LINDBERG

ENVIRONMENTAL PROJECTS MANAGER VU-DUC
SUBJECT: AUTHORIZATION TO SUBMIT A GRANT APPLICATION FOR

THE MONTEREY BAY REGION EQUITABLE ELECTRIC

VEHICLE CHARGING PROJECT PROPOSED UNDER THE

FEDERAL HIGHWAY ADMINISTRATION CHARGING AND

FUELING INFRASTRUCTURE DISCRETIONARY GRANT

COMMUNITY PROGRAM
RECOMMENDED ACTION:

Adopt resolution authorizing the City Manager to apply for funds and accept any funds from the Federal Highway Administration (FHWA) Charging and Fueling Infrastructure (CFI) Discretionary Grant Community Program (Round 2) as co-applicant for installation of publicly available level 2 and DC fast charging at city-owned facilities.

BACKGROUND:

Watsonville is a leader in climate action in California, having adopted our Climate Action & Adaptation Plan (CAAP) in 2021, and holding leadership roles in regional and state collaborative climate networks. A vital component of the adopted CAAP and neighboring jurisdictions’ plans is to reduce emissions coming from the transportation sector on a community-wide scale, which accounts for 60% of Watsonville’s greenhouse gas (GHG).

Measure T-7 of the CAAP requires expansion of electric vehicle (EV) use, with submeasure T7-B specifying an increase in public EV charging stations.

To scale up climate investment and achieve the deep reductions in GHG emissions necessary to meet CAAP goals, the City is a founding member of the Monterey Bay Regional Climate Project Working Group (RCPWG). RCPWG seeks to collaborate among groups and organizations in the Monterey Bay Area region—mainly the tri-county areas of Santa Cruz, San Benito, and Monterey—to implement regionally beneficial climate programs. The RCPWG is funded through yearly membership contributions and has hired grant-writing consultants to write collaborative regional grant applications to fund climate programs at the regional scale.

8/22/2024 4:55:26 PM
C:\Program Files\eSCRIBE\TEMP\16552294926\16552294926,,,Report - Grant Application Electric Vehicle Chargers.docx Numerous funding opportunities are becoming available both through state and federal agencies, funded through the Inflation Reduction Act (IRA) and the Infrastructure Investment and Jobs Act (IIJA). In collaboration with the RCPWG, Ecology Action, the Association of Monterey Bay Area Governments (AMBAG), and other partners, the City tracks these opportunities to identify those for which a collaborative regional model would be most competitive.

DISCUSSION:

The Federal Highway Administration’s CFI Discretionary Grant Community Program (Round 2) is one of these funding opportunities for which a regional proposal is considered highly competitive. It leverages learnings from successful proposals awarded in Round 1. Applications for Round 2 are due on August 28, 2024.

The CFI Community program has $800 million to fund charging and fueling infrastructure along any public road. Award amounts range from $500,000 to $15 million, with a minimum match requirement. Last year, the RCPWG applied to Round 1 of this funding opportunity, but due to an overwhelming number of applications and despite a “recommended for funding” score, it was not awarded funds.

Since notification that the Round 1 application would not be funded, staff, in collaboration with RCPWG members, Ecology Action, and AMBAG, have refined the scope of the Monterey Bay Region Equitable EV Charging Project to be more competitive. The Round 2 proposal will apply for a $10 million investment for the region. Current estimates for Watsonville investment are $2.4 million of this total regional amount, though this number can change depending on actual installation costs. The City of Santa Cruz is acting as the lead applicant with each RCPWG member—including the City of Watsonville—as coapplicants.

Figure 1 Screenshot from the grant application's web viewer showing a proposed network of regional public EV Chargers

8/22/2024 4:55:26 PM
C:\Program Files\eSCRIBE\TEMP\16552294926\16552294926,,,Report - Grant Application Electric Vehicle Chargers.docx The Monterey Bay Region Equitable EV Charging Project will install at least 100 level 2 EV charging locations and up to 5 DC Fast charging locations throughout the Monterey Bay Region (Figure 1). The grant proposal allocates an additional 48 ports in Watsonville across 10 locations at no cost, more than doubling the number of public charging ports in the City. All planning, installation, maintenance, and operations for 5 years will be funded through project funding. Under the proposal, 80% of the cost is funded by the Charging & Fueling Infrastructure grant, and the remaining 20% funded through an owner/operator or developer model, where the company installing the new chargers will supply the 20% cost share along with planning, make-ready, installation, maintenance, and operating costs for a 5-year term.

Each location will support at least four charging ports, each with a dedicated parking space. The project will also support an education and outreach component to increase awareness around EVs, mainly focused on reaching the underserved communities that could greatly benefit from this new infrastructure. Moreover, there is a workforce development component to support the skills and careers needed to support the EV charging installation, operation, and maintenance, should the project be awarded funds.

Locations must also be located at a publicly accessible, publicly owned facility. It will be publicly accessible during the chosen site's hours of operation. Outside of those hours, each site host will be allowed to determine whether the infrastructure should remain publicly available or be prioritized to serve specific EV charging needs, such as municipal fleet charging or a future EV ridesharing fleet.

If awarded, the co-applicants and a stakeholder working group will undertake a competitive solicitation process to select vendors for the installation, operation, and maintenance of the EV charging infrastructure. The selected private entity will be required to provide matching funds for the project. This approach, combined with the regional scale of the application, will ensure that Watsonville benefits from the deep economies of scale achieved through larger projects while also ensuring that neighboring jurisdictions also achieve a minimum level of EV infrastructure buildout, which will support community members as they travel to neighboring jurisdictions, and vice versa.

STRATEGIC PLAN:

The Monterey Bay Region Equitable EV Charging Project proposed in this application to the CFI Discretionary Grant Community Program (Round 2), if awarded, directly addresses:
1- Economic Development through the investment in workforce development for EV charging infrastructure
2- Infrastructure & Environment through the installation of GHG emission-reducing EV chargers
4- Fiscal Health by delivering the work through external funding sources 7- Efficient and Well-performing Government by maximizing economies of scale and working collaboratively with regional partners

8/22/2024 4:55:26 PM
C:\Program Files\eSCRIBE\TEMP\16552294926\16552294926,,,Report - Grant Application Electric Vehicle Chargers.docx FINANCIAL IMPACT:

Approval of this recommendation will not result in an immediate fiscal impact on the General Fund. The regional grant application will total $10 million, and the private entity selected through a competitive selection process will provide most of the required match.

Ecology Action and the RCPWG staff members will meet any remaining match requirements through an in-kind labor match.

ALTERNATIVE ACTION:

The City may opt out of this grant application and regional project proposal. This alternative is not recommended, however, because without the grant opportunity and regional approach of this project, the City would need to front the costs of expanding EV infrastructure in its entirety or choose not to expand infrastructure and risk failing to meet key climate targets committed to in the CAAP.

ATTACHMENTS AND/OR REFERENCES (If any):

None.

1 Reso No. (CM)
Meeting Date: 082724 SWZ ______ TV ______ PWU ______
RESOLUTION NO. (CM)

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF

WATSONVILLE AUTHORIZING AND DIRECTING THE CITY MANGER

ON BEHALF OF THE CITY OF WATSONVILLE SUBMISSION OF A

GRANT APPLICATION AS CO-APPLICANT TO THE FEDERAL
HIGHWAY ADMINISTRATION’S CHARGING & FUELING

INFRASTRUCTURE DISCRETIONARY GRANT COMMUNITY
PROGRAM, IN AN AMOUNT OF $10,000,000 FOR THE MONTEREY
BAY REGION EQUITABLE EV CHARGING PROJECT; AND IF

AWARDED, TO EXECUTE ALL AGREEMENTS AND ANY

AMENDMENTS THERETO AND ANY NECESSARY DOCUMENTS

WHICH MAY BE NECESSARY FOR THE COMPLETION OF THE

PROJECT AND ACCEPTING SUCH FUNDS PERTAINING TO
WATSONVILLE OF THE $10 MILLION GRANT TO THE SPECIAL
GRANTS FUND [0260]
WHEREAS, the City of Watsonville adopted a Climate Action & Adaptation Plan in 2021 which identifies transportation has the largest source of emissions and commits to a GHG emissions reduction goal of 80% lower than 1990 levels by 2030; and WHEREAS, since 2022, the Monterey Bay Regional Climate Project Working Group has collaborated among agencies and organizations in the Monterey Bay Area region, including Santa Cruz, San Benito, and Monterey Counties to develop, prioritize, secure funding for, and effectively and equitably advocate for and implement regionally beneficial climate programs; and
WHEREAS, the City of Watsonville is a founding member Monterey Bay Regional Climate Project Working Group; and
WHEREAS, the Monterey Bay Regional Climate Project Working Group, the Association of Monterey Bay Area Governments, and Ecology Action have identified funding opportunities where a regional collaborative approach would be most competitive; and

2 Reso No. (CM)
Meeting Date: 082724
WHEREAS, the Department of Transportation has provided funds for the Charging & Fueling Infrastructure Discretionary Grant Community Program established by the Bipartisan Infrastructure Law; and
WHEREAS, the Federal Highway Administration has been delegated the responsibility for the administration of this grant program, establishing necessary procedures; and
WHEREAS, the City of Watsonville is a co-applicant with other public agencies and non-profit partners on a grant application to be made to the Federal Highway Administration Charging & Fueling Infrastructure Discretionary Grant Community Program for the Monterey Bay Region Equitable EV Charging Project.

NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF WATSONVILLE, CALIFORNIA, AS FOLLOWS:

1. This action does not meet CEQA’s definition of a “project”, because the action does not have the potential for resulting in either a direct physical change in the environment or a reasonably foreseeable indirect physical change in the environment.

2. Directs City of Watsonville staff to work as co-applicant to submit the regional grant proposal package to the Federal Highway Administration in the amount of $10 million.

3. Authorizes and directs the City Manager of the City of Watsonville to apply for, accept, and execute in the name of the City of Watsonville all necessary documents including but not limited to applications, contracts and agreements and amendments from the Federal Highways Administration to implement and carry out the scope of work approved through approval of the grant application.

3 Reso No. (CM)
Meeting Date: 082724

4. That the City Manager of the City of Watsonville is authorized and directed, if said grant is awarded to accept funds pertaining to Watsonville of the regional $10 million grant proposal under the Monterey Bay Region Equitable EV Charging Project to the Special Grants Fund [0260].
****************************************

Agenda Report
MEETING DATE: Tuesday, August 27, 2024
TO: City Council
FROM: DEPUTY CITY MANAGER MANNING

PUBLIC WORKS & UTILITIES DIRECTOR LINDBERG
SUBJECT: APPROVAL AND AUTHORIZATION OF NEW AND REVISED

PUBLIC WORKS & UTILITIES JOB CLASSIFICATIONS
RECOMMENDED ACTION:

It is recommended that the City Council approve and authorize the new and revised Public Works and Utilities job classifications and associated salaries, where applicable. The Personnel Commission considered these items at its July 8, 2024, meeting and recommends City Council approval.

Solid Waste Division:
• Integrated Waste Superintendent (new): $41.85-$56.08 per hour or $87,048 - $116,646 per year
• Landfill Equipment Operator I, II, III (new)
Landfill Operator I: $23.41-$31.38 per hour or $48,703 - $65,266 per year Landfill Operator II: $26.45-$35.45 per hour or $55,018 - $73,730 per year Landfill Operator III: $30.67-$41.10 per hour or $63,798 - $85,484 per year Wastewater Division:
• Wastewater Division Manager (revised): No salary change.

BACKGROUND:

The City of Watsonville is currently undergoing a city-wide classification and compensation study. This study is expected to be completed by the end of the calendar year. The City has put a pause on bringing most new job descriptions and salaries forward pending the results of the study.

DISCUSSION:

With the planned re-opening of the landfill and the recent resignation of the Wastewater Division Manager, the Public Works and Utilities department is bringing forward some

8/22/2024 6:46:39 PM
C:\Program Files\eSCRIBE\TEMP\18463559445\18463559445,,,Report - Public Works Job Classifications.docx proposed changes to best position the department to hire and recruit for key positions that must be in place prior to the completion of the city-wide study.

Solid Waste Division
Two new job classifications are being proposed:

1. Integrated Waste Superintendent: The City is set to open the next phase of its landfill before the end of this year which previously stopped receiving garbage in 2020. The landfill has an existing Integrated Waste Supervisor position which oversees day-to-day operations. A new Superintendent position is proposed to provide a higher level of oversight to the landfill integrated waste management planning, reporting, and implementation of all disposal programs on behalf of the City, and to assist the Solid Waste Division Manager in their duties. This position is proposed to be added to the Management bargaining group and be placed at a salary of 15% above the current Integrated Waste Supervisor at this time. This salary, as well as those in the division, will be further reviewed as part of the current classification and compensation city-wide study and is subject to change through that process.

New Classification Step 0 Step 6
Integrated Waste Superintendent $41.85/hr $56.08/hr

2. Landfill Equipment Operator I, II, III: Public Works is proposing a new job classification series for Landfill Equipment Operators. The landfill is currently staffed by a Utility Worker III. The Utility Worker series is broad in definition and does not currently capture all of the specific job requirements and knowledge necessary to perform the landfill operation duties. A new series is proposed with experience requirements specific to landfill operations. Operator I is the entry level position, Operator II and III are journey level classifications determined by landfillspecific experience and requirements. This series is proposed to remain in the OE3 bargaining group where the current Utility Worker I, II, and III position resides.

These salaries will be further revised as part of the current classification and compensation city-wide study and is subject to change through that process. OE3 is in agreement with the proposed changes.

New Classification Step 0 Step 6 Pegged
To
Landfill Equipment
Operator I
$22.96/hr $31.38/hr Utility
Worker I
Landfill Equipment
Operator II
$25.93/hr $34.75/hr Utility
Worker II
Landfill Equipment
Operator III
$30.67/hr. $41.10/hr Utility
Worker III

8/22/2024 6:46:39 PM
C:\Program Files\eSCRIBE\TEMP\18463559445\18463559445,,,Report - Public Works Job Classifications.docx Wastewater Division
With the resignation of our Wastewater Division manager, the City would like to update the job description and required certifications to ensure the City can attract a wide range of qualified applicants.

STRATEGIC PLAN:

This aligns with the strategic plan goal of efficient and high performing government by attracting qualified candidates and retaining great employees.

FINANCIAL IMPACT:

The proposed fiscal changes are accounted for in the current fiscal year budget.

ALTERNATIVE ACTION:

The City Council may elect not to approve the new and revised job classifications and salary adjustments.

ATTACHMENTS AND/OR REFERENCES (If any):

None.

Reso No. (CM)
Meeting Date: 082724 SWZ ______ TV ______ HR ______
1 RESOLUTION NO.__________ (CM)

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF

WATSONVILLE APPROVING AND AUTHORIZING THE NEW JOB

CLASSIFICATION AND JOB DESCRIPTION FOR INTEGRATED WASTE

SUPERINTENDENT (MANAGEMENT UNIT) AT THE ESTABLISHED
SALARY RANGE OF $41.85-$56.08 PER HOUR OR $7,253.47-$9,720.33 PER MONTH.

WHEREAS, on July 8, 2024, the Personnel Commission of the City of Watsonville reviewed and recommended to the City Council the new job classification and job description of Integrate Waste Superintendent; and
WHEREAS, the Interim City Manager has submitted her report and recommendation to the City Council to approve and authorize the new job classification and job description of Integrated Waste Superintendent, a copy of which is attached hereto and incorporated herein by this reference.

NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF WATSONVILLE, CALIFORNIA, AS FOLLOWS:

1. This action is exempt from the requirements of the California Environmental Quality Act (CEQA) in accordance with CEQA Guidelines Section 15378(b)(5), in that adopting a Resolution approving and authorizing the new job classification and job description for Integrated Waste Superintendent does not meet CEQA's definition of a “project,” because the action does not have the potential for resulting in either a direct physical change in the environment or a reasonably foreseeable indirect physical change in the environment and if a “project,” is exempt under the “common sense” exception (14 Cal. Code Regs. § 15061(b)(3)) because it can be seen with certainty that there is no possibility that this action may have a significant effect on the environment.

Reso No. (CM)
Meeting Date: 082724
2 2. That the job classification and description of Integrated Waste Superintendent (Management Unit), is hereby approved and authorized at the established Salary Range of $41.85 - $56.08 per hour or $7,253.47-$9,720.33 per month. **********************************

1 | Integrated Waste Superintendent Job Description
City of Watsonville
Job Description
JOB TITLE: Integrated Waste Superintendent DATE APPROVED:

DEPARTMENT: Public Works & Utilities SUPERSEDES: N/A
REPORTS TO: Solid Waste Division Manager
SUPERVISION: May act as Solid Waste Division Manager, Integrated Waste Supervisor, or Waste and Recycling Center Supervisor in their absence
EMPLOYEE UNIT: Management
FLSA: EXEMPT
JOB SUMMARY:

Performs a specialized professional work in the areas of solid waste disposal, planning and source reduction, household hazardous waste collection and disposal, recycling and resource recovery programs, and monitoring regulatory requirements for the City's waste management activities.

Performs a variety of operational, planning, research, coordination and management tasksto maintain regulatory compliance of City landfill and waste and recycling center facility. Performs related duties as assigned.

DISTINGUISHING CHARACTERISTICS:

This classification is distinguished from the next lower classification of Integrated Waste Supervisor in that the latter is the supervisory level classification responsible for the day-to-day operations, maintenance, and supervision of an assigned functional area within the Solid Waste division. This classification oversees the overall planning, management, operation and regulatory compliance of the City’s waste management facilities. Employees in this classification may be required to function as acting Solid Waste Division Manager, Integrated Waste Supervisor, or Waste and Recycling Center Supervisor in their absence.

EXAMPLES OF ESSENTIAL DUTIES:

Duties may include, but are not limited to, the following:
• Plans, coordinates, implements and updates the City's integrated waste management plan • Plans, coordinates and monitors development and implementation of all disposal programs • Researches and makes recommendations for City source reduction and waste diversion programs and goals.
• Implements approved programs

2 | Integrated Waste Superintendent Job Description
• Plans, coordinates, develops and implements household waste disposal programs • Performs regulatory monitoring and evaluation activities for solid waste, landfill and source reduction programs; documents problem areas and researches remedies; makes recommendations to staff to resolve problems. Writes reports and correspondence • Manages and develops marketing strategies for recycling programs acting as a technical resource to the City
• Prepares written and oral reports
• Acts as chief technical adviser to staff and outside contractors in areas relating to waste management legislation and regulations, and monitors contractor compliance. • Acts as liaison with Federal, State and local agencies • Directs daily landfill operations
• Directs daily waste and recycling center operations
• Supervises, trains and evaluates landfill and waste and recycling center staff, directly or through supervisors
• Recommends selection, promotion and discipline of division employees • Recommends operational landfill site modifications to Engineering staff • Plans, coordinates and monitors development and implementation of composting or wood waste processing operations at landfill site
• Cooperates with other City departments for hazardous materials handling • Monitors and maintains landfill leachate system
• Assists in preparing landfill monitoring reports to Regional Water Quality Control Board • Manages landfill methane gas capture system
• Performs other related duties similar in scope and function as required

EMPLOYMENT STANDARDS
Knowledge of:
• Waste diversion technology, methods and practices
• Laws and regulations relating to source reduction, recycling, composting and household hazardous waste collection relative to municipalities
• Fiscal and statistical record keeping procedures
• Methods and techniques of budget preparation and control • Principles of effective supervision, leadership, coaching and mentoring, performance evaluation and career development
• Basic knowledge of computer systems and related software applications • Safety programs and procedures
• Landfill and Solid Waste Collection equipment operation, maintenance, and repair Ability to:
• Supervise and evaluate compliance activities directly or indirectly for a decentralized work force

3 | Integrated Waste Superintendent Job Description
• Observe, organize and analyze facts including technical, statistical and market data and develop appropriate recommendations
• Establish and implement programs per regulatory requirements • Deal effectively with the public, other agencies and staff • Prepare clear and concise written reports and correspondence • Manage an effective safety system
• Establish and maintain effective work relationships with those contacted in the performance of required duties
PHYSICAL REQUIREMENTS:

Physical requirements described here are representative of those that must be met by an employee to successfully perform the essential functions of this job. • Meet the physical requirements necessary to safely and effectively perform required duties • Hear and distinguish various sounds, such as voices of co-workers in noisy environments, cell phone, etc.
• Drive an automobile and light, medium, and heavy equipment • Intermittently bend and twist to reach equipment surrounding desk and climb into and out of trucks, automobiles and heavy equipment
• Walk on uneven surfaces
• Work outside in inclement weather
TRAINING AND EXPERIENCE:

Any combination of training and experience, which would provide the required knowledge and abilities, is qualifying. A typical way to obtain the knowledge and abilities is:
• Advanced educational training in solid waste management or related subjects • 6 years of increasingly responsible experience in the operation, maintenance, and regulatory compliance of landfill and related waste management facilities, or such experience in a closely related area
• At least 4 years in a supervisory or administrative capacity in landfill, waste management, or a closely related activity
LICENSE & CERTIFICATION:
• Possession and maintenance of a valid California Class C Driver’s License with a safe driving record
• Current and active certification by Solid Waste Association of North America (SWANA) as Manager of Landfill Operations (MOLO).

Reso No. (CM)
Meeting Date: 082724 SWZ ______ TV ______ HR ______
1 RESOLUTION NO.__________ (CM)

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF

WATSONVILLE APPROVING AND AUTHORIZING THE NEW JOB

CLASSIFICATION AND JOB DESCRIPTION FOR LANDFILL
EQUIPMENT OPERATOR I (OE3 UNIT) AT THE ESTABLISHED SALARY RANGE OF $23.41- $31.38 PER HOUR OR $4,058.54-$5,438.83 PER MONTH.

WHEREAS, on July 8, 2024, the Personnel Commission of the City of Watsonville reviewed and recommended to the City Council the new job classification and job description of Landfill Equipment Operator I; and
WHEREAS, the Interim City Manager has submitted her report and recommendation to the City Council to approve and authorize the new job classification and job description of Landfill Equipment Operator I, a copy of which is attached hereto and incorporated herein by this reference.

NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF WATSONVILLE, CALIFORNIA, AS FOLLOWS:

1. This action is exempt from the requirements of the California Environmental Quality Act (CEQA) in accordance with CEQA Guidelines Section 15378(b)(5), in that adopting a Resolution approving and authorizing the new job classification and job description for Landfill Equipment Operator I does not meet CEQA's definition of a “project,” because the action does not have the potential for resulting in either a direct physical change in the environment or a reasonably foreseeable indirect physical change in the environment and if a “project,” is exempt under the “common sense” exception (14 Cal. Code Regs. § 15061(b)(3)) because it can be seen with certainty that there is no possibility that this action may have a significant effect on the environment.

Reso No. (CM)
Meeting Date: 082724
2 2. That the job classification and description of Landfill Equipment Operator I (OE3 Unit), is hereby approved and authorized at the established Salary Range of $23.41- $31.38 per hour or $4,058.54-$5,438.83 per month.
**********************************

Reso No. (CM)
Meeting Date: 082724 SWZ ______ TV ______ HR ______
1 RESOLUTION NO.__________ (CM)

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF

WATSONVILLE APPROVING AND AUTHORIZING THE NEW JOB

CLASSIFICATION AND JOB DESCRIPTION FOR LANDFILL
EQUIPMENT OPERATOR II (OE3 UNIT) AT THE ESTABLISHED SALARY RANGE OF $26.45-$35.45 PER HOUR OR $4,584.84-$6,144.15 PER MONTH.

WHEREAS, on July 8, 2024, the Personnel Commission of the City of Watsonville reviewed and recommended to the City Council the new job classification and job description of Landfill Equipment Operator II; and
WHEREAS, the Interim City Manager has submitted her report and recommendation to the City Council to approve and authorize the new job classification and job description of Landfill Equipment Operator II, a copy of which is attached hereto and incorporated herein by this reference.

NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF WATSONVILLE, CALIFORNIA, AS FOLLOWS:

1. This action is exempt from the requirements of the California Environmental Quality Act (CEQA) in accordance with CEQA Guidelines Section 15378(b)(5), in that adopting a Resolution approving and authorizing the new job classification and job description for Landfill Equipment Operator II does not meet CEQA's definition of a “project,” because the action does not have the potential for resulting in either a direct physical change in the environment or a reasonably foreseeable indirect physical change in the environment and if a “project,” is exempt under the “common sense” exception (14 Cal. Code Regs. § 15061(b)(3)) because it can be seen with certainty that there is no possibility that this action may have a significant effect on the environment.

Reso No. (CM)
Meeting Date: 082724
2 2. That the job classification and description of Landfill Equipment Operator II (OE3 Unit), is hereby approved and authorized at the established Salary Range of $26.45- $35.45 per hour or $4,584.84-$6,144.15 per month.
**********************************

1 | Landfill Equipment Operator I/II Job Description
City of Watsonville
Job Description
JOB TITLE: Landfill Equipment Operator I/II DATE APPROVED:

DEPARTMENT: Public Works & Utilities Department SUPERSEDES: N/A REPORTS TO: Integrated Waste Supervisor
SUPERVISION: N/A
EMPLOYEE UNIT: OE3
FLSA: Non-Exempt
JOB SUMMARY:

Under general supervision, performs a variety of heavy equipment operation and maintenance tasks relative to the operations and type of work performed at the City’s landfill and performs other related work as assigned.

DISTINGUISHING CHARACTERISTICS
This job classification provides day to day tasks and duties required for landfill operation. Operator Level I is the entry and training level classification requiring little experience in the related areas.

Operator Level II functions at a full journey level of classification. Employees in this classification may also be assigned to work alone on assigned projects.

In addition to the characteristics above, Landfill Equipment Operator II may train, direct, and monitor the technical work of others in the accomplishment of specific projects as assigned. Employees in this classification receive limited supervision within a framework of standard policies and procedures.

EXAMPLES OF ESSENTIAL DUTIES:

Duties may include, but are not limited to, the following:
• Operates heavy equipment such as motor graders, bulldozer tractors, compactors, scrapers, loaders and truck and trailer combinations to perform skilled construction and earth-moving tasks such as grading to engineering specification, excavating, covering and compacting • Performs routine equipment maintenance and makes tool adjustments • Performs various construction, maintenance and repair tasks relative to the operations of the landfill, such as installing drainage pipes and maintaining drainage culverts • Orders supplies and materials as needed and maintains necessary work records • Operates/maintains landfill weigh scale. Functions as gate/scale attendant as needed • Operates a water truck along landfill roads to control dust, and water tanker truck to haul leachate off site

2 | Landfill Equipment Operator I/II Job Description
• Operates, installs and maintains leachate pumping system, gas collection system, monitoring wells, and other related landfill operation mechanical and electrical equipment • Reads landfill construction maps and plans
• Constructs/maintains berms, roads, pads and drainage facilities such as ponds and stormwater infrastructure
• Performs routine maintenance and safety checks on assigned equipment and vehicles; reports the need for major mechanical repairs
• Uses a variety of hand and power tools
• Maintains records and prepares records as assigned, performs routine data entry and report generation with computers
• Informs others concerning status of work completed
• Performs general landfill maintenance and operation duties • May occasionally be asked to assist operations at the Public Drop Off, operate garbage vehicles, or other Solid Waste related tasks
• Performs other related duties that may be reasonably expected as part of this classification

EMPLOYMENT STANDARDS
Knowledge of:
• The safe operation and basic repair of a variety of maintenance and construction equipment methods, materials and practices used in public works and utilities maintenance and construction activities
• Operation and maintenance of landfill equipment and monitoring systems including gas collection, leachate management, monitoring wells, and stormwater best management practices
• Safe work practice and the construction safety orders issued by the State Division of Industrial Safety
Ability to:
• Read and interpret basic engineered plans, sketches, diagrams and construction markers • Safely and effectively operate light, medium, and heavy duty equipment associated with landfill operations
• Perform complex equipment operation assignments in a variety of landfill operation and maintenance situations
• Perform work related to the operation and maintenance of the landfill • Follow oral and written instruction given in English
• Keep records and prepare routine reports in English
• Use a basic computer and/or tablet system as needed to perform duties • Work effectively alone or as a member of a crew
• Work outdoors in adverse weather conditions
• Establish and maintain effective work relationships with those contacted in the performance of required duties

3 | Landfill Equipment Operator I/II Job Description
• Willingness to perform on-call duty assignment and call-back work as required

PHYSICAL REQUIREMENTS:

Physical requirements described here are representative of those that must be met by an employee to successfully perform the essential functions of this job. • Meet the physical requirements necessary to safely and effectively perform required duties • Hear and distinguish various sounds, such as voices of co-workers in noisy environments, operating equipment sounds, abnormal equipment sounds, etc. • Drive and get in and out of a vehicle
• Hear adequately to converse on the telephone, radio, cellular phone, and in person • Use a basic computer and/or tablet system
• Safely and effectively work on ladders and tall structures • Be exposed to chemicals, bacteria and garbage
• Climb up and down ladders and stairs
• Grasp with right and left hands and use fine hand manipulation • Perform manual labor involving frequent bending, pulling, pushing, lifting, squatting, twisting, turning, climbing and carrying of weights up to 50 lbs. • Distinguish various visual colors
• Walk on uneven surfaces
• Work outside in inclement weather
• Operate large heavy equipment while sitting for prolonged periods of time in outdoor environments and subject to all weather conditions
• Work under conditions as confined spaces, high noise levels, strong and unpleasant odors, vibration from equipment, exposure to dust, toxic substances and/or chemical irritants (within legal exposure limits)
• Reach above and at shoulder height
• Perform physical tasks involving frequent bending, lifting, carrying, pushing and pulling of weights up to 50 pounds
• Safely and effectively operate light, medium and heavy maintenance and construction equipment
TRAINING AND EXPERIENCE:

Any combination of training and experience, which provides the required knowledge and abilities, is qualifying. A typical way to obtain the knowledge and abilities is:

Operator I:
• Effectively and safely operate small equipment related to landfill operation or construction and maintenance trades
• Minimum 1 year landfill operation experience or equivalent experience in a related field

4 | Landfill Equipment Operator I/II Job Description
Operator II:
• Minimum of two years of experience as a Landfill Equipment Operator I with the City of Watsonville, or three years equivalent experience as a landfill equipment operator • Effectively and safely operate heavy construction equipment such as graders, bulldozer tractors, compactors, scrapers, loaders and truck and trailer combinations to perform skilled grading and excavating
• Perform maintenance and repairs on tools and equipment LICENSE & CERTIFICATION:

Operator I:
• Possession and maintenance of a valid California Class C Driver’s License with a safe driving record
• Possession of or obtain within 12 months a valid Class B Driver's License with the following endorsements: tankers and airbrake
Operator II:
• Possession of a valid Class B Driver's License with the following endorsements: tankers and airbrake, and maintain a safe driving record

Reso No. (CM)
Meeting Date: 082724 SWZ ______ TV ______ HR ______
1 RESOLUTION NO.__________ (CM)

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF

WATSONVILLE APPROVING AND AUTHORIZING THE NEW JOB

CLASSIFICATION AND JOB DESCRIPTION FOR LANDFILL
EQUIPMENT OPERATOR III (OE3 UNIT) AT THE ESTABLISHED
SALARY RANGE OF $30.67- $41.10 PER HOUR OR $5,315.81-$7,123.70

PER MONTH
WHEREAS, on July 8, 2024, the Personnel Commission of the City of Watsonville reviewed and recommended to the City Council the new job classification and job description of Landfill Equipment Operator III; and
WHEREAS, the Interim City Manager has submitted her report and recommendation to the City Council to approve and authorize the new job classification and job description of Landfill Equipment Operator III, a copy of which is attached hereto and incorporated herein by this reference.

NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF WATSONVILLE, CALIFORNIA, AS FOLLOWS:

1. This action is exempt from the requirements of the California Environmental Quality Act (CEQA) in accordance with CEQA Guidelines Section 15378(b)(5), in that adopting a Resolution approving and authorizing the new job classification and job description for Landfill Equipment Operator III does not meet CEQA's definition of a “project,” because the action does not have the potential for resulting in either a direct physical change in the environment or a reasonably foreseeable indirect physical change in the environment and if a “project,” is exempt under the “common sense” exception (14 Cal. Code Regs. § 15061(b)(3)) because it can be seen with certainty that there is no possibility that this action may have a significant effect on the environment.

Reso No. (CM)
Meeting Date: 082724 2

2. That the job classification and description of Landfill Equipment Operator III (OE3 Unit), is hereby approved and authorized at the established Salary Range of $30.67- $41.10 per hour or $5,315.81-$7,123.70 per month.
**********************************

1 | Landfill Equipment Operator III Job Description
City of Watsonville
Job Description
JOB TITLE: Landfill Equipment Operator III DATE APPROVED:

DEPARTMENT: Public Works & Utilities Department SUPERSEDES: N/A REPORTS TO: Integrated Waste Supervisor
SUPERVISION: May oversee and direct technical work of others EMPLOYEE UNIT: OE3
FLSA: Non-Exempt
JOB SUMMARY:

Performs a variety of heavy equipment operation and maintenance tasks relative to the operations and type of work performed at the City’s landfill and performs other related work as assigned.

DISTINGUISHING CHARACTERISTICS
This job classification functions at the journey level and is distinguished from the Landfill Equipment Operator II in increased level of responsibility for training, directing, and monitoring the technical work of others in the accomplishment of specific projects. Employees in this classification may also be assigned to work alone on assigned projects. Employees in this classification receive limited supervision within a framework of standard policies and procedures.

EXAMPLES OF ESSENTIAL DUTIES:

Duties may include, but are not limited to, the following:
• Operates heavy equipment such as motor graders, bulldozer tractors, compactors, scrapers, loaders and truck and trailer combinations to perform skilled construction and earth-moving tasks such as grading to engineering specification, excavating, covering and compacting • Performs routine equipment maintenance and makes tool adjustments • Performs various construction, maintenance and repair tasks relative to the operations of the landfill, such as installing drainage pipes and maintaining drainage culverts • Orders supplies and materials as needed and maintains necessary work records • Operates/maintains landfill weigh scale. Functions as gate/scale attendant as needed • Operates a water truck along landfill roads to control dust, and water tanker truck to haul leachate off site
• Operates, installs and maintains leachate pumping system, gas collection system, monitoring wells, and other related landfill operation mechanical and electrical equipment

2 | Landfill Equipment Operator III Job Description
• Reads landfill construction maps and plans
• Constructs/maintains berms, roads, pads and drainage facilities such as ponds and stormwater infrastructure
• Performs routine maintenance and safety checks on assigned equipment and vehicles; reports the need for major mechanical repairs
• Uses a variety of hand and power tools
• Maintains records and prepares records as assigned, performs routine data entry and report generation with computers
• Informs others concerning status of work completed
• Performs general landfill maintenance and operation duties • May occasionally be asked to assist operations at the Public Drop Off, operate garbage vehicles, or other Solid Waste related tasks.
• Performs other related duties that may be reasonably expected as part of this classification.

EMPLOYMENT STANDARDS
Knowledge of:
• The safe operation and basic repair of a variety of maintenance and construction equipment methods, materials and practices used in public works and utilities maintenance and construction activities
• Operation and maintenance of landfill equipment and monitoring systems including gas collection, leachate management, monitoring wells, and stormwater best management practices
• Safe work practice and the construction safety orders issued by the State Division of Industrial Safety
Ability to:
• Read and interpret basic engineered plans, sketches, diagrams and construction markers • Safely and effectively operate light, medium, and heavy duty equipment associated with landfill operations
• Perform complex equipment operation assignments in a variety of landfill operation and maintenance situations
• Perform work related to the operation and maintenance of the landfill • Follow oral and written instruction given in English
• Keep records and prepare routine reports in English
• Use a basic computer and/or tablet system as needed to perform duties • Work effectively alone or as a member of a crew
• Work outdoors in adverse weather conditions
• Establish and maintain effective work relationships with those contacted in the performance of required duties
• Willingness to perform on-call duty assignment and call-back work as required

3 | Landfill Equipment Operator III Job Description

PHYSICAL REQUIREMENTS:

Physical requirements described here are representative of those that must be met by an employee to successfully perform the essential functions of this job. Physical requirements described here are representative of those that must be met by an employee to successfully perform the essential functions of this job.
• Meet the physical requirements necessary to safely and effectively perform required duties • Hear and distinguish various sounds, such as voices of co-workers in noisy environments, operating equipment sounds, abnormal equipment sounds, etc. • Drive and get in and out of a vehicle
• Hear adequately to converse on the telephone, radio, cellular phone, and in person • Use a basic computer and/or tablet system
• Safely and effectively work on ladders and tall structures • Be exposed to chemicals, bacteria and garbage
• Climb up and down ladders and stairs
• Grasp with right and left hands and use fine hand manipulation • Perform manual labor involving frequent bending, pulling, pushing, lifting, squatting, twisting, turning, climbing and carrying of weights up to 50 lbs. • Distinguish various visual colors
• Walk on uneven surfaces.
• Work outside in inclement weather
• Operate large heavy equipment while sitting for prolonged periods of time in outdoor environments and subject to all weather conditions
• Work under conditions such as confined spaces, high noise levels, strong and unpleasant odors, vibration from equipment, exposure to dust, toxic substances and/or chemical irritants (within legal exposure limits)
• Reach above and at shoulder height
• Perform physical tasks involving frequent bending, lifting, carrying, pushing and pulling of weights up to 50 pounds
• Safely and effectively operate light, medium and heavy maintenance and construction equipment
TRAINING AND EXPERIENCE:

Any combination of training and experience, which provides the required knowledge and abilities, is qualifying. A typical way to obtain the knowledge and abilities is:
• Effectively and safely operate heavy construction equipment such as graders, bulldozer tractors, compactors, scrapers, loaders and truck and trailer combinations to perform skilled grading and excavating.
• Perform maintenance and repairs on tools and equipment. • Effectively and safely operate small equipment related to landfill operation or construction and maintenance trades.

4 | Landfill Equipment Operator III Job Description
• Minimum three (3) years of experience as a Landfill Equipment Operator II with the City of Watsonville, or six (6) years of equivalent experience as a landfill equipment operator LICENSE & CERTIFICATION:
• Possession of a valid Class B Driver's License with the following endorsements: tankers and airbrake, and maintain a safe driving record

Reso No. (CM)
Reference: Reso No. 26-91 (CM) (Amend)
Meeting Date: 082724 SWZ ______ TV ______ HR ______
1 RESOLUTION NO.__________ (CM)

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF

WATSONVILLE APPROVING THE REVISED JOB DESCRIPTION OF

WASTEWATER DIVISION MANAGER (MANAGEMENT UNIT) AND
REAFFIRMING THE ESTABLISHED SALARY RANGE OF $61.12-$81.90 PER HOUR OR $10,593.59-$14,196.43 PER MONTH
WHEREAS, on July 8, 2024, the Personnel Commission of the City of Watsonville reviewed and recommended to the City Council the revised job description of Wastewater Division Manager; and
WHEREAS, the Interim City Manager has submitted her report and recommendation to the City Council to approve the revised job description of Wastewater Division Manager, a copy of which is attached hereto and incorporated herein by this reference.

NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF WATSONVILLE, CALIFORNIA, AS FOLLOWS:

1. This action is exempt from the requirements of the California Environmental Quality Act (CEQA) in accordance with CEQA Guidelines Section 15378(b)(5), in that adopting a Resolution approving and authorizing the new job classification and job description for Wastewater Division Manager does not meet CEQA's definition of a “project,” because the action does not have the potential for resulting in either a direct physical change in the environment or a reasonably foreseeable indirect physical change in the environment and if a “project,” is exempt under the “common sense” exception (14 Cal. Code Regs. § 15061(b)(3)) because it can be seen with certainty that there is no possibility that this action may have a significant effect on the environment.

Reso No. (CM)
Reference: Reso No. 26-91 (CM) (Amend)
Meeting Date: 082724
2 2. That the revised description of Wastewater Division Manager (Management Unit), is hereby approved at the established Salary Range of $61.12-$81.90 per hour or $10,593.59-$14,196.43 per month.
**********************************

1 | Wastewater Division Manager Job Description
City of Watsonville
Job Description
JOB TITLE: Wastewater Division Manager DATE APPROVED:

DEPARTMENT: Public Works & Utilities SUPERSEDES: January 1991 REPORTS TO: Public Works & Utilities Director and Assistant Public Works & Utilities Director SUPERVISION: Collection Systems Manager, Wastewater Treatment Plant Lead Operator, Utilities Maintenance Supervisor
EMPLOYEE UNIT: Management
FLSA : EXEMPT
JOB SUMMARY:

To plan, organize, and supervise the administration, operation, and maintenance of the City's wastewater conveyance, treatment, and recycling facilities to ensure efficient operation and compliance with applicable regulations and standards; may oversee and administer the City's wastewater source control program; to develop division policies, and to develop and monitor division budgets; to coordinate the work of engineering and other consultants; to assist in the establishment and administration of the wastewater revenue program. Employees in this classification receive administrative direction within a framework of general guidelines and exercise supervision over subordinate supervisors.

EXAMPLES OF ESSENTIAL DUTIES:

Duties may include, but are not limited to, the following:
• Manages and directs the activities of the City's wastewater operations • May serve as the registered Chief Plant Operator (CPO) if in possession of a Grade V Wastewater Treatment Plant Operator certificate issued by the California State Water Resources Control Board (SWRCB)
• Participates in the selection of staff; provides for their training and development; prepares performance appraisals and recommendations for disciplinary actions, wage and salary actions, promotions, and related negotiating and establishing permit conditions and compliance
• Analyzes complex issues and problems related to areas of responsibility, evaluates alternatives, and develops and recommends effective courses of action

2 | Wastewater Division Manager Job Description
• Prepares and reviews a variety of technical studies, feasibility studies, reports, and correspondence
• Makes presentations and serves on a variety of committees to work with regulatory agencies, the public, elected officials, and other agencies • Ensures the effective utilization of equipment, material, and other resources of the department through review of records, review and approval of requisitions • Plans and prepares requests for proposals, reviews contracts negotiates for optimal cost; reviews progress payment requests; and otherwise manages contract costs • Assists in the development and implementation of policies and procedures and other general administration for the department
• Performs related duties similar to the above in scope and function as required • Makes presentations regarding the wastewater division to the City Council, other City commissions, and community groups

EMPLOYMENT STANDARDS
Knowledge of:
• principles and techniques of supervision including staffing, employee development, and planning and organizing work
• principles and practices of wastewater collection and treatment including wastewater source control and revenue program development and administration • laws, codes, regulations and ordinances affecting wastewater facility operation and administration
• applicable City policies, procedures, and memoranda of understanding related to maintenance and construction, budgeting, finance, and personnel • general administrative practices including budget development and management, and contract administration
Ability to:
• plan, organize, and supervise work, including providing for employee training and development, and appraisal
• assist in formulating, evaluating and making recommendations on policies and procedures affecting the provision of designated public works services • prepare effective technical reports and correspondence • make effective presentations to elected officials, the public, and regulatory and other agencies
• prepare and manage a budget including capital improvements financing, and consultant contract management
• review and evaluate technical engineering and maintenance information, reports and recommendations
• effectively and tactfully communicate in both oral and written forms

3 | Wastewater Division Manager Job Description
• establish and maintain effective work relationships with those contacted in the employment actions
• Assists and participates in design, bidding, construction and grant management of the City's wastewater facilities capital improvement
• May oversee administration of the City's industrial source control program • Represents the City as liaison to the Environmental Protection Agency, the Water Resources Control Board, the Regional Water Quality Control Board and other regulatory agencies in performance of required duties
PHYSICAL REQUIREMENTS:

Physical requirements described here are representative of those that must be met by an employee to successfully perform the essential functions of this job. • Meet the physical requirements necessary to safely and effectively perform required duties • Hear and distinguish various sounds, such as voices of co-workers in noisy environments, cell phone, etc.
• Drive an automobile and light, medium, and heavy equipment • Intermittently bend and twist to reach equipment surrounding desk and climb into and out of trucks, automobiles and heavy equipment
• Walk on uneven surfaces
• Work outside in inclement weather
TRAINING AND EXPERIENCE:

Any combination of training and experience, which provides the required knowledge and abilities, is qualifying. A typical way to obtain the knowledge and abilities is:
• Advanced educational training in wastewater treatment and chemistry, engineering, or related subjects. Five years of increasingly responsible experience in the operation, maintenance, or design of wastewater conveyance or treatment facilities including at least two years in a supervisory or administrative capacity in the operation of publicly owned wastewater collection and treatment facilities.

LICENSE & CERTIFICATION:
• Possession and continued maintenance of a valid California Class C driver’s license with a safe driving record.
• Highly desired: Possession of a Grade IV or Grade V Wastewater Treatment Plant Operator certificate issued by the California State Water Resources Control Board (SWRCB) or a state with reciprocity.

8/22/2024 6:43:41 PM
C:\Program Files\eSCRIBE\TEMP\18433824473\18433824473,,,APPOINTMENT OF TAMARA VIDES AS CITY MANAGER AND APPROVAL OF CONTRACT FOR EMPLOYMENT.docx
Agenda Report
MEETING DATE: Tuesday, August 27, 2024
TO: City Council
FROM: DEPUTY CITY MANAGER MANNING
SUBJECT: APPOINTMENT OF TAMARA VIDES AS CITY MANAGER AND

APPROVAL OF CONTRACT FOR EMPLOYMENT
RECOMMENDED ACTION:

It is recommended that the City Council adopt a resolution appointing Tamara Vides as City Manager and approving a contract between the City of Watsonville and Tamara Vides for employment as City Manager; and authorizing the Mayor to execute the Employment Contract.

BACKGROUND:

Former City Manager Rene Mendez resigned in May 2024 to become the City Manager of Salinas. After receiving and reviewing several proposals, the City Council awarded a contract to Ralph Andersen and Associates to conduct an executive recruitment to fill the City Manager position.

DISCUSSION:

Ralph Andersen and Associates, led by consultant Fred Wilson, conducted an extensive search for candidates who met the characteristics and qualifications desired in a City Manager for the City of Watsonville. The position was widely advertised, and 17 applications were received. The consultant conducted preliminary interviews and recommended seven candidates to the City Council as the most competitive candidates for consideration.

The City Council narrowed down the candidate pool and invited five candidates to interview, ultimately selecting Tamara Vides based on her extensive experience with the City of Watsonville and her qualifications for the position. Ms. Vides started her career with the City of Watsonville over twenty-six years ago and has held various positions in the organization, ultimately advancing to Assistant City Manager in 2020. Ms. Vides has also served as interim Parks and Community Services Director, interim Public Works and Utilities Director, and is currently serving as Interim City Manager for the second time.

Ms. Vides has a Master of Science in Recreation Management and a Bachelor of Science in Business Administration.

8/22/2024 6:43:41 PM
C:\Program Files\eSCRIBE\TEMP\18433824473\18433824473,,,APPOINTMENT OF TAMARA VIDES AS CITY MANAGER AND APPROVAL OF CONTRACT FOR EMPLOYMENT.docx
The terms of the proposed Employment Agreement include, among other terms, a base salary of $281,000 per year with a six percent increase within six months if a satisfactory performance review is received. The contract also provides for a $10,000 annual contribution to deferred compensation and the ability to cash out up to 100 hours of accrued vacation time within three months of the execution of the agreement.

Furthermore, she will be eligible for the benefits as outlined in the Executive Team Compensation and Benefits Plan, which include health, life, and disability insurance; administrative, vacation, and sick leave; and holidays. The contract includes annual performance reviews, at which time the City Council may consider cost of living and salary adjustments.

Either party may terminate without cause upon providing a sixty-day notice. The City may terminate for cause for the specific reasons set forth in the Employment Agreement by providing her with a written notice of termination, which shall be effective immediately.

If employment is terminated and severance pay is applicable per the contract, the employee will receive a cash payment equal to nine (9) months of base salary.

If approved, Ms. Vides’ contract will be effective on August 28, 2024.

STRATEGIC PLAN:

The appointment of a City Manager supports all aspects of the Strategic Plan, but specifically Goal 7-Efficient and High Performing Government.

FINANCIAL IMPACT:

The proposed salary and benefits for this position exceed the current budget allocation by $21,000 for this fiscal year. We will cover this increase by reallocating funds from other line items within the city manager’s budget.

ALTERNATIVE ACTION:

The City Council could elect not to move forward with this appointment.

ATTACHMENTS AND/OR REFERENCES (If any):

None.

Reso No. (CM)
Meeting Date: 082724 SWZ ______ HR ______
1 RESOLUTION NO.__________ (CM)

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF WATSONVILLE

APPOINTING TAMARA VIDES AS CITY MANAGER AND APPROVING
CONTRACT FOR EMPLOYMENT AS CITY MANAGER; AND

AUTHORIZING THE MAYOR TO EXECUTE THE EMPLOYMENT

CONTRACT

BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
WATSONVILLE, CALIFORNIA, AS FOLLOWS:

1. That Tamara Vides be and is hereby appointed City Manager, and she shall have all the powers and authority granted the City Manager in Sections 703 and 704 of the Charter of the City of Watsonville.

2. That the Contract between the City of Watsonville and Tamara Vides for employment as City Manager of the City of Watsonville, a copy of which Contract is attached hereto and incorporated herein by this reference, is fair and equitable and is hereby approved.

3. That the Mayor be and is hereby authorized and directed to execute the Contract for and on behalf of the City of Watsonville.

BE IT FURTHER RESOLVED that this appointment shall become effective August 28, 2024.
*********************************

4874-6823-0618 v1 1

AT-WILL EMPLOYMENT AGREEMENT
OF

TAMARA VIDES
This agreement is between the CITY OF WATSONVILLE (“City”), a municipal corporation organized in the State of California, and TAMARA VIDES (“Employee”) (“Agreement”). City and Employee shall be collectively referred to as “Parties” or individually referred to as “Party”, “Employee” or “City”.

RECITALS
WHEREAS, Employee has been employed by the City of Watsonville since 1998, including as the Assistant City Manager since 2020. Employee served as the Interim City Manager from December 15, 2021 to June 16, 2022, and from May 15, 2024 to the present ; and WHEREAS, the City has completed a recruitment process and has determined that the City desires to offer the position of City Manager to Employee; and WHEREAS, Employee has indicated she desires to serve in the capacity of City Manager; and
WHEREAS, In accordance with the terms of this Agreement, City and Employee have agreed to memorialize their intent and the terms of employment.

NOW THEREFORE, it is hereby agreed by City and Employee as follows:

1. Effective Date
The effective date of this Agreement is August 28, 2024.

2. Appointment as City Manager and Start Date
The City agrees to employ Employee as City Manager for the City, subject to the terms, conditions and provisions of this Agreement. Employee accepts such employment. Employee shall be “at will” and serve at the pleasure of the City Council. Employee shall start performance of her duties as City Manager on August 28, 2024.

Employee’s employment with the City will be subject to all requirements of the City’s Personnel Rules (“Rules”) unless contradicted by some provision of this Agreement, in which case this Agreement will govern.

3. Duties and Responsibilities
a. Employee will perform the functions and duties specified in the laws of the United States and the State of California and in Article VII of the City’s Charter, as well as the City’s Municipal Code, Personnel Rules, ordinances and resolutions of City, and all other legally permissible and proper duties and functions that the City Council may, from time to time, assign.

Docusign Envelope ID: 2266DE6C-4A2A-4F68-824B-890CE65A01FE In Process

4874-6823-0618 v1 2
b. Employee shall perform her duties to the best of her ability in accordance with the highest professional and ethical standards of the profession, comply with all general rules and regulations established by the City, and obey all State and Federal laws. c. Employee agrees to devote her productive time, ability and attention to the City’s business while employed as City Manager. Employee shall not hold secondary employment, and shall be employed exclusively by the City. The City and Employee recognize that Employee is expected to devote necessary time outside normal office hours to perform business of the City.

Since Employee’s position is “exempt” under the Fair Labor Standards Act, Employee shall not receive overtime or extra compensation for work performed outside normal business hours. d. Employee shall not engage in any activity that is or may become a conflict of interest, prohibited by contract, or that may create an incompatibility of office as defined under California law. Employee will complete annual disclosure forms as required by law.

4. Resignation and Termination
a. Resignation: Employee may resign at any time with or without cause and agrees to give City at least sixty (60) days advance written notice of the effective date of her resignation, unless the parties mutually agree otherwise.
b. Termination: City may terminate Employee, with or without cause, at any time, consistent with the requirements of Section 701 of the City’s Charter, which provides that the City Council may remove the City Manager by a resolution adopted by at least four (4) affirmative votes.
i. Termination without Cause: City may terminate Employee without cause by providing her a written notice of termination. If City terminates employee without cause, City shall provide Employee sixty (60) days written notice of such termination, unless the parties mutually agree otherwise. If the City, at the request of a majority of the City Council, requests Employee’s resignation without cause, Employee will be deemed terminated without cause. If Employee is terminated without cause, Employee is entitled to severance as detailed herein. ii. Termination for Cause: City may terminate Employee for cause by providing her a written notice of termination. Such termination may be effective immediately. Termination for cause does not require payment of severance. The following are sufficient bases for termination for cause:

A. Employee engages in illegal activities;
B. Gross malfeasance;
C. Dereliction of duties;
D. Absence from employment without a good cause;
E. Failure to perform duties and responsibilities under this Agreement, as defined in the City’s Charter, or as specified in the City Manager’s job description.

Docusign Envelope ID: 2266DE6C-4A2A-4F68-824B-890CE65A01FE In Process

4874-6823-0618 v1 3
F. Resume fraud or other acts of material dishonesty;
G. Violation of the City’s Rules, including but not limited to, the City’s rule against harassment, discrimination, and retaliation; H. Use or possession of illegal drugs;
I. Engaging conduct tending to bring embarrassment or disrepute to the City;
J. Conviction of any felony or any criminal offense involving moral turpitude; or
K. An abuse of his office or position as defined in Government Code Section 53243.4.
c. Termination by Reduction of Salary or Benefits: If City reduces the salary of City Manager in a greater percentage than an across-the-board reduction for other “at will” employees, as defined in the City’s Compensation and Benefits Plan for at-will employees (“Plan”), the Employee may, at her option, be deemed to be “terminated” without cause as of the date of such reduction.
d. Affirmation of “At-Will” status: The parties recognize and affirm that: 1) Employee is an “at-will” employee whose employment may be terminated by the City Council at any time; and 2) there is no express or implied promise made to Employee for any form of continued employment as City Manager or any other position with City. This Agreement is the sole and exclusive basis for an employment relationship between Employee and the City.

Nothing in this Agreement shall be construed to create a property interest for Employee in the position of City Manager.

5. Salary
a. Effective August 28, 2024, City agrees to pay Employee $281,000 in base salary per year (approximately $23,416 per month) . The City will make all salary payments to Employee at the same time payments to other City employees , and payments will be subject to the customary withholdings.
b. City agrees to review Employee’s performance within six (6) months of adoption of this Agreement. If the Council agrees that Employee has performed satisfactorily, Council will consider a 6% increase in salary at that time.
c. Employee is eligible to receive a salary increase, commencing in 2025 and every year thereafter, for cost of living adjustment. The City Council will review and determine whether to grant a cost of living adjustment and the appropriate rate of adjustment at the time of performance review.

Docusign Envelope ID: 2266DE6C-4A2A-4F68-824B-890CE65A01FE In Process