KB HOME SOUTH BAY - REIMBURSEMENT AGMT WATER LINE UPSIZING

C. During the course of construction, if changes are required which would increase the cost of the Improvements in excess of $3,500, Developer shall meet with City in advance of approving any such changes, and both parties shall agree prior to approval of any such changes. City approval shall not be unreasonably withheld, and any City decision shall be made within three (3) business days. Increases in the cost of the Improvements shall only be allowed due to changed conditions. D. Within thirty (30) days after completion of the Improvements, Developer shall submit to the City Engineer the actual costs of the construction work related to the Improvements, certified by Developer ("Statement of Costs"). Thereafter, the City Engineer shall review the Statement of Costs for appropriateness to determine whether any item in the Statement of Costs is inappropriate or excessive, and that item may be adjusted accordingly. Developer shall be notified in advance of any such adjustment. If the item cannot be resolved to the satisfaction of both the City Engineer and the Developer, the City Manager shall make the final determination as to permissible costs. Reimbursement from the City shall be based upon the Statement of Costs as approved by the City Engineer or as finally approved by the City Manager. Section 3. Ownership of Improvements. Developer shall dedicate the Improvements to the City in conjunction with the dedication of public improvements for Tract ?271, and City shall own the Improvements after acceptance by the City Council. Thereafter, Developer shall have the right to connect to and use the Improvements in accordance with City regulations and the right to reimbursement for the Reimbursable Costs for the Improvements, as provided herein. Section 4. Reimbursement. Upon acceptance of the Improvements by the City Council, the City shall pay the approved Reimbursable Costs to Developer within thirty (30) days. Section 5. Manner of Disbursement. The right to the Reimbursable Costs shall be personal to Developer and shall continue notwithstanding the subsequent sale or transfer of the Property. Developer shall have the right, in its sole discretion, to assign its interest to the Reimbursable Costs to another person or entity at any time by providing City written notice of such assignment. The Developer hereby directs that any Reimbursable Costs due to the Developer pursuant to this Agreement shall be payable to the Developer and mailed to: KB Home South Bay Inc. 6700 Koll Center Parkway, Suite 200 Pleasanton, CA 94566 KB Home South Bay, Inc. -Tract 7271 Page 2