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REDEVELOPMENT AGENCY AGENDA ITEM NO. 2

Meeting Date: March 23, 2004

Subject/Title: Approve Resolution to authorize the Executive Director to execute the Affordable Housing Contribution Agreement for the construction of affordable housing in the KB Home’s Harbor Heights Subdivision on Sycamore Drive in North Brentwood Redevelopment Project Area. (G. Rozenski)

Prepared by: Gina Rozenski, Redevelopment Manager

Submitted by: Gina Rozenski, Redevelopment Manager

RECOMMENDATION
Approve Resolution to authorize the Executive Director to execute the Affordable Housing Contribution Agreement for the construction of affordable housing in the KB Home’s Harbor Heights Subdivision on Sycamore Drive in North Brentwood Redevelopment Project Area. (G. Rozenski)

PREVIOUS ACTION
On June 17, 2003, the City’s Planning Commission, by its Resolution No. 03-41, approved the vesting tentative map and design review for a 66-unit residential development by KB Home, located on Sycamore Drive, between Spruce Street and Sycamore Drive.

As part of the Planning Commission approvals, and in accordance with Community Redevelopment Law (“CRL”) Health & Safety Code Section 33413, this project was conditioned with a 15% affordable housing obligation.

On February 19, 2004, this contribution request was reviewed by the Redevelopment Subcommittee, and is forwarded to the Redevelopment Agency Board with a recommendation for approval.

BACKGROUND
Health & Safety Code Section 33413 requires that 15% of all housing units constructed within the Redevelopment Project Areas be restricted and available at affordable housing costs. Of those units, at least forty percent (40%) shall be affordable to very-low income households. Therefore, ten (10) of the 66 proposed units must have affordability restrictions. Four units must be restricted to, available to and occupied by a very-low income household, three units by low-income households, and the remaining three units by moderate-income households. For-sale units must be restricted for a period of 45 years.

Twenty percent of the annual tax increment revenues are deposited directly into the Agency’s Housing Fund and are primarily set-aside for the sole purpose of preserving, improving and increasing affordable housing within the Redevelopment Project Areas. Since housing developers are conditioned to supply 15% of all newly constructed dwelling units within our Project Areas as affordable housing, the Agency’s Housing Fund is a principal funding source to assist with the financial burden, if any, of producing this affordable housing.

While the City’s Affordable Housing Ordinance requires 10% affordable housing within each residential development, CRL levies a higher requirement of 15%. Furthermore, housing developers are not permitted to “fee-out” of the redevelopment requirements, as with the City’s Affordable Housing Ordinance. Hence, CRL carries a higher standard of constructing all required affordable units. KB Home has agreed to comply with these regulations.

After meeting and discussing the project’s financial proforma with the Owner’s representative, a financial analysis was performed to determine the potential loss of profit imposed on this project by the 15% affordability restriction. An analysis of the project’s potential profit/(gap) was performed on two revenue scenarios: KB’s projected sales revenue and Staff’s projected sales revenue. Both scenarios included the heavily-discounted sales price for the ten restricted units, and are described below.

KB Projected Sales Revenue Scenario
Dividing the KB projected sales revenues by the total land and development costs, it was determined that the project would realize a 5.7% profit as a percentage of sales price. This level of profit is a direct result of the encumbrance of 10 restricted units. To reach a financial return of 8%, which is the low end of an acceptable level of profit to a developer of market rate housing, this residential development warrants assistance of $438,300 from the Agency’s Housing Fund.

Staff’s Projected Revenue Scenario
The financial analysis of the KB Scenario is based on 2003/04 maximum sales prices for the ten restricted units. If the units are sold in 2004/05, when State HCD housing limits are increased, then the maximum sales prices for the restricted units will increase. Secondly, staff feels that the KB projected sales revenues for the non-restricted units are conservative. By increasing the projected sales revenues by 3% on the restricted units and by 8% on the non-restricted units, and dividing the higher projected sales revenues by the total land and development costs, it was determined that the project would realize a 12.3% profit as a percentage of sales price. In this analysis, no Agency assistance is warranted.

Staff and KB representatives met to review the results of the two analyses. It was acknowledged that, while the real estate market has been favorable for the past few years, there is always a risk in anticipating future sales revenues and what price non-restricted units can bear in a competitive market. Therefore, Staff and KB agreed to compromise on the level of assistance from the Agency in the amount of $200,000, based on three reasons:

1. $200,000 is between $438,000 assistance and no assistance, which are the results of the two analyses above.
2. Based on historical data, $20,000 per unit is the average assistance the Agency provides per unit, so 10 units x $20,000 each = $200,000.
3. If sales revenues increased only by a modest 3% across the board for both restricted and non-restricted units (rather than 3% and 8% respectively), $200,000 is warranted to reach a profit of 8.5% for the project.

Staff and the Redevelopment Subcommittee recommend that the Agency pay a portion of the project’s affordable housing building fees in an amount not to exceed $200,000, to offset the financial burden of the 15% affordability condition, and thereby provide a reasonable profit to the developer.


Most importantly, this project complies with the Implementation Plan to encourage infill residential projects, creates new affordable housing opportunities in the Project Area, keeps the units affordable for 45 years, contributes to the Agency’s mandated age targeting requirements (i.e., non-senior units), and provides the mandated inclusionary housing count. Furthermore, the Agency shall receive increased tax increment revenues generated by this new project that will repay the Agency’s investment of $200,000 in two years, in net present value dollars.

To secure the Agency’s contribution to this project, the contribution shall be considered a grant upon satisfaction of a two conditions: 1) completion of the construction of the ten restricted units as evidenced by a certificate of completion by the City, and 2) execution of the Regulatory Agreement. KB Home has already satisfied the execution and delivery of the Regulatory Agreement, which shall be recorded against the title of the ten restricted units. Should KB Home not satisfactorily complete the construction of the restricted units within the time frame provided by the Regulatory Agreement, the contribution converts to a loan with a term of four years with 5% simple interest. KB is in agreement with these terms.

FISCAL IMPACT
The Agency’s Housing Fund will pay the contribution of $200,000 towards this affordable housing project. This amount is included in the 2003/04 Agency budget.

Attachment: Resolution
Affordable Housing Contribution Agreement (with Regulatory Agreement
And Promissory Note)

AGENCY RESOLUTION NO.____

RESOLUTION OF THE REDEVELOPOMENT AGENCY OF THE CITY OF BRENTWOOD APPROVING AND AUTHORIZING THE EXECUTION OF AN AFFORDABLE HOUSING CONTRIBUTION AGREEMENT BETWEEN THE REDEVELOPMENT AGENCY AND
KB HOME SOUTH BAY, INC.

WHEREAS, the Redevelopment Agency of the City of Brentwood (the “Agency”) is carrying out the Merged Area Redevelopment Plan (the “Redevelopment Plan”) and in connection therewith adopted an Implementation Plan on March 28, 2000, by Resolution No. RA15, in accordance with Health and Safety Code Section 33490 of the Community Redevelopment Law; and

WHEREAS, the Agency is authorized by its Redevelopment Plan and its Implementation Plan, in accordance with Health and Safety Code Section 33334.2, to use its 20% Housing Set Aside Fund for the purposes of increasing and improving the supply of housing for persons and families of very low, low or moderate income; and

WHEREAS, in connection therewith, the Agency may pay all or part of the cost of development and building fees (“City Fees”) to defray the cost of production of affordable housing either inside or outside the Merged Redevelopment Project Areas (“Project”); and

WHEREAS, the Agency proposes to prepare an Affordable Housing Contribution Agreement, along with a Regulatory Agreement and Agency Promissory Note (collectively herein referred to as “Agreements), between the Agency and KB Home South Bay, Inc. (“Owners”), pursuant to which the Agency proposes to contribute to the Owner’s development of ten affordable units within a 66-unit residential development on Sycamore Drive, known as Harbor Heights (“Development”), a portion of the cost of City Fees (“Contribution”), as set forth in the Agreement.

NOW, THEREFORE, THE REDEVELOPMENT AGENCY OF THE CITY OF BRENTWOOD DOES HEREBY RESOLVE AS FOLLOWS:

Section 1. The Development will be of benefit to the Project. This finding is based on the fact that the Development is located within the Project area and will improve the supply of affordable housing.

Section 2. The Agency’s Contribution to the Development will assist in the elimination of one or more blighting conditions inside the Project and will increase and improve the supply of housing for persons and families of very low, low or moderate income. This finding is based on the following facts:

(a) The Development will provide for the planning, design and development of an under-developed area that is stagnant and improperly utilized.

(b) The Contribution of a portion of the City Fees for the affordable units in the Development is conditioned on the completion of housing affordable to persons of very low, low and moderate income and restricted for a period not less than 45 years;

(c) The Implementation Plan identifies goals and objectives for the five-year period from Fiscal Year 1999-00 through Fiscal Year 2003-04 as follows:

To encourage expansion and improvement of the supply of very low, low and moderate income housing; and

To create new very low, low and moderate income housing opportunities in the Project Areas.

Section 3. The Agency hereby approves the proposed Agreements and its exhibits, together with such minor technical and clarifying revisions as shall be approved by the Executive Director and Agency Counsel.

Section 4. The Agency hereby authorizes the Executive Director to execute the Agreements on behalf of the Agency and to take all further actions reasonably necessary to carry out the provisions of the Agreements.

PASSED AND ADOPTED by the Redevelopment Agency of the City of Brentwood at a regular meeting held on the 23rd day of March 2004 by the following vote:

AYES:
NOES:
ABSENT:
ABSTAIN:

Brian Swisher, Agency Chairperson

ATTEST:

Karen Diaz, Agency Secretary



RECORDING REQUESTED BY AND
AFTER RECORDATION, MAIL TO:

The Redevelopment Agency of
the City of Brentwood
150 City Park Way
Brentwood, CA 94513
Attn: Redevelopment/Housing Manager

AFFORDABLE HOUSING CONTRIBUTION AGREEMENT

1. PARTIES AND DATE

This Agreement is made this 9th day of March, 2004, between the REDEVELOPMENT AGENCY OF THE CITY OF BRENTWOOD, CALIFORNIA, a public body, corporate and politic, organized and operating under the Community Redevelopment Law of the State of California (Health & Safety Code Section 33000 et seq.) (the "Agency"), and KB HOME SOUTH BAY, INC., a California corporation (the “Developer”).

2. RECITALS

2.01. The Agency is carrying out the redevelopment plan (“Redevelopment Plan”) for the Brentwood Redevelopment Project ("Redevelopment Project") approved and adopted by the City of Brentwood (“City”) on July 9, 1991, by Ordinance No. 496, as amended. The Redevelopment Plan is incorporated herein by reference and made a part hereof as though fully set forth herein.

2.02. Pursuant to Health & Safety Code Section 33490, on March 28, 2000, by Resolution No. RA15, the Agency adopted an Implementation Plan for the
Redevelopment Project which identified the following goals and objectives for the five (5) year period from fiscal year 1999-2000 through 2003-2004:

1. To encourage expansion and improvement of the supply of very low, low and moderate income housing.

2. To create new very low, low and moderate income housing opportunities in the Project Areas.

2.03 The Developer owns that certain real property located on Sycamore Drive (5.18 acres) identified as Assessor Parcel Numbers 013-030-010 (“Developer’s Property”).

2.04 The Developer has received the necessary development entitlements from the City to construct on the Developer’s Property a single-family residential development (the “Project”) consisting of sixty-six (66) residential units, as approved and adopted by the City’s Planning Commission on June 17, 2003, by Resolution No. 03-41.

2.05 Pursuant to the Regulatory Agreement attached hereto as Exhibit B, Developer and Agency agreed that ten (10) units (the “Restricted Units”) in the Project, as more fully described in Exhibit A attached hereto, shall be subject to certain affordability conditions and restrictions.

2.06 As a condition to the Project, the City requires Developer to pay all City development fees (the “City Fees”) including, but not limited to, the following:

a) Building, electrical, plumbing, and mechanical permit fees
b) Delta Expressway fees
c) Water connection fees
d) Waste water connection fees
e) Roadway fees
f) Parks & trail fees
g) Community facilities fees
h) Administration fees
i) Fire fees
j) Lot line adjustment fees
k) Base map revision fees

The above City Fees do not include plan check or other fees levied and charged by other taxing agencies, including but not limited to fire district, flood control and school district.

2.07 Developer executed and delivered to the Agency the Regulatory Agreement subject to the Agency agreeing to pay all or a portion of the Restricted Unit’s City Fees as described and set forth in Section 2.06(a) through (k) of this Agreement, in an amount equal to TWO HUNDRED THOUSAND DOLLARS ($200,000). All other fees and costs to construct the Project shall be borne solely by Developer.

2.08. The Agency is authorized to provide for the construction, rehabilitation or preservation of affordable housing necessary for carrying out the Redevelopment Plan and in connection therewith, may pay all or part of the cost of development fees to defray the cost of production of affordable housing either within or without the Project Area (Health & Safety Code Section 33334.2).

3. TERMS

3.01. Design and Construction of Project. Currently, Developer intends to design, finance, and construct the Project in thirteen releases or phases; however, Developer may design, finance, and construct the Project in such other releases or phases as permitted by the Regulatory Agreement. The total estimated cost of the Project is EIGHTEEN MILLION NINE THOUSAND THREE HUNDRED EIGHTY EIGHT DOLLARS ($18,009,388).

3.02. Contribution. The Agency shall contribute to the costs to construct the Restricted Units by paying a portion of the City Fees on behalf of Developer for constructing the Restricted Units in an amount equal to TWO HUNDRED THOUSAND DOLLARS ($200,000) (the "Contribution"). The City shall have no liability for payment of the Contribution.

3.03. Conditions of Contribution. The Agency shall pay the Contribution directly to the City within the time set forth by the City for issuance of building permits to the Developer for the Restricted Units. The Contribution shall be considered a non-refundable grant from the Agency to the Developer upon the satisfaction of the following conditions by the Developer:

A. Satisfactory completion of the Restricted Units within two (2) years after the issuance of the building permit for the first Restricted Unit as evidenced by a certificate of completion, certificate of occupancy or its equivalent from the City stating that the Restricted Units have been inspected and found to be constructed in substantial compliance with the approved plans and specifications. The time of performance described herein may be extended upon mutual written agreement between the Agency and Developer, or unless extended by a Force Majeure Event, as described in Section 3.23.

B. Delivery by the Developer to the Agency of the executed and acknowledged Agency Promissory Note (“Promissory Note”), attached hereto as Exhibit C, at the time of execution of this Agreement.

3.04. Conversion of Contribution to Loan. The Developer and Agency agree that failure of the Developer to satisfactorily complete the conditions as described in Section 3.03 shall give the Agency the right to terminate this Agreement at any time prior to the satisfactory completion of such conditions. If the Agency terminates this Agreement, an amount (“Refundable Contribution”) equal to the product of (i) the Contribution, multiplied by (ii) the percent of the Restricted Units which do not satisfy the conditions set forth in Section 3.03 above shall immediately convert to a loan subject to the conditions and restrictions, and the rights of Agency, specified in the Promissory Note. The loan shall have a term of four years with five percent (5%) simple interest, payable in semi-annual installments by the Developer to the Agency.

3.05. Inspection. The City shall have the right at all times to inspect the construction of the Restricted Units to monitor compliance with City plans and specifications.

3.06. Insurance; Indemnity

A. Developer shall require its contractors and subcontractors for the Restricted Units to obtain and maintain insurance of the types and in the amounts described below in a form and with carriers reasonably satisfactory to the Agency.

(1) Commercial General Liability Insurance. Occurrence version comprehensive general liability insurance or equivalent form with a limit of not less than ONE MILLION DOLLARS ($1,000,000) (or as otherwise approved, in writing, by the Agency) each occurrence shall be maintained. Such insurance shall:

a. Name the Agency, the City and their officials, officers and employees as additional insureds, by endorsements, with respect to the performance of the Project’s Restricted Units. The coverage shall contain no special limitations on the scope of its protection afforded to the above listed insureds.
b. Be primary with respect to any insurance or self-insurance programs covering the Agency, the City and their officials, officers and employees.

(2) Business Automobile Liability Insurance. Business automobile liability insurance or equivalent form with a limit of not less than ONE MILLION DOLLARS ($1,000,000) each accident shall be maintained. Such insurance shall include coverage for owned, hired and non-owned automobiles and shall contain the provisions set forth in subsection (A) (1)(a) and (b) set forth directly above.

(3) Worker’s Compensation Insurance. Worker’s compensation insurance with statutory limits and employer’s liability insurance with statutory limits shall be maintained.

(4) Other Insurance Requirements. Developer shall:

(a) Prior to commencing construction of the Project, furnish Agency with properly executed certificates of insurance which shall clearly evidence all insurance required in this section and provide that such insurance shall not be canceled, allowed to expire or be materially reduced in coverage except on thirty (30) days prior written notice to the Agency.

(b) Provide to Agency certified copies of endorsements and policies if requested by Agency, and properly executed certificates of insurance evidencing the insurance required herein.

(c) Replace or require the replacement of certificates, policies and endorsements for any insurance required herein expiring prior to the time that a certificate of completion, certificate of occupancy or its equivalent from the City has been issued for the Restricted Units.

(d) Maintain all insurance required herein from the time of commencement of construction of the Project until the time that a certificate of completion, certificate of occupancy or its equivalent from the City has been issued for the Restricted Units.

(e) Place all insurance required herein with insurers licensed to do business in California.

B. Indemnity. Developer shall defend, indemnify and hold the Agency and the City and each of their respective elected officials, officers, and employees free and harmless from any and all liability from loss, damage, or injury to or death of persons or property in any manner arising out of or incident to the design, installation and/or construction of the Restricted Units, including without limitation all damages, reasonable attorney's fees and court costs, to the extent resulting from the negligence or willful misconduct of Developer or Developer's agents. This indemnity shall extend to any liability arising because Developer has failed to properly secure any necessary easements, land rights, contracts, or approvals, but shall not extend to any liability arising out of the sole negligence or willful misconduct of the Agency or the City.

3.07. Commencement of Construction and Inspection. Developer and its contractor or subcontractors shall not commence construction of the first Restricted Unit until Developer has delivered to the Agency properly executed certificates of insurance evidencing the insurance required by Section 3.06. For purposes of this Section 3.07, commencement of construction of the first Restricted Unit is defined as pouring foundation for the first Restricted Unit. All work performed on the Restricted Units shall be done in substantial compliance with City approved plans and specifications and in a good and workmanlike manner. All work performed by Developer, its contractor or agents to construct the Restricted Units shall be subject to inspection by City. Inspection by City or its employees or agents shall not relieve Developer of its liability for design defects or improper or inadequate workmanship.

3.08. Compliance with Applicable Laws. All work performed on the Restricted Units shall be performed in a manner which complies with all applicable federal, state, county and local government laws, regulations and rules, including all rules and regulations of City.

3.09. Contractor Licenses. All work performed on the Restricted Units shall be done only by contractors licensed in the State of California and qualified to perform the type of work required and comply with the City’s Business License Ordinance.

3.10. Acceptance of Work. Upon completion of the Restricted Units pursuant to the building plans for which building permits were issued, the City shall certify, by issuance of a certificate of completion, certificate of occupancy or its equivalent, that the Restricted Units have been inspected and found to be constructed in substantial compliance with the approved plans and specifications.

3.11 Notice. Any notices required or desired to be sent pursuant to this Agreement shall be deemed to have been received: (a) when personally delivered, if by hand delivery or by a recognized overnight courier (such as UPS, DHL or Fed-Ex); or (b) if sent by certified mail, return receipt requested, then one week following deposit of the same in any United States Post Office, postage prepaid and addressed as follows, or to such other addresses as the parties shall from time to time designate in writing:

Agency: Housing Manager
Redevelopment Agency of the City of Brentwood
150 City Park Way
Brentwood, CA 94513

Developer: Ray Panek, Vice President of Forward Planning
KB Homes South Bay, Inc.
6700 Koll Center Parkway, Suite 200
Pleasanton, CA 94566

3.12. Attorney’s Fees. In the event any action is commenced to enforce or interpret any term or condition of this Agreement, in addition to costs and any other relief, the prevailing party shall be entitled to reasonable attorney’s fees. Jurisdiction shall be maintained in Contra Costa County.

3.13. Entire Agreement. This Agreement contains the entire agreement of the parties hereto with respect to the matters contained herein.

3.14. Assignment.

A. Except as specifically provided herein, this Agreement shall not be assigned by the Developer without the prior written consent of the Agency, which consent shall not be unreasonably delayed, and any assignment without such written consent shall be void and ineffective.

B. This restriction shall not apply to any assignment or other transfer of the Developer's interest in this Agreement to any trust, partnership, corporation, limited liability company or other entity that is managed and controlled by Developer. This restriction shall not be deemed to limit or restrict the making of dedications or the granting of easements or permits to facilitate the Project, or to prohibit, limit or restrict the sale of the Project’s lots to individual homebuyers on the Developer’s Property. This restriction on assignment shall also not be deemed to prohibit, limit or restrict the assignment or granting of any security interests in this Agreement or in the Developer’s Property for the purpose of securing loans or funds to be used for financing the construction of the Project, or the exercise by any lenders of their rights and remedies, including, without limitation, foreclosure, under the agreements and instruments evidencing or securing any such financing.

C. Any proposed assignee of the Developer pursuant to an assignment as to which the Agency's approval is required shall have the qualifications and financial responsibility necessary and adequate, as may reasonably be determined by the Agency, to fulfill the obligations undertaken in this Agreement by the Developer. Any such proposed assignee, by instrument in writing satisfactory to the Agency, for itself and its successors and assigns, and for the benefit of the Agency, shall expressly assume all of the applicable outstanding obligations of the Developer under this Agreement and agree to be subject to all conditions and restrictions in this Agreement to which the Developer is subject with respect to the interest acquired. There shall be submitted to the Agency for review all instruments and other legal documents proposed to effect any such assignment so that the Agency may confirm compliance with these requirements. The Agency’s approval of the proposed assignment shall be given to the Developer in writing, shall not be unreasonably delayed and shall be deemed given if no written notice of disapproval is received by the Developer within twenty (20) business days after request for the approval is made.

3.15. Time of Essence. Time is of the essence for this Agreement.

3.16 Use of the Developer’s Property. The Developer agrees to devote the Developer’s Property to the uses specified in the Redevelopment Plan and to comply with all other provisions and conditions of the Redevelopment Plan. The Agency hereby affirms that, at the time of execution of this Agreement, the Project complies with the uses, provisions, and conditions of the Redevelopment Plan.

3.17. Nondiscrimination

A. The Developer agrees that during the period of time this Agreement is in force and effect, there shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, marital status, ancestry or national origin in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Restricted Units, nor shall the Developer itself or any person claiming under or through it establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the Restricted Units.

B. During the period this Agreement is in force and effect, Developer shall refrain from restricting the rental, sale or lease of the Restricted Units on the basis of race, color, creed, religion, sex, marital status, ancestry or national origin of any person. All deeds, leases or contracts executed during such period shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses:

(1) In deeds: "The grantee herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, marital status, ancestry, or national origin in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land herein conveyed, nor shall the grantee or any person claiming under or through him or her establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the land herein conveyed. The foregoing covenants shall run with the land."

(2) In leases: "The lessee herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assigns, and all persons claiming under or through him or her, and this lease is made and accepted upon and subject to the following conditions:

"That there shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, marital status, ancestry, or national origin in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of the land herein leased nor shall the lessee himself, or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination of segregation with reference to the selection, location, number, use, or occupancy of tenants, lessees, sublessees, subtenants, or vendees in the land herein leased."

(3) In contracts: "There shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, marital status, ancestry, or national origin in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the land, nor shall the transferee himself or herself, or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy of tenants, lessees, subtenants, sublessees, or vendees of the land."

3.18. Severability. If any part of this Agreement is held to be illegal or unenforceable by a court of competent jurisdiction, the remainder this Agreement shall be given effect to the fullest extent reasonably possible.

3.19. Waiver. Failure by a party to insist upon the strict performance of any of the provisions of this Agreement by the other party, or the failure by a party to exercise its rights upon the default of the other party, shall not constitute a waiver of such party’s right to insist and demand strict compliance by the other party with the terms of this Agreement thereafter.

3.20. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original.

3.21. Amendments. Amendments to this Agreement shall be made only by written instrument executed by each of the parties hereto.

3.22. No Agency. Neither Developer nor any of Developer’s agents, engineers, contractors or subcontractors are or shall be considered to be agents of the Agency or the City in connection with the performance of any of Developer’s obligations under this Agreement.

3.23. Enforced Delay: Extension of Times of Performance. In addition to the specific provisions of this Agreement, performance by any party hereunder of its obligations under this Agreement (other than the monetary obligations) shall be equitably extended, where delays or defaults are due to war; insurrection; strikes; lock-outs; riots; floods; earthquakes; fires; casualties; acts of God; acts of the public enemy; epidemics; quarantine restrictions; freight embargoes; lack of transportation; governmental restrictions or priority; litigation; unusually severe weather; inability to secure necessary labor, materials or tools; delays of any contractor, subcontractor or supplier; acts of another party; acts or the failure to act of any public or governmental agency or entity (except that acts or the failure to act of the City or the Agency shall not excuse performance by the City or the Agency); or any other causes beyond the control or without the fault of the party claiming an extension of time to perform ("Force Majeure Event"). An extension of time for any such cause shall only be for the period of delay caused by the Force Majeure Event, which period shall commence to run from the time of the commencement of the cause. If, however, notice by the party claiming such extension is sent to the other parties more than thirty (30) days after the commencement of the cause, the period shall commence to run only thirty (30) days prior to the giving of such notice. Times of performance under this Agreement may also be extended in writing by the Agency and the Developer.



IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective representatives thereunto duly authorized. The date of this Agreement shall be the date it has been executed by all of the parties hereto.

, 2004 REDEVELOPMENT AGENCY OF THE CITY OF BRENTWOOD

By:
Executive Director
"AGENCY"


, 2004

KB HOME SOUTH BAY INC.


By:

By:
"DEVELOPER"


Attachments: Exhibit A, Legal Description of Restricted Units
Exhibit B, Regulatory Agreement
Exhibit C, Agency Promissory Note

SIGNATURES TO BE NOTARIZED

EXHIBIT A

LEGAL DESCRIPTION OF RESTRICTED UNITS


Real Property situated in the incorporated territory of the City of Brentwood, County of Contra Costa, State of California, described as follows:

Being a portion of Parcel ____, as shown on that Certain parcel Map filed _________________, _ ______, in Book ___of Parcel Maps, at Pages ___ and ___, Contra Costa County records. Being a portion of Assessor’s Parcel Number 013-030-010, Subdivision 7637, Lots 9, 13, 16, 23, 29, 36, 43, 49, 53 and 64.

EXHIBIT B

RECORDED AT THE REQUEST OF
AND WHEN RECORDED RETURN TO:

Redevelopment Agency of the
City of Brentwood
150 City Park Way
Brentwood, California 94513
Attn.: Housing Manager

REGULATORY AGREEMENT

THIS AGREEMENT is entered into as of the ___________ day of _____________, 2004, by and between KB HOME South Bay Inc., a California corporation (“Developer”), and THE REDEVELOPMENT AGENCY OF THE CITY OF BRENTWOOD (“Agency”). The Developer and Agency agree as follows, with reference to the following facts:

RECITALS

A. Developer owns that certain real property located on Sycamore Avenue (5.18 acres) further identified as Assessor Parcel Number 013-030-010 (“Site”). Developer proposes to construct on the Site a residential development (the “Development”) consisting of approximately sixty-six (66) detached, single-family residential units on separate legal lots (each lot, together with all improvements thereon and membership and other rights appurtenant thereto, being referred to singly as a “Unit” and collectively as the “Units”) which Units shall be offered for sale.

B. Agency is acting to carry out its obligations under the Community Redevelopment Law of the State of California (Health and Safety Code Section 33000 et seq.) by establishing an affordable housing program for the City of Brentwood.

C. Developer and Agency agree that ten (10) Units on the Site, as described in Legal Description of Restricted Units, attached as Exhibit A hereto, shall be subject to the conditions and restrictions, and the rights of Agency as specified below (“Restricted Units”).

NOW, THEREFORE, Developer and Agency agree as follows:

ARTICLE 1
SALE OF INDIVIDUAL RESTRICTED UNITS

1.1 Defined Terms. The following terms used in this Article 1 shall have the meanings set forth in this Section 1.1:

A. “Affordable Housing Cost” shall be as defined in Health and Safety Code Section 50052.5 or any successor statute thereto. If the statute is no longer in effect and no successor statute is enacted, the Agency shall establish the Affordable Housing Cost for purposes of this Agreement. For purposes of determining the Affordable Housing Cost: (i) the purchase price for a 3 bedroom Restricted Unit shall be established using the assumption that the Eligible Household purchasing the Unit is comprised of four persons; and (ii) the purchase price for a 4 bedroom Restricted Unit shall be established using the assumption that the Eligible Household purchasing the Unit is comprised of five persons.

B. “Eligible Households” shall mean and include persons and families meeting the definitions of “Very Low Income Households”, “Low Income Households”, and “Moderate Income Households” under this Section 1.1.

C. “Very Low Income Household” shall mean a person or household whose annual gross income does not exceed 50% (which percentage shall be adjusted as provided in Title 25, Section 6932 of California Code of Regulations) of the Median Income (as defined below) and who otherwise meets Developer’s standard criteria for determining eligibility for occupancy. These occupancy criteria may include an evaluation of the applicant’s ability to pay mortgage, employment status and credit history. These specific standards may vary from time to time, but must be uniformly applied at all times.

D. “Low Income Household” shall mean a person or household whose annual gross income does not exceed 80% (which percentage shall be adjusted as provided in Title 25, Section 6932 of California Code of Regulations) of the Median Income (as defined below) and who otherwise meets Developer’s standard criteria for determining eligibility for occupancy. These occupancy criteria may include an evaluation of the applicant’s ability to pay mortgage, employment status and credit history. These specific standards may vary from time to time, but must be uniformly applied at all times.

E. “Moderate Income Household” shall mean a person or household whose annual gross income does not exceed 120% (which percentage shall be adjusted as provided in Title 25, Section 6932 of California Code of Regulations) of the Median Income (as defined below) and who otherwise meets Developer’s standard criteria for determining eligibility for occupancy. These occupancy criteria may include an evaluation of the applicant’s ability to pay mortgage, employment status and credit history. These specific standards may vary from time to time, but must be uniformly applied at all times.

F. “Median Income” is the area wide median gross yearly income in Contra Costa County, adjusted for household size, as established from time to time by the U.S. Department of Housing and Urban Development (“HUD”). In the event that such income determinations are no longer published or are not updated for a period of at least 18 months by HUD, Median Income shall mean the area wide median gross income for households in Contra Costa County, adjusted for family size, as published from time to time by the California Department of Housing and Community Development (“HCD”). In the event that such income determinations are no longer published, or not updated for a period of at least 18 months, the Agency shall provide Developer with other income determinations which are reasonably similar with respect to methods of calculation to those previously published by HUD or HCD.

1.2 Affordability Requirements and Restrictions

A. Ten (10) of the Units, or fifteen percent (15%) of sixty-six (66) Units, developed by the Developer on the Site shall be sale-restricted (“Restricted Units”) and occupied by Eligible Households. Four (4) of the ten (10) Restricted Units shall be sale-restricted to and occupied by Very Low Income Households (as defined in Section 1.1 above), three (3) of the ten (10) Restricted Units shall be sale-restricted to and occupied by Low Income Households (as defined in Section 1.1 above), and the remaining three (3) Restricted Units shall be sale-restricted to and occupied by Moderate Income Households (as defined in Section 1.1 above). Said Ten (10) Restricted Units are described in Legal Description of Restricted Units, attached as Exhibit A hereto, and identified by circled lot numbers in the Release Schedule, attached as Exhibit B hereto. If there is a total of more than sixty-six (66) Units developed on the Site, there shall be required additional Restricted Units in accordance with Community Redevelopment Law Section 33413.

B. The income of all persons residing in the Restricted Unit shall be considered for purposes of calculating the applicable income of the Eligible Household.

C. Developer shall use reasonable efforts to verify the income levels of all applicants for Restricted Units. This process may include obtaining a copy of each applicant’s most recent income tax return, verifying the applicant’s employment or income source, and conducting a credit search. Developer shall have the right to rely on the authenticity, truth and accuracy of all information and materials provided by or on behalf of an applicant.

D. There shall be no physical concentration of the Restricted Units and the Restricted Units shall be dispersed throughout the Site in accordance with Exhibit B (Restricted Units are identified as circled lot numbers). The Restricted Units will have the same exterior quality, design, finish and materials as the non-Restricted Units per plan and elevation. The Restricted Units will be constructed at a standard Spec 2 interior finish schedule. Purchasers of the Restricted Units may select and purchase options and upgrades at an additional cost. The selected options and upgrades shall be paid by Purchaser directly to Developer through escrow. In no circumstances shall the additional cost of selected options and upgrades result in the initial purchase money mortgage and total debt encumbrance exceeding the Affordable Housing Cost for the Restricted Unit.

E. The Restricted Units shall be constructed in the locations as shown in Exhibit B and the Restricted Units shall be constructed according to the developers Release Schedule as shown in Exhibit B. . The close of escrow of the last 10% of the non-Restricted Units shall not be permitted until the last Restricted Unit is complete and ready for occupancy, as evidenced by an occupancy permit by the City.

F. Developer has made a written designation to the Agency, at the time the final subdivision map for the Site was filed, of those Units that shall be Restricted Units for sale, attached as Exhibit B hereto (circled units). The total number of Restricted Units being offered for sale in accordance with this Article 1 shall be as required by Section 1.2.A. above. The Restricted Units shall be subject to the following affordability restrictions and requirements:

1. During the Term of this Agreement, the Restricted Units shall only be sold to Eligible Households, and only at an amount that does not exceed the Affordable Housing Cost (unless sold to the Agency pursuant to Section 1.2.G. hereof), and during such period the other requirements of this Article 1 shall apply.

2. At least ninety (90) calendar days prior to the close of escrow or other transfer of any of the Restricted Units during the Term of this Agreement, Developer shall submit to the Agency a copy of the written agreement of purchase and sale, together with the prospective purchaser’s/transferee’s income certification and a list of all assets owned by the prospective purchaser/transferee or other financial information in a form reasonably approved by the Agency along with the income certification to be provided to any lender making a loan on the Restricted Unit. The Agency may require documentation reasonably evidencing and supporting the income and other financial information contained in the certifications. Within fifteen (15) business days from receipt of the income certifications, Agency shall render a decision of eligibility or noneligibility. If the prospective purchaser/transferee qualifies as an Eligible Household and the purchase price of the Restricted Unit is within the definition of Affordable Housing Cost, the Agency shall so certify in writing within such fifteen (15) business day period, and upon request shall execute a certificate, in recordable form, confirming that the proposed transaction complies with the requirements of this Article 1. If the prospective purchaser/transferee does not qualify as an Eligible Household or the purchase price of the Restricted Unit is not within the definition of Affordable Housing Cost, the Agency shall so notify the Developer in writing, within such fifteen (15) business day period, stating the basis for its determination in reasonable detail.

3. EXCEPT AS EXPRESSLY PROVIDED IN SECTION 1.2.G. BELOW, THERE SHALL BE NO SALE OR OTHER TRANSFER OF THE RESTRICTED UNIT WITHOUT THE WRITTEN CERTIFICATION BY THE AGENCY THAT THE PURCHASER / TRANSFEREE IS AN ELIGIBLE HOUSEHOLD AND THE PURCHASE PRICE OF THE RESTRICTED UNIT IS WITHIN THE DEFINITION OF AFFORDABLE HOUSING COST. ANY SALE OR OTHER TRANSFER OF THE RESTRICTED UNIT IN VIOLATION OF THIS AGREEMENT SHALL BE VOID.

4. EACH PURCHASER OF A RESTRICTED UNIT FROM DEVELOPER SHALL ENTER INTO AND RECORD AT THE CLOSE OF ESCROW A REFINANCE AND RESALE LIMITATION AGREEMENT, IN THE FORM ATTACHED HERETO AS EXHIBIT C, FOR THE BENEFIT OF THE AGENCY. UPON RECORDATION OF THE REFINANCE AND RESALE LIMITATION AGREEMENT: (A) THIS AGREEMENT SHALL HAVE NO FURTHER FORCE OR EFFECT AS AN ENCUMBRANCE AGAINST THE RESTRICTED UNIT; AND (B) DEVELOPER SHALL HAVE NO FURTHER OBLIGATIONS OR LIABILITIES WITH RESPECT TO THE RESTRICTED UNIT, INCLUDING WITHOUT LIMITATION ANY RESPONSIBILITY FOR COMPLIANCE BY THE BUYER OR ITS SUCCESSORS WITH THE TERMS AND CONDITIONS OF THE REFINANCE AND RESALE LIMITATION AGREEMENT.

G. Agency’s Option to Purchase. If, after a period of 180 days from the issuance of a Certificate of Occupancy for a Restricted Unit, the Developer cannot in good faith, and despite its best commercially reasonable efforts, locate an Eligible Household to purchase a Restricted Unit at an Affordable Housing Cost, Developer shall have the right, but not the obligation, to give the Agency written notice of such circumstances (the “Agency Option Notice”). In the event Developer gives the Agency an Agency Option Notice, the Agency may purchase the Restricted Unit at a price equal to the lesser of the fair market value of the Restricted Unit (as determined by agreement of the parties or by appraisal in the absence of an agreement) or the Affordable Housing Cost, using the maximum housing cost for an Eligible Household based on the applicable unit size as defined in Health and Safety Code Section 50052.5 and Title 25, California Code of Regulations, Section 6932, or any successor thereto. This option shall be exercised by the Agency, if at all, within sixty (60) days of receipt of the Agency Option Notice. The Agency may designate another governmental entity, nonprofit organization or an Eligible Household to purchase the Restricted Unit. In the event that the Agency does not exercise its Agency Option Notice within the specified time period, (i) Developer shall have the right to sell the Restricted Unit as a non-Restricted Unit, and (ii) this Agreement shall have no further force or effect as an encumbrance against the Restricted Unit and Developer shall have no further obligations or liabilities with respect to the Restricted Unit, including without limitation any responsibility for compliance by the buyer or its successors with the terms and conditions of the Refinance and Resale Limitation Agreement, and (iii) Agency shall provide Developer with a quitclaim, release or other instrument, in recordable form, sufficient to confirm the release of the Restricted Unit from the effect of this Agreement.

H. Escrow. If the Agency exercises its rights under Section 1.2.G. above to purchase an unsold Restricted Unit, the closing of the purchase and sale of the Restricted Unit to the Agency or its designee shall be effectuated in accordance with the following provisions:

1. Close of Escrow. Close of escrow shall occur no later than one hundred twenty (120) days following the receipt by Agency of the Agency Option Notice. If escrow is required to close on a Saturday, Sunday or Holiday, it shall close on the next business day following the Saturday, Sunday or Holiday.

2. Prorations and Costs. All title insurance premiums, transfer taxes and escrow fees shall be paid according to customary practice in Contra Costa County.

3. Escrow Instructions. The parties shall execute all escrow instructions which the Escrow Holder reasonably requires within fifteen (15) days after the request thereof. All escrow instructions shall be consistent with the provisions of this Agreement.

I. Notice of Resale. In order to permit the Agency to enforce its rights under this Agreement, Developer shall provide written notice to the Agency not less than twenty (20) business days in advance of close of escrow on any initial sale of a Restricted Unit.

ARTICLE 2
NO DISCRIMINATION; COMPLIANCE WITH
REDEVELOPMENT PLAN

2.1 No Discrimination. Developer covenants by and for itself and any successors in interest that there shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Restricted Units, nor shall the Developer itself or any person claiming under or through it establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees or vendees in the Restricted Units.

2.2 Nondiscrimination Clauses. All deeds, leases or contracts made relative to the Restricted Units, the improvements thereon or any part thereof, shall contain or be subject to substantially the following nondiscrimination clauses:

a. In deeds: The Grantee herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, marital status, national origin or ancestry in the sale, lease, transfer, use, occupancy, tenure or enjoyment of the land herein conveyed, nor shall the Grantee himself or herself, or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, sublessees or vendees in the land herein conveyed. The foregoing covenants shall run with the land.

b. In leases: The lessee herein covenants by and for himself or herself, his or her heirs, executors, administrators and assigns, and all persons claiming under or through him or her, that this lease is made and accepted upon and subject to the following conditions:

That there shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, marital status, national origin or ancestry in the leasing, transferring, use, occupancy, tenure or enjoyment of the land herein leased, nor shall the lessee himself or herself, or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees or vendees in the land herein leased.

c. In contracts: There shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, marital status, national origin or ancestry in the sale, lease, transfer, use occupancy, tenure or enjoyment of the land, nor shall the transferee himself or herself, or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees or vendees in the land.

2.3 Compliance with Redevelopment Plan. During the term of this Agreement, the Restricted Units shall be used in a manner consistent with the Redevelopment Plan; provided, however, that this covenant shall not require compliance with any changes in the Redevelopment Plan that would have a material impact on the occupancy, use, operation or enjoyment of the Restricted Units unless the changes have been approved in writing by Developer.

ARTICLE 3
MAINTENANCE AND MANAGEMENT

3.1 Maintenance and Management. During the Term of this Agreement, Developer agrees to maintain the improvements and landscaping on the Restricted Units in a clean and orderly condition and in good condition and repair and keep the Restricted Units free from accumulation of debris and waste materials.

3.2 Agency’s Cure Right. If, at any time prior to the sale or transfer of the Restricted Units, Developer fails to maintain the Restricted Units, and has either failed to commence to cure such condition or to diligently prosecute to completion the condition or the condition is not corrected after expiration of thirty (30) days from the date of written notice from Agency to Developer (or such longer period as may be reasonably required, so long as Developer has commenced and is diligently prosecuting corrective action), Agency may perform the necessary corrective maintenance, and Developer shall pay such costs as are reasonably incurred for such maintenance within sixty (60) days following Agency’s written demand to Developer for reimbursement of such costs. Developer, on behalf of itself its heirs, successors and assigns, hereby grants to Agency and its officers, employees and agents, an irrevocable license to enter upon the Restricted Units to perform such maintenance during normal business hours after receipt of written notice from Agency as hereinabove described and Developer’s failure to cure or remedy such failure within the time allotted by this Section 3.2. Any such entry shall be made only after a 24 hour notice to Developer, and Agency shall indemnify and hold Developer harmless from any claims or liabilities pertaining to any such entry by Agency.

3.3 Effect of Article 3. This Article 3 shall terminate and be of no further force and effect upon the first to occur of: (a) the outside date set forth in Section 4.2 below; or (b) the closing of the sale by Developer of the last Restricted Unit pursuant to Article 1 above.

ARTICLE 4
GENERAL PROVISIONS

4.1 Notices. Notices required to be given to the Agency or to Developer shall be given by hand delivery, recognized overnight courier (such as UPS, DHL or FedEx) or certified mail, return receipt requested, to the following addresses, or to such other address(es) as a party may designate from time to time by written notice to the other:

To Agency:

Housing Manager
Redevelopment Agency of the City of Brentwood
150 City Park Way
Brentwood, CA 94513

To Developer:

Ray Panek, Vice President of Forward Planning
KB HOME South Bay Inc.
6700 Koll Center Parkway, Suite 200
Pleasanton, CA 94566
FAX: 925-750-1823

4.2 Duration. Notwithstanding anything to the contrary contained in this Agreement, upon recordation of the Refinance and Resale Limitation Agreement, attached hereto as Exhibit C, this Agreement shall have no further force or effect as an encumbrance against the Restricted Unit, and Developer shall have no further obligations or liabilities with respect to the Restricted Unit, including without limitation any responsibility for compliance by the buyer or its successors with the terms and conditions of the Refinance and Resale Limitation Agreement.

The covenants set forth herein on the Restricted Units shall be covenants running with the land in accordance with Section 33334.3(f) and 33413(c) of the Health and Safety Code, or any successor statutes, and shall inure to the benefit of the Agency, the City of Brentwood and their successors and assigns, and subject to any shorter time limitations specifically set forth herein shall be enforceable by the Agency, the City of Brentwood or their successors and assigns, for a period of forty-five (45) years from the date of recording this Agreement (the “Term”).

4.3 Amendment. This Agreement may be amended only in writing by Agency and the Developer.

4.4 No Impairment of Lien. No violation or breach of the covenants, conditions, restrictions, provisions or limitations contained in this Agreement shall defeat or render invalid or in any way impair the lien or charge of any mortgage, deed of trust or other financing or security instrument; provided, however, that any successor of Developer to the Site shall be bound by such covenants, conditions, restrictions, limitations and provisions, whether such successor’s title was acquired by foreclosure, deed in lieu of foreclosure, trustee’s sale or otherwise.

4.5. Successors and Assigns.

A. Binding Effect; Covenants Run with Land. The covenants contained in this Agreement shall inure to the benefit of the Agency and its successors and assigns and, subject to Section 4.7 and any other limitations contained herein, shall be binding upon Developer and any successor in interest as owner of fee title to the Site, or any part thereof. Upon the transfer by Developer of all of its interest in the Site, such Developer shall automatically be released from and have no further obligations or liabilities under this Agreement, and all references in this Agreement to Developer thereafter shall mean and refer to such successor in interest of Developer as may then be the owner of the Site. The covenants shall run in favor of the Agency and its successors and assigns for the entire period during which such covenants shall be in force and effect. The Agency, and its successors and assigns, in the event of any breach of any such covenants, shall have the right to exercise all of the rights and remedies, and to maintain any actions at law or suits in equity or other proper proceedings, to enforce the curing of such breach.

B. Transfer by Developer of Site. Except as expressly permitted by this Section 4.5.B, Developer shall not sell, transfer, convey, assign or ground lease the Site (a “Transfer”) during the period between the date of recordation of this Agreement and the closing date for the sale of the last Restricted Unit to be sold pursuant to Article 1 above without prior written approval of the Agency. The Agency’s approval shall not be unreasonably withheld or delayed, and shall be deemed given if no reasoned written notice of disapproval is received by Developer within ten (10) business days after request for approval is made. This restriction shall not apply to any Transfer to any trust, partnership, corporation, limited liability company or other entity that is managed and controlled by Developer whether through any trust, partnership, corporation, limited liability company or other entity, and shall not apply to any Transfer after the closing date for the last Restricted Unit sold pursuant to Article 1 above. This restriction on Transfer shall not be deemed to limit or restrict the making of dedications or granting of easements or permits to facilitate the development of the Site, or to limit or restrict the sale of any individual Units. This restriction on Transfer shall also not be deemed to prohibit, limit or restrict the assignment or granting of any security interests in the Site for the purpose of securing loans or funds to be used for financing the construction of the improvements on the Site, or the exercise by any lenders of their rights and remedies, including without limitation foreclosure, under the agreements and instruments evidencing or securing any such financing.

4.6 No Third Party Beneficiaries. Notwithstanding anything in this Agreement to the contrary, there are no third party beneficiaries of this Agreement except for the City of Brentwood.

4.7 Effect of Agreement. Notwithstanding anything in this Agreement to the contrary, nothing in this Agreement shall have any force or effect on any buyer of a single Unit or its right, title or interest in or to such Unit, except for the buyers of Restricted Units provided that nothing herein shall be deemed to limit the obligations of any buyer of a Restricted Unit under any applicable Refinance and Resale Limitation Agreement. The foregoing exemption and release shall be self-executing and require no further instruments or assurances to be effective.

4.8 Default.

a. Any failure by Developer to perform any term or provision of this Agreement shall constitute an “Event of Default” (1) if Developer does not cure such failure within thirty (30) days following written notice of default from the Agency, or (2) if such failure is not of a nature which can be cured within such thirty (30) day period, if the Developer does not within such thirty (30) day period commence substantial efforts to cure such failure, or thereafter does not within a reasonable time prosecute to completion with diligence and continuity the curing of such failure. The Agency shall not enforce any of its rights and remedies for breach by Developer except upon the occurrence of an Event of Default.

b. Any notice of default given hereunder shall specify in detail the nature of the failure in performance alleged by the Agency and the manner in which such failure of performance may be satisfactorily cured in accordance with the terms and conditions of this Agreement. During the time periods herein specified for cure of a failure to perform, the Developer shall not be considered to be in default of this Agreement for any purposes.

c. Any failure or delay by the Agency in asserting any of its rights or remedies as to any Event of Default shall not operate as a waiver of any Event of Default or of any such rights or remedies or deprive the Agency of its right to institute and maintain any actions or proceedings which it may deem necessary to protect, assert or enforce any such rights or remedies.

d. In the event of an Event of Default under this Agreement, Agency shall have the right to exercise all of the rights and remedies, and to maintain any actions at law or suits in equity or other remedy proceedings to cure, correct or remedy such Event of Default.

e. Notwithstanding the foregoing, failure by the Developer to comply with the construction and completion of the Restricted Units in accordance with the Release Schedule shall be grounds for the City to suspend issuance of building permits for non-Restricted Units, to suspend building inspections of non-Restricted Units, or to not issue occupancy permits for non-Restricted Units. Efforts to cure failure by Developer to comply with the construction and completion of Restricted Units in accordance with the Release Schedule shall be in accordance with this Section 4.8.

4.9 California Law. This Agreement shall be construed in accordance with and be governed by the laws of the State of California.

4.10 Severability. Should any provision of this Agreement be found invalid or unenforceable by a court or other body of competent jurisdiction, said invalidity, unenforceability or ineffectiveness shall not affect the validity of the remaining provisions which shall remain in force to the maximum extent possible.


IN WITNESS WHEREOF, the Agency and the Developer have caused this instrument to be executed on their behalf by their respective officers thereunto duly authorized.


Date:__________________________
REDEVELOPMENT AGENCY OF THE CITY
OF BRENTWOOD

By:
John Stevenson, Executive Director

By:
Karen, Diaz, Agency Secretary

“AGENCY”
APPROVED AS TO FORM:


City Attorney


Date: _________________________ KB HOME South Bay Inc., a California
Corporation

By:

Its:
 

Date: _________________________ KB HOME South Bay Inc., a California
Corporation

By:

Its:


“DEVELOPER”

SIGNATURES MUST BE NOTARIZED

EXHIBIT A

Legal Description of Restricted Units

Real Property situated in the incorporated territory of the City of Brentwood, County of Contra Costa, State of California, described as follows:

Being a portion of Parcel ___, as shown on that certain Parcel Map filed _____ __, ____ in Book __ of Parcel Maps, at Pages __ and __, Contra Costa County records. Being a portion of Assessor's Parcel Number 013-030-010, Subdivision 7637, Lots 9, 13, 16, 23, 29, 36, 43, 49, 53 and 64.

EXHIBIT B

Insert Release Schedule

EXHIBIT C

Form of Refinance and Resale Limitation Agreement for Individual Units

recorded at the request of
AND WHEN RECORDED RETURN TO:

Redevelopment Agency of the
City of Brentwood
150 City Park Way
Brentwood, California 94513
Attn.: Housing Manager

REFINANCE AND RESALE LIMITATION AGREEMENT

For valuable consideration, the receipt of which is hereby acknowledged, _____________________________________________ (collectively, “Owner”), and THE REDEVELOPMENT AGENCY OF THE CITY OF BRENTWOOD (“Agency”) agree as follows, with reference to the following facts:

RECITALS

A. Owner owns that certain attached residence located at _____________, Brentwood, California and more particularly described in Exhibit A attached and incorporated herein. The real property, which includes the land, the residence and all other improvements thereon, and all membership and other rights appurtenant thereto, is referred to in this Agreement as the “Restricted Unit.” The Restricted Unit is part of a sixty-six (66)-unit single-family), detached, residential community referred to herein as the “Project.”

B. Agency has acted to carry out its obligations under the Community Redevelopment Law of the State of California (Health and Safety Code Section 33000 et seq.) by establishing an affordable housing program for the City of Brentwood. As part of the affordable housing program, Agency has procured assurances that the Restricted Unit will be sold, owned and occupied only by members of Eligible Households, and will be sold only for a price that does not exceed the Affordable Housing Cost (as those terms are defined below).

C. Owner has received the benefit of these assurances in purchasing the Restricted Unit, and is providing the same assurances for the benefit of the Agency and the City of Brentwood by entering into this Agreement. Owner and Agency therefore agree that the Restricted Unit shall be subject to the terms, conditions and restrictions, and the rights of Agency, as specified in this Agreement.

NOW, THEREFORE, in this factual context, for good and valuable consideration, Owner and Agency agree as follows:

1. Principal Residence. Owner shall occupy the Restricted Unit as his or her principal residence. Upon request by the Agency, the Owner shall submit an affidavit to the Agency certifying that the Restricted Unit is the Owner’s principal residence. If Owner, without the Agency’s prior written consent: (i) transfers, or attempts to transfer, the Restricted Unit in violation of the terms of this Agreement contained hereinbelow, (ii) vacates or leases the Restricted Unit, or (iii) otherwise does not occupy the Restricted Unit as Owner’s principal residence, the Agency may purchase the Restricted Unit at a price (“Option Price”) equal to the lesser of (a) the fair market value of the Restricted Unit (as determined by agreement of the parties or in the absence of an agreement, by an appraisal acceptable to the Agency) or (b) the Affordable Housing Cost, using the maximum housing cost for the Eligible Household, as adjusted for the applicable unit size as defined in Health and Safety Code Section 50052 or any successor thereto. This option shall be exercised by the Agency giving the Owner notice (the “Principal Residence Restriction Breach Exercise Notice”). The Agency may designate another governmental entity, a nonprofit organization or an Eligible Household to purchase the Restricted Unit.

2. Debt and Refinance Limitations. Without the Agency’s prior written consent, Owner shall not obtain or refinance any loan in connection with the Restricted Unit (a “Loan”) that causes Owner’s indebtedness (i.e. the total amount borrowed by Owner) in connection with the Restricted Unit to exceed the Affordable Housing Cost (as defined in Section 4(a) below). If Owner, without the Agency’s prior written consent, obtains or refinances any loan in connection with the Restricted Unit that causes Owner’s indebtedness in connection with the Restricted Unit to exceed the Affordable Housing Cost, the Agency may purchase the Restricted Unit at the Option Price. This option shall be exercised by the Agency giving the Owner notice (the “Debt Restriction Breach Exercise Notice”). The Agency may designate another governmental entity, a nonprofit organization or an Eligible Household to purchase the Restricted Unit.

IF THE AGENCY EXERCISES SUCH RIGHT, ANY LOAN TO THE EXTENT IN EXCESS OF THE OPTION PRICE SHALL BE NULL AND VOID AND NOT AN ENCUMBRANCE AGAINST THE RESTRICTED UNIT.

3. Submission of Loan or Refinance Information to Agency. Not less than forty-five (45) days prior to an Owner obtaining or refinancing a Loan that requires Agency’s approval, Owner shall submit to the Agency a copy of the proposed Loan’s terms together with any and all other information reasonably requested by the Agency, including without limitation a copy of the loan application and Good Faith Estimate. Within fifteen (15) business days from receipt of the, proposed loan terms, the City shall render a decision. If the City does not approve the Loan, the City shall so notify Owner in writing within such fifteen (15) business days, stating the basis for its determination in reasonable detail.

4. Resale Limitations. Except as otherwise provided in this Agreement during the Term of this Agreement, the Restricted Unit shall only be sold to an Eligible Household and only for an amount that does not exceed the Affordable Housing Cost. As used in this Agreement:

a. “Affordable Housing Cost” shall be as defined in Health and Safety Code Section 50052.5 or any successor statute thereto. If the statute is no longer in effect and no successor statute is enacted, the Agency shall establish the Affordable Housing Cost for purposes of this Agreement. For purposes of determining the Affordable Housing Cost: (i) the purchase price for a 3 bedroom Restricted Unit shall be established using the assumption that the Eligible Household purchasing the Unit is comprised of four persons; and (ii) the purchase price for a 4 bedroom Restricted Unit shall be established using the assumption that the Eligible Household purchasing the Unit is comprised of five persons.

b. “Eligible Household” shall mean and include a person or household whose annual gross income does not exceed [insert “50%” for very-low income household or “80% for low income household” or “120%” for moderate-income household] (which percentage shall be adjusted as provided in Title 25, Section 6932 of California Code of Regulations) of the Median Income, as defined below.

c. “Median Income” shall mean the area wide median gross yearly income in Contra Costa County, adjusted for household size, as established from time to time by the U.S. Department of Housing and Urban Development (“HUD”), or, by the California Department of Housing and Community Development (“HCD”) if HUD ceases to establish such income standards. In the event that neither HUD nor HCD are establishing such income standards, the Agency shall provide Owner with income standards which are determined in a manner reasonably similar to the methods of calculation previously used by HUD or HCD.

5. Submission of Resale Information to Agency. Not less than forty-five (45) days prior to any proposed sale or other transfer of the Restricted Unit during the Term of this Agreement, Owner shall submit to the Agency a copy of the written agreement of purchase and sale, together with the prospective purchaser’s/transferee’s income certification and a list of all assets owned by the prospective purchaser/transferee or other financial information in a form reasonably approved by the Agency along with the income certification to be provided to any lender making a loan on the Restricted Unit. The Agency may require documentation reasonably evidencing and supporting the income and other financial information contained in the certifications. Within fifteen (15) business days from receipt of the income certifications, Agency shall render a decision of eligibility or noneligibility. If the prospective purchaser/transferee qualifies as an Eligible Household and the purchase price of the Restricted Unit is within the definition of Affordable Housing Cost, the Agency shall so certify in writing within such fifteen (15) business days, and upon request shall execute a certificate, in recordable form, confirming that the proposed transaction complies with the requirements of this Agreement. If the prospective purchaser/transferee does not qualify as an Eligible Household or the purchase price of the Restricted Unit is not within the definition of Affordable Housing Cost, the Agency shall so notify Owner in writing, within such fifteen (15) business days, stating the basis for its determination in reasonable detail.

6. Ineligible Transfers. EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, THERE SHALL BE NO SALE OR OTHER TRANSFER OF THE RESTRICTED UNIT WITHOUT THE WRITTEN CERTIFICATION BY THE AGENCY THAT THE PURCHASER / TRANSFEREE IS AN ELIGIBLE HOUSEHOLD AND THE PURCHASE PRICE OF THE RESTRICTED UNIT IS WITHIN THE DEFINITION OF AFFORDABLE HOUSING COST. ANY SALE OR OTHER TRANSFER OF THE RESTRICTED UNIT IN VIOLATION OF THIS AGREEMENT SHALL BE VOID.

7. Permissible Transfers. The following transfers of title to a Restricted Unit or any interest therein are not subject to the Agency’s prior written approval so long as the transferree’s household (i.e., the person or persons acquiring ownership of the Restricted Unit) qualifies as an Eligible Household and occupies the Restricted Unit in compliance with the terms of this Agreement: (a) transfer by gift, devise or inheritance to the spouse, issue or adopted child of the Owner; (b) transfer resulting from death of an Owner when the transfer is to a co-Owner or joint tenant; (c) transfer by an Owner to any person who becomes a co-Owner of the Restricted Unit provided (i) the Owner retains at least a 33% interest in the Restricted Unit, (ii) the co-Owner and Owner together qualify as an Eligible Household, and (iii) co-Owner agrees to be bound by this Agreement by signing a copy of this Agreement and delivering it to the Agency; (d) transfer of title to a spouse resulting from divorce; (e) decree of dissolution or legal separation or from a property settlement agreement incidental to such a decree in which one of the Owners becomes the sole owner; or (f) acquisition of title to the Restricted Unit or interest therein in conjunction with marriage; (g) a transfer between co-Owners or a transfer by Owner into an inter vivos trust in which Owner is a beneficiary and Owner continues to occupy the Restricted Unit.

8. Effect of Sale. THE PURCHASER OF THE RESTRICTED UNIT FROM OWNER SHALL ENTER INTO AND RECORD AT THE CLOSE OF ESCROW A NEW REFINANCE AND RESALE LIMITATION AGREEMENT, IN THE SAME FORM AS THIS AGREEMENT, FOR THE BENEFIT OF THE AGENCY. IF PURCHASER FAILS TO EXECUTE A NEW AGREEMENT, PURCHASER WILL REMAIN SUBJECT TO THIS AGREEMENT. UPON THE CLOSING, AND RECORDATION OF THE NEW REFINANCE AND RESALE LIMITATION AGREEMENT, OWNER SHALL HAVE NO FURTHER OBLIGATIONS OR LIABILITIES TO THE AGENCY WITH RESPECT TO THE RESTRICTED UNIT, INCLUDING WITHOUT LIMITATION ANY RESPONSIBILITY FOR COMPLIANCE BY THE BUYER OR ITS SUCCESSORS WITH THE TERMS AND CONDITIONS OF THE NEW REFINANCE AND RESALE LIMITATION AGREEMENT.

9. Agency’s Option to Purchase. If the Owner cannot in good faith, and despite using best commercially reasonable efforts, locate an Eligible Household to purchase the Restricted Unit at an Affordable Housing Cost, the Owner shall have the right, but not the obligation, to give the Agency written notice of such circumstances (the “Agency Option Notice”); provided, however, that the Owner may not sell the Restricted Unit for a price that exceeds the Affordable Housing Cost or to a non-Eligible Household without first giving the Agency an Agency Option Notice so that the Agency has the opportunity to exercise the option granted by this Section 9. In the event Owner gives the Agency an Agency Option Notice, the Agency may purchase the Restricted Unit at the Option Price. This option shall be exercised by the Agency giving the Owner notice, no later than sixty (60) days following Agency’s receipt of the Agency Option Notice, of the Agency’s intent to purchase the Restricted Unit (the “Exercise Notice”). The Agency may designate another governmental entity, a nonprofit organization or an Eligible Household to purchase the Restricted Unit. If Agency or its designee does not exercise the option to purchase the Restricted Unit, then the terms of Section 12 shall apply.

10. Escrow. If the Agency exercises its rights under Sections 1, 2 or 9 above, the closing of the purchase and sale of the Restricted Unit to the Agency or its designee shall be effectuated in accordance with the following provisions:

a. Close of Escrow. Close of escrow shall occur no later than one hundred twenty (120) days following the receipt by Owner of the Principal Residence Restriction Breach Exercise Notice or Debt Restriction Breach Exercise Notice or the receipt by Agency of the Agency Option Notice, as applicable. If escrow is required to close on a Saturday, Sunday or Holiday, it shall close on the next business day following the Saturday, Sunday or Holiday.

b. Prorations and Costs. All title insurance premiums, transfer taxes and escrow fees shall be paid according to customary practice in Contra Costa County.

c. Escrow Instructions. The parties shall execute all escrow instructions which the Escrow Holder reasonably requires within fifteen (15) days after the request thereof. All escrow instructions shall be consistent with the provisions of this Agreement.

d. Monetary Liens. The Purchase Price shall be applied to any monetary liens encumbering the Restricted Unit prior to any disbursement to Owner.

11. Notice of Resale. In order to permit the Agency to enforce its rights under this Agreement, Owner shall provide written notice to the Agency not less than forty-five (45) days in advance of scheduled close of escrow for the sale of the Restricted Unit.

12. Owner’s Right to Sell Free of Restrictions. In the event the Agency does not exercise the purchase option provided pursuant to Section 9, or the Agency does exercise the option but fails to close the transaction as provided in Section 10 above for any reason other than a default by Owner, Owner shall have the right, for a period of 180 days after the date the Agency’s option expired or the Agency failed to close, as the case may be, to sell the Restricted Unit for a market sales price to any buyer, regardless of income, without any obligation on the part of the buyer to enter into and record a new Refinance and Resale Limitation Agreement at closing. In the event of such a sale, this Agreement shall have no force or effect as an encumbrance against the Restricted Unit on and after the closing date. If Owner or the buyer requests, the Agency shall provide a recordable quitclaim deed at closing in accordance with Section 16 below. If Owner does not close on the sale of the Restricted Unit within the 180 day-period provided herein, the requirements of this Agreement shall again apply to any proposed sale of the Restricted Unit, including without limitation the Agency option rights.

13. No Discrimination. Owner covenants by and for itself and any successors in interest that there shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Restricted Unit, nor shall the Owner itself or any person claiming under or through it establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees or vendees in the Restricted Unit.

14. Nondiscrimination Clauses. All deeds, leases or contracts made relative to the Restricted Unit, the improvements thereon or any part thereof, shall contain or be subject to substantially the following nondiscrimination clauses:

a. In deeds: The Grantee herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, marital status, national origin or ancestry in the sale, lease, transfer, use, occupancy, tenure or enjoyment of the land herein conveyed, nor shall the Grantee himself or herself, or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, sublessees or vendees in the land herein conveyed. The foregoing covenants shall run with the land.

b. In leases: The lessee herein covenants by and for himself or herself, his or her heirs, executors, administrators and assigns, and all persons claiming under or through him or her, that this lease is made and accepted upon and subject to the following conditions:

That there shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, marital status, national origin or ancestry in the leasing, transferring, use, occupancy, tenure or enjoyment of the land herein leased, nor shall the lessee himself or herself, or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees or vendees in the land herein leased.

c. In contracts: There shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, marital status, national origin or ancestry in the sale, lease, transfer, use occupancy, tenure or enjoyment of the land, nor shall the transferee himself or herself, or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees or vendees in the land.

15. Notices. Notices required to be given to the Agency or to Owner shall be given by hand delivery, recognized overnight courier (such as UPS, DHL or FedEx) or by certified mail, return receipt requested, to the following addresses, or to such other address(es) as a party may designate from time to time by written notice to the other:

To Agency:
Housing Manager
Redevelopment Agency of the City of Brentwood
150 City Park Way
Brentwood, CA 94513

To Owner:
At the address set forth in Recital A.

16. Duration. The covenants set forth herein shall be covenants running with the land in accordance with Section 33334.3(f) and 33413(c) of the Health and Safety Code, or any successor statutes, and shall inure to the benefit of the Agency, the City of Brentwood and their successors and assigns, and shall be enforceable by the Agency, the City of Brentwood or their successors and assigns, without regard to whether the Agency is or remains an owner of any land or interest to which such covenants relate, until [_______________, 20 __ - insert the date that is 45 years after the date the initial Regulatory Agreement is recorded] (the “Term”). The parties agree that for the Term of this Agreement, all future deeds or transfers of interest shall show or reference the applicable restrictions of this Agreement. Upon expiration of the Term, Agency shall provide Owner with a quitclaim, release or other instrument, in recordable form, sufficient to confirm the release of the Restricted Unit from the effect of this Agreement.

17. Amendment. This Agreement may be amended only in a writing signed by Agency and the Owner.

18. No Impairment of Lien. No violation or breach of the covenants, conditions, restrictions, provisions or limitations contained in this Agreement shall defeat or render invalid or in any way impair the lien or charge of any mortgage, deed of trust or other financing or security instrument; provided, however, that any successor to Owner as owner of the Unit shall be bound by such covenants, conditions, restrictions, limitations and provisions, whether such successor’s title was acquired by foreclosure, deed in lieu of foreclosure, trustee’s sale or otherwise.

19. Successors and Assigns. The covenants contained in this Agreement shall inure to the benefit of the Agency and its successors and assigns and shall be binding upon Owner and any successor in interest as owner of fee title to the Restricted Unit. Upon the transfer by Owner of all of its interest in the Restricted Unit, such Owner shall automatically be released from and have no further obligations or liabilities under this Agreement, and all references in this Agreement to Owner thereafter shall mean and refer to such successor in interest of a prior Owner as may then be the owner of the Restricted Unit. The covenants shall run in favor of the Agency and its successors and assigns for the entire period during which such covenants shall be in force and effect, without regard to whether the Agency is or remains an owner of any land or interest therein to which such covenants relate. The Agency, and its successors and assigns, in the event of any breach of any such covenants, shall have the right to exercise all of the rights and remedies, and to maintain any actions at law or suits in equity or other proper proceedings, to enforce the curing of such breach.

20. No Third Party Beneficiaries. Notwithstanding anything in this Agreement to the contrary, there are no third party beneficiaries of this Agreement except for the City of Brentwood.

21. California Law. This Agreement shall be construed in accordance with and be governed by the laws of the State of California.

22. Severability. Should any provision of this Agreement be found invalid or unenforceable by a court or other body of competent jurisdiction, said invalidity, unenforceability or ineffectiveness shall not affect the validity of the remaining provisions which shall remain in force to the maximum extent possible.


IN WITNESS WHEREOF, the Agency and the Owner have caused this Agreement to be executed on their behalf by their respective officers thereunto duly authorized.

Dated for reference purposes only as of , 20__.


REDEVELOPMENT AGENCY OF THE CITY OF BRENTWOOD

By:
Executive Director

By:
Secretary





Owner


Owner

SIGNATURES MUST BE NOTARIZED

EXHIBIT A

Legal Description of Restricted Unit





RECORDING REQUESTED BY AND
AFTER RECORDATION, MAIL TO:

The Redevelopment Agency of
the City of Brentwood
150 City Park Way
Brentwood, CA 94513
Attn: Redevelopment/Housing Manager


AGENCY PROMISSORY NOTE
Principal Not to Exceed March 9, 2004
$200,000 Brentwood, California

FOR VALUE RECEIVED, KB HOMES SOUTH BAY, INC. (the “Maker”), having an address of 6700 Koll Center Parkway, Suite 200, Pleasanton, CA 94566, promises to pay THE REDEVELOPMENT AGENCY OF THE CITY OF BRENTWOOD ("Payee"), a principal sum of TWO HUNDRED THOUSAND DOLLARS ($200,000) (the "Loan"), in the event of termination by the Agency of the Affordable Housing Contribution Agreement (the “Agreement”) between Maker and Payee dated March 9, 2004 for the development of that certain real property on Sycamore Drive, Brentwood California, known as the Harbor Heights development (“Site”).
1. Pursuant to the Agreement, Maker and Payee have also executed and recorded a "Regulatory Agreement" which requires that the ten (10) housing units constructed on the Site shall be sale restricted to and occupied by lower income households (“Restricted Units”).
2. Maker acknowledges his obligation to pay this Note in full, and consents that payment of this Note shall be secured with a lien imposed against any unsold Restricted Units, as described in the Legal Description, attached as Exhibit A hereto. In the event of termination by the Agency of the Agreement, Maker consents to recordation of this Note in the Contra Costa County Recorder’s Office to provide record notice of the lien to secure collection. Maker also agrees that any and all amounts due hereunder shall be immediately due and payable upon the sale of the unsold Restricted Units encumbered with this Note.
3. The principal sum of this Note shall bear interest at the rate of five percent (5%) per annum, simple interest.

4. The outstanding principal and all accrued interest shall be due and payable in full four (4) years from the date of recording this Note (the "Maturity Date"). Maker shall make payments to Agency semi-annually on September 1 and March 1, commencing with whichever date occurs first upon written notice of termination of the Agreement by Agency to Maker.
5. Payment shall be made in lawful money of the United States to Payee c/o The Redevelopment Agency of the City of Brentwood, 150 City Park Way, Brentwood, California 94513. The place of payment may be changed from time to time as the Payee may from time to time designate in writing.
6. The occurrence of the following shall constitute an event of default under this Note: There shall be a failure to make the payment of any installment of principal or interest which continues for fifteen (15) days after notice that such payment is due.
Upon the occurrence of an event of default under this Note, at the option of the Payee hereof, the entire unpaid principal and interest sums owing on this Note shall become immediately due and payable. This option may be exercised at any time following any such event, and the acceptance of one or more installments thereafter shall not constitute a waiver of Payee's option. Payee's failure to exercise such option shall not constitute a waiver of such option with respect to any subsequent event of default. Payee's failure in the exercise of any other right or remedy hereunder shall not affect any right or remedy and no single or partial exercise of any such right or remedy shall preclude any further exercise thereof.
7. Maker agrees to pay immediately upon demand all reasonable costs and expenses of Payee including reasonable attorneys' fees, (i) if after an event of default this Note be placed in the hands of an attorney or attorneys for collection, (ii) if after an event of default Payee finds it necessary or desirable to secure the services or advice of one or more attorneys with regard to collection of this Note against Maker, any guarantor or any other party liable therefore or to the protection of its rights under this Note, or (iii) if Payee seeks to have attempts to have any stay or injunction prohibiting the enforcement or collection of the Note lifted by any bankruptcy or other court.
8. Any notices provided for in this Note shall be given by mailing such notice by certified mail, return receipt requested at the address stated in this Note or at such address as either party may designate by written notice.
9. This Note shall be binding upon Maker, its successors and assigns.
10. This Note shall be construed in accordance with and be governed by the laws of the State of California.
11. 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.
12. This Note shall be subject to prepayment in whole or in part at any time without premium or other penalty.

13. In the event Maker fails to pay any amount owing hereunder, the Agency has the right to exercise all rights and remedies and to maintain any action in law or equity to enforce the terms and covenants of this Note. Without limiting the foregoing, the Agency shall have the right to proceed with foreclosure of the lien against the unsold Restricted Units for all delinquent amounts, including interest, costs, attorneys’ fees and cost of the foreclosure proceedings.

KB HOMES SOUTH BAY, INC.

By:

By: ____

"MAKER"

s
SIGNATURES TO BE NOTARIZED

EXHIBIT A

LEGAL DESCRIPTION OF THE UNSOLD RESTRICTED UNITS


(to be inserted)
 

City Administration
City of Brentwood City Council
150 City Park Way
Brentwood, CA 94513
(925) 516-5440
Fax (925) 516-5441
E-mail allcouncil@brentwoodca.gov