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HomeMy WebLinkAboutItem 06 - Authorization to persue State & Ferderal Affordable Housing, Transportation, and Water Quality Grant Funding Department Name: Community Development and Public Works Cost Center: 4007, 5010, 5301 For Agenda of: January 21, 2020 Placement: Consent Estimated Time: N/A FROM: Michael Codron, Community Development Director Shelly Stanwyck, Assistant City Manager – Community Services Prepared By: Cara Vereschagin, Housing Coordinator Brian Nelson, Supervising Civil Engineer Wyatt Banker-Hix, Engineer II SUBJECT: AUTHORIZATION TO PURSUE STATE AND FEDERAL AFFORDABLE HOUSING, TRANSPORTATION, AND WATER QUALITY GRANT FUNDING RECOMMENDATION 1. Adopt a Resolution (Attachment A) authorizing (1) the City as a Participating Entity in the Application to be submitted by Peoples’ Self-Help Housing Corporation (PSHHC) to apply for the Affordable Housing Sustainable Communities (AHSC) grant program to the California Department of Housing and Community Development (HCD) for an estimated $3 million for sustainable transportation infrastructure projects and transportation related amenities; and (2) to execute certain documents with PSHHC for the submittal of the AHSC Program Application, in connection with Tiburon Place, an Affordable Housing Project at 3750 Bullock Lane; and 2. Adopt a Resolution (Attachment B) authorizing a proposal for funding from the Department of Water Resources and authorizing the City Manager to execute the agreement and any amendments thereto; and 3. Authorize staff to prepare and submit State and Federal grant applications for the Prado Road Interchange Project and Mid-Higuera Bypass projects; and 4. Authorize the City Manager or designee to execute grant application documentation; and 5. Authorize the City Manager to appropriate grant funds and approve a budget amendment to reflect received grant funds, if awarded. DISCUSSION Background on Affordable Housing Sustainable Communities Grant Program and Application for Tiburon Place The AHSC Program provides competitive grants and loans to support infill and compact development projects that will achieve greenhouse gas (GHG) reductions through the development of affordable housing and related infrastructure, active transportation infrastructure, capital transit improvements, and related programming. The AHSC Program is administered by the Strategic Growth Council and implemented by the HCD. Funding for the AHSC Program is Item 6 Packet Page 83 provided from the Greenhouse Gas Reduction Fund (GGRF), which is an account established to receive Cap-and-trade auction proceeds. On November 1, 2019, HCD published a Notice of Funding Availability (NOFA), for the 5th Round of the AHSC Program, which indicates the availability of hundreds of millions of dollars for new projects across the State of California. PSHHC, a local non-profit housing developer, intends on applying for Round 5 of the AHSC Program for financial assistance to construct its affordable housing project, titled Tiburon Place, which will provide 68 new affordable housing units in the City’s Orcutt Area. Because the AHSC Program requires integration of housing and transportation-related projects, PSHHC is requesting that City staff collaborate in the grant application by identifying potential sustainable transportation infrastructure projects (STIs) and transportation related amenities (TRAs) that would be eligible for AHSC funds. Potential projects and/or amenities must be located within a mile of the Tiburon Place development in the Orcutt Area and may include investments that support sustainable transportation, such as new bicycle or pedestrian infrastructure, green stormwater treatments, and improved transit service and facilities. Staff has identified the following STI/TRA projects for this grant application, representing a total request for approximately $3 million in funds: • Railroad Safety Trail Gap Closure (Complete pedestrian//bicycle trail connection between Orcutt Road and Tiburon Road) – STI Category • Purchase of two electric transit vehicles (Additional buses to improve SLO Transit service to the Orcutt Area and affordable housing development) – TRA Category Since the AHSC Program encourages partnerships between local munici palities, transit agencies, and housing developers, both PSHHC and City staff are recommending that PSHHC apply as “Lead Applicant” to the AHSC Program, and the City be identified in the Application as a “Participating Entity,” which will (1) strengthen the Application’s overall competitiveness; and (2) allow for ease of the distribution of funds for the transportation-related projects. In order for PSHHC to submit the AHSC Program Application by the February 11, 2020 deadline, the City and PSHHC must execute an Implementation and Mutual Indemnity Agreement, identifying understandings and intentions of the expenditure of AHSC Program Funds, should the Application be awarded funding. A draft form of this Implementation and Mutual Indemnity Agreement is provided in Attachment C, which will be reviewed by the City Attorney’s office prior to execution, along with any other required documentation. Background on Prado Road Interchange and IIG and SB1 Grants The Prado Road Interchange is the proposed connection between the two halves of Prado Road. The project consists of a bridge spanning Prado Road across Highway 101, northbound ramps in the initial phase, and southbound ramps at a later phase of the project. The Prado Road Interchange will provide multimodal connectivity and traffic relief throughout the City and is essential for the development of future housing and business. The City is the lead agency and currently considering interchange types as well as producing environmental documents. Item 6 Packet Page 84 While planning-level construction cost estimates have been developed and a funding program has been established for the project, local construction costs have escalated rapidly in recent years and recent project design refinements indicate that project construction costs are likely to increase between now and the anticipated construction year of 2021-22. In anticipation of a potential future funding gap between programmed allocations and future construction costs, staff has begun exploring grant opportunities to fill that gap. Two grants have thus far been identified: The Infill Infrastructure Grant (IIG) and the Senate Bill 1 Local Partnership Program Competitive Grant (SB1). HCD administers the IIG in order to mitigate the cost of low-income housing developments. The grant provides construction cost relief to both developers and agencies based on the number of low-income units constructed. The Prado Interchange facilitates the development of low-income housing units at the San Luis Ranch development, and staff seeks authorization to pursue a grant application in a future NOFA cycle. SB1 is the omnibus bill passed and signed in 2017 providing additional funding for transportation projects. Part of that bill created a competitive grant program for agencies to fund infrastructure projects and roadway maintenance. The Prado Interchange fits the goals and objectives of this bill and could be a competitive application for grant funding. In addition to the grants above, staff will continue searching for other supplemental funding opportunities and recommend Council authorize staff to prepare and submit other State and Federal grant applications to support funding needs for this project. Background on Mid-Higuera Bypass Project and Coastal Watershed Flood Risk Reduction Grant Program The Mid-Higuera Bypass Project is located along the stretch of the San Luis Obispo Creek between Marsh Street and Madonna Road. The project will increase flood protection within the Mid-Higuera area by removing sediment from the creek, creating pathways for flood waters to return to the creek, removing barriers within the creek channel, and by creating flood bypass channels and graded benches for increased creek capacity. The project also includes the replacement of the Bianchi Lane Bridge as a creek widening component. To date, the City has been developing designs for this project through funding appropriated by the County Zone 9 Advisory Committee. Staff have begun the process of seeking supplemental funding sources to contribute to the construction of the project. This project could be competitive for the Coastal Watershed Flood Risk Reduction Grant Program. This program will fund projects in coastal areas that focus on multi-benefit flood risk reduction projects. The goal of the program is to address flood risk and public safety, enhance coastal ecosystems, including fish and wildlife habitat enhancement, and promote natural resources stewardship and public access corridors. The Mid-Higuera Bypass Project fits these grant program goals and objectives, and the City is an eligible agency to receive these funds. Item 6 Packet Page 85 In addition to the Coastal Watershed Flood Risk Reduction Grant Program, staff continue to seek supplemental funding for this project, and are recommending that Council authorize staff to prepare and submit other State and Federal grant applications to support funding needs for the Mid-Higuera Bypass Project. Policy Context Seeking alternative funding sources and applying to available grant opportunities is a theme commonly referenced throughout the City’s Housing Element. HE Goal 6 is Housing Production, which specifically states “Plan for new housing to meet the full range of community housing needs.” HE Program 6.20 states, “Continue to financially assist in the development of housing affordable to extremely-low, very-low, low or moderate income households during the planning period using State, Federal and local funding sources, with funding priority given to projects that result in the maximum housing benefits for the lowest household income levels.” Additionally, the City has made a commitment to achieving carbon neutrality by 2035 and is working on numerous initiatives including, an update to the Climate Action Plan and developing a Clean Energy Choice Program for new construction. These align with the purpose of the AHSC Program, as it is intended to help facilitate the construction of new affordable housing while providing funding for transportation improvements that encourage walking, bicycling, and transit use which ultimately reduce GHG emissions. The City’s Financial Management Manual, Section 740, requires City Council approval of all grant applications in excess of $5,000 and delegates receipt and contract execution to the City Manager if delegation is allowed by the grantor agency. In particular, section 3(d) states: “For grants in excess of $5,000, prepare a Council Agenda Report requesting authorization to seek grant funding. This report should describe the grant program's conformance with this policy, including the results of the cost/benefit analysis.” Staff finds that submittal of grant applications for Mid-Higuera Bypass Project and the Prado Road Interchange Project meets the City’s Grant Management Policy outlined in Section 740 because there is an opportunity to significantly leverage available funding on balance with only modest staff time required to prepare the grant application; the proposed grant applications would result in additional priority work efforts being implemented; and, all grant administration, tracking, and reporting will be conducted in accordance with applicable City policy and any requirements specified in an awarded grant contract. Public Engagement Although this is authorization to apply for grant funding, no public engagement is required; however, public engagement will take place as part of ongoing project work, and as required by these specific grant opportunities. For example, the AHSC Program does require a level of public engagement, which is currently being conducted by PSHHC. Public comment can also be provided to the City Council through written correspondence and public comment at the meeting. Item 6 Packet Page 86 CONCURRENCE Both Community Development and Public Works staff have been collaborating since August 2019 with PSHHC staff on putting together the AHSC grant application, as it is designed to fund affordable housing and sustainable transportation development. ENVIRONMENTAL REVIEW There is no environmental review required for grant submittals. The California Environmental Quality Act does not apply to the recommended action in this report, because the action does not constitute a “Project” under CEQA Guidelines Sec. 15378. FISCAL IMPACT Budgeted: No Budget Year: 2019-20 Funding Identified: Yes Fiscal Analysis for AHSC Program: Funding Sources Current FY Cost Annualized On-going Cost Total Project Cost General Fund State (AHSC Program Total) $3,000,000 Federal Fees Other: Total $3,000,000 If awarded, the AHSC Grant Program will provide critical funding in the amount of about $3 million for new sustainable transportation infrastructure and transportation related amenities in the Orcutt Area, as well as provide an anticipated $8 million directly to PSHHC for the construction of the affordable housing units. This funding will also reduce the barrier of PSHHC to seek additional major funding sources for the development of Tiburon Place. Currently, PSHHC anticipates financing Tiburon Place with AHSC Program Funds, City Affordable Housing Fund in-lieu fee dollars (only to fund the construction of specific units included that exceed the original inclusionary housing requirement for certain residential development tracts in the Orcutt Area), awards from the California Tax Credit Committee and the California Debt Limit Allocation Committee, and other private entities. Further, awards that are granted for the transportation components of the AHSC Application will be a bonus for the City by backfilling the portion of project costs that would otherwise require funding through the General Fund, Transit Fund or other local funding sources, allowing these limited local funds to be utilized for other high-priority investments in the community. Item 6 Packet Page 87 The Public Works Department has time allocated within its normal work program to prepare and submit grant applications for the Prado Road Interchange and Mid Higuera Bypass projects. If successful, these grant facilities could significantly leverage and augment construction funding. The award funding that could be contributed to each project from the identified grants are affected by factors including total grant program funding, competition for grant funds from other agencies, and project delivery timeframes. The following table lists the total program funding available, which would be divided into grants to awarded agencies. Grant Identified Total Grant Program Funding* Prop 1 Coastal Watershed Flood Risk Reduction Program $26 Million Infrastructure Infill Grant $194 Million SB1 LPP Competitive Grant $100 Million *Note: This is the total funding that other agencies would compete for in grant proposals. ALTERNATIVES 1. Continue the recommendations to a later meeting. This alternative is not recommended as the AHSC grant application is due on February 11, 2020, and this Implementation and Mutual Indemnity Agreement is a required attachment of the application. Additionally, the IIG, SB1, Coastal Watershed Flood Risk Reduction Grant Program grant applications are due at the end of January. 2. The City Council could choose to deny the request to participate, prepare, and/or submit grant applications. This alternative is not recommended because these grants would provide critical supplemental funding sources for projects in the City. Attachments: a - Draft Resolution - AHSC Application b - Draft Resolution - Prop 1 Grant Application c - AHSC Implementation and Mutual Indemnity Agreement Item 6 Packet Page 88 R ______ RESOLUTION NO. _____ (2020 SERIES) A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS OBISPO, CALIFORNIA: (1) AUTHORIZING THE CITY AS A PARTICIPATING ENTITY IN THE APPLICATION TO BE SUBMITTED BY PEOPLES’ SELF-HELP HOUSING CORPORATION, UNDER THE STATE OF CALIFORNIA’S AFFORDABLE HOUSING AND SUSTAINABLE COMMUNITIES PROGRAM; AND (2) TO EXECUTE CERTAIN DOCUMENTS WITH PSHHC FOR THE SUBMITTAL OF THE AHSC PROGRAM APPLICATION; IN CONNECTION WITH TIBURON PLACE, AN AFFORDABLE HOUSING PROJECT AT 3750 BULLOCK LANE IN THE CITY WHEREAS, the State of California, the Strategic Growth Council (“SGC”) and the Department of Housing and Community Development (“HCD”) issued a Notice of Funding Availability dated November 1, 2019 (the “NOFA”), under the Affordable Housing and Sustainable Communities (“AHSC”) Program established under Division 44, Part 1 of the Public Resources Code, commencing with Section 75200; and WHEREAS, Peoples’ Self-Help Housing Corporation (“PSHHC or “Lead Applicant”) desires to apply for AHSC Program funds and submit the Application Package released by HCD for the AHSC Program; and WHEREAS, the SGC is authorized to approve funding allocations for the AHSC Program, subject to the terms and conditions of the NOFA, Program guidelines, Application Package, and Standard Agreement. HCD is authorized to administer the approved funding allocations of the AHSC Program; and WHEREAS, PSHHC wishes to receive funding to assist with: (A) the construction of Tiburon Place affordable housing project in San Luis Obispo, California (“Housing Project”); (B) the construction of certain housing related infrastructure (“HRI Improvements”); (C) the construction of certain sustainable transportation infrastructure (“STI Improvements”); (D) the construction of certain transit related amenities (“TRA Improvements”); and (E) certain costs related to program service and implementation (“AHSC Programs”); and WHEREAS, PSHHC will serve as Lead Applicant of the AHSC Program and has requested the City of San Luis Obispo (“City”) to be identified in the AHSC Program Application as a “Participating Entity” in part as required through the NOFA; and WHEREAS, as required by the NOFA, the Lead Applicant and Participating Entity must execute a AHSC Implementation and Mutual Indemnity Agreement (“Agreement”), identifying understandings and intentions of the expenditure of AHSC Program Funds for the approved AHSC Program Application; and Item 6 Packet Page 89 Resolution No. _____ (2020 Series) Page 2 R ______ NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obispo as follows: SECTION 1. AHSC Program Participation. The Council hereby authorizes the City to be designated as a Participating Entity in the AHSC Program Application and authorizes City staff to work with the Lead Applicant, in order for Lead Applicant to apply for and submit to HCD the AHSC Program Application, as detailed in the NOFA, in an aggregate amount of $13,993,144, for the funding of: (A) the Housing Project; (B) the HRI Improvements; (C) the STI Improvements; (D) the TRA Improvements; and (E) the AHSC Programs. SECTION 2. Execution of Documents. The Council hereby authorizes the Community Development Director, the Public Works Director, or their designees, to execute the Agreement with PSHHC, as well as any other documents required or deemed necessary or appropriate for PSHHC to secure AHSC Program Funds from HCD, and all amendments thereto. SECTION 3. Eligible Activities. If the application for the AHSC Program is approved for funding to Lead Applicant, the City hereby agrees to work with PSHHC to expend the AHSC Program Funds for the eligible activities in the manner agreed upon in the Agreement, also presented in the AHSC Program Application as approved by HCD and in accordance with the AHSC Program guidelines as cited above. Item 6 Packet Page 90 Resolution No. _____ (2020 Series) Page 3 R ______ SECTION 4. Environmental Determination. No environmental review is required for grant submittals, per Section 15061(b)(3) General Rule of the CEQA Guidelines. It can be seen with certainty that the proposed action of PSHHC to apply for grant funding will have no significant effect on the environment. Upon motion of _______________________, seconded by _______________________, and on the following roll call vote: AYES: NOES: ABSENT: The foregoing resolution was adopted this _____ day of _____________________ 2020. ____________________________________ Mayor Heidi Harmon ATTEST: ____________________________________ Teresa Purrington City Clerk APPROVED AS TO FORM: _____________________________________ J. Christine Dietrick City Attorney IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of San Luis Obispo, California, this __________ day of ____________________________, 2020. ____________________________________ Teresa Purrington City Clerk Item 6 Packet Page 91 R ______ RESOLUTION NO. _____ (2020 SERIES) A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS OBISPO, CALIFORNIA, AUTHORIZING A PROPOSAL FOR FUNDING BE SUBMITTED TO THE DEPARTMENT OF WATER RESOURCES AND AUTHORIZING THE CITY MANAGER TO EXECUTE THE AGREEMENT AND ANY AMENDMENTS THERETO, FOR THE MID- HIGUERA BYPASS PROJECT WHEREAS, the City of San Luis Obispo (“City”) is responsible for and has authority over (e.g. flood management, ecosystem management, water quality management) in the area proposed for the Mid-Higuera Bypass Project (“Project”) and is willing to participate in, coordinate, and collaborate with other interested parties that are participating in the devel opment of the Project; and, WHEREAS, the City is authorized to submit a proposal to obtain funding for the Project from the Department of Water Resources and the State of California; and NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obispo as follows; SECTION 1. That pursuant and subject to all of the terms and conditions of the Water Quality, Supply, and Infrastructure Improvement Act of 2014 (Proposition 1; Wat. Code, § 79700 et seq.), the City shall submit a proposal to obtain funding for the Project from the Department of Water Resources. SECTION 2. That the City Council authorizes the City Manager, or designee, to execute a funding agreement with the Department of Water Resources and any amendments thereto, if funding is awarded to the City. SECTION 3. That the City Manager, or designee, shall prepare the necessary data, make investigations, and take other such actions as necessary and appropriate to execute the Mid - Higuera Bypass Project. Item 6 Packet Page 92 Resolution No. _____ (2020 Series) Page 2 R ______ SECTION 4. No environmental review is required for grant submittals, per Section 15061(b)(3) General Rule of the CEQA Guidelines. It can be seen with certainty that the proposed action of the City to apply for grant funding will have no significant effect on the environment. Upon motion of _______________________, seconded by _______________________, and on the following roll call vote: AYES: NOES: ABSENT: The foregoing resolution was adopted this _____ day of _____________________ 2020. ____________________________________ Mayor Heidi Harmon ATTEST: ____________________________________ Teresa Purrington City Clerk APPROVED AS TO FORM: _____________________________________ J. Christine Dietrick City Attorney IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of San Luis Obispo, California, this __________ day of ____________________________, 2020. ____________________________________ Teresa Purrington City Clerk Item 6 Packet Page 93 1 AHSC IMPLEMENTATION AND MUTUAL INDEMNITY AGREEMENT THIS AHSC IMPLEMENTATION AND MUTUAL INDEMNITY AGREEMENT (the “Agreement”) is made and entered into as of ________________, 2019, between the City of San Luis Obispo, a California charter city and municipal corporation (“Agency”), and Peoples’ Self- Help Housing Corporation, a California nonprofit public benefit corporation (“Developer”, and collectively with the Agency, the “Parties”, or individually, a “Party”), upon the basis of the following facts, understanding and intentions of the parties: A. The State of California, the Strategic Growth Council (“SGC”) and the Department of Housing and Community Development (“HCD”) issued a Notice of Funding Availability dated November 1, 2019 (the “AHSC NOFA”), under the Affordable Housing and Sustainable Communities (“AHSC”) Program established under Division 44, Part 1 of the Public Resources Code, commencing with Section 75200. B. Developer is applying for AHSC Funds in response to the AHSC NOFA to provide funding for (A) construction of the Tiburon Place affordable housing project in San Luis Obispo, California (the “Housing Project”); (B) the construction of certain housing related infrastructure (the “HRI Improvements”); (C) the construction of certain sustainable transportation infrastructure (the “STI Improvements”); (D) the construction of certain transit related amenities (the “TRA Improvements”); and (E) certain costs related to program service and implementation (the “AHSC Programs”). These improvements are described in more detail in the Final Application to be submitted by February 11, 2020 (collectively, the “AHSC Application”). C. The AHSC Application seeks an award to the Developer in an aggregate amount of $13,993,144 in AHSC Funds consisting of: (A) $9,795,201of AHSC loan Funds for a permanent loan (“AHSC Loan”) which will be disbursed to a limited partnership to be formed later (the “Partnership”) for construction of the Housing Project; (B) $_____________ of AHSC grant funds shall be used for the purpose of reimbursing the cost of the HRI Improvements; (C) $___________ of the AHSC grant funds for the purpose of reimbursing the cost of the STI Improvements; (D) $___________ of AHSC grant funds for the purpose of reimbursing the cost of the TRA Improvements; and (E) $______ of AHSC grant funds for reimbursing the costs of the AHSC Programs. The AHSC grants shall be referred to collectively as the “AHSC Grants”. The AHSC Loan and the AHSC Grants are collectively referred to herein as the “AHSC Financing.” D. The Agency and Developer are required to enter into this Agreement in order to comply with the specific AHSC Program Threshold Requirement stated in Section 106 (a) 11 (A) of the 2019 AHSC Program Guidelines dated October 31, 2019 (the “Transportation Agency Prior Experience Threshold Requirement”). This section of the guidelines dictates that applicants must demonstrate prior experience by providing evidence of at least two prior projects that are similar to the proposed AHSC project in scope and size, which have been completed by the applicant, or joint applicant, during the ten (10) years preceding the application due date. This section of the guidelines also states that the applicants may demonstrate the requisite experience by using the past experience of work completed of a non-applicant so long as the applicants can provide an executed agreement with that specific non-applicant for the completion of the related Item 6 Packet Page 94 2 work in the AHSC Application for which funding is sought. The purpose of this Agreement is to, amongst other things, comply with the Transportation Agency Prior Experience Threshold Requirement. E. The Agency owns the property that the Transportation Obligations will be constructed on, and thus has sufficient “site control” as that term is defined in the AHSC Program Guidelines. [modify as needed] F. The Agency is a non-applicant, but, as set forth herein, will have obligations to perform the following specific [modify as needed] STI Improvements and TRA Improvements included in the AHSC Application (collectively, the “Transit Obligations”): 1. _________________ 2. _________________ 3. _________________ G. The Agency can demonstrate prior experience and provide evidence of at least two prior projects that are similar in scope and size which have been completed during the ten (10) years preceding Jan 16, 2018. Below is a list of these projects: 1. _______________________ 2. _______________________ H. The Agency shall be responsible for developing and constructing the Transit Obligations, and for all costs expenses related thereto, and Developer shall be responsible for constructing and developing the Housing Project and the HRI Improvements (together, the “Developer Obligations”), and for all costs and expenses related thereto. In connection with the AHSC Grants and AHSC Loan, Developer is required to enter into standard agreements, disbursement agreements, and regulatory agreements with HCD where Developer will be liable for the full and timely performance by the parties to complete the obligations set forth therein, including completion of the Housing Project, completion of the HRI, STI and TRA Improvements, and funding of the AHSC Programs, as described in the AHSC Application. The AHSC Application and all standard agreements, disbursement agreements, regulatory agreements and any other agreements required by HCD in connection with the AHSC Financing shall be collectively referred to herein as the “AHSC Documents”. I. The Agency and Developer each acknowledge and agree that the inability or failure by either party to fully and timely complete each party’s respective improvements required by the AHSC Documents may affect the timing and right of the other party to receive disbursement of AHSC funds due the other party notwithstanding the other party’s full and timely performance of its obligations. NOW, THEREFORE, in consideration of the recitals, covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: Item 6 Packet Page 95 3 AGREEMENT 1. Obligations. The Agency shall, in its sole responsibility, complete the Transit Obligations in accordance with the terms of the AHSC Documents and the approved design and construction documents. The Developer shall, in its sole responsibility, complete the Developer Obligations in accordance with the terms of the AHSC Documents and the approved design and construction documents. Each Party will provide the other Party with copies of all requisitions for work related to their respective work, the notice of completion, and other documents related to their respective work that another party may reasonably request. 2. Agency Indemnity. Agency is responsible for carrying out the Transit Obligations using AHSC grant proceeds in accordance with the AHSC Documents, including, but not limited to, any disbursement deadlines contained therein. Agency shall indemnify, defend, protect, and hold harmless Developer, and its affiliates, directors, officers, partners, members, agents and employees (each, an “Developer Indemnified Party”) against any and all claims, actions, suits, causes of action, losses, liabilities, injuries, costs, damages, or expenses (collectively, “Claims”), including, without limitation, any direct, indirect or consequential loss, liability, damage, or expense, court costs and attorneys’ fees, arising out of or in connection with the Agency’s performance of or failure to perform its obligations to complete the Transit Obligations, in the manner and within the time periods, and to otherwise perform any covenants constituting Agency obligations, set forth in the AHSC Documents, including any claims, losses or liabilities of the Partnership caused by a breach or default under the AHSC Documents that triggers a default under the AHSC Loan. However, in no event shall the Developer Indemnified Party be indemnified hereunder for any Claims resulting from such party’s sole negligence or willful misconduct. Agency agrees to pay all of the Developer Indemnified Party’s costs and expenses, including attorneys’ fees, which may be incurred in any effort to enforce any term of this Agreement, including, but not limited to, all such costs and expenses which may be incurred by any Developer Indemnified Party in any legal action, reference or arbitration proceeding brought by HCD or other third party. 3. Developer Indemnity. Developer is responsible for carrying out the Developer Obligations using AHSC grant proceeds and AHSC Loan funds in accordance with the AHSC Documents, including, but not limited to, any disbursement deadlines contained. Developer shall indemnify, defend, protect, and hold harmless the Agency and its affiliates, directors, officers, partners, members, agents and employees (each, an “Agency Indemnified Party”) against any and all Claims, including, without limitation, any direct, indirect or consequential loss, liability, damage, or expense, court costs and attorneys’ fees, arising out of or in connection with Developer’s performance of or failure to perform its Developer Obligations to complete construction and development of the Housing Development, in the manner and within the time periods, and to otherwise perform any covenants, set forth in the AHSC Documents. However, in no event shall the Agency Indemnified Party be indemnified hereunder for any Claims resulting from such party’s sole negligence or willful misconduct. Developer agrees to pay all of the costs and expenses of the Agency Indemnified Party, including attorneys’ fees, which may be incurred in any effort to enforce any term of this Agreement, including, but not limited to, all such costs and expenses which may be incurred by any Agency Indemnified Party in any legal action, reference or arbitration proceeding brought by HCD or other third party. Item 6 Packet Page 96 4 4. Schedule of Performance; Progress Reports. Developer and Agency shall comply with the schedule of performance to be mutually agreed upon, as shall be set forth in the AHSC Documents, for the completion of their respective obligations hereunder (the “Schedule of Performance”). The Agency and Developer agree to give the other party a written monthly status report on the progress toward the milestones listed in the Schedule of Performance, i.e., the Developer will report on the Developer’s progress on the Housing Project, HRI Improvements and AHSC Programs, and the Agency will report on the Agency’s progress on the STI Improvements and TRA Improvements. If any Party anticipates not meeting the targeted construction and grant disbursement milestones as established in the AHSC Documents, that Party will promptly notify the other parties in writing and will meet the other Party to discuss the reasons why the milestone dates may not be met and what actions the delayed party intends to take to meet the milestones or otherwise rectify the Schedule of Performance in order to maintain good standing with the terms and conditions established in the AHSC Documents. 5. Delegation. Notwithstanding the obligations of each party under this Agreement, each party shall be entitled to enter into sub-agreements with each other or with other parties to provide any assistance or services needed for each party to perform its obligations under this Agreement and the AHSC Documents. 6. Cost Overruns. Developer shall be responsible for paying all costs required to complete the Housing Project, irrespective of whether such costs exceeds the AHSC Loan and the portion of the AHSC Grant designated for the HRI Improvements. Agency shall be responsible for paying all costs required for the Transit Obligations irrespective of whether such costs exceed the portion of the AHSC Grant designated for the Transit Obligations. 7. Developer and Partnership Step In Rights. (a) The Parties each acknowledge and agree that the inability or failure by the Agency to fully and timely complete the Transit Obligations required by the AHSC Documents may affect the timing and right of the Developer to receive disbursement of AHSC Grants or AHSC Loan funds notwithstanding the other party’s full and timely performance of its obligations. If, at any time, the Developer determines in its reasonable discretion that Agency is not, or may not, be able to comply with the Schedule of P erformance or its obligations hereunder, Developer shall have the right, but not the obligation, to step in and take over the performance of the Transit Obligations, by delivering written notice to the Agency (“Work Takeover Notice”). (b) Within five (5) business days of Developer delivering the Work Takeover Notice, Agency shall meet with Developer within fifteen (15) business days (the “Discussion Period”) to discuss the cooperative steps to be taken by each Party for Developer to complete the Transit Obligations in accordance with the Schedule of Performance. The Agency hereby acknowledges and agrees that Developer’s right to step in and take over the performance of the Transit Obligations shall be effective after the expiration of the Discussion Period, without the necessity of any further notice or action by either party. (c) If Developer takes over the performance of the Transit Obligations under this Section 7, then from and after the expiration of the Discussion Period the following provisions shall apply: Item 6 Packet Page 97 5 (i) Developer shall be entitled to prepare and submit all draw requests for AHSC Grant funds and apply such proceeds to pay invoices for such work. (ii) Developer shall be responsible for the performance and completion of the Transit Obligations in accordance with the terms of the AHSC Documents and in accordance with the Agency's requirements for public works contracts and construction. (iii) Within five (5) business days following expiration of the Discussion Period, Agency shall fully and unconditionally assign to Developer all of the Agency’s rights and benefits under the design and construction documents, any and all contracts, and any and all permits and approvals related to the Transit Obligations, and shall cooperate with commercially reasonable diligence with Developer’s efforts to complete the Transit Obligations. (iv) Within five (5) business days following expiration of the Discussion Period, Agency shall fully and unconditionally assign to Developer all of Agency’s rights and benefits with respect to any and all funds which would have been available to and used by the Agency to complete the Transit Obligations. (v) The terms of any assignment described in this Section 7(c) shall be reasonably acceptable to both Agency and Developer. The Agency shall be solely responsible for obtaining any third-party consents or approvals necessary to implement the provisions of this Section 7(c), including but not limited to approvals of architects, contractors, and funding sources. (d) The parties hereto hereby agree that the Partnership shall have the right to succeed to Developer’s rights hereunder as necessary to effectuate completion of the work under this Section 7. Under no circumstances shall such assumption by the Partnership be conditioned upon the assumption of the Partnership of any indemnification obligations contained herein, provided, however, that the Partnership will assume Developer’s indemnification obligations with respect to any subsequent breach by the Partnership under this Agreement first occurring after such assumption. 8. Disbursement of AHSC Grant Funds. Developer and Agency agree that the AHSC Grants for the Transit Obligations shall be reimbursed directly to Agency and that the AHSC Grants for the HRI Improvements shall be reimbursed directly to Developer. The parties further agree that all of the AHSC Loan funds shall be disbursed directly to the Partnership. Notwithstanding the foregoing, if required by the AHSC Documents, the Agency shall submit to Developer all draw requests for AHSC Grant funds for the costs associated with the Transit Obligations and Developer shall submit such requests to HCD and disburse to the Agency any such funds received from HCD. Agency shall apply any such proceeds received to pay the invoices submitted in connection with the draw request. 9. Implementation Agreements. In the event a grant award is received from AHSC, Developer and Agency recognize that each Party will need additional assurances from the other Parties (including assurances for the Project’s lenders and investors) regarding the specific grant Item 6 Packet Page 98 6 award before commencement of construction of the Project. The Parties agree to cooperate in amending this Agreement and/or entering into an implementation agreements or other documents necessary to provide reasonable assurances and indemnifications related to the disbursement of AHSC Grant funds. The Parties recognize that any such amendments to this Agreement or execution of additional agreements may require approval of the Agency’s Board of Directors and the Developer’s Board of Directors. 10. Notices. Formal notices, demands, and communications between the parties shall be sufficiently given if, and shall not be deemed given unless, dispatched by registered or certified mail, postage prepaid, return receipt requested, or delivered by express delivery service, return receipt requested, or delivered personally, to the principal office of the parties as follows: Agency: City of San Luis Obispo ___________________ San Luis Obispo, CA ____ Attn: Developer: Peoples’ Self-Help Housing Corporation, 3533 Empleo Street San Luis Obispo, CA 93401 Attn: Ken Trigueiro 11. Events of Default. The occurrence of any of the following events shall constitute an Event of Default under this Agreement: (a) A Party fails to perform any of its obligations under this Agreement, and does not cure such failure within 30 days after written notice of such failure has been delivered to the defaulting party in accordance with Section 3 above; or (b) A Party purports to revoke this Agreement or this Agreement becomes ineffective for any reason. 12. Termination. This Agreement shall terminate upon the earlier of: (i) completion of the all obligations under the AHSC Documents; or (ii) mutual agreement of the parties hereto. 13. Third Party Beneficiary. The Partnership shall be a third party beneficiary of this Agreement and shall be entitled to the rights and benefits hereunder and may enforce the provisions hereof as if it were a party to this Agreement. 14. Assignment. Agency hereby acknowledges and approves the assignment by Developer and the Partnership to the Housing Project’s senior lender (“Construction Lender”) of all of their respective right, title and interest in, to and under the Agreement (the “Collateral”) as collateral security for the Partnership’s obligations to Construction Lender under, and in connection with Construction Lender’s loan to the Partnership. In the event Construction Lender forecloses upon the Collateral, Agency hereby agrees that Construction Lender shall have all of Developer’s rights and interests under the Agreement. Construction Lender is hereby made an express third party beneficiary of this Section 13, and the parties hereto shall not amend, modify or terminate the Agreement without Construction Lender’s express written consent. Item 6 Packet Page 99 7 15. Miscellaneous. (a) Nothing in this Agreement shall be construed to limit any claim or right which any party may otherwise have at any time against an Indemnitor or any other person arising from any source other than this Agreement, including any claim for fraud, misrepresentation, waste, or breach of contract other than this Agreement, and any rights of contribution or indemnity under any federal or state environmental law or any other applicable law, regulation, or ordinance. (b) If any party delays in exercising or fails to exercise any right or remedy against a Party, that alone shall not be construed as a waiver of such right or remedy. All remedies of any Party against the other Party are cumulative. (c) This Agreement shall be binding upon and inure to the benefit of each of the parties hereto and their respective representatives, heirs, executor, administrators, successors, and assigns. This Agreement may not be amended except by a written instrument executed by the parties hereto. (d) This Agreement shall be deemed to have been delivered and accepted in the State of California and governed exclusively by the internal substantive laws of the State of California as the same may exist at the date hereof. The parties hereto hereby agree that any action hereon between the parties hereto and their successors in interest may be maintained in a court of competent jurisdiction located in the State of California, and consent to the jurisdiction of any such California court for the purposes connected herewith. (e) Each party hereto intends that this Agreement shall not benefit or create any right or cause of action in or on behalf of any person other than the parties hereto. (f) This Agreement may be executed in multiple counterpart copies, any one of which when duly executed, with all formalities hereof, shall be fully binding and effective as the original of this Agreement. (g) This Agreement shall be effective as of the date first written above, provided however that in the event that the parties do not receive an award of the AHSC Financing, this Agreement shall automatically terminate and be of no further force or effect. [Signatures on following page] Item 6 Packet Page 100 8 Each of the undersigned hereby executes this Agreement in the spaces provided below to evidence their respective agreement to the terms of this Agreement. Agency: By: ________________________________ Name: ________________________________ Its: ________________________________ Developer: Peoples’ Self-Help Housing Corporation, a California nonprofit public benefit corporation By: ________________________________ Name: ________________________________ Its: ________________________________ Item 6 Packet Page 101 Page intentionally left blank. Item 6 Packet Page 102