Item 12 - Agreement for Payment In-Lieu of Taxes

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reduction of 13.33%), rounded to the nearest dollar ("New Base Taxes"); and 7. Taxes assessed on the Property are subject to California Proposition 13 (codified at California Constitution, article XIII A), which provides that property taxes may not increase by more than two percent (2%) per year ("Annual Tax Increase"), and for purposes of this Agreement shall be assumed to increase at the rate of exactly 2%per year. L. The Parties acknowledge and agree that capital improvements associated with the School's Share of the Property which could result in a re-assessment of the Property are not intended to increase the Payment(s)in Lieu or be attributed to the Taxable Share of the Property. AGREEMENT NOW, THEREFORE, in consideration of the mutual benefits accruing to the Parties, and for other valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Owner on behalf of itself and its heirs,executors, successors, and assigns and City hereby covenant and agree as follows: I. The "Effective Date" of this Agreement shall mean the latest of the following dates, as applicable: (i) expiration of any appeal period without challenge following Project Approval by the City's Planning Commission; (ii) expiration of any appeal period without challenge following Approval of this Agreement by City Council; or (iii) successful defense of any appeal of City Council's Project Approval and entry of a final, non-appealable judgment in support of Project Approval. Unless and until final, non-appealable Project Approval is obtained, this Agreement shall be of no force or effect. 2. Following the Effective Date, Owner shall initiate Payments in Lieu to the City subject to the terms in this Agreement. 3. The Payments in Lieu contemplated by this Agreement shall commence on the first day of the first month following the City's issuance of a Certificate of Occupancy to the School ("Payment Commencement Date"), and renew annually on the anniversary of The Payment Commencement Date for a total of up to twenty (20) individual payments ("Twenty Year Period"),provided the School remains in operation at the Property. 4. If at any point the School discontinues operations at the Property, Owner's obligation for any Payments In Lieu shall immediately cease, and no additional Payments In Lieu shall be due or payable unless and until the School resumes operations at the Property. 5. The Amount of the Payment in Lieu is intended to reflect the estimated impact of the Property Tax Exemption on the City's share of Base Taxes, and is calculated as follows: (i) For 2025, the base amount was $16,606, calculated as the Property Tax Exemption (41.62%) of the City Share (16.9%) of the New Base Taxes AGREEMENT FOR PAYMENT IN-LIEU OF TAXES 3 109231\18768373v1