HomeMy WebLinkAbout2020-12-14 City Council Agendas (10)
City of Palo Alto (ID # 11354)
City Council Staff Report
Report Type: Consent Calendar Meeting Date: 12/14/2020
City of Palo Alto Page 1
Summary Title: 4115 El Camino Real: Final Map for 11 Condos
Title: QUASI-JUDICIAL. 4115 El Camino Real: Request for Final Map to Divide
an Existing 15,453 Square Foot Parcel Into Condominiums for a Mixed-use
Project, Including Seven Residential Units, Four Commercial Condominiums,
and a Public Access Easement. Environmental Assessment: Exempt. Zoning
District: CN (Commercial Neighborhood)
From: City Manager
Lead Department: Planning and Development Services
Recommendation
Staff recommends City Council take the following action(s):
1. Find the project exempt from the California Environmental Quality Act (CEQA) pursuant
to Section 15268(b)(3), and
2. Find that the final map substantially conforms to the approved tentative map and
approve the final map on the consent calendar pursuant to Palo Alto Municipal Code
Section 21.16 and the Subdivision Map Act .
Executive Summary
The requested action is approval of a final subdivision map for recordation. This action follows
review and approval of the Tentative Map application by the Planning and Transportation
Commission (PTC) and City Council. The Final Map reflects the one lot with eleven airspace
condominiums as shown on the Tentative Map Council approved on December 16, 2019.
Background
The Planning and Transportation Commission (PTC) reviewed the Tentative Map in a public
hearing on November 13, 20191 and recommended approval to the City Council. On December
16, 20192, the City Council reviewed the Tentative Map in a public hearing and adopted the
11 Staff Report: https://www.cityofpaloalto.org/civicax/filebank/documents/74016
2 Staff Report: https://www.cityofpaloalto.org/civicax/filebank/blobdload.aspx?t=53428.21&BlobID=74314
City of Palo Alto Page 2
Record of Land Use Action. The action of the City Council was based on its findings that the
proposed subdivision will have no significant environmental impact and is in conformance with
all state and local laws and regulations, and applicable Comprehensive Plan Elements in effect
at that time.
The related Architectural Review application was recommended for approval by the
Architectural Review Board on December 6, 20183 and the effective approval by the Director of
Planning and Community Environment was on January 7, 2019.
Discussion
The project site is a 0.36-acre site in the Ventura neighborhood on El Camino Real near the
intersection of West Meadow Drive and El Camino Way, formerly Pizz’a Chicago. The Final Map
includes a total of 11 airspace condominiums; seven units are for residential use (including one
below market rate unit) and four units are for commercial use.
The Final Map is the official, legal document to be recorded with the County to allow for
separate ownership of the 11 airspace parcels. The Final Map is prepared under the direction of
a registered civil engineer and is based on a survey. This map also notes easements for utilities
and pedestrian access. The pedestrian access easement will allow residents to easily cross the
property to go back and forth between El Camino Real and El Camino Way. Per the conditions
of approval for the Architectural Review, 17PLN-00280, the pedestrian access easement must
be provided to the City prior to recordation of the Final Map or issuance of a building permit,
whichever is sooner.
As required by the Subdivision Map Act, after review and confirmation by various City
departments, City staff determined the Final Map presented substantially conforms to the
approved tentative map. Approval of a Final Map is ministerial if the Final Map is in substantial
conformance with the approved Tentative Map. While many cities delegate approval of the
Final Map to the City Engineer, under PAMC Section 21.16, the City Council is responsible for
this approval. The Final Map also includes a Subdivision Improvement Agreement, describing
any obligations for improvements by the subdivider and the payment of bonds by the
subdivider for financial security, to ensure these improvements are completed as described
within the Subdivision Improvement Agreement.
On December 16, 2019, the City approved a Tentative Map for the subject property. The
Tentative Subdivision Map will expire on December 16, 2021, unless the City Council takes
action on the Final Map as recommended.
Environmental Review
3 Staff Report: https://www.cityofpaloalto.org/civicax/filebank/documents/68004
City of Palo Alto Page 3
In conformance with the California Environmental Quality Act (CEQA), staff determined the
Final Map is covered under the statutory exemption, Section 15268(b)(3), approval of final
subdivision maps. No further CEQA evaluation is necessary for the request.
Attachments:
Attachment A: Final Map
Attachment A-1
Attachment B: Approved Record of Land Use Action for Tentative Map
Attachment C: Covenants Regarding Below Market Rate Units
Attachment D: Copy of Subdivider's Agreement
Attachment A
Project Plans
During Shelter-in-Place, project plans are only available online.
Directions to review Project plans online:
1. Go to: bit.ly/PApendingprojects
2. Scroll down to find “4115 El Camino Real” and click the address link
3. On this project specific webpage you will find a link to the project plans and
other important information
Direct Link to Project Webpage:
https://www.cityofpaloalto.org/news/displaynews.asp?NewsID=5045
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ACTION NO. 2019-11
DRAFT RECORD OF THE COUNCIL OF THE CITY OF PALO ALTO LAND USE ACTION FOR
4115 EL CAMINO REAL: TENTATIVE MAP, 18PLN-00238 (Bill Wu, APPLICANT)
At its meeting on December 16, 2019, the City Council of the City of Palo Alto (“City
Council”) approved the Tentative Map for the development of a one-lot subdivision project making
the following findings, determinations and declarations:
SECTION 1. Background.
A. On July 20, 2018, Naresh Krishnamoorti applied for a Tentative Map and on
March 11, 2019, due to an ownership change, Bill Wu became the applicant of record. The project
includes a Tentative Map for the development of a one parcel condominium subdivision project with
seven residential units and four commercial spaces totaling 7,848 square feet of commercial space
(“Project”).
B. The Project site is comprised of one existing lot (APN No. 132-46-100) of
approximately 0.36-acres zoned CN. The site contains one existing commercial structure.
Commercial land uses are located adjacent to the lot to the north; place of worship to the west;
multi-family to the east and south.
C. Following staff review, the Planning and Transportation Commission reviewed
the Project and recommended approval on November 13, 2019, subject to conditions of approval.
SECTION 2. Environmental Review.
The City as the lead agency for the Project has determined that the project is subject to
environmental review under provisions of the California Environmental Quality Act (CEQA) under
Guideline section 15070, Decision to Prepare an Initial Study-Mitigated Negative Declaration (IS-
MND). An initial study was prepared for the project and it has been determined that there is
potential for significant impacts that would require mitigation measures to reduce them to a less
than significant level. These include mitigations for protection for nesting birds, cultural resources
in the event of discovery, geotechnical for expansive soils, and construction noise. The IS-MND was
made available for public review beginning November 30, 2018 and ended on January 2, 2019 and
approved by the Director of Planning & Development Services on January 7, 2019. The Initial Study
and Negative Declaration are contained as Attachment G in the December 6, 2018, ARB staff report
(ID #9800).
SECTION 3. Tentative Map Findings.
A legislative body of a city shall deny approval of a tentative map, if it makes any of the following
findings (California Government Code Section 66474). The City Council cannot make these findings
for the following reasons:
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1. That the proposed map is not consistent with applicable general and specific
plans as specified in Section 65451:
The site is consistent with the Comprehensive Plan as described below.
2. That the design or improvement of the proposed subdivision is not consistent
with applicable general and specific plans:
The Project is consistent with the following Comprehensive Plan policies:
Goal L-1: A compact and resilient city providing residents and visitors with attractive
neighborhoods, work places, shopping districts, public facilities and open spaces.
Policy L-1.3: Infill development in the urban service area should be compatible with its
surroundings and the overall scale and character of the city to ensure a compact, efficient
development pattern.
Policy L-1.4: Commit to creating an inventory of below market rate housing for purchase
and rental.
Goal L-2. An enhanced sense of “community” with development designed to foster public
life, meet citywide needs and embrace the principles of sustainability.
Policy L-2.2: Enhance connections between commercial and mixed use centers and the
surrounding residential neighborhoods by promoting walkable and bikeable connections
and a diverse range of retail and services that caters to the daily needs of residents.
Policy L-2.6: Create opportunities for new mixed use development consisting of housing
and retail.
Goal B-6: Attractive, vibrant retail centers, each with a mix of uses and a distinctive
character.
Policy B-6.5: Strengthen the commercial viability of businesses along the El Camino Real
corridor by, for example, encouraging the development of well-designed retail,
professional services and housing.
The project includes a mixed-use building with frontage along El Camino Real with at-grade parking
in the rear along El Camino Way and below-grade parking. The project complements the
surrounding development and is consistent with the land-use designations for the property. The
project was reviewed by the ARB previously for design review.
3. That the site is not physically suitable for the type of development:
The site is a through-lot with street frontages in the front and the rear. The project is consistent with
the City’s Performance Standards set forth in Palo Alto Municipal Code (PAMC) 18.23, ensuring
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compatibility between commercial and residential uses. Proposed lighting is directed downward to
prevent spillover to adjacent properties. Trash enclosures are located at grade level of the project.
The site circulation facilitates access for all modes of transportation. The project includes short-term
and long-term bike parking. The project will include a pedestrian access breezeway to connect El
Camino Way and El Camino Real.
4. That the site is not physically suitable for the proposed density of
development:
The allowed residential density for the site is up to 20 dwelling units per acre, which
based on the project site acreage amounts to seven dwelling units that would be allowed. The
project is consistent with the maximum Floor Area Ratio and does qualify for an affordable housing
density bonus. The density bonus floor area is applied to the below-market-rate units in accordance
with the City’s Municipal Code.
5. That the design of the subdivision or the proposed improvements are likely to
cause substantial environmental damage or substantially and avoidably injure fish or wildlife or
their habitat:
As conditioned in the Final IS-MND approved by the Director of Planning &
Development Services on January 7, 2019, the Project will not cause environmental damage or
injure fish, wildlife, or their habitat, in that property is not adjacent to sensitive habitat areas and
would incorporate mitigation measures to reduce impacts to a less than significant level.
6. That the design of the subdivision or type of improvements is likely to cause
serious public health problems:
An environmental analysis identifies potentially significant impacts related to
the associated development project’s improvements that would require mitigation measures to
reduce them to a less than significant level. These include mitigations as reported in the Final IS-
MND approved by the Director of Planning & Development Services on January 7, 2019.
7. That the design of the subdivision or the type of improvements will conflict with
easements, acquired by the public at large, for access through or use of, property within the proposed
subdivision. In this connection, the governing body may approve a map if it finds that alternate
easements, for access or for use, will be provided, and that these will be substantially equivalent to
ones previously acquired by the public. This subsection shall apply only to easements of record or to
easements established by judgment of a court of competent jurisdiction and no authority is hereby
granted to a legislative body to determine that the public at large has acquired easements for access
through or use of property within the proposed subdivision.
The design of the subdivision will not conflict with any easements for access
through or use of the property. An access easement will be in effect for pedestrian access between
El Camino Way and El Camino Real.
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SECTION 4. Tentative Map Approval Granted.
Vesting Tentative Map Approval is filed and processed in accordance to PAMC Chapter 21.12 and
granted by the City Council under PAMC Chapters 21.12 and 21.20 and the California Government
Code Section 66474, subject to the conditions of approval in Section 6 of this Record.
SECTION 5. Final Map.
The Final Map submitted for review and approval by the City Council shall be in substantial
conformance with the Tentative Map prepared by Lea & Braze Engineering, Inc. titled “Tentative
Map For Condominium Purposes,” consisting of 16 pages, stamped as received January 28, 2019,
except as modified to incorporate the conditions of approval in Section 6. A copy of the Tentative
Map is on file in the Department of Planning Development Services, Current Planning Division. Prior
to the expiration of the Tentative Map approval, the subdivider shall cause the subdivision or any
part thereof to be surveyed, and a Final Map, as specified in PAMC Chapter 21.08, to be prepared
in conformance with the Tentative Map as conditionally approved, and in compliance with the
provisions of the Subdivision Map Act and PAMC Title 21 and submitted to the City Engineer (PAMC
Section 21.16.010[a]).
SECTION 6. Conditions of Approval.
Planning Division
1. MITIGATION MONITORING AND REPORTING PROGRAM. Mitigation Monitoring and
Reporting Program (MMRP), prepared for this project in compliance with the California
Environmental Quality Act (CEQA), shall be incorporated by reference as conditions of
approval. The applicant shall comply with all specified mitigation measures in the timelines
outlined in the project’s MMRP. Prior to requesting issuance of any related demolition
and/or construction permits, the applicant shall meet with the Project Planner to review and
ensure compliance with the MMRP, subject to the satisfaction of the Director of Planning
and Community Environment.
2. BELOW MARKET RATE (BMR) HOUSING REQUIREMENT: This project’s total BMR
requirement is 1.05 units. When the BMR requirement results in a fractional unit, an in-lieu
payment to the Residential Housing Fund may be made for the fractional unit instead of
providing an actual BMR unit, except that larger projects of 30 or more units must provide a
whole BMR unit for any fractional unit of one-half (0.50) or larger.
To satisfy this requirement, the applicant shall provide one (1) BMR for-sale housing unit
affordable to households making 80 to 100 percent of the Santa Clara County median income
within the project in accordance with the requirements set forth in Program H3.1.2 of the
City of Palo Alto Comprehensive Plan, Chapter 16.65 of the Palo Alto Municipal Code, and
the BMR Program rules and regulations. The applicant shall also provide in lieu payment as
specified in Section 16.65.060. The fractional in-lieu fee shall be paid prior to issuance of any
building permits for the project; provided, however, that prior to issuance of the first building
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permit for the project, the applicant may elect to provide one additional inclusionary unit
instead of paying the fractional in lieu payment.
3. AFFORDABLE HOUSING PLAN AND AGREEMENT. All BMR units constructed under this
condition shall be in conformance with the City’s BMR Program rules and regulations. A BMR
Agreement in a form acceptable to the City Attorney for the 1.05 BMR units shall be executed
and recorded prior to final map approval or building permit issuance, whichever occurs first.
Failure to comply with the timing of this condition and any adopted BMR Program rules and
regulations shall not waive its later enforcement. (PAMC 16.65.090)
The applicant is hereby notified, as required by Government Code § 66020, that the
approved plans, these conditions of approval, and the adopted City fee schedule set forth in
Program H3.1.2 of the City of Palo Alto Comprehensive Plan constitute written notice of the
description of the dedications, reservations, amount of fees and other exactions related to
the project. As of the date of project approval, the 90-day period has begun in which the
applicant may protest any dedications, reservations, fees or other exactions imposed by the
City. Failure to file a protest in compliance with all of the requirements of Government Code
§ 66020 will result in a legal bar to challenging the dedications, reservations, fees or other
exactions.
4. ESTIMATED IMPACT FEE. Development Impact Fees, currently estimated in the amount of
$248,628.62 plus the applicable public art fee, per PAMC 16.61.040, shall be paid prior to
the issuance of the related building permit. This is in addition to the required affordable
housing in-lieu fee, noted above.
5. IMPACT FEE 90-DAY PROTEST PERIOD. California Government Code Section 66020 provides
that a project applicant who desires to protest the fees, dedications, reservations, or other
exactions imposed on a development project must initiate the protest at the time the
development project is approved or conditionally approved or within ninety (90) days after
the date that fees, dedications, reservations or exactions are imposed on the
Project. Additionally, procedural requirements for protesting these development fees,
dedications, reservations and exactions are set forth in Government Code Section 66020. IF
YOU FAIL TO INITIATE A PROTEST WITHIN THE 90-DAY PERIOD OR FOLLOW THE PROTEST
PROCEDURES DESCRIBED IN GOVERNMENT CODE SECTION 66020, YOU WILL BE BARRED
FROM CHALLENGING THE VALIDITY OR REASONABLENESS OF THE FEES, DEDICATIONS,
RESERVATIONS, AND EXACTIONS. If these requirements constitute fees, taxes, assessments,
dedications, reservations, or other exactions as specified in Government Code Sections
66020(a) or 66021, this is to provide notification that, as of the date of this notice, the 90-
day period has begun in which you may protest these requirements. This matter is subject
to the California Code of Civil Procedures (CCP) Section 1094.5; the time by which judicial
review must be sought is governed by CCP Section 1094.6.
Public Works Engineering Department
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6. Subdivider shall prepare and submit documents per PAMC 21.16.020 along with the Final
Map.
7. Off-site improvements such as curb and gutter, sidewalk replacement, street tree
replacement and/or new street trees, street lights, utility upgrades or street resurfacing,
striping are typically required with subdivisions. Since the proposed project is a subdivision,
applicant shall be aware that off-site improvements such as those listed above will be
required. At a minimum, applicant shall provide an Off-site improvement Plan set that show
new curb, gutter and sidewalk along the project frontages to be removed and replaced, full
street width resurfacing (grind and overlay) will be required, new street trees, striping, all
off-site utility upgrades. Applicant shall meet with City’s Urban Forestry division to evaluate
if a new street tree can be planted along the project frontages.
8. Provide closure calculations and stamped and signed cost estimate for the off-site
improvements described above.
9. Subdivision Improvement Agreement is required to secure compliance with condition of
approval and security of improvements onsite and offsite per PAMC Section 21.16.220.
10. The Final Map shall include CITY ENGINEER STATEMENT, CITY SURVEYOR STATEMENT,
BENEFICIARY STATEMENT, DIRECTOR OF PLANNING AND COMMUNITY ENVIRONMENT
STATEMENT and CITY CLERK. Please note, it has come to PWE attention that the City
Engineer’s Statement on maps moving forward needs to be updated to have the following
phrase removed “AND I AM SATISFIED THAT SAID MAP IS TECHNICALLY CORRECT”. Please
ensure City Engineer’s statement does not include this wording.
11. The City of Palo Alto does not currently have a City Surveyor on staff and has retained the
services of Siegfried Engineering to review and provide approval on behalf of the City.
Siegfried will be reviewing, signing and stamping the Final Map associated with the project.
In effort to employ the services of Siegfried Engineering, and as part of the City’s cost
recovery measures, the applicant is required to provide payment to cover the cost of
Siegfried Engineering’s review.
City’s Public Works Department intends to forward the Final Map to Siegfried for an initial
preliminary review of the documents. Siegfried will then provide a review cost amount based
on the complexity of the project and the information shown on the document. Public Works
will share this information with the applicant once received and ask that applicant return a
copy acknowledging the amount. Applicant may then provide a check for this amount as
payment for the review cost. The City must receive payment prior to beginning the final
review process.
12. Provide electronic copies of the documents provided.
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PRIOR TO FINAL MAP RECORDATION
13. Submit wet signed and stamped mylar copy of the Final Map to the Public Works for
signature. Map shall be signed by Owner, Notary and Surveyor prior to formal submittal.
14. Signed Subdivision Improvement Agreement and Security Bonds as described per PAMC
21.16.230.
PRIOR TO ISSUANCE OF A BUILDING PERMIT OR GRADING AND EXCAVATION PERMIT
15. Final Map shall be recorded with County Recorder.
SECTION 7. Term of Approval. Tentative Map. All conditions of approval of the Tentative Map shall
be fulfilled prior to approval of a Final Map (PAMC Section 21.16.010[c]). Unless a Final Map is filed,
and all conditions of approval are fulfilled within a two-year period from the date of Tentative Map
approval, the Tentative Map shall expire and all proceedings shall terminate. An extension of time
may be granted by the city council after recommendation of the planning commission, upon the
written application of the subdivider, prior to the expiration of the Tentative Map approval, or any
previous extension granted. Such extension(s) shall be subject to the maximum limitations set forth
in the Subdivision Map Act.
INTRODUCTED AND PASSED: December 16, 2019
AYES: Cormack, DuBois, Filseth, Fine, Kniss, Kou, Tanaka
NOES:
ABSENT:
ABSTENTIONS:
ATTEST: APPROVED:
_________________________ ____________________________
City Clerk Director of Planning and
Development Services
APPROVED AS TO FORM:
___________________________
Assistant City Attorney
PLANS AND DRAWINGS REFERENCED:
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Those plans prepared by Lea & Braze Engineering, Inc. titled “Tentative Map for Condominium
Purposes” consisting of 16 pages, stamped, January 28, 2019.
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/
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
City
of Palo Alto
Office of the City Attorney
250 Hamilton Avenue,8th Floor
Palo
Alto,CA 94301
No fee for recording pursuant to
Government Code Section 27383
REGULATORY AGREEMENT AND DECLARATION OF RESTRICTIVE
COVENANTS REGARDING BELOW-MARKET-RATE UNITS
4115 El Camino Real
APN:132-46-100
This Regulatory Agreement and Declaration of Restrictive Covenants Regarding Below-
Market-Rate Units (the “Agreement11)is made and entered into as of ,2019
by and between the City of Palo Alto,a charter city and municipal corporation (the 11jtt)and Y
&J MICHELE WAY,LLC,a California Limited Liability Company (the “Developer”).
RECITALS
A.Defined terms used but not defined in these recitals are as defined in Article I of
this Agreement.
B.On January 7,2019,the City’s Director of Planning &Community Environment
approved Developer’s construction of seven (7)for-sale housing units (the “Development”)on
that certain property in the City,generally known and described as 4115 El Camino Real,Palo
Alto,California (the “Property”)and more particularly described in Exhibit A attached to this
Agreement and incorporated by reference.
C.The Development is subject to the City’s Below-Market-Rate (“BMR”)
requirements as contained in Program H.3.1.2 of the 20 15-2023 Housing Element (the “Housing
Element”)and Palo Alto Municipal Code (“PAMC”)Chapter 16.65 that new for-sale housing
development include at least fifteen percent (15%)BMR dwelling units.
D.To satisfy the requirements of PAMC Chapter 16.65 and Housing Element
Program H.3.1.2 ,the Developer shall construct and sell one (1)dwelling unit at an initial sales
price affordable to a household making 80 to 100 percent of the Santa Clara County median
income (the “Low-Moderate Income Units1t)and 0 dwelling units at an initial sales price
affordable to a household making 100 to 120 percent of the Santa Clara County median income
(the “Moderate Income Units”).The Low-Moderate Income Units and the Moderate Income
Units shall collectively be referred to as the “BMR Units”.Because the BMR requirement would
result in .05 fractional units,the Developer has agreed to make a cash payment to the City’s
Residential Housing Fund in lieu of providing a whole BMR unit in the amount provided for in
the City’s Municipal Fee Schedule pursuant to PAMC Chapter 16.65.
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May 5, 2020,
E.The Developer is required to sell the BMR Units to buyers from Eligible
Households (the “Initial Buyers”)and to execute certain documents with each Initial Buyer that
will restrict the sates price to maintain the affordability of the BMR Units for a period of ninety-
nine (99)years.
F.Developer acknowledges and agrees that in connection with its approval of the
Development,the City provided adequate and proper notice pursuant to Government Code
Section 66020 of Developer’s right to protest any requirements for fees,dedications,reservations,
and other exactions as may be included in this Agreement,that no protest in compliance with
Section 66020 was made within ninety (90)days of the date that notice was given,and that the
period has expired in which Developer may protest any and all fees,dedications,reservations,
and other exactions as may be included in this Agreement.
G.In order to ensure that the entire Development will be used and operated in
accordance with these conditions and restrictions,the City and Developer wish to enter into this
Agreement.
THEREFORE,the City and Developer agree and acknowledge that the above recitals are
true and accurate,and are incorporated into this Agreement by this reference,and they hereby
agree as follows.
ARTICLE I
DEFINITIONS
1.1 Definitions
When used in this Agreement,the following terms have the respective meanings assigned
to them in this Article 1.
(a)“Affordable Sales Price”means the maximum allowable sales price for a
BMR Unit in effect at the time of its sale by the Developer to an Eligible Household.
(b)“Agreement”means this Regulatory Agreement and Declaration of
Restrictive Covenants Regarding Below-Market-Rate Units.
(c)“BMR”means below-market-rate.
(d)“BMR Units”is defined in Recital D.
(e)“City”means the City of Palo Alto.
(f)“City Deed of Trust”means a Deed of Trust and Security Agreement
securing performance under the Resale Restriction and City Note in a form substantially similar
to that shown in Exhibit F.
(g)“City Note”means a Promissory Note in favor of the City in a form
substantially similar to that shown in Exhibit E.
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(h)“Developer”means Y &J MICHELE WAY,LLC,and its authorized
representatives,assigns,transferees,or successors-in-interest thereto.
(i)“Development”is defined in Recital B.
(j)“Director”means the Planning and Community Environment Director for
the City or the corresponding successor position.
(k)“Eligible Household”means a household which has been determined by
the City or its designee to be eligible to purchase a BMR Unit as a Low or Moderate Income
Household,in compliance with the Housing Element and this Agreement.
(1)“Indemnitees”is defined in Section 6.3.
(m)“Initial Buyers”is defined in Recital E.
(n)“Housing Element”means the City’s 20 15-2023 Housing Element,which
is Chapter 4 of its Comprehensive Plan.
(o)“Low-Moderate Income Household”means a household whose income
does not exceed one hundred percent (100%)of the Santa Clara County median income.
(p)“Low-Moderate Income Units”means the BMR Units that are required to
be initially sold to Low-Moderate Income Households.
(q)“Market Rate Units”are dwelling units in the Development that are not
BMR Units.
(r)“Moderate Income Household”means a household whose income does not
exceed one hundred twenty percent (120%)of the Santa Clara County median income.
(s)“Moderate Income Units”means the BMR Units that are required to be
initially sold to Moderate Income Households.
(t)“Property”means the real property described in Exhibit A attached hereto
and incorporated herein.
(u)“Resale Restriction”means an Occupancy,Resale,and Refinancing
Restriction Agreement,with Option to Purchase at Restricted Price in a form substantially
similar to that shown in Exhibit D.
(v)“Term”means the term of this Agreement,which commences on the date
of this Agreement and continues until the earlier to occur of (i)fifty-nine (59)years from the
date of this Agreement,or (ii)the sale of 100%of the BMR Units to Initial Buyers from Eligible
Households in compliance with the terms of this Agreement.
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1.2 Exhibits.The following exhibits are attached to and incorporated into this
Agreement:
Exhibit A Legal Description.
Exhibit B 3MR Location and Production Schedule.
Exhibit C Affordable Sales Price.
Exhibit D form of Resale Restriction.
Exhibit E Form of City Note.
Exhibit F form of City Deed of Trust.
ARTICLE 2
CONSTRUCTION Of DEVELOPMENT AND BMR UNITS
2.1 Construction of BMR Units.The Developer shalt construct and sell the BMR
Units,consisting of one (I)Low-Moderate Income Units and zero (0)Moderate Income Units in
the approximate location shown and described on Exhibit B at an Affordable Sales Price.If,
after recordation of this Agreement,the Developer proposes to change the location of any
Affordable Unit within the Development,the Developer shall submit a written request for such
change to the Director,who shall have sole discretion to approve or deny such request.
2.2 Construction Timing.The BMR Units shall be constructed in proportion to
construction of the Market Rate Units.No certificates of occupancy or final inspections shall be
issued for any Market Rate Unit unless a proportional number (generally one certificate of
occupancy for a BMR Unit for each seven Market-Rate Units issued certificates of occupancy)
of certificates of occupancy or final inspections have been issued for BMR Units.If,after
recordation of this Agreement,the Developer proposes to change the Affordable Unit production
schedule,the Developer shall submit a written request for such change to the Director,who shall
have sole discretion to approve or deny such request.
2.3 Design and Appearance of Affordable Units.The design,bedroom count,
appearance,and general quality of the BMR Units shall be compatible with those of the
DeveLopment as a whole.
ARTICLE 3
SALE Of BMR UNITS
3.1 Sale by Developer to Eligible Households.
(a)Developer shall sell the BMR Units to Eligible Households at prices not in
excess of the then-current Affordable Sales Prices provided by the City.The Affordable Sales
Price shall be the absolute maximum price that the Developer or any other seller may receive as
compensation for the sale of a BMR Unit.The Developer or other seller may not charge or
receive any additional amount for a BMR Unit regardless of whether the additional amount is (a)
4
895\I 6\I 879533.1 4 LI5ECR BMR Regulatory Areementv.2O I8.H-V REVISED!0.8.1 9.doc
for options,upgrades or additional improvements to the BMR Unit,(b)paid through escrow or
outside of escrow,(c)paid prior to,after or as part of the purchase escrow or (d)paid in cash or
in kind,unless a reasonable accommodation is approved by the City for buyers requiring options
or accommodations related to a disability,in which any additional cost shall be paid through
escrow with prior written approval by City.
(b)The Developer shall actively market the BMR Units,openly and in the
same general manner as the Market-Rate Units,allow prospective buyers to view the BMR Units,
model units or floor plans,disclosure documents,and any other relevant sales materials,as may
be available.Developer’s sales agents shall provide the same general quality of customer service
to the BMR Unit buyers as provided to Market-Rate Unit buyers,shall display information about
the availability of the BMR Units in a readily noticeable manner in the sales office and/or Project
sales website,and shall disclose the BMR Unit restrictions to any prospective buyers in a timely
manner.Selected applicants shall be responsible for obtaining their own financing for the BMR
Units.Developer shall comply with applicable fair housing laws in the marketing and sale of the
BMR Units.Purchase contracts between Developer and Eligible Households shall include
requirements that buyers execute documents for the benefit of the City as described in Section
3.3 below.
(c)The City or its designee shall verify an Initial Buyer’s eligibility pursuant
to this Agreement before Developer may accept the Initial Buyer’s offer to purchase a BMR Unit.
Developer agrees to pay a transaction fee in compliance with the City’s then-applicable
Municipal fee Schedule,per sale of each BMR Unit,or any such fee for the reasonable cost of
administering this Agreement as may be adopted by resolution or ordinance of the City Council.
(d)Eligible Households shall submit purchase offers directly to Developer,
and Developer shall accept offers to purchase in the order received,provided that such offers
include a letter from the City certifying buyer’s eligibility,a valid check for the required good
faith deposit,and a preliminary first mortgage loan approval.Developer shall conduct any
additional screening of applicants deemed necessary and not in violation of fair housing laws.
(e)The Developer shall be independently responsible to make good faith
efforts to market and sell the BMR Units in compliance with this Agreement,and shall cooperate
with City in good faith in the effort to sell the BMR Units to Eligible Households in a timely
manner.
(f)Once Developer has accepted an offer from an Eligible Household or
existing Tenant of a BMR Unit,Developer shall allow at least ninety (90)days from the date
escrow has been opened for escrow to close,whether to the original Eligible Household or to a
subsequent City-approved Eligible Household.If an Eligible Household fails to close escrow
within the applicable ninety (90)-day period,Developer shall notify City of any intent to dissolve
escrow at least ten (10)business days prior to dissolution.In the event of a dissolution,
Developer shall resume marketing the BMR Unit until it accepts an offer from a second Eligible
Household.Developer shall allow at least ninety (90)days from the date the second escrow has
been opened for escrow to close.If a second Eligible Household fails to close escrow within the
applicable ninety (90)-day period,Developer shall notify City of any intent to dissolve escrow at
least ten (10)business days prior to dissolution.In the event of a second dissolution,Developer
5
895\16\1879533.1 4115 ECR BMR Regulatory Agreementv.20 I$.H-V REVISEDI 0.8.1 9.doc
may sell the BMR Unit at its fair market value and pay to the City an amount equal to the
difference between the actual contract sale price of the BMR Unit and the Affordable Sales Price.
(g)If Developer has not received any purchase offer from an Eligible
Household for a BMR Unit within one hundred eighty (180)days after the BMR Unit has been
offered for sale,the Developer shall provide a one hundred eighty (180)days’notice to the City
and shall satisfy any further conditions that may be reasonably required by the City,including
but not limited to,further efforts to find an Eligible Household and/or additional marketing by
the Developer to attract an offer to purchase from an Eligible Household.If escrow has not
closed on the BMR Unit sale within an additional sixty (60)days from date of Developer’s
acceptance of such offer under this Section,Developer may sell the BMR Unit at its fair market
value and pay to the City an amount equal to the difference between the actual contract sale price
and the Affordable Sales Price.
(h)If a BMR Unit is sold at fair market value as specified in subparagraphs (f)
or (g)above,such BMR Unit shall not be subject to any requirements of this Agreement
following City’s receipt of applicable payment.Upon receipt of such payment,City shall provide
Developer with a recordable document releasing the BMR Unit from this Agreement.
3.2 Affordable Sales Prices.The BMR Units shall be sold to Eligible Households at
sales prices that do not exceed Affordable Sales Prices established by the City.Affordable Sales
Prices for the BMR Units in effect on the date of this Agreement (and subject to change annually
thereafter)are shown in Exhibit C attached hereto and incorporated herein.Developer
acknowledges and agrees that Affordable Sales Prices are determined based on current income
levels in Santa Clara County,changes to which are published annually by the State of California,
Department of Housing and Community Development.
3.3 Homebuyer Documents and Security Instruments.Prior to the sale of each BMR
Unit,the Developer shall ensure that:
(a)The Initial Buyer and the City execute the Resale Restriction,which shall
be recorded against the BMR Unit at close of escrow on the sale to the Initial Buyer.The Resale
Restriction shall be recorded immediately following the grant deed to the Initial Buyer,unless
otherwise approved in writing by the City.
(b)The Initial Buyer signs the City Note that obligates the Initial Buyer to pay
the City any excess sales proceeds or excess rents received by the Initial Buyer if the Initial
Buyer fails to comply with the Resale Restriction on rental or resale of the BMR Unit.
(c)The Initial Buyer signs the City Deed of Trust to secure performance of
the Eligible Household’s covenants under the Resale Restriction and payment of the amounts due
under the City Note if the Initial Buyer fails to comply with the terms of the Resale Restriction.
The City Deed of Trust shall be recorded against the BMR Unit,subordinate only to the Resale
Restriction and the lien for the first mortgage loan obtained by the Initial Buyer to finance the
purchase of the BMR Unit unless otherwise approved in writing by the City.
3.4 Compliance Reports,Inspections,Monitoring.Within five (5)days following the
sale of any BMR Unit by the Developer to an Eligible Household,Developer shall forward,or
6
895\16\1879533.1 4115 ECR BMR ReuIatorv AreemenW.2O I8.1-I-V REVISEDI0.8.1 9.doc
shall cause escrow officer to forward to the City,copies of the buyer’s and seller’s settlement
statement and all closing documents,including Resale Restriction,City Note,and City Deed of
Trust executed in connection with the sale.
ARTICLE 4
CALCULATION AND PAYMENT Of IN LIEU FEES
4.1 In-Lieu Payments.In lieu of providing 0.05 required BMR units on-site,
Developer agrees to pay in-lieu fees at rates established in the City’s Municipal Fee Schedule or
by City Council ordinance or resolution.In-lieu fees shall be calculated using the rates in effect
at the time of payment.
4.2 Timing of Payment.Any in-lieu payments due pursuant to this Agreement shall
be paid to the prior to first building permit issuance,or at a time otherwise specified by City
Council ordinance or resolution.Failure to pay the in-lieu fees when due may result in the City
withholding building permits,refusing to approve a final parcel map or subdivision map,or
withholding certificates of occupancy,as applicable,in addition to any of the remedies available
to the City under Section 5.3 of this Agreement.
ARTICLE 5
ENFORCETVIENT
5.1 Covenants Running with the Land.The City and Developer hereby declare their
express intent that the covenants and restrictions set forth in this Agreement shall apply to and
bind Developer and its heirs,executors,administrators,successors,transferees,and assignees
having or acquiring any right,title or interest in or to any part of the Property and shall run with
and burden such portions of the Property until terminated in accordance with Section 5.2.Until
all or portions of the Property are expressly released from the burdens of this Agreement,each
and every contract,deed or other instrument hereafter executed covering or conveying the
Property or any portion thereof shall be held conclusively to have been executed,delivered,and
accepted subject to such covenants and restrictions,regardless of whether such covenants or
restrictions are set forth in such contract,deed or other instrument.In the event of foreclosure or
transfer by deed-in-lieu of all or any portion of the Property prior to completion and sale of all of
the BMR Units,title to all or any portion of the Property shall be taken subject to this Agreement.
5.2 Release of Property from Agreement.
(a)Upon sale of one hundred percent (100%)of the BMR Units,execution of
the Resale Restrictions in compliance with this Agreement,and payment of any applicable in-
lieu fees,the entire Property shall be released from the burdens of this Agreement.
(b)Prior to the sale of all BMR Units,upon sale of each of the Units in the
Project to an individual buyer,City shall execute and record a release of each such Unit from the
burdens of this Agreement if at the time the Developer is in compliance with all terms of this
Agreement,including,without limitation,Developer’s obligations to market and sell BMR Units
concurrently with Market Rate Units.
7$95\16\1879533.1 4115 ECR BMR Regulatory Agreementv201 8.1-1-VREVISEDI 0.8.1 9.doc
5.3 Default.failure of the Developer to satisfy any of Develope?s obligations under
the terms of this Agreement within thirty (30)days after the delivery of a notice of default from
the City will constitute a default under this Agreement.In addition to remedies for breach of this
Agreement,the City may exercise any and all remedies available to it under law or equity,
including but not limited to:
(a)withholding,conditioning,suspending or revoking any permit,license,
subdivision approval or map,or other entitlement for the Project,including without limitation
final inspections for occupancy and/or certificates of occupancy;
(b)instituting against the Developer,or other parties,a civil action for
declaratory relief,injunction or any other equitable relief,or relief at law,including without
limitation an action to rescind a transaction and/or to require repayment of any funds received in
connection with such a violation;
(c)where one or more persons have received financial benefit as a result of
violation of this Agreement,the City may assess,and institute legal action to recover as
necessary,a penalty in any amount up to and including the amount of financial benefit received,
in addition to recovery of the benefit received;
(d)requiring the Developer or his/her successors in interest to the Property to
pay the City rent for a BMR Unit from the date of any unauthorized use of the BMR Unit;and
(e)any other means authorized under the City of Palo Alto Municipal Code.
5.4 Remedies Cumulative.No right,power,or remedy given to the City by the terms
of this Agreement is intended to be exclusive of any other right,power,or remedy;and each and
every such right,power,or remedy shall be cumulative and in addition to every other right,
power,or remedy given to the City by the terms of any such document,or by any statute or
ordinance or otherwise against Developer and any other person.Neither the failure nor any
delay on the part of the City to exercise any such rights and remedies shall operate as a waiver
thereof,nor shall any single or partial exercise by the City of any such right or remedy preclude
any other or further.exercise of such right or remedy,or any other right or remedy.
ARTICLE 6
GENERAL PROVISiONS
6.1 Term.The provisions of this Agreement apply to the Development for the entire
Term.This Agreement is binding on any successor,heir or assign of Developer,whether a
change in interest occurs voluntarily or involuntarily,by operation of law or otherwise,except as
expressly released by the City.
6.2 No Subordination to Security Interest.in no event may this Agreement be
subordinated to any mortgage,deed of trust,or other security financing interest encumbering the
Property or the Development.The Agreement shall be recorded against the Property subject
only to such other exceptions and exclusions reasonably acceptable to the City and shall not be
$
895\16\1$79533.1 4115 ECR BMR Regulatory Agreementv.2018.l-I-V REVISEDIO..8.19.doc
subordinated to any future mortgages,deeds of trust,or other security financing interests
encumbering the Property or the Development.
6.3 Indemnification.
(a)To the full extent permitted by law,the Developer shall indemnify,defend
at its own expense,and hold the City and its elected officials,officers,employees and agents in
their official capacity (collectively “Indemnitees”)harmless against any and all claims,suits,
actions,losses and liability of every kind,nature and description made against it and expenses
(including reasonable attorneys’fees)which arise out of or in connection with this Agreement,
including but not limited to the marketing and sale of the BMR Units,except to the extent such
claim arises from the grossly negligent or willful misconduct of the City or Indemnitees.Each
party shall notify the other party immediately in writing of any claim or damage related to
activities performed under this Agreement.The parties shall cooperate with each other in the
investigation and disposition of any claim arising out of the activities under this Agreement,
provided that nothing shall require either party to disclose any documents,records or
communications that are protected under the attorney-client privilege or attorney work product
privilege.
(b)The provisions of this Section shall survive the expiration of the Term and
any release of part or all of the Property from the burdens of this Agreement.
6.4 Appointment of Other Agencies.At its sole discretion,the City may designate,
appoint or contract with any other public agency,for-profit or non-profit organization to perform
some or all of the City’s obligations under this Agreement.
6.5 Records.Developer shall retain all records related to compliance with obligations
under this Agreement for a period not less than five (5)years from the date of origination of such
records,and make them available to City employees or others designated by the City for
inspection and copying on five (5)business days’written notice.The City shall be entitled to
monitor compliance with this Agreement,and Developer shall cooperate with City monitoring,
including obtaining Affordable Sales Price and Eligible Household income verification upon
request of the City.
6.6 Monitoring Fee.Developer agrees to pay an annual monitoring fee as may be
adopted by resolution or ordinance of the City Council which is in force and effect for a similar
class of BMR units.
6.7 Nondiscrimination.All of the BMR Units shall be available for sale to members
of the general public.The Developer shall not give preference to any particular class or group of
persons in selling the Affordable Units,except to the extent that the Affordable Units are
required to be sold to Eligible Households and as required by this Agreement;provided,however,
there shall be no discrimination against or segregation of any person or group of persons,on
account of race,color,creed,religion,sex,sexual orientation,marital status,national origin,
source of income (e.g.,SSI),age (except for lawful senior housing),ancestry,or disability,in the
leasing,transferring,use,occupancy,tenure,or enjoyment of any Unit nor shall the Developer or
any person claiming under or through the Developer,establish or permit any such practice or
practices of discrimination or segregation with reference to sale of any Unit or in connection
9
$95\16\1879533.1 4115 ECR BMR Regulatory Agreernentv.201$.H-V REVISEDIO..$.19.doc
with the employment of persons for the construction,operation and management of the
Development.
6.8 Recording and Filing.The Developer shall record this Agreement,and all
amendments and supplements to it,in the Official Records of Santa Clara County against the
Property prior to the recordation of any parcel map or final subdivision map or issuance of any
building permit for the Project,whichever occurs first.
6.9 Governing Law.This Agreement is governed by the laws of the State of
California.
6.10 Waiver of Requirements.No waiver of the requirements of this Agreement shall
occur unless expressly waived by the City in writing.No waiver will be implied from any delay
or failure by the City to take action on any breach or default of Developer or to pursue any
remedy permitted under this Agreement or applicable law.Any extension of time granted to
Developer to perform any obligation under this Agreement will not operate as a waiver or release
from any of its obligations under this Agreement.Consent by the City to any act or omission by
Developer shall not be construed to be consent to any other or subsequent act or omission or to
waive the requirement for the City’s written consent to future waivers.
6.11 Amendments.This Agreement may be amended only by a written instrument
executed by all the parties hereto or their successors in title,and duly recorded in the real
property records of the County of Santa Clara.
6.12 Notices.All notices required herein shall be sent by certified mail,return receipt
requested,express delivery service with a delivery receipt,or personal delivery with a delivery
receipt and shall be deemed to be effective as of the date received,the date delivery was refused,
or the date returned as undeliverable as indicated on the return receipt as follows:
City:City of Palo Alto
250 Hamilton Avenue
Palo Alto,CA 94301
Attn:City Manager
Developer:
Y &J Michele Way,LLC
433 Airport Blvd.Suite 550
Burlingame,CA 94010
Such addresses may be changed by notice to the other party given in the same manner as
provided above.
10
$95\16\1 $79533.1 4115 ECR BMR Regulatory Agreementv.2018.H-v REVISEDI0.8.1 9.doc
6.13 Severability.If any provision of this Agreement is found invalid,illegal or
unenforceable,the validity,legality and enforceability of the remaining portions of this
Agreement shall not in any way be affected or impaired thereby.
6.14 Multiple Originals;Counterparts.This Agreement may be executed in multiple
originals,each of which is deemed to be an original,and may be signed in counterparts.
[Signatures onJotlowingpage.]
11
895\16\1 879533.1 4115 ECR BMR Regulatory Agreemenw2018H-V REVISED1O..$.I9.doc
IN WITNESS WHEREOF,the City and Developer have entered into this Agreement,as
of the date first written above.
DEVELOPER:
Y &J Michele Way,LLC
CITY:
By:Y Xiao
Its:anaer/Owner
APPROVED AS TO FORM
CITY OF PALO ALTO,a charter city and
municipal corporation
By:3 ,City Manager
Regulatory Agreement
Signature Page
895\16\1 879533.1
Its:Manager/Owner
By:
1Yj $lurtp ,City Attorney
A notary public or other officer completing this certificate verifies only the identity of
the individual who signed the document to which this certificate is attached,and not
the truthfulness,accuracy,or validity of that document.
State of
County of SAT C-fZF
On the ‘‘cf IV1M.j %Z-()_before me,?3.cff(1 Pu A.uW1,a Notary Public,
personally appeared cd Shi ct’.
who proved to me on the basis of satisfactory evidence to be the person(I)whose name(
s/are subscribed to the within instrument and acknowledged to me thatshe/they executed the
same inIher/their authorized capacityIs),and that by’her/their signatuje(s)on the
instrument the person),or the entity upon behalf of which the person)acted,executed the
instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
WIThEtSmyh:nnd
I San Matea County
Signature:________________
_______________
Name:ie rv
(Typed or Printed)(Seal)
Homebuyers Resale Restriction Agreement October 2016
A notary public or other officer completing this certificate verifies only the
identity of the individual who signed the document to which this certificate is
attached,and not the truthfulness,accuracy,or validity of that document.
STATE OF CALIFORNIA )
)
COUNTY OF )
On Oi”/?,/.2-o ,before me,:i ,Notary
Public,personally appeared i’,who proved to me
on the basis of satisfactory evidence to be the person.s)whose name()is/afe-subscribed to the
within instrument and acknowledged to me that ‘re1she/they executed the same in bi-s/her/their
authorized capacity(ies,and that by hs/herkhir signature(on the instrument the person(or
the entity upon behalf of which the person(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.
9O6
_______
Notary Public•California Name:Rk4.2 Santa Clara County -‘-r m 1 1•INotaryruoilc
895\16\1$79533.1
A notary public or other officer completing this certificate verifies only the
identity of the individual who signed the document to which this certificate is
attached,and not the truthfulness,accuracy,or validity of that document.
STATE OF CALIFORNIA )
COUNTY Of (3L-/ec )
On Acpi(]/,before me,-,Notary
Public,personally appeared ‘%Lv\‘)cj?j ,who proved to me
on the basis of satisfactory evidence to be the person(whose name(.)-is/ace subscribed to the
within instrument and acknowledged to me that heishe/tby executed the same in h4’her/th.r
authorized capacity(ies),and that by h /her/thr signatureon the instrument the person,or
the entity upon behalf of which the person)acted,executed the instrument.
I certify UNDER PENALTY Of PERJURY under the laws of the State of California that
the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Public
LO1 ---WILLIAM T$UI1—I CoMu.#2209018
(I)NOTARYPUBUCCAuFORNIA
SANUATEOCOUNTY —
895\16\1879533.I
EXHIBIT A
LEGAL DESCRIPTION
THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY Of PALO ALTO,COUNTY Of
SANTA CLARA,STATE OF CALIFORNIA AND IS DESCRIBED AS FOLLOWS:
BEGINNING AT A POINT ON THE SOUTHWESTERN LINE OF THE OLD SAN FRANCISCO-SAN JOSE
ROAD WHERE IT IS INTERSECTED BY THE SOUTHEASTERN LINE OF THAT CERTAIN 0.275 ACRE
TRACT OF LAND AS DESCRIBED [N THE DEED FROM TYNAN LUMBER COMPANY,A
CORPORATION,TO THOMAS RUNE,ET UX.,BY DEED DATED OCTOBER 7,1935,IN BOOK 749
O.R.PAGE 50,SANTA CLARA COUNTY RECORDS;THENCE ALONG SAID SOUTHWESTERN LINE
Of THE OLD SAN FRANCISCO-SAN JOSE ROAD,NORTH 56°55’WEST 100 FEET;THENCE AT
RIGHT ANGLES SOUTH 33°05’WEST 155 FEET,MORE OR LESS,TO A POINT ON THE
NORTHEASTERN LINE OF THE NEW SAN FRANCISCO-SAN JOSE ROAD (STATE HIGHWAY),AS
SAiD NORTHEASTERN LINE WAS ESTABLISHED BY DEED FROM THERESA L.RHODES TO STATE OF
CALIFORNIA,BY DEED DATED JULY 31,1929,RECORDED SEPTEMBER 13,1929,IN BOOK 484 O.R.,
PAGE 110,SANTA CLARA COUNTY RECORDS;THENCE RUNNING SOUTHEASTERLY ALONG SAID
NORTHEASTERN LINE OF THE NEW SAN FRANCISCO-SAN JOSE ROAD (STATE HIGHWAY)ALONG A
CURVE TO THE RIGHT HAVING A RADIUS OF 3050 FEET,A DISTANCE OF 116 FEET,MORE OR LESS,
TO THE NORTHWESTERN CORNER OF THAT CERTAIN 2-1/2 ACRE TRACT OF LAND DESCRIBED IN
THE DEED FROM THERESA L.RHODES TO ANDREW J.MCCOY,ET UX.,DATED MARCH 18,1925,
RECORDED MARCH 21,1925,IN BOOK 149 O.R.PAGE 163;THENCE ALONG THE NORTHWESTERN
LINE Of SAID 2-1/2 ACRE TRACT OF LAND ABOVE REFERRED TO;NORTH 33°05’EAST 190 FEET,
MORE OR LESS,TO THE POINT Of BEGINNING.
EXCEPTING THEREFROM THAT PORTION THEREOF FRONTING ON THE HIGHWAY LEADING
FROM SAN FRANCISCO TO SAN JOSE KNOWN AS EL CAMINO REAL TAKEN OR CONVEYED FOR
THE PURPOSE OF WIDENING SAID ROADWAY.
ALSO EXCEPTING THEREFROM THAT PORTION OF THE LAND GRANTED TO THE CITY OF PALO
ALTO,A MUNICIPAL CORPORATION IN THAT FINAL JUDGMENT OF CONDEMNATION RECORDED
OCTOBER 3,1967 AS INSTRUMENT NO.3296676,IN BOOK 7880,PAGE 102 OF OFFICIAL RECORDS.
$95\16\1 $79533.I
EXHIBIT B
BMR UNIT LOCATION AND PRODUCTION SCHEDULE
UNIT 4,SECOND FLOOR AS SHOWN ON PAGE 7 ON THE ATTACHED APPROVED
PLANS.
PRODUCTION SCHEDULE:
THE BMR UNIT IS TO BE COMPLETED AT THE SAME TIME AS THE BALANCE OF
THE PROJECT AND THE MARKET UNITS LOCATED THEREIN.
895\16\1879533.1
EXHIBIT C
AFFORDABLE SALES PRICE
City of Palo Alto BMR Ownership Program
Prices for New BMR Units
for Households at 80 -100%of Area Median Income
Revised August 2019
Persons In 80%of County Area Affordable Prices at 80%100%of County Area Median Affordable Prices at 100%of
Household Median Income ofMedian Income tncome Median Income
1 $72,750 $211,154 $92,000 $294,533
2 $83,150 $256,201 $105,100 $351,274
3 $93,550 $301,247 $118,250 $408,232
4 $103,900 $346,077 $131,400 $465,189
5 $112,250 $382,244 $141,900 $510,669
BMR Unit Price BMR Unit PriceAssumedHousehold
Size for lJnit Type Unit Type (Assumes 80%of Area (Assumes 100%of Area
Median Income)Median Income)
I Studio $211,154 $294,533
2 1 Bedroom $256,201 $351,274
3 2 Bedrooms $301,247 $408,232
4 3 Bedrooms $346,077 $465,189
5 4 Bedrooms $382,244 $510,669
VARIABLES AND ASSUMPTIONS:
Area Median Income:State HCD 4-person househoki (As of5/6/
Annualized Rates:
Interest Rates (As ofAugist 2019)
Initial Property Tax Rate (Annual)
Total Eflèctive Interest Rate
Term of Mortgage (Years)
Loan-To-Value (5%downpayment):
Allowance for:HOA,Insurance.Reserve and PMI
Loan Terms:
Zero (0)Loan Points
30 Year.fixed Rate,fully Amortized Loan
Maximum of 30%ofGross Income for All Housing Costs (mortgage.
private mortgage insurance,property taxes,HOA dues,repairs &
maintenance allowance &fire insurance)
895\16\l $79533.I
EXHIBIT I)
FORM OF RESALE RESTRICTION
NO RECORDING FEE PURSUANT
TO GOVERNMENT CODE SECTION 27323
RECORDING REQUESTED BY
Title Company Name
Escrow #
AND WHEN RECORDED MAIL TO
City Attorney
City of Palo Alto
250 Hamilton Avenue
Palo Alto,CA 94301
SPACE ABOVE THIS LINE FOR RECORDERS USE
OCCUPANCY,RESALE,AND REFINANCING RESTRICTION AGREEMENT,WITH
OPTION TO PURCHASE AT RESTRICTED PRICE
CITY OF PALO ALTO
BELOW MARKET RATE PURCHASE PROGRAM
Owner:
Property Address:
Affordable Housing Cost:
$
NOTE:THIS AGREEMENT GRANTS THE CITY AN OPTION TO BUY YOUR
PROPERTY AT A RESTRICTED PRICE THAT MAY BE BELOW THE MARKET
VALUE.
$95\16\1879533.I
This Occupancy,Resale,and Refinancing Restriction Agreement,with Option to
Purchase at Restricted Price (the “Agreement”)is entered into as of this day of
____________
201_,by and between the City of Palo Alto,a California chartered municipal
corporation (the “City”)and
_______________________________
(“Owner”).
RECITALS
A.To further its goal of creating affordable home ownership opportunities for low
income and moderate-income persons and families,the City has adopted a program for the sale
of some homes at a price below fair market value following policies contained in the Housing
Element of the City’s Comprehensive Plan and in the City’s Below Market Rate Housing
Program Ordinance (Chapter 16.65 of the Palo Alto Municipal Code)(together the “BMR
Program”).
B.Owner intends to purchase the property located at
______________,
which is more
particularly described in Exhibit A attached hereto and incorporated by this reference (the
“Property”)at a cost affordable to Owner and below the unrestricted fair market value of the
Property,as shown on page 1 of this Agreement (the “Affordable Housing Cost”).The Property
has been made affordable to Owner through the terms of the 3MR Program.The Owner has
agreed to execute and comply with this Agreement in consideration of the Owner’s purchase of
the Property at the Affordable Housing Cost.
C.Owner is an eligible moderate income purchaser,intends to purchase the Property,
intends to live in the Property as an owner-occupant,and agrees to maintain the Property as
Owner’s principal residence (an “Eligible Purchaser”).
D.The purpose of this Agreement is to place occupancy,refinancing,and resale
controls on the Property and to require the payment of any excess proceeds of sale or excess
rental proceeds to the City.This Agreement also provides the City an option to purchase the
Property at a restricted price.The occupancy,refinancing,and resale controls prevent the Owner
and subsequent purchasers from using the Property for purposes incompatible with the BMR
Program and realizing unwarranted gains from sale of the Property at an unrestricted price.The
terms and conditions of this Agreement are intended to provide the necessary use and resale
restrictions to ensure that the Property is used,maintained,and preserved as housing affordable
to eligible low and moderate-income purchasers.
E.The Owner is receiving the following purchase money loan(s):
Name of Lender Amount
$
$
$
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The purchase money loans listed in this Recital E is the “First Lender Loan.”The lender of the
First Lender Loan is the “first Lender.”The First Lender Loan is secured by a deed of trust
executed by the Owner in favor of the First Lender and recorded in the County of Santa Clara
concurrently with this Agreement (the “First Lender Deed of Trust”).
F.The Owner’s obligations to pay the City any excess sale proceeds and excess rents
according to this Agreement are evidenced by a promissory note (the “City Note”).This
Agreement and the City Note shall be secured by a deed of trust and security agreement on the
Property (the “City Deed of Trust”).
G.The Property constitutes a valuable community resource by providing decent,safe,
and sanitary housing to persons and families of low and moderate incomes who otherwise would
be unable to afford such housing.To protect and preserve this resource it is necessary,proper,
and in the public interest for the City to administer the occupancy,financing,and resale controls
by means of this Agreement.
NOW,THEREFORE,in consideration of the benefits received by the Owner and the
public purposes served by the BMR Program,the Owner and the City agree as follows:
AGREEMENT
The foregoing recitals are hereby incorporated by reference and made part of this
Agreement.
1.DEFINITIONS
The following terms are specially defined for this Agreement and their definitions can be
found in the sections indicated below:
A.“Advances”—Section 7.F
B.“Affordable Housing Cost”—Recital B
C.“Affordable Rent”—Section 3.A
D.“Agreement”-First sentence on page 1
E.“BMR Program”—Recital A
F.“City”—First sentence of the Agreement on page 1
G.“City Deed of Trust”—Recital F
H.“City Note”—Recital F
I.“City Response Notice”-Section 7.C
J.“Declaration of Default”—Section 12.C
895\16\1879533.1
K.
L.
M.
N.
0.
P.
Q.
R.
S.
T.
U.
V.
w.
x.
Y.“Indexed Price”-Section 8.A
Z.“Maximum Resale Price”-Section $
AA.“Option”-Section 6.A
33.“Owner”-first sentence of the Agreement on Page I
CC.“Owner’s Notice of Intent to Transfer”-Section 7.A
DD.“Permitted Encumbrance Amount”—Section 11.B
EE.“Term”—Section 17
FF.“Transfer”-Section 5.A
GG.“VA”is the United States Veterans Administration.
The following exhibits are attached to this Agreement:
Exhibit A:Legal Description of the Property
Exhibit B:form of Owner Occupancy Certification
“Default”—Section 12.A
“Designated Purchaser”—Section 6.3
“Eligible Capital Improvements”-Section $.A
“Eligible Purchaser”—Recital C
“Excess Rents”—Section 3.3
“Excess Sales Proceeds”-Section 1O.A
“Fair Market Value”-Section 8.8
“First Lender”-Recital E
“first Lender Deed of Trust”-Recital E
“first Lender Loan”-Recital E
“HUD”is the United States Department of Housing and Urban Development.
“Inheriting Owner”—Section 5.C
“Permitted Transfer”—Section 5.3
“Property”-Recital B
$95\16\I$79533.I
Exhibit C:Form of Owner’s Notice of Intent to Transfer
Exhibit D:Form of Owner Request for City Subordination to Refinance First Lender
Loan
2.OWNER CERTIFICATIONS;OWNER OCCUPANCY REQUIREMENT
The Owner certifies that the financial and other information previously provided in order
to qualify to purchase the Property is true and correct as of the date first written above.The
Owner shall occupy the Property as the Owner’s principal place of residence for the Term of this
Agreement.The Owner shall be considered as occupying the Property as the Owner’s principal
place of residence if the Owner is living in the unit for at least ten (10)months out of each
calendar year,maintains a valid homeowner’s property tax exemption,and provides reasonable
requested documentation to verify occupancy.
A.Annual Certification of Owner Occupancy.On or before February 1 of each
calendar year,the Owner,under penalty of perjury,shall provide an annual written certification
to the City,in the form shown on Exhibit B of this Agreement,that the Owner is occupying the
Property as his or her principal place of residence,unless the City has approved a temporary
waiver of the occupancy requirement in writing as provided in Section 2.B;or the City has
approved rental of the Property in writing as provided in Section 3 below.The City may request
additional documentation from the Owner(s)to demonstrate that the Property is Owner’s
principal place of residence.The Owner agrees to fully cooperate with the City in promptly
providing all information requested by the City to assist the City in monitoring Owner’s
compliance with this Agreement.
B.Temporary Waiver of Occupancy Requirement.The City may,in its sole
discretion,grant a temporary waiver of this occupancy requirement if all of the following
conditions are met:(I)the City has determined that the Owner will incur substantial hardship if
he or she is not permitted to temporarily vacate the Property;(2)the Owner provides a written
request to the City for a temporary waiver of the occupancy requirement before vacating the
Property;and (3)the term of the occupancy waiver is not greater than one (1)year.A temporary
vacancy shall only be considered approved if the City approves the request in writing.
3.RENTAL OR LEASING OF PROPERTY
A.Prohibition on Renting or Leasing the Property.The Owner shall not rent or lease
the Property except with the prior express written consent of the City.The City may,in its sole
discretion,approve the rental or leasing of the Property if all of the following conditions are met:
(1)the Owner demonstrates to the City,in the City’s sole discretion,that the Owner wilt incur
substantial hardship if he or she is not permitted to rent or lease the Property;(2)the term of the
rental or lease is not greater than twelve (12)months and cannot be extended without the City’s
written approval;(3)the lease requires the tenant to maintain the Property and surrounding
property in good condition and prohibits subleasing;(4)the rent for the Property does not exceed
the lesser of:(1)thirty percent (30%)of the income of the tenant household that is renting the
Property,or (ii)the Owner’s monthly cost of principal and interest on the First Lender Loan,and
property insurance,property taxes,and homeowners association dues,if any,associated with
Property (the lesser rent is the “Affordable Rent”);and (5)the City certifies that the tenant’s
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income meets the income limits,as adjusted by household size,that are applicable to the
Property.
B.Payment of Excess Rents.Any lease of the Property in violation of this
Agreement is prohibited.The Owner agrees that,in the event the Owner rents or leases the
Property in violation of this Section 3,any rents paid to the Owner by the tenant or lessee in
excess of the Affordable Rent (“Excess Rents”)shall be due and payable to the City immediately
upon receipt thereof by the Owner.Such Excess Rents shall be considered a recourse debt of the
Owner to the City,which the City may collect by legal action against the Owner,by foreclosure
under the City Deed of Trust,and/or by exercising the Option.
4.MAINTENANCE AND INSURANCE REQUIREMENTS
A.Maintenance.The Owner shall maintain the Property,including landscaping,in
good repair and in a neat,clean and orderly condition and will not commit waste or permit
deterioration of the Property.
B.Insurance.The Owner shall maintain a standard all risk property insurance policy
equal to the replacement value of the Property (adjusted every five (5)years by appraisal,if
requested by City),naming the City as an additional insured.Additional insurance requirements
are set forth in the City Deed of Trust.
5.RESTRICTIONS ON RESALE AND TRANSFER OF THE PROPERTY
A.Transfer.Any Transfer of the Property will be subject to the provisions of this
Agreement including,without limitation,the Option described in Section 6 below.“Transfer”
means any sale,assignment or transfer,voluntary or involuntary,of any interest in the Property,
including,but not limited to,a fee simple interest,a joint tenancy interest,a life estate,a
leasehold interest (unless approved as provided in Section 3 of this Agreement),an interest
evidenced by a land contract by which possession of the Property is transferred and Owner
retains title,or a deed of trust.Any Transfer without satisfaction of the provisions of this
Agreement is prohibited and shall constitute a Default.
B.Permitted Transfers.Notwithstanding Section 5.A,the following forms of
Transfer shall be considered a “Permitted Transfer”and shall not constitute a Default,but all
such transferees shall continue to be bound by this Agreement:
(1)To a spouse or domestic partner;
(2)Between spouses or domestic partners as part of a dissolution proceeding
or divorce;
(3)To an inter vivos revocable trust in which Owner is the beneficiary,trustor,
and trustee subject to the provisions of Section 5.E;
(4)By operation of law on the death of ajoint tenant;
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(5)A refinancing of the First Lender Loan in accordance with Section 11.C of
this Agreement,or
(6)Execution of a deed of trust subordinate to the City Deed of Trust in
accordance with Section 11.D of this Agreement.
However,Owner shall provide written notice of all Permitted Transfers to the City under
Section 5.D,and all owners of the Property shall continue to occupy the Property as his or her
principal place of residence.
C.Inheritance.In the event a Transfer occurs by devise or inheritance due to death of
the Owner,the administrator of the Owner’s estate,the trustee of Owner’s trust,or the person
inheriting the Property shall provide written notice to the City of the Owner’s death within thirty
(30)days of the date of death and the following procedures shall apply:
(fl If the person inheriting the Property was previously a co-owner who was
income qualified,or who obtained title through a Permitted Transfer,then the inheritance is
permitted.All other persons inheriting the Property shall be an “Inheriting Owner.”The
Inheriting Owner shall provide the City with income and other information,to be verified by the
City,so that the City may determine if the Inheriting Owner qualifies as an Eligible Purchaser.
(2)If the City determines that the Inheriting Owner is an Eligible Purchaser,
such Inheriting Owner shall be permitted to take ownership of the Property provided that the
Inheriting Owner shall enter into a new agreement,note,and deed of trust,in a form determined
by the City,for a new Term and comply with all obligations under those documents,including
occupancy of the Property as his or her principal place of residence.
(3)If the Inheriting Owner fails to qualify as an Eligible Purchaser or does not
provide the City with information to determine if the Inheriting Owner is an Eligible Purchaser,
he or she shall be required to Transfer the Property to an Eligible Purchaser at a price not
exceeding the Maximum Resale Price,and/or the City may exercise the Option;provided,that if
the Inheriting Owner is a minor child,such Inheriting Owner and his or her legal guardian may
occupy the Property for the time period prescribed by Probate Code Section 6500 without the
City determining that the legal guardian of any such Inheriting Owner is an eligible purchaser.
(4)Failure of an Inheriting Owner to follow the procedures and file the
notices described in this Section 5.C shall constitute a Default under this Agreement and the City
may then exercise any of the remedies available to it,including,without limitation,exercise of
the Option.
D.Notice of Permitted Transfer.Owner shall provide notice to the City of any
transfers described in Sections 5.B and 5.C of this Agreement within thirty (30)days of the date
of transfer.
E.Transfer to Inter Vivos Revocable Trust.With the prior written approval of the
City,the Property may be transferred to an inter vivos revocable trust where the Owner is the
beneficiary,trustor,and trustee of the trust;except that if the Owner lacks capacity and is subject
to a conservatorship,a third party trustee may be named.The trust must contain language
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reasonably acceptable to the City describing the restrictions of this Agreement.Transfer of the
Property to any other form of trust is prohibited and shall constitute a Default.
6.GRANT OF OPTION TO PURCHASE;ASSIGNMENT OF OPTION BY CITY
A.Grant of Option.In consideration of the economic benefits received by the Owner
resulting from purchase and ownership of the Property at the Affordable Housing Cost.Owner
hereby grants and gives to the City a right to purchase all of Owner’s right,title,and interest in
and to the Property (“Option”)for the Maximum Resale Price,calculated as provided in Section
8 below,upon the occurrence of either of the following:
(1)The City receives an Owner’s Notice of Intent to Transfer (defined in
Section 7.A of this Agreement);or
(2)The City declares a Default as provided in Section 12 of this Agreement.
B.Assignment of Option.The City may,instead of purchasing the Property itself,
assign the Option to another public agency,a nonprofit corporation,or to an Eligible Purchaser
(each a “Designated Purchaser”).
C.Exercise of Option.The City acknowledges and agrees that the Option shall only
be exercised for the purpose of retaining the Property as an affordable housing unit as provided
in Section 13.
D.Option Term.The term of the Option extends for the Term of this Agreement.
The City’s rights to exercise the Option shall survive any Transfer of the Property by the Owner
in violation of this Agreement.As long as the Option has not been expressly abandoned,any
actual or attempted Transfer of the Property in violation of the terms and conditions of this
Agreement shall be a Default and shall be voidable at the election of the City.
E.HUD-Insured and VA-Guaranteed Mortgages.Notwithstanding the above,if
Owner has acquired the Property by a mortgage insured by the Secretary of the United States
Department of Housing and Urban Development (“HUB”)or guaranteed by the Secretary of the
Department of Veteran’s Affairs (“VA”),and a notice of default under such mortgage has been
recorded pursuant to California Civil Code Section 2924 (or successor provisions),this Option
shall automatically terminate if title to the Property is transferred to HUB or the VA by
foreclosure or deed-in-lieu of foreclosure under such mortgage,or if the insured mortgage is
assigned to the Secretary of HUD or VA.
7.NOTICE OF LNTENDED SALE OR TRANSFER
A.Transfer Notice.In the event the Owner intends to Transfer or vacate the Property,
the Owner shall promptly give the City written notice of such intent (the “Owner’s Notice of
Intent to Transfer”).in the form shown in Exhibit C attached to this Agreement.The Owner shall
give the City the Owner’s Notice of Intent to Transfer prior to notifying real estate brokers or
lenders of Owner’s intent to Transfer the Property and prior to listing of the Property on the
Multiple Listing Service.The Owner’s Notice of Intent to Transfer shall be sent to the City by
certified mail,return receipt requested at the address provided in Section 26 of this Agreement.
$95\16\I$79533.I
B.Real Estate Broker.The Owner should not contract with a real estate broker to
sell the Property until the Owner has received the City Response Notice as provided in Section
7.8 below,as the services of a broker will not be required if the City exercises the Option to
purchase the Property.
C.City Response Notice.The City shall respond in writing (the “City Response
Notice”)to the Owner’s Notice of Intent to Transfer within thirty (30)days of City receipt of a
complete Owner’s Notice of Intent to Transfer.The City Response Notice shall inform the
Owner of the City’s election to proceed under one of the following two alternatives:
(1)City Exercise of Option.The City Response Notice may notify the Owner
that the City elects to exercise the Option,or assign the Option to a Designated Purchaser,and
shall include the City’s calculation of the Maximum Resale Price to be paid by the City as
provided in Section $below.The City may choose to assign the Option to a Designated
Purchaser at any time after the City has decided to exercise the Option but before the close of
escrow.
(2)City Determination Not to Exercise Option.Alternatively,the City
Response Notice may notify the Owner that the City elects not to exercise the Option.In this
event,the Owner may sell the Property subject to the provisions of Section 9.The City
Response Notice shall include an information packet regarding the Property and the sale process
for distribution to applicants on the BMR Program waiting list maintained by the City.
D.Preparation for Sale Procedure.following delivery to the City of the Owner’s
Notice of Intent to Transfer,the Owner shall prepare the Property for sale,as follows:
(1)within thirty (30)days of delivery of the Owner’s Notice of Intent to
Transfer,the Owner shall obtain and deliver to the City a current written report of inspection of
the Property by a licensed structural pest control operator,and within the sooner of (a)sixty (60)
days from the date of delivery of the Owner’s Notice of Intent to Transfer,or (b)prior to close of
escrow on the Transfer,the Owner shall repair all Section 1 deficiencies noted in the pest report
including damage caused by infestation or infection by wood-destroying pests;
(2)within thirty (30)days of the date of the Owner’s Notice of Intent to
Transfer,the Owner shall allow the City to inspect the Property to determine its physical
condition,and,within the sooner of (a)sixty (60)days from the date of the inspection report,or
(b)prior to close of escrow on the Transfer,the Owner shall repair all damage and deferred
maintenance noted in the inspection report;
(3)if the Property is vacant,the Owner shall maintain the Property,including
the exterior Landscaping,in good condition and shall maintain utility connections until the close
of escrow on the Transfer;
(4)in the event of exercise of the Option by the City,the Owner shall permit a
final walk-through of the Property by the City or the Designated Purchaser in the final three (3)
days prior to close of escrow on the Transfer.
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The Owner shall cooperate with the City throughout the process for preparing the
Property for sale described in this Section 7.D in promptly providing all information requested
by the City to assist the City in preparing the Property for sale.
E.Escrow.If the City Response Notice notifies the Owner that the City intends to
exercise the Option,the City or the Designated Purchaser shall open an escrow account for its
purchase of the Property.Close of escrow shall take place on such date which is the later to
occur of the following:(a)ninety (90)days after the date of the City Response Notice,or (b)ten
(10)days after Owner has done all acts and executed all documents required for close of escrow.
F.Deposit of funds Into Escrow.Prior to the close of escrow,the City or the
Designated Purchaser shall ensure that funds are deposited to pay the Maximum Resale Price of
the Property.All Advances previously paid by the City shall be repaid from escrow.“Advances”
include any payment by the City of costs including,but not limited to,principal,interest,taxes,
assessments,insurance premiums,homeowners’fees,and associated late fees,costs,interest,
attorneys’fees,costs of investigation (including but not limited to costs of investigating
compliance with the owner occupancy requirements of Section 2),pest inspections,resale
inspections,and other expenses related to the Property.which Owner has failed to pay or has
permitted to become delinquent or which are required to remove liens and encumbrances as
provided in Section 7.G below or which are otherwise due to the City.Closing costs and title
insurance shall be paid by City or its Designated Purchaser and Owner pursuant to the custom
and practice in the County of Santa Clara at the time of the opening of escrow,or as may be
provided otherwise by mutual agreement.Owner agrees to do all acts and execute all documents
necessary to enable the close of escrow and Transfer of the Property to the City or its Designated
Purchaser.
G.Removal of Exceptions to Title.The Owner shall convey title to the Property at
the close of escrow free and clear of any mortgage,lien,or other encumbrance,unless approved
in advance in writing by the City or its Designated Purchaser.If the amounts deposited into
escrow by the City or its Designated Purchaser are not sufficient to satisfy all liens and
encumbrances recorded against the Property,then the Owner shall deposit into escrow the
additional sums that are required to remove the liens and encumbrances.
K.No Obligation.In no event shall the City become liable or obligated in any
manner to Owner by reason of the assignment of the Option,nor shall the City be in any way
liable or obligated to Owner for any failure of the Designated Purchaser to consummate a
purchase of the Property or to comply with the terms of this Option,or any escrow instructions
or agreement for the purchase of the Property.
8.DETERMINATION OF MAXIMUM RESALE PRICE
If the City exercises the Option,the maximum sales price (the “Maximum Resale Price”)
that the Owner shall receive for purchase of the Property shall be the LESSER of the Indexed
Price or the Fair Market Value.
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A.Original Purchase
(1)for purposes of determining the Maximum Resale Value,the date of the
original purchase will be the date documented on the earliest recorded Grant Deed by the
Owner or,where there are multiple owners,any one of the named Owners.
B.Indexed Price.
(1)The “Indexed Price”of the Property is total of(l)the Affordable Housing
Cost of the Property at the time of purchase by the Owner,increased by the one-third of the
percentage of increase in Consumer Price Index,All Urban Consumers,for the San Francisco-
Oakland-San Jose area published by the U.S.Department of Labor,Bureau of Labor Statistics,
from the date of the original purchase of the Property by the Owner to the date of receipt by the
City of the Owner’s Notice of Intent to Transfer,and (2)where applicable,adjustments made as
provided in Section $.A (2)below.
(2)Where applicable,the Indexed Price shall include an upward adjustment
reflecting the depreciated value of any substantial structural or permanent fixed improvements
which the Owner has made to the Property after purchase of the Property.No such adjustment
shall be made except for improvements made or installed by the Owner which conformed with
applicable building codes at the time of installation and whose initial costs,as verified by
invoices,receipts,or similar forms of documentation,exceed $5,000.Improvements meeting the
above requirements are referred to in this Agreement as “Eligible Capital Improvements.”In
addition,the Indexed Price shall be increased by Two Thousand Dollars ($2,000)per year
beginning with the date of the original purchase and subject to subsection (3)of this section,if
the Property has no violations of applicable building,plumbing,electric,fire or housing codes or
any other provisions of the City of Palo Alto Building Code,and all other repairs are made to put
the Property into a “sellable condition”.Items necessary to put the Property into sellable
condition shall be determined by the City,and may include cleaning,painting and making
needed structural,mechanical,electrical,plumbing and fixed appliance repairs and other
deferred maintenance repairs.
(3)Eligible Capital Improvements,if applicable,shall be awarded only once
to the Owner(s)of the Property,in accordance with the provisions of this Agreement,
irrespective of whether there are multiple Owners at the time of the City’s receipt of the Notice
of Transfer.
C.Fair Market Value.
(1)In certain circumstances it may be necessary to determine the fair market
value of the Property without taking account of the resale restrictions imposed by this Agreement
(the “fair Market Value”).These circumstances include:(1)where the parties wish to determine
if the Indexed Price exceeds the Fair Market Value in order to determine the Maximum Resale
Price as provided in Section 8;and (2)where the Owner is selling the Property to an purchaser at
an unrestricted price as provided in Section 9.
(2)If it is necessary to determine the fair Market Value of the Property,it
shall be determined by a certified MAI or other qualified real estate appraiser approved in
advance by the City.If possible,the appraisal shall be based upon the sales prices of comparable
895\16\1879533.1
properties sold in the market area during the preceding three (3)-month period.The cost of the
appraisal shall be shared equally by the City and the Owner,unless the appraisal is obtained from
a new purchaser,or unless the appraisal is necessary because the Owner wishes to refinance the
First Lender Loan or take out a new subordinate loan as provided in Section 11,in which event
the Owner shall pay the cost of the appraisal.
(3)Nothing in this Section shall preclude the Owner and the City from
establishing the fair Market Value of the Property by mutual agreement in lieu of an appraisal.
9.SALE Of HOME BY OWNER If CITY DOES NOT EXERCISE OPTION TO
PURCHASE
In the event the City Response Notice notifies the Owner that the City does not want to
exercise the Option or assign it to a Designated Purchaser,the Owner may elect to sell the
Property to a purchaser at unrestricted fair market value.The City shall reconvey the liens of this
Agreement and the City Deed of Trust and cancel the City Note,provided that the Owner pays
the Excess Sales Proceeds to the City as provided in Section 10 below and provide the City with
the following documentation associated with such a Transfer:
A.The name and address of the purchaser;
B.The final sales contract and all other related documents which shall set forth all
the terms of the sale of the Property,including a HUD-1 Settlement Statement.Said documents
shall include at least the following terms:(a)the sales price;and (b)the price to be paid by the
purchaser for the Owne?s personal property,if any,for the services of the Owner,if any,and any
credits,allowances or other consideration,if any.
C.A written certification,from the Owner and the purchaser in a form acceptable to
the City,that the sale shall be closed in accordance with the terms of the sales contract and other
documents submitted to and approved by the City.The certification shall also provide that
neither the purchaser nor any other party has paid or will pay to the Owner,and the Owner has
not received and will not receive from the purchaser or any other party,money or other
consideration,including personal property,in addition to what is set forth in the sales contract
and documents submitted to the City.The written certification shall also include a provision that
in the event a Transfer is made in violation of the terms of this Agreement or false or misleading
statements are made in any documents or certification submitted to the City,the City shall have
the right to foreclose on the Property or file an action at law or in equity as may be appropriate.
In any event,any costs,liabilities or obligations incurred by the Owner and the purchaser for the
return of any moneys paid or received in violation of this Agreement or for any costs and legal
expenses,shall be borne by the Owner and/or the purchaser and they shall hold the City harmless
and reimburse their expenses,legal fees and costs for any action they reasonably take in good
faith in enforcing the terms of this Agreement.
D.A copy of the MAI or other qualified appraisal for the Property.
E.Upon the close of the proposed sale,a copy of the final sales contract,HUD-l
Settlement Statement,escrow instructions,and any other documents which the City may
reasonably request.
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10.PAYMENT TO CITY OF EXCESS SALES PROCEEDS
A.Excess Sale Proceeds.If the Owner Transfers the Property at an unrestricted price
as provided in Section 9 above,or if the Owner makes a Transfer in violation of this Agreement,
the Owner shall pay the Excess Sales Proceeds to the City.For purposes of this Agreement,
‘Excess Sales Proceeds”shall mean the amount by which the gross sales proceeds received by
the Owner from the new purchaser exceed the Maximum Resale Price for the Property.However,
if the Owner Transfers the Property as provided in Section 9 and is otherwise not in Default
under this Agreement,the amount of Excess Sales Proceeds due to the City shall be reduced by
the amount of any actual closing costs and real estate commission paid by the Owner at Transfer,
up to a maximum of six percent (6%)of gross sales proceeds.
B.The amount of any Excess Sales Proceeds shall be a debt of the Owner to the City,
evidenced by this Agreement,secured by the City Deed of Trust.The Owner acknowledges that
the City shall have no obligation to cause release or reconveyance of this Agreement or of the
City Deed of Trust until the Excess Sales Proceeds are paid to the City.The City shall utilize the
Excess Sales Proceeds for City affordable housing programs.The Owner and the City
acknowledge that the formula for calculation of the amount of Excess Sales Proceeds due from
the Owner to the City is intended to cause the Owner to receive the same net sales proceeds from
sale of the Property at an unrestricted price to an purchaser in conformance with this Agreement
as the Owner would receive from sale of the Property to the City or to an eligible purchaser at
the Maximum Resale Price.
11.REFINANCE OF FIRST LENDER LOAN;NEW SUBORDINATE LOANS
A.City Consent Required.The Owner covenants and agrees not to place any
additional mortgage or deed of trust,including any line of credit,on the Property without
obtaining prior written consent of the City.A form for use by the Owner in requesting City
subordination to a refinanced first Lender loan or requesting consent for a subordinate loan is
attached as Exhibit D to this Agreement.
B.Permitted Encumbrance Amount.The “Permitted Encumbrance Amount”,is
defined as the greater of:(i)ninety percent (90%)of the Maximum Resale Price,or (ii)the
remaining balance of the original First Lender Loan:provided,however,that the City may,in its
sole discretion,permit a greater encumbrance amount if a greater encumbrance amount would
prevent substantial hardship to the Owner.
C.Refinance.The City shall permit a prepayment and refinance of the first Lender
Loan and shall agree to subordinate this Agreement and the City Deed of Trust to the refinanced
First Lender Loan provided that:
(I)following such refinance,the principal amount of all debt secured by the
Property does not exceed the Permitted Encumbrance Amount;
(2)The refinanced First Lender Loan is a fully amortized fixed rate loan,is
frilly documented,has a term not exceeding thirty (30)years,and requires no balloon payments;
895\16\1879533.I
(3)If the remaining balance of the original First Lender Loan exceeds ninety
percent (90%)of the Maximum Resale Price,then the refinanced First Lender Loan reduces the
Owner’s principal and interest payments;and
(4)The total new housing cost to the Owner after the refinance does not
exceed the Owner’s ability to pay.
D.Subordinate Loans.Subordinate loans,including second or junior loans and
equity tines of credit,are not permitted except as expressly approved by the City in writing.The
City shall permit only those subordinate loans that conform to the following:
(1)Following the addition of the subordinate loan (calculated assuming a
maximum permitted draw on any equity line of credit),the principal amount of all debt secured
by the Property shall not exceed the greater of:(i)seventy-five percent (75%)of the Maximum
Resale Price,or (ii)the remaining balance of the original First Lender Loan;provided,however,
that the City may,in its sole discretion,permit a greater encumbrance amount if a greater
encumbrance amount would prevent substantial hardship to the Owner.
(2)The subordinate loan is a fully amortized fixed rate loan,is fully
documented,has a term not exceeding thirty (30)years,and requires no balloon payments;and
(3)The total new housing cost to the Owner after the addition of the
subordinate loan does not exceed the Owner’s ability to pay.
E.Request for Notice of Default.As a condition for subordination of the City Deed
of Trust or approval of a subordinate loan,a request for notice of default and notice of sale
regarding the refinanced first Lender Loan or subordinate loan shall be recorded in the Office of
the Recorder of the County of Santa Clara for the benefit of the City.
F.Purpose of Restrictions.The City and the Owner agree that the requirements of
this Section 11 are necessary to ensure the continued affordability of the Property to Owner and
to minimize the risk of loss of the Property by Owner through default and foreclosure of
mortgage loans.Owner further acknowledges that violation of the provisions of this Section 11
shall constitute a Default under this Agreement.
12.DEFAULTS
A.Events Constituting Default.The following events shall constitute a “Default”by
the Owner under this Agreement:
(1)The City determines that the Owner has made a misrepresentation to
obtain the benefits of purchase of the Property or in connection with its obligations under this
Agreement;
(2)The Owner fails to owner occupy the Property,as required by Section 2
above;
$95\16\1 579533.1
(3)The Owner rents or leases the Property,not in compliance with Section 3
above;
(4)The Owner actuaLly Transfers,or attempts to Transfer,the Property in
violation of this Agreement;
(5)The Owner fails to provide information to the City necessary to determine
Owner’s compliance with the requirements of this Agreement.
(6)Judicial foreclosure proceedings are commenced regarding the Property;
(7)A notice of default is issued under any financing secured by the Property,
or the City receives any other notice of default as provided in Civil Code Section 2924b,or the
Owner is in default on any other financing secured by the Property.
(8)The Owner executes any deed in lieu of foreclosure transferring ownership
of the Property;
(9)A lien is recorded against the Property other than the lien of the First
Lender Loan,the City Loan,or a loan approved by the City as provided in Section 11.D;or
(10)The Owner otherwise fails to comply with the requirements of this
Agreement,the City Note,or the City Deed of Trust.
B.Remedies.Upon a declaration of Default by the City under this Agreement,the
City may exercise any remedies at law or in equity,including without limitation any or all of the
following,none of which shall be an exclusive remedy:
(1)Declare all sums due under the City Note immediately due and payable
without further demand;
(2)Declare a default under the City Note;
(3)Invoke the power of sale under the City Deed of Trust;
(4)Apply to a court of competent jurisdiction for such relief at law or in
equity as may be appropriate;
(5)Take such enforcement action as is authorized under the Palo Alto
Municipal Code;
(6)Declare a Default under the City Note and City Deed of Trust and pursue
all City remedies under the City Deed of Trust;and
(7)Exercise the Option as provided in Section 13 of this Agreement.
C.Notice and Cure.
$95\16\1879533.1
(1)The City may give written notice to the Owner specifying the nature of
any violation.If the violation is not corrected to the satisfaction of City within a reasonable
period of time,not longer than thirty (30)days after the date the notice is mailed,or within such
further time as the City may provide at its sole discretion,the City may declare a Default under
this Agreement by written notice to Owner (“Declaration of Default”).However,if the Owner is
in default under any financing secured by the Property,the City may send a Declaration of
Default upon receipt of any notice given to the City as provided in Civil Code Section 2924b or
through any other means and may exercise its remedies upon Default as provided in this Section
and Section 13.
(2)The City shall notify the first Lender in the manner set forth in Section 26
of this Agreement if the City has sent a Declaration of Default under this Agreement or declared
a Default under the City Note or the City Deed of Trust.
D.Recordation of Requests for Notice.Requests for notice of default and any notice
of sale under any deed of trust or mortgage with power of sale encumbering the Property shall be
recorded by the City in the Office of the Recorder of the County of Santa Clara for the benefit of
the City.
13.EXERCISE OF OPTION UPON DEFAULT
A.Exercise of Option.The City shall have thirty (30)days after issuing a
Declaration of Default to notify Owner and First Lender of its intent to exercise the Option.Not
later than ninety (90)days after the City has notified the Owner of its intent to exercise the
Option under this Section,Owner and the City shall complete all acts and execute all documents
necessary to enable the close of escrow and transfer of the Property to the City,including but not
limited to removal of all exceptions to title as required by Section 7.G.If Owner has cured all
Defaults prior to close of escrow,City and Owner,at City’s sole discretion,may by written
agreement determine that City shall not exercise the Option.
B.Court Order.If there is a stay or injunction imposed by court order precluding the
City from exercising the Option within the applicable time period,then the running of such
period shall be tolled until such time as the stay is lifted or injunction dissolved and the City has
been given written notice thereof,at which time the period for exercise of the Option shall again
begin to run.
C.Right of City to Reinstate Mortgages.In the event of default and foreclosure,the
City shall have the same right as the Owner to cure defaults and redeem the Property prior to the
foreclosure sale and shall be deemed to be Owner’s successor in interest under California Civil
Code Section 2924c (or successor sections)solely for the purposes of reinstating any mortgage
on the Property that has Led to the recordation of the notice of default.As Owner’s deemed
successor in interest,the City shall be entitled,but not required,to pay all amounts of principal,
interest,taxes,assessments,insurance premiums,advances,costs,attorneys’fees and expenses
required to cure the default.Nothing herein shall be construed as creating any obligation of the
City to cure any such default,nor shall this right to cure and redeem operate to extend any time
limitations in the default provisions of the underlying deed of trust or mortgage.
14.NONLIABILITY OF THE CITY
$95\16\1$79533.1
A.No Obligation to Exercise Option.The City shall have no obligation to exercise
any Option granted it under this Agreement.In no event shall the City become in any way liable
or obligated to the Owner or any successor-in-interest to the Owner by reason of the Option,nor
shall the City be in any way obligated or liable to the Owner or any successor-in-interest to the
Owner for any failure to exercise the Option.
B.Nonliability for Negligence,Loss,or Damage.Owner acknowledges,understands
and agrees that the relationship between the City and the Owner is solely that of a property
owner and the administrator of an affordable housing program,and the City does not assume any
responsibility for or duty to the Owner to select,review,inspect,supervise,pass judgment on,or
inform Owner of the quality,adequacy or suitability of the Property or any other matter.The
City owes no duty of care to protect Owner against negligent,faulty,inadequate or defective
building or construction or any condition of the Property,and the Owner agrees that neither
Owner,or Owner’s heirs,successors or assigns shall ever claim,have or assert any right or action
against the City for any loss,damage or other matter arising out of or resulting from any
condition of the Property and will hold the City harmless from any liability,loss or damage for
these things.
C.Indemnity.Owner agrees to defend,indemnify,and hold the City and its officers,
employees,agents,board members and/or council members harmless from all losses,damages,
liabilities,claims,actions,judgments,costs,and reasonable attorneys’fees that the City may
incur as a direct or indirect consequence of:(I’)Owner’s Default,performance,or failure to
perform any obligations as and when required by this Agreement or the City Deed of Trust;or (2)
the failure at any time of any of Owner’s representations to the City to be true and correct.
15.RESTRICTIONS ON FORECLOSURE PROCEEDS
If a creditor acquires title to the Property through a deed in lieu of foreclosure,a trustee’s
deed upon sale,or otherwise,the Owner shall not be entitled to the proceeds of sale to the extent
that such proceeds otherwise payable to the Owner when added to the proceeds paid or credited
to the creditor exceed the Maximum Resale Price.The Owner shall instruct the holder of such
excess proceeds to pay such proceeds to the City (in addition to any other amounts due the City
from the Owner under this Agreement),in consideration of the benefits received by the Owner
through purchase of the Property at Affordable Housing Cost.
16.RESTRICTION ON INSURANCE PROCEEDS
If the Property is damaged or destroyed and the Owner elects not to rebuild or repair the
Property,the Owner shall pay the City the portion of any insurance proceeds received by the
Owner for such destruction or damage which is in excess of the Maximum Resale Price
calculated as provided in Section 8 above.
17.TERM Of AGREEMENT
Alt the provisions of this Agreement,including the benefits and burdens,run with the
Property and this Agreement shall bind,and the benefit hereof shall inure to,the Owner,his or
her heirs,legal representatives,executors,successors in interest and assigns,and to the City and
its successors,until the earlier of(i)fifty-nine (59)years from the date of purchase of the
895\16\1 879533.1
Property by Owner;(ii)the date of Transfer of the Property to an Eligible Purchaser or an
Inheriting Owner where the Eligible Purchaser or Inheriting Owner enters into a new agreement,
note,and deed of trust in a form determined by the City;or (iii)the date of Transfer of the
Property to another purchaser at an unrestricted price and payment of all principal and interest
due under the City Note,including but not limited to payment of all Excess Sales Proceeds (the
“Term”).
18.SUPERIORITY OF AGREEMENT
The Owner covenants that he or she has not,and will not,execute any other agreement
with provisions contradictory to or in opposition to the provisions of this Agreement,and that,in
any event,this Agreement is controlling as to the rights and obligations between and among the
Owner,the City and their respective successors.further,this Agreement shall supersede any and
all deed restrictions or similar conditions limiting the right of resale previously imposed on the
Property pursuant to the City’s BMR Program.
19.SUBORDINATION
Notwithstanding any other provision herein,the provisions of this Agreement and the
City Deed of Trust shall be subordinate to the lien of the first Lender Deed of Trust and shall not
impair the rights of the First Lender in the event of default under the First Lender Deed of Trust
by the Owner.Such remedies under the first Lender Deed of Trust include the right of
foreclosure or acceptance of a deed or assignment in lieu of foreclosure.After such foreclosure
or acceptance of a deed in lieu of foreclosure,this Agreement and the City Deed of Trust shall be
forever terminated and shall have no further effect as to the Property or any transferee thereafter;
provided,however,if the holder of such First Lender Deed of Trust acquires title to the Property
pursuant to a deed or assignment in lieu of foreclosure,this Agreement and the City Deed of
Trust shall automatically terminate upon such acquisition of title,oniy if(i)the City has been
given written notice of default under such First Lender Deed of Trust with a sixty (60)-day cure
period (which requirement shall be satisfied by recordation of a notice of default under
California Civil Code Section 2924)and (ii)the City shall not have cured the default within such
sixty (60)-day period or commenced to cure and given its firm commitment to complete the cure
in form and substance acceptable to the First Lender.
20.NONDISCRIMINATION
The Owner covenants by and for itself and its successors and assigns that there shall be
no discrimination against or segregation of a person or of a group of persons on account of race,
color,religion,creed,age,disability,sex,sexual orientation,marital status,ancestry or national
origin in the sale,transfer,use,occupancy,tenure or enjoyment of the Property,nor shall the
Owner or any person claiming under or through the Owner establish or permit any such practice
or practices of discrimination or segregation with reference to the use,occupancy,or transfer of
the Property.The foregoing covenant shall run with the land.
21.RIGHTS Of HUD,CALHFA AND VA
Notwithstanding any other provision in this Agreement to the contrary,this Agreement
shall not diminish or affect the rights of HUD,the California Housing Finance Agency
895\16\1879533.1
(“CalHFA)or the VA under the First Lender Deed of Trust insured by HUD,held by Ca1HFA,
or guaranteed by the VA and utilized to purchase the Property or recorded against the Property in
compliance with Section ii above.Notwithstanding any other provision in this Agreement to the
contrary,all of the provisions of this Agreement shall terminate and have no further force and
effect if the title is acquired by FEUD,Ca1HFA,or the VA,or another party upon foreclosure of a
deed of trust securing a loan insured by HUD,held by CaIHFA,or guaranteed by the VA.
22.HUD FORBEARANCE RELIEF
Notwithstanding any other provision of this Agreement,the Option as provided in
Section 6 above shall not be exercised by the City when a deed of trust insured by HUD is
secured by the Property,and:(i)the owner is undergoing consideration by HUD for assignment
forbearance relief or (ii)the owner is undergoing consideration for relief under HUD’s
Temporary Mortgage Assistance Payment (“TMAP”)program.
23.INVALID PROVISIONS
If any one or more of the provisions contained in this Agreement shall for any reason be
held to be invalid,illegal or unenforceable in any respect,then such provision or provisions shall
be deemed severable from the remaining provisions contained in this Agreement,and this
Agreement shall be construed as if such invalid,illegal or unenforceable provision had never
been contained herein.
24.CONTROLLING LAW
The terms of this Agreement shall be interpreted under the laws of the State of California.
The venue for any legal action pertaining to this Agreement shall be Santa Clara County,
California.
25.NO WAIVER
No delay or omission in the exercise of any right or remedy of City upon any default by
Owner shall impair such right or remedy or be construed as a waiver.The City’s failure to insist
in any one or more instance upon the strict observance of the terms of this Agreement shall not
be considered a waiver of the City’s right thereafter to enforce the provisions of the Agreement.
The City shall not waive its rights to enforce any provision of this Agreement unless it does so in
writing,signed by an authorized agent of the City.
26.NOTICES
All notices required herein shall be sent by certified mail,return receipt requested,
express delivery service with a delivery receipt,or personal delivery with a delivery receipt and
shall be deemed to be effective as of the date received,the date delivery was refused,or the date
returned as undeliverable as indicated on the return receipt as follows:
To the Owner:
At the address of the Property.
895\16\1 $79533.I
To the City:-
City of Palo Alto
250 Hamilton Avenue
Palo Alto,CA 94301
Attn:City Attorney
With a copy to:
PARC Housing Services,LLC
2595 East Bayshore Road #200
Palo Alto,CA 94303
Attn:BMR Housing Administrator
To the First Lender:
[To be inserted]
The parties may subsequently change addresses by providing written notice of the change in
address to the other parties in accordance with this Section.
27.CITY APPROVAL
The City Manager or his or her designee is authorized on behalf of the City to deliver any
approvals or consents that this Agreement requires.The City,in its sole discretion,may assign
its duties under this Agreement to a third party.
2$.[NTERPRETAT[ON OF AGREEMENT
The terms of this Agreement shall be interpreted so as to avoid speculation on the
Property and to insure to the extent possible that its sales price and mortgage payment remain
affordable to persons and families of lower or moderate income,as applicable.
29.COVENANTS RUNNING WITH THE LAND
A.Owner hereby subjects the Property to the covenants and restrictions set forth in
this Agreement.Owner hereby declares its express intent that the covenants and restrictions set
forth herein shall be deemed covenants running with the land and shall pass to and be binding
upon all parties having any interest in the Property throughout the Term of this Agreement.Each
and every contract,deed,lease or other instrument covering,conveying or otherwise transferring
the Property or any interest therein,as the case may be,shall conclusively be held to have been
executed,delivered and accepted subject to this Agreement regardless of whether the other party
or parties to such contract have actual knowledge of this Agreement.
B.The Owner and the City hereby declare their understanding and intent that:(i the
covenants and restrictions contained in this Agreement shall be construed as covenants running
with the land as provided in California Civil Code Section 1468 and not as conditions which
might result in forfeiture of title by Owner;(ii)the burden of the covenants and restrictions set
895\16\1879533.1
forth in this Agreement touch and concern the Property in that the Owner’s legal interest in the
Property may be rendered less valuable thereby;and (iii)the benefit of the covenants and
restrictions set forth in this Agreement touch and concern the land by enhancing and increasing
the enjoyment and use of the Property by eligible purchasers,the intended beneficiaries of such
covenants and restrictions.
C.All covenants and restrictions contained herein without regard to technical
classification or designation shall be binding upon Owner for the benefit of the City and eligible
purchasers and such covenants and restrictions shall run in favor of such parties for the entire
period during which such covenants and restrictions shall be in force and effect,without regard
to whether the City is an owner of any land or interest therein to which such covenants and
restrictions relate.
30.SPECIFIC PERFORMANCE
Owner acknowledges that any breach in Owner’s performance of Owner’s obligations
under this Agreement shall cause irreparable harm to the City.Owner agrees that the City is
entitled to equitable relief in the form of specific performance upon its exercise of the Option,
and that an award of damages shall not be adequate to compensate the City for Owner’s failure to
perform according to the terms of this Agreement.
31.OWNER’S ACKNOWLEDGEMENT Of RESALE RESTRICTION
Owner acknowledges and agrees that:
A.This Agreement places certain restrictions and limits the price for which Owner
may sell the Property.Owner may not enjoy the same economic or other benefits from owning
the Property that Owner would enloy if this Agreement did not exist.
B.Absent the provisions of this Agreement.the Property could not be made
available to eligible purchasers,such as the Owner,at an affordable price.
C.Owner understands all of the provisions of this Agreement.Owner agrees to the
provisions of this Agreement with the understanding that this Agreement will remain in full force
and effect as to the Property throughout the Term of this Agreement.
D.OWNER UNDERSTANDS THAT THE DETERMINATION OF THE
MAXIMUM RESALE PRICE OF THE PROPERTY CAN BE MADE ONLY AT THE TIME
Of THE PROPOSED TRANSFER,TAKING INTO CONSIDERATION INCREASES IN THE
CONSUMER PRICE INDEX.WHICH CANNOT BE ACCURATELY PREDICTED,AND
THAT THE SALES PRICE MAY NOT INCREASE OR DECREASE IN THE SAME
MANNER AS OTHER SIMILAR PROPERTY WHICH IS NOT ENCUMBERED BY THIS
AGREEMENT.OWNER FURTHER ACKNOWLEDGES THAT IN SETTING THE SALES
PRICE OF THE PROPERTY,THE PRIMARY OBJECTIVE OF THE CITY ANT)THIS
AGREEMENT IS TO PROVIDE HOUSING TO ELIGIBLE PURCHASERS AT
AFFORDABLE HOUSING COST.THE MAXIMUM RESALE PRICE WILL ALMOST
CERTAINLY BE LESS THAN THAT OF OTHER SIMILAR PROPERTIES THAT HAVE NO
RESTRICTIONS.
$95\16\1$79533.1
Initialed by Owner(s)
[Signatures follow on Subsequent Page]
$95\16\1879533.1
IN WITNESS WHEREOF,the parties have executed this Agreement on or as of the date
first written above.
CITY:OWNER:
CITY OF PALO ALTO,a California
chartered municipal corporation
By:_____________________________By:________________________________
Title:City Manager Title:___________________________________
(Type Name)
APPROVED AS TO FORM:
895\16\1879533.1
A notary public or other officer completing this certificate verifies only the identity of
the individual who signed the document to which this certificate is attached,and not
the truthfulness,accuracy,or validity of that document.
State of___________________________
County of
________________
On the
_________________________before
me,a Notary Public,
personally appeared
who proved to me on the basis of satisfactory evidence to be the person(s)whose name(s)
is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the
same in his/her/their authorized capacity(ies),and that by his/her/their signature(s)on the
instrument the person(s),or the entity upon behalf of which the person(s)acted,executed the
instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature:
________________________________
Name:
_________________________________
(Typed or Printed)(Seal)
Homebuyers Resale Restriction Agreement October2016
A notary public or other officer completing this certificate verifies only the identity of
the individual who signed the document to which this certificate is attached,and not
the truthfulness,accuracy,or validity of that document.
State of___________________________
County of
_________________
On the
_________________________before
me,a Notary Public,
personally appeared
who proved to me on the basis of satisfactory evidence to be the person(s)whose name(s)
is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the
same in his/her/their authorized capacity(ies),and that by his/her/their signature(s)on the
instrument the person(s),or the entity upon behalf of which the person(s)acted,executed the
instrument.
I certify under PENALTY Of PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature:
______________________________
Name:
_________________________________
(Typed or Printed)(Seal)
Homebuyers Resale Restriction Agreement October 2016
EXHIBIT A
Legal Description of the Property
Homebuyers Resale Restriction Agreement A—I October2016
EXHIBIT B
Form of Owner Occupancy Certification
To:City of Palo Alto (“City”)
from:
___________________________________________
(“Owner”)
Property Address:
_______________________________________
(“Property”)
Date:
_________________________________________
By signature below,I
____________________
tinsert name or names of OwnerJ hereby
certify to the City under penalty of perjury that I/we occupy the Property located at
___________________________________________
tinsert address](the “Property”)as my/our
principal place of residence and that I/we have lived in and physically occupied the Property for
_______________
Li tinsert number]months of the calendar year
______________
tinsert
previous calendar year].Attached to this letter is a copy of my homeowners property tax
exemption showing my place of residence.
The Owner hereby certifies that the above information is true and correct and this Owner
Occupancy Certification is signed under penalty of perjury on
____________
—,20_.
By:________________________
Owner ttype name]
By:___________________________
Owner ttype name]
Due Date:February 1 of each calendar year.
Attach copy of property tax bill showing address of Property.
Homebuyers Resale Restnction Agreement B—i October 2016
EXHIBIT C
Form of Owner’s Notice of Intent to Transfer
To:City of Palo Alto (“City”)
From:
___________________________________________
(“Owner”)
Property Address:
_______________________________________
(“Property”)
Date:
_________________________________________
Please be notified that the Owner intends to transfer the Property listed above.
A.The following information is provided to the City as provided in Section 7 of the Resale
Agreement:
I.Address of Property:
__________________________________________________
2.Date Owner purchased Property:
_______________________________________
3.Affordable Housing Cost when Property was purchased:
___________________
4.Date Owner intends to vacate Property:
__________________________________
5.Date Property will be placed on market:
________________________________
6.Name and phone number of person for City to contact to schedule inspection:
______________________
and
____________________
(name)(phone number)
B.As required by Section 9 of the Resale Restriction Agreement,the following documents
are attached to this Notice:
I.Copy of HUD-I Settlement Statement from Owner’s purchase of the Property
2.If Owner has made Eligible Capital Improvements to the Property that Owner
wishes to include in the City’s calculation of Indexed Price,check box below
Homebuyers Resale Restriction Agreement C—I October 2016
Yes,I have made Eligible Capital Improvements as provided in Section $.A.2 of the
Resale Agreement.They are
________________
tdescribe improvementsJ and were completed
on
_______________
[insert dateJ.I attach the following documents to this letter:
a.copy of City letter granting prior approval of these improvements;
b.evidence of cost of these improvements;
c.appraisal showing value added to Property by the improvements.
C.I have not yet listed the Property for sale with a multiple listing service,or contacted a
real estate broker or financial institution.I agree to prepare the Property for sale
by:______________
1.obtaining a pest control report within thirty (30)days of the date of this notice,
2.repairing all damage noted in the pest report within the sooner of:(i)sixty (60)
days from the date of this notice,or (ii)two (2)weeks prior to close of escrow or
the transfer of the Property,
3.allowing the City to inspect the Property within thirty (30)days of this notice,
4.if requested by the City following the City’s inspection,I will obtain a home
inspection report from a licensed home inspector,
5.maintaining utility connections until the Property is transferred,
6.permitting a walk through by the City prior to close of escrow or the transfer.
This Owner’s Notice of Intent to Transfer is certified by Owner to be true and correct and is
signed on
______________________________
tinsert dateJ under penalty ofperjury.
By:_________________________
Owner
By:________________________
Owner
Homebuyers Resale Restriction Agreement C—2 October 2016
EXHIBIT D
Form of Owner Request for City Subordination to Refinance First Lender Loan or for
Subordinate Loan
To:City of Palo Alto (“City”)
from:
___________________________________________
(“Owner”)
Property Address:
_______________________________________
(“Property”)
Date:
_________________________________________
The Owner hereby requests the City to approve the Owner’s refinance of the existing First
Lender Loan on the Property [provide information for all First Lender Loans if more than
one First Lender Loan]and/or approval of a subordinate loan.The Owner provides the
following information which it certifies to be true and correct:
1.Affordable Housing Cost at time of purchase:$_________________
2.Original Principal Balance of existing first Lender Loan:$_________________
3.Interest Rate of Existing First Lender Loan:
or subordinate loan.%
4.Principal Amount of Proposed New first Lender Loan
or subordinate loan:$_________________
5.Interest Rate of Proposed New First Lender Loan
or subordinate loan:%
The Owner hereby certifies the above information is true and correct and this Owner Request is
executed under penalty of perjury on
____________________
tinsert date].
By:______________________________________
Owner
By:______________________________________
Owner
1
Performance Deed of Trust December2018
EXHIBIT E
FORM OF CITY NOTE
NOTICE TO BORROWER:THIS DOCUMENT CONTAINS PROVISIONS
RESTRICTING ASSUMPTIONS.
CITY Of PALO ALTO
PROMISSORY NOTE
Secured by Deed of Trust
(Below Market Rate Purchase Program)
City of Palo Alto,California
Excess Sales Proceeds,
____________________
jDateJ
Excess Rents,and Advances
FOR VALUE RECEIVED,the undersigned
__________________________
(the
“Borrowert’)promises to pay to the City of Palo Alto,a charter municipal corporation (the
“City”),at 250 Hamilton Avenue,Palo Alto,CA 94301,Attn:City Manager,or such other place
as the City may designate in writing,any amounts due to the City as Excess Sales Proceeds,
Excess Rents,and Advances as provided in that Occupancy,Resale,and Refinancing Restriction
Agreement,with Option to Purchase at Restricted Price of even date herewith (the “Resale
Agreement”).
1.Purpose of Note.Borrower is purchasing the property located at
(the “Property”)
pursuant to policies contained in the Housing Element of the City’s General Plan and Chapter
16.65 of the Palo Alto Municipal Code (the “Legal Requirements”)as part of an effort by the
City to create affordable home ownership opportunities for low-income and moderate-income
persons and families.The Legal Requirements provide for the sale of some homes at a price
below fair market value at affordable prices.
Pursuant to the Legal Requirements,the purchase price of the Property has been set below its
unrestricted fair market value so that the Property will be affordable for purchase by moderate
income households.
Because the purchase price has been set below the unrestricted fair market value,the Borrower is
required and has agreed to execute the Resale Agreement,which restricts the price of the
Property upon resale and which requires the Borrower to pay any Excess Sales Proceeds at resale
to the City.In addition,the Resale Agreement prohibits the Borrower from tenting or leasing the
Property except under limited circumstances and requires the Borrower to pay any Excess Rents
to the City.The Resale Agreement also requires the Borrower to pay Advances.This City Note
evidences:(a)the obligation of the Borrower to pay any Excess Rents to the City as provided in
2
Performance Deed of Trust December 2018
the Resale Agreement;(b)the obligation of the Borrower to pay any Excess Sales Proceeds to
the City as provided in the Resale Agreement;and (c)the obligation of the Borrower to pay any
Advances pursuant to the Resale Agreement.
1.Security.This City Note is secured by a deed of trust dated the same date as this
City Note (the “City Deed of Trust”).Borrower and City have also executed the Resale
Agreement.Borrower acknowledges that this City Note is given in connection with the
Borrower’s purchase of the Property as part of a program of the City to assist in the purchase of
residences by low and moderate income households.Said property,including both the real
property and all improvements now or hereafter erected on the property,and all easements,rights,
appurtenances and all fixtures now or hereafter attached to the property,shall be referred to in
this City Note as the Property.The term “Property,”as used herein,shall have the same meaning
as the term “Security”is used in the City Deed of Trust.
2.Definitions.The capitalized terms set forth in this City Note shall have the same
meanings as in the Resale Agreement.
3.Term.The term of this City Note shall be the same as the Term of the Resale
Agreement.
4.Payment.Any Excess Sales Proceeds plus Excess Rents and Advances owed
under this City Note or the Resale Agreement shall immediately become due and payable:(i)in
the event of a Default by the Borrower under this City Note,the Resale Agreement,the City
Deed of Trust,or the First Lender Loan;or (ii)on the date Transfer is made whether voluntarily,
involuntarily,or by operation of law and whether by deed,contract of sale,gift,devise,bequest
or otherwise.Failure to declare such amounts due shall not constitute a waiver on the part of the
City to declare them due in the event of a subsequent Transfer.
5.No Assumption of City Note by Subsequent Buyers.Borrower acknowledges that
this City Note is given in connection with the purchase of the Property as part of an effort by the
City to assist in the purchase of the Property by tow or moderate income households.
Consequently,this City Note is not assumable by subsequent purchasers nor by the successors
and assigns of the Borrower.
6.Prepayments.The City Deed of Trust shall remain on the Property to secure
payment of the Excess Sales Proceeds,Excess Rents,and Advances,if any,and to secure
performance of the Resale Agreement,and so cannot be prepaid.
7.Default.The Borrower shall be in default under this City Note if (i)he or she is
in Default under the Resale Agreement,City Note,City Deed of Trust,or First Lender Loan,(ii)
fails to pay any money when due under this City Note;or (iii)breaches any representation or
covenant made in this City Note or the Resale Agreement.
8.Acceleration.Upon a Declaration of Default,the full amount of any Excess Rents,
Excess Sales Proceeds,Advances or any other amounts due under this City Note,if any,shall be
immediately due and payable.Any failure by the City to pursue its legal and equitable remedies
upon Default shall not constitute a waiver of the City’s right to issue a Declaration of Default and
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Performance Deed ofTrust December 2018
exercise all of its rights under this Note,the Resale Agreement,and the City Deed of Trust.Nor
shalt acceptance by the City of any payment provided for herein constitute a waiver of the City’s
right to require prompt payment of any remaining payments owed.
9.Nonliability for Negligence,Loss,or Damage.Borrower acknowledges,
understands and agrees that the relationship between Borrower and City is solely that of
borrower and lender,and that the City and its designated agents neither undertake nor assume
any responsibility for or duty to Borrower to select,review,inspect,supervise,pass judgment on,
or inform Borrower of the quality,adequacy or suitability of the Property or any other matter.
The City and its designated agents owe no duty of care to protect Borrower against negligent,
faulty,inadequate,or defective building or construction or any condition of the Property,and
Borrower agrees that neither Borrower,nor Borrower’s heirs,successors or assigns shall ever
claim,have,or assert any right or action against City or its agents for any loss,damage,or other
matter arising out of or resulting from any condition of the Property and will hold City and its
agents harmless from any liability,loss,or damage for these things.
10.Indemnity.Borrower agrees to defend,indemnify,and hold the City and its
designated agents harmless from all losses,damages,liabilities,claims,actions,judgments,costs,
and reasonable attorneys’fees that the City and its designated agents may incur as a direct or
indirect consequence of:
(a)Borrower’s failure to perform any obligations as and when required by this
City Note,the City Deed of Trust,and the Resale Agreement;or
(b)the failure at any time of any of Borrower’s representations or warranties
to be true and correct.
Ii.Attorneys’Fees and Costs.Borrower agrees that if any amounts due under this
Note are not paid when due,to pay in addition to principal and accrued interest,all costs and
expenses of collection and reasonable attorneys’fees paid or incurred in connection with the
collection or enforcement of this Note,whether or not suit is filed.
12.Joint and Several Obligations.This Note is the joint and several obligations of all
makers,sureties,guarantors and endorsers,and shall be binding upon them and their successors
and assigns.
13.No Offset.Borrower hereby waives any rights of offset it now has or may
hereafter have against City,its successors and assigns,and agrees to make the payments called
for herein in accordance with the terms of this Note.
14.Waiver.Borrower and any endorsers or guarantors of this Note,for themselves,
their heirs,legal representatives,successors and assigns,respectively,severally waive diligence,
presentment,protest,and demand,and notice of protest,notice of dishonor and notice of non
payment of this Note,and expressly waive any rights to be released by reason of any extension
of time or change in terms of payment,or change,alteration or release of any security given for
the payments hereof,and expressly waive the right to plead any and all statutes of limitations as
a defense to any demand on this Note or agreement to pay the same,and jointly and severally
agree to pay all costs of collection when incurred,including reasonable attorneys’fees.
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Performance Deed of Trust December 2018
15.Notices.All notices required in this Note shall be sent by certified mail,return
receipt requested,or express delivery service with a delivery receipt,or personally delivered with
a delivery receipt obtained and shall be deemed to be effective as of the date shown on the
delivery receipt as the date of delivery,the date delivery was refused,or the date the notice was
returned as undeliverable as follows:
To the Borrower:
At the address of the Property.
To the City:
City of Palo Alto
250 Hamilton Avenue
Palo Alto,CA 94301
Attn:City Manager
With a copy to:
PAHC Housing Services,LLC
725 Alma Street
Palo Alto,CA 94301-2403
Attn:BMR Housing Administrator
The parties may subsequently change addresses by providing written notice of the change in
address to the other parties in accordance with this Section 15.
16.Controlling Law.This Note shall be construed in accordance with and governed
by the laws of the State of California.
17.Assignment by City.The City may assign its right to receive the proceeds under
this Note to any person,and upon notice to the Borrower by the City,all payments shall be made
to the assignee.
18.Severability.If any provision of this Note shall be invalid,illegal or
unenforceable,the validity,legality and enforceability of the remaining provisions hereof shall
not in any way be affected or impaired thereby.
19.Entire Agreement.This Note (along with the Resale Agreement and City Deed of
Trust)sets forth the entire understanding and agreement between the City and the Borrower,and
any amendment,alteration or interpretation of this Note must be in writing signed by both the
City and the Borrower.
BORROWER:
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Performance Deed ofTrust December 2018
tType Borrower’s Namel
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Performance Deed of Trust December 2018
EXHIBiT F
FORM OF CITY DEED Of TRUST
NO RECORDING FEE PURSUANT
TO GOVERNMENT CODE SECTION 27383
RECORDING REQUESTED BY
Title Company Name
Escrow #
AND WHEN RECORDED MAIL TO
City Attorney
City of Palo Alto
250 Hamilton Avenue
Palo Alto,CA 94301
SPACE ABOVE THIS LINE FOR RECORDERS USE
DEED OF TRUST
AND SECURITY AGREEMENT
CITY OF PALO ALTO
BELOW MARKET RATE PURCHASE PROGRAM
______________________________
jPropcrty Addressl)
THIS DEED OF TRUST AND SECURITY AGREEMENT (“Deed of Trust”)made this
day of ,201,,among the trustor,
_______________________
(the “Owner”).
whose address is
__________________________________
jTitle CompanyJ (“Trustee”),and the City of Palo Alto,
as Beneficiary.
The Owner,in consideration of the promises herein recited and the trust herein created,
irrevocably grants,transfers,conveys and assigns to Trustee,in trust,with power of sale,the
property located in the City of Palo Alto,State of California,described in the attached Exhibit
“A”(the “Property”).
TOGETHER with all the improvements now or hereafter erected on the Property,and all
easements,rights,appurtenances,and all fixtures now or hereafter attached to the Property.all of
which,including replacements and additions thereto,shall be deemed to be and remain a part of
the Property covered by this Deed of Trust;and
TOGETHER with alt articles of personal property or fixtures now or hereafter attached to
or used in and about the building or buildings now erected or hereafter to be erected on the
Property which are necessary to the complete and comfortable use and occupancy of such
building or buildings for the purposes for which they were or are to be erected,including all
other goods and chattels and personal property as are ever used or furnished in operating a
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Performance Deed of Trust December2015
building,or the activities conducted therein,similar to the one herein described and referred to,
and all renewals or replacements thereof or articles in substitution therefor,whether or not the
same are,or shall be attached to said building or buildings in any manner;and all of the
foregoing,together with the Property,is herein referred to as the “Security.”
To have and to hold the Security together with acquittances to the Trustee,its successors
and assigns forever;
TO SECURE to the City the performance of the covenants and agreements of Owner
contained in that certain Occupancy,Resale,and Refinancing Restriction Agreement,with
Option to Purchase at Restricted Price executed by and between the Owner and the City of even
date herewith (the “Resale Agreement”);
TO SECURE to the City the payment of Excess Rents,Excess Sales Proceeds,and any
Advance (as such terms are defined in the Resale Agreement and evidenced by that certain
Promissory Note executed by the Owner for the City’s benefit of even date herewith (the “City
Note”))that may become due by Owner to City.
TO SECURE the payment of all other sums,with interest thereon,advanced in
accordance herewith to protect the security of this Deed of Trust;and the performance of the
covenants and agreements of Owner herein contained.
OWNER AND CITY COVENANT AND AGREE AS FOLLOWS:
ARTICLE I Owner’s Estate.That Owner is lawfully seized of the estate hereby conveyed and
has the right to grant and convey the Security,that other than this Deed of Trust,the Security is
encumbered only by:(a)that deed of trust executed by Owner in connection with a loan made to
Owner by
__________________________________
(the “first Lender”),securing a promissory
note executed by Owner in favor of the First Lender (“first Lender Note”),to assist in the
purchase of the Property;and (b)the Resale Agreement.Owner agrees to warrant and defend
generally the title to the Security against all claims and demands,subject to any declarations,
easements or restrictions listed in a schedule of exceptions to coverage in any title insurance
policy insuring the City’s interest in the Security.(As used in this Deed of Trust,the term “first
Lender”shall also include all successors and assigns of the First Lender.)
ARTICLE 2 Payment of Excess Sales Proceeds,Excess Rents,and Advance.Owner
will promptly pay to the City,when and if due the:(i)Excess Sales Proceeds as provided in the
Resale Agreement and City Note;and (ii)Excess Rents as provided in the Resale Agreement and
City Note;and (iii)any Advance as provided in the Resale Agreement and City Note.
ARTICLE 3 Resale Agreement.Owner will observe and perform all of the covenants
and agreements of the Resale Agreement.
ARTICLE 4 Charges;Liens.Owner will pay all taxes,assessments and other charges,
fines and impositions attributable to the Security which may attain a priority over this Deed of
Trust,by Owner making any payment,when due,directly to the payee thereof.Upon request by
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Performance Deed of Trust December 2018
the City,Owner will promptly furnish to the City all notices of amounts due under this paragraph.
In the event Owner makes payment directly,Owner will promptly discharge any lien which has
priority over this Deed of Trust;provided,that Owner will not be required to discharge the lien
of the First Lender Deed of Trust or any other lien described in this paragraph so long as Owner
will agree in writing to the payment of the obligation secured by such lien in a manner
acceptable to the City,or will,in good faith,contest such lien by,or defend enforcement of such
lien in,legal proceedings which operate to prevent the enforcement of the lien or forfeiture of the
Security or any part thereof.
ARTICLE 5 Hazard Insurance.Owner will keep the Security insured by a standard all
risk property insurance policy equal to the replacement value of the Security (adjusted every five
(5)years by appraisal,if requested by the City).If the Security is located in a flood plain,Owner
shall also obtain flood insurance.
The insurance carrier providing this insurance shall be licensed to do business in the State
of California and be chosen by Owner subject to approval by the City.
All insurance policies and renewals thereof will be in a form acceptable to the City and
will include a standard mortgagee clause with standard lender’s endorsement in favor of the
holder of the First Lender Note and the City as their interests may appear and in a form
acceptable to the City.The City shall have the right to hold,or cause its designated agent to hold,
the policies and renewals thereof,and Owner shall promptly furnish to the City,or its designated
agent,the original insurance policies or certificates of insurance,all renewal notices and all
receipts of paid premiums.In the event of loss,Owner will give prompt notice to the insurance
carrier and the City or its designated agent.The City,or its designated agent,may make proof of
toss if not made promptly by Owner.The City shati receive thirty (30)days’advance notice of
cancellation of any insurance policies required under this section.
Unless the City and Owner otherwise agree in writing,insurance proceeds,subject to the
rights of the First Lender,will be applied to restoration or repair of the Security damaged,
provided such restoration or repair is economically feasible and the Security of this Deed of
Trust is not thereby impaired.If such restoration or repair is not economically feasible or if the
Security of this Deed of Trust would be impaired,the insurance proceeds will be used to repay
any amounts due under the Resale Agreement and City Note,with the excess,if any,paid to
Owner.If the Security is abandoned by Owner,or if Owner fails to respond to the City,or its
designated agent,within thirty (30)days from the date notice is mailed by either of them to
Owner that the insurance carrier offers to settle a claim for insurance benefits,the City,or its
designated agent,is authorized to collect and apply the insurance proceeds at the City’s option
either to restoration or repair of the Security or to pay amounts due under the Resale Agreement
and City Note.
If the Security is acquired by the City,all right,title and interest of Owner in and to any
insurance policy and in and to the proceeds thereof resulting from damage to the Security prior to
the sale or acquisition will pass to the City to the extent of the sums secured by this Deed of
Trust immediate prior to such sale or acquisition,subject to the rights of the First Lender.
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Performance Deed ofTrust December 2018
ARTICLE 6 Preservation and Maintenance of Security.Owner will keep the Security
in good repair and in a neat,clean,and orderly condition and will not commit waste or permit
impairment or deterioration of the Security.If there arises a condition in contravention of this
Section 6,and if the Owner has not cured such condition within thirty (30)days after receiving a
City notice of such a condition,then in addition to any other rights available to the City,the City
shall have the right (but not the obligation)to perform all acts necessary to cure such condition,
and to establish or enforce a lien or other encumbrance against the Security to recover its cost of
curing.
ARTICLE 7 Protection of the City’s Security.tf Owner fails to perform the covenants
and agreements contained in this Deed of Trust or if any action or proceeding is commenced
which materially affects the City’s interest in the Security,including,but not limited to,default
under the first Lender Deed of Trust,eminent domain,insolvency,code enforcement,or
arrangements or proceedings involving a bankrupt or decedent,then the City,at the City’s option,
upon notice to Owner,may make such appearances,disburse such sums and take such action as
it determines necessary to protect the City’s interest,including,but not limited to,disbursement
of reasonable attorneys’fees and entry upon the Security to make repairs.
Any amounts disbursed by the City pursuant to this paragraph,with interest thereon,will
become an indebtedness of Owner secured by this Deed of Trust.Unless Owner and City agree
to other terms of payment,such amount will be payable upon notice from the City to Owner
requesting payment thereof,and will bear interest from the date of disbursement at the lesser of
(1)ten percent (10%);or (ii)the highest rate permissible under applicable law.Nothing
contained in this paragraph will require the City to incur any expense or take any action
hereunder.
ARTICLE $Inspection.The City may make or cause to be made reasonable entries
upon and inspections of the Security;provided,however,that the City will give Owner
reasonable notice of inspection.
ARTICLE 9 forbearance by the City Not a Waiver.Any forbearance by the City in
exercising any right or remedy will not be a waiver of the exercise of any such right or remedy.
The procurement of insurance or the payment of taxes or other liens or charges by the City will
not be a waiver of the City’s right to require payment of any amounts secured by this Deed of
Trust.
ARTICLE 10 Remedies Cumulative.All remedies provided in this Deed of Trust are
distinct and cumulative to any other right or remedy under this Deed of Trust or any other
document,or afforded by law or equity,and may be exercised concurrently,independently or
successively.
ARTICLE 11 Hazardous Materials.Owner shall keep and maintain the Property
(including,but not limited to soil and ground water conditions)in compliance with all,and shall
not cause or permit the Property to be in violation of any,Hazardous Materials Law.Owner
shall not do,nor allow anyone else to do,anything affecting the Security that is in violation of
any Hazardous Materials Law.The preceding two sentences shall not apply to the presence,use,
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Performance Deed of Trust December 2018
or storage on the Security of small quantities of Hazardous Materials that are generally
recognized to be appropriate to normal residential uses and to maintenance of the Security.
“Hazardous Material”shall mean (1)any substance,material,or waste that is petroleum,
petroleum-related,or a petroleum by-product,asbestos or asbestos-containing material,
polychiorinated byphenyls,flammable,explosive,radioactive,Freon gas,radon,or a pesticide,
herbicide,or any other agricultural chemical,and (ii)any waste,substance,or material defined as
or included in the definition of “hazardous substances,”hazardous wastes,”“hazardous
materials,”“toxic materials,”“toxic waste,”“toxic substances,”or words of similar import under
any Hazardous Materials Law.
“Hazardous Materials Law”shall mean any federal,state or local laws,ordinances,or
regulations relating to any Hazardous Materials,health,industrial hygiene,environmental
conditions,or the regulation or protection of the environment,and all amendments thereto as of
this date and to be added in the future and any successor statute or rule or regulation promulgated
thereto.
Owner shall promptly give City written notice of any investigation,claim,demand,
lawsuit or other action by any governmental or regulatory agency or private party involving the
Security and any Hazardous Material or Hazardous Materials Law of which Owner has actual
knowledge (“Hazardous Material Claims”).
Without the City’s prior written consent,which shall not be unreasonably withheld,the
Owner shall not take any remedial action in response to the presence of any Hazardous Materials
on,under or about the Property,nor enter into any settlement agreement,consent decree,or other
compromise in respect to any Hazardous Material Claims,which remedial action,settlement,
consent decree or compromise might,in the City’s reasonable judgment,impair the value of the
Security;provided,however,that the City’s prior consent shall not be necessary in the event that
the presence of Hazardous Materials on,under,or about the Property either poses an immediate
threat to the health,safety or welfare of any individual or is of such a nature that an immediate
remedial response is necessary and it is not reasonably possible to obtain the City’s consent
before taking such action,provided that in such event the Owner shall notify the City as soon as
practicable of any action so taken.The City agrees not to withhold its consent,where such
consent is required hereunder,if(i)a particular remedial action is ordered by a court of
competent jurisdiction,(ii)the Owner will or may be subjected to civil or criminal sanctions or
penalties if it fails to take a required action;(iii)the Owner establishes to the reasonable
satisfaction of the City that there is no reasonable alternative to such remedial action which
would result in less impairment of the Security;or (iv)the action has been agreed to by the City.
ARTICLE 12 Successors and Assigns Bound.The covenants and agreements herein
contained shall bind,and the rights hereunder shall inure to,the respective successors and
assigns of the City and Owner subject to the provisions of this Deed of Trust.
ARTICLE 13 No Assumption of Deed of Trust by Subsequent Buyers.Borrower
acknowledges that this Deed of Trust is given in connection with the purchase of the Property as
part of an effort by the City to assist in the purchase of the Property by low or moderate income
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Performance Deed of Trust December 2018
households.Consequently,this Deed of Trust is not assumable by subsequent purchasers nor by
the successors and assigns of the Borrower.
ARTICLE 14 Joint and Several Liability.All covenants and agreements of Owner shall
be joint and several.
ARTICLE 15 Notice.Except for any notice required under applicable law to be given in
another manner:(a)any notice to Owner provided for in this Deed of Trust will be given by
certified mail,addressed to Owner at the address shown in the first paragraph of this Deed of
Trust or such other address as Owner may designate by notice to the City as provided herein;and
(b)any notice to the City will be given by certified mail,return receipt requested,or express
delivery service with a delivery receipt,or personally delivered with a delivery receipt,to City of
Palo Alto,250 Hamilton Avenue,Palo Alto,CA 94301,Attn:City Attorney or to such other
address as the City may designate by notice to Owner as provided above.Notice shall be
effective as of the date received by City as shown on the return receipt.
ARTICLE 16 Governing Law.This Deed of Trust shall be governed by the laws of the
State of California.
ARTICLE 17 Severability.In the event that any provision or clause of this Deed of
Trust or the Resale Agreement conflicts with applicable law,such conflict will not affect other
provisions of this Deed of Trust or the Resale Agreement which can be given effect without the
conflicting provision,and to this end the provisions of the Deed of Trust and the Resale
Agreement are declared to be severable.
ARTICLE 1$Captions.The captions and headings in this Deed of Trust are for
convenience only and are not to be used to interpret or define the provisions hereof
ARTICLE 19 Nondiscrimination.The Owner covenants by and for itself and its
successors and assigns that there shall be no discrimination against or segregation of a person or
of a group of persons on account of race,color,religion,creed,age,disability,sex,sexual
orientation,marital status,ancestry or national origin in the sale,transfer,use,occupancy,tenure
or enjoyment of the Property,nor shall the Owner or any person claiming under or through the
Owner establish or permit any such practice or practices of discrimination or segregation with
reference to the use,occupancy,or transfer of the Property.The foregoing covenant shall run
with the land.
ARTICLE 20 Nonliability for Negligence,Loss,or Damage.Owner acknowledges,
understands and agrees that the relationship between Owner and City is solely that of hvo
separate parties in an arm’s length transaction,and that City neither undertakes nor assumes any
responsibility for or duty to Owner to select,review,inspect,supervise,pass judgment on,or
inform Owner of the quality,adequacy or suitability of the Security or any other matter.City
owes no duty of care to protect Owner against negligent,faulty,inadequate or defective building
or construction or any condition of the Security and Owner agrees that neither Owner,or
Owner’s heirs,successors or assigns shall ever claim,have or assert any right or action against
City for any loss,damage or other matter arising out of or resulting from any condition of the
Security and will hold City harmless from any liability,loss or damage for these things.
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Performance Deed of Trust December 201$
ARTICLE 21 Indemnity.Owner agrees to defend,indemnify,and hold City and its
officers,employees,agents,board members harmless from all losses,damages,liabilities,claims,
actions,judgments,costs,and reasonable attorneys’fees that City may incur as a direct or
indirect consequence of:
21.1 Owner’s failure to perform any obligations as and when required by the
Resale Agreement,the City Note,and this Deed of Trust;or
21.2 the failure at any time of any of Owner’s representations or warranties to
be true and correct.
ARTICLE 22 Acceleration;Remedies.Upon Owner’s breach of any covenant or
agreement of Owner in the Resale Agreement,the City Note,or this Deed of Trust,including,
but not limited to,the covenants to pay,when due,any sums secured by this Deed of Trust,the
City,prior to acceleration,will mail by express delivery,return receipt requested notice to
Owner specifying:(1)the breach;(2)the action required to cure such breach;(3)a date,not less
than thirty (30)days from the date the notice is received by Owner as shown on the return receipt,
by which such breach is to be cured;and (4)that failure to cure such breach on or before the date
specified in the notice may result in acceleration of the sums secured by this Deed of Trust and
sale of the Security.The notice will also inform Owner of Owner’s right to reinstate after
acceleration and the right to bring a court action to assert the nonexistence of default or any other
defense of Owner to acceleration and sale.If the breach is not cured on or before the date
specified in the notice,the City,at the City’s option,may:(a)declare all of the sums secured by
this Deed of Trust to be immediately due and payable without further demand and may invoke
the power of sale and any other remedies permitted by California law;(b)either in person or by
agent,with or without bringing any action or proceeding,or by a receiver appointed by a court,
and without regard to the adequacy of its security,enter upon the Security and take possession
thereof (or any part thereof)and of any of the Security,in its own name or in the name of Trustee,
and do any acts which it deems necessary or desirable to preserve the value or marketability of
the Property,or part thereof or interest therein,increase the income therefrom or protect the
security thereof.The entering upon and taking possession of the Security shall not cure or waive
any breach hereunder or invalidate any act done in response to such breach and,notwithstanding
the continuance in possession of the Security,the City shall be entitled to exercise every right
provided for in this Deed of Trust,or by law upon occurrence of any uncured breach,including
the right to exercise the power of sale;(c)commence an action to foreclose this Deed of Trust as
a mortgage,appoint a receiver,or specifically enforce any of the covenants hereof;(U)deliver to
Trustee a written declaration of default and demand for sale,pursuant to the provisions for notice
of sale found at California Civil Code Sections 2924 et seq.,as amended from time to time;or (e)
exercise all other rights and remedies provided herein,in the instruments by which the Owner
acquires title to any Security,or in any other document or agreement now or hereafter evidencing,
creating or securing all or any portion of the obligations secured hereby,or provided by law.
The City shall be entitled to collect all reasonable costs and expenses incurred in pursuing
the remedies provided in this paragraph,including,but not limited to,reasonable attorneys’fees.
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Performance Deed of Trust December 2018
ARTICLE 23 Owner’s Right to Reinstate.Notwithstanding the City’s acceleration of the
sums secured by this Deed of Trust,Owner will have the right to have any proceedings begun by
the City to enforce this Deed of Trust discontinued at any time prior to five (5)days before sale
of the Security pursuant to the power of sale contained in this Deed of Trust or at any time prior
to entry of a judgment enforcing this Deed of Trust if:(a)Owner pays City all sums which
would be then due under this Deed of Trust and Owner cures all breaches of any other covenants
or agreements of Owner contained in the Resale Agreement or this Deed of Trust;(b)Owner
pays all reasonable expenses incurred by City and Trustee in enforcing the covenants and
agreements of Owner contained in the Resale Agreement or this Deed of Trust,and in enforcing
the City’s and Trustee’s remedies,including,but not limited to,reasonable attorneys’fees;and (c)
Owner takes such action as City may reasonably require to assure that the lien of this Deed of
Trust,City’s interest in the Security and Owner’s obligation to perform the obligations and pay
the sums secured by this Deed of Trust shall continue unimpaired.Upon such payment and cure
by Owner,this Deed of Trust and the obligations secured hereby will remain in full force and
effect as if no acceleration had occurred.
ARTICLE 24 Due on Transfer of the Property.Upon a Transfer (as defined in the
Resale Agreement)of the Property or any interest in it,the City shall require immediate payment
in full of all sums secured by this Deed of Trust.
ARTICLE 25 Reconveyance.Upon payment of all sums secured by this Deed of Trust,
and following the expiration of the Term of the Resale Agreement,City will request Trustee to
reconvey the Security and will surrender this Deed of Trust,the City Note,and the Resale
Agreement to Trustee.Trustee will reconvey the Security without warranty and without charge
to the person or persons legally entitled thereto.Such person or persons will pay all costs of
recordation,if any.
ARTICLE 26 Substitute Trustee.The City,at the City’s option,may from time to time
remove Trustee and appoint a successor trustee to any Trustee appointed hereunder.The
successor trustee will succeed to all the title,power and duties conferred upon the Trustee herein
and by applicable law.
ARTICLE 27 Superiority of First Lender Documents.Notwithstanding any provision
herein,this Deed of Trust shall not diminish or affect the rights of the First Lender under the
First Lender Deed of Trust or any subsequent First Lender deeds of trust hereafter recorded
against the Security in compliance with the requirements of the Resale Agreement.
Notwithstanding any other provision hereof,the provisions of this Deed of Trust shall be
subordinate to the lien of the First Lender Deed of Trust and shall not impair the rights of the
First Lender,or such lender’s assignee or successor in interest,to exercise its remedies under the
first Lender Deed of Trust in the event of default under the first Lender Deed of Trust by the
Owner.Such remedies under the first Lender Deed of Trust include the right of foreclosure or
acceptance of a deed or assignment in lieu of foreclosure.After such foreclosure or acceptance
of a deed in lieu of foreclosure,this Deed of Trust shall be forever terminated and shall have no
further effect as to the Property or any transferee thereafter;provided,however,if the holder of
such First Lender Deed of Trust acquired title to the Property pursuant to a deed or assignment in
lieu of foreclosure and no notice of default was recorded against the Property by such holder in
14
Performance Deed of Trust December20 I$
connection therewith,this Deed of Trust shall automatically terminate upon such acquisition of
title,only if:(i)the City has been given written notice of default under such First Lender Deed
of Trust with a sixty (60)-day cure period (which requirement shall be satisfied by recordation of
a notice of default under California Civil Code Section 2924);and (ii)the City shall not have
cured or commenced to cure the default within such sixty (60)-day period or commenced to cure
and given its firm commitment to complete the cure in form and substance acceptable to the First
Lender.
ARTICLE 28 Request for Notice.Owner requests that copies of the notice of default
and notice of sale be sent to Owner at the address set forth in Section 15 above.
IN WITNESS WHEREOF,Owner has executed this Deed of Trust as of the date first
written above.
OWNER:
tType Owner’s Name]
15
Performance Deed of Trust December 2018
A notary public or other officer completing this certificate verifies only the
identity of the individual who signed the document to which this certificate is
attached,and not the truthfulness,accuracy,or validity of that document.
STATE OF CALIFORNIA )
)
COUNTY OF____________)
On
______________________,
before me,
______________________________,
Notary
Public,personally appeared
________________________________________,
who proved to me
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.
Name:
Notary Public
895\04\15782964
EXHIBIT A
Legal Description of the Property
895\16\1879533.I