75B - PH - AMEND DEVELOPMENT AGMT 2005-02

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Amend DA No. 2005-02, CUP No. 2011-05 VA No. 2011-04, SPR No. 2011-01 March 14, 2011 Page 4 agreement. Further, the approved development agreement required certain improvements and public benefits such as in-lieu fees for parkland dedication, payment of an inclusionary housing fee, and the execution of an off-site improvement agreement with the Sandpointe Neighborhood Association. In 2008, the development agreement was amended to allow the phasing of public art. In 2009, the development agreement was again amended to give the developers the right to rent some or all of the units within the Skyline Towers and Integral projects. Over the last few years, a significant shift in the local and national economy has occurred. This shift has severely impacted the real estate and development market. As evidence of the severe nature of the economic downturn in real estate development, of the 14 large projects that have been submitted to the City for review in the past five years (Brookhollow Office project, City Place retail/residential project, Sky Loft Tower, Cordoba courtyard housing, First and Cabrillo condominiums, Montage condominiums, Nexus Skyline Towers, Nexus Phase II, One Broadway Plaza office tower, Promenade Pointe condominiums, Sixth and Parkcenter development, Town and Country Manor, Village Green and the West End Lofts), only the City Place and Skyline Towers projects have begun or completed construction. These same trends are evident in communities throughout the country. Due to the shift in the economy, Integral has not been able to proceed with its mid-rise residential development. In response, they have partnered with Lyon Community Development to modify the project in an effort to commence construction. The amendments to Development Agreement No. 2005-02 are minor changes that recognize Lyon as the primary developer for the project. Further, the amendments reflect the new scope of the project, such as a modest increase in the number of units and the new parking configuration. All other elements of the development agreement will remain, with Lyon committed to developing the project as proposed, with all finishes and amenities for the project to be of the highest quality. Lyon is also committed to the eventual sale of units within the project and will also be involved in the sale, rental and managing of the units (Exhibit 7). Their intention is to rent the units in the near-term but consider selling them as condominiums when economic conditions allow. The documents allowing the sale of units, including the subdivision map and covenants, conditions and restrictions (CC&Rs), have been recorded for the Lyon project, which allows Lyon the ability to sell units when the housing and financial markets shift. Conditional Use Permit Conditional Use Permits are governed by Section 41-638 of the SAMC. Conditional use permits may be granted when it can be shown that the following can be established: That the proposed use will provide a service or facility which will contribute to the general well being of the neighborhood or community. 75B-6