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HomeMy WebLinkAboutHB Boardwalk, LLC - 2016-11-07Dept. ID CD 16-013 Page 1 of 2 Meeting Date: 11/7/2016 CITY OF HUNTINGTON BEACH REQUEST FOR. CITY COUNCIL/HOUSING AUTHORITY ACTION MEETING DATE: 11/7/2016 SUBMITTED TO: Honorable Mayor/Chairperson and City Councilmembers/Board Members SUBMITTED BY: Fred A. Wilson, City Manager/Executive Officer PREPARED BY: -----Scott Hess, AICP, Director of Community Development SUBJECT: Approve and authorize execution of a Standstill Agreement among HB Boardwalk, LLC, Fannie Mae, the City of Huntington Beach and the Huntington Beach Housing Authority (Boardwalk Development Agreement - 7441 Edinger Avenue) Statement of Issue: A "Standstill Agreement" is requested by the owners of the Boardwalk mixed use project which would allow the project's lender to cure a default under the City Council approved Development Agreement for the project. The Boardwalk is a 487-unit mixed use project that has recently completed construction and the owners recently secured permanent loan financing. As a condition of the loan, the lender has requested an agreement between the owners, the lender, and the City that allows the lender to step in and cure in the event of a default under the approved Development Agreement. Financial Impact: Not applicable. Housing Authority and City Council Recommended Action: Approve and authorize the Mayor, City Clerk and Executive Officer of the Housing Authority to execute the "Standstill Agreement" by and among HB Boardwalk, LLC, Fannie Mae, The City of Huntington Beach and the Huntington Beach Housing Authority. Alternative Action(s): The City Council may make the following alternative motion(s): 1. Deny the Standstill Agreement 2. Continue the Standstill Agreement and direct staff accordingly. Analysis: A. PROJECT PROPOSAL: Applicant: HB Boardwalk, LLC Location: 7441 Edinger Avenue, Huntington Beach, CA 92647 HB -283- Item 11. - I Dept. ID CD 16-013 Page 2 of 2 Meeting Date: 11/7/2016 The Boardwalk mixed use project was approved in 2011 and recently completed construction. The construction loan has expired and the project owners recently secured permanent loan financing. As a condition of the permanent loan financing, the lender is requesting a "Standstill Agreement," which would provide the lender a 60-day "standstill period" to cure a default before the City exercises any remedies under the approved Development Agreement for the project (ATTACHMENT NO. 2). No changes to the current project approvals including the Site Plan Review, Development Agreement or Affordable Housing Agreement are requested as part of this standstill agreement. B. STAFF ANALYSIS AND RECOMMENDATION: The proposed standstill agreement is requested by the Boardwalk owners because it is a condition of the permanent loan financing they recently obtained for the project. The agreement states that the City/Housing Authority shall not exercise any remedies under the approved Development Agreement, including the Affordable Housing Agreement, until the expiration of a 60-day "standstill period." The "standstill period" would provide the lender an opportunity to step in and cure a default during the 60-day time period. Staff is recommending approval of the standstill agreement as the existing terms of the approved Development Agreement already include provisions to allow the developer to cure a default within a reasonable time period. The project's approved Development Agreement also currently includes lender protection provisions. In addition, the requested standstill agreement would not affect the project's current approvals, conditions, terms or obligations under the approved Site Plan Review, Development Agreement and Affordable Housing Agreement. Environmental Status: Pursuant to Section 15061 of the CEQA Guidelines, this item is not subject to CEQA as it will not result in a direct or reasonably foreseeable indirect physical change in the environment. Strategic Plan Goal: Non -Applicable —Administrative Item Attachment(s): 1. Standstill Agreement 2. Approved Development Agreement Item 11. - 2 HB -284- ATTACHMENT #1 RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: Jeremy M. McLean, Esquire Troutman Sanders LLP P.O. Box 1122 Richmond, VA 23218 Recorded in Official Records, Orange County Hugh Nguyen, Clerk -Recorder 11 Rl IE� 11T IT 11� 11111 [T IT I NO FEE *$ R 0 0 0 8 8 4 9 5 1 4$ 2016000576207 9:40 am 11115116 90 SC5 Al 9 0.00 0.00 0.00 0.00 24.00 0.00 0.00 0.00 STANDSTILL AGREEMENT This document is solely for the offidai busk*" of the City of Huntington 9e4ch, as contemp­lztec under Govortarien! Cade Sec. 6103 3r d Boardwalk by Windsor STANDSTILL AGREEMENT ^ THIS STANDSTILL AGREEMENT (this "Agreement") is made as of they 7�day of / / VO , 2016 by and among HB BOARDWALK, LLC, a Delaware limited liability company ("Borrower"), FANNIE MAE, a corporation organized under the laws of the United States of America and successor -in -interest to Walker & Dunlop, LLC, a Delaware limited liability company ("Lender"), THE CITY OF HUNTINGTON BEACH, a California municipal corporation (the "City"), and THE HUNTINGTON BEACH HOUSING AUTHORITY, a public body and successor -in -interest to the Redevelopment Agency of the City of Huntington Beach (the "HBHA," and together, with the City, the "Authority"). RECITALS: A. Borrower has a leasehold interest in that certain real property located in the City of Huntington Beach, County or Orange, State of California, as more particularly described on Exhibit A attached hereto (the "Property"). B. Borrower has refinanced a multifamily housing development on the Property; the Property and the improvements constructed on it are referred to in this Agreement as the "Project." C. In connection with the City's approval of the Project, (i) Freeway Industrial Park, a California corporation, the fee simple owner of the Property and ground lessor to Borrower and (ii) the Authority entered into that certain Affordable Housing Agreement Restrictions -Rental (Declaration of Conditions, Covenants and Restrictions for Property) dated as of August 1, 2011, which sets forth certain use restrictions affecting the Project (the "Regulatory Agreement"), which Regulatory Agreement was recorded in the Orange County Recorder's Office ("Official Records") on August 17, 2011 as Document Number 2011000406500. D. Walker & Dunlop, LLC, a Delaware limited liability company ("Original Lender") made a loan on June 29, 2016 (the "Loan") to Borrower under the Fannie Mae DUS Loan Program in accordance with the requirements thereunder and sold the Loan to Lender. E. The Loan is evidenced by a Multifamily Note which is secured by a Multifamily Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing (the "Deed of Trust"). F. As a condition to making the Loan, Original Lender required that the Authority not exercise remedies under the Regulatory Agreement for a 60 day period following notice to Lender. Original Lender made the Loan requiring Borrower to obtain this Agreement. G. Borrower and the Authority hereby agree to the stand still provisions set forth in this Agreement. NOW, THEREFORE, in consideration of the mutual benefits accruing to the parties hereto and other valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows: 1. Recitals. The foregoing Recitals are hereby incorporated into this Agreement as agreements among the parties. 2. Stand Still/Cure Period. The Authority shall not exercise any remedies under the Regulatory Agreement until the expiration of a 60-day period (the "Stand Still Period") following Lender's receipt from the Authority of notice of a default under the Regulatory Agreement. Lender shall have the right, but not the obligation, to cure a default under the Regulatory Agreement during the Stand Still Period. 3. Notice. (a) Process of Serving Notice. All notices under this Agreement shall be: (1) in writing and shall be: (A) delivered, in person; (B) mailed, postage prepaid, either by registered or certified delivery, return receipt requested; (C) sent by overnight courier; or (D) sent by electronic mail with originals to follow by overnight courier; (2) addressed to the intended recipient at the address(es) below the signature block, as applicable; and (3) deemed given on the earlier to occur of: (A) the date when the notice is received by the addressee; or (B) if the recipient refuses or rejects delivery, the date on which the notice is so refused or rejected, as conclusively established by the records of the United States Postal Service or any express courier service. (b) Change of Address. Any party to this Agreement may change the address to which notices intended for it are to be directed by means of notice given to the other parties identified in this Agreement. (c) Receipt of Notices. Lender, the Housing Authority, or Borrower shall not refuse or reject delivery of any notice given in accordance with this Agreement. Each party is required to acknowledge, in writing, the receipt of any notice upon request by the other party. 4. Entire Agreement. This Agreement represents the entire understanding and agreement between the parties hereto and shall supersede and cancel any prior agreements with regard to this subject matter. 5. Binding Provisions. The covenants and agreements contained in this Agreement shall be binding upon the heirs, personal representatives, successors and assigns of the respective parties to this Agreement. 2 6. Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California. 7. Amendment. This Agreement may not be modified orally or in any manner other than by an agreement in writing signed by the parties hereto or their respective successors in interest. 8. Further Instruments. Each of the parties hereto will, whenever and as often as they shall be requested to do so by the other, execute, acknowledge and deliver, or cause to be executed, acknowledged or delivered, any and all such further instruments and documents as may be reasonably necessary to carry out the intent and purpose of this Agreement, and to do any and all further acts reasonably necessary to carry out the intent and purpose of this Agreement. 9. Legal Action. In the event any legal action is commenced by any party hereto concerning this Agreement or the rights and duties of any party hereto, whether such action be an action for damages, or for equitable or declaratory relief, the prevailing party in such litigation shall be entitled to, in addition to all other relief as may be granted by the court, reasonable sums as and for attorneys' fees in an amount to be set by the court. 10. Valid Authorization. Each person executing this Agreement on behalf of a party hereto represents and warrants that such person is duly and validly authorized to do so on behalf of such party with full right and authority to execute this Agreement and to bind such party with respect to all of its obligations hereunder. 11. Counterparts. This Agreement may be executed in counterparts each of which shall be deemed an original and all of which when taken together constitute one and the same instrument, binding on all of the parties. The signature of any party to any counterpart shall be deemed a signature to, and may be appended to, any other counterpart. IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the day and year above written. [END OF PAGE - SIGNATURES TO FOLLOW] BORROWER: HB BOARDWALK, LLC, a Delaware limited liability company By: ✓ ��, Gregory'E. Haa's Assistant Treasurer Notice Address: c/o GID 125 High Street High Street Tower, 27th Floor Boston, Massachusetts 02110 A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. ACKNOWLEDGMENT Commonwealth of Massachusetts County of Suffolk On n ac)hc'Y 61 ZO I U before me, � (-> 11, r I"� fi� l (Insert Name and Title of the Officer) personally appeared Gregory E. Haas, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the Commonwealth of Massachusetts that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature -y 6tt ", k-(' � A-l'.,C."LC�' (Seal) HOLLY D. BARRETT �A NOTARY PUBLIC \� Commonwealth of Massachusetts My Commission Expires 04/28/2017 4 29034678 FANNIE MAE: By: Walker & Dunlop, LLC, a Delaware limited liability company, its Attorney -in -Fact 7 By: /i �ti�� . (SEAL) Ndncy Sexton Vice President Notice Address: 7501 Wisconsin Avenue Suite 1200E Bethesda, Maryland 20814 A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. Cv/� ACKNOWLEDGMENT rr��: f1�+LC�/� -tiS+ate of County of On zo/h before me, 41,11L (Insert Name and Title of the Officer) personally appeared Nancy Sexton, who proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged to me that she executed the same in her authorized capacity, and that by her signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. I certify under PENALTY OF PERJURY tinder the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature /� (Seal) ®, PAULA C. BATTISTA Notary Public COWADWRATH OF HASSA£NUSE"S my Commission Expires October 22, 2 221 INITIAAD AND APPROVED: Difector of(Tommunity Development REV ND APPROVED: Cityya6a&r A notary public or other officer completing this certificate verities only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. State of �i, Lz z ED 1C�4j//-4- THE CITY: THE CITY OF HUNTINGTON BEACH, a California muni ' 'al%cor oration a y o r City -Clerk Notice Address: 2000 MAIN STREET 2ND FLOOR HUNTINGTON BEACH, CA 92648 APPROVED City, Attorney t,Y ACKNOWLEDGMENT Countyof �,G= On �+J _ � ;to before me, —'� (Insert Name and Title of the Officer) personally appeared �,%�,�},�js� A��J /�,gTi�,y�•cf, who proved to me on the basis of satisfactory evidence to be the person(s) whose name -is/ re� subscribed to the within instrument and acknowledged to me that � 4&shQ6l�ie ' executed the same in -1 lie etr authorized capacity ie and that by hi4 their signatures ; on the instrument the persot s or the entity upon behalf of which the persorejacted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature f 29034678 P. L. ESPARZA Commission # 2032750 Notary Public - California z Orange County D My Comm. Expires Aug 4, 2017 HAHB: THE HUNTINGTON BEACH HOUSING AUTHORI tiblic body By: V .� Name: . WILSON Title: C 1141VE OFFICER Notice Address: 2000 MAIN STREET 2ND FLOOR HUNTINGTON BEACH. CA 92648 A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. ACKNOWLEDGMENT State of �i�>✓ lFo✓P�iA County of DIQ�st�3� On ®VU6� Zo/g before me, P L , ,5�' zA . "779,4-Y �.eBOC_ , (Insert Name and Title of the Officer) personally appeared 4. who proved to me on the basis of satisfactory evidence to be the person(g) whose name(g) C/ar-e subscribed to the within instrument and acknowledged to me that Oeshe4hey executed the same in lii' /her/l-heir authorized capacity(ie-s), and that by Gi %e�/-the-ir- signatures) on the instrument the person(,}, or the entity upon behalf of which the person" acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. r:,,: P. L. ESPARZA Commission # 2032750 Notary Public - California z Orange County ;:.. Signature (Seal) — My Comm. Expires Aug 4, 2017 7 29034678 EXHIBIT A LEGAL DESCRIPTION , opl 44.1 k-i-dUngee Avc-., Hunfiftg-41` (fie'- f�. , f i PAVl 0-2 I �; DESCRIBED 4N tOT LiDJUSTNIFENT NO. 1 007 RECORDED MAY _ 2131 t A° S lr4STRlJMENT r 0- 2 110002 7-7 OF OFFICEAL REGORD-1; [K I i j E 0OFFICE OF TI IL MANCif C:OUINTY RECOR DER. A-1 29034678 ATTACHMENT #2------Ji This Document was electronically recorded by City of Huntington Beach RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 Attn: Director of Planning and Building Recorded in Official Records, Orange County Hugh Nguyen, Clerk -Recorder 1111111111111111111111111Jill I I IIII II III I I Jill 111111111 111IN0 FEE 2014000282366 09:56am 07/16/14 93 Sec4 Al2 8 0.00 0.00 0.00 0.00 21.00 0.00 0.00 0.00 SPACE ABOVE THIS LINE RESERVED FOR RECORDER'S USE FIRST AMENDMENT TO DEVELOPMENT AGREEMENT THIS FIRST AMENDMENT TO DEVELOPMENT AGREEMENT ("The First Amendment") is made in Orange County, California, as of MAI Z� 2014, by and between the CITY OF HUNTINGTON BEACH, a municipal corporation of the State of California (the "City") and Freeway Industrial Park, a California Corporation (the "Property Owner"), and Sares-Regis Group (the "Developer"). RECITALS A. The City is authorized pursuant to Government Code sections 65864 through 65869.5 and Huntington Beach Zoning and Subdivision Ordinance (HBZSO) Chapter 246 to enter into and modify binding development agreements with persons or entities owning legal interests in real property located within the City. B. The City, Property Owner and Developer have entered into that certain Development Agreement dated as of August 1, 2011 that was recorded in the Official Records of the Orange County Recorder's office on August 18, 2011, as Instrument No. 2011000408735 (the "Development Agreement"). All capitalized terms used in this First Amendment that are not defined herein shall have the same meanings ascribed to those terms in the Development Agreement. Among other things, the Development Agreement sets forth certain rights and obligations of the City, Property Owner and Developer with respect to the mutually beneficial development of the Property identified therein. NOW, THEREFORE, in consideration of the foregoing recitals which are hereby incorporated into the operative provisions of this First Amendment by this reference and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the City, Property Owner and the Developer agree that the Development Agreement shall be amended as follows: The following definitions from Section 1 — Definitions shall be amended and read as follows: This doaunent is solely for the oikW of the City of Hunlhnpton Basch. as contar;VWted under Goverment Code Sec. 8103 and dxxdd be nod free of charga. Item 11. - 12 HB -294- 1.3 "Affordable Rent" for Very Low Income households shall have the same meaning set forth in California Health and Safety Code section 50053, as more specifically set forth in the Agreement Containing Covenants Affecting Real Property to be attached to the Affordable Housing Agreement. "Affordable Rent" for Moderate Income households means rents which do not exceed the product of 30 percent times 120 percent of the area median income, adjusted for family size appropriate for the unit, as more specifically set forth in the Agreement Containing Covenants Affecting Real Property to be attached to the Affordable Housing Agreement. 1.14 "Moderate Income Household" means persons and families whose gross incomes do not exceed the Moderate Income Limits for the County of Orange ("County") as published annually by the Department of Housing and Community Development and determined in accordance with the U.S. Department of Housing and Community Development criteria then in effect and published from time to time. For purposes of this Agreement, the qualifying limits shall be those limits for the County, as set forth in Title 25, California Code of Regulations, section 6932, as that section may be amended, modified or recodified from time to time. If Title 25, California Code of Regulations, section 6932 is amended or modified during the term of this Agreement so that such regulations do not specify the Moderate Income limits for the County, the City and Developer shall negotiate in good faith to determine an equivalent authoritative source which determines the Moderate Income limits for the County. 1.22 "Very Low Income Household" shall mean persons and families whose gross incomes do not exceed the Very Low Income Limits for the County of Orange ("County") as published annually by the Department of Housing and Community Development and determined in accordance with the U.S. Department of Housing and Community Development criteria then in effect and published from time to time. For purposes of this Agreement, the qualifying limits shall be those limits for the County, as set forth in Title 25, California Code of Regulations, section 6932, as that section may be amended, modified or recodified from time to time. If Title 25, California Code of Regulations, section 6932 is amended or modified during the term of this Agreement so that such regulations do not specify the Very Low Income limits for the County, the City and Developer shall negotiate in good faith to determine an equivalent authoritative source which determines the Very Low Income limits for the County. 2. Section 1 — Affordability Covenants of Exhibit C ("Affordable Housing Agreement") shall be amended to read as follows: (a) Qualified Households. Covenantor agrees to make available, restrict occupancy to, and to lease 57 units for the duration of the Affordability Period as defined herein. These 57 units may sometimes be referred to as an "Affordable Unit" or, collectively, the "Affordable Units." Each Affordable Unit shall be occupied by Moderate or Very Low Income Households as those terms are defined in the Development Agreement adjusted for the actual number of persons Paae 2 of 4 HB -295- Item 11. - 13 in the Household that will reside in the Affordable Unit. 10 Affordable Units shall only be occupied by Very Low -Income Households, and 47 Affordable Units shall only be occupied by Moderate -Income Households, adjusted for the actual number of persons in the Household that will reside in the Affordable Units. The Affordable Units will not be fixed in specific locations, but once final inspections have been issued for all 487 units in the Project, a minimum of 57 units will always be designated by the Covenantor as Affordable Units during the term of this Agreement. Of this total, at least 10 of the units will be designated as Very Low Income units. (d) Determination of Affordable Rent for the Affordable Units. The rent for each Affordable Unit (the "Affordable Rent") shall be adjusted annually by the following formula upon the publication of revised Orange County median income figures by the California Housing and Community Development Department: (i) The Affordable Rent amount for the Very Low -Income units shall not exceed thirty percent (30%) of 50 percent (50%) of the monthly area median income adjusted for the family size as set forth in California Health and Safety Code Section 50052.5(h); (ii) The Affordable Rent amount for the Moderate -Income units shall not exceed thirty percent (30%) of one -hundred twenty percent (120%) of the monthly area median income adjusted for the family size as set forth in California Health and Safety Code Section 50052.5(h). The income limits and Affordable Rents in effect as of the date of this Agreement are attached hereto as Exhibit "B" and incorporated herein by this reference. 3. Exhibit B ("Current Qualifying Income and Rent Schedule") to the Affordable Housing Agreement shall be replaced as set forth in and attached hereto as Exhibit "A" and incorporated herein by this reference. 4. Except as expressly set forth in this First Amendment, all of the terms and provisions set forth in the Development Agreement shall remain in full force and effect. IN WITNESS WHEREOF, the City, Property Owner and the Developer hereto have each executed this First Amendment to the Development Agreement as of the date first written above. Developer: SARES-REGIS GROUP, a California general partnership and/or its assigneesa Print: James Ivory �iO15_� Its: Vice President Property Owner: Freeway Industrial Park, a California corporation rint: J cT Kow Y A C4fZi"L"p,� PaoP 3 of Item 11. - 14 h-1B -296- Its: —FP—c—S I City: City of Huntington Beach, a municipal corporation of the State of California A6&t�- -, Ma or APPROVED AS TO FORM: Attorney ,i p....• Exhibit A: Exhibit B — Current Qualifying Income and Rent Schedule of the Affordable Housing Agreement (Exhibit C to the Development Agreement) Page 4 of 4 HB -297- Item 11. - 15 EXHIBIT B CURRENT QUALIFYING INCOME AND RENT SCHEDULE BOARDWALK APARTMENT PROJECT HUNTINGTON BEACH, CALIFORNIA I. 2014 Orange County Income Information Household Size HCD Median HUD Median 1 Person $61,050 2 Persons 69,750 3 Persons 78,500 4 Persons 87,200 87,200 5 Persons 94,200 6 Persons 101,150 7 Persons 108,150 8 Persons 115,100 II. Household Income Limits as Defined by the California Health & Safety Code Very -Low Income Moderate income (Section S010S) (Section 50093) 1 Person $0 $33,750 $53,950 $73,250 2 Persons 0 38,550 61,650 - 83,700 3 Persons 0 43,350 69,350 - 94,200 4 Persons 0 - 48,150 77,050 - 104,650 5 Persons 0 - 52,050 83,250 - 113,000 6 Persons 0 55,900 89,400 - 121,400 7 Persons 0 - 59,750 95,550 - 129,750 8 Persons 0 63,600 101,750 138,150 III. Development Agreement Affordable Housing Cost Calculations Very -Low Income Moderate Income Studio 1-Bdrm 2-Bdrm Studio 1-Bdrm 2-Bdrm Section 50053 Benchmark Hhld Size 1 2 3 1 2 3 % of HCD Median Income 50% 50% 50% 120% 120% 120% Household Income for Rent Calculation 1 $30,525 $34,875 $39,250 $73,260 $83,700 $94,200 % of Income Allotted to Gross Rent 30% 30°/6 30% 30% 30% 30% Allowable Gross Rent $763 $872 $981 $1,832 $2,093 $2,355 (Less) Utilities Allowance 2 67 84 97 67 84 97 Allowable Net Rent $696 $788 $884 $1,765 $2,009 $2,258 1 The Development Agreement imposes a rent calculation standard for Moderate Income Households at the top of the Moderate Income category. This calculation does not comport with the Section 50053 methodology, and therefore these units cannot be counted towards the fulfillment of Section 33413 inclusionary housing production requirements. 2 Based on utilities published by (OCHA 10/1/2013). Includes Gas: Cooking & Water Heater; Electric: Basic & Space Heating;,w,4 Water & Sewer 0.N cl t('a 5'trV I GQ . Prepared by: Keyser Marston Associates, Inc. Item ll. - 16: Boardwalk Inc Aff_5 19 2014; Exh 8 DA 2014 - - - - - HB -298- CALIFORNIACIVIL •a .lc�..c�...c�c�.!c.. State of California County of On 2� before me, iKOA0s/ I L'� ate Here Insert Name and Title of thi Officer personally appeared ALLISON HILL Commission # 1999851 z a -s Notary Public- California z Orange County My Comm. Expires Dec 3.2016 Name(s) o{Signer(s) who proved to me on the basis of satisfactory evidence to be the personX whose names) Wart - subscribed to the within instrument and acknowledged to me that he/slfe4l:�ey executed the same in his/I; '#ei - authorized capacity, and that by his/herAhe+i; signaturex on the instrument the person(', or the entity upon behalf of which the person(,) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS myhand and ""��official seal. Place Notary Seal Above Signature:,A lli[>>_LX�- Signature of Notary Public OPTIONAL Though this section is optional, completing this information can deter alteration of the document or fraudulent reattachment of this form to an unintended document. Description of Attached Document W Ta Title or Type of Document: Document Date: Z 1 Number of Pages: 5 Signer(s) Other Than Named Above: Capacity(ies) Claimed by Signer(s) Signer's Name: ❑ Corporate Officer — Title(s): ❑ Partner — ❑ Limited ❑ General ❑ Individual ❑ Attorney in Fact ❑ Trustee ❑ Guardian or Conservator ❑ Other: Signer Is Representing: Signer's Name: ❑ Corporate Officer— Title(s): ❑ Partner — ❑ Limited ❑ General ❑ Individual ❑ Attorney in Fact ❑ Trustee ❑ Guardian or Conservator ❑ Other: Signer Is Representing: © 2013 National Notary Association • www.NationalNotary.org • 1-800-US NOTARY (1-800-876-6827) Item #5907 HB -299- Item 11. - 17 CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT CIVIL CODE § 1189 C. c <�..ac,=.",.�.,�t,�<�<-�<..s�<�<!�<!�<!�:..�.!��.!�;!�<!�t!�<�.!=�.�a�<,s�;,a;,�,,s�cs�'N�,•a:,s�,,s".:�,!�,•.�c �t,�;,�,!�t•�,•�<!�.!�<. State of Californian ,�� -- County of OIL{{ 6? t_ �,_ . I On SVz��1'q- before me, A�k1 Tkjau-c�- , Date J �-r-Here Insert Name and Title o the Officer personally appeared f��� I r&rfi�:g_ r-) Name(s) of Signer(s) ALLISON HILL Commission 1999857- a `=Q �:p. Notary Public - California i z •. .1t; z D Orange County My Comm. Expire s Dec 3.20t6 who proved to me on the basis of satisfactory evidence to be the person whose name is/are subscribed to the within instrument and acknowledged to me that ke/she/hey- executed the same in 4i6/her/t4E4 authorized capacity and that by #Is�her/toe* signatureN on the instrument the person(9), or the entity upon behalf of which the person(§) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Place Notary Seal Above Signature: OD 4&, 111A Signature of Notary Public OPTIONAL Though this section is optional, completing this information can deter alteration of the document or fraudulent reattachment of this form to an unintended document. Description of Attached Docym� DM �t7a Title or Type of Document: �LggP 7� Pwt_r.�nrT Document Date Number of Pages: Ste, v L� g r Signer(s) Other Than Named Above: Capacity(ies) Claimed by Signer(s) Signer's Name: ❑ Corporate Officer — Title(s): ❑ Partner — ❑ Limited ❑ General ❑ Individual ❑ Attorney in Fact ❑ Trustee ❑ Guardian or Conservator ❑ Other: Signer Is Representing: A NO Signer's Name: ❑ Corporate Officer — Title(s): ❑ Partner — ❑ Limited ❑ General ❑ Individual ❑ Attorney in Fact ❑ Trustee ❑ Guardian or Conservator ❑ Other: Signer Is Representing: Item 11. - 18 HB -300- ACKNOWLEDGMENT STATE OF CALIFORNIA ss COUNTY OF ORANGE On June 23, 2014, before me, A L. Esparza, Notary Public, personally appeared Joan L. Flynn and Matthew M. Harper who proved to me on the basis of satisfactory evidence to be the persons whose names are subscribed to the within instrument and acknowledged to me that they executed the same in their authorized capacities, and that by their signatures on the instrument the persons, or the entity upon behalf of which the persons acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. (Notary igna re) �•` P L. ESPARZA Commission # 2032750 Notary Public - California s Orange County Comm. Expires Aug4, 2017 -------------------- (Seal) HB _301_ Item 11. - 19 Ord. No. 4027 STATE OF CALIFORNIA ) COUNTY OF ORANGE ) ss: CITY OF HUNTINGTON BEACH ) I, JOAN L. FLYNN, the duly elected, qualified City Clerk of the City of Huntington Beach, and ex-officio Clerk of the City Council of said City, do hereby certify that the whole number of members of the City Council of the City of Huntington Beach is seven; that the foregoing ordinance was read to said City Council at a Regular meeting,thereof held on June 2, 2014, and was again read to said City Council at a Regular meeting thereof held on June 16, 2014,_ and was passed and adopted by the affirmative vote of at least a majority of all the members of said City Council. AYES: Katapodis, Hardy, Harper, Boardman, Shaw, Carchio NOES: Sullivan ABSENT: None ABSTAIN: None 1, Joan L. Flynn, CITY CLERK of the City of Huntington Beach and ex-officio Clerk of the City Council, do hereby certify that a synopsis ofthis ordinance has been published in the Huntington Beach Fountain Valley Independent on June 26, 2014. In accordance with the City Charter of said City Joan L. Flynn. City Clerk C' k- Se for De u City Clerk m J/4 0 a d CiUClerk and ex-officio Clerk of the City Council of the City of Huntington Beach, California Item 11. - 20 H13 - )02- This Document was electronically recorded by City of Huntington Beach RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 Attn: Director of Planning and Building Recorded in Official Records, Orange County Tom Daly, Clerk -Recorder IIIIIII IIIII IIIIII IIIII IIIII IIIII IIIII 1111111111111111111111175.00 2011000408735 04:09pm 08/18/11 66 406 Al 24 0.00 0.00 0.00 0.00 69.00 0.00 0.00 0.00 SPACE ABOVE THIS LINE RESERVED FOR RECORDER'S USE DEVELOPMENT AGREEMENT THIS DEVELOPMENT AGREEMENT ("Agreement") is made in Orange County, California, as of ,��� (�'.� (t'._ i 6 =:/ , 2011, by and between the CITY OF HUNTINGTON BEACH, a municipal corporation of the State of California (the "City") and Freeway Industrial Park, a California Corporation (the "Property Owner"), and Sares-Regis Group (the "Developer"). RECITALS A. The City is authorized pursuant to Government Code sections 65864 through 65869.5 and Huntington Beach Zoning and Subdivision Ordinance (HBZSO) Chapter 246 to enter into binding development agreements with persons or entities owning legal interests in real property located within the City. B. Property Owner is the owner of that certain real property more particularly described in Exhibit A attached hereto and incorporated herein by this reference (the "Property"). Developer has an option (the "Option") to acquire a 99 year ground leasehold interest in the Property pursuant to the terms of a ground lease (the "Ground Lease") between Property Owner, as ground lessor, and Developer, as ground lessee. In the event Developer enters into the Ground Lease, Developer intends to develop the Project (as defined below). C. The City and Property Owner and Developer each desire to enter into this Agreement affecting the Property in conformance with Government Code section 65864 et seq. and HBZSO 246 in order to achieve the mutually beneficial development of the Property in accordance with this Agreement. D. The Developer seeks to develop a project on the Property consisting of 487 dwelling units, 9,000 square feet of resident recreation area, 4,500 square feet of leasing office area, and 10,000 square feet of commercial/retail uses, as more particularly set forth in the Development Plan (collectively, the "Project"), attached as Exhibit B and incorporated herein, all in accordance with the Beach and Edinger Corridors Specific Plan, as may be amended from time to time (the Page 1 of 20 HB -303- Item 11. - 21 "Specific Plan") adopted by the City Council of the City (the "City Council") on March 1, 2010. E. The Planning Commission of the City (the "Planning Commission") certified an environmental impact report (the "EIR") for the Project on February 8, 2011 and approved the Site Plan Review. The Site Plan Review became effective February 18, 2011. F. The City, Property Owner and the Developer each mutually desire to obtain the binding agreement of one another to permit and ensure that the Property is developed strictly in accordance with the provisions of this Agreement. G. This Agreement will benefit the Property Owner, Developer and the City by eliminating uncertainty in planning and providing for the orderly development of the Project. Specifically, this Agreement (1) eliminates uncertainty about the validity of exactions to be imposed by the City, (2) provides for the construction of needed affordable housing, (3) ensures that development of the Property occurs within a timeframe generally consistent with that analyzed in the EIR, and (4) generally serves the public interest within the city and the surrounding region. H. The Planning Commission and City Council have each given notice of their intention to consider this Agreement, and have each conducted public hearings thereon pursuant to the relevant provisions of the Government Code. The City Council has found that the provisions of this Agreement are consistent with the City's 1996 General Plan for development within the City, as amended (the "General Plan"), City zoning ordinances, as amended, and the Beach and Edinger Corridors Specific Plan. The Planning Commission and City Council have also specifically considered the impacts and benefits of the Project upon the welfare of the residents of the City and the surrounding region. The City Council has determined that this Agreement is beneficial to the residents of the City and is consistent with the present public health, safety and welfare needs of the residents of the City and the surrounding region. I. On June 28, 2011 , the Planning Commission held a duly noticed public hearing on this Agreement. J. On August 01, 201,1the City Council held a duly noticed public hearing on this Agreement. NOW, THEREFORE, in consideration of the foregoing recitals which are hereby incorporated into the operative provisions of this Agreement by this reference and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the City, Property Owner and the Developer agree as follows: 1. Definitions. Page 2 of 20 Item 11. - 22 l-113.304_ 1.1 "Affordable Dwelling Units" shall mean a Dwelling Unit available at Affordable Rent. 1.2 "Affordable Housing Agreement" shall collectively mean that certain Affordable Housing Rental Agreement (AHRA) by and between the RDA, City, Property Owner and Developer together with all attachments thereto, which was approved as to form as part of this Development Agreement. AHRA shall also include any and all amendments or modifications thereto. 1.3 "Affordable Rent" shall have the same meaning set forth in California Health and Safety Code section 50053, as more specifically set forth in the Agreement Containing Covenants Affecting Real Property to be attached to the Affordable Housing Agreement. 1.4 "Applicable Rules" means the rules, regulations, ordinances and official policies of the City which were in force as of the Effective Date (as defined below), including, but not limited to, the General Plan, the Specific Plan, City zoning ordinances and other entitlements, development conditions and standards, public works standards, subdivision regulations, grading requirements, and provisions related to density, growth management, environmental considerations, and design criteria applicable to the Project. Applicable Rules shall not include building standards adopted by the City pursuant to Health and Safety Code sections 17922 and 17958.5. 1.5 "Area Median Income: shall mean the area median income for the County of Orange ("County") as published annually by the Department of Housing and Community Development and determined in accordance with the U.S. Department of Housing and Urban Development criteria then in effect and published from time to time. For purposes of this Agreement, the qualifying limits shall be those limits for the County, as set forth in Title 25, California Code of Regulations, section 6932, as that section may be amended, modified or recodified from time to time. If the California Code of Regulations is amended or modified during the term of this Agreement so that such regulations do not specify the area median income from the County, the City and Developer shall negotiate in good faith to determine an equivalent authoritative source which determines median income for the County. 1.6 "City Council" shall mean the City Council of the City. 1.7 "City Manager" shall mean the City Manager of the City. 1.8 "County" shall mean Orange County. 1.9 'Developer" shall mean Sares-Regis Group and any of its successors and assigns to the Ground Lease for the Property. Page 3 of 20 NB -305- Item 11. - 23 1.10 "Development Impact Fees" means and includes all fees charged by the City in connection with the application, processing and approval or issuance of permits for the development of property, including, without limitation: application fees; permit processing fees; inspection fees; utility capacity fees; service or connection fees; library/cultural enrichment fees, traffic impact fees; development impact or major facilities fees; park fees; flood control fees; environmental impact mitigation fees; and any similar governmental fees, charges and exactions required for the development of the Project. 1.11 "Discretionary Actions" and "Discretionary Approvals" means those actions and approvals which require the exercise of judgment, or imposition of a condition or obligation, by any officer, employee, review board, commission or department of the City. Discretionary Actions and Discretionary Approvals are distinguished from activities or approvals which merely require any officer, employee, review board, commission or department of the City to determine whether or not there has been compliance with applicable statutes, ordinances, regulations or conditions of approval. 1.12 "Dwelling Unit" shall mean a place in the Project that is legally available to be rented by a person or family. 1.13 "Effective Date" means the date on which the ordinance approving this Agreement has been adopted by the City. 1.14 "Moderate Income Household" means persons and families whose gross incomes do not exceed one hundred twenty percent (120%) of the Area Median Income, adjusted for size. 1.15 "Market Rate Rental Dwelling Unit" shall mean those Dwelling Units in the Project that are not Affordable Dwelling Units nor governed by the Affordable Housing Agreement. 1.16 "Periodic Review" shall have the meaning assigned to such term in Paragraph 10(a). 1.17 "Planning Commission" means the Planning Commission of the City. 1.18 "Project" shall mean that development contemplated pursuant to the Development Plan, attached as Exhibit B, approved by Site Plan Review No. 10-004. 1.19 "RDA" shall mean the Huntington Beach Redevelopment Authority. Page 4 of 20 Item 11. - 24 HS -306- 1.20 "Specific Plan" shall mean the Beach and Edinger Corridors Specific Plan adopted by the City Council on March 1, 2010, as may be amended from time to time. 1.21 "Subsequent Rules" means the rules, regulations, ordinances and official policies of the City, adopted and becoming operative after the Effective Date, including, but not limited to, the General Plan, the Specific Plan, City zoning ordinances and other entitlements, development conditions and standards, public works standards, subdivision regulations, grading requirements, and other provisions related to density, growth management, environmental considerations, and design criteria. [See also paragraph 3 below.] 1.22 "Very Low Income Household" shall mean persons and families whose gross incomes do not exceed fifty percent (50%) of the Area Median Income, adjusted for size. 2. Term of Agreement. This Agreement shall become operative and commence upon the Effective Date and remain in effect for a term of ten (10) years. Except for continuing obligations regarding affordable housing covenants and requirements, upon the expiration or termination of the term, this Agreement shall be deemed terminated and have no further force and effect. 3. Vested Right to Develop the Project. Subject to Paragraphs 3.3 through 3.8, below, and the Applicable Rules, the City hereby grants to the Property Owner and Developer the vested right to develop the Project on the Property to the extent and in the manner provided in this Agreement. Subject to Paragraphs 3.3 through 3.8, below, any change in the Applicable Rules adopted or becoming effective after the Effective Date (Subsequent Rules) shall not be applicable to or binding upon the Projector the Property. Subject to Paragraphs 3.3 through 3.8, below, this Agreement will bind the City to the terms and obligations specified in this Agreement and will limit, to the degree specified in this Agreement and under state law, the future exercise of the City's ability to regulate development of the Project. 3.1 No Conflicting Enactments. Subject to Paragraphs 3.3 through 3.8, below, neither the City Council nor any department of the City shall enact rules, regulations, ordinances or other measures which relate to the rate, timing, sequencing, density, intensity or configuration of the development of any part of the Project which is inconsistent or in conflict with this Agreement during the term of this Development Agreement. 3.2 Initiative Measures. Subject to Paragraphs 3.3 through 3.8, below, the Property Owner, Developer and City intend that no moratorium or other limitation (whether relating to the rate, timing or sequence of the development of all or any part of the Project and whether enacted by initiative or otherwise) affecting parcel or subdivision maps (whether tentative, vesting tentative or final), building permits, certificates of occupancy or other Page 5 of 20 IJB _3Q7_ Item 11. - 25 entitlements shall apply to the Project to the extent such moratorium or other limitation is inconsistent or conflicts with this Agreement. 3.3 Federal or State Laws. Notwithstanding any provision to the contrary contained herein, the City expressly reserves the right to modify any of the Applicable Rules to the extent necessary to comply with applicable federal or state laws, codes or regulations which preempt local jurisdiction including, by way of example, and without limiting the generality of the foregoing, the California Environmental Quality Act, all building codes, and any safety regulations, but such modifications shall be made only to the extent required thereunder. 3.4 Emergency. Notwithstanding any provision to the contrary contained herein, the City expressly reserves the right to apply to the Project any development moratorium, limitation on the delivery of City -provided utility services, or other generally applicable emergency rule, regulation, law or ordinance affecting land use: (1) which is based on genuine health, safety and general welfare concerns (other than general growth management issues); (2) which arises out of a documented emergency situation, as declared by the President of the United States, Governor of California, or the Mayor, City Council or City Manager of the City; and (3) based upon its terms or its effect as applied, does not apply exclusively, primarily or disproportionately to the Project or the Property. 3.5 Project Completion. This Agreement and the EIR and associated findings, are based on the expectation that the Project will be constructed as follows: up to 430 Market Rate Rental Dwelling Units, 57 Affordable Dwelling Units and up to 14,500 square feet of commercial/office space will be completed for occupancy during the term of the Agreement. 3.6 Public Health Concerns. Notwithstanding any provision to the contrary contained herein, the City expressly reserves the right to apply to the Project any generally applicable rule, regulation, law or ordinance which does not affect the land use or development of the Project and which is based on concerns for the public health, safety or general welfare, including, but not limited to, building codes not otherwise preempted by State law. 3.7 New Engineering and Construction Standards. Notwithstanding any provision to the contrary contained herein, the City expressly reserves the right to modify any of the Applicable Rules if the City adopts new and/or amended regulations governing engineering and construction and grading standards and specifications including, without limitation, any and all uniform codes adopted by the City, including local amendments to these codes pursuant to state law allowing for such amendments; provided that such codes are uniformly applied to all new development projects of similar type as the Project within the City and provided further that any such modifications to grading standards can only be imposed prior to grading and any such modifications to Page 6 of 20 Item 11. - 26 IAB -308- engineering or construction standards can only be applied prior to the initiation of construction. Such codes include, without limitation, the City's Uniform Housing Code, Building Code, Plumbing Code, Mechanical Code, Electrical Code and Fire Code. 3.8 Cooperation and Indemnification. City agrees to cooperate with Property Owner and Developer in all reasonable manners in order to keep this Agreement in full force and effect. Notwithstanding the preceding sentence, in the event any legal action instituted by a third party or other government entity or official challenging the validity of this Agreement, the City and Developer agree to cooperate in defending such action, with the Developer to indemnify the City pursuant to Paragraph 17 of this Agreement. In the event of any litigation challenging the effectiveness of this Agreement or any portion thereof, this Agreement shall remain in full force and effect while such litigation, including any appellate review, is pending, unless a court of competent jurisdiction orders otherwise. 4. Development of the Property. (a) Permitted Uses. The Property Owner and Developer agree that the Property shall only be developed in accordance with the Development Plan and any conditions and mitigation measures imposed on the Project through final approval of the Project, and the provisions of this Development Agreement. Notwithstanding anything set forth in this Agreement to the contrary, unless Developer proceed with development of the Property, Property Owner and Developer are not obligated by the terms of this Agreement to affirmatively act to develop all or any portion of the Project, pay any sums of money, dedicate any land, indemnify any party, or to otherwise meet or perform any obligation with respect to the Project, except and only as a condition of development of any portion of the Project. (b) Development Standards. All development and design requirements and standards applicable to the Project shall conform to the Beach and Edinger Corridors Specific Plan, the Huntington Beach Municipal Code, and any Applicable Rules. (c) Development Impact Fees. In addition to the obligations set forth elsewhere in this Agreement, Developer shall be responsible for paying when due all Development Impact Fees in connection with development of the Project at the rates then in effect. Subject to all applicable laws then in effect, City shall have the right: (i) to charge and apply to the Property all Development Impact Fees as may be in effect at the time applicable to the Project; and (ii) to increase or otherwise modify any and all Development Impact Fees applicable to the Project. Notwithstanding the Development Impact Fee obligation above, required Traffic Impact Fees for the Development Plan shall be satisfied by the payment of $588,597.00 to the City Traffic Impact Fee Fund. Such payment shall be made Page 7 of 20 Hg _309_ Item 11. - 27 prior to issuance of certificates of occupancy. Payment of the Traffic Impact Fee amount set forth herein shall constitute satisfactory mitigation for Environmental Impact Report No. 10-002 Mitigation Measures 4.13-1 through 4.13-18. 5. Park Fee Credit and In -Lieu Fees. The City acknowledges, as specified in the Specific Plan, approximately 0.50 acre of the project will consist of public open space. Pursuant to conditions of approval, the public open space shall be available for public use as provided therein so long as the Project is developed and remains operational. Upon recordation of the easement for public use and full improvement of the public open space, City shall grant credit ("ParkFee Credit") to Developer in an amount equal to the sum of the value of the land and costs reasonably incurred by Developer in connection with the engineering and construction of the approximately 0.50 acre. Such Park Fee Credit shall be applied against Park Fees due for development within the Project. To the extent that, at the time of issuance of building permits for any portion of the project, adequate Park Fee Credits do not exist to cover the applicable Park Fees, the City shall not require the payment of Park Fees until the approval of a final inspection for that portion of the project. If at the time of approval of final inspection, adequate Park Fee Credits still do not exist to cover the applicable Park Fees, then Developer shall pay the Park Fees then due to the City. At such time, if it occurs, that adequate Park Fee Credits have accrued to cover amounts previously paid by the Developer to the City for the Park Fees, the City shall refund any excess of amounts paid over credits to the Developer. 6. Affordable Housing. The Project is subject to the requirement of providing a total of 57 Affordable Dwelling Units, all of which shall be rental units and must remain Affordable Dwelling Units for at least fifty-five (55) years. The City and Developer agree as a condition precedent to Development that an Affordable Housing Agreement be executed to memorialize the terms and conditions of the affordable housing components (Attached Hereto as Exhibit Q. The Developer will provide affordable units for rent, which shall be made available as follows: 10 units to and occupied by Very Low Income Households and 47 units made available to and occupied by Moderate Income Households. The Developer agrees to record said affordability covenants and Deed of trust in favor of the City to assure that affordability covenants run with the land and remain in effect for the affordability period. The Developer agrees to comply with all terms and provisions of the Affordable Housing Agreement and its attachments and acknowledges that any default thereunder shall also constitute a default under this Agreement. Prior to approval of a Final Inspection for the 60th Market Rate Rental Dwelling Unit, Developer shall have completed construction and shall have received all required Final Inspections for two rental Very Low Income Household Affordable Dwelling Units and six rental Moderate Income Household Affordable Dwelling Page 8 of 20 Item 11. - 28 14B 10- Units; and concurrent with issuance of a Final Inspection for the 4301h Market Rate Rental Dwelling Unit, Developer shall have completed construction and shall have received required Final Inspection for all 57 Affordable Dwelling Units. 7. Extension of Project Approvals. Unless a longer term would result under otherwise applicable state law, the term of any permits approved as part of the Project approvals shall be automatically extended for the term of this Agreement. 8. Additional Developer Obligations: Developer shall, at the time that a building permit is issued by City for the Development Plan, deposit with the City the amount of $250,000.00 ("Deposit"), which shall be used to pay for the costs of planning, design, permits and construction of a certain pedestrian path ("the Facility") between the Property and The Village at Bella Terra/Costco property(ies) east of the railroad tracks (as set forth in the Development Plan) and which shall constitute the maximum amount due from Developer for this facility. The Developer's final contribution amount toward the planning, design, permitting and construction of the Facility shall be the lesser of: (i) $250,000; (ii) 50 percent of the total cost of the Facility; or (iii) Developer's fair share based on the contributions of others that will benefit from the Facility. To the extent Developer's final contribution is less than its Deposit, the remainder portion of the Deposit shall be returned to Developer. The Developer entity that actually posts the Deposit shall be entitled to reimbursement for any unspent portion of the Deposit if construction of the pedestrian path has not commenced prior to expiration of this agreement even if such entity is no longer the Developer of the Project at the time the unspent portion of the Deposit is due to be reimbursed. 9. Subsequent Discretionary Action and Approval. The City agrees not to unreasonably withhold, condition or delay any Discretionary Action or Discretionary Approval or other action or approval by the City which may be required by the Project subsequent to the execution of this Agreement. Upon the filing of a complete application and payment of appropriate processing fees by Developer, the City shall promptly commence and diligently schedule and convene all required public hearings in an expeditious manner consistent with the law and process all Discretionary Actions and Discretionary Approvals in an expeditious manner. 10. Compliance Review. (a) Periodic Review. Pursuant to Government Code section 65865.1, the City Manager or his or her designee shall, not less than once in every twelve (12) months, review the Project and this Agreement to ascertain whether or not the Developer is in full compliance with the terms of the Agreement (the "Periodic Review"). Page 9 of 20 H 13-311- Item 11. - 29 (b) Review Procedure. During a Periodic Review, Developer shall provide information reasonably requested by the City Manager or his or her designee that the Project is being developed in good faith compliance with the terms of this Agreement. If, as a result of a Periodic Review, the City finds and determines on the basis of substantial evidence that the Developer has not complied in good faith with the terms or conditions of this Agreement, the City shall issue a written "Notice of Non -Compliance" to the Developer specifying the grounds therefore and all facts demonstrating such non-compliance. The Developer's failure to cure the alleged non-compliance within sixty (60) days after receipt of the notice, or, if such noncompliance is not capable of being cured within sixty (60) days, the Developer's failure to initiate all actions required to cure such non-compliance within sixty (60) days after receipt of the notice and completion of the cure of such non-compliance within one hundred twenty (120) days, shall constitute a default under this Agreement on the part of the Developer and shall constitute grounds for the termination of this Agreement by the City as provided for below. If requested by Developer, City agrees to provide to Developer a certificate that Developer is in compliance with the terms of this Agreement, provided Developer reimburses City for all reasonable and direct costs and fees incurred by City with respect thereto. (c) Termination or Modification for Non -Compliance. Pursuant to Government Code section 65865.1, if the City Council finds and determines, on the basis of substantial evidence, that the Developer has not complied in good faith with the terms or conditions of this Agreement, the City Council may modify or terminate this Agreement. Any action by the City with respect to the termination or modification of this Agreement shall comply with the notice and public hearing requirements of Government Code section 65867 in addition to any other notice required by law. Additionally, the City shall give the Developer written notice of its intention to terminate or modify this Agreement and shall grant the Developer a reasonable opportunity to be heard on the matter and to oppose such termination or modification by the City. 11. Modification, Amendment, Cancellation or Termination. 11.1 Amendment and Cancellation. Pursuant to Government Code section 65868, this Agreement may be amended or canceled, in whole or in part, by mutual written consent of the City, Property Owner and the Developer or their successors in interest. Public notice of the parties' intention to amend or cancel any portion of this Agreement shall be given in the manner provided by Government code section 65867. Any amendment to the Agreement shall be subject to the provisions of Government Code section 65867.5. 11.2 Modification. The City Planning Director, with the consent of the Developer and the Property Owner, may make minor modifications to the Agreement without the need for formal action by the City's Planning Commission or City Council as long as such modifications do not alter the Term of this Development Agreement, the permitted uses, density or intensity of uses, the Page 10 of 20 Item 11. - 30 HB - )12)- maximum height or size of buildings, provisions for reservations or Dedication of land, conditions, terms, restrictions and requirements relating to Subsequent Discretionary Actions and Approvals, and monetary contributions by Developer. 11.3 Termination By Property Owner. Property Owner shall have the right to unilaterally terminate this Agreement, if Developer fails to execute the Ground Lease for the Property within the prescribed time periods designated in the Option, by sending written notice of such termination to City and Developer. In the event Developer does not enter into the Ground Lease and Property Owner terminates this Agreement, no party shall have any liability to another party under this Agreement. 12. Defaults, Notice and Cure Periods, Events of Default and Remedies. 12.1 Default By the Developer. 12.1.1 Default. If the Developer does not perform its obligations under this Agreement in a timely manner, the City may exercise all rights and remedies provided in this Agreement, provided the City shall have first given written notice to the Developer as provided in Paragraph 17(a) hereof. 12.1.2 Notice of Default. If the Developer does not perform its obligations under this Agreement in a timely manner, the City through the City Manager may submit to the Developer a written notice of default in the manner prescribed in Paragraph 17(a) identifying with specificity those obligations of the Developer under this Agreement which have not been timely performed. Upon receipt of any such written notice of default, the Developer shall promptly commence to cure the identified default(s) at the earliest reasonable time after receipt of any such written notice of default and shall complete the cure of any such default(s) no later than sixty (60) days after receipt of any such written notice of default, or if such default(s) is not capable of being cured within sixty (60) days, no later than one hundred twenty (120) days after receipt of any such written notice of default, provided the Developer commences the cure of any such default(s) within such sixty (60) day period and thereafter diligently pursues such cure at all times until any such default(s) is cured. 12.1.3 Failure to Cure Default Procedure. If after the cure period provided in Paragraph 12.1.2 has elapsed, the City Manager finds and determines the Developer, or its successors, transferees and/or assignees, as the case may be, remains in default and that the City intends to terminate or modify this Agreement, or those transferred or assigned rights and obligations, as the case may be, the City's Planning and Building Director shall make a report to the Planning Commission and then set a public hearing before the Planning Commission in accordance with the notice and hearing requirements of Government Code sections 65867 and 65868. If after public hearing, the Planning Commission finds and determines, on the basis of substantial evidence, that the Developer, or its successors, transferees and/or assigns, as the case may be, has not cured a default under this Agreement pursuant to this Paragraph 12, and that the City shall terminate or modify this Agreement, or those transferred or assigned rights and Page 11 of 20 BB 13)_ Item 11. - 31 obligations, as the case may be, the Developer, and its successors, transferees and/or assigns, shall be entitled to appeal that finding and determination to the City Council. Such right of appeal shall include, but not be limited to, an objection to the manner in which the City intends to modify this Agreement if the City intends as a result of a default of the Developer, or one of its successors or assigns, to modify this Agreement. In the event of a finding and determination that all defaults are cured, there shall be no appeal by any person or entity. Nothing in this Paragraph 12 or this Agreement shall be construed as modifying or abrogating the City Council's review of Planning Commission actions or limiting the City's rights and remedies available at law or in equity, which shall include (without limitation) compelling the specific performance of the Developer's obligations under this Agreement. 12.1.4 Termination or Modification of Agreements. The City may terminate or modify this Agreement, or those transferred or assigned rights and obligations, as the case may be, after such final determination of the City Council or, where no appeal is taken, after the expiration of the applicable appeal periods described herein. There shall be no modifications of this Agreement unless the City Council acts pursuant to Government Code sections 65967.5 and 65868, irrespective of whether an appeal is taken as provided herein. 12.1.5 Lender Protection Provisions. 12.1.5.1 Notice of Default. In addition to the notice provisions set forth in Paragraph 12.1.2, the City shall send a copy of any notice of default sent to the Developer or any of its successors or assigns to any lender that has made a loan then secured by a deed of trust against the Property, or a portion thereof, provided such lender shall have (a) delivered to the City written notice in the manner provided in Paragraph 17(a) of such lender's election to receive a copy of any such written notice of default and (b) provided to the City a recorded copy of any such deed of trust. Any such lender that makes a loan secured by a deed of trust against the Property, or a portion thereof, and delivers a written notice to the City and provides the City with a recorded copy of any such deed of trust in accordance with the provisions of this Paragraph 12.1.5.1 is herein referred to as a "Qualified Lender." 12.1.5.2 Right of a Qualified Lender to Cure a Default. The City shall send a written notice of any Developer default to each Qualified Lender. From and after receipt of any such written notice of default, each Qualified Lender shall have the right to cure any such default within the same cure periods as provided to the Developer hereunder. If the nature of any such default is such that a Qualified Lender cannot reasonably cure any such default without being the ground lessee of the Property, or the applicable portion thereof, (as reasonably determined by the City), then so long as the Qualified Lender(s) is (are) diligently proceeding (as reasonably determined by the City) to foreclose the lien of its deed of trust against the ground lessee of the Property, or the applicable portion thereof, and after completing any such foreclosure promptly commences the cure of any such default and thereafter diligently pursues the cure of such default to completion, then such Qualified Lender shall have any additional sixty (60) days following such foreclosure to cure any such default. Page 12 of 20 Item 11. - 32 HB -314- 12.1.5.3 Exercise of City's Remedies. Notwithstanding any other provision of this Agreement, the City shall not exercise any right or remedy to cancel or amend this Agreement during any cure period. 12.2 Default by the City. 12.2.1 Default. In the event the City does not accept, process or render a decision in a timely manner on necessary development permits, entitlements, or other land use or building approvals for use as provided in this Agreement upon compliance with the requirements therefore, or as otherwise agreed to by the City and Developer, or the City otherwise defaults under the provisions of this Agreement, subject to Paragraph 12.3, the Developer shall have all rights and remedies provided herein or by applicable law, which shall include compelling the specific performance of the City's obligations under this Agreement provided the Developer has first complied with the procedures in Paragraph 12.2.2. 12.2.2 Notice of Default. Prior to the exercise of any other right or remedy arising out of a default by the City under this Agreement, the Developer shall first submit to the City a written notice of default stating with specificity those obligations which have not been performed under this Agreement. Upon receipt of the notice of default, the City shall promptly commence to cure the identified default(s) at the earliest reasonable time after receipt of the notice of default and shall complete the cure of such default(s) no later than thirty (30) days after receipt of the notice of default, or such longer period as is reasonably necessary to remedy such default(s), provided the City shall continuously and diligently pursue each remedy at all times until such default(s) is cured. In the case of a dispute as to whether the City is in default under this Agreement or whether the City has cured the default, or to seek the enforcement of this Agreement, the City and the Developer may submit the matter to negotiation/mediation pursuant to Paragraph 17(n) of this Agreement. 12.3 Monetary Damages. The Developer and City acknowledge that neither the City nor the Developer would have entered into this Agreement if either were liable for monetary damages under or with respect to this Agreement or the application thereof. Both the City and the Developer agree and recognize that, as a practical matter, it may not be possible to determine an amount of monetary damages which would adequately compensate the Developer for its investment of time and financial resources in planning to arrive at the kind, location, intensity of use, and improvements for the Project, nor to calculate the consideration the City would require to enter into this Agreement to justify such exposure. Therefore, the City and the Developer agree that neither shall be liable for monetary damages under or with respect to this Agreement or the application thereof and the City and the Developer covenant not to sue for or claim any monetary damages for the breach of any provision of this agreement. This foregoing waiver shall not be deemed to apply to any fees or other monetary amounts specifically required to be paid by the Developer to the City pursuant to this Agreement including but not limited to, any amounts due pursuant to Paragraph 17(g) and 17(m). The foregoing waiver shall also not be deemed to apply to any fees or Page 13 of 20 HB 1 s_ Item 11. - 33 other monetary amounts specifically required to be paid or credited by the City to the Developer pursuant to this Agreement, including, but not limited to any fee credits specifically required to be credited by City to Developer or its assignee(s). 12.4 No Liability of Property Owner. Notwithstanding anything to the contrary herein, in the event Developer does enter into the Ground Lease for the Property, Property Owner shall not be liable or responsible for any of Developer's obligations under this Agreement or for any default or breach of this Agreement by Developer. 13. Administration of Agreement and Resolution of Disputes. The Developer shall at all times have the right to appeal to the City Council any decision or determination made by any employee, agent or other representative of the City concerning the Project or the interpretation and administration of this Agreement. All City Council decisions or determinations regarding the Project or the administration of this Agreement shall also be subject to judicial review pursuant to Code of Civil Procedure section 1094.5, provided that, pursuant to Code of Civil Procedure section 1094.6, any such action must be filed in a court of competent jurisdiction not later than ninety (90) days after the date on which the City Council's decision becomes final. In addition, in the event the Developer and the City cannot agree whether a default on the part of the Developer, or any of its successors or assigns, under this Agreement exists or whether or not any such default has been cured, then the City or the Developer may submit the matter to negotiation/mediation pursuant to Paragraph 17(n). 14. Recordation of this Agreement. Pursuant to Government Code section 65868.5, the City Clerk shall record a copy of this Agreement in the Official Records of the County within ten (10) days after the mutual execution of this Agreement. 15. Constructive Notice and Acceptance. Every person or entity who now or hereafter owns or acquires any right, title or interest in or to any portion of the Property is, and shall be, conclusively deemed to have consented and agreed to every provision contained herein, whether or not any reference to this Agreement is contained in the instrument by which such person acquired an interest in the Property. 16. No Third Party Beneficiaries. This Agreement is made and entered into for the sole protection and benefit of the City, the Developer, the Property Owner and their respective successors and assigns. No other person or entity shall have any right of action based upon any provision of this Agreement. 17. Miscellaneous. (a) Notices. All notices which are allowed or required to be given hereunder shall be in writing and (1) shall be deemed given and received when personally delivered or (2) shall be sent by registered or certified mail or overnight mail service, addressed to the applicable designated person by one party to the other in writing, and shall be deemed received on the second business day after such mailing. Page 14 of 20 Item 11. - 34 H B 1 6- If to City: City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 Attn: City Manager Tel. No.: (714) 536-5575 Fax No.: (714) 536-5233 If to Developer: Sares-Regis Group 18825 Bardeen Avenue Irvine, CA 92612 Attn: Michael J. Winter Tel. No. (949) 809-2523 Fax. No. (949) 253-0475 Allen Matkins 1900 Main Street, Suite 500 Irvine, CA 92614 Attn: William R. Devine Te. No. (949) 553-1313 Fax. No. (949) 553-8354 If to Property Owner: Freeway Industrial Park 2032 La Colina Drive Santa Ana, CA 92705 Attn: Janette Ditkowsky Tel. No. (714) 744-4526 Fax. No. (714) 532-9040 Palmieri, Tyler 2603 Main Street, Suite 1300 Irvine, CA 92614 Attn: Robert C. Ihrke Tel. No. (949) 851-9400 Fax. No. (949) 851-1554 (b) Severability. If any part of this Agreement is declared invalid for any reason, such invalidity shall not affect the validity of the remainder of the Agreement unless the invalid provision is a material part of the Agreement. The other parts of this Agreement shall remain in effect as if this Agreement had been executed without the invalid part. In the event any material provision of this Agreement is determined to be invalid, void or voidable, City or Developer may terminate this Agreement. (c) Entire Agreement; Conflicts. This Agreement represents the entire agreement between the City and the Developer with respect to the subject matter hereof and supersedes all prior agreements and understandings, whether oral or written, between the City and the Developer with respect to the matters contained in this Agreement. Should any or all of the provisions of this Agreement be found to be in Page 15 of 20 lily 1 7_ Item 11. - 35 conflict with any other provision or provisions found in the Applicable Rules or the Subsequent Applicable Rules, then the provisions of this Agreement shall govern and prevail. (d) Further Assurances. The City and the Developer agree to perform, from time to time, such further acts and to execute and deliver such further instruments reasonably to effect the intents and purposes of this Agreement, provided that the intended obligations of the City and the Developer are not thereby modified. (e) Inurement and Assignment. This Agreement shall inure to the benefit of and bind the successors and assigns of the City and the Developer, may be assigned by either the City or the Developer to any party or parties purchasing all or any part of the Property, or any interest therein pursuant to the provisions of this Paragraph 26(e). The specific rights and obligations of this Agreement shall be deemed covenants running with the land that concern and affect Developer's ground leasehold interest in the Property. Prior to Developer's assignment of any rights, duties or obligations under this Agreement, the Developer shall present such information required by the City at its sole discretion to demonstrate to the City's satisfaction that the proposed successor and/or assignee has the financial ability and experience to fulfill those specific rights, duties and obligations under the Agreement that the successor and/or assignee would assume. In addition, the Developer and the proposed assignee shall present to the City a signed agreement delineating the right to use the credits established by this Agreement as between such parties. City shall have the right to approve the proposed successor and/or assignee, provided that the City's approval may not be unreasonably withheld, conditioned or delayed. The provisions of this Paragraph 26(e) shall be self-executing and shall not require the execution or recordation of any further document or instrument. (f) Negation of Agency. The City and the Developer acknowledge that, in entering into and performing under this Agreement, each is acting as an independent entity and not as an agent of the other in any respect. Nothing contained herein or in any document executed in connection herewith shall be construed as making the City and the Developer joint venture's, partners or employer/employee. (g) Attomey's Fees. In the event of any claim, dispute or controversy arising out of or relating to this Agreement, including an action for declaratory relief, the prevailing party in such action or proceeding shall not be entitled to recover its court costs and reasonable out-of-pocket expenses. (h) Waiver. No waiver of any provision of this Agreement shall be effective unless in writing and signed by a duly authorized representative of the party against whom enforcement of a waiver is sought. (i) Force Majeure. Performance by either party hereunder shall not be deemed to be in default where delays or defaults are due to one or more of the following events, providing that any one or more of such event(s) actually delays or interferes with the timely performance of the matter to which it would apply and despite the exercise of diligence and good business practices and such event(s) are beyond the Page 16 of 20 Item 11. - 36 Ha 1 b- reasonable control of the parry claiming such interference: war, terrorism, terrorist acts, insurrection, strikes, lock -outs, unavailability in the marketplace of essential labor, tools, materials or supplies, failure of any contractor, subcontractor, or consultant to timely perform (so long as Developer is not otherwise in default of any obligation under this Agreement and is exercising commercially reasonable diligence of such contractor, subcontractor or consultant to perform, riots, floods, earthquakes, fires, casualties, acts of God, acts of the public enemy, epidemics, quarantine restrictions, freight embargoes, lack of transportation, governmental restrictions or priority, or unusually severe weather. An extension of time for any such cause (a "Force Majeure Delay") shall be for the period of the enforced delay and shall commence to run from the time of the commencement of the cause, if notice by the party claiming such extension is sent to the other parry within thirty (30) days of actual knowledge of the commencement of the cause. Notwithstanding the foregoing, none of the foregoing events shall constitute a Force Majeure Delay unless and until the party claiming such delay and interference delivers to the other party written notice describing the event, its cause, when and how such party obtained knowledge, the date and the event commenced, and the estimated delay resulting therefrom. 0) Parag_raph Headings. The paragraph headings contained in this Agreement are for convenience and identification only and shall not be deemed to limit or define the contents to which they relate. (k) Time of Essence. Time is of the essence of this Agreement, and all performances required hereunder shall be completed within the time periods specified. Any failure of performance shall be deemed as a material breach of this Agreement. (1) Counterparts. This Agreement and any modifications hereto may be executed in any number of counterparts with the same force and effect as if executed in the form of a single document. (m) Indemnification. The Developer agrees, as a condition of approval of this Agreement, to indemnify, defend and hold harmless at the Developer's expense, the City, the City Council, and the City's agents, officers and employees from and against any claim, action or proceeding to attack, review, set aside, void or annul the approval of this Agreement, the Specific Plan or EIR to determine the reasonableness, legality or validity of any provision hereof or obligation contained herein. Developer also agrees to indemnify the City, the City Council, and the City's officials, agents and employees for any claims, acts or proceedings relating to the Project's affordable housing requirements, including, but not limited to, any challenge to the City's Housing Element arising from such requirements. The indemnity described in this section is not subject to the provisions of paragraph 4.a. providing that obligations cease if the Project does not go forward. The City shall promptly notify the Developer of any such claim, action or proceeding of which the City receives notice, and the City will cooperate fully with the Developer in the defense thereof. The Developer shall provide a defense to the City with counsel Page 17 of 20 HB 19_ Item 11. - 37 reasonably selected by Developer and City to defend both the City and Developer, and shall reimburse the City for any court costs which the City may be required to pay as a result of any such claim, action or proceeding. The City may, in its sole discretion, participate in the defense of any such claim, action or proceeding at its own expense, but such participation shall not relieve the Developer of the obligations of this Paragraph 25(m). (n) Hold Harmless Agreement. City and Developer mutually agree to, and shall hold each other and Property Owner and each of the other's elective and appointed councils, boards, commissions, directors, officers, partners, agents, representatives and employees harmless from any liability for damage or claims for personal injury, including death, and from claims for property damage which may arise from the activities of the other's or contractor's, subcontractors, agents, or employees which relate to the Project whether such activities be by City or Developer, or by any of City's or the Developer's contractors, subcontractors, or by any one or more persons indirectly employed by, or acting as agent for Developer, any of Developer's or the City's contractors or subcontractors. City and Developer agree to and shall defend the other and Property Owner and each of the other's elective and appointive councils, boards, directors, commissioners, officers, partners, agents, representatives and employees from any suits or actions at law or in equity for damage caused or alleged to have been caused by reason of the aforementioned activities which relate to the Project. (o) Alternative Dispute Resolution Procedure. (1) Dispute. If a dispute arises concerning whether the City or the Developer or any of Developer's successors or assigns is in default under this Agreement or whether any such default has been cured or whether or not a dispute is subject to this Paragraph (a "Dispute"), then such dispute shall be subject to negotiation between the parties to this Agreement, and if then not resolved shall be subject to non- binding mediation, both as set forth below, before either party may institute legal proceedings. (2) Negotiation. If a Dispute arises, the parties agree to negotiate in good faith to resolve the Dispute. If the negotiations do not resolve the Dispute to the reasonable satisfaction of the parties within 15 days from a written request for a negotiation, then each party shall give notice to the other party identifying an official or executive officer who has authority to resolve the Dispute to meet in person with the other party's designated official or executive officer who is similarly authorized. The designated persons identified by each party shall meet in person for one day within the 20-day period following the expiration of the 15-day period and the designated persons shall attempt in good faith to resolve the Dispute. If the designated persons are unable to resolve the Dispute, then the Dispute shall be submitted to non -binding mediation. Page 18 of 20 Item 11. - 38 FIB -320- (3) Mediation. (i) Within 15 days following the designated persons' meeting described in paragraph 17(o)(2), above, either party may initiate non -binding mediation (the "Mediation"), conducted by Judicial Arbitration & Mediation Services, Inc. ("JAMS") or other agreed upon mediator. Either party may initiate the Mediation by written notice to the other party. (ii) The mediator shall be a retired judge or other mediator, selected by mutual agreement of the parties, and if they cannot agree within 15 days after the Mediation notice, the mediator shall be -selected through tbe-procedures --- regularly followed by JAMS. The Mediation shall be held within 15 days after the Mediator is selected, or a longer period as the parties and the mediator mutually decide. (ill) If the Dispute is not fully resolved by mutual agreement of the parties within 15 days after completion of the Mediation, then either party may institute legal proceedings. (iv) The parties shall bear equally the cost of the mediator's fees and expenses, but each party shall pay its own attorneys' and expert witness fees and any other associated costs. (4) Preservation of Rights. Nothing in this Paragraph shall limit a party's right to seek an injunction or restraining order from a court in circumstances where such equitable relief is deemed necessary by a party to preserve such party's rights. (p) Reference of California Law. Unless expressly stated to the contrary, all references to statutes herein are to the California codes. (q) Interpretation. The language in all parts of this Agreement shall in all cases be construed simply, as a whole and in accordance with its fair meaning and not strictly for or against any party. The parties hereto acknowledge and agree that this Agreement has been prepared jointly by the parties and has been the subject of arm's length and careful negotiation over a considerable period of time, that each party has independently reviewed this Agreement with legal counsel, and that each party has the requisite experience and sophistication to understand, interpret and agree to the particular language of the provisions hereof. Accordingly, in the event of an ambiguity in or dispute regarding the interpretation of this Agreement, this Agreement shall not be interpreted or construed against the party preparing it, and instead other rules of interpretation and construction shall be utilized. Page 19 of 20 t-tg -321- Item 11. - 39 IN WITNESS WHEREOF, the City, Property Owner and the Developer hereto have each executed this Agreement as of the date first written above. Developer: SARES-REGIS GROUP, a California general partnership and/or its assignees Print: Michael -J. Winter Its: Senior Vice President Property Owner: Freeway Industrial Park, a California corporation Print: SRrJ��i I FZo�E� �tT}cLS`� '-'lis: C� � o0�cii t o CQr - City: Cit untingt each, a municipal corporation 'of the Stat&aKalifornia ATTEST: City C AP -PROVED AS TO FORM: ' City Attorney '1v Page 20 of 20 Item 11. - 40 HB -;»- ACKNOWLEDGMENT STATE OF CALIFORNIA ) ss COUNTY OF ORANGE On August 17, 2011 before me, P. L. Esparza, Notary Public, personally appeared Joan L. Flynn and Joe Carchio who proved to me on the basis of satisfactory evidence to be the persons whose names are subscribed to the within instrument and acknowledged to me that they executed the same in their authorized capacities, and that by their signatures on the instrument the persons, or the entity upon behalf of which the persons acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. P L. E 7 17 WITNESS my hand and official seal. Commission' # 1857021 Notary Public - California Z Z z Z Orange County my Comm. Expires Aug 4, 2013 (Seal) (Notary Signature) j/ t-1 HB -3123- Item 11. - 41 EXHIBIT A Item 11. - 42 HB -324- EXHIBIT "A" Legal Description of 7441 Edinger Ave., Huntington Beach, California PARCEL 1 AS DESCRIBED IN LOT LINE ADJUSTMENT NO. 10-007 RECORDED MAY 4, 2011 AS INSTRUMENT NO. 2011000225797 OF OFFICIAL RECORDS IN THE OFFICE OF THE ORANGE COUNTY RECORDER. 1 HB _32;_ Item 11. - 43 EXHIBIT B Item 11. - 44 HB-326- EXHIBIT B EDINGER AVENUE EDINGER AVENUE HB -327- Item 11. - 45 EXHIBIT C Item 11. - 46 HB -328- This Document was electronically recorded by City of Huntington Beach Recorded in Official Records, Orange County Tom Daly, Clerk -Recorder I I III II I 11111111111111111111111111 I IIIII III NO FEE 2011000406500 04:07pm 08/17/11 93 401 Al2 12 RECORDING REQUESTED BY ) 0.00 0.00 0.00 0.00 33.00 0.00 0.00 0.00 AND WHEN RECORDED MAIL TO: ) City of Huntington Beach ) 2000 Main Street ) Huntington Beach, CA 92648 ) Attn: City Clerk ) (Space above for Recorder's use) This document is exempt from recording fees pursuant to Government Code Section 27383. AFFORDABLE HOUSING AGREEMENT RESTRICTIONS -RENTAL (DECLARATION OF CONDITIONS, COVENANTS AND RESTRICTIONS FOR PROPERTY) This Affordable Housing Agreement and Declaration of Conditions, Covenants and Restrictions for Property (the "Declaration") is made as of C-1 , 2011, by and between Freeway Industrial Park, a California Corporation (the "Property Owner"), Sares-Regis Group (the "Developer" or the "Covenantor"), and THE CITY OF HUNTINGTON BEACH, a California municipal corporation (the "City") and the REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body corporate and politic (the "Agency"). Collectively, the City and Agency will be referred to as the '`Covenantee." RECITALS A. Property Owner is the owner of record of that certain real property located at 7441 Edinger Avenue (the "Subject Property"), in the City of Huntington Beach, County of Orange, State of California legally described in the attached "Exhibit A." Developer is the ground lessee of the Subject Property. B. The Developer seeks to develop a project on the Property consisting of 487 dwelling units, 9,000 square feet of resident recreation area, 4,500 square feet of leasing office area, and 10,000 square feet of commercial/retail uses, as more particularly set forth in the Development Plan (collectively, the "Project") approved by Site Plan Review No. 10-004, attached as Exhibit C and incorporated herein, all in accordance with the Beach and Edinger Corridors Specific Plan, as may be amended from time to time (the "Specific Plan") adopted by the City Council of the City (the "City Council") on March 1, 2010. C. The City unposed conditions of approval on the Project, in part that Developer provide affordable housing. As part of the plan to provide affordable housing, the City and Developer entered into a Development Agreement which requires as a condition that an Affordable Housing Agreement be executed requiring Developer to provide affordable rental units for a certain period of time. Specifically, the Developer provide 57 units within the Project 1 1-1B _329_ Item 11. - 47 available for rent to households earning Moderate or Very Low Income (as those terms are defined in the Development Agreement) for a period of 55 years as further defined herein. The execution and recordation of this Declaration is intended to fully satisfy that condition. NOW, THEREFORE, the parties hereto agree and covenant as follows: 1. Affordability Covenants. Covenantor agrees for itself and its successors and assigns, and every successor to Covenantor's interest in the affordable unit, or any part thereof that the Project approved by Site Plan Review No. 10-004 located at 7441 Edinger Avenue, which consists of 487 units, 57 of which shall be designated as affordable and shall be held subject to this Declaration for fifty-five years from the date the Certificate of Occupancy has been issued by the City as follows: (a) Qualified Households. Covenantor agrees to make available, restrict occupancy to, and to lease 57 units for the duration of the Affordability Period as defined herein. These 57 units may sometimes be referred to as an "Affordable Unit" or, collectively, the "Affordable Units." Each Affordable Unit shall be occupied by Moderate or Very Low Income Households as those terms are defined in the Development Agreement adjusted for the actual number of persons in the Household that will reside in the Affordable Unit. 10 Affordable Units shall only be occupied by Very Low -Income Households, and 47 Affordable Units shall only be occupied by Moderate -Income Households, adjusted for the actual number of persons in the Household that will reside in the Affordable Units. As used in this Declaration, the term "Household" shall mean one or more persons, whether or not related, living together in an Affordable Unit that rent or lease any portion of the Affordable Unit. As used in this Declaration, the term "Covenantor" shall mean Developer, its successors and assigns, and every successor to Developer's interest in the Project, or any part thereof. Property Owner only shall be deemed "Covenantor" if and when Property Owner should become the Owner of the Project during the Affordability Period. (b) Duration. The term of this agreement shall commence on the date that the Final Inspection for the twenty-ninth affordable unit is approved by the City and will continue for 55 years thereafter ("Affordability Period"). The covenant contained in this Section 1 shall run with the Project and shall automatically terminate and be of no further force or effect upon the expiration of the Affordability Period. (c) Income Qualification. Prior to the lease of an Affordable Unit to any Household, Covenanator shall submit to the Covenantee a completed income computation and certification form, in such form as is generally used by City in administering its affordable housing program as may be amended from time to time. Covenantor shall certify that, to the best of its knowledge, each Household is a Moderate or Very Low- Income Household that meets the eligibility requirements established for the particular Affordable Unit occupied by such Household. Covenantor shall obtain an income certification from each adult member of the Household and shall certify that, to the best of Covenantor's knowledge, the income of the 2 Item 11. - 48 HB _;;0- Household is truthfully set forth in the income certification form. Furthermore the Covenantor shall, on renewal of the annual lease for the particular Affordable Unit, again obtain income certification from each adult member of the Household and submit to the Covenantee a recertification form that shall certify, to the best of Covenantor's knowledge, each Household is a Moderate or Very Low -Income Household that meets the eligibility requirements established for the particular Affordable Unit occupied by such Household. Covenantor shall verify the income certification of the Household in one or more of the following methods as specifically requested by Covenantee. (1) Obtain two (2) paycheck stubs from two (2) most recent pay periods for each adult member of the Household. (2) Obtain a copy of an income tax return certified to be true and complete for the most recent tax year in which a return was filed, for each adult member of the Household. (3) Obtain an income verification certification from the employer of each adult member of the Household. (4) Obtain an income verification certification from the Social Security Administration and/or the California Department of Social Services if the Household receives assistance from such agencies. (5) Obtain an alternate form of income verification reasonably requested by Covenantee, if none of the above forms of verification is available to Covenanter. If, after renting an Affordable Unit to an eligible Household, the Household's income increases above the income level permitted for that unit, the Household shall continue to be permitted to reside in such Affordable Unit, for no more than one year. (d) Determination of Affordable Rent for the Affordable Units. The rent for each Affordable Unit (the "Affordable Rent") shall be adjusted annually by the following formula upon the publication of revised Orange County median income figures by the United States Department of Housing and Urban Development: (i) The Affordable Rent amount for the Very Low -Income units shall not exceed thirty percent (30%) of 50 percent (50%) of the monthly area median income adjusted for the actual number of persons in the Household as determined by California Health and Safety Code Section 50053; (ii) The Affordable Rent amount for the Moderate -Income units shall not exceed thirty percent (30%) of one -hundred twenty% percent (120%) of the monthly area median income adjusted for the actual number of persons in the Household as determined by California Health and Safety Code Section 50053. The income limits and Affordable Rents in effect as of the date of this Agreement are attached hereto as Exhibit `B" and incomorated herein by this reference. COVENANTOR UNDERSTANDS AND KNOWINGLY AGREES THAT THE MAXIMUM RENTAL PAYMENTS TO BE ESTABLISHED BY THIS FORMULA ARE NOT NECESSARILY EQUAL TO THE FAIR MARKET RENT FOR THE AFFORDABLE UNITS, AND MAY BE ESTABLISHED AT A LEVEL SUBSTANTIALLY BELOW THE FAIR MARKET RENT LEVELS. 3 1113 3 1 - Item 11. - 49 COVENANTOR HEREBY AGREES TO RESTRICT THE AFFORDABLE UNITS ACCORDINGLY. COS NANTOR'S INITIALS In the event state law referenced herein is amended, the terms of this Agreement shall automatically be amended to remain consistent with State law. (e) Annual Report. Within sixty (60) days after the end of each calendar year during the Affordability Period, Covenantor shall submit to Covenantee a report verifying Covenantor's compliance with the provisions of this Declaration ("Annual Report"). Covenantor's final Annual Report shall be submitted to Covenantee within sixty (60) days after the end of the Affordability Period. Each Annual Report shall identify the location of the Affordable Units for the applicable reporting period, the identity of each Household member occupying an Affordable Unit during any portion of such period, the income and family size of each such Household, the Affordable Rent for each of the Affordable Units, and the rent actually charged pursuant to the lease or rental agreement. If Covenantee prescribes a particular form to be utilized by Covenantor in preparing the Annual Report, Covenantor shall utilize said form, provided that it complies substantially with the foregoing requirements. 2. Non -Discrimination Covenants. Covenantor covenants by and for itself, its successors and assigns, and all persons claiming under or through them that there shall be no discrimination against or segregation of any person or group of persons on account of race, color, religion, sex, sexual orientation, creed, ancestry, national or ethnic origin, age, family or marital status, handicap or disability, in the use, occupancy, tenure, or enjoyment of the Affordable Unit, nor shall Covenantor itself or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, subtenants, or vendees in the Affordable Unit. Covenantor and its successors and assigns shall refrain from restricting the leasing of the Affordable Unit on the basis of race, color, religion, sex, sexual orientation, creed, ancestry, national or ethnic origin, age, family or marital status, handicap or disability, of any person. All such leases shall contain or be subject to substantially the following nondiscrimination or nonsegregation clause: "The lessee herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assigns, and all persons claiming under or through him or her, and this lease is made and accepted upon and subject to the following conditions: "That there shall be no discrimination against or segregation of any person or group of persons, on account of race, color, religion, sex, sexual orientation, creed, ancestry, national or ethnic origin, age, family or marital status, handicap or disability in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of the premises herein leased nor shall the lessee himself or herself, or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation Item 11. - 50 HB -3,2- with reference to the selection, location, number, use, or occupancy of tenants, lessees, sublessees, subtenants, or vendees in the premises herein leased." 3. Use Restrictions. During the Affordability Period, Covenantor shall be required to take all reasonable steps necessary to ensure that each Household renting an Affordable Unit has knowledge of all terms and conditions of this Declaration by including in each and every lease and rental agreement a clause which incorporates this Declaration by reference and makes this Declaration a part of an attachment to such lease or rental agreement. In addition, during the Affordability Period, each lease or rental agreement for any of the Affordable Units shall contain provisions that the Affordable Unit shall be occupied, used, and maintained as follows: (a) The Affordable Unit shall be used only for private dwelling purposes, with appurtenant facilities, and for no other purposes; (b) Household Size. The number of persons that may occupy an Affordable Unit shall be based on unit size: Unit Size Household Size 0 bedroom (studio) 2 persons 1 bedroom 3 persons 2 bedrooms 5 persons (c) the Household shall not permit or suffer anything to be done or kept upon the premises which will increase the rate of insurance on any building, or on the contents thereof, and shall not impair the structural integrity thereof obstruct or interfere with the rights of other occupants, or annoy such occupants by reasonable noises or otherwise, nor shall any Household commit or permit any nuisance on the premises or fail to keep the premises free of rubbish, clippings, and trash or commit or suffer any illegal act to be committed thereon; (d) The Household shall not sublease any or all parts of the Affordable Unit without prior approval from Covenantee; (e) The Household shall comply with all of the lawful requirements of all governmental authorities with respect to the premises; (f) No person shall be permitted to occupy the premises for transient or hotel purposes; and (g) The Household shall comply in all respects with this Declaration and any failure by the Household to comply with the terms of this Declaration shall be a default under the Household's lease or rental agreement. 4. Covenants for Benefit of City and Agency. All covenants without regard to technical classification or designation shall be binding for the benefit of the Covenantee and 5 11 B Item 11. - 51 such covenants shall run in favor of Covenantee for the entire period during which time such covenants shall be in force and effect. The Covenantee, in the event of any breach of any such covenants, shall have the right to exercise all the rights and remedies and to maintain any such action at law or suits in equity or other proper legal proceedings to enforce and to cure such breach to which it or any other beneficiaries of these covenants may be entitled during the term specified for such covenants, except the covenants against discrimination which may be enforced at law or in equity at any time in perpetuity. 5. Binding on Successors and Assigns The covenants and agreements established in this Declaration shall, without regard to technical classification and designation, be binding on Covenantor and any successor to Covenantor's right, title, and interest in and to all or any portion of the Project, for the benefit of and in favor of the City of Huntington Beach and the Redevelopment Agency of the City of Huntington Beach. All the covenants contained in this Declaration shall remain in effect for the Affordability Period, and shall automatically terminate and be of no further force or effect after such time. Upon expiration of the Affordability Period, Covenantee agrees to cooperate with Covenantor, at no cost to Covenantee in removing this Declaration of record from the Subject Property. 6. Counterparts. This Agreement may be executed in a number of counterparts, each of which shall be an original, but all of which shall constitute one and the same document. 7. Applicable Law. (a) If any provision of this Agreement or portion thereof, or the application of any provision to any person or circumstances, shall to any extent be held invalid, inoperative, or unenforceable, the remainder of this Agreement, or the application of such provision or portion thereof to any other persons or circumstances, shall not be affected thereby and it shall not be deeded that any such invalid provision affects the consideration for this Agreement; and each provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law. (b) This Agreement shall be construed in accordance with the laws of the State of California and all applicable HUD Housing Quality Standards and City Codes. [Signatures and Jurats to Follow] ON Item 11. - 52 H B -;; 4- IN WITNESS WHEREOF, the Covenantee and Covenantor have caused this instrument to be executed on their behalf by their respective officers hereunto duly authorized as of the date set forth above. PROPERTY OWNER: FREEWAY INDUSTRIAL PARK, a California corporation L _i k7L-�SK_Y print name ITS: Op-c,ra.i-z",� O rzc�r J DEVELOPER: SARES-REGIS GROUP, a California general partnership and/or its assignees By - - -. print name ITS: (circle ooze) Chairman/Presideni/Vice President 7 COVENANTEE: CITY OF HUNTIN BEACH, ;�ia.njiktffEipal corporation Mayor Clerk THE REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body corporate and politic Bv: L_ - ,,,Deputy Executive Director APPROVED AS TO FORM: l City attorney / Ag y Counsel M V INITIATEO AND APPROVED: r p�; t lantYng Director .s-17-11 HB _));_ Item 11. - 53 EXHIBIT "A" Legal Description of 7441 Edinger Ave., Huntington Beach, California PARCEL 1 AS DESCRIBED IN LOT LINE ADJUSTMENT NO. 14-447 RECORDED MAY 4, 2411 AS INSTRUMENT NO. 2011444225797 OF OFFICIAL RECORDS IN THE OFFICE OF THE ORANGE COUNTY RECORDER. Item 11. - 54 HB _;;h_ EXHIBIT `B" Current Qualifying Income and Rent Schedule Very Low f5b% : - - Mode `rate 120% income:Limit Rent"Lirriit .,` Income Limit =Rent Limn Comments. 1P = $32,550 16R- 930 1P = $73,250 16R- $2,092 1 B R - 3 persons 2P = $37,200 26R - $1,161 2P = $83,700 26R - $2,616 26R - 5 persons 3P = 41 850 3BR - $1,255 3P = $94,200 3BR - $2,825 4P = $46,450 4P = $104,650 5P = $50,200 5P = $113,000 Income Restriction Calculations: Verv-Low Income Restrictions (50%): $92,900 x 50% x 70% = $32,550 - 1 person $92,900 x 50% x 80% = $37,200 - 2 people $92,900 x 50% x 90% = $41,850 - 3 people $92,900 x 50% x 100% = $46,450 - 4 people $92,900 x 500/c x 108% = $50,200 - 5 people Moderate Income Restrictions (120%): $87,200 x 120% x 70% = $73,250 - 1 person $87,200 x 120% x 80% = $83,700 - 2 people $87,200 x 1200k x 90% = $94,200 - 3 people $87,200 x 120% x 100% = $104,650 - 4 people $87,200 x 120% x 108% = $113,000 - 5 people Rent Restriction Calculations: Very Low Rent Restriction (50%): $37,200 x 30% / 12 = $930 for 2 people $46,450 x 30% / 12 = $1,161 for 4 people $50,200 x 30% / 12 = $1,255 for 5 people Moderate Rent Restriction (120%): $83,700 x 30% / 12 = $2,092 for 2 people $104,650 x 30% / 12 = $2,616 for 4 people $113,000 x 30% / 12 = $2,825 for 5 people Median Income - $92,900 (round to closest $50) Median Income - $87,200 (round to closest $50) 11 IAB -337- Item 11. - 55 EXHIBIT C "J EDINGER AVENUE EDINGER AVENUE Item 11. - 56 1 HB -3 3 8- ACKNOWLEDGMENT STATE OF CALIFORNIA ss COUNTY OF ORANGE On August 17, 2011 before me, P. L. Esparza, Notary Public, personally appeared Joan L. Flynn and Joe Carchio who proved to me on the basis of satisfactory evidence to be the persons whose names are subscribed to the within instrument and acknowledged to me that they executed the same in their authorized capacities, and that by their signatures on the instrument the persons, or the entity upon behalf of which the persons acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. (Notary Signature) P L. ESPARZA Commission # 1857021 Z ;,_ Notary Public - California z Orange County My Comm. Expires Aug 4, 2013 (Seal) ► B -339- Item 11. - 57 STATE OF CALIFORNIA ss. COUNTY OF ORANGE On %71 ��, 2011, before me, the undersigned, a Notary Public in and for said State, person�11 1y appeared j ��'► e b; -b(>>---'—RSPersonally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that 4@/she executed the same in 4i-s/her authorized capacity, and that by kis/her signature on the instrument the persons or the entities upon behalf of which the person acted executed the instrument. WITNESS my hand and official seal. (2" pat Signature of Notary Public STATE OF CALIFORNIA ss. COUNTY OF ORANGE CHARIENE P. HUGHES Commission # 1798709 a llotary Public - California Orange County l*CMM80MMaV2Q2D12 (SEAL) On , 2011, before e, the and rsigned, a Notary Public in and for said State, person y appeared �- ersonally known to me (or proved to me on the basis of satisfa4tory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he/&he executed the same in his/her authorized capacity, and that by his/her signature on the instrument the persons or the entities upon behalf of which the person acted executed the instrument. WITNESS my hand and official seal. P le4' Signature of Notary Public CHARIENE P. HUGHES Commission # 1798709 Notary Public - California x Orange County MyCartvn. Egt+esMaV 2Q 2012 (SEAL) Item 11. - 58 xB -340- Ord. No. 3916 STATE OF CALIFORNIA ) COUNTY OF ORANGE ) ss: CITY OF HUNTINGTON BEACH ) I, JOAN L. FLYNN, the duly elected, qualified City Clerk of the City of Huntington Beach, and ex-officio Clerk of the City Council of said City, do hereby certify that the whole number of members of the City Council of the City of Huntington Beach is seven; that the foregoing ordinance was read to said City Council at a regular meeting thereof held on August 01, 2011, and was again read to said City Council at a regular meeting thereof held on August 15, 2011, and was passed and adopted by the affirmative vote of at least a majority of all the members of said City Council. AYES: Shaw, Harper, Hansen, Carchio, Bohr, Dwyer, Boardman NOES: None ABSENT: None ABSTAIN: None I, Joan L. Flynn, CITY CLERK of the City of Huntington Beach and ex-officio Clerk of the City Council, do hereby certify that a synopsis of this ordinance has been published in the Huntington Beach Fountain Valley Independent on August 25, 2011. In accordance with the City Charter of said City Joan L. Flynn, City Clerk Senior Deputy City Clerk Q&&4) o. (Jvjft�- CV Clerk and ex-officio, Jerk of the City Council of the City of Huntington Beach, California HB _341 - Item 11. - 59