LEASE DISPOSITION AND DEVELOPMENT AGREEMENT

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2 LEASE DISPOSITION AND DEVELOPMENT AGREEMENT This Lease Disposition and Development Agreement ( Agreement ) is entered into as of the Effective Date listed on the title page of this Agreement by and between the CITY OF OAKLAND, an independent municipal corporation ( City of Oakland ( for ease of reference in the body of this Agreement only, City ), and OMSS, LLC, a California limited liability company (the Developer ), (each individually referred to as Party and collectively referred to as the Parties ). For good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the City and the Developer agree as follows: A. In 2003, in order to enable local economic redevelopment and job creation and ease the economic hardship on the local community caused by the base closure per Section 2903 of Title XXIX of Public Law , the U.S. Department of the Army ( Army ) transferred via No-Cost Economic Development Conveyance ( EDC ) certain real property (the EDC Property ) located in the City to the Oakland Base Reuse Authority ( OBRA ), a joint powers authority composed of the City and the former Redevelopment City of the City of Oakland ( Agency ) under the California Joint Exercise of Powers Act as set forth in Title 1, Division 7, Chapter 5, Article 1 of the Government Code of the State of California (Government Code 6470 et seq.) through that certain EDC Memorandum of Agreement between the Army and OBRA dated September 27, 2002 ( EDC MOA ) and by that certain Quitclaim Deed for No-Cost Economic Development Conveyance Parcel ( Army EDC Deed ), recorded August 8, 2003, as Document No in the Official Records of Alameda County ( Official Records ). Immediately thereafter, OBRA transferred portions of the EDC Property to the Port of Oakland ( Port ), such that the Port now owns approximately 241 acres of the EDC Property (the Port Development Area ) and OBRA retained approximately 170 acres of the EDC Property (the Gateway Development Area ). B. Pursuant to the Oakland Army Base Title Settlement and Exchange Agreement dated June 30, 2006 by and between the State of California, acting by and through the State Lands Commission ( SLC ), the City, the Port, OBRA and the Agency ( Exchange Agreement ), there was an exchange of public trust lands such that the public trust was terminated on all of the EDC Property then owned by OBRA (see State of California Patent and Trust Termination recorded in the Official Records on August 7, 2006, as Document No ), except on one, approximately 16.7-acre parcel conveyed from the SLC to the Agency by State of California Patent and Trust Termination recorded in the Official Records on August 7, 2006, as Document No ( Parcel E ). Parcel E was transferred to the Agency pursuant to the Exchange Agreement. C. Also in 2006 and 2007, the portions of the EDC Property owned by OBRA that were not subject to the public trust were conveyed by OBRA to the Agency by the following Quitclaim Deeds recorded in the Official Records on September 19, 2006 as Documents 1

3 Numbers and and on May 17, 2007 as Document Number D. On March 3, 2011, the Agency and the City entered into a Purchase and Sale Agreement, approved by City Council Ordinance No C.M.S. and Agency Resolution No C.M.S. (the Agency-City PSA ), whereby the Agency agreed to sell and convey, inter alia, the Agency-owned portions of the EDC Property, excepting Parcel E, to the City under its own auspices, and the City agreed to accept assignment of all agreements related to such property (the EDC Property Agreements ). The EDC Property Agreements include, but are not necessarily limited to, the agreements set forth in Attachments 12A, 12B and 13. E. On June 29, 2011, the California Legislature passed, and Governor Jerry Brown signed, Assembly Bill 1x26, and on June 27, 2012, the Governor also signed Assembly Bill 1484, which amended Assembly Bill 1x26, which require the dissolution of all redevelopment agencies (collectively, AB 26 ). F. On January 10, 2012, the City Council passed Resolution No C.M.S., electing to serve as the successor to the Agency ( Successor Agency ) pursuant to AB 26. G. On January 31, 2012, the City closed escrow under the Agency-City PSA and took title to the Agency-owned portions of the EDC Property (excluding Parcel E) pursuant to the grant deed recorded January 31, 2012 as Document No in the Official Records and assumed all of the Agency s rights and obligations under the EDC Property Agreements with respect to such property. H. The EDC Property is also subject to the terms and conditions of that certain Consent Agreement between the City and the Department of Toxic Substances Control ( DTSC ), dated September 27, 2002, as revised on May 19, 2003 and amended on May 2, 2005 and September 8, 2008 ( Consent Agreement ). I. To guide redevelopment of the EDC Property, the City adopted the Oakland Army Base Area Redevelopment Plan in 2000, as most recently amended and restated March 21, 2006 per City Ordinance No C.M.S., and adopted the Base Reuse Plan in 2002 and amended by City Council Resolution No C.M.S. on June 19, 2012, which plans affect and control the development of the EDC Property. J. In addition, the San Francisco Bay Conservation and Development Commission ( BCDC ) requires the City to maintain 15 acres of the Gateway Development Area for ancillary maritime support ( AMS ) uses. AMS is a category of industry that includes trucking and other uses, such as trade and logistics, and warehousing that support maritime operations. BCDC designated a 15-acre parcel in the East Gateway Area of the Gateway Development Area as a Port Priority Use Area for the purpose of fulfilling the requirement. BCDC consent is necessary to move the designation of the AMS uses to AMS Site (hereinafter defined). K. On June 22, 2007, the City issued a request for proposals ( RFP ) seeking proposals for a project to be located on the 15-acre parcel in the East Gateway Area. The City s goals 2

4 for the project included: (1) retention and creation of high quality jobs in trucking, logistics, and/or other related sectors; (2) support for the modernization and expansion of the Port of Oakland; and (3) relocation of existing trucking uses out of residential areas to improve the quality of life for West Oakland residents. L. The City received seven proposals in response to the RFP, including one from the Developer to develop a multi-use AMS facility in the East Gateway Area (the Developer s Proposal ). After a review and interview process, the City determined that the Developer s proposal was the most responsive and would satisfy: (1) BCDC objectives for the Gateway Development Area, and (2) the City s objectives set forth in Recital K above, and the City selected the Developer to negotiate with regarding the development of the AMS facility. M. The City and Developer entered into an Exclusive Negotiating Agreement ( ENA ) on November 7, 2007, a first amendment thereto on August 8, 2008, extending the term of the ENA to February 28, 2009, and a second amendment thereto on February 28, 2009 extending the ENA term to the earlier of: (1) February 28, 2011; or (2) the resolution of a lawsuit brought by East Bay Municipal Utility District (EBMUD) against the City regarding the City s certification of a Supplemental Environmental Impact Report ( SEIR ) and adoption of an Addendum for the former Oakland Army Base, specifically with respect to the use of a 15-inch sewer line (the CEQA Litigation ). Collectively, the ENA, together with its amendments, shall collectively be referred to as the OMSS ENA. N. During the OMSS ENA period, City staff and Developer evaluated the design and financial feasibility of a proposed AMS project, which would include tractor and trailer parking, container storage, office space, fueling stations, project-serving retail including a food court, and truck maintenance (the Initial Project ) on the 15-acre parcel in the East Gateway Area ( East Gateway Parcel ). City staff and Developer arrived at a general agreement on terms for the development of the Initial Project in the East Gateway which City staff intended to present to the City of Oakland City Council for its approval, in its sole and absolute discretion. O. In 2008, the City issued a request for qualifications to identify potential master development teams for redevelopment of certain portions of the Gateway Development Area, generally consisting of the West Gateway, Central Gateway, and East Gateway exclusive of the 15 acres designated for AMS uses, and selected Prologis, L.P. ( Prologis ) (then named AMB Property, L.P.), and CCIG Oakland Global, LLC ( CCIG ) (successor-in-interest to California Capital Group) to negotiate with regarding development on portions of the Gateway Development Area. Prologis and CCIG are the joint venture members of Prologis CCIG Oakland Global, LLC, the entity that would become the master developer of the above-described property ( Master Developer ). P. The City and Prologis/CCIG entered into an Exclusive Negotiating Agreement on January 22, 2010, and executed a first amendment thereto on August 10, 2010, a second amendment thereto on April 11, 2011, and a third amendment thereto on May 28, The City/Prologis/CCIG Exclusive Negotiating Agreement, along with its amendments, shall collectively be referred to herein as the Master Developer ENA. 3

5 Q. Pursuant to the Master Developer ENA, CCIG agreed to prepare a master plan for the projects under consideration by the City and the Port in the EDC Property, including the development contemplated by the Developer and related public improvements, which resulted in the preparation of that certain Oakland Army Base Master Plan Design Set, dated April 2, 2012, prepared by Architecture Dimensions Master Design Team ( Master Plan ). R. On March 23, 2009, the Superior Court of California ordered the City to set aside its certification of those portions of the SEIR and Addendum specific to the sewer line, which prevented development of the Gateway Development Area, including development of the project proposed by Developer, and on February 28, 2011, the OMSS ENA expired. However, the Parties continued discussions on a nonexclusive basis for an alternative site that resulted in the negotiation and execution of this Agreement. S. The Master Plan, among other things, identifies the public infrastructure the City currently intends to undertake for the EDC Property pursuant to the Master Developer LDDA. Such public infrastructure includes the public improvements necessary for development of the Project (hereinafter defined) that are summarized for the purposes of this Agreement in Attachment 3, Scope of Development for the OMSS Public Improvements ( OMSS Public Improvements ). T. The Master Plan also identifies for AMS uses an approximately seventeen (17)-acre portion of the EDC Property located within the North Gateway and Central Gateway of the Gateway Development Area near the intersection of Maritime Street and West Grand Avenue, as described in Attachment 1 and attached hereto (the AMS Site ). The notices, use restrictions and restrictive covenants set forth in the EDC Property Agreements also apply to the AMS Site. U. The City desires to ground lease to Developer the approximately seventeen (17)-acre AMS Site, hereinafter referred to as the Lease Property or Project Site for the same uses as the Initial Project, but relocated to the Project Site (the Project ). The Lease Property is being leased for purposes of developing the AMS Site, as defined in the Scope of Development attached as Attachment 4, and operating the Project as provided in the Ground Lease. The Lease Property consists of approximately 15 acres owned in fee by the City and approximately 2 acres ( Easement Area ) to which the City owns easement rights ( Easement Rights ). That portion of the Lease Property that consists of the City s interests in the Easement Rights is subject to the terms and conditions of: (1) the Quitclaim Deed from the Federal Highway Administration (FHWA) in favor of the State of California, Department of Transportation (CalTrans), dated February 11, 2002, and recorded on February 13, 2002, in Official Records as Document No (FHWA Deed), a copy of which is attached hereto as Attachment 20; and (2) the Easement granted by CalTrans to OBRA, dated April 22, 2005, and recorded on April 29, 2005, in Official Records as Document No (the CalTrans Easement ), a copy of which is attached hereto as Attachment 19. V. City and Developer desire to provide community benefits through this Agreement and have negotiated a plan that commits to, among other things, creating jobs and training 4

6 opportunities for the local community. To that end, the plan includes negotiated employment policies and procedures specific to the Project. The policies related to Private Improvements construction and operations jobs create obligations that otherwise would not be applicable through the City s social justice policies. The other community benefits provided in the plan include funding, implementation of the City s social justice policies, adoption of environmental and green development measures, and other important community benefits. The community benefits ( Community Benefits ) are as set forth in Article IV. W. The City has found that the Project will implement the goals and objectives of the Oakland Army Base Area Redevelopment Plan and the Reuse Plan. X. The City has conducted all required hearings on the Project and has by City Council Resolution No C.M.S. adopted on June 19, 2012 fully analyzed all potentially significant environmental effects in compliance with the CEQA and the CEQA Guidelines, as more fully described in the 2002 Oakland Army Base Redevelopment Plan Environmental Impact Report ( EIR ) and the 2012 Oakland Army Base Project Initial Study/Addendum ( EIR Addendum ). Y. City staff brought the proposed real estate terms of the LDDA and Ground Lease before the City Council, and on December 3, 2013, by way of Ordinance C.M.S., the City Council authorized staff to negotiate and execute an LDDA and Ground Lease with OMSS in accordance with the terms set forth in the Ordinance. The City Council, by Ordinance No C.M.S., amended the terms of Ordinance to modify certain terms regarding a guaranty and an exclusive right to sell fuel to trucks. The actions contemplated in this Agreement are authorized by City Ordinance No C.M.S., and City Ordinance No C.M.S. (collectively Ordinance ). NOW, THEREFORE, in consideration of the foregoing recitals and the covenants and mutual obligations contained in this Agreement, and in reliance on the Developer s representations and warranties set forth herein, the City and Developer agree as follows: 1.1 Effective Date and Term. ARTICLE I GENERAL Effective Date. This Agreement shall become effective as of the last to occur of the following (the Effective Date ): (1) the Ordinance is effective, (2) each of the Parties has duly executed and delivered this Agreement to the other Party, (3) the Memorandum of LDDA has been recorded in the Official Records pursuant to Section 1.5. The Effective Date will be inserted by the City on the cover page of this Agreement; provided, however, no failure to do so by the City shall in anyway invalidate this Agreement. The Title Company shall be instructed by the Parties, and in accordance with those instructions shall, (i) insert the Effective Date in the appropriate place in the Memorandum of LDDA and (ii) to record the Memorandum of LDDA in accordance with Section

7 1.1.2 Term. The term of this Agreement (the Term ) shall be from the Effective Date until the Close of Escrow on the Ground Lease, unless this Agreement is earlier terminated in accordance with its provisions. Upon termination of this Agreement, the Parties agree to promptly execute and record a memorandum of termination in form reasonably acceptable to the Parties. 1.2 Definitions. Initially capitalized terms used in this Agreement are defined in ARTICLE XIV or have the meanings given them when first defined. 1.3 Relationship of Agreement to the Ground Lease. This Agreement addresses, among other matters, the delivery of the Property to Developer under the Ground Lease (Attachment 5), the scope of Developer's obligations to design and construct the Private Improvements (Attachment 4) and obtain project approvals hereunder, the Schedule of Performance (Attachment 6) and the Completion Guaranty (Attachment 7) for those obligations, Developer's compliance with specified City programs, the scope of the City s obligations for the OMSS Public Improvements and any pre-closing environmental remediation, and the financing for construction of the Project by Developer. If the conditions for the Close of Escrow, as set forth in ARTICLE VIII of this Agreement are satisfied, then the City will lease the Lease Property to Developer, and Developer will lease the Lease Property from the City under the Ground Lease. This Agreement and the Ground Lease establish the rights and obligations of the Parties. The Ground Lease and this Agreement will both govern the rights and obligations of the Parties until the Certificate of Completion has been issued under Section In the event of any inconsistency between this Agreement and the Ground Lease before issuance of the Certificate of Completion, this Agreement will control as to issues of development and construction, and the Ground Lease will control as to issues of payment of Rent and the Parties' rights and obligations as landlord and tenant under the Ground Lease. From and after the issuance of the Certificate of Completion, the Ground Lease shall exclusively govern the rights and obligations of the Parties with respect to the Lease Property, except where this Agreement explicitly provides that certain provisions shall survive the termination hereof. If at the time the Certificate of Completion is issued, there exist any Deferred Items, Developer shall be responsible under the Ground Lease for completing such Deferred Items in a timely manner and in accordance with Section 9.21(b) of this Agreement. Within thirty (30) days of the City's determination that Developer has completed the Deferred Items, the City shall provide Developer with written acknowledgment of Developer's compliance with its obligations to complete such Deferred Items. 1.4 Security Deposit Amount and Form. Developer s obligations under this Agreement shall be secured by a FIFTY THOUSAND DOLLARS ($50,000) cash security deposit (the Security Deposit ), which shall be deposited into an escrow account ( Escrow ) with the Title Company ( Escrow Agent ) as follows: (i) TEN THOUSAND DOLLARS ($10,000) on execution of this Agreement; and (ii) FORTY THOUSAND DOLLARS ($40,000) within thirty (30) days of 6

8 Developer s receipt of the six (6) months Notice of Completion referenced in Section 3.4. Concurrently with Developer's payment of any portion of the Security Deposit into Escrow, the Parties shall execute, deliver and cause the Escrow Agent to countersign, the Escrow Agreement containing escrow instructions in substantially the form approved by both Parties. The Parties acknowledge and agree that any unapplied Security Deposit shall be credited against the security deposit required under the Ground Lease Disbursement of the Security Deposit Upon Termination/Expiration. If this Agreement terminates or expires prior to the Close of Escrow, the Security Deposit shall be disbursed as follows: (i) if this Agreement is terminated due to Developer s default hereunder (after application of the applicable notice and cure periods), the provisions of Section 12.2 shall apply; and (ii) in all other events, the Security Deposit shall be returned to Developer. 1.5 Recordation of Memorandum of LDDA. Concurrently with the execution and delivery of this Agreement, the Parties shall: (a) execute and cause to be notarized the Memorandum of Lease Disposition and Development Agreement in the form attached hereto as Attachment 8 ( Memorandum of LDDA ); and (b) deliver the Memorandum of LDDA to the Title Company for recordation in the Official Records by the City within the time set for on the Schedule of Performance. ARTICLE II THIRD PARTY COORDINATION; BILLBOARD EASEMENTS 2.1 Cooperation by the Parties. The Parties acknowledge that the Project requires a number of discretionary approvals and agreements with non-city governmental entities and other third parties which have a material effect on Project feasibility, the Schedule of Performance, and the implementation of this Agreement. Therefore, the Parties agree to communicate regularly and to cooperate in good faith to implement the Project and this Agreement. The Parties obligation to cooperate in good faith shall include, but not be limited to, meeting and conferring as necessary, joint invitations to and attendance at meetings, copies of correspondence, execution of the mutually agreeable forms of the agreements provided in Section 2.2, below, and execution of mutually acceptable applications as owner and applicant where necessary and appropriate to implement the Project and this Agreement. 2.2 Third Parties Agreements, Approvals and Permits. 7

9 City shall reasonably cooperate with Developer in its pursuit of third party permits and approvals related to the Project; provided that City shall not be required to expend any out-ofpocket costs except for reasonable amounts of staff time. Developer, at its option, shall have the right to communicate directly with CalTrans or FHWA regarding the City conditions to close escrow under Section , provided that Developer shall keep the City informed about the status of such communications. 2.3 Billboard Access Agreement. City has previously executed a Billboard Franchise and Lease Agreement between the City and the Master Developer, dated October 23, 2012, and consented to a Billboard Sublease Agreement between the Master Developer and Foster Interstate Media, Inc., dated October 23, 2012 (collectively Billboard Agreements ), copies of which have been made available to the Developer. The Billboard Agreements allow construction and operation of certain billboard advertising structures on the EDC Property, including one (1) billboard site located outside the boundaries of, but surrounded by, the Lease Property (the Billboard Site ). The Billboard Agreements also designate Access Areas across which the billboard operators will have access to the structures, including an Access Area across the Lease Property for various purposes described in the Billboard Agreements. By no later than the close of escrow, the City will have recorded against the Lease Property an agreement (which may be in the form of an easement agreement or similar agreement) providing access to the Billboard Site for the purposes described in the Billboard Agreements ( Billboard Access Agreement ). Developer shall have the right to approve the Billboard Access Agreement under Section as a condition to its obligation to close escrow. If the Developer approves or waives its condition regarding the Billboard Access Agreement and the parties proceed to close escrow, the Billboard Access Agreement shall be a Permitted Exception under Section 8.10 hereof. ARTICLE III DEVELOPMENT OF THE PUBLIC IMPROVEMENTS 3.1 Scope of the City s Construction Obligation. To facilitate the Project, City is required to cause construction of the OMSS Public Improvements as specifically set forth in Attachment 3 Scope of Development for the OMSS Public Improvements. 3.2 Funding of OMSS Public Improvements. Except for its obligations under the SCA/MMRP set forth in Attachments 15A and 15B, any monetary obligations under the Special District, and subject to the terms of Section 7.3.4, below, the Parties agree that Developer shall not be required to contribute any funds for the Completion of the OMSS Public Improvements. Developer s obligation for Fair Share in Attachment 15B shall be a Fair Share Contribution to the cost of standard conditions and/or mitigations. The Developer shall pay its Fair Share Contribution at the earlier of: (i) the date specified in Attachment 15A or 15B, or (ii) if not specified, prior to the issuance of a Certificate 8

10 of Occupancy or its equivalent. Developer s Fair Share Contribution for Transportation-Related standard conditions and/or mitigations shall be based on the following formula Fair Share Transportation Formula (use am and pm peaks): Project Generated Traffic/[Future Baseline + Project] Existing = Fair Share % Illustrative Example: Existing traffic is 200 am peak trips Project generates 100 am peak trips in traffic w/ project is 400 am peak trips Thus, 100/200 ( ) = 50% is Project s Fair Share for am peak trips Developer s obligation to pay its Fair Share Contribution shall survive any termination of this Agreement. 3.3 Scheduling. Within thirty (30) days of the Effective Date, the City shall provide Developer with a schedule for the Completion of the OMSS Public Improvements ( OMSS Public Improvements Schedule ), as set forth in the schedule of performance for the Project ( Schedule of Performance ) attached hereto as Attachment 6. The City can modify the OMSS Public Improvements Schedule reasonably and in good faith to reflect then-current progress and/or delay in delivery of the overall public infrastructure for the EDC Property under the Master Developer LDDA, or delay in the OMSS Public Improvements, including completion of Remediation Obligations per Article VII, below. Consistent with Section 2.1, the City shall provide Developer with periodic updates on the status of the OMSS Public Improvements construction including, at Developer s request, a reasonable number of periodic meetings to discuss such status. In the event of a significant anticipated delay, the City and Developer shall meet and confer to discuss efforts to minimize the delay to the schedule for delivery of the Lease Property. 3.4 Notices of Completion. Subject to Article VII, below, the City shall provide the Developer with a written notice of the anticipated Completion of the OMSS Public Improvements ( Notice of Completion of OMSS Public Improvements ) at the following times: (a) least six (6) months prior to Completion, (b) ninety (90) days prior to Completion and (c) thirty (30) days prior to Completion. As used in this Section 3.4, the term Completion shall mean that the OMSS Public Improvements have been constructed pursuant to the plans and specifications approved by the City. 3.5 Formation of Special District. The City intends to form a Special District on the Gateway Development Area, including the Lease Property, that shall be responsible for maintaining, operating, repairing, and replacing that portion of the OMSS Public Improvements to be owned and/or otherwise maintained by the City. Developer acknowledges that: (1) by this Agreement, the City has notified Developer of its intent to create the Special District; (2) by executing the Ground Lease on Close of Escrow, it 9

11 will have agreed to pay any special taxes, assessments, or other fees imposed by the Special District on Developer s interest as Tenant under the Ground Lease (collectively CFD Assessments ); and (3) the CFD Assessments will be levied on a pro-rata basis based on acreage; provided that the City retains the right to adopt a different basis for any CDF Assessment if Developer significantly changes the Project configuration. ARTICLE IV COMMUNITY BENEFITS 4.1 Community Benefits Requirements. As part of the consideration for the rights received under this Agreement, the Developer hereby agrees to comply with the community benefits requirements as described in this Article IV. 4.2 Construction Jobs Policy. Developer shall include the Construction Jobs Policy, attached as Attachment 9A, as a material term of all contracts under which Private Improvements (as that term is defined in the Construction Jobs Policy) may occur, and shall itself comply with terms of the Construction Jobs Policy. 4.3 Operations Jobs Policy. Developer shall ensure that any contract under which an On-Site Job (as defined in the Operations Jobs Policy, attached as Attachment 9B) may be performed includes the Operations Jobs Policy as a material term of the contract in question, and shall itself comply with the Operations Jobs Policy. 4.4 West Oakland Community Fund Contribution. On Close of Escrow, the Developer shall pay a contribution of $16,000 per net developable acre to the West Oakland Community Fund Additional Funding. Developer shall commit a portion of revenues to the West Oakland Community Fund, on the terms set forth in the Ground Lease 4.5 Resource Center Funding. Developer shall commit a portion of revenues to the West Oakland Job Resource Center, on the terms set forth in the Ground Lease. 4.6 Environmental. 10

12 4.6.1 Developer shall make a good faith effort to show conformance with the applicable sections of the City s Energy Climate Action Plan, as adopted December 4, Developer shall comply with CEQA Standard Conditions of Approval and Mitigation Monitoring and Reporting Program, attached as Attachment 15A. Such measures include those set forth in the City Council Areas of Agreement, including measures to address noise limits, dust control, hazardous materials removal, storm water plan, use of permeable pavers where feasible, use deconstruction rather than demolition where possible, prepare a GHG Reduction Plan and maximize the use of green energy (solar, wind, other) where possible, further water conservation through use of rain barrels and gray water technology where possible, ensure that truck-related construction routes are directed away from residents, provide public or private transit connection for construction workers (connecting to BART and at least two West Oakland locations), and provide public notification of project status (updated at least monthly and posted online and at the West Oakland Public Library). More feasible and/or cost effective measures may be considered by the Parties so long as those measures meet CEQA requirements and do not themselves cause any potentially significant effect on the environment, as determined by the City. 4.7 Equal Benefits Ordinance. Developer shall comply, and require all employers within the Project to comply, with responsibilities of Contractors as described in the City Equal Benefits Ordinance (Council Ordinance No , 12/18/01), except where such application would be inconsistent with the terms or conditions of a grant or a contract with an agency of the United States or the State of California. 4.8 Award of Service Contracts and Supply Contracts. When Developer awards a contract for services to be performed on the Project Site, or supplies to be delivered to the Project Site, each in amount of at least $75,000, Developer shall make good faith efforts to award the contract to a Local Business Enterprise, Small Local Business Enterprise, or Very Small Local Business Enterprise, certified as such by the City pursuant to its Local and Small Local Business Enterprise (L/SLBE) Program. For purposes of this section, good faith efforts include: (1) at least two weeks before award of the contract in question, providing notification of the contracting opportunity, and the procedure for bidding on the contract, to the City s Contract Compliance office, or other outreach resource as directed by the City; (2) at least two weeks before award of the contract in question, advertising the opportunity to bid in a local publication designated by the City; (3) where feasible, breaking down the contract into smaller contracts where doing so would not increase the total cost of the contract by more than 10%; and (4) promptly providing certified local businesses with complete information about the prospective contract and bidding procedures. Within five days after the award of any contract covered by this section, Developer shall provide to the City s Contract Compliance office the following information: the name, address, and 11

13 telephone number of the business to whom the contract was awarded, whether that business is a certified local business, and the projected dollar amount of the contract. Requirements of this Section 4.8 shall not apply to award of contracts for which Developer reasonably believes that application of this section will interfere with a pressing business interest related to timing of contract award or safety of goods or persons. 4.9 Implementation Through Relevant Contracts. Where this Article IV requires the Developer to impose responsibilities on entities that are not parties to this Agreement, Developer shall ensure that relevant contracts: (i) impose such responsibilities on such entities; (ii) require such entities to impose such responsibilities on subcontractors or other parties involved in the Project pursuant to the contract in question; (iii) require all entities with such responsibilities to provide to the City upon request any information necessary to determine compliance with such responsibilities. ARTICLE V OAKLAND ARMY BASE ENVIRONMENTAL REVIEW FUNDING The City, through its predecessor in interest, the City contemplated the redevelopment of a portion of the former OARB, including (inter alia) the City's remediation of Hazardous Materials, development of the public infrastructure, and the construction and operation of projects by the Master Developer, the Developer and other approved uses. The public infrastructure and private developments constitute the Army Base Project. To effectuate the Army Base Project, the City Council adopted the 2012 Oakland Army Base Project Initial Study/Addendum, the Environmental Document. 5.1 Funding of Environmental Document Preparation Costs. Upon execution of this Agreement, Developer shall pay its fair share of Environmental Document Preparation Costs that the Parties agree is $21, Future Environmental Review Subject to Section 5.1 hereof, Developer shall not be responsible for any future CEQA work required by its Project unless supplemental CEQA review is required by law. ARTICLE VI ARTICLE VII ARTICLE VIII INDEMNITY 8.1 Developer Indemnity Regarding City Approvals. 12

14 To the maximum extent permitted by law, Developer shall defend (with counsel acceptable to the City), indemnify, and hold harmless the City, the Oakland City Council, the Oakland Planning Commission, the Oakland Redevelopment Successor Agency, and their respective agents, officers, employees and volunteers (hereafter collectively called City Parties ) from any liability, damages, claim, judgment, loss (direct or indirect) action, causes of action, or proceeding (including legal costs, attorneys fees, expert witnesses or consultant fees, City Attorneys or staff time, expenses or costs) (Collectively called Action ) against the City to attack, set aside, void or annul this Agreement or any City approvals approved concurrently herewith or any subsequent approval or the implementation of the same. The City may elect, in its sole discretion, to participate in the defense of said Action and Developer shall reimburse the City for its reasonable legal costs and attorneys fees. Within ten (10) calendar days of the filing of any Action as specified in the preceding paragraph, Developer shall execute a Joint Defense Letter Agreement with the City, acceptable to the Office of the City Attorney, which memorializes the above obligations. These obligations and the Joint Defense Letter of Agreement shall survive termination, extinguishment, or invalidation of the City approval or any subsequent approval requested by Developer. Failure to timely execute the Letter Agreement does not relieve the Developer of any obligations contained in this Section or other requirements or Conditions of Approval for the Project that may be imposed by the City. ARTICLE IX REMEDIATION 9.1 City s Disclosure. The City hereby makes the following disclosures to the Developer: Presence of Hazardous Materials. Hazardous Materials exist in soil and groundwater at, on and under portions of the Lease Property and in buildings currently existing on the Lease Property. The City has provided Developer with a reference index of environmental assessment reports pertaining to the Gateway Development Area, the current version of which is attached as Attachment 10. The City shall continue to make available to the Developer for review and copying complete copies of all listed documents at the City s document repository of OARB environmental reports located at 250 Frank Ogawa Plaza, 3 rd Floor, Dimond Room, Oakland, California. The City shall make access available at all reasonable times through the last day before Close of Escrow. The City shall promptly update Attachment 10 upon written request from Developer. In addition, if the City becomes aware of any material information relating to environmental conditions at, on, under or emanating from the Lease Property, including, without limitation, the presence of Hazardous Materials, the City shall so inform Developer and provide Developer with a copy of such information no later than ten (10) business days following the City s discovery of the information. The Port may have additional documents pertaining to the Gateway Development Area that are not identified in Attachment

15 9.1.2 HSC Notice of Release. This Agreement, which has been executed pursuant to a public ordinance, was properly circulated in accordance with applicable Laws and City procedures and does not become effective until at least thirty (30) days after the first reading at a properly noticed meeting of the City Council. This Agreement provides the thirty (30) day written notice that there has been a release of hazardous materials on or beneath the Lease Property pursuant to Health and Safety Code section , as required in the Covenant, defined in Section , below Environmental Remediation Requirements. As noted in Recital A, the EDC Property was transferred to the City through the City s predecessor in interest, OBRA, from the Army in 2003 pursuant to the EDC MOA. The EDC MOA required the City to complete environmental services (including investigation, remediation and related document preparation activities) for the EDC Property as set forth in the Environmental Services Cooperative Agreement dated May 16, 2003 ( ESCA ). Pursuant to the ESCA, the City, through its predecessor in interest, OBRA, contractually assumed the Army s remediation responsibilities (except in limited circumstances specifically identified in the ESCA) and agreed to remediate the EDC Property so that the Army could obtain its CERCLA covenant certifying completion of remediation, as required by federal law. In the ESCA, the City committed to complete the environmental response activities set forth in the DTSC Consent Agreement described in Recital H, and the associated Remedial Action Plan ( RAP ) and Risk Management Plan ( RMP ), each dated September 27, 2002, with the RAP amended on July 29, 2004 and December 2006 (collectively, the RAP/RMP ), in order to achieve regulatory closure. The agreement by the City to assume remediation obligations was endorsed by Governor Gray Davis in the Governor s August 6, 2003 approval of the Army s Finding of Suitability for Early Transfer ( FOSET ). To approve the FOSET and meet the terms of the Consent Agreement, the City established a separate account (the Remediation Fund ), which was jointly established with the Port and set aside eleven million and four hundred thousand ($11,400,000) for the sole purpose of paying for remediation costs on the EDC Property. As of June 30, 2014, the City and the Port have expended approximately $7, 610,000 from the Remediation Fund. Finally, the EDC Property is also subject to the Regional Water Quality Control Board Order No. R dated November 5, 2004 ( RWQCB Order ) City/Port ARMOA. Because the City and Port each own portions of the EDC Property, the City and Port contractually allocated responsibility for cleanup of the EDC Property pursuant to the terms of that certain Amended and Restated Memorandum of Agreement dated February 27, 2008 ( City/Port ARMOA ), which agreement requires the City and Port to coordinate on (a) all remediation work plans and schedules under the Consent Agreement and RAP/RMP, and (b) payments to and from the Remediation Fund. The City and the Port are reimbursed from the Remediation Fund on a first-come-first-serve basis for qualified invoices for Remediation The Consent Agreement, RAP/RMP, RWQCB Order, Covenant and Army EDC Deed. The Consent Agreement, RAP/RMP and RWQCB Order contain controlling environmental requirements and standards for Remediation of Hazardous Materials at the EDC Property and are included as Attachments 11A, B and C, respectively. The Consent Agreement specifically sets forth the scope and schedule of work to be completed to remediate environmental hazards on the EDC Property. The RAP and RMP identify the priority 14

16 remediation sites ( RAP Sites ) at the former Oakland Army Base and establish the cleanup goals for the entire EDC Property. The RMP sets forth the risk management protocols and the procedures for addressing environmental conditions at the EDC Property, including the presence and potential presence of Hazardous Materials, as they are identified. The RWQCB Order specifies the cleanup requirements for petroleum impacted soil and groundwater on the EDC Property. The Consent Agreement includes a Covenant to Restrict Use of the Property ( Covenant ), which prohibits certain sensitive land uses, requires notice of a release of Hazardous Materials to future owners or lessees of the land, requires an annual certification be submitted to DTSC attesting to compliance with the Covenant and reserves DTSC s right of access to the EDC Property. The Army EDC Deed, described in Recital A, also incorporates the Covenant, requires that the City provide written notice to the Army of any noncompliance with the Covenant and requires that the Army be provided with a right of access to the EDC Property for purposes of environmental investigation, remediation or other corrective action, if and to the extent required. For purposes of this Agreement, DTSC, the RWQCB and the Army are collectively referred to as the Resource Agencies and the documents identified in this section, together with any other requirements of the applicable Hazardous Materials Laws, are collectively referred to as the Environmental Remediation Requirements Notice of Restrictions in the Covenant and EDC Deed. The Covenant required by DTSC as part of the Consent Agreement provides that all of the environmental restrictions set forth in the Covenant shall be included in any transfer of the EDC Property or any interest therein. The Covenant is provided in full in Attachment 12A. Further, the Army EDC Deed provides that all of the environmental protection provisions of the Army EDC Deed shall be included either verbatim or by reference into any transfer of the EDC Property or any interest therein. The Army EDC Deed is provided in full in Attachment 12B. Required notices and copies of the Covenant and Army EDC Deed shall also be provided in all relevant agreements flowing from this Agreement, including the Ground Lease and any subsequent subleases. Developer covenants that it will include or reference the Covenant and Army EDC Deed in each of its future leases and/or subleases. 9.2 Pre-Close of Escrow City Responsibility for Environmental Remediation. With respect to the Lease Property, the City shall be responsible (except to the extent Developer or its contractors or employees cause or contribute to such a condition) for Remediation obligations at the Lease Property as set forth below ("Pre-Closing Remediation Obligations"); except that the City shall not be responsible for Remediation obligations retained by the Army pursuant to the EDC MOA and the ESCA (collectively, Army Retained Conditions ). All Pre-Closing Remediation Obligations shall be conducted in accordance with the Environmental Remediation Requirements and the coordination procedures and limitations set forth in Section RAP Sites. The City shall be responsible for all Hazardous Materials and Remediation at RAP Sites. The City has completed all required work plans and received Remediation Certification Letters for RAP Sites on the Lease Property OMSS Public Improvements. The City shall be responsible for all demolition and Hazardous Materials and Remediation identified during, required by or otherwise associated 15

17 with, construction and/or completion of the OMSS Public Improvements, including conditions identified during environmental investigation(s) conducted in advance of or as part of the OMSS Public Improvements and Remediation required during the course of the construction thereof Pre-Closing Inspection Items. Developer may, at its discretion, its own cost and in accordance with the requirements and procedures in this section, conduct environmental testing on portions of the Lease Property proposed for Private Improvements subsurface utilities or foundations to confirm the presence or absence of additional conditions that may require Remediation pursuant to the RAP/RMP ( Pre-Closing Environmental Inspection ). Subject to the procedures in Section and limitation in Section 7.3.4, below, the City shall be responsible for all such Hazardous Materials and Remediation found during such Pre-Closing Environmental Inspection Developer shall perform such work at its own cost and expense pursuant to the Right of Entry attached to this Agreement as Attachment 14 and in accordance with the coordination procedures set forth in Section 7.3, below Within one hundred and twenty (120) days following the Effective Date, the City shall provide the City's plan for grading the Lease Property, as determined by the City in setting the OMSS Public Improvements Schedule under Section Within thirty (30) days following the Parties review of the OMSS Public Improvements Schedule and grading plan for the Lease Property, the Parties shall meet and confer in good faith to determine if Developer desires to proceed with the Pre-Closing Environmental Inspection and agree upon a written schedule for such work. The schedule developed pursuant to this section shall be modified as consistent with the modifications to the OMSS Public Improvements Schedule. It is the intent of the Parties that Developer s Pre- Closing Environmental Inspection relates to the then-current OMSS Public Improvements Schedule, as follows No less than ninety (90) days prior to the date identified in the then-current OMSS Public Improvements Schedule for commencement of the grading for the Lease Property, Developer shall provide the City with written notice of its intent to perform the Pre-Closing Environmental Inspection along with a work plan that includes the planned scope and schedule for the inspection for the City's approval. The City shall promptly (within 3 business days) send copies of the plan to the Port and shall within five (5) business days after receiving comments from the Port pursuant to the City/Port ARMOA, review and comment on the proposed inspection work plan, which approval shall not be unreasonably conditioned, withheld or delayed. If the City does not conditionally approve or provide comments to the Developer within the foregoing five-day period, the City shall be deemed to have conditionally approved the planned inspection. Once conditionally approved by the City, such work plan shall then be subject to DTSC and/or RWQCB approval, as appropriate, in accordance with the coordination procedures in Section In the event that Developer elects to perform an inspection, Developer shall use its best efforts to complete Pre-closing Environmental Inspection, including all sampling activities, within thirty (30) days following the date of the City s and the Resource 16

18 Agencies' approval of the Developer s work plan. The City shall have the right to attend and observe Developer s inspection and to take independent samples or obtain split samples, at the City s discretion and cost, with respect to all sampling performed by Developer. In event that Developer fails to commence the inspection within sixty (60) days following the City s written approval of the work plan, Developer shall be deemed to have waived its right to conduct such inspection. Once the Lease Property has been inspected or the sixty (60)-day period has passed, Developer shall not have the right to conduct further subsurface inspections on the Lease Property prior to Closing No later than fifteen (15) days following the date of Developer s and City s receipt of the sampling results from the inspection, the City and Developer shall exchange all sampling data relating to the inspection and shall promptly meet and confer to determine whether conditions at and beneath the investigation location exceed the standards in the approved RAP/RMP and require Remediation (or further Remediation) pursuant to the RAP/RMP In the event that the Pre-Closing Environmental Inspection reveals conditions that require Remediation pursuant to the RAP/RMP, then the City shall obtain the cost estimate to complete such Remediation. The City shall provide copies of the cost estimates and an accounting of the remaining monies in the Remediation Fund to the Developer. If the Parties determine that the Remediation Fund is unlikely to retain sufficient funds for Remediation, the Parties agree to meet and confer within thirty (30) days to attempt to resolve the funding gap. If the parties are unable to agree on a plan to resolve the funding gap the Developer may, within thirty (30) days thereafter, either terminate this Agreement or elect to continue Remediation at its own cost, in accordance with the coordination requirements of Section 7.3 and on the conditions set forth in Section After this thirty-day period, either Party may terminate. If Developer elects to continue Remediation at its own cost pursuant to the terms of this Section , and subject to Section 7.3.4, Developer may select its own remediation contractor to perform the Remediation. 9.3 Pre-Close of Escrow; City and Developer Coordination. The following requirements shall apply to each of the City s pre-close of Escrow obligations set forth in Section 7.2 above: Coordination. The City shall complete all remaining Pre-Closing Remediation Obligations for the Lease Property pursuant to one or more work plans reviewed and approved by DTSC and/or RWQCB, if applicable under the Environmental Remediation Requirements. In the event any Army Retained Conditions are encountered on the Lease Property prior to Close of Escrow, the City shall work diligently with the Army to obtain closure of any Army Retained Conditions. The Parties intend that the City shall be the lead with the all Resource Agencies for all Pre-Closing Remediation Obligations Communications. As soon as reasonably practicable, the City shall provide the Developer with copies of all correspondence (including all electronic correspondence), documents, notices, plans and reports directed to or received from (a) the City, (b) DTSC, (c) the 17