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HomeMy WebLinkAboutReso 12-2020 (20-08)City of South San Francisco P.O. Box 711 (City Hall, 400 Grand Avenue) South San Francisco, CA City Council Resolution: RES 12-2020 File Number: 20-08 Enactment Number: RES 12-2020 RESOLUTION APPROVING A PURCHASE AND SALE AGREEMENT WITH BADEN DEVELOPMENTS LLC FOR THE SALE OF 432 BADEN AVENUE FOR $1,100,000 AND AUTHORIZING THE CITY MANAGER TO EXECUTE THE AGREEMENT. WHEREAS, on June 29, 2011, the Legislature of the State of California ("State") adopted Assembly Bill xl 26 ("AB 26"), which amended provisions of the State's Community Redevelopment Law (Health and Safety Code sections 33000 et seq.) ("Dissolution Law"), pursuant to which the former Redevelopment Agency of the City of South San Francisco ("City") was dissolved on February 1, 2012; and WHEREAS, the City elected to become the Successor Agency to the Redevelopment Agency of the City of South San Francisco ("Successor Agency"); and WHEREAS, pursuant to Health and Safety Code Section 34191.5(c)(2)(C), property shall not be transferred to a successor agency, city, county or city and county, unless a Long Range Property Management Plan ("LRPMP") has been approved by the Oversight Board and the California Department of Finance ("DOF"); and WHEREAS, in accordance with the Dissolution Law, the Successor Agency prepared a LRPMP, which was approved by a resolution of the Oversight Board for the Successor Agency to the Redevelopment Agency of the City of South San Francisco ("Oversight Board") on May 21, 2015, and was approved by the DOF on October 1, 2015; and WHEREAS, consistent with the Dissolution Law and the LRPMP, certain real properties located in the City of South San Francisco, that were previously owned by the former Redevelopment Agency, were transferred to the Successor Agency ("Agency Properties"); and WHEREAS, on October 18, 2016, the City entered into an Amended and Restated Master Agreement for Taxing Entity Compensation ("Compensation Agreement") with the various local agencies who receive shares of property tax revenues from the former redevelopment project area ("Taxing Entities"), which provides that upon approval by the Oversight Board of the sale price, and consistent with the LRPMP, the proceeds from the sale of any of the Agency Properties will be distributed to the Taxing Entities in accordance with their proportionate contributions to the Real Property Tax Trust Fund for the former Redevelopment Agency; and WHEREAS, the former Redevelopment Agency purchased the Property in 1997; and, WHEREAS, the LRPMP, prepared by the Successor Agency and approved by the Oversight Board for City of South San Francisco Page 1 File Number: 20-08 Enactment Number. RES 12-2020 the Successor Agency to the Redevelopment Agency of the City of South San Francisco ("Oversight Board"), designated 432 Baden Avenue, County Assessor's Parcel Number 012-321-160 ("Property"), to be sold, with the proceeds of the sale distributed to the taxing entities; and, WHEREAS, consistent with the LRPMP and the Oversight Board resolution, the Successor Agency executed and recorded a grant deed on May 16, 2017, transferring the Agency Properties, including the Property to the City; and, WHEREAS, the LRPMP designated the site in the `For Sale' disposition category; and, WHEREAS, Baden Developments LLC ("Developer") own the adjacent property, 428 Baden Avenue; and, WHEREAS, during the entitlement process for 428 Baden Avenue, Developer approached the City with a price offer and a proposal to assemble the site with a larger project with housing units and better design; and, WHEREAS, on September 23, 2019, Developer provided the City with a Letter of Intent ("LOI") for the purchase of the Property; and, WHEREAS, typically the City would undergo a competitive bid process for the sale of a property but it was determined that this sole offer from Developer would render the highest and best use of both properties, and consistent with the LRPMP; and, WHEREAS, on October 9, 2019, the City Council considered the LOI and agreed that the site had a far greater value if assembled with 428 Baden rather than disposing of it as a stand-alone site and provisionally accepted the offer price of $1,100,000, subject to an appraisal; and, WHEREAS, staff commissioned an appraisal by Colliers International Valuation and Advisory Services ("Appraiser") which valued the property at $1,020,000; and, WHEREAS, Developer submitted a Planning application that assembles the two sites for the construction of 36 residential units; and, WHEREAS, this infill housing project utilizes the State Density Bonus and provides three BMR units at the Very Low -Income level; and, WHEREAS, there is no cost to the General Fund for the sale of this property; and, WHEREAS, the City's share of the sale proceeds are 16.7% or $183,700; and, WHEREAS, pursuant to redevelopment law and the Compensation Agreement, final approval of the sale price of the Property must be approved by the Oversight Board to the Successor Agency of South San Francisco; and City of South San Francisco Page 2 File Number. 20-08 Enactment Number. RES 12-2020 WHEREAS, the City and the Developer now wish to enter into a Purchase and Sale Agreement for the Property, attached hereto and incorporated herein as Exhibit A; and WHEREAS, the proposed construction of 36 residential units at 428 and 432 Baden Avenue is an infill housing project given its size and location, and will be subject to further environmental review and determination pursuant the California Environmental Quality Act, Pub. Resources Code §21000, et seq. ("CEQA") as a part of the planning entitlements approval process; and, WHEREAS, on January 16, 2020, at its regular meeting, the Planning Commission determined that the sale of the Property at 432 Baden Avenue was consistent with the South San Francisco General Plan. NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of South San Francisco does hereby resolve as follows: 1. The foregoing recitals are true and correct and made a part of this Resolution. 2. Subject to approval by the Oversight Board of the final sale price, a Purchase and Sale Agreement with Baden Developments LLC in substantially the same form attached hereto as Exhibit A, for the disposition of 432 Baden Avenue (APN 012-321-160) for $1,100,000, is hereby approved. 3. The City Manager is hereby authorized to enter into and execute on behalf of the City Council the Purchase and Sale Agreement, in substantially the same form attached hereto as Exhibit A; and to make any non -material revisions, amendments or modifications deemed necessary to carry out the intent of this Resolution and subject to the Oversight Board's review of this transaction and approval of the final sale price. 4. The City Manager is hereby authorized to execute any other necessary documents related to the sale of the Property, and to take any and all other actions necessary to implement this intent of this Resolution, subject to approval as to form by the City Attorney. Exhibit A: Purchase and Sale Agreement for 432 Baden Avenue. At a meeting of the City Council on 1/22/2020, a motion was made by Vice Mayor Addiego, seconded by Councilmember Nagales, that this Resolution be approved. The motion passed. Yes: 5 Mayor Garbarino, Vice Mayor Addiego, Councilmember Nagales, Councilmember Nicolas, and Councilmember Matsumoto Attest by �dm ZVtX dolaL sa Govea Acosta, City Clerk City of South San Francisco Page 3 PURCHASE AND SALE AGREEMENT AND JOINT ESCROW INSTRUCTIONS THIS PURCHASE AND SALE AGREEMENT AND JOINT ESCROW INSTRUCTIONS (“this Agreement”) is entered into as of ________________, 2020 (the “Effective Date”), by and between the City of South San Francisco, a municipal corporation, (“Seller”) and Baden Development, LLC, a California limited liability company (“Buyer”). Seller and Buyer are collectively referred to herein as the “Parties.” RECITALS A. Seller is owner of certain real property with an address of 432 Baden Avenue, South San Francisco, California, also known as San Mateo County Assessor’s Parcel Numbers 012-321- 160 and as more particularly described in Exhibit A attached hereto and incorporated herein (“Property”). B. The former Redevelopment Agency of the City of South San Francisco (“RDA”) purchased the Property on April 16, 1997. C. On, June 29, 2011 the legislature of the State of California (the “State”) adopted Assembly Bill x1 26 (“AB 26”), which amended provisions of the Redevelopment Law, and the California Supreme Court decision in California Redevelopment Association, et al. v. Ana Matosantos, et al., upheld AB 26 (together with AB 1484, the “Dissolution Law”), and the RDA was dissolved on February 1, 2012. D. Pursuant to the Dissolution Law, the South San Francisco Successor Agency (“Agency”) prepared a Long Range Property Management Plan (“LRPMP”), which was approved by a resolution of the Oversight Board for the Successor Agency to the Redevelopment Agency of the City of South San Francisco (“Oversight Board”) on November 19, 2013, and on May 21, 2015, the Oversight Board approved the Amended Long Range Property Management Plan (“LRPMP”), which was approved by the California Department of Finance (“DOF”) on October 1, 2015. E. Pursuant to the LRPMP and Dissolution Law, the Agency’s transfer of real property assets to the City for disposition consistent with the LRPMP is subject to entering into a Master Agreement for Taxing Entity Compensation by all Taxing Entities. F. The City and Taxing Entities entered into an Amended and Restated Master Agreement for Taxing Entity Compensation, dated October 18, 2016 (“Master Compensation Agreement”), which governs the distribution of any net proceeds received from the sale of the Property, as defined herein. G. The Property was transferred from the Agency to the City pursuant to a grant deed recorded on May 16, 2017. 2 H. Buyer agrees to purchase the Property, and Seller agrees to sell the Property to Buyer, subject to the terms and conditions of this Agreement. NOW, THEREFORE, for and in consideration of the mutual covenants and agreements contained in this Agreement, and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged by the parties, Seller and Buyer hereby agree as follows: 1. INCORPORATION OF RECITALS AND EXHIBITS. The Recitals set forth above and the Exhibits attached to this Agreement are each incorporated into the body of this Agreement as if set forth in full. 2. PURCHASE AND SALE. 2.1 Agreement to Buy and Sell. Subject to the terms and conditions set forth herein, Seller agrees to sell the Property to Buyer, and Buyer hereby agrees to acquire the Property from Seller. 2.2 Purchase Price. The purchase price for the Property to be paid by Buyer to Seller (the “Purchase Price”) is one million one hundred thousand dollars ($1,100,000.00). The Purchase Price shall be paid in cash at the Closing to the Seller. 3. ESCROW. 3.1 Escrow Account. Seller has opened an interest-bearing escrow account (the “Escrow”) maintained by North American Title Company in San Mateo (the “Escrow Holder”), with interest accruing to the benefit of Buyer. Escrow Holder shall perform all escrow and title services in connection with this Agreement. 3.2 Opening of Escrow. Within seven (7) business days after the Effective Date, the Parties will deposit into Escrow the fully executed Agreement, or executed counterparts thereto. The date that is the later of the following to occur shall be deemed the “Opening of Escrow”: (a) the date that such fully executed Agreement is received by Escrow Holder. (b) the date that Buyer submits Developer’s Financing Plan (as defined in Section 5.2(e) below) to Seller for review. (c) the date that Buyer submits an application for building permits to develop the Property to Seller for review. 3.3 Buyer’s Deposit. Within three (3) business days after the Effective Date, Buyer shall deposit thirty thousand dollars ($30,000.00) with Seller, to be held in trust pursuant to this Agreement (“Initial Deposit”). Within three (3) business days after the Opening of Escrow, Seller shall deposit the Initial Deposit into Escrow with Escrow Holder on behalf of Buyer. If Buyer issues an Approval Notice (as defined in Section 3.4 below), Buyer shall deposit an additional seventy thousand dollars ($70,000.00) in Escrow (the “Additional Deposit”). The 3 Initial Deposit and Additional Deposit are sometimes collectively referred to herein as the “Deposits.” The Deposits shall be applied toward the Purchase Price in the event of Closing. 3.4 Satisfaction of Due Diligence Contingency. Buyer shall have the right, in its sole discretion, to terminate this Agreement for any reason prior to the expiration of the Due Diligence Contingency Period (as defined in Section 5(a) below) by providing written notice thereof and to receive a refund of the Deposits. Buyer hereby agrees to provide written notice to Seller prior to the expiration of the Due Diligence Contingency Period if Buyer approves all due diligence items (“Approval Notice”). If Buyer provides a termination notice to Seller before 11:59 p.m. on the last day of the Due Diligence Contingency Period, this Agreement shall terminate, and all amounts deposited by Buyer into escrow (except the Independent Consideration), together with interest thereon, if any, will be returned to Buyer, and neither party shall have any further rights or obligations hereunder except those which expressly survive the termination hereof. If Buyer fails to deliver the Approval Notice to Seller prior to 11:59 p.m. on the last day of the Due Diligence Contingency Period, it will be conclusively presumed that Buyer has disapproved all such items, matters or documents, and this Agreement shall terminate and the Deposits shall be refunded to Buyer. 3.5 Independent Consideration. As independent consideration for Seller’s entering into this Agreement to sell the Property to Buyer, Buyer shall deliver the sum of one hundred dollars ($100.00) to Seller through Escrow (“Independent Consideration”). In the event that Buyer terminates this Agreement in accordance with Section 3.4 above, Seller shall retain the Independent Consideration; in the event that Buyer does not terminate this Agreement as aforesaid, the Independent Consideration shall be applied to the Purchase Price at Closing. 4. PROPERTY DISCLOSURE REQUIREMENTS. 4.1 Condition of Title/Preliminary Title Report. Escrow Holder shall deliver a Preliminary Title Report for the Property (the “Preliminary Report”) to Buyer within three (3) days after the Effective Date. Buyer shall have until the end of the Due Diligence Contingency Period to approve the condition of title to the Property. If Buyer delivers the Approval Notice, Buyer agrees to take title to the Property subject to the following “Permitted Exceptions”: (a) standard printed exceptions in the Preliminary Report; (b) general and special real property taxes and assessments constituting a lien not yet due and payable; and (c) the Schedule B exceptions to the title referenced in the Approval Notice. In no event shall any monetary liens be deemed a Permitted Exception. Buyer shall provide any objections to the condition of title to Seller in writing prior to the Due Diligence Contingency Period. 4.2 Environmental Condition of Property. Seller has provided Buyer with all documents reasonably known to Seller pertaining to the environmental condition of the Property. At Closing, the Buyer agrees to take title of the Property in AS- IS WHERE-IS condition with no environmental remediation work required by or indemnities from the Seller or the Agency. Seller, at Buyer’s expense, agrees to cooperate with Buyer to obtain regulatory approval of any necessary environmental work for the Property. Buyer explicitly acknowledges that Buyer will be responsible to manage and complete any remediation work for the Property after Closing. After 4 Closing, Seller shall have no further obligations with respect to environmental and/or natural hazards remediation costs. 4.3 Environmental and Natural Hazards Disclosure. California Health & Safety Code section 25359.7 requires owners of non-residential real property who know, or have reasonable cause to believe, that any release of hazardous substances are located on or beneath the real property to provide written notice of same to the buyer of real property. Other applicable laws require Seller to provide certain disclosures regarding natural hazards affecting the Property. Pursuant to Section 4.2, Seller agrees to make any necessary disclosures required by law. 5. CLOSING AND PAYMENT OF PURCHASE PRICE. 5.1 Closing. The closing (the “Closing” or “Close of Escrow”) will occur no later than one hundred eighty (180) calendar days after the Effective Date (“Closing Date”) or such other date that the Parties agree in writing. 5.2 Buyer’s Conditions to Closing. Buyer's obligation to purchase the Property is subject to the satisfaction of all of the following conditions or Buyer's written waiver thereof (in Buyer’s sole discretion) on or before the Closing Date: (a) Buyer has approved the condition of the Property. Buyer will have sixty (60) calendar days from the Effective Date (the “Due Diligence Contingency Period”) to complete physical inspections of the Property and due diligence related to the purchase of the Property. Seller shall provide to Buyer copies of all reasonably available and known documents relating to the ownership and operation of the Property, including but not limited to plans, permits and reports (environmental, structural, mechanical, engineering and land surveys) that Seller has in its possession not later than two (2) business days following the execution and delivery of this Agreement. All physical inspections must be coordinated with Seller’s representative. Buyer hereby agrees to indemnify and hold Seller harmless for any damage to the Property caused (but not merely revealed) by Buyer’s inspections. (b) Seller has performed all obligations to be performed by Seller pursuant to this Agreement. (c) Seller’s representations and warranties herein are true and correct in all material respects as of the Closing Date. (d) The Title Company is irrevocably committed to issue an ALTA standard coverage title insurance policy to Buyer, effective as of the Closing Date, insuring title to Buyer in the full amount of the Purchase Price. (e) Seller shall have approved Buyer’s financing plan for the development of the Property, which shall include a proforma reasonably acceptable to Seller and proof of construction loan necessary to reasonably complete the development of the Property (the “Developer’s Financing Plan”). 5 (f) Seller shall have approved the construction contract for Buyer’s development of the Property (the “Construction Contract”). (g) Seller shall have approved the merger of the Property with the adjacent lot located at 428 Baden Avenue, South San Francisco, California (the “Adjacent Lot”). (h) Buyer and Seller shall have executed an Affordable Housing Agreement ( “AHA”) for the Property on commercially reasonable terms and which shall include the following provisions: (1) Below Market Rate units shall be constructed by Buyer to meet or exceed South San Francisco Municipal Code Chapter 20.380 requirements; (2) Seller shall approve any proposed assignment of the AHA or disposition of the Property prior to completion of the development of the Property, and Seller’s approval of the same, shall not be unreasonably withheld or delayed, it being acknowledged that the City Council would need to review and approve of any such proposed assignment. 5.3 Seller’s Conditions to Closing. The Close of Escrow and Seller’s obligation to sell and convey the Property to Buyer are subject to the satisfaction of the following conditions or Seller’s written waiver (in Seller’s sole discretion) of such conditions on or before the Closing Date: (a) Buyer shall have submitted Developer’s Financing Plan to Seller for approval. (b) Buyer shall have obtained Seller’s approval of a Construction Contract for development of the Property by Buyer. (c) Buyer shall have taken all necessary actions for the issuance of building permits from Seller necessary to enable to development of the Property. (d) Buyer shall have taken all necessary actions to obtain the approval of the merger of the Property with the Adjacent Lot and such approval shall be ready to be recorded promptly following the Closing. (e) Buyer has performed all obligations to be performed by Buyer pursuant to this Agreement before Closing Date. (f) Buyer's representations and warranties set forth herein are true and correct in all material respects as of the Closing Date. 5.4 Conveyance of Title. Seller will deliver marketable fee simple title to Buyer at the Closing, subject only to the Permitted Exceptions. The Property will be conveyed by Seller to Buyer in an “as is” condition, with no warranty, express or implied, by Seller as to the physical condition including, but not limited to, the soil, its geology, or the presence of known or unknown faults or Hazardous Materials or hazardous waste (as defined by Section 12); provided, however, that the foregoing shall not relieve Seller from disclosure of any such conditions of which Seller has actual knowledge. 6 5.5 Deliveries at Closing. (a) Deliveries by Seller. Seller shall deposit into the Escrow for delivery to Buyer at Closing: (i) a grant deed, substantially in the form attached hereto as Exhibit B (“Grant Deed”); (ii) an affidavit or qualifying statement which satisfies the requirements of paragraph 1445 of the Internal Revenue Code of 1986, as amended, any regulations thereunder (the “Non-Foreign Affidavit”); (iii) a California Franchise Tax Board form 590 (the “California Certificate”) to satisfy the requirements of California Revenue and Taxation Code Section 18805(b) and 26131. (b) Deliveries by Buyer. No less than one (1) business day prior to the close of escrow, Buyer shall deposit into escrow immediately available funds in the amount, which together with the Independent Consideration and the Deposits is equal to: (i) the Purchase Price as adjusted by any prorations between the Parties; (ii) the escrow fees and recording fees; and (iii) the cost of the Title Policy. (c) Closing. Upon Closing, Escrow Holder shall: (i) record the Grant Deed; (ii) disburse to Seller the Purchase Price, less Seller’s share of any escrow fees, costs and expenses; (iii) deliver to Buyer the Non-Foreign Affidavit, the California Certificate and the original recorded Grant Deed; (iv) pay any commissions and other expenses payable through escrow; and (vi) distribute to itself the payment of escrow fees and expenses required hereunder. (d) Closing Costs. Buyer will pay all escrow fees (including the costs of preparing documents and instruments), and recording fees. Buyer will also pay title insurance and title report costs. Seller will pay all transfer taxes and governmental conveyance fees, where applicable. (e) Pro-Rations. At the close of escrow, the Escrow Agent shall make the following prorations: (i) property taxes will be prorated as of the close of escrow based upon the most recent tax bill available, including any property taxes which may be assessed after the close of escrow but which pertain to the period prior to the transfer of title to the Property to Buyer, regardless of when or to whom notice thereof is delivered; and (ii) any bond or assessment that constitutes a lien on the Property at the close of escrow will be assumed by Buyer. Seller does not pay ad valorem taxes. 5.6 Post-Closing Obligations. The following obligations shall survive the Close of Escrow: (a) Permits. Buyer shall take all necessary actions for construction permits to be issued to Buyer for the development of the Property within ten (10) business days following the Close of Escrow. (b) Commence Work. Buyer shall commence work to develop the Property within forty-five (45) days of the Close of Escrow. (c) Lot Merger. Buyer shall record the merger of the Property with the Adjacent Lot within ten (10) business days of the Close of Escrow. 7 6. REPRESENTATIONS, WARRANTIES AND COVENANTS. 6.1 Seller’s Representations, Warranties and Covenants. In addition to the representations, warranties and covenants of Seller contained in other sections of this Agreement, Seller hereby represents, warrants and covenants to Buyer that the statements below in this Section 6.1 are each true and correct as of the Closing Date provided however, if to Seller’s actual knowledge any such statement becomes untrue prior to Closing, Seller will notify Buyer in writing and Buyer will have three (3) business days thereafter to determine if Buyer wishes to proceed with Closing or terminate this Agreement and receive a refund of the Deposits. If Buyer determines it does not wish to proceed, then the terms of Section 3.4 will apply. (a) Authority. Seller is a municipal corporation, lawfully formed, in existence and in good standing under the laws of the State of California. Seller has the full right, capacity, power and authority to enter into and carry out the terms of this Agreement. This Agreement has been duly executed by Seller, and upon delivery to and execution by Buyer is a valid and binding agreement of Seller. (b) Encumbrances. Seller has not alienated, encumbered, transferred, mortgaged, assigned, pledged, or otherwise conveyed its interest in the Property or any portion thereof, nor entered into any Agreement to do so, and there are no liens, encumbrances, mortgages, covenants, conditions, reservations, restrictions, easements or other matters affecting the Property, except as disclosed in the Preliminary Report. Seller will not, directly or indirectly, alienate, encumber, transfer, mortgage, assign, pledge, or otherwise convey its interest prior to the Close of Escrow, as long as this Agreement is in force. (c) There are no agreements affecting the Property except those which have been disclosed by Seller. There are no agreements which will be binding on the Buyer or the Property after the Close of Escrow, which cannot be terminated on thirty (30) days prior written notice. (d) Conflicts and Pending Actions. There is no agreement to which Seller is a party or, to Seller’s knowledge, binding on Seller, which is in conflict with this Agreement. There is no action, suit, arbitration, unsatisfied order or judgment, governmental investigation or proceeding pending or, to Seller’s knowledge, threatened against the Property or the transaction contemplated by this Agreement. (f) Lease. There are no leases of space in the Property, subleases, licenses, franchise agreements or other agreements to occupy or utilize all or any portion of the Property that will be in force after the Closing. At Closing, Seller shall deliver the Property to Buyer vacant of any occupants. (g) Condemnation. No condemnation proceedings relating to the Property are pending or, to Seller’s knowledge, threatened. (h) Foreign Person; OFAC. Seller is not a “foreign person” within the meaning of Section 1445(f)(3) of the Internal Revenue Code of 1986, as amended. Seller 8 represents and warrants that (a) Seller and, to Seller’s actual knowledge, each person or entity owning an interest in Seller is (i) not currently identified on the Specially Designated Nationals and Blocked Persons List maintained by the Office of Foreign Assets Control, Department of the Treasury (“OFAC”) and/or on any other similar list maintained by OFAC pursuant to any authorizing statute, executive order or regulation (collectively, the “List”), and (ii) not a person or entity with whom a citizen of the United States is prohibited to engage in transactions by any trade embargo, economic sanction, or other prohibition of United States law, regulation, or Executive Order of the President of the United States, and (iii) not an Embargoed Person (as hereinafter defined), (b) to Seller’s actual knowledge, none of the funds or other assets of Seller constitute property of, or are beneficially owned, directly or indirectly, by any Embargoed Person, and (c) to Seller’s actual knowledge, no Embargoed Person has any interest of any nature whatsoever in Seller (whether directly or indirectly). The term “Embargoed Person” means any person, entity or government subject to trade restrictions under U.S. law, including but not limited to, the International Emergency Economic Powers Act, 50 U.S.C. §1701 et seq., The Trading with the Enemy Act, 50 U.S.C. App. 1 et seq., and any Executive Orders or regulations promulgated thereunder. (i) Compliance. Seller has not received any written notice from any governmental authority that the Property is not in material compliance with all applicable laws and regulations (including environmental and zoning laws and regulations), other than such violations as have been fully cured. To Seller’s knowledge, neither Seller nor the Property are in default or breach of any material obligation under any encumbrances, covenants or easement agreements recorded against the Property. (j) Hazardous Materials. Except as otherwise disclosed to Buyer by Seller (including in any materials delivered or made available to Buyer), Seller has received no written notice from any local, state or national governmental entity or agency of any asbestos, lead or other Hazardous Materials existing or potentially existing with respect to the Property. As used herein, “Hazardous Material” means any hazardous, toxic or dangerous waste, substance or material, pollutant or contaminant, as defined for purposes of the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42 U.S.C. Section 9601 et seq.), as amended, or the Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.), as amended, or any other laws, or any substance which is toxic, explosive, corrosive, flammable, infectious, radioactive, carcinogenic, mutagenic, or otherwise hazardous, or any substance which contains gasoline, diesel fuel or other petroleum hydrocarbons, polychlorinated biphenyls (PCBs), or radon gas, urea formaldehyde, asbestos or lead. (k) Purchase Options. There are no outstanding rights of first refusal, rights of first offer, purchase options or similar purchase rights with respect to the Property. (l) Management Agreements. There are no management agreements, leasing agreements, brokerage agreements or similar agreements which affect the Property and will survive Closing. (m) Taxes. To Seller’s knowledge, there are no impositions of new special assessments with respect to the Property. 9 The truth and accuracy of each of the representations and warranties, and the performance of all covenants of Seller contained in this Agreement are conditions precedent to Buyer’s obligation to proceed with the Closing hereunder. The foregoing representations and warranties shall survive the expiration, termination, or close of escrow of this Agreement and shall not be deemed merged into the deed upon closing. 6.2 Buyer’s Representations and Warranties. In addition to the representations, warranties and covenants of Buyer contained in other sections of this Agreement, Buyer hereby represents, warrants and covenants to Seller that the statements below in this Section 6.2 are each true as of the Effective Date, and, if to Buyer’s actual knowledge any such statement becomes untrue prior to Closing, Buyer shall so notify Seller in writing and Seller shall have at least three (3) business days thereafter to determine if Seller wishes to proceed with Closing. (a) Buyer is a California limited liability company. Buyer has the full right, capacity, power and authority to enter into and carry out the terms of this Agreement. This Agreement has been duly executed by Buyer, and upon delivery to and execution by Seller shall be a valid and binding agreement of Buyer. (b) Buyer is not bankrupt or insolvent under any applicable federal or state standard, has not filed for protection or relief under any applicable bankruptcy or creditor protection statute, and has not been threatened by creditors with an involuntary application of any applicable bankruptcy or creditor protection statute. (c) Pending Actions. There is no action, suit, arbitration, unsatisfied order or judgment, government investigation or proceeding pending against Buyer which, if adversely determined, could individually or in the aggregate materially interfere with the consummation of the transaction contemplated by this Agreement. (d) ERISA. Buyer is not acquiring the Property with the assets of an employee benefit plan as defined in Section 3(3) of ERISA. (e) Foreign Person; OFAC. Buyer is not a “foreign person” within the meaning of Section 1445(f)(3) of the Internal Revenue Code of 1986, as amended. Buyer and, to Buyer’s actual knowledge, each person or entity owning an interest in Buyer is (i) not currently identified on the Specially Designated Nationals and Blocked Persons List maintained by the OFAC and/or on any other similar List, (ii) not a person or entity with whom a citizen of the United States is prohibited to engage in transactions by any trade embargo, economic sanction, or other prohibition of United States law, regulation, or Executive Order of the President of the United States, and (iii) not an “Embargoed Person,” to Buyer’s actual knowledge, none of the funds or other assets of Buyer constitute property of, or are beneficially owned, directly or indirectly, by any Embargoed Person, and to Buyer’s actual knowledge, no Embargoed Person has any interest of any nature whatsoever in Buyer (whether directly or indirectly). The truth and accuracy of each of the representations and warranties, and the performance of all covenants of Buyer contained in this Agreement are conditions precedent to Seller’s obligation to proceed with the Closing hereunder. 10 6.3 Property Sold, “AS IS”. Buyer specifically acknowledges that the Seller is selling the Property on an “AS IS”, “WHERE IS” and “WITH ALL FAULTS” basis and that, subject to Seller's representations, warranties, covenants and obligations set forth in this Agreement, and all exhibits attached hereto and incorporated herein, and any obligations arising under applicable law, and any document or instrument executed and delivered in connection with Closing, Buyer is not relying on any representations or warranties of any kind whatsoever, express or implied, from Seller, or its employees, appointed or elected officials, agents, or brokers as to any matters concerning the Property. Subject to Seller's representations, warranties, covenants and obligations set forth in this Agreement, and all exhibits attached hereto and incorporated herein, and any obligations arising under applicable law, and any document or instrument executed and delivered in connection with Closing, Seller makes no representations or warranties as to any matters concerning the Property, including without limitation: (i) the quality, nature, adequacy and physical condition of the Property, (ii) the quality, nature, adequacy, and physical condition of soils, geology and any groundwater, (iii) the existence, quality, nature, adequacy and physical condition of utilities serving the Property, (iv) the development potential of the Property, and the Property's use, habitability, merchantability, or fitness, suitability, value or adequacy of the property for any particular purpose, (v) except as otherwise provided in this Agreement, the zoning or other legal status of the Property or any other public or private restrictions on use of the Property, (vi) the compliance of the Property or its operation with any Environmental Laws, covenants, conditions and restrictions of any governmental or quasi-governmental entity or of any other person or entity, (vii) the presence or removal of Hazardous Materials, substances or wastes on, under or about the Property or the adjoining or neighboring property; (viii) the quality of any labor and materials used in any improvements on the Property, (ix) the condition of title to the Property, (x) the leases, service contracts, or other agreements affecting the Property, or (xi) the economics of the operation of the Property. 7. REMEDIES In the event of a breach or default under this Agreement by Seller, if such breach or default occurs prior to Close of Escrow, Buyer reserves the right to either (a) seek specific performance from Seller or (b) to do any of the following: (i) to waive the breach or default and proceed to close as provided herein; (ii) to extend the time for performance and the Closing Date until Seller is able to perform; or (iii) to terminate this Agreement upon written notice to Seller, whereupon Seller shall cause Escrow Holder to return to Buyer any and all sums placed into the Escrow by Buyer, and except for the rights and obligations expressly provided to survive termination of this Agreement, neither party shall have any further obligations or liabilities hereunder. IN THE EVENT OF A BREACH OR DEFAULT HEREUNDER BY BUYER AND THE CLOSING DOES NOT OCCUR DUE TO SUCH DEFAULT, SELLER’S SOLE REMEDY SHALL BE TO RETAIN THE DEPOSITS AS LIQUIDATED DAMAGES. THE PARTIES AGREE THAT IN SUCH INSTANCE, THE DEPOSITS REPRESENT A REASONABLE APPROXIMATION OF SELLER’S DAMAGES AND ARE NOT INTENDED AS A FORFEITURE OR PENALTY BUT RATHER AN ENFORCEABLE LIQUIDATED DAMAGES PROVISION PURSUANT TO CALIFORNIA CIVIL CODE SECTION 1671, ET SEQ. IN NO EVENT SHALL EITHER PARTY BE ENTITLED TO LOST PROFITS OR CONSEQUENTIAL DAMAGES AS A RESULT OF THE OTHER PARTY’S BREACH OF THIS AGREEMENT. 11 Buyer’s Initials Seller’s Initials 8. BROKERS. Seller represents that no real estate broker has been retained by Seller in the sale of the Property or the negotiation of this Agreement. Buyer represents that no real estate broker has been retained by Buyer in the procurement of the Property or negotiation of this Agreement other than Victor Lo of Sierra Investments. Buyer shall indemnify, hold harmless and defend Seller from any and all claims, actions and liability for any commission, finder’s fee, or similar charges arising out of Buyer’s retention of Mr. Lo or any breach of the preceding sentence. 9. ASSIGNMENT. Absent an express signed written agreement between the Parties to the contrary, neither Seller nor Buyer may assign its rights or delegate its duties under this Agreement without the express written consent of the other. No permitted assignment of any of the rights or obligations under this Agreement shall result in a novation or in any other way release the assignor from its obligations under this Agreement. Buyer may not assign its rights under this Agreement without first obtaining Seller’s written consent, which approval may be given or withheld in Seller’s reasonable discretion. Seller’s approval of any assignment pursuant to this Section 9 shall be contingent on the review and approval by the City Council of such proposed assignment. Any transfer, directly or indirectly, of any stock, partnership interest or other ownership interest in Buyer, for the sole purpose of transferring Buyer’s interest in this Agreement, without Seller’s written approval, which approval may be given or withheld in Seller’s reasonable discretion, shall constitute a default by Buyer under this Agreement; provided, however, that a transfer of an ownership interest in Buyer to investors as reasonably necessary to raise funds for the development of the Property will not be a default and will not require advanced consent of Seller, so long as Victor Lo retains exclusive, day-to-day managerial control of Buyer at all times. Without limitation of the foregoing, no assignment by Buyer shall relieve Buyer of any of its obligations or liabilities pursuant to this Agreement. Notwithstanding the foregoing, without having to obtain Seller’s approval, Buyer may assign its interest in this Agreement on or before the Closing Date to an entity (a “Buyer Assignee”) that is (a) an entity of which Buyer has day-to- day managerial control or (b) any joint venture entity in which Buyer maintains a majority economic interest, or may (c) partially assign this Agreement for the purposes of enabling closing as tenant-in-common with an otherwise joint venture partner of Buyer for the purposes of consummating a tax deferred exchange, so long as Buyer and Buyer Assignee execute and deliver an assignment and assumption agreement in form reasonably satisfactory to Seller, pursuant to which Buyer Assignee remakes all of Buyer’s representation and warranties set forth in this Agreement and the transferor shall not be released from the obligations of “Buyer” hereunder. 10. ENVIRONMENTAL INDEMNITY. To the fullest extent allowed by law, Buyer agrees to unconditionally and fully indemnify, protect, defend (with counsel satisfactory to Seller), and hold Seller, and its respective elected and appointed officers, officials, employees, agents, consultants, contractors, and Agency harmless from and against any and all claims (including without limitation third party claims for personal injury, real or personal property damage, or damages to natural resources), actions, administrative proceedings (including without limitation both formal and informal proceedings), judgments, damages, punitive damages, penalties, fines, costs (including without limitation any and all costs relating to investigation, assessment, analysis or clean-up of the Property), liabilities (including without limitation sums paid in settlements of 12 claims), interest, or losses, including reasonable attorneys’ and paralegals’ fees and expenses (including without limitation any such fees and expenses incurred in enforcing this Agreement or collecting any sums due hereunder), together with all other costs and expenses of any kind or nature (collectively, the “Costs”) that arise directly or indirectly from or in connection with the presence, suspected presence, release, or suspected release, of any Hazardous Materials in, on or under the Property or in or into the air, soil, soil gas, groundwater, or surface water at, on, about, around, above, under or within the Property, or any portion thereof, except those Costs that arise solely as a result of actions by Seller, or Seller’s agents, employees, or contractors. The indemnification provided pursuant to this Section shall specifically apply to and include claims or actions brought by or on behalf of employees of Buyer or any of its predecessors in interest and Buyer hereby expressly waives any immunity to which Buyer may otherwise be entitled under any industrial or worker’s compensation laws. In the event the Seller suffers or incurs any Costs, Buyer shall pay to Seller the total of all such Costs suffered or incurred by the Seller upon demand therefore by Seller. The indemnification provided pursuant to this Section shall include, without limitation, all loss or damage sustained by the Seller due to any Hazardous Materials: (a) that are present or suspected by a governmental agency having jurisdiction to be present in the Property or in the air, soil, soil gas, groundwater, or surface water at, on, about, above, under, or within the Property (or any portion thereof) or to have emanated from the Property, or (b) that migrate, flow, percolate, diffuse, or in any way move onto, into, or under the air, soil, soil gas, groundwater, or surface water at, on, about, around, above, under, or within the Property (or any portion thereof) after the date of this Agreement as a result of Seller’s or its predecessors’ activities on the Property, or those of Seller’s agents, employees, or contractors. The provisions of this Section 10 shall survive the termination of this Agreement and the Close of Escrow. 11. RELEASE BY BUYER. Effective upon the Close of Escrow, except with respect to the representations and warranties of Seller under Section 6.1 of this Agreement, Buyer waives releases, remises, acquits and forever discharges Seller, and its officers, directors, board members, managers, employees and agents, and any other person acting on behalf of Seller, from any and all claims, actions, causes of action, demands, rights, damages, costs, expenses and compensation whatsoever, direct or indirect, known or unknown, foreseen or unforeseen, which Buyer now has or which may arise in the future on account of or in any way arising from or in connection with the physical condition of the Property or any law or regulation applicable thereto including, without limiting the generality of the foregoing, any federal, state or local law, ordinance or regulation pertaining to Hazardous Materials. This Section 11 shall survive the termination of this Agreement and the Close of Escrow. BUYER ACKNOWLEDGES THAT BUYER IS FAMILIAR WITH SECTION 1542 OF THE CALIFORNIA CIVIL CODE, WHICH PROVIDES AS FOLLOWS: A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT THE CREDITOR OR RELEASING PARTY DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE AND THAT, IF KNOWN BY HIM OR HER, WOULD HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR OR RELEASED PARTY. 13 BY INITIALING BELOW, BUYER EXPRESSLY WAIVES THE BENEFITS OF SECTION 1542 OF THE CALIFORNIA CIVIL CODE WITH RESPECT TO THE FOREGOING RELEASE: Buyer’s initials: _____________ 12. HAZARDOUS MATERIALS; DEFINITIONS. 12.1 Hazardous Materials. As used in this Agreement, “Hazardous Materials” means any chemical, compound, material, mixture, or substance that is now or may in the future be defined or listed in, or otherwise classified pursuant to any Environmental Laws (defined below) as a “hazardous substance”, “hazardous material”, “hazardous waste”, “extremely hazardous waste”, infectious waste”, toxic substance”, toxic pollutant”, or any other formulation intended to define, list or classify substances by reason of deleterious properties such as ignitability, corrosivity, reactivity, carcinogenicity, or toxicity. The term “Hazardous Materials” shall also include asbestos or asbestos-containing materials, radon, chrome and/or chromium, polychlorinated biphenyls, petroleum, petroleum products or by-products, petroleum components, oil, mineral spirits, natural gas, natural gas liquids, liquefied natural gas, and synthetic gas usable as fuel, perchlorate, and methyl tert butyl ether, whether or not defined as a hazardous waste or hazardous substance in the Environmental Laws. 12.2 Environmental Laws. As used in this Agreement, “Environmental Laws” means any and all federal, state and local statutes, ordinances, orders, rules, regulations, guidance documents, judgments, governmental authorizations or directives, or any other requirements of governmental authorities, as may presently exist, or as may be amended or supplemented, or hereafter enacted, relating to the presence, release, generation, use, handling, treatment, storage, transportation or disposal of Hazardous Materials, or the protection of the environment or human, plant or animal health, including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986 (42 U.S.C. § 9601), the Hazardous Materials Transportation Act (49 U.S.C. § 1801 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. § 1251 et seq.), the Clean Air Act (42 U.S.C. § 7401 et seq.), the Toxic Substances Control Act (15 U.S.C. § 2601 et seq.), the Oil Pollution Act (33 U.S.C. § 2701 et seq.), the Emergency Planning and Community Right-to-Know Act (42 U.S.C. § 11001 et seq.), the Porter-Cologne Water Quality Control Act (Cal. Water Code § 13000 et seq.), the Toxic Mold Protection Act (Cal. Health & Safety Code § 26100, et seq.), the Safe Drinking Water and Toxic Enforcement Act of 1986 (Cal. Health & Safety Code § 25249.5 et seq.), the Hazardous Waste Control Act (Cal. Health & Safety Code § 25100 et seq.), the Hazardous Materials Release Response Plans & Inventory Act (Cal. Health & Safety Code § 25500 et seq.), and the Carpenter-Presley-Tanner Hazardous Substances Account Act (Cal. Health and Safety Code, Section 25300 et seq.). 13. MISCELLANEOUS. 13.1 Attorneys’ Fees. If any party employs counsel to enforce or interpret this Agreement, including the commencement of any legal proceeding whatsoever (including insolvency, bankruptcy, arbitration, mediation, declaratory relief or other litigation), the prevailing 14 party shall be entitled to recover its reasonable attorneys’ fees and court costs (including the service of process, filing fees, court and court reporter costs, investigative fees, expert witness fees, and the costs of any bonds, whether taxable or not) and shall include the right to recover such fees and costs incurred in any appeal or efforts to collect or otherwise enforce any judgment in its favor in addition to any other remedy it may obtain or be awarded. Any judgment or final order issued in any legal proceeding shall include reimbursement for all such attorneys’ fees and costs. In any legal proceeding, the “prevailing party” shall mean the party determined by the court to most nearly prevail and not necessarily the party in whose favor a judgment is rendered. 13.2 Interpretation. This Agreement has been negotiated at arm’s length and each party has been represented by independent legal counsel in this transaction and this Agreement has been reviewed and revised by counsel to each of the Parties. Accordingly, each party hereby waives any benefit under any rule of law (including Section 1654 of the California Civil Code) or legal decision that would require interpretation of any ambiguities in this Agreement against the drafting party. 13.3 Survival. All indemnities, covenants, representations and warranties contained in this Agreement shall survive Close of Escrow. 13.4 Successors. Except as provided to the contrary in this Agreement, this Agreement shall be binding on and inure to the benefit of the Parties and their successors and assigns. 13.5 Governing Law. This Agreement shall be construed and interpreted in accordance with the laws of the State of California. 13.6 Integrated Agreement; Modifications. This Agreement contains all the agreements of the Parties concerning the subject hereof any cannot be amended or modified except by a written instrument executed and delivered by the parties. There are no representations, agreements, arrangements or understandings, either oral or written, between or among the parties hereto relating to the subject matter of this Agreement that are not fully expressed herein. In addition there are no representations, agreements, arrangements or understandings, either oral or written, between or among the Parties upon which any party is relying upon in entering this Agreement that are not fully expressed herein. 13.7 Severability. If any term or provision of this Agreement is determined to be illegal, unenforceable, or invalid in whole or in part for any reason, such illegal, unenforceable, or invalid provisions or part thereof shall be stricken from this Agreement, any such provision shall not be affected by the legality, enforceability, or validity of the remainder of this Agreement. If any provision or part thereof of this Agreement is stricken in accordance with the provisions of this Section, then the stricken provision shall be replaced, to the extent possible, with a legal, enforceable and valid provision this is in keeping with the intent of the Parties as expressed herein. 13.8 Notices. Any delivery of this Agreement, notice, modification of this Agreement, collateral or additional agreement, demand, disclosure, request, consent, approval, waiver, declaration or other communication that either party desires or is required to give to the other party or any other person shall be in writing. Any such communication may be served 15 personally, or by nationally recognized overnight delivery service (i.e., Federal Express) which provides a receipt of delivery, or sent by prepaid, first class mail, return receipt requested to the party’s address as set forth below, or by fax or electronic mail, in each case, sent to the intended addressee at the address set forth below, or to such other address or to the attention of such other person as the addressee shall have designated by written notice sent in accordance herewith, and shall be deemed to have been given either at the time of first attempted delivery at the address and in the manner provided herein, or, in the case of electronic mail for fax, as of the date of the electronic mail or fax: To Buyer: 311 9th Avenue San Mateo, CA 94401 Attn: Mr. Victor Lo Phone: 415-297-0709 Email: [email protected] With Copy To: Schinner & Shain, LLP 96 Jessie Street San Francisco, CA 94105 Attn: R. Ryan Shain, Esq. Phone: 310-913-4582 Email: [email protected] To Seller: City of South San Francisco 400 Grand Avenue South San Francisco, CA 94080 Attn: City Manager, Mike Futrell Email: [email protected] Telephone No.: (650) 829 6620 Fax (650) 829-6609 With Copy To: City of South San Francisco 400 Grand Avenue South San Francisco, CA 94080 Attn: Project Manager, Julie Barnard Email: [email protected] Telephone No.: (650) 829 6629 With Copy To: Meyers Nave 555 12th Street, Suite 1500 Oakland, CA 94607 Attn: Sky Woodruff Email: [email protected] To Escrow Holder: Katie Berggren North American Title Company 66 Bovet Rd, Suite 200 San Mateo, CA 94402 16 Phone: 650-343-6282 Email: [email protected] Any party may change its address by notice to the other party. Each party shall make an ordinary, good faith effort to ensure that it will accept or receive notices that are given in accordance with this section and that any person to be given notice actually receives such notice. 13.9 Time. Time is of the essence to the performance of each and every obligation under this Agreement. 13.10 Days of Week. If any date for exercise of any right, giving of any notice, or performance of any provision of this Agreement falls on a Saturday, Sunday or holiday, the time for performance will be extended to 11:59 p.m. on the next business day. 13.11 Reasonable Consent and Approval. Except as otherwise provided in this Agreement, whenever a party is required or permitted to give its consent or approval under this Agreement, such consent or approval shall not be unreasonably withheld or delayed. If a party is required or permitted to give its consent or approval in its sole and absolute discretion or if such consent or approval may be unreasonably withheld, such consent or approval may be unreasonably withheld but shall not be unreasonably delayed. 13.12 Further Assurances. The Parties shall at their own cost and expense execute and deliver such further documents and instruments and shall take such other actions as may be reasonably required or appropriate to carry out the intent and purposes of this Agreement. 13.13 Waivers. Any waiver by any party shall be in writing and shall not be construed as a continuing waiver. No waiver will be implied from any delay or failure to take action on account of any default by any party. Consent by any party to any act or omission by another party shall not be construed to be consent to any other subsequent act or omission or to waive the requirement for consent to be obtained in any future or other instance. 13.14 Signatures/Counterparts. This Agreement may be executed by electronic or facsimile signature. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Any one of such completely executed counterparts shall be sufficient proof of this Agreement. 13.15 Date and Delivery of Agreement. Notwithstanding anything to the contrary contained in this Agreement, the parties intend that this Agreement shall be deemed effective, and delivered for all purposes under this Agreement, and for the calculation of any statutory time periods based on the date an agreement between parties is effective, executed, or delivered, as of the Effective Date. 13.16 Representation on Authority of Parties. Each person signing this Agreement represents and warrants that he or she is duly authorized and has legal capacity to execute and deliver this Agreement. Each party represents and warrants to the other that the execution and delivery of the Agreement and the performance of such party’s obligations 17 hereunder have been duly authorized and that the Agreement is a valid and legal agreement binding on such party and enforceable in accordance with its terms. 13.17 Possession. At Closing, Seller shall deliver sole and exclusive possession of the Property to Buyer. 13.18 Approvals. Whenever this Agreement calls for Seller approval, consent, extension or waiver, the written approval, consent, or waiver of the Seller’s Executive Director or his or her designee(s) shall constitute the approval, consent, extension or waiver of the Seller, without further authorization required from the Seller’s Council. The Seller hereby authorizes the City Manager and his or her designee(s) to deliver any such approvals, consents, or extensions or waivers as are required by this Agreement, or that do not otherwise reduce Seller’s rights under this Agreement, and to waive requirements under this Agreement, on behalf of the Seller. 13.19 Merger, Survival. The provisions of this Agreement shall not merge with the delivery of the Deed or any other instrument delivered at Closing, but shall, except as otherwise provided in this Agreement, survive the Closing. SIGNATURES ON FOLLOWING PAGE 18 IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first written above. SELLER: CITY OF SOUTH SAN FRANCISCO By: _______________________________ Mike Futrell City Manager ATTEST: By: _______________________________ City Clerk APPROVED AS TO FORM: By: _______________________________ Sky Woodruff City Attorney BUYER: Baden Development, LLC, a California limited liability company By: _______________________________ Victor Lo Title: Manager APPROVED AS TO FORM: By: _______________________________ Counsel for Buyer 19 LIST OF EXHIBITS Exhibit A Legal Description Exhibit B Grant Deed Exhibit C Permitted Exceptions Exhibit D Form of Affordable Housing Agreement Exhibit E Form of Completion Guaranty 20 Exhibit A LEGAL DESCRIPTION That real property situated in the State of California, County of San Mateo, City of South Su. Francisco, and described as Lot 8 in Block 117, as shown on that certain map entitled "SOUI'H SAN FRANCISCO SAN MATEO CO. CAL PLAT. NO. 1”, filed in the office of the County Recorder of San Mateo County, State of California, on March 1, 1892 in Book “B” of Maps at page(s) 6, and a copy entered in Book 2 of Maps at Page 52. AP. No.: 012-321-160 JPN 012 032 321 16 A 21 Exhibit B GRANT DEED Recording Requested By and When Recorded Return To: Attention: APN: ___________________ (Space above this line for Recorder’s use) GRANT DEED THE UNDERSIGNED GRANTOR(s) DECLARE(s): DOCUMENTARY TRANSFER TAX IS $__________________ computed on full value of property conveyed, or computed on full value less value of liens or encumbrances remaining at time of sale. _______________________________ Signature of Declarant FOR VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, _______________________ _____________________________, a ____________________ (“Grantor”) hereby grants to _____________________________, a _________________ (“Grantee”), the real property located in the City of __________, County of __________, State of __________, described on Exhibit A attached hereto and made a part hereof. GRANTOR: _______________________________, a _______________________________ By: _______________________________ Its: _______________________________ Date: _______________________________ 22 [Exhibit A and notarial acknowledgement to be attached] 23 Exhibit C PERMITTED EXCEPTIONS 24 Exhibit D FORM OF AFFORDABLE HOUSING AGREEMENT RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: City of South San Francisco 400 Grand Avenue South San Francisco, CA 94080 Attn: City Manager EXEMPT FROM RECORDING FEES PER GOVERNMENT CODE §§6103, 27383 Space above this line for Recorder’s use. AFFORDABLE HOUSING REGULATORY AGREEMENT AND DECLARATION OF RESTRICTIVE COVENANTS for 432 Baden Avenue, South San Francisco by and between THE CITY OF SOUTH SAN FRANCISCO and BADEN DEVELOPMENT LLC 25 This Affordable Housing Regulatory Agreement and Declaration of Restrictive Covenants (this “Agreement”) is entered into effective as of _____________, 2020 (“Effective Date”) by and between the City of South San Francisco, a municipal corporation (“City”) and _______________________, a California corporation {INSERT NEW ENTITY IF APPLICABLE AT CLOSING} (“Owner”). City and Owner are hereinafter collectively referred to as the “Parties.” RECITALS A. Owner owns that certain real property located in the City of South San Francisco at 432 Baden Avenue, known as San Mateo County Assessor’s Parcel Nos. 012-321-160 and more particularly described in Exhibit A attached hereto (the “Property”). B. In accordance with that certain Purchase and Sale Agreement executed by and between the Parties and dated as of ____________ (the “PSA”), Owner will re-develop the Property into a high-density, residential apartment building (the “Project”). Capitalized terms used and not defined in this Agreement have the meaning ascribed to them in the PSA. C. As a condition to its agreement to provide the City Grants, the City requires the Property to be subject to the terms, conditions and restrictions set forth herein, specifically, the City requires that for a period of not less than fifty-five (55) years, three (3) of the residential units in the Project be rented at Affordable Rents to Eligible Households. D. The Parties have agreed to enter into and record this Agreement in order to satisfy the conditions described in the foregoing Recitals. The purpose of this Agreement is to regulate and restrict the occupancy and rents of the Project’s Restricted Units for the benefit of the occupants of the Project. The Parties intend the covenants set forth in this Agreement to run with the land and to be binding upon Owner and Owner’s successors and assigns for the full term of this Agreement. E. Chapter 20.380 of the South San Francisco Municipal Code sets forth the requirements for Inclusionary Housing (“Inclusionary Housing Ordinance”) F. The Developer is planning to construct thirty six (36) rental units on the Project Property (the “Project”) and has submitted site development plan for the Project. G. H. The Developer is required by the Inclusionary Housing Ordinance to set aside ten percent (10%) of new housing as low- and moderate-income level housing. I. The Inclusionary Housing Ordinance requires the Developer’s plans and the City’s conditions regarding inclusionary housing be set forth in an Affordable Housing Agreement. J. This Affordable Housing Agreement is required as a condition of future discretionary permits for development of the Project Property and shall be recorded against the Project Property; K. 432 Baden is located in the Residential Core District and the Project allows for 30 The Developer will utilize the State Density Bonus of 35% for the Project by providing 11.5% 26 of the units targeting Very Low Income households (“VLI”). J. The base density for the Project’s 14,000 sf (0.32 acre) lot is 80 du/acre, which allows for 26 units. The 35% density bonus to the base allowable 26 units returns a yield of 36 units. The project will provide 11.5% of the base density of 26 units or 3 units as VLI targeted. NOW THEREFORE, in consideration of the foregoing, and other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows. AGREEMENT 1. Definitions. The following terms have the meanings set forth in this Section wherever used in this Agreement or the attached exhibits. “Actual Household Size" means the actual number of persons in the applicable household. “Adjusted for Family Size Appropriate for the Unit” shall be determined consistent with Section 50052.5(h) of the California Health and Safety Code and applicable federal rules (if any) and as defined below: Studio – 1 person One Bedroom – 1.5 people Two Bedroom – 3 people Three Bedroom – 4.5 people "Affordable Rent" means the following amounts, less a utility allowance and such other adjustments as required pursuant to the California Redevelopment Law: (i) for units that are restricted for rental to households with incomes of not more than eighty percent (80%) of AMI (“80% Units”), a monthly rent that does not exceed one-twelfth (1/12) of thirty percent (30%) of eighty percent (80%) of AMI, Adjusted for Family Size Appropriate for the Unit, and (ii) for units that are restricted for rental to households with incomes of not more than one hundred twenty percent (120%) of AMI (“120% Units”), a monthly rent that does not exceed one-twelfth of thirty percent (30%) of one hundred twenty percent (120%) of Area Median Income, Adjusted for Family Size Appropriate for the Unit. "Area Median Income" or "AMI" means the median income for San Mateo County, California, adjusted for Actual Household Size, as determined by the U.S. Department of Housing and Urban Development (“HUD”) pursuant to Section 8 of the United States Housing Act of 1937 and as published from time to time by the State of California Department of Housing and Community Development (“HCD”) in Section 6932 of Title 25 of the California Code of Regulations or successor provision published pursuant to California Health and Safety Code Section 50093(c). “Claims” is defined in Section 10. 27 "Eligible Household" means a household for which gross household income does not exceed the applicable maximum income level for a Restricted Unit as specified in Section 2.1 and Exhibit B. “Indemnitees” is defined in Section 10. “Very Low-Income” means an annual gross household income that is less than or equal to the qualifying limits for households of Very Low-Income adjusted for actual household size, as determined periodically by HUD on the basis of gross annual household income and published by HCD in the Regulations for San Mateo County. If HUD ceases to make such determination, "Very Low-Income" shall be defined as not greater than 50% of Area Median Income adjusted for actual household size, as published by HCD in the Regulations. If both HCD and HUD cease to make such determinations, City in its reasonable discretion may designate another definition of "Very Low-Income" used by any other federal or state agency so long as such definition is no more restrictive than that set forth herein. “Regulations” means Title 25 of the California Code of Regulations. “Rent-Restricted” means a dwelling unit for which the gross rent charged for such unit does not exceed the Affordable Rent, as adjusted for assumed household size in accordance with the Department of Housing and Community Development (“HCD”) guidelines. "Restricted Unit" means a dwelling unit which is reserved for occupancy at an Affordable Rent by a household of not more than a specified household income in accordance with and as set forth in Sections 2.1 and 2.2 and Exhibit B. 2. Use and Affordability Restrictions. Owner hereby covenants and agrees, for itself and its successors and assigns, that the Property shall be used solely for the operation of a mixed-use, multifamily rental housing development in compliance with the DA and the requirements set forth herein. Owner represents and warrants that it has not entered into any agreement that would restrict or compromise its ability to comply with the occupancy and affordability restrictions set forth in this Agreement, and Owner covenants that it shall not enter into any agreement that is inconsistent with such restrictions without the express written consent of City. 2.1 Affordability Requirements. 2.1.1 Property. For a term of fifty-five (55) years commencing upon the date of issuance of a final certificate of occupancy for the Project, not less than three (3) of the residential units of the Project shall be both Rent Restricted (as defined below) and occupied (or if vacant, available for occupancy), available at Affordable Rents to Eligible Households with income no greater than 50% of Area Median Income. The three (3) residential units are allocated across unit type as specified in Exhibit B. 2.1.2 Recertification. In the event that recertification of Eligible Household incomes indicates that the number of Restricted Units actually occupied by Eligible Households falls below the number reserved for each income group as specified in this Section 2.1 and Exhibit 28 B, Owner shall rectify the condition by renting the next available dwelling unit(s) in the Project to Eligible Household(s) until the required income mix is achieved. 2.2 Rents for Restricted Units. Rents for Restricted Units shall be limited to Affordable Rents for households of the applicable income limit in accordance with Section 2.1 and Exhibit B. Notwithstanding the foregoing, no Eligible Household qualifying for a Restricted Unit shall be denied continued occupancy of a unit in the Project because, after admission, such Eligible Household's adjusted income increases to exceed the qualifying limit for such Restricted Unit. A household which at initial occupancy qualifies in a particular income category shall be treated as continuing to be of such income category so long as the household’s gross income does not exceed 140% of the applicable income limit. In the event the gross household income of a household that qualified at the applicable income limit at initial occupancy exceeds the applicable income limit for a unit, that unit will continue to be considered as satisfying the applicable income limit if the unit remains Rent-Restricted. If upon recertification of Eligible Household incomes, Owner determines that a Eligible Household has a household income exceeding the maximum qualifying income for such Eligible Household’s unit, the Eligible Household shall be permitted to continue to occupy the unit, and upon expiration of the Eligible Household's lease and upon sixty (60) days’ written notice, Owner may increase the rent for such unit to the fair market rent, and Owner shall rent the next available unit to a Eligible Household whose household income does not exceed the applicable income limit in order to achieve the affordability requirements of this Agreement. 2.3 Unit Sizes, Design and Location. The Restricted Units shall be of comparable design quality as unrestricted units in the Project. Eligible Households of Restricted Units shall have access to all common facilities of the Project equal to that of Eligible Households of units in the Project that are not Restricted Units. The Restricted Units shall be allocated among affordability categories as set forth in Exhibit B. 2.4 City Grant Funds. Owner shall ensure that all City Grant Funds are used for the construction of affordable units in a manner consistent with the applicable City Grant Funds requirements, which at a minimum, requires residential rental units assisted For with funds from the City’s low- and moderate-income housing fund to remain affordable for the longest feasible time. 2.5 No Condominium Conversion. Owner shall not convert the residential units in the Project to condominium or cooperative ownership or sell condominium or cooperative rights to the residential portion of the Project or any part thereof unless Owner obtains the City's consent and meets the affordability requirements of Section 2.1. City’s prior written consent shall be required with respect to the sale or condominium conversion of the retail/commercial portion of the Project or any part thereof. 2.6 Non-Discrimination; Compliance with Fair Housing Laws. 2.6.1 Preferences. In order to ensure that there is an adequate supply of affordable housing within the City for City residents and employees of businesses located within the City, to the extent permitted by law and consistent with the program regulations for funding sources used 29 for development of the Project, at initial lease up, Owner shall give a preference in the rental of the residential units in the Project to Eligible Households that include at least one member who lives or works in the City of South San Francisco. If there are fewer Eligible Households than the number of such units, the units will be made available to the general public. Notwithstanding the foregoing, in the event of a conflict between this provision and the provisions of Section 42 of the Internal Revenue Code of 1986, as amended, the provisions of such Section 42 shall control. 2.6.2 Fair Housing. Owner shall comply with state and federal fair housing laws in the marketing and rental of the units in the Project. Owner shall accept as Eligible Households, on the same basis as all other prospective Eligible Households, persons who are recipients of federal certificates or vouchers for rent subsidies pursuant to the existing Section 8 program or any successor thereto. 2.6.3 Non-Discrimination. Owner 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. Owner 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 Owner or any person claiming under or through Owner establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of Eligible Households, lessees, sub-Eligible Households, sublessees or vendees in, of, or for the Property or part thereof. Owner shall include such provision in all deeds, leases, contracts and other instruments executed by Owner, and shall enforce the same diligently and in good faith. 3. Reporting Requirements. 3.1. Eligible Household Certification. Owner or Owner’s authorized agent shall obtain from each household prior to initial occupancy of each Restricted Unit, and on every anniversary thereafter, a written certificate containing all of the following in such format and with such supporting documentation as City may reasonably require: (a) The identity of each household member; and (b) The total gross household income; Owner shall retain such certificates for not less than three (3) years, and upon City’s request, shall make the certificates available for City inspection. 3.2 Annual Report; Inspections. By not later than April 30th of each year during the term of this Agreement, Owner shall submit an annual report (“Annual Report”) to the City in form satisfactory to City, together with a certification that the Project is in compliance with the requirements of this Agreement. The Annual Report shall, at a minimum, include the following 30 information for each dwelling unit in the Project: (i) unit number; (ii) number of bedrooms; (iii) current rent and other charges; (iv) dates of any vacancies during the previous year; (v) number of people residing in the unit; (vi) total gross household income of residents; (vii) documentation of source of household income; and (viii) the information required by Section 3.1. Owner shall include with the Annual Report, an income recertification for each household, documentation verifying Eligible Household eligibility, and such additional information as City may reasonably request from time to time in order to demonstrate compliance with this Agreement. The Annual Report shall conform to the format requested by City; provided however, during such time that the Project is subject to a regulatory agreement restricting occupancy and/or rents pursuant to requirements imposed in connection with the use of state or federal low-income housing tax credits, Owner may satisfy the requirements of this Section by providing City with a copy of compliance reports required in connection with such financing. 3.3 On-site Inspection. Owner shall permit representatives of City to enter and inspect the Property and the Project during reasonable business hours in order to monitor compliance with this Agreement upon 48-hours advance notice of such visit to Owner or to Owner's management agent. 3.4 Additional Information. Owner shall provide any additional information reasonably requested by City. The City shall have the right to examine and make copies of all books, records, or other documents of the Owner which pertain to the Project. 3.5 Records. The Owner shall maintain complete, accurate and current records pertaining to the Development, and shall permit any duly authorized representative of the City to inspect records, including records pertaining to income and household size of Eligible Households. All Eligible Household lists, applications and waiting lists relating to the Project shall at all times be kept separate and identifiable from any other business of the Owner and shall be maintained in a reasonable condition for proper audit and subject to examination during business hours by representatives of the City. The Owner shall retain copies of all materials obtained or produced with respect to occupancy of the Units for a period of at least three (3) years, and for any period during which there is an audit undertaken by the City pursuant to the DA. 4. Term of Agreement. 4.1 Term of Restrictions. Unless extended by mutual agreement of the Parties, upon the 55th anniversary of issuance of the final certificate of occupancy for the residential portion of the Project, this Agreement shall automatically terminate and be of no further force or effect. 4.2 Effectiveness Succeeds Conveyance of Property and Repayment of Loan. This Agreement shall remain effective and fully binding for the full term hereof, as such may be extended pursuant to Section 4.1, regardless of any sale, assignment, transfer, or conveyance of the Property or the Project or any part thereof or interest therein. 4.3 Reconveyance. Upon the expiration of this Agreement, the Parties agree to execute and record appropriate instruments to release and discharge this Agreement; provided, however, the execution and recordation of such instruments shall not be necessary or a prerequisite to evidence the expiration of this Agreement, or to evidence the release and discharge of this Agreement as a matter of title. 31 5. Binding Upon Successors; Covenants to Run with the Land. Owner hereby subjects its interest in the Property and the Project to the covenants and restrictions set forth in this Agreement. The Parties hereby declare their express intent that the covenants and restrictions set forth herein shall be deemed covenants running with the land and shall be binding upon and inure to the benefit of the heirs, administrators, executors, successors in interest, transferees, and assigns of the Parties, regardless of any sale, assignment, conveyance or transfer of the Property, the Project or any part thereof or interest therein. Any successor-in-interest to Owner, including without limitation any purchaser, transferee or lessee of the Property or the Project (other than the Eligible Households of the individual dwelling units or retail/commercial space within the Project) shall be subject to all of the duties and obligations imposed hereby for the full term of this Agreement. Each and every contract, deed, ground lease or other instrument affecting or conveying the Property or the Project or any part thereof, shall conclusively be held to have been executed, delivered and accepted subject to the covenants, restrictions, duties and obligations set forth herein, regardless of whether such covenants, restrictions, duties and obligations are set forth in such contract, deed, ground lease or other instrument. If any such contract, deed, ground lease or other instrument has been executed prior to the date hereof, Owner hereby covenants to obtain and deliver to City an instrument in recordable form signed by the parties to such contract, deed, ground lease or other instrument pursuant to which such parties acknowledge and accept this Agreement and agree to be bound hereby. Owner agrees for itself and for its successors that in the event that a court of competent jurisdiction determines that the covenants herein do not run with the land, such covenants shall be enforced as equitable servitudes against the Property and the Project in favor of City. 6. Property Management; Repair and Maintenance; Marketing. 6.1 Management Responsibilities. Owner, or Owner’s designee, shall be responsible for all management functions with respect to the Property and the Project, including without limitation the selection of Eligible Households, certification and recertification of household income and eligibility, evictions, collection of rents and deposits, maintenance, landscaping, routine and extraordinary repairs, replacement of capital items, and security. City shall have no responsibility for management or maintenance of the Property or the Project. 6.2 Repair, Maintenance and Security. Throughout the term of this Agreement, Owner, or Owner’s designee, shall at its own expense, maintain the Property and the Project 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, Owner agrees to maintain the Project and the Property (including without limitation, the residential units, common areas, meeting rooms, 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. Owner 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 located thereon in good condition and repair. Owner shall provide adequate security services for occupants of the Project. 32 6.2.1 City’s Right to Perform Maintenance. In the event that Owner breaches any of the covenants contained in Section 6.2, and such default continues for a period of thirty (30) days after written notice from City (with respect to graffiti, debris, and waste material) or thirty (30) days after written notice from City (with respect to landscaping, building improvements and general maintenance), then City, in addition to any other remedy it may have under this Agreement or at law or in equity, shall have the right, but not the obligation, to enter upon the Property and perform all acts and work necessary to protect, maintain, and preserve the improvements and the landscaped areas on the Property. 6.2.2 Costs. All costs expended by City in connection with the foregoing Section 6.2.1, shall be paid by Owner to City upon demand. All such sums remaining unpaid thirty (30) days following delivery of City’s invoice therefor shall bear interest at the lesser of 8% per annum or the highest rate permitted by applicable law. Notwithstanding anything to the contrary set forth in this Section, City agrees that it will provide Owner with not less than thirty (30) days’ written notice prior to undertaking any work for which Owner will incur a financial obligation. 6.3 Marketing and Management Plan. Within 180 days following the Effective Date of this Agreement, Owner shall submit for City review and approval, a plan for marketing and managing the Property ("Marketing and Management Plan" or “Plan”). The Marketing and Management Plan shall address in detail how Owner plans to market the Restricted Units to prospective Eligible Households in accordance with fair housing laws and this Agreement, Owner’s Eligible Household selection criteria, and how Owner plans to certify the eligibility of Eligible Households. The Plan shall also describe the management team and shall address how the Owner and the management entity plan to manage and maintain the Property and the Project. The Plan shall include the proposed management agreement and the form of rental agreement that Owner proposes to enter into with Project Eligible Households. Owner shall abide by the terms of the Marketing and Management Plan in marketing, managing, and maintaining the Property and the Project, and throughout the term of this Agreement. 6.4 Approval of Amendments. If City has not responded to any submission of the Management and Marketing Plan, the proposed management entity, or a proposed amendment or change to any of the foregoing within thirty (30) days following City’s receipt of such plan, proposal or amendment, the plan, proposal or amendment shall be deemed approved by City. 6.5 Fees, Taxes, and Other Levies. Owner shall be responsible for payment of all fees, assessments, taxes, charges, liens and levies applicable to the Property or the Project, including without limitation possessory interest taxes, if applicable, imposed by any public entity, and shall pay such charges prior to delinquency. However, Owner shall not be required to pay any such charge so long as (a) Owner is contesting such charge in good faith and by appropriate proceedings, (b) Owner maintains reserves adequate to pay any contested liabilities, and (c) on final determination of the proceeding or contest, Owner immediately pays or discharges any decision or judgment rendered against it, together with all costs, charges and interest. Nothing in this Section 6.6 is intended to prohibit Owner from applying for any exemption from property taxes and fees that may be available to the owners of low-income housing. 33 6.6 Insurance Coverage. Throughout the term of this Agreement Owner shall comply with the insurance requirements set forth in the DA, and shall, at Owner’s expense, maintain in full force and effect insurance coverage as specified in the DA. 6.7 Property Damage or Destruction. If any part of the Project is damaged or destroyed, Owner shall repair or restore the same, consistent with the occupancy and rent restriction requirements set forth in this Agreement. Such work shall be commenced as soon as reasonably practicable after the damage or loss occurs and shall be completed within one year thereafter or as soon as reasonably practicable, provided that insurance proceeds are available to be applied to such repairs or restoration within such period and the repair or restoration is financially feasible. During such time that lenders or low-income housing tax credit investors providing financing for the Project impose requirements that differ from the requirements of this Section the requirements of such lenders and investors shall prevail. 7. Recordation; Subordination. This Agreement shall be recorded in the Official Records of San Mateo County. Owner hereby represents, warrants and covenants that with the exception of easements of record, absent the written consent of City, this Agreement shall not be subordinated in priority to any lien (other than those pertaining to taxes or assessments), encumbrance, or other interest in the Property or the Project. If at the time this Agreement is recorded, any interest, lien, or encumbrance has been recorded against the Project in position superior to this Agreement, upon the request of City, Owner hereby covenants and agrees to promptly undertake all action necessary to clear such matter from title or to subordinate such interest to this Agreement consistent with the intent of and in accordance with this Section 7, and to provide such evidence thereof as City may reasonably request. Notwithstanding the foregoing, the City agrees that pursuant to Health and Safety Code Section 33334.14(a)(4), the City will not withhold consent to reasonable requests for subordination of this Agreement to deeds of trust provided for the benefit of lenders identified in the Financing Plan approved in connection with the DA, provided that the instruments effecting such subordination include reasonable protections to the City in the event of default consistent with the requirements of Health and Safety Code Section 33334.14(a)(4), including without limitation, extended notice and cure rights. 8. Transfer and Encumbrance. 8.1 Restrictions on Transfer and Encumbrance. Upon issuance of a final certificate of occupancy for the Project, or any portion thereof, Owner may freely transfer or assign all or any portion of its interests, rights or obligations in the Property, or under this Agreement, to any third party, and, as this Agreement “runs with the land” this Agreement shall be binding on Owner’s successors and assigns for the full term of this Agreement. 34 Prior to issuance of a final certificate of occupancy for the Project, or any portion thereof, Owner may transfer or assign all or any portion of its interest, right or obligations in the Property only as set forth in the DA, and with City’s prior written consent, which consent City shall not withhold provided that (1) the Project is and shall continue to be operated in compliance with this Agreement; (2) the transferee expressly assumes all obligations of Owner imposed by this Agreement; (3) the transferee executes all documents reasonably requested by the City with respect to the assumption of the Owner’s obligations under this Agreement, and upon City’s and/or Agency’s request, delivers to the City an opinion of its counsel to the effect that such document and this Agreement are valid, binding and enforceable obligations of such transferee; and (4) either (A) the transferee has at least three years’ experience in the ownership, operation and management of low-income multifamily rental housing projects of similar size to that of the Project, without any record of material violations of nondiscrimination provisions or other state or federal laws or regulations applicable to such projects, or (B) the transferee agrees to retain a property management firm with the experience and record described in sub-clause (A). Consent to any proposed Transfer may be given by the City’s City Manager unless the City Manager, in his or her discretion, refers the matter of approval to the City’s governing board. If a proposed Transfer has not been approved by City in writing within thirty (30) days following City’s receipt of written request by Owner, it shall be deemed rejected. Owner shall reimburse City for all City costs, including but not limited to reasonable attorneys’ fees, incurred in reviewing instruments and other legal documents proposed to effect 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 of an invoice detailing such costs. 8.3 Encumbrances. Owner agrees to use best efforts to ensure that all deeds of trust or other security instruments and any applicable subordination agreement recorded against the Property, the Project or part thereof for the benefit of a lender (“Lender”) shall contain each of the following provisions: (i) Lender shall use its best efforts to provide to City a copy of any notice of default issued to Owner concurrently with provision of such notice to Owner; and, (ii) City shall 35 have the reasonable right, but not the obligation, to cure any default by Owner within the same period of time provided to Owner for such cure extended by an additional 90 days. Owner agrees to provide to City a copy of any notice of default Owner receives from any Lender within thirty (30) business days following Owner’s receipt thereof. 8.4 Mortgagee Protection. No violation of any provision contained herein shall defeat or render invalid the lien of any mortgage or deed of trust made in good faith and for value upon all or any portion of the Project or the Property, and the purchaser at any trustee’s sale or foreclosure sale shall not be liable for any violation of any provision hereof occurring prior to the acquisition of title by such purchaser. Such purchaser shall be bound by and subject to this Agreement from and after such trustee’s sale or foreclosure sale. Promptly upon determining that a violation of this Agreement has occurred, City shall give written notice to the holders of record of any mortgages or deeds of trust encumbering the Project or the Property that such violation has occurred. 9. Default and Remedies. 9.1 Events of Default. The occurrence of any one or more of the following events shall constitute an event of default hereunder ("Event of Default"): (a) The occurrence of a Transfer in violation of Section 8 hereof; (b) Owner’s failure to maintain insurance on the Property and the Project as required hereunder, and the failure of Owner to cure such default within thirty (30) days of written notice from City; (c) Subject to Owner’s right to contest the following charges, Owner’s failure to pay taxes or assessments due on the Property or the Project or failure to pay any other charge that may result in a lien on the Property or the Project, and Owner’s failure to cure such default within sixty (60) days of delinquency; (d) A default arises 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; (e) Owner’s default in the performance of any material term, provision or covenant under this Agreement (other than an obligation enumerated in this Subsection 9.1), and unless such provision specifies a shorter cure period for such default, the continuation of such default for thirty (30) days in the event of a monetary default or sixty (60) days in the event of a non-monetary default following the date upon which City shall have given written notice of the default to Owner, or if the nature of any such non-monetary default is such that it cannot be cured within 60 days, Owner’s failure to commence to cure the default within thirty (60) days and thereafter prosecute the curing of such default with due diligence and in good faith. 9.2 Remedies. Upon the occurrence of an Event of Default and its continuation beyond any applicable cure period, City may proceed with any of the following remedies: 36 A. 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 declaratory relief; B. For violations of obligations with respect to rents for Restricted Units, impose as liquidated damages a charge in an amount equal to the actual amount collected in excess of the Affordable Rent; C. Pursue any other remedy allowed at law or in equity. Each of the remedies provided herein is cumulative and not exclusive. The City may exercise from time to time any rights and remedies available to it under applicable law or in equity, in addition to, and not in lieu of, any rights and remedies expressly provided in this Agreement. 10. Indemnity. To the fullest extent permitted by law, Owner shall indemnify, defend (with counsel approved by City) and hold City and its respective elected and appointed officers, officials, employees, agents, and representatives (collectively, the “Indemnitees”) harmless from and against all liability, loss, cost, expense (including without limitation attorneys’ fees and costs of litigation), claim, demand, action, suit, judicial or administrative proceeding, penalty, deficiency, fine, order, and damage (all of the foregoing collectively “Claims”) arising directly or indirectly, in whole or in part, as a result of or in connection with Owner’s construction, management, or operation of the Property and the Project or any failure to perform any obligation as and when required by this Agreement. Owner’s indemnification obligations under this Section 10 shall not extend to Claims resulting solely from the gross negligence or willful misconduct of Indemnitees. The provisions of this Section 10 shall survive the expiration or earlier termination of this Agreement. It is further agreed that City do not and shall not waive any rights against Owner that they may have by reason of this indemnity and hold harmless agreement because of the acceptance by, or the deposit with City by Owner, of any of the insurance policies described in this Agreement or the DA. 11. Miscellaneous. 11.1 Amendments. This Agreement may be amended or modified only by a written instrument signed by both Parties. 11.2 No Waiver. Any waiver by City of any term or provision of this Agreement must be in writing. No waiver shall be implied from any delay or failure by City to take action on any breach or default hereunder or to pursue any remedy allowed under this Agreement or applicable law. No failure or delay by City at any time to require strict performance by Owner of any provision of this Agreement or to exercise any election contained herein or any right, power or remedy hereunder shall be construed as a waiver of any other provision or any succeeding breach of the same or any other provision hereof or a relinquishment for the future of such election. 11.3 Notices. Except as otherwise specified herein, all notices to be sent pursuant to this Agreement shall be made in writing, and sent to the Parties at their respective addresses specified 37 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 upon receipt if delivery is confirmed by a return receipt; or (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. If to City, to: City of South San Francisco 400 Grand Avenue Attn: City Manager South San Francisco, CA 94080 Phone: (650) 877-8500 With a Copy to: City of South San Francisco 400 Grand Avenue Attn: ECD Director South San Francisco, CA 94080 Phone: (650) 829-6622 Email: [email protected] With a Copy to: Meyers Nave Attn: Sky Woodruff 555 12th Street, Suite 1500 Oakland, CA 94607 Tel (510) 808-2000 Email [email protected] If to Developer: 311 9th Avenue San Mateo, CA 94401 Attn: Mr. Victor Lo Phone: 415-297-0709 Email: [email protected] 11.4 Further Assurances. The Parties shall execute, acknowledge and deliver to the other such other documents and instruments, and take such other actions, as either shall reasonably request as may be necessary to carry out the intent of this Agreement. 11.5 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. 38 11.6 Action by the City. Except as may be otherwise specifically provided herein, whenever any approval, notice, direction, consent or request by the City is required or permitted under this Agreement, such action shall be in writing, and such action may be given, made or taken by the City Manager or by any person who shall have been designated by the City Manager, without further approval by the governing board of the City at the discretion of the City Manager. 11.7 Non-Liability of City Officials, Employees and Agents. No member, official, employee or agent of the City shall be personally liable to Owner or any successor in interest, in the event of any default or breach by the City, or for any amount of money which may become due to Owner or its successor or for any obligation of City under this Agreement. 11.8 Headings; Construction. The headings of the sections and paragraphs of this Agreement are for convenience only and shall not be used to interpret this Agreement. The language of this Agreement shall be construed as a whole according to its fair meaning and not strictly for or against any Party. 11.9 Time is of the Essence. Time is of the essence in the performance of this Agreement. 11.10 Governing Law. This Agreement shall be construed in accordance with the laws of the State of California without regard to principles of conflicts of law. 11.11 Attorneys' Fees and Costs. If any legal or administrative action is brought to interpret or enforce the terms of this Agreement, the prevailing party shall be entitled to recover all reasonable attorneys' fees and costs incurred in such action. 11.12 Severability. If any provision of this Agreement is held invalid, illegal, or unenforceable by a court of competent jurisdiction, the validity, legality, and enforceability of the remaining provisions shall not be affected or impaired thereby. 11.13 Entire Agreement; Exhibits. This Agreement, together with the DA, and the other City Documents and Agency Documents contains the entire agreement of Parties with respect to the subject matter hereof, and supersedes all prior oral or written agreements between the Parties with respect thereto. Exhibits A and B, attached hereto are incorporated herein by this reference. 11.14 Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be an original and all of which together shall constitute one agreement. SIGNATURES ON FOLLOWING PAGE. IN WITNESS WHEREOF, the Parties have executed this Affordable Housing Regulatory Agreement and Declaration of Restrictive Covenants as of the date first written above. CITY THE CITY OF SOUTH SAN FRANCISCO, a municipal corporation - 2 - 219\3220028.3 By: __________________________________ Name:________________________________ Title:_________________________________ ATTEST: By: _________________________________ Krista Martinelli, City Clerk APPROVED AS TO FORM: By: _________________________________ Jason Rosenberg, City Attorney OWNER ROEM DEVELOPMENT CORPORATION, A CALIFORNIA CORPORATION By: ______________________________ Its: _______________________________ SIGNATURES MUST BE NOTARIZED. - 3 - 219\3220028.3 STATE OF CALIFORNIA ) ) COUNTY OF SAN MATEO ) On , 20__, before me, ______________________, (here insert name and title of the officer), personally appeared , who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature _______________________________ (Seal) STATE OF CALIFORNIA ) ) COUNTY OF SAN MATEO ) On , 20__, before me, ______________________, (here insert name and title of the officer), personally appeared , who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. - 4 - 219\3220028.3 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) - 5 - 219\3220028.3 Exhibit A 432 BADEN AVENUE LEGAL DESCRIPTION That real property situated in the State of California, County of San Mateo, City of South Su. Francisco, and described as Lot 8 in Block 117, as shown on that certain map entitled "SOUI'H SAN FRANCISCO SAN MATEO CO. CAL PLAT. NO. 1”, filed in the office of the County Recorder of San Mateo County, State of California, on March 1, 1892 in Book “B” of Maps at page(s) 6, and a copy entered in Book 2 of Maps at Page 52. AP. No.: 012-321-160 JPN 012 032 321 16 A - 6 - 219\3220028.3 Exhibit B Number of Units by Unit Size and Targeted Area Median Income (AMI) Levels 432 Baden Avenue Property Maximum Household Income 30-60% AMI Up to 60% AMI 60% - 80% AMI 80% -120% AMI Total Studio 1-Bedroom 2-Bedroom 3-Bedroom Total - 7 - 219\3220028.3 Exhibit E FORM OF COMPLETION GUARANTY THIS COMPLETION GUARANTY (the “Guaranty”) is made this ___day of _____________________, 2020 by and between THE CITY OF SOUTH SAN FRANCISCO, a municipal corporation (“City”) and ____________________________________(“Guarantor”). RECITALS A. On _______, _______________________________, a _________ (“Developer”) acquired the real property commonly known as 432 Baden Avenue, South San Francisco, California (the “Property”) from the City pursuant to that certain Purchase and Sale Agreement and Joint Escrow Instructions dated ____________, 2020 (the “PSA”). B. As set forth in the PSA, Developer is to construct a 36 residential unit project, three (3) of which are required to be below market rate units (“Project”). C. As a condition precedent to transferring the Property to Developer, the City requires Guarantor to execute and deliver this Guaranty Guarantying the lien-free completion of the Project pursuant to, and in accordance with, the PSA, and providing for the performance of other covenants contained herein. GUARANTY AND AGREEMENT NOW, THEREFORE, in consideration of the foregoing and the agreements set forth below, Guarantor hereby agrees as follows: 1. Guaranty. Subject to the terms and conditions set forth herein, Guarantor unconditionally and irrevocably guarantees the full and timely performance of Developer’s obligations under the DA, to construct and complete the Project in accordance with the DA, free and clear of all mechanics liens. 2. Remedies. If Developer fails to timely perform an of its obligations under the PSA with respect to the construction and completion of the Project, after expiration of any applicable notice and cure periods, the City, prior to exercising any of its remedies hereunder, shall demand (by written notice) that Guarantor perform the same on Developer’s behalf. If, within thirty (30) days after receiving such demand, Guarantor advises the City in writing that Guarantor will commence and diligently proceed to cure all defaults of Developer under the DA, which by their nature are capable of being cured by Guarantor, then the PSA shall remain in full force and effect, and the City shall perform for the benefit of the Guarantor any unperformed obligations of the City under the DA. If Guarantor fails to respond to City’s written notice, or fails to perform as herein above provided, the City shall have the following remedies in addition to other remedies expressly provided herein: - 8 - 219\3220028.3 (a) From time to time and without first being required to exhaust any or all security held by the City, if any, to require performance by the Guarantor of any obligation to be performed on the part of the Guarantor pursuant to the terms hereof, by action at law or in equity or both. Nothing herein shall be construed to prohibit the City from pursuing any remedies under any other agreement, against any person other than the Guarantor. (b) If Guarantor does not timely perform its obligations under this Guaranty, the City, at City’s option, shall have the right to perform any obligation required to be performed by Guarantor under this Guaranty, which City reasonably deems necessary, and expend such sums as City reasonably deems proper in order so to complete such obligation. The amount of any and all reasonable expenditures made by City shall be immediately due and payable by Guarantor to City, notwithstanding City’s pursuit of any other rights or remedies. 3. Termination. This Guaranty shall terminate and be of no further force or effect upon the occurrence of either (i) upon issuance of a final certificate of occupancy for the Project, or (ii) termination of the PSA by either City or Developer in accordance with its own terms. 4. Interest. Any sums required to be paid by the Guarantor to the City pursuant to the terms hereof that are not paid within thirty (30) days of the date due, shall bear interest at the prime rate announced by the Bank of America plus three percent (3%), from the date said sums shall have become due until the date said sums are paid. 5. Consideration. Guarantor acknowledges that the undertakings given hereunder are given in consideration of the City's conveyance of the Property to Developer pursuant to the PSA and City’s performance under the DA, and that the City would not convey the Property were it not for Guarantor’s execution and delivery of this Guaranty. 6. No Waiver, Extension or Modification. No failure on the part of the City to pursue any remedy hereunder shall constitute a waiver on its part of the right to pursue said remedy on the basis of the same or a subsequent breach. No extension, modification, amendment or renewal of the PSA shall serve to waive the provisions hereof or discharge the Guarantor from any obligation herein contained, in whole or in part, except to the extent expressly approved by the City by written instrument signed by the City, specifying the nature and the extent of the intended waiver and discharge of the Guarantor. 7. Covenant of Guarantor. Guarantor shall promptly advise the City in writing of any material adverse change in the business or financial condition of Guarantor. 8. Guaranty Independent; Waiver of Exoneration. (a) Guarantor agrees that the obligations hereunder are independent of and in addition to the undertakings of the Developer pursuant to the DA, any other Guarantees given in connection with the DA, and other obligations of the Guarantor to the City. - 9 - 219\3220028.3 (b) Guarantor agrees that the validity of this Guaranty shall continue and the obligations of Guarantor hereunder shall in no way be terminated, affected, diminished or impaired by reason of any bankruptcy, insolvency, reorganization, arrangement, assignment for the benefit of creditors, receivership or trusteeship affecting the Developer or its partners, parents, principals, or members whether or not notice is given to the Guarantor, or by any other circumstances or condition that may grant or result in a discharge, limitation or reduction of liability of the Developer or its partners, parents, principals, members or of a surety or a guarantor. (c) Guarantor waives all rights and remedies accorded by applicable law to guarantors and agrees not to assert or take advantage of any such rights or remedies including but not limited to any right to require the City to, after expiration of applicable notice and cure periods to Developer, (1) proceed against the Developer, any partner or member of the Developer or any other person, (2) proceed against or exhaust any security held by the City, or (3) pursue any remedy in the power of the City whatsoever. If Guarantor is liable pursuant to this Guaranty, Guarantor waives any defense arising by reason of any disability or other defense of the Developer or any partner or member of the Developer, or any of their parents, principals, or affiliated entities or by reason of the cessation from any cause whatsoever of the liability of the Developer or any member or partner of the Developer, or any of their parents, principals, or affiliated entities other than the full discharge and performance of all of Developer’s obligations under the DA. Guarantor, except as expressly set forth herein, waives any defense it may acquire by reason of the City's election of any remedy against it or the Developer, or both, even though the Guarantors’ right of subrogation may be impaired thereby or extinguished under the antideficiency statutes of the State of California. Without limiting the generality of the foregoing, Guarantor waives (a) any defense that may arise by reason of the lack of authority or of any other person or persons or the failure of City to file or enforce a claim against the estate (in administration, bankruptcy, or any other proceeding) of any other person or persons; (b) demand, protest and notice of any kind including but not limited to notice of any kind (except for the notice required in Sections 2 and 10 hereof or under the DA) including but not limited to notice of the existence, creation or incurring of any new or additional indebtedness or obligation or of any action or nonaction on the part of Developer, City, any endorser or creditor of Developer or Guarantor or on the part of any other person whomsoever under this or any other instrument in connection with any obligation or evidence of indebtedness held by City as collateral or in connection with any obligations the performance of which are hereby Guaranty; (c) any defense based upon any statute or rule of law which provides that the obligation of a surety must be neither larger in amount nor in other respects more burdensome than that of the principal; (d) any duty on the part of City to disclose to Guarantor any facts City may now or hereafter know about Developer, regardless of whether City has reason to believe that any such facts materially increase the risk beyond that which Guarantor intended to assume or has reason to believe that such facts are unknown to Guarantor; (e) any defense arising because of City's election, in any proceeding instituted under the federal Bankruptcy Code, of the application of Section 1111(b)(2) of the Federal Bankruptcy Code; and (f) any defense based on any borrowing or grant of a security interest under Section 364 of - 10 - 219\3220028.3 the Federal Bankruptcy Code. Without limiting the generality of the foregoing or any other provision hereof, Guarantor hereby expressly waives any and all benefits which might otherwise be available to Guarantor under California Civil Code Sections 2809, 2810, 2819, 2839, 2845, 2849, 2850, 2899, and 3433 and California Code of Civil Procedure Sections 580(a), 580(b), 580(d), and 726. (e) Until termination of this Guaranty (as set forth in Section 3), Guarantor shall have no right of subrogation, and waives any right to enforce any remedy that the City now has or may hereafter have against the Developer or any member of Developer, or any other person, and waives the benefit of, and any right to participate in, any security now or hereafter held by City from the Developer. 9. Continued Existence; No Transfer or Assignment. (a) Guarantor does hereby further agree that as long as this Guaranty is in effect, it will not dispose of all or substantially all of its assets without the express written approval of the City, which shall not be unreasonably withheld. (b) The obligations of Guarantor under this Guaranty may not be assigned or transferred without, in each case, the express written approval of the City, which approval shall be within the sole and absolute discretion of the City. 10. Notices. City shall provide Guarantor with all written notices delivered to Developer pursuant to the PSA at the same time such notice is delivered to Developer. Guarantor shall not be liable under this Guaranty unless and until it has received such notice. The Guarantor shall have the right to perform any and all of Developer’s obligations under the DA. 11. Miscellaneous. (a) This Guaranty shall inure to the benefit of City and its successors and assigns and shall bind the heirs, executors, administrators, personal representatives, successors and assigns of Guarantor. (b) This Guaranty shall be governed by and shall be construed in accordance with the laws of the State of California. (c) Time is of the essence hereof. (d) If any term, provision, covenant or condition hereof or any application thereof should be held by a court of competent jurisdiction to be invalid, void or unenforceable, all terms, provisions, covenants and conditions hereof and all applications thereof not held invalid, void or unenforceable shall continue in full force and effect and shall in no way be affected, impaired or invalidated thereby. (e) Guarantor assumes the responsibility for keeping informed of (1) the financial condition of Developer, (2) any change in the management or control of Developer, - 11 - 219\3220028.3 and (3) all other circumstances bearing upon the risk of nonperformance by Developer of its obligations under the DA. (f) This Guaranty shall be construed and enforced in accordance with the laws of the State of California. Any action to enforce or interpret this Agreement shall be filed and heard in the Superior Court of San Mateo County, California. (g) Any notice or communication required hereunder between City or Guarantor must be in writing, and may be given either personally, by e-mail (with original forwarded by regular U.S. Mail), by registered or certified mail (return receipt requested), or by Federal Express or other similar courier promising overnight delivery. If personally delivered, a notice shall be deemed to have been given when delivered to the party to whom it is addressed. If given by email transmission, a notice or communication shall be deemed to have been given and received upon actual physical receipt of the entire document by the receiving party. Notices transmitted after 5:00 p.m. on a normal business day or on a Saturday, Sunday, or holiday shall be deemed to have been given and received on the next normal business day. If given by registered or certified mail, such notice or communication shall be deemed to have been given and received on the first to occur of: (i) actual receipt by any of the addressees designated below as the party to whom notices are to be sent, or (ii) five (5) days after a registered or certified letter containing such notice, properly addressed, with postage prepaid, is deposited in the United States mail. If given by Federal Express or similar courier, a notice or communication shall be deemed to have been given and received on the date delivered as shown on a receipt issued by the courier. Any party hereto may at any time, by giving ten (10) days written notice to the other party hereto, designate any other address in substitution of the address to which such notice or communication shall be given. Such notices or communications shall be given to the parties at their addresses set forth below: If to City, to: City of South San Francisco 400 Grand Avenue Attn: City Manager South San Francisco, CA 94080 Phone: (650) 877-8500 Fax: (650) 829-6609 With a Copy to: City of South San Francisco 400 Grand Avenue Attn: ECD Director South San Francisco, CA 94080 Phone: (650) 829-6622 [email protected] - 12 - 219\3220028.3 With a Copy to: Meyers Nave Attn: Sky Woodruff 555 12th Street, Suite 1500 Oakland, CA 94607 Tel (510) 808-2000 Email [email protected] If to Guarantor: With Copies to: (h) In any legal action or other proceeding brought by either party to enforce or interpret a provision of this Guaranty, the prevailing party is entitled to reasonable attorneys’ fees and any other costs incurred in that proceeding in addition to any other relief to which it is entitled. IN WITNESS WHEREOF, the undersigned has executed this Guaranty as of the day and year first above written. GUARANTOR By:_____________________________ Name: __________________________ Its______________________________