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Meritage Homes of California, Inc. - 2018-01-16 (2)
RECORDED AT THE REQUEST OF AND WHEN RECORDED RETURN TO: City Clerk City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 17-6040/168088/SFF Recorded in Official Records, Orange County Hugh Nguyen, Clerk -Recorder 1 111 1[� 11$ 11111 11 1[� 11 I NO FEE *$ R 0 0 1 0 1 2 1 0 7 6 $ * 2018000196471 10:57 am 05130/18 90 SC5 Al2 66 0.00 0.00 0.00 0.00 195.00 0.00 0.000.000.00 0.00 (Space Above For Recorder's Use) This Density Bonus and Affordable Housing Agreement is recorded at the request and for the benefit of the City of Huntington Beach and is exempt from the payment of a recording fee pursuant to Government Code Sections 6103 and 27383. DENSITY BONUS AND AFFORDABLE HOUSING AGREEMENT FOR 19100 GOTHARD STREET, HUNTINGTON BEACH BY AND BETWEEN CITY OF HUNTINGTON BEACH, a California Municipal Corporation and MERITAGE HOMES OF CALIFORNIA, INC., a California corporation 1 DENSITY BONUS AND AFFORDABLE HOUSING AGREEMENT TABLE OF CONTENTS Page 1. Density Bonus and Affordable Housing Agreement for 19100 Gothard Street, ("DBAH Agreement").....................................................3 (a) Signature page to DBAH Agreement to be notarized..................................13 2. Exhibit A to DBAH Agreement — Legal Description.........................................14 3. Exhibit B to DBAH Agreement — Site Plan........................................................15 4. Exhibit C to DBAH Agreement — Affordable Housing Covenant, with: ........... 16 (a) Legal Description (Exhibit A); .....................................................................29 (b) Notice of Affordability Restrictions (Exhibit B):........................................30 (c) Promissory Note (Exhibit C); and................................................................34 (d) Affordable Housing Deed of Trust (Exhibit D)...........................................40 5. Exhibit D to DBAH Agreement — Unit Release Agreement..............................55 6. Exhibit E to DBAH Agreement — Release of Density Bonus Agreement .......... 60 1 17-6040/180314 4 DENSITY BONUS AND AFFORDABLE HOUSING AGREEMENT FOR 19100 GOTHARD STREET, HUNTINGTON BEACH This DENSITY BONUS AND AFFORDABLE HOUSING AGREEMENT ("Agreement") is entered into as of the 3Rd day g ("Effective Date") by and between the CITY OF HUNTINGTON BEACH, a California municipal corporation ("City"), and Meritage Homes of California, inc., a California corporation ("Owner"). City and Owner are hereinafter sometimes referred to collectively as the "Parties" and individually as a "Party." .RECITALS A. City is a municipal corporation and charter city organized and existing pursuant to the Constitution and laws of the State of California. B. Owner is the owner in fee of that certain real property located at 19100 Gothard Street, Huntington Beach, consisting of approximately 1.28 net acres of land, and more particularly described in the legal description attached hereto as Exhibit "A" (the "Property"). C. Owner has submitted to City plans to develop the Property as a twenty-one (21) unit residential community to be subdivided as a condominium development, as more particularly depicted in the attached Exhibit "B" (the "Project"). Owner will build the Project in a single phase and sell individual units to individual homebuyers. Pursuant to the Holly Seacliff Specific Plan, fifteen percent (15%) of the units in the Project shall be affordable to Moderate Income Households. D. Pursuant to California Government Code Section 65915 (the "State Density Bonus Law"), as implemented under Huntington Beach Zoning and Subdivision Ordinance ("HBZSO"), Chapter 230.14, developers of housing projects that include specified levels of affordable housing are entitled to apply for and receive certain density bonuses and additional incentives in order to facilitate the economic feasibility of those projects. A five percent density bonus is available if ten percent of the units are affordable to Moderate Income Households earning 120% of median income or less, with an additional one percent density bonus for each one percent increase in moderate income units, such that a ten percent density bonus is available if fifteen percent (15%) of the units are affordable to moderate income households. Owner proposes that a minimum of fifteen percent (15%) of its nineteen (19) "base" units permitted under the HBZSO will be affordable to Moderate Income Households, and consequently is entitled to ten percent (10%) density bonus, yielding twenty one (21) total units. E. In exchange for making at least ten percent (10%) of the units affordable to Moderate Income Households, the State Density Bonus Law provides that the developer may receive up to one "incentive or concession." (Gov't § 65915(d)(2)(A).) In addition, in exchange for making at least ten percent of the units affordable to moderate income households, the State Density Bonus Law provides that the developer is entitled to the "waiver and modification" of any "development standard" that would physically preclude the construction of a project with the density bonus and the incentives or concessions to which the developer is entitled. (Gov't § 65915(e).) A "development standard" includes a site or construction condition that applies to a residential development, including, but not limited to, a height limitation, a setback requirement, a floor area ratio, an onsite open -space requirement, or a parking ratio. (Gov't § 65915(o).) 17-6040/168088/SFF _2- 3 F. The Holly-Seacliff Specific Plan requires that fifteen percent (15%) of new housing within the planning area be affordable to households earning less than 120% of Orange County Median Income. In compliance with the Holy-Seacliff requirement, Owner agrees to provide as part of the nineteen (19) base units permitted under the City development standards, three (3) units will be affordable to Moderate Income Households, consisting of two (2), four -bedroom units and one (1), three -bedroom unit. As a result, the total of twenty one (21) residential units in the Project consists of nineteen (19) base residential units, and two (2) density bonus residential units, with three (3) units affordable to Moderate Income Households. G. Pursuant to Government Code Section 65915(e), Owner has applied for the waiver and reduction of several development standards on the basis that they would physically preclude the construction of the Project with the density bonus. Owner seeks relief from the 15-foot front setback the Holly-Seacliff Specific Plan requires for Building 1 which sides onto Gothard Street, and instead will provide a five-foot setback, thereby avoiding the loss of one unit. Owner further seeks relief from the average of a 10-foot setback on the third story from the second floor facade that HBZSO Section 210.06 (F) requires, thereby avoiding the loss of three units. Finally, the Owner proposes a 10-foot separation between Buildings I and 2, instead of the 20-foot building separation that the Holly-Seacliff Specific Plan requires between three-story buildings, thereby avoiding the loss of one unit. H. Pursuant to Government Code Section 65915(d)(2)(A), Owner also seeks as a concession relief from the requirement of HBZSO Section 210.06, and is proposing patio walls of exactly 42 inches throughout the Project, rather than walls that exceed 42 inches. Finally, Owner has applied for a waiver and reduction of parking pursuant to Government Code Section 65915(p)(5) & (6), and will provide only 53 onsite parking spaces. I. On December 12, 2017, the Planning Commission approved the Owner's application for Tentative Tract Map No. 18106 and CUP No. 17-010. As approved, the Project includes the aforementioned incentives and concessions, and waivers and reduction. The Project will include a 1.0% density bonus, in which Owner would construct nineteen (19) base residential units and two (2) density bonus residential units, for a total of twenty-one (21) residential units. In order to take advantage of the increase in allowable density, Owner must ensure, pursuant to the terms of this Agreement, that no less than fifteen percent (15%) of the nineteen (19) units permitted under City development standards are affordable to Moderate Income Households. Consequently, the Project shall include three (3) units that will be owned and occupied by Low or Moderate Income Households as defined in Health and Safety Code Section 50093, consisting of two (2) four -bedroom units and one (1) three -bedroom unit. J. This Agreement sets forth the terms and conditions for the implementation of the Project's requirement to provide affordable housing units in exchange for receiving the density bonus units and additional incentives and concessions, and waiver and modification of development standards as set forth herein. K. The development of the Project on the Property pursuant to this Agreement, and the fulfillment generally of this Agreement, are in the vital and best interests of City and the welfare of its residents, and in accordance with the public purposes and provisions of applicable federal, state, and local laws and requirements. 17-6040/168088/SFF -3- 4 COVENANTS NOW, THEREFORE, in consideration of the above Recitals, which are incorporated herein by this reference, and of the mutual covenants hereinafter contained and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties agree as follows: 1. DEFINITIONS AND EXHIBITS 1.1 Definitions. The following terms when used in this Agreement shall be defined as follows: 1.1.1 "Adjusted For Family Size Appropriate To The Unit" means a household of one person in the case of a studio unit, a household of two persons in the case of a one - bedroom unit, a household of three persons in the case of a two -bedroom unit, a household of four persons in the case of a three -bedroom unit, and a household of five persons in the case of a four - bedroom unit. 1.1.2 "Affordable Housing Cost" for a Moderate Income Household means that purchase price which would result in an annual Monthly Housing Cost which does not exceed Thirty -Five Percent (35%) of One Hundred Ten Percent (110%) of the current Orange County monthly median income for a household adjusted for family size appropriate to the Unit. In determining monthly housing payments, the City will assume principal and interest payments on a conventional home mortgage after paying a ten percent (10%) down payment. Monthly housing costs will also include homeowner's association dues, utilities, homeowner's insurance, maintenance costs and property taxes. Affordable Housing Cost shall be calculated pursuant to the City Housing Regulations. 1.1.3 "Affordable Units" means the three (3) units, consisting of one (1) three -bedroom Unit and the two (2) four -bedroom Units that are designate pursuant to Section 3.2 to be sold to and occupied by Moderate Income households in the Project. 1.1.4 "Affordable Housing Covenant" means the Declaration of Conditions, Covenants and Restrictions for Moderate Income Affordable Housing to be recorded against each Affordable Unit in the form attached hereto as Exhibit "C." L L5 "City Housing Regulations" means the "Affordable Ownership Housing Regulations -Homeowner Requirements of the City of Huntington Beach," dated August 15, 2011, as they exist now, and as they may be amended in the future. 1.1.6 "Effective Date" means the date the City Council of City approves this Agreement, which date shall be inserted in the preamble to this Agreement. 1.1.7 "Household" means all persons residing in a Unit. 1.1.8 "Market Rate Units" means the Units within the Project to be rented or sold by Owner to a Household without restriction as to income levels, rental rate or sales price. 17-6040/168088/SFF -4- 5 1.1.9 "Median Income" means the Orange County area median income, adjusted for household size, as established by the United States Department of Housing and Urban Development, and as published periodically by the California Department of Housing and Community Development. 1.1.10 "Moderate Income Household" means a Household whose income does not exceed the qualifying limits for moderate income households pursuant to Health and Safety Code Section 50093, which is those Households whose income does not exceed one hundred twenty percent (120%) of Median Income, adjusted for family size. The income level of a Household shall be determined in accordance with the City Housing Regulations. 1.1.11 "Monthly Housing Cost" shall include all of the following associated with the Affordable Unit: (i) principal and interest payments on a mortgage loan; (ii) property taxes and assessments; (iii) the cost of fire and casualty insurance covering replacement value of property improvements; (iv) homeowner's association fees; (v) reasonable Unit maintenance and repair costs; and (vi) reasonable utility allowance, all as determined according to the City Housing Regulations. 1.1.12 "Qualified Purchaser" means a Household that complies with all income verification requirements in this Agreement, and earns not more than one hundred twenty percent (120%) of the Median Income, adjusted for family size, to be determined in accordance with the City Housing Regulations. 1.1.13 "Unit" means a residential dwelling unit within the Project to be sold by Owner pursuant to this Agreement. 1.1.14 "Unit Release" means that certain instrument to be recorded for the benefit of a Market Rate Unit no longer subject to this Agreement, in the form of Exhibit "D" of this Agreement. 1.2 Exhibits. The following documents are attached to, and by this reference made a part of, this Agreement: Exhibit "A" — Legal Description of the Property Exhibit "B" — Depiction of the Project Exhibit "C" — Declaration of Conditions, Covenants and Restrictions for Moderate Income Affordable Housing, with attachments Exhibit "D" — Unit Release Agreement Exhibit "E" — Density Bonus and Affordable Housing Agreement Release Agreement 2. DEVELOPMENT OF THE PROPERTY 2.1 Project. Owner shall develop the Project as a twenty-one (21) unit condominium residential community in accordance with and subject to all applicable entitlements and permits. The Project shall have eighteen (18) Market Rate Units, and three (3) Affordable Units. There shall be one (1) three -bedroom Affordable Unit, and two (2) four -bedroom Affordable Units. The average square footage of the Affordable Units shall be approximately the same as the average square footage of the Market Rate Units of the same number of bedrooms. The Affordable Units shall be constructed with the same exterior appearance and interior features, fixtures, and amenities, 17-6040/16808815FF -5- 0 and shall use the same type and quality of materials as the Market Rate Units in the Project. The Affordable Units shall be dispersed throughout the Project. At its discretion, Owner may increase the number of Affordable Units. 2.2 Authorized Waivers and Modifications and Incentives and Concessions. In accordance with the State Density Bonus Law and pursuant to the entitlements for the Project, City authorized the Waivers and Modifications, and Incentives and Concessions described in the Recitals, above. 2.3 Compliance with Laws. Owner at its sole cost and expense shall secure or cause to be secured any and all permits that may be required by City or any other federal, state, or local governmental entity having or claiming jurisdiction over the Property or Project. Upon securing any and all permits, Owner shall carry out and perform the development, and marketing of the Project in conformity with all applicable federal, state, and local laws and regulations, and all conditions of approval of Tentative Map No. 18106. 2.4 Replacement Housing. Owner represents that there are no, and there have not been any rental dwelling units on the Property for the five years preceding Owner submitting its Project application to the City. Should it later be determined that Government Code Section 65915(c)(3) requires Owner to provide replacement dwelling units in order to obtain the benefits of this Agreement, then Owner shall have the sole and exclusive responsibility for providing all replacement dwelling units legally required. Owner shall indemnify, defend (with counsel of City's choosing and the consent of Owner, which shall not be unreasonably withheld, and which may be joint defense counsel upon City's and Owner's consent) and hold harmless City and all of its officials, officers, employees, representatives, volunteers and agents from any and all alleged or actual claims, causes of action, liabilities, and damages from any third party alleging a violation of Government Code Section 65915(c)(3). 2.5 Mechanic's Liens,• Indemnification. Owner shall take all actions reasonably necessary to prevent and remove any mechanic's liens or other similar liens (including design professional liens) against the Property or Project, or any part thereof, by reason of work, labor, services, or materials supplied or claimed to have been supplied to Owner or anyone holding the Property or Project, or any part thereof, through or under Owner. Upon request by the City, Owner shall provide to the City updated information from Owner's title insurer. City hereby reserves all rights to post notices of non -responsibility and any other notices as may be appropriate upon a filing of a mechanic's lien. Owner shall indemnify, defend (with counsel of City's choosing and the consent of Owner, which shall not be unreasonably withheld, and which may be joint defense counsel upon City's and Owner's consent), and hold harmless City and all of its officials, officers, employees, representatives, volunteers and agents from any and all alleged or actual claims, causes of action, liabilities, and damages from any third party by reason of a mechanic's lien or work, labor, services, or materials supplied or claimed to have been supplied to Owner or anyone holding the Property or Project, or any part thereof, through or under Owner. AFFORDABLE UNITS 3.1 Execution and Recording of This Agreement. Owner shall execute this Agreement prior to City Council consideration of approval of this Agreement. No later than thirty (30) 17-6040/168088/SFF -6- 7 days after the Effective Date of this Agreement, Owner shall record an executed original of this Agreement against the Property in the Official Records for Orange County, California. 3.2 Designation of Affordable Units. At least three (3) months prior to the recordation of the Condominium Map with the approval of the California Department of Real Estate, Owner shall obtain the approval from the City's Housing Manager of the designation of the three (3) Affordable Units. The Affordable Units shall be disbursed throughout the buildings of the Project. Inunediately following the recordation of each Condominium Map for the Project, Owner shall cause the Affordable Housing Covenant (Ex. C) to be recorded against any Affordable Units within the Condominium Map. 3.3 Prohibition of Leasing of Market Rate or Affordable Units by the Owner. Owner agrees to market and sell all Market Rate and Affordable Units at the Project. City would not grant the aforementioned Waiver and Reduction of Development Standards, the Concessions and Incentives, nor the modification of parking standards unless Owner agrees to market and sell all the Units in the Project as ownership housing. While Market Rate Units may be leased by the individual owner once purchased from the Owner, in no event may Owner lease any Units. 3.4 Term of Affordable Unit Covenants. Each Affordable Unit designated for Moderate Income Households shall be restricted for use and occupancy by a Moderate Income Household, for a total period of forty-five (45) years, commencing on the date that the Owner conveys title to the first purchaser of each Affordable Unit. By way of explanation of the foregoing sentence, it is possible that the affordability term for one Affordable Unit will neither commence on the same date nor terminate on the same date as another Affordable Unit, and it is possible that the affordability terms for all Affordable Units will commence on different days and terminate on different days. 3.5 Memorializing Commencement of Affordability Term. The Notice of Affordability Restrictions is attached as an exhibit to Exhibit C, the Declaration of Conditions, Covenants, and Restrictions for Moderate Income Affordable Housing. This Notice shall be recorded concurrently with conveyance of title to the first buyer of each Affordable Unit and the affordability term for each Affordable Unit shall begin as of the recordation date of the Notice. 3.6. Sale of Affordable Units to Moderate Income Households. When marketing the Affordable Units, Owner shall comply with the City Housing Regulations. Owner shall not convey title to any Affordable Unit to a Household that the City has not verified as a Moderate Income Household, as determined pursuant the City Housing Regulations. Owner shall not convey title to any Affordable Unit to a Moderate Income Household at a price that exceeds the Affordable Housing Cost for that Affordable Unit as established by the City. 4. TERM OF THIS AGREEMENT AND RELEASE OF MARKET RATE UNITS 4.1 The term of this Agreement shall commence on the Effective Date and shall continue until the date Owner conveys fee title to buyers of all of the Units of the Project in accordance with the requirements of this Agreement. Upon satisfaction of the foregoing, the City shall, at the request of Owner, record a termination of this Agreement in the form of Exhibit E to this Agreement. The recording of such a termination document shall remove this Agreement as an 17-6040/168088/5FF -7- 1�7 encumbrance upon title to the Property. Notwithstanding any other provision herein to the contrary, Owner's indemnity obligations under Sections 2.4 (Replacement Housing), 2.5 (Mechanic's Liens) and 5.3 (Indemnification) hereof shall survive the termination of this Agreement. 4.2 Owner shall have the right at the time that it enters into a sales agreement for each of the Units to request that City execute a Unit Release for the Unit in the form of Exhibit D to this Agreement. 5. DEFAULT AND TERMINATION, INDEMNIFICATION 5.1 Default. Failure or delay by any Party to perform any term or provision of this Agreement which is not cured within thirty (30) days after receipt of notice from the other Party specifying the default (or such other period specifically provided herein) constitutes a default under this Agreement; provided, however, if such default is of the nature requiring more than thirty (30) days to cure, the defaulting Party shall avoid default hereunder by commencing to cure within such thirty (30) day period, and thereafter diligently pursuing such cure to completion within an additional sixty (60) days following the conclusion of such thirty (30) day period (for a total of ninety (90) days). Except as required to protect against further damages, the injured Party may not institute proceedings against the Party in default until the time for cure has expired. Failure or delay in giving such notice shall not constitute a waiver of any default, nor shall it change the tune of default. 5.2 Rights and Remedies Cumulative. The rights and remedies of the Parties are cumulative, and the exercise by either Party of one or more of its rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default by the other Party. 5.3 Indemnification. In addition to any other indemnity specifically provided in this Agreement, Owner shall defend (with counsel of City's choosing and the consent of Owner, which shall not be unreasonably withheld, and which may be joint defense counsel upon City's and Owner's consent), indemnify and hold harmless City and its officers, officials, agents, employees, representatives, and volunteers from and against any loss, liability, claim, or judgment arising from any act or omission of Owner in connection with its obligations under this Agreement. ASSIGNMENT 6.1 Assignment by Owner. The qualifications and identity of Owner are of particular concern to City. It is because of those qualifications and identity that City has entered into this Agreement. Accordingly, except as authorized in Section below, Owner shall not sell, transfer, or assign the Property or Project in whole or in part, or transfer or assign Owner's rights and obligations in this Agreement, without City's prior written approval, which shall not be unreasonably withheld. In considering whether to grant its approval of any proposed transfer or assignment by Owner of its interest in the Property, Project, or this Agreement, City shall consider factors such as the financial strength and capacity of the proposed transferee or assignee to perform Owner's obligations in this Agreement, and the proposed transferee's or assignee's experience and expertise in the planning, financing, development, and operation of similar projects. 17-6040/168088/SFF -8- A 6.2 Subsequent Assignment. As used in this Agreement, the term "Owner" shall be deemed to include any such transferee or assignee after the date such transfer or assignment occurs in compliance with this Agreement. 6.3 Unpermitted Assignments Void. Any sale, transfer, or assignment made in violation of this Agreement shall be null and void, and City shall have the right to pursue any right or remedy at law or in equity to enforce the provisions of the restriction against unpermitted sales, transfers, or assignments. 7. MISCELLANEOUS 7.1 Notices. As used in this Agreement, "notice" includes, but is not limited to, the communication of notice, request, demand, approval, statement, report, acceptance, consent, waiver, appointment or other communication required or permitted hereunder. All notices shall be in writing and shall be considered given either: (i) when delivered in person to the recipient named below; or (ii) on the date of delivery shown on the return receipt, after deposit in the United States mail in a sealed envelope as either registered or certified mail with return receipt requested, and postage and postal charges prepaid, and addressed to the recipient named below; or (iii) five (5) days after deposit in the United States mail in a sealed envelope, first class mail and postage prepaid, and addressed to the recipient named below; or (iv) one (1) day after deposit with a la-iown and reliable next -day document delivery service (such as FedEx), charges prepaid and delivery scheduled next -day to the recipient named below, provided that the sending party receives a confirmation of delivery from the delivery service provider. All notices shall be addressed as follows: If to CITY: City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 Attn: Director of Community Development & Housing Manager If to OWNER: Meritage Homes of California, Inc. 1401 Dove Street, Suite 640 Newport Beach, CA 92660 Attn: Moses Kim, Forward Planning Manager 7.2 Change of Address. Either Party may, by notice given at any time, require subsequent notices to be given to another person or entity, whether a party or an officer or representative of a parry, or to a different address, or both. Notices given before actual receipt of notice of change shall not be invalidated by the change. 7.3 Entire Agreement. This Agreement and all of its Exhibits and attachments set forth and contain the entire understanding and agreement of the parties, and there are no oral or written representations, understandings or ancillary covenants, undertakings or agreements which are not contained or expressly referred to herein. No testimony or evidence of any such representations, understandings or covenants shall be admissible in any proceeding of any kind or 17-6040/168088/SFF -9- 10 nature to interpret or determine the terms or conditions of this Agreement. 7.4 Amendments. The terms of this Agreement may only be modified or amended by an instrument in writing executed by each of the parties hereto; provided, however, the City Manager shall have the authority to issue interpretations, waive provisions and enter into amendments of this Agreement on behalf of City so long as such actions do not substantially change the uses or development permitted on the Property. 7.5 Severability. If any term, provision, covenant or condition of this Agreement shall be determined invalid, void or unenforceable, the remainder of this Agreement shall not be affected thereby to the extent such remaining provisions are not rendered impractical to perform, taking into consideration the purposes of this Agreement. 7.6 Interpretation and Governing Law. This Agreement and any dispute arising hereunder shall be governed and interpreted in accordance with the laws of the State of California without regard to conflict of law principles. This Agreement shall be construed as a whole according to its fair language and common meaning to achieve the objectives and purposes of the Parties hereto, and the rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not be employed in interpreting this Agreement, all Parties having been represented by counsel in the negotiation and preparation hereof. 7.7 Section Headings. All section headings and subheadings are inserted for convenience only and shall not affect any construction or interpretation of this Agreement. 7.8 Singular and Plural. As used herein, the singular of any word includes the plural, and vice versa, as context so dictates. Masculine, feminine, and neuter forms of any word include the other as context so dictates. 7.9 Joint and Several Obligations. If at any time during the term of this Agreement the Property and/or Project is owned, in whole or in part, by more than one Owner, all obligations of such Owner under this Agreement shall be joint and several, and the default of any such Owner shall be the default of all such Owners. 7.10 Time of Essence. Time is of the essence in the performance of the provisions of this Agreement as to which time is an element. 7.11 Days. Unless otherwise specified in this Agreement or any Exhibit attached hereto, use of the term "days" shall mean calendar days. For purposes of this Agreement and all Exhibits attached hereto, "business days" shall mean every day of the week that City Hall of the City is open for business to the general public. 7.12 Waiver. Failure by a Party to insist upon the strict performance of any of the provisions of this Agreement by the other Party, or the failure by a Party to exercise its rights upon the default of the other Party, shall not constitute a waiver of such Party's right to insist and demand strict compliance by the other Party with the terms of this Agreement thereafter. 7.13 Force Majeure. Neither Party shall be deemed to be in default where failure or delay in performance of any of its obligations under this Agreement is caused by 17-6040/168088/SFF -10- 11 floods, earthquakes, other Acts of God, fires, wars, riots or similar hostilities, strikes and other labor difficulties beyond the Party's control (including the Party's employment force), court actions (such as restraining orders or injunctions), government regulations or other causes beyond the Party's control. If any such events shall occur, the term of this Agreement and the time for performance by either Party of any of its obligations hereunder may be extended by the written agreement of the Parties for the period of time that such events prevented such performance. 7.14 Mutual Covenants. The covenants contained herein are mutual covenants and also constitute conditions to the concurrent or subsequent performance by the Party benefited thereby of the covenants to be performed hereunder by such benefited Party. 7.15 Successors in Interest. The burdens of this Agreement shall be binding upon, and the benefits of this Agreement shall inure to, all successors in interest to the Parties to this Agreement. All provisions of this Agreement shall be enforceable as equitable servitudes and constitute covenants running with the land. Each covenant to do or refrain from doing some act hereunder with regard to development of the Property: (a) is for the benefit of and is a burden upon every portion of the Property; (b) runs with the Property and each portion thereof; and, (c) is binding upon each Party and each successor in interest during ownership of the Property or any portion thereof. 7.16 Jurisdiction and Venue. Any action at law or in equity arising under this Agreement or brought by a Party hereto for the purpose of enforcing, construing or determining the validity of any provision of this Agreement shall be filed and tried in the Superior Court of the County of Orange, State of California, or any other court in that county, and the Parties hereto waive all provisions of law providing for the filing, removal or change of venue to any other court. 7.17 Project as a Private Undertaking. It is specifically understood and agreed by and between the Parties hereto that the development of the Project is a private development, that neither Party is acting as the agent of the other in any respect hereunder, and that each Party is an independent contracting entity with respect to the terms, covenants and conditions contained in this Agreement. No partnership, joint venture or other association of any kind is formed by this Agreement. The only relationship between City and Owner is that of a government entity regulating the development of private property and the Owner of such property. 7.18 Attorneys' Fees and Costs. If either Party to this Agreement commences an action against the other Party to this Agreement arising out of or in connection with this Agreement, each party shall bear its own attorneys' fees and costs of suit. 7.19 Authority to Execute. The person or persons executing this Agreement on behalf of either Party warrants and represents that he or she/they have the authority to execute this Agreement on behalf of his or her/their agency, corporation, partnership or business entity and warrants and represents that he or she/they has/have the authority to bind the Party to the performance of its obligations hereunder. 7.20 Counterparts. This Agreement may be executed by the Parties in counterparts, which counterparts shall be construed together and have the same effect as if all of the Parties had executed the same instrument. 17-6040/168088/SFF -11- 12 IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the date set forth above. ATTEST: City Clerk 17-6040/168088/SFF CITE' OF N BEACH, a C. lif a unit al or ti By Mike Posey, Mayor "OWNER" Meritage Homes of California, Inc., a Califo c By. Y__ Philip S. Bodem Its: By: Its: -Z2- 13 ACKNOWLEDGMENT (In accordance with Section 1189 of the California Civil Code) 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. State of California County of Orange) ss. On May 18, 2018 before me, K L Chavez, Notary Public, personally appeared Philip S. Bodem, 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 signatures(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 State of California that the foregoing paragraph is true and correct. K. L. CHAV�EZ WITNESS my hand and official seal. i NotaryPublic- California Riverside County v Commission # 2193122 My Comm. Expires Apr 22, 2021 Signature (seal) K. L. Chavez, Notary PuiSlic, #2193222 (Commission Expires April 22, 2021) 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 CALIFORNIA ss COUNTY OF ORANGE On May 29, 2018 before me, P. L. Esparza, Notary Public, personally appeared Robin Estanislau and Mike Posey 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 a , P. L. ESPARZA Notary Public •California <' > <•�' � Orange County Commission a 2204197 My Comm. Expires Aug 4, 2021 (Seal) EXHIBIT A LEGAL DESCRIPTION FOR 19100 GOTHARD STREET HUNTINGTON BEACH APN: 111-150-17 LOTS 15 AND 16 IN BLOCK "B" OF "GARFIELD STREETADDITION TO HUNTINGTON BEACH", AS PER MAP RECORDED IN BOOK 7, PAGES 27 AND 28 OF MISCELLANEOUS MAPS IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. EXCEPTING THEREFROM ALL RIGHT, TITLE AND INTEREST OF THE GRANTOR IN AND TO THAT CERTAIN OIL LEASE OF RECORD DATED APRIL 28, 1920, EXECUTED BY T. G. HERMAN, A SINGLE MAN, ET AL, IN FAVOR OF W. W. HANBERY, RECORDED JUNE 23, 1920 IN BOOK 14, PAGE 251 OF LEASES, ONLY IN SO FAR AS SAID RIGHTS APPLY TO THE ABOVE DESCRIBED LAND. ALSO, EXCEPTING THEREFROM THAT PORTION OF LAND CONVEYED TO THE CITY OF HUNTINGTON BEACH AND ITS SUCCESSORS AND ASSIGNS FOR ROAD PURPOSES, DESCRIBED AS "EXHIBIT A", IN FINAL ORDER OF CONDEMNATION RECORDED NOVEMBER 9, 1999 AS INSTRUMENT NO. 19990780474 OF OFFICIAL RECORDS. 17-6040/171748 14 17-60401168088/SFF EXHMIT C TO DENSITY BONUS AND AFFORDABLE HOUSING AGREEMENT FOR 19100 GOTHARD STREET, HUNTINGTON BEACH (Affordable Housing Covenant) -15- 16 Recorded in Official Records, Orange County Hugh Nguyen,Clerk-Recorder II 0101 II III I IlillU I I III II III III NO FEE SR0014145818 $ * 2023000004829 2:21 pm 01109123 RECORDING REQUESTED BY AND 227 NC-5 D02 20 WHEN RECORDED MAIL TO: 0.00 0.00 0.00 0.00 57.00 0.00 0.000.000.00 0.00 i i City Clerk City of Huntington Beach 2000 Main Street Huntington Beach,CA 92648 SPACE ABOVE THIS LINE FOR RECORDERS'USE ONLY i y i 3 DECLARATION OF CONDITIONS,COVENANTS AND RESTRICTIONS FOR MODERATE INCOME AFFORDABLE HOUSING 9 19100 GOTHARD STREET,HUNTINGTON BEACH This Declaration Of Conditions, Covenants And Restrictions For Moderate Income 1 Affordable Housing("Resale Restrictions") is made as of b2/Z02d ,2022,by and between i Meritage Homes of California,Inc., a California corporation, (the"Owner"),and the CITY OF HUNTINGTON BEACH,a California municipal corporation(the"City"),and the HOUSING f AUTHORITY OF THE CITY OF HUNTINGTON BEACH, a public body corporate and politic 1 (the"Authority"). At the option of the City and Authority,the Authority may enforce these Resale Restrictions in place of the City. r RECITALS A. Owner is the owner in fee of that certain real property consisting of Units 6, 7, and 8, located at 19100 Gothard Street,Huntington Beach(APN Nos. 935-76-187, 935-76-188,and q 935-76-189), as more particularly described in the legal description attached hereto as Exhibit "A" (the"Property"). B. Owner submitted to City plans to develop the Property as a twenty-one(21)unit residential community to be subdivided as a condominium development. Owner will build the Project in a single phase and sell individual units to individual homebuyers. Pursuant to California Government Code Section 65915, Owner obtained a ten percent (10%)density bonus. Pursuant to Section 65915 and Chapter 230.26 of the Huntington Beach Zoning and Subdivision Ordinance ("HBZSO"),and the Holly Seacliff Specific Plan, at least fifteen percent(15%) of the units in the Project shall be affordable to Moderate Income Households. 1 C. On December 12,2017,the Huntington Beach Planning Commission approved the Project pursuant to Tentative Tract No. 18106 and CUP No. 17-010. As a condition of approval of the Tentative Tract Map and CUP,the Project includes three units,which are to be occupied by, and sold at prices affordable to Moderate Income Households for a term of 45 years ("the"Affordable Units"). Tentative Tract Map No. 18106 was later recorded as Final Tract Map No. 18106 at Instrument No. 201900296859 of the Records of Orange County,California. This document is solely for the official Mime of the City of Huntington Bch, 22-12018/296597 1as conternpleted under Goverment Gods Sec.27383 and should'bs recorded free of charge RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: City Clerk City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 SPACE ABOVE THIS LINE FOR RECORDERS'USE ONLY DECLARATION OF CONDITIONS, COVENANTS AND RESTRICTIONS FOR MODERATE INCOME AFFORDABLE HOUSING 19100 GOTHARD STREET,HUNTINGTON BEACH This Declaration Of Conditions, Covenants And Restrictions For Moderate Income Affordable Housing ("Resale Restrictions") is made as of /Z/22 , 2022, by and between Meritage Homes of California, Inc., a California corporation, (the "Owner"), and the CITY OF HUNTINGTON BEACH, a California municipal corporation(the"City"), and the HOUSING AUTHORITY OF THE CITY OF HUNTINGTON BEACH, a public body corporate and politic (the "Authority"). At the option of the City and Authority,the Authority may enforce these Resale Restrictions in place of the City. RECITALS A. Owner is the owner in fee of that certain real property consisting of Units 6, 7, and 8, located at 19100 Gothard Street, Huntington Beach(APN Nos. 935-76-187, 935-76-188, and 935-76-189), as more particularly described in the legal description attached hereto as Exhibit "A" (the "Property"). B. Owner submitted to City plans to develop the Property as a twenty-one (21) unit residential community to be subdivided as a condominium development. Owner will build the Project in a single phase and sell individual units to individual homebuyers. Pursuant to California Government Code Section 65915, Owner obtained a ten percent(10%) density bonus. Pursuant to Section 65915 and Chapter 230.26 of the Huntington Beach Zoning and Subdivision Ordinance ("HBZSO"), and the Holly Seacliff Specific Plan, at least fifteen percent (15%) of the units in the Project shall be affordable to Moderate Income Households. C. On December 12, 2017,the Huntington Beach Planning Commission approved the Project pursuant to Tentative Tract No. 18106 and CUP No. 17-010. As a condition of approval of the Tentative Tract Map and CUP, the Project includes three units, which are to be occupied by, and sold at prices affordable to Moderate Income Households for a term of 45 years ("the "Affordable Units"). Tentative Tract Map No. 18106 was later recorded as Final Tract Map No. 18106 at Instrument No. 201900296859 of the Records of Orange County, California. This document is solely for the official business of the City of Huntington Bosch, 22-12018/296597 1 ss contemplated under Government Code Sec.27383 and should-be recorded free of charge. D. In order to secure the long term affordability of the Affordable Units, the City and Owner entered into the "Density Bonus and Affordable Housing Agreement for 19100 Gothard Street," which was recorded as Instrument No. 2018000196471 in the Records of Orange County, California(the "Density Bonus Agreement"). The Density Bonus Agreement provides that Owner shall designate two, four-bedroom units and one, three-bedroom unit as the Affordable Units. E. Pursuant to the Density Bonus Agreement, Owner has designated the Affordable Units as: (i) Unit 7 a four-bedroom unit; (ii) Unit 8, a four bedroom unit; and Unit 6, a, three- bedroom unit. Owner is the owner of record of these Units, which are located in the City of Huntington Beach, County of Orange, State of California and legally described in the attached Exhibit"A", and are collectively known as the "Restricted Unit(s)." The Restricted Units are at times individually referred to herein as follows: Unit Number Address 6 7282 Crystal Drive 7 7288 Crystal Drive 8 7294 Crystal Drive NOW, THEREFORE,the Parties hereto agree and covenant as follows: 1. Affordability Covenants. Owner agrees for itself and the successors and assigns to Owner's interest in the Restricted Units, including each Moderate Income Household purchasing one of the Restricted Units, that for a term of forty-five (45) years from the date of the close of escrow for the initial sale of each such Restricted Unit: 1.1 The Restricted Units shall only be owned and occupied by Owner or by a Moderate Income Household, which shall mean persons or families earning not more than 120% of the Orange County median income, adjusted for household size as appropriate to the Unit. 1.2 The Restricted Units shall only be sold at an Affordable Housing Cost to Moderate Income Households. 2. Definitions and Exhibits. 2.1 Definitions. In addition to the terms that may be defined elsewhere in this Covenant, the following terms when used in these Resale Restrictions shall be defined as follows: 2.1.1 "Adjusted for family size appropriate to the Unit" means a household of one person in the case of a studio unit, a household of two persons in the case of one-bedroom unit, a household of three persons in the case of a two-bedroom unit, a household of four persons in the case of a three-bedroom unit, and a household of five persons in the case of a four-bedroom unit. 22-12018/296597 2 2.1.2 "Affordable Housing Cost" for a Moderate Income Household means that purchase price which would result in an annual Monthly Housing Cost which does not exceed Thirty-Five Percent (35%) of One Hundred Ten Percent (110%) of the current Orange County monthly median income for a household adjusted for family size appropriate to the Unit. In determining monthly housing payments, the City will assume principal and interest payments on a conventional home mortgage after paying a ten percent(10%) down payment. Monthly housing costs will also include monthly homeowner's association dues, utilities, homeowner's insurance, maintenance costs and property taxes. The Affordable Housing Cost shall be calculated pursuant to the City Housing Regulations. 2.1.3 "City Housing Regulations"means the "Affordable Ownership Housing Regulations-Homeowner Requirements of the City of Huntington Beach," dated August 15, 2011, as they exist now, and as they may be amended in the future. 2.1.4 "Default" means the failure of a Party to perform any action or covenant required by these Resale Restrictions within the time periods provided herein following notice and opportunity to cure. 2.1.5 "First Lien" means the lien of a primary Lender which secures the obligations of the Owner to repay amounts owed to the Lender. 2.1.6. "Owner" means initially, Meritage Homes of California, Inc., a California corporation, and later its successors and assigns, each owner of any legal or equitable interest in one of the three (3) Restricted Units. 2.1.7 "Lender" means a lender making a purchase money loan to the Owner for the purchase of the Affordable Unit. 2.1.8 "Median Income" means the Orange County, California area median income, adjusted for household size, as established by the United States Department of Housing and Urban Development, and as published periodically by the State of California Department of Housing and Community Development. 2.1.9 "Moderate Income Household" means a Household whose income does not exceed one hundred twenty percent (120%) of Median Income, adjusted for family size. The income level of a Household shall be determined in accordance with the City Housing Regulations. 2.1.10 "Monthly Housing Cost" shall include all of the following associated with the Restricted Units: (i) principal and interest payments on a mortgage loan; (ii) property taxes and assessments; (iii)the cost of fire and casualty insurance covering replacement value of property improvements; (iv) homeowner's association fees; (v) reasonable Unit maintenance and repair costs; and (vi) reasonable utility allowance. All Monthly Housing costs shall be determined by the City according to the City Housing Regulations. 2.1.11 "Qualified Purchaser" means a person or family who complies with all income verification requirements of these Resale Restrictions, and earns not more than 22-12018/296597 3 one hundred twenty percent(120%) of the Median Income, adjusted for family size, to be determined in accordance with the City Housing Regulations. 2.1.12 "Transfer" shall mean any sale, assignment, conveyance, lease, or transfer, voluntary or involuntary, of any interest in the Restricted Unit. Without limiting the generality of the foregoing, Transfer shall include (i) a transfer by devise, inheritance or intestacy; (ii) the creation of a life estate; (iii) the creation of a joint tenancy interest; (iv) a gift of all or any portion of the Restricted Unit; or (v) any voluntary conveyance of the Restricted Unit. 3. Attachments. The following documents are attached to, and by this reference made a part of, these Resale Restrictions: Exhibit A—Legal Description of Restricted Units Exhibit B —Notice of Affordability Restriction Exhibit C—Promissory Note Exhibit D—Affordable Housing Deed of Trust 4. Term of Resale Restrictions. 4.1 The term of these Resale Restrictions shall commence on the date of the initial sale of each Restricted Unit from Owner to a Qualified Purchaser as evidenced by a deed recorded with the Orange County Recorder's Office and shall continue, with respect to each such Restricted Unit, for forty-five (45) years from said date (the "Affordability Period"). The Covenant contained in this Section shall run with each Restricted Unit and shall terminate and be of no further force or effect upon expiration of the Affordability Period. By way of explanation of the foregoing sentence, it is possible that the affordability term for one Restricted Unit will neither commence on the same date nor terminate on the same date as another Restricted Unit, and it is possible that the affordability terms for all Restricted Units will commence on different days and terminate on different days. The beginning and expiration dates of the Affordability Period for each Restricted Unit shall be established by the City in the Notice of Affordability Covenant (Ex. B) recorded in connection with each sale of the Restricted Units. 4.2 Each Qualified Purchaser of each Restricted Unit shall enter into a Notice of Affordability Restriction, Promissory Note and Deed of Trust in the forms attached as Exhibits B, C, and D to these Resale Restrictions. 5. Covenant Regarding Use and Sale of Restricted Units. For the Affordability Period, the Restricted Units shall be owned and occupied as the principal residence of a Moderate Income Household, and in no event may the Restricted Unit be leased to a third party. No transfer of a Restricted Unit shall occur until the City determines that: (a) the proposed purchaser intends to occupy the Restricted Unit as the proposed purchaser's principal residence; (b)the proposed purchaser is a Moderate Income Household; and (c) the proposed transfer occurs at an Affordable Housing Cost. 6. Permitted and Prohibited Transfers of Restricted Units. 22-12018/296597 4 6.1 The following Transfers, made in compliance with the terms and conditions of these Resale Restrictions and the City Housing Regulations, shall constitute "Permitted Transfers": (i) a Transfer to a surviving joint tenant or other permitted co-Owner of the Restricted Unit by devise, descent, or operation of law on the death of an Owner; (ii) a Transfer to a spouse such that the spouses become co-Owners of the Restricted Unit; (iii) a Transfer by decree of dissolution, legal separation agreement, or from an incidental property settlement by which the spouse becomes an Owner of the Restricted Unit,provided that in each case the transferee spouse occupies or will occupy the Restricted Unit; (iv) a Transfer to an inter vivos trust in which Owner is and remains the beneficiary and occupant of the Restricted Unit; and (v) a Transfer to a Moderate Income Household at Affordable Housing Cost. A Transfer that is not a Permitted Transfer specified above is a"Prohibited Transfer." The occurrence of a Prohibited Transfer is a Default under these Resale Restrictions. 6.2 All Transfers Prohibited Without City Approval. During the Affordability Period, Owner shall not sell, transfer, use as security for any loan, or convey any interest in a Restricted Unit, except with the express written consent of the City, which consent shall be given only if the Transfer is a Permitted Transfer and in strict compliance with the provisions of this Section 6. 6.3 Maximum Sale Price of Restricted Unit. In the event that Owner decides to sell or otherwise Transfer the Restricted Unit, Owner shall contact the City to obtain the current Affordable Housing Cost, which shall be the maximum sales price of the Restricted Unit. City shall provide the Affordable Housing Cost pursuant to its current Affordable Housing Regulations. Regarding the Affordable Housing Cost, Owner acknowledges that: OWNER, AND EACH SUCCESSOR, HEIR OR ASSIGN OF OWNER, UNDERSTANDS THAT THE DETERMINATION OF THE AFFORDABLE HOUSING COST CAN BE MADE ONLY AT THE TIME OF A PROPOSED SALE OR OTHER TRANSFER OF THE RESTRICTED UNIT,TAKING INTO CONSIDERATION PREVAILING INTEREST RATES, THE OFFERED TERMS OF SALE, THE ECONOMIC CIRCUMSTANCES OF THE PROPOSED PURCHASER AND OTHER FACTORS THAT CANNOT BE ACCURATELY PREDICTED, AND THAT THE TRANSFER PRICE PERMITTED HEREUNDER MAY BE LESS THAN THE FAIR MARKET VALUE OF THE SAME OR OTHER SIMILAR REAL PROPERTY WHICH IS NOT ENCUMBERED BY THIS COVENANT. OWNER, AND EACH SUCCESSOR, HEIR OR ASSIGN OF OWNER, FURTHER ACKNOWLEDGES THAT AT ALL TIMES IN SETTING THE TRANSFER PRICE, THE PRIMARY OBJECTIVE OF THE CITY AND THESE RESALE RESTRICTIONS IS TO PROVIDE HOUSING TO MODERATE INCOME HOUSEHOLDS AT AN AFFORDABLE HOUSING COST. Owner's Initials 22-12018/296597 5 6.4 Procedure to Verify a Proposed Transfer. In the event that Owner desires to sell the Restricted Unit, Owner shall send written notice thereof to the City at the following address: City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 Attention: Director of Economic Development City shall process the sale of the Restricted Unit pursuant to the City Housing Regulations. The City shall not be obligated to approve a transfer unless and until the proposed purchaser has submitted to the City such information and completed such forms as necessary to verify the proposed purchaser's intent with respect to his/her/its residency of the Restricted Unit, his/her/its gross income, and an affidavit of the proposed purchaser disclosing and certifying the amount of the proposed purchase price. Prior to conveyance of the Restricted Unit, each approved purchaser shall also submit to the City an executed disclosure statement which certifies that the purchaser is aware that: (i) the purchaser buying the Restricted Unit may only sell the Restricted Unit at an Affordable Housing Cost to a Moderate-Income Household as provided in Section 1 above, (ii) the maximum permitted sales price may be less than fair market value and (iii) the Restricted Unit must be owner-occupied at all times and cannot be rented or leased. The approved purchaser shall also submit an executed promissory, trust deed, notice documents, and any other documentation reasonably required by the City to effectuate the Affordable Housing Program. Owner shall cooperate with the City in providing such forms to proposed purchasers and in assisting proposed purchasers to prepare such forms and to provide any required information to the City in connection with only the Owner's sale of the Restricted Unit. 7. Non-Discrimination Covenants. Owner covenants by and for itself, it 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 sale, transfer, use, occupancy, tenure or enjoyment of the Restricted Unit, nor shall Owner 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 Restricted Unit. Owner and its successors and assigns shall refrain from restricting the sale of the Restricted 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 deeds or contracts shall contain or be subject to substantially the following nondiscrimination or nonsegregation clause: (a) In deeds: "The grantee herein covenants by and for himself or herself, his or her heirs, executors, administrators and assigns, and all persons 22-12018/296597 6 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 sale, transfer, use, occupancy, tenure or enjoyment of the land herein conveyed, nor shall the grantee 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 with reference to the selection, location, number, use or occupancy of tenants, or vendees in the land herein conveyed. The foregoing covenants shall run with the land." (b) In contracts: "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 sale, transfer, use, occupancy, tenure or enjoyment of the premises, nor shall the transferor himself or herself of any person claiming under or though him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use of occupancy of tenants, subtenants or vendee of the premises." (c) In leases: "The lessee herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assignees, and all persons claiming under or though 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 though him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy of tenants, sublessees, subtenants, or vendees in the premises herein leased." Nothing in this Section 7 shall be construed to authorize the rental or lease of the Restricted Unit if such rental or lease is not otherwise permitted. 8. Encumbrances. 8.1 Financings on Transfer. This Section 8 shall not prohibit the encumbering of title for the sole purpose of securing financing of the purchase price of the Restricted Unit upon a Transfer thereof; however, any such financing shall be for the Owner and (i) must be a First Lien, (ii) must not be in excess of the Affordable Housing Cost of the 22-12018/296597 7 Restricted Unit as of date of approval for the financing, (iii) must be in compliance with these Resale Restrictions and the Affordable Housing Deed of Trust, and (iv) shall be subordinate to these Resale Restrictions. 8.2 Subordination. These Resale Restrictions shall have priority over all monetary liens and encumbrances for the Affordability Period. However, the Affordable Housing Deed of Trust only may be subordinated to a First Lien on the Restricted Unit that secures the payment of a principal amount that is not in excess, as of the date of approval for said financing, of the Affordable Housing Cost of the Restricted Unit. The City shall execute a written instrument for the subordination of its rights under the Affordable Housing Deed of Trust in the form approved by the City Attorney as may reasonably be requested by the Lender. The City's agreement to so subordinate its rights is subject to agreement in writing by the Lender providing the City the following rights: (a) Upon the occurrence of a Default under any of the First Lien documents, the holder of the First Lien shall promptly notify the City of the occurrence of such Default, which notification shall be provided to the City contemporaneously with the delivery to Owner of any notice of Default under any of the First Lien documents; and (b) The City shall have the right, during the cure periods which apply to the Owner pursuant to the First Lien documents and any cure period which may apply to the City under applicable law, to cure the Owner's Default relative to the First Lien; and (c) After a Default on any of the First Lien documents but prior to a foreclosure sale or deed in lieu assignment of the Restricted Unit, the City shall have the right to take title to the Restricted Unit and cure the Default relative to the First Lien documents, without the holder of the First Lien exercising any right it might otherwise have to accelerate the obligations secured by the First Lien by reason of such title transfer, so long as the City promptly cures any such Default upon taking title to the Restricted Unit. 8.3 Request for Notice of Default. The City may cause a Request for Notice to be recorded on the Restricted Unit subsequent to the recordation of the First Lien deed of trust or mortgage requesting a statutory notice of Default as set forth in California Civil Code Section 2924b. 8.4 Further Encumbrances Prohibited. Owner shall not record or cause or permit the recordation of any deed of trust, mortgage, lien or other instrument creating a security interest in or to the Restricted Unit(a"Further Encumbrance") other than these Resale Restrictions, the First Lien and the Affordable Housing Deed of Trust. 9. Uses. The Restricted Unit shall be used as the principal residence of Owner and Owner's family and may not be rented, or leased. Owner covenants and agrees to devote, use, and maintain the Restricted Unit in accordance with these Resale Restrictions. All uses conducted on the Restricted Unit, including, without limitation, all activities undertaken by the 22-12018/296597 8 Owner pursuant to these Resale Restrictions, shall conform to all applicable provisions of federal, state, and local laws, including the Huntington Beach Municipal Code, and the City Housing Regulations. 10. Maintenance of Unit. Owner shall maintain the Restricted Unit in a manner consistent with community standards, which will uphold the value of the Restricted Unit, in accordance with the Huntington Beach Municipal Code. Owner also shall comply with all applicable federal, state and local laws. 11. Effect of Violation of the Terms and Provisions of These Resale Restrictions. 11.1 Covenants Run with the Land. These Resale Restrictions are designed to create equitable servitudes and covenants running with the Restricted Unit, in accordance with the provisions of Civil Code Section 1468, and the State Density Bonus Law and the Huntington Beach Zoning and Subdivision Ordinance. The covenants, conditions, restrictions, reservations, equitable servitudes, liens and charges set forth herein shall run with the Restricted Unit and shall be binding upon all persons having any right, title or interest in the leasehold interest in the Restricted Unit, or any part thereof, their heirs, successive owners and assigns; shall inure to the benefit of the City and its successors and assigns, shall be binding upon Owner, and its successors and assigns; and may be enforced by City and its successors and assigns. Owner hereby declares its understanding and intent that the burden of the covenants set forth herein touch and concern the land and that the Owner's interest in the Restricted Unit is rendered less valuable thereby. Owner hereby further declares its understanding and intent that the benefit of such covenants touch and concern the land by enhancing and increasing the enjoyment and use of the Restricted Unit by Owner, and by furthering public purposes for City. In amplification and not in restriction of the provisions hereinabove, it is intended and agreed that City is deemed a beneficiary of the agreements and covenants provided herein both for and in its own right and also for the purposes of protecting the interests of the community. All covenants without regard to technical classification or designation shall be binding for the benefit of City and such covenants shall run in favor of City for the entire period during which such covenants shall be in force and effect, without regard to whether City is or remains an owner of any land or interest therein to which such covenants relate. However, all such covenants and restrictions shall be deemed to run in favor of all real property owned by the City which real property shall be deemed the benefited property of such covenants. Furthermore, all of the covenants, conditions, and restrictions contained herein shall also constitute easements in gross running in favor of the City. City shall have the right, in the event of any breach of any such agreement or covenant, to exercise all the rights and remedies, and to maintain any action at law or suit in equity or other proper proceedings to enforce the curing of such breach of agreement or covenant. 11.2 Notice of Default. Failure or delay by Owner to perform any term or provision of these Resale Restrictions which is not cured within thirty (30) days after receipt of notice from the City constitutes a Default under these Resale Restrictions; provided, however, if such Default is of the nature requiring more than thirty (30) days to cure, Owner may avoid Default hereunder by immediately commencing to cure within such thirty (30) day period, 22-12018/296597 9 and thereafter diligently pursuing such cure to completion within sixty (60) days after the expiration of the initial thirty (30) day period, for a total of ninety (90) days. Failure or delay in giving notice by the City shall not constitute a waiver of any Default, nor shall it change the time of Default. 11.3 City's Remedies. Upon the declaration of a Default, the City may (i) apply to a court of competent jurisdiction for specific performance, for an injunction prohibiting any act or omission in violation of these Resale Restrictions, or for any such other relief as may be appropriate, (ii) exercise the City's rights under these Resale Restrictions and the Affordable Housing Deed of Trust, including, without limitation, foreclosure of the Restricted Unit, and(iii)pursue such other rights and remedies permitted under these Resale Restrictions and by applicable law. 11.4 Prohibited Transfers Void. Any attempt by the Owner to make a Prohibited Transfer of title to or any interest in the Restricted Unit in violation of these Resale Restrictions shall be void and subject to rescission, specific performance, or any other right or remedy available at law or in equity. 12. Governing Law. Owner hereby agrees to comply with all ordinances, rules and regulations of the City, including the City Housing Regulations. Nothing in these Resale Restrictions is intended to be, nor shall it be deemed to be, a waiver of any City ordinance, rule or regulation. These Resale Restrictions shall be governed by the laws of the State of California without regard to conflict of law principles. Any legal action brought under these Resale Restrictions must be instituted in the Superior Court of the County of Orange, State of California, or in the Federal District Court in the Central District of California. 13. Attorneys' Fees and Costs. If either Party to these Resale Restrictions institutes any action against the other Party arising out of or in connection with to these Resale Restrictions, each Party shall bear its own attorney's fees and costs of suit. 14. Severability. So long as the material bargain of the Parties may be preserved, any provision of these Resale Restrictions that is deemed to be illegal, invalid or unenforceable by an arbitrator or court of competent jurisdiction shall be ineffective to the extent of the invalidity or unenforceability of such provision and shall be deemed stricken from these Resale Restrictions. Any stricken provision shall not affect the legality, enforceability or validity of the remainder of these Resale Restrictions. If any provision of these Resale Restrictions is stricken in accordance with the provisions of this Section, then the stricken provision shall be replaced, to the extent possible, with a legal, enforceable and valid provision that is as similar in tenor and intent to the stricken provision as is legally possible. Any such invalidity or unenforceability of any provision in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 15. Exhibits. Each of the Attachments referenced in these Resale Restrictions and attached hereto is incorporated into these Resale Restrictions by this reference as though fully set forth in this Section. 22-12018/296597 10 IN WITNESS WHEREOF, the Parties have caused this instrument to be executed on their behalf by their respective officers hereunto duly authorized as of the date set forth above. 22-12018/296597 11 OWNER: CITY: MERITAGE HOMES OF CALIFORNIA, CITY OF HUNTINGTON BEACH, INC., a California corporation a Califo • m ' 'pal corporation By: Mayor Its: kit ce- ATTEST: By: /11/1C lCity lerk Its: AUTHORITY: APPROVED AS T FORM: HOUSING AUTHORITY OF THE CITY OF HUNTINGTON BEACH, a public body corporate and politic it Attorney �' By: I J� Director of Community Development REVIEWED AND APPROVED: triv ity Manager 22-12018/296597 12 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 CALIFORNIA ) ) ss COUNTY OF ORANGE ) On December 22, 2022 before me, Tania Moore, Notary Public, personally appeared Tony Strickland and Donna Switzer 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. TANIA moon, Notary Public-California 0ra County un 8=r' •i0 `My ComCommmissosNMa23y5 2306 52 025 (Seal) (Notary Signat e) CALIFORNIA ACKNOWLEDGMENT CIVIL CODE § 1189 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. State of California 1 County of V rarr€ On h ere mber 11,2_022_ before me, Arc fetesSci1azAr , iVO4af-( Pv ')iC , Date Here Insert Name and Title of the Officer personally appeared A a re ' \ Gt atr\C0 Name(s)of Signer(s) who proved to me on the basis of satisfactory evidence to be the person(4whose name(. &are subscribed to the within instrument and acknowledged to me that/she/they executed the same i dip her/their authorized capacity(je1j, and that by is her/their signature(,a'jon the instrument the person(>�j, or the entity upon behalf of which the person,( ac ed, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing ••ry ANDREWSALAZAR paragraph is true and correct. ,i � Notary ,. Public.California 1 ;N L;�_- Orange County � WITNESS :'—x,; � Commission#2365034 my hand and official seal. ''L " My Comm.Expires Jul 10,2025 Signature .. Place Notary Seal and/or Stamp Above Signature of Notary Public OPTIONAL Completing this information can deter alteration of the document or fraudulent reattachment of this form to an unintended document. Description of Attached Document Title or Type of Document: Document Date: Number of Pages: Signer(s) Other Than Named Above: Capacity(ies) Claimed by Signer(s) Signer's Name: Signer's Name: ❑ Corporate Officer— Title(s): 0 Corporate Officer — Title(s): ❑ Partner— 0 Limited 0 General 0 Partner— 0 Limited 0 General ❑ Individual 0 Attorney in Fact 0 Individual 0 Attorney in Fact ❑ Trustee 0 Guardian or Conservator ❑ Trustee 0 Guardian or Conservator ❑ Other: 0 Other: Signer is Representing: Signer is Representing: ©2019 National Notary Association CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT CIVIL CODE § 1189 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. State of California County of Orange On 1 e C 14 1 hey— before me, Kim D. Radding, Notary Public, personally appeared Ursula Luna-Reynosa, 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 he executed the same in his authorized capacity, and that by his 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 under the laws of the State of California that the foregoing paragraph is true and correct. RADDING Notary Public•California = WITNESS my hand and official seal. z,- Orange County -;,.14!c Commission#2361781 My Comm.Expires Jun 22,2025 Signature "c(e17 (Notary Seal Above) J EXHIBIT A LEGAL DESCRIPTION OF THREE AFFORDABLE UNITS AT 19100 GOTHARD STREET,HUNTINGTON BEACH SUBJECT TO THE AFFORDABLE HOUSING COVENANT FOR 19100 GOTHARD STREET,HUNTINGTON BEACH (The Affordable Housing Covenant is Exhibit C to Density Bonus and Affordable Housing Agreement For 19100 Gothard Street,Huntington Beach) PARCEL 1: CONDOMINIUM UNITS 6,7 AND 8(THE"PROPERTY"),AS DEPICTED ON THAT CERTAIN GOTHARD REGATTA CONDOMINIUM PLAN—PHASE 4,RECORDED ON APRIL 9,2021,AS INSTRUMENT NO. 2021000243417,IN THE OFFICIAL RECORDS OF ORANGE COUNTY,CALIFORNIA(THE "CONDOMINIUM PLAN"), SAID CONDOMINIUM UNIT BEING SITUATED ON A PORTION OF LOT 1 OF TRACT NO. 18106,AS SHOWN ON A MAP FILED IN BOOK 982,AT PAGES 46 TO 48, INCLUSIVE,OF MISCELLANEOUS MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF ORANGE COUNTY, CALIFORNIA("MAP"). EXCEPTING THEREFROM ALL RIGHT,TITLE,AND INTEREST OF THE GRANTOR IN AND TO THAT CERTAIN OIL LEASE OF RECORD DATED APRIL 28, 1920,EXECUTED BY T.G.HERMAN,A SINGLE MAN,ET AL., IN FAVOR OF W.W. HANBERY, RECORDED JUNE 23, 1920 IN BOOK 14,PAGE 251 OF OFFICIAL RECORDS, ONLY IN SO FAR AS SAID RIGHTS APPLY TO THE ABOVE-DESCRIBED LAND. 935-76-187,935-76-188,935-76-189 PARCEL 2: AN UNDIVIDED THREE-THIRTEENTH(3/13TH)INTEREST IN THE"COMMON AREA"(AS DEFINED IN THE DECLARATION(AS DEFINED BELOW)AND AS DEPICTED ON THE CONDOMINIUM PLAN). PARCEL 3: THE EXCLUSIVE RIGHT TO THE USE,POSSESSION AND ENJOYMENT OF THE EXCLUSIVE USE AREAS, IF ANY,APPURTENANT TO PARCEL 1,ABOVE,AS DEFINED IN THE DECLARATION AND AS MAY BE DEPICTED ON THE CONDOMINIUM PLAN WHICH ARE SET ASIDE AND ALLOCATED FOR THE EXCLUSIVE USE OF THE OWNER OF THE CONDOMINIUM TO WHICH THEY ARE ATTACHED OR ASSIGNED. PARCEL 4: A NON-EXCLUSIVE EASEMENT FOR INGRESS AND EGRESS, SUPPORT,USE,ENJOYMENT AND RIGHTS OVER,UNDER,UPON AND THROUGH ASSOCIATION PROPERTY AS SHOWN ON THE CONDOMINIUM PLAN AND DEFINED IN THE DECLARATION. EXCEPTING THEREFROM AND RESERVING THE FOLLOWING: ALL THE CONDOMINIUM UNITS DEPICTED ON THE CONDOMINIUM PLAN AND DEFINED IN THE DECLARATION OTHER THAN THE PROPERTY DESCRIBED IN PARCEL 1 ABOVE. THE EXCLUSIVE USE AREAS,IF ANY,AS DEFINED IN THE DECLARATION AND/OR DEPICTED ON THE CONDOMINIUM PLAN WHICH ARE SET ASIDE AND ALLOCATED FOR THE EXCLUSIVE USE OF THE OWNERS OF CONDOMINIUMS OTHER THAN THE CONDOMINIUM UNIT DESCRIBED IN PARCEL 1 ABOVE. 22-12018/296597 13 NON-EXCLUSIVE EASEMENTS FOR INGRESS,EGRESS, SUPPORT,USE, ENJOYMENT AND RIGHTS OVER,UNDER UPON AND THROUGH THE ASSOCIATION PROPERTY APPURTENANT TO ALL CONDOMINIUM UNITS AS SAID EASEMENTS AND RIGHTS ARE DEFINED IN THE DECLARATION. PARCEL 5: NONEXCLUSIVE EASEMENTS APPURTENANT TO THE PROPERTY DESCRIBED IN PARCEL 1 ABOVE FOR INGRESS,EGRESS,ACCESS,MAINTENANCE,REPAIRS,DRAINAGE,ENCROACHMENT, SUPPORT,USE, ENJOYMENT AND FOR ALL OTHER PURPOSES AS DESCRIBED IN THE DECLARATION(AS DEFINED BELOW). PARCEL 6: A NON-EXCLUSIVE EASEMENT AND RIGHT TO ENTER AND USE THE PRIVATE STREETS AND ALLEYS AS IDENTIFIED IN THAT CERTAIN EASEMENT DEED RECORDED APRIL 14,2021,AS INSTRUMENT NO. 2021000252618,IN THE OFFICIAL RECORDS OF ORANGE COUNTY,CALIFORNIA, BETWEEN GRANTOR AND THE REGATTA COMMUNITY ASSOCIATION,A CALIFORNIA NONPROFIT MUTUAL BENEFIT CORPORATION("ASSOCIATION"),FOR THE PURPOSES SET FORTH IN THE PRIVATE STREET MAINTENANCE AND RESERVE AGREEMENT("STREET AGREEMENT")BETWEEN GRANTOR AND THE ASSOCIATION. SUCH RIGHTS GRANTED TO THE ASSOCIATION AND GRANTEE,AS A MEMBER OF THE ASSOCIATION,UNDER THE EASEMENT DEED INCLUDES ACCESS TO AND FROM THE PROPERTY IDENTIFIED IN PARCEL 1. THE EASEMENT DEED,THE NON- EXCLUSIVE EASEMENT AND RIGHT TO ENTER AND USE THE PRIVATE STREETS AND ALLEYS FOR SAID PURPOSES SET FORTH IN THE STREET AGREEMENT SHALL IMMEDIATELY AND AUTOMATICALLY EXTINGUISH UPON CONVEYANCE OF THE PRIVATE STREETS AND ALLEYS TO THE ASSOCIATION. 22-12018/296597 14 EXHIBIT B (Notice of Affordability Restrictions) (The Notice is an Exhibit to the Affordable Housing Covenant,which is Exhibit C to Density Bonus and Affordable Housing Agreement For 19100 Gothard Street,Huntington Beach) 22-12018/296597 15 EXHIBIT C (Promissory Note) (The Promissory Note is an Exhibit to the Affordable Housing Covenant,which is Exhibit C to Density Bonus and Affordable Housing Agreement For 19100 Gothard Street, Huntington Beach) 22-12018/296597 16 EXHIBIT'D (Affordable Housing Deed of Trust) (This Affordable Housing Deed of Trust is an Exhibit to the Affordable Housing Covenant, which is Exhibit C to Density Bonus and Affordable Housing Agreement For 19100 Gothard Street,Huntington Beach) 22-12018/296597 17 RECORDING REQUESTED BY WHEN RECORDED MAIL TO: City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 DECLARATION OF CONDITIONS, COVENANTS AND RESTRICTIONS FOR MODERATE INCOME AFFORDABLE HOUSING 19100 GOTHARD STREET, HUNTINGTON BEACH This Declaration Of Conditions, Covenants And Restrictions For Moderate Income Affordable Housing ("Resale Restrictions") is made as of , 20_, by and between Meritage Homes of California, Inc., a California corporation, (the "Owner"), and the CITY OF HUNTINGTON BEACH, a California municipal corporation (the "City"), and the HOUSING AUTHORITY OF THE CITY OF HUNTINGTON BEACH, a public body corporate and politic (the "Authority"). At the option of the City and Authority, the Authority may enforce these Resale Restrictions in place of the City. A. Owner is the owner in fee of that certain real property consisting of Units , and , located at 19100 Gothard Street, Huntington Beach (APN , , and ), as more particularly described in the legal description attached hereto as Exhibit "A" (the "Property"). B. Owner submitted to City plans to develop the Property as a twenty-one (21) unit residential community to be subdivided as a condominium development. Owner will build the Project in a single phase and sell individual units to individual homebuyers. Pursuant to California Government Code Section 65915, Owner obtained a ten percent (10%) density bonus. Pursuant to Section 65915 and Chapter 230.26 of the Huntington Beach Zoning and Subdivision Ordinance ("HBZSO"), and the Holly Seacliff Specific Plan, at least fifteen percent (15%) of the units in the Project shall be affordable to Moderate Income Households. C. On December 12, 2017, the Huntington Beach Planning Commission approved the Project pursuant to Tentative Tract No. 18106 and CUP No. 17-010. As a condition of approval of the Tentative Tract Map and CUP, the Project includes three units which are to be occupied by, and sold at prices affordable to Moderate Income Households for a teen of 45 years ("the "Affordable Units"). Tentative Tract Map No. 18105 was later recorded as Final Tract Map No. 18105 at Instrument No. of the Records of Orange County, California. D. In order to secure the long term affordability of the Affordable Units, the City and Owner entered into the "Density Bonus and Affordable Housing Agreement for 19100 Gothard Street," which was recorded as Instrument No. in the Records of Orange County, California (the "Density Bonus Agreement"). The Density Bonus Agreement provides that Owner shall designate two, four -bedroom units and one, three -bedroom unit as the Affordable Units. E. Pursuant to the Density Bonus Agreement, Owner has designated the Affordable Units as: (i) Unit _ a four -bedroom unit; (ii) Unit , a four bedroom unit; and Unit _, a, three -bedroom unit. Owner is the owner of record of these Units, which are located in the City of Huntington Beach, County of Orange, State of California and legally described in the attached Exhibit "A", and are collectively known as the "Restricted Unit(s)." NOW, THEREFORE, the Parties hereto agree and covenant as follows: 1. Affordability Covenants. Owner agrees for itself and the successors and assigns to Owner's interest in the Restricted Units, including each Moderate Income Household purchasing one of the Restricted Units, that for a term of forty-five (45) years from the date of the close of escrow for the initial sale of each such Restricted Unit: 1.1 The Restricted Units shall only be owned and occupied by Owner or by a Moderate Income Household, which shall mean persons or families earning not more than 120% of Orange County median income, adjusted for household size as appropriate to the Unit. 1.2 The Restricted Units shall only be sold at an Affordable Housing Cost to Moderate Income Households. 2. Definitions and Exhibits. 2.1 Definitions. In addition to the terms that may be defined elsewhere in this Covenant, the following terms when used in these Resale Restrictions shall be defined as follows: 2.1.1 "Adjusted for family size appropriate to the Unit" means a household of one person in the case of a studio unit, a household of two persons in the case of one -bedroom unit, a household of three persons in the case of a two -bedroom unit, a household of four persons in the case of a three -bedroom unit, and a household of five persons in the case of a four -bedroom unit. 2.1.2 "Affordable Housing Cost" for a Moderate Income Household means that purchase price which would result in an annual Monthly Housing Cost which does not exceed Thirty -Five Percent (35%) of One Hundred Ten Percent (I 10%) of the current Orange County monthly median income for a household adjusted for family size appropriate to the Unit. 2 17-6040/168247.doc/S FF 18 In determining monthly housing payments, the City will assume principal and interest payments on a conventional home mortgage after paying a ten percent (10%) down payment. Monthly housing costs will also include monthly homeowner's association dues, utilities, homeowner's insurance, maintenance costs and property taxes. The Affordable Housing Cost shall be calculated pursuant to the City Housing Regulations. 2.1.3 "City Housing Regulations" means the "Affordable Ownership Housing Regulations -Homeowner Requirements of the City of Huntington Beach," dated August 15, 2011, as they exist now, and as they may be amended in the future. 2.1.4 "Default" means the failure of a Party to perform any action or covenant required by these Resale Restrictions within the time periods provided herein following notice and opportunity to cure. 2.1.5 "First Lien" means the lien of a primary Lender which secures the obligations of the Owner to repay amounts owed to the Lender. 2.1.6. "Owner" means initially, Meritage Homes of California, Inc., a California corporation, and later its successors and assigns, each owner of any legal or equitable interest in one of the three (3) Restricted Units. 2.1.7-6. "Lender" means a lender making a purchase money loan to the Owner for the purchase of the Affordable Unit. 2.1.8 "Median Income" means the Orange County, California area median income, adjusted for household size, as established by the United States Department of Housing and Urban Development, and as published periodically by the State of California Department of Housing and Community Development. 2.1.9 "Moderate Income Household" means a Household whose income does not exceed one hundred twenty percent (120%) of Median Income, adjusted for family size. The income level of a Household shall be detennined in accordance with the City Housing Regulations. 2.1.10 "Monthly Housing Cost" shall include all of the following associated with the Restricted Units: (i) principal and interest payments on a mortgage loan; (ii) property taxes and assessments; (iii) the cost of fire and casualty insurance covering replacement value of property improvements; (iv) homeowner's association fees; (v) reasonable Unit maintenance and repair costs; and (vi) reasonable utility allowance. All MontlAy Housing costs shall be determined by the City according to the City Housing Regulations. 2.t.11 "Qualified Purchaser" means a person or family who complies with all income verification requirements of these Resale Restrictions, and earns not more than one hundred twenty percent (120%) of the Median Income, adjusted for family size, to be determined in accordance with the City Housing Regulations. 2.1.12 "Transfer" shall mean any sale, assignment, conveyance, lease, or transfer, voluntary or involuntary, of any interest in the Restricted Unit. Without limiting the 17-6040/168247.doUSFF 19 generality of the foregoing, Transfer shall include (i) a transfer by devise, inheritance or intestacy; (ii) the creation of a life estate; (iii) the creation of a joint tenancy interest; (iv) a gift of all or any portion of the Restricted Unit; or (v) any voluntary conveyance of the Restricted Unit. 3. Attachments. The following documents are attached to, and by this reference made a part of, these Resale Restrictions: Exhibit A — Legal Description of Restricted Units Exhibit B — Notice of Affordability Restriction Exhibit C — Promissory Note Exhibit D — Affordable Housing Deed of Trust 4. Term of Resale Restrictions. 4.1 The term of these Resale Restrictions shall commence on the date of the initial sale of each Restricted Unit from Owner to a Qualified Purchaser as evidenced by a deed recorded with the Orange County Recorder's Office and shall continue, with respect to each such Restricted Unit, for forty-five (45) years from said date (the "Affordability Period"). The Covenant contained in this Section shall run with each Restricted Unit and shall terminate and be of no further force or effect upon expiration of the Affordability Period. By way of explanation of the foregoing sentence, it is possible that the affordability term for one Restricted Unit will neither commence on the same date nor terminate on the same date as another Restricted Unit, and it is possible that the affordability terms for all Restricted Units will commence on different days and terminate on different days. The beginning and expiration dates of the Affordability Period for each Restricted Unit shall be established by the City in the Notice of Affordability Covenant (Ex. B) recorded in connection with each sale of the Restricted Units. 4.2 Each Qualified Purchaser of each Restricted Unit shall enter into a Notice of Affordability Restriction, Promissory Note and Deed of Trust in the forms attached as Exhibits B, C, and D to these Resale Restrictions. 5. Covenant Regarding Use and Sale of Restricted Units. For the Affordability Period, the Restricted Units shall be owned and occupied as the principal residence of a Moderate Income Household, and in no event may the Restricted Unit be leased to a third party. No transfer of a Restricted Unit shall occur until the City determines that: (a) the proposed purchaser intends to occupy the Restricted Unit as the proposed purchaser's principal residence; (b) the proposed purchaser is a Moderate Income Household; and (c) the proposed transfer occurs at an Affordable Housing Cost. 6. Permitted and Prohibited Transfers of Restricted Units. 6.1 The following Transfers, made in compliance with the terms and conditions of these Resale Restrictions and the City Housing Regulations, shall constitute "Permitted Transfers": (i) a Transfer to a surviving joint tenant or other permitted co -Owner of the Restricted Unit by devise, descent, or operation of law on the death of an Owner; (ii) a 4 17-6040/168247.dodSFF 20 Transfer to a spouse such that the spouses become co -Owners of the Restricted Unit; (iii) a Transfer by decree of dissolution, legal separation agreement, or from an incidental property settlement by which the spouse becomes an Owner of the Restricted Unit, provided that in each case the transferee spouse occupies or will occupy the Restricted Unit; (iv) a Transfer to an inter vivos trust in which Owner is and remains the beneficiary and occupant of the Restricted Unit; and (v) a Transfer to a Moderate Income Household at Affordable Housing Cost. A Transfer that is not a Permitted Transfer specified above is a "Prohibited Transfer." The occurrence of a Prohibited Transfer is a Default under these Resale Restrictions. 6.2 All Transfers Prohibited Without City Approval. During the Affordability Period, Owner shall not sell, transfer, use as security for any loan, or convey any interest in a Restricted Unit, except with the express written consent of the City, which consent shall be given only if the Transfer is a Permitted Transfer and in strict compliance with the provisions of this Section 6. 6.3 Maximum Sale Price of Restricted Unit. In the event that Owner decides to sell or otherwise Transfer the Restricted Unit, Owner shall contact the City to obtain the current Affordable Housing Cost, which shall be the maximum sales price of the Restricted Unit. City shall provide the Affordable Housing Cost pursuant to its current Affordable Housing Regulations. Regarding the Affordable Housing Cost, Owner acknowledges that: OWNER, AND EACH SUCCESSOR, HEIR OR ASSIGN OF OWNER, UNDERSTANDS THAT THE DETERMINATION OF THE AFFORDABLE HOUSING COST CAN BE MADE ONLY AT THE TIME OF A PROPOSED SALE OR OTHER TRANSFER OF THE RESTRICTED UNIT, TAKING INTO CONSIDERATION PREVAILING INTEREST RATES, THE OFFERED TERMS OF SALE, THE ECONOMIC CIRCUMSTANCES OF THE PROPOSED PURCHASER AND OTHER FACTORS THAT CANNOT BE ACCURATELY PREDICTED, AND THAT THE TRANSFER PRICE PERMITTED HEREUNDER MAY BE LESS THAN THE FAIR MARKET VALUE OF THE SAME OR OTHER SIMILAR REAL PROPERTY WHICH IS NOT ENCUMBERED BY THIS COVENANT. OWNER, AND EACH SUCCESSOR, HEIR OR ASSIGN OF OWNER, FURTHER ACKNOWLEDGES THAT AT ALL TIMES IN SETTING THE TRANSFER PRICE, THE PRIMARY OBJECTIVE OF THE CITY AND THESE RESALE RESTRICTIONS IS TO PROVIDE HOUSING TO MODERATE INCOME HOUSEHOLDS AT AN AFFORDABLE HOUSING COST. Owner's Initials 5 17-6040/168247. doe/SFF 21 6.4 Procedure to Verify a Proposed Transfer. In the event that Owner desires to sell the Restricted Unit, Owner shall send written notice thereof to the City at the following address: City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 Attention: Director of Economic Development City shall process the sale of the Restricted Unit pursuant to the City Housing Regulations. The City shall not be obligated to approve a transfer unless and until the proposed purchaser has submitted to the City such information and completed such forms as necessary to verify the proposed purchaser's intent with respect to his/her/its residency of the Restricted Unit, his/her/its gross income, and an affidavit of the proposed purchaser disclosing and certifying the amount of the proposed purchase price. Prior to conveyance of the Restricted Unit, each approved purchaser shall also submit to the City an executed disclosure statement which certifies that the purchaser is aware that: (i) the purchaser buying the Restricted Unit may only sell the Restricted Unit at an Affordable Housing Cost to a Moderate -Income Household as provided in Section l above, (ii) the maximum permitted sales price may be less than fair market value and (iii) the Restricted Unit must be owner -occupied at all times and cannot be rented or leased. The approved purchaser shall also submit an executed promissory, trust deed, notice documents, and any other documentation reasonably required by the City to effectuate the Affordable Housing Program. Owner shall cooperate with the City in providing such forms to proposed purchasers and in assisting proposed purchasers to prepare such forms and to provide any required information to the City in connection with only the Owner's sale of the Restricted Unit. 7. Non -Discrimination Covenants. Owner covenants by and for itself, it 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 sale, transfer, use, occupancy, tenure or enjoyment of the Restricted Unit, nor shall Owner 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 Restricted Unit. Owner and its successors and assigns shall refrain from restricting the sale of the Restricted 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 deeds or contracts shall contain or be subject to substantially the following nondiscrimination or nonsegregati.on clause: (a) In deeds: "The grantee herein covenants by and for himself or herself, his or her heirs, executors, administrators and assigns, and all persons 0 17-6040/168247. doc/SFF 22 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 sale, transfer, use, occupancy, tenure or enjoyment of the land herein conveyed, nor shall the grantee 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 with reference to the selection, location, number, use or occupancy of tenants, or vendees in the land herein conveyed. The foregoing covenants shall run with the land." (b) In contracts: "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 sale, transfer, use, occupancy, tenure or enjoyment of the premises, nor shall the transferor himself or herself of any person claiming under or though him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use of occupancy of tenants, subtenants or vendee of the premises." (c) In leases: "The lessee herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assignees, and all persons claiming under or though 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 though him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy of tenants, sublessees, subtenants, or vendees in the premises herein leased." Nothing in this Section 7 shall be construed to authorize the rental or lease of the Restricted Unit if such rental or lease is not otherwise permitted. 8. Encumbrances. 8.1 Financings on Transfer. This Section 8 shall not prohibit the encumbering of title for the sole purpose of securing financing of the purchase price of the Restricted Unit upon a Transfer thereof, however, any such financing shall be for the Owner and (i) must be a First Lien, (ii) must not be in excess of the Affordable Housing Cost of the 7 17-6040/168247.doc/SFF 23 Restricted Unit as of date of approval for the financing, (iii) must be in compliance with these Resale Restrictions and the Affordable Housing Deed of Trust, and (iv) shall be subordinate to these Resale Restrictions. 8.2 Subordination. These Resale Restrictions shall have priority over all monetary liens and encumbrances for the Affordability Period. However, the Affordable Housing Deed of Trust only may be subordinated to a First Lien on the Restricted Unit that secures the payment of a principal amount that is not in excess, as of the date of approval for said financing, of the Affordable Housing Cost of the Restricted Unit. The City shall execute a written instrument for the subordination of its rights under the Affordable Housing Deed of Trust in the form approved by the City Attorney as may reasonably be requested by the Lender. The City's agreement to so subordinate its rights is subject to agreement in writing by the Lender providing the City the following rights: (a) Upon the occurrence of a Default under any of the First Lien documents, the holder of the First Lien shall promptly notify the City of the occurrence of such Default, which notification shall be provided to the City contemporaneously with the delivery to Owner of any notice of Default under any of the First Lien documents; and (b) The City shall have the right, during the cure periods which apply to the Owner pursuant to the First Lien documents and any cure period which may apply to the City under applicable law, to cure the Owner's Default relative to the First Lien; and (c) After a Default on any of the First Lien documents but prior to a foreclosure sale or deed in lieu assignment of the Restricted Unit, the City shall have the right to take title to the Restricted Unit and cure the Default relative to the First Lien documents, without the holder of the First Lien exercising any right it might otherwise have to accelerate the obligations secured by the First Lien by reason of such title transfer, so long as the City promptly cures any such Default upon taking title to the Restricted Unit. 8.3 Request for Notice of Default. The City may cause a Request for Notice to be recorded on the Restricted Unit subsequent to the recordation of the First Lien deed of trust or mortgage requesting a statutory notice of Default as set forth in California Civil Code Section 2924b. 8.4 Further Encumbrances Prohibited. Owner shall not record or cause or permit the recordation of any deed of trust, mortgage, lien or other instrument creating a security interest in or to the Restricted Unit (a "Further Encumbrance") other than these Resale Restrictions, the First Lien and the Affordable Housing Deed of Trust. 9. Uses. The Restricted Unit shall be used as the principal residence of Owner and Owner's family and may not be rented, or leased. Owner covenants and agrees to devote, use, and maintain the Restricted Unit in accordance with these Resale Restrictions. All uses 17-6040/ 168247.doc/SFF 24 conducted on the Restricted Unit, including, without limitation, all activities undertaken by the Owner pursuant to these Resale Restrictions, shall conform to all applicable provisions of federal, state, and local laws, including the Huntington Beach Municipal Code, and the City Housing Regulations. 10. Maintenance of Unit. Owner shall maintain the Restricted Unit in a manner consistent with community standards which will uphold the value of the Restricted Unit, in accordance with the Huntington Beach Municipal Code. Owner also shall comply with all applicable federal, state and local laws. 11. Effect of Violation of the Terms and Provisions of These Resale Restrictions. 11.1 Covenants Run with the Land. These Resale Restrictions are designed to create equitable servitudes and covenants running with the Restricted Unit, in accordance with the provisions of Civil Code Section 1468, and the State Density Bonus Law and the Huntington Beach Zoning and Subdivision Ordinance. The covenants, conditions, restrictions, reservations, equitable servitudes, liens and charges set forth herein shall run with the Restricted Unit and shall be binding upon all persons having any right, title or interest in the leasehold interest in the Restricted Unit, or any part thereof, their heirs, successive owners and assigns; shall inure to the benefit of the City and its successors and assigns, shall be binding upon Owner, and its successors and assigns; and may be enforced by City and its successors and assigns. Owner hereby declares its understanding and intent that the burden of the covenants set forth herein touch and concern the land and that the Owner's interest in the Restricted Unit is rendered less valuable thereby. Owner hereby further declares its understanding and intent that the benefit of such covenants touch and concern the land by enhancing and increasing the enjoyment and use of the Restricted Unit by Owner, and by furthering public purposes for City. In amplification and not in restriction of the provisions hereinabove, it is intended and agreed that City is deemed a beneficiary of the agreements and covenants provided herein both for and in its own right and also for the purposes of protecting the interests of the community. All covenants without regard to technical classification or designation shall be binding for the benefit of City and such covenants shall run in favor of City for the entire period during which such covenants shall be in force and effect, without regard to whether City is or remains an owner of any land or interest therein to which such covenants relate. However, all such covenants and restrictions shall be deemed to run in favor of all real property owned by the City which real property shall be deemed the benefited property of such covenants. Furthermore, all of the covenants, conditions, and restrictions contained herein shall also constitute easements in gross running in favor of the City. City shall have the right, in the event of any breach of any such agreement or covenant, to exercise all the rights and remedies, and to maintain any action at law or suit in equity or other proper proceedings to enforce the curing of such breach of agreement or covenant. 11.2 Notice of Default. Failure or delay by Owner to perform any term or provision of these Resale Restrictions which is not cured within thirty (30) days after receipt of notice from the City constitutes a Default under these Resale Restrictions; provided, however, if such Default is of the nature requiring more than thirty (30) days to cure, Owner may avoid 9 17-6040/168247. doc/SFF 25 Default hereunder by immediately commencing to cure within such thirty (30) day period, and thereafter diligently pursuing such cure to completion within sixty (60) days after the expiration of the initial thirty (30) day period, for a total of ninety (90) days. Failure or delay in giving notice by the City shall not constitute a waiver of any Default, nor shall it change the time of Default. 11.3 City's Remedies. Upon the declaration of a Default, the City may (i) apply to a court of competent jurisdiction for specific performance, for an injunction prohibiting any act or omission in violation of these Resale Restrictions, or for any such other relief as may be appropriate, (ii) exercise the City's rights under these Resale Restrictions and the Affordable Housing Deed of Trust, including, without limitation, foreclosure of the Restricted Unit, and (iii) pursue such other rights and remedies permitted under these Resale Restrictions and by applicable law. 11.4 Prohibited Transfers Void. Any attempt by the Owner to make a Prohibited Transfer of title to or any interest in the Restricted Unit in violation of these Resale Restrictions shall be void and subject to rescission, specific performance, or any other right or remedy available at law or in equity. 12. Governing Law. Owner hereby agrees to comply with all ordinances, rules and regulations of the City, including the City Housing Regulations. Nothing in these Resale Restrictions is intended to be, nor shall it be deemed to be, a waiver of any City ordinance, rule or regulation. These Resale Restrictions shall be governed by the laws of the State of California without regard to conflict of law principles. Any legal action brought under these Resale Restrictions must be instituted in the Superior Court of the County of Orange, State of California, or in the Federal District Court in the Central District of California. 13. Attorneys' Fees and Costs. If either Party to these Resale Restrictions institutes any action against the other Party arising out of or in connection with to these Resale Restrictions, each Party shall bear its own attorney's fees and costs of suit. 14. Severability. So long as the material bargain of the Parties may be preserved, any provision of these Resale Restrictions that is deemed to be illegal, invalid or unenforceable by an arbitrator or court of competent jurisdiction shall be ineffective to the extent of the invalidity or unenforceability of such provision and shall be deemed stricken from these Resale Restrictions. Any stricken provision shall not affect the legality, enforceability or validity of the remainder of these Resale Restrictions. If any provision of these Resale Restrictions is stricken in accordance with the provisions of this Section, then the stricken provision shall be replaced, to the extent possible, with a legal, enforceable and valid provision that is as similar in tenor and intent to the stricken provision as is legally possible. Any such invalidity or unenforceability of any provision in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 15. Exhibits. Each of the Attachments referenced in these Resale Restrictions and attached hereto is incorporated into these Resale Restrictions by this reference as though fully set forth in this Section. 10 17-6040/168247.doe/SFF 26 IN WITNESS WHEREOF, the Parties have caused this instrument to be executed on their behalf by their respective officers hereunto duly authorized as of the date set forth above. OWNER: MERITAGE HOMES OF CALIFORNIA, INC., a California corporation By: Its: By: Its: CITY: CITY OF HUNTINGTON BEACH, a California municipal corporation Mayor ATTEST: City Clerk AUTHORITY: HOUSING AUTHORITY OF THE CITY OF HUNTINGTON BEACH, a public body corporate and politic By: Chairperson ATTEST: Authority Clerk 17-6040/168247,doc/SFF II 27 APPROVED AS TO FORM: City Attorney/Authority Counsel INITIATED AND APPROVED: City Manager 12 17-6040/168247.doc/SFF 28 EXHIBIT A LEGAL DESCRIPTION OF THREE AFFORDABLE UNITS AT 19100 GOTHARD STREET, HUNTINGTON BEACH SUBJECT TO__ THE AFFORDABLE HOUSING COVENANT FOR 19100 GOTHARD STREET, HUNTINGTON BEACH (The Affordable Housing Covenant is Exhibit C to Density Bonus and Affordable Housing Agreement For 19100 Gothard. Street, Huntington Beach) 13 17-6040/168247.doc/SFF 29 EXHIBIT B (Notice of Affordability Restrictions) (The Notice is an Exhibit to the Affordable Housing Covenant, which is Exhibit C to Density Bonus and Affordable Housing Agreement For 19100 Gothard Street, Huntington Beach) 14 17-60401168247.doc/SFF 30 Recording Requested By: City of Huntington Beach 2000 Main Street Huntington Beach, California 92648 Attention: Economic Development Dept./Housing Div. SPACE ABOVE THIS LINE FOR RECORDER'S USE NOTICE OF AFFORDABILITY RESTRICTIONS ON TRANSFER OF PROPERTY (Unit , 19100 GOTHARD STREET, HUNTINGTON BEACH) NOTICE IS HEREBY GIVEN by ("Owner"), owner of the property located at 19100 Gothard Street, Unit , Huntington Beach, California 92648, and more particularly described in Exhibit "A" attached hereto (the "Property"), that: 1. The Property is subject to a "Declaration of Covenants, Conditions and Restrictions for Moderate Income Affordable Housing" recorded on , 20_ as Instrument Number No. in the Office of the County Recorder of the County of Orange, California (the "Resale Restrictions"). Among other things, the Resale Restrictions limit the price that the Property may be sold to an "Affordable Housing Cost" for "Moderate Income Households." Concurrently with executing this Notice, Owner has executed a Promissory Note and a Deed of Trust securing the Resale Restrictions. 2. The administration of the Resale Restrictions shall be governed by the Affordable Housing Regulations of the City of Huntington Beach, dated August 15, 2011, as they exist now and may be amended in the future. 3. In summary, the term "Affordable Housing Cost" means the purchase price that would result in monthly housing payments that do not exceed Thirty -Five Percent (35%) of One Hundred Ten Percent (110%) of the current Orange County monthly median income for a household adjusted for family size appropriate to the Unit. Family size is one plus the number of bedrooms; for example, a household of four persons is the family size of a three -bedroom unit. In determining monthly housing payments, the City will assume principal and interest payments on a conventional home mortgage after paying a ten percent (10%) downpayment. Monthly housing costs will also include homeowner's association dues, utilities, homeowner's insurance, maintenance costs and property taxes. The effect of relying on prevailing interest rates to determine the Affordable Sales Price is to make the resale price of the Property sensitive to interest rates. For example, if interest rates rise, the resale price will fall, and if interest rates fall, the resale price will rise. This could result in the Affordable Housing Cost decreasing below the original purchase price. 17-6041 / 168201. doc/SFF 31 5. In the event that Owner decides to sell or otherwise Transfer of the Property, Owner shall contact the City to obtain the current Affordable Housing Cost, which shall be the maximum sales price of the Property. City shall provide the Affordable Housing Cost pursuant to its current Affordable Housing Regulations. Regarding the Affordable Housing Cost, Owner acknowledges that: OWNER, AND EACH SUCCESSOR, HEIR OR ASSIGN OF OWNER, UNDERSTANDS THAT THE DETERMINATION OF THE AFFORDABLE HOUSING COST CAN BE MADE ONLY AT THE TIME OF A PROPOSED SALE OR OTHER TRANSFER OF THE RESTRICTED UNIT, TAKING INTO CONSIDERATION PREVAILING INTEREST RATES, THE OFFERED TERMS OF SALE, THE ECONOMIC CIRCUMSTANCES OF THE PROPOSED PURCHASER AND OTHER FACTORS THAT CANNOT BE ACCURATELY PREDICTED, AND THAT THE TRANSFER PRICE PERMITTED HEREUNDER MAY BE LESS THAN THE FAIR MARKET VALUE OF THE SAME OR OTHER SIMILAR REAL PROPERTY WHICH IS NOT ENCUMBERED BY THIS COVENANT. OWNER, AND EACH SUCCESSOR, HEIR OR ASSIGN OF OWNER, FURTHER ACKNOWLEDGES THAT AT ALL TIMES IN SETTING THE TRANSFER PRICE, THE PRIMARY OBJECTIVE OF THE CITY AND THESE RESALE RESTRICTIONS IS TO PROVIDE HOUSING TO MODERATE INCOME HOUSEHOLDS AT AN AFFORDABLE HOUSING COST. Owner's Initials 6. The Resale Restrictions imposed on the Property began on , 20_, and expire forty-five (45) years later, on , 20____. This Notice is recorded for the purpose of providing notice only and it in no way modifies the provisions of the Resale Restrictions. Dated: , 20 APPROVED AS TO FORM: OFFICE OF HUNTINGTON BEACH CITY ATTORNEY Dated: , 20_ MICHAEL E. GATES, City Attorney 2 17-6041/168201.doc/SFF 32 Exhibit "A" 17-6041n 6s2o 1.doc/SFF 33 � (Promissory Note) (The Promissory Note is an Exhibit to the Affordable Housing Covenant, which is Exhibit C to Density Bonus and Affordable Housing Agreement For 19100 Gothard Street, Huntington Beach) 15 17-6040/ 168247. doc/SFF 34 PROMISSORY NOTE TO SECURE AFFORDABILITY RESTRICTIONS ON TRANSFER OF PROPERTY (Unit ,19100 GOTHARD STREET, HUNTINGTON BEACH) THIS PROMISSORY NOTE (the "Note") is dated this _ day of 20 , between a ("Promissor") and the City of Huntington Beach ("City") with reference to the following facts: A. This Promissory Note is made in reference to that property in the City of Huntington Beach, County of Orange, State of California, with the street address 19100 Gothard Street, Unit Huntington Beach, California 92648 and the Assessor's Parcel Map No. (the "Property")- B. The Property is subject to a "Declaration of Covenants, Conditions and Restrictions for Moderate Income Affordable Housing" recorded on , 20_ as Instrument Number No. in the Office of the County Recorder of the County of Orange, California (the "Resale Restrictions"). Among other things, the Resale Restrictions limit the price that the Property may be sold to an "Affordable Housing Cost" for "Moderate Income Households." C. In summary, the term "Affordable Housing Cost" means the purchase price that would result in monthly housing payments that do not exceed Thirty -Five Percent (35%) of One Hundred Ten Percent (110%) of the current Orange County monthly median income for a household adjusted for family size appropriate to the Unit. Fan -lily size is one plus the number of bedrooms; for example, a household of four persons is the family size of a three -bedroom unit. In determining monthly housing payments, the City will assume principal and interest payments on a conventional home mortgage after paying a ten percent (10%) downpayment. Monthly housing costs will also include homeowner's association dues, utilities, homeowner's insurance, maintenance costs and property taxes. The effect of relying on prevailing interest rates to determine the Affordable Sales Price is to make the resale price of the Property sensitive to interest rates. For example, if interest rates rise, the resale price will fall, and if interest rates fall, the resale price will rise. This could result in the Affordable Housing Cost decreasing below the original purchase price. D. The Resale Restrictions imposed on the Property began on , 20_, and expire forty-five (45) years later, on , 20—. E. The administration of the Resale Restrictions shall be governed by the Affordable Housing Regulations of the City of Huntington Beach, dated August 15, 2011, as they exist now and may be amended in the future. F. Concurrently with executing this Note, Promissor has executed a Deed of Trust securing and modifying the Resale Restrictions (the "City of Deed of Trust"). Page 1 of 4 17-6040/168204.DOC/SFF 35 G. Pursuant to the Resale Restrictions, the City approved the sale of the Property to Promissor at an Affordable Housing Cost. To insure that any further sale, transfer or assignment of the Property occurs with the City's approval and at an Affordable Sales Price, the City has required as a condition of the Promissor's purchase of the Property that Promissor execute this Note. AGREEMENT NOW, THEREFORE, the parties agree as follows: 1. Incorporation of Recitals. The recitals set forth above are incorporated by reference as though fully set forth herein. 2. Amount of the Note. The Amount of this Note is the "Transfer Price" of the Property, less the then current "Affordable Housing Cost." The Transfer Price shall be determined according to the circumstances that cause the Amount of the Note to become due pursuant to Section 3 of this Note. In the case of the sale of the Property without the City's consent, the Transfer Price shall be the market sales price. In the case of the financing or refinancing of the Property without the City's consent, the Transfer Price shall be the loan amount in excess of the last loan balance on the First Mortgage that the City previously approved. In all other cases, the Transfer Price shall be the fair market value of the Property as established by the Director of Economic Development of the City pursuant to an appraisal. The term "Affordable Housing Cost" shall be defined according to the Resale Restrictions. Promissor promises to pay the Amount of this Note when due to the City at 2000 Main Street, P.O. Box 190, Huntington Beach, California 92648, or at such other address as City may direct from time to time in writing. All sums hereunder shall be payable in lawful money of the United States of America and all sums shall be credited first to interest then due and the balance to principal. 3. Due on Sale, Transfer or Refmand". Promissor agrees to notify the City not less than thirty (30) days prior to (i) the sale or transfer of the Property or (ii) any financing or refinancing of the Property. This Note shall be due and payable upon (i) such sale or transfer without the City's consent, (ii) the financing or refinancing of the Property without the City's consent, (iii) Promissor is no longer an occupant of the Property, or (iv) Promissor is in material default of any other obligation under the Resale Restrictions, or the City Deed of Trust. 4. Expiration of the Note Obli ag tion. In the event Promissor does not sell or transfer the Property, does not fail to occupy the Property, does not refinance, or is not in material breach of any other provision of the Resale Restrictions or the City Deed of Trust before , 20_, the expiration of the Affordability Period, as that term is established under the Resale Restrictions, Promissor shall have no obligation to pay the Note Amount to City upon later sale, transfer or refinancing of the Property. Page 2 of 4 17-6040/168204.DOC/SFF 36 5. Default. The entire unpaid Amount of this Note shall be due and payable in full in the event of a default. a. Events of Default. The following shall be deemed to be an event of default: i. Failure of Promissor to pay any real property taxes or insurance premiums on the Property as they become due; or ii. Any material breach of the Resale Restrictions or the City Deed of Trust, following the City giving notice of the breach and an opportunity to cure; or iii. Failure of Promissor to pay the Note Amount when due. 6. This Note is secured by a Deed of Trust, dated , 20, to the Housing Authority of the City of Huntington Beach, as Trustee, executed by Promissor in favor of the City. 7. Notice. All payments, notices, consents, waivers and other communications under this Agreement must be in writing and shall be deemed to have been given when (a) delivered by hand, or, (b) when received by the addressee, if sent by a nationally recognized overnight delivery service (receipt requested), in each case addressed as set forth below: If to PROMISSOR: 19100 Gothard Street, Unit _ Huntington Beach, CA 92648 If to CITY: City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 Attention: City Clerk and, Economic Development Deputy Director City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 8. Governing Law. This Note is governed by and shall be construed in accordance with the laws of the State of California without giving effect to the conflict of laws principles thereof. The parties agree to personal jurisdiction in the State Courts in Orange County, California and specifically waive any claims of forum non conviens. 9. Modification. This Note shall not be amended or modified, except in writing, signed by both parties. Page 3 of 4 17-6040/168204,DOUSH 37 10. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the successors and assigns under this Note. This Note shall not be assigned without the express written consent of City. Dated: , 20_ Dated: , 20_ APPROVED AS TO FORM PROMISSOR: FOR THE CITY OF HUNTINGTON BEACH: M. , Assistant City Manager OFFICE OF HUNTINGTON BEACH CITY ATTORNEY Dated: 520 By: Page 4 of 4 17-6040/168204.DOC/SFF City Attorney 9.11 ACKNOWLEDGMENT State of California ss County of On _ _ __ before me, (Here Insert Name and Title of the Notary Officer ) personally appeared , 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 State of California that the foregoing is true and correct. WITNESS my hand and official seal. [Seal] (Signature of Notary Public) 4 17-6041/168201.doc/SFF 39 (Affordable Housing Deed of Trust) (This Affordable Housing Deed of Trust is an Exhibit to the Affordable Housing Covenant, which is Exhibit C to Density Bonus and Affordable Housing Agreement For 19100 Gothard Street, Huntington Beach) 16 17-6040/168247. doc/SFF 40 OFFICIAL BUSINESS Document entitled to free recording per Government Code Sections 6103 and 27383 Recording Requested By: City of Huntington Beach 2000 Main Street Huntington Beach, California 92648 Attention: Economic Development Dept./Housing Div. DEED OF TRUST WITH ASSIGNMENTS OF RENTS TO SECURE AFFORDABILITY RESTRICTIONS ON TRANSFER OF PROPERTY (Unit , 19100 Gothard Street, Huntington Beach) THIS DEED OF TRUST is made this day of , 2017, by and among (the "Trustor"), whose address is Unit , 19100 Gothard Street, Huntington Beach 92648 and the HOUSING AUTHORITY OF THE CITY OF HUNTINGTON BEACH, a municipal corporation (the "Trustee") and the CITY OF HUNTINGTON BEACH, a public body corporate and politic (the `Beneficiary" or the "City"), whose address is 2000 Main Street, Huntington Beach, California 92648, with reference to the following facts: A. This Deed of Trust is made in reference to that property in the City of Huntington Beach, County of Orange, State of California, described legally in the Legal Description attached hereto as Exhibit "A" and incorporated hereui with the street address Units , 19100 Gothard Street, Huntington Beach, California 92648 and the Assessor's Parcel Map Nos. , (the "Property"). B. A "Declaration of Covenants, Conditions and Restrictions for Moderate Income Affordable Housing" was recorded on , 20 as Instrument Number No. in the Office of the County Recorder of the County of Orange, California (the "Resale Restrictions"). The Resale Restrictions Iimit the price that the Property may be sold to an "Affordable Housing Cost" for "Moderate Income Households." The Affordable Housing Cost pursuant to the Resale Restrictions shall be the purchase price that would result in monthly housing payments that do not exceed Thirty -Five Percent (35%) of One Hundred Ten Percent (110%) of the current Orange County monthly median income for a household adjusted for family size appropriate to the Unit. Family size is one plus the number of bedrooms; for example, a household of four persons is the family size of a three -bedroom unit. In determining monthly housing payments, the City will assume principal and interest payments on a conventional home mortgage after paying a ten percent (10%) downpayment. Monthly housing costs will also include homeowner's association dues, utilities, homeowner's insurance, maintenance costs and property taxes. In determining monthly housing payments, the City will assume principal and interest payments on a conventional home mortgage after paying a ten percent (10%) downpayment. C. The effect of relying on prevailing interest rates to determine the Affordable Housing Cost is to make the resale price of the Property sensitive to interest rates. For example, if interest rates rise, the resale price will fall, and if interest rates fall, the resale price will rise. This could result in the Affordable Housing Cost decreasing below the original purchase price. D. The administration of the Resale Restrictions shall be governed by the "Affordable Ownership Housing Regulations -Homeowner Requirements of the City of Huntington Beach," dated August 15, 2011, as they exist now, and as they may be amended in the future (the "City Housing Regulations"). E. The Resale Restrictions imposed on the Property began on , 20, and expire forty-five (45) years later, on , 20 (the "Affordability Period"). NOW, THEREFORE, TRUSTOR HEREBY irrevocably grants, transfers and assigns, to Trustee, in trust, with power of sale of the Property, together with (a) all buildings, improvements and fixtures, now or hereafter placed thereon, it being understood and agreed that all classes of property attached or unattached used in connection herewith shall be deemed fixtures, (b) rents, issues and profits thereof, (c) any water rights and/or stock are appurtenant or pertain to said land, and (d) all sums of money payable on the purchase price of the Property secured by a lien thereon or payable under any agreement for the sale thereof, SUBJECT, HOWEVER, to the right, power and authority hereinafter given to and conferred upon Beneficiary to collect and apply such rents, issues and profits, and all sums of money payable on the purchase price of the Property secured by a lien thereon.or payable under any agreement. A. FOR THE PURPOSE OF SECURING: 1. Payment of the indebtedness evidenced by a promissory note (the "Note") executed by Trustor concurrently with this Deed of Trust. The Amount of the indebtedness is the "Transfer Price" of the Property, less the "Affordable Housing Cost." The calculation of the Amount of the indebtedness is set forth with specificity in the Note, which is on file with the Economic Development Department of the City of Huntington Beach. 2. Performance of each and every obligation, covenant, promise and agreement of the Resale Restrictions. B. TO PROTECT THE SECURITY OF THIS DEED OF TRUST, TRUSTOR AGREES: I . Trustor agrees for itself, and its successors and assigns, and every successor to Trustor's interest in the Property, or any part thereof throughout the Affordability Term, to perform all obligations due under the Resale Restrictions, as set forth below: (a) The Property shall only be owned and occupied by persons or families of "Moderate Income." "Moderate Income" shall mean persons or families earning no more than one hundred twenty percent (120%) of the Orange County median income, adjusted for appropriate family size. Page 2 of 14 17-6040/168203/SFF 42 (b) The Property may only be sold at an "Affordable Housing Cost" to households of "Moderate Income," as those terms are defined in the City Housing Regulations. Generally, those Regulations define Affordable Housing Cost to mean that purchase price which would result in monthly housing payments which do not exceed Thirty -Five Percent (35%) of One Hundred Ten Percent (l 10%) of the current Orange County monthly median income for a household equal to the number of bedrooms ul the unit plus one (1) person. In determining monthly housing payments, the Regulations assume principal and interest payments on a conventional home mortgage after paying a ten percent (10%) downpayment. The mortgage interest rate will be the prevailing Fannie Mae or Freddie Mac thirty (30) year mortgage rate, or a City -selected equivalent. Monthly housing costs will also include homeowner's association dues, utilities, homeowner's insurance, maintenance costs and property taxes. (c) The Trustor shall further comply with the City Housing Regulations. (d) No transfer of the Property shall occur until the City of Huntington Beach determines (a) that the proposed purchaser intends to occupy the Property as the proposed purchaser's principal residence, (b) that the proposed purchaser is a person or family of Moderate Income, and (c) that the proposed transfer occurs at an Affordable Housing Cost. The City of Huntington Beach shall not be obligated to approve a transfer until and unless the proposed purchaser has submitted to the City of Huntington Beach such information and completed such forms as the City of Huntington Beach shall request to certify the proposed purchaser's intent with respect to its residency of the Property and its gross income, and the proposed purchaser has submitted an affidavit disclosing and certifying the amount of the proposed purchase price. Prior to conveyance of the Property, each approved purchaser shall submit to the City of Huntington Beach an executed disclosure statement which certifies that the purchaser is aware that the purchaser may only sell the unit at an Affordable Housing Cost to a Moderate Income person or family, that the maximum permitted sales price may be less than fair market value and that the unit must be owner -occupied at all times and cannot be rented or leased. TRUSTOR AND EACH SUCCESSOR, HEIR OR ASSIGN OF TRUSTOR UNDERSTANDS THAT THE DETERMINATION OF THE AFFORDABLE HOUSING COST CAN BE MADE ONLY AT THE TIME OF THE PROPOSED TRANSFER, TAKING INTO CONSIDERATION INTEREST RATES, THE TERMS OF SALE OFFERED TO AND THE ECONOMIC CIRCUMSTANCES OF THE PROPOSED PURCHASER AND OTHER FACTORS THAT CANNOT BE ACCURATELY PREDICTED, AND THAT THE TRANSFER PRICE PERMITTED HEREUNDER MAY BE LESS THAN THE FAIR MARKET VALUE OF THE PROPERTY AND MAY NOT INCREASE OR DECREASE IN THE SAME MANNER AS OTHER SIMILAR REAL PROPERTY WHICH IS NOT ENCUMBERED BY THIS RESTRICTION. TRUSTOR AND EACH SUCCESSOR, HEIR. OR ASSIGN OF TRUSTOR FURTHER ACKNOWLEDGES THAT AT ALL TIMES IN SETTING THE TRANSFER PRICE THE PRIMARY OBJECTIVE OF THE BENEFICIARY Page 3 of 14 17-6040/168203/SFF 43 AND THIS DEED OF TRUST IS TO PROVIDE HOUSING TO ELIGIBLE PERSONS OR FAMILIES AT AN AFFORDABLE HOUSING COST. Trustor Initials (e) The City of Huntington Beach may impose any conditions on the approval of any transfer of the Property as it determines are reasonably necessary for the effective administration of its Affordable Housing Program. 2. Trustor 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, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the said property, nor shall Trustor 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, lessees, subtenants, sublessees, or vendees in said property. Trustor and its successors and assigns, shall refrain from restricting the rental or lease (if permitted by Trustor) or sale of said property on the basis of race, color, religion, sex, marital status, national origin or ancestry of any person. All such deeds, leases or contracts shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses: (a) In deeds: "The grantee herein covenants by and for himself or herself, his or her heirs, executors, administrators 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, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land herein conveyed, nor shall the grantee 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 with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessee or vendees in the land herein conveyed. The foregoing covenants shall run with the land." (b) In leases: "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: "There shall be no discrimination against or segregation of any person or group of persons on account of race, color, religion, sex, marital status, ancestry or national origin 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 to through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to Page 4 of 14 17-6040/168203/SFF 44 the selection, location, number, use or occupancy of tenants, lessees, sublessees, subtenants or vendees in the premises herein leased." (c) In contracts: "There shall be no discrimination against or segregation of, any person, or group of persons on account of race, color, religion, sex, marital status, ancestry or national origin, in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the premises, nor shall the transferee 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 with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessee or vendees of the premises." Nothing in this Section 2 shall be construed to authorize the rental or lease of the Property if such rental or lease is not otherwise permitted by the Resale Restrictions. 3. No violation or breach of the covenants, conditions, restrictions, provisions or limitations contained in this Deed of Trust shall defeat or render invalid or in any way impair the lien or charge of any mortgage or deed of trust or security interest. 4. Trustor has made certain representations and disclosures as a requirement under the Resale Restrictions in order to induce Beneficiary to approve the sale of the Property to Trustor. In the event that Trustor has made any material misrepresentation or failed to disclose any material fact regarding said transaction, Beneficiary at its option and without notice, shall have the right to declare a material breach of the Resale Restrictions and the Note. Beneficiary may make a written declaration of default and demand for sale as in paragraph No. 6 herein set forth. Trustee, upon presentation to it of an affidavit signed by Beneficiary setting forth facts showing a default by Trustor under this paragraph, is authorized to accept as true and conclusive all facts and statements therein, and to act thereon hereunder. 5. All covenants without regard to technical classification or designation shall be binding for the benefit of the Beneficiary and such covenants shall run in favor of the Beneficiary for the entire period during which such covenants shall be in force and effect, without regard to whether the Beneficiary is or remains an owner of any land or interest therein to which such covenants relate. The Beneficiary, 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 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 tern specified for such covenants, except the covenants against discrimination which may be enforced at law or in equity at any time in perpetuity. 6. Upon default by Trustor in the obligations of the Note, in the performance of any obligation under this Deed of Trust or under the terms of any First Lender's Deed of Trust which is or appears to be prior or superior to this Deed of Trust, Beneficiary may declare all sums secured by this Deed of Trust immediately due and payable by delivering to Trustee of a written declaration of default and demand for sale and a written notice of default and election to sell the Property. Default in the payment of any indebtedness secured by this Deed of Trust, in the obligation of the Note, or in the performance of any agreement under this Deed of Trust Page 5 of 14 17-6040/168203/SFF 45 constitutes a default only under this Deed of Trust and the Note and does not constitute a default under the First Deed of Trust. Trustee shall cause the notice of default to be recorded. Beneficiary also shall deposit with Trustee this Deed of Trust, the Note, and all documents evidencing any additional expenditures secured by this Deed of Trust. After the lapse of such time as then may be required by law following recordation of such notice of default, and notice of sale having been given as then required by law, Trustee, without demand on Trustor, shall sell the Property at the time and place fixed by it in such notice of sale, whether as a whole or in separate parcels, and in such order as it may determine, at public auction to the highest bidder qualified under the Resale Restrictions and this Deed of Trust in lawful money of the United States, payable at time of sale. Trustee may postpone sale of all or any portion of the Property by public announcement at such time and place of sale, and from time to time thereafter may postpone such sale by public announcement at the time fixed by the preceding postponement. Trustee shall deliver to such purchaser its Deed conveying the Property so sold, but without any covenant or warranty, express or implied. The recital in such Deed of any matters of fact shall be conclusive of the truthfulness thereof. Any person, including Trustor, Trustee, or Beneficiary as hereinafter defined, may purchase at such sale. Trustee may also sell at any such sale and as part thereof any shares of corporate stock securing the obligations secured hereby, and Trustor waives demand and notice of such sale. (Beneficiary at its option may also foreclose on such shares by independent pledge sale, and Trustor waives demand and notice of such sale.) After deducting all costs, fees and expenses of Trustee, and of this Trust, including cost of evidence of title in connection with this sale, Trustee shall apply the proceeds of sale to payment, first; all sums expended under the terms hereof, not then repaid, with accrued interest at the rate then payable under the First Lender Deed of Trust secured hereby, and then of all other sums secured hereby, and, if there are any proceeds remaining, shall distribute them to the person or persons legally entitled thereto. 7. Trustor shall keep the Property in good condition and repair; to allow Beneficiary or its representatives to enter and inspect the Property at all reasonable times and access thereto, shall be permitted for that purpose; not to remove or demolish any building thereon; not to make alterations thereto without the consent of the Beneficiary; to suffer or permit no change in the general nature of the occupancy of the Property without Beneficiary's written consent; to complete or restore promptly and in good workmanlike manner any building which may be constructed, damaged or destroyed thereon, including, without restricting the generality of the foregoing, damage from termites and dry -rot; to pay when due all claims for labor performed and materials furnished in connection with the Property and not to permit any mechanic's lien against the Property; to comply with all laws affecting the Property or requiring any alterations or improvements to be made thereon; not to initiate or acquiesce in any zoning reclassification without Beneficiary's written consent; not to commit or permit waste thereon; not to commit, suffer or permit any act upon the Property in violation of the law; to paint, cultivate, irrigate, fertilize, fumigate, prune, and do all other acts that from the character or use of the Property may be reasonably necessary; and to promptly pay all amounts due others upon agreements of lease or conditional sale of all fixtures, furnishings and equipment located thereon. 8. Trustor shall provide, and maintain in force at all times with respect to the Property, fire and other types of insurance as may be required by Beneficiary. All of such insurance shall have a loss payable endorsement in favor of Beneficiary, shall be for a term and in form, content, amount and in such companies as may be satisfactory to Beneficiary, and the Page 6 of 14 17-6040/168203/SFF .p: policies therefore shall be delivered to and remain in possession of Beneficiary as further security for the faithful performance of these trusts. At least thirty (30) days prior to the expiration of any such insurance policy, a policy or policies renewing or extending such expiring insurance shall be delivered to Beneficiary together with written evidence showing payment of the premium therefore and, in the event any such insurance policy and evidence of the payment of the premium therefore are not so delivered by Trustor to Beneficiary, Trustor by executing this Deed of Trust specifically requests Beneficiary to obtain such insurance and Beneficiary, without obligation to do so, without notice to or demand upon Trustor and without releasing Trustor from any obligation hereof, may obtain such insurance through or from any insurance agency or company acceptable to it, pay the premium thereof, and may add the amount thereof to the indebtedness secured hereby, which amount shall bear a like rate of interest. Beneficiary may furnish to any insurance agency or company, or any other person, any information contained in or extracted from any insurance policy delivered to Beneficiary pursuant hereto and any information concerning the loan secured hereby. Neither Trustee nor Beneficiary shall be responsible for such insurance or for the collection of any insurance monies, or for any insolvency of any insurer or insurance underwriter. In case of insurance loss, Beneficiary is hereby authorized either (a) to settle and adjust any claim under the insurance policies provided for in this document without the consent of the Trustor, or (b) to allow Trustor to agree with the insurance company or companies on the amount to be paid upon the loss. In either case, the Beneficiary is authorized to collect and make receipt of any such insurance money. If Trustor is obligated to restore or replace the damaged or destroyed buildings or improvements under the terms of any lease or leases which are or may be prior to the lien of this Deed of Trust and such damage or destruction does not result in cancellation or termination of such lease, such proceeds, after deducting therefrom any expenses incurred in the collection thereof, shall be used to reimburse the Trustor for the cost of rebuilding or restoring the buildings or improvements on said premises. In all other cases, such insurance proceeds shall either be applied for the cost of the rebuilding or restoring the buildings or improvements on said premises. Such buildings and improvements shall be so restored or rebuilt as to be of at least equal value and substantially the same character as prior to the damage or destruction, and shall be in a condition satisfactory to Beneficiary. Such application or release shall not cure or waive any default or notice of default hereunder or invalidate any act done pursuant to such notice. Any and all unexpired insurance shall inure to the benefit of, and pass to the purchaser of, the property conveyed at any Trustee sale held hereunder. 9. Trustor shall pay: (a) at least ten (10) days before delinquency, all general and special City and County taxes, and all assessments on appurtenant water stock, affecting the Property, (b) when done, all special assessments for public improvements, without permitting any improvement bond to issue for any special assessment, (c) when done, all encumbrances, charges and lines, with interest, on the Property, or any part thereof, which are or appears to be prior to superior hereto, (d) if the security of this Deed of Trust is leasehold estate, to make any payment or do any act required of the Lessee or its successor in interest under the terms of the instrument or instruments creating said leasehold, (e) all costs, fees and expenses of this trust, (f) for any statement regarding the obligation secured hereby any amount demanded by Beneficiary not to exceed the maximum allowed by law thereof at the time when such request is made, (g) such other charges for services rendered by Beneficiary and furnished at Trustor's request or that of any successor in interest to Trustor as the Beneficiary may deem reasonable. Page 7of14 17-6040/168203/SFF 47 10. Should Trustor fail to make any payment or do any act as provided in this Deed of Trust, the Beneficiary or Trustee, but without obligation to do so and without notice to or demand upon Trustor and without releasing Trustor from any obligation hereof, may (a) make or do the same in such manner and to such extent as either may deem necessary to protect the security hereof, Beneficiary or Trustee being authorized to enter upon the Property for such purposes, (b) commence, appear in, or defend any action or proceeding purporting to affect the security hereof or the property covered by this Deed of Trust, or the rights or powers of Beneficiary or Trustee, (c) pay, purchase, contest or compromise any encumbrance, charge or lien, which in the judgment of either is or appears to be prior or superior hereto, and (d) in exercising any such powers, pay necessary expenses, employ counsel and pay his reasonable fees. Trustor agrees to repay any amount so expended on demand of Beneficiary, and any amount so expended may be added by Beneficiary to the indebtedness secured hereby and shall bear a like rate of interest. 11. Trustor shall appear in and defend any action or proceeding purporting to affect the security hereof or the Property which is covered by this Deed of Trust, or the rights or powers of Beneficiary or Trustee, and whether or not Trustor so appears or defends, to pay all costs and expenses, including cost of evidence of title and attorney's fees in a reasonable sum, in any such action or proceeding in which Beneficiary or Trustee may appear by virtue of being made a party defendant or otherwise irrespective of whether the interest of Beneficiary or Trustee in the Property is directly questioned by such action, including any action for the condemnation or partition of said premises, and in any suit brought by Beneficiary to foreclose this Deed of Trust. 12. Trustor shall pay immediately and without demand, all sums expended under the terms of this Deed of Trust by Beneficiary or Trustee, with interest from the date of expenditure at the rate which the principal obligation secured hereby bears at the time such payment is made, and the repayment of such sums shall be secured hereby. 13. Should Trustor or any successor in interest to Trustor in the Property drill or extract, or enter into a lease for drilling or extraction of oil, gas or other hydrocarbon substances or any mineral of any kind or character, or sell, convey, further encumber, or alienate the Property, or any party thereof, or any interest therein, or be divested of his title or any interest therein in any manner or way, whether voluntarily or involuntarily, Beneficiary shall have the right, at its option, to declare any obligations secured hereby irrespective of the maturity date specified in any Note evidencing the same, immediately due and payable, and no waiver of this right shall be effective unless in writing. 14. Any award, settlement or damages for injury or damages to the Property, or in construction with the transaction financed by such loan, and any award of damages in connection with any condemnation for public use of or injury to the Property, or any part thereof, is hereby assigned and shall be paid to Beneficiary, who may apply or release such monies received by it in such manner and with the same effect as above provided for the disposition of proceeds of fire or other insurance. Page 8of14 17-6040/168203/SFF 48 15. By accepting payment of any sums secured by this Deed of Trust after its due date, or by making any payment, performing any act on behalf of Trustor, that Trustor was obligated hereunder, but failed, to make, or perform, or by adding any payment so made by Beneficiary to the indebtedness secured hereby, Beneficiary does not waive its right either to require prompt payment when due of all other sums so secured or to declare a default for failure so to pay. 16. At any time, or from time to time, without liability of the Beneficiary or Trustee thereof, and without notice, upon written request of Beneficiary and presentation of this Deed of Trust and the Note secured hereby for endorsement, and without affecting the personal liability of any person for payment of the indebtedness secured hereby, or the lien of the Deed of Trust upon the remainder of the Property for the full amount of the indebtedness then or thereafter secured hereby, or the rights or powers of Beneficiary or the Trustee with respect to the remainder of the Property, Trustee may: (a) reconvey any part of the Property, (b) consent to the making of any map or plat thereof, (c) join in granting any easement thereon, (d) join in any agreement subordinating the lien or charge hereof. 17. The lien hereof shall remain in full force and effect during any postponement or extension of time of payment of the indebtedness secured hereby, or any part thereof. 18. As additional security, Trustor irrevocably assigns to Beneficiary the rents, issues, and profits of the Property for the purposes and upon the terms and conditions set forth below. This assignment shall not impose upon Beneficiary any duty to produce rents from the property affected by this Deed of Trust, or cause Beneficiary to be (a) "mortgages in possession" for any purpose; (b) responsible for performing any of the obligations of the lessor under any lease; or (c) responsible for any waste committed by lessees or any other parties, for any dangerous or defective condition of the property affected by this Deed of Trust, or for any negligence in the management, upkeep, or control of such* rights to rents, issues and profits is not contingent upon, and may be exercised without possession of, the property affected by this Deed of Trust. Beneficiary confers upon Trustor a license ("License") to collect and retain the rents, issues and profits of the property affected by this Deed of Trust as they become due and payable, until the occurrence of a default hereunder. Upon such default, the License shall be automatically revoked and Beneficiary may collect and retain the rents, issues and profits without notice and without taking possessions of the property affected by this Deed of Trust. This right to collect rents, issues and profits shall not grant to Beneficiary or Trustee the right to possession, except as otherwise provided herein; and neither said right, nor termination of the License, shall impose upon Beneficiary or Trustee the duty to produce rents, issues or profits or maintain all or any part of the Property affected by this Trust Deed. If Trustor shall default as aforesaid, Trustor's right to collect any such money shall cease and Beneficiary shall have the right, with or without taking possession of the property affected hereby, to collect all rents, issues, royalties and profits and shall be authorized to, and may, without notice and irrespective of whether declaration of default has been delivered to Trustee and without regard to the adequacy of the security for the indebtedness secured hereby, either personally or by attorney or agent without bringing any action or proceeding, or by receiver to be appointed by the Court, enter into possession and hold, occupy, Page 9 of 14 17-6040/168203/SFF 49 possess and enjoy the Property, make, cancel, enforce and modify leases, obtain and eject tenants, and set and modify rents and terms of rents, and to sue, and to take, receive and collect all or any part of the said rents, issues, and profits of the property affected hereby, and after paying such costs of maintenance, operation of the Property, and of collection including reasonable attorneys' fees, as in its judgment it may deem proper, to apply the balance upon any indebtedness then secured hereby, the rents, issues, royalties and profits of the Property being hereby assigned to Beneficiary for said purposes. The acceptance of such rents, issues, royalties and profits shall not constitute a waiver of any other right which Trustee or Beneficiary may enjoy under this Deed of Trust or under the laws of California. Failure of or discontinuance by Beneficiary at any time, or from time to time, to collect any such rents, issues, royalties or profits shall not in any manner affect the subsequent enforcement by Beneficiary of the right, power and authority to collect the same. The receipt and application by said Beneficiary of all such rents, issues, royalties and profits pursuant hereto, after execution and delivery of declaration of default and demand for sale as hereinafter provided, or during the pendency of Trustee's sale proceedings hereunder, shall not cure such breach or default nor affect sale proceedings, or any sale made pursuant thereto, but such rents, issues, royalties and profits, less all costs of operation, maintenance, collection and reasonable attorneys' fees, when received by Beneficiary, shall be applied in reduction of the indebtedness secured hereby, from time to time, in such order as Beneficiary may determine. Nothing contained herein, nor the exercise of the right by Beneficiary to collect, shall be, or be construed to be, an affirmation by Beneficiary of any tenancy, lease or option, nor an assumption of liability under, nor subordination of the lien or charge of this Deed of Trust to, any such tenancy, lease or option. 19. If the security of this Deed of Trust is a leasehold estate, the Trustor agrees that: (a) the term "Lease" as used herein shall mean the lease creating the "leasehold estate"' (b) Trustor shall not amend, change or modify his leasehold interest, or the Lease, or agree to do so, without the written consent of the Beneficiary; (c) Trustor will promptly advise Beneficiary regarding any notice, request or demand received by him from the lessor under the Lease and promptly furnish Beneficiary with a copy of any such notice, request or demand; (d) as long as any of the indebtedness secured hereby shall remain unpaid, unless the Beneficiary shall otherwise consent thereto in writing, the leasehold estate shall not merge with the fee title but shall always be kept separate and distinct, notwithstanding the union of said estates in any party; (e) Trustor agrees that it will promptly, strictly, and faithfully perform, fulfill, and comply with all covenants, agreements, terms, conditions and provisions under any lease affecting the premises and to neither do anything, nor to permit anything to be done which may cause modification or termination of any such lease or of the obligations of any lessee or person claiming through such lease or the rents provided for therein or the interest of the lessor or the Beneficiary therein or thereunder. Trustor further agrees he will not execute a Deed of Trust or mortgage which may be or become superior to any leasehold estate that is security for this Deed of Trust. In the event of a violation of any of the covenants set forth in this paragraph, Beneficiary shall have the right, at its option, to declare all sums secured hereby immediately due and payable. Consent to or waiver of one of said violations shall not be deemed to be a consent to or waiver of any other violation. If the security for this Deed of Trust is a leasehold estate, the term "property" as used in this Deed of Trust shall be deemed to mean the leasehold estate whenever the context so requires for the protection of the Beneficiary. Page 10 of 14 17-6040/168203/SFF 50 20. Trustor waives, to the fullest extent permissible by law, the right to plead any statute of limitations as a defense to any demand secured hereby. 21. Beneficiary may, from time to time, by instrument in writing, substitute a successor or successors to any Trustee named herein or acting hereunder, which instrument, executed and acknowledged by Beneficiary and recorded in the office of the recorder of the county or counties where the Property is situated, shall be conclusive proof of property substitution of such successor Trustee or Trustees, who shall, without conveyances from the Trustee predecessor, succeed to all its title, estate, rights, powers and duties, including but not limited to the power to reconvey the whole or any part of the property covered by this Deed of Trust. Such instrument must contain the name of the original Trustor, Trustee and Beneficiary hereunder, the book and page where this Deed of Trust is recorded. If notice of default shall have been recorded, this power of substitution cannot be exercised until after the costs, fees and expenses of the then acting Trustee shall have been paid to such Trustee, who shall endorse receipt thereof upon such instrument. The procedures herein provided for substitution of Trustee shall not be exclusive of other provisions for substitution provided by law. 22. This Deed of Trust applies to, inures to the benefit of, and binds all parties hereto, their heirs, legatees, devisees, administrators, executors, successors and assigns. The term "Beneficiary" shall mean the owner and holder, including pledgee, of the Note secured hereby, whether or not names as Beneficiary herein. In this Deed of Trust, whenever the context so requires, the masculine gender includes the feminine and/or neuter, and the singular number includes the plural. 23. That in the event of a demand for, and the preparation and delivery of a written statement regarding the obligations secured by this Deed of Trust pursuant to Sections 2943 and 2954 of the Civil Code of California, Beneficiary shall be entitled to make a reasonable charge, not exceeding the maximum amount which is permitted by law at the time the statement is furnished. Beneficiary may also charge Trustor a reasonable fee for any other services rendered to Trustor or rendered in Trustor's behalf in connection with the Property of this Deed of Trust, including changing Beneficiary's records, pertaining to this Deed of Trust in connection with the transfer of the Property, or releasing an existing policy of fire insurance or other casualty insurance held by Beneficiary and replacing the same with another such policy. 24. Trustee accepts this Trust when this Deed of Trust, duly executed and acknowledged, is made a public record as provided by law. Trustee is not obligated to notify any party hereto of pending sale under any other Deed of Trust or of any action or proceeding in which Trustor, Beneficiary, or Trustee shall be a party unless brought by Trustee. 25. Any notice which any party hereto may desire or be required to give to the other party shall be in writing. The mailing thereof must be certified mail addressed to the Trustor at his address hereinabove set forth or to the Beneficiary at his office or at such other place as such parties hereto may designate in writing. Page I I of 14 17-6040/168203/SFF 51 THE UNDERSIGNED REQUEST that a copy of any notice of default and of any notice of sale hereunder be mailed to the parties' respective addresses hereinbefore set forth. Dated: TRUSTOR CITY OF HUNTINGTON BEACH Dated: By: Assistant City Manager HOUSING AUTHORITY OF THE CITY OF HUNTINGTON BEACH Dated: APPROVED AS TO FORM: Housing Authority Director OFFICE OF HUNTINGTON BEACH CITY ATTORNEY Dated: wa Page 12 of 14 17-6040/168203JSFF City Attorney Exhibit "A Page 13 of 14 17-6040/ 168203/SFF 53 ACKNOWLEDGMENT State of California } } ss County of ) On , before me, (Here Insert Name and Title of the Notary Officer) personally appeared , 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 State of California that the foregoing is true and correct. WITNESS my hand and official seal. [Seal] (Signature of Notary Public) Page 14 of 14 17-6040/168203/SFF 54 17-6040l168088/SFF EXHIBIT D TO DENSITY BONUS AND AFFORDABLE HOUSING AGREEMENT FOR 19100 GOTHARD STREET HUNTINGTON BEACH Unit Release Agreement -16- 55 RECORDED AT THE REQUEST OF AND WHEN RECORDED RETURN TO: City Clerk City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 (SPACE ABOVE THIS LINE FOR RECORDER'S USE) This Unit Release is recorded at the request and for the benefit of the City of Huntington Beach and is exempt from the payment of a recording fee pursuant to Govemment Code Sections 6103 27383. UNIT RELEASE AGREEMENT This UNIT RELEASE (the "Unit Release") is being entered into by and between the CITY OF HUNTINGTON BEACH, a California municipal corporation (the "City"), and MLC HOLDINGS, INC., an Arizona Corporation (the "Owner"). City and Owner are hereinafter sometimes referred to collectively as the "Parties" and individually as a "Party." RECITALS: A. City is a municipal corporation and charter city organized and existing pursuant to the Constitution and laws of the State of California. B. Owner is the owner in fee of that certain real property located at 19100 Gothard Street, Huntington Beach, and more particularly described in the legal description attached hereto as Exhibit "A" (the "Property"). C. On or about , 2018, Owner and City entered into that certain Density Bonus Housing Agreement (the "Density Bonus Agreement") relating to the Property, recorded on , 2018, as Instrument No. of the Official Records for Orange County, California. Pursuant to the Density Bonus Agreement, the Owner has developed the Property as a twenty-one (21) unit residential community subdivided as a condominium development (the "Project"). Further, Developer agreed to include in the Project three (3) units that will be sold at an Affordable Housing Cost to Moderate Income Households, consisting of two (2), four -bedroom units and one (1), three - bedroom unit, with the remaining units to be sold at market prices. D. Pursuant to the Density Bonus Agreement, when the Owner sells each of the Units on the Property pursuant to the terms and conditions of the Density Bonus Agreement, Owner and City may execute and record or cause to be executed and recorded for the benefit of each Unit this Unit Release, whereupon the Unit(s) would be released from the terms and conditions of the Density Bonus Agreement. COVENANTS: Based upon the foregoing Recitals, which are incorporated herein by this reference, and for good and valuable consideration, the receipt and sufficiency of which is acknowledged by 17-6040/ 17033 3/SFF -2- 56 both parties, Owner and City agree as follows: I . From and after the date that this Unit Release is recorded against each Unit, the Unit shall be released from, not be burdened by any of the provisions of the Density Bonus Agreement. 2. Nothing in this Unit Release terminates or releases, or shall be deemed or construed to terminate or release, the Affordable Housing Covenant recorded against each Affordable Unit owned in fee by a Qualified Purchaser or said Qualified Purchaser's successor in interest or assignee. 3. This Unit Release shall not constitute evidence of compliance with or satisfaction of any obligation of Owner to any holder of a mortgage, or any insurer of a mortgage, securing money loaned to finance the construction or operation of work on the Unit(s), or any part thereof. 4. No later than ten (10) days after receipt by Owner of a conformed copy of the executed Unit Release from the Orange County Recorder's Office, Owner shall deliver a copy of said conformed copy to City at the address identified in the Density Bonus Agreement for delivery of notices. IN WITNESS WHEREOF, City has executed this Unit Release from as of this day of , CITY OF HUNTINGTON BEACH, a California municipal corporation Its: ATTEST: City Clerk APPROVED AS TO FORM: OFFICE OF HUNTINGTON BEACH CITY ATTORNEY MICHAEL E. GATES, City Attorney Dated: , 20_ 17-6040/ 17033 3/SFF -3- 57 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. STATE OF CALIFORNIA ) ss. COUNTY OF ORANGE ) On , before me, Notary Public, personally appeared , 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 State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. (Seal) Notary Public 17-6040/170333/SFF 4- 58 ATTACHMENT 1 TO UNIT RELEASE LEGAL DESCRIPTION OF RELEASED UNITS) 17-6040/170333/SFF -5- 59 EXHIBIT "E" TO DENSITY BONUS AND AFFORDABLE HOUSING AGREEMENT FOR 19100 GOTHARD STREET, HUNTINGTON BEACH Release of Density Bonus and Affordable Housing Agreement .11 • ( , Recorded in Cr '11 Records, Orange County Hugh Nguyenrk-Recorder • II IIiMl llIiO11 I lIfl NO FEE * $ R 0 0 1 4 5 7 3 8 9 0 $ * RECORDED AT THE REQUEST OF 2023000234002 1:44 pm 09126/23 AND WHEN RECORDED RETURN TO: 90 CR-SCO6 R09 5 • 0.00 0.00 0.00 0.00 12.00 0.00 0.000.000.00 0.00 • City Clerk City of Huntington Beach • 2000 Main Street . Huntington Beach, cA 92648 • (SPACE ABOVE THIS LINE FQR RECORDERS USE) This Unit Release is recorded at the request and for the benefit of the ' City of Huntington Beach and is exempt from the payment of a • recording fee pursuant to Government Code Sections 6103 27383: REJ1EASE•OF DgiNSIT 'BONUS Ajv� D AFFORDABLE HOUSING AGREEMENT (19100 Gothard.Street) • • This RELEASE (the "Release") is being entered into by and between the CITY OF • 'HUNTINGTON"BEACH, a.California municipal corporation (the "City"); and Mer tage Homes ' ' of California, Inc., a California corporation (the "Owner"). City and Owner. are hereinafter sometimes referred to collectively as the "Parties" and individually as a"Party." RECITALS: A. City is a municipal corporation and charter city organized and existing pursuant to the Constitution and laws of the State of California. • B. Owner is the owner in fee of that certain real property located at 1910.0 Gothard Street, Huntington Beach, and more particularly described in the legal description attached hereto as Exhibit "A".(the "Property"). C. On or about April 18, 201$, Owner and City entered into that certain Density Bonus and Affordable Housing Agreement (the "Density Bonus' Agreement") relating to the • , Property,recorded on May 30,,2018, as Instrument"No.2Q180Q01.96471 of the Official Records for Orange County; California.Pursuant to the.Density Bonus Agreement, the Owner has developed the Property as a twenty-one (21) unit residential community subdivided as a condominium - • development(the"Project"). Further,Developer agreed to include in the Project three.(3)units that - will be sold at an Affordable Housing Coat to Moderate Income Households, consisting of two (2), four-bedroom units and one (1), three-bedroom unit, with the remaining units to be sold at • market prices. D. Pursuant to the Density Bonus Agreement, when the Owner has sold all of the • Units on the Property pursuant to.the terms and conditions of the Density Bonus Agreement, . Owner and City may execute and record or cause to be executed and, recorded for the•benefit of Owner this Release, whereupon the Property would be released from the terms and conditions • of the Density Bonus Agreement. • . ' • • 23-13400/318923 -1- RECORDED AT THE REQUEST OF AND WHEN RECORDED RETURN TO: City Clerk City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 (SPACE ABOVE THIS LINE FOR RECORDER'S USE) This Unit Release is recorded at the request and for the benefit of the City of Huntington Beach and is exempt from the payment of a recording fee pursuant to Government Code Sections 6103 27383. RELEASE OF DENSITY BONUS AND AFFORDABLE HOUSING AGREEMENT (19100 Gothard Street) This RELEASE (the "Release") is being entered into by and between the CITY OF HUNTINGTON BEACH, a California municipal corporation (the "City"), and Meritage Homes of California, Inc., a California corporation (the "Owner"). City and Owner are hereinafter sometimes referred to collectively as the "Parties" and individually as a "Party." RECITALS: A. City is a municipal corporation and charter city organized and existing pursuant to the Constitution and laws of the State of California. B. Owner is the owner in fee of that certain real property located at 19100 Gothard Street, Huntington Beach, and more particularly described in the legal description attached hereto as Exhibit "A" (the "Property"). C. On or about April 18, 2018, Owner and City entered into that certain Density Bonus and Affordable Housing Agreement (the "Density Bonus Agreement") relating to the Property, recorded on May 30,.2018, as Instrument No. 2018000196471 of the Official Records for Orange County, California. Pursuant to the Density Bonus Agreement, the Owner has developed the Property as a twenty-one (21) unit residential community subdivided as a condominium development(the"Project"). Further,Developer agreed to include in the Project three (3)units that will be sold at an Affordable Housing Cost to Moderate Income Households, consisting of two (2), four-bedroom units and one (1), three-bedroom unit, with the remaining units to be sold at market prices. D. Pursuant to the Density Bonus Agreement, when the Owner has sold all of the Units on the Property pursuant to the terms and conditions of the Density Bonus Agreement, Owner and City may execute and record or cause to be executed and recorded for the benefit of Owner this Release, whereupon the Property would be released from the terms and conditions of the Density Bonus Agreement. 23-13400/318923 -1- COVENANTS: Based upon the foregoing Recitals, which are incorporated herein by this reference, and for good and valuable consideration, the receipt and sufficiency of which is acknowledged by both parties, Owner and City agree as follows: 1. From and after the date that this Release is recorded,the Property shall be released from, and not be burdened by, any of the provisions of the Density Bonus Agreement. 2. Nothing in this Release terminates or releases, or shall be deemed or construed to terminate or release, the Affordable Housing Covenant recorded against each Affordable Unit owned in fee by a Qualified Purchaser or said Qualified Purchaser's successor in interest or assignee. 3. This Release shall not constitute evidence of compliance with or satisfaction of any obligation of Owner to any holder of a mortgage, or any insurer of a mortgage, securing money loaned to finance the construction or operation of work on Property, or any part thereof. 4. No later than ten (10) days after receipt by Owner of a conformed copy of the executed Release from the Orange County Recorder's Office, Owner shall deliver a copy of said conformed copy to City at the address identified in the Density Bonus Agreement for delivery of notices. IN WITNESS WHEREOF, City has executed this Release on September 20 , 2023. CITY OF HUNTINGTON BEACH, a California municipal corporation By: 7 Its: Tony Strickland, Mayor ATTEST: Ee( Ci Clerk, Robin Estanislau APPROVED AS TO FORM: OFFICE OF HUNTINGTON BEACH CITY ATTORNEY CCYMIC L E. GATES, City Attorney Dated: ($ ' 2 2 , 2023 23-13400/318923 -2- • A notary public or other ___icer completing this certificate \ pies 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 CALIFORNIA ) ) ss COUNTY OF ORANGE ) On September 20, 2023 before me, Donna Switzer, Notary Public, personally appeared Robin Estanislau and Tony Strickland 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. _ "\\ o ITZER COMMISSION A 2311801 .! I COMMISSIONNotary Public-California 4 .` 1� Notary COUNTY 3 _ _ — My Comm Exp.N Nov.5.2023 1161 1- �► I► (Seal) (Notary Signat ATTACHMENT 1 TO RELEASE OF DENSITY BONUS AND AFFORDABLE HOUSING AGREEMENT LEGAL DESCRIPTION OF RELEASED PROPERTY 23-13400/318923 -3- • LEGAL DESCRIPTION FOR 19100 GOTHARD STREET, HUNTINGTON BEACH APN:111-150-17 • • LOTS 15 AND 16 IN BLOCK"B" OF"GARFIELD STREET ADDITION TO HUNTINGTON BEACH",AS PER MAP RECORDED IN BOOK 7,PAGES 27 AND 28 OF MISCELLANEOUS MAPS IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. • EXCEPTING THEREFROM ALL RIGHT,TITLE AND INTEREST OF THE GRANTOR IN AND TO THAT CERTAIN OIL LEASE OF RECORD DATED APRIL 28,1920, EXECUTED BY T.G.HERMAN,A SINGLE MAN, ET AL,IN FAVOR OF W.W.HANBERY,RECORDED JUNE 23, 1920 IN BOOK 14, PAGE 251 OF LEASES,ONLY IN SO FAR AS SAID RIGHTS APPLY TO THE ABOVE DESCRIBED LAND. ALSO, EXCEPTING THEREFROM THAT PORTION OF LAND CONVEYED TO THE CITY OF HUNTINGTON BEACH AND ITS SUCCESSORS AND ASSIGNS FOR ROAD PURPOSES,DESCRIBED AS"EXHIBIT A",IN FINAL .ORDER OF CONDEMNATION RECORDED NOVEMBER 9, 1999 AS INSTRUMENT NO. 19990780474 OF OFFICIAL RECORDS. RECORDED AT THE REQUEST OF AND WHEN RECORDED RETURN TO: City Clerk City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 17-6041/169223/SFF Recorded in Official Records, Orange County Hugh Nguyen, Clerk -Recorder I[ � III II III 11111 111 �� 111� I II NO FEE *$ R 0 0 1 0 1 2 0 9 4 5 $ * 201800019637410:40 am 05/30/18 90 SCS Al2 64 0.00 0.00 0.00 0.00 189.00 0.00 0.000.000.00 0.00 (Space Above For Recorders Use) This Density Bonus and Affordable Housing Agreement is recorded at the request and for the bcncfit of the City of Huntington Beach and is exempt from the payment of a recording fee pursuant to Government Code Sections 6103 and 27383. DENSITY BONUS AND AFFORDABLE HOUSING AGREEMENT FOR 19200 HOLLY LANE, HUNTINGTON BEACH BY AND BETWEEN CITY OF HUNTINGTON BEACH, a California Municipal Corporation and MERITAGE HOMES OF CALIFORNIA, INC., a California corporation 1 DENSITY BONUS AND AFFORDABLE HOUSING AGREEMENT FOR 19200 HOLLY LANE, HUNTINGTON BEACH TABLE OF CONTENTS Page 1. Density Bonus and Affordable Housing Agreement for 19200 Holly Lane ("DBAH Agreement")...........................................................3 (a) Signature page to DBAH Agreement to be notarized..................................13 2. Exhibit A to DBAH Agreement — Legal Description.........................................14 3. Exhibit B to DBAH Agreement — Site Plan........................................................15 4. Exhibit C to DBAH Agreement — Affordable Housing Covenant, with: ........... 16 (a) Legal Description (Exhibit A); .....................................................................29 (b) Notice of Affordability Restrictions (Exhibit B);........................................30 (c) Promissory Note (Exhibit C); and................................................................35 (d) Affordable Housing Deed of Trust (Exhibit D)...........................................40 5. Exhibit D to DBAH Agreement — Unit Release Agreement..............................55 6. Exhibit E to DBAH Agreement — Release of Density Bonus Agreement .......... 58 17-6041/180306 2 DENSITY BONUS AND AFFORDABLE HOUSING AGREEMENT FOR 19200 HOLLY LANE, HUNTINGTON BEACH This DENSITY BONUS AND AFFORDABLE HOUSING AGREEMENT ("Agreement") is entered into as of the 3WA day of &AIL , 2018 ("Effective Date") by and between the CITY OF HUNTINGTON BEACH, a California municipal corporation ("City"), and Meritage Homes of California, Inc., a California corporation ("Owner"). City and Owner are hereinafter sometimes referred to collectively as the "Parties" and individually as a "Party." RECITALS A. City is a municipal corporation and charter city organized and existing pursuant to the Constitution and laws of the State of California. B. Owner is the owner in fee of that certain real property located at 19200 Holly Lane, Huntington Beach, consisting of approximately 1.93 net acres of land, and more particularly described in the legal description attached hereto as Exhibit "A" (the "Property"). C. Owner has submitted to City plans to develop the Property as a thirty-two (32) unit residential community to be subdivided as a condominium development, as more particularly depicted in the attached Exhibit `B" (the "Project"). Owner will build the Project in a single phase and sell individual units to individual homebuyers. In compliance with the Holly Seacliff Specific Plan, seventeen percent (17%) of the Units in the Project shall be affordable to Moderate Income Households. D. Pursuant to California Government Code Section 65915 (the "State Density Bonus Law"), as implemented under Huntington Beach Zoning and Subdivision Ordinance ("HBZSO"), Chapter 230.14, developers of housing projects that include specified levels of affordable housing are entitled to apply for and receive certain density bonuses and additional incentives in order to facilitate the economic feasibility of those projects. A five percent density bonus is available if ten percent of the units are affordable to moderate income households earning 120% of median income or less, with an additional one percent density bonus for each one percent increase in moderate income units, such that a twelve percent (12%) density bonus is available if seventeen percent (17%) of the units are affordable to Moderate Income Households. Owner proposes that a minimum of seventeen percent (17%) of its twenty-eight (28) "base" units permitted under the 14BZSO will be affordable to Moderate Income Households, and consequently is entitled to twelve percent (12%) density bonus, yielding thirty-two (32) total units. E. In exchange for making at least ten percent of the units affordable to moderate income households, the State Density Bonus Law provides that the developer may receive up to one "incentive or concession." (Gov't § 65915(d)(2)(A).) In addition, in exchange for making at least ten percent of the units affordable to moderate income households, the State Density Bonus Law provides that the developer is entitled to the "waiver and modification" of any "development standard" that would physically preclude the construction of a project with the density bonus and the incentives or concessions to which the developer is entitled. (Gov't § 65915(e).) A "development standard" includes a site or construction condition that applies to a residential development, including, but not limited to, a height limitation, a setback requirement, a floor area oil 17-6041/169223/SFF 3 ratio, an onsite open -space requirement, or a parking ratio. (Gov't § 65915(o).) F. The Holly-Seacliff Specific Plan requires that fifteen percent (15%) of new housing within the planning area be affordable to households earning less than 120% of Orange County Median Income. In compliance with the Holly-Seacliff requirement, Owner agrees to provide that seventeen percent (17%) of the twenty-eight (28) base units permitted under the City development standards will be affordable to Moderate Income Households, consisting of four (4), four -bedroom units and one (1), three -bedroom unit. As a result, the total of thirty-two (32) residential units in the Project consists of twenty-eight (28) base residential units, and four (4) density bonus residential units, with five (5) units affordable to Moderate Income Households. G. Pursuant to Government Code Section 65915(e), Owner has applied for the waiver and reduction of several development standards on the basis that they would physically preclude the construction of the Project with the density bonus. Instead of providing 350 square feet of open space per unit required under the Holly-Seacliff Specific Plan, or 11,200 square feet for thirty-two (32) units, Owner will provide 10,075 square feet. Owner further seeks relief from the average of a 10-foot setback on the third story from the second floor facade that HBZSO Section 210.06 (F) requires, thereby avoiding the loss of up to four (4) units and open space. Instead, two-story units will front on Holly Lane, and three-story units will front on Clay Avenue. H. Pursuant to Government Code Section 65915(d)(2)(A), Owner also seeks as a concession relief from the requirement of HBZSO Section 210.06, and is proposing patio walls of exactly 42 inches throughout the Project, rather than walls that exceed 42 inches. Finally, Owner has applied for a waiver and reduction of parking pursuant to Government Code Section 65915(p)(5) & (6), and will provide only seventy-six (76) onsite parking spaces. I. On December 12, 2017, the Planning Commission approved the Owner's application for Tentative Tract Map No. 18105 and CUP No. 17-011. As approved, the Project includes the aforementioned incentives and concessions, and waivers and reduction. The Project will include a twelve percent (12%) density bonus, in which Owner would construct twenty-eight (28) base residential units and four (4) density bonus residential units, for a total of thirty-two (32) residential units. In order to take advantage of the increase in allowable density, Owner must ensure, pursuant to the terms of this Agreement, that no less than seventeen percent (17%) of the twenty-eight (28) units permitted under City development standards are affordable to Moderate Income Households. Consequently, the Project shall include five (5) units that will be owned and occupied by Low or Moderate Income Households as defined in Health and Safety Code Section 50093, consisting of four (4) four -bedroom units and one (1) three -bedroom unit. J. This Agreement sets forth the terms and conditions for the implementation of the Project's requirement to provide affordable housing units in exchange for receiving the density bonus units and additional incentives and concessions, and waiver and modification of development standards as set forth herein. K. The development of the Project on the Property pursuant to this Agreement, and the fulfillment generally of this Agreement, are in the vital and best interests of City and the welfare of its residents, and in accordance with the public purposes and provisions of applicable federal, state, and local laws and requirements. -2- 17-6041/169223/SFF 4 COVENANTS NOW, THEREFORE, in consideration of the above Recitals, which are incorporated herein by this reference, and of the mutual covenants hereinafter contained and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties agree as follows: l . DEFINITIONS AND EXHIBITS 1.1 Definitions. The following terms when used in this Agreement shall be defined as follows: 1.1.1 "Adjusted For Family Size Appropriate To The Unit" means a household of one person in the case of a studio unit, a household of two persons in the case of a one -bedroom unit, a household of three persons in the case of a two -bedroom unit, a household of four persons in the case of a three -bedroom unit, and a household of five persons in the case of a four -bedroom unit. 1.1.2 "Affordable Housing Cost" for a Moderate Income Household means that purchase price which would result in an annual Monthly Housing Cost which does not exceed Thirty -Five Percent (35%) of One Hundred Ten Percent (110%) of the current Orange County monthly median income for a household adjusted for fancily size appropriate to the Unit. In determining monthly housing payments, the City will assume principal and interest payments on a conventional home mortgage after paying a ten percent (10%) down payment. Monthly housing costs will also include homeowner's association dues, utilities, homeowner's insurance, maintenance costs and property taxes. Affordable Housing Cost shall be calculated pursuant to the City Housing Regulations. 1.1.3 "Affordable Units" means the five (5) units, consisting of four (4) four -bedroom Units and the one (1) three -bedroom Units that are designated pursuant to Section 3.2 to be sold to and occupied by Moderate Income households in the Project. 1.1.4 "Affordable Housing Covenant" means the Declaration of Conditions, Covenants and Restrictions for Moderate Income Affordable Housing to be recorded against each Affordable Unit in the form attached hereto as Exhibit "C." 1.1.5 "City Housing Regulations" means the "Affordable Ownership Housing Regulations -Homeowner Requirements of the City of Huntington Beach," dated August 15, 2011, as they exist now, and as they may be amended in the future. 1.1.6 "Effective Date" means the date the City Council of City approves this Agreement, which date shall be inserted in the preamble to this Agreement. 1.1.7 "Household" means all persons residing in a Unit. 1.1.8 "Market Rate Units" means the Units within the Project to be rented or sold by Owner to a Household without restriction as to income levels, rental rate or sales price. -3- 17-6041/169223/SFF 9 1.1.9 "Median Income" means the Orange County area median income, adjusted for household size, as established by the United States Department of Housing and Urban Development, and as published periodically by the California Department of Housing and Community Development. 1.1.10 "Moderate Income Household" means a Household whose income does not exceed the qualifying limits for moderate income households pursuant to Health and Safety Code Section 50093, which is those Households whose income does not exceed one hundred twenty percent (120%) of Median Income, adjusted for family size. The income level of a Household shall be determined in accordance with the City Housing Regulations. 1.1.11 "Monthly Housing Cost" shall include all of the following associated with the Affordable Unit: (i) principal and interest payments on a mortgage loan; (ii) property taxes and assessments; (iii) the cost of fire and casualty insurance covering replacement value of property improvements; (iv) homeowner's association fees; (v) reasonable Unit maintenance and repair costs; and (vi) reasonable utility allowance, all as determined according to the City Housing Regulations. 1.1.12 "Qualified Purchaser" means a Household that complies with all income verification requirements in this Agreement, and earns not more than one hundred twenty percent (120%) of the Median Income, adjusted for family size, to be determined in accordance with the City Housing Regulations. 1.1.13 "Unit" means a residential dwelling unit within the Project to be sold by Owner pursuant to this Agreement. 1.1.1.4 "Unit Release" means that certain instrument to be recorded for the benefit of a Market Rate Unit no longer subject to this Agreement, in the form of Exhibit "D" of this Agreement. 1.2 Exhibits. The following documents are attached to, and by this reference made a part of, this Agreement: Exhibit "A" — Legal Description of the Property Exhibit `B" — Depiction of the Project Exhibit "C" — Declaration of Conditions, Covenants and Restrictions for Moderate Income Affordable Housing, with attachments Exhibit "D" — Unit Release Agreement Exhibit "E" — Density Bonus and Affordable Housing Agreement Release Agreement 2. DEVELOPMENT OF THE PROPERTY 2.1 Project. Owner shall develop the Project as a thirty-two (32) unit condominium residential community in accordance with and subject to all applicable entitlements and pen -nits. The Project shall have twenty seven (27) Market Rate Units, and five (5) Affordable Units. There shall be four (4) four -bedroom Affordable Units and one (1) three -bedroom -4- 17-6041/169223/SFF 0 Affordable Unit. The average square footage of the Affordable Units shall be approximately the same as the average square footage of the Market Rate Units of the same number of bedrooms. The Affordable Units shall be constructed with the same exterior appearance and interior features, fixtures, and amenities, and shall use the same type and quality of materials as the .Market Rate Units in the Project. The Affordable Units shall be dispersed throughout the Project. At its discretion, Owner may increase the number of Affordable Units. 2.2 Authorized Waivers and Modifications and Incentives and Concessions. In accordance with the State Density Bonus Law and pursuant to the entitlements for the Project, City authorized the Waivers and Modifications, and Incentives and Concessions described in the Recitals, above. 2.3 Compliance with Laws. Owner at its sole cost and expense shall secure or cause to be secured any and all permits that may be required by City or any other federal, state, or local governmental entity having or claiming jurisdiction over the Property or Project. Upon securing any and all permits, Owner shall carry out and perform the development, and marketing of the Project in conformity with all applicable federal, state, and local laws and regulations, and all conditions of approval of Tentative Map No. 18105. 2.4 Replacement Housing. Owner represents that there are no and there have not been any rental dwelling units on the Property for the five years preceding Owner submitting its Project application to the City. Should it later be determined that Government Code Section 65915(c)(3) requires Owner to provide replacement dwelling units in order to obtain the benefits of this Agreement, then Owner shall have the sole and exclusive responsibility for providing all relocation dwelling units legally required. Owner shall indemnify, defend (with counsel of City's choosing and the consent of Owner, which shall not be unreasonably withheld, and which may be joint defense counsel upon City's and Owner's consent) and hold harmless City and all of its officials, officers, employees, representatives, volunteers and agents from any and all alleged or actual claims, causes of action, liabilities, and damages from any third party alleging a violation of Government Code Section 65915(e)(3). 2.5 Mechanic's Liens-, Indemnification. Owner shall take all actions reasonably necessary to prevent and remove any mechanic's liens or other similar liens (including design professional liens) against the Property or Project, or any part thereof, by reason of work, labor, services, or materials supplied or claimed to have been supplied to Owner or anyone holding the Property or Project, or any part thereof, through or under Owner. Upon request by the City, Owner shall provide to the City updated information from Owner's title insurer. City hereby reserves all rights to post notices of non -responsibility and any other notices as may be appropriate upon a filing of a mechanic's lien. Owner shall indemnify, defend (with counsel of City's choosing and the consent of Owner, which shall not be unreasonably withheld, and which may be joint defense counsel upon City's and Owner's consent), and hold harmless City and all of its officials, officers, employees, representatives, volunteers and agents from any and all alleged or actual claims, causes of action, liabilities, and damages from any third party by reason of a mechanic's lien or work, labor, services, or materials supplied or claimed to have been supplied to Owner or anyone holding the Property or Project, or any part thereof, through or under Owner. -5- 17-6041/169223/SFF 7 AFFORDABLE UNITS 3.1 Execution and Recording of This Agreement. Owner shall execute this Agreement prior to City Council consideration of approval of this Agreement. No later than thirty (30) days after the Effective Date of this Agreement, Owner shall record an executed original of this Agreement against the Property in the Official Records for Orange County, California. 3.2 Designation of Affordable Units. At least three (3) months prior to the recordation of the Condominium Map with the approval of the California Department of Real Estate, Owner shall obtain the approval from the City's Housing Manager of the designation of the five (5) Affordable Units. The Affordable Units shall be disbursed throughout the buildings of the Project. Immediately following recordation of each Condominium Map for the Project, Owner shall cause the Affordable Housing Covenant (Ex. C) to be recorded against any Affordable Units within the Condominium Map. 3.3 Prohibition of Leasing of Market Rate or Affordable Units by the Owner. Owner agrees to market and sell all Market Rate and Affordable Units at the Project. City would not grant the aforementioned Waiver and Reduction of Development Standards, the Concessions and Incentives, nor the modification of parking standards unless Owner agrees to market and sell all the Units in the Project as ownership housing. While Market Rate Units may be leased by the individual owner once purchased from the Owner, in no event may Owner lease any Units. 3.4 Term of Affordable Unit Covenants. Each Affordable Unit designated for Moderate Income Households shall be restricted for use and occupancy by a Moderate Income Household, for a total period of forty-five (45) years, commencing on the date that the Owner conveys title to the first purchaser of each Affordable Unit. By way of explanation of the foregoing two sentences, it is possible that the affordability term for one Affordable Unit will neither commence on the same date nor terminate on the same date as another Affordable Unit, and it is possible that the affordability terms for all Affordable Units will commence on different days and terminate on different days. 3.5 Memorializing Commencement of Affordabil�y Term. The Notice of Affordability Restrictions is attached as an exhibit to Exhibit C, the Declaration of Conditions, Covenants, and Restrictions for Moderate Income Affordable Housing. This Notice shall be recorded concurrently with conveyance of title to the first buyer of each Affordable Unit and the affordability term for each Affordable Unit shall begin as of the recordation date of the Notice. 3.6. Sale of Affordable Units to Moderate Income Households. When marketing the Affordable units, Owner shall comply with the City Housing Regulations. Owner shall not convey title to any Affordable Unit to a Household that the City has not verified as a Moderate Income Household, as determined pursuant the City Housing Regulations. Owner shall not convey title to any Affordable Unit to a Moderate Income Household at a price that exceeds the Affordable Housing Cost for that Affordable Unit as established by the City. no 17-6041/169223/SFF 0 4. TERM OF THIS AGREEMENT 4.1 The term of this Agreement shall commence on the Effective Date and shall continue until the date Owner conveys fee title to buyers of all of the Units of the Project in accordance with the requirements of this Agreement. Upon satisfaction of the foregoing, the City shall, at the request of Owner, record a termination of this Agreement in the form of Exhibit E to this Agreement. The recording of such a termination document shall remove this Agreement as an encumbrance upon title to the Property. Notwithstanding any other provision herein to the contrary, Owner's indemnity obligations under Sections 2.4 (Replacement Housing), 2.5 (Mechanic's Liens) and 5.3 (Indemnification) hereof shall survive the termination of this Agreement. 4.2 Owner shall have the right at the time that it enters into a sales agreement for each of the Units to request that City execute a Unit Release for the Unit in the form of Exhibit D to this Agreement. DEFAULT AND TERMINATION; INDEMNIFICATION 5.1 Default. Failure or delay by any Party to perform any term or provision of this Agreement which is not cured within thirty (30) days after receipt of notice from the other Party specifying the default (or such other period specifically provided herein) constitutes a default under this Agreement; provided, however, if such default is of the nature requiring more than thirty (30) days to cure, the defaulting Party shall avoid default hereunder by commencing to cure within such thirty (30) day period, and thereafter diligently pursuing such cure to completion within an additional sixty (60) days following the conclusion of such thirty (30) day period (for a total of ninety (90) days). Except as required to protect against further damages, the injured Parry may not institute proceedings against the Party in default until the time for cure has expired. Failure or delay in giving such notice shall not constitute a waiver of any default, nor shall it change the time of default. Y 5.2 Rights and Remedies Cumulative. The rights and remedies of the Parties are cumulative, and the exercise by either Party of one or more of its rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default by the other Party. 5.3 Indemnification. In addition to any other indemnity specifically provided in this Agreement, Owner shall defend (with counsel of City's choosing and the consent of Owner, which shall not be unreasonably withheld, and which may be joint defense counsel upon City's and Owner's consent), indemnify and hold harmless City and its officers, officials, agents, employees, representatives, and volunteers from and against any loss, liability, claim, or judgment arising from any act or omission of Owner in connection with its obligations under this Agreement. 6. ASSIGNMENT 6.1 Assignment by Owner. The qualifications and identity of Owner are of particular concern to City. It is because of those qualifications and identity that City has -7- 17-6041/169223/SFF E entered into this Agreement. Accordingly, except as authorized in Section below, Owner shall not sell, transfer, or assign the Property or Project in whole or in part, or transfer or assign Owner's rights and obligations in this Agreement, without City's prior written approval, which shall not be unreasonably withheld. In considering whether to grant its approval of any proposed transfer or assignment by Owner of its interest in the Property, Project, or this Agreement, City shall consider factors such as the financial strength and capacity of the proposed transferee or assignee to perform Owner's obligations in this Agreement, and the proposed transferee's or assignee's experience and expertise in the planning, financing, development, and operation of similar projects. 6.2 Subsequent Assignment. As used in this Agreement, the term "Owner" shall be deemed to include any such transferee or assignee after the date such transfer or assignment occurs in compliance with this Agreement. 6.3 Unpermitted Assignments Void. Any sale, transfer, or assignment made in violation of this Agreement shall be null and void, and City shall have the right to pursue any right or remedy at law or in equity to enforce the provisions of the restriction against unpermitted sales, transfers, or assignments. 7. MISCELLANEOUS 7.1 Notices. As used in this Agreement, "notice" includes, but is not limited to, the communication of notice, request, demand, approval, statement, report, acceptance, consent, waiver, appointment or other communication required or permitted hereunder. All notices shall be in writing and shall be considered given either: (i) when delivered in person to the recipient named below; or (ii) on the date of delivery shown on the return receipt, after deposit in the United States mail in a sealed envelope as either registered or certified mail with return receipt requested, and postage and postal charges prepaid, and addressed to the recipient named below; or (iii) five (5) days after deposit in the United States mail in a sealed envelope, first class mail and postage prepaid, and addressed to the recipient named below; or (iv) one (1) day after deposit with a known and reliable next -day document delivery service (such as FedEx), charges prepaid and delivery scheduled next -day to the recipient named below, provided that the sending party receives a confirmation of delivery from the delivery service provider. All notices shall be addressed as follows: If to CITY: City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 Attn: Director of Community Development & Housing Manager If to OWNER: Meritage Homes of California, Inc. 1401 Dove Street, Suite 640 Newport Beach, CA 92660 Attn: Moses Kim, Forward Planning Manager -8- 17-6041/169223/SFF 10 7.2 Change of Address. Either Party may, by notice given at any time, require subsequent notices to be given to another person or entity, whether a party or an officer or representative of a party, or to a different address, or both. Notices given before actual receipt of notice of change shall not be invalidated by the change. 7.3 Entire Agreement. This Agreement and all of its Exhibits and attachments set forth and contain the entire understanding and agreement of the parties, and there are no oral or written representations, understandings or ancillary covenants, undertakings or agreements which are not contained or expressly referred to herein. No testimony or evidence of any such representations, understandings or covenants shall be admissible in any proceeding of any kind or nature to interpret or determine the terms or conditions of this Agreement. 7.4 Amendments. The terms of this Agreement may only be modified or amended by an instrument in writing executed by each of the parties hereto; provided, however, the City Manager shall have the authority to issue interpretations, waive provisions and enter into amendments of this Agreement on behalf of City so long as such actions do not substantially change the uses or development permitted on the Property. 7.5 Severability. If any term, provision, covenant or condition of this Agreement shall be determined invalid, void or unenforceable, the remainder of this Agreement shall not be affected thereby to the extent such remaining provisions are not rendered impractical to perform, taking into consideration the purposes of this Agreement. 7.6 Interpretation and Governing_Law. This Agreement and any dispute arising hereunder shall be governed and interpreted in accordance with the laws of the State of California without regard to conflict of law principles. This Agreement shall be construed as a whole according to its fair language and common meaning to achieve the objectives and purposes of the Parties hereto, and the rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not be employed in interpreting this Agreement, all Parties having been represented by counsel in the negotiation and preparation hereof. 7.7 Section Headings. All section headings and subheadings are inserted for convenience only and shall not affect any construction or interpretation of this Agreement. 7.8 _Singular and Plural. As used herein, the singular of any word includes the plural, and vice versa, as context so dictates. Masculine, feminine, and neuter forms of any word include the other as context so dictates. 7.9 Joint and Several Obligations. If at any time during the term of this Agreement the Property and/or Project is owned, in whole or in part, by more than one Owner, all obligations of such Owner under this Agreement shall be joint and several, and the default of any such Owner shall be the default of all such Owners. 7.10 Time of Essence. Time is of the essence in the performance of the provisions of this Agreement as to which time is an element. '0' 17-6041/169223/SFF 11 7.11 Days. Unless otherwise specified in this Agreement or any Exhibit attached hereto, use of the term "days" shall mean calendar days. For purposes of this Agreement and all Exhibits attached hereto, "business days" shall mean every day of the week that City Hall of the City is open for business to the general public. 7.12 Waiver. Failure by a Parry to insist upon the strict performance of any of the provisions of this Agreement by the other Party, or the failure by a Party to exercise its rights upon the default of the other Party, shall not constitute a waiver of such Party's right to insist and demand strict compliance by the other Party with the terms of this Agreement thereafter. 7.13 Force Majeure. Neither Party shall be deemed to be in default where failure or delay in performance of any of its obligations under this Agreement is caused by floods, earthquakes, other Acts of God, fires, wars, riots or similar hostilities, strikes and other labor difficulties beyond the Party's control (including the Party's employment force), court actions (such as restraining orders or injunctions), government regulations or other causes beyond the Party's control. If any such events shall occur, the term of this Agreement and the time for performance by either Party of any of its obligations hereunder may be extended by the written agreement of the Parties for the period of time, that such events prevented such performance. 7.14 Mutual Covenants. The covenants contained herein are mutual covenants and also constitute conditions to the concurrent or subsequent performance by the Party benefited thereby of the covenants to be performed hereunder by such benefited Party. 7.15 Successors in Interest. The burdens of this Agreement shall be binding upon, and the benefits of this Agreement shall inure to, all successors in interest to the Parties to this Agreement. All provisions of this Agreement shall be enforceable as equitable servitudes and constitute covenants running with the land. Each covenant to do or refrain from doing some act hereunder with regard to development of the Property: (a) is for the benefit of and is a burden upon every portion of the Property; (b) runs with the Property and each portion thereof; and, (c) is binding upon each Party and each successor in interest during ownership of the Property or any portion thereof. 7.16 Jurisdiction and Venue. Any action at law or in equity arising under this Agreement or brought by a Party hereto for the purpose of enforcing, construing or determining the validity of any provision of this Agreement shall be filed and tried in the Superior Court of the County of Orange, State of California, or any other court in that county, and the Parties hereto waive all provisions of law providing for the filing, removal or change of venue to any other court. 7.17 Project as a Private Undertaking. It is specifically understood and agreed by and between the Parties hereto that the development of the Project is a private development, that neither Party is acting as the agent of the other in any respect hereunder, and that each Party is an independent contracting entity with respect to the terms, covenants and conditions contained in this Agreement. No partnership, joint venture or other association of any kind is formed by this Agreement. The only relationship between City and Owner is that of a government entity regulating the development of private property and the Owner of such property. 7.18 Attorneys' Fees and Costs. If either Party to this Agreement commences an action against the other Party to this Agreement arising out of or in connection with this Agreement, each party shall bear its own attorneys' fees and costs of suit. 7.19 Authority to Execute. The person or persons executing this Agreement on behalf of either Parry warrants and represents that he or she/they have the authority to execute this Agreement on behalf of his or her/their agency, corporation, partnership or business entity and warrants and represents that he or she/they has/have the authority to bind the Party to the performance of its obligations hereunder. 7.20 Counterparts. This Agreement may be executed by the Parties in counterparts, which counterparts shall be construed together and have the same effect as if all of the Parties had executed the same instrument. IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the date set forth above. "CITY" CITY OF TIN N BEACH, a lifo a ci co ratio By: Mike Posey, Mayor ATTEST: City C rk APPROVED AS TO City A "OWNER" MERITAGE HOMES OF CALIFORNIA, INC., a Cali inia corpora 'on By: J PhiliP S. Bodem Its: Its: -11- 17-6041/169223/SFF Division President 13 ACKNOWLEDGMENT (In accordance with Section 1189 of the California Civil Code) 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. State of California County of Orange} ss. On May 18, 2018 before me, K L Chavez, Notary Public, personally appeared Philip S. Bodem, 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 signatures(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 State of California that the foregoing paragraph is true and correct. K. L. CHAVEZ WITNESS my hand and official seal. ? NotaryPublic- California z Riverside County r v Commission N 2193122 My Comm. Expires Apr 22, 2021 Signature A , �,� �/ ear• K. L. Chavez, Notary Pu lic, #2193222 (Commission Expires Ap it 22, 2021) 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 CALIFORNIA ss COUNTY OF ORANGE On May 29, 2018 before me, P. L. Esparza, Notary Public, personally appeared Robin Estanislau and Mike Posey 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 Signatuie) il a P. L. ESPARZA Notary Public - California q Orange County •r' Commission k 2204197 My COMM, Expires Aug 4, 2021 (Seal) EXHIBIT A LEGAL DESCRIPTION FOR 19200 HOLLY LANE HUNTINGTON BEACH APN: 159-282-11 LOTS 22,23 AND 24 IN BLOCK A OF GARFIELD STREET ADDITION TO HUNTINGTON BEACH,. AS PER MAP RECORDED IN BOOK 7, PAGES 27 AND 28 OF MISCELLANEOUS MAPS, IN THE OFFICE OF THE COUNTY RECORDER. 17-6041/171747 14 EXHIBIT C TO DENSITY BONUS AND AFFORDABLE HOUSING AGREEMENT FOR 19200 HOLLY LANE, HUNTINGTON BEACH 17-6041/169223/SFF (Affordable Housing Covenant) -14- 16 Recorded in Official Records, Orange County Hugh Nguyen,Clerk-Recorder II III IIII III I0III III NO FEE * $ R 0 0 1 4 1 4 5 7 9 4 $ * 2023000004811 2:14 pm 01/09/23 90 CR-SCO6 D02 20 RECORDING REQUESTED BY AND 0.00 0.00 0.00 0.00 57.00 0.00 0.000.000.00 0.00 WHEN RECORDED MAIL TO: City Clerk City of Huntington Beach 2000 Main Street Huntington Beach,CA 92648 SPACE ABOVE THIS LINE FOR RECORDERS'USE ONLY DECLARATION OF CONDITIONS,COVENANTS AND RESTRICTIONS FOR MODERATE INCOME AFFORDABLE HOUSING 19200 HOLLY LANE,HUNTINGTON BEACH This Declaration Of Conditions,Covenants And Restrictions For Moderate Income Affordable Housing("Resale Restrictions") is made as of /422, 20,2__Z by and between Meritage Homes of California, Inc., a California corporation(the"Owner"),and the CITY OF HUNTINGTON BEACH, a California municipal corporation(the "City"), and the HOUSING AUTHORITY OF THE CITY OF HUNTINGTON BEACH, a public body corporate and politic (the"Authority"). At the option of the City and Authority, the Authority may enforce these Resale Restrictions in place of the City. RECITALS A. Owner is the owner in fee of that certain real property consisting of Units 8, 10, 23, 24,and 25, located at 19200 Holly Lane, Huntington Beach(APN Nos. 937-40-377, 937-40- 379, 937-40-370, 937-40-371, and 937-40-372), as more particularly described in the legal description attached hereto as Exhibit"A"(the"Property"). B. Owner submitted to City plans to develop the Property as a thirty-two(32) unit residential community to be subdivided as a condominium development. Owner will build the Project in a single phase and sell individual units to individual homebuyers. Pursuant to California Government Code Section 65915, Owner obtained a twelve percent(12%)density bonus. Pursuant to Section 65915 and Chapter 230.26 of the Huntington Beach Zoning and Subdivision Ordinance("HBZSO"),and the Holly Seacliff Specific Plan, at least seventeen percent(17%) of the units in the Project shall be affordable to Moderate Income Households. C. On December 12,2017,the Huntington Beach Planning Commission approved the Project pursuant to Tentative Tract No. 18105 and CUP No. 17-011. As a condition of approval of the Tentative Tract Map and CUP,the Project includes five(5) units which are to be This document N solely for the official 22-12018/294783 1 bushels of the City of leech. as oontemplsted under Government Code Sec.27353 and should•Oe recorded free of charge. RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: City Clerk City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 SPACE ABOVE THIS LINE FOR RECORDERS'USE ONLY DECLARATION OF CONDITIONS, COVENANTS AND RESTRICTIONS FOR MODERATE INCOME AFFORDABLE HOUSING 19200 HOLLY LANE,HUNTINGTON BEACH This Declaration Of Conditions, Covenants And Restrictions For Moderate Income Affordable Housing ("Resale Restrictions") is made as of /42, , 202Z, by and between Meritage Homes of California, Inc., a California corporation(the"Owner"), and the CITY OF HUNTINGTON BEACH, a California municipal corporation(the "City"), and the HOUSING AUTHORITY OF THE CITY OF HUNTINGTON BEACH, a public body corporate and politic (the"Authority"). At the option of the City and Authority,the Authority may enforce these Resale Restrictions in place of the City. RECITALS A. Owner is the owner in fee of that certain real property consisting of Units 8, 10, 23, 24, and 25, located at 19200 Holly Lane, Huntington Beach (APN Nos. 937-40-377, 937-40- 379, 937-40-370, 937-40-371, and 937-40-372), as more particularly described in the legal description attached hereto as Exhibit"A" (the"Property"). B. Owner submitted to City plans to develop the Property as a thirty-two (32)unit residential community to be subdivided as a condominium development. Owner will build the Project in a single phase and sell individual units to individual homebuyers. Pursuant to California Government Code Section 65915, Owner obtained a twelve percent(12%) density bonus. Pursuant to Section 65915 and Chapter 230.26 of the Huntington Beach Zoning and Subdivision Ordinance ("HBZSO"), and the Holly Seacliff Specific Plan, at least seventeen percent(17%) of the units in the Project shall be affordable to Moderate Income Households. C. On December 12, 2017,the Huntington Beach Planning Commission approved the Project pursuant to Tentative Tract No. 18105 and CUP No. 17-011. As a condition of approval of the Tentative Tract Map and CUP, the Project includes five (5) units which are to be This document is solely for the official business of the City of Huntington Beach, 22-12018/294783 1 as contemplated under Government Code Sec.27383 and shou$d be recorded free of char. occupied by, and sold at prices affordable to Moderate Income Households for a term of 45 years ("the "Affordable Units"). Tentative Tract Map No. 18105 was later recorded as Final Tract Map No. 18105 at Instrument No. 201900297619 of the Records of Orange County, California. D. In order to secure the long-term affordability of the Affordable Units, the City and Owner entered into the "Density Bonus and Affordable Housing Agreement for 19200 Holly Lane,"which was recorded as Instrument No. 2018000196374 in the Records of Orange County, California(the "Density Bonus Agreement"). The Density Bonus Agreement provides that Owner shall designate four (4), four-bedroom units and one, three-bedroom unit as the Affordable Units. E. Pursuant to the Density Bonus Agreement, Owner has designated the Affordable Units as: (i) Units 8, 10, 23, and 25, all four-bedroom units; and (ii) Unit 24, a three-bedroom unit. Owner is the owner of record of these Units, which are located in the City of Huntington Beach, County of Orange, State of California and legally described in the attached Exhibit"A", and are collectively known as the "Restricted Unit(s). The Restricted Units are at times individually referred to herein as follows: Unit Number Address 8 7262 Highwater Drive 10 7274 Highwater Drive 23 7275 Whitewave Drive 24 7269 Whitewave Drive 25 7263 Whitewave Drive NOW, THEREFORE,the Parties hereto agree and covenant as follows: 1. Affordability Covenants. Owner agrees for itself and the successors and assigns to Owner's interest in the Restricted Units, including each Moderate Income Household purchasing one of the Restricted Units, that for a term of forty-five (45) years from the date of the close of escrow for the initial sale of each such Restricted Unit: 1.1 The Restricted Units shall only be owned and occupied by Owner or by a Moderate Income Household, which shall mean persons or families earning not more than 120% of the Orange County median income, adjusted for household size as appropriate to the Unit. 1.2 The Restricted Units shall only be sold at an Affordable Housing Cost to Moderate Income Households. 2. Definitions and Exhibits. 2.1 Definitions. In addition to the terms that may be defined elsewhere in this 22-12018/294783 2 Covenant, the following terms when used in these Resale Restrictions shall be defined as follows: 2.1.1 "Adjusted for family size appropriate to the Unit" means a household of one person in the case of a studio unit, a household of two persons in the case of one-bedroom unit, a household of three persons in the case of a two-bedroom unit, a household of four persons in the case of a three-bedroom unit, and a household of five persons in the case of a four-bedroom unit. 2.1.2 "Affordable Housing Cost" for a Moderate Income Household means that purchase price which would result in an annual Monthly Housing Cost, which does not exceed Thirty-Five Percent (35%) of One Hundred Ten Percent (110%) of the current Orange County monthly median income for a household adjusted for family size appropriate to the Unit. In determining monthly housing payments, the City will assume principal and interest payments on a conventional home mortgage after paying a ten percent (10%) down payment. Monthly housing costs will also include monthly homeowner's association dues, utilities, homeowner's insurance, maintenance costs and property taxes. The Affordable Housing Cost shall be calculated pursuant to the City Housing Regulations. 2.1.3 "City Housing Regulations" means the "Affordable Ownership Housing Regulations-Homeowner Requirement of the City of Huntington Beach," dated August 15, 2011, as they exist now, and as they may be amended in the future. 2.1.4 "Default" means the failure of a Party to perform any action or covenant required by these Resale Restrictions within the time periods provided herein following notice and opportunity to cure. 2.1.5 "First Lien" means the lien of a primary Lender which secures the obligations of the Owner to repay amounts owed to the Lender. 2.1.6. "Owner" means initially, Meritage Homes of California, Inc., a California corporation, and later its successors and assigns, each owner of any legal or equitable interest in one of the five (5) Restricted Units. 2.1.7. "Lender" means a lender making a purchase money loan to the Owner for the purchase of the Affordable Unit. 2.1.8 "Median Income" means the Orange County, California area median income, adjusted for household size, as established by the United States Department of Housing and Urban Development, and as published periodically by the State of California Department of Housing and Community Development. 2.1.9 "Moderate Income Household" means a Household whose income does not exceed one hundred twenty percent (120%) of Median Income, adjusted for family size. The income level of a Household shall be determined in accordance with the City Housing Regulations. 22-12018/294783 3 2.1.10 "Monthly Housing Cost" shall include all of the following associated with the Restricted Units: (i) principal and interest payments on a mortgage loan; (ii) property taxes and assessments; (iii) the cost of fire and casualty insurance covering replacement value of property improvements; (iv) homeowner's association fees; (v) reasonable Unit maintenance and repair costs; and (vi) reasonable utility allowance. All Monthly Housing costs shall be determined by the City according to the City Housing Regulations. 2.1.11 "Qualified Purchaser" Means a person or family who complies with all income verification requirements of these Resale Restrictions, and earns not more than one hundred twenty percent(120%) of the Median Income, adjusted for family size, to be determined in accordance with the City Housing Regulations. 2.1.12 "Transfer" shall mean any sale, assignment, conveyance, lease, or transfer, voluntary or involuntary, of any interest in the Restricted Unit. Without limiting the generality of the foregoing, Transfer shall include (i) a transfer by devise, inheritance or intestacy; (ii)the creation of a life estate; (iii) the creation of a joint tenancy interest; (iv) a gift of all or any portion of the Restricted Unit; or(v) any voluntary conveyance of the Restricted Unit. 3. Attachments. The following documents are attached to, and by this reference made a part of, these Resale Restrictions: Exhibit A—Legal Description of Restricted Units Exhibit B —Notice of Affordability Restriction Exhibit C—Promissory Note Exhibit D—Affordable Housing Deed of Trust 4. Term of Resale Restrictions. 4.1 The term of these Resale Restrictions shall commence on the date of the initial sale of each Restricted Unit from Owner to a Qualified Purchaser as evidenced by a deed recorded with the Orange County Recorder's Office and shall continue, with respect to each such Restricted Unit, for forty-five (45) years from said date (the"Affordability Period"). The Covenant contained in this Section shall run with each Restricted Unit and shall automatically terminate and be of no further force or effect upon the expiration of the Affordability Period. By way of explanation of the foregoing sentence, it is possible that the affordability term for one Restricted Unit will neither commence on the same date nor terminate on the same date as another Restricted Unit, and it is possible that the affordability terms for all Restricted Units will commence on different days and terminate on different days. The beginning and expiration dates of the Affordability Period for each Restricted Unit shall be established by the City in the Notice of Affordability Covenant (Ex. B) recorded in connection with each sale of the Restricted Units. 4.2 Each Qualified Purchaser of each Restricted Unit shall enter into a Notice of Affordability Restriction, Promissory Note, and Deed of Trust in the forms attached as Exhibits B, C, and D to these Resale Restrictions. 22-12018/294783 4 5. Covenant Regarding Use and Sale of Restricted Units. For the Affordability Period, the Restricted Units shall be owned and occupied as the principal residence of a Moderate Income Household, and in no event may the Restricted Unit be leased to a third party. No transfer of a Restricted Unit shall occur until the City determines that: (a) the proposed purchaser intends to occupy the Restricted Unit as the proposed purchaser's principal residence; (b)the proposed purchaser is a Moderate Income Household; and (c) the proposed transfer occurs at an Affordable Housing Cost. 6. Permitted and Prohibited Transfers of Restricted Units. 6.1 The following Transfers, made in compliance with the terms and conditions of these Resale Restrictions and the City Housing Regulations, shall constitute "Permitted Transfers": (i) a Transfer to a surviving joint tenant or other permitted co-Owner of the Restricted Unit by devise, descent, or operation of law on the death of an Owner; (ii) a Transfer to a spouse such that the spouses become co-Owners of the Restricted Unit; (iii) a Transfer by decree of dissolution, legal separation agreement, or from an incidental property settlement by which the spouse becomes an Owner of the Restricted Unit, provided that in each case the transferee spouse occupies or will occupy the Restricted Unit; (iv) a Transfer to an inter vivos trust in which Owner is and remains the beneficiary and occupant of the Restricted Unit; and (v) a Transfer to a Moderate Income Household at Affordable Housing Cost. A Transfer that is not a Permitted Transfer specified above is a"Prohibited Transfer." The occurrence of a Prohibited Transfer is a Default under these Resale Restrictions. 6.2 All Transfers Prohibited Without City Approval. During the Affordability Period, Owner shall not sell, transfer, use as security for any loan, or convey any interest in a Restricted Unit, except with the express written consent of the City, which consent shall be given only if the Transfer is a Permitted Transfer and in strict compliance with the provisions of this Section 6. 6.3 Maximum Sale Price of Restricted Unit. In the event that Owner decides to sell or otherwise Transfer the Restricted Unit, Owner shall contact the City to obtain the current Affordable Housing Cost, which shall be the maximum sales price of the Restricted Unit. City shall provide the Affordable Housing Cost pursuant to its current Affordable Housing Regulations. Regarding the Affordable Housing Cost, Owner acknowledges that: OWNER, AND EACH SUCCESSOR, HEIR OR ASSIGN OF OWNER, UNDERSTANDS THAT THE DETERMINATION OF THE AFFORDABLE HOUSING COST CAN BE MADE ONLY AT THE TIME OF A PROPOSED SALE OR OTHER TRANSFER OF THE RESTRICTED UNIT, TAKING INTO CONSIDERATION PREVAILING INTEREST RATES, THE OFFERED TERMS OF SALE, THE ECONOMIC CIRCUMSTANCES OF THE PROPOSED PURCHASER AND OTHER FACTORS THAT CANNOT BE ACCURATELY PREDICTED, AND THAT THE TRANSFER PRICE PERMITTED HEREUNDER MAY BE LESS THAN THE FAIR MARKET VALUE OF THE SAME OR OTHER SIMILAR REAL PROPERTY WHICH IS NOT 22-12018/294783 5 ENCUMBERED BY THIS COVENANT. OWNER, AND EACH SUCCESSOR, HEIR OR ASSIGN OF OWNER, FURTHER ACKNOWLEDGES THAT AT ALL TIMES IN SETTING THE TRANSFER PRICE, THE PRIMARY OBJECTIVE OF THE CITY AND THESE RESALE RESTRICTIONS IS TO PROVIDE HOUSING TO MODERATE INCOME HOUSEHOLDS AT AN AFFORDABLE HOUSING COST. Owner's Initials 6.4 Procedure to Verify a Proposed Transfer. In the event that Owner desires to sell the Restricted Unit, Owner shall send written notice thereof to the City at the following address: City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 Attention: Director of Economic Development City shall process the sale of the restricted Unit pursuant to the City Housing Regulations. The City shall not be obligated to approve a transfer unless and until the proposed purchaser has submitted to the City such information and completed such forms as necessary to verify the proposed purchaser's intent with respect to his/her/its residency of the Restricted Unit,his/her/its gross income, and an affidavit of the proposed purchaser disclosing and certifying the amount of the proposed purchase price. Prior to conveyance of the Restricted Unit, each approved purchaser shall also submit to the City an executed disclosure statement which certifies that the purchaser is aware that: (i)the purchaser buying the Restricted Unit may only sell the Restricted Unit at an Affordable Housing Cost to a Moderate-Income Household as provided in Section 1 above, (ii)the maximum permitted sales price may be less than fair market value and (iii)the Restricted Unit must be owner-occupied at all times and cannot be rented or leased. The approved purchaser shall also submit an executed promissory, trust deed, notice documents, and any other documentation reasonably required by the City to effectuate the Affordable Housing Program. Owner shall cooperate with the City in providing such forms to proposed purchasers and in assisting proposed purchasers to prepare such forms and to provide any required information to the City in connection with only the Owner's sale of the Restricted Unit. 7. Non-Discrimination Covenants. Owner covenants by and for itself, it 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 sale, transfer, use, occupancy,tenure or enjoyment of the Restricted Unit, nor shall Owner 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 22-12018/294783 6 selection, location, number, use or occupancy of tenants, subtenants, or vendees in the Restricted Unit. Owner and its successors and assigns shall refrain from restricting the sale of the Restricted 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 deeds or contracts shall contain or be subject to substantially the following nondiscrimination or nonsegregation clause: (a) In deeds: "The grantee herein covenants by and for himself or herself, his or her heirs, executors, administrators 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 sale, transfer, use, occupancy, tenure or enjoyment of the land herein conveyed, nor shall the grantee 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 with reference to the selection, location, number, use or occupancy of tenants, or vendees in the land herein conveyed. The foregoing covenants shall run with the land." (b) In contracts: "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 sale, transfer, use, occupancy, tenure or enjoyment of the premises, nor shall the transferor himself or herself of any person claiming under or though him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use of occupancy of tenants, subtenants or vendee of the premises." (c) In leases: "The lessee herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assignees, and all persons claiming under or though 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 though him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the 22-12018/294783 7 selection, location, number, use, or occupancy of tenants, sublessees, subtenants, or vendees in the premises herein leased." Nothing in this Section 7 shall be construed to authorize the rental or lease of the Restricted Unit if such rental or lease is not otherwise permitted. 8. Encumbrances. 8.1 Financings on Transfer. This Section 8 shall not prohibit the encumbering of title for the sole purpose of securing financing of the purchase price of the Restricted Unit upon a Transfer thereof; however, any such financing shall be for the Owner and (i) must be a First Lien, (ii) must not be in excess of the Affordable Housing Cost of the Restricted Unit as of date of approval for the financing, (iii) must be in compliance with these Resale Restrictions and the Affordable Housing Deed of Trust, and (iv) shall be subordinate to these Resale Restrictions. 8.2 Subordination. These Resale Restrictions shall have priority over all monetary liens and encumbrances for the Affordability Period. However, the Affordable Housing Deed of Trust only may be subordinated to a First Lien on the Restricted Unit that secures the payment of a principal amount that is not in excess, as of the date of approval for said financing, of the Affordable Housing Cost of the Restricted Unit. The City shall execute a written instrument for the subordination of its rights under the Affordable Housing Deed of Trust in the form approved by the City Attorney as may reasonably be requested by the Lender. The City's agreement to so subordinate its rights is subject to agreement in writing by the Lender providing the City the following rights: (a) Upon the occurrence of a Default under any of the First Lien documents, the holder of the First Lien shall promptly notify the City of the occurrence of such Default, which notification shall be provided to the City contemporaneously with the delivery to Owner of any notice of Default under any of the First Lien documents; and (b) The City shall have the right, during the cure periods which apply to the Owner pursuant to the First Lien documents and any cure period which may apply to the City under applicable law, to cure the Owner's Default relative to the First Lien; and (c) After a Default on any of the First Lien documents but prior to a foreclosure sale or deed in lieu assignment of the Restricted Unit, the City shall have the right to take title to the Restricted Unit and cure the Default relative to the First Lien documents, without the holder of the First Lien exercising any right it might otherwise have to accelerate the obligations secured by the First Lien by reason of such title transfer, so long as the City promptly cures any such Default upon taking title to the Restricted Unit. 8.3 Request for Notice of Default. The City may cause a Request for Notice to be recorded on the Restricted Unit subsequent to the recordation of the First Lien deed of trust 22-12018/294783 8 or mortgage requesting a statutory notice of Default as set forth in California Civil Code Section 2924b. 8.4 Further Encumbrances Prohibited. Owner shall not record or cause or permit the recordation of any deed of trust, mortgage, lien or other instrument creating a security interest in or to the Restricted Unit(a"Further Encumbrance") other than these Resale Restrictions, the First Lien and the Affordable Housing Deed of Trust. 9. Uses. The Restricted Unit shall be used as the principal residence of Owner and owner's family and may not be rented or leased. Owner covenants and agrees to devote, use, and maintain the Restricted Unit in accordance with these Resale Restrictions. All uses conducted on the Restricted Unit, including, without limitation, all activities undertaken by the Owner pursuant to these Resale Restrictions, shall conform to all applicable provisions of federal, state, and local laws, including the Huntington Beach Municipal Code, and the City Housing Regulations. 10. Maintenance of Unit. Owner shall maintain the Restricted Unit in a manner consistent with community standards, which will uphold the value of the Restricted Unit, in accordance with the Huntington Beach Municipal Code. Owner also shall comply with all applicable federal, state and local laws. 11. Effect of Violation of the Terms and Provisions of These Resale Restrictions. 11.1 Covenants Run with the Land. These Resale Restrictions are designed to create equitable servitudes and covenants running with the Restricted Unit, in accordance with the provisions of Civil Code Section 1468, and the State Density Bonus Law and the Huntington Beach Zoning and Subdivision Ordinance. The covenants, conditions, restrictions, reservations, equitable servitudes, liens and charges set forth herein shall run with the Restricted Unit and shall be binding upon all persons having any right, title or interest in the leasehold interest in the Restricted Unit, or any part thereof, their heirs, successive owners and assigns; shall inure to the benefit of the City and its successors and assigns, shall be binding upon Owner, and its successors and assigns; and may be enforced by City and its successors and assigns. Owner hereby declares its understanding and intent that the burden of the covenants set forth herein touch and concern the land and that the Owner's interest in the Restricted Unit is rendered less valuable thereby. Owner hereby further declares its understanding and intent that the benefit of such covenants touch and concern the land by enhancing and increasing the enjoyment and use of the Restricted Unit by Owner, and by furthering public purposes for City. In amplification and not in restriction of the provisions hereinabove, it is intended and agreed that City is deemed a beneficiary of the agreements and covenants provided herein both for and in its own right and also for the purposes of protecting the interests of the community. All covenants without regard to technical classification or designation shall be binding for the benefit of City and such covenants shall run in favor of City for the entire period during which such covenants shall be in force and effect, without regard to whether City is or remains an owner of any land or interest therein to which such covenants relate. However, all such covenants and restrictions shall be deemed to run in favor of all real property owned by the City which real property shall be deemed the benefited property of such covenants. Furthermore, 22-12018/294783 9 all of the covenants, conditions, and restrictions contained herein shall also constitute easements in gross running in favor of the City. City shall have the right, in the event of any breach of any such agreement or covenant, to exercise all the rights and remedies, and to maintain any action at law or suit in equity or other proper proceedings to enforce the curing of such breach of agreement or covenant. 11.2 Notice of Default. Failure or delay by Owner to perform any term or provision of these Resale Restrictions which is not cured within thirty(30) days after receipt of notice from the City constitutes a Default under these Resale Restrictions; provided, however, if such Default is of the nature requiring more than thirty (30) days to cure, Owner may avoid Default hereunder by immediately commencing to cure within such thirty (30) day period, and thereafter diligently pursuing such cure to completion within sixty (60) days after the expiration of the initial thirty (30) day period, for a total of ninety (90) days. Failure or delay in giving notice by the City shall not constitute a waiver of any Default, nor shall it change the time of Default. 11.3 City's Remedies. Upon the declaration of a Default, the City may (i) apply to a court of competent jurisdiction for specific performance, for an injunction prohibiting any act or omission in violation of these Resale Restrictions, or for any such other relief as may be appropriate, (ii) exercise the City's rights under these Resale Restrictions and the Affordable Housing Deed of Trust, including, without limitation, foreclosure of the Restricted Unit, and(iii)pursue such other rights and remedies permitted under these Resale Restrictions and by applicable law. 11.4 Prohibited Transfers Void. Any attempt by the Owner to make a Prohibited Transfer of title to or any interest in the Restricted Unit in violation of these Resale Restrictions shall be void and subject to rescission, specific performance, or any other right or remedy available at law or in equity. 12. Governing Law. Owner hereby agrees to comply with all ordinances, rules and regulations of the City, including the City Housing Regulations. Nothing in these Resale Restrictions is intended to be, nor shall it be deemed to be, a waiver of any City ordinance, rule or regulation. These Resale Restrictions shall be governed by the laws of the State of California without regard to conflict of law principles. Any legal action brought under these Resale Restrictions must be instituted in the Superior Court of the County of Orange, State of California, or in the Federal District Court in the Central District of California. 13. Attorneys' Fees and Costs. If either Party to these Resale Restrictions institutes any action against the other Party arising out of or in connection with to these Resale Restrictions, each Party shall bear its own attorney's fees and costs of suit. 14. Severability. So long as the material bargain of the Parties may be preserved, any provision of these Resale Restrictions that is deemed to be illegal, invalid or unenforceable by an arbitrator or court of competent jurisdiction shall be ineffective to the extent of the invalidity or unenforceability of such provision and shall be deemed stricken from these Resale Restrictions. Any stricken provision shall not affect the legality, enforceability or validity of the 22-12018/294783 10 remainder of these Resale Restrictions. If any provision of these Resale Restrictions is stricken in accordance with the provisions of this Section, then the stricken provision shall be replaced, to the extent possible, with a legal, enforceable and valid provision that is as similar in tenor and intent to the stricken provision as is legally possible. Any such invalidity or unenforceability of any provision in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 15. Exhibits. Each of the Attachments referenced in these Resale Restrictions and attached hereto is incorporated into these Resale Restrictions by this reference as though fully set forth in this Section. IN WITNESS WHEREOF,the Parties have caused this instrument to be executed on their behalf by their respective officers hereunto duly authorized as of the date set forth above. OWNER: CITY: MERITAGE HOMES OF CALIFORNIA, CITY OF HUNTINGTON BEACH, INC., a Calif co oration a Ca icipal corporation By: ! ') - Mayor Its: U"LL P ‘ ATTEST: By: A .,/-1 ity Clerk Its: AUTHORITY: APPROVED AS TO ORM: HOUSING AUTHORITY OF THE CITY OF HUNTINGTON BEACH, a public body corporate and politic i Attorney By: 'AMA \a" Director of Community Development REVIEWED AND APPROVED: f„City Manager 22-12018/294783 11 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 CALIFORNIA ) ) ss COUNTY OF ORANGE ) On December 22, 2022 before me, Tania Moore, Notary Public, personally appeared Tony Strickland and Donna Switzer 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 bikGIHornia - -: := Orange county Commission N 358365 — ►�y Comm.Expires►a1y 10,1015 (Seal) (Notary Sig at e) CALIFORNIA ACKNOWLEDGMENT CIVIL CODE § 1189 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. State of California County of ©` ex e •` On Oecember �3,7_o22 before me, ,4rd reu3&Ocv_ari/✓ckr r`i' fii,b#1►G Date Here Insert Name and Title of the Officer personally appeared A At'c.n Ta\e"r' �© Name(s)of Signer(s) who proved to me on the basis of satisfactory evidence to be the person(r6)whose name :tare subscribed to the within instrument and acknowledged to me that('she/they executed the same i 4P/her/their authorized capacity(iesl, and that b 4 er/their signatureK on the instrument the person,( , or the entity upon behalf of which the personpi'T'acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing • , ANDREW SALAZAR paragraph is true and correct. Notary Public-California = ' orange County ,'. Commission N 2365034 WITNESS my hand and official seal. My Comm.Expires Jul 10,2025 Signature Place Notary Seal and/or Stamp Above Signature of Notary Public OPTIONAL Completing this information can deter alteration of the document or fraudulent reattachment of this form to an unintended document. Description of Attached Document Title or Type of Document: Document Date: Number of Pages: Signer(s) Other Than Named Above: Capacity(ies) Claimed by Signer(s) Signer's Name: Signer's Name: ❑ Corporate Officer—Title(s): ❑ Corporate Officer— Title(s): ❑ Partner— 0 Limited ❑ General ❑ Partner— 0 Limited 0 General ❑ Individual 0 Attorney in Fact ❑ Individual 0 Attorney in Fact ❑ Trustee ❑ Guardian or Conservator ❑ Trustee ❑ Guardian or Conservator ❑ Other: 0 Other: Signer is Representing: Signer is Representing: ©2019 National Notary Association CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT CIVIL CODE § 1189 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. State of California County of Orange On De ervn he V 1 fi , 2_0 y'_Z before me, Kim D. Radding, Notary Public, personally appeared Ursula Luna-Reynosa, 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 he executed the same in his authorized capacity, and that by his 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 under the laws of the State of California that the 5E.`?,;,,, i0M D.RADDING foregoing paragraph is true and correct. ,7 x Notary Public-California .. s+ - Orange County ��. � WITNESS my hand and official seal. Commission k 2361781 o`" My Comm.Expires Jun 22,2025 Signature � r��r�� (Notary Seal Above) EXHIBIT A LEGAL DESCRIPTION OF FIVE AFFORDABLE UNITS AT 19200 HOLLY LANE, HUNTINGTON BEACH SUBJECT TO THE AFFORDABLE HOUSING COVENANT FOR 19200 HOLLY LANE,HUNTINGTON BEACH (The Affordable Housing Covenant Is Exhibit C To Density Bonus And Affordable Housing Agreement For 19200 Holly Lane, Huntington Beach) PHASE 2 UNITS PARCEL 1: CONDOMINIUM UNITS 23, 24, 25 (THE "PROPERTY"), AS DEPICTED ON THAT CERTAIN "AMENDED CONDOMINIUM PLAN FOR HOLLY REGATTA CONDOMINIUM PLAN — PHASE 2," RECORDED ON JANUARY 3, 2022, AS INSTRUMENT NO. 2022000000141, IN THE OFFICIAL RECORDS OF ORANGE COUNTY, CALIFORNIA(THE"CONDOMINIUM PLAN"), SAID CONDOMINIUM UNIT BEING SITUATED ON A PORTION OF LOT 1 OF TRACT NO. 18105,AS SHOWN ON A MAP FILED IN BOOK 984, AT PAGES 12 TO 14, INCLUSIVE, OF MISCELLANEOUS MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF ORANGE COUNTY, CALIFORNIA("MAP"). EXCEPTING THEREFROM ALL MINERAL RIGHTS FROM THE OIL AND GAS LEASE DATED OCTOBER 11, 1920, RECORDED IN BOOK 27, PAGE 121 OF LEASES, RECORDS OF ORANGE COUNTY AND SURFACE ENTRY RIGHTS FROM THE LEASE DATED JUNE 2, 1951, RECORDED JULY 5, 1951, AS INSTRUMENT NO. 34564, IN BOOK 2088,PAGE 616 OF OFFICIAL RECORDS OF ORANGE COUNTY. PARCEL 2: AN UNDIVIDED THREE-ELEVENTH (3/11TH) INTEREST IN THE "COMMON AREA" (AS DEFINED IN THE DECLARATION (AS DEFINED BELOW)AND AS DEPICTED ON THE CONDOMINIUM PLAN). PARCEL 3: THE EXCLUSIVE RIGHT TO THE USE, POSSESSION AND ENJOYMENT OF THE EXCLUSIVE USE AREAS, IF ANY, APPURTENANT TO PARCEL 1, ABOVE, AS DEFINED IN THE DECLARATION AND AS MAY BE DEPICTED ON THE CONDOMINIUM PLAN WHICH ARE SET ASIDE AND ALLOCATED FOR THE EXCLUSIVE USE OF THE OWNER OF THE CONDOMINIUM TO WHICH THEY ARE ATTACHED OR ASSIGNED. PARCEL 4: A NON-EXCLUSIVE EASEMENT FOR INGRESS AND EGRESS, SUPPORT, USE, ENJOYMENT AND RIGHTS OVER, UNDER, UPON AND THROUGH ASSOCIATION PROPERTY AS SHOWN ON THE CONDOMINIUM PLAN AND DEFINED IN THE DECLARATION. EXCEPTING THEREFROM THE FOLLOWING: ALL THE CONDOMINIUM UNITS DEPICTED ON THE CONDOMINIUM PLAN AND DEFINED IN THE DECLARATION OTHER THAN THE PROPERTY DESCRIBED IN PARCEL 1 ABOVE. THE EXCLUSIVE USE AREAS, IF ANY, AS DEFINED IN THE DECLARATION AND/OR DEPICTED ON THE CONDOMINIUM PLAN WHICH ARE SET ASIDE AND ALLOCATED FOR THE EXCLUSIVE USE OF THE OWNERS OF CONDOMINIUMS OTHER THAN THE CONDOMINIUM UNIT DESCRIBED IN PARCEL 1 ABOVE. 22-12018/294783 12 NON-EXCLUSIVE EASEMENTS FOR INGRESS, EGRESS, SUPPORT, USE, ENJOYMENT AND RIGHTS OVER, UNDER UPON AND THROUGH THE ASSOCIATION PROPERTY APPURTENANT TO ALL CONDOMINIUM UNITS AS SAID EASEMENTS AND RIGHTS ARE DEFINED IN THE DECLARATION. PARCEL 5: NONEXCLUSIE EASEMENTS APPURTNENT TO THE PROPERTY DESCRIBED IN PARCEL 1 ABOVE FOR INGRESS, EGRESS, ACESS, MAINTENANCE, REPAIRS, DRAINAGE, ENCROACHMENT, SUPPORT, USE, EJOYMENT AND FOR ALL OTHER PURPOSES AS DESCRIBED IN THE DECLARATION OF COVENANTS, CONDITIONS AND RESTRICTIONS FOR REGATTA RECORDED APRIL 9, 2021 AS INSTRUMENT NO. 2021000243412, IN THE OFFICIAL RECORDS OF ORANGE COUNTY, CALIFORNIA, AS MAY BE AMENDED OR SUPPLEMENTED(COLLETIVELY,THE"DECLARATION"). PARCEL 6: A NON-EXCLUSIVE EASEMENT AND RIGHT TO ENTER AND USE THE PRIVATE STREETS AND ALLEYS AS IDENTIFIED IN THAT CERTAIN EASEMENT DEED RECORDED APRIL 14,2021,AS INSTRUMENT NO.2021000252618,IN THE OFFICIAL RECORDS OF ORANGE COUNTY, CALIFORNIA, BETWEEN GRANTOR AND THE REGATTA COMMUNITY ASSOCIATION,A CALIFORNIA NONPROFIT MUTUAL BENEFIT CORPORATION("ASSOCIATION"), FOR THE PURPOSES SET FORTH IN THE PRIVATE STREET MAINTENANCE AND RESERVE AGREEMENT("STREET AGREEMENT")BETWEEN GRANTOR AND THE ASSOCIATION. SUCH RIGHTS GRANTED TO THE ASSOCIATION AND GRANTEE,AS A MEMBER OF THE ASSOCIATION,UNDER THE EASEMENT DEED INCLUDES ACCESS TO AND FROM THE PROPERTY IDENTIFIED IN PARCEL 1. THE EASEMENT DEED,THE NON- EXCLUSIVE EASEMENT AND RIGHT TO ENTER AND USE THE PRIVATE STREETS AND ALLEYS FOR SAID PURPOSES SET FORTH IN THE STREET AGREEMENT SHALL IMMEDIATELY AND AUTOMATICALLY EXTINGUISH UPON CONVEYANCE OF THE PRIVATE STREETS TO THE ASSOCIATION. 937-40-370,937-40-371,937-40-372 PHASE 5 UNITS PARCEL 1: CONDOMINIUM UNITS 8 AND 10 (THE "PROPERTY"), AS DEPICTED ON THAT CERTAIN "AMENDED CONDOMINIUM PLAN FOR HOLLY REGATTA CONDOMINIUM PLAN - PHASE 5," RECORDED ON JANUARY 3, 2022, AS INSTRUMENT NO. 2022000000142, IN THE OFFICIAL RECORDS OF ORANGE COUNTY, CALIFORNIA(THE"CONDOMINIUM PLAN"), SAID CONDOMINIUM UNIT BEING SITUATED ON A PORTION OF LOT 1 OF TRACT NO. 18105, AS SHOWN ON A MAP FILED IN BOOK 984, AT PAGES 12 TO 14, INCLUSIVE, OF MISCELLANEOUS MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF ORANGE COUNTY,CALIFORNIA("MAP"). EXCEPTING THEREFROM ALL MINERAL RIGHTS FROM THE OIL AND GAS LEASE DATED OCTOBER 11, 1920, RECORDED IN BOOK 27, PAGE 121 OF LEASES, RECORDS OF ORANGE COUNTY AND SURFACE ENTRY RIGHTS FROM THE LEASE DATED JUNE 2, 1951, RECORDED JULY 5, 1951, AS INSTRUMENT NO. 34564,IN BOOK 2088,PAGE 616 OF OFFICIAL RECORDS OF ORANGE COUNTY. PARCEL 2: AN UNDIVIDED TWO-SEVENTH (2/7TH) INTEREST IN THE "COMMON AREA" (AS DEFINED IN THE DECLARATION(AS DEFINED BELOW)AND AS DEPICTED ON THE CONDOMINIUM PLAN). 22-12018/294783 13 PARCEL 3: THE EXCLUSIVE RIGHT TO THE USE, POSSESSION AND ENJOYMENT OF THE EXCLUSIVE USE AREAS, IF ANY, APPURTENANT TO PARCEL 1, ABOVE, AS DEFINED IN THE DECLARATION AND AS MAY BE DEPICTED ON THE CONDOMINIUM PLAN WHICH ARE SET ASIDE AND ALLOCATED FOR THE EXCLUSIVE USE OF THE OWNER OF THE CONDOMINIUM TO WHICH THEY ARE ATTACHED OR ASSIGNED. PARCEL 4: A NON-EXCLUSIVE EASEMENT FOR INGRESS AND EGRESS, SUPPORT, USE, ENJOYMENT AND RIGHTS OVER, UNDER, UPON AND THROUGH ASSOCIATION PROPERTY AS SHOWN ON THE CONDOMINIUM PLAN AND DEFINED IN THE DECLARATION. EXCEPTING THEREFROM THE FOLLOWING: ALL THE CONDOMINIUM UNITS DEPICTED ON THE CONDOMINIUM PLAN AND DEFINED IN THE DECLARATION OTHER THAN THE PROPERTY DESCRIBED IN PARCEL 1 ABOVE. THE EXCLUSIVE USE AREAS, IF ANY, AS DEFINED IN THE DECLARATION AND/OR DEPICTED ON THE CONDOMINIUM PLAN WHICH ARE SET ASIDE AND ALLOCATED FOR THE EXCLUSIVE USE OF THE OWNERS OF CONDOMINIUMS OTHER THAN THE CONDOMINIUM UNIT DESCRIBED IN PARCEL 1 ABOVE. NON-EXCLUSIVE EASEMENTS FOR INGRESS, EGRESS, SUPPORT, USE, ENJOYMENT AND RIGHTS OVER, UNDER UPON AND THROUGH THE ASSOCIATION PROPERTY APPURTENANT TO ALL CONDOMINIUM UNITS AS SAID EASEMENTS AND RIGHTS ARE DEFINED IN THE DECLARATION. PARCEL 5: NONEXCLUSIE EASEMENTS APPURTNENT TO THE PROPERTY DESCRIBED IN PARCEL 1 ABOVE FOR INGRESS, EGRESS, ACESS, MAINTENANCE, REPAIRS, DRAINAGE, ENCROACHMENT, SUPPORT, USE, EJOYMENT AND FOR ALL OTHER PURPOSES AS DESCRIBED IN THE DECLARATION OF COVENANTS, CONDITIONS AND RESTRICTIONS FOR REGATTA RECORDED APRIL 9, 2021 AS INSTRUMENT NO. 2021000243412, IN THE OFFICIAL RECORDS OF ORANGE COUNTY, CALIFORNIA, AS MAY BE AMENDED OR SUPPLEMENTED(COLLETIVELY,THE"DECLARATION"). 937-40-377,937-40-379 22-12018/294783 14 EXHIBIT B NOTICE OF AFFORDABILITY RESTRICTION (The Notice is an Exhibit to the Affordable Housing Covenant,which is Exhibit C to Density Bonus And Affordable Housing Agreement For 19200 Holly Lane, Huntington Beach) 22-12018/294783 15 EXHIBIT C PROMISSORY NOTE (The Promissory Note is an Exhibit to the Affordable Housing Covenant, which is Exhibit C to Density Bonus And Affordable Housing Agreement For 19200 Holly Lane, Huntington Beach) 22-12018/294783 16 EXHIBIT D AFFORDABLE HOUSING DEED OF TRUST (The Affordable Housing Deed of Trust is an Exhibit to the Affordable Housing Covenant, which is Exhibit C to Density Bonus And Affordable Housing Agreement For 19200 Holly Lane, Huntington Beach) 22-12018/294783 17 RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: City Clerk City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 SPACE ABOVE THIS LINE FOR RECORDERS' USE ONLY DECLARATION OF CONDITIONS, COVENANTS AND RESTRICTIONS FOR MODERATE INCOME AFFORDABLE HOUSING 19200 HOLLY LANE, HUNTINGTON BEACH This Declaration Of Conditions, Covenants And Restrictions For Moderate Income Affordable Housing ("Resale Restrictions") is made as of , 20_, by and between Meritage Homes of California, Inc., a California corporation (the "Owner"), and the CITY OF HUNTINGTON BEACH, a California municipal corporation (the "City"), and the HOUSING AUTHORITY OF THE CITY OF HUNTINGTON BEACH, a public body corporate and politic (the "Authority"). At the option of the City and Authority, the Authority may enforce these Resale Restrictions in place of the City. RECITALS A. Owner is the owner in fee of that certain real property consisting of Units and _, located at 19200 Holly Lane, Huntington Beach (APN , and ), as more particularly described in the legal description attached hereto as Exhibit "A" (the "Property"). B. Owner submitted to City plans to develop the Property as a thirty-two (32) unit residential community to be subdivided as a condominium development. Owner will build the Project in a single phase and sell individual units to individual homebuyers. Pursuant to California Government Code Section 65915, Owner obtained a twelve percent (12%) density bonus. Pursuant to Section 65915 and Chapter 230.26 of the Huntington Beach Zoning and Subdivision Ordinance ("HBZ.,SO"), and the Holly Seacliff Specific Plan, at least seventeen percent (17%) of the units in the Project shall be affordable to Moderate Income Households. C. On December 12, 2017, the Huntington Beach Planning Commission approved the Project pursuant to Tentative Tract No. 18105 and CUP No. 17-011. As a condition of approval of the Tentative Tract Map and CUP, the Project includes five (5) units which are to be 17-6041/169225.doc/SFF 17 occupied by, and sold at prices affordable to Moderate Income Households for a term of 45 years ("the "Affordable Units"). Tentative Tract Map No. 18105 was later recorded as Final Tract Map No. 18105 at Instrument No. of the Records of Orange County, California. D. In order to secure the long term affordability of the Affordable Units, the City and Owner entered into the "Density Bonus and Affordable Housing Agreement for 19200 Holly Lane," which was recorded as Instrument No. in the Records of Orange County, California (the "Density Bonus Agreement"). The Density Bonus Agreement provides that Owner shall designate four (4), four -bedroom units and one, three -bedroom unit as the Affordable Units. E. Pursuant to the Density Bonus Agreement, Owner has designated the Affordable Units as: (i) Units _, _ , and _, all four -bedroom units; and (ii) Unit _, a three -bedroom unit. Owner is the owner of record of these Units, which are located in the City of Huntington Beach, County of Orange, State of California and legally described in the attached Exhibit "A", and are collectively known as the "Restricted Unit(s)." NOW, THEREFORE, the Parties hereto agree and covenant as follows: l . Affordability Covenants. Owner agrees for itself and the successors and assigns to Owner's interest in the Restricted Units, including each Moderate Income Household purchasing one of the Restricted Units, that for a term of forty-five (45) years from the date of the close of escrow for the initial sale of each such Restricted Unit: 1.1 The Restricted Units shall only be owned and occupied by Owner or by a Moderate Income Household, which shall mean persons or families earning not more than 120% of the Orange County median income, adjusted for household size as appropriate to the Unit. 1.2 The Restricted Units shall only be sold at an Affordable Housing Cost to Moderate Income Households. 2. Definitions and Exhibits. 2.1 Definitions. In addition to the terms that may be defined elsewhere in this Covenant, the following terms when used in these Resale Restrictions shall be defined as follows: 2.1.1 "Adjusted for family size appropriate to the Unit" means a household of one person in the case of a studio unit, a household of two persons in the case of one -bedroom unit, a household of three persons in the case of a two -bedroom unit, a household of four persons in the case of a three -bedroom unit, and a household of five persons in the case of a four -bedroom unit. 2.1.2 "Affordable Housing Cost" for a Moderate Income Household means that purchase price which would result in an annual Monthly Housing Cost which does not exceed Thirty -Five Percent (35%) of One Hundred Ten Percent (110%) of the current Orange County monthly median income for a household adjusted for family size appropriate to the Unit. 2 17-6041 J169225.doc/SFF 18 In determining monthly housing payments, the City will assume principal and interest payments on a conventional home mortgage after paying a ten percent (10%) down payment. Monthly housing costs will also include monthly homeowner's association dues, utilities, homeowner's insurance, maintenance costs and property taxes. The Affordable Housing Cost shall be calculated pursuant to the City Housing Regulations. 2.1.3 "City Housing Regulations" means the "Affordable Ownership Housing Regulations -Homeowner Requirement of the City of Huntington Beach," dated August 15, 2011, as they exist now, and as they may be amended in the future. 2.1.E "Default" means the failure of a Party to perform any action or covenant required by these Resale Restrictions within the time periods provided herein following notice and opportunity to cure. 2.1.5 "First Lien" means the lien of a primary Lender which secures the obligations of the Owner to repay amounts owed to the Lender. 2.1.6. "Owner" means initially, Meritage Homes of California, inc., a California corporation, and later its successors and assigns, each owner of any legal or equitable interest in one of the five (5) Restricted Units. 2.1.7. "Lender" means a lender making a purchase money loan to the Owner for the purchase of the Affordable Unit. 2.1.8 "Median Income" means the Orange County, California area median income, adjusted for household size, as established by the United States Department of Housing and Urban Development, and as published periodically by the State of California Department of Housing and Community Development. 2.1.9 "Moderate Income Household" means a Household whose income does not exceed one hundred twenty percent (120%) of Median Income, adjusted for fan -lily size. The income level of a Household shall be determined in accordance with the City Housing Regulations. 2.1.10 "Monthly Housing Cost" shall include all of the following associated with the Restricted Units: (i) principal and interest payments on a mortgage loan; (ii) property taxes and assessments; (iii) the cost of fire and casualty insurance covering replacement value of property improvements; (iv) homeowner's association fees; (v) reasonable Unit maintenance and repair costs; and (vi) reasonable utility allowance. All Monthly Housing costs shall be determined by the City according to the City Housing Regulations. 2.1.11 "Qualified Purchaser" Means a person or family who complies with all income verification requirements of these Resale Restrictions, and earns not more than one hundred twenty percent (120%) of the Median Income, adjusted for family size, to be determined in accordance with the City Housing Regulations. 2.1.12 "Transfer" shall mean any sale, assignment, conveyance, lease, or transfer, voluntary or involuntary, of any interest in the Restricted Unit. Without limiting the I 7-60411169225. dodSFF 19 generality of the foregoing, Transfer shall include (i) a transfer by devise, inheritance or intestacy; (ii) the creation of a life estate; (iii) the creation of a joint tenancy interest; (iv) a gift of all or any portion of the Restricted Unit; or (v) any voluntary conveyance of the Restricted Unit. 3. Attachments. The following documents are attached to, and by this reference made a part of, these Resale Restrictions: Exhibit A — Legal Description of Restricted Units Exhibit B — Notice of Affordability Restriction Exhibit C — Promissory Note Exhibit D — Affordable Housing Deed of Trust 4. Term of Resale Restrictions. 4.1 The term of these Resale Restrictions shall commence on the date of the initial sale of each Restricted Unit from Owner to a Qualified Purchaser as evidenced by a deed recorded with the Orange County Recorder's Office and shall continue, with respect to each such Restricted Unit, for forty-five (45) years from said date (the "Affordability Period"). The Covenant contained in this Section shall run with each Restricted Unit and shall automatically terminate and be of no further force or effect upon the expiration of the Affordability Period. By way of explanation of the foregoing sentence, it is possible that the affordability term for one Restricted Unit will neither commence on the same date nor terminate on the same date as another Restricted Unit, and it is possible that the affordability terms for all Restricted Units will commence on different days and terminate on different days. The beginning and expiration dates of the Affordability Period for each Restricted Unit shall be established by the City in the Notice of Affordability Covenant (Ex. B) recorded in connection with each sale of the Restricted Units. 4.2 Each Qualified Purchaser of each Restricted Unit shall enter into a Notice of Affordability Restriction, Promissory Note and Deed of Trust in the forms attached as Exhibits B, C, and D to these Resale Restrictions. 5. Covenant Regarding Use and Sale of Restricted Units. For the Affordability Period, the Restricted Units shall be owned and occupied as the principal residence of a Moderate Income Household, and in no event may the Restricted Unit be leased to a third party. No transfer of a Restricted Unit shall occur until the City determines that: (a) the proposed purchaser intends to occupy the Restricted Unit as the proposed purchaser's principal residence; (b) the proposed purchaser is a Moderate Income Household; and (c) the proposed transfer occurs at an Affordable Housing Cost. 6. Permitted and Prohibited Transfers of Restricted Units. 6.1 The following Transfers, made in compliance with the terms and conditions of these Resale Restrictions and the City Housing Regulations, shall constitute "Permitted Transfers": (i) a Transfer to a surviving joint tenant or other permitted co -Owner of the Restricted Unit by devise, descent, or operation of law on the death of an Owner; (ii) a 4 17-604 1/169225. doe/SFF 20 Transfer to a spouse such that the spouses become co -Owners of the Restricted Unit; (iii) a Transfer by decree of dissolution, legal separation agreement, or from an incidental property settlement by which the spouse becomes an Owner of the Restricted Unit, provided that in each case the transferee spouse occupies or will occupy the Restricted Unit; (iv) a Transfer to an inter vivos trust in which Owner is and remains the beneficiary and occupant of the Restricted Unit; and (v) a Transfer to a Moderate Income Household at Affordable Housing Cost, A Transfer that is not a Permitted Transfer specified above is a "Prohibited Transfer." The occurrence of a Prohibited Transfer is a Default under these Resale Restrictions. 6.2 All Transfers Prohibited Without City Approval. During the Affordability Period, Owner shall not sell, transfer, use as security for any loan, or convey any interest in a Restricted Unit, except with the express written consent of the City, which consent shall be given only if the Transfer is a Permitted Transfer and in strict compliance with the provisions of this Section 6. 6.3 Maximum Sale Price of Restricted Unit. In the event that Owner decides to sell or otherwise Transfer the Restricted Unit, Owner shall contact the City to obtain the current Affordable Housing Cost, which shall be the maximum sales price of the Restricted Unit. City shall provide the Affordable Housing Cost pursuant to its current Affordable Housing Regulations. Regarding the Affordable Housing Cost, Owner acknowledges that: OWNER, AND EACH SUCCESSOR, HEIR OR ASSIGN OF OWNER, UNDERSTANDS THAT THE DETERMINATION OF THE AFFORDABLE HOUSING COST CAN BE MADE ONLY AT THE TIME OF A PROPOSED SALE OR OTHER TRANSFER OF THE RESTRICTED UNIT, TAKING INTO CONSIDERATION PREVAILING INTEREST RATES, THE OFFERED TERMS OF SALE, THE ECONOMIC CIRCUMSTANCES OF THE PROPOSED PURCHASER AND OTHER FACTORS THAT CANNOT BE ACCURATELY PREDICTED, AND THAT THE TRANSFER PRICE PERMITTED HEREUNDER MAY BE LESS THAN THE FAIR MARKET VALUE OF THE SAME OR OTHER SIMILAR REAL PROPERTY WHICH IS NOT ENCUMBERED BY THIS COVENANT. OWNER, AND EACH SUCCESSOR, HEIR OR ASSIGN OF OWNER, FURTHER ACKNOWLEDGES THAT AT ALL TIMES IN SETTING THE TRANSFER PRICE, THE PRIMARY OBJECTIVE OF THE CITY AND THESE RESALE RESTRICTIONS IS TO PROVIDE HOUSING TO MODERATE INCOME HOUSEHOLDS AT AN AFFORDABLE HOUSING COST. Owner's Initials 5 17 -6041 / 16922 5. d oelS FF 21 6.4 Procedure to Verify a Proposed Transfer. In the event that Owner desires to sell the Restricted Unit, Owner shall send written notice thereof to the City at the following address: City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 Director of Economic Development City shall process the sale of the restricted Unit pursuant to the City Housing Regulations. The City shall not be obligated to approve a transfer unless and until the proposed purchaser has submitted to the City such information and completed such forms as necessary to verify the proposed purchaser's intent with respect to his/her/its residency of the Restricted Unit, his/her/its gross income, and an affidavit of the proposed purchaser disclosing and certifying the amount of the proposed purchase price. Prior to conveyance of the Restricted Unit, each approved purchaser shall also submit to the City an executed disclosure statement which certifies that the purchaser is aware that: (i) the purchaser buying the Restricted Unit may only sell the Restricted Unit at an Affordable Housing Cost to a Moderate -Income Household as provided in Section 1 above, (ii) the maximum permitted sales price may be less than fair market value and (iii) the Restricted Unit must be owner -occupied at all times and cannot be rented or leased. The approved purchaser shall also submit an executed promissory, trust deed, notice documents, and any other documentation reasonably required by the City to effectuate the Affordable Housing Program. Owner shall cooperate with the City in providing such forms to proposed purchasers and in assisting proposed purchasers to prepare such forms and to provide any required information to the City in connection with only the Owner's sale of the Restricted Unit. 7. Non -Discrimination Covenants. Owner covenants by and for itself, it 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 sale, transfer, use, occupancy, tenure or enjoyment of the Restricted Unit, nor shall Owner 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 Restricted Owner and its successors and assigns shall refrain from restricting the sale of the Restricted 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 deeds or contracts shall contain or be subject to substantially the following nondiscrimination or nonsegregation clause: (a) In deeds: "The grantee herein covenants by and for himself or herself, his or her heirs, executors, administrators 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 sale, transfer, use, occupancy, tenure or enjoyment of the land herein conveyed, nor shall the grantee 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 with reference to the selection, location, number, use or occupancy of tenants, or vendees in the land herein conveyed. The foregoing covenants shall run with the land." (b) In contracts: "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 sale, transfer, use, occupancy, tenure or enjoyment of the premises, nor shall the transferor himself or herself of any person claiming under or though him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use of occupancy of tenants, subtenants or vendee of the premises." (c) In leases: "The lessee herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assignees, and all persons claiming under or though 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 though him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy of tenants, sublessees, subtenants, or vendees in the premises herein leased." Nothing in this Section 7 shall be construed to authorize the rental or lease of the Restricted Unit if such rental or lease is not otherwise permitted. 8. Encumbrances. 8.1 Financings on Transfer. This Section 8 shall not prohibit the encumbering of title for the sole purpose of securing financing of the purchase price of the Restricted Unit upon a Transfer thereof; however, any such financing shall be for the Owner and (i) must be a First Lien, (ii) must not be in excess of the Affordable Housing Cost of the 17-6041 / 169225. d oc/SFF 23 Restricted Unit as of date of approval for the financing, (iii) must be in compliance with these Resale Restrictions and the Affordable Housing Deed of Trust, and (iv) shall be subordinate to these Resale Restrictions. 8.2 Subordination. These Resale Restrictions shall have priority over all monetary liens and encumbrances for the Affordability Period. However, the Affordable Housing Deed of Trust only may be subordinated to a First Lien on the Restricted Unit that secures the payment of a principal amount that is not in excess, as of the date of approval for said financing, of the Affordable Housing Cost of the Restricted Unit. The City shall execute a written instrument for the subordination of its rights under the Affordable Housing Deed of Trust in the form approved by the City Attorney as may reasonably be requested by the Lender. The City's agreement to so subordinate its rights is subject to agreement in writing by the Lender providing the City the following rights: (a) Upon the occurrence of a Default under any of the First Lien documents, the holder of the First Lien shall promptly notify the City of the occurrence of such Default, which notification shall be provided to the City contemporaneously with the delivery to Owner of any notice of Default under any of the First Lien documents; and (b) The City shall have the right, during the cure periods which apply to the Owner pursuant to the First Lien documents and any cure period which may apply to the City under applicable law, to cure the Owner's Default relative to the First Lien; and (c) After a Default on any of the First Lien documents but prior to a foreclosure sale or deed in lieu assignment of the Restricted Unit, the City shall have the right to take title to the Restricted Unit and cure the Default relative to the First Lien documents, without the holder of the First Lien exercising any right it might otherwise have to accelerate the obligations secured by the First Lien by reason of such title transfer, so long as the City promptly cures any such Default upon taking title to the Restricted Unit. 8.3 Request for Notice of Default. The City may cause a Request for Notice to be recorded on the Restricted Unit subsequent to the recordation of the First Lien deed of trust or mortgage requesting a statutory notice of Default as set forth in California Civil Code Section 2924b. 8.4 Further Encumbrances Prohibited. Owner shall not record or cause or permit the recordation of any deed of trust, mortgage, lien or other instrument creating a security interest in or to the Restricted Unit (a "Further Encumbrance") other than these Resale Restrictions, the First Lien and the Affordable Housing Deed of Trust. 9. Uses. The Restricted Unit shall be used as the principal residence of Owner and owner's family and may not be rented or leased. Owner covenants and agrees to devote, use, and maintain the Restricted Unit in accordance with these Resale Restrictions. All uses conducted on 17-6041/169225.doG(SFF 24 the Restricted Unit, including, without limitation, all activities undertaken by the Owner pursuant to these Resale Restrictions, shall conform to all applicable provisions of federal, state, and local laws, including the Huntington Beach Municipal Code, and the City Housing Regulations. 10. Maintenance of Unit. Owner shall maintain the Restricted Unit in a manner consistent with community standards which will uphold the value of the Restricted Unit, in accordance with the Huntington Beach Municipal Code. Owner also shall comply with all applicable federal, state and local laws. 11. Effect of Violation of the Terms and Provisions of These Resale Restrictions. 11.1 Covenants Run with the Land. These Resale Restrictions are designed to create equitable servitudes and covenants running with the Restricted Unit, in accordance with the provisions of Civil Code Section 1468, and the State Density Bonus Law and the Huntington Beach Zoning and Subdivision Ordinance. The covenants, conditions, restrictions, reservations, equitable servitudes, liens and charges set forth herein shall run with the Restricted Unit and shall be binding upon all persons having any right, title or interest in the leasehold interest in the Restricted Unit, or any part thereof, their heirs, successive owners and assigns; shall inure to the benefit of the City and its successors and assigns, shall be binding upon Owner, and its successors and assigns; and may be enforced by City and its successors and assigns. Owner hereby declares its understanding and intent that the burden of the covenants set forth herein touch and concern the land and that the Owner's interest in the Restricted Unit is rendered less valuable thereby. Owner hereby further declares its understanding and intent that the benefit of such covenants touch and concern the land by enhancing and increasing the enjoyment and use of the Restricted Unit by Owner, and by furthering public purposes for City. In amplification and not in restriction of the provisions hereinabove, it is intended and agreed that City is deemed a beneficiary of the agreements and covenants provided herein both for and in its own right and also for the purposes of protecting the interests of the community. All covenants without regard to technical classification or designation shall be binding for the benefit of City and such covenants shall ran in favor of City for the entire period during which such covenants shall be in force and effect, without regard to whether City is or remains an owner of any land or interest therein to which such covenants relate. However, all such covenants and restrictions shall be deemed to run in favor of all real property owned by the City which real property shall be deemed the benefited property of such covenants. Furthermore, all of the covenants, conditions, and restrictions contained herein shall also constitute easements in gross ruining in favor of the City. City shall have the right, in the event of any breach of any such agreement or covenant, to exercise all the rights and remedies, and to maintain any action at law or suit in equity or other proper proceedings to enforce the curing of such breach of agreement or covenant. 11.2 Notice of Default. Failure or delay by Owner to perform any term or provision of these Resale Restrictions which is not cured within thirty (30) days after receipt of notice from the City constitutes a Default under these Resale Restrictions; provided, however, if such Default is of the nature requiring more than thirty (30) days to cure, Owner may avoid Default hereunder by immediately commencing to cure within such thirty (30) day period, 9 17-6041/169225. doc/SFF 25 and thereafter diligently pursuing such cure to completion within sixty (60) days after the expiration of the initial thirty (30) day period, for a total of ninety (90) days. Failure or delay in giving notice by the City shall not constitute a waiver of any Default, nor shall it change the time of Default. 11.3 City's Remedies. Upon the declaration of a Default, the City may (i) apply to a court of competent jurisdiction for specific performance, for an injunction prohibiting any act or omission in violation of these Resale Restrictions, or for any such other relief as may be appropriate, (ii) exercise the City's rights under these Resale Restrictions and the Affordable Housing Deed of Trust, including, without limitation, foreclosure of the Restricted Unit, and (iii) pursue such other rights and remedies permitted under these Resale Restrictions and by applicable law. 11.4 Prohibited Transfers Void. Any attempt by the Owner to make a Prohibited Transfer of title to or any interest in the Restricted Unit in violation of these Resale Restrictions shall be void and subject to rescission, specific performance, or any other right or remedy available at law or in equity. 12. Governing Law. Owner hereby agrees to comply with all ordinances, rules and regulations of the City, including the City Housing Regulations. Nothing in these Resale Restrictions is intended to be, nor shall it be deemed to be, a waiver of any City ordinance, rule or regulation. These Resale Restrictions shall be governed by the laws of the State of California without regard to conflict of law principles. Any legal action brought under these Resale Restrictions must be instituted in the Superior Court of the County of Orange, State of California, or in the Federal District Court in the Central District of California. 13. Attorneys' Fees and. Costs. If either Party to these Resale Restrictions institutes any action against the other Party arising out of or in connection with to these Resale Restrictions, each Party shall bear its own attorney's fees and costs of suit. 14. Severability. So long as the material bargain of the Parties may be preserved, any provision of these Resale Restrictions that is deemed to be illegal, invalid or unenforceable by an arbitrator or court of competent jurisdiction shall be ineffective to the extent of the invalidity or unenforceability of such provision and shall be deemed stricken from these Resale Restrictions. Any stricken provision shall not affect the legality, enforceability or validity of the remainder of these Resale Restrictions. If any provision of these Resale Restrictions is stricken in accordance with the provisions of this Section, then the stricken provision shall be replaced, to the extent possible, with a legal, enforceable and valid provision that is as similar in tenor and intent to the stricken provision as is legally possible. Any such invalidity or unenforceability of any provision in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 15. Exhibits. Each of the Attachments referenced in these Resale Restrictions and attached hereto is incorporated into these Resale Restrictions by this reference as though fully set forth in this Section. 10 17-604I/169225.doc/SFF 26 IN WITNESS WHEREOF, the Parties have caused this instrument to be executed on their behalf by their respective officers hereunto duly authorized as of the date set forth above. OWNER: MERITAGE HOMES OF CALIFORNIA, INC., a California corporation By: Its: By: Its: CITY: CITY OF HUNTINGTON BEACH, a California municipal corporation Mayor ATTEST: City Clerk AUTHORITY: HOUSING AUTHORITY OF THE CITY OF HUNTINGTON BEACH, a public body corporate and politic R-A Chairperson ATTEST: Authority Clerk lI 17-6041/169225.doc/SFF 27 EXIHBIT A LEGAL DESCRIPTION OF FIVE AFFORDABLE UNITS AT 19200 HOLLY LANE, HUNTINGTON BEACH SUBJECT TO THE AFFORDABLE HOUSING COVENANT FOR 19200 HOLLY LANE, HUNTINGTON BEACH (The Affordable Housing Covenant Is Exhibit C To Density Bonus And Affordable Housing Agreement For 19200 Holly Lane, Huntington Beach) 13 17-6041I169225.doc/SFF 29 EXMBIT B NOTICE OF AFFORDABILITY RESTRICTION (The Notice is an Exhibit to the Affordable Housing Covenant, which is Exhibit C to Density Bonus And Affordable Housing Agreement For 19200 Holly Lane, Huntington Beach) 14 17-6W 1/169225Aoc/SFF 30 Recording Requested By: City of Huntington Beach 2000 Main Street Huntington Beach, California 92648 Attention: Economic Development Dept./Housing Div. SPACE ABOVE THIS LINE FOR RECORDER'S USE NOTICE OF AFFORDABILITY RESTRICTIONS ON TRANSFER OF PROPERTY (Unit , 19200 HOLLY LANE, HUNTINGTON BEACH) NOTICE IS HEREBY GIVEN by ("Owner"), owner of the property located at 19200 Holly Lane, Unit , Huntington Beach, California 92648, and more particularly described in Exhibit "A" attached hereto (the "Property"), that: 1. The Property is subject to a "Declaration of Covenants, Conditions and Restrictions for Moderate Income Affordable Housing" recorded on , 20_ as Instrument Number No. in the Office of the County Recorder of the County of Orange, California (the "Resale Restrictions"), Among other things, the Resale Restrictions limit the price that the Property may be sold to an "Affordable Housing Cost" for "Moderate Income Households." Concurrently with executing this Notice, Owner has executed a Promissory Note and a Deed of Trust securing the Resale Restrictions, 2. The administration of the Resale Restrictions shall be governed by the Affordable Housing Regulations of the City of Huntington Beach, dated August 15, 2011, as they exist now and may be amended in the future. 3. In summary, the term "Affordable Housing Cost" means the purchase price that would result in monthly housing payments that do not exceed Thirty -Five Percent (35%) of One Hundred Ten Percent (110%) of the current Orange County monthly median income for a household adjusted for family size appropriate to the Unit. Family size is one plus the number of bedrooms; for example, a household of four persons is the family size of a three -bedroom unit. In determining monthly housing payments, the City will assume principal and interest payments on a conventional home mortgage after paying a ten percent (10%) downpayment. Monthly housing costs will also include homeowner's association dues, utilities, homeowner's insurance, maintenance costs and property taxes. The effect of relying on prevailing interest rates to determine the Affordable Sales Price is to make the resale price of the Property sensitive to interest rates. For example, if interest rates rise, the resale price will fall, and if interest rates fall, the resale price will rise. This could result in the Affordable Housing Cost decreasing below the original purchase price. 17-6041 / 169227/SFF 31 5. In the event that Owner decides to sell or otherwise Transfer of the Property, Owner shall contact the City to obtain the current Affordable Housing Cost, which shall be the maximum sales price of the Property, City shall provide the Affordable Housing Cost pursuant to its current Affordable Housing Regulations. Regarding the Affordable Housing Cost, Owner acknowledges that: OWNER, AND EACH SUCCESSOR, HEIR OR ASSIGN OF OWNER, UNDERSTANDS THAT THE DETERMINATION OF THE AFFORDABLE HOUSING COST CAN BE MADE ONLY AT THE TIME OF A PROPOSED SALE OR OTHER TRANSFER OF THE RESTRICTED UNIT, TAKING INTO CONSIDERATION PREVAILING INTEREST RATES, THE OFFERED TERMS OF SALE, THE ECONOMIC CIRCUMSTANCES OF THE PROPOSED PURCHASER AND OTHER FACTORS THAT CANNOT BE ACCURATELY PREDICTED, AND THAT THE TRANSFER PRICE PERMITTED HEREUNDER MAY BE LESS THAN THE FAIR MARKET VALUE OF THE SAME OR OTHER SIMILAR REAL PROPERTY WHICH IS NOT ENCUMBERED BY THIS COVENANT. OWNER, AND EACH SUCCESSOR, HEIR OR ASSIGN OF OWNER, FURTHER ACKNOWLEDGES THAT AT ALL TIMES IN SETTING THE TRANSFER PRICE, THE PRIMARY OBJECTIVE OF THE CITY AND THESE RESALE RESTRICTIONS IS TO PROVIDE HOUSING TO MODERATE INCOME HOUSEHOLDS AT AN AFFORDABLE HOUSING COST. Owner's Initials 6. The Resale Restrictions imposed on the Property began on , 20_, and expire forty-five (45) years later, on , 20_. This Notice is recorded for the purpose of providing notice only and it in no way modifies the provisions of the Resale Restrictions. Dated: , 20_ APPROVED AS TO FORM: OFFICE OF HUNTINGTON BEACH CITY ATTORNEY Dated: , 20 MICHAEL E. GATES, City Attorney tj 17-6041/169227(SFF W Exhibit "A" 17-6041/169227/SFF 33 ACKNOWLEDGMENT State of California ) } ss County of ) On 5 before me, (Here Insert Name and Title of the Notary Officer ) personally appeared , 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 State of California that the foregoing is true and correct, WITNESS my hand and official seal. [Seal] (Signature of Notary Public) 0 17-6041 / 169227/SFF 34 EXHIBIT C PROMISSORY NOTE (The Promissory Note is an Exhibit to the Affordable Housing Covenant, which is Exhibit C to Density Bonus And Affordable Housing Agreement For 19200 Holly Lane, Huntington Beach} 15 17-6041 /169225. docJS FF 35 PROMISSORY NOTE TO SECURE AFFORDABILITY RESTRICTIONS ON TRANSFER OF PROPERTY (Unit , 19200 HOLLY LANE, HUNTINGTON BEACH) THIS PROMISSORY NOTE (the "Note") is dated this day of 20 , between ("Promissor") and the City of Huntington Beach ("City") with reference to the following facts; A. This Promissory Note is made in reference to that property in the City of Huntington Beach, County of Orange, State of California, with the street address 19200 Holly Lane, Unit , Huntington Beach, California 92648 and the Assessor's Parcel Map No. (the "Property"). B. The Property is subject to a "Declaration of Covenants, Conditions and Restrictions for Moderate Income Affordable Housing" recorded on , 20_ as Instrument Number No. in the Office of the County Recorder of the County of Orange, California (the "Resale Restrictions"), Among other things, the Resale Restrictions limit the price that the Property may be sold to an "Affordable Housing Cost" for "Moderate Income Households." C. In summary, the term "Affordable Housing Cost" means the purchase price that would result in monthly housing payments that do not exceed Thirty -Five Percent (35%) of One Hundred Ten Percent (110%) of the current Orange County monthly median income for a household adjusted for family size appropriate to the Unit. Family size is one plus the number of bedrooms; for example, a household of four persons is the family size of a three -bedroom unit. In determining monthly housing payments, the City will assume principal and interest payments on a conventional home mortgage after paying a ten percent (10%) downpayment. Monthly housing costs will also include homeowner's association dues, utilities, homeowner's insurance, maintenance costs and property taxes. The effect of relying on prevailing interest rates to determine the Affordable Sales Price is to make the resale price of the Property sensitive to interest rates. For example, if interest rates rise, the resale price will fall, and if interest rates fall, the resale price will rise. This could result in the Affordable Housing Cost decreasing below the original purchase price. D. The Resale Restrictions imposed on the Property began on , 20_, and expire forty-five (45) years later, on , 20_. E. The administration of the Resale Restrictions shall be governed by the Affordable Housing Regulations of the City of Huntington Beach, dated August 15, 2011, as they exist now and may be amended in the future. F. Concurrently with executing this Note, Promissor has executed a Deed of Trust securing and modifying the Resale Restrictions (the "City of Deed of Trust"), Page 1 of 4 17-6041/169226/SFF 36 G. Pursuant to the Resale Restrictions, the City approved the sale of the Property to Promissor at an Affordable Housing Cost. To insure that any fiuther sale, transfer or assignment of the Property occurs with the City's approval and at an Affordable Sales Price, the City has required as a condition of the Promissor's purchase of the Property that Promissor execute this Note. AGREEMENT NOW, THEREFORE, the parties agree as follows; 1. Incorporation of Recitals. The recitals set forth above are incorporated by reference as though fully set forth herein. 2. Amount of the Note. The Amount of this Note is the "Transfer Price" of the Property, less the then current "Affordable Housing Cost." The Transfer Price shall be determined according to the circumstances that cause the Amount of the Note to become due pursuant to Section 3 of this Note. In the case of the sale of the Property without the City's consent, the Transfer Price shall be the market sales price. In the case of the financing or refinancing of the Property without the City's consent, the Transfer Price shall be the loan amount in excess of the last loan balance on the First Mortgage that the City previously approved. In all other cases, the Transfer Price shall be the fair market value of the Property as established by the Director of Economic Development of the City pursuant to an appraisal. The term "Affordable Housing Cost" shall be defined according to the Resale Restrictions. Promissor promises to pay the Amount of this Note when due to the City at 2000 Main Street, P.O. Box 190, Huntington Beach, California 92648, or at such other address as City may direct from time to time in writing. All sums hereunder shall be payable in lawful money of the United States of America and all sums shall be credited first to interest then due and the balance to principal. 3. Due on Sale, Transfer or Refinancing. Promissor agrees to notify the City not less than thirty (30) days prior to (i) the sale or transfer of the Property or (ii) any financing or refinancing of the Property. This Note shall be due and payable upon (i) such sale or transfer without the City's consent, (ii) the financing or refinancing of the Property without the City's consent, (iii) Promissor is no longer an occupant of the Property, or (iv) Promissor is in material default of any other obligation under the Resale Restrictions, or the City Deed of Trust. 4. Expiration of the Note Obli ag tom. In the event Promissor does not sell or transfer the Property, does not fail to occupy the Property, does not refinance, or is not in material breach of any other provision of the Resale Restrictions or the City Deed of Trust before , 20_, the expiration of the Affordability Period, as that term is established under the Resale Restrictions, Promissor shall have no obligation to pay the Note Amount to City upon later sale, transfer or refinancing of the Property. Page 2 of 4 17-6041/169226/SFF 37 5. Default. The entire unpaid Amount of this Note shall be due and payable in full in the event of a default, a. Events of Default. The following shall be deemed to be an event of default: i. Failure of Promissor to pay any real property taxes or insurance premiums on the Property as they become due; or ii. Any material breach of the Resale Restrictions or the City Deed of Trust, following the City giving notice of the breach and an opportunity to cure; or iii. Failure of Promissor to pay the Note Amount when due. 6. This Note is secured by a Deed of Trust, dated _, 20, to the Housing Authority of the City of Huntington Beach, as Trustee, executed by Promissor in favor of the City. 7. Notice. All payments, notices, consents, waivers and other communications under this Agreement must be in writing and shall be deemed to have been given when (a) delivered by hand, or, (b) when received by the addressee, if sent by a nationally recognized overnight delivery service (receipt requested), in each case addressed as set forth below: If to PROMISSOR: 19200 Holly Lane, Unit Huntington Beach, CA 92648 If to CITY: City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 Attention: City Clerk and, Economic Development Deputy Director City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 8. Governing Law. This Note is governed by and shall be construed in accordance with the laws of the State of California without giving effect to the conflict of laws principles thereof. The parties agree to personal jurisdiction in the State Courts in Orange County, California and specifically waive any claims of forum non conviens. 9. Modification. This Note shall not be amended or modified, except in writing, signed by both parties. Page 3 of 4 17-6041 /169226/SFF 38 10. Successors and Assi . This Agreement shall be binding upon and inure to the benefit of the successors and assigns under this Note. This Note shall not be assigned without the express written consent of City. Dated: , 20 PROMISSOR: FOR THE CITY OF HUNTINGTON BEACH: Dated: , 20 By: APPROVED AS TO FORM FRED WILSON, City Manager OFFICE OF HUNTINGTON BEACH CITY ATTORNEY Dated: , 20_ By: MICHAEL E. GATES, City Attorney Page 4 of 4 17-6041/169226/SFF 39 EXHIBIT D AFFORDABLE HOUSING DEED OF TRUST (The Affordable Housing Deed of Trust is an Exhibit to the Affordable Housing Covenant, which is Exhibit C to Density Bonus And Affordable Housing Agreement For 19200 Holly Lane, Huntington Beach) 16 17-6041 /169225. dedSFF 40 OFFICIAL, BUSINESS Document entitled to free recording per Government Code Sections 6103 and 27383 Recording Requested By: City of Huntington Beach 2000 Main Street Huntington Beach, California 92648 Attention: Economic Development Dept./Housing Div. SPACE ABOVE THIS LINE FOR RECORDER'S USE DEED OF TRUST WITH ASSIGNMENTS OF RENTS TO SECURE AFFORDABILITY RESTRICTIONS ON TRANSFER OF PROPERTY (Unit , 19200 Holly Lane, Huntington Beach) THIS DEED OF TRUST is made this day of , 2018, by and among (the "Trustor"), whose address is Unit , 19200 Holly Lane, Huntington Beach 92648 and the HOUSING AUTHORITY OF THE CITY OF HUNTINGTON BEACH, a municipal corporation (the "Trustee") and the CITY OF HUNTINGTON BEACH, a public body corporate and politic (the "Beneficiary" or the "City"), whose address is 2000 Main Street, Huntington Beach, California 92648, with reference to the following facts: A. This Deed of Trust is made in reference to that property in the City of Huntington Beach, County of Orange, State of California, described legally in the Legal Description attached hereto as Exhibit "A" and incorporated herein with the street address Unit 19200 Holly Lane, Huntington Beach, California 92648 and the Assessor's Parcel Map No. -_-_ (the "Property"). B. A "Declaration of Covenants, Conditions and Restrictions for Moderate Income Affordable Housing" was recorded on , 20_ as Instrument Number No. in the Office of the County Recorder of the County of Orange, California (the "Resale Restrictions"), The Resale Restrictions limit the price that the Property may be sold to an "Affordable Housing Cost" for "Moderate Income Households." The Affordable Housing Cost pursuant to the Resale Restrictions shall be the purchase price that would result in monthly housing payments that do not exceed Thirty -Five Percent (35%) of One Hundred Ten Percent (110%) of the current Orange County monthly median income for a household adjusted for family size appropriate to the Unit. Family size is one plus the number of bedrooms; for example, a household of four persons is the family size of a three -bedroom unit. In determining monthly housing payments, the City will assume principal and interest payments on a conventional home mortgage after paying a ten percent (10%) downpayment. Monthly housing costs will also include homeowner's association dues, utilities, homeowner's insurance, maintenance costs and property taxes. In determining monthly housing payments, the City will assume principal and interest payments on a conventional home mortgage after paying a ten percent (10%) downpayment. Page 1 of 14 17-6040/168203/SFF 41 C. The effect of relying on prevailing interest rates to determine the Affordable Housing Cost is to make the resale price of the Property sensitive to interest rates. For example, if interest rates rise, the resale price will fall, and if interest rates fall, the resale price will rise. This could result in the Affordable Housing Cost decreasing below the original purchase price. D. The administration of the Resale Restrictions shall be governed by the Affordable Housing Regulations of the City of Huntington Beach as they exist now and may be amended in the future. E. The Resale Restrictions imposed on the Property began on , 20_, and expire forty-five (45) years later, on , 20___ (the "Affordability Period"), NOW, THEREFORE, TRUSTOR HEREBY irrevocably grants, transfers and assigns, to Trustee, in trust, with power of sale of the Property, together with (a) all buildings, improvements and fixtures, now or hereafter placed thereon, it being understood and agreed that all classes of property attached or unattached used in connection herewith shall be deemed fixtures, (b) rents, issues and profits thereof, (c) any water rights and/or stock are appurtenant or pertain to said land, and (d) all sums of money payable on the purchase price of the Property secured by a lien thereon or payable under any agreement for the sale thereof, SUBJECT, HOWEVER, to the right, power and authority hereinafter given to and conferred upon Beneficiary to collect and apply such rents, issues and profits, and all sums of money payable on the purchase price of the Property secured by a lien thereon or payable under any agreement. A. FOR THE PURPOSE OF SECURING: 1. Payment of the indebtedness evidenced by a promissory note (the "Note") executed by Trustor concurrently with this Deed of Trust. The Amount of the indebtedness is the "Transfer Price" of the Property, less the "Affordable Housing Cost." The calculation of the Amount of the indebtedness is set forth with specificity in the Note, which is on file with the Economic Development Department of the City of Huntington Beach, 2. Performance of each and every obligation, covenant, promise and agreement of the Resale Restrictions. B. TO PROTECT THE SECURITY OF THIS DEED OF TRUST, TRUSTOR AGREES: 1. Trustor agrees for itself, and its successors and assigns, and every successor to Trustor's interest in the Property, or any part thereof throughout the Affordability Term, to perform all obligations due under the Resale Restrictions, as set forth below: (a) The Property shall only be owned and occupied by persons or families of "Moderate Income." "Moderate Income" shall mean persons or families earning no more than one hundred twenty percent (120%) of the Orange County median income, adjusted.for appropriate family size. Page 2 of 14 17-6040/168203/SFF 42 (b) The Property may only be sold at an "Affordable Housing Cost" to households of "Moderate Income," as those terms are defined in current Affordable Housing Regulations as adopted by the City of Huntington Beach. Generally, those Regulations define Affordable Housing Cost to mean that purchase price which would result in monthly housing payments which do not exceed Thirty -Five Percent (35%) of One Hundred Ten Percent (110%) of the current Orange County monthly median income for a household equal to the number of bedrooms in the unit plus one (1) person. In determining monthly housing payments, the Regulations assume principal and interest payments on a conventional home mortgage after paying a ten percent (10%) downpayment. The mortgage interest rate will be the prevailing Fannie Mae or Freddie Mac thirty (30) year mortgage rate, or a City -selected equivalent. Monthly housing costs will also include homeowner's association dues, utilities, homeowner's insurance, maintenance costs and property taxes. (c) The Trustor shall further comply with the Affordable Housing Regulations of the City of Huntington Beach as they exist now and may be amended in the future. (d) No transfer of the Property shall occur until the City of Huntington Beach determines (a) that the proposed purchaser intends to occupy the Property as the proposed purchaser's principal residence, (b) that the proposed purchaser is a person or family of Moderate Income, and (c) that the proposed transfer occurs at an Affordable Housing Cost. The City of Huntington Beach shall not be obligated to approve a transfer until and unless the proposed purchaser has submitted to the City of Huntington Beach such information and completed such forms as the City of Huntington Beach shall request to certify the proposed purchaser's intent with respect to its residency of the Property and its gross income, and the proposed purchaser has submitted an affidavit disclosing and certifying the amount of the proposed purchase price. Prior to conveyance of the Property, each approved purchaser shall submit to the City of Huntington Beach an executed disclosure statement which certifies that the purchaser is aware that the purchaser may only sell the unit at an Affordable Housing Cost to a Moderate Income person or family, that the maximum permitted sales price may be less than fair market value and that the unit must be owner -occupied at all times and cannot be rented or leased. TRUSTOR AND EACH SUCCESSOR, HEIR OR ASSIGN OF TRUSTOR UNDERSTANDS THAT THE DETERMINATION OF THE AFFORDABLE HOUSING COST CAN BE MADE ONLY AT THE TIME OF THE PROPOSED TRANSFER, TAKING INTO CONSIDERATION INTEREST RATES, THE TERMS OF SALE OFFERED TO AND THE ECONOMIC CIRCUMSTANCES OF THE PROPOSED PURCHASER AND OTHER FACTORS THAT CANNOT BE ACCURATELY PREDICTED, AND THAT THE TRANSFER PRICE PERMITTED HEREUNDER MAY BE LESS THAN THE FAIR MARKET VALUE OF THE PROPERTY AND MAY NOT INCREASE OR DECREASE IN THE SAME MANNER AS OTHER SIMILAR REAL PROPERTY WHICH IS NOT ENCUMBERED BY THIS RESTRICTION. TRUSTOR AND EACH SUCCESSOR, HEIR OR ASSIGN OF TRUSTOR FURTHER ACKNOWLEDGES THAT AT ALL TIMES IN SETTING THE Page 3 of 14 17-6040/168203/SFF 43 TRANSFER PRICE THE PRIMARY OBJECTIVE OF THE BENEFICIARY AND THIS DEED OF TRUST IS TO PROVIDE HOUSING TO ELIGIBLE PERSONS OR FAMILIES AT AN AFFORDABLE HOUSING COST. Trustor Initials (e) The City of Huntington Beach may impose any conditions on the approval of any transfer of the Property as it determines are reasonably necessary for the effective administration of its Affordable Housing Program. 2. Trustor 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, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the said property, nor shall Trustor 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, lessees, subtenants, sublessees, or vendees in said property. Trustor and its successors and assigns, shall refrain from restricting the rental or lease (if permitted by Trustor) or sale of said property on the basis of race, color, religion, sex, marital status, national origin or ancestry of any person. All such deeds, leases or contracts shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses: (a) In deeds: "The grantee herein covenants by and for himself or herself, his or her heirs, executors, administrators 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, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land herein conveyed, nor shall the grantee 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 with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessee or vendees in the land herein conveyed. The foregoing covenants shall run with the land." (b) In leases: "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: "There shall be no discrimination against or segregation of any person or group of persons on account of race, color, religion, sex, marital status, ancestry or national origin 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 to through him or her, establish or permit any such Page 4 of 14 17-6040/168203/SFF 44 practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, sublessees, subtenants or vendees in the premises herein leased." (c) In contracts; "There shall be no discrimination against or segregation of, any person, or group of persons on account of race, color, religion, sex, marital status, ancestry or national origin, in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the premises, nor shall the transferee himself or herself or any person claiming under or through hum or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessee or vendees of the premises." Nothing in this Section 2 shall be construed to authorize the rental or lease of the Property if such rental or lease is not otherwise permitted by the Resale Restrictions. 3. No violation or breach of the covenants, conditions, restrictions, provisions or limitations contained in this Deed of Trust shall defeat or render invalid or in any way impair the lien or charge of any mortgage or deed of trust or security interest. 4. Trustor has made certain representations and disclosures as a requirement under the Resale Restrictions in order to induce Beneficiary to approve the sale of the Property to Trustor. In the event that Trustor has made any material misrepresentation or failed to disclose any material fact regarding said transaction, Beneficiary at its option and without notice, shall have the right to declare a material breach of the Resale Restrictions and the Note. Beneficiary may make a written declaration of default and demand for sale as in paragraph No. 6 herein set forth. Trustee, upon presentation to it of an affidavit signed by Beneficiary setting forth facts showing a default by Trustor under this paragraph, is authorized to accept as true and conclusive all facts and statements therein, and to act thereon hereunder. 5. All covenants without regard to technical classification or designation shall be binding for the benefit of the Beneficiary and such covenants shall run in favor of the Beneficiary for the entire period during which such covenants shall be in force and effect, without regard to whether the Beneficiary is or remains an owner of any land or interest therein to which such covenants relate. The Beneficiary, 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 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. 6. Upon default by Trustor in the obligations of the Note, in the performance of any obligation under this Deed of Trust or under the terms of any First Lender's Deed of Trust which is or appears to be prior or superior to this Deed of Trust, Beneficiary may declare all sums secured by this Deed of Trust immediately due and payable by delivering to Trustee of a written declaration of default and demand for sale and a written notice of default and election to sell the Property. Default in the payment of any indebtedness secured by this Deed of Trust, in the Page 5 of 14 17-6040/168203/SFF 45 obligation of the Note, or in the performance of any agreement under this Deed of Trust constitutes a default only under this Deed of Trust and the Note and does not constitute a default under the First Deed of Trust. Trustee shall cause the notice of default to be recorded. Beneficiary also shall deposit with Trustee this Deed of Trust, the Note, and all documents evidencing any additional expenditures secured by this Deed of Trust. After the lapse of such time as then may be required by law following recordation of such notice of default, and notice of sale having been given as then required by law, Trustee, without demand on Trustor, shall sell the Property at the time and place fixed by it in such notice of sale, whether as a whole or in separate parcels, and in such order as it may determine, at public auction to the highest bidder qualified under the Resale Restrictions and this Deed of Trust in lawful money of the United States, payable at time of sale. Trustee may postpone sale of all or any portion of the Property by public announcement at such time and place of sale, and from time to time thereafter may postpone such sale by public announcement at the time fixed by the preceding postponement. Trustee shall deliver to such purchaser its Deed conveying the Property so sold, but without any covenant or warranty, express or implied. The recital in such Deed of any matters of fact shall be conclusive of the truthfulness thereof. Any person, including Trustor, Trustee, or Beneficiary as hereinafter defined, may purchase at such sale. Trustee may also sell at any such sale and as part thereof any shares of corporate stock securing the obligations secured hereby, and Trustor waives demand and notice of such sale. (Beneficiary at its option may also foreclose on such shares by independent pledge sale, and Trustor waives demand and notice of such sale.) After deducting all costs, fees and expenses of Trustee, and of this Trust, including cost of evidence of title in connection with this sale, Trustee shall apply the proceeds of sale to payment, first; all sums expended under the terms hereof, not then repaid, with accrued interest at the rate then payable under the First Lender Deed of Trust secured hereby, and then of all other sums secured hereby, and, if there are any proceeds remaining, shall distribute them to the person or persons legally entitled thereto. 7. Trustor shall keep the Property in good condition and repair, to allow Beneficiary or its representatives to enter and inspect the Property at all reasonable times and access thereto, shall be permitted for that purpose; not to remove or demolish any building thereon; not to make alterations thereto without the consent of the Beneficiary; to suffer or permit no change in the general nature of the occupancy of the Property without Beneficiary's written consent; to complete or restore promptly and in good workmanlike manner any building which may be constructed, damaged or destroyed thereon, including, without restricting the generality of the foregoing, damage from termites and dry -rot; to pay when due all claims for labor performed and materials furnished in connection with the Property and not to permit any mechanic's lien against the Property; to comply with all laws affecting the Property or requiring any alterations or improvements to be made thereon; not to initiate or acquiesce in any zoning reclassification without Beneficiary's written consent; not to commit or permit waste thereon; not to commit, suffer or permit any act upon the Property in violation of the law; to paint, cultivate, irrigate, fertilize, fumigate, prune, and do all other acts that from the character or use of the Property may be reasonably necessary; and to promptly pay all amounts due others upon agreements of lease or conditional sale of all fixtures, furnishings and equipment located thereon. 8. Trustor shall provide, and maintain in force at all times with respect to the Property, fire and other types of insurance as may be required by Beneficiary. All of such insurance shall have a loss payable endorsement in favor of Beneficiary, shall be for a term and in Page 6 of 14 17-6040/168203/SFF 46 form, content, amount and in such companies as may be satisfactory to Beneficiary, and the policies therefore shall be delivered to and remain in possession of Beneficiary as further security for the faithful performance of these trusts. At least thirty (30) days prior to the expiration of any such insurance policy, a policy or policies renewing or extending such expiring insurance shall be delivered to Beneficiary together with written evidence showing payment of the premium therefore and, in the event any such insurance policy and evidence of the payment of the premium therefore are not so delivered by Trustor to Beneficiary, Trustor by executing this Deed of Trust specifically requests Beneficiary to obtain such insurance and Beneficiary, without obligation to do so, without notice to or demand upon Trustor and without releasing Trustor from any obligation hereof, may obtain such insurance through or from any insurance agency or company acceptable to it, pay the premium thereof, and may add the amount thereof to the indebtedness secured hereby, which amount shall bear a like rate of interest. Beneficiary may furnish to any insurance agency or company, or any other person, any information contained in or extracted from any insurance policy delivered to Beneficiary pursuant hereto and any information concerning the loan secured hereby. Neither Trustee nor Beneficiary shall be responsible for such insurance or for the collection of any insurance monies, or for any insolvency of any insurer or insurance underwriter. In case of insurance loss, Beneficiary is hereby authorized either (a) to settle and adjust any claim under the insurance policies provided for in this document without the consent of the Trustor, or (b) to allow Trustor to agree with the insurance company or companies on the amount to be paid upon the loss. In either case, the Beneficiary is authorized to collect and make receipt of any such insurance money. If Trustor is obligated to restore or replace the damaged or destroyed buildings or improvements under the terms of any lease or leases which are or may be prior to the lien of this Deed of Trust and such damage or destruction does not result in cancellation or termination of such lease, such proceeds, after deducting therefrom any expenses incurred in the collection thereof, shall be used to reimburse the Trustor for the cost of rebuilding or restoring the buildings or improvements on said premises. In all other cases, such insurance proceeds shall either be applied for the cost of the rebuilding or restoring the buildings or improvements on said premises. Such buildings and improvements shall be so restored or rebuilt as to be of at least equal value and substantially the same character as prior to the damage or destruction, and shall be in a condition satisfactory to Beneficiary. Such application or release shall not cure or waive any default or notice of default hereunder or invalidate any act done pursuant to such notice. Any and all unexpired insurance shall inure to the benefit of, and pass to the purchaser of, the property conveyed at any Trustee sale held hereunder. 9. Trustor shall pay: (a) at least ten (10) days before delinquency, all general and special City and County taxes, and all assessments on appurtenant water stock, affecting the Property, (b) when done, all special assessments for public improvements, without permitting any improvement bond to issue for any special assessment, (c) when done, all encumbrances, charges and lines, with interest, on the Property, or any part thereof, which are or appears to be prior to superior hereto, (d) if the security of this Deed of Trust is leasehold estate, to make any payment or do any act required of the Lessee or its successor in interest under the terms of the instrument or instruments creating said leasehold, (e) all costs, fees and expenses of this trust, (f) for any statement regarding the obligation secured hereby any amount demanded by Beneficiary not to exceed the maximum allowed by law thereof at the time when such request is made, (g) such other charges for services rendered by Beneficiary and furnished at Trustor's request or that of any successor in interest to Trustor as the Beneficiary may deem reasonable. Page 7 of 14 17-6040/168203/SFF 47 10. Should Trustor fail to make any payment or do any act as provided in this Deed of Trust, the Beneficiary or Trustee, but without obligation to do so and without notice to or demand upon Trustor and without releasing Trustor from any obligation hereof, may (a) make or do the same in such manner and to such extent as either may deem necessary to protect the security hereof, Beneficiary or Trustee being authorized to enter upon the Property for such purposes, (b) commence, appear in, or defend any action or proceeding purporting to affect the security hereof or the property covered by this Deed of Trust, or the rights or powers of Beneficiary or Trustee, (c) pay, purchase, contest or compromise any encumbrance, charge or lien, which in the judgment of either is or appears to be prior or superior hereto, and (d) in exercising any such powers, pay necessary expenses, employ counsel and pay his reasonable fees. Trustor agrees to repay any amount so expended on demand of Beneficiary, and any amount so expended may be added by Beneficiary to the indebtedness secured hereby and shall bear a like rate of interest. 11. Trustor shall appear in and defend any action or proceeding purporting to affect the security hereof or the Property which is covered by this Deed of Trust, or the rights or powers of Beneficiary or Trustee, and whether or not Trustor so appears or defends, to pay all costs and expenses, including cost of evidence of title and attorney's fees in a reasonable sum, in any such action or proceeding in which Beneficiary or Trustee may appear by virtue of being made a party defendant or otherwise irrespective of whether the interest of Beneficiary or Trustee in the Property is directly questioned by such action, including any action for the condemnation or partition of said premises, and in any suit brought by Beneficiary to foreclose this Deed of Trust. 12. Trustor shall pay immediately and without demand, all sums expended under the terms of this Deed of Trust by Beneficiary or Trustee, with interest from the date of expenditure at the rate which the principal obligation secured hereby bears at the time such payment is made, and the repayment of such sums shall be secured hereby. 13. Should Trustor or any successor in interest to Trustor in the Property drill or extract, or enter into a lease for drilling or extraction of oil, gas or other hydrocarbon substances or any mineral of any kind or character, or sell, convey, further encumber, or alienate the Property, or any party thereof, or any interest therein, or be divested of his title or any interest therein in any manner or way, whether voluntarily or involuntarily, Beneficiary shall have the right, at its option, to declare any obligations secured hereby irrespective of the maturity date specified in any Note evidencing the same, immediately due and payable, and no waiver of this right shall be effective unless in writing. 14. Any award, settlement or damages for injury or damages to the Property, or in construction with the transaction financed by such loan, and any award of damages in connection with any condemnation for public use of or injury to the Property, or any part thereof, is hereby assigned and shall be paid to Beneficiary, who may apply or release such monies received by it in such manner and with the same effect as above provided for the disposition of proceeds of fire or other insurance. Page 8 of 14 17-6040/168203/SFF 48 15. By accepting payment of any sums secured by this Deed of Trust after its due date, or by making any payment, performing any act on behalf of Trustor, that Trustor was obligated hereunder, but failed, to make, or perform, or by adding any payment so made by Beneficiary to the indebtedness secured hereby, Beneficiary does not waive its right either to require prompt payment when due of all other sums so secured or to declare a default for failure so to pay. 16. At any time, or from time to time, without liability of the Beneficiary or Trustee thereof, and without notice, upon written request of Beneficiary and presentation of this Deed of Trust and the Note secured hereby for endorsement, and without affecting the personal liability of any person for payment of the indebtedness secured hereby, or the lien of the Deed of Trust upon the remainder of the Property for the full amount of the indebtedness then or thereafter secured hereby, or the rights or powers of Beneficiary or the Trustee with respect to the remainder of the Property, Trustee may: (a) reconvey any part of the Property, (b) consent to the making of any map or plat thereof, (c) join in granting any easement thereon, (d) join in any agreement subordinating the lien or charge hereof. 17. The lien hereof shall remain in full force and effect during any postponement or extension of time of payment of the indebtedness secured hereby, or any part thereof. 18. As additional security, Trustor irrevocably assigns to Beneficiary the rents, issues, and profits of the Property for the purposes and upon the terms and conditions set forth below. This assignment shall not impose upon Beneficiary any duty to produce rents from the property affected by this Deed of Trust, or cause Beneficiary to be (a) "mortgages in possession" for any purpose; (b) responsible for performing any of the obligations of the lessor under any lease; or (c) responsible for any waste committed by lessees or any other parties, for any dangerous or defective condition of the property affected by this Deed of Trust, or for any negligence in the management, upkeep, or control of such rights to rents, issues and profits is not contingent upon, and may be exercised without possession of, the property affected by this Deed of Trust. Beneficiary confers upon Trustor a license ("License") to collect and retain the rents, issues and profits of the property affected by this Deed of Trust as they become due and payable, until the occurrence of a default hereunder. Upon such default, the License shall be automatically revoked and Beneficiary may collect and retain the rents, issues and profits without notice and without taking possessions of the property affected by this Deed of Trust. This right to collect rents, issues and profits shall not grant to Beneficiary or Trustee the right to possession, except as otherwise provided herein; and neither said right, nor termination of the License, shall impose upon Beneficiary or Trustee the duty to produce rents, issues or profits or maintain all or any part of the Property affected by this Trust Deed. If Trustor shall default as aforesaid, Trustor's right to collect any such money shall cease and Beneficiary shall have the right, with or without taking possession of the property affected hereby, to collect all rents, issues, royalties and profits and shall be authorized to, and may, without notice and irrespective of whether declaration of default has been delivered to Trustee and without regard to the adequacy of the security for the indebtedness secured hereby, either personally or by attorney or agent without bringing any action or proceeding, or by receiver to be appointed by the Court, enter into possession and hold, occupy, Page 9 of 14 17-6040/168203/SFF 49 possess and enjoy the Property, make, cancel, enforce and modify leases, obtain and eject tenants, and set and modify rents and terms of rents, and to sue, and to take, receive and collect all or any part of the said rents, issues, and profits of the property affected hereby, and after paying such costs of maintenance, operation of the Property, and of collection including reasonable attorneys' fees, as in its judgment it may deem proper, to apply the balance upon any indebtedness then secured hereby, the rents, issues, royalties and profits of the Property being hereby assigned to Beneficiary for said purposes. The acceptance of such rents, issues, royalties and profits shall not constitute a waiver of any other right which Trustee or Beneficiary may enjoy under this Deed of Trust or under the laws of California. Failure of or discontinuance by Beneficiary at any time, or from time to time, to collect any such rents, issues, royalties or profits shall not in any manner affect the subsequent enforcement by Beneficiary of the right, power and authority to collect the same, The receipt and application by said Beneficiary of all such rents, issues, royalties and profits pursuant hereto, after execution and delivery of declaration of default and demand for sale as hereinafter provided, or during the pendency of Trustee's sale proceedings hereunder, shall not cure such breach or default nor affect sale proceedings, or any sale made pursuant thereto, but such rents, issues, royalties and profits, less all costs of operation, maintenance, collection and reasonable attorneys' fees, when received by Beneficiary, shall be applied in reduction of the indebtedness secured hereby, from time to time, in such order as Beneficiary may determine, Nothing contained herein, nor the exercise of the right by Beneficiary to collect, shall be, or be construed to be, an affirmation by Beneficiary of any tenancy, lease or option, nor an assumption of liability under, nor subordination of the lien or charge of this Deed of Trust to, any such tenancy, lease or option. 19, if the security of this Deed of Trust is a leasehold estate, the Trustor agrees that: (a) the term "Lease" as used herein shall mean the lease creating the "leasehold estate"' (b) Trustor shall not amend, change or modify his leasehold interest, or the Lease, or agree to do so, without the written consent of the Beneficiary; (c) Trustor will promptly advise Beneficiary regarding any notice, request or demand received by him from the lessor under the Lease and promptly furnish Beneficiary with a copy of any such notice, request or demand; (d) as long as any of the indebtedness secured hereby shall remain unpaid, unless the Beneficiary shall otherwise consent thereto in writing, the leasehold estate shall not merge with the fee title but shall always be kept separate and distinct, notwithstanding the union of said estates in any party; (e) Trustor agrees that it will promptly, strictly, and faithfully perform, fulfill, and comply with all covenants, agreements, terms, conditions and provisions under any lease affecting the premises and to neither do anything, nor to permit anything to be done which may cause modification or termination of any such lease or of the obligations of any lessee or person claiming through such lease or the rents provided for therein or the interest of the lessor or the Beneficiary therein or thereunder. Trustor further agrees he will not execute a Deed of Trust or mortgage which may be or become superior to any leasehold estate that is security for this Deed of Trust. In the event of a violation of any of the covenants set forth in this paragraph, Beneficiary shall have the right, at its option, to declare all sums secured hereby immediately due and payable. Consent to or waiver of one of said violations shall not be deemed to be a consent to or waiver of any other violation. If the security for this Deed of Trust is a leasehold estate, the term "property" as used in this Deed of Trust shall be deemed to mean the leasehold estate whenever the context so requires for the protection of the Beneficiary. Page 10of14 17-6040/168203/SFF 20. Trustor waives, to the fullest extent permissible by law, the right to plead any statute of limitations as a defense to any demand secured hereby. 21. Beneficiary may, from time to time, by instrument in writing, substitute a successor or successors to any Trustee named herein or acting hereunder, which instrument, executed and acknowledged by Beneficiary and recorded in the office of the recorder of the county or counties where the Property is situated, shall be conclusive proof of property substitution of such successor Trustee or Trustees, who shall, without conveyances from the Trustee predecessor, succeed to all its title, estate, rights, powers and duties, including but not limited to the power to reconvey the whole or any part of the property covered by this Deed of Trust. Such instrument must contain the name of the original Trustor, Trustee and Beneficiary hereunder, the book and page where this Deed of Trust is recorded. If notice of default shall have been recorded, this power of substitution cannot be exercised until after the costs, fees and expenses of the then acting Trustee shall have been paid to such Trustee, who shall endorse receipt thereof upon such instrument. The procedures herein provided for substitution of Trustee shall not be exclusive of other provisions for substitution provided by law. 22. This Deed of Trust applies to, inures to the benefit of, and binds all parties hereto, their heirs, legatees, devisees, administrators, executors, successors and assigns. The term "Beneficiary" shall mean the owner and holder, including pledgee, of the Note secured hereby, whether or not names as Beneficiary herein. In this Deed of Trust, whenever the context so requires, the masculine gender includes the feminine and/or neuter, and the singular number includes the plural. 23. That in the event of a demand for, and the preparation and delivery of a written statement regarding the obligations secured by this Deed of Trust pursuant to Sections 2943 and 2954 of the Civil Code of California, Beneficiary shall be entitled to make a reasonable charge, not exceeding the maximum amount which is permitted by law at the time the statement is furnished. Beneficiary may also charge Trustor a reasonable fee for any other services rendered to Trustor or rendered in Trustor's behalf in connection with the Property of this Deed of Trust, including changing Beneficiary's records, pertaining to this Deed of Trust in connection with the transfer of the Property, or releasing an existing policy of fire insurance or other casualty insurance held by Beneficiary and replacing the same with another such policy. 24. Trustee accepts this Trust when this Deed of Trust, duly executed and acknowledged, is made a public record as provided by law. Trustee is not obligated to notify any party hereto of pending sale under any other Deed of Trust or of any action or proceeding in which Trustor, Beneficiary, or Trustee shall be a party unless brought by Trustee. 25. Any notice which any party hereto may desire or be required to give to the other party shall be in writing. The mailing thereof must be certified mail addressed to the Trustor at his address hereinabove set forth or to the Beneficiary at his office or at such other place as such parties hereto may designate in writing. Page 11 of 14 17-6040/ 168203/SFF 51 THE UNDERSIGNED REQUEST that a copy of any notice of default and of any notice of sale hereunder be mailed to the parties' respective addresses hereinbefore set forth. Dated: TRUSTOR CITY OF HUNTINGTON BEACH Dated: By: Fred Wilson, Executive Director HOUSING AUTHORITY OF THE CITY OF HUNTINGTON BEACH Dated: By: Kellee Fritzal Deputy Director of Economic Development APPROVED AS TO FORM: OFFICE OF HUNTINGTON BEACH CITY ATTORNEY Dated: Page 12 of 14 17-6040/168203/SFF MICHAEL E. GATES, City Attorney 52 Exhibit "A" Page 13 of 14 17-6040/168203/SFF 53 ACKNOWLEDGMENT State of California ) ss County of ) On I before me, (Here Insert Name and Title of the Notary Officer ) personally appeared , 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 State of California that the foregoing is true and correct. WITNESS my hand and official seal. [Seal] (Signature of Notary Public) Page 14 of 14 17-6040/168203/SFF 54 EXHIBIT "D" TO DENSITY BONUS AND AFFORDABLE HOUSING AGREEMENT FOR 19200 HOLLY LANE, HUNTINGTON BEACH (Unit Release Agreement) 55 RECORDED AT THE REQUEST OF AND WHEN RECORDED RETURN 'TO: City Clerk City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 (SPACE ABOVE THIS LINE FOR RECORDER'S USE) This Unit Release is recorded at the request and for the benefit of the City of Huntington Beach and is exempt from the payment of a recording fee pursuant to Government Code Sections 6103 27383. m 01-F-VANJ-41 This UNIT RELEASE (the "Unit Release") is being entered into by and between the CITY OF HUNTINGTON BEACH, a California municipal corporation (the "City"), and Meritage Homes of California, Inc., a California corporation (the "Owner"). City and Owner are hereinafter sometimes referred to collectively as the "Parties" and individually as a "Party." RECITALS: A. City is a municipal corporation and charter city organized and existing pursuant to the Constitution and laws of the State of California. B. Owner is the owner in fee of that certain real property located at 19200 Holly Lane, Huntington Beach, and more particularly described in the legal description attached hereto as Exhibit "A" (the "Property"). C. On or about , 2018, Owner and City entered into that certain Density Bonus Housing Agreement (the "Density Bonus Agreement") relating to the Property, recorded on , 2018, as Instrument No. of the Official Records for Orange County, California. Pursuant to the Density Bonus Agreement, the Owner has developed the Property as a thirty-two (32) unit residential community subdivided as a condominium development (the "Project"). Further, Developer agreed to include in the Project five (5) units that will be sold at an Affordable Housing Cost to Moderate Income Households, consisting of four (4), four -bedroom units and one (1), three - bedroom unit, with the remaining units to be sold at market prices. D. Pursuant to the Density Bonus Agreement, when the Owner sells each of the Market Rate Units on the Property pursuant to the terms and conditions of the Density Bonus Agreement, Owner and City may execute and record or cause to be executed and recorded for the benefit of each Market Unit this Unit Release, whereupon the Market Unit(s) would be released from the terms and conditions of the Density Bonus Agreement. 17-6041/170380/SFF -2- 56 • Recorded in t metal Records, Orange County Hugh Nguyen;ti,,{irk-Recorder III II II II IIIMIO III I I IIII i 1 IIIII 111111 NO FEE * $ R 0 0 1 4 5 7 3 8 9 3 $ * RECORDED AT THE REQUEST OF 2023000234004 1:45 pm 09/26123 AND WHEN RECORDED RETURN TO: 90 CR-SCO6 R09 7 0.00 0.00 0.00 0.00 18.00 0.00 0.000.000.00 0.00 City Clerk City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 (SPACE ABOVE THIS LINE FOR RECORDER'S USE) This Unit Release is recorded at the request and for the benefit of the City of Huntington Beach and is exempt from the payment of a recording fee pursuant to Government Code Sections 6103 27383. RELEASE OF DENSITY BONUS AND AFFORDABLE HOUSING AGREEMENT (19200 Holly Lane) • This RELEASE (the "Release") is being entered into by and between the CITY OF HUNTINGTON BEACH, a California municipal corporation (the "City"), and Meritage Homes of California, Inc., a California corporation (the "Owner"). City and Owner are hereinafter • sometimes referred to collectively as the "Parties" and individually as a"Party." RECITALS: A. City is a municipal corporation and charter city organized and existing pursuant to the Constitution and laws of the State of California. B. Owner is the owner in fee of that certain real property located at 19200 Holly Lane, Huntington Beach, and more particularly described in the legal description attached hereto as Exhibit "A" (the "Property"). C. On or about April 18, 2018, Owner and City entered into that certain Density Bonus and Affordable Housing Agreement (the "Density Bonus Agreement") relating to the Property,recorded on May 30,2018, as Instrument No. 2018000196374 of the Official Records for Orange County,California. Pursuant to the Density Bonus Agreement, the Owner has developed • the Property as a thirty-two (32) unit residential community subdivided as a condominium development(the"Project"). Further,Developer agreed to include in the Project five (5) units that will be sold at an Affordable Housing Cost to'Moderate Income Households, consisting of four (4), four-bedroom units and one (1), three-bedroom unit, with the remaining units to be sold at market prices. • D. Pursuant to the Density Bonus Agreement, when the Owner has sold all of the Units on the Property pursuant to the terms and conditions of the Density Bonus Agreement, Owner and*City may execute and record or cause to be executed and recorded for the benefit of Owner this Release, whereupon the Property would be released from the terms and conditions of the Density Bonus Agreement. • 23-13400/318922 -1- RECORDED AT THE REQUEST OF AND WHEN RECORDED RETURN TO: City Clerk City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 (SPACE ABOVE THIS LINE FOR RECORDERS USE) This Unit Release is recorded at the request and for the benefit of the City of Huntington Beach and is exempt from the payment of a recording fee pursuant to Government Code Sections 6103 27383. RELEASE OF DENSITY BONUS AND AFFORDABLE HOUSING AGREEMENT (19200 Holly Lane) This RELEASE (the "Release") is being entered into by and between the CITY OF HUNTINGTON BEACH, a California municipal corporation (the "City"), and Meritage Homes of California, Inc., a California corporation (the "Owner"). City and Owner are hereinafter sometimes referred to collectively as the "Parties" and individually as a"Party." RECITALS: A. City is a municipal corporation and charter city organized and existing pursuant to the Constitution and laws of the State of California. B. Owner is the owner in fee of that certain real property located at 19200 Holly Lane, Huntington Beach, and more particularly described in the legal description attached hereto as Exhibit "A" (the "Property"). C. On or about April 18, 2018, Owner and City entered into that certain Density Bonus and Affordable Housing Agreement (the "Density Bonus Agreement") relating to the Property, recorded on May 30,.2018, as Instrument No. 2018000196374 of the Official Records for Orange County, California. Pursuant to the Density Bonus Agreement, the Owner has developed the Property as a thirty-two (32) unit residential community subdivided as a condominium development(the"Project"). Further, Developer agreed to include in the Project five (5) units that will be sold at an Affordable Housing Cost to Moderate Income Households, consisting of four (4), four-bedroom units and one (1), three-bedroom unit, with the remaining units to be sold at market prices. D. Pursuant to the Density Bonus Agreement, when the Owner has sold all of the Units on the Property pursuant to the terms and conditions of the Density Bonus Agreement, Owner and City may execute and record or cause to be executed and recorded for the benefit of Owner this Release, whereupon the Property would be released from the terms and conditions of the Density Bonus Agreement. 23-13400/318922 -1- COVENANTS: Based upon the foregoing Recitals, which are incorporated herein by this reference, and for good and valuable consideration, the receipt and sufficiency of which is acknowledged by both parties, Owner and City agree as follows: 1. From and after the date that this Release is recorded,the Property shall be released from, and not be burdened by, any of the provisions of the Density Bonus Agreement. 2. Nothing in this Release terminates or releases, or shall be deemed or construed to terminate or release, the Affordable Housing Covenant recorded against each Affordable Unit owned in fee by a Qualified Purchaser or said Qualified Purchaser's successor in interest or assignee. 3. This Release shall not constitute evidence of compliance with or satisfaction of any obligation of Owner to any holder of a mortgage, or any insurer of a mortgage, securing money loaned to finance the construction or operation of work on Property, or any part thereof. 4. No later than ten (10) days after receipt by Owner of a conformed copy of the executed Release from the Orange County Recorder's Office, Owner shall deliver a copy of said conformed copy to City at the address identified in the Density Bonus Agreement for delivery of notices. IN WITNESS WHEREOF, City has executed this Release on September 20 , 2023. CITY OF HUNTINGTON BEACH, a California municipal corporation By: / Its: Tony Strickland, Mayor ATTEST: City lerk, Robin Estanislau APPROVED AS TO FORM: OFFICE OF HUNTINGTON BEACH CITY ATTORNEY L E. AT , ity Attorney Dated: 0 9 - 22 , 2023 23-13400/318922 -2- A notary public or other ___icer completing this certificate Nd.,..les 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 CALIFORNIA ) ) ss COUNTY OF ORANGE ) On September 20, 2023 before me,Donna Switzer, Notary Public, personally appeared Robin Estanislau and Tony Strickland 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. ••-'` DONNA SNATZER WITNESS my hand and official seal. a COMMISSION f2311001 Notary Public•CMifm ie 4 IORANGE COINITY .. ty comet EvrK Nov.6_2023 ,e( /1 (Seal) (Notary Signature ATTACHMENT 1 TO RELEASE OF DENSITY BONUS AND AFFORDABLE HOUSING AGREEMENT LEGAL DESCRIPTION OF RELEASED PROPERTY 23-13400/318922 -3- LEGAL DESCRIPTION OF FIVE AFFORDABLE UNITS AT 19200 HOLLY LANE, HUNTINGTON BEACH SUBJECT TO THE AFFORDABLE HOUSING COVENANT FOR 19200 HOLLY LANE,HUNTINGTON BEACH PHASE 2 UNITS PARCEL 1: CONDOMINIUM UNITS 23, 24, 25 (THE "PROPERTY"), AS DEPICTED ON THAT CERTAIN "AMENDED CONDOMINIUM PLAN FOR HOLLY REGATTA CONDOMINIUM PLAN: PHASE 2," RECORDED ON JANUARY 3, 2022, AS INSTRUMENT NO. 2022000000141, IN THE OFFICIAL RECORDS OF ORANGE COUNTY,CALIFORNIA(THE"CONDOMINIUM PLAN"), SAID CONDOMINIUM UNIT BEING SITUATED ON A PORTION OF LOT 1 OF TRACT NO. 18105,AS SHOWN ON A MAP FILED IN BOOK 984,AT PAGES 12 TO 14, INCLUSIVE, OF MISCELLANEOUS MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF ORANGE COUNTY,CALIFORNIA("MAP"). EXCEPTING THEREFROM ALL MINERAL RIGHTS FROM THE OIL AND GAS LEASE DATED OCTOBER 11, 1920, RECORDED IN BOOK 27, PAGE 121 OF LEASES, RECORDS OF ORANGE COUNTY AND SURFACE ENTRY RIGHTS FROM THE LEASE DATED JUNE 2, 1951, RECORDED JULY 5, 1951, AS INSTRUMENT NO.34564,IN BOOK 2088,PAGE 616 OF OFFICIAL RECORDS OF ORANGE COUNTY.. PARCEL 2: AN UNDIVIDED THREE-ELEVENTH (3/11TH) INTEREST IN THE "COMMON AREA" (AS DEFINED IN THE DECLARATION(AS DEFINED BELOW)AND AS DEPICTED ON THE CONDOMINIUM PLAN). PARCEL 3: THE EXCLUSIVE RIGHT TO THE USE, POSSESSION AND ENJOYMENT OF THE EXCLUSIVE USE AREAS, IF ANY,APPURTENANT TO PARCEL 1,ABOVE,AS DEFINED IN THE DECLARATION AND AS MAY BE DEPICTED ON THE CONDOMINIUM PLAN WHICH ARE SET ASIDE AND ALLOCATED FOR THE EXCLUSIVE USE OF THE OWNER OF THE CONDOMINIUM TO WHICH THEY ARE ATTACHED OR ASSIGNED. PARCEL 4: A NON-EXCLUSIVE EASEMENT FOR INGRESS AND EGRESS, SUPPORT, USE, ENJOYMENT AND RIGHTS OVER, UNDER, UPON AND THROUGH ASSOCIATION PROPERTY AS SHOWN ON THE CONDOMINIUM PLAN AND DEFINED IN THE DECLARATION. EXCEPTING THEREFROM THE FOLLOWING: ALL THE CONDOMINIUM UNITS DEPICTED ON THE CONDOMINIUM PLAN AND DEFINED IN THE DECLARATION OTHER THAN THE PROPERTY DESCRIBED IN PARCEL 1 ABOVE. THE EXCLUSIVE USE AREAS, IF ANY, AS DEFINED IN THE DECLARATION AND/OR DEPICTED ON THE CONDOMINIUM PLAN WHICH ARE SET ASIDE AND ALLOCATED FOR THE EXCLUSIVE USE OF THE OWNERS OF CONDOMINIUMS OTHER THAN THE CONDOMINIUM UNIT DESCRIBED IN PARCEL 1 ABOVE. • NON-EXCLUSIVE EASEMENTS FOR INGRESS, EGRESS, SUPPORT, USE, ENJOYMENT AND RIGHTS OVER, UNDER UPON AND THROUGH THE ASSOCIATION PROPERTY APPURTENANT TO ALL CONDOMINIUM UNITS AS SAID EASEMENTS AND RIGHTS ARE DEFINED IN THE DECLARATION. PARCEL 5: NONEXCLUSIE EASEMENTS APPURTNENT TO THE PROPERTY DESCRIBED IN PARCEL 1 ABOVE FOR INGRESS,EGRESS,ACESS,MAINTENANCE,REPAIRS, DRAINAGE,ENCROACHMENT, SUPPORT, USE, EJOYMENT AND FOR ALL OTHER PURPOSES AS DESCRIBED IN THE DECLARATION OF COVENANTS, CONDITIONS AND RESTRICTIONS FOR REGATTA RECORDED APRIL 9, 2021 AS INSTRUMENT NO. 2021000243412, IN THE OFFICIAL RECORDS OF ORANGE COUNTY, CALIFORNIA, AS MAY BE AMENDED OR SUPPLEMENTED(COLLETIVELY,THE"DECLARATION"). PARCEL 6: A NON-EXCLUSIVE EASEMENT AND RIGHT TO ENTER AND USE THE PRIVATE STREETS AND ALLEYS AS IDENTIFIED IN THAT CERTAIN EASEMENT DEED RECORDED APRIL 14,2021,AS INSTRUMENT NO.2021000252618,IN THE OFFICIAL RECORDS OF ORANGE COUNTY,CALIFORNIA, BETWEEN GRANTOR AND THE REGATTA COMMUNITY ASSOCIATION,A CALIFORNIA NONPROFIT MUTUAL BENEFIT CORPORATION("ASSOCIATION"),FOR THE PURPOSES SET FORTH IN THE PRIVATE STREET MAINTENANCE AND RESERVE AGREEMENT("STREET AGREEMENT")BETWEEN GRANTOR AND THE ASSOCIATION. SUCH RIGHTS GRANTED TO THE ASSOCIATION AND GRANTEE,AS A MEMBER OF THE ASSOCIATION,UNDER THE EASEMENT DEED INCLUDES ACCESS TO AND FROM THE PROPERTY IDENTIFIED IN PARCEL 1. THE EASEMENT DEED,THE NON- EXCLUSIVE EASEMENT AND RIGHT TO ENTER AND USE THE PRIVATE STREETS AND ALLEYS FOR SAID PURPOSES SET FORTH IN THE STREET AGREEMENT SHALL IMMEDIATELY AND AUTOMATICALLY EXTINGUISH UPON CONVEYANCE OF THE PRIVATE STREETS TO THE ASSOCIATION. 937-40-370,937-40-371,937-40-372 PHASE 5 UNITS PARCEL 1: CONDOMINIUM UNITS 8 AND 10 (THE"PROPERTY"), AS DEPICTED ON THAT CERTAIN "AMENDED CONDOMINIUM PLAN FOR HOLLY REGATTA CONDOMINIUM PLAN - PHASE 5," RECORDED ON JANUARY 3, 2022, AS INSTRUMENT NO. 2022000000142, IN THE OFFICIAL RECORDS OF ORANGE COUNTY, CALIFORNIA(THE"CONDOMINIUM PLAN"), SAID CONDOMINIUM UNIT BEING SITUATED ON A PORTION OF LOT 1 OF TRACT NO. 18105,AS SHOWN ON A MAP FILED IN BOOK 984,AT PAGES 12 TO 14, INCLUSIVE, OF MISCELLANEOUS MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF ORANGE COUNTY,CALIFORNIA("MAP"). EXCEPTING THEREFROM ALL MINERAL RIGHTS FROM THE OIL AND GAS LEASE DATED OCTOBER 11, 1920, RECORDED IN BOOK 27, PAGE 121 OF LEASES, RECORDS OF ORANGE COUNTY AND SURFACE ENTRY RIGHTS FROM THE LEASE DATED JUNE 2, 1951, RECORDED DULY 5, 1951, AS INSTRUMENT NO.34564,IN BOOK 2088,PAGE 616 OF OFFICIAL RECORDS OF ORANGE COUNTY. PARCEL 2: AN UNDIVIDED TWO-SEVENTH (2/7TH) INTEREST IN THE "COMMON AREA" (AS DEFINED IN THE DECLARATION(AS DEFINED BELOW)AND AS DEPICTED ON THE CONDOMINIUM PLAN). PARCEL 3: THE EXCLUSIVE RIGHT TO THE USE, POSSESSION AND ENJOYMENT OF THE EXCLUSIVE USE AREAS, IF ANY,APPURTENANT TO PARCEL 1, ABOVE,AS DEFINED IN THE DECLARATION AND AS MAY BE DEPICTED ON THE CONDOMINIUM PLAN WHICH ARE SET ASIDE AND ALLOCATED FOR THE EXCLUSIVE USE OF THE OWNER OF THE CONDOMINIUM TO WHICH THEY ARE ATTACHED OR ASSIGNED. PARCEL 4: A NON-EXCLUSIVE EASEMENT FOR INGRESS AND EGRESS, SUPPORT, USE, ENJOYMENT AND RIGHTS OVER, UNDER, UPON AND THROUGH ASSOCIATION PROPERTY AS SHOWN ON THE CONDOMINIUM PLAN AND DEFINED IN THE DECLARATION. EXCEPTING THEREFROM THE FOLLOWING: ALL THE CONDOMINIUM UNITS DEPICTED ON THE CONDOMINIUM PLAN AND DEFINED IN THE DECLARATION OTHER THAN THE PROPERTY DESCRIBED IN PARCEL 1 ABOVE. THE EXCLUSIVE USE AREAS, IF ANY, AS DEFINED IN THE DECLARATION AND/OR DEPICTED ON THE CONDOMINIUM PLAN WHICH ARE SET ASIDE AND ALLOCATED FOR THE EXCLUSIVE USE OF THE OWNERS OF CONDOMINIUMS OTHER THAN THE CONDOMINIUM UNIT DESCRIBED IN PARCEL 1 ABOVE. NON-EXCLUSIVE EASEMENTS FOR INGRESS, EGRESS, SUPPORT, USE, ENJOYMENT AND RIGHTS OVER, UNDER UPON AND THROUGH THE ASSOCIATION PROPERTY APPURTENANT TO ALL CONDOMINIUM UNITS AS SAID EASEMENTS AND RIGHTS ARE DEFINED IN THE DECLARATION. PARCEL 5: NONEXCLUSIE EASEMENTS APPURTNENT TO THE PROPERTY DESCRIBED IN PARCEL 1 ABOVE FOR INGRESS, EGRESS,ACESS,MAINTENANCE, REPAIRS, DRAINAGE, ENCROACHMENT, SUPPORT,USE, EJOYMENT AND FOR ALL OTHER PURPOSES AS DESCRIBED IN THE DECLARATION OF COVENANTS, CONDITIONS AND RESTRICTIONS FOR REGATTA RECORDED APRIL 9, 2021 AS INSTRUMENT NO. 2021000243412, IN THE OFFICIAL RECORDS OF ORANGE COUNTY, CALIFORNIA, AS MAY BE AMENDED OR SUPPLEMENTED(COLLETIVELY,THE"DECLARATION"). 937-40-377,937-40-379 ATTACHMENT I TO UNIT RELEASE LEGAL DESCRIPTION OF RELEASED UNIT(S) 17-6041/171544/SFF -4- 61 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. STATE OF CALIFORNIA ss. COUNTY OF ORANGE On , before me, , Notary Public 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 State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Notary Public (Seal) 17-6041/171544/SFF -5- 62 Dept. ID ED 18-01 Page 1 of 3 Meeting Date: 1/16/2018 Aw kvva) �-o CITY OF HUNTINGTON BEACH REQUEST FOR. CITY COUNCIL AND HOUSING AUTHORITY ACTION MEETING DATE: 1/16/2018 SUBMITTED TO: Honorable Mayor/Chairperson and City Council Members/Commissioners SUBMITTED BY: Fred A. Wilson, City Manager/Executive Officer PREPARED BY: Kellee Fritzal, Deputy Director of Business Development SUBJECT: Approve and authorize Density Bonus and Affordable Housing Agreements with MLC Holdings, Inc., (Inclusionary/Density Bonus) for 19100 Gothard Street and 19200 Hollv Lane develoDment Statement of Issue: It is recommended that the City Council approve two (2) Density Bonus and Affordable Housing Agreements between the City and MLC Holdings, Inc. (MLC). The agreement for 19100 Gothard Street is to facilitate the development of 21 for -sale townhome units with three (3) affordable units. The 19200 Holly Lane agreement will develop 32 for -sale townhome units with five (5) affordable units. Financial Impact: Not applicable. Housing Authority and City Council Recommended Action: A) Approve as to form the Density Bonus Agreement for 19100 Gothard Street (Tentative Tract Map No. 18106; Conditional Use Permit No. 17-010) and authorize the Mayor/Chairperson to sign the Agreement, subject to the City Attorney/Authority Counsel confirming that MLC Holding, Inc., has acquired clear title for the property from Gothard Street, LLC, a California limited liability company; and, B) Approve as to form the Density Bonus Agreement for 19200 Holly Lane (Tentative Tract Map No. 18105; Conditional Use Permit No. 17-011), and authorize the Mayor/Chairperson to sign the Agreement, subject to the City Attorney/Authority Counsel confirming that MLC Holding, Inc., has acquired clear title for the property from 19200 Holly Street, LLC, a California limited liability company. Alternative Action(s): Do not approve and direct staff accordingly. Analysis: On December 12, 2017, MLC Holdings, Inc. received approval from the Planning Commission to develop the properties at 19100 Gothard Street and 19200 Holly Lane. Both projects requested the State approved density bonus provision which provided for additional units. The site at 19100 Gothard Street will result in 21 three-story, for -sale townhomes. In compliance with the Holly-Seacliff requirement, MLC will provide, as part of the 19 base units permitted under the City development standards, two (2) density bonus residential units and one (1) inclusionary housing unit made affordable to moderate income households. The three (3) affordable units will consist of two (2) four -bedroom units and one (1) three -bedroom unit. HB -77- Item 9, - 1 Dept. ID ED 18-01 Page 2 of 3 Meeting Date: 1/16/2018 The site at 19200 Holly Lane site will result in 32 three-story, for -sale townhomes. In compliance with the Holly-Seacliff requirement, MLC will provide, as part of the 28 base units permitted under the City development standards, four (4) density bonus residential units and one (1) inclusionary housing unit made affordable to moderate income households. The five (5) affordable units will consist of four (4) four -bedroom units and one (1) three -bedroom unit, State law allows for a density bonus to increase over the otherwise maximum allowable gross residential density. The granting of a density bonus shall not require a general plan amendment, zoning change or other discretionary approval to exceed the maximum allowable gross residential density. The amount of a density bonus is contingent on the percentage of affordable units being provided and at what income. Pursuant to State law, when a developer requests a density bonus and proposes at least 10 percent of residential units to be affordable for persons and families of moderate income, the developer can receive one concession to a development standard. A concession is intended to reduce costs to provide affordable housing units. In addition to one concession, the developer may request multiple waivers of development standards in order to ensure construction of the entitled density bonus units. Compliance with development standards could physically preclude a developer from constructing at the density permitted by State law. Therefore, the waivers of development standards are requested to provide a mechanism to achieve the density units. Concessions or waivers to development standards cannot be denied unless there are specific, adverse impacts to public health and safety or the physical environment or to any real property that is listed in the California Register of Historical Resources and for which there is no feasible method to satisfactorily mitigate or avoid the specific, adverse impact without rendering the development unaffordable to lower income and moderate income households. As defined in the California Government Code Section 65589.5, an adverse impact means a significant, quantifiable, direct, and unavoidable impact, based on objective, identified written public health or safety standards, policies, or conditions as they existed on the date the application was deemed complete. Inconsistency with the zoning ordinance or general plan land use designation shall not constitute a specific, adverse impact upon the public health or safety. As such, the requested concession and waivers to development standards do not pose a specific, adverse impact to the public health and safety of the future residents, general public, or the surrounding properties. Both developments received a density bonus provision to the projects. State Law allows a density bonus provision when a development provides affordable housing units and permits the developer to build additional units that exceed the allowable base density. The Gothard site with three (3) restricted units and the Holly site with five (5) restricted units will fulfill both the density bonus and Inclusionary requirements placed on the Project, pursuant to Density Bonus State Law, HBZSO Section 230.14 and 230.16. In addition, both projects will be restricted for a period of 45 years, requiring the owners to sell to other moderate income households during that period. The maximum moderate income sales prices for all units will be set by the Office of Business Development in accordance with the Density Bonus and Affordable Housing Agreements. The proposed agreements were prepared by the City Attorney's Office. Environmental Status: N/A Strategic Plan Goal: Improve quality of life Item 9. - 2 HB -78- Dept. ID ED 18-01 Page 3 of 3 Meeting Date: 1/16/2018 Attachment(s): 1. Density Bonus and Affordable Housing Agreement for 19100 Gothard Street, Huntington Beach, by and between City of Huntington Beach, a California Municipal Corporation, and MLC Holdings, Inc., an Arizona Corporation 2. Community Development Department Staff Report, dated December 12, 2017 (Gothard Townhomes) 3. Density Bonus and Affordable Housing Agreement for 19200 Holly Lane, Huntington Beach, by and between City of Huntington Beach, a California Municipal Corporation, and MLC Holdings, Inc., an Arizona Corporation 4. Community Development Department Staff Report, dated December 12, 2017 (Holly Townhomes) HB _79_ Item 9. - 3 ATTACHMENT #1 PAI RECORDED AT THE REQUEST OF AND WHEN RECORDED RETURN TO: City Clerk City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 (Space Above For Recorder's Use) This Density Bonus and Affordable Housing Agreement is recorded at the request and for the benefit of the City of Huntington Beach and is exempt from the payment of a recording fee pursuant to Government Code Sections 6103 and 27383. DENSITY BONUS AND AFFORDABLE HOUSING AGREEMENT FOR 19100 GOTHARD STREET, HUNTINGTON BEACH BY AND BETWEEN CITY OF HUNTINGTON BEACH, a California Municipal Corporation and MLC HOLDINGS, INC., an Arizona Corporation 17-6040/168088/SFF Item 9. - 4 HB -80- DENSITY BONUS AND AFFORDABLE HOUSING AGREEMENT FOR 1.9100 GOTHARD STREET, HUNTINGTON BEACH This DENSITY BONUS AND AFFORDABLE .HOUSING AGREEMENT ("Agreement") is entered into as of the day of , 20J ("Effective Date") by and between the CITY OF HUNTINGTON BEACH, a California municipal corporation ("City"), and MLC HOLDINGS,INC., an Arizona Corporation ("Owner"). City and Owner are hereinafter sometimes referred to collectively as the "Parties" and individually as a "Party." RECITALS A. City is a municipal corporation and charter city organized and existing pursuant to the Constitution and laws of the State of California. B. Owner is the owner in fee of that certain real property located at 19100 Gothard Street, Huntington Beach, consisting of approximately 1.28 net acres of land, and more particularly described in the legal description attached hereto as Exhibit "A" (the "Property"). C. Owner has submitted to City plans to develop the Property as a twenty-one (21) unit residential community to be subdivided as a condominium development, as more particularly depicted in the attached Exhibit "B" (the "Project"). Owner will build the Project in a single phase and sell individual units to individual homebuyers. Pursuant to the Holly Seacliff Specific Plan, fifteen percent (15%) of the units in the Project shall be affordable to Moderate Income Households. D. Pursuant to California Government Code Section 65915 (the "State Density Bonus Law"), as implemented under Huntington Beach Zoning and Subdivision Ordinance ("HBZSO"), Chapter 230.14, developers of housing projects that include specified levels of affordable housing are entitled to apply for and receive certain density bonuses and additional incentives in order to facilitate the economic feasibility of those projects. A five percent density bonus is available if ten percent of the units are affordable to Moderate Income Households earning 120% of median income or less, with an additional one percent density bonus for each one percent increase in moderate income units, such that a ten percent density bonus is available if fifteen percent (15%) of the units are affordable to moderate income households. Owner proposes that a minimum of fifteen percent (15%) of its nineteen (19) "base" units permitted under the HBZSO will be affordable to Moderate Income Households, and consequently is entitled to ten percent (10%) density bonus, yielding twenty one (21) total units. E. In exchange for making at least ten percent (10%) of the units affordable to Moderate Income Households, the State Density Bonus Law provides that the developer may receive up to one "incentive or concession." (Gov't § 65915(d)(2)(A).) In addition, in exchange for making at least ten percent of the units affordable to moderate income households, the State Density Bonus Law provides that the developer is entitled to the "waiver and modification" of any "development standard" that would physically preclude the construction of a project with. the density bonus and the incentives or concessions to which the developer is entitled. (Gov't § 65915(e).) A. "development standard" includes a site or construction condition that applies to a residential development, including, but not limited to, a height limitation, a setback requirement, a floor area ratio, an onsite open -space requirement, or a parking ratio. (Gov't § 65915(o).) 17-6040/168088/SFF -2- HB -8 1 - Item 9. - 5 F. The Holly-Seacliff Specific Plan requires that fifteen percent (15%) of new housing within the planning area be affordable to households earning less than 1.20% of Orange County Median Income. In compliance with the Holy-Seacliff requirement, Owner agrees to provide as part of the nineteen. (19) base units permitted under the City development standards, three (3) units will be affordable to Moderate Income Households, consisting of two (2), four -bedroom units and one (1), three -bedroom unit. As a result, the total of twenty one (21) residential units in the Project consists of nineteen (19) base residential units, and two (2) density bonus residential units, with three (3) units affordable to Moderate Income Households. G. Pursuant to Government Code Section 65915(e), Owner has applied for the waiver and reduction of several development standards on the basis that they would physically preclude the construction of the Project with the density bonus. Owner seeks relief from the 15-foot front setback the Holly-Seacliff Specific Plan requires for Building 1 which sides onto Gothard Street, and instead will provide a five-foot setback, thereby avoiding the loss of one unit. Owner further seeks relief from the average of a 10-foot setback on the third story from the second floor facade that HBZSO Section 210.06 (F) requires, thereby avoiding the loss of three units. Finally, the Owner proposes a 10-foot separation between Buildings 1 and 2, instead of the 20-foot building separation that the Holly-Seacliff Specific Plan requires between three-story buildings, thereby avoiding the loss of one unit. H. Pursuant to Government Code Section 65915(d)(2)(A), Owner also seeks as a concession relief from the requirement of HBZSO Section 210.06, and is proposing patio walls of exactly 42 inches throughout the Project, rather than walls that exceed 42 inches. Finally, Owner has applied for a waiver and reduction of parking pursuant to Government Code Section 65915(p)(5) & (6), and will provide only 53 onsite parking spaces. 1. On December 12, 2017, the Planning Commission approved the Owner's application for Tentative Tract Map No. 18106 and CUP No. 17-010. As approved, the Project includes the aforementioned incentives and concessions, and waivers and reduction. The .Project will include a 10% density bonus, in which Owner would construct nineteen (19) base residential units and two (2) density bonus residential units, for a total of twenty-one (21) residential units. In order to take advantage of the increase in allowable density, Owner must ensure, pursuant to the terms of this Agreement, that no less than fifteen percent (15%) of the nineteen (1.9) units permitted under City development standards are affordable to Moderate Income Households. Consequently, the Project shall include three (3) units that will be owned and occupied by Low or Moderate Income Households as defined in Health and Safety Code Section 50093, consisting of two (2) four -bedroom units and one (1) three -bedroom unit. J. This Agreement sets forth the terms and conditions for the implementation of the Project's requirement to provide affordable housing units in exchange for receiving the density bonus units and additional incentives and concessions, and waiver and modification of development standards as set forth herein. K. The development of the Project on the Property pursuant to this Agreement, and the fulfillment generally of this Agreement, are in the vital and best interests of City and the welfare of its residents, and in accordance with the public purposes and provisions of applicable federal, state, and local laws and requirements. 17-6040/168088/SFF -3- Item 9. - 6 HB -82- COVENANTS NOW, THEREFORE, in consideration of the above Recitals, which are incorporated herein by this reference, and of the mutual covenants hereinafter contained and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties agree as follows: DEFINITIONS AND EXHIBITS 1.1 Definitions. The following terms when used in this Agreement shall be defined as follows: 1.1.1 "Adjusted For Family Size Appropriate To :The Unit" means a household of one person in the case of a studio unit, a household of two persons in the case of a one - bedroom unit, a household of three persons in the case of a two -bedroom unit, a household of four persons in the case of a three -bedroom unit, and a household of five persons in the case of a four - bedroom unit. 1.1.2 "Affordable Housing Cost" for a Moderate Income Household means that purchase price which would result in an annual Monthly Housing Cost which does not exceed Thirty -Five Percent (35%) of One Hundred Ten Percent (110%) of the current Orange County monthly median income for a household adjusted for family size appropriate to the Unit. In determining monthly housing payments, the City will assume principal and interest payments on a conventional home mortgage after paying a ten percent (10%) down payment. Monthly housing costs will also include homeowner's association dues, utilities, homeowner's insurance, maintenance costs and property taxes, Affordable Housing Cost shall be calculated pursuant to the City Housing Regulations. 1.1.3 "Affordable Units" means the three (3) units, consisting of one (1) three -bedroom Unit and the two (2) four -bedroom Units that are designate pursuant to Section 3.2 to be sold to and occupied by Moderate Income households in the Project. 1.1.4 "Affordable Housing Covenant" means the Declaration of Conditions, Covenants and Restrictions for Moderate Income Affordable Housing to be recorded against each Affordable Unit in the form attached hereto as Exhibit "C." 1.1.5 "City Housing Regulations" means the "Affordable Ownership Housing Regulations -Homeowner Requirements of the City of Huntington Beach," dated August 1.5, 2011, as they exist now, and as they may be amended in the future. 1.1.6 "Effective Date" means the date the City Council of City approves this Agreement, which date shall be inserted in the preamble to this Agreement. 1.1.7 "Household" means all persons residing in. at] nit. 1.1.8 "Market Rate Units" means the Units within the Project to be rented or sold by Owner to a Household without restriction as to income levels, rental rate or sales price. f 7-6040/168088/SFF -4- HB -83- Ltem 9. - 7 1.1.9 "Median Intone" means the Orange County area median income, adjusted for household size, as established by the United States Department of Housing and Urban Development, and as published periodically by the California Department of Housing and Community Development. 1.1.1.0 "Moderate Income Household" means a Household whose income does not exceed the qualifying limits for moderate income households pursuant to Health and Safety Code Section 50093, which is those Households whose income does not exceed one hundred twenty percent (120%) of Median Income, adjusted for family size. The income level of a Household shall be determined in accordance with the City Housing Regulations. 1.1,1.1 "Monthly Housing Cost" shall include al] of the following associated with the Affordable Unit: (i) principal and interest payments on a mortgage loan; (ii) property taxes and assessments; (iii) the cost of fire and casualty insurance covering replacement value of property improvements; (iv) homeowner's association fees; (v) reasonable Unit maintenance and repair costs; and (vi) reasonable utility allowance, all as determined according to the City Housing Regulations. 1.1.12 "Qualified Purchaser" means a Household that complies with all income verification requirements in this Agreement, and earns not more than one hundred twenty percent (120%) of the Median Income, adjusted for family size, to be determined in accordance with the City Housing Regulations. L .13 "Unit" means a residential dwelling unit within the Project to be sold by Owner pursuant to this Agreement. 1.1.14 "Unit Release" means that certain instrument to be recorded for the benefit of a Market Rate Unit no longer subject to this Agreement, in the form of Exhibit "D" of this Agreement. 1.2 Exhibits. The following documents are attached to, and by this reference made a part of, this Agreement: Exhibit "A" -- Legal Description of the Property Exhibit "B" — Depiction of the Project Exhibit "C" — Declaration of Conditions, Covenants and Restrictions for Moderate Income Affordable Housing, with attachments Exhibit "D" — Unit Release Agreement Exhibit "E" — Density Bonus and Affordable Housing Agreement Release Agreement 2. DEVELOPMENT OF THE PROPERTY 2.1 Project. Owner shall develop the Project as a twenty-one (21) unit condominium residential. community in accordance with and subject to all applicable entitlements and permits. The Project shall have eighteen (18) Market Rate Units, and three (3) Affordable Units. There shall be one (1) three -bedroom Affordable Unit, and two (2) four -bedroom. Affordable Units. The average square footage of the Affordable Units shall be approximately the same as the average square footage of the Market Rate Units of the same number of bedrooms, The Affordable Units shall be constructed with the same exterior appearance and interior features, fixtures, and amenities, 17-6040/168088/SFF -5- Item 9. - 8 HB -84- and shall use the same type and quality of materials as the Market Rate Units in the Project. The Affordable Units shall be dispersed throughout the Project. At its discretion, Owner may increase the number of Affordable Units. 2.2 Authorized Waivers and Modifications and Incentives and Concessions. In accordance with the State Density Bonus Law and pursuant to the entitlements for the Project, City authorized the Waivers and Modifications, and Incentives and Concessions described in the Recitals, above. 2.3 Compliance with Laws. Owner at its sole cost and expense shall secure or cause to be secured any and all permits that may be required by City or any other federal, state, or local govermnental entity having or claiming jurisdiction over the Property or Project. Upon securing any and all permits, Owner shall carry out and perform the development, and marketing of the Project in conformity with all applicable federal, state, and local laws and regulations, and all conditions of approval of Tentative Map No. 18106. 2.4 Replacement Housing. Owner represents that there are no, and there have not been any rental dwelling units on the Property for the five years preceding Owner submitting its Project application to the City. Should it later be determined that Governmment Code Section 65915(c)(3) requires Owner to provide replacement dwelling units in order to obtain the benefits of this Agreement, then Owner shall have the sole and exclusive responsibility for providing all replacement dwelling units legally required. Owner shall indemnify, defend (with counsel of City's choosing and the consent of Owner, which shall not be unreasonably withheld, and which may be joint defense counsel upon City's and Owner's consent) and hold harmless City and all of its officials, officers, employees, representatives, volunteers and agents from any and all alleged or actual claims, causes of action, liabilities, and damages from any third party alleging a violation of Government Code Section 65915(c)(3). 2.5 Mechanic's Liens, Indemnification. Owner shall take all actions reasonably necessary to prevent and remove any mechanic's liens or other similar liens (including design professional liens) against the Property or Project, or any part thereof, by reason of work, labor, services, or materials supplied or claimed to have been supplied to Owner or anyone holding the Property or Project, or any part thereof, through or under Owner. Upon request by the City, Owner shall provide to the City updated information from Owner's title insurer. City hereby reserves all rights to post notices of non -responsibility and any other notices as may be appropriate upon a filing of a mechanic's lien. Owner shall indemnify, defend (with counsel of City's choosing and the consent of Owner, which shall not be unreasonably withheld, and which may be joint defense counsel upon City's and Owner's consent), and hold harmless City and all of its officials, officers, employees, representatives, volunteers and agents from any and all alleged or actual claims, causes of action, liabilities, and damages from any third party by reason of a mechanic's lien or work, labor, services, or materials supplied or claimed to have been supplied to Owner or anyone Bolding the Property or Project, or any part thereof, through or under Owner. 3. AFFORDABLE UNITS 3.1 Execution and Recording of This Agreement. Owner shall execute this Agreement prior to City Council consideration of approval of this Agreement. No later than thirty (30) 17-60401168088/SFF -6- HB -85- Item 9. - 9 days after the Effective Date of this Agreement, Owner shall record an executed original of this Agreement against the Property in the Official Records for Orange County, California. 3.2 Designation of Affordable Units. At ]east three (3) months prior to the recordation of the Condominium Map with the approval of the California Department of Real Estate, Owner shall obtain the approval from the City"s Housing .Manager of the designation of the three (3) Affordable Units. The Affordable Units shall be disbursed throughout the buildings of the Project. Immediately following the recordation of each Condominium. Map for the Project, Owner shall cause the Affordable Housing Covenant (Ex. C) to be recorded against any Affordable Units within the Condominium Map. 3.3 Prohibition of Leasing of Market Rate or Affordable Units by the Owner. Owner agrees to market and sell all Market Rate and Affordable Units at the Project. City would not grant the aforementioned Waiver and Reduction of Development Standards, the Concessions and Incentives, nor the modification of parking standards unless Owner agrees to market and sell all the Units in the Project as ownership housing. While Market Rate Units may be leased by the individual owner once purchased from the Owner, in no event may Owner lease any Units. 3.4 Tenn of Affordable Unit Covenants. Each Affordable Unit designated for Moderate Income Households shall be restricted for use and occupancy by a Moderate Income Household, for a total period of forty-five (45) years, commencing on the date that the Owner conveys title to the first purchaser of each Affordable Urvt. By way of explanation of the foregoing sentence, it is possible that the affordability term for one Affordable Unit will neither commence on the same date nor terminate on the same date as another Affordable Unit, and it is possible that the affordability terms for all Affordable Units will commence on different days and terminate on different days. 3.5 Memorializing Commencement of Affordability Term. The Notice of Affordability Restrictions is attached as an exhibit to Exlvbit C, the Declaration of Conditions, Covenants, and Restrictions for Moderate Income Affordable Housing. This Notice shall be recorded concurrently with conveyance of title to the first buyer of each Affordable Unit and the affordability term for each Affordable Unit shall begin as of the recordation date of the Notice. 3.6. Sale of Affordable Units to Moderate Income Households. When marketing the Affordable Units, Owner shall comply with the City Housing Regulations. Owner shall not convey title to any Affordable Unit to a Household that the City has not verified as a Moderate Income Household, as determined pursuant the City Housing Regulations. Owner shall not convey title to any Affordable Unit to a Moderate Income Household at a price that exceeds the Affordable Housing Cost for that Affordable Unit as established by the City. 4. TERM OF THIS AGREEMENT AND RELEASE OF MARKET RATE UNITS 4.1 The term of this Agreement shall commence on the Effective Date and shall continue until the date Owner conveys fee title to buyers of all of the Units of the Project in accordance with the requirements of this Agreement. Upon satisfaction of the foregoing, the City shall, at the request of Owner, record a termination of this Agreement in the form of Exhibit E to this Agreement. The recording of such a termination document shall remove this Agreement as an 17-6040/168088/SFF -7- 1tem 9. - 10 HB _86_ encumbrance upon title to the Property. Notwithstanding any other provision herein to the contrary, Owner's indemnity obligations under Sections 2.4 (Replacement Housing), 2.5 (Mechanic's Liens) and 5.3 (Indemnification) hereof shall survive the termination of this Agreement. 4.2 Owner shall have the right at the time that it enters into a sales agreement for each of the Units to request that City execute a Unit Release for the Unit in the form of Exhibit D to this Agreement. 5. DEFAULT AND TERMINATION-, INDEMNIFICATION 5.1 Default. Failure or delay by any Party to perform any term or provision of this Agreement which is not cured within thirty (30) days after receipt of notice from the other Party specifying the default (or such other period specifically provided herein) constitutes a default under this Agreement; provided, however, if such default is of the nature requiring more than thirty (30) days to cure, the defaulting Party shall avoid default hereunder by commencing to cure within such thirty (30) day period, and thereafter diligently pursuing such cure to completion within an additional sixty (60) days following the conclusion of such thirty (30) day period. (for a total of ninety (90) days). Except as required to protect against further damages, the injured Party may not institute proceedings against the Party in default until the time for cure has expired. Failure or delay in giving such notice shall not constitute a waiver of any default, nor shall it change the time of default. 5.2 Rights and Remedies Cumulative. The rights and remedies of the Parties are cumulative, and the exercise by either Party of one or more of its rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default by the other Party. 5.3 Indemnification. In addition to any other indemnity specifically provided in this Agreement, Owner shall defend (with counsel of City's choosing and the consent of Owner, which shall not be unreasonably withheld, and which may be joint defense counsel upon City's and Owner's consent), indemnify and hold harmless City and its officers, officials, agents, employees, representatives, and volunteers from and against any loss, liability, claim, or judgment arising from any act or omission of Owner in connection with its obligations under this Agreement. 6. ASSIGNMENT 6.1 Assignment by Owner. The qualifications and identity of Owner are of particular concern to City. It is because of those qualifications and identity that City has entered into this Agreement. Accordingly, except as authorized in Section below, Owner shall not sell, transfer, or assign the Property or Project in whole or in part, or transfer or assign Owner's rights and obligations in this Agreement, without City's prior written approval, which shall not be unreasonably withheld. In considering whether to grant its approval of any proposed transfer or assignment by Owner of its interest in the Property, Project, or this Agreement, City shall consider factors such as the financial strength and capacity of the proposed transferee or assignee to perform Owner's obligations in this Agreement, and the proposed transferee's or assignee's experience and expertise in the planning, financing, development, and operation of similar projects. 17-6040/168088/SFF HB -87- Item 9. - 11 6.2 Subsequent Assignment. As used in this Agreement, the term "Owner" shall be deemed to include any such transferee or assignee after the date such transfer or assignment occurs in compliance with this Agreement. 6.3 Unpermitted Assignments Void. Any sale, transfer, or assigmnent violation of this Agreement shall be null and void, and City shall have the right to I right or remedy at law or in equity to enforce the provisions of the restriction against ru sales, transfers, or assignments. MISCELLANEOUS T I Notices. As used in this Agreement, "notice" includes, but is not limited to, the communication of notice, request, demand, approval, statement, report, acceptance, consent, waiver, appointment or other communication required or permitted hereunder. All notices shall be in writing and shall be considered given either: (i) when delivered in person to the recipient named below; or (ii) on the date of delivery shown on the return receipt, after deposit in the United States mail in a sealed envelope as either registered or certified mail with return receipt requested, and postage and postal charges prepaid, and addressed to the recipient named below; or (iii) five (5) days after deposit in the United States mail in a sealed envelope, first class mail and postage prepaid, and addressed to the recipient named below; or (iv) one (1) day after deposit with a known and reliable next -day document delivery service (such as FedEx), charges prepaid and delivery scheduled next -day to the recipient named below, provided that the sending parry receives a confirmation of delivery from the delivery service provider. All notices shall be addressed as follows: City of Huntington Beach 2000 Main Street Huntington, Beach, CA 92648 Attn: Director of Community Development & Housing Manager If to OWNER: MLC Holdings, Inc. 1401 Dove Street, Suite 640 Newport Beach, CA 92660 Attn: Moses Kim, Forward Plarnung Manager 7.2 Change of Address. Either Party may, by notice given at any time, require subsequent notices to be given to another person or entity, whether a party or an officer or representative of a party, or to a different address, or both. Notices given before actual receipt of notice of change shall not be invalidated by the change. T3 Entire Agreement. This Agreement and all of its Exhibits and attachments set forth and contain the entire understanding and agreement of the parties, and there are no oral or written representations, understandings or ancillary covenants, undertakings or agreements which are not contained or expressly referred to herein. No testimony or evidence of any such representations, understandings or covenants shall be admissible in any proceeding of any hind or nature to interpret or determine the terms or conditions of this Agreement. 17-6040/168088/SFF 7.4 Amendments. The terms of this Agreement may only be modified or amended by an instrument in writing executed by each of the parties hereto; provided, however, the City Manager shall have the authority to issue interpretations, waive provisions and enter into amendments of this Agreement on behalf of City so Long as such actions do not substantially change the uses or development permitted on the Property. 7.5 Severability. If any term, provision, covenant or condition of this Agreement shall be determined invalid, void or unenforceable, the remainder of this Agreement shall not be affected thereby to the extent such remaining provisions are not rendered impractical to perform; taking into consideration the purposes of this Agreement. 7.6 Interpretation and Governing Law. This Agreement and any dispute arising hereunder shall be governed and interpreted in accordance with the laws of the State of California without regard to conflict of law principles. This Agreement shall be construed as a whole according to its fair language and common meaning to achieve the objectives and purposes of the Parties hereto, and the rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not be employed in interpreting this Agreement, all Parties having been represented by counsel in the negotiation. and preparation hereof. 7.7 Section Headings. All section headings and subheadings are inserted for convenience only and shall not affect any construction or interpretation of this Agreement. T8 Singular and Plural. As used herein, the singular of any word includes the plural, and vice versa, as context so dictates. Masculine, feminine, and neuter forms of any word include the other as context so dictates. 7.9 Joint and Several _ Obli atg ions. If at any time during the term of this Agreement the Property and/or Project is owned, in whole or in part, by more than one Owner, all obligations of such Owner under this Agreement shall be joint and several, and the default of any such Owner shall be the default of all such Owners. 7.10 Time of Essence. Time is of the essence in the performance of the provisions of this Agreement as to which time is an element. 7.11 Days. Unless otherwise specified in this Agreement or any Exhibit attached hereto, use of the term "days" shall mean calendar days. For purposes of this Agreement and all Exhibits attached hereto, "business days" shall mean every day of the week that City Hall of the City is open for business to the general public. 7.12 Waiver. Failure by a :Party to insist upon the strict performance of any of the provisions of this Agreement by the other Party, or the failure by a Party to exercise its rights upon the default of the other Party, shall not constitute a waiver of such Party's right to insist and demand strict compliance by the other Party with the terms of this Agreement thereafter. 7.13 Force Majeure. Neither Party shall be deemed to be in default where failure or delay in performance of any of its obligations under this Agreement is caused by floods, earthquakes, other Acts of God, fires, wars, riots or similar hostilities, strikes and other 17-6040/L68088/SFF - t �- HB -89- Item 9. - 13 labor difficulties beyond the .Party's control (including the Party's employment force), court actions (such as restraining orders or injunctions), government regulations or other causes beyond the Party's control. If any such events shall occur, the term of this Agreement and the time for performance by either Party of any of its obligations hereunder may be extended by the written agreement of the Parties for the period of time that such events prevented such performance. 7.1.4 Mutual Covenants. The covenants contained herein are mutual covenants and also constitute conditions to the concurrent or subsequent performance by the Party benefited thereby of the covenants to be performed hereunder by such benefited Party. T 15 Successors in Interest. The burdens of this Agreement shall be binding upon, and the benefits of this Agreement shall inure to, all successors in interest to the Parties to this Agreement. All provisions of this Agreement shall be enforceable as equitable servitudes and constitute covenants running with the land. Each covenant to do or refrain from doing some act hereunder with regard to development of the Property. (a) is for the benefit of and is a burden upon every portion of the Property; (b) runs with the Property and each portion thereof; and, (c) is binding upon each Party and each successor in interest during ownership of the Property or any portion thereof. 7.16 Jurisdiction and Venue. Any action at law or in equity arising under this Agreement or brought by a Party hereto for the purpose of enforcing, construing or determining the validity of any provision of this Agreement shall be filed and tried in the Superior Court of the County of Orange, State of California, or any other court in that county, and the Parties hereto waive all provisions of law providing for the filing, removal or change of venue to any other court. 7.17 Project as a Private Undertaking. It is specifically understood and agreed by and between the Parties hereto thatthe development of the Project is a private development, that neither Party is acting as the agent of the other in any respect hereunder, and that each Party is an independent contracting entity with respect to the terms, covenants and conditions contained in this Agreement. No partnership, joint venture or other association of any kind is formed by this Agreement. The only relationship between City and Owner is that of a government entity regulating the development of private property and the Owner of such property. 7.1.8 Attorneys' Fees and Costs. If either Party to this Agreement commences an action against the other Party to this Agreement arising out of or in connection with this Agreement, each party shall bear its own attorneys' fees and costs of suit. 7.19 Authority to Execute. The person or persons executing this Agreement on behalf of either Party warrants and represents that he or she/they have the authority to execute this Agreement on behalf of his or her/their agency, corporation, partnership or business entity and warrants and represents that he or she/they has/have the authority to bind the Party to the performance of its obligations hereunder. 7.20 Counterparts. This Agreement may be executed by the Parties in counterparts, which counterparts shall be construed together and have the same effect as if all of the Parties had executed the same instrument. 17-6040/168088/SFF -11- Item 9. - 14 HB -90- IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the date set forth above, ATTEST: City Clerk APPROVED AS TO FORM: City Attorney "CITY" CITY OF HUNTINGTON BEACH, a California municipal corporation "OWNER" MLC HOLDINGS, INC. an Arizona Corporation By: Its: By: Its: 17-6040/168088/SFF -1.2- HB -91- Item 9. 15 17-6040/168088/SFF � (Legal Description) -13- Item 9. - 16 KB -92- EXHIBIT A LEGAL DESCRIPTION FOR 19100 GOTHARD PROJECT: LOTS 15 AND 16 IN BLOCK "B" OF "GARFIELD STREET ADDITION TO HUNTINGTON BEACH", AS PER MAP RECORDED IN BOOK 7, PAGES 27 AND 28 OF MISCELLANEOUS MAPS IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. EXCEPTING THEREFROM ALL RIGHT, TITLE AND INTEREST OF THE GRANTOR IN AND TO THAT CERTAIN OIL LEASE OF RECORD DATED APRIL 28, 1920, EXECUTED BY T. G. HERMAN, A SINGLE MAN, ET AL, IN FAVOR OF W. W. HANBERY, RECORDED JUNE 23, 1920 IN BOOK 14, PAGE 251 OF LEASES, ONLY IN SO FAR AS SAID RIGHTS APPLY TO THE ABOVE DESCRIBED LAND. ALSO, EXCEPTING THEREFROM THAT PORTION OF LAND CONVEYED TO THE CITY OF HUNTINGTON BEACH AND ITS SUCCESSORS AND ASSIGNS FOR ROAD PURPOSES, DESCRIBED AS "EXHIBIT A", IN FINAL ORDER OF CONDEMNATION RECORDED NOVEMBER 9, 1999 AS INSTRUMENT NO. 19990780474 OF OFFICIAL RECORDS. HB -93- Item 9. - 17 t 7-b040/1 b8088/SFF (Project Depiction) -14- Item 9. - 18 H B -94- 17-6040/t68088/SFF EXHIBIT C (Affordable Housing Covenant) U2 Item 9. - 20 HB -96- RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: City Clerk City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 SPACE ABOVE THIS LINE FOR RECORDERS' USE ONLY DECLARATION OF CONDITIONS, COVENANTS AND RESTRICTIONS FOR .MODERATE INCOME AFFORDABLE HOUSING 19100 GOTHARD STREET, HUNTINGTON BEACH This Declaration Of Conditions, Covenants And Restrictions For Moderate Income Affordable Housing ("Resale Restrictions") is made as of , 20_, by and between MLC HOLDINGS, INC. an Arizona corporation, (the "Owner"), and the CITY OF HUNTINGTON BEACH, a California municipal corporation (the "City"), and the HOUSING AUTHORITY OF THE CITY OF HUNTINGTON BEACH, a public body corporate and politic (the "Authority") At the option of the City and Authority, the Authority may enforce these Resale Restrictions in place of the City. RECITALS A. Owner is the owner in fee of that certain real property consisting of Units , and _, located at 19100 Gothard Street, Huntington Beach (APN and ), as more particularly described in the legal description attached hereto as Exhibit "A" (the "Property"). B. Owner submitted to City plans to develop the Property as a twenty-one (21) unit residential community to be subdivided as a condominium development. Owner will build the Project in a single phase and sell individual units to individual homebuyers. Pursuant to California Government Code Section 65915, Owner obtained a ten percent (10%) density bonus. Pursuant to Section 65915 and Chapter 230.26 of the Huntington Beach Zoning and Subdivision Ordinance ("HBZSO"), and the Holly Seacliff Specific Plan, at least fifteen percent (1.5%) of the units in the Project shall be affordable to Moderate Income Households. C. On December 12, 2017, the Huntington Beach Planning Commission approved the Project pursuant to Tentative Tract No. 18106 and CUP No. 17-010. As a condition of approval of the Tentative Tract Map and CUP, the Project includes three units which are to be 17-6040l16 8247. do0SFF 1413 -97- Item 9. - 21 occupied by, and sold at prices affordable to Moderate Income Households for a term of 45 years ("the "Affordable Units"). Tentative Tract Map No. 18105 was later recorded as Final Tract Map No. 18105 at Instrument No. __ of the Records of Orange County, California. D. In order to secure the long tern affordability of the Affordable Units, the City and Owner entered into the "Density Bonus and Affordable Housing Agreement for 19100 Gothard Street," which was recorded as Instrument No. in the Records of Orange County, California (tbe "Density Bonus Agreement"). The Density Bonus Agreement provides that Owner shall designate two, four -bedroom units and one, three -bedroom unit as the Affordable Units. E. Pursuant to the Density Bonus Agreement, Owner has designated the Affordable Units as: (i) Unit a four -bedroom unit; (ii) Unit , a four bedroom unit; and Unit _, a, three -bedroom unit. Owner is the owner of record of these Units, which are located in the City of Huntington Beach, County of Orange, State of California and legally described in the attached Exhibit "A", and are collectively known as the "Restricted Unit(s)." NOW, THEREFORE, the Parties hereto agree and covenant as follows: 1. Affordability Covenants. Owner agrees for itself and the successors and assigns to Owner's interest in the Restricted Units, including each Moderate Income Household purchasing one of the Restricted Units, that for a term of forty-five (45) years from the date of the close of escrow for the initial sale of each such Restricted Unit: 1.1 The Restricted Units shall only be owned and occupied by Owner or by a Moderate Income Household, which shall mean persons or families earning not more than 120% of the Orange County median income, adjusted for household size as appropriate to the Unit. 1.2 The Restricted Units shall only be sold at an Affordable Housing Cost to Moderate Income Households. 2. Definitions and Exhibits. 2.1 Definitions. In addition to the terms that may be defined elsewhere in this Covenant, the following terms when used in these Resale Restrictions shall be defined as follows: 2.1.1 "Adjusted for family size appropriate to the Unit" means a household of one person in the case of a studio unit, a household of two persons in the case of one -bedroom unit, a household of three persons in the case of a two -bedroom unit, a household of four persons in the case of a three -bedroom unit, and a household of five persons in the case of a four -bedroom unit. 2.1.2 "Affordable Housing Cost" for a Moderate Income Household means that purchase price which would result in an annual Monthly Housing Cost which does not exceed Thirty -Five Percent (35%) of One Hundred Ten Percent (110%) of the current Orange County monthly median income for a household adjusted for family size appropriate to the Unit. 2 1-,4n,10/168247.doc/SFF Item 9. - 22 H13 _yg_ In determining monthly housing payments, the City will assume principal and interest payments on a conventional home mortgage after paying a ten percent (10%) down payment. Monthly housing costs will also include monthly homeowner's association dues, utilities, homeowner's insurance, maintenance costs and property taxes. The Affordable Housing Cost shall be calculated pursuant to the City Housing Regulations. 2.1.3 "City Housing Regulations" means the "Affordable Ownership Housing Regulations -Homeowner Requirements of the City of Huntington Beach," dated August 15, 2011, as they exist now, and as they may be amended in the future. 2.1.4 "Default" means the failure of a Party to perform any action or covenant required by these Resale Restrictions within the time periods provided herein following notice and opportunity to cure. 2.1.5 "First Lien" means the lien of a primary Lender which secures the obligations of the Owner to repay amounts owed to the Lender. 2.1.6. "Owner" means initially, MLC Holdings, Inc., an Arizona corporation, and later its successors and assigns, each owner of any legal or equitable interest in one of the three (3) Restricted Units. 2.1.7-6. "Lender" means a lender making a purchase money loan to the Owner for the purchase of the Affordable Unit. 2.1.8 "Median Income" means the Orange County, California area median income, adjusted for household size, as established by the United States Department of Housing and Urban Development, and as published periodically by the State of California Department of Housing and Community Development. 2.1.9 "Moderate Income Household" means a Household whose income does not exceed one hundred twenty percent (120%) of Median Income, adjusted for family size. The income level of a Household shall be determined in accordance with the City Housing Regulations. 2.1.10 "Monthly Housing Cost" shall include all of the following associated with the Restricted Units: (i) principal and interest payments on a mortgage loan; (ii) property taxes and assessments; (iii) the cost of fire and casualty insurance covering replacement value of property improvements; (iv) homeowner's association fees; (v) reasonable Unit maintenance and repair costs; and (vi) reasonable utility allowance. All Monthly Housing costs shall be determined by the City according to the City Housing Regulations. 2.1.11 "Qualified Purchaser" means a person or family who complies with all income verification requirements of these Resale Restrictions, and earns not more than one hundred twenty percent (120%) of the Median Income, adjusted for family size, to be determined in accordance with the City Housing Regulations. 2.1.12 "Transfer" shall mean any sale, assignment, conveyance, lease, or transfer, voluntary or involuntary, of any interest in the Restricted Unit. Without limiting the 3 17-6040/165247.doc/SFF HB -99- Item 9. - 23 generality of the foregoing, Transfer shall include (i) a transfer by devise, inheritance or intestacy; (ii) the creation of a life estate; (iii) the creation of a joint tenancy interest; (iv) a gift of all or any portion of the Restricted Unit; or (v) any voluntary conveyance of the Restricted Unit. 3. Attachments. The following documents are attached to, and by this reference trade a part of, these Resale Restrictions: Exhibit A — Legal Description of Restricted Units Exhibit B Notice of Affordability Restriction Exhibit C — Promissory Note Exhibit D -- Affordable Housing Deed of Trust 4. Term of Resale Restrictions. 4.1 The term of these Resale Restrictions shall commence on the date of the initial sale of each Restricted Unit from Owner to a Qualified Purchaser as evidenced by a deed recorded with the Orange County Recorder's Office and shall continue, with respect to each such Restricted Unit, for forty-five (45) years from said date (the "Affordability Period"). The Covenant contained in this Section shall run with each Restricted Unit and shall terminate and be of no further force or effect upon expiration of the Affordability Period. By way of explanation of the foregoing sentence, it is possible that the affordability term for one Restricted Unit will neither commence on the same date nor terminate on the same date as another Restricted Unit, and it is possible that the affordability terms for all Restricted Units will commence on different days and terminate on different days. The beginning and expiration dates of the Affordability Period for each Restricted Unit shall be established by the City in the Notice of Affordability Covenant (Ex. B) recorded in connection with each sale of the Restricted Units. 4.2 Each Qualified Purchaser of each Restricted Unit shall enter into a Notice of Affordability Restriction, Promissory Note and Deed of Trust in the forms attached as Exhibits B, C, and D to these Resale Restrictions, 5. Covenant Regarding Use and Sale of Restricted Units. For the Affordability Period, the Restricted Units shall be owned and occupied as the principal residence of a Moderate Income Household, and in no event may the Restricted Unit be leased to a third party. No transfer of a Restricted Unit shall occur until the City determines that: (a) the proposed purchaser intends to occupy the Restricted Unit as the proposed purchaser's principal residence; (b) the proposed purchaser is a Moderate Income Household; and (c) the proposed transfer occurs at an Affordable Housing Cost. 6. Permitted and Prohibited Transfers of Restricted Units. 6.1 The following Transfers, made in compliance with the terms and conditions of these Resale Restrictions and the City Housing Regulations, shall constitute "Permitted Transfers": (i) a Transfer to a surviving joint tenant or other permitted co -Owner of the Restricted Unit by devise, descent, or operation of law on the death of an Owner; (ii) a E 17-6040/ 168247. doc/SFF Item 9. - 24 HB - l 0o- Transfer to a spouse such that the spouses become co -Owners of the Restricted Unit; (iii) a Transfer by decree of dissolution, legal separation agreement, or from an incidental property settlement by which the spouse becomes an Owner of the Restricted Unit, provided that in each case the transferee spouse occupies or will occupy the Restricted unit; (iv) a Transfer to an inter vivos trust in which Owner is and remains the beneficiary and occupant of the Restricted Unit; and (v) a Transfer to a Moderate Income Household at Affordable Housing Cost. A Transfer that is not a Permitted Transfer specified above is a "Prohibited Transfer." The occurrence of a Prohibited Transfer is a Default under these Resale Restrictions. 6.2 All Transfers Prohibited Without City Approval. During the Affordability Period, Owner shall not sell, transfer, use as security for any loan, or convey any interest in a Restricted Unit, except with the express written consent of the City, which consent shall be given only if the Transfer is a Permitted Transfer and in strict compliance with the provisions of this Section 6. 6.3 Maximum Sale Price of Restricted Unit. In the event that Owner decides to sell or otherwise Transfer the Restricted Unit, Owner shall contact the City to obtain the current Affordable Housing Cost, which shall be the maximum sales price of the Restricted Unit. City shall provide the Affordable Housing Cost pursuant to its current Affordable Housing Regulations. Regarding the Affordable Housing Cost, Owner acknowledges that: OWNER, AND EACH SUCCESSOR, HEIR OR ASSIGN OF OWNER, UNDERSTANDS THAT THE DETERMINATION OF THE AFFORDABLE HOUSI.NG COST CAN BE MADE ONLY AT THE TIME OF A PROPOSED SALE OR OTHER TRANSFER OF THE RESTRICTED UNIT, TAKING INTO CONSIDERATION PREVAILING INTEREST RATES, THE OFFERED TERMS OF SALE, THE ECONOMIC CIRCUMSTANCES OF THE PROPOSED PURCHASER AND OTHER FACTORS THAT CANNOT BE ACCURATELY PREDICTED, AND THAT THE TRANSFER PRICE PERMITTED HEREUNDER MAY BE LESS THAN THE FAIR MARKET VALUE OF THE SAME OR OTHER SIMILAR REAL PROPERTY WHICH IS NOT ENCUMBERED BY THIS COVENANT. OWNER, AND EACH SUCCESSOR, HEIR OR ASSIGN OF OWNER, FURTHER ACKNOWLEDGES THAT AT ALL TIMES IN SETTING THE TRANSFER PRICE, THE PRIMARY OBJECTIVE OF THE CITY AND THESE RESALE RESTRICTIONS IS TO PROVIDE HOUSING TO MODERATE INCOME HOUSEHOLDS AT AN AFFORDABLE HOUSING COST. Owner's Initials 5 17-6040/ 168247,doc/W HB-101- Item 9.-25 6.4 Procedure to Verify a Proposed Transfer. In the event that Owner desires to sell the Restricted Unit, Owner shall send written notice thereof to the City at the following address: City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 Attention: Director of Economic Development City shall process the sale of the Restricted Unit pursuant to the City Housing Regulations. The City shall not be obligated to approve a transfer unless and until the proposed purchaser has submitted to the City such information and completed such forms as necessary to verify the proposed purchaser's intent with respect to his/her/its residency of the Restricted Unit, Iris/her/its gross income, and an affidavit of the proposed purchaser disclosing and certifying the amount of the proposed purchase price. Prior to conveyance of the Restricted Unit, each approved purchaser shall also submit to the City an executed disclosure statement which certifies that the purchaser is aware that: (i) the purchaser buying the Restricted Unit may only sell the Restricted unit at an Affordable Housing Cost to a Moderate -Income Household as provided in Section l above, (ii) the maximum permitted sales price may be less than fair market value and (iii) the Restricted Unit must be owner -occupied at all times and cannot be rented or leased. The approved purchaser shall also submit an executed promissory, trust deed, notice documents, and any other documentation reasonably required by the City to effectuate the Affordable Housing Program. Owner shall cooperate with the City in providing such forms to proposed purchasers and in assisting proposed purchasers to prepare such forms and to provide any required information to the City in connection with only the Owner's sale of the Restricted Unit. 7. Non -Discrimination Covenants. Owner covenants by and for itself, it 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 sale, transfer, use, occupancy, tenure or enjoyment of the Restricted Unit, nor shall Owner 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 Restricted Unit. Owner and its successors and assigns shall refrain from restricting the sale of the Restricted 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 deeds or contracts shall contain or be subject to substantially the following nondiscrimination or nonsegregation clause: (a) In deeds: "The grantee herein covenants by and for himself or herself, his or her heirs, executors, administrators and assigns, and all persons 6 11 6AA 0/J 68247.doc/SFF Item 9. - 26 HB -102- 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 sale, transfer, use, occupancy, tenure or enjoyment of the land herein conveyed, nor shall the grantee himself or herself or any person claiming under or through him or her, establish or pen -nit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, or vendees in the land herein conveyed. The foregoing covenants shall run with the land." (b) In contracts: "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 sale, transfer, use, occupancy, tenure or enj oyment of the premises, nor shall the transferor himself or herself of any person claiming under or though him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use of occupancy of tenants, subtenants or vendee of the premises." (c) In leases: "The lessee herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assignees, and all persons claiming under or though 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 though him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy of tenants, sublessees, subtenants, or vendees in the premises herein leased." Nothing in this Section 7 shall be construed to authorize the rental or lease of the Restricted Unit if such rental or lease is not otherwise permitted. 8. Encumbrances. 8.1 Financings on Transfer. This Section 8 shall not prohibit the encumbering of title for the sole purpose of securing financing of the purchase price of the Restricted Unit upon a Transfer thereof, however, any such financing shall be for the Owner and (1) must be a First Lien, (ii) must not be in excess of the Affordable Housing Cost of the 7 17-6040i 168247.doc/SFF 1-113 -103- Item 9. - 27 Restricted Unit as of date of approval for the financing, (iii) must be in compliance with these Resale Restrictions and the Affordable Housing Deed of Trust, and (iv) shall be subordinate to these Resale Restrictions. 8.2 Subordination. These Resale Restrictions shall have priority over all monetary liens and encumbrances for the Affordability Period. However, the Affordable Housing Deed of Trust only may be subordinated to a First Lien on the Restricted Unit that secures the payment of a principal amount that is not in excess, as of the date of approval for said financing, of the Affordable Housing Cost of the Restricted Unit. The City shall execute a written instrument for the subordination of its rights under the Affordable Housing Deed of Trust in the form approved by the City Attorney as may reasonably be requested by the Lender. The City's agreement to so subordinate its rights is subject to agreement in writing by the Lender providing the City the following rights: (a) Upon the occurrence of a Default under any of the First Lien documents, the holder of the First Lien shall promptly notify the City of the occurrence of such Default, which notification shall be provided to the City contemporaneously with the delivery to Owner of any notice of Default under any of the First Lien documents; and (b) The City shall have the right, during the cure periods which apply to the Owner pursuant to the First Lien documents and any cure period which may apply to the City under applicable law, to cure the Owner's Default relative to the First Lien; and (c) After a Default on any of the First Lien documents but prior to a foreclosure sale or deed in lieu assignment of the Restricted Unit, the City shall have the right to take title to the Restricted Unit and cure the Default relative to the First. Lien documents, without the holder of the First Lien exercising any right it might otherwise have to accelerate the obligations secured by the First Lien by reason of such title transfer, so long as the City promptly cures any such Default upon taking title to the Restricted Unit. 8.3 Request for Notice of Default. The City may cause a Request for Notice to be recorded on the Restricted Unit subsequent to the recordation of the First Lien deed of trust or mortgage requesting a statutory notice of Default as set forth in California Civil Code Section 2924b. 8.4 Further Encumbrances Prohibited. Owner shall not record or cause or pen -nit the recordation of any deed of trust, mortgage, lien or other instrument creating a security interest in or to the Restricted Unit (a "Further Encumbrance") other than these Resale Restrictions, the First Lien and the Affordable Housing Deed of Trust. 9. Uses. The Restricted Unit shall be used as the principal residence of Owner and Owner's family and may not be rented, or leased. Owner covenants and agrees to devote, use, and maintain the Restricted Unit in accordance with these Resale Restrictions. All uses V ? _r. nn 0/ 168247. doe/SFF Item 9. - 28 HB -104- conducted on the Restricted Urut, including, without limitation, all activities undertaken by the Owner pursuant to these Resale Restrictions, shall conform to all applicable provisions of federal, state, and local laws, including the Huntington Beach Municipal Code, and the City Housing Regulations. 10. Maintenance of Unit. Owner shall maintain the Restricted Unit in a manner consistent with community standards which will uphold the value of the Restricted Unit, in accordance with the Huntington Beach Municipal Code. Owner also shall comply with all applicable federal, state and local laws. 11. Effect of Violation of the Terms and Provisions of These Resale Restrictions. 11.1 Covenants Run with the Land. These Resale Restrictions are designed to create equitable servitudes and covenants running with the Restricted Unit, in accordance with the provisions of Civil Code Section 1468, and the State Density Bonus Law and the Huntington Beach Zoning and Subdivision Ordinance. The covenants, conditions, restrictions, reservations, equitable servitudes, liens and charges set forth herein shall run with the Restricted Unit and shall be binding upon all persons having any right, title or interest in the leaschold interest in the Restricted Unit, or any part thereof, their heirs, successive owners and assigns; shall inure to the benefit of the City and its successors and assigns, shall be binding upon Owner, and its successors and assigns; and may be enforced by City and its successors and assigns. Owner hereby declares its understanding and intent that the burden of the covenants set forth herein touch and concern the land and that the Owner's interest in the Restricted Unit is rendered less valuable thereby. Owner hereby further declares its understanding and intent that the benefit of such covenants touch and concern the land by enhancing and increasing the enjoyment and use of the Restricted Unit by Owner, and by furthering public purposes for City. fn amplification and not in restriction of the provisions hereinabove, it is intended and agreed that City is deemed a beneficiary of the agreements and covenants provided herein both for and in its own right and also for the purposes of protecting the interests of the community. All covenants without regard to technical classification or designation shall be binding for the benefit of City and such covenants shall run in favor of City for the entire period during which such covenants shall be in force and effect, without regard to whether City is or remains an owner of any land or interest therein to which such covenants relate. However, all such covenants and restrictions shall be deemed to run in favor of all real property owned by the City which real property shall be deemed the benefited property of such covenants. Furthermore, all of the covenants, conditions, and restrictions contained herein shall also constitute casements in gross running in favor of the City. City shall have the right, in the event of any breach of any such agreement or covenant, to exercise all the rights and remedies, and to maintain any action at law or suit in equity or other proper proceedings to enforce the curing of such breach of agreement or covenant. 11.2 Notice of Default. Failure or delay by Owner to perform any term or provision of these Resale Restrictions which is not cured within thirty (30) days after receipt of notice from the City constitutes a Default under these Resale Restrictions; provided, however, if such Default is of the nature requiring more than thirty (30) days to cure, Owner may avoid 9 17-6040/168247.doe/SFF HB -105- Item 9. - 29 Default hereunder by immediately commencing to cure within such thirty (30) day period, and thereafter diligently pursuing such cure to completion within sixty (60) days after the expiration of the initial thirty (30) day period, for a total of ninety (90) days. Failure or delay in giving notice by the City shall not constitute a waiver of any Default, nor shall it change the time of Default. 11.3 City's Remedies. Upon the declaration of a Default, the City may (i) apply to a court of competent jurisdiction for specific performance, for an injunction prohibiting any act or omission in violation of these Resale Restrictions, or for any such other relief as may be appropriate, (ii) exercise the City's rights under these Resale Restrictions and the Affordable Housing Deed of Trust, including, without limitation, foreclosure of the Restricted Unit, and (iii) pursue such other rights and remedies permitted under these Resale Restrictions and by applicable law. 11.4 Prohibited Transfers Void. Any attempt by the Owner to make a Prohibited Transfer of title to or any interest in the Restricted Unit in violation of these Resale Restrictions shall be void and subject to rescission, specific performance, or any other right or remedy available at law or in equity. 12. Governin1l Law. Owner hereby agrees to comply with all ordinances, rules and regulations of the City, including the City Housing Regulations. Nothing in these Resale Restrictions is intended to be, nor shall it be deemed to be, a waiver of any City ordinance, rule or regulation. These Resale Restrictions shall be governed by the laws of the State of California without regard to conflict of law principles, Any legal action brought under these Resale Restrictions must be instituted in the Superior Court of the County of Orange, State of California, or in the Federal District Court in the Central District of California. 13. Attorneys' Fees and Costs. If either Party to these Resale Restrictions institutes any action against the other Party arising out of or in connection with to these Resale Restrictions, each Party shall bear its oven attorney's fees and costs of suit. 14. Seyerability. So long as the material bargain of the Parties may be preserved, any provision of these Resale Restrictions that is deemed to be illegal, invalid or unenforceable by an arbitrator or court of competent jurisdiction shall be ineffective to the extent of the invalidity or unenforceability of such provision and shall be deemed stricken from these Resale Restrictions. Any stricken provision shall not affect the legality, enforceability or validity of the remainder of these Resale Restrictions. if any provision of these Resale Restrictions is stricken in accordance with the provisions of this Section, then the stricken provision shall be replaced, to the extent possible, with a legal, enforceable and valid provision that is as similar in tenor and intent to the stricken provision as is legally possible. Any such invalidity or unen fore cability of any provision in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 15, Exhibits. Each of the Attachments referenced in these Resale Restrictions and attached hereto is incorporated into these Resale Restrictions by this reference as though fully set forth in this Section. 10 17-F049/168247. doc/SFF Item 9. - 30 KB _106_ IN WITNESS WHEREOF, the Parties have caused this instrument to be executed on their behalf by their respective officers hereunto duly authorized as of the date set forth above. OWNER: MLC HOLDINGS, INC., an Arizona Corporation By: Its: By: Its: CITY: CITY OF HUNTINGTON BEACH, a California municipal corporation Mayor ATTEST: City Clerk AUTHORITY: HOUSING AUTHORITY OF THE CITY OF HUNTINGTON BEACH, a public body corporate and politic By:_ Chairperson ATTEST: Authority Clerk 17-6040/168247.doc/SFF 11 HB -I07- Item9.-31 APPROVED AS TO FORM: City Attorney/Authority Counsel INITIATED AND APPROVED: City Manager 12 . - "" ' Q/I68247.doc/SFF Item 9. - 32 HB -108- (Legal Description) 13 17- 6 040/ t 68 24 7. d o c/S FF HB -109- Item 9. - 33 EXHIBIT B (Notice of Affordability Restriction) U T 7_rnd0/168247.doc(SFF Item 9. - 34 H B -110- Recording Requested By: City of Huntington Beach 2000 Main Street Huntington Beach, California 92648 Attention: Economic Development Dept./Housing Div. SPACE ABOVE THIS LINE FOR RECORDER'S USE NOTICE OF AFFORDABILITY RESTRICTIONS ON TRANSFER OF PROPERTY (Unit , 19100 GOTHARD STREET, HUNTINGTON BEACH) NOTICE IS HEREBY GIVEN by ("Owner"), owner of the property located at 1.9100 Gothard Street, Unit , Huntington Beach, California 92648, and more particularly described in Exhibit "A" attached hereto (the "Property"), that: 1. The Property is subject to a "Declaration of Covenants, Conditions and Restrictions for Moderate Income Affordable Housing' recorded on , 20 as Instrument Number No. in the Office of the County Recorder of the County of Orange, California (the "Resale Restrictions"). Among other things, the Resale Restrictions limit the price that the Property may be sold to an "Affordable Housing Cost" for "Moderate Income Households." Concurrently with executing this Notice, Owner has executed a Promissory Note and a Deed of Trust securing the Resale Restrictions. 2. The administration of the Resale Restrictions shall be governed by the Affordable Housing Regulations of the City of Huntington Beach, dated August 15, 2011, as they exist now and may be amended in the future. 3. In summary, the teen "Affordable Housing Cost" means the purchase price that would result in monthly housing payments that do not exceed Thirty -Five Percent (35%) of One Hundred Ten Percent (110%) of the current Orange County monthly median income for a household adjusted for family size appropriate to the Unit. Family size is one plus the number of bedrooms; for example, a household of four persons is the family size of a three -bedroom unit. In detertnining monthly housing payments, the City will assume principal and interest payments on a conventional home mortgage after paying a ten percent (10%) downpayment. Monthly housing costs will also include homeowner's association dues, utilities, homeowner's insurance, maintenance costs and property taxes. The effect of relying on prevailing interest rates to determine the Affordable Sales Price is to make the resale price of the Property sensitive to interest rates. For example, if interest rates rise, the resale price will fall, and if interest rates fall, the resale price will rise. This could result in the Affordable Housing Cost decreasing below the original purchase price. 17-6041 / 168201. doe/SFF H13_111_ Item 9.-35 5. In the event that Owner decides to sell or otherwise 'Transfer of the Property, Owner shall contact the City to obtain the current Affordable Housing Cost, which shall be the maximum sales price of the Property. City shall provide the Affordable Housing Cost pursuant to its current Affordable Housing Regulations. Regarding the Affordable Housing Cost, Owner acknowledges that: OWNER, AND EACH SUCCESSOR, HEIR OR ASSIGN OF OWNER, UNDERSTANDS THAT THE DETERMINATION OF THE AFFORDABLE HOUSING COST CAN BE MADE ONLY AT THE TIME OF A PROPOSED SALE OR OTHER TRANSFER OF THE RESTRICTED UNIT, TAKING INTO CONSIDERATION PREVAILING INTEREST RATES, THE OFFERED TERMS OF SALE, THE ECONOMIC CIRCUMSTANCES OF THE PROPOSED PURCHASER AND OTHER FACTORS THAT CANNOT BE ACCURATELY PREDICTED, AND THAT THE TRANSFER PRICE PERMITTED HEREUNDER MAY BE LESS THAN THE FAIR MARKET VALUE OF THE SAME OR OTHER SIMILAR REAL PROPERTY WHICH IS NOT ENCUMBERED BY THIS COVENANT. OWNER, AND EACH SUCCESSOR, HEIR OR ASSIGN OF OWNER, FURTHER ACKNOWLEDGES THAT AT ALL TIMES IN SETTING THE TRANSFER PRICE, THE PRIMARY OBJECTIVE OF THE CITY AND THESE RESALE RESTRICTIONS IS TO PROVIDE HOUSING TO MODERATE INCOME HOUSEHOLDS AT AN AFFORDABLE HOUSING COST. Owner's Initials 6. The Resale Restrictions imposed on the Property began on , 20—, and expire forty-five (45) years later, on , 20— This Notice is recorded for the purpose of providing notice only and it in no way modifies the provisions of the Resale Restrictions. Dated: , 20_ APPROVED AS TO FORM: OFFICE OF HUNTINGTON BEACH CITY ATTORNEY Dated: , 20_ MICHAEL E. GATES, City Attorney 2 17-6041 /168201.doe/SFF Item 9. - 36 HB -i 12- Exhibit "A" 17-6041 /168201.doc/SFF HB -113- Item 9. - 37 ACKNOWLEDGMENT State of California ) ss County of } On , before me, (Here Insert Nance and Title of the Notary Officer ) personally appeared , who proved to me on the basis of satisfactory evidence to be the person(s) whose narne(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 State of California that the foregoing is true and correct. WITNESS my hand and official seal. [Seal] (Signature of Notary Public) 4 17-6041/16820 Ldoc/SFF Item 9. - 38 HB _ 1 1 4- EXHIBIT C (Promissory Note) ILI 17-60401168247. d oc(SFF HB -115- Item 9. - 39 PROMISSORY NOTE TO SECURE AFFORDABILITY RESTRICTIONS ON TRANSFER OF PROPERTY (Unit , 19100 GOTHARD STREET, HUNTINGTON BEACH) THIS PROMISSORY NOTE (the "Note") is dated this day of _ 20, between reference to the following facts: ("Promissor") and the City of Huntington Beach ("City") with A. This Promissory Note is made in reference to that property in the City of Huntington Beach, County of Orange, State of California, with the street address 19100 Gothard Street, Unit. Huntington Beach, California 92648 and the Assessor's Parcel Map No. (the "Property"). B. The Property is subject to a "Declaration of Covenants, Conditions and Restrictions for Moderate Income Affordable Housing" recorded on , 20_ as Instrument Number No. in the Office of the County Recorder of the County of Orange, California (the "Resale Restrictions"). Arnong other things, the Resale Restrictions limit the price that the Property may be sold to an "Affordable Housing Cost" for "Moderate Income Households." C. In summary, the term "Affordable Housing Cost" means the purchase price that would result in monthly housing payments that do not exceed Thirty -Five Percent (35%) of One Hundred Ten Percent (110%) of the current Orange County montl-ly Median income for a household. adjusted for family size appropriate to the Unit. Family size is one plus the number of bedrooms; for example, a household of four persons is the family size of a three -bedroom unit. In determining monthly housing payments, the City will assume principal and interest payments on a conventional home mortgage after paying a ten percent (10%) downpayment. Monthly housing costs will also include homeowner's association dues, utilities, homeowner's insurance, maintenance costs and property taxes. The effect of relying on prevailing interest rates to determine the Affordable Sales Price is to snake the resale price of the Property sensitive to interest rates. For example, if interest rates rise, the resale price will fall, and if interest rates fall, the resale price will rise. This could result in the Affordable Housing Cost decreasing below the original purchase price. D. The Resale Restrictions imposed on the Property began on , 20 , and expire forty-five (45) years later, on , 20_. E. 'The administration of the Resale Restrictions shall be governed by the Affordable Housing Regulations of the City of Huntington Beach, dated August 15, 2011, as they exist now and may be amended in the future. R Concurrently with executing this Note, Promissor has executed a Deed of Trust securing and modifying the Resale Restrictions (the "City of Deed of Trust"). Page I of 4 Item 9. - 40 0/1 68204_I)oc/srF H B -1 16- G, Pursuant to the Resale Restrictions, the City approved the sale of the Property to Promissor at an Affordable Housing Cost. To insure that any further sale, transfer or assignment of the Property occurs with the City's approval and at an Affordable Sales Price, the City has required as a condition of the Promissor's purchase of the Property that Promissor execute this Note. AGREEMENT NOW, THEREFORE, the parties agree as follows: l , Incoiporation of Recitals. The recitals set forth above are incorporated by reference as though fully set forth herein. 2. Amount of the Note. The Amount of this Note is the "Transfer Price" of the Property, less the then current "Affordable Housing Cost." The Transfer Price shall be detennined according to the circumstances that cause the Ainount of the Note to become due pursuant to Section 3 of this Note. In the case of the sale of the Property without the City's consent, the Transfer Price shall be the market sales price. In the case of the financing or refinancing of the Property without the City's consent, the Transfer Price shall be the loan amount in excess of the last loan balance on the First Mortgage that the City previously approved. In all other cases, the Transfer Price shall be the fair market value of the Property as established by the Director of Economic Development of the City pursuant to an appraisal. The term "Affordable Housing Cost" shall be defined according to the Resale Restrictions. Promissor promises to pay the Amount of this Note when due to the City at 2000 Main Street, P.O. Box 190, Huntington Beach, California 92648, or at such other address as City may direct from time to time in writing. All sums hereunder shall be payable in lawful money of the United States of America and all sums shall be credited first to interest then due and the balance to principal. 3. Due on Sale, Transfer or Refinancing. Promissor agrees to notify the City not less than thirty (30) days prior to (i) the sale or transfer of the Property or (ii) any financing or refinancing of the Property. This Note shall be due and payable upon (i) such sale or transfer without the City's consent, (ii) the financing or refinancing of the Property without the City's consent, (iii) Promissor is no longer an occupant of the Property, or (iv) Promissor is in material default of any other obligation under the Resale Restrictions, or the City Deed of Trust. 4. Expiration of the Note Obli ation. In the event Promissor does not sell or transfer the Property, does not fail to occupy the Property, does not refinance, or is not in material breach of any other provision of the Resale Restrictions or the City Deed of Trust before , 20_, the expiration of the Affordability Period, as that term is established under the Resale Restrictions, Promissor shall have no obligation to pay the Note Amount to City upon later sale, transfer or refinancing of the Property. Page 2 of 4 17-6040/ I68204.DOC/SFF HB _ l l '/_ Item 9. - 41 S. Default. The entire unpaid Amount of this Note shall be due and payable in full in the event of a default. a. Events of Default. The following shall be deemed to be an event of default: i. Failure of Promissor to pay any real property taxes or insurance premiums on the Property as they become due; or ii. Any material breach of the Resale Restrictions or the City Deed of Trust, following the City giving notice of the breach and an opportunity to cure; or iii- Failure of Promissor to pay the Note Amount when due. 6. This Note is secured by a Deed of Trust, dated , 20, to the Housing Authority of the City of Huntington Beach, as Trustee, executed by Promissor in favor of the City. 7. Notice. All payments, notices, consents, waivers and other communications under this Agreement must be in writing and shall be deemed to have been given when (a) delivered by hand, or, (b) when received by the addressee, if sent by a nationally recognized overnight delivery service (receipt requested), in each case addressed as set forth below: If to PROMISSOR: 19100 Gothard Street, Unit Huntington Beach, CA 92648 If to CITY: City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 Attention: City Clerk and, Economic Development Deputy Director City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 8. Governing Law. This Note is governed by and shall be construed in accordance with the laws of the State of California without giving effect to the conflict of laws principles thereof. The parties agree to personal jurisdiction in the State Courts in Orange County, California and specifically waive any claims of forum non conviens. 9. Modification. This Note shall not be amended or modified, except in writing, signed by both parties. Page 3 of 4 Item 9. - 42 0n68204.noasH HB -1 IS- 10. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the successors and assigns under this Note. This Note shall not be assigned without the express written consent of City. Dated: , 20 PROMISSOR.: FOR THE CITY OF HUNTINGTON BEACH: Dated: , 20. By: APPROVED AS TO FORM Assistant City Manager OFFICE OF HUNTINGTON BEACH CITY ATTORNEY Dated: , 20 By: City Attorney Page 4 of 4 17-6040I168204DOCYSCT HB -119- Item 9. - 43 EXHIBIT D (Affordable Housing Deed of Trust) 16 1 7_rn4p/J 68247.doc/SFF Item 9. - 44 HB -120- OFFICIAL BUSINESS Document entitled to free recording per Government Code Sections 6103 and 27383 Recording Requested By: City of Huntington Beach 2000 Main Street Huntington Beach, California 92648 Attention: Economic Development Dept./Housing Div. SPACE ABOVE THIS LINE FOR RECORDER'S USE DEED OF TRUST WITH ASSIGNMENTS OF RENTS TO SECURE AFFORDABILITY RESTRICTIONS ON TRANSFER OF PROPERTY (Unit , 19100 Gothard Street, Huntington Beach) THIS DEED OF TRUST is made this day of , 2017, by and among (the "Trustor"), whose address is Unit , 19100 Gothard Street, Huntington Beach 92648 and the HOUSING AUTHORITY OF THE CITY OF HUNTINGTON BEACH, a municipal corporation (the "Trustee") and the CITY OF HUNTINGTON BEACH, a public body corporate and politic (the `Beneficiary" or the "City"), whose address is 2000 Main Street, Huntington Beach, California 92648, with reference to the following facts: A. This Deed of Trust is made in reference to that property in the City of Huntington Beach, County of Orange, State of California, described legally in the Legal Description attached hereto as Exhibit "A" and incorporated herein with the street address Units , 19100 Gothard Street, Huntington Beach, California 92648 and the Assessor's Parcel Map Nos. , (the "Property"). B. A "Declaration of Covenants, Conditions and Restrictions for Moderate Income Affordable Housing" was recorded on , 20 as Instrument Number No. in the Office of the County Recorder of the County of Orange, California (the "Resale Restrictions"). The Resale Restrictions limit the price that the Property may be sold to an "Affordable Housing Cost" for "Moderate Income Households," The Affordable Housing Cost pursuant to the Resale Restrictions shall be the purchase price that would result in monthly housing payments that do not exceed Thirty -Five Percent (35%) of One Hundred Ten Percent (110%) of the current Orange County monthly median income for a household adjusted for family size appropriate to the Unit. Family size is one plus the number of bedrooms; for example, a household of four persons is the family size of a three -bedroom unit. In determining monthly housing payments, the City will assume principal and interest payments on a conventional home mortgage after paying a ten percent (10%) downpayment. Monthly housing costs will also include homeowner's association dues, utilities, homeowner's insurance, maintenance costs and property taxes. In determining monthly housing payments, the City will assume principal and interest payments on a conventional home mortgage after paying a ten percent (10%) downpayment. Page I of 14 17-6040/168203/SFF HB -121- Item 9. - 45 C. The effect of relying on prevailing interest rates to determine the Affordable Housing Cost is to make the resale price of the Property sensitive to interest rates. For example, if interest rates rise, the resale price will fall, and if interest rates fall, the resale price will rise. This could result in the Affordable Housing Cost decreasing below the original purchase price. D. The administration of the Resale Restrictions shall be governed by the "Affordable Ownership Housing Regulations -Homeowner Requirements of the City of Huntington Beach," dated August 15, 2011, as they exist now, and as they may be amended in the future (the "City Housing Regulations"). E. The Resale Restrictions imposed on the Property began on 20_, and expire forty-five (45) years later, on , 20_ (the "Affordability Period"). NOW, THEREFORE, TRUSTOR HEREBY irrevocably grants, transfers and assigns, to Trustee, in trust, with power of sale of the Property, together with (a) all buildings, improvements and fixtures, now or hereafter placed thereon, it being understood and agreed that all classes of property attached or unattached used in connection herewith shall be deemed fixtures, (b) rents, issues and profits thereof, (c) any water rights and/or stock are appurtenant or pertain to said land, and (d) all sums of money payable on the purchase price of the Property secured by a lien thereon or payable under any agreement for the sale thereof, SUBJECT, HOWEVER, to the right, power and authority hereinafter given to and conferred upon Beneficiary to collect and apply such rents, issues and profits, and all sums of money payable on the purchase price of the Property secured by a lien thereon or payable under any agreement. A. FOR THE PURPOSE OF SECURING: 1. Payment of the indebtedness evidenced by a promissory note (the "Note") executed by Trustor concurrently with this Deed of Trust. The Amount of the indebtedness is the "Transfer Price" of the Property, less the "Affordable Housing Cost." The calculation of the Amount of the indebtedness is set forth with specificity in the Note, which is on file with the Economic Development Department of the City of Huntington Beach. 2. Performance of each and every obligation, covenant, promise and agreement of the Resale Restrictions. B. TO PROTECT THE SECURITY OF THIS DEED OF TRUST, TRUSTOR AGREES: L Trustor agrees for itself, and its successors and assigns, and every successor to Trustor's interest in the Property, or any part thereof throughout the Affordability Term, to perform all obligations due under the Resale Restrictions, as set forth below: (a) The Property shall only be owned and occupied by persons or families of "Moderate Income." "Moderate Income" shall mean persons or families earning no more than one hundred twenty percent (120%) of the Orange County median income, adjusted for appropriate family size. Page 2 of 14 7_1V14o/t68203/SFF Item 9. - 46 HB -122- (b) The Property may only be sold at an "Affordable Housing Cost" to households of "Moderate Income," as those terms are defined in the City Housing Regulations. Generally, those Regulations define .Affordable Housing Cost to mean that purchase price which would result in monthly housing payments which do not exceed Thirty -Five Percent (35%) of One Hundred Ten .Percent (110%) of the current Orange County monthly median income for a household equal to the number of bedrooms in the unit plus one (1) person. In determining monthly housing payments, the Regulations assume principal and interest payments on a conventional home mortgage after paying a ten percent (10%) downpayment. The mortgage interest rate will be the prevailing Fannie Mae or Freddie Mac thirty (30) year mortgage rate, or a City -selected equivalent. Monthly housing costs will also include homeowner's association dues, utilities, homeowner's insurance, maintenance costs and property taxes. (c) The Trustor shall further comply with the City Housing Regulations. (d) No transfer of. the Property shall occur until the City of Huntington Beach determines (a) that the proposed purchaser intends to occupy the Property as the proposed purchaser's principal residence, (b) that the proposed purchaser is a person or family of Moderate Income, and (c) that the proposed transfer occurs at an Affordable Housing Cost. The City of Huntington Beach shall not be obligated to approve a transfer until and unless the proposed purchaser has submitted to the City of Huntington Beach such information and completed such forms as the City of Huntington Beach shall request to certify the proposed purchaser's intent with respect to its residency of the Property and its gross income, and the proposed purchaser has submitted an affidavit disclosing and certifying the amount of the proposed purchase price. Prior to conveyance of the Property, each approved purchaser shall submit to the City of Huntington Beach an executed disclosure statement which certifies that the purchaser is aware that the purchaser may only sell the unit at an Affordable Housing Cost to a Moderate Income person or family, that the maximum permitted sales price may be less than fair market value and that the unit trust be owner -occupied at all times and cannot be rented or leased. TRUSTOR AND EACH SUCCESSOR, HEIR OR ASSIGN OF TRUSTOR UNDERSTANDS THAT THE DETERMINATION OF THE AFFORDABLE HOUSING COST CAN BE MADE ONLY .AT THE TIME OF THE PROPOSED TRANSFER, TAKING INTO CONSIDERATION INTEREST RATES, THE TERMS OF SALE OFFERED TO AND THE ECONOMIC CIRCUMSTANCES OF THE PROPOSED PURCHASER AND OTHER FACTORS THAT CANNOT BE ACCURATELY PREDICTED, AND THAT THE TRANSFER PRICE PERMITTED HEREUNDER MAY BE LESS THAN THE FAIR MARKET VALUE OF THE PROPERTY AND MAY NOT INCREASE OR DECREASE IN THE SAME MANNER AS OTHER SIMILAR REAL PROPERTY WHICH IS NOT ENCUMBERED BY THIS RESTRICTION. TRUSTOR AND EACH SUCCESSOR, HEIR OR ASSIGN OF TRUSTOR FURTHER ACKNOWLEDGES THAT AT ALL TIMES IN SETTING THE TRANSFER. PRICE THE PRIMARY OBJECTIVE OF THE BENEFICIARY Page 3 of 14 17-6040/168203/SFF HB -123- Item 9. - 47 AND THIS DEED OF TRUST IS TO PROVIDE HOUSING TO ELIGIBLE PERSONS OR FAMILIES AT AN AFFORDABLE HOUSING COST. Trustor Initials (e) The City of Huntington Beach may impose any conditions on the approval of any transfer of the Property as it determines are reasonably necessary for the effective administration of its Affordable Housing Program. 2. Trustor 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, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the said property, nor shall Trustor 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, lessees, subtenants, sublessees, or vendees in said property. Trustor and its successors and assigns, shall refrain from restricting the rental or lease (if permitted by Trustor) or sale of said property on the basis of race, color, religion, sex, marital status, national origin or ancestry of any person. All such deeds, leases or contracts shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses: (a) In deeds: "The grantee herein covenants by and for himself or herself, his or her heirs, executors, administrators 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, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land herein conveyed, nor shall the grantee himself or herself or any person claiming under or through. hum or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessee or vendees in the land herein conveyed. The foregoing covenants shall run with the land." (b) In leases: "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: "There shall be no discrimination against or segregation of any person or group of persons on account of race, color, religion, sex, marital status, ancestry or national origin 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 to through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to Page 4 of 14 1 7-Fn4Q/1682ONSFF Item 9. - 48 HB -124- the selection; location, number, use or occupancy of tenants, lessees, sublessees, subtenants or vendees in the premises herein leased." (c) In contracts: "There shall be n.o discrimination against or segregation of, any person, or group of persons on account of race, color, religion, sex, marital status, ancestry or national origin, in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the premises, nor shall the transferee 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 with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessee or vendees of the premises." Nothing in this Section 2 shall be construed to authorize the rental or lease of the Property if such rental or lease is not otherwise permitted by the Resale Restrictions. 3. No violation or breach of the covenants, conditions, restrictions, provisions or limitations contained in this Deed of Trust shall defeat or render invalid or in any way impair the lien or charge of any mortgage or deed of trust or security interest. 4. Trustor has made certain representations and disclosures as a requirement under the Resale Restrictions in order to induce Beneficiary to approve the sale of the Property to Trustor. In the event that Trustor has made any material misrepresentation or failed to disclose any material fact regarding said transaction, Beneficiary at its option and without notice, shall have the right to declare a material breach of the Resale Restrictions and the Note. Beneficiary may make a written declaration of default and demand for sale as in paragraph No. 6 herein set forth. Trustee, upon presentation to it of an affidavit signed by Beneficiary setting forth facts showing a default by Trustor under this paragraph, is authorized to accept as true and conclusive all facts and statements therein, and to act thereon hereunder, 5. All covenants without regard to technical classification or designation shall be binding for the benefit of the Beneficiary and such covenants shall run in favor of the Beneficiary for the entire period during which such covenants shall be in force and effect, without regard to whether the Beneficiary is or remains an owner of any land or interest therein to which such covenants relate. The Beneficiary, 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 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. 6. Upon default by Trustor in the obligations of the Note, in the performance of any obligation under this Deed of Trust or under the terms of any First Lender's Deed of Trust which is or appears to be prior or superior to this Deed of Trust, Beneficiary may declare all sums secured by this Deed of Trust immediately due and payable by delivering to Trustee of a written declaration of default and demand for sale and a written notice of default and election to sell the Property. Default in the payment of any indebtedness secured by this Deed of Trust, in the obligation of the Note, or in the performance of any agreement under this Deed of Trust Page 5 of 14 17-6040/168203/SFF 11B -125- Item 9. - 49 constitutes a default only under this Deed of Trust and the Note and does not constitute a default under the First Deed of Trust. Trustee shall cause the notice of default to be recorded. Beneficiary also shall deposit with Trustee this Deed of Trust, the Note, and all documents evidencing any additional expenditures secured by this Deed of Trust. After the lapse of such time as then may be required by law following recordation of such notice of default, and notice of sale having been given as then required by law, Trustee, without demand on Trustor, shall sell the Property at the time and place fixed by it in such notice of sale, whether as a whole or in separate parcels, and in such order as it may determine, at public auction to the highest bidder qualified under the Resale Restrictions and this Deed of Trust in lawful money of the United States, payable at time of sale. Trustee may postpone sale of all or any portion of the Property by public announcement at such time and place of sale, and from time to time thereafter may postpone such sale by public announcement at the time fixed by the preceding postponement. Trustee shall deliver to such purchaser its Deed conveying the Property so sold, but without any covenant or warranty, express or implied. The recital in such Deed of any matters of fact shall be conclusive of the truthfulness thereof Any person, including Trustor, Trustee, or Beneficiary as hereinafter defined, may purchase at such sale. Trustee may also sell at any such sale and as part thereof any shares of corporate stock securing the obligations secured hereby, and Trustor waives demand and notice of such sale. (Beneficiary at its option may also foreclose on such shares by independent pledge sale, and Trustor waives demand and notice of such sale.) After deducting all costs, fees and expenses of Trustee, and of this Trust, including cost of evidence of title in connection with this sale, Trustee shall apply the proceeds of sale to payment, first; all sums expended under the terms hereof, not then repaid, with accrued interest at the rate then payable under the First Lender Deed of Trust secured hereby, and then of all other sums secured hereby, and, if there are any proceeds remaining, shall distribute them to the person or persons legally entitled thereto. 7. Trustor shall keep the Property in good condition and repair; to allow Beneficiary or its representatives to enter and inspect the Property at all reasonable times and access thereto, shall be permitted for that purpose; not to remove or demolish any building thereon; not to make alterations thereto without the consent of the Beneficiary; to suffer or permit no change in the general nature of the occupancy of the Property without Beneficiary's written consent; to complete or restore promptly and in good workmanlike manner any building which may be constructed, damaged or destroyed thereon, including, without restricting the generality of the foregoing, damage from termites and dry -rot; to pay when due all claims for labor performed and materials furnished in connection with the Property and not to pen -nit any mechanic's lien against the Property; to comply with all laws affecting the Property or requiring any alterations or improvements to be made thereon; not to initiate or acquiesce in any zoning reclassification without Beneficiary's written consent; not to commit or permit waste thereon; not to commit, suffer or permit any act upon the Property in violation of the law; to paint, cultivate, irrigate, fertilize, fumigate, prune, and do all other acts that from the character or use of the Property may be reasonably necessary; and to promptly pay all amounts due others upon agreements of lease or conditional sale of all fixtures, furnishings and equipment located thereon. 8. Trustor shall provide, and maintain in force at all times with respect to the Property, fire and other types of insurance as may be required by Beneficiary. All of such insurance shall have a loss payable endorsement in favor of Beneficiary, shall be for a term and in form, content, amount and in such companies as may be satisfactory to Beneficiary, and the Page 6 of 14 17-6040/168203/SFF Item 9. - 50 HB -126- policies therefore shall be delivered to and remain in possession of Beneficiary as further security for the faithful performance of these trusts. At least thirty (30) days prior to the expiration of any such insurance policy, a policy or policies renewing or extending such expiring insurance shall be delivered to Beneficiary together with written evidence showing payment of the premium therefore and, in the event any such insurance policy and evidence of the payment of the premium therefore are not so delivered by Trustor to Beneficiary, Trustor by executing this Deed of Trust specifically requests Beneficiary to obtain such insurance and Beneficiary, without obligation to do so, without notice to or demand upon Trustor and without releasing Trustor from any obligation hereof, may obtain such insurance through or from any insurance agency or company acceptable to it, pay the premium thereof, and may add the amount thereof to the indebtedness secured hereby, which amount shall bear a like rate of interest. Beneficiary may furnish to any insurance agency or company, or any other person, any information contained in or extracted from any insurance policy delivered to Beneficiary pursuant hereto and any information concerning the loan secured hereby. Neither Trustee nor Beneficiary shall be responsible for such insurance or for the collection of any insurance monies, or for any insolvency of any insurer or insurance underwriter. In case of insurance loss, Beneficiary is hereby authorized either (a) to settle and adjust any claim under the insurance policies provided for in this document without the consent of the Trustor, or (b) to allow Trustor to agree with the insurance company or companies on the amount to be paid upon the loss. In either case, the Beneficiary is authorized to collect and make receipt of any such insurance money. If Trustor is obligated to restore or replace the damaged or destroyed buildings or improvements under the terms of any lease or leases which are or may be prior to the lien of this Deed of Trust and such damage or destruction does not result in cancellation or termination of such lease, such proceeds, after deducting therefrom any expenses incurred in the collection thereof, shall be used to reimburse the Trustor for the cost of rebuilding or restoring the buildings or improvements on said premises. In all other cases, such insurance proceeds shall either be applied for the cost of the rebuilding or restoring the buildings or improvements on said premises. Such buildings and improvements shall be so restored or rebuilt as to be of at least equal value and substantially the same character as prior to the damage or destruction, and shall be in a condition satisfactory to Beneficiary. Such application or release shall not cure or waive any default or notice of default hereunder or invalidate any act done pursuant to such notice. Any and all unexpired insurance shall inure to the benefit of, and pass to the purchaser of, the property conveyed at any Trustee sale held hereunder. 9. Trustor shall pay: (a) at least ten (10) days before delinquency, all general and special City and County taxes, and all assessments on appurtenant water stock, affecting the Property, (b) when done, all special assessments for public improvements, without permitting any improvement bond to issue for any special assessment, (c) when done, all encumbrances, charges and lines, with interest, on the Property, or any part thereof, which are or appears to be prior to superior hereto, (d) if the security of this Deed of Trust is leasehold estate, to make any payment or do any act required of the Lessee or its successor in interest under the terms of the instrument or instruments creating said leasehold, (e) all costs, fees and expenses of this trust, (f) for any statement regarding the obligation secured hereby any amount demanded by Beneficiary not to exceed the maximum allowed by law thereof at the time when such request is made, (g) such other charges for services rendered by Beneficiary and furnished at Trustor's request or that of any successor in interest to Trustor as the Beneficiary may deem reasonable. Page 7 of 14 17-6040/168203/sFF HB -127- Item 9. - 51 10. Should Trustor fail to make any payment or do any act as provided in this Deed of Trust, the Beneficiary or Trustee, but without obligation to do so and without notice to or demand upon Trustor and without releasing Trustor from any obligation hereof, may (a) make or do the same in such manner and to such extent as either may deem necessary to protect the security hereof, Beneficiary or Trustee being authorized to enter upon the Property for such purposes, (b) commence, appear in, or defend any action or proceeding purporting to affect the security hereof or the property covered by this Deed of Trust, or the rights or powers of Beneficiary or Trustee, (c) pay, purchase, contest or compromise any encumbrance, charge or lien, which in the judgment of either is or appears to be prior or superior hereto, and (d) in exercising any such powers, pay necessary expenses, employ counsel and pay his reasonable fees. Trustor agrees to repay any arnount so expended on demand of Beneficiary, and any amount so expended may be added by Beneficiary to the indebtedness secured hereby and shall bear a like rate of interest. 11. Trustor shall appear in and defend any action or proceeding purporting to affect the security hereof or the Property which is covered by this Deed of Trust, or the rights or powers of Beneficiary or Trustee, and whether or not Trustor so appears or defends, to pay all costs and expenses, including cost of evidence of title and attorney's fees in a reasonable sum, in any such action or proceeding in which Beneficiary or Trustee may appear by virtue of being made a party defendant or otherwise irrespective of whether the interest of Beneficiary or Trustee in the Property is directly questioned by such action, including any action for the condemnation or partition of said premises, and in any suit brought by Beneficiary to foreclose this Deed of Trust. 12. Trustor shall pay immediately and without demand, all sums expended under the terms of this Deed of Trust by Beneficiary or Trustee, with interest from the date of expenditure at the rate which the principal obligation secured hereby bears at the time such payment is made, and the repayment of such sums shall be secured hereby. 13. Should Trustor or any successor in interest to Trustor in the Property drill or extract, or enter into a lease for drilling or extraction of oil, gas or other hydrocarbon substances or any mineral of any kind or character, or sell, convey, further encumber, or alienate the Property, or any party thereof, or any interest therein, or be divested of his tide or any interest therein in any manner or way, whether voluntarily or involuntarily, Beneficiary shall have the right, at its option, to declare any obligations secured hereby irrespective of the maturity date specified in any Note evidencing the same, immediately due and payable, and no waiver of this right shall be effective unless in writing. 14. Any award, settlement or damages for injury or damages to the Property, or in construction with the transaction financed by such loan, and any award of damages in connection with any condemnation for public use of or injury to the Property, or any part thereof, is hereby assigned and shall be paid to Beneficiary, who may apply or release such monies received by it in such manner and with the same effect as above provided for the disposition of proceeds of fire or other insurance. Page 8 of 14 17_r;n40/168203/SFF Item 9. - 52 HB -128- 15. By accepting payment of any sums secured by this Deed of Trust after its due date, or by making any payment, performing any act on behalf of Trustor, that Trustor was obligated hereunder, but failed, to make, or perform, or by adding any payment so made by Beneficiary to the indebtedness secured hereby, Beneficiary does not waive its right either to require prompt payment when due of all other sums so secured or to declare a default for failure so to pay. 16. At any time, or from time to time, without liability of the Beneficiary or Trustee thereof, and without notice, upon written request of Beneficiary and presentation of this Deed of Trust and the Note secured hereby for endorsement, and without affecting the personal liability of any person for payment of the indebtedness secured hereby, or the lien of the Deed of Trust upon the remainder of the Property for the full amount of the indebtedness then or thereafter secured hereby, or the rights or powers of Beneficiary or the Trustee with respect to the remainder of the Property, Trustee may: (a) reconvey any part of the Property, (b) consent to the making of any map or plat thereof, (c) join in granting any easement thereon, (d) join in any agreement subordinating the lien or charge hereof. 17. The lien hereof shall remain in full force and effect during any postponement or extension of time of payment of the indebtedness secured hereby, or any part thereof. 18. As additional security, Trustor irrevocably assigns to Beneficiary the rents, issues, and profits of the Property for the purposes and upon the terns and conditions set forth below. This assignment shall not impose upon Beneficiary any duty to produce rents from the property affected by this Deed of Trust, or cause Beneficiary to be (a) "mortgages in possession" for any purpose; (b) responsible for performing any of the obligations of the lessor under any lease; or (c) responsible for any waste committed by lessees or any other parties, for any dangerous or defective condition of the property affected by this Deed of Trust, or for any negligence in the management, upkeep, or control of such rights to rents, issues and profits is not contingent upon, and may be exercised without possession of, the property affected by this Deed of Trust. Beneficiary confers upon Trustor a license ("License") to collect and retain the rents, issues and profits of the property affected by this Deed of Trust as they become due and payable, until the occurrence of a default hereunder. Upon such default, the License shall be automatically revoked and Beneficiary may collect and retain the rents, issues and profits without notice and without taking possessions of the property affected by this Deed of Trust. This right to collect rents, issues and profits shall not grant to Beneficiary or Trustee the right to possession, except as otherwise provided herein; and neither said right, nor termination of the License, shall impose upon Beneficiary or Trustee the duty to produce rents, issues or profits or maintain all or any part of the Property affected by this Trust Deed. If Trustor shall default as aforesaid, Trustor's right to collect any such money shall cease and Beneficiary shall have the right, with or without taking possession of the property affected hereby, to collect all rents, issues, royalties and profits and shall be authorized to, and may, without notice and irrespective of whether declaration of default has been delivered to Trustee and without regard to the adequacy of the security for the indebtedness secured hereby, either personally or by attorney or agent without bringing any action or proceeding, or by receiver to be appointed by the Court, enter into possession and hold, occupy, Page 9 of 14 17-6040/168203/SFF HB -129- Item 9. - 53 possess and enjoy the Property, make, cancel, enforce and modify leases, obtain and eject tenants, and set and modify rents and terms of rents, and to sue, and to take, receive and collect all or any part of the said rents, issues, and profits of the property affected hereby, and after paying such costs of maintenance, operation of the Property, and of collection including reasonable attorneys' fees, as in its judgment it may deem proper, to apply the balance upon any indebtedness then secured hereby, the rents, issues, royalties and profits of the Property being hereby assigned to Beneficiary for said purposes. The acceptance of such rents, issues, royalties and profits shall not constitute a waiver of any other right which Trustee or Beneficiary may enjoy under this Deed of Trust or under the laws of California. Failure of or discontinuance by Beneficiary at any time, or from time to time, to collect any such rents, issues, royalties or profits shall not in any manner affect the subsequent enforcement by Beneficiary of the right, power and authority to collect the same. The receipt and application by said Beneficiary of all such rents, issues, royalties and profits pursuant hereto, after execution and delivery of declaration of default and demand for sale as hereinafter provided, or during the pendency of Trustee's sale proceedings hereunder, shall not cure such breach or default nor affect sale proceedings, or any sale made pursuant thereto, but such rents, issues, royalties and profits, less all costs of operation, maintenance, collection and reasonable attorneys' fees, when received by Beneficiary, shall be applied in reduction of the indebtedness secured hereby, from time to time, in such order as Beneficiary may determine. Nothing contained herein, nor the exercise of the right by Beneficiary to collect, shall be, or be construed to be, an affirmation by Beneficiary of any tenancy, lease or option, nor an assumption of liability under, nor subordination of the lien or charge of this Deed of Trust to, any such tenancy, lease or option. 19. If the security of this Deed of Trust is a leasehold estate, the Trustor agrees that: (a) the term "Lease" as used herein shall mean the lease creating the "leasehold estate"' (b) Trustor shall not amend, change or modify his leasehold interest, or the Lease, or agree to do so, without the written consent of the Beneficiary; (c) Trustor will promptly advise Beneficiary regarding any notice, request or demand received by him from the lessor under the Lease and promptly furnish Beneficiary with a copy of any such notice, request or demand; (d) as long as any of the indebtedness secured hereby shall remain unpaid, unless the Beneficiary shall otherwise consent thereto in writing, the leasehold estate shall not merge with the fee title but shall always be kept separate and distinct, notwithstanding the union of said estates in any party; (e) Trustor agrees that it will promptly, strictly, and faithfully perform, fulfill, and comply with all covenants, agreements, terms, conditions and provisions under any lease affecting the prernises and to neither do anything, nor to permit anything to be done which may cause modification or termination of any such lease or of the obligations of any lessee or person claiming through such lease or the rents provided for therein or the interest of the lessor or the Beneficiary therein or thereunder. Trustor further agrees he will not execute a Deed of Trust or mortgage which may be or become superior to any leasehold estate that is security for this Deed of Trust. In the event of a violation of any of the covenants set forth in this paragraph, Beneficiary shall have the right, at its option, to declare all sums secured hereby immediately due and payable. Consent to or waiver of one of said violations shall not be deemed to be a consent to or waiver of any other violation. If the security for this Deed of Trust is a leasehold estate, the term "property" as used in this Deed of Trust shall be deemed to mean the leasehold estate whenever the context so requires for the protection of the Beneficiary. Page 10 of 14 17-6040/168203/SFF Item 9. - 54 xB -130- 20. Trustor waives, to the fullest extent permissible by law, the right to plead any statute of limitations as a defense to any demand secured hereby. 21. Beneficiary may, from time to time, by instrument in writing, substitute a successor or successors to any Trustee named herein or acting hereunder, which instrument, executed and acknowledged by Beneficiary and recorded in the office of the recorder of the county or counties where the Property is situated, shall be conclusive proof of property substitution of such successor Trustee or Trustees, who shall, without conveyances from the Trustee predecessor, succeed to all its title, estate, rights, powers and duties, including but not limited to the power to reconvey the whole or any part of the property covered by this Deed of Trust. Such instrument must contain the name of the original Trustor, Trustee and Beneficiary hereunder, the book and page where this Deed of Trust is recorded. If notice of default shall have been recorded, this power of substitution cannot be exercised until after the costs, fees and expenses of the then acting Trustee shall have been paid to such Trustee, who shall endorse receipt thereof upon such instrument. The procedures herein provided for substitution of Trustee shall not be exclusive of other provisions for substitution provided by law. 22. This Deed of Trust applies to, inures to the benefit of, and binds all parties hereto, their heirs, legatees, devisees, administrators, executors, successors and assigns. The term "Beneficiary" shall mean the owner and holder, including pledgee, of the Note secured hereby, whether or not names as Beneficiary herein. In this Deed of Trust, whenever the context so requires, the masculine gender includes the feminine and/or neuter, and the singular number includes the plural. 23. That in the event of a demand for, and the preparation and delivery of a written statement regarding the obligations secured by this Deed of Trust pursuant to Sections 2943 and 2954 of the Civil Code of California, Beneficiary shall be entitled to make a reasonable charge, not exceeding the maximum amount which is permitted by law at the time the statement is furnished. Beneficiary may also charge Trustor a reasonable fee for any other services rendered to Trustor or rendered in Trustor's behalf in connection with the Property of this Deed of Trust, including changing Beneficiary's records, pertaining to this Deed of Trust in connection with the transfer of the Property, or releasing an existing policy of fire insurance or other casualty insurance held by Beneficiary and replacing the same with another such policy. 24. Trustee accepts this Trust when this Deed of Trust, duly executed and acknowledged, is made a public record as provided by law. Trustee is not obligated to notify any party hereto of pending sale under any other Deed of Trust or of any action or proceeding in which Trustor, Beneficiary, or Trustee shall be a party unless brought by Trustee. 25. Any notice which any party hereto may desire or be required to give to the other party shall be in writing. The mailing thereof must be certified mail addressed to the Trustor at his address hereinabove set forth or to the Beneficiary at his office or at such other place as such parties hereto may designate in writing. Page 11 of 14 17-6040/168203/SFF HB-(,l- Item 9. - 55 THE UNDERSIGNED REQUEST that a copy of any notice of default and of any notice of sale hereunder be mailed to the parties' respective addresses hereinbefore set forth. Dated: Dated: Dated: APPROVED AS TO FORM: Dated: TRIISTOR CITY OF HUNTINGTON BEACH Assistant City Manager HOUSING AUTHORITY OF THE CITY OF HUNTINGTON BEACH Housing Authority Director OFFICE OF HUNTINGTON BEACH CITY ATTORNEY Page 12 of 14 City Attorney 1'7-r-n40/168203/SFF Item 9.-56 HB - }2- Exhibit "A" Page 13 of 14 17-6040/168203/SFF HB -133- Item 9. - 57 ACKNOWLEDGMENT State of California County of [OR before me, (here Insert Name and Title of the Notary Officer) personally appeared , 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 State of California that the foregoing is true and correct. WITNESS my hand and official seal. [Seal] (Signature of Notary Public) Page 14 of 14 1'7_Kn40/168203/SFF Item 9. - 58 HB -134- EXHIBIT "D" TO DENSITY BONUS HOUSING AGREEMENT Unit Release [Attached) HH -135_ item 9. - 59 RECORDED AT THE REQUEST OF AND WHEN RECORDED RETURN TO: City Clerk City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 (SPACE ABOVE THIS LINE FOR REC0KUL R-S USt ) This Unit Release is recorded at the request and for the benefit of the City of Huntington Beach and is exempt from the payment of a recording fee pursuant to Government Code Sections 6103 27383. UNIT RELEASE AGREEMENT This UNIT RELEASE (the "Unit Release") is being entered into by and between the CITY OF HUNTINGTON BEACH, a California municipal corporation (the "City"), and MLC HOLDINGS, INC., an Arizona Corporation (the "Owner"). City and Owner are hereinafter sometimes referred to collectively as the "Parties" and individually as a "Party." RECITALS: A. City is a municipal corporation and charter city organized and existing pursuant to the Constitution and laws of the State of California. B. Owner is the owner in fee of that certain real property located at 19100 Gothard Street, Huntington Beach, and more particularly described in the legal description attached hereto as Exhibit "A" (the "Property"). C. On or about 2018, Owner and City entered into that certain Density Bonus Housing Agreement (the "Density Bonus Agreement") relating to the Property, recorded on , 2018, as Instrument No. of the Official Records for Orange County, California. Pursuant to the Density Bonus Agreement, the Owner has developed the Property as a twenty-one (21) unit residential community subdivided as a condominium development (the "Project"). Further, Developer agreed to include in the Project three (3) units that will be sold at an Affordable Housing Cost to Moderate Income Households, consisting of two (2), four -bedroom units and one (1), three - bedroom unit, with the remaining units to be sold at market prices. D. Pursuant to the Density Bonus Agreement, when the Owner sells each of the Uriits on the Property pursuant to the terms and conditions of the Density Bonus Agreement, Owner and City may execute and record or cause to be executed and recorded for the benefit of each Unit this Unit Release, whereupon the Unit(s) would be released from the terms and conditions of the Density Bonus Agreement. COVENANTS: Based upon the foregoing Recitals, which are incorporated herein by this reference, and for good and valuable consideration, the receipt and sufficiency of which is aelmowledged by Item 9, - 6(�140/1703331SFh -2- HB -1 6- both parties, Owner and City agree as follows: I � From and after the date that this Unit Release is recorded against each Unit, the Unit shall be released from, not be burdened by any of the provisions of the Density Bonus Agreement. 2. Nothing in this Unit Release terminates or releases, or shall be deemed or construed to terminate or release, the Affordable Housing Covenant recorded against each Affordable Unit owned in fee by a Qualified Purchaser or said Qualified Purchaser's successor in interest or assignee. 3. This Unit Release shall not constitute evidence of compliance with or satisfaction of any obligation of Owner to any holder of a mortgage, or any insurer of a mortgage, securing money loaned to finance the construction or operation of work on the Unit(s), or any part thereof. 4. No later than ten (10) days after receipt by Owner of a conformed copy of the executed Unit Release from the Orange County Recorder's Office, Owner shall deliver a copy of said conformed copy to City at the address identified in the Density Bonus Agreement for delivery of notices. IN WITNESS WHEREOF, City has executed this Unit Release from as of this day of , CITY OF HUNTINGTON BEACH, a California municipal corporation Its: ATTEST: City Cleric APPROVED AS TO FORM: OFFICE OF HUNTINGTON BEACH CITY ATTORNEY MICHAEL E. GATES, City Attorney Dated: , 20 17-6040/ 170333/SFF -3- HB -I;7- Item 9. - 61 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. STATE OF CALIFORNIA COUNTY OF ORANGE } ss. On before me, _ Notary Public, personally appeared , 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 State of California that the foregoing paragraph is true and correct. WITNESS nay hand and official seal. (Seal) Notary Public Item _ 62140I1703331SFF H13 14 ATTACHMENT I TO UNIT RELEASE LEGAL DESCRIPTION OF RELEASED UNITS) 17-6040/ 1703 3 3 /SFF -5- Ha -139- Item 9. - 63 EXHIBIT "E" TO DENSITY BONUS HOUSING AGREEMENT Agreement Release [Attached] Item 9. - 64 H B -140- RECORDED AT THE REQUEST OF AND WHEN RECORDED RETURN TO: City Clerk City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 (SPACE ABOVE THIS LINE FOR i2ECORDF,R'S USE) This Unit Release is recorded at the request and for the benefit of the Cil), of Huntington Beach and is exempt from lice payment of a recording fee pursuant to Government Code Sections 6103 27383. RELEASE OF DENSITY BONUS AND AFFORDABLE HOUSING AGREEMENT This RELEASE (the "Unit Release") is being entered into by and between the CITY OF HUNTINGTON BEACH, a California municipal corporation (the "City"), and MLC HOLDINGS, INC., an Arizona Corporation (the "Owner"), City and Owner are hereinafter sometimes referred to collectively as the "Parties" and individually as a "Party." RECITALS: A. City is a municipal corporation and charter city organized and existing pursuant to the Constitution and laws of the State of California. B. Owner is the owner in fee of that certain real property located at 19100 Gothard Street, Huntington Beach, and more particularly described in the legal description attached hereto as Exhibit `'A" (the "Property"). C. On or about —, 2018, Owner and City entered into that certain Density Bonus and Affordable Housing Agreement (the "Density Bonus Agreement") relating to the Property, recorded on , 2018, as Instrument No. of the Official Records for Orange County, California. Pursuant to the Density Bonus Agreement, the Owner has developed the Property as a twenty-one (21) unit residential community subdivided as a condominium development (the "Project"). Further, Developer agreed to include in the Project three (3) units that will be sold at an Affordable Housing Cost to Moderate Income Households, consisting of two (2), four -bedroom units and one (1), three - bedroom unit, with the remaining units to be sold at market prices. D. Pursuant to the Density Bonus Agreement, when the Owner has sold all of the Units on the Property pursuant to the terms and conditions of the Density Bonus Agreement, Owner and City may execute and record or cause to be executed and recorded for the benefit of Owner this Release, whereupon the Property would be released from the terms and conditions of the Density Bonus Agreement. 17-6040/170926/SFF -2- H B -141- Item 9. - 65 COVENANTS: Based upon the foregoing Recitals, which are incorporated herein by this reference, and for good and valuable consideration, the receipt and sufficiency of which is acknowledged by both parties, Owner and City agree as follows: 1, From and after the date that this Release is recorded, the Property shall be released from, not be burdened by any of the provisions of the Density Bonus Agreement. 2. Nothing in this Unit Release terminates or releases, or shall be deemed or construed to terminate or release, the Affordable Housing Covenant recorded against each Affordable Unit owned in fee by a Qualified Purchaser or said Qualified Purchaser's successor in interest or assignee. 3. This Unit Release shall not constitute evidence of compliance with or satisfaction of any obligation of Owner to any holder of a mortgage, or any insurer of a mortgage, securing money loaned to finance the construction or operation of work on Property, or any part thereof. 4. No later than ten (10) days after receipt by Owner of a conformed copy of the executed Release from the Orange County Recorder's Office, Owner shall deliver a copy of said conformed copy to City at the address identified in the Density Bonus Agreement for delivery of notices. IN WITNESS WHEREOF, City has executed this Unit Release from as of this day of , CITY OF HUNTINGTON BEACH, a California municipal corporation Its: ATTEST: City Clerk APPROVED AS TO FORM: OFFICE OF HUNTINGTON BEACH CITY ATTORNEY MICHAEL E. GATES, City Attorney Dated: _ . 20— �40i170926/sFF _3_ Item 9. - 66 HB -142- 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. STATE OF CALIFORNIA ) ss. COUNTY OF ORANGE ) On , before me, Notary Public, personally appeared , who proved to me on the basis of satisfactory evidence to be the persons) whose names) is/are subscribed to the within instrument and acluiowtedged 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 State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. (Seal) Notary Public 17-6040/ 170926/SFF -5- HB -143- Item 9. - 67 ATTACHMENT I TO UNIT RELEASE LEGAL DESCRIPTION OF RELEASED UNIT(S) 17-6040/ 170926/SFF -6- Item 9. - 68 HQ -144- ATTACHMENT #2 Ia City of Huntington Beach Community Development Department STAFF REPORT HUNTINGTON BEACH TO: Planning Commission FROM: Scott Hess, AICP, Director of Community Development BY: Jessica Bui, Assistant Planner DATE: December 12, 2017 SUBJECT: TENTATIVE TRACT MAP NO. 18106/ CONDITIONAL USE PERMIT NO. 17- 010 (GOTHARD TOWNHOMES) APPLICANT: Moses Kim, MLC Holdings, 1401 Dove Street #640, Newport Beach, CA 93660 PROPERTY OWNER: Linda Stadel, 3456 Plumeria Place, Costa Mesa, CA 92626 LOCATION: 19100 Gothard Street, 92648 (east side of Gothard St. and south of Garfield Ave.) STATEMENT OF ISSUE: • Tentative Tract Map (TTM) No. 18106 to subdivide an approximately L28 net acre lot for condominium purposes • Conditional Use Pen -nit (CUP) No. 17-010 is a request to: a) Develop 21 for -sale townhome units and; b) A density bonus for two units which includes: 1. One request for a concession to development standards to construct private patio walls at 42 inches in height in lieu of physically separating the private patio space by a wall exceeding 42 inches in height; 2. Three requests for waivers of development standards: • Front yard setback at 5 ft. in lieu of 15 ft. • Relief from an average of 10 ft. setback for all covered portions of all stories above the second story for the 3-story building fronting Gothard Street • A building separation of 10 ft. in lieu of 20 ft. • Staff s Recommendation: Approve Tentative Tract Map (TTM) No. 18106 and Conditional Use Permit (CUP) No. 17-010, based on the following: - Consistent with the site's and surrounding properties' zoning and land use designations; - Provides for the creation of new housing units in the City, including affordable housing; - Complies with the Huntington Beach Zoning and Subdivision Ordinance (HBZSO) and Holly- Seacliff Specific Plan (SP 9); - Compatible with other residential uses surrounding the project site; - Meets the requirements of the Subdivision Map Act; HB -145- Item 9. - 69 RECOMMENDATION: Motion to: A. "Approve Tentative Tract Map No. 18106 and Conditional Use Pennit No. 17-010 with findings and suggested conditions of approval (Attachment No. 1);" ALTERNATIVE ACTIONN: The Planning Commission may take alternative actions such as: A. "Deny Tentative Tract Map No. 18106 and Conditional Use Permit No. 17-010 with findings for denial." B. "Continue Tentative Tract Map No. 18106 and Conditional Use Permit No. 17-010, and direct staff accordingly." PROJECT PROPOSAL: Tentative Tract Map 18106 represents a request to subdivide an approximately 1.28 net acre lot for condominium purposes pursuant to Section 250.14 of the HBZSO. Conditional Use Permit No. 17-010 represent requests a request for the following: A. To permit the development of 21 for -sale townhome units pursuant to Section III of the Holly- Seacliff Specific Plan (SP 9) B. Density bonus for two units pursuant to Section 230.14 of the HBZSO which includes: a. One request for a concession to development standards to construct private patio walls at 42 inches in height in lieu of physically separating the private patio space by a wall exceeding 42 inches in height; b. Three requests for waivers of development standards: 1. Front yard setback at 5 ft. in lieu of 15 ft. 2. Relief from an average of 10 ft. setback for all covered portions of all stories above the second story for the 3-story building fronting Gothard Street 3. A building separation of 10 ft. in lieu of 20 ft. The applicant is proposing a tentative tract map for a one -lot subdivision for condominium purposes on an approximately 1.28 net acre site to construct a development of 21 for -sale townhome units along with associated open space and infrastructure. The Medium Density Residential Land Use and zoning designations within Holly-Seacliff Specific Plan (SP 9) allows for 19 units on the 1.28 acre site. According to the affordable housing requirements of SP 9, a minimum of 15 percent of the units are required as affordable housing. In accordance with State Law, SP 9, and the Huntington Beach Zoning and Subdivision Ordinance (HBZSO), the applicant is providing 15 percent of its base units affordable to Moderate Income Households, which requires three units (19 base units x 15 % affordable = 3 affordable units) to be sold to families with a Moderate Income as defined by the California Department of Housing and Community Development. As an incentive to provide affordable housing, State Law allows a density bonus when a developer provides affordable housing units, and permits the developer to build additional units that exceed the allowable base density. By providing 15 percent of the base units to be affordable to PC Staff Report -- 12/12/17 HB -14 7- 17sr41 — Gothard Con Item 9. - 71 Moderate Income, the developer can request a 10 percent density bonus, which results in two additional units for a total of 21 townhomes where 19 would be allowed (19 x 10% = 1.9; round up to the nearest whole number, equals 21 total units). As part of the request for a density bonus, there is a Draft Density Bonus and Affordable Housing Agreement (Attachment No. 4) with the City that establishes three of the 19 units to be sold as affordable units for persons and families of Moderate Income. Moderate Income is defined as persons and families whose income does not exceed 120 percent of the area median income and is adjusted by family size. The remaining 18 units may be sold at market rate. The project site consists of one parcel with existing oil drilling operations. Immediately adjacent to the site are multi -family residential uses to the north, east, and south. To the west of the site, across Gothard Street, is an industrial use. The project is proposing one driveway from Gothard Street to provide egress and ingress into the site. Five detached buildings are proposed throughout the property and are composed of a mixture of four to five attached residential units. One of the five buildings is 2-stories fronting Gothard Street, and the remaining four buildings are 3-stories along the south side of the site along Gothard Street and the interior of the property. Open space is provided in a common area courtyard in the northeast area of the site between two buildings and along the east side of the property adjacent to guest parking. Private open spaces for each unit are provided as ground floor patios or second story balconies. Study Session The project was introduced to the Planning Commission (PC) on November 28, 2017, at a study session. The PC inquired about a few project -related issues that are identified and expanded upon below and in the Analysis section: Density & Concession & Waivers of Development Standards State law allows for a density bonus to increase over the otherwise maximum allowable gross residential density. The granting of a density bonus shall not require a general plan amendment, zoning change, or other discretionary approval to exceed the maximum allowable gross residential density. The amount of a density bonus is contingent on the percentage of affordable units being provided and at what income level (see density bonus chart below). For example, if the developer were to provide 15 percent at Very Low Income, the developer could request a density bonus of a maximum 35 percent. In this case, the proposed project is providing 15 percent to Moderate Income households which would grant the developer a 10 percent density bonus over the base density allowed (19 units x 10% = 1.9 or 2 units = 21 total units). The Gothard site has a maximum allowable density of 15 dwelling units per acre. With the requested density bonus, the resulting density would be 16.4 dwelling units per acre. DFn'S/TV BONUS (7/ART Affordable Unit Percentage** Very Low Income Density .Bonus Low Income Density Bonus Moderate income Density Bonus 5% 20.00% NA NA 6% 22.50% NA NA 7% 25.00% NA NA 8% 27.50% NA NA 9% 30.00% NA NA 10% 32.50% 20.0% 5% 11% 35.00% 21.5% 6% 12% 1 35.00% 23.0% 7% 13% 1 35.00% 1 24.5% 8% Item 9. - 72 -Port — 12/12/17 1413 -148- 17sr41 — Gothard Condominiums 14% 35.00% 26.0% 9% 15% 35.00% 27.5% 10% 16% 35.00% 29.0% 11% 17% 35.00% 30.5% 12% 18% 35.00% 32.0% 13% 19% 1 35.00% 33.5% 14% 20% 1 35.00% 35.0% 15% All density bonus calculations resulting in fractions are rounded up to the next whole number. * * Affordable unit percentage is calculated excluding units added by a density bonus. Pursuant to State law, when a developer requests a density bonus and proposes at least 10 percent of residential units to be affordable for persons and families of moderate income, the developer can receive one concession to a development standard. A concession is intended to reduce costs to provide affordable housing units. In addition to one concession, the developer may request multiple waivers of development standards in order to ensure construction of the entitled density bonus units. Compliance with development standards could physically preclude a developer from constructing at the density permitted by State law. Therefore, the waivers of development standards are requested to provide a mechanism to achieve the density units. The applicant also provided additional information regarding concessions and waivers of development standards as it applies to the Gothard site (Attachment No. 3 and Attachment No. 7). Concession & Waivers - Adverse Impacts to Public Health and Safety Concessions or waivers to development standards cannot be denied unless there are specific, adverse impacts to public health and safety or the physical environment or to any real property that is listed in the California Register of Historical Resources and for which there is no feasible method to satisfactorily mitigate or avoid the specific, adverse impact without rendering the development unaffordable to lower - income and moderate income households. As defined in the California Government Code Section 65589.5, an adverse impact means a significant, quantifiable, direct, and unavoidable impact, based on objective, identified written public health or safety standards, policies, or conditions as they existed on the date the application was deemed complete. Inconsistency with the zoning ordinance or general plan land use designation shall not constitute a specific, adverse impact upon the public health or safety. As such, the requested concession and waivers to development standards do not pose a specific, adverse impact to the public health and safety of the future residents, general public, or the surrounding properties. Parking With a request for a Density Bonus, the developer is entitled, if approved, reduced parking standards. The HBZSO would require 63 spaces. The State law allows 51 parking spaces, and the developer is proposing a total of 53 spaces. Each unit would have a 2-car garage, or 42 enclosed spaces and 11 open spaces made available for guests. The developer will be subject to a parking management plan and proposes to incorporate specific language within the CC&Rs to ensure the interior of the garages will not be used for personal recreational areas such as work out areas, and storage will not obstruct the standing of two vehicles. Furthermore, additional assurances will be made to make open spaces available for guests such as restricting the use of open spaces from the personal storage of vehicles, boats, trailers, and campers, and implementing a guest parking permit system. Signs would be used to identify guest parking spaces and notifying residential guests that vehicles in violation of the parking spaces will be towed. PC Staff Report — 12/12/17 H B -149- 17sr41 — Gothard Con Item 9. - 73 Adjacent Affordable Housing and Density Bonus Requests The Holly-Seacliff Specific Plan was adopted April 20, 1992. All residential developments proposed after the adoption of the Holly-Seacliff Specific Plan was subject to providing 15 percent of residential units to be affordable to persons and families at least at the Moderate Income level. The multi -family residential development immediately south of the subject site was required and provided 15 percent of the units to be affordable housing units and did not include a request for a density bonus. The multi -family residential development immediately north of the subject site provided 15 percent of the units to be affordable to Moderate Income Households and was approved for one density bonus unit but without the request of a concession or waiver of development standards. A more recent project, which is immediately north of that development, on the southeast corner of Gothard Street and Garfield Avenue was approved on October 11, 2016 for the development of 10 townhome units which included 15 percent of the units to be affordable to persons and families of low income with a request for one density bonus unit with no concession or waivers to development standards. ISSUES: Subject Property And Surrounding Land Use, Zoning And General Plan Designations: LOCATION GENERAL PLAN ZONING LAND USE Subject Property: RM — sp (Residential SP-9 (Holly-Seacliff Oil drilling Medium Density — Specific Plan, specific plan overlay) Planning Area 4 Residential Medium Density) North, East and South RM — sp (Residential SP-9 (Holly-Seacliff Multi -family residential of Subject Property Medium Density — Specific Plan, (across Garfield Ave.): specific plan overlay) Planning Area 1 Residential Medium Density) West of Subject I — sp (Industrial — SP-9 (Holly-Seacliff RV Storage Property (across specific plan overlay) Specific Plan, Gothard St.): Planning Area 4 Industrial) General Plan Conformance: The General Plan Land Use Map designation on the subject property is RM-sp (Residential Medium Density — specific plan overlay) and the zoning designation is SP 9 (Holly-Seacliff Specific Plan, Planning Area 4 Residential Medium Density). The proposed project will implement both the General Plan and specific plan designations of the site. The proposed project is consistent with the intent of these designations, and the goals and policies of the City's General Plan as follows: A. Land Use Element Item 9. - 74 .-Port— 12/12/17 HB -150- 17sr41 — Gothard Condominiums Goal LU-1: New commercial, industrial, and residential development is coordinated to ensure that the land use pattern is consistent with the overall goals and needs of the community. Policies LU-IA: Ensure that development is consistent with the land use designations presented in the Land Use Map, including density, intensity, and use standards applicable to each land use designation. Policies LU-ID: Ensure that new development projects are of compatible proportion, scale, and character to complement adjoining uses. Goal L U-4: A range of housing types available to meet the diverse economic, physical, and social needs of future and existing residents, while neighborhood character and residences are well maintained and protected. Policies LU-4A: Encourage a mix of residential types to accommodate people with diverse needs. The proposed project is consistent with the land use designation which allows for multi -family residential uses at the subject site. The proposed architectural style and site layout of the multi -family residential project with a mix of two- and three-story buildings is consistent with the proportion, scale, and character of the existing development in the area. The development will improve an underutilized site and provide a range of housing types to meet the diverse economic and social needs of existing and future residents. The proposed for -sale townhomes will provide an expanded opportunity for ownership and accommodate the diverse needs such as potential first-time homebuyers. B. Housing, Element Policy 3.1: Encourage the production of housing that meets all economic segments of the community, including lower, moderate, and upper income households, to maintain a balanced community. Policy 3.2: Utilize the City's Inclusionary Housing Ordinance as a tool to integrate affordable units within market rate developments. Continue to prioritize the construction of affordable units on -site, with provision of units off - site or payment of an in -lieu housing fee as a less preferred alternative. Policy 4.1: Support the use of density bonuses and other incentives, such as fee deferrals/waivers and parking reductions, to offset or reduce the costs of developing affordable housing while ensuring that potential impacts are addressed. Policv 6.1: Implement the City's Green Building Program to ensure new development is energy and water efficient. The project consists of 21 for -sale townhome units, which adds to the City's housing stock. The project includes a request for a density bonus for two additional units in exchange for affordable housing as PC Staff Report — 12/12/17 H B -1 > 1- 17sr41 — Gothard Con Item 9. - 75 allowed by State Law and the HBZSO. As part of the request for a density bonus, the applicant is entering into a Density Bonus and Affordable Housing Agreement with the City to establish three of the 21 units as affordable units for persons/families of Moderate Income for 45 years. The development request as proposed is consistent with the intent of the policies within the Housing Element identified above. As such, the project will contribute to the City's overall housing goals. Furthermore, as conditioned, green building practices for the construction of the project is required to ensure water and energy fixtures are implemented. Zoning Compliance: This project complies with the requirements of the Holly Seacliff Specific Plan in regards to private and common open space, building height, and lot coverage. Density Bonus Request Pursuant to State law, eligible density bonus projects are entitled up to three concessions to development standards depending on the percentage of affordable units and level of targeted income. In addition to concessions, a developer may also request waivers to development standards. According to State Law, concessions and waivers of development standards must be offered by the City to reduce construction costs and to allow the developer to construct the density bonus units. Consequently, concessions resulting in lower construction costs are intended to increase affordable housing opportunities. In this case, the developer is entitled to one concession, and is requesting one concession and three waivers of development standards (Attachment No. 7). CONCESSION & WAIVERS REQUEST CODE REQUIREMENT PROPOSED Concession atio wall" height Must exceed 42 inches in height 42 inches Waiver l: front yard setback Min. 15 ft. 5 ft. Waiver 2: upper story setback Average 0 ft. Waiver 3: building separation Min. 20 ft. 10 ft. The applicant is requesting a concession to the development standard which requires private patio walls to exceed 42 inches and consequently be located outside of minimum setbacks while providing privacy. The private patio walls are proposed to be exactly 42 inches. The applicant has identified this concession as an identifiable cost reduction to help provide the cost of providing affordable housing units. The applicant is also requesting three waivers of development standards. The first waiver of development standard is to provide a 5 ft. front yard setback in lieu of 15 ft. for the southerly 3-story building which sides along Gothard Street. The applicant has stated that conformance to this development standard would require the loss of one townhome unit. The second waiver of development standards is relief from the requirement to set back the covered portions of all stories above the second story an average of 10 feet for a multi -family structure for the southerly 3-story building which sides along Gothard Street. The proposed building instead provides variation in wall planes, recessed windows, a change in roof lines, and other architectural details to reduce the massing of the 3-story buildings. The developer states that conformance with this development standard would result in a loss of up to three townhome units. The third waiver of Item 9. - 76 Port — 12/12/17 HB -152- 17sr41 — Gothard Condominiums development standards is a 10 ft. separation between two 3-story buildings in lieu of 20 ft. in order to provide two smaller buildings rather than one large, attached 9-unit building. The developer states that conformance with this development standard would result in the loss of one unit. It is important to note that the density bonus law states that a jurisdiction cannot apply any development standard to a project eligible for a density bonus that will have the effect of physically precluding the construction of the development at the densities in which it is entitled unless the requested concession or waiver will have an adverse impact to public health and safety or the physical environment. Urban Design Guidelines Conformance: The character of the development is consistent with the existing neighborhood in size, scale and massing of other residential structures in the vicinity. The architectural design of the project is a Spanish influence with the use of materials such as tile roof, stucco, metal accents, decorative tiles, and wood trellises. The proposed colors are muted earth tone colors which is characteristic with the existing neighborhood, The project creates visual interest along Gothard Street by incorporating enhanced landscaping and decorative paving, providing a variety of trees, as well as functional open space in the common areas and private yards, and maintains high quality architectural design that is complementary to the adjacent multi -family residential developments. The locations of the two- and three-story buildings create a proportional scale to the street and surrounding uses. Furthermore, roof lines are varied and building facades contain wall offsets and decorative features to reduce the massing of the buildings. Second story balconies are appropriately integrated to further break up the massing and provide enhanced variation in wall planes. Additionally, the buildings are designed with stucco window trims, brick veneer, corbels, gable accents, and decorative shutters. Decorative paving is provided at the site entry creating a visually attractive access way to the site. Common open space area is sited in a location to maximize accessibility and use by all residents. Overall the layout of the development provides efficient and safe access for both pedestrians and vehicles. Environmental Status: The proposed project is covered by Holly-Seacliff Specific Plan Final Environmental Impact Report No. 89-1, which was adopted by the City of Huntington Beach on January 8, 1990. The proposed subdivision of an approximately 1.28 net acre lot for a one -lot subdivision and construction of 21 for -sale townhome condominium units with a density bonus request, along with associated open space and infrastructure is subject to compliance with the adopted mitigation measures contained in the Final Environmental Impact Report No. 89-1 (see MMRP Attachment No. 6). Coastal Status: Not applicable. Desi,an Review Board: On October 12, 2017, the Design Review Board (DRB) reviewed Design Review No, 17-004 to review the design, colors, and materials of the 21, two and three story townhome buildings. The proposed buildings will be compatible with existing development at similar heights and massing and incorporate a Spanish architectural palette into the area, providing visual interest and a quality design to the streetscape. Variations in building heights within the project combined with enhanced landscaping and decorative paving at the site entry will create visual interest from the frontages along Gothard Street. Roof lines are varied and building facades contain wall offsets and decorative features to reduce the massing of PC Staff Report — 12/12/17 HB -153- 17sr41 — Gothard Con Item 9. - 77 the buildings. Garages are offset to break up the appearance of flat wall, windows are recessed, and accent features such as trellises, brick veneer, shutters, and decorative window trim details enhance the overall design. The DRB approved the proposed design of the project and recommended the following conditions: 1. The upper portion of all buildings shall provide enhanced architectural elements such as increased eave projections, cornice elements, additional corbels, tiles or other architectural accents. 2. Additional architectural elements shall be added to the two story townhornes along Gothard Street on the upper story such as: shutters, bay windows, metal features, or other elements that are complementary to the colors, materials, and design of the building. 1 Garages shall be offset by at least two to three feet to provide enhanced wall variation, reduce massing, and decrease the appearance of a flat, blank wall. 4. Increase the width of window trims on all elevations. The applicant has since revised the building elevations to demonstrate compliance with the DRB's recommendation (Attachment No. 2). The proposed design is complementary with the approved architecture of the adjacent multi -family residential uses. Subdivision Committee: Tentative Tract Map No. 18106 was reviewed by the Subdivision Committee on November 7, 2017. Staff presented the proposed subdivision including the access points and vehicular drive aisles within the vicinity as well as access to the development, and the layout of the condominiums. The Subdivision Committee reviewed the recommended conditions of approval for the tentative tract map from the Community Development, Fire and Public Works Departments. The Subdivision Committee unanimously recommended approval of the proposed project to the Planning Commission with minor revisions to the suggested conditions regarding the use of garages and open parking spaces, and the Fire Department standards regarding the language for the requirements for a Remedial Action Plan (Attachment No. 1). Other Departments Concerns and Requirements: The Departments of Public Works, Police, Fire, Community Services, and Community Development have reviewed the project and identified a list of recommended conditions that are incorporated into the suggested conditions of approval as well as code requirements (Attachment No. 5) applicable to the proj ect. Public Notification: Legal notice was published in the Huntington Beach Wave on November 30, 2017, and notices were sent to property owners of record and tenants within a 500 ft. radius of the subject property, the applicant, the property owner, and interested parties. As of December 5, 2017, one communication supporting and one opposing the requests have been received (Attachment No. 8). Item 9. - 78 eport — 12/12/17 HB -1 -54- 17sr41 -Gothard Condominiums Application Processing Dates: DATE OF COMPLETE APPLICATION: MANDATORY PROCESSING DATE(S): November 30, 2017 February 28, 2018 ANALVfiIfi- Compatibility with Surrounding Uses and Compliance with HBZSO, SP 9 & Subdivision Map Act The proposed two and three-story development will be compatible with the nearby and surrounding properties. Properties to the north, east, and south are developed with two-story multiple family dwellings. The adjacent properties are similar in grade and height to the proposed project and the massing and architectural scale proposed is consistent with these existing developments. The two-story building is sited along Gothard Street and one, three-story building sides Gothard Street, and the remaining three- story buildings are located within the interior of the site, setback away from the street front. The proposed site layout of the buildings ensures architectural compatibility in scale and massing with the existing neighborhood. Additionally, architectural elements are incorporated such as metal accent features, recessed windows, a mix of different materials such as brick veneer, and variations in roof lines and wall planes are added to ensure compatibility. The architecture is a Spanish style architectural design and incorporates stucco, tile roof, metal accents, decorative tile, and various building offsets and earth -tone colors and is consistent with the abutting multi -family residential developments. The existing site has an active oil well in addition to one abandoned oil well. The applicant is working with the property owner and has submitted application forms to decommission the active well and properly abandon all oil wells in accordance with the provisions of the California Division of Oil, Gas & Geothermal Resources (DOGGR) and the requirements of the Huntington Beach Fire Department. The project will be subject to the park land in -lieu fees pursuant to the requirements of HBZSO Section 254.08 — Parkland Dedications. The fees shall be paid and calculated according to a schedule adopted by the City Council resolution (Ordinance No. 3562, Resolution Nos. 2002-46 and 2002-57). With the exception of the concession and waivers of development standards, the proposed project complies with the provisions of SP 9 in regards to private and common open space, building height, and lot coverage. Furthermore, the tentative tract map for a one lot subdivision for condominium purposes complies with the Subdivision Map Act and is suitable for the type and density of the project. Density Bonus Request The proposed density bonus for the project complies with both State Law and the HBZSO. The proposed density bonus would yield two additional units above the allowed density (21 units instead of 19), resulting in a density of 16.4 dwelling units per acre. Except for the density bonus and the concession and waivers of development standards, the project complies with all provisions of the HBZSO, SP9 and is consistent with the intent of the General Plan. Additionally, the project, inclusive of the density bonus, can be adequately served by local utility systems (water, sewer, storm drain) and will not have a significant or adverse impact on traffic volume, school enrollment or recreational resources in the area. As designed, the project is compatible with the physical character of the surrounding area. PC Staff Report — 12/12/17 HB -155- 17sr41 — Gothard Con Item 9. - 79 Concession and Waivers of Development Standards The one concession for patio walls to be 42 inches in height lieu of physically separating the private open space by a wall exceeding 42 inches in height does not create an adverse impact to public health and safety. Patio walls are required to exceed 42 inches so that private patio spaces do not encroach in the required front yard setbacks because no structure shall exceed 42 inches within the required front yard setback area. The intent of the code requirement is to prevent private patios within typical setback areas for design and aesthetic reasons. The concession request for patio walls to be 42 inches does not create specific, adverse impact to public health and safety as this request does not conflict with Building or Fire codes; and furthennore, the patio walls will be sited behind a required 6 ft. high masonry wall and will not be visible from the public right-of-way. The three waivers for 1) a 5 ft. front yard setback in lieu of 15 ft., 2) the average of a 10 ft. setback on the third story for the building along Gothard Street, and 3) the building separation of 10 ft. in lieu of a minimum of a 20 ft. separation also do not create specific, adverse impacts to public health and safety. The Holly-Seacliff Specific Plan typically requires a 15 ft. front yard setback; however, when adjacent to an industrial site, the specific plan requires a 30 ft. setback with a 15 ft. landscaped setback area from the front property line, and from that 15 ft. landscaped setback, a required 6 ft. high block wall; in addition, all buildings must be setback an additional 15 ft. from the required block wall, for a total of a 30 ft. front yard setback. Across Gothard Street are industrial uses; and therefore, the site is subject to the 30 ft. front yard setback. The intent of the 30 ft. setback is to create a substantial buffer for sensitive uses such as a residential use from industrial sites. Ultimately, the requested 5 ft. front yard setback in lieu of a 15 ft. setback is taken from the required 6 ft. high block wall, and is therefore 20 ft. from the front property line which is a substantial setback and buffer from the industrial site across Gothard as the width of Gothard is approximately 70 ft. The second waiver for the average of a 10 ft. setback on the third story for the building siding Gothard Street is typically required for buildings along street frontages only to reduce the mass and bulk of structures for buildings that are visible from a public right-of-way. As such, this requirement is architectural in nature to protect visual aesthetics of a neighborhood. However, since only one unit is required to be setback an average of 10 ft. on the third floor, staff does not anticipate a specific, adverse impact from a relief from the third story setback requirement. Lastly, the 10 ft. separation in lieu of a miniinum of a 20 ft. separation for the two three-story buildings on the south end of the site is requested to reduce the massing and bulk of the structures to avoid having one large, 9-unit building. The Holly-Seacliff Specific Plan requires a minimum 20 ft. separation which is unique to the Specific Plan area. The HBZSO minimum requirement for building separation of any height or number of stories is 10 ft. for all areas outside of the Specific Plan. The proposed 10 ft. separation would be characteristic of developments in other areas of the City. Additionally, the 10 ft. separation also meets Building and Fire codes for minimum separation for safety reasons. Architectural Design and Site Layout The proposed development is well designed and appropriate for the subject site based on the applicable zoning, surrounding uses and the physical characteristics of the lot. The project, as proposed, achieves IteM 9. - 80 2port - 12/12/17 HB -156- 17sr41 — Gothard Condominiums substantial conformance with the City's Urban Design Guidelines for multi -family residential projects. Visual interest is provided along Gothard Street with the incorporation of decorative paving, building projections in the facades, second story balconies, and varied roof lines, use of different materials, and accent colors and two- and three-story massing elements. Buildings are arranged in clusters ranging from four to five units. Adequate parking is provided within 1 1 guest spaces and a two -car garage per unit. State law allows for reduced parking standards when a density bonus is requested. A total of 51 parking spaces are required for the 21 unit project based on State law; and 42 enclosed parking spaces and 1 1 guest spaces are provided for a total of 53 spaces. The applicant proposes CC&Rs to encourage the use of garages for parking of vehicles and prohibit the storage of boats, trailers, campers, or other recreational vehicles within the open guest parking areas. The project also provides usable open space and landscaping which complies with code requirements. The development features three common open space areas on the property with adequate access for all residents. The common open space areas consist of passive recreation area with cooking and eating facilities. Each dwelling unit is provided with private open space areas consisting of private patio or balcony. Staff supports the proposed project's site layout, design, and architecture because it results in a development that will be compatible with the physical character of the surrounding multi -family residential areas. Affordable Housing Agreement Consistency with the HSSP and General Plan A density bonus and affordable housing agreement between the City and developer outlining all aspects of the density bonus affordable housing provisions contained within the HBZSO is required, and shall be reviewed by the Planning Commission (Attachment No. 4). No project shall be deemed approved until the density bonus and affordability agreement has been approved by the City Council. The objective of a density bonus and affordable housing agreement is to provide assurances that an applicant can proceed with a project in accordance with existing policies and standards in place at the time of project approval. The City and developer propose to enter into an agreement in order to establish three of the 21 units as affordable units for persons/families of Moderate Income Households for a period of 45 years, and identify methods in which the developer and the City are to monitor the enforcement of the affordability of the subject affordable units. The draft density bonus and affordable housing agreement is consistent with the General Plan, HBZSO, and SP 9 as it relates to the project's fulfillment of the City's Inclusionary Housing Ordinance. SUMMARY: Staff recommends approval of Tentative Tract Map No. 18106 and Conditional Use Permit No. 17-010, based upon the following: - Consistent with the site's and surrounding properties' zoning and land use designations; - Provides for the creation of new housing units in the City, including affordable housing; - Complies with the Huntington Beach Zoning and Subdivision Ordinance (HBZSO); - Compatible with other residential uses surrounding the project site; - Meets the requirements of the Subdivision Map Act. PC Staff Report - 12/12/ 17 HB -1 5 7- 17sr41 - Gothard Con Item 9, - 81 ATTACHMENTS: 1. Suggested Findings and Conditions of Approval for Tentative Tract Map No. 18106 and Conditional Use Pen -nit No. 17-010 2. Site plans, floor plans, elevations and Tentative Map dated and received November 13, 2017 3. Narrative dated December 1, 2017 4. Draft Density Bonus and Affordable Housing Agreement 5. Code Requirements Letter (for informational purposes only), dated November 30, 2017 6. Mitigation Monitoring and Reporting Program 7. Concession and Waivers Exhibit 8. Communications SH:JJ:JB Item 9. - 82 Port — 12/12/17 H B -158- 17sr41 — Gothard Condominiums ATTACHMENT NO. 1 SUGGESTED FINDINGS AND CONDITIONS OF APPROVAL TENTATIVE TRACT MAP NO. 18106 CONDITIONAL USE PERMIT NO. 17-010 SUGGESTED FINDINGS FOR PROJECTS EXEMPT FROM CEQA: The Planning Commission finds that the proposed project is covered by Holly-Seacliff Specific Plan Final Environmental Impact Report No. 89-1, which was adopted by the City of Huntington Beach on January 8, 1990. The proposed one -lot subdivision on an approximately 1.28 net acre site and construction of 21 for -sale townhome condominium units with a density bonus request, along with associated open space and infrastructure is subject to compliance with the adopted mitigation measures contained in the Final Environmental Impact Report No. 89-I. Staff has reviewed the proposed project for compliance and has determined the project is consistent with the adopted mitigation measures contained in the Final EIR, SUGGESTED FINDINGS FOR APPROVAL - TENTATIVE TRACT MAP NO. 18106: Tentative Tract Map No. I8106 the subdivision of an approximately L28 net lot into one numbered lot for residential development for 21 townhome units is consistent with the General Plan Land Use Element designation of Residential Medium Density — Specific Plan Overlay (R-M-sp) and the requirements of the Holly-Seacliff Specific Plan. The proposed subdivision is consistent with the goals, policies, and objectives of the General Plan Land Use Element that govern new subdivisions and residential development. These goals and policies call for a range of housing types to be available to meet the diverse economic, physical, and social needs of future and existing residents, while neighborhood character and residences are well maintained and protected. 2. The site is physically suitable for the type and density of development. The size, depth, frontage, street width and other design features of the proposed subdivision are in compliance with the HBZSO code. The project site is able to accommodate the type of development proposed. The proposed subdivision will result in a density of 16.4 units per acre, which is allowed in accordance with State Density Bonus Law and as part of the request for this property designated Residential Medium Density land use designation. The proposed density would be compatible with surrounding multi- family developments. The project site is able to accommodate public services and provides for adequate onsite circulation and drainage. 3. The design of the subdivision or the proposed improvements will not cause serious health problems or substantial environmental damage or substantially and avoidably injure fish or wildlife or their habitat. The site is vacant with oil drilling operations and is adjacent to existing multi -family residential uses. The site does not contain significant habitat for wildlife or fish. The project site is surrounded by residential development, vacant property, and light industrial uses and paved roads. The site does not contain any natural open space or any significant biological resources. The proposed project complies with the provisions of the Holly-Seacliff Specific Plan and the Huntington Beach Zoning and Subdivision Ordinance will ensure that the subdivision will not significantly impact the function and value of existing resources adjacent to the project site. HB -1 s9- Attachir Item 9. - 83 4. The design of the subdivision or the type of improvements will not conflict with easements, acquired by the public at large, for access through or use of, property within the proposed subdivision unless alternative easements, for access or for use, will be provided. The subdivision will provide all necessary easements and will not affect any existing easements. SUGGESTED FINDINGS FOR APPROVAL - CONDITIONAL USE PERMIT NO. 17-010: Conditional Use Permit No. 17-010 for the development of 21 attached for -sale townhome units and associated infrastructure and site improvements, including a density bonus request of two units, with one concession and three waivers of development standards will not be detrimental to the general welfare of persons working or residing in the vicinity or detrimental to the value of the property and improvements in the neighborhood. The project will provide three units for families or households of Moderate Income for a period of 45 years. The project will improve the existing underutilized parcel of land with a development consistent with the General Plan land use and zoning designations. The proposed residential use is similar to those existing uses in the vicinity. The project will not result in any adverse or significant environmental impacts including traffic, noise, lighting, aesthetics, and hazardous materials. The project will be consistent in massing and scale to adjacent residential uses. Proposed improvements include enhanced landscaping, decorative paving, and quality architectural design throughout the site. Furthennore, the layout of the site improves the visual surroundings by providing efficient drive aisles for vehicular access, and minimizing the visibility of parking garages and parking spaces from the street. 2. Conditional Use Permit No. 17-010 for the development of 21 attached for -sale townhome units and associated infrastructure and site improvements, including a density bonus request of two units with one concession and three waivers of development standards will be compatible with surrounding residential uses in terms of landscaping, opens pace, parking, lot coverage, and allowable building height. The subject site is entirely surrounded by multi -family residential uses to the north, east, and south. To the west of the site, across Gothard Street are industrial uses; however, one of the two buildings along Gothard is setback 30 ft. from the property line and the second building is setback 15 ft. which provides a substantial buffer from the industrial uses. The proposed design is composed of a Spanish style consisting of stucco exterior, an earth tone color palette, the roof, metal and tile accents, varied wall offsets and rooflines, and decorative balcony railings and is architecturally compatible with the adjacent residential developments. Enhanced landscaping along the street front and decorative paving at the site entry will create visual interest and improve the aesthetics of the street front from public right-of-way. The project includes two- and three-story buildings that are compatible with surrounding developments and proportionally relate to the overall mass and scale of the neighborhood. 3. Conditional Use Pen -nit No. 17-010 for the development of 21 attached for -sale townhome units and associated infrastructure and site improvements, including a density bonus request of two units with one concession and three waivers of development standards complies with all provisions of the Holly- Seacliff Specific Plan and applicable provisions in Titles 20 through 25 of the Huntington Beach Zoning and Subdivision Ordinance. The project complies with the development standards in teens of private and common open space, building height, and lot coverage. Adequate vehicular and pedestrian circulation is provided for convenient. access throughout the project. Item 9. - 84 HJ3 -160- Attachment No. 1.2 4. The granting of Conditional Use Pen -nit No. 17-010 for the development of 21 attached for -sale townhome units and associated infrastructure and site improvements, including a density bonus request of two units, with one concession and three waivers of development standards will not adversely affect the General Plan. It is consistent with the intent of General Plan Land Use Element designation of Residential Medium Density. In addition, it is consistent with the following goals, objectives, and policies of the General Plan: A. Land Use Element Objective LU 1.1: Provide for the timing of residential, commercial, and industrial development coincident with the availability of adequate market demand to ensure economic vitality. Objective LU 8.1: Maintain the pattern of existing land uses while providing opportunities for the evolution, including intensification and re -use, of selected subareas in order to improve their character and identity. Goal LU 9: Achieve the development of a range of housing units that provides for the diverse economic, physical, and social needs of existing and future residents of Huntington Beach. Objective LU 9.3: Provide for the development of new residential subdivisions and projects that incorporate a diversity of uses and are configured to establish a distinct sense of neighborhood and identity. Policv LU 9.2.1: Require that all new residential development within existing residential neighborhoods (i.e., infill) be compatible with existing structures. The proposed project will improve an underutilized and partially vacant property by allowing the development of residential uses within close proximity to compatible uses. The residential project will implement the residential land use category appropriate for the site's General Plan land use designation and establish a development consistent with the size, scale, mass and pattern of existing development in the area. The surrounding residential uses will benefit with the introduction of newly constructed housing in the neighborhood as the existing temporary structures on site will be removed. The development will provide new housing stock in the area and will potentially attract first-time homebuyers by providing an expanded opportunity for ownership in the area. B. Urban Design Element Goal UD 1: Enhance the visual image of the City of Huntington Beach. Objective UD 1.1: Identify and reinforce a distinctive architectural and environmental image for each district in Huntington Beach. HB -161- Attachir Item 9. - 85 The project will enhance the character of the neighborhood and improve property values. The proposed buildings will be compatible with existing development at similar heights and massing and incorporate a traditional architectural palette into the area, providing interest and high -quality design to the streetscape. Common open space within the project combined with enhanced landscaping will create visual interest from the frontages along Gothard Street and Garfield Avenue. Garages and open parking spaces are primarily located facing away from the street frontages. A decorative paving treatment frames the drive aisle entry to the site and creates visual interest for the access into the site. C. Housing Element Policv 3.1: Encourage the production of housing that meets all economic segments of the community, including lower, moderate, and upper income households, to maintain a balanced community. Policv 3.2: Utilize the City's lnclusionary Housing Ordinance as a tool to integrate affordable units within market rate developments. Continue to prioritize the construction of affordable units on -site, with provision of units off - site or payment of an in -lieu housing fee as a less preferred alterative. Policv 3.3: Facilitate the development of affordable housing through regulatory incentives and concessions, and/or financial assistance, with funding priority to projects that include extremely low income units. Proactively seek out new models and approaches in the provision of affordable housing. Policv 4.1: Support the use of density bonuses and other incentives, such as fee deferrals/waivers and parking reductions, to offset or reduce the costs of developing affordable housing while ensuring that potential impacts are addressed. Policv 6.1: Implement the City's Green Building Program to ensure new development is energy and water efficient. The project consists of 21 residential units, which contributes to the City's housing stock. The project includes a request for a density bonus for two additional units, with one concession and three waivers of development standards in exchange for affordable housing as allowed by State Law and the HBZSO. As part of the request for a density bonus, the applicant is entering into a Density Bonus and Affordable Housing Agreement with the City to establish three of the 21 units as affordable units for persons/families of Moderate Income for a period of 45 years. The development request as proposed is consistent with the intent of the policies identified above. As such, the project will contribute to the City's overall housing goals. Additionally, sustainable features and construction practices will be incorporated in the project including energy -efficient lighting, water efficient plumbing fixtures and recycling of construction waste. SUGGESTED CONDITIONS OF APPROVAL — TENTATIVE TRACT MAP NO. 18106: 1. The Tentative Tract Map No. 18106 to subdivide an approximately 1.28 net acre lot for condominium purposes, received and dated August 31, 2017, shall be the approved layout. Item 9. - 86 H B -162- Attachment No. 1.4 2. Pursuant to section 230.14 of the HBZSO, Tentative Tract Map No.18106 and Conditional Use Pen -nit No. 17-010 shall not be deemed approved until an Affordable Housing Agreement has been approved by the City Council. 3. Prior to issuance of a grading permit and at least 14 days prior to any grading activity, the applicant/developer shall provide notice in writing to property owners of record and tenants of properties within a 500-foot radius of the project site as noticed for the public hearing. The notice shall include a general description of planned grading activities and an estimated timeline for commencement and completion of work and a contact person name with phone number. Prior to issuance of the grading permit, a copy of the notice and list of recipients shall be submitted to the Community Development Department. 4. Prior to issuance of Building Pen -nits, an Affordable Housing Agreement in accordance with the Affordable Housing Program shall be submitted to the Community Development for review and approval by the City Attorney, and accepted by the City Council. Said agreement shall be recorded with the Orange County Recorder's Office prior to issuance of the first building permit for the tract. The Agreement shall comply with HBZSO Section 230.14 and include, but not be limited to, the following items: a) The duration of the affordability and the number of the affordable units; b) The method in which the developer and the City are to monitor the affordability of the subject affordable units and the eligibility of the tenants or owners of those units over the period of the agreement; c) The method in which vacancies will be marketed and filled; d) A description of the location and unit type (bedrooms, floor area, etc.) of the affordable units within the project. Affordable units shall be located throughout the project and shall include a mixture of unit types in the same ratio as provided throughout the project; and e) Standards for maximum qualifying household incomes and standards for maximum rents or sales prices. 5. Prior to submittal of the final tract and at least 90 days before City Council action on the final map, CC&Rs shall be submitted to the Community Development Department and approved by the City Attorney. The CC&Rs shall identify the common driveway access easements, and maintenance of all walls, common landscape areas by the Homeowners' Association, as well as a parking management plan to ensure the ongoing control of availability of on -site parking including but not limited to: restricting garages to be converted to living quarters, workshops, or storage that will preclude the parking of two vehicles, all open parking spaces within the project shall be unassigned and available for visitors and guests; no boat, trailer, camper, off -road vehicle, golf cart, cornmercial vehicle, mobile home, motor home, bus, or other recreational vehicle or any non -operating vehicle shall be parked or stored in any open sparking spaces; and towing of any vehicles violating the restrictions within the CC&Rs.. The CC&Rs must be in recordable form prior to recordation of the map. (HBZSO Section 253.12.H) 6. Block wall/fencing plans (including a site plan, section drawings, and elevations depicting the height and material of all retaining walls, walls, and fences) consistent with the grading plan shall be HB -163- Attachrrltem 9. - 87 submitted to and approved by the Community Development Department. Double walls shall be avoided to the greatest extent feasible. Applicant shall coordinate with adjacent property owners and make reasonable attempts to construct one common property line wall. If coordination between property owners cannot be accomplished, the applicant shall construct up to an eight (8') foot tall wall located entirely within the subject property and with a two (2) inch maximum separation from the property line. Prior to the construction of any new walls, a plan must be submitted identifying the removal of any existing walls located on the subject property. Any removal of walls on private residential property and construction of new common walls shall include approval by property owners of adjacent properties. The plans shall identify materials, seep holes and drainage. 7. Comply with all applicable mitigation measures contained in Environmental Impact Report No. 89-1 for the Holly-Seacliff Specific Plan. 8. Tentative Tract Map No. 18106 shall become null and void unless exercised within two years of the date of final approval by the City Council, or such extension of time, as granted by the Director pursuant to a written request submitted to the Planning Department a mininnwm 30 days prior to the expiration date. 9. Comply with al I applicable Conditional Use Permit No. 17-010 conditions of approval. 10. Incorporation of sustainable or "green" building practices into the design of the proposed structures and associated site improvements is highly encouraged. Sustainable building practices may include (but are not limited to) those recommended by the U.S. Green Building Council's Leadership in Energy and Environmental Design (LEED) Program certification (lhttp://www.usgbc.ors/DisplayPaue.aspx?CategorylD=19) or Build It Green's Green Building Guidelines and Rating Systems (http://w«,-w.builditszreen.orL/index.efni?fLiseaction=2uidelines). 11. The development services departments (Community Development Department, Fire Department, and Public Works) shall be responsible for ensuring compliance with all applicable code requirements and conditions of approval. The Director of Community Development may approve minor amendments to plans and/or conditions of approval as appropriate based on changed circumstances, new information or other relevant factors. Any proposed plan/project revisions shall be called out on the plan sets submitted for building pen -nits. Permits shall not be issued until the Development Services Departments have reviewed and approved the proposed changes for conformance with the intent of the Planning Commission's action. If the proposed changes are of a substantial nature, an amendment to the original entitlement reviewed by the Planning Commission may be required pursuant to the provisions of HBZSO Section 241.18. SUGGESTED CONDITIONS OF APPROVAL - CONDITIONAL USE PERMIT NO. 17-010: The site plans, floor plans, and elevations received and dated November 13, 2017, shall be the conceptually approved design. 2. Prior to submittal for building permits, the following shall be completed: a. Zoning entitlement conditions of approval, EIR No. 89-1 mitigation measures, and Code Requirements letter dated November 30, 2017 shall be printed verbatim on one of the first Item 9. - 88 HB -164- Attachment No. 1.6 three pages of all the working drawing sets used for issuance of building permits (architectural, structural, electrical, mechanical and plumbing) and shall be referenced in the sheet index. The minimum font size utilized for printed text shall be 12 point. b. Submit three (3) copies of the approved site plan and the processing fee to the Community Development Department for addressing of the new units. 3. Prior to issuance of building permits, the following shall be completed: a. Block wall/fencing plans (including a site plan, section drawings, and elevations depicting the height and material of all retaining walls, walls, and fences) consistent with the grading plan shall be submitted to and approved by the Community Development Department. Double walls shall be avoided to the greatest extent feasible. Applicant shall coordinate with adjacent property owners and make reasonable attempts to construct one common property line wall. If coordination between property owners cannot be accomplished, the applicant shall construct up to an eight (8') foot tall wall located entirely within the subject property and with a two (2) inch maximum separation from the property line. Prior to the construction of any new watts, a plan must be submitted identifying the removal of any existing walls located on the subject property. Any removal of walls on private residential property and construction of new common walls shall include approval by property owners of adjacent properties. The plans shall identify materials, seep holes and drainage. b. Contact the United States Postal Service for approval of mailbox location(s). c. An interim parking and building materials storage plan shall be submitted to the Community Development Department to assure adequate parking and restroom facilities are available for employees, customers and contractors during the project's construction phase and that adjacent properties will not be impacted by their location. The plan shall also be reviewed and approved by the Fire Department and Public Works Department. The applicant shall obtain any necessary encroachment permits from the Department of Public Works. 4. The structure(s) cannot be occupied, the final building perinit(s) cannot be approved, and utilities cannot be released for the first residential unit until the following has been completed: a. The applicant shall obtain the necessary permits from the South Coast Air Quality Management District and submit a copy to Community Development Department. b. Compliance with all conditions of approval specified herein shall be accomplished and verified by the Community Development Department. c. All building spoils, such as unusable lumber, wire, pipe, and other surplus or unusable material, shall be disposed of at an off -site facility equipped to handle them. d. Parkland dedication in -lieu fees (Quimby Fees) shall be paid to the Community Development Department. 5. Signage shall be reviewed under separate pen -nits and applicable processing. 6. The applicant and/or applicant's representative shall be responsible for ensuring the accuracy of all plans and information submitted to the City for review and approval. HB -165- Attachrrltem 9. - 89 i. Conditional Use Permit No. 1 i-010 shall become null and void unless exercised within one year of the date of final approval by the City Council, or such extension of time, as granted by the Director pursuant to a written request submitted to the Planning Department a minimum 30 days prior to the expiration date. INDEMNIFICATION AND HOLD HARMLESS CONDITION: The owner of the property which is the subject of this project and the project applicant if different from the property owner, and each of their heirs, successors and assigns, shall defend, indemnify and hold harmless the City of Huntington Beach and its agents, officers, and employees from any claim, action or proceedings, liability cost, including attorney's fees and costs against the City or its agents, officers or employees, to attack, set aside, void or annul any approval of the City, including but not limited to any approval granted by the City Council, Planning Commission, or Design Review Board concerning this project. The City shall promptly notify the applicant of any claim, action or proceeding and should cooperate fully in the defense thereof. Item 9. - 90 HB -166- Attachment No. 1.8 ATTACHMENT #3 RECORDED AT THE REQUEST OF AND WHEN RECORDED RETURN TO: City Clerk City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 (Space Above For Recorder's Use) This Density Bonus and Affordable Housing Agreement is recorded at the request and for the benefit of the City of Huntington Beach and is exempt from the payment of a recording fee pursuant to Government Code Sections 6103 and 27383. DENSITY BONUS AND AFFORDABLE HOUSING AGREEMENT FOR 19200 HOLLY LANE, HUNTINGTON BEACH BY AND BETWEEN CITY OF HUNTINGTON BEACH, a California Municipal Corporation and MLC HOLDINGS, INC., an Arizona Corporation 17-6041/I69223/SFF HB -167- Item 9. - 91 DENSITY BONUS AND AFFORDABLE HOUSING AGREEMENT FOR 19200 HOLLY LANE, HUNTINGTON BEACH This DENSITY BONUS AND AFFORDABLE HOUSING AGREEMENT ("Agreement") is entered into as of the day of _, 2018 ("Effective Date") by and between the CITY OF HUNTINGTON BEACH, a California municipal corporation ("City"), and MLC HOLDINGS, INC., an Arizona Corporation ("Owner"). City and Owner are hereinafter sometimes referred to collectively as the "Parties" and individually as a "Party." RECITALS A. City is a municipal corporation and charter city organized and existing pursuant to the Constitution and laws of the State of California. B. Owner is the owner in fee of that certain real property located at 19200 Holly Lane, Huntington Beach, consisting of approximately 1.93 net acres of land, and more particularly described in the legal description attached hereto as Exhibit "A" (the "Property"). C. Owner has submitted to City plans to develop the Property as a thirty-two (32) unit residential community to be subdivided as a condominium development, as more particularly depicted in the attached Exhibit "B" (the "Project"). Owner will build the Project in a single phase and sell individual units to individual homebuyers. In compliance with the Holly Seacliff Specific Plan, seventeen percent (17%) of the Units in the Project shall be affordable to Moderate Income Households. D. Pursuant to California Government Code Section 65915 (the "State Density Bonus Law"), as implemented under Huntington Beach Zoning and Subdivision Ordinance ("HBZSO"), Chapter 230.14, developers of housing projects that include specified levels of affordable housing are entitled to apply for and receive certain density bonuses and additional incentives in order to facilitate the economic feasibility of those projects. A five percent density bonus is available if ten percent of the units are affordable to moderate income households earning 120% of median income or less, with an additional one percent density bonus for each one percent increase in moderate income units, such that a twelve percent (12%) density bonus is available if seventeen percent (17%) of the units are affordable to Moderate Income Households. Owner proposes that a minimum of seventeen percent (17%) of its Nventy-eight (28) "base" units pennitted under the HBZSO will be affordable to Moderate Income Households, and consequently is entitled to twelve percent (12%) density bonus, yielding thirty-two (32) total units. E. In exchange for making at least ten percent of the units affordable to moderate income households, the State Density Bonus Law provides that the developer may receive up to one "incentive or concession." (Gov't § 65915(d)(2)(A).) In addition, in exchange for making at least ten percent of the units affordable to moderate income households, the State Density Bonus Law provides that the developer is entitled to the "waiver and modification" of any "development standard" that would physically preclude the construction of a project with the density bonus and the incentives or concessions to which the developer is entitled. (Gov't § 65915(e).) A "development standard" includes a site or construction condition that applies to a residential development, including, but not limited to, a height limitation, a setback requirement, a floor area 4- Item 9. - 92 /169223/sFF H B -168- ratio, an onsite open -space requirement, or a parking ratio. (Gov't § 65915(o).) F. The Holly-Seacliff Specific Plan requires that fifteen percent (15%) of new housing within the planning area be affordable to households earning less than 120% of Orange County Median Income. In compliance with the Holly-Seacliff requirement, Owner agrees to provide that seventeen percent (17%) of the twenty-eight (28) base units permitted under the City development standards will be affordable to Moderate Income Households, consisting of four (4), four -bedroom units and one (1), three -bedroom unit. As a result, the total of thirty-two (32) residential units in the Project consists of twenty-eight (28) base residential units, and four (4) density bonus residential units, with five (5) units affordable to Moderate Income Households. G. Pursuant to Govertunent Code Section 65915(e), Owner has applied for the waiver and reduction of several development standards an the basis that they would physically preclude the construction of the Project with the density bonus. Instead of providing 350 square feet of open space per unit required under the Holly-Seacliff Specific Plan, or 11,200 square feet for thirty-two (32) units, Owner will provide 10,075 square feet. Owner further seeks relief from the average of a. 10-foot setback on the third story from the second floor facade that HBZSO Section 210.06 (F) requires, thereby avoiding the loss of up to four (4) units and open space. Instead, two-story units will front on Holly Lane, and three-story units will front on Clay Avenue. H. Pursuant to Government Code Section 65915(d)(2)(A), Owner also seeks as a concession relief from the requirement of 14BZSO Section 210.06, and is proposing patio walls of exactly 42 inches throughout the Project, rather than walls that exceed 42 inches. Finally, Owner has applied for a waiver and reduction of parking pursuant to Government Code Section 65915(p)(5) & (6), and will provide only seventy-six (76) onsite parking spaces. I. On December 12, 2017, the Planning Commission approved the Owner's application for Tentative Tract Map No. 18105 and CUP No. 17-011. As approved, the Project includes the aforementioned incentives and concessions, and waivers and reduction. The Project will include a twelve percent (12%) density bonus, in which Owner would construct twenty-eight (28) base residential units and four (4) density bonus residential units, for a total of thirty-two (32) residential units. In order to take advantage of the increase in allowable density, Omer must ensure, pursuant to the terms of this Agreement, that no less than seventeen percent (17%) of the twenty-eight (28) units permitted under City development standards are affordable to Moderate Income Households. Consequently, the Project shall include five (5) units that will be owned and occupied by Low or Moderate Income Households as defined in Health and Safety Code Section 50093, consisting of four (4) four -bedroom units and one (1) three -bedroom unit. J. This Agreement sets forth the terms and conditions for the implementation of the Project's requirement to provide affordable housing units in exchange for receiving the density bonus units and additional incentives and concessions, and waiver and modification of development standards as set forth herein. K. The development of the Project on the Property pursuant to this Agreement, and the fulfillment generally of this Agreement, are in the vital and best interests of City and the welfare of its residents, and in accordance with the public purposes and provisions of applicable federal, state, and local laws and requirements. 17-6041(169223/SFF -2- 1-113 -169- Item 9. - 93 COVENANTS NOW, THEREFORE, in consideration of the above Recitals, which are incorporated herein by this reference, and of the mutual covenants hereinafter contained and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties agree as follows: DEFINITIONS AND EXHIBITS Definitions. The following terms when used in this Agreement shall be defined as follows: 1.1.1 "Adjusted For Family Size Appropriate To The Unit" means a household of one person in the case of a studio unit, a household of two persons in the case of a one -bedroom unit, a household of three persons in the case of a two -bedroom unit, a household of four persons in the case of a three -bedroom unit, and a household of five persons in the case of a four -bedroom unit. 1.1.2 "Affordable Housing Cos(' for a Moderate Income Household means that purchase price which would result in an annual Monthly Housing Cost which does not exceed Thirty -Five Percent (35%) of One Hundred Ten Percent (110%) of the current Orange County monthly median income for a household adjusted for family size appropriate to the Unit. In determining monthly housing payments, the City will assume principal and interest payments on a conventional home mortgage after paying a ten percent (10%) down payment. Monthly housing costs will also include homeowner's association dues, utilities, homeowner's insurance, maintenance costs and property taxes. Affordable Housing Cost shall be calculated pursuant to the City Housing Regulations. 1.1.3 "Affordable Units" means the five (5) units, consisting of four (4) four -bedroom Units and the one (1) three -bedroom Units that are designated pursuant to Section 3.2 to be sold to and occupied by Moderate Income households in the Project. 1.1.4 "Afordable Housing Coi'enant" means the Declaration of Conditions, Covenants and Restrictions for Moderate Income Affordable Housing to be recorded against each Affordable Unit in the form attached hereto as Exhibit "C." 1.1.5 "City Housing Regulations" means the "Affordable Ownership Housing Regulations -Homeowner Requirements of the City of Huntington Beach," dated August 15, 2011, as they exist now, and as they may be amended in the fixture, 1.1.6 "Effective Date" means the date the City Council of City approves this Agreement, which date shall be inserted in the preamble to this Agreement. 1.1.7 "Household" means all persons residing in a Unit. 1.1.8 "Market Rate Units" means the Units within the Project to be rented or sold by Owner to a Household without restriction as to income levels, rental rate or sales price. -3 - Item 9. - 94 /169223/SFF HB -170- 1.1.9 " 1edian Income" means the Orange County area median income, adjusted for household size, as established by the United States Department of Housing and Urban Development, and as published periodically by the California Department of Housing and Conununity Development. 1.1.10 "Moderate Income Household" means a Household whose income does not exceed the qualifying limits for moderate income households pursuant to Health and Safety Code Section 50093, which is those Households whose income does not exceed one hundred twenty percent (120%) of Median Income, adjusted for family size. The income level of a Household shall be determined in accordance with the City Housing Regulations. 1.1.11 "Monthly Housing Cost" shall include all of the following associated with the Affordable Unit: (1) principal and interest payments on a mortgage loan; (ii) property taxes and assessments; (iii) the cost of fire and casualty insurance covering replacement value of property improvements; (iv) homeowner's association fees; (v) reasonable Unit maintenance and repair costs; and (vi) reasonable utility allowance, all as determined according to the City Housing Regulations. 1.1.12 "Qualified Purchase" means a Household that complies with all income verification requirements in this Agreement, and earns not more than one hundred twenty percent (1.20%) of the Median Income, adjusted for family size, to be determined in accordance with the City Housing Regulations. 1.1.13 "Unit" means a residential dwelling unit within the Project to be sold by Owner pursuant to this Agreement. 1.1.14 "Unit Release" means that certain instrument to be recorded for the benefit of a Market Rate Unit no longer subject to this Agreement, in the form of Exhibit "D" of this Agreement. L2 Exhibits. The following documents are attached to, and by this reference made a part of, this Agreement: Exhibit "A" — Legal Description of the Property Exhibit "B" — Depiction of the Project Exhibit "C" — Declaration of Conditions, Covenants and Restrictions for Moderate Income Affordable Housing, with attachments Exhibit "D" — Unit Release Agreement Exhibit "E" Density Bonus and Affordable Housing Agreement Release Agreement 2. DEVELOPMENT OF THE PROPERTY 2.1 Project. Owner shall develop the Project as a thirty-two (32) unit condominium residential eominunity in accordance with and subject to all applicable entitlements and permits. The Project shall have twenty seven (27) Market Rate Units, and five (5) Affordable Units. There shall be four (4) four -bedroom Affordable Units and one (1) three -bedroom 17-6041/169223/SFF -4- HB -171- Item 9. - 95 Affordable Unit. The average square footage of the Affordable Units shall be approximately the same as the average square footage of the Market Rate Units of the same number of bedrooms. The Affordable Units shall be constructed with the same exterior appearance and interior features, fixtures, and amenities, and shall use the same type and quality of materials as the Market Rate Units in the Project. The Affordable Units shall be dispersed throughout the Project. At its discretion, Owner may increase the number of Affordable Units. 2.2 Authorized Waivers and Modifications and incentives and Concessions. In accordance with the State Density Bonus Law and pursuant to the entitlements for the Project, City authorized the Waivers and Modifications, and Incentives and Concessions described in the Recitals, above. 2.3 Compliance with Laws. Owner at its sole cost and expense shall secure or cause to be secured any and all permits that may be required by City or any other federal, state, or local governmental entity having or claiming jurisdiction over the Property or Project. Upon securing any and all permits, Owner shall carry out and perform the development, and marketing of the Project in conformity with al] applicable federal, state, and local laws and regulations, and all conditions of approval of Tentative Map No. 18105. 2.4 Replacement Housing. Owner represents that. there are no and there have not been any rental dwelling units on the Property for the five years preceding Owner submitting its Project application to the City. Should it later be determined that Government Code Section 65915(c)(3) requires Owner to provide replacement dwelling units in order to obtain the benefits of this Agreement, then Owner shall have the sole and exclusive responsibility for providing all relocation dwelling units legally required. Owner shall indemnify, defend (with counsel of City's choosing and the consent of Owner, which shall not be unreasonably withheld, and which may be joint defense counsel upon City's and Owner's consent) and hold harmless City and all of its officials, officers, employees, representatives, volunteers and agents from any and all alleged or actual claims, causes of action, liabilities, and damages from any third party alleging a violation of Govermnent Code Section 65915(c)(3). 2.5 Mechanic's Liens; Indenmification. Owner shall take all actions reasonably necessary to prevent and remove any mechanic's liens or other similar liens (including design professional liens) against the Property or Project, or any part thereof, by reason of work, labor, services, or materials supplied or clai ned to have been supplied to Owner or anyone holding the Property or Project, or any part thereof, through or under Owner. Upon request by the City, Owner shall provide to the City updated information from Owner's title insurer. City hereby reserves all rights to post notices of non -responsibility and any other notices as may be appropriate upon a filing of a mechanic's lien. Owner shall indemnify, defend (with counsel of City's choosing and the consent of Owner, which shall not be unreasonably withheld, and which may be joint defense counsel upon City's and Owner's consent), and hold harmless City and all of its officials, officers, employees, representatives, volunteers and agents from any and all alleged or actual claims, causes of action, liabilities, and damages from any third party by reason of a mechanic's lien or work, labor, services, or materials supplied or claimed to have been supplied to Owner or anyone holding the Property or Project, or any part thereof, through or udder Owner. -5- Item 9. - 96 /169223/sFF HB - 172_ 3. AFFORDABLE UNITS 3.1 Execution and Recording of This Agreement. Owner shall execute this Agreement prior to City Council consideration of approval of this Agreement. No later than thirty (30) days after the Effective Date of this Agreement, Owner shall record an executed original of this Agreement against the Property in the Official Records for Orange County, California. 3.2 Designation of Affordable Units. At least three (3) months prior to the recordation of the Condominium Map with the approval of the California Department of Real Estate, Owner shall obtain the approval from the City's Housing Manager of the designation of the five (5) Affordable Units. The Affordable Units shall be disbursed throughout the buildings of the Project. Immediately following recordation of each Condominium Map for the Project, Owner shall cause the Affordable Housing Covenant (Ex. C) to be recorded against any Affordable Units within the Condominium Map. 3.3 Prohibition of Leasing of Market Rate or Affordable Units by the Owner. Owner agrees to market and sell all Market Rate and Affordable Units at the Project. City would not grant the aforementioned Waiver and Reduction of Development Standards, the Concessions and Incentives, nor the modification of parking standards unless Owner agrees to market and sell all the Units in the Project as ownership housing. While Market Rate Units may be leased by the individual owner once purchased from the Owner, in no event may Owner lease any Units. 3.4 Term of Affordable Unit Covenants. Each Affordable Unlit designated for Moderate Income Households shalt be restricted for use and occupancy by a Moderate Income Household; for a total period of forty-five (45) years, commencing on the date that the Owner conveys title to the first purchaser of each Affordable Unit. By way of explanation of the foregoing two sentences, it is possible that the affordability term for one Affordable Unit will neither commence on the same date nor terminate on the same date as another Affordable Unit, and it is possible that the affordability terms for all Affordable Units will continence on different days and terminate on different days. 3.5 Memorializing Cominencement of Affordability Term. The Notice of Affordability Restrictions is attached as an exhibit to Exhibit C, the Declaration of Conditions, Covenants, and Restrictions for Moderate Income Affordable Housing. This Notice shall be recorded concurrently with conveyance of title to the first buyer of each Affordable Unit and the affordability term for each Affordable Unit shall begin as of the recordation date of the Notice. 3.6. Sale of Affordable Units to Moderate Income Households. When marketing the Affordable units, Owner shall comply with the City Housing Regulations. Owner shall not convey title to any Affordable Unit to a Household that the City has not verified as a Moderate Income Household, as determined pursuant the City Housing Regulations. Owner shall not convey title to any Affordable Unit to a Moderate Income Household at a price that exceeds the Affordable Housing Cost for that Affordable Unit as established by the City. -6- i 7-6041/169223/SFF HB -1 /3- Item 9. - 97 4. TERM OF THIS AGREEMENT 4.1 The term of this Agreement shall commence on the Effective Date and shall continue until the date Owner conveys fee title to buyers of all of the Units of the Project in accordance with the requirements of this Agreement. Upon satisfaction of the foregoing, the City shall, at the request of Owner, record a termination of this Agreement in the form of Exhibit E to this Agreement. The recording of such a termination document shall remove this Agreement as an encumbrance upon title to the Property, Notwithstanding any other provision 'herein to the contrary, Owner's indemnity obligations under Sections 2.4 (Replacement Housing), 2.5 (Mechanic's Liens) and 5.3 (Indemnification) hereof shall survive the termination of this Agreement. 4.2 Owner shall have the right at the time that it enters into a sales agreement for each of the Units to request that City execute a Unit Release for the Unit in the form of Exhibit D to this Agreement. 5. DEFAULT AND TERMINATION INDEMNIFICATION 5.1 Default. Failure or delay by any Party to perform any term or provision of this Agreement which is not cured within thirty (30) days after receipt of notice from the other Party specifying the default (or such other period specifically provided herein) constitutes a default under this Agreement; provided, however, if such default is of the nature requiring more than thirty (30) days to cure, the defaulting Party shall avoid default hereunder by cominencing to cure within such thirty (30) day period, and thereafter diligently pursuing such cure to completion within an additional sixty (60) days following the conclusion of such thirty (30) day period (for a total of ninety (90) days). Except as required to protect against further damages, the injured Party may not institute proceedings against the Party in default until the time for cure has expired. Failure or delay in giving such notice shall not constitute a waiver of any default, nor shall it change the time of default. 5.2 Rijzhts and Remedies Cumulative. The rights and remedies of the Parties are cumulative, and the exercise by either Party of one or more of its rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default by the other Party. 5.3 Indemnification. In addition to any other indemnity specifically provided in this Agreement, Owner shall defend (with counsel of City's choosing and the consent of Owner, which shall not be unreasonably withheld, and which may be joint defense counsel upon City's and Owner's consent), indemnify and hold harmless City and its officers, officials, agents, employees, representatives, and volunteers from and against any loss, liability, claim, or judgment arising from any act or omission of Owner in connection with its obligations under this Agreement. 6. ASSIGNMENT 6.1 Assignment by Owner. The qualifications and identity of Owner are of particular concern to City. It is because of those qualifications and identity that City has -7- . _ `- .. /ib9223/SFF Item 9. - 98 1413 -174- entered into this Agreement. Accordingly, except as authorized in Section below, Owner shall not sell, transfer, or assign the Property or Project in whole or in part, or transfer or assign Owner's rights and obligations in this Agreement, without City's prior written approval, which shall not be unreasonably withheld. In considering whether to grant its approval of any proposed transfer or assignment by Owner of its interest in the Property, Project, or this Agreement, City shall consider factors such as the financial strength and capacity of the proposed transferee or assignee to perform Owner's obligations in this Agreement, and the proposed transferee's or assignee's experience and expertise in the planning, financing, development, and operation of similar proj ects. 6.2 Subsequent Assi nment. As used in this Agreement, the term "Owner" shall be deemed to include any such transferee or assignee after the date such transfer or assignment occurs in compliance with this Agreement. 63 Unpermitted Assignments Void. Any sale, transfer, or assignment made in violation of this Agreement shall be null and void, and City shall have the right to pursue any right or remedy at law or in equity to enforce the provisions of the restriction against unpermitted sales, transfers, or assignments. 7. MISCELLANEOUS 7.1 Notices. As used in this Agreement, "notice" includes, but is not limited to, the communication of notice, request, demand, approval, statement, report, acceptance, consent, waiver, appointment or other communication required or permitted hereunder. All notices shall be in writing and shall be considered given either: (i) when delivered in person to the recipient named below; or (ii) on the date of delivery shown on the return receipt, after deposit in the United States mail in a sealed envelope as either registered or certified snail with return receipt requested, and postage and postal charges prepaid, and addressed to the recipient named below; or (iii) five (5) days after deposit in the United States mail in a sealed envelope, first class mail and postage prepaid, and addressed to the recipient named below; or (iv) one (1) day after deposit with a known and reliable next -day document delivery service (such as FedEx), charges prepaid and delivery scheduled next -day to the recipient named below, provided that the sending party receives a confirmation of delivery from the delivery service provider. All notices shall be addressed as follows: If to CITY: City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 Attn: Director of Community Development & Housing Manager If to OWNER: MLC Holdings, Inc. 1401 Dove Street, Suite 640 Newport Beach, CA 92660 Attn: Moses Kim, Forward Planning Manager -8- L 7-6041/169223/SFF H -175- Item 9. - 99 7,2 Change of Address. Either Party may, by notice given at any time, require subsequent notices to be given to another person or entity, whether a party or an officer or representative of a party, or to a different address, or both, Notices given before actual receipt of notice of change shall not be invalidated by the change. 7.3 Entire Agreement. This Agreement and all of its Exhibits and attachments set forth and contain the entire understanding and agreement of the parties, and there are no oral or written representations, understandings or ancillary covenants, undertakings or agreements which are not contained or expressly referred to herein. No testimony or evidence of any such representations, understandings or covenants shall be admissible in any proceeding of any kind or nature to interpret or determine the terms or conditions of this Agreement. 7A Amendments. The terms of this Agreement may only be modified or amended by an instrument in writing executed by each of the parties hereto; provided, however, the City Manager shall have the authority to issue interpretations, waive provisions and enter into amendrnents of this Agreement on behalf of City so long as such actions do not substantially change the uses or development permitted on the Property. 7.5 Severability. If any term, provision, covenant or condition of this Agreement shall be determined invalid, void or unenforceable, the remainder of this Agreement shall not be affected thereby to the extent such remaining provisi.oiis are not rendered impractical to perform, taking into consideration the purposes of this Agreement. 7.6 Interpretation and Governing _LaV+r. This Agreement and any dispute arising hereunder shall be governed and interpreted in accordance with the laws of the State of California without regard to conflict of law principles. This Agreement shall be construed as a whole according to its fair language and common meaning to achieve the objectives and purposes of the Parties hereto, and the rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not be employed in interpreting this Agreement, all Parties having been represented by counsel in the negotiation and preparation hereof. 7.7 Section Headings. All section headings and subheadings are inserted for converdence only and shall not affect any construction or interpretation of this Agreement. 7.8 Singular and Plural. As used herein, the singular of any word includes the plural, and vice versa, as context so dictates. Masculine, feminine, and neuter forms of any word include the other as context so dictates. 7.9 Joint and Several Obligations. If at any time during the term of this Agreement the Property and/or Project is owned, in whole or in part, by more than one Owner, all obligations of such Owner under this Agreement shall be joint and several, and the default of any such Owner shall be the default of all such Owners. 7.10 Time of Essence. Time is of the essence in the performance of the provisions of this Agreement as to which time is an element. u 69223/SFF Item 9. -- 100 Hg -176- 7.11 Days. Unless otherwise specified in this Agreement or any Exhibit attached hereto, use of the term "days" shall mean calendar days. For purposes of this Agreement and all Exhibits attached hereto, "business days" shall mean every day of the week that City Hall of the City is open for business to the general public. 7.12 Waiver. Failure by a Party to insist upon the strict performance of any of the provisions of this Agreement by the other Party, or the failure by a Party to exercise its rights upon the default of the other Party, shall not constitute a waiver of such Party's right to insist and demand strict compliance by the other Party with the terms of this Agreement thereafter. 7.13 Force Majeure, Neither Party shall be deemed to be in default where failure or delay in performance of any of its obligations under this Agreement is caused by floods, earthquakes, other Acts of God, fires, wars, riots or similar hostilities, strikes and other labor difficulties beyond the Party's control (including the Party's employment force), court actions (such as restraining orders or injunctions), government regulations or other causes beyond the Party's control. If any such events shall occur, the term of this Agreement and the time for performance by either Party of any of its obligations hereunder may be extended by the written agreement of the Parties for the period of time that such events prevented such performance. 7.14 Mutual Covenants. The covenants contained herein are mutual covenants and also constitute conditions to the concurrent or subsequent performance by the Party benefited thereby of the covenants to be performed hereunder by such benefited Party. 7.15 Successors in Interest. The burdens of this Agreement shall be binding upon, and the benefits of this Agreement shall inure to, all successors in interest to the Parties to this Agreement. All provisions of this Agreement shall be enforceable as equitable servitudes and constitute covenants running with the land. Each covenant to do or refrain from doing some act hereunder with regard to development of the Property: (a) is for the benefit of and is a burden upon every portion of the Property; (b) runs with the Property and each portion thereof; and, (c) is binding upon each Party and each successor in interest during ownership of the Property or any portion thereof. 7.16 Jurisdiction and Venue. Any action at law or in equity arising under this Agreement or brought by a Party hereto for the purpose of enforcing, construing or determining the validity of any provision of this Agreement shall be filed and tried in the Superior Court of the County of Orange, State of California, or any other court in that county, and the Parties hereto waive all provisions of law providing for the filing, removal or change of venue to any other court. 7.17 Project as a Private Undertaking. It is specifically understood and agreed by and between the Parties hereto that the development of the Project is a private development, that neither Party is acting as the agent of the other in any respect hereunder, and that each Party is an independent contracting entity with respect to the terms, covenants and conditions contained in this Agreement. No partnership, joint venture or other association of any kind is formed by this Agreement. The only relationship between City and Owner is that of a government entity regulating the development of private property and the Owner of such property. -10- 17-6041/169223/SFF HB -177- Item 9. - 101 7.18 Attorneys' Fees and Costs. If either Party to this Agreement commences an action against the other Party to this Agreement arising out of or in connection with this Agreement, each party shall bear its own attorneys' fees and costs of suit. 7.19 Authority to Execute. The person or persons executing this Agreement on behalf of either Party warrants and represents that he or she/they have the authority to execute this Agreement on behalf of his or her/their agency, corporation, partnership or business entity and warrants and represents that he or she/they has/have the authority to bind the Party to the performance of its obligations hereunder. 7.20 Counterparts. This Agreement may be executed by the Parties in counterparts, which counterparts shall be construed together and have the same effectas if all of the Parties had executed the same instrument. IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the date set forth above. ATTEST: City Clerk APPROVED AS TO FORM: City Attorney "CITY" CITY OF HUNTINGTON BEACH, a California municipal corporation "OWNER" MLC HOLDINGS, INC. an. Arizona Corporation By: Its: By: Its: 11- 69223/SFF Item 9. - 102 HB -178- EXHIBIT A (Legal Description) 17-6041I169223ISFF -12- HB -179- Item 9, - 103 EXHIBIT A LEGAL DESCRIPTION FOR 19200 HOLLY PROJECT: LOTS 22, 23 AND 24 IN BLOCK A OF GARFIELD STREET ADDITION TO HUNTINGTON BEACH, AS PER MAP RECORDED IN BOOK 7, PAGES 27 AND 28 OF MISCELLANEOUS MAPS, IN THE OFFICE OF THE COUNTY RECORDER. EXCEPTING ALL MINERAL RIGHTS FROM THE OIL AND GAS LEASE DATED OCTOBER 11, 1920, RECORDED IN BOOK 27, PAGE 121 OF LEASES, RECORDS OF ORANGE COUNTY AND SURFACE ENTRY RIGHTS FROM THE LEASE DATED JUNE 2, 1951 RECORDED IN BOOK 2088, PAGE 616 OF LEASES, RECORDS OF ORANGE COUNTY. Item 9. - 104 HB -180- EXHIBIT B (Projeet Depiction) 17-604111692231SFF -13- HB -181- Item 9. - 105 EXHIBIT C (Affordable Housing Covenant) 17-6041/169223/SFF -14- HB -18>- Item 9. - 107 RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: City Clerk City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 SPACE ABOVE THIS LINE FOR RECORDERS' USE ONLY DECLARATION OF CONDITIONS, COVENANTS AND RESTRICTIONS FOR MODERATE INCOME AFFORDABLE HOUSING 19200 HOLLY LANE, HUNTINGTON BEACH This Declaration Of Conditions, Covenants And Restrictions For Moderate Income Affordable Housing ("Resale Restrictions") is made as of , 20___, by and between MLC HOLDINGS, INC. an Arizona corporation, (the "Owner"), and the CITY OF HUNTINGTON BEACH, a California municipal corporation (the "City"), and the HOUSING AUTHORITY OF THE CITY OF HUNTINGTON BEACH, a public body corporate and politic (the "Authority") At the option of the City and Authority, the Authority may enforce these Resale Restrictions in place of the City. RECITALS A. Owner is the owner in fee of that certain real property consisting of Units and _, located at 19200 Holly Lane, Huntington Beach (APN , , and __J, as more particularly described in the legal description attached hereto as Exhibit "A" (the "Property"). B. Owner submitted to City plans to develop the Property as a thirty-two (32) unit residential community to be subdivided as a condominium development. Owner will build the Project in a single phase and sell individual units to individual homebuyers. Pursuant to California Government Code Section 65915, Owner obtained a twelve percent (12%) density bonus. Pursuant to Section 65915 and Chapter 230.26 of the Huntington Beach Zoning and Subdivision Ordinance ("HBZSO"), and the Holly Seacliff Specific Plan, at least seventeen percent (17%) of the units in the Project shall be affordable to Moderate Income Households. C. On December 12, 2017, the Huntington Beach Planning Commission approved the Project pursuant to Tentative Tract No. 18105 and CUP No. 17-011. As a condition of approval of the Tentative Tract Map and CUP, the Project includes five (5) units which are to be '- "69225.doo/SFF Item 9. - 108 HB -184- occupied by, and sold at prices affordable to Moderate Income Households for a term of 45 years ("the "Affordable Units"). Tentative Tract Map No. 18105 was later recorded as Final Tract Map No. 18105 at Instrument No. of the Records of Orange County, California. D. In order to secure the long term affordability of the Affordable Units, the City and Owner entered into the "Density Bonus and Affordable Housing Agreement for 19200 Holly Lane," which was recorded as Instrument No. in the Records of Orange County, California (the "Density Bonus Agreement"). The Density Bonus Agreement provides that Owner shall designate four (4), four -bedroom units and one, three -bedroom unit as the Affordable Units. E. Pursuant to the Density Bonus Agreement, Owner has designated the Affordable Units as: (i) Units _, _, _, and all four -bedroom units; and (ii) Unit _, a three -bedroom unit. Owner is the owner of record of these Units, which are located in the City of Huntington Beach, County of Orange, State of California and legally described in the attached Exhibit "A", and are collectively known as the "Restricted Unit(s)." NOW, THEREFORE, the Parties hereto agree and covenant as follows: l . Affordability Covenants. Owner agrees for itself and the successors and assigns to Owner's interest in the Restricted Units, including each Moderate Income Household purchasing one of the Restricted Units, that for a term of forty-five (45) years from the date of the close of escrow for the initial sale of each such Restricted Unit: 1.1 The Restricted Units shall only be owned and occupied by Owner or by a Moderate Income Household, which shall mean persons or families earning not more than 120% of the Orange County median income, adjusted for household size as appropriate to the Unit. 1.2 The Restricted Units shall only be sold at an Affordable Housing Cost to Moderate Income Households. 2. Definitions and Exhibits. 2.1 Definitions. In addition to the terms that may be defined elsewhere in this Covenant, the following terms when used in these Resale Restrictions shall be defined as follows: 2.1.1 "Adjusted for family size appropriate to the I.Jnit" means a household of one person in the case of a studio unit, a household of two persons in the case of one -bedroom unit, a household of three persons in the case of a two -bedroom unit, a household of four persons in the case of a three -bedroom unit, and a household of five persons in the case of a four -bedroom unit. 2.1.2 "Affordable Housing Cost" for a Moderate Income Household means that purchase price which would result in an annual Monthly Housing Cost which does not exceed Thirty -Five Percent (35%) of One Hundred Ten Percent (110%) of the current Orange County monthly median income for a household adjusted for family size appropriate to the Unit. 2 17-6041J1 69225. doc/SFF HB -185- Item 9. - 109 In determining monthly housing payments, the City will assume principal and interest payments on a conventional home mortgage after paying a ten percent (10%) down payment. Monthly housing costs will also include monthly homeowner's association dues, utilities, homeowner's insurance, maintenance costs and property taxes. The Affordable Housing Cost shall be calculated pursuant to the City Housing Regulations. 2.1.3 "City Housing Regulations" means the "Affordable Ownership Housing Regulations-l-tom.eowner Requirement of the City of Huntington Beach," dated August 15, 2011, as they exist now, and as they may be amended in the future. 2.1.34 "Default" means the failure of a Party to perform any action or covenant required by these Resale Restrictions within the time periods provided herein following notice and opportunity to cure. 2.1.5 "First Lien" means the lien of a primary Lender which secures the obligations of the Owner to repay amounts owed to the Lender. 2.1.6. "Owner" means initially, MLC Holdings, Inc., an Arizona corporation, and later its successors and assigns, each owner of any legal or equitable interest in one of the five (5) Restricted Units. 2..1.7. "Lender" means a lender making a purchase money loan to the Owner for the purchase of the Affordable Unit. 2.1.8 "Median Income" means the Orange County, California area median income, adjusted for household size, as established by the United States Department of Housing and Urban Development, and as published periodically by the State of California Department of Housing and Community Development. 2.1..9 "Moderate Income Household" means a Household whose income does not exceed one hundred twenty percent (120%) of Median Income, adjusted for family size. The income level of a Household shall be determined in accordance with the City Housing Regulations. 2.1.10 "Monthly Housing Cost" shall include all of the following associated with the Restricted Units: (i) principal and interest payments on a mortgage loan; (ii) property taxes and assessments; (iii) the cost of fire and casualty insurance covering replacement value of property improvements; (iv) homeowner's association fees; (v) reasonable Unit maintenance and repair costs; and (vi) reasonable utility allowance. All Monthly Housing costs shall be detennined by the City according to the City Housing Regulations. 2.1.11 "Qualified Purchaser" Means a person or family who complies with all income verification requirements of these Resale Restrictions, and earns not more than one hundred twenty percent (120%) of the Median Income, adjusted for family size, to be determined in accordance with the City Housing Regulations. 2.1.12 "Transfer" shall mean any sale, assigninent, conveyance, lease, or transfer, voluntary or involuntary, of any interest in the Restricted Unit. Without limiting the Item 9. - I 10 69225.doc/SFF HB -1 8'6- generality of the foregoing, Transfer shall include (i) a transfer by devise, inheritance or intestacy; (ii) the creation of a life estate; (iii) the creation of a joint tenancy interest; (iv) a gift of all or any portion of the Restricted Unit; or (v) any voluntary conveyance of the Restricted Unit. 3. Attachments. The following documents are attached to, and by this reference made a part of, these Resale Restrictions: Exhibit A -- Legal Description of Restricted Units Exhibit B - Notice of Affordability .Restriction Exhibit C - Promissory Note Exhibit D - Affordable Housing Deed of Trust 4. Term of Resale Restrictions, 4.1 The term of these Resale Restrictions shall commence on the date of the initial sale of each Restricted Unit from Owner to a Qualified Purchaser as evidenced by a deed recorded with the Orange County Recorder's Office and shall continue, with respect to each such Restricted Unit, for forty-five (45) years from said date (the "Affordability Period"). The Covenant contained in tlus Section shall run with each Restricted Unit and shall automatically terminate and be of no further force or effect upon the expiration of the Affordability Period. By way of explanation of the foregoing sentence, it is possible that the affordability term for one Restricted Unit will neither commence on the same date nor terminate on the same date as another Restricted Unit, and it is possible that the affordability terms for all Restricted Units will commence on different days and terminate on different days. The beginning and expiration dates of the Affordability Period for each Restricted Unit shall be established by the City in the Notice of Affordability Covenant (Ex. B) recorded in connection with each sale of the Restricted Units. 4.2 Each Qualified Purchaser of each Restricted Unit shall enter into a Notice of Affordability Restriction, Promissory Note and Deed of Trust in the forms attached as Exhibits B, C, and D to these Resale Restrictions, 5. Covenant Relzarding Use and Sale of Restricted Units. For the Affordability Period, the Restricted Units shall be owned and occupied as the principal residence of a Moderate Income Household, and in no event may the Restricted Unit be leased to a third party. No transfer of a Restricted Unit shall occur until the City determines that: (a) the proposed purchaser intends to occupy the Restricted Unitas the proposed purchaser's principal residence; (b) the proposed purchaser is a Moderate Income Household; and (c) the proposed transfer occurs at an Affordable Housing Cost. 6. Permitted and Prohibited Transfers of Restricted Units. 6.1 The following Transfers, made in compliance with the terms and conditions of these Resale Restrictions and the City Housing Regulations, shall constitute "Permitted Transfers": (i) a Transfer to a surviving joint tenant or other permitted co -Owner of the Restricted Unit by devise, descent, or operation of law on the death of an Owner; (ii) a 0 17-6041/169225.doc/SFF HB Item 9, - III Transfer to a spouse such that the spouses become co -Owners of the Restricted Unit; (iii) a Transfer by decree of dissolution, legal separation agreement, or from an incidental property settlement by which the spouse becomes an Owner of the Restricted Unit, provided that in each case the transferee spouse occupies or will occupy the Restricted Unit; (iv) a Transfer to an inter vivos trust in which Owner is and remains the beneficiary and occupant of the Restricted Unit; and (v) a Transfer to a Moderate Income Household at Affordable Housing Cost. A Transfer that is not a Permitted "Transfer specified above is a "Prohibited Transfer." The occurrence of a Prohibited Transfer is a Default under these Resale Restrictions. 6.2 All Transfers Prohibited Without City Approval. During the Affordability Period, Owner shall not sell, transfer, use as security for any loan, or convey any interest in. a Restricted Unit, except with the express written consent of the City, which consent shall be given only if the Transfer is a Permitted Transfer and in strict compliance with the provisions of this Section 6. 6.3 Maximum Sale Price of Restricted Unit. In the event that Owner decides to sell or otherwise Transfer the Restricted Unit, Owner shall contact the City to obtain the current Affordable Housing Cost, which shall be the maximum sales price of the Restricted Unit. City shall provide the Affordable Housing Cost pursuant to its current Affordable Housing Regulations. Regarding the Affordable Housing Cost, Owner acknowledges that; OWNER, AND EACH SUCCESSOR, HEIR OR ASSIGN OF OWNER, UNDERSTANDS THAT THE DETERMINATION OF THE AFFORDABLE HOUSING COST CAN BE MADE ONLY AT THE TIME OF A PROPOSED SALE OR OTHER TRANSFER OF THE RESTRICTED UNIT, TAKING INTO CONSIDERATION PREVAILING INTEREST RATES, THE OFFERED TERMS OF SALE, THE ECONOMIC CIRCUMSTANCES OF THE PROPOSED PURCHASER AND OTHER FACTORS THAT CANNOT BE ACCURATELY PREDICTED, AND THAT THE TRANSFER PRICE PERMITTED HEREUNDER MAY BE LESS THAN THE FAIR MARKET VALUE OF THE SAME OR OTHER SIMILAR REAL PROPERTY WHICH IS NOT ENCUMBERED BY THIS COVENANT. OWNER, AND EACH SUCCESSOR, HEIR OR ASSIGN OF OWNER, FURTHER ACKNOWLEDGES THAT AT ALL TIMES IN SETTING THE TRANSFER PRICE, THE PRIMARY OBJECTIVE OF THE CITY AND THESE RESALE RESTRICTIONS IS TO PROVIDE HOUSING TO MODERATE INCOME HOUSEHOLDS AT AN AFFORDABLE HOUSING COST. Owner's Initials 5 b9225.dnc/sFF Item 9. - 112 HB -188- 6.4 Procedure to Verify a Proposed Transfer. In the event that Owner desires to sell the Restricted Unit, Owner shall send written notice thereof to the City at the following address: City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 Attention: Director of Economic Development City shall process the sale of the restricted Unit pursuant to the City Housing Regulations. The City shall not be obligated to approve a transfer unless and until the proposed purchaser has submitted to the City such information and completed such forms as necessary to verify the proposed purchaser's intent with respect to his/her/its residency of the Restricted Unit, his/her/its gross income, and an affidavit of the proposed purchaser disclosing and certifying the amount of the proposed purchase price. Prior to conveyance of the Restricted Unit, each approved purchaser shall also submit to the City an executed disclosure statement which certifies that the purchaser is aware that: (i) the purchaser buying the Restricted Unit may only sell the Restricted Unit at an Affordable Housing Cost to a Moderate -Income Household as provided in Section I above, (ii) the maximum permitted sales price may be less than fair market value and (iii) the Restricted Unit must be owner -occupied at all times and cannot be rented or leased. The approved purchaser shall also submit an executed promissory, trust deed, notice documents, and any other documentation reasonably required by the City to effectuate the Affordable Housing Program. Owner shall cooperate with the City in providing such forms to proposed purchasers and in assisting proposed purchasers to prepare such forms and to provide any required information to the City in connection with only the Owner's sale of the Restricted Unit. 7. Non -Discrimination Covenants. Owner covenants by and for itself, it 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 sale, transfer, use, occupancy, tenure or enjoyment of the Restricted Unit, nor shall Owner 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 Restricted Unit. Owner and its successors and assigns shall refrain from restricting the sale of the Restricted 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 deeds or contracts shall contain or be subject to substantially the following nondiscrimination or nonsegregation clause: (a) In deeds: "The grantee herein covenants by and for himself or herself, his or her heirs, executors, administrators and assigns, and all persons 0 17-604 t /169225.doe/SFF HB -189- Item 9. - 113 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 sale, transfer, use, occupancy, tenure or enjoyment of the land herein conveyed, nor shall the grantee 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 with reference to the selection, location, number, use or occupancy of tenants, or vendees in the land herein conveyed. The foregoing covenants shall run with the land." (b) In contracts: "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 sale, transfer, use, occupancy, tenure or enjoyment of the premises, nor shall the transferor himself or herself of any person claiming under or though him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use of occupancy of tenants, subtenants or vendee of the premises." (c) In leases: "The lessee herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assignees, and all persons claiming under or though 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 though him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy of tenants, sublessees, subtenants, or vendees in the premises herein leased." Nothing in this Section 7 shall be construed to authorize the rental or lease of the Restricted Unit if such rental or lease is not otherwise permitted. S. Encumbrances. 8.1 Financings on Transfer. This Section 8 shall not prohibit the encumbering of title for the sole purpose of securing financing of the purchase price of the Restricted Unit upon a Transfer thereof; however, any such financing shall be for the Owner and (i) must be a First Lien, (ii) must not be in excess of the Affordable Housing Cost of the " " "" 69225.doc/SFI' Item 9. - 114 HB -190- Restricted Unit as of date of approval for the financing, (iii) must be in compliance with these Resale Restrictions and the Affordable Housing Deed of Trust, and (iv) shall be subordinate to these Resale Restrictions. 8.2 Subordination. These Resale Restrictions shall have priority over all monetary liens and encumbrances for the Affordability Period. However, the Affordable Housing Deed of Trust only may be subordinated to a First Lien on the Restricted Unit that secures the payment of a principal amount that is riot in excess, as of the date of approval for said financing, of the Affordable Housing Cost of the Restricted Unit. The City shall execute a written instrument for the subordination of its rights under the Affordable Housing Deed of Trust in the form approved by the City Attorney as may reasonably be requested by the Lender. The City's agreement to so subordinate its rights is subject to agreement in writing by the Lender providing the City the following rights: (a) Upon the occurrence of a Default under any of the First Lien documents, the holder of the First Lien shall promptly notify the City of the occurrence of such Default, which notification shall be provided to the City contemporaneously with the delivery to Owner of any notice of Default under any of the First Lien documents; and (b) The City shall have the right, during the cure periods which apply to the Owner pursuant to the First Lien documents and any cure period which may apply to the City under applicable law, to cure the Owner's Default relative to the First Lien; and (e) After a Default on any of the First Lien documents but prior to a foreclosure sale or deed in lieu assigmnent of the Restricted Unit, the City shall have the right to take title to the Restricted Unit and cure the Default relative to the First Lien documents, without the holder of the First Lien exercising any right it might otherwise have to accelerate the obligations secured by the First Lien by reason of such title transfer, so long as the City promptly cures any such Default upon taking title to the Restricted Unit. 8.3 Request for Notice of Default. The City may cause a Request for Notice to be recorded on the Restricted Unit subsequent to the recordation of the First Lien deed of trust or mortgage requesting a statutory notice of Default as set forth in California Civil Code Section 2924b. 8.4 Further Encumbrances Prohibited. Owner shall not record or cause or permit the recordation of any deed of trust, mortgage, lien or other instrument creating a security interest in or to the Restricted Unit (a "Further Encumbrance") other than these Resale Restrictions, the First Lien and the Affordable Housing Deed of Trust. 9. Uses. The Restricted Unit shall be used as the principal residence of Owner and owner's family and may not be rented or leased. Owner covenants and agrees to devote, use, and maintain the Restricted Unit in accordance with these Resale Restrictions. All uses conducted on 17-6041 /169225.aoc/SPF 11B -191- Item 9. - 115 the Restricted Unit, including, without limitation, all activities undertaken by the Owner pursuant to these Resale Restrictions, shall conform to all applicable provisions of federal, state, and local laws, including the Huntington Beach Municipal Code, and the City Housing Regulations. 10. Maintenance of Unit. Owner shall maintain the Restricted Unit in a manner consistent with community standards which will uphold the value of the Restricted Unit, in accordance with the Huntington Beach Municipal Code. Owner also shall comply with all applicable federal, state and local laws. 11. Effect of Violation of the Terms and Provisions of These Resale Restrictions. 11.1 Covenants Run with the Land. These Resale Restrictions are designed to create equitable servitudes and covenants running with the Restricted Unit, in accordance with the provisions of Civil Code Section 1468, and the State Density Bonus Law and the Huntington Beach Zoning and Subdivision Ordinance. The covenants, conditions, restrictions, reservations, equitable servitudes, liens and charges set forth herein shall run with the Restricted Unit and shall be binding upon all persons having any right, title or interest in the leasehold interest in the Restricted Unit, or any part thereof, their heirs, successive owners and assigns; shall inure to the benefit of the City and its successors and assigns, shall be binding upon Owner, and its successors and assigns; and may be enforced by City and its successors and assigns. Owner hereby declares its understanding and intent that the burden of the covenants set forth herein touch and concern the land and that the Owner's interest in the Restricted Unit is rendered less valuable thereby. Owner hereby further declares its understanding and intent that the benefit of such covenants touch and concern the land by enhancing and increasing the enjoyment and use of the Restricted Unit by Owner, and by furthering public purposes for City. In amplification and not in restriction of the provisions hereinabove, it is intended and agreed that City is deemed a beneficiary of the agreements and covenants provided herein both for and in its own right and also for the purposes of protecting the interests of the community. All covenants without regard to technical classification or designation shall be binding for the benefit of City and such covenants shall run in favor of City for the entire period during which such covenants shall be in force and effect, without regard to whether City is or remains an owner of any land or interest therein to which such covenants relate. However, all such covenants and restrictions shall be deemed to run in favor of all real property owned by the City which real property shall be deemed the benefited property of such covenants. Furthermore, all of the covenants, conditions, and restrictions contained herein shall also constitute easements in gross running in favor of the City. City shall have the right, in the event of any breach of any such agreement or covenant, to exercise all the rights and remedies, and to maintain any action at law or suit in equity or other proper proceedings to enforce the curing of such breach of agreement or covenant. 11.2 Notice of Default. Failure or delay by Owner to perform any term or provision of these Resale Restrictions which is not cured within thirty (30) days after receipt of notice from the City constitutes a Default under these Resale Restrictions; provided, however, if such Default is of the nature requiring more than thirty (30) days to cure, Owner may avoid Default hereunder by immediately commencing to cure within such thirty (30) day period, 9 Item 9. - 1 1 61111.doc/SFF HB -192- and thereafter diligently pursuing such cure to completion within sixty (60) days after the expiration of the initial thirty (30) day period, for a total of ninety (90) days. Failure or delay in giving notice by the City shall not constitute a waiver of any Default, nor shall it change the time of Default. 11.3 City's Remedies. Upon the declaration of a Default, the City may (i) apply to a court of competent jurisdiction for specific performance, for an injunction prohibiting any act or omission in violation of these Resale Restrictions, or for any such other relief as may be appropriate, (ii) exercise the City's rights under these Resale Restrictions and the Affordable Housing Deed of Trust, including, without limitation, foreclosure of the Restricted Unit, and (iii) pursue such other rights and remedies permitted under these Resale Restrictions and by applicable law. 11.4 Prohibited Transfers Void. Any attempt by the Owner to make a Prohibited Transfer of title to or any interest in the Restricted Unit in violation of these Resale Restrictions shall be void and subject to rescission, specific performance, or any other right or remedy available at law or in equity. 12. Governing Law. Owner hereby agrees to comply with all ordinances, rules and regulations of the City, including the City Housing Regulations. Nothing in these Resale Restrictions is intended to be, nor shall it be deemed to be, a waiver of any City ordinance, rule or regulation. These Resale Restrictions shall be governed by the laws of the State of California without regard to conflict of law principles. Any legal action brought under these Resale Restrictions must be instituted in the Superior Court of the County of Orange, State of California, or in the Federal District Court in the Central District of California. 13. Attorneys' Fees and Costs. If either Party to these Resale Restrictions institutes any action against the other Party arising out of or in connection with to these Resale Restrictions, each Party shall bear its own attorney's fees and costs of suit. 14. Severability. So long as the material bargain of the Parties may be preserved, any provision of these Resale Restrictions that is deemed to be illegal, invalid or unenforceable by an arbitrator or court of competent jurisdiction shall be ineffective to the extent of the invalidity or unenforceability of such provision and shall be deemed stricken from these Resale Restrictions. Any stricken provision shall not affect the legality, enforceability or validity of the remainder of these Resale Restrictions. If any provision of these Resale Restrictions is stricken in accordance with the provisions of this Section, then the stricken provision shall be replaced, to the extent possible, with a legal, enforceable and valid provision that is as similar in tenor and intent to the stricken provision as is legally possible. Any such invalidity or unenforceability of any provision in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 15. Exhibits. Each of the Attachments referenced in these Resale Restrictions and attached hereto is incorporated into these Resale Restrictions by this reference as though fully set forth in this Section. 10 17-6041 /l 69225.doc/sFF HB -193- Item 9. - 117 IN WITNESS WHEREOF, the Parties have caused this instrument to be executed on their behalf by their respective officers hereunto duly authorized as of the date set forth above. MLC HOLDINGS, INC., an Arizona Corporation By: Its: By: Its: CITY: CITY OF HUNTINGTON BEACH, a California municipal corporation Mayor ATTEST: City Clerk AUTHORITY: HOUSING AUTHORITY OF THE CITY OF HUNTINGTON BEACH, a public body corporate and politic LOW Chairperson ATTEST: Authority Clerk 11 Item 9. - 118 19221.docisrr HB -194- APPROVED AS TO FORM: City Attorney/Authority Counsel INITIATED AND APPROVED: City Manager 12 17-6041/169225.docISFF HB -195- Item 9. - 119 EXHIBIT A (Legal Description) 13 Item 9. - 120 19125.aocisrF H B -196- EXHMIT B (Notice of Affordability Restriction) 14 17-60411169225. docl SFF HB -197- Item 9. - 121 Recording Requested By: City of Huntington Beach 2000 Main Street Huntington Beach, California 92648 Attention: Economic Development Dept./Housing Div. SPACE ABOVE THIS LINE FOR.. RECORDER'S USE NOTICE OF AFFORDABILITY RESTRICTIONS ON TRANSFER OF PROPERTY (Unit , 19200 HOLLY LANE, HUNTINGTON BEACH) NOTICE IS HEREBY GIVEN by ("Owner"), owner of the property located at 19200 Holly Lane, Unit , Huntington Beach, California 92648, and more particularly described in Exhibit "A" attached hereto (the "Property"), that; 1. The Property is subject to a "Declaration of Covenants, Conditions and Restrictions for Moderate Income Affordable Housing" recorded on , 20 as Instrument Number No. in the Office of the County Recorder of the County of Orange, Califona (the "Resale Restrictions"). Among other things, the Resale Restrictions limit the price that the Property may be sold to an "Affordable Housing Cost" for "Moderate Income Households." Concurrently with executing this Notice, Owner has executed a Promissory Note and a Deed of Trust securing the Resale Restrictions. 2. The administration of the Resale Restrictions shall be governed by the Affordable Housing Regulations of the City of Huntington Beach, dated August 15, 2011, as they exist now and may be amended in the future. 3. In summary, the term "Affordable Housing Cost" means the purchase price that would result in monthly housing payments that do not exceed Thirty -Five Percent (35%) of One Hundred Ten Percent (110%) of the current Orange County monthly median income for a household adjusted for family size appropriate to the Unit. Family size is one plus the number of bedrooms; for example, a household of four persons is the family size of a three bedroom unit. In determining monthly housing payments, the City will assume principal and interest payments on a conventional home mortgage after paying a ten percent (10%) downpayment. Monthly housing costs will also include homeowner's association dues, utilities, homeowner's insurance, maintenance costs and property taxes. The effect of relying on prevailing interest rates to determine the Affordable Sales Price is to make the resale price of the Property sensitive to interest rates. For example, if interest rates rise, the resale price will fall, and if interest rates fall, the resale price will rise. This could result in the Affordable Housing Cost decreasing below the original purchase price. 17-6041/169227/SFF Item 9. - 122 HB -198- 5. In the event that Owner decides to sell or otherwise "Transfer of the Property, Owner shall contact the City to obtain the current Affordable Housing Cost, which shall be the maximum sales price of the Property, City shall provide the Affordable Housing Cost pursuant to its current Affordable Housing Regulations. Regarding the Affordable Housing Cost, Owner acknowledges that: OWNER, AND EACH SUCCESSOR, HEIR OR ASSIGN OF OWNER, UNDERSTANDS THAT THE DETERMINATION OF THE AFFORDABLE HOUSING COST CAN BE MADE ONLY AT THE TIME OF A PROPOSED SALE OR OTHER TRANSFER OF THE RESTRICTED UNIT, TAKING INTO CONSIDERATION PREVAILING INTEREST RATES, THE OFFERED TERMS OF SALE, THE ECONOMIC CIRCUMSTANCES OF THE PROPOSED PURCHASER AND OTHER FACTORS THAT CANNOT BE ACCURATELY PREDICTED, AND THAT THE TRANSFER PRICE PERMITTED HEREUNDER MAY BE LESS THAN THE FAIR MARKET VALUE OF THE SAME OR OTHER SIMILAR REAL PROPERTY WHICH IS NOT ENCUMBERED BY THIS COVENANT. OWNER, AND EACH SUCCESSOR, HEIR OR ASSIGN OF OWNER, FURTHER ACKNOWLEDGES THAT AT ALL TIMES IN SETTING THE TRANSFER PRICE, THE PRIMARY OBJECTIVE OF THE CITY AND THESE RESALE RESTRICTIONS IS TO PROVIDE HOUSING TO MODERATE INCOME HOUSEHOLDS AT AN AFFORDABLE HOUSING COST. Owner's Initials 6. The Resale Restrictions imposed on the Property began on , 20_, and expire forty-five (45) years later, on , 20—. This Notice is recorded for the purpose of providing notice only and it in no way modifies the provisions of the Resale Restrictions. Dated: , 20 APPROVED AS TO FORM: Dated: , 20 OFFICE OF HUNTINGTON BEACH CITY ATTORNEY MICHAEL E. GATES, City Attorney I 17-6041/ t69227/SFF HB -199- Item 9. - 123 Exhibit "A" 17-6041/169227/SFF Item 9. - 124 HB -200- ACKNOWLEDGMENT State of California ) ss County of ) On , before me, (Here Insert Name and Title of the Notary Officer ) personally appeared 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 State of California that the foregoing is true and correct. WITNESS my hand and official seal. (Signature of Notary Public) [Seal] 9 17-6041/169227/SFF im:�rn�e Item 9. - 125 EXHIBIT C (Promissory Note) 15 Fi9225.doclSFF Item 9. - 126 HB -202- PROMISSORY NOTE TO SECURE AFFORDABILITY RESTRICTIONS ON TRANSFER OF PROPERTY (Unit , 19200 HOLLY LANE, HUNTINGTON BEACH) THIS PROMISSORY NOTE (the "Note") is dated this _ day of _ 20_, between ("Promissor") and the City of Huntington Beach ("City") with reference to the following facts: A. This Promissory Note is made in reference to that property in the City of Huntington Beach, County of Orange, State of California, with the street address 19200 Holly Lane, Unit _, Huntington Beach, California 92648 and the Assessor's Parcel Map No. (the "Property"). B. The Property is subject to a "Declaration of Covenants, Conditions and Restrictions for Moderate Income Affordable Housing" recorded on , 20_ as Instrument Number No. in the Office of the County Recorder of the County of Orange, California (the "Resale Restrictions"). Among other things, the Resale Restrictions limit the price that the Property may be sold to an "Affordable Housing Cost" for "Moderate Income Households." C. In summary, the term "Affordable Housing Cost" means the purchase price that would result in monthly housing payments that do not exceed Thirty -Five Percent (35%) of One Hundred Ten Percent (110%) of the current Orange County monthly median income for a household adjusted for family size appropriate to the Unit. Family size is one plus the number of bedrooms; for example, a household of four persons is the family size of a three -bedroom unit. In deterrnining monthly housing payments, the City will assume principal and interest pa5�rnents on a conventional home mortgage after paying a ten percent (10%) downpayment. Monthly housing costs will also include homeowner's association dues, utilities, homeowner's insurance, maintenance costs and property taxes. The effect of relying on prevailing interest rates to determine the Affordable Sales Price is to make the resale price of the Property sensitive to interest rates. For example, if interest rates rise, the resale price will fall, and if interest rates fall, the resale price will rise. This could result in the Affordable Housing Cost decreasing below the original purchase price. D. The Resale Restrictions imposed on the Property began on , 20_, and expire forty-five (45) years later, on ---, 20_. E. The administration of the Resale Restrictions shall be governed by the Affordable Housing Regulations of the City of Huntington Beach, dated August 15, 2011, as they exist now and may be amended in the future. F. Concurrently with executing this Note, Promissor has executed a Deed of Trust securing and modifying the Resale Restrictions (the "City of Deed of Trust"). Page 1 of 4 17-6041/169226/SFF HB _703_ Item 9. - 127 G. Pursuant to the Resale Restrictions, the City approved the sale of the Property to Promissor at an Affordable Housing Cost. To insure that any fizrther sale, transfer or assignment of the Property occurs with the City's approval and at an Affordable Sales Price; the City has required as a condition of the Promissor's purchase of the Property that Promissor execute this Note. AGREEMENT NOW, THEREFORE, the parties agree as follows: 1. Incorporation of Recitals. The recitals set forth above are incorporated by reference as though fully set forth herein. 2. Amount of the Note. The Amount of this Note is the "Transfer Price", of the Property, less the then current "Affordable Housing Cost." The Transfer Price shall be determined according to the circumstances that cause the Amount of the Note to become due pursuant to Section 3 of this Note. In the case of the sale of the Property without the City's consent, the Transfer Price shall be the market sales price. In the case of the financing or refinancing of the Property without the City's consent, the Transfer Price shall be the loan amount in excess of the last loan balance on the First Mortgage that the City previously approved. In all other cases, the Transfer Price shall be the fair market value of the Property as established by the Director of Economic Development of the City pursuant to an appraisal. The term "Affordable Housing Cost" shall be defined according to the Resale Restrictions. Promissor promises to pay the Amount of this Note when due to the City at 2000 Main Street, P.O. Box 190, Huntington Beach, California 92648, or at such other address as City may direct from time to time in writing. All sums hereunder shall be payable in lawful money of the United States of America and all sums shall be credited first to interest then due and the balance to principal. 3. Due on Sale, Transfer or Refinancing. Promissor agrees to notify the City not less than thirty (30) days prior to (i) the sale or transfer of the Property or (ii) any financing or refinancing of the Property. This Note shall be due and payable upon (i) such sale or transfer without the City's consent, (ii) the financing or refinancing of the Property without the City's consent, (iii) Promissor is no longer an occupant of the Property, or (iv) Promissor is in material default of any other obligation under the Resale Restrictions, or the City Deed of Trust. 4. Expiration of the Note Obligation._ In the event Promissor does not sell or transfer the Property, does not fail to occupy the Property, does not refinance, or is not in material breach of any other provision of the Resale Restrictions or the City Deed of Trust before 20 , the expiration of the Affordability Period, as that term is established under the Resale Restrictions, Promissor shall have no obligation to pay the Note Amount to City upon later sale, transfer or refinancing of the Property. Page 2 of 4 Item 9. - 128 69226/SFF HB -204- 5. _Default. The entire unpaid Amount of this Note shall be due and payable in full in the event of a default. a. Events of Default. The following shall be deemed to be an event of default: i. Failure of Promissor to pay any real property taxes or insurance premiums on the Property as they become due; or ii. Any material breach of the Resale Restrictions or the City Deed of Trust, following the City giving notice of the breach and an opportunity to cure; or iii. Failure of Promissor to pay the Note Amount when due. 6. This Note is secured by a Deed of Trust, dated , 20, to the Housing Authority of the City of Huntington Beach, as Trustee, executed by Promissor in favor of the City. 7. Notice. All payments, notices, consents, waivers and other communications under this Agreement must be in writing and shall be deemed to have been given when (a) delivered by hand, or, (b) when received by the addressee, if sent by a nationally recognized overnight delivery service (receipt requested), in each case addressed as set forth below: If to PROMISSOR: 19200 Holly Lane, Unit Huntington Beach, CA 92648 If to CITY: City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 Attention: City Clerk and, Economic Development Deputy Director City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 8. Governing Law. This Note is governed by and shall be construed in accordance with the laws of the State of California without giving effect to the conflict of laws principles thereof. The parties agree to personal jurisdiction in the State Courts in Orange County, California and specifically waive any claims of forum non conviens. 9. Modification. This Note shall not be amended or modified, except in writing, signed by both parties. Page 3 of 4 17-6041/r 69226/SFF H B -205- Item 9.- 129 10. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the successors and assigns under this Note. This Note shall not be assigned without the express written consent of City. Dated: , 20 PROMISSOR: FOR THE CITY OF HUNTINGTON BEACH: Dated: , 20 By: APPROVED AS TO FORM FRED WILSON, City Manager OFFICE OF HUNTINGTON BEACH CITY ATTORNEY Dated: , 20_ By: MICHAEL E. GATES, City Attorney Page 4 of 4 Item 9. - 130 t69226/SFF HB _206_ EXHIBIT D (Affordable Housing Deed of Trust) 16 1 7-saa v1 69zzs. docrsFF HB -207- Item 9. - 131 OFFICIAL BUSINESS Document entitled to free recording per Government Code Sections 6103 and 27383 Recording Requested By: City of Huntington Beach 2000 Main Street Huntington Beach, California 92648 Attention: Economic Development Dept./Housing Div. SPACE ABOVE THIS LINE FOR RECORDER'S USE DEED OF TRUST WITH ASSIGNMENTS OF RENTS TO SECURE AFFORDABILITY RESTRICTIONS ON TRANSFER OF PROPERTY (Unit , 19200 Holly Lane, Huntington Beach) THIS DEED OF TRUST is made this day of , 2017, by and among (the "Trustor"), whose address is Unit 19200 Holly Lane, Huntington Beach 92648 and the HOUSING AUTHORITY OF THE CITY OF HUNTINGTON BEACH, a municipal corporation (the "Trustee") and the CITY OF HUNTINGTON BEACH, a public body corporate and politic (the `Beneficiary" or the "City"), whose address is 2000 Main Street, Huntington Beach, California 92648, with reference to the following facts: A. This Deed of Trust is made in reference to that property in the City of Huntington Beach, County of Orange, State of California, described legally in the Legal Description attached hereto as Exhibit "A" and incorporated herein with the street address Unit 19200 Holly Lane, Huntington Beach, California 92648 and the Assessor's Parcel Map No. - (the "Property"). .B. A "Declaration of Covenants, Conditions and Restrictions for Moderate Income Affordable Housing" was recorded on , 20_ as Instrument Number No. in the Office of the County Recorder of the County of Orange, California (the "Resale Restrictions"). The Resale Restrictions limit the price that the Property may be sold to an "Affordable Housing Cost" for "Moderate Income Households." The Affordable Housing Cost pursuant to the Resale Restrictions shall be the purchase price that would result in monthly housing payments that do not exceed Thirty -Five Percent (35%) of One Hundred Ten Percent (I 10%) of the current Orange County monthly median income for a household adjusted for family size appropriate to the Unit. Family size is one plus the number of bedrooms, for example, a household of four persons is the family size of a three -bedroom unit. In determining monthly housing payments, the City will assume principal and interest payments on a conventional home mortgage after paying a ten percent (10%) downpayment. Monthly housing costs will also include homeowner's association dues, utilities, homeowner's insurance, maintenance costs and property taxes. In determining monthly housing payments, the City will assume principal and interest payments on a conventional home mortgage after paying a ten percent (10%) downpayment. Page 1 of 14 1168203/SFF Item 9. - 132 HB -208- C. The effect of relying on prevailing interest rates to determine the Affordable Housing Cost is to make the resale price of the Property sensitive to interest rates, For example, if interest rates rise, the resale price will fall, and if interest rates fall, the resale price will rise. This could result in the Affordable Housing Cost decreasing below the original purchase price. D. The administration of the Resale Restrictions shall be governed by the Affordable Housing Regulations of the City of Huntington Beach as they exist now and may be amended in the future. E. The Resale Restrictions imposed on the Property began on , 20_, and expire forty-five (45) years later, on , 20^ (the "Affordability Period"). NOW, THEREFORE, TRUSTOR. HEREBY irrevocably grants, transfers and assigns, to Trustee, in trust, with power of sale of the Property, together with (a) all buildings, improvements and fixtures, now or hereafter placed thereon, it being understood and agreed that all classes of property attached or unattached used in connection herewith shall be deemed fixtures, (b) rents, issues and profits thereof, (c) any water rights and/or stock are appurtenant or pertain to said land, and (d) all sums of money payable on the purchase price of the Property secured by a lien thereon or payable under any agreement for the sale thereof, SUBJECT, HOWEVER, to the right, power and authority hereinafter given to and conferred upon Beneficiary to collect and apply such rents, issues and profits, and all sums of money payable on the purchase price of the Property secured by a lien thereon or payable under any agreement. l . Payment of the indebtedness evidenced by a promissory note (the "Note") executed by Trustor concurrently with this Deed of Trust. The Amount of the indebtedness is the "Transfer Price" of the Property, less the "Affordable Housing Cost." The calculation of the Amount of the indebtedness is set forth with specificity in the Note, which is on file with the Economic Development Department of the City of Huntington Beach. Performance of each and every obligation, covenant, promise and agreement of TO PROTECT THE SECURITY OF THIS DEED OF TRUST, 1. Trustor agrees for itself, and its successors and assigns, and every successor to Trustor's interest in the Property, or any part thereof throughout the Affordability Term, to perform all obligations due under the Resale Restrictions, as set forth below: (a) The Property shall only be owned and occupied by persons or families of "Moderate Income." "Moderate Income" shall mean persons or families earning no more than one hundred twenty percent (120%) of the Orange County median income, adjusted for appropriate family size. (b) The Property may only be sold at an "Affordable Housing Cost" to households of "Moderate Income," as those terms are defined in current Affordable Housing Regulations as adopted by the City of Huntington Beach. Generally, those Regulations define Affordable Housing Cost to mean that purchase price which would result in monthly housing payments which do not exceed Thirty -Five Percent (3.5%) of One Hundred Ten Percent (110%) of the current Orange County monthly median income for a household equal to the number of bedrooms in the unit plus one (1) person. In determining monthly housing payments, the Regulations assume principal and interest payments on a conventional home mortgage after paying a ten percent (10%) downpayment. The mortgage interest rate will be the prevailing Fannie Mae or Freddie Mac thirty (30) year mortgage rate, or a City -selected equivalent. Monthly housing costs will also include homeowner's association dues, utilities, homeowner's insurance, maintenance costs and property taxes. (c) The Trustor shall further comply with the Affordable Housing Regulations of the City of Huntington Beach as they exist now and may be amended in the future. (d) No transfer of the Property shall occur until the City of Huntington Beach determines (a) that the proposed purchaser intends to occupy the Property as the proposed purchaser's principal residence, (b) that the proposed purchaser is a person or family of Moderate Income, and (c) that the proposed transfer occurs at an Affordable Housing Cost. The City of Huntington Beach shall not be obligated to approve a transfer until and unless the proposed purchaser has submitted to the City of Huntington Beach such information and completed such forms as the City of Huntington Beach shall request to certify the proposed purchaser's intent with respect to its residency of the Property and its gross income, and the proposed purchaser has submitted an affidavit disclosing and certifying the amount of the proposed purchase price. Prior to conveyance of the Property, each approved purchaser shall submit to the City of Huntington Beach an executed disclosure statement which certifies that the purchaser is aware that the purchaser may only sell the unit at an Affordable Housing Cost to a Moderate Income person or family, that the maximum permitted sales price may be less than fair market value and that the unit must be wrier -occupied at all times and cannot be rented or leased. TRUSTOR AND EACH SUCCESSOR, HEIR OR ASSIGN OF TRUSTOR UNDERSTANDS THAT THE DETERMINATION OF THE AFFORDABLE HOUSING COST CAN BE MADE ONLY AT THE TIME OF THE PROPOSED TRANSFER, TAKING INTO CONSIDERATION INTEREST RATES, THE TERMS OF SALE OFFERED TO AND THE ECONOMIC CIRCUMSTANCES OF THE PROPOSED PURCHASER AND OTHER FACTORS THAT CANNOT BE ACCURATELY PREDICTED, AND THAT THE TRANSFER PRICE PERMITTED HEREUNDER MAY BE LESS THAN THE FAIR MARKET VALUE OF THE PROPERTY AND MAY NOT INCREASE OR DECREASE IN THE SAME MANNER AS OTHER SIMILAR REAL PROPERTY WHICH IS NOT ENCUMBERED BY THIS RESTRICTION. TRUSTOR AND EACH SUCCESSOR, HEIR OR ASSIGN OF TRUSTOR FURTHER ACKNOWLEDGES THAT AT ALL TIMES IN SETTING THE Page 3of14 17-6040(16820RSTT Item 9. - 134 HB -210- TRANSFER PRICE THE PRIMARY OBJECTIVE OF THE BENEFICIARY AND THIS DEED OF TRUST IS TO PROVIDE HOUSING TO ELIGIBLE PERSONS OR FAMILIES AT AN AFFORDABLE HOUSING COST. Trustor Initials (e) The City of Huntington Beach may impose any conditions on the approval of any transfer of the Property as it determines are reasonably necessary for the effective administration of its Affordable Housing Program. 2. Trustor 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, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the said property, nor shall Trustor 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, lessees, subtenants, sublessees, or vendees in said property. Trustor and its successors and assigns, shall refrain from restricting the rental or lease (if permitted by Trustor) or sale of said property on the basis of race, color, religion, sex, marital status, .national origin or ancestry of any person. All such deeds, leases or contracts shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses: (a) In deeds: "The grantee herein covenants by and for himself or herself, his or her heirs, executors, administrators 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, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land herein conveyed, nor shall the grantee 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 with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessee or vendees in the land herein conveyed. The foregoing covenants shall run with the land." (b) In leases: "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: "There shall be no discrimination against or segregation of any person or group of persons on account of race, color, religion, sex, marital status, ancestry or national origin 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 to through him or her, establish or permit any such Page 4 of 14 17-6040/168203/SFF 1413 -211- Item 9. - 135 practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, sublessees, subtenants or vendees in the premises herein leased." (c) In contracts: "There shall be no discrimination against or segregation of, any person, or group of persons on account of race, color, religion, sex, marital status, ancestry or national origin, in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the premises, nor shall the transferee 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 with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessee or vendees of the premises." Nothing in this Section 2 shall be construed to authorize the rental or lease of the Property if such rental or lease is not otherwise permitted by the Resale Restrictions. 3. No violation or breach of the covenants, conditions, restrictions, provisions or limitations contained in this Deed of Trust shall defeat or render invalid or in any way impair the lien or charge of any mortgage or deed of trust or security interest. 4. Trustor has made certain representations and disclosures as a requirement under the Resale Restrictions in order to induce Beneficiary to approve the sale of the Property to Trustor. In the event that Trustor has made any material misrepresentation or failed to disclose any material fact regarding said transaction, Beneficiary at its option and without notice, shall have the right to declare a material breach of the Resale Restrictions and the Note. Beneficiary may make a written declaration of default and demand for sale as in paragraph No. 6 herein set forth. Trustee, upon presentation to it of an affidavit signed by Beneficiary setting forth facts showing a default by Trustor under this paragraph, is authorized to accept as true and conclusive all facts and statements therein, and to act thereon hereunder. 5. All covenants without regard to technical classification or designation shall be binding for the benefit of the Beneficiary and such covenants shall run in favor of the Beneficiary for the entire period during which such covenants shall be in force and effect, without regard to whether the Beneficiary is or remains an owner of any land or interest therein to which such covenants relate. The Beneficiary, 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 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. 6. Upon default by Trustor in the obligations of the Note, in the performance of any obligation under this Deed of Trust or under the terms of any First Lender's Deed of Trust which is or appears to be prior or superior to this Deed of Trust, Beneficiary may declare all sums secured by this Deed of Trust immediately due and payable by delivering to Trustee of a written declaration of default and demand for sale and a written notice of default and election to sell the Property. Default in the payment of any indebtedness secured by this Deed of Trust, in the Page 5 of 14 "- __ " 11682o3/SFF Item 9. - 136 HB -212_ obligation of the Note, or in the performance of any agreement under this Deed of Trust constitutes a default only under this Deed of Trust and the Note and does not constitute a default under the First Deed of Trust, Trustee shall cause the notice of default to be recorded. Beneficiary also shall deposit with Trustee this Deed of Trust, the Note, and all documents evidencing any additional expenditures secured by this Deed of Trust. After the lapse of such time as then may be required by law following recordation of such notice of default, and notice of sale having been given as then required by law, Trustee, without demand on Trustor, shall sell the Property at the time and place fixed by it in such notice of sale, whether as a whole or in separate parcels, and in such order as it may determine, at public auction to the highest bidder qualified under the Resale Restrictions and this Deed of Trust in lawful money of the United States, payable at time of sale. Trustee may postpone sale of all or any portion of the Property by public announcement at such time and place of sale, and from time to time thereafter may postpone such sale by public announcement at the time fixed by the preceding postponement. Trustee shall deliver to such purchaser its Deed conveying the Property so sold, but without any covenant or warranty, express or implied. The recital in such Deed of any matters of fact shall be conclusive of the truthfulness thereof Any person, including Trustor, Trustee, or Beneficiary as hereinafter defined, may purchase at such sale. Trustee may also sell at any such sale and as part thereof any shares of corporate stock securing the obligations secured hereby, and Trustor waives demand and notice of such sale. (Beneficiary at its option may also foreclose on such shares by independent pledge sale, and Trustor waives demand and notice of such sale.) After deducting all costs, fees and expenses of Trustee, and of this Trust, including cost of evidence of title in connection with this sale, Trustee shall apply the proceeds of sale to payment, first; all sums expended under the terms hereof, not then repaid, with accrued interest at the rate then payable under the First Lender Deed of Trust secured hereby, and then of all other sums secured hereby, and, if there are any proceeds remaining, shall distribute them to the person or persons legally entitled thereto. 7. Trustor shall keep the Property in good condition and repair; to allow Beneficiary or its representatives to enter and inspect the Property at all reasonable times and access thereto, shall be permitted for that purpose; not to remove or demolish any building thereon; not to make alterations thereto without the consent of the Beneficiary; to suffer or permit no change in the general nature of the occupancy of the Property without Beneficiary's written consent; to complete or restore promptly and in good workmanlike manner any building which may be constructed, damaged or destroyed thereon, including, without restricting the generality of the foregoing, damage from termites and dry -rot; to pay when due all claims for labor performed and materials furnished in connection with the Property and not to permit any mechanic's lien against the Property; to comply with all laws affecting the Property or requiring any alterations or improvements to be made thereon; not to initiate or acquiesce in any zoning reclassification without Beneficiary's written consent; not to commit or permit waste thereon; not to commit, suffer or permit any act upon the Property in violation of the law; to paint, cultivate, irrigate, fertilize, fumigate, prune, and do all other acts that from the character or use of the Property may be reasonably necessary; and to promptly pay all amounts due others upon agreements of lease or conditional sale of all fixtures, furnishings and equipment located thereon. 8. Trustor shall provide, and maintain in force at all times with respect to the Property, fire and other types of insurance as may be required by Beneficiary. All of such insurance shall have a loss payable endorsement in favor of Beneficiary, shall be for a term and in Page 6 of 14 17-6040/168203/SFF HB -213- Item 9. - 137 form, content, amount and in such companies as may be satisfactory to Beneficiary, and the policies therefore shall be delivered to and remain in possession of Beneficiary as further security for the faithful performance of these trusts. At least thirty (30) days prior to the expiration of any such insurance policy, a policy or policies renewing or extending such expiring insurance shall be delivered to Beneficiary together with written evidence showing payment of the premium therefore and, in the event any such insurance policy and evidence of the payment of the premium therefore are not so delivered by Trustor to Beneficiary, Trustor by executing this Deed of Trust specifically requests Beneficiary to obtain such insurance and Beneficiary, without obligation to do so, without notice to or demand upon. Trustor and without releasing Trustor from any obligation hereof, may obtain such insurance through or from any insurance agency or company acceptable to it, pay the premium thereof, and may add the amount thereof to the indebtedness secured hereby, which amount shall bear a like rate of interest. Beneficiary may furnish to any insurance agency or company, or any other person, any information contained in or extracted from any insurance policy delivered to Beneficiary pursuant hereto and any information concerning the loan secured hereby. Neither Trustee nor Beneficiary shall be responsible for such insurance or for the collection of any insurance monies, or for any insolvency of any insurer or insurance underwriter. In case of insurance loss, Beneficiary is hereby authorized either (a) to settle and adjust any claim. under the insurance policies provided for in this document without the consent of the Trustor, or (b) to allow Trustor to agree with the insurance company or companies on the amount to be paid upon the loss. In either case, the Beneficiary is authorized to collect and make receipt of any such insurance money. If Trustor is obligated to restore or replace the damaged or destroyed buildings or improvements under the terms of any lease or leases which are or may be prior to the lien of this Deed of Trust and such damage or destruction does not result in cancellation or termination of such lease, such proceeds, after deducting therefrom any expenses incurred in the collection thereof, shall be used to reimburse the Trustor for the cost of rebuilding or restoring the buildings or improvements on said premises. In all other cases, such insurance proceeds shall either be applied for the cost of the rebuilding or restoring the buildings or improvements on said premises. Such buildings and improvements shall be so restored or rebuilt as to be of at least equal value and substantially the same character as prior to the damage or destruction, and shall be in a condition satisfactory to Beneficiary. Such application or release shall not cure or waive any default or notice of default hereunder or invalidate any act done pursuant to such notice. Any and all unexpired insurance shall inure to the benefit of, and pass to the purchaser of, the property conveyed at any Trustee sale held hereunder. 9. Trustor shall pay. (a) at least ten (10) days before delinquency, all general and special City and County taxes, and all assessments on appurtenant water stock, affecting the Property, (b) when done, all special assessments for public improvements, without permitting any improvement bond to issue for any special assessment, (e) when done, all encumbrances, charges and lines, with interest, on the Property, or any part thereof, which are or appears to be prior to superior hereto, (d) if the security of this Deed of Trust is leasehold estate, to make any payment or do any act required of the Lessee or its successor in interest under the terms of the instrument or instruments creating said leasehold, (e) all costs, fees and expenses of this trust, (f) for any statement regarding the obligation secured hereby any amount demanded by Beneficiary not to exceed the maximum allowed by law thereof at the time when such request is made, (g) such other charges for services rendered by Beneficiary and furnished at Trustor's request or that of any successor in interest to Trustor as the Beneficiary may deem reasonable, Page 7of14 Item 9. - 13 8 1168203rsFF HB 21 10. Should Trustor fail to make any payment or do any act as provided in this Deed of Trust, the Beneficiary or Trustee, but without obligation to do so and without notice to or demand upon Trustor and without releasing Trustor from any obligation hereof, may (a) make or do the same in such manner and to such extent as either may deem necessary to protect the security hereof, Beneficiary or Trustee being authorized to enter upon the Property for such purposes, (b) commence, appear in, or defend any action or proceeding purporting to affect the security hereof or the property covered by this Deed of Trust, or the rights or powers of Beneficiary or Trustee, (c) pay, purchase, contest or compromise any encumbrance, charge or lien, which in the judgment of either is or appears to be prior or superior hereto, and (d) in exercising any such powers, pay necessary expenses, employ counsel and pay his reasonable fees. Trustor agrees to repay any amount so expended on demand of Beneficiary, and any amount so expended may be added by Beneficiary to the indebtedness secured hereby and shall bear a like rate of 11. Trustor shall appear in and defend any action or proceeding purporting to affect the security hereof or the Property which is covered by this Deed of Trust, or the rights or powers of Beneficiary or Trustee, and whether or not Trustor so appears or defends, to pay all costs and expenses, including cost of evidence of title and attorney's fees in a reasonable sum, in any such action or proceeding in which Beneficiary or Trustee may appear by virtue of being made a party defendant or otherwise irrespective of whether the interest of Beneficiary or Trustee in the Property is directly questioned by such action, including any action for the condemnation or partition of said premises, and in any suit brought by Beneficiary to foreclose this Deed of Trust. 12. Trustor shall pay immediately and without demand, all sums expended under the terms of this Deed of Trust by Beneficiary or Trustee, with interest from the date of expenditure at the rate which the principal obligation secured hereby bears at the time such payment is made, and the repayment of such sums shall be secured hereby. 13. Should Trustor or any successor in interest to Trustor in the Property drill or extract, or enter into a lease for drilling or extraction of oil, gas or other hydrocarbon substances or any mineral of any kind or character, or sell, convey, further encumber, or alienate the Property, or any party thereof, or any interest therein, or be divested of his title or any interest therein in any manner or way, whether voluntarily or involuntarily, Beneficiary shall have the right, at its option, to declare any obligations secured hereby irrespective of the maturity date specified in any Note evidencing the same, immediately due and payable, and no waiver of this right shall be effective unless in writing. 14. Any award, settlement or damages for injury or damages to the Property, or in construction with the transaction financed by such loan, and any award of damages in connection with any condemnation for public use of or injury to the Property, or any part thereof, is hereby assigned and shall be paid to Beneficiary, who may apply or release such monies received by it in such manner and with the same effect as above provided for the disposition of proceeds of fire or 15. By accepting payment of any sums secured by this Deed of Trust after its due date, or by making any payment, performing any act on behalf of Trustor, that Trustor was obligated hereunder, but failed, to make, or perform, or by adding any payment so made by Beneficiary to the indebtedness secured hereby, Beneficiary does not waive its right either to require prompt payment when due of all other sums so secured or to declare a default for failure so to pay. 16. At any time, or from time to time, without liability of the Beneficiary or Trustee thereof, and without notice, upon written request of Beneficiary and presentation of this Deed of Trust and the Note secured hereby for endorsement, and without affecting the personal liability of any person for payment of the indebtedness secured hereby, or the lien of the Deed of Trust upon the remainder of the Property for the full amount of the indebtedness then or thereafter secured hereby, or the rights or powers of Beneficiary or the Trustee with respect to the remainder of the Property, Trustee may: (a) reconvey any part of the Property, (b) consent to the making of any map or plat thereof, (c) join in granting any easement thereon, (d) join in any agreement subordinating the lien or charge hereof. 17. The lien hereof shall remain in full force and effect during any postponement or extension of time of payment of the indebtedness secured hereby, or any part thereof. 1.8. As additional security, Trustor irrevocably assigns to Beneficiary the rents, issues, and profits of the Property for the purposes and upon the terms and conditions set forth below. This assignment shall not impose upon Beneficiary any duty to produce rents from the property affected by this Deed of Trust, or cause Beneficiary to be (a) "mortgages in possession" for any purpose; (b) responsible for performing any of the obligations of the lessor under any lease; or (c) responsible for any waste committed by lessees or any other parties, for any dangerous or defective condition of the property affected by this Deed of Trust, or for any negligence in the management, upkeep, or control of such rights to rents, issues and profits is not contingent upon, and may be exercised without possession of, the property affected by this Deed of Trust. Beneficiary confers upon Trustor a license ("License") to collect and retain the rents, issues and profits of the property affected by this Deed of Trust as they become due and payable, until the occurrence of a default hereunder. Upon such default, the License shall be automatically revoked and Beneficiary may collect and retain the rents, issues and profits without notice and without taking possessions of the property affected by this Deed of Trust. This right to collect rents, issues and profits shall not grant to Beneficiary or Trustee the right to possession, except as otherwise provided herein; and neither said right, nor termination of the License, shall impose upon Beneficiary or Trustee the duty to produce rents, issues or profits or maintain all or any part of the Property affected by this Trust Deed. If Trustor shall default as aforesaid, Trustor's right to collect any such money shall cease and Beneficiary shall have the right, with or without taking possession of the property affected hereby, to collect all rents, issues, royalties and profits and shall be authorized to, and may, without notice and irrespective of whether declaration of default has been delivered to Trustee and without regard to the adequacy of the security for the indebtedness secured hereby, either personally or by attorney or agent without bringing any action or proceeding, or by receiver to be appointed by the Court, enter into possession and hold, occupy, Page 9 of 14 -'-(168203/SFF Item 9. - 140 HB -216- possess and enjoy the Property, make, cancel, enforce and modify leases, obtain and eject tenants, and set and modify rents and terms of rents, and to sue, and to take, receive and collect all or any part of the said rents, issues, and profits of the property affected hereby, and after paying such costs of maintenance, operation of the Property, and of collection including reasonable attorneys' fees, as in its judgment it may deem proper, to apply the balance upon any indebtedness then secured hereby, the rents, issues, royalties and profits of the Property being hereby assigned to Beneficiary for said purposes. The acceptance of such rents, issues, royalties and profits shall not constitute a waiver of any other right which Trustee or Beneficiary may enjoy under this Deed of Trust or under the laws of California. Failure of or discontinuance by Beneficiary at any time, or from time to time, to collect any such rents, issues, royalties or profits shall not in any manner affect the subsequent enforcement by Beneficiary of the right, power and authority to collect the same. The receipt and application by said Beneficiary of all such rents, issues, royalties and profits pursuant hereto, after execution and delivery of declaration of default and demand for sale as hereinafter provided, or during the pendency of Trustee's sale proceedings hereunder, shall not cure such breach or default nor affect sale proceedings, or any sale made pursuant thereto, but such rents, issues, royalties and profits, less all costs of operation, maintenance, collection and reasonable attorneys' fees, when received by Beneficiary, shall be applied in reduction of the indebtedness secured hereby, from time to time, in such order as Beneficiary may determine. Nothing contained herein, nor the exercise of the right by Beneficiary to collect, shall be, or be construed to be, an affirmation by Beneficiary of any tenancy, lease or option, nor an assumption of liability under, nor subordination of the lien or charge of this Deed of Trust to, any such tenancy, lease or option. 1.9. If the security of this Deed of Trust is a leasehold estate, the Trustor agrees that: (a) the term "Lease" as used herein shall mean the lease creating the "leasehold estate"' (b) Trustor shall not amend, change or modify his leasehold interest, or the Lease, or agree to do so, without the written consent of the Beneficiary; (c) Trustor will promptly advise Beneficiary regarding any notice, request or demand received by him from the lessor under the Lease and promptly furnish Beneficiary with a copy of any such notice, request or demand; (d) as long as any of the indebtedness secured hereby shall remain unpaid, unless the Beneficiary shall otherwise consent thereto in writing, the leasehold estate shall not merge with the fee title but shall always be kept separate and distinct, notwithstanding the union of said estates in any party; (e) Trustor agrees that it will promptly, strictly, and faithfully perform, fulfill, and comply with all covenants, agreements, terms, conditions and provisions under any lease affecting the premises and to neither do anything, nor to permit anything to be done which may cause modification or termination of any such lease or of the obligations of any lessee or person claiming through such lease or the rents provided for therein or the interest of the lessor or the Beneficiary therein or thereunder. Trustor further agrees he will not execute a Deed of Trust or mortgage which may be or become superior to any leasehold estate that is security for this Deed of Trust. In the event of a violation of any of the covenants set forth in this paragraph, Beneficiary shall have the right, at its option, to declare all sums secured hereby immediately due and payable. Consent to or waiver of one of said violations shall not be deemed to be a consent to or waiver of any other violation. If the security for this Deed of Trust is a leasehold estate, the term "property" as used in this Deed of Trust shall be deemed to mean the leasehold estate whenever the context so requires for the protection of the Beneficiary. Page 10 of 14 i 7-6aaa/t 6s2osisrF ItB -21 7_ Item 9. - 141 20. Trustor waives, to the fullest extent permissible by law, the right to plead any statute of limitations as a defense to any demand secured hereby. 21. Beneficiary may, from time to time, by instrument in writing, substitute a successor or successors to any Trustee named herein or acting hereunder, which instrument, executed and acknowledged by Beneficiary and recorded in the office of the recorder of the county or counties where the Property is situated, shall be conclusive proof of property substitution of such successor Trustee or Trustees, who shall, without conveyances from the Trustee predecessor, succeed to all its title, estate, rights, powers and duties, including but not limited to the power to reconvey the whole or any part of the property covered by this Deed of Trust. Such .instrument must contain the name of the original Trustor, Trustee and Beneficiary hereunder, the book and page where this Deed of Trust is recorded. If notice of default shall have been recorded, this power of substitution cannot be exercised until after the costs, fees and expenses of the then acting Trustee shall have been paid to such Trustee, who shall endorse receipt thereof upon such instrument. The procedures herein provided for substitution of Trustee shall not be exclusive of other provisions for substitution provided by law. 22. This Deed of Trust applies to, inures to the benefit of, and binds all parties hereto, their heirs, legatees, devisees, administrators, executors, successors and assigns. The term "Beneficiary" shall mean the owner and holder, including pledgee, of the Note secured hereby, whether or not names as Beneficiary herein. In this Deed of Trust, whenever the context so requires, the masculine gender includes the feminine and/or neuter, and the singular number includes the plural. 23. That in the event of a demand for, and the preparation and delivery of a written statement regarding the obligations secured by this Deed of Trust pursuant to Sections 2943 and 2954 of the Civil Code of California, Beneficiary shall be entitled to make a reasonable charge, not exceeding the maximum amount which is permitted by law at the time the statement is furnished. Beneficiary may also charge Trustor a reasonable fee for any other services rendered to Trustor or rendered in Trustor's behalf in connection with the Property of this Deed of Trust, including changing Beneficiary's records, pertaining to this Deed of Trust in connection with the transfer of the Property, or releasing an existing policy of fire insurance or other casualty insurance held by Beneficiary and replacing the same with another such policy. 24. Trustee accepts this Trust when this Deed of Trust, duly executed and acknowledged, is made a public record as provided by taw. Trustee is not obligated to notify any patty hereto of pending sale under any other Deed of Trust or of any action or proceeding in which Trustor, Beneficiary, or Trustee shall be a party unless brought by Trustee. 25. Any notice which any party hereto may desire or be required to give to the other party shall be in writing. The mailing thereof must be certified mail addressed to the Trustor at his address hereinabove set forth or to the Beneficiary at his office or at such other place as such parties hereto may designate in writing. Page 11 of 14 /161203/SFF Item 9. - 142 KB _21 g_ THE UNDERSIGNED REQUEST that a copy of any notice of default and of any notice of sale hereunder be mailed to the parties' respective addresses hereinbefore set forth. Dated: Dated: Dated: APPROVED AS TO FORM: Dated: TRUSTOR CITY OF HUNTINGTON BEACH In Fred Wilson, Executive Director HOUSING AUTHORITY OF THE CITY OF HUNTINGTON BEACH C Kellee Fritzal Deputy Director of Economic Development OFFICE OF HUNTINGTON BEACH CITY ATTORNEY MICHAEL, E. GATES, City Attorney Page 12 of 14 17-6040(168203(SEF HB -219- Item 9. - 143 Exhibit "A" Page 13of14 /168203/SFF Item 9. - 144 Ha -220- ACKNOWLEDGMENT State of California (Here insert Name and Title of the Notary Officer ) personally appeared , 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 State of California that the foregoing is true and correct. WITNESS my hand and official seal. EXHIBIT "D" TO DENSITY BONUS HOUSING AGREEMENT unit Release [Attached] Item 9. - 146 HB -222- RECORDED AT THE REQUEST OF AND WHEN RECORDED RETURN TO; City Clerk City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 (SPACE ABOVE 'rHIS LINE; FOK RI WRL)EK'N UNh) This Unit Release is recorded at the request and for the benefit of the City of Huntington Beach and is exempt from the payment of a recording fee pbrcsuant to Government Code Sections 6103 27383. UNIT RELEASE AGREEMENT This UNIT RELEASE (the "Unit Release") is being entered into by and between the CITY OF HUNTINGTON BEACH, a California municipal corporation (the "City"), and MLC HOLDINGS, INC,, an Arizona Corporation (the "Owner"). City and Owner are hereinafter sometin-Ies referred to collectively as the "Parties" and individually as a "Party." RECITALS: A. City is a municipal corporation and charter city organized and existing pursuant to the Constitution and laws of the State of California. B. Owner is the owner in fee of that certain real property located at 19200 Holly Lane, Huntington Beach, and more particularly described in the legal description attached hereto as Exhibit "A" (the "Property"). C, On or about , 2018, Owner and City entered into that certain Density Bonus Housing Agreement (the "Density Bonus Agreement") relating to the Property, recorded on , 2018, as Instrument No. of the Official Records for Orange County, California. Pursuant to the Density Bonus Agreement, the Owner has developed the Property as a thirty-two (32) unit residential community subdivided as a condominium development (the "Project"). Further, Developer agreed to include in the Project five (5) units that will be sold at an Affordable Housing Cost to Moderate Income Households, consisting of four (4), four -bedroom units and one (1), three - bedroom unit, with the remaining units to be sold at market prices. D, Pursuant to the Density Bonus Agreement, when the Owner sells each of the Market Rate Units on the Property pursuant to the terms and conditions of the Density Bonus Agreement, Owner and City may execute and record or cause to be executed and recorded for the benefit of each Market Unit this Unit Release, whereupon the Market Unit(s) would be released from the terms and conditions of the Density Bonus Agreement. i 7-6041 i 1703 90/SFF HB -223- Item 9. - 147 COVENANTS: Based upon the foregoing Recitals, which are incorporated herein by this reference, and for good and valuable consideration, the receipt and sufficiency of which is acknowledged by both parties, Owner and City agree as follows; 1. From and after the date that this Unit Release is recorded against each Market Unit, the Market Unit shall be released from, not be burdened by any of the provisions of the Density Bonus Agreement. 2. City shall cooperate in executing any further or additional documents, in recordable form if necessary, as may be reasonably requested by any existing or prospective owner or holder of a mortgage or deed of trust of, in, or to any of the Market Unit(s) to confirm said Unit Release. The form of any such additional documents shall be prepared by such existing or prospective owner or holder at no cost to City, and shall be in a form approved by the City Attorney, 3. Nothing in this Unit Release terminates or releases, or shall be deemed or construed to terminate or release, the Affordable Housing Covenant recorded against each Affordable Unit owned in fee by a Qualified Purchaser or said Qualified Purchaser's successor in interest or assignee. 4. This Unit Release shall not constitute evidence of compliance with or satisfaction of any obligation of Owner to any holder of a mortgage, or any insurer of a mortgage, securing money loaned to finance the construction or operation of work on the Market Unit(s), or any part thereof. 5. No later than ten (10) days after receipt by Owner of a conformed copy of the executed Unit Release from the Orange County Recorder's Office, Owner shall deliver a copy of said conformed copy to City at the address identified in the Density Bonus Agreement for delivery of notices. IN WITNESS WHERE -OF, City has executed this Unit Release from as of this day of ATTEST: City Clerk CITY OF HUNTINGTON BEACH, a California municipal corporation Its: APPROVED AS TO FORM: CITY ATTORNEY MICHAEL E. GATES, City Attorney Dated: , 20_ i�r�a3sorsF� Item 9. - 148 HB -2'24- 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. STATE OF CALIFORNIA COUNTY OF ORANGE ss. } On , before me, _ > Notary Public, personally appeared ,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 State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. (Seal) Notary Public 17-6041/170390/sFt HB _225- Item 9. - 149 ATTACHMENT l TO UNIT RELEASE LEGAL DESCRIPTION OF RELEASED UNITES) Item 9. - 150'-6141l170380/SFF HB -226- EXHIBIT "E" TO DENSITY BONUS HOUSING AGREEMENT Agreement Release [Attached] HB -227- Item 9. - 151 RECORDED AT THE REQUEST OF AND WFIEN RECORDED RETURN TO: City Clerk City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 (SPACE ABOVE THIS LINE FOR RECOR_DFWS USE) This Unit Release is recorded at the request and for the benefit of the City of Huntington Beach and is exempt from the payment of a recording fee pursuant to Govemment Code Sections 6103 27383. RELEASE OF DENSITY BONUS AND AFFORDABLE HOUSING AGREEMENT This RELEASE (the "Unit Release") is being entered into by and between the CITY OF HUNTINGTON BEACH, a California municipal corporation (the "City"), and MLC HOLDINGS, INC., an Arizona Corporation (the "Owner"). City and Owner are hereinafter sometimes referred to collectively as the "Parties" and individually as a "Party." RECITALS: A. City is a municipal corporation and charter city organized and existing pursuant to the Constitution and laws of the State of California. B. Owner is the owner in fee of that certain real property located at 19200 Holly Lane, Huntington Beach, and more particularly described in the legal description attached hereto as Exhibit "A" (the "Property"). C. On or about , 2018, Owner and City entered into that certain Density Bonus and Affordable Housing Agreement (the "Density Bonus Agreement") relating to the Property, recorded on , 2018, as Instrument No. of the Official Records for Orange County, California. Pursuant to the Density Bonus Agreement, the Owner has developed the Property as a thirty-two (32) unit residential community subdivided as a condominium development (the "Project"). Further, .Developer agreed to include in the Project five (5) units that will be sold at an Affordable Housing Cost to Moderate Income Households, consisting of four (4), four -bedroom units and one (1), three - bedroom unit, with the remaining units to be sold at market prices. D. Pursuant to the Density Bonus Agreement, when the Owner has sold all of the Units on the Property pursuant to the terms and conditions of the Density Bonus Agreement, Owner and City may execute and record or cause to be executed and recorded for the benefit of Owner this Release, whereupon the Property would be released from the terms and conditions of the Density Bonus Agreement. Item 9. - 15217[544/SFF HB -228- COVENANTS: Based upon the foregoing Recitals, which are incorporated herein by this reference, and for good and valuable consideration, the receipt and sufficiency of which is acknowledged by both parties, Owner and City agree as follows: 1. From and after the date that this Release is recorded, the Property shall be released from, not be burdened by any of the provisions of the Density Bonus Agreement. 2. Nothing in this Unit Release terminates or releases, or shall be deemed or construed to terminate or release, the Affordable Housing Covenant recorded against each Affordable Unit owned in fee by a Qualified Purchaser or said Qualified Purchaser's successor in interest or assignee. 3. This Unit Release shall not constitute evidence of compliance with or satisfaction of any obligation of Owner to any holder of a mortgage, or any insurer of a mortgage, securing money loaned to finance the construction or operation of work on Property, or any part thereof. 4, No later than ten (10) days after receipt by Owner of a conformed copy of the executed Release from the Orange County Recorder's Office, Owner shall deliver a copy of said conformed copy to City at the address identified in the Density Bonus Agreement for delivery of notices. IN WITNESS WHEREOF, City has executed this Unit Release from as of this day of CITY OF HUNTINGTON BEACH, a California municipal corporation Its: ATTEST: City Clerk APPROVED AS TO FORM: OFFICE OF HUNTINGTON BEACH CITY ATTORNEY MIC1 AEL E. GATES, City Attorney Dated: 17-6041/171544/SFF HB -229- Item 9. - 153 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. STATE OF CALIFORNIA } ss. COUNTY OF ORANGE ) On before Notary Public, personally appeared , 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 State of California that the foregoing paragraph is true and correct. WITNESS my hand and official. seal. (Seal) Notary Public Item 9. - 154 i71544/SFF HB -2>0- ATTACHMENT TO UNIT RELEASE LEGAL DESCRIPTION OF RELEASED UNIVSi 17-6041/171544/SFF HB -23)1 - Item 9. - 155 ATTACHMENT #4 City of Huntington Beach Community Development Department STAFF REPORT HUNTINCTON BEACH TO: Planning Commission FROM: Scott Hess, AICP, Director of Community Development BY: Jessica Bui, Assistant Planner DATE: December 12, 2017 SUBJECT: TENTATIVE TRACT MAP NO. 18105/ CONDITIONAL USE PERMIT NO. 17- 011 (HOLLY TOWNHOMES) APPLICANT: Moses Kim, MLC Holdings, Inc., 1401 Dove Street, Suite 640, Newport Beach, CA 92660 PROPERTY OWNER: Linda Stadel, 3456 Plumeria Place, Costa Mesa, CA 92626 LOCATION: 19200 Holly Lane, 92648 (north of Clay Avenue and east of Holly Lane) STATEMENT OF ISSUE: • Tentative Tract Map (TTM) No. 18105 to subdivide an approximately 1.93 net acre lot for condominium purposes • Conditional Use Pen -nit No. 17-01 1 is a request to: a) Develop 32 for -sale townhome units and; b) A density bonus for four additional units which includes: 1. One request for a concession to development standards to construct private patio walls at 42 inches in height in lieu of physically separating the private patio space by a wall exceeding 42 inches in height; 2. Two requests for waivers of development standards: ■ 10,075 sq. ft. of common open space in lieu of 11,200 sq. ft. ■ Relief from an average of 10 ft. setback for all covered portions of all stories above the second story for the 3-story building fronting Clay Avenue Staff s Recommendation: Approve Tentative Tract Map (TTM) No. 18105 and Conditional Use Pen -nit (CUP) No. 17-011, based on the following: - Consistent with the site's and surrounding properties' zoning and land use designations; - Provides for the creation of new housing units in the City, including affordable housing; - Complies with the Huntington Beach Zoning and Subdivision Ordinance (HBZSO) and Holly- Seacliff Specific Plan (SP 9); - Compatible with other residential uses surrounding the project site; - Meets the requirements of the Subdivision Map Act Item 9. - 156 HB-232- 1- . GAHFULD YOYKTOWN +MIMAFOLLS - ATI.AN'iA l HAMILTON BANNING 1 l VICINITY MAP TENTATIVE TRACT MAP NO. 18105/ CONDITIONAL USE PERMIT NO. 17-011 (HOLLY TOWNHOMES -19200 HOLLY LANE) PC Staff Report — 12/12/17 HB -233- 17sr40 — Ho115 Item 9. - 1 57 RECOMMENDATION: Motion to: A. "Approve Tentative Tract Map No. 18105 and Conditional Use Permit No. 17-011 with findings and suggested conditions of approval (Attachment No. 1);" ALTERNATIVE ACTION(S): The Planning Commission may take alternative actions such as: A. "Deny Tentative Tract Map No. 18105 and Conditional Use Permit No. 17-011 with findings for denial." B. "Continue Tentative Tract Map No. 18105 and Conditional Use Permit No. 17-011 and Development and direct staff accordingly." PROJECT PROPOSAL: Tentative Tract Map 18105 represents a request to subdivide an approximately 1.93 net acre lot for condominium purposes pursuant to Chapter 251 of the Huntington Beach Zoning and Subdivision Ordinance (HBZSO): Tentative Maps Conditional Use Permit No. 17-011 represents a request for the following: A. To permit the development of 32 for -sale townhome units pursuant to Section III of the Holly- Seacliff Specific Plan (SP 9) B. Density bonus of four units pursuant to Section 230.14 of the HBZSO which includes: a. One request for a concession to development standards to construct private patio walls at 42 inches in height in lieu of physically separating the private patio space by a wall exceeding 42 inches in height; and b. Two requests for waivers of waivers of development standards: 1. 10,075 sq. ft. of common open space in lieu of 11,200 sq. ft. 2. Relief from an average of 10 ft. setback for all covered portions of all stories above the second story for the 3-story building fronting Clay Avenue The applicant is proposing a tentative tract map for a one -lot subdivision for condominium purposes on an approximately 1.93 net acre site to construct a development of 32 for -sale townhome units along with associated open space and infrastructure. The Medium Density Residential Land Use and zoning designations within Holly-Seacliff Specific Plan (SP 9) allows for 28 units on the 1.93 acre site. According to the affordable housing requirements of SP 9, a minimum of 15 percent of the units are required as affordable housing. In accordance with State Law, SP 9, and the Huntington Beach Zoning and Subdivision Ordinance (HBZSO), the applicant is providing 17 percent of its base units affordable to Moderate Income Households, which requires five units (28 base units x 17% affordable = 5 affordable units) to be sold to families with a Moderate Income as defined by the California Department of Housing and Community Development. As an incentive to provide affordable housing, State Law allows a density bonus when a developer provides affordable housing units, and permits the developer to build additional units that exceed the allowable base density. By providing 17 percent of the base units to be affordable to Item 9. - 15 g ort— 12/12/17 HB -234- 17sr40 — Holly Townhomes Moderate Income, the developer can request a 12 percent density bonus, which results in four additional units for a total of 32 townhomes where 28 would be allowed (28 x 12% = 3.36; round up to the nearest whole number, equals 32 total units). As part of the request for a density bonus, there is a Draft Affordable Housing Agreement (Attachment No. 5) with the City that establishes five of the 32 units to be sold as affordable units for persons and families of Moderate Income. Moderate Income is defined as persons and families whose income does not exceed 120 percent of the area median income and is adjusted by family size. The remaining 28 units may be sold at market rate. The project site consists of one parcel with existing oil drilling operations. Immediately adjacent to the site are multi -family residential uses to the north, east, west, and south. The project is proposing one driveway from Holly Lane to provide egress and ingress into the site. Six detached buildings are proposed throughout the property and are composed of a mixture of four to seven attached residential units. Two of the six buildings are 2-stories which front Holly Lane, and the remaining four buildings are 3-stories along Clay Avenue and the interior of the property. Open space is provided in a common area courtyard in the center portion of the site between two buildings and along the east side of the property adjacent to guest parking. Private open spaces for each unit are provided as ground floor patios or balconies. Study Session The project was introduced to the Planning Commission (PC) on November 28, 2017, at a study session. The PC inquired about a few project -related issues that are identified and expanded upon below and in the Analysis section: Density & Concession & Waivers of Development Standards State law allows for a density bonus to increase over the otherwise maximum allowable gross residential density. The granting of a density bonus shall not require a general plan amendment, zoning change, or other discretionary approval to exceed the maximum allowable gross residential density. The amount of a density bonus is contingent on the percentage of affordable units being provided and at what income level (see density bonus chart below). For example, if the developer were to provide 17 percent at Very Low Income, the developer could request a density bonus of a maximum 35 percent over the base allowable density. In this case, the proposed project is providing 17 percent to Moderate Income households which would grant the developer a 12 percent density bonus over the base density allowed (28 units x 12% _ 3.36 or 4 units = 32 units). The Holly site has a maximum allowable density of 15 dwelling units per acre. With the requested 12 percent density bonus, the resulting density would be 16.5 dwelling units per acre. nRN.47TV R07V77N CHART Affordable Unit Percentage** Very LowIncome Density Bonus Low Income Density Bonus Moderate Income Density Bonus 5% 20.00% NA NA 6% 22.50% NA NA 7% 25.00% NA NA 8% 27.50% NA NA 9% 30.00% NA NA 10% 32.50% 20.0% 5% 11% 35.00% 1 21.5% 1 6% 12% 35.00% 23.0% 7% 13% 35.00% 24.5% 8% PC Staff Report — 12/12/17 HB -235- 17sr40 — Ho113 Item 9. - 159 14% 35.00% 26.0% 9% 15% 35.00% 27.5% 10% 16% 35.00% 29.0% 11%' 17% 35.00% 30.5% 12% 18% 35.00% 32.0% 13% 19% 1 35.00% 1 33.5% 1 14% 20% 1 35.00% 35.0% 1 15% All density bonus calculations resulting in fractions are rounded up to the next whole number. ** Affordable unit percentage is calculated excluding units added by a density bonus. Pursuant to State law, when a developer requests a density bonus and proposes at least 10 percent of residential units to be affordable for persons and families of moderate income, the developer can receive one concession to a development standard. A concession is intended to reduce costs to provide affordable housing units. In addition to one concession, the developer may request multiple waivers of development standards in order to ensure construction of the entitled density bonus units. Compliance with development standards could physically preclude a developer from constructing at the density permitted by State law. Therefore, the waivers of development standards are requested to provide a mechanism to achieve the density units. The applicant also provided additional information regarding concessions and waivers of development standards as it applies to the Holly site (Attachment No. 3 and Attachment No. 7). Concession & Waivers -Adverse Impacts to Public Health and Safety Concessions or waivers to development standards cannot be denied unless there are specific, adverse impacts to public health and safety or the physical environment or to any real property that is listed in the California Register of Historical Resources and for which there is no feasible method to satisfactorily mitigate or avoid the specific, adverse impact without rendering the development unaffordable to lower - income and moderate income households. As defined in the California Government Code Section 65589.5, an adverse impact means a significant, quantifiable, direct, and unavoidable impact, based on objective, identified written public health or safety standards, policies, or conditions as they existed on the date the application was deemed complete. Inconsistency with the zoning ordinance or general plan land use designation shall not constitute a specific, adverse impact upon the public health or safety. As such, the requested concession and waivers to development standards do not pose a specific, adverse impact to the public health and safety of the future residents, general public, or the surrounding properties. Parking With a request for a Density Bonus, the developer is entitled to reduced parking standards. The HBZSO would require 96 spaces. The State law allows 76 parking spaces, and the developer is proposing a total of 76 spaces. Each unit would have a 2-car garage, or 64 enclosed spaces and 12 open spaces made available for guests. The developer will be subject to a parking management plan and proposes to incorporate specific language within the CC&Rs to ensure the interior of the garages will not be used for personal recreational areas such as work out areas, and storage will not obstruct the standing of two vehicles (Attachment No. 3). Furthermore, additional assurances will be made to make open spaces available for guests such as restricting the use of open spaces from the personal storage of vehicles, boats, trailers, and campers, and implementing a guest parking permit system. Signs would be used to identify guest parking spaces and notifying residential guests that vehicles in violation of the parking spaces will be towed. Lastly, sidewalk and street and gutter improvements will be required as part of the development of the site where none exists now. There is currently on -street parking along Clay Avenue and Holly Lane adjacent Item 9. - 160 ort — 12/12/17 HB -236- 17sr40 — Holly Townhomes to the site; and therefore, the improvements would provide approximately 15 additional parking spaces along these streets. The addition of the on -street parking along Clay Avenue and Holly Lane will provide parking alternatives to residents and guests. Adjacent Affordable Housing and Density Bonus Requests The Holly-Seacliff Specific Plan was adopted April 20, 1992. All residential developments proposed after the adoption of the Holly-Seacliff Specific Plan were subject to providing 15 percent of residential units to be affordable to persons and families at least at the Moderate Income level. The site immediately north of the subject property predates the adoption of the Holly-Seacliff Specific Plan and does not include affordable housing units or a request for a density bonus. However, the development to the north was approved with special permits for a relief from a 15 ft. building setback from an unenclosed parking space and a reduced aisle width from 48 ft. to 25 ft. The development to the south across Clay Avenue is not located within the Holly-Seacliff Specific Plan and was also approved with two special permits. One special permit was for a reduced setback for garages of 5 ft. in lieu of a required 20 ft. The second special permit was relief from the requirement to provide one-third of the units at one-story less in height than the remaining two-thirds of the units; however, these development standards are no longer in effect. The developments east and west of the subject property were entitled after the adoption of the Specific Plan and provide the required 15 percent affordability; however, no density bonuses or special permits were requested with the development of the sites. ISSUES: Subjcect Property And Surrounding Land Use, Zoning And General Plan Designations: LOCATION GENERAL PLAN ZONING LAND USE Subject Property: RM — sp (Residential SP-9 (Holly-Seacliff Oil drilling Medium Density — Specific Plan, specific plan overlay) Planning Area 4 Residential Medium Density) North and East of RM — sp (Residential RM (Residential Multi -family residential Subject Property: Medium Density — Medium Density) specific plan overlay) South of Subject RM (Residential RM (Residential Multi -family residential Property: Medium Density) Medium Density) West of Subject RM — sp (Residential SP-9 (Holly-Seacliff Multi -family residential Property: Medium Density — Specific Plan, specific plan overlay) Planning Area 4 Industrial) General Plan Conformance. - The General Plan Land Use Map designation on the subject property is RM-sp (Residential Medium Density — specific plan overlay) and the zoning designation is SP 9 (Holly-Seacliff Specific Plan, Planning Area 4 Residential Medium Density). The proposed project will implement both the General PC Staff Report— 12/12/17 1113 -237- 17sr40 — Ho113 Item 9. - 161 Plan and specific plan designations of the site. The proposed project is consistent with the intent of these designations, and the goals and policies of the City's General Plan as follows: A. Land Use Element Goal L U-1: New commercial, industrial, and residential development is coordinated to ensure that the land use pattern is consistent with the overall goals and needs of the community. Policies LU-IA: Ensure that development is consistent with the land use designations presented in the Land Use Map, including density, intensity, and use standards applicable to each land use designation. Policies LU-ID: Ensure that new development projects are of compatible proportion, scale, and character to complement adjoining uses. Goal L U-4: A range of housing types available to meet the diverse economic, physical, and social needs of future and existing residents, while neighborhood character and residences are well maintained and protected. Policies LU-4A: Encourage a mix of residential types to accommodate people with diverse needs. The proposed project is consistent with the land use designation which allows for multi -family residential uses at the subject site. The proposed architectural style and site layout of the multi -family residential project with a mix of two- and three-story buildings is consistent with the proportion, scale, and character of the existing development in the area. The development will improve an underutilized site and provide a range of housing types to meet the diverse economic and social needs of existing and future residents. The proposed for -sale townhomes will provide an expanded opportunity for ownership and accommodate the diverse needs such as potential first-time homebuyers. B. Housing Element Policy 3.1: Encourage the production of housing that meets all economic segments of the community, including lower, moderate, and upper income households, to maintain a balanced community. Policy 3.2: Utilize the City's Inclusionary Housing Ordinance as a tool to integrate affordable units within market rate developments. Continue to prioritize the construction of affordable units on -site, with provision of units off - site or payment of an in -lieu housing fee as a less preferred alternative. Policv 4.1: Support the use of density bonuses and other incentives, such as fee deferrals/waivers and parking reductions, to offset or reduce the costs of developing affordable housing while ensuring that potential impacts are addressed. Item 9. - 162ort-12/12/17 HB-238- 17sr40— Holly Townhomes Policv 6.1: Implement the City's Green Building Program to ensure new development is energy and water efficient. The project consists of 32 for -sale townhome units, which adds to the City's housing stock. The project includes a request for a density bonus for four additional units in exchange for affordable housing as allowed by State Law and the HBZSO. As part of the request for a density bonus, the applicant is entering into a Density Bonus and Affordable Housing Agreement with the City to establish five of the 32 units as affordable units for persons/families of Moderate Income for 45 years. The development request as proposed is consistent with the intent of the policies within the Housing Element identified above. As such, the project will contribute to the City's overall housing goals. Furthermore, as conditioned, green building practices for the construction of the project is required to ensure water and energy fixtures are implemented. Zoning Compliance: This project complies with the requirements of the Holly Seacliff Specific Plan in regards to base setbacks, private open space, building separation, building height, and lot coverage. Density Bonus Request Pursuant to State law, eligible density bonus projects are entitled up to three concessions to development standards depending on the percentage of affordable units and level of targeted income. In addition to concessions, a developer may also request waivers to development standards. According to State Law, concessions and waivers of development standards must be offered by the City to reduce construction costs and to allow the developer to construct the density bonus units. Consequently, concessions resulting in lower construction costs are intended to increase affordable housing opportunities. In this case, the developer is requesting one concession and two waivers of development standards (Attachment No. 7). CONCESSION & WAIVERS REQUEST CODE REQUIREMENT PROPOSED Concession for patio wall height Must exceed 42 inches in height 42 inches Waiver l: common open space Min. 11,200 sq. ft. 10,075 sq. ft. Waiver 2: upper story setback Average of 10 ft. 0 ft. The applicant is requesting a concession to the development standard which requires private patio walls to exceed 42 inches and consequently be located outside of minimum setbacks while providing privacy. The private patio walls are proposed to be exactly 42 inches. The applicant has identified this concession as an identifiable cost reduction to help provide the cost of providing affordable housing units. The applicant is also requesting two waivers of development standards. The first waiver of development standards is to deviate from the required common open space requirement. SP 9 requires a minimum of 350 sq. ft. of common open space per dwelling unit for a total of 11,200 sq. ft. The proposed project provides 10,075 sq. ft. which is approximately 10 percent less of the required common open space. The applicant has PC Staff Report — 12/12/17 HB -239- 17sr40 — Ho115 Item 9. - 163 stated that confonnance with this requirement would result in the loss of one townhome unit (Attachment No. 3). The second waiver of development standards is relief from the requirement to set back the covered portions of all stories above the second story an average of 10 feet for a multi -family structure. The developer states that conformance with this requirement would result in a loss of up to four units and an increased loss of open space. It is important to note that the density bonus law states that a jurisdiction cannot apply any development standard to a project eligible for a density bonus that will have the effect of physically precluding the construction of the development at the densities in which it is entitled unless the requested concession or waiver will have an adverse impact to public health and safety or the physical environment. Urban Design Guidelines Conformance: The character of the development is consistent with the existing neighborhood in size, scale and massing of other residential structures in the vicinity. The architectural design of the project is a Spanish influence with the use of materials such as tile roof, stucco, metal accents, decorative tiles, and wood trellises. The proposed colors are muted earth tone colors which is characteristic with the existing neighborhood. The project creates visual interest along Holly Lane and Clay Avenue by incorporating enhanced landscaping and decorative paving, providing a variety of trees, as well as functional open space in the common areas and private yards, and maintains high quality architectural design that is complementary to the adjacent multi -family residential developments. The locations of the two- and three-story buildings create a proportional scale to the street and surrounding uses. Furthermore, roof lines are varied and building facades contain wall offsets and decorative features to reduce the massing of the buildings. Second story balconies are appropriately integrated to further break up the massing and provide enhanced variation in wall planes. Additionally, the buildings are designed with stucco window trims, brick veneer, corbels, gable accents, and decorative shutters. Decorative paving is provided at the site entry creating a visually attractive access way to the site. Common open space area is sited in a location to maximize accessibility and use by all residents. Overall the layout of the development provides efficient and safe access for both pedestrians and vehicles. Environmental Status: The proposed project is covered by Holly-Seacliff Specific Plan Final Environmental Impact Report No. 89-1, which was adopted by the City of Huntington Beach on January 8, 1990. The proposed subdivision of an approximately 1.93 net acre lot for a one -lot subdivision and construction of 32 for -sale townhome condominium units with a density bonus request, along with associated open space and infrastructure is subject to compliance with the adopted mitigation measures contained in the Final Environmental Impact Report No. 89- l (see MMRP Attachment No. 6). Coastal Status: Not applicable. Desi,an Review Board: On October 12, 2017, the Design Review Board (DRB) reviewed Design Review No. 17-005 to review the design, colors, and materials of the 32, two and three story townhome buildings. The proposed buildings will be compatible with existing development at similar heights and massing and incorporate a Spanish architectural palette into the area, providing visual interest and a quality design to the streetscape. Variations in building heights within the project combined with enhanced landscaping and Item 9. - 164 ort - 12/12/17 HB -240- 17sr40 - Hotly Townhomes decorative paving at the site entry will create visual interest from the frontages along Holly Lane and Clay Avenue. Roof lines are varied and building facades contain wall offsets and decorative features to reduce the massing of the buildings. Garages are offset to break up the appearance of flat wall, windows are recessed, and accent features such as trellises, brick veneer, shutters, and decorative window trim details enhance the overall design. The DRB approved the proposed design of the project and recommended the following conditions: - The upper portion of all buildings shall provide enhanced architectural elements such as increased eave projections, cornice elements, additional corbels, tiles or other architectural accents. - Additional architectural elements shall be added to the two story townhomes along Holly Lane and Clay Avenue on the upper story such as: shutters, bay windows, metal features, or other elements that are complementary to the colors, materials, and design of the building. - Garages shall be offset by at least two to three feet to provide enhanced wall variation, reduce massing, and decrease the appearance of a flat, blank wall. - Increase the width of window trims on all elevations. The applicant has since revised the building elevation recommendation (Attachment No. 2). The proposed architecture of the adjacent multi -family residential uses. Subdivision Committee: s to demonstrate compliance with the DRB's design is complementary with the approved Tentative Tract Map No. 18105 was reviewed by the Subdivision Committee on November 7, 2017. Staff presented the proposed subdivision including the access points and vehicular drive aisles within the vicinity as well as access to the development, and the layout of the condominiums. The Subdivision Committee reviewed the recommended conditions of approval for the tentative tract map from the Community Development, Fire and Public Works Departments. 'The Subdivision Committee unanimously recommended approval of the proposed project to the Planning Commission with minor revisions to the suggested conditions regarding the use of garages and open parking spaces, and the Fire Department standards regarding the language for the requirements for a Remedial Action Plan (Attachment No. 1). Other Departments Concerns and Requirements: The Departments of Public Works, Police, Fire, Community Services, and Community Development have reviewed the project and identified a list of recommended conditions that are incorporated into the suggested conditions of approval as well as code requirements (Attachment No. 5) applicable to the proj ect. Public Nodfle ion: Legal notice was published in the Huntington Beach Wave on November 30, 2017, and notices were sent to property owners of record and tenants within a 500 ft. radius of the subject property, the applicant, the property owner, and interested parties. As of December 5, 2017, two communications supporting the project and one in opposition have been received (Attachment No. 8). PC Staff Report — 12/ 12/17 HB -241- 17sr40 — Holl} Item 9. - 165 Application Processing Dates: DATE OF COMPLETE APPLICATION November 30, 2017 ANALYSIS: MANDATORY PROCESSING DATE(S) February 28, 2018 Compatibility with Surrounding Uses and Compliance with HBZSO, SP 9 & Subdivision Map Act The proposed two and three-story development will be compatible with the nearby and surrounding properties. Properties to the north, east, west, and south are developed with two-story multiple family dwellings. The adjacent properties are similar in grade and height to the proposed project and the massing and architectural scale proposed is consistent with these existing developments. The two-story building is sited along Holly Lane, and three-story buildings are located along Clay Avenue and within the interior of the site, setback from the street front. The proposed site layout of the buildings ensures architectural compatibility in scale and massing with the existing neighborhood. Additionally, architectural elements are incorporated such as metal accent features, recessed windows, a mix of different materials such as brick veneer, and variations in roof lines and wall planes are added to ensure compatibility. The architecture is a Spanish style architectural design and incorporates stucco, the roof, metal accents, decorative tile, and various building offsets and earth -tone colors and is consistent. with the abutting multi -family residential developments. The existing site has three active oil wells and one abandoned oil well. The applicant is working with the property owner and has submitted application forms to decommission active wells and all abandoned oil wells in accordance with the provisions of the California Division of Oil, Gas, & Geothermal Resources (DOGGR) and the requirements of the Huntington Beach Fire Department. The project will be subject to the park land in -lieu fees pursuant to the requirements of HBZSO Section 254.08 — Parkland Dedications. The fees shall be paid and calculated according to a schedule adopted by the City Council resolution (Ordinance No. 3562, Resolution Nos. 2002-46 and 2002-57). With the exception of the concession and waivers of development standards, the proposed project complies with the provisions of SP 9 in regards to setbacks, private open space, building separation, building height, and lot coverage. Furthermore, the tentative tract map for a one lot subdivision for condominium purposes complies with the Subdivision Map Act and is suitable for the type and density of the proj ect. Density Bonus Request The proposed density bonus for the project complies with both State Law and the HBZSO. The proposed density bonus would yield four additional units above the allowed density (32 units instead of 28), resulting in a density of 16.5 dwelling units per acre. Except for the density bonus and the concession and waivers of development standards, the project complies with all provisions of the HBZSO, SP 9 and is consistent with the intent of the General Plan. Additionally, the project, inclusive of the density bonus, can be adequately served by local utility systems (water, sewer, storm drain) and will not have a significant or adverse impact on traffic volume, school enrollment or recreational resources in the area. As designed, the project. is compatible with the physical character of the surrounding area. Item 9. - 166 ort— 12/12/17 HB -242- 17sr40—Holly Townhomes Concession and Waivers of Development Standards The one concession for patio walls to be 42 inches in height lieu of�physically separating the private open space by a wall exceeding 42 inches in height does not create an adverse impact to public health and safety. Patio walls are required to exceed 42 inches so that private patio spaces do not encroach into the required front yard setback area. The intent of the code requirement is to prevent private patios within typical setback areas for design and aesthetic reasons. In an effort to provide useable private open space to each unit, the proposed patio areas are sited within setback areas, but do not exceed the maximum allowable height requirement within the required setback. Walls 42 inches or less do not have a setback requirement, and the 42 inch height and location of said walls do not conflict with Building or Fire codes; and therefore, is not a public health or safety concern. The two waivers for 1) a 10 percent reduction in common open space, or 10,075 sq. ft. in lieu of a minimum of 11,200 sq ft. and 2) the average of a 10 ft. setback on the third story for the building along Clay Avenue do not create specific, adverse impacts to public health and safety. Common open space is provided throughout the site and is located within the center of the lot and on the north and south ends along the east property line. The common open space provides for passive recreation, outdoor cooking and eating amenities, and is located in areas that are accessible to all residents and guests. Each dwelling unit provides private patios or balconies that range from 81 sq. ft. to 185 sq. ft., which exceeds the code requirement of 75 sq. ft. per unit. The required private open space is 2,400 sq. ft. (32 units x 75 sq. ft = 2,400 sq. ft.); however, as designed, the project provides 5,666 sq. ft. of private open space as patios or balconies which offsets the reduction in common open space. Therefore, a 10 percent reduction in common open space should not have a specific, adverse impact to public health and safety. The second waiver for the average of a 10 ft. setback on the third story for the building fronting Clay Avenue is required for buildings along street frontages only, in order to reduce the mass and bulk of structures for buildings that are visible from a public right-of-way. As such, this requirement is architectural in nature to protect visual aesthetics of a neighborhood. Staff does not anticipate a specific, adverse impact from a relief from the third story setback requirement as the height of the structure does not exceed the maximum allowable height of 40 ft. and architectural elements have been added to reduce the mass and bulk such as providing wall offsets to create variation in the wall plane, variations in the roof line, second story balconies, trellis structures, and recessed windows. Architectural Design and Site Layout The proposed development is well designed and appropriate for the subject site based on the applicable zoning, surrounding uses and the physical characteristics of the lot. The project, as proposed, achieves substantial conformance with the City's Urban Design Guidelines for multi -family residential projects. Visual interest is provided along Holly Lane and Clay Avenue with the incorporation of decorative paving, building projections in the facades, second story balconies, and varied roof lines, use of different materials, and accent colors and two- and three-story massing elements. Buildings are arranged in clusters ranging from four to seven units. Adequate parking is provided within 12 guest spaces and a two -car garage per unit. State law allows for reduced parking standards when a density bonus is requested. A total of 76 parking spaces are required for PC Staff Report — 12/ 12/17 HB -243- 17sr40 — Hot13Item 9. — 167 the 32 unit project based on State law; and 64 enclosed parking spaces and 12 guest spaces are provided for a total of 76 spaces. The applicant proposes CC&Rs to encourage the use of garages for parking of vehicles and prohibit the storage of boats, trailers, campers, or other recreational vehicles within the open guest parking areas, The development features enhanced landscaping along Holly Lane and Clay Avenue and two common open space areas on the property with adequate access for all residents. The common open space areas consist of passive recreation area with cooking and eating facilities. Each dwelling unit is provided with private open space areas consisting of private patio or balcony. Staff supports the development that residential areas. layout, design, and architecture the physical character of the Affordable Housing Agreement Consistency with the HSSP and General Plan A density bonus and affordable housing agreement between the City and developer outlining all aspects of the density bonus affordable housing provisions contained within the HBZSO is required, and shall be reviewed by the Planning Commission (Attachment No. 4). No project shall be deemed approved until the density bonus and affordability agreement has been approved by the City Council. The objective of a density bonus and affordable housing agreement is to provide assurances that an applicant can proceed with a project in accordance with existing policies and standards in place at the time of project approval. The City and developer propose to enter into an agreement in order to establish five of the 32 units as affordable units for persons/families of Moderate Income Households for a period of 45 years, and identify methods in which the developer and the City are to monitor the enforcement of the affordability of the subject affordable units. The draft density bonus and affordable housing agreement is consistent with the General Plan, HBZSO, and SP 9 as it relates to the project's fulfillment of the City's Inclusionary Housing Ordinance. SUMMARY: Staff recommends approval of Tentative Tract Map No. 18106 and Conditional Use Permit No based upon the following: - Consistent with the site's and surrounding properties' zoning and land use designations; - Provides for the creation of new housing units in the City, including affordable housing; - Complies with the Huntington Beach Zoning and Subdivision Ordinance (HBZSO); - Compatible with other residential uses surrounding the project site; - Meets the requirements of the Subdivision Map Act. ATTACHMENTS: Suggested Findings and Conditions of Approval for Tentative Tract Map No. 18105 and Conditional Use Permit No. 17-01 l Site plans, floor plans, elevations and Tentative Map dated and received November 13, 2017 Narrative dated December 1, 2017 Draft Density Bonus and Affordable Housing Agreement Code Requirements Letter (for informational purposes only), dated November 30, 2017 Mitigation Monitoring and Reporting Program 168 ort— 12/12/17 HR -244- 17sr40 — Holly Townhomes 7. Concession and Waivers Exhibit 8. Communications SH:.IJ:JB PC Staff Report — 12/12/17 HB -245- 17sr40 — Holl) Item 9, - 169 ATTACHMENT NO. 1 SUGGESTED FINDINGS AND CONDITIONS OF APPROVAL TENTATIVE TRACT MAP NO. 18105 CONDITIONAL USE PERMIT NO. 17-011 SUGGESTED FINDINGS FOR PROJECTS EXEMPT FROM CEQA: The Planning Commission finds that the proposed project is covered by Holly-Seacliff Specific Plan Final Environmental Impact Report No. 89-1, which was adopted by the City of Huntington Beach on January 8, 1990. The proposed one -lot subdivision on an approximately 1.93 net acre site and construction of 32 for -sale townhome condominium units with a density bonus request, along with associated open space and infrastructure is subject to compliance with the adopted mitigation measures contained in the Final Environmental Impact Report No. 89-1. Staff has reviewed the proposed project for compliance and has determined the project is consistent with the adopted mitigation measures contained in the Final EIR. SUGGESTED FINDINGS FOR APPROVAL - TENTATIVE TRACT MAP NO. 18105: Tentative Tract Map No. 18105 the subdivision of an approximately 1.93 net acre lot into one numbered lot for residential development for 32 townhome units is consistent with the General Plan Land Use Element designation of Residential Medium Density — Specific Plan Overlay (RM-sp) and the requirements of the Holly-Seacliff Specific Plan. The proposed subdivision is consistent with the goals, policies, and objectives of the General Plan Land Use Element that govern new subdivisions and residential devetopment. These goals and policies call for a range of housing types to be available to meet the diverse economic, physical, and social needs of future and existing residents, while neighborhood character and residences are well maintained and protected. 2. The site is physically suitable for the type and density of development. The size, depth, frontage, street width and other design features of the proposed subdivision are in compliance with the HBZSO code. The project site is able to accommodate the type of development proposed. The proposed subdivision will result in a density of 16.5 units per acre, which is allowed in accordance with State Density Bonus Law and as part of the request for this property designated Residential Medium Density land use designation. The proposed density would be compatible with surrounding multi- family developments. The project site is able to accommodate public services and provides for adequate onsite circulation and drainage. 3. The design of the subdivision or the proposed improvements will not cause serious health problems or substantial environmental damage or substantially and avoidably injure fish or wildlife or their habitat. The site is vacant with oil drilling operations and is adjacent to existing multi -family residential uses. The site does not contain significant habitat for wildlife or fish. The project site is surrounded by residential development, vacant property, and light industrial uses and paved roads. The site does not contain any natural open space or any significant biological resources. The proposed project complies with the provisions of the Holly-Seacliff Specific Plan and the Huntington Beach Zoning and Subdivision Ordinance will ensure that the subdivision will not significantly impact the function and value of existing resources adjacent to the project site. Item 1. - 170 0 HB -246- Attachment No. 1.1 4. The design of the subdivision or the type of improvements will not conflict with easements, acquired by the public at large, for access through or use of, property within the proposed subdivision unless alternative easements, for access or for use, will be provided. The subdivision will provide all necessary easements and will not affect any existing easements. SUGGESTED FINDINGS FOR APPROVAL - CONDITIONAL USE PERMIT NO. 17-011: Conditional Use Pen -nit No. 17-01 1 for the development of 32 attached for -sale townhome units and associated infrastructure and site improvements, including a density bonus request of four units, with one concession and two waivers of development standards, will not be detrimental to the general welfare of persons working or residing in the vicinity or detrimental to the value of the property and improvements in the neighborhood. The project will provide five units for families or households of Moderate Income for a period of 45 years. The project will improve the existing underutilized parcel of land with a development consistent with the General Plan land use and zoning designations, The proposed residential use is similar to those existing uses in the vicinity. The project will not result in any adverse or significant environmental impacts including traffic, noise, lighting, aesthetics, and hazardous materials. The project will be consistent in massing and scale to adjacent residential uses. Proposed improvements include enhanced landscaping, decorative paving, and quality architectural design throughout the site. Furthermore, the layout of the site improves the visual surroundings by providing efficient drive aisles for vehicular access, and minimizing the visibility of parking garages and parking spaces from the street. 2. Conditional Use Permit No. 17-01 1 for the development of 32 attached for -sale townhome units and associated infrastructure and site improvements, including a density bonus request of four units with one concession and two waivers of development standards, will be compatible with surrounding residential uses in terms of setbacks, private open space, building separation, building height, and lot coverage. The subject site is entirely surrounded by multi -family residential uses to the north, east, west. and south. The proposed design is composed of a Spanish style consisting of stucco exterior, an earth tone color palette, tile roof, metal and tile accents, varied wall offsets and rooflines, and decorative balcony railings and is architecturally compatible with the adjacent residential developments. Enhanced landscaping along the street front and decorative paving at the site entry will create visual interest and improve the aesthetics of the street front from public right-of-way. The project includes two- and three-story buildings that are compatible with surrounding developments and proportionally relate to the overall mass and scale of the neighborhood. 3. Conditional Use Pennit No. 17-0] 1 for the development of 32 attached for -sale townhome units and associated infrastructure and site improvements, including a density bonus request of four units with one concession and two waivers of development standards, complies with all provisions of the Holly- Seacliff Specific Plan and applicable provisions in Titles 20 through 25 of the Huntington Beach Zoning and Subdivision Ordinance. The project complies with the development standards in terns of setbacks, private open space, building separation, building height, and lot coverage. Adequate vehicular and pedestrian circulation is provided for convenient access throughout the project. 4. The granting of Conditional Use Permit No. 17-011 for the development of 32 attached for -sale townhome units and associated infrastructure and site improvements, including a density bonus H B -247- Attar Item 9. - 171 request of four units with one concession and two waivers of development standards, will not adversely affect the General Plan. It is consistent with the intent of General Plan Land Use Element designation of Residential Medium Density. In addition, it is consistent with the following goals, objectives, and policies of the General Plan: A. Land Use Element Objective LU 1.1: Provide for the timing of residential, commercial, and industrial development coincident with the availability of adequate market demand to ensure economic vitality. Objective LU 8.1: Maintain the pattern of existing land uses while providing opportunities For the evolution, including intensification and re -use, of selected subareas in order to improve their character and identity. Goal LU9: Achieve the development of a range of housing units that provides for the diverse economic, physical, and social needs of existing and future residents of I Iuntinaton Beach. Objective LU 9.3: Provide for the development of new residential subdivisions and projects that incorporate a diversity of uses and are configured to establish a distinct sense of neighborhood and identity. Poliev LU 9.2.1: Require that all new residential development within existing residential neighborhoods (i.e., infill) be compatible with existing structures. The proposed project will improve an underutilized and partially vacant property by allowing the development of residential uses within close proximity to compatible uses. The residential project will implement the residential land use category appropriate for the site's General Plan land use designation and establish a development consistent with the size, scale, mass and pattern of existing development in the area. The surrounding residential uses will benefit with the introduction of newly constructed housing in the neighborhood as the existing temporary structures on site will be removed. The development will provide new housing stock in the area and will potentially attract first-time homebuyers by providing an expanded opportunity for ownership in the area. B. Urban Desi n Element Goal UD 1: Enhance the visual image of the City of Huntington Beach. Objective UD 1.1: Identify and reinforce a distinctive architectural and environmental image for each district in Huntington Beach. The project will enhance the character of the neighborhood and improve property values. The proposed buildings will be compatible with existing development at similar heights and massing and incorporate a traditional architectural palette into the area, providing interest and high -quality design to the streetscape. Common open space within the project combined with enhanced landscaping will Item 9. - 172 HB -248- Attachment No. 1.3 create visual interest from the frontages along Holly Lane and Clay Avenue. Garages and open parking spaces are primarily located facing away from the street frontages. A decorative paving treatment frames the drive aisle entry to the site and creates visual interest for the access into the site. C. Housing Element Policv 3.1: Encourage the production of housing that meets all economic segments of the community, including lower, moderate, and upper income households, to maintain a balanced community. Policv 3.2: Utilize the City's Inclusionary Housing Ordinance as a tool to integrate affordable units within market rate developments. Continue to prioritize the construction of affordable units on -site, with provision of units off - site or payment of an in -lieu housing fee as a less preferred alternative. Policv 3.3: Facilitate the development of affordable housing through regulatory incentives and concessions, and/or financial assistance, with funding priority to projects that include extremely low income units. Proactively seek out new models and approaches in the provision of affordable housili c, Policv 4.1: Support the use of density bonuses and other incentives, such as fee deferrals/waivers and parking reductions, to offset or reduce the costs of developing affordable housing while ensuring that potential impacts are addressed. Policv 6.1: Implement the City's Green Building Program to ensure new development is energy and water efficient. The project consists of 32 residential units, which contributes to the City's housing stock. The project includes a request for a density bonus for four additional units, with one concession and two waivers of development standards in exchange for affordable housing as allowed by State Law and the HBZSO. As part of the request for a density bonus, the applicant is entering into a Density Bonus and Affordable Housing Agreement with the City to establish five of the 32 units as affordable units for persons/families of Moderate Income for a period of 45 years. The development request as proposed is consistent with the intent of the policies identified above. As such, the project will contribute to the City's overall housing goals. Additionally, sustainable features and construction practices will be incorporated in the project including energy -efficient lighting, water efficient plumbing fixtures and recycling of construction waste. SUGGESTED CONDITIONS OF APPROVAL — TENTATIVE TRACT MAP NO. 18105: 1. The Tentative Tract Map No. 18105 to subdivide an approximately 1.93 net acre lot for condominium purposes, received and dated August 31, 20t7, shall be the approved layout. 2. Pursuant to section 230.14 of the HBZSO, Tentative Tract Map No.] 8105 and Conditional Use Pen -nit No. 17-01 1 shall not be deemed approved until an Affordable Housing Agreement has been approved by the City Council. HB -249- AttadItem 9. - 173 3. Prior to issuance of a grading permit and at least 14 days prior to any grading activity, the applicant/developer shall provide notice in writing to property owners of record and tenants of properties within a 500-foot radius of the project site as noticed for the public hearing. The notice shall include a general description of planned grading activities and an estimated timeline for commencement and completion of work and a contact person name with phone number. Prior to issuance of the grading permit, a copy of the notice and list of recipients shall be submitted to the Community Development Department. 4. Prior to issuance of Building Permits, an Affordable Housing Agreement in accordance with the Affordable Housing Program shall be submitted to the Community Development for review and approval by the City Attorney, and accepted by the City Council. Said agreement shall be recorded with the Orange County Recorder's Office prior to issuance of the first building pen -nit for the tract. The Agreement shall comply with HBZSO Section 230.14 and include, but not be limited to, the following items: a) The duration of the affordability and the number of the affordable units; b) The method in which the developer and the City are to monitor the affordability of the subject affordable units and the eligibility of the tenants or owners of those units over the period of the agreement; c) The method in which vacancies will be marketed and filled; d) A description of the location and unit type (bedrooms, floor area, etc.) of the affordable units within the project. Affordable units shall be located throughout the project and shall include a mixture of unit types in the same ratio as provided throughout the project; and e) Standards for maximum qualifying household incomes and standards for maximum rents or sales prices. 5. Prior to submittal of the final tract and at least 90 days before City Council action on the final map, CC&Rs shall be submitted to the Community Development Department and approved by the City Attorney. The CC&Rs shall identify the common driveway access easements, and maintenance of all walls, common landscape areas by the Homeowners' Association, as well as a parking management plan to ensure the ongoing control of availability of on -site parking including but not limited to: restricting garages to be converted to living quarters, workshops, or storage that will preclude the parking of two vehicles, all open parking spaces within the project shall be unassigned and available for visitors and guests; no boat, trailer, camper, off -road vehicle, golf cart, commercial vehicle, mobile home, motor home, bus, or other recreational vehicle or any non -operating vehicle shall be parked or stored in any open sparking spaces; and towing of any vehicles violating the restrictions within the CC&Rs. The CC&Rs must be in recordable form prior to recordation of the map. (HBZSO Section 253.12.H) 6. Block wall/fencing plans (including a site plan, section drawings, and elevations depicting the height and material of all retaining walls, walls, and fences) consistent with the grading plan shall be submitted to and approved by the Community Development Department. Double walls shall be avoided to the greatest extent feasible. Applicant shall coordinate with adjacent property owners and make reasonable attempts to construct one common property tine wall. If coordination between property owners cannot be accomplished, the applicant shall construct up to an eight (8') foot tall wall Item 9. - 174 HB -250- Attachment No.1.5 located entirely within the subject property and with a two (2) inch maximum separation from the property line. Prior to the construction of any new walls, a plan must be submitted identifying the removal of any existing walls located on the subject property. Any removal of walls on private residential property and construction of new common walls shall include approval by property owners of adjacent properties. The plans shall identify materials, seep holes and drainage. 7. Comply with all applicable mitigation measures contained in Environmental Impact Report No. 89-1 for the Holly-Seacliff Specific Plan. 8. Tentative Tract Map No. 18105 shall become null and void unless exercised within two years of the date of final approval by the City Council, or such extension of time, as granted by the Director pursuant to a written request submitted to the Planning Department a minimum 30 days prior to the expiration date. 9. Comply with all applicable Conditional Use Pen -nit No. 17-01 1 conditions of approval. 10. Incorporation of sustainable or "green" building practices into the design of the proposed structures and associated site improvements is highly encouraged. Sustainable building practices may include (but are not limited to) those recommended by the U.S. Green Building Council's Leadership in Energy and Environmental Design (LEED) Program certification (http://www.usabc.ora/DissplayPaL,e.aspx?CategorylD=19) or Build It Green's Green Building Guidelines and Rating Systems(http://www.builditgreen.org/index.cfn9fuseaction=guidelines). 11. The development services departments (Community Development Department, Fire Department, and Public Works) shall be responsible for ensuring compliance with all applicable code requirements and conditions of approval. The Director of Community Development may approve minor amendments to plans and/or conditions of approval as appropriate based on changed circumstances, new infonnation or other relevant factors. Any proposed plan/project revisions shall be called out on the plan sets submitted for building permits. Permits shall not be issued until the Development Services Departments have reviewed and approved the proposed changes for conformance with the intent of the Planning Commission's action. If the proposed changes are of a substantial nature, an amendment to the original entitlement reviewed by the Planning Commission may be required pursuant to the provisions of HBZSO Section 241.18. SUGGESTED CONDITIONS OF APPROVAL - CONDITIONAL USE PERMIT NO. 17-011: The site plans, floor plans, and elevations received and dated November 13, 2017, shall be the conceptually approved design. 2. Prior to submittal for building permits, the following shall be completed: a. Zoning entitlement conditions of approval, EIR No. 89-1 mitigation measures, and Code Requirements letter dated November 30, 2017 shall be printed verbatim on one of the first three pages of all the working drawing sets used for issuance of building permits (architectural, structural, electrical, mechanical and plumbing) and shall be referenced in the sheet index. The minimum font size utilized for printed text shall be 12 point. HB -22 5 1 - Attad Item 9. - 175 b. Submit three (3) copies of the approved site plan and the processing fee to the Community Development Department for addressing of the new units. 3. Prior to issuance of building permits, the following shall be completed: a. Block wall/fencing plans (including a site plan, section drawings, and elevations depicting the height and material of all retaining walls, walls, and fences) consistent with the grading plan shall be submitted to and approved by the Community Development Department. Double walls shall be avoided to the greatest extent feasible. Applicant shall coordinate with adjacent property owners and make reasonable attempts to construct one common property line wall. If coordination between property owners cannot be accomplished, the applicant shall construct up to an eight (8') foot tall wall located entirely within the subject property and with a two (2) inch maximum separation from the property line. Prior to the construction of any new walls, a plan must be submitted identifying the removal of any existing walls located on the subject property. Any removal of walls on private residential property and construction of new common walls shall include approval by property owners of adjacent properties. The plans shall identify materials, seep holes and drainage. b. Contact the United States Postal Service for approval of mailbox location(s). c. An interim parking and building materials storage plan shall be submitted to the Community Development Department to assure adequate parking and restroom facilities are available for employees, customers and contractors during the project's construction phase and that adjacent properties will not be impacted by their location. The plan shall also be reviewed and approved by the Fire Department and Public Works Department. The applicant shall obtain any necessary encroachment permits from the Department of Public Works. 4. The structure(s) cannot be occupied, the final building perrnit(s) cannot be approved, and utilities cannot be released for the first residential unit until the following has been completed: a. The applicant shall obtain the necessary permits from the South Coast Air Quality Management District and submit a copy to Community Development Department. b. Compliance with all conditions of approval specified herein shall be accomplished and verified by the Community Development Department. c. All building spoils, such as unusable lumber, wire, pipe, and other surplus or unusable material, shall be disposed of at an off -site facility equipped to handle them. d. Parkland dedication in -lieu fees (Quimby Fees) shall be paid to the Community Development Department. 5. Signage shall be reviewed under separate permits and applicable processing. 6. The applicant and/or applicant's representative shall be responsible for ensuring the accuracy of all plans and information submitted to the City for review and approval. 7. Conditional Use Pen -nit No. 17-01 1 shall become null and void unless exercised within two years of the date of final approval by the City Council, or such extension of time, as granted by the Director pursuant to a written request submitted to the Planning Department a minimum 30 days prior to the expiration date. Item 9. - 176 HB -252- Attachment No. 1.7 INDEMNIFICATION AND HOLD HARMLESS CONDITION: The owner of the property which is the subject of this project and the project applicant if different from the property owner, and each of their heirs, successors and assigns, shall defend, indemnify and hold harmless the City of Huntington Beach and its agents, officers, and employees from any claim, action or proceedings, liability cost, including attorney's fees and costs against the City or its agents, officers or employees, to attack, set aside, void or annul any approval of the City, including but not limited to any approval granted by the City Council, Planning Commission, or Design Review Board concerning this project. The City shall promptly notify the applicant of any claim, action or proceeding and should cooperate fully in the defense thereof. H B -253- Attad Item 9. - 177 ........,.... ...,...... .....,........ ._......_...._.................. _ _......._........_..,,...._........_..._._.._...._............._ __ .... _......_...._.._........... olm aRnuwW.•rr�.aap°0deea"" 19100GOTHARJSITE CONCEPTUAL DESIGN ��"�Ne/Srsw• rssn smwaw,a,r. in aucusru.rcir e Wr.w., s•+amwti rwwws nwrxc, off eaatG +swrara Proect Summa SIIa Information Gross SU Area 1.28 Acre Dwelling UrA. 21 DU Density 16.4 DUTAC Men Tvoe Area Quantity Plan 1 (3-Story) 3 Ed 1,705 of 4 Homes Plan 2 ("u rY) 4 Ed 1,904 of 5 Homes Plan 3 (3-5tory) 4 Ed 2,001 of 8 Homes Man 5 (2-Story) 4 Ed 14119 sf 2 Homes Plan B (2-SSorY] 4 Ed 2 054 sr 2 Hamer Totah 21 Homes Perking Recufradr 3 bad 4 x 2.0 Spaces 6,D Spaces 4 or more bads 17 x28eoams 426 Spews Total $0.5 Spaoas Paridno Providad Garage; 42 Spaces Open PalAno: 11 Spaces Total 53 Spaces (25krut) Lot Coverage; 20,390 SF (37%) Notes: r 1. Per CAgovemmarlt code asobgn 6W5 2. General Ptan Daelgnatbn la RM46 (16 dulac or 19 untie Maxj; Site is currently under a"S Holly-SMCAN 6pec111c Plan. 3. Per DaWty bonus, up to 21 hones parrnMad. r 4. InoWdes 3 BMR Units Cgncesslon Raaueetad m Paris Wag Height The prsater than 42' pallo wait height requir meet sat forth by Huntinglon Beach Zoning and 8u6dlvislon Ordhtance, Section 210.D6 RL, RM, RMH, RH, and Rmp Dletriatc Current design proposed are 42 Inch high patio walta. A concessics la boing requested to relief or the praater than 42 Inohee in height raqutrament for pado walls throughout the project. 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CONCEPTUP SffE Prey Al.O -11 N / ||q !h \� \( )/ :§ §) I GARFULD RTOWN MA 21" VICINITY MAP TENTATIVE TRACT MAP NO. 18106/ CONDITIONAL USE PERMIT NO. 17-010/ (GOTHARD TOWNHOMES - 19100 GOTHARD STREET) Item 9. - 70 --port — 12/12/17 HB -146- 17sr41 — Gothard Condominiums 34'R 2 D r^1 ` J Item 9. - 106 51 'o wn iociv iaw� �vvvvvv_ o oc u, S p 0 n p mb m m � O O Q6sm m v�gzoeo^6o m qm� p> > m 3 n a 29 a j �nAm vy m -,2 Mu- m m Nm x N nnannm a jF n N C o de Y � i'D m` n m amp°amp KI on ym m 6a ma m 53•� 3.Xm0ScQi�p1 o m o �3 m m gH� W+rn wom OlN jp �au, v ww v VO Oct �' m m m 9 y m d y m u m C m� h ��j A N N A OI al OI m j Cr 00 0000 a O1 HB -18?-