HomeMy WebLinkAboutRESOLUTION 2025-123 N.C.S. 08/04/2025Resolution No. 2025-123 N.C.S.Page 1 of 3
Resolution No. 2025-123 N.C.S.
of the City of Petaluma, California
RESOLUTION APPLYING RESOLUTION NO. 2025-122 N.C.S. ADOPTED BY CITY COUNCIL ON
AUGUST 4, 2025, REGARDING LOAN OPTION FOR PAYMENT OF THE FEES FOR CERTAIN
CITY-SUPPORTED AFFORDABLE HOUSING PROJECT TO DANCO’S MERIDIAN AT
PETALUMA NORTH STATION AFFORDABLE HOUSING PROJECT
WHEREAS, on august 4, 2025, the city council adopted resolution no. 2025-122 N.C.S. amending
resolution nos. 2014-036 N.C.S. setting City Facilities Development Impact Fees, 2014-037 N.C.S. setting park
land development impact fees, 2014-038 N.C.S. setting Non-Quimby Act Park Land Acquisition Fees, 2014-039
N.C.S. setting open space land acquisition fees, and 2016-076 N.C.S. setting traffic development impact fees, to
provide a loan option for payment of the fees for certain city-supported affordable housing projects; and
WHEREAS, Resolution No. 2022-182 N.C.S. previously established that development impact fees are
inapplicable to specified deed-restricted affordable residential projects under defined conditions; and
WHEREAS, the City Council desires to provide an alternative option to the exemption established in
resolution no. 2022-182 N.C.S. by allowing qualifying affordable housing projects to defer payment of
development impact fees through a city loan program; and
WHEREAS, under this loan option, development impact fees may be treated as a loan from the account
in which fee proceeds are accrued, payable at a specified simple interest rate comparable to the rate the city earns
on its funds, and due upon a specified repayment or maturity date; and
WHEREAS, to qualify for the loan option, a residential development project must be deed restricted for
at least 55 years to serve acutely low, extremely low, very low, low, or moderate income residents, must provide
supportive housing or on-site supportive services as defined in section 65582 of the government code, and must
have received or be scheduled to receive city financial support or comparable assistance, such as the city acting
as co-applicant for grant funding; and
WHEREAS, loans under this option shall be evidenced by a promissory note and other appropriate
instruments such as a loan agreement and deed of trust, with terms subject to the approval of the City Attorney;
and
WHEREAS, this deferred fee loan option shall apply to all qualifying projects as of the effective date of
this resolution that have not yet paid the applicable development impact fees, including those projects already
approved and under construction; and
WHEREAS, the Danco Meridian at Petaluma North Station Affordable Housing Project qualifies for the
loan deferment option adopted by Resolution No. 2025-122 N.C.S., adopted by City Council on August 4, 2025;
and
WHEREAS, Danco has provided the promissory note attached as Exhibit A, which is acceptable to the
City Attorney; and
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Resolution No. 2025-123 N.C.S. Page 2 of 3
WHEREAS, the Danco meridian at Petaluma North Station Affordable Housing Project has previously
undergone and completed environmental review in accordance with the California Environmental Quality Act
(CEQA), and the action authorized by this resolution constitutes an administrative financial action that does not
result in any new physical environmental impacts beyond those already analyzed and is therefore within the scope
of the prior CEQA review and not a separate project pursuant to CEQA Guidelines Section 15378, or in the
alternative, is exempt from CEQA as an action similar in nature to fee-setting activities described in CEQA
Guidelines Section 15273; and
NOW, THEREFORE, BE IT RESOLVED, by the City Council of the City of Petaluma as follows:
SECTION 1. Recital Findings. The City Council hereby finds that the above recitals are true and correct and are
incorporated herein as findings of City Council.
SECTION 2. CEQA Findings. The Danco Meridian at Petaluma North Station Affordable Housing Project has
previously undergone and completed environmental review in accordance with the California Environmental
Quality Act (CEQA). The action authorized by this resolution constitutes an administrative financial action that
does not result in any new physical environmental impacts beyond those already analyzed. As such, the action is
within the scope of the prior CEQA review for the project and is not a separate project under CEQA pursuant to
CEQA Guidelines Section 15378. In the alternative, the action is exempt from CEQA as it is similar in nature to
the fee-setting activities described in CEQA Guidelines Section 15273.
SECTION 3. Loan Deferral Authorization. The City Council hereby authorizes and approves the application of
the loan deferment option established by Resolution No. 2025-122 N.C.S., adopted on August 4, 2025, to the
Danco Meridian at Petaluma North Station Affordable Housing Project. This action grants the project a deferred
payment of applicable development impact fees, in lieu of the inapplicability of such fees under Resolution No.
2022-182 N.C.S., and in accordance with the requirements of Resolution No. 2025-122 N.C.S., including the
project’s qualification as a City-supported, deed-restricted affordable housing development. The City Council
further authorizes the City Manager to execute the promissory note attached hereto as Exhibit A and any other
documents necessary to effectuate the fee loan deferment consistent with the terms approved herein and as
reviewed and approved by the City Attorney.
SECTION 4: Severability. If any part of this resolution is for any reason held to be unconstitutional, unlawful or
otherwise invalid by a court of competent jurisdiction, such decision will not affect the validity of the remaining
parts of this ordinance. The City Council of the City of Petaluma hereby declares that it would have passed and
adopted this ordinance and each of its provisions irrespective of any part being held invalid.
SECTION 5: Effective Date. This resolution shall become effective immediately.
Under the power and authority conferred upon this Council by the Charter of said City.
REFERENCE: I hereby certify the foregoing Resolution was introduced and adopted by the
Council of the City of Petaluma at a Regular meeting on the 4th day of August 2025,
by the following vote:
Approved as to
form:
__________________________
City Attorney
AYES: McDonnell, Barnacle, Cader Thompson, DeCarli, Nau, Quint, Shribbs
NOES: None
ABSENT: None
ABSTAIN: None
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Resolution No. 2025-123 N.C.S.Page 3 of 3
ATTEST: ______________________________________________
City Clerk
______________________________________________
Mayor
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SECURED PROMISSORY NOTE
(Meridian North – Impact Fee Loan)
$3,044,702 Petaluma, California
August 1, 2025
FOR VALUE RECEIVED, Petaluma Corona Station LP, a California limited
partnership (“Borrower”), promises to pay to the City of Petaluma, a municipal corporation and
charter city (the “City”), in lawful money of the United States of America, the principal sum of
Three Million, Forty-Four Thousand Seven Hundred and Two Dollars ($3,044,702), together
with interest accrued on the outstanding principal balance of this Note in accordance with the
terms and conditions described herein.
This Secured Promissory Note (this “Note”) has been executed and delivered pursuant to
and in accordance with that certain Affordable Housing Loan Agreement, dated as of the date
hereof and executed by and between Borrower and City (the “Loan Agreement”), and is subject
to the terms and conditions of the Loan Agreement, which is by this reference incorporated
herein and made a part hereof. Capitalized terms used but not defined herein shall have the
meaning ascribed to such terms in the Loan Agreement.
This Note is secured by an Amended and Restated Deed of Trust, Assignment of Rents,
Security Agreement and Fixture Filing (“Deed of Trust”) dated as of the date of this Note,
executed by Borrower as trustor for the benefit of City and to be recorded in the Official Records
of Sonoma County (“Official Records”). City shall be entitled to the benefits of the security
provided by the Deed of Trust and shall have the right to enforce the covenants and agreements
contained herein, in the Deed of Trust, the Loan Agreement, and the other City Documents,
including without limitation, that certain Affordable Housing Regulatory Agreement and
Declaration of Restrictive Covenants dated as of November 1, 2022, and recorded in the Official
Records on December 1, 2022 as Instrument No. 2022-076600 (as subsequently amended, the
“Regulatory Agreement”). The rent restrictions and other requirements set forth in the
Regulatory Agreement shall remain effective for the full term of the Regulatory Agreement and
shall survive the repayment of this Note.
1. PAYMENTS.
1.1 INTEREST RATE. Interest shall accrue on the principal balance of this Note
outstanding from time to time at the rate of Two Percent (2.0%) simple annual interest. Interest
shall be calculated on the basis of a year of 365 days, and charged for the actual number of days
elapsed.
1.2 PAYMENT DATES; MATURITY DATE. The entire outstanding principal
balance of this Note, together with interest accrued thereon and all other sums accrued hereunder
shall be payable in full in one lump sum on the date (the “Maturity Date”) which is the earlier
of (a) the date that is 180 days after the eighteenth (18th) anniversary of the Conversion Date, and
(b) the twenty-first (21st) anniversary of the date of this Note. Payments shall be credited first to
any unpaid late charges and other costs and fees then due, then to accrued interest, and then to
Exhibit A
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principal. In no event shall any amount due under this Note become subject to any rights, offset,
deduction or counterclaim on the part of Borrower.
1.3 DUE ON SALE. The entire unpaid principal balance and all interest and other
sums accrued hereunder shall be due and payable upon the Transfer (as defined in the Loan
Agreement) absent City consent, of all or any part of the Project or the Property or any interest
therein other than a Transfer permitted without City consent pursuant to the City Documents.
Without limiting the generality of the foregoing, this Note shall not be assumable without City’s
prior written consent, which consent may be granted or denied in City’s sole discretion.
1.4 PREPAYMENT. Borrower may, without premium or penalty, at any time and
from time to time, prepay all or any portion of the outstanding principal balance due under this
Note, provided that each such prepayment is accompanied by accrued interest on the amount of
principal prepaid calculated to the date of such prepayment. Prepayments shall be applied first to
any unpaid late charges and other costs and fees then due, then to accrued but unpaid interest,
and then to principal. The Regulatory Agreement shall remain in full force for the entire term
thereof regardless of any prepayment of this Note.
1.5 MANNER OF PAYMENT. All payments on this Note shall be made to City at
11 English Street, Petaluma, CA 94952 or such other place as City shall designate to Borrower in
writing, or by wire transfer of immediately available funds to an account designated by City in
writing.
2. DEFAULTS AND REMEDIES.
2.1 EVENTS OF DEFAULT. The occurrence of any one or more of the following
events shall constitute an event of default hereunder (“Event of Default”):
(A) Borrower fails to pay when due the principal and interest payable hereunder and
such failure continues for ten (10) days after such payment is due.
(B) Pursuant to or within the meaning of the United States Bankruptcy Code or any
other federal or state law relating to insolvency or relief of debtors (“Bankruptcy Law”),
Borrower or any general partner of Borrower or any manager, manager or officer thereof (i)
commences a voluntary case or proceeding; (ii) consents to the entry of an order for relief against
Borrower, or any general partner of Borrower or manager, manager or officer thereof, in an
involuntary case; (iii) consents to the appointment of a trustee, receiver, assignee, liquidator or
similar official for Borrower or any general partner of Borrower or any member or manager
thereof; (iv) makes an assignment for the benefit of its creditors; or (v) admits in writing its
inability to pay its debts as they become due.
(C) A court of competent jurisdiction enters an order or decree under any Bankruptcy
Law that (i) is for relief against Borrower or any general partner of Borrower, or any manager,
member, or officer thereof thereof in an involuntary case, (ii) appoints a trustee, receiver,
assignee, liquidator or similar official for Borrower, or any general partner of Borrower or any
manager or member thereof, or substantially all of such entity’s assets, (iii) orders the liquidation
of Borrower or any general partner of Borrower or any manager or member thereof, or (iv) issues
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or levies a judgment, writ, warrant of attachment or similar process against the Property or the
Project, and in each case the order or decree is not released, vacated, dismissed or fully bonded
within sixty (60) days after its issuance.
(D) Borrower shall have voluntarily suspended its business or Borrower shall have
been dissolved or terminated.
(E) The occurrence of a Transfer in violation of the Loan Agreement or the
Regulatory Agreement.
(F) The holder of any instrument secured by a mortgage or deed of trust on the
Project or the Property declares a default and such default remains uncured beyond any
applicable cure period such that the holder of such instrument has the right to accelerate payment
thereunder.
(G) Borrower fails to maintain insurance on the Property and the Project as required
pursuant to the City Documents and Borrower fails to cure such default within five (5) days.
(H) Subject to Borrower’s right to contest the following charges pursuant to the City
Documents, if Borrower fails to pay when due taxes or assessments due on the Property or the
Project, or fails to pay any other charge that may result in a lien on the Property or the Project,
and Borrower fails to cure such default within twenty (20) days of delinquency, but in all events
prior to the date upon which the holder of any such tax or other lien has the right to foreclose
thereon.
(I) If any representation or warranty by Borrower, any general partner or member,
manger or authorized representative thereof contained in any City Document, or any certificate
furnished in connection therewith, or in connection with any request for disbursement of the
proceeds of the Loan (“Loan Proceeds”) proves to have been false or misleading in any adverse
respect when made.
(J) An Event of Default shall have been declared under the Loan Agreement or any
other City Document, and remains uncured beyond the expiration of the applicable cure period.
(K) Borrower fails to use the Loan Proceeds in accordance with the Loan Agreement
or fails to use the Loan Proceeds in accordance with Borrower’s request for disbursement.
(L) Borrower fails to perform any requirement set forth in this Note other than one
enumerated in this Section 2.1, and unless a shorter cure period is specified for such default, the
default is not cured within thirty (30) days following written notice.
2.2 REMEDIES. Upon the occurrence of an Event of Default hereunder, City may, at
its option (i) by written notice to Borrower, declare the entire unpaid principal balance of this
Note, together with all accrued interest thereon and all sums due hereunder, immediately due and
payable regardless of any prior forbearance, (ii) exercise any and all rights and remedies
available to it under applicable law, and (iii) exercise any and all rights and remedies available to
City under this Note and the other City Documents, including without limitation, the right to
pursue foreclosure under the Deed of Trust. Borrower shall pay all reasonable costs and
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expenses incurred by or on behalf of City including, without limitation, reasonable attorneys'
fees, incurred in connection with City's enforcement of this Note and the exercise of any or all of
its rights and remedies hereunder and all such sums shall be a part of the indebtedness secured by
the Deed of Trust. The rights and remedies of City under this Note shall be cumulative and not
alternative.
2.3 DEFAULT RATE. Upon the occurrence of an Event of Default, interest shall
automatically be increased without notice to the rate of the lesser of ten percent (10%) per annum
or the maximum rate permitted by law (the “Default Rate”); provided however, if any payment
due hereunder is not paid when due, the Default Rate shall apply commencing upon the due date
for such payment. When Borrower is no longer in default, the Default Rate shall no longer
apply, and the interest rate shall once again be the rate specified in the first paragraph of this
Note. Notwithstanding the foregoing provisions, if the interest rate charged exceeds the
maximum legal rate of interest, the rate shall be the maximum rate permitted by law. The
imposition or acceptance of the Default Rate shall in no event constitute a waiver of a default
under this Note or prevent City from exercising any of its other rights or remedies.
2.4 LIMITED PARTNERS RIGHT TO CURE. Borrower’s limited partners shall
have the right to cure any default of Borrower hereunder upon the same terms and conditions
afforded to Borrower. Any cure tendered by a limited partner of Borrower shall be deemed to be
a cure by Borrower and shall be accepted or rejected on the same basis as if tendered by
Borrower. City shall concurrently deliver to the limited partners a copy of any notice of default
hereunder that it delivers to Borrower.
3. MISCELLANEOUS.
3.1 WAIVERS; AMENDMENTS; BORROWER’S WAIVERS. No waiver by City
of any right or remedy under this Note shall be effective unless in a writing signed by City.
Neither the failure nor any delay in exercising any right, power or privilege under this Note will
operate as a waiver of such right, power or privilege, and no single or partial exercise of any such
right, power or privilege by City will preclude any other or further exercise of such right, power
or privilege or the exercise of any other right, power or privilege. No waiver that may be given
by City will be applicable except in the specific instance for which it is given. No notice to or
demand on Borrower will be deemed to be a waiver of any obligation of Borrower or of the right
of City to take further action without notice or demand as provided in this Note. There shall be
no amendment to or modification of this Note except by written instrument executed by
Borrower and City.
To the maximum extent permitted by applicable law Borrower hereby waives
presentment, demand, protest, notices of dishonor and of protest and all defenses and pleas on
the grounds of any extension or extensions of the time of payment or of any due date under this
Note, in whole or in part, whether before or after maturity and with or without notice.
3.2 NOTICES. Any notice required or permitted to be given hereunder shall be given
in accordance with the Loan Agreement.
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3.3 SEVERABILITY. If any provision in this Note is held invalid or unenforceable
by any court of competent jurisdiction, the other provisions of this Note will remain in full force
and effect. Any provision of this Note held invalid or unenforceable only in part or degree will
remain in full force and effect to the extent not held invalid or unenforceable.
3.4 GOVERNING LAW; VENUE. This Note shall be governed by the laws of the
State of California without regard to principles of conflicts of laws. Any legal action filed in
connection with this Note shall be filed in the Superior Court of Sonoma County, California, or
in the Federal District Court for the Northern District of California.
3.5 BINDING ON SUCCESSORS. This Note shall bind Borrower and its successors
and permitted assigns and shall accrue to the benefit of City and its successors and assigns.
3.6 SECTION HEADINGS, CONSTRUCTION. The headings of Sections in this
Note are provided for convenience only and will not affect its construction or interpretation.
3.7 RELATIONSHIP OF THE PARTIES. The relationship of Borrower and City
under this Note is solely that of borrower and lender, and the loan evidenced by this Note and
secured by the Deed of Trust will in no manner make City the partner or joint venturer of
Borrower.
3.8 TIME IS OF THE ESSENCE. Time is of the essence with respect to every
provision of this Note.
3.9 NONRECOURSE. Except as expressly provided in this Section 3.9, neither
Borrower nor the general or limited partners of Borrower shall have personal liability for
payment of the principal of, or interest on, this Note, and the sole recourse of City with respect to
the payment of the principal of, and interest on, this Note shall be to the Project, the Property and
any other collateral held by City as security for this Note; provided however, nothing contained
in the foregoing limitation of liability shall:
(A) impair the enforcement against all such security for the Loan of all the rights and
remedies of the City under the Deed of Trust and any financing statements City files in connection
with the Loan as each of the foregoing may be amended, modified, or restated from time to time;
(B) impair the right of City to bring a foreclosure action, action for specific
performance or other appropriate action or proceeding to enable City to enforce and realize upon
the Deed of Trust, the interest in the Project and the Property created thereby and any other
collateral given to City in connection with the indebtedness evidenced hereby and to name the
Borrower as party defendant in any such action;
(C) be deemed in any way to impair the right of the City to assert the unpaid principal
amount of the Loan as a demand for money within the meaning of Section 431.70 of the
California Code of Civil Procedure or any successor provision thereto;
(D) constitute a waiver of any right which City may have under any bankruptcy law to
file a claim for the full amount of the indebtedness owed to City hereunder or to require that the
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Project and the Property shall continue to secure all of the indebtedness owed to City hereunder
in accordance with this Note and the Deed of Trust; or
(E) limit or restrict the ability of City to seek or obtain a judgment against Borrower
to enforce against Borrower and its general partners to:
(1) recover under any provision of any City Document that obligates Borrower to
indemnify City, or
(2) recover from Borrower and its general partners compensatory damages as well
as other costs and expenses incurred by City (including without limitation reasonable
attorneys’ fees and expenses) arising as a result of the occurrence of any of the following:
(a) any fraud or intentional misrepresentation on the part of the Borrower,
or its general partners, or any officer, director or authorized representative of
Borrower or its general partners in connection with the request for or creation of
the Loan, or in any City Document, or in connection with any request for any
action or consent by City in connection with the Loan;
(b) any failure to maintain insurance on the Property and the Project as
required pursuant to the City Documents;
(c) failure to pay taxes, assessments or other charges which may become
liens on the Property or the Project (subject to the right to contest as set forth in
the Loan Agreement);
(d) the presence of Hazardous Materials on the Property or other violation
of the Borrower’s obligations under the City Documents pertaining to
environmental matters;
(e) the occurrence of any act or omission of Borrower that results in waste
to or of the Project or the Property and which has a material adverse effect on the
value of the Project or the Property;
(f) the material misapplication of the Loan proceeds;
(g) the removal or disposal of any personal property or fixtures other than
in the normal course of Borrower’s business, or the retention of rents, insurance
proceeds, or condemnation awards in violation of the City Documents;
(h) the material misapplication of the proceeds of any insurance policy or
award resulting from condemnation or the exercise of the power of eminent
domain or by reason of damage, loss or destruction to any portion of the Project
or the Property; and
(i) the failure of Borrower to pay all amounts payable under this Note in
full if a Transfer occurs in violation of the City Documents.
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IN WITNESS WHEREOF, Borrower has executed this Amended and Restated Secured
Promissory Note as of the date first written above.
BORROWER:
PETALUMA CORONA STATION LP, a California limited partnership
By: Petaluma Corona Station, LLC, a California limited liability company
Its: Administrative General Partner
By: Danco Communities, a California corporation
Its: Manager
By: ________________________
Daniel J. Johnson, President
By: Community Revitalization and Development Corporation, a California nonprofit public
benefit corporation
Its: Managing General Partner
By: __________________________
David Rutledge, President
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