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c�<,FORN'P City Council Staff Report
February 12, 2019
Agenda Item No. SS2
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: Seimone Jurjis, Community Development Director - 949-644-3232,
sjurjis@newportbeachca.gov
PREPARED BY: Lauren Wooding Whitlinger, Real Property Administrator,
Iwooding@newportbeachca.gov
PHONE: 949-644-3236
TITLE: Beacon Bay Home Owners Association Proposed Rate Change to
Current Lease
ABSTRACT:
Beacon Bay is a residential neighborhood of 72 single-family homes located at the
terminus of Harbor Island Road and Beacon Bay. The property contains both land owned
in fee by the City of Newport Beach (City), and filled tidelands owned in fee by the State
of California, which are managed by the City under California State Statutes commonly
known as the Beacon Bay Bill. Ground lease agreements previously negotiated with
representatives of the Beacon Bay Home Owners' Association (HOA), and approved by
the State Lands Commission and the City Council, govern the private residential use of
publicly -owned properties. The residents pay a monthly ground lease rent to the City.
Representatives of the HOA have submitted a proposal to amend the rate of the most
recent lease agreement. Staff has analyzed the HOA proposal and will present the
findings and seek further direction from the City Council on next steps.
RECOMMENDATION:
Provide further direction to City staff.
FUNDING REQUIREMENTS:
There is no fiscal impact related to this study session.
DISCUSSION -
Background
Beacon Bay is a residential community of 72 single-family homes, located on
approximately 19 acres bayward of Bayside Drive, at the terminus of Harbor Island Road
and Beacon Bay. With 27 bayfront lots, and 45 interior lots, the land is made up of property
owned in fee by the City and filled tidelands owned in fee by the State held in trust by the
City pursuant to the California State Statutes commonly known as the Beacon Bay Bill
(Chapter 74, Statutes of 1978, as amended in 1997 by Chapter 317). The State Lands
Commission holds oversight on land owned by the State. The residential properties are
ground leased to the homeowners, who own the vertical improvements (i.e. dwelling unit,
landscaping, personal property) only.
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Beacon Bay Home Owners Association Proposed Rate Change to Current Lease
February 12, 2019
Page 2
History
In 1919, the State legislatively granted tide and submerged lands to the City for
development and management. Improvements to Newport Harbor, including dredging to
create a channel to navigable waters required certain portions of the harbor to be filled,
including portions of the area now known as Beacon Bay. The land in Beacon Bay was
first leased by the City to J. A. Beek (Beek), for commerce and navigational use, in 1927.
Then in 1938, the City directed Beek to convert the leased land to residential use. Beek
subdivided and subleased the parcels to individuals for private residential use, and homes
were constructed in Beacon Bay through the 1950's.
The private, exclusive use of the tidelands for residential purposes was addressed by the
State with an amendment to the legislative tidelands grant in 1978. The State approved
continued residential use of approximately three -acres of tidelands in Beacon Bay, with
the following conditions:
1. A property of similar size, value, and utility be transferred into the tidelands trust,
to continue the trust's purpose of promoting commerce, navigation, and fisheries.
2. The portions of the tidelands in Beacon Bay over the streets and beaches shall not
be converted to another use, and must remain in the trust for commerce,
navigation, and fisheries.
3. The City must continue to hold the tidelands in Beacon Bay in trust, and abide by
the other terms and provisions of the statutory grant, and other laws applicable to
tide and submerged lands.
4. Should the City decide to continue its use of the tidelands in Beacon Bay for
residential purposes, prior to its issuance the State must approve the form of such
lease and the fair market rental value consideration of the lease.
5. The revenues from leasing the tidelands in Beacon Bay must be deposited into a
separate fund for operations, maintenance, and capital improvements of tidelands,
and to further the purposes of the trust.
With the Beek leases expiring in 1987, and the State's requirement to obtain fair market
value rent for the use of parcels in Beacon Bay, the City entered into market rent leases
with the residents in 1981. The City lease term ran concurrent with the remaining term of
the Beek lease, but deducted the amount of the Beek rent. The lease automatically
renewed in 1988 and expired in 2006, limiting the term to a total of 25 -years in accordance
with the City Charter at the time.
In 1994 new leases were negotiated with the HOA, the State, and the City. The leases
were for a static 50 -year term that started in 1994 and end in 2044. There are 22
properties under this lease version.
In 2010 the HOA again approached the City, requesting a rolling lease term, rather than
the static 50 -year term, to allow residents to obtain a traditional 30 -year mortgage when
financing or refinancing their home. The lease was amended and in June 2012, the
current lease agreement was approved by the HOA, State Lands Commission, and the
City Council (Attachment A).
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Beacon Bay Home Owners Association Proposed Rate Change to Current Lease
February 12, 2019
Page 3
Current Leases
Three versions of the Beacon Bay lease template are currently in use, as the lease
agreement only changes to the most current version when a property changes ownership.
Below is a table outlining the key differences in the terms of the three versions of the
lease, and the current distribution of each lease:
Current Beacon Bay Lease Agreement Templates
Description
Lease Term
CPI*
Number of
Adjustment
Properties
Pre-existing
Tenancy
50 -year lease,
No CPI
Tenant—
started prior
expires in 2044
adjustment
27
1994 Lease
to 1994
Tenancy
Lease expires in
CPI adjustment
1994 Lease
started after
2044
applied every 7
22
July 1, 1994
years
Tenancy
50 -years from
CPI adjustment
2012 Lease
started after
date of
applied every
23
June 2012
acquisition
year
*Consumer Price Index, published by the United States Department of Labor, Bureau of Labor Statistics
Rental Rate and City Council Policy
In addition to the State's requirement under the tidelands trust to charge fair market value,
City Council Policy F-7 — Income Property (Policy F-7) (Attachment B), requires the City
charge fair market value rent to private third -parties of City -owned property. Rent for
leases in Beacon Bay are set at 2.5% of the sale price of the improvements, which are
transferred on the open residential real estate market. Sale prices are negotiated by the
buyer and seller in the open market, with consideration for the leasehold interest and the
ongoing responsibility to pay the leasehold rent to the City.
City staff works closely with the escrow companies whenever a transaction takes place
to ensure the Beacon Bay lease agreement is disclosed and properly assigned to the new
owner(s). Staff also works with trustees or estate attorneys when the property is part of
an estate plan.
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Beacon Bay Home Owners Association Proposed Rate Change to Current Lease
February 12, 2019
Page 4
Current Revenues Collected
The City collects approximately $2,850,000 per year from the Beacon Bay leases. Of the
revenue collected 51% is placed in the Tidelands account, 49% is placed in the General
Fund, and 10% of the revenue placed in the Tidelands account is remitted back to the
State.
HOA Proposed Changes to Lease Terms
In 2018, the HOA approached the City and proposed changing several of the key terms
of the template lease agreement. The HOA proposes to reduce the rental rate from 2.5%
of the purchase price to 1 % of the purchase price, and to eliminate the CPI cost of living
adjustment to the rent. The HOA's proposal to changing the terms of the template lease
agreement can be found in Attachment C.
Revenue Modeling
To better evaluate how the HOA's proposal would affect the City's revenue, City staff
contracted with Keyser Marston Associates, Inc. (KMA) to review and model the HOA's
proposed changes to the lease terms (Attachment D). KMA could not exactly duplicate
the mathematical data in the HOA's tables and spreadsheets to verify the proposed
revenue projections. However, using the HOA's proposed changes to the rent structure,
and most of the same price and sales volume assumptions, KMA determined the City
would experience a $31,631,694 loss in revenue from Beacon Bay leases between 2019
and 2037 (approximately $1,757,316 per year reduction in revenue), as compared to
current revenue figures only adjusted by an average annual inflation rate of 2.5% per
year, and assuming no resales.
It should be noted that staff and KMA have met with HOA representatives to discuss their
proposal. The HOA disputes the assumptions that were used in KMA's modeling.
State Lands Commission
After receipt of the HOA's proposed changes to the lease, staff provided detail of the
HOA's proposal with the State Lands Commission's Executive Officer, External Affairs
Division Chief, and Legal Counsel. The State responded with a letter confirming any
change to the form of the lease will require State approval. The letter also notified the City
that the State will thoroughly analyze any proposed reduction in the lease amount, and
will require "ironclad and indisputable justification and rationale to prove that the reduced
amount reflects fair market value" (Attachment E).
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Beacon Bay Home Owners Association Proposed Rate Change to Current Lease
February 12, 2019
Page 5
ENVIRONMENTAL REVIEW:
Staff recommends the City Council find this action is not subject to the California
Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) (the activity will not
result in a direct or reasonably foreseeable indirect physical change in the environment)
and 15060(c)(3) (the activity is not a project as defined in Section 15378) of the CEQA
Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has no
potential for resulting in physical change to the environment, directly or indirectly.
NOTICING:
The agenda item has been noticed according to the Brown Act (72 hours in advance of
the meeting at which the City Council considers the item).
ATTACHMENTS:
Attachment A — 2012 Beacon Bay Template Lease Agreement
Attachment B — City Council Policy F-7 — Income Property
Attachment C — HOA Proposed Changes to Lease Terms
Attachment D — Keyser Marston Associates, Inc. Beacon Bay Revenue Modeling
Attachment E — State Lands Commission Letter, Dated September 5, 2018
SS2-5
Attachment A
2012 Beacon Bay Template Lease Agreement
SS2-6
BEACON BAY LEASE
THIS BEACON BAY LEASE ("Lease") is entered into as of the _ day of
, 20_ ("Effective Date"), by and between the City of Newport Beach, a
California municipal corporation, tideland's trustee, and charter city ("Lessor" or "City")
and , a ("Lessee").
Lessor and Lessee are sometimes individually referred to herein as "Party" and
collectively as the "Parties."
RECITALS
A. Lessor by virtue of a 1978 legislative grant found in Chapter 74 of the
Statutes of 1978, as amended ("Beacon Bay Bill"), holds the right, title, and interest to
certain tidelands and uplands commonly known as Beacon Bay and generally depicted
in Exhibit "A" attached hereto and incorporated by reference.
B. The Beacon Bay Bill frees the "Westerly portion" of the filled tidelands
from the public trust and specifically authorizes the lease of the property for residential
purposes subject to certain express statutory conditions.
C. As required by the Beacon Bay Bill, the consideration to be received by
the City for the residential leases is the fair market rental value of such lots as finished
subdivided lots with streets constructed and all utilities installed.
D. On November 3, 1987, a majority of the electors in the City approved a
measure authorizing the City Council to enter into residential leases in Beacon Bay for a
period not to exceed fifty (50) years.
E. On November 3, 1992, a majority of the electors in the City approved
Measure M authorizing the City Council to lease tidelands and waterfront property
consistent with the provisions of state law.
F. The City Council, pursuant to the authority conferred by the electors and
the Beacon Bay Bill, leased out the residential lots within Beacon Bay for fifty (50) year
terms.
G. The current residential leases are set to expire on July 1, 2044, which is
preventing certain persons with existing leases within Beacon Bay from obtaining a
traditional thirty (30) year mortgage.
H. Lessor and Lessee desire a new residential lease for Beacon Bay with a
new fifty (50) year term and new provisions that are reflective of current conditions.
I. City has determined this Lease is consistent with the Beacon Bay Bill, the
City's Charter, General Plan, Zoning Ordinances, and all other applicable state and
local laws.
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J. The California State Lands Commission reviewed the form of this Lease
and the range of consideration to be received by the City and determined that the Lease
is in conformance with the provisions in the Beacon Bay Bill.
1. AGREEMENT TO LEASE
1.1 Lease. For good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Lessor hereby leases to Lessee the real property
commonly known as Beacon Bay Lot , ("Property") which is more particularly
described in Exhibit "B", and generally depicted on Exhibit "A", each attached hereto
and incorporated by reference herein. If Lessee is a Limited Liability Corporation
("LLC") Lessee shall provide Lessor with the name of its majority share holder at the
time of execution of this Lease. The LLC may not change its majority shareholder
without the prior written consent of the City's City Manager or his/her designee. If
approved, a change of the majority shareholder triggers a re -appraisal of the Property
and an adjustment of Base Rent pursuant to the re -appraisal process in Section 3.6(b).
1.2 Reservation of Mineral Rights. Lessor expressly reserves all oil, oil rights,
gas, minerals, mineral rights, natural gas rights and other hydrocarbon substances in
and under the Property and the right to grant and transfer the same, together with all
necessary and convenient rights to explore for, develop, produce and extract and take
the same, subject to the express limitation that any and all operations shall be carried
on at levels below the depth of five hundred feet (500') from the surface of the land by
means of wells, derricks and other equipment from surface locations on adjoining or
neighboring land, and subject further to all restrictions and regulations concerning the
drilling for, and production of, oil, gas, minerals, petroleum and other hydrocarbon
substances specified in the City's Charter and Municipal Code.
1.3 Net Lease. This Lease is a net lease, pursuant to which Lessor has no
obligation with respect to the payment of taxes, insurance, the cost of maintenance,
utilities and repairs or other costs or obligations associated with the Property, except as
expressly stated herein.
1.4 Termination of Prior Lease(s). Lessee affirmatively represents that: (a)
the persons executing this Lease have a hundred percent (100°/x) of all interests in any
prior lease(s) covering the Property; and (b) have authority to execute this Lease and be
bound by the terms herein. Upon the execution of this Lease, any lease(s) between the
City and the Lessee or any other party covering the Property shall automatically
terminate and be of no further effect. Lessee shall execute and record any document(s)
that may be required by City to evidence the termination of any prior lease(s) covering
the Property. City shall owe no compensation to Lessee or any other party for the
termination of a lease under this section. Lessee shall indemnify and hold the City
harmless from any and all liability, loss, expense, damage, or claims which may arise
directly or indirectly from or in connection with any allegation that the representations
made is this section are false.
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2. TERM OF LEASE
2.1 Fixed Term. The term of this Lease shall be for a fixed period of
years commencing as of , 20_ ("Commencement Date") and terminating on
, 20 . The total term may not exceed fifty (50) years pursuant to the Beacon
Bay Bill.
2.2 Options. Upon the written request of Lessee and in the sole and absolute
discretion of City, this Lease may be terminated and a new lease (with the most current
terms approved by the City and/or State Lands Commission) executed with a term not
to exceed fifty (50) years pursuant to the payment of the "Option Fee" by Lessee for
each year the term is extended. The new lease's term shall be the cumulative total of
the purchased years under this section and the remaining years in this Lease (i.e., if ten
(10) years and one (1) month remain in this Lease and five (5) years are purchased
under this section the new lease shall be for a term of fifteen (15) years and one (1)
month). The Option Fee shall be calculated pursuant to a specified percentage, as
provided in Exhibit "C", attached hereto and incorporated by reference, of the fair
market value of the Property as determined by an appraisal, multiplied by the number of
years that are purchased by the Lessee (i.e., for illustrative purposes, if the specified
percentage is one percent (1%) and the appraised Property value is one hundred
dollars ($100) and Lessee desires to extend the term five (5) years, Lessee would owe
the City five dollars ($5) [$1 x 5 years= $5]). The Option Fee shall be paid to City by
Lessee at the time of execution of the new lease.
The Property appraisal shall be conducted after the City's approval of the written
request submitted by Lessee. The City's approval of the written request shall be valid
for six (6) months or some other time period as may be agreed upon by the parties.
Lessor shall submit three (3) California licensed appraisers to Lessee; Lessee shall
select one (1) appraiser from the three (3) submitted appraisers to appraise the
Property. Lessee shall pay all costs associated with the appraiser and the appraisal.
For purposes of the Option Fee calculation, in no event shall the appraised fair market
value be less than the Property value used to determine Base Rent (as defined in
Section 3.2) in Sections 3.1 and 3.2 of the then effective Lease. Because there will be
no sale of the Property, the Base Rent for the new lease shall be calculated pursuant to
Section 3.6(b), notwithstanding the appraisal requirement in Section 3.6(b), the parties
may rely upon the appraisal conducted pursuant to this section to calculate the Base
Rent.
2.3 Holdover. This Lease shall terminate and become null and void
without further notice upon the expiration of the term of this Lease. Any holding over by
Lessee after the expiration of the term shall not constitute a renewal or extension and
shall not give Lessee any rights in or to the Property or any part thereof except as
expressly provided in this Lease. Any holding over after the expiration of the term with
the consent of Lessor shall be construed to be a tenancy from month-to-month on the
same terms and conditions set forth in this Lease insofar as such terms and conditions
can be applicable to a month-to-month tenancy, except that the rental for each month or
any portion thereof during such holdover period shall be an amount equal to one
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hundred fifty percent (150%) of one -twelfth (1/12) of the annual rent for the most recent
year paid. The month-to-month tenancy may be terminated by Lessee or Lessor upon
thirty (30) calendar days' prior written notice to the other.
3. RENT & TRANSFERABILITY
3.1 Rent Calculation. Annual rent for the Property shall be calculated at the
rate of two and half percent (2.5%) of the total of all consideration paid for the Property
or the appraised value of the Property, including any improvements or structures, but
excluding any consideration paid for the transfer of personal property in connection with
such transaction. The annual rent shall be adjusted from time -to -time pursuant to
Section 3.3. The rent calculation provided in this section shall serve as the basis for the
Base Rent (defined below) in Section 3.2.
3.2 Base Rent. Lessee agrees to pay Lessor rent for the use and occupancy
of the Property, in twelve (12) equal monthly installments on the first day of each month
("Base Rent"). Said sums shall be paid in lawful money of the United States of America.
If the Commencement Date is other than the first day of a month, rent during any partial
month at the beginning and at the end of the lease term will be prorated. Base Rent
hereunder will be Dollars ($ .00) for an annual total of
Dollars ($ .00). Base Rent due hereunder will be subject to the rent adjustment
provisions of Section 3.3 below. Lessee shall send said rent to the mailing address or
send an electronic fund transfer via the web address provided in Section 3.5. Lessee
shall be responsible for any delays in the mode of sending the rent payment to Lessor.
(a) Base Rent shall be due on the first day of each month. If said rent
is received later than the fifteenth (15th) day of the month, there shall be a delinquency
charge equal to five percent (5%) of the month's Base Rent due.
(b) Each monthly installment of Base Rent shall bear interest if not paid
promptly on or before the date it becomes delinquent at the rate of five percent (5%) per
annum from the date it becomes delinquent until it is paid by Lessee to Lessor. This
interest charge shall be in addition to the delinquency charge set forth in Section 3.2(a).
3.3 Rent Adjustments. Monthly Base Rent may be adjusted on July 1 St of
each Lease Year (the term "Lease Year" as used herein refers to successive twelve
(12) month periods, commencing with the Commencement Date of this Lease) to reflect
increases or decreases in the cost of living as indicated by the Consumer Price Index
described below. Monthly Base Rent may be adjusted if the Consumer Price Index for
the Los Angeles — Orange County - Riverside Area, All Urban Consumers, All Items
("Index"), as published by the United States Department of Labor, Bureau of Labor
Statistics ("Bureau"), increases or decreases over the Base Period Index. The initial
"Base Period Index" shall be the Index for the calendar month which is four (4) months
prior to the month of the Commencement Date (thus, , 20_, which equals ).
The initial Base Period Index shall be compared with the Index for the same calendar
month for each subsequent Lease Year ("Comparison Index"). The Comparison Index
used for a given year's adjustment calculation will become the Base Period Index for
0
SS2-10
purposes of the next annual rent adjustment calculation. If the Comparison Index is
higher or lower than the Base Period Index, then Base Rent for the next Lease Year
shall be increased or decreased by the amount of such percentage change. Should the
Bureau discontinue the publication of the above Index, or publish same less frequently,
or alter same in some other manner, then the Parties shall adopt a substitute Index or
substitute procedure which reasonably reflects and monitors consumer prices.
Notwithstanding the Index adjustments described above, if Lessor, in its sole and
absolute discretion, believes that notwithstanding such adjustments, monthly Base
Rent, as adjusted, does not accurately reflect the fair market rental value of the
Property, Lessor may elect to further adjust monthly Base Rent at the commencement
of the thirtieth (30th) Lease Year. Lessor will provide notice to Lessee not earlier than
six (6) months nor later than three (3) months prior to the expiration of the twenty-ninth
(29th) Lease Year of Lessor's election to further adjust monthly Base Rent. Within
fifteen (15) days thereafter, Lessor and Lessee will attempt to agree upon an
adjustment in Base Rent. If Lessor and Lessee are unable to agree, the Property will
be appraised to determine its fair market rental value. Lessor shall submit three (3)
California licensed appraisers to Lessee; Lessee shall select one (1) appraiser from the
three (3) submitted appraisers to appraise the Property. Lessor shall pay all costs
associated with the appraiser and the appraisal. The fair market rental value
determined by the appraiser will constitute monthly Base Rent for the thirtieth (30th)
Lease Year and each successive year remaining on the Lease; provided, however, that
in no event will monthly Base Rent so determined be less than that otherwise payable
through the annual Index adjustments described above.
3.4 Additional Rent. All other payments from Lessee described in this Lease,
whether to Lessor or third parties (i.e., for the payment of taxes, utilities, insurance,
maintenance and the like) constitute "Additional Rent." Included within Additional Rent
is any service charge incurred by City when processing the Rent (e.g., credit card
transaction fee, etc.), such service charged shall be passed onto Lessee without any
additional mark-up by the City. All references in this Lease to "Rent" include Base Rent
and Additional Rent.
3.5 Place for Payment of Rent. All Rent that becomes due and payable under
this Lease shall be paid to Lessor in person or by United States mail at the Cashier's
Office located at 3300 Newport Boulevard, Newport Beach, California 92658, or
electronically at www.newportbeachca.gov, or at any other place or places that Lessor
may designate by written notice to Lessee.
3.6 Calculation of Base Rent for Leases Without Corresponding Sale.
(a) Through January 1, 2015, Lessor will allow current lessees within
Beacon Bay to voluntarily terminate their prior lease (that had an effective date of July
1, 1994 and an expiration date of July 1, 2044) and enter into this Lease. No transfers
from the prior lease to this Lease are allowed after January 1, 2015. If a current lessee
terminates their prior lease and enters into this Lease prior to January 1, 2015 or if
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SS2-11
Lessee purchases additional years pursuant to Section 2.2, there will not be a sale price
to calculate Base Rent.
(b) The Base Rent shall be calculated at the rate of two and half
percent (2.5%) of the appraised fair market value of the Property including any
improvements or structures, but excluding any personal property. Lessor shall submit
three (3) California licensed appraisers to Lessee; Lessee shall select one (1) appraiser
from the three (3) submitted appraisers to appraise the Property. Lessee shall pay all
costs associated with the appraiser and the appraisal. In no event shall the Base Rent
be less than the dollar amount received by the Lessor under the former lease. The
annual Base Rent shall be adjusted from time -to -time pursuant to Section 3.3.
3.7 Prohibition Against Transfer or Assignment. With the exception of the
transfer and assignment provisions in Section 7 and Section 3.8, this Lease may not be
transferred or assigned by Lessee. Any attempt to transfer or assign this Lease shall be
an event of default subject to the remedies provided in Section 13.2. Any purported
assignment or transfer in violation of this section shall be null and void.
3.8 Exempt Transfers or Assignments. Notwithstanding the prohibition
against transfer and assignment provided in Section 3.7, the Lease may be transferred
by Lessee if:
(a) the transfer is caused by the death of a spouse and the full interest
of the deceased spouse is transferred to a surviving spouse;
(b) the transfer of an interest in this Lease is between or among
tenants in common or joint tenants in ownership of the leasehold estate created by this
Lease, and such tenants in common or joint tenants first acquired their respective
interests in this Lease simultaneously;
(c) the transfer is caused by the dissolution of the marriage of Lessee
and the full interest of one of the spouses is transferred to the other spouse;
(d) the transfer is to an inter vivos trust, living trust, or other similar
estate planning arrangement of Lessee and the sole beneficiaries are the Lessee, the
Lessee's spouse, or a tenant as contemplated in Section 3.8(b); or
(e) the transfer is to a LLC; provided at the time of transfer the Lessee
is the majority share holder of the LLC. The LLC may not change its majority
shareholder without the prior written consent of the City's City Manager or his/her
designee. If approved, a change of the majority shareholder triggers a re -appraisal of
the Property and an adjustment of Base Rent pursuant to the re -appraisal process in
Section 3.6(b).
In the event of any transfer under this Section 3.8 the Lease term shall be
for the remaining years existing on the Lease prior to the transfer (i.e., the term shall not
be extended due to the transfer).
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4. LESSOR'S TITLE
Lessor covenants, represents and warrants that Lessee, its guests and permitted
successors and assigns shall peaceably and quietly have, hold and enjoy the sole and
exclusive use and enjoyment of the Property, or any part thereof, for the full term of this
Lease and as the same may be extended as provided herein. This covenant and
warranty of quiet enjoyment shall only apply to Lessor and those claiming or acting by,
through or under Lessor.
5. USE AND CONDITION OF PROPERTY
5.1 Use of Property. The Property shall be used solely for residential
purposes consistent with the City's Zoning and Municipal Code. Lessee may demolish,
construct, remodel, reconstruct and maintain structures on the Property for residential
purposes so long as the structures and construction are authorized by appropriate City
permits and fully comply with all City ordinances, resolutions, regulations, policies, and
plans. Lessee shall also obtain permission to construct and/or maintain structures from
the Beacon Bay Community Association, California Coastal Commission, and any other
private or governmental agency if required by law. Nothing in this section shall be
interpreted as a pre -approval of any permit or other approval required for the use of the
Property.
5.2 Maintenance of Improvements. Lessor shall not be required to make any
changes, alterations, additions, improvements, or repairs in on or about all or part of the
Property. Lessee shall, at all times during the term of this Lease and without any cost
or expense to Lessor, keep and maintain, the Property, including, without limitation, all
structures, facilities, walks, curbs, parkways and other improvements, in good order and
repair and in a clean, safe, sanitary and orderly condition. Lessee shall cause to be
constructed, maintained and repaired all utilities, pipes, walls, sewers, drains, and other
improvements on the Property to the extent required by law or as necessary to maintain
the improvement in good order and repair and safe and sanitary condition.
5.3 Compliance with Laws. Lessee shall make, or cause to be made, any
additions, alterations or repairs to any structure or improvement on the Property which
may be required by, and Lessee shall otherwise observe and comply with, any law,
statute, ordinance, plan, resolution or policy applicable to the Property. Lessee shall
indemnify, defend and hold Lessor harmless from and against any loss, liability, action,
claim or damage, arising out of, or in any way related, to Lessee's failure to comply with,
and perform pursuant to provisions of this Lease. All repairs, additions, and alterations
to the structures or improvements on the Property shall conform to all applicable laws,
ordinances, regulations, plans, policies and resolutions and all work shall be performed
with reasonable diligence, completed within a reasonable time, and performed at the
sole cost and expense of Lessee.
5.4 As Is Condition of Property. Lessee expressly accepts the Property "as is"
and acknowledges that Lessor has made no representations or warranties as to the
suitability of the Property or any construction or improvement. Lessee shall conduct all
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tests necessary to determine the suitability of the Property for any proposed
construction or improvement, including, without limitation, the amount and extent of any
fill, and related factors. Lessee expressly acknowledges that Lessor shall not be liable
for any damage or loss resulting from any subsurface or soil condition in, on, or under
the Property or adjacent property. Lessee expressly acknowledges that, while the
legislature of the State of California has purportedly removed the public trust restrictions
on use of the Property pursuant to the Beacon Bay Bill, the Property may constitute
filled tidelands, and Lessor has made no representation or warranty relative to the
validity of the Beacon Bay Bill or the power of the legislature of the State of California to
remove public trust restrictions on tidelands through legislation. Notwithstanding the
foregoing, in the event of any challenge to the right and power of Lessor to lease the
Property for the purposes provided in this Lease, Lessor agrees, at its sole cost and
expense, to use all reasonable efforts to resist and defend against such challenge and
to seek a ruling or judgment affirming and upholding the right and power of Lessor to
lease the Property for the purposes provided in this Lease.
5.5 Tidelands Grant. The Property may be located on land that is the subject
of a Tidelands Grant from the State of California to the City. Lessee shall not take any
action that would cause the City to be in violation of any provisions of that Tidelands
Grant. If the Property is located upon tidelands and the State of California terminates,
or modifies the Tidelands Grant to prohibit the uses contemplated under this Lease, this
Lease shall terminate as a result and the Parties shall be released from all liabilities and
obligations under this Lease and Lessor shall owe no compensation to Lessee.
6. TAXES AND UTILITIES
6.1 Lessee to Pay Taxes. In addition to the Base Rent required to be paid
under this Lease, Lessee shall pay any and all real and personal property taxes,
including possessory interest tax (California Revenue and Taxation Code § 107.6),
assessments, and other charges of any description levied or assessed during the term
of this Lease by any governmental agency or entity on or against the Property, any
portion of or interest in the Property, or any improvements on the Property.
6.2 Proration of Taxes. In the event that this Lease commences, terminates
or expires during a tax year, Lessee shall pay the taxes for the period of such year
during which this Lease was in effect.
6.3 Payment Before Delinquency. Any and all taxes and assessments and
installments of taxes and assessments required to be paid by Lessee under this Lease
shall be paid when due and the official and original receipt for the payment of such tax,
assessment, or installment shall be given to Lessor upon request.
6.4 Contest of Tax. Lessee shall have the right to contest, oppose, or object
to the amount or validity of any tax, assessment, or other charge levied on or assessed
against the Property or any part thereof; provided, however, that the contest, opposition
or objection must be filed before the tax, assessment or other charge at which it is
directed becomes delinquent and written notice of the contest, opposition or objection
SS2-14
must be given to Lessor at least twenty (20) days before the date the tax, assessment,
or other charge becomes delinquent. Furthermore, no such contest, opposition or
objection shall be continued or maintained after the date the tax, assessment, or other
charge at which it is directed becomes delinquent unless Lessee has:
(a) Paid such tax, assessment, or other charge under protest prior to
its becoming delinquent; or
(b) Obtained and maintained a stay of all proceedings for enforcement
and collection of the tax, assessment, or other charge by posting such bond or other
matter required by law for such a stay; or
(c) Delivered to Lessor a good and sufficient undertaking in an amount
reasonably specified by Lessor and issued by a bonding corporation authorized to issue
undertakings in California conditioned on the payment by Lessee of the tax, assessment
or other charge together with any fines, interest, penalties, costs and expenses that may
have accrued or been imposed thereon within thirty (30) days after final determination of
Lessee's contest, opposition or objection to such tax, assessment or other charge.
6.5 Tax Returns and Statements. Lessee shall, as between Lessor and
Lessee, have the duty of attending to, preparing, making, and filing any statement,
return, report, or other instrument required or permitted by law in connection with the
determination, equalization, reduction or payment of any taxes, assessments or other
charges that are or may be levied on or assessed against the Property, any portion or
interest in the Property, or any improvements on the Property.
6.6 Tax Hold -Harmless Clause. Lessee shall indemnify and hold Lessor and
the property of Lessor, including the Property and any improvements now or hereafter
located thereon, free and harmless from any liability, loss, or damage resulting from any
taxes, assessments, or other charges required by this Lease to be paid by Lessee and
from all interests, penalties, and other sums imposed thereon and from any sales or
other proceedings to enforce collection of any such taxes, assessments, or other
charges.
6.7 Utilities. Lessee shall contract in its own name and fully and promptly pay
for all water, gas, heat, light, power, telephone service, and other public utilities of every
kind furnished to the Property throughout the term hereof, and all other costs and
expenses of every kind whatsoever of or in connection with the use, operation, and
maintenance of the Property and all activities conducted thereon, and Lessor shall have
no responsibility of any kind for any thereof. In the event that it is necessary for Lessor
to provide any of the foregoing utilities to Lessee on a pass through basis, Lessee shall
provide a separate meter for the Property and shall reimburse Lessor for Lessee's
usage of such utility service within ten (10) days of Lessor's invoice to Lessee.
Furthermore, Lessee shall be solely responsible for the cost and expense of any
upgrade, modification or other utility installation which is required as a result of Lessee's
use of the Property.
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SS2-15
6.8 Payment by Lessor. Should Lessee fail to pay within the time specified in
this Lease any taxes, assessments, or other charges required by this Lease to be paid
by Lessee, Lessor may, upon ten (10) days prior written notice and demand to Lessee,
pay, discharge or adjust such tax, assessment, or other charge for the benefit of
Lessee. In such event, Lessee shall promptly on written demand of Lessor reimburse
Lessor for the full amount paid by Lessor in paying, discharging or adjusting such tax,
assessment or other charge, together with interest thereon at the rate of ten percent
(10%) per annum from the date of payment by Lessor until the date of repayment by
Lessee. Where no time within which any charge required by this Lease to be paid by
Lessee is specified in this Lease, such charge must be paid by Lessee before it
becomes delinquent.
7. ENCUMBERANCES
7.1 Right to Encumber. Lessee may encumber this Lease by deed of trust,
mortgage, or similar instrument, in favor of any bona fide lender ("Lender" or
"Mortgagee") in a bona fide loan transaction for any purpose without the consent of
Lessor. To determine whether a loan is a bona fide lending transaction, and not an
arrangement for transfer of the possession or title to the Property to the putative lender,
Lessee and the Lender agree to provide Lessor with all documentation executed
between Lessee and the Lender concerning the loan upon request of Lessor. Neither
Lessee nor Lessor shall have the power to encumber Lessor's interest in the Property.
Any encumbrance shall be subject to all covenants, conditions and restrictions in this
Lease and to all rights and interests of Lessor except as otherwise expressly provided in
this Lease. Lessee shall give Lessor prior written notice of any encumbrance.
7.2 Notice to Lender. Lessor shall have no obligation to give any Lender any
written notice pursuant to this Lease unless the Lender has given Lessor written notice
of its name, address, and nature of encumbrance ("Complying Lender(s)"). Lessor shall
give all Complying Lenders a copy of any written notice of default, notice of termination
or other notice which may affect Lessee's rights under this Lease. Notice shall be
deemed given by Lessor to Lender five (5) days following deposit in the United States
mail, certified and return receipt requested, postage prepaid, and sent to Complying
Lender at the address furnished in writing by Complying Lender. Failure by Complying
Lender to actually receive notice shall not affect Lessor's compliance with this section
provided notice was deposited in the United States mail.
7.3 Modification. Lessor and Lessee agree that they will not modify, surrender
or cancel this Lease by mutual agreement without providing prior written notice to the
Lender.
7.4 Rights of Lender. Any Lender holding or the beneficiary of a security
interest or lien on this Lease and the leasehold estate created hereby shall have the
right, during the term of the Lease, to:
(a) perform any act required of Lessee pursuant to this Lease;
10
SS2-16
(b) transfer this Lease to the purchaser at any foreclosure sale, the
assignee in the event of an assignment in lieu of foreclosure, or to acquire the interest
of Lessee pursuant to foreclosure or assignment and thereafter transfer this Lease to
the Lender's successor. Lender shall have no right to transfer this Lease unless and
until Lender has cured all defaults requiring the payment or expenditure of money by
Lessee.
7.5 Right of Lender to Cure Default. Lessor shall give written notice of any
default or breach of this Lease by Lessee to Complying Lenders and afford Complying
Lenders the opportunity, after notice, to:
(a) cure the breach or default within ten (10) days after expiration of
the time period granted to Lessee for curing the default if the default can be cured by
payment of money;
(b) cure the breach or default within thirty (30) days after expiration of
the time period granted to Lessee for curing the default when the breach or default can
be cured within that period of time; or
(c) cure the breach or default in a reasonable time when something
other than money is required to cure the breach or default and cannot be performed
within thirty (30) days after expiration of the time period granted to Lessee for curing the
default, provided the acts necessary to cure the breach are commenced within thirty
(30) days and thereafter diligently pursued to completion by Complying Lender.
7.6 Foreclosure in Lieu of Cure. Complying Lender may forestall termination
of this Lease for a default or breach by Lessee by commencing foreclosure proceedings
subject to strict compliance with the following:
(a) proceedings are commenced within thirty (30) days after the later of
(i) expiration of the time period granted to Lessee for curing the default, or (ii) service on
Complying Lender of the notice describing the breach or default;
(b) the proceedings are diligently pursued to completion in the manner
authorized by law; and
(c) Complying Lender performs all of the terms, covenants and
conditions of this Lease requiring the payment or expenditure of money by Lessee until
the proceedings are complete or are discharged by redemption, satisfaction, payment or
conveyance of this Lease to Complying Lender.
7.7 New Lease. Notwithstanding any other provision of this Lease, should this
Lease terminate or be terminated because of any default or breach by Lessee, Lessor
shall enter into a new lease with Lender as lessee provided:
11
SS2-17
(a) the written request for the new lease is served on Lessor by Lender
within thirty (30) days after the termination of this Lease.
(b) the new lease contains the same terms and conditions as this
Lease except for those which have already been fulfilled or are no longer applicable.
(c) on execution of the new lease by Lessor, Lender shall pay any and
all sums that would be due upon execution of the new lease, but for its termination, and
shall fully remedy, or agree in writing to remedy, any other default or breach committed
by Lessee that can reasonably be remedied by Lender.
(d) Lender shall, upon execution of the new lease, pay all reasonable
costs and expenses (including attorney's fees) incurred in terminating this Lease,
recovering possession of the Property from Lessee, in preparing the new lease.
(e) The new lease with Lender shall be for the remainder of the term
existing in the prior Lease (i.e., if twenty-five (25) years remain on the Lease at the time
of termination/breach the new lease shall be for a term of twenty-five (25) years).
7.8
Lender:
Miscellaneous
The following provisions shall apply to Lessee and any
(a) Any Lender shall be liable to perform the obligations of the Lessee
under this Lease only so long as the Lender holds title to this Lease; and
(b) Lessee shall, within ten (10) days after the recordation of any trust
deed or other security instrument, record, at Lessee's sole expense, Lessor's written
request for a copy of any notice of default and/or notice of sale under any deed of trust
as provided by state law.
8. RESTORATION AND ENVIRONMENTAL MATTERS
8.1 Restoration of the Property. Should any improvements on the Property be
damaged or destroyed by fire or other casualty or any cause whatsoever, Lessee, will
cause the commencement of reconstruction to the damaged or destroyed
improvements within ninety (90) days, or such other time period as may be mutually
agreed upon by the Parties, after such damage and destruction and will thereafter
cause such reconstruction to be diligently prosecuted to completion.
8.2 Environmental Matters.
(a) Definitions. The following terms will be defined as follows:
(i) Environmental Law. "Environmental Law" shall include all
federal, state, and local environmental, health, and safety laws, statutes, ordinances,
regulations, rules, judgments, orders, and notice requirements, which were in effect as of
the date of closing, which regulate or relate to (a) the protection or clean-up of the
12
SS2-18
environment; (b) the use, treatment, storage, transportation, handling or disposal of
hazardous, toxic or otherwise dangerous substances, wastes or materials; (c) the quality
of the air and the discharge of airborne wastes, gases, particles, or other emissions; (d)
the preservation or protection of waterways, groundwater, or drinking water; (e) the
health and safety of persons or property; or (6) impose liability with respect to any of the
foregoing, including without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 (CERCLA) [42 USCS §§ 9601 et seq.]; the
Resource Conservation and Recovery Act of 1976 (RCRA) [42 USCS §§ 6901 et seq.];
the Clean Water Act, also known as the Federal Water Pollution Control Act (FWPCA)
[33 USCS §§ 1251 et seq.]; the Toxic Substances Control Act (TSCA) [15 USCS §§
2601 et seq.]; the Hazardous Materials Transportation Act (HMTA) [49 USCS §§ 1801 et
seq.]; the Insecticide, Fungicide, Rodenticide Act [7 USCS §§ 136 et seq.]; the
Superfund Amendments and Reauthorization Act [42 USCS §§ 6901 et seq.]; the Clean
Air Act [42 USCS §§ 7401 et seq.]; the Safe Drinking Water Act [42 USCS §§ 300f et
seq.]; the Solid Waste Disposal Act [42 USCS §§ 6901 et seq.]; the Surface Mining
Control and Reclamation Act [30 USCS §§ 1201 et seq.]; the Emergency Planning and
Community Right to Know Act [42 USCS §§ 11001 et seq.]; the Occupational Safety and
Health Act [29 USCS §§ 655 and 657]; the California Underground Storage of
Hazardous Substances Act [H & S C §§ 25280 et seq.]; the California Hazardous
Substances Account Act [H & S C §§ 25300 et seq.]; the California Hazardous Waste
Control Act [H & S C §§ 25100 et seq.]; the California Safe Drinking Water and Toxic
Enforcement Act [H & S C §§ 24249.5 et seq.]; the Porter -Cologne Water Quality Act
[Water C §§ 13000 et seq.] together with any amendments of or regulations promulgated
under the statutes cited above.
(ii) Hazardous Materials. "Hazardous Materials" shall include
any substance which falls within the definition of hazardous substance, hazardous
waste, hazardous material, toxic substance, solid waste, or pollutant or contaminant,
under any Environmental Law.
(b) Lessee's Obligations. Lessee will not use, occupy, or permit any
portion of the Property to be used or occupied in violation of any Environmental Law or
to store any Hazardous Material.
(c) Environmental Indemnity. Lessee shall indemnify, defend, and hold
Lessor and Lessor's, City Council, officers, appointees, volunteers, employees, agents,
successors and assigns free and harmless from and against all Damages (as defined
below) that may at any time be imposed upon, incurred by, or asserted or awarded
against Lessor or any of them in connection with or arising from any breach of Lessee's
obligations hereunder or out of any violation by Lessee of any Environmental Law; or
resulting in the imposition of any lien or claim for the recovery of any costs for
environmental cleanup or other response costs relating to the release or threatened
release of Hazardous Materials due to the construction of any improvements on the
Property or the use or misuse of the Property by the Lessee. The term "Damages" shall
mean all liabilities, demands, claims, actions or causes of action, regulatory, legislative
or judicial proceedings, assessments, levies, losses, fines, penalties, damages, costs
and expenses, in each case as awarded by a court or arbitrator, including, without
13
SS2-19
limitation: (i) reasonable attorneys', accountants', investigators', and experts' fees and
expenses sustained or incurred in connection with the defense or investigation of any
such liability, and (ii) costs and expenses incurred to bring the Property into compliance
with Environmental Laws. The term "Damages" also includes, expressly, those
Damages that arise as a result of strict liability, whether arising under Environmental
Laws and regulations or otherwise. Lessee's obligations hereunder will survive the
expiration or sooner termination of this Lease.
9. INDEMNITY
9.1 Indemnity Agreement. In addition to the Environmental Indemnity
provided above, except to the extent caused by the sole negligence and/or willful
misconduct of the Lessor, Lessee shall defend, indemnify and hold Lessor and Lessor's
City Council, officers, appointees, volunteers, employees, agents, successors and
assigns free and harmless from any and all liability, claims, loss, damages, or expenses
resulting from Lessee's occupation and use of the Property, specifically including,
without limitation, any liability, claim, loss, damage, or expense arising by reason of:
(a) The death or injury of any person, including any person who is a
guest or invitee of Lessee, or by reason of the damage to or destruction of any property,
including property owned by Lessee or by any person who is a guest or invitee of
Lessee, from any cause whatever while such person or property is in or on the Property
or in any way connected with the Property or with any of the improvements or personal
property on the Property;
(b) The death or injury of any person, including any person who is a
guest or invitee of Lessee, or by reason of the damage to or destruction of any property,
including property owned by Lessee or any person who is a guest or invitee of Lessee,
caused or allegedly caused by either (i) the condition of the Property, or improvements
on the Property, or (ii) some act or omission on the Property by Lessee or any person
in, on, or about the Property with or without the permission and consent of Lessee;
(c) Any work performed on the Property or material furnished to the
Property at the request of Lessee or any person or entity acting for or on behalf of
Lessee; or
(d) Lessee's failure to comply with any material legal or other
requirement validly imposed on Lessee or the Property by a governmental agency or
authority having jurisdiction over the Property.
10. CONDEMNATION
10.1 Definitions of Terms.
(a) The term "total taking" as used in this Lease shall mean the taking
of the entire Property under the power of eminent domain or the taking of so much of
the Property as to prevent or substantially impair the use thereof by Lessee for
residential purposes.
14
ss2-20
(b) The term "partial taking" shall mean the taking of only a portion of
the Property which does not constitute a total taking as defined above.
(c) The term "taking" shall include a voluntary conveyance by Lessor to
an agency, authority or public utility under threat of a taking under the power of eminent
domain in lieu of formal proceedings.
(d) The term "date of taking" shall be the date upon which title to the
Property or portion thereof passes to and vests in the condemner.
10.2 Effect of Taking. If, during the term hereof, there shall be a total taking or
partial taking under the power of eminent domain, then the leasehold estate of the
Lessee in and to the Property or the portion thereof taken shall cease and terminate as
of the date of taking of said Property. If this Lease is so terminated in whole or in part,
all Rent and other charges payable by Lessee to Lessor hereunder and attributable to
the Property or portion thereof taken shall be paid by Lessee up to the date of taking by
the condemner, and the Parties shall thereupon be released from all further liability in
relation thereto.
10.3 Allocation of Award for Total Taking. All compensation and damages
awarded for the total taking of the Property and Lessee's leasehold interest therein shall
be allocated as follows:
(a) The Lessor shall be entitled to an amount equal to the sum of the
following:
(i) The fair market value of the Property as improved (exclusive
of the dwelling and appurtenances to such dwelling) as of the date of taking, discounted
by multiplying such fair market value by the factor for the present worth of one dollar
($1.00) at five percent (5%) per annum compound interest for the number of years
remaining from the date of taking to the date of the expiration of the term of this Lease;
and
(ii) The present worth of Rent due during the period from the
date of taking to the date of the expiration of the term of this Lease, computed by
multiplying the annual rent then payable by the factor for the present worth of one dollar
($1.00) per annum at five percent (5%) per annum compound interest (Inwood
Coefficient) for the number of years in such period.
(b) The Lessee and the Mortgagee, if any shall be entitled to the
amount remaining of the total award after deducting therefrom the sums to be paid to
Lessor as hereinafter provided. Lessee and Mortgagee may decide between
themselves how an award will be divided between them. In the event of any dispute
between the Lessee and Mortgagee as to the division of an award the City may satisfy
its responsibilities under this Lease by transferring any money due under this section to
15
SS2-21
Lessee. Lessee shall indemnify City from any and all claims or actions brought by
Mortgagee or any other party for any award under this section.
10.4 Allocation of Award for Partial Taking. All compensation and damages
awarded for the taking of a portion of the Property shall be allocated and divided as
follows:
(a) The Lessor shall be entitled to an amount equal to the sum of the
following:
(i) The proportionate reduction of the fair market value of the
Property as improved (exclusive of the dwelling and appurtenances to such dwelling) as
of the date of taking, discounted by multiplying such proportionate reduction in fair
market value by the factor for the present worth of one dollar ($1.00) at five percent
(5%) per annum compound interest for the number of years remaining from the date of
taking to the date of expiration of the term of this Lease; and
(ii) The present worth of the amount by which the Rent is
reduced computed by multiplying the amount by which the annual Rent is reduced by
the factor for the present worth of one dollar ($1.00) per annum at five percent (5%) per
annum compound interest (Inwood Coefficient) for the number of years remaining from
the date of taking to the date of expiration of the term of this Lease.
(b) The Lessee and the Mortgagee, if any shall be entitled to the
amount remaining of the total award after deducting therefrom the sums to be paid to
Lessor as hereinabove provided. Lessee and Mortgagee may decide between
themselves how an award will be divided between them. In the event of any dispute
between the Lessee and Mortgagee as to the division of an award the City may satisfy
its responsibilities under this Lease by transferring any money due under this section to
Lessee. Lessee shall indemnify City from any and all claims or actions brought by
Mortgagee or any other party for any award under this section.
10.5 Reduction of Rent on Partial Taking. In the event of a partial taking, the
Rent payable by Lessee hereunder shall be adjusted from the date of taking to the date
of the expiration of the term of this Lease. Such rental adjustment will be made by
reducing the Base Rent payable by Lessee in the ratio that the Fair Market Rental Value
of the Property at the date of taking bears to the Fair Market Rental Value of the
Property immediately thereafter.
11. BEACON BAY COMMUNITY ASSOCIATION
11.1 Membership in Association. As a material part of the consideration of this
Lease, and as an express condition to the continuance of any of the rights of Lessee
pursuant to this Lease, Lessee agrees to become, and during the term of this Lease to
remain, a member in good standing of the Beacon Bay Community Association
("Association").
16
SS2-22
11.2 Compliance with Rules and Regulations. Lessee agrees to abide by the
articles of incorporation, bylaws, covenants, conditions and restrictions and any
amendment thereto ("CC&Rs") attached hereto as Exhibit "D" and incorporated herein
by reference, and all rules and regulations of the Association, and to pay to the
Association, before delinquency, all valid dues, fees, assessments and other charges
properly levied or assessed by the Association. Lessee's failure to comply with the
provisions of Section 11.1 or 11.2 shall constitute a material breach of this Lease.
11.3 Use of Common Area. Lessee shall have the right to use the streets,
beaches, walkways, tennis courts, docks, piers, and common landscaped areas in
Beacon Bay (as depicted on Exhibit "A") and which are leased to the Association by
Lessor in consideration of the maintenance thereof by such Association and Rent to be
paid by individual Lessees under their respective leases.
11.4 Maintenance of Infrastructure. Lessor has no obligation to install,
improve, repair, or maintain streets, curbs, gutters, water lines, sewer lines, drainage
facilities, street lighting or other facilities used by the residents of Beacon Bay
(Infrastructure). Lessor reserves the right to maintain streets, curbs, gutters, water
lines, sewer lines', drainage facilities, street lighting, telephone and electricity lines and
other Infrastructure facilities in Beacon Bay at its initial cost and to assess Lessee for a
pro rata share of such costs, and to collect such costs from Lessee in the form of Rent
over the remaining term of this Lease. Subject to a public health, safety, and welfare
finding, Lessor reserves the right to commence improvements to the streets, curbs,
gutters, water lines, sewer lines', drainage facilities, street lighting, telephone and
electricity lines and other Infrastructure facilities in Beacon Bay. If Lessor constructs
any improvements Lessor has the right to assess Lessee for a pro rata share of such
costs, and to collect such costs from Lessee in the form of Rent over the remaining term
of this Lease.
11.5 Lessor Maintenance of Common Areas. If the Association, after receiving
prior written notice from Lessor, fails or ceases to maintain community facilities, Lessor
may, at its option and without obligation, assume the obligations of the Association to
maintain, repair, install or improve community facilities. In such event, Lessee shall pay
a pro rata share of Lessor's reasonable expenses in maintaining and operating the
community facilities, including a reasonable management fee or the fee charged by a
management agent. Lessee's pro rata share shall be determined by dividing Lessor's
costs by the number of residential lots within Beacon Bay (currently seventy-two (72)
lots). Lessee's pro rata share of the annual costs incurred by Lessor shall be paid within
thirty (30) days after written notice of the amount due, and any failure to pay shall
constitute a material breach of this Lease. The costs of maintaining and operating
community facilities shall be determined annually and solely from the financial records
of Lessor.
12. INSURANCE
12.1 General Conditions. All insurance required to be carried pursuant to this
Lease shall be obtained from reputable carriers licensed to conduct business in the
17
SS2-23
State of California. Each policy required to be carried pursuant to this Lease shall name
Lessee and Lessor as additional named insureds, and shall provide that the policy may
not be surrendered, cancelled or terminated, or coverage reduced, without less than
twenty (20) days prior written notice to Lessor.
12.2 Fire Insurance. Lessee shall, during the term of this Lease, insure all
structures and improvements on the Property against loss or damage by fire or other
risk for residential structures. The insurance shall provide coverage to one hundred
percent (100%) of the full insurable replacement value of all improvements on the
Property, with the loss payable to Lessee and Lessor unless this Lease is terminated by
Lessor for default of Lessee in which case the proceeds of insurance shall be paid to
Lessor.
12.3 Liability Insurance. Lessee shall, at Lessee's sole cost and expense,
procure and maintain during the term of this Lease, a broad form comprehensive
coverage policy of public liability insurance which insures Lessee and Lessor against
any loss or liability caused by, or in any way related to, the condition, for Lessee's use
and occupation, of the Property in amounts not less than:
(a) $1,000,000 per occurrence for injury to or death of, one (1) person;
(b) $1,000,000 for damage to or destruction of property.
These dollar amounts may be adjusted by Lessor with no less than ninety (90)
days prior written notice to Lessee.
12.4 Primary Insurance Coverage. Lessee's insurance coverage shall be
primary insurance and/or primary source of recovery as respects to City, its elected or
appointed officers, agents, officials, employees and volunteers as respects to all claims,
losses, or liability arising directly or indirectly from the Lessee's use and occupation of
Property. Any insurance or self-insurance maintained by City, its officers, officials,
employees and volunteers shall be excess of the Lessee's insurance and shall not
contribute with it.
13. DEFAULT
13.1 Events of Default. The occurrence of any one (1) or more of the following
events shall constitute a material default and breach of this Lease by Lessee:
(a) The maintenance of the Property in violation of any applicable
provisions of the City's Municipal Code and Zoning Code, State Law, Federal Law,
and/or the Association's CC&Rs;
(b) The failure by Lessee to make any payment of Rent when due if the
failure continues for three (3) days after written notice has been given to Lessee. In the
event that Lessor serves Lessee with a Notice to Pay Rent or Quit pursuant to
in
SS2-24
applicable unlawful detainer statutes, such Notice to Pay Rent or Quit shall also
constitute the notice required by this paragraph;
(c) The failure by Lessee to perform any of the provisions of this Lease
and any Exhibits attached hereto to be performed by Lessee, if the failure to perform
continues for a period of thirty (30) days after written notice thereof has been given to
Lessee. If the nature of Lessee's default is such that more than thirty (30) days are
reasonably required for its cure, then Lessee shall not be in default if Lessee
commences the cure within said thirty (30) day period and thereafter diligently
prosecutes the cure to completion; or
(d) The making by Lessee of any general assignment, or general
arrangement for the benefit of creditors; the filing by or against Lessee of a petition to
have Lessee adjudged a bankrupt or a petition for reorganization or arrangement of any
law relating to bankruptcy unless the same is dismissed within sixty (60) days; the
appointment of a trustee or receiver to take possession of substantially all of Lessee's
assets located at the Property or of Lessee's interest in the Lease, where possession is
not restored to Lessee within thirty (30) days; or the attachment, execution or other
judicial seizure of substantially all of Lessee's assets located at the Property or of
Lessee's interest in the Lease, where such seizure is not discharged within thirty (30)
days. Notices given under this paragraph shall specify the alleged default and the
applicable Lease provisions, and shall demand that Lessee perform the provisions of
this Lease or pay the rent that is in arrears, as the case may be, within the applicable
period of time. No such notice shall be deemed a forfeiture or a termination of this
Lease unless Lessor so elects in the notice.
13.2 Lessor's Remedies. In the event of any default by Lessee as defined in
this Lease, Lessor may, in addition to any rights or remedies permitted by law, do the
following:
(a) Terminate Lessee's right to possession of the Property by any
lawful means, in which case this Lease shall terminate and Lessee shall immediately
surrender possession of the Property to Lessor. In such event, Lessor shall be entitled
to recover from Lessee all amounts to which Lessor is entitled pursuant to Section
1951.2 of the California Civil Code, or any other provision of law, including, without
limitation, the following:
(i) The worth at the time of award of the amount by which the
unpaid Rent for the balance of the term after the time of award exceeds the amount of
the loss that Lessee proves could be reasonably avoided: and
(ii) Any other amount necessary to compensate Lessor for all
detriment proximately caused by Lessee's failure to perform obligations pursuant to this
Lease or which in the ordinary course of things would be likely to result from the breach,
including, without limitation, the cost of recovering possession, expenses of reletting
(including necessary repair, renovation and alteration, and any other reasonable costs.
19
SS2-25
The "worth at the time of award" of all rental amounts other than that referred to in
clause (i) above shall be computed by allowing interest at the rate of five percent (5%)
per annum from the date amounts accrue to Lessor. The worth at the time of award of
the amount referred to in clause (i) shall be computed by discounting such amount at
one (1) percentage point above the discount rate of the Federal Reserve Bank of San
Francisco at the time of award.
(b) Without terminating or affecting the forfeiture of this Lease or, in the
absence of express written notice of Lessor's election to do so, relieving Lessee of any
obligation pursuant to this Lease, Lessor may, but need not, relet all or a portion of the
Property at any time, or from time -to -time, and on such terms and conditions as Lessor,
at its sole discretion, deems appropriate. Whether or not the Property is relet, Lessee
shall pay all amounts required by this Lease up to the date that Lessor terminates
Lessee's right to possession of the Property. Lessee shall make such payments at the
time specified in the Lease and Lessor need not wait until termination of the Lease to
recover sums due by legal action. If Lessor relets all or a portion of the Property, the
reletting shall not relieve Lessee of any obligation pursuant to this Lease; provided,
however, Lessor shall apply the Rent or other proceeds actually collected by virtue of
the reletting against amounts due from Lessee. Lessor may execute any agreement
reletting all or a portion of the Property and Lessee shall have no right to collect any
proceeds due Lessor by virtue of any reletting. Lessor shall not, by any reentry or
reletting or other act, be deemed to:
Property;
(i) Have accepted any surrender by Lessee of this Lease or the
(ii) Have terminated this Lease; or
(iii) Have relieved Lessee of any obligation pursuant to this
Lease unless Lessor has given Lessee express written notice of Lessor's election to do
so.
(c) Lessor may terminate this Lease by express written notice to
Lessee of its election to do so. The termination shall not relieve Lessee of any
obligation which has accrued prior to the date of termination. In the event of termination,
Lessor shall be entitled to recover the amounts specified in this Lease.
13.3 Default By Lessor. Lessor shall not be in default under this Lease unless
Lessor fails to perform obligations required of Lessor within a reasonable time, but in no
event later than thirty (30) days after written notice by Lessee to Lessor specifying
wherein Lessor has failed to perform such obligation. If the nature of Lessor's obligation
is such that more than thirty (30) days are required for performance, then Lessor shall
not be in default if Lessor commences performance within such thirty (30) day period
and thereafter diligently prosecutes the same to completion. Alternatively, Lessor may
in its sole and absolute discretion decide not to cure a default and instead elect to
terminate this Lease. In the event of termination under this section Lessor shall owe no
compensation to Lessee.
20
SS2-26
(a) No Damages. The parties acknowledge that Lessor would not
have entered into this Lease if it were to be liable in damages under, or with respect to,
this Lease or any of the matters referred to in this Lease. Accordingly, Lessee
covenants on behalf of itself and its successors and assigns, not to sue Lessor (either in
its capacity as lessor in this Lease or in its capacity as the City of Newport Beach) for
damages or monetary relief for any breach of this Lease by Lessor or arising out of or
connected with any dispute, controversy, or issue between Lessor and Lessee
regarding this Lease or any of the matters referred to in this Lease or any future
amendments or enactments thereto, or any land use permits or approvals sought in
connection with the Property, the parties agreeing that declaratory and injunctive relief,
mandate, and specific performance shall be Lessee's sole and exclusive judicial
remedies.
13.4 Stay of Obligations. Neither Party shall be under any obligation to perform
or comply with its obligations pursuant to this Lease after the date of any default by the
other Party.
13.5 Determination of Rental Value. In any action or unlawful detainer
commenced by Lessor, the reasonable rental value of the Property shall be deemed to
be the amount of Rent and/or additional monies due (such as reimbursement for costs
of Infrastructure improvements or the payment of taxes or assessments) for the period
of the unlawful detainer, unless Lessee shall prove to the contrary by competent
evidence.
13.6 Waiver of Rights. The failure or delay of either Party to exercise any right
or remedy shall not be construed as a waiver of such right or remedy or any default by
the other Party. Lessor's acceptance of any Rent shall not be considered a waiver of
any preexisting breach of default by Lessee other than the failure to pay the particular
Rent accepted regardless of Lessor's knowledge of the preexisting breach of default at
the time Rent is accepted.
13.7 Waiver of Right of Redemption. Lessee waives any right of redemption or
relief from forfeiture pursuant to California Code of Civil Procedure Sections 1174 and
1179 and/or pursuant to any existing or future statutory or decisional law in the event
Lessee is evicted or Lessor takes possession of the Property by reason of Lessee's
default.
14. SURRENDER OF POSSESSION UPON EXPIRATION OR TERMINATION
14.1 Surrender of Property. Upon the expiration or termination of this Lease.
Lessee agrees to peaceably deliver possession of, and agrees to vacate without
contest, legal or otherwise, the Property. Lessor, at its sole discretion, may record a
document evidencing the expiration or termination of the leasehold interest. Lessee
waives any right to receive relocation assistance or similar form of payment from
Lessor.
21
SS2-27
14.2 Removal of Improvements. Upon the expiration of the term of this Lease,
and on condition that Lessee is not then in default of any of the provisions of this Lease,
Lessee shall have the right to remove from the Property all buildings and improvements
built or installed on the Property. Removal of any building or improvement shall be at
the sole cost and expense of Lessee and removal must be complete no later than ninety
(90) days after expiration of the term of this Lease. Lessee shall fill all excavations and
remove all foundations, debris and other parts of the buildings or improvements
remaining after removal and surrender possession of the Property to Lessor in a clean
and orderly condition. In the event any of the buildings and improvements are not
removed within the time provided in this paragraph they shall become the property of
Lessor without the payment of any consideration to Lessee.
15. NO ATTORNEYS' FEES
Should either Party be required to employ counsel to enforce the terms, conditions and
covenants of this Lease, the prevailing Party shall not be entitled to attorneys' fees.
16. REMEDIES CUMULATIVE
The rights, powers, elections and remedies of the Lessor or Lessee contained in this
Lease shall be construed as cumulative and no one (1) of them shall be considered
exclusive of the other or exclusive of any rights or remedies allowed by law, and the
exercise of one (1) or more rights, powers, elections or remedies shall not impair or be
deemed a waiver of Lessor's or Lessee's rights to exercise any other.
17. NO WAIVER
No delay or omission of either Party to exercise any right or power arising from any
omission, neglect or default of the other Party shall impair any such right or power or
shall be construed as a waiver of any such omission, neglect or default on the part of
the other Party or any acquiescence therein. No waiver of any breach of any of the
terms, covenants, agreements, restrictions or conditions of this Lease shall be
construed as a waiver of any succeeding breach of the same or of any of the terms,
covenants, agreements, restrictions or conditions of this Lease.
18. COMPLIANCE WITH LAWS
Lessee covenants and agrees to comply with all rules, regulations, statutes, ordinances
and laws of the State of California. County of Orange, City of Newport Beach, or any
other governmental body or agency having lawful jurisdiction over the Property.
19. NOTICES
Any notice or notices provided for by this Lease or by law, to be given or served by
Lessee, may be given or served by mail, registered or certified, with postage prepaid,
on the City of Newport Beach, addressed to the City Manager and City Clerk, 3300
Newport Boulevard, P.O. Box 1768. Newport Beach. California 92659-1768, or at such
22
SS2-28
other address as may be hereafter furnished to Lessee in writing. If notice is intended to
be served by Lessor on Lessee, it may be served either:
(a) By delivering a copy to the Lessee personally; or
(b) By depositing the notice in the United States Mail, registered or
certified, with postage prepaid, to the Property or business address furnished by
Lessee; or
(c) If the Lessee is absent from the Property by leaving a copy with
some person of suitable age and discretion who may be occupying the Property; or
(d) If no one can be found, then by affixing a copy of the notice in a
conspicuous place on the Property and also sending a copy through the mail addressed
to the Lessee at the Property. Such service upon Lessor or Lessee shall be deemed
complete upon the earlier of (i) actual delivery, or (ii) the expiration of seventy-two (72)
hours from and after the deposit in the United States mail of such notice, demand or
communication.
20. SEVERABILITY
If any term or provision of this Lease shall, to any extent be invalid or unenforceable, the
remainder of this Lease shall not be affected thereby, and each term and provision of
this Lease shall remain valid and enforceable to the fullest extent permitted by law.
21. MISCELLANEOUS
21.1 Representations. Lessee agrees that no representations as to the
Property have been made by Lessor or by any person or agent acting for Lessor.
Lessor and Lessee agrees and acknowledges that this document contains the entire
agreement of the Parties, that there are no verbal agreements, representations,
warranties or other understandings affecting this Lease, and Lessor and Lessee, as a
material part of the consideration of this Lease, waives all claims against the other for
recision, damages, or otherwise by reason of any alleged covenant, agreement or
understanding not contained in this Lease.
21.2 Inurement. Each and all of the covenants, conditions and agreements
herein contained shall, in accordance with the context, inure to the benefit of Lessor and
Lessee and apply to and bind Lessor and Lessee, as the case may be, their respective
heirs, legatees, devisees, executors and administrators, successors, assigns, licensees,
permittees, or any person who may come into possession or occupancy of the Property
or any part thereof in any manner whatsoever.
21.3 Joint Several Liability. If Lessee consists of more than one (1) person, the
covenants, obligations and liabilities of Lessee pursuant to this Lease shall be the joint
and several covenants, obligations and liabilities of such persons.
23
SS2-29
21.4 Captions. The section and paragraph captions used in this Lease are for
the convenience of the Parties and shall not be considered in the construction or
interpretation of any provision.
21.5 Gender. In this Lease, the masculine gender includes the feminine and
neuter and the singular number includes the plural whenever the context so requires.
21.6 Governing Law and Venue. This Lease, and all matters relating to this
Lease, shall be governed by the laws of the State of California in force at the time any
need for interpretation of this Lease or any decision or holding concerning this Lease
arises. Venue for any legal action between the parties shall be in Orange County,
California or, if appropriate, the nearest federal district court having jurisdiction over the
Property.
21.7 Time of Essence. Time is expressly declared to be of the essence in this
Lease.
21.8 Memorandum of Lease. Pursuant to California Government Code Section
37393 the Parties shall execute, acknowledge and Lessor may record at any time
following the date hereof, a memorandum of this Lease, in the same form as that
attached hereto as Exhibit "E" and incorporated herein by reference.
[SIGNATURES ON NEXT PAGE]
24
SS2-30
IN WITNESS WHEREOF, the Parties have caused this Lease to be executed on
the dates written below.
APPROVED AS TO FORM:
OFFICE OF THE CITY ATTORNEY
Date:
Bv:
Aaron Harp
City Attorney
ATTEST:
Date:
Bv:
Leilani I. Brown
City Clerk
Attachments: Exhibit "A"
Exhibit "B"
Exhibit "C
Exhibit "D"
Exhibit "E"
CITY OF NEWPORT BEACH,
A California municipal corporation
Date:
Bv:
Grace K. Leung
City Manager
LESSEE Date:
in
Date:
go
Depiction of Beacon Bay
Legal Description of Property
Option Fee Percentages
CC&Rs
Memorandum of Lease
[END OF SIGNATURES]
25
SS2-31
EXHIBIT "A"
DEPICTION OF BEACON BAY
See Attached
26
SS2-32
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12/17/2010 Beacon Bay_LeaseAma Detail
SS2-33
EXHIBIT "B"
LEGAL DESCRIPTION OF THE PROPERTY
That certain real property located in the City of Newport Beach, County of
Orange, California, described as follows:
SS2-34
EXHIBIT "C"
OPTION FEE PERCENTAGES
LENGTH OF EXTENSION
% OF FAIR MARKET VALUE OF
(YEARS)
PROPERTY PER
YEAR OF EXTENSION
1 - 5
0.10%
6-10
0.15%
11-50
0.25%
SS2-35
EXHIBIT "D"
CC&Rs
See Attached
SS2-36
RECORDING REQUESTED BY AND
WHEN RECORDED RETURN TO:
City Clerk
City of Newport Beach
3300 Newport Boulevard
P. O. Box 1768
Newport Beach, CA 92658-8915
D-2246
Recorded in Official Records, Orange County
Tom Daly, Clerk -Recorder
!III. II IIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIII IIII 1111111 NO FEE
*$ R 0 0 0 5 0 5 6 0 8 9$
201200046439010:26 am 08114112
210 403 A17 36
0.00 0.00 0.00 0.00 105.00 0.00 0.00 0.00
THIS SPACE FOR RECORDER'S USE ONLY.
Exempt Recording Request per Government Code 27383
AMENDED AND RESTATED
DECLARATION FOR
BEACON BAY COMMUNITY ASSOCIATION,
A PLANNED DEVELOPMENT
SS2-37
TABLE OF CONTENTS
Page
ARTICLE I DEFMTIONS............................................................................................................2
Section 1.01
Organization of the Association...................................................................7
"Architectural Committee" ............... . ..........................................................2
Section3.02
Section1.02
"Articles".....................................................................................................2
Transfer........................................................................................................8
Section 1.03
Section 3.04
"Assessments.".............................................................................................2
Section 1,04
Voting Rights...............................................................................................8
"Association"...............................................................................................3
Section 3.06
Section1.05
"Board"...................................................................
................................3
Section1.06
"Bylaws"......................................................................................................3
Section1.07
"City"..........................................................................................................3
Section1.08
"Common Area".........................................................................................3
Section 1.09
"Common Expenses.....................................................................................3
Section 1.10
"Covered Property........................................................................................4
Section1.11
"Declarant"..................................................................................................4
Section 1.12
"Declaration"...............................................................................................4
Section 1.13
"Development"............................................................................................4
Sectionl
.14
"Exhibit"......................................................................................................4
Section 1.15
"Governing Instruments".............................................................................4
Section1.16
"Lessee".......................................................................................................4
Section1.17
"Manager"....................................................................................................4
Section1.18
"Member"....................................................................................................4
Section1.19
"Mortgage"..................................................................................................4
Section1.20
"Mortgagee".................................................................................................4
Section1.21
"Mortgagor".................................................................................................5
Section1.22
"Person".......................................................................................................5
Section1.23
"Residence"..................................................................................................5
Section 1.24
"Residential Lot".........................................................................................5
Section 1.25
"Rules and Regulations"..............................................................................5
Section1.26
"Setback".....................................................................................................5
Section 1.27
"Subdivision Map".......................................................................................5
ARTICLE II THE PROPERTY.......................................................................................................5
Section 2.01 Property Subject to Declaration ................... ................................................ 5
Section 2.02 Use and Enjoyment of Common Area.........................................................5
Section 2.03 Maintenance by Members............................................................................7
Section 2.04 Prohibition Against Severance of Elements of Residence ...........................7
ARTICLE III THE ASSOCIATION...............................................................................................7
Section 3.01
Organization of the Association...................................................................7
Section3.02
Membership.................................................................................................8
Section3.03
Transfer........................................................................................................8
Section 3.04
Classes of Membership ................ . .. .............................................................8
Section 3.05
Voting Rights...............................................................................................8
Section 3.06
Approval of Members..................................................................................9
Section 3.07
Membership Meetings.................................................................................9
311112 10120,4
#114293 v1 1
SS2-38
Section 3.08
General Powers and Authority.....................................................................9
Section 3.09
Duties of the Association...........................................................................10
Section 3.10
Board of Directors......................................................................................13
Section 3.11
Inspection of Books and Records..............................................................13
Section 3.12
Resolution of Disputes ......................... .. .....
13
ARTICLE IV ASSESSMENTS AND COLLECTION PROCEDURES......................................14
Section4.01
Covenant to Pay.........................................................................................14
Section 4.02
Purpose of Assessments.............................................................................14
Section 4.03
Assessment Period.....................................................................................14
Section 4.04
Regular Assessments.................................................................................14
Section 4.05
Special Assessments..................................................................................14
Section 4.06
Limitations on Assessments.......................................................................14
Section 4.07
Late Charges..............................................................................................15
Section 4.08
Enforcement of Assessments and Late Charges........................................16
Section 4.09
Statement Regarding Assessments............................................................17
Section4.10
Reserves.....................................................................................................17
ARTICLE V USE RESTRICTIONS AND COVENANTS..........................................................17
Section 5.01
General Restrictions on Use.......................................................................17
Section 5.02
Damage Liability.......................................................................................18
Section 5.03
Equitable Servitudes..................................................................................18
ARTICLE VI ARCHITECTURAL AND DESIGN CONTROL..................................................19
Section 6.01
Architectural and Design Approval...........................................................19
Section 6.02
Architectural Committee............................................................................19
Section 6.03
Procedural Rules and Fees.........................................................................19
Section 6.04
The Board of Directors..............................................................................19
Section 6.05
No Power to Modify Setback Requirements.............................................19
Section 6.06
Nonliability for Approval of Plans............................................................19
ARTICLE VII INSURANCE........................................................................................................20
Section 7.01
Fire and Casualty Insurance.......................................................................20
Section 7.02
General Liability and Individual Liability Insurance.................................20
Section 7.03
Other Association Insurance......................................................................20
Section 7.04
Trustee for Policies....................................................................................20
Section 7.05
Individual Insurance...................................................................................20
Section 7.06
Insurance Premiums...................................................................................21
Section 7.07
Additional Provisions.................................................................................21
ARTICLE VIII DAMAGE OR DESTRUCTION.........................................................................21
Section 8.01
Duty to Restore and Replace......................................................................21
Section 8.02
Proceeds Justifying Automatic Restoration and Repair .............................21
Section 8.03
Approval by Members of Special Assessment for Certain
Restorations and Repairs............................................................................21
Section 8.04
Ordering Reconstruction or Repair ...................
Section 8.05
Election Not to Rebuild.............................................................................22
Section 8.06
Minor Restoration and Repair Work..........................................................22
311112 10120.4
4114293 v1 11
SS2-39
ARTICLE 1X EMINENT DOMAIN.............................................................................................23
Section 9.01 Sale to Condemning Authority..................................................................23
Section 9.02 Distribution of Sales Proceeds...................................................................23
Section 9.03 Taking and Condemnation Awards...........................................................23
ARTICLE X RIGHTS OF MORTGAGEES.................................................................................23
Section10.01 Warranty....................................................................................................23
Section 10.02 Subordination.............................................................................................23
Section 10.03 Notice of Default........................................................................................24
Section 10.04 Unpaid Assessments..................................................................................24
Section 10.05 Mortgagee Approval of Material Amendments.........................................24
Section 10.06 Mortgagee Approval of Other Actions......................................................24
Section10.07 Liens......................................................................................................25
Section10.08 Priority.......................................................................................................25
Section 10.09 Reserve Fund.............................................................................................25
Section 10.10 Management...............................................................................................25
Section 10.11 Right to Inspect Books and Records..........................................................25
Section 10.12 Right to Furnish Mortgage Information.....................................................25
ARTICLEXI AMENDMENTS....................................................................................................25
Section 11.01 Amendments by Members.........................................................................25
Section 11.02 Amendments Pursuant to Court Order.......................................................26
ARTICLE XII GENERAL PROVISIONS....................................................................................26
Section12.01
Term........................................................................................................26
Section 12.02
Enforcement....................I..........................................................................26
Section 12.03
Cumulative Remedies................................................................................27
Section 12.04
Nonwaiver of Remedies
.............................................................................27
Section 12.05
Attorneys' Fees..........................................................................................27
Section12.06
Severability................................................................................................27
Section12.07
Binding.......................................................................................................27
Section1.2.08
Interpretation..............................................................................................27
Section 12.09
Effect of Declaration..................................................................................27
Section 12.10
Limitation of Liability................................................................................27
Section 12.11
Nonliability of Officials
.............................................................................27
Section 12.12
Fair Housing..............................................................................................27
Section12.13
Subleases....................................................................................................28
Section12.14
Notices.......................................................................................................28
Section 12.1.5
Numbers and Headings.......
.......................................................................28
EXHIBITS
Exhibit A Legal Description
Exhibit B Common Area Legal Description
3!1112 10120.4
#114293 v 1 117
SS2-40
AMENDED AND RESTATED
DECLARATION FOR
BEACON BAY COMMUNITY ASSOCIATION,
A PLANNED DEVELOPMENT
THIS DECLARATION is made as of February 28, 2012, by the City of Newport Beach
("Declarant"), a chartered municipal corporation, having been approved and adopted by Beacon
Bay Community Association, a California non-profit mutual benefit corporation.
RECITALS
A. This Declaration amends and restates the Declaration of Covenants, Conditions
and Restrictions imposed upon the Covered Property, as hereinafter defined, on or about
September 24, 1979 and has been approved by the Members of Beacon Bay Community
Association, a California non-profit corporation (the "Association"), in accordance with the
provisions of that Declaration,
B. The City of Newport Beach, referred to herein as Declarant, by virtue of a 1978
legislative grant found in Chapter 74 of the Statutes of 1978 (the "Beacon Bay Bill"), holds the
right, title and interest to certain tidelands and uplands commonly known as Beacon Bay, more
particularly described in Exhibit "A" attached to and made part of this Declaration.
C. Beacon Bay has been divided into individual residential lots, commonly known as
1 through and including 69 Beacon Bay and 101, 107 and 115 Harbor Island Drive, Newport
Beach (the "Residential Lots"). Within Beacon Bay are certain streets, walkways, beaches,
common landscaped areas and tennis courts, identified as Lots A through J and Lot 62 (the
"Common Area"). Both the Residential Lots and the Common Area are shown on Exhibit "B."
attached to and made part of this Declaration.
D. Declarant has leased the Residential Lots to the respective members of the
Association and the Common Area to the Association until July 1, 2044. The leasehold interests
in the Residential Lots and in the Common Area are together referred to herein as the Covered
Property.
E. This Declaration is imposed by Declarant, with the approval of the Association,
upon the Covered Property, a planned development subject to the provisions of the Davis -
Stirling Common Interest Development Act contained in Division 11, pt. 4, Title 6 of the
California Civil Code.
F. In furtherance of this intent, Declarant hereby declares that all of the Covered
Property shall be held, conveyed, hypothecated, encumbered, leased, rented, used, occupied, and
improved subject to the declarations, limitations, covenants, conditions, restrictions, reservations,
rights, and easements set forth in this Declaration, as this Declaration may be amended from time
to time, all of which are declared and agreed to be in furtherance of a general plan established for
the purpose of enhancing and perfecting the value, desirability, and attractiveness of the Covered
Property. All covenants and restrictions set forth in this Declaration shall constitute covenants
running with the land and enforceable equitable servitudes upon the Covered Property, and shall
be binding on and for the benefit of all of the Covered Property and all parties having or
311112 10120,4
4114293 v1
SS2-41
acquiring any right, title, or interest in all or any part of the Covered Property, including the
heirs, executors, administrators, and assigns of these parties and all subsequent Lessees of all or
any part of any Residential Lot within the Development.
G. It is desirable for the efficient management of the Covered Property and the
preservation of the value, desirability and attractiveness of the Covered Property to continue to
delegate and assign the powers of managing the Covered Property, maintaining and
administering the Common Area and administering and enforcing these covenants, conditions
and restrictions and collecting and disbursing funds pursuant to the assessment and charges
hereinafter created and referred to and to perform such other acts as shall generally benefit the
Covered Property to the Beacon Bay Community Association, a California nonprofit
corporation.
H. The Association and the respective owners of the Residential Lots have held title
to their lcaschold interests in the Covered Property, and shall continue to hold title to their
leasehold interests in the Covered Property subject to the protective covenants, conditions and
restrictions hereafter set forth.
NOTICE OF AIRPORT IN VICINITY
This property is presently located in the vicinity of an airport, within what is known as an
airport influence area. For that reason, the property may be subject to some of the annoyances or
inconveniences associated with proximity to airport operations (for example, noise, vibration, or
odors). Individual sensitivities to those annoyances can vary from person to person. You may
wish to consider what airport annoyances, if any, are associated with the property before you
complete your purchase and determine whether they are acceptable to you.
ARTICLE I
DEFINITIONS
Section 1.01 "Architectural Committee" means.the committee or committees provided
for in the Article entitled "Architectural Control".
Section 1.02 "Articles" means the Articles of Incorporation of Beacon Bay Community
Association and any amendments to the Articles that are filed in the Office of the Secretary of
State of the State of California.
Section 1.03 "Assessments." The following meanings shall be given to the
Assessments hereinafter defined:
"Regular Assessment" means the amount which is to be paid by each Member of
the Association for Common Expenses.
"Special Assessment" means a charge against a particular Member and his
Residential Lot, directly attributable to the Member, to reimburse the Association for costs
incurred in bringing the Member and his Residential Lot into compliance with the provisions of
this Declaration, the Articles, Bylaws or Association Rules, or any other charge designated as a
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Special Assessment, together with attorneys' fees and other charges payable, plus interest
thereon as provided for in this Declaration,
Section 1.04 "Association" means Beacon Bay Community Association, a California
nonprofit mutual benefit corporation.
Section 1.05 "Board" means the Board of Directors of the Association.
Section 1.06 "Bylaws" means the Bylaws of the Association and any amendments to
the Bylaws that are or shall be adopted by the Board and approved by the Members.
Section 1.07 "City" means the City of Newport Beach, a municipal corporation of the
State of California.
Section 1.08 "Common Area" means those portions of the Development leased by the
Association for the common use and enjoyment of the Members. This Common Area includes all
streets, beaches, walkways, tennis courts, docks, piers, storage areas and common landscaped
areas within the Covered Property and, includes without limitation, Lots A through J, inclusive,
as shown on the Subdivision Map.
Section 1.09 "Common Expenses" means the actual and estimated costs of:
(a) maintenance, management, operation, repair and replacement of the
Common Area, and all other areas on the Covered Property which are maintained by the
Association;
(b) maintenance by the Association of areas within the public right-of-way of
public streets in the vicinity of the Covered Property as provided in this Declaration or pursuant
to agreements with the City;
(c) costs of management and administration of the Association, including, but
not limited to compensation paid by the Association to managers, accountants, attomeys and
employees;
(d) the costs of utilities, gardening and other services which generally benefit
and enhance the value and desirability of the Residential Lot;
(e) the costs of fire, casualty, liability, workmen's compensation and other
insurance covering the Common Area;
(f) the costs of any other insurance obtained by the Association;
(g) reasonable reserves deemed appropriate by the Board;
(h) the costs of bonding of the members of the Board, and any professional
managing agent or any other person handling the funds of the Association;
(i) taxes paid by the Association;
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0) amounts paid by the Association for discharge of any lien or encumbrance
levied against the Common Area or portions thereof;
(k) costs incurred by the Architectural Committee or other committee
established by the Board; and
(1) other expenses incurred by the Association for any reason whatsoever in
connection with the Common Area, or the costs of any other item or items designated by this
Declaration, the Articles, Bylaws or Association Rules, or in furtherance of the purposes of the
Association or in discharge of any duties or powers of the Association.
Section 1.10 "Covered Property" means the leasehold interests in the Residential Lots
and in the Common Area, as such terms are defined in the Recitals.
Section 1.11 "Declarant" means the City of Newport Beach, the fee Lessor of the
Covered Property, its successors and assigns.
Section 1,12 "Declaration" means this Declaration and any amendments thereto.
Section l .1 a "Development" means the Beacon Bay subdivision.
Section 1,14 "Exhibit" means those documents so designated herein and attached
hereto and each of such Exhibits is by this reference incorporated in this Declaration.
Section 1.1 5 "Governing Instruments" means this Declaration, the Articles and Bylaws
of the Association, and any Rules and Regulations of the Association_
Section 1. t G "Lessee" means the holder or holders of record of the leasehold interest in
a Residential Lot created by and arising out of a lease with Declarant. "Lessee" shall not include
any persons or entities who hold an interest in a Residential Lot merely as security for
performance of an obligation.
Section 1.17 "Manager" means any person or entity appointed by the Board to manage
the Development.
Sectioji 1.18 "Member" means every person or entity entitled to membership in the
Association as provided in this Declaration.
Section 1.19 "Mortgage" means a mortgage or deed of trust encumbering a Residential
Lot within the Development. "First Mortgage" means a mortgage that has priority over all other
mortgages encumbering the same Residential Lot within the Development.
Section 1.20 "Mortgagee" means a Person to whom a Mortgage is made and includes
the beneficiary of a deed of trust and any guarantor or insurer of a mortgage. "Institutional
Mortgagee" means a mortgagee that is a financial intermediary or depository, such as a bank,
savings and loan, or mortgage company, that is chartered under federal or state law and that
lends money on the security of real property or invests in such loans, or any insurance company
or governmental agency or instrumentality, including the Federal National Mortgage Association
(FNMA), the Federal Home Loan Mortgage Corporation (FHLMC), and the Government
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National Mortgage Association (GNMA). "First Mortgagee" means a Mortgagee that has priority
over all other mortgages or holders of mortgages encumbering the same Residential Lot or other
portion of the Development. The term "Beneficiary" shall be synonymous with the term
"Mortgagee."
Section 1.21 "Mortgagor" means a Person who mortgages his, her, or its Residential
Lot to another (i.e., the maker of a mortgage), and shall include the trustor of a deed of trust. The
term "Trustor" shall be synonymous with the term "Mortgagor."
Section 1.22 "Person" means a natural individual, a corporation, or any other entity
with the legal right to hold title to real property.
Section 1.23 "Residence" means the residential dwelling unit Including garages,
structures and other improvements on a Residential Lot.
Section 1.24 "Residential Lot" means a numbered lot shown on the Subdivision Map
not including any Common Area, but including the residential dwelling unit together with
garages, structures and other improvements on the same lot or parcel. Beacon Bay has been
divided into individual residential lots, commonly known as 1 through and including 69 Beacon
Bay and 101, 107 and 115 Harbor Island Drive, Newport Beach (the "Residential Lots").
Section 1.25 "Rules and Regulations" means any Rules and Regulations for Beacon
Bay Community Association regulating the use of the Common Area and adopted by the
Association pursuant to Section 3.08(b) of this Declaration.
Section 1.26 "Setback" means those internal distances from the property line of each
Residential Lot as shown on Exhibit II.
Section 1.27 "Subdivision Map" means the Record of Survey Map of Beacon Bay
Subdivision recorded in Book 9, Pages 42 and 43, Records of Survey, on file in the Office of the
County Recorder, Orange County, California.
ARTICLE II
THE PROPERTY
Section 2.01 Property Subject to Declaration. All of the Covered Property shall be
subject to this Declaration.
Section 2.02 Use and Enjoyment of Common Area. The following provisions govern
the use and enjoyment of the Common Area:
(a) The Common Area shall be used solely and exclusively for vehicular
ingress and egress and parking, boat storage and launching, pedestrian walkway purposes,
recreational uses for Beacon Bay residents, and the property designated as Lot "62" shall be used
exclusively for tennis court and park purposes and for construction and maintenance of an office
and meeting facilities for Lessee in connection with the maintenance and operation of the
homeowners' association in Beacon Bay. The property designated as beach property hereunder
shall be used exclusively for beach purposes.
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(b) Subject to the provisions of this Declaration and the provisions of the
Common Area Lease between the Declarant and the Association (the "Common Area Lease"),
there is an easement for ingress, egress, and support through the Common Area appurtenant to
each Residential Lot. These easements shall grass with title to the Residential Lot.
(c) The Members' easements over, and rights of use and enjoyment of, the
Common Area shall be subject to the restrictions set forth in the Common Area Lease and in the
Governing Instruments, including the following;
(1) The right of the Association to adopt and enforce Rules and
Regulations for the use of the Common Area.
(2) The right of the Association to reasonably limit the number of
guests and tenants using the Common Area while allowing for open public access to the
tidelands around Beacon Bay.
(3) The right of the Association to assign or otherwise control the use
of any unassigned parking spaces within the Common Area; provided, however, the Association
shall position any signs that limit parking and beach access to Members and their guests in a
manner that does not discourage visitor and public use of the tidelands around Beacon Bay
(4) The right of the Association to suspend the right of any Member,
and the Persons deriving rights from any Member, to use and enjoy the Common Area for any
period during which the Member is delinquent in the payment of any assessment.
(5) The right of the Association to cause the construction of additional
improvements in the Common Area, or to cause the alteration or removal of existing
improvements in the Common Area,
(6) The right of the Association to join with the Declarant in the grant
or conveyance of easements, licenses, or rights-of-way in, on, or over the Common Area.
(7) The rights of Declarant as described in this Declaration and in the
Common Area Lease.
(S) The right of the Association to reasonably restrict access to
maintenance facilities or areas, landscaped areas, and similar areas of the Development.
(9) The right of the Board to approve any proposed alteration or
modification to the Common Area or any Residence.
(d) The Association may join with the Declarant in granting to third parties
easements in, on, and over the Common Area for the purpose of constructing, installing, or
maintaining necessary utilities and services, and each Member expressly consents to these
easements. However, no such easement can be granted if it would interfere with Member's use,
occupancy, or enjoyment of his or her Residence.
(e) A Member who has sold his or her Residence to a contract purchaser or
who has leased the Residence shall be entitled to delegate his or her rights to use and enjoy the
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Common Area to any contract purchaser or subtenant who resides in the Member's Residence,
subject to reasonable regulation by the Board. If the Member makes such a delegation of rights,
the Member and the Member's family, guests, employees, and invitees shall not be entitled to
use and enjoy the Common Area for so long as the delegation remains effective.
(f) Each Member shall be liable to the Association for any damage to the
Common Area or to Association -owned property, to the extent that the damage is not covered by
insurance, if the damage is sustained because of the negligence, willful misconduct, or
unauthorized or improper installment or maintenance of any improvement by the Member or the
Member's family, guests, sub -tenants, contract purchasers or invitees. In the case of joint
ownership of a Residence, the liability of the co-owners shall be joint and several, unless the co-
owners and the Association have agreed in writing to an alternative allocation of liability.
(g) Nothing in this Declaration shall limit Declarar>t's right to use any
properties held in trust by Declarant (including tidelands) for the purposes of establishing,
maintaining, and operating mitigation bank locations for Eelgrass (zoostera marina) or projects
that are intended to enhance the water quality or ecosystem of Newport Bay without infringing
on or limiting Beacon Bay residents' ability to operate and maintain legal and permitted
residential piers.
(h) The Association may not encumber the Common Area except to finance
improvements thereon.
Section 2.03 Maintenance by Members. Except as the Association shall be obligated to
maintain and repair as provided in this Declaration, every Member shall:
(a) maintain all portions of the exterior of his Residence, including without
limitation, the walls, fences and roof of such Residence in good condition and repair; and
(b) install and thereafter maintain in attractive condition yard landscaping of
his Residential Lot in accordance with the provisions of this Article.
Section 2.04 Prohibition Against Severance of Elements of Residence. Any
conveyance, judicial sale, or other voluntary or involuntary transfer of the Member's entire estate
shall also include the Member's Membership interest in the Association, as provided in Section
3.02 of this Declaration. Any transfer that attempts to sever those component interests shall be
void.
ARTICLE III
THE ASSOCIATION
Section 3.01 Organization of the Association. The Association is incorporated under
the name of Beacon Bay Community Association, as a nonprofit corporation organized under the
California Nonprofit Mutual Benefit Corporation Law. The Association is charged with the
duties and invested with the powers prescribed by law and set forth in this Declaration, the
Articles of Incorporation, the Bylaws and the Common Area Lease,
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Section 3.02 Membershit2. Every Lessee shall be a Member but there shall be only one
Membership and one Voting Member per Residence. The term and provisions set forth in this
Declaration, which are binding upon all Members are not exclusive, as Members shall, in
addition, be subject to the terms and provisions of the Articles, Bylaws and Association Rules to
the extent the provisions thereof are not in conflict with this Declaration. Membership shall be
appurtenant to and may not be separated from the interest of such Member in any Residential
Lot. Ownership of a leasehold interest in a Residential Lot shall be the sole qualification for
membership; provided, however, a Member's voting rights may be regulated or suspended as
provided in this Declaration, the Bylaws or the Association Rules.
Section 3.03 Transfer. The Membership held by any Member shall not be transferred,
pledged or alienated in any way, except that such Membership shall automatically be transferred
to the transferee of the interest required for Membership. Any attempt to make a prohibited
transfer is void and will not be reflected upon the books and records of the Association. The
Association shall have the right to record the transfer upon the books of the Association without
any further action or consent by the transferring Member.
Section 3.04 Classes of Membership. The Association shall have one (1) class of
voting membership.
Section 3.05 Voting Rights. All voting rights of the Members shall be subject to the
following restrictions, limitations, and requirements:
(a) Except as provided in this Article, on each matter submitted to a vote of
the Members, one vote may be cast for each Residential Lot owned. The Member entitled to cast
the vote with respect to a Residential Lot is referred to herein as the Voting Member.
(b) Fractional votes shall not be allowed. When there is more than one record
Lessee of a Residential Lot ("co -Lessees), all of the co -Lessees shall be Members, but only one
of them shall be entitled to cast the single vote attributable to the Residential Lot. Co -Lessees
should designate in writing one of their number to vote. If no such designation is made or if it is
revoked, the co -Lessees shall decide among themselves, by majority vote, how the vote
associated with that Residential Lot is to be cast and which of them is the Voting Member as to
that vote. Unless the Board receives a written objection in advance from a co -Lessee, it shall be
conclusively presumed that the voting co -Lessee is acting with the consent of his or her co -
Lessees and is the Voting Member of that Residential Lot. No vote shall be cast for a Residential
Lot on a particular matter if a majority of the co -Lessees present in person or by proxy cannot
agree on a vote.
(c) Except as provided in Section 3.05 of the Bylaws governing the removal
of directors, any provision of this Declaration, the Articles, or the Bylaws that requires the
approval of a specified percentage of the voting power of the Association shall require the vote
or written consent of the Voting Members representing the specified percentage of the total
voting power of the Association. `
(d) The Board shall fix, in advance, a record date or dates for the purpose of
determining the Members entitled to notice of and to vote at any meeting of Members. The
record date for notice of a meeting shall not be more than 90 or less than 10 days before the date
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of the meeting. The record date for voting shall not be more than 60 days before the date of the
meeting or before the date on which the first written ballot is mailed or solicited, The Board may
also fix, in advance, a record date for the purpose of determining the Members entitled to
exercise any rights in connection with any other action. Any such date shall not be more than 60
days prior to the action.
(e) Every Member entitled to vote at any election of the Directors in which
more than two Directors are to be elected may cumulate the Member's votes and give one
candidate a number of votes equal to the number of Directors to be elected multiplied by the
number of votes to which the Member is entitled, or distribute the Member's votes on the same
principle among as many candidates as the Member thinks fit. No Member shall be entitled to
cumulate votes for a candidate or candidates unless more than two Directors are to be elected.
(f) All voting rights shall be subject to the restrictions and limitations
provided herein and in the Articles, Bylaws and Association Rules.
Section 3.06 Approval of Members. Unless elsewhere otherwise specifically provided
in this Declaration or the Bylaws, any provision of this Declaration or the Bylaws which requires
the vote or written assent of the voting power of the Association shall be deemed satisfied by the
following:
(a) The vote in person or by proxy of the specified percentage of the Voting
Members present at a meeting duly called and noticed pursuant to the provisions of the Bylaws
dealing with annual or special meetings of the Members at which a quorum is present as
determined in accordance with Section 2.08 of the Bylaws.
(b) Written consents signed by the specified percentage of Voting Members as
provided in the Bylaws.
Section 3.07 Membership Meetings. Article II of the Bylaws governing meetings of the
Members is hereby incorporated by reference.
Section 3.08 General Powers and Authority. The Association shall have all the powers
of a nonprofit mutual benefit corporation organized under the California Nonprofit Mutual
Benefit Corporation Law, subject to any limitations set forth in this Declaration or in the Articles
and Bylaws of the Association. It may perform all acts that may be necessary for or incidental to
the performance of the obligations and duties imposed upon it by this Declaration or the other
Governing Instruments. Its powers shall include, but are not limited to, the following:
(a) The Association shall have the power to establish, fix, levy, collect, and
enforce, and shall enforce, the payment of assessments against the Members in accordance with
the procedures set out in Article IV of this Declaration.
(b) The Association shall have the power to adopt reasonable Rules and
Regulations governing the use of the Common Area and its facilities, and of any other
Association property. These Rules and Regulations may include, but are not limited to:
reasonable restrictions on use by the Members and their family, guests, employees, tenants, and
invitees; rules of conduct; and the setting of reasonable fees for the use of recreational facilities.
A copy of the current Rules and Regulations, if any, shall be given to each Member and shall be
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posted at conspicuous places in the Common Area. If any provision of the Rules and Regulations
conflicts with any provision of this Declaration, the Articles, or the Bylaws, the Declaration,
Articles, or Bylaws shall control to the extent of the inconsistency.
(c) The Association shall have the right to institute, defend, settle, or
intervene in litigation, arbitration, mediation, or administrative proceedings in its own name as
the real party in interest and without joining with it the Members, in matters pertaining to the
following;
and Regulations.
(1) Enforcement of this Declaration, the Articles, Bylaws, and Rules
(2) Damage to the Common Area.
(d) In addition to the general power of enforcement described above, the
Association may discipline its Members for violation of any of the provisions of the Governing
Instruments or Rules and Regulations by suspending the violator's voting rights and privileges
for use of the Common Area, or by imposing monetary penalties, subject to the following
Iimitations:
(1) The accused Member shall be given notice and an opportunity to
be heard with regard to the alleged violation in accordance with the provisions of Corporations
Code Section 7341 and Civil Code Section 1363(b).
(2) Any suspension of a Member's association privileges shall not
exceed thirty (30) days for each violation.
(3) If the Association imposes a monetary penalty, the Board shall
distribute to each Member, by personal delivery or first-class mail, a schedule of the monetary
penalties that may be assessed for those violations.
(4) Except as provided in Article IV of this Declaration, relating to
foreclosure for failure to pay assessments, or as a result of the judgment of a court or a decision
arising out of arbitration, the Association shall in no way abridge the right of any Member to the
full use and enjoyment of his or her Residence.
(e) The Association, acting through the Board, shall have the power to
delegate its authority, duties, and responsibilities to its officers, employees, committees, or
agents, including a professional management agent. The term of any agreement with a manager
for the furnishing of maintenance, repair, and related services shall not exceed one year,
renewable by agreement of the parties for successive one-year periods. Such an agreement shall
be terminable by either party (1) for cause on 30 days' written notice, and (2) without cause or
the payment of a termination fee on 90 days' written notice.
Section 3.09 Duties of the Association. In addition to the duties delegated to the
Association or its agents and employees elsewhere in these Governing Instruments, the
Association shall be responsible for the following.
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(a) The Association, acting through the Board, shall operate, maintain, repair,
and replace the Common Area, its improvements including all landscaping within the Common
Area, or contract for the performance of that work, subject to the provisions of Article VIII of
this Declaration relating to destruction of improvements, Article IX of this Declaration
pertaining to eminent domain, and Section 2.02(f) of this Declaration relating to damage caused
by Members. The foregoing areas and improvements shall be kept in a clean, sanitary, and
attractive condition. The Association shall also have the exclusive right and duty to acquire and
maintain any furnishings and equipment for the Common Area that it determines are necessary
and proper. As a general rule, maintenance costs shall be included in the regular assessments.
(b) The Association shall use the maintenance fund described in Section 4.02
of this Declaration to, among other things, acquire and pay for the following:
(1) Water, sewer, trash, electrical, gas, and other necessary utility
service for the Common Area;
(2) The insurance policies described in Article VII of this Declaration;
(3) The services of any personnel that the Board determines are
necessary or proper for the operation of the Common Area; and
(4) Legal and accounting services necessary or proper in the operation
of the Common Area or the enforcement of this Declaration.
(c) The Association shall prepare a pro forma operating budget for each fiscal
year, and shall distribute a copy of the budget to each Member not less than 45 and not more than
60 days before the beginning of the fiscal year. As an alternative to the foregoing distribution of
the budget, the Association may elect to do all of the following in the manner required by statute:
distribute a summary of the budget to each Member, make the budget available for inspection at
a designated location, and provide copies of the budget to Members on request and at the
expense of the Association. The budget shall contain at least the following:
(1) The estimated revenue and expenses on an accrual basis;
(2) A summary (printed in bold type) of the Association's reserves that
is based on the most recent review or study conducted pursuant to Civil Code Section 1365.5.
This summary shall include the following: (i) the current estimated replacement cost, estimated
remaining life, and estimated useful life of each major component that the Association is
obligated to maintain (hereafter referred to as the "major components"); (ii) the current estimate,
as of the end of the fiscal year for which the study is prepared, of the amount of cash reserves
necessary to repair, replace, restore, or maintain the major components; (iii) the current amount,
as of the end of the fiscal year for which the study is prepared, of accumulated cash reserves
actually set aside to repair, replace, restore, or maintain the major components; and (iv) the
percentage that the amount described in (iii), above, is of the amount determined for purposes of
(ii), above (that is, the percentage obtained by dividing the amount described in (iii), above, by
the amount described in (ii), above).
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(3) A statement as to whether the Board has determined or anticipates
that the levy of one or more special assessments will be required to repair, replace, or restore any
major component or to provide adequate reserves for such work.
(4) A general statement addressing the procedures used for the
calculation and establishment of reserves to defray the future repair, replacement, or additions to
the major components.
(d) Within 120 days after the close of each fiscal year, the Association shall
prepare and distribute to the Members an annual report consisting of the following:
(1) A balance sheet as of the end of the fiscal year.
(2) An operating (income) statement for the fiscal year.
(3) A statement of changes in financial position for the fiscal year.
(4) For any fiscal year in which the gross income to the Association
exceeds $75,000, a copy of the review of the annual report prepared in accordance with generally
accepted accounting principles by a licensee of the California State Board of Accountancy. If
this report is not prepared by an independent accountant, it shall be accompanied by the
certificate of an authorized officer of the Association that the statement was prepared without
independent audit or review from the books and records of the Association.
(e) Within 60 days before the beginning of each fiscal year, the Association
shall prepare and distribute to the Members a statement describing the Association's policies and
practices in enforcing lien rights or other Iegal remedies for default in payment of assessments
against Members.
(f) Each year, the Association must provide the Owners with a summary of
the provisions of Civil Code Sections 1369.510 through 1369.590. These statutes require that
alternative dispute resolution be pursued before a civil action may be filed in connection with
certain disputes related to enforcement of the governing documents, the Davis -Stirling Common
Interest Development Act (Civ. Code § 1350 et seq. ), or the Nonprofit Mutual Benefit
Corporation Law (Corp. Code § 7110 et seq.). The required summary must include a specific
reference to Civil Code Sections 1369.510 through 1369.590, and the statutory language set forth
in Civil Code Section 1369.590(a). This summary must be provided either (1) at the time the pro
forma operating budget described in Section 3.09(c) of this Declaration is distributed, or (2) in
the manner specified in Corporations Code Section 5016.
(g) The Association shall provide any Member with the following documents
within 10 days of the mailing or delivery of a written request therefor:
(1) A copy of the Governing Instruments.
(2) A copy of the most recent financial statement distributed pursuant
to Section 3.09(4) of this Declaration.
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(3) A written statement from an authorized representative of the
Association specifying (i) the amount of any assessments levied on the Member's Residence that
are unpaid on the date of the statement; and (ii) the amount of late charges, interest, and costs of
collection that, as of the date of the statement, are or may be made a lien on the Member's
Residential Lot pursuant to Section 4.08 of this Declaration. The Association may charge the
Member a reasonable fee to cover its cost to prepare and reproduce those requested items.
(h) The Association shall pay all real and personal property taxes and
assessments levied against it, its personal property and the Common Area.
Section 3.10 Board of Directors. The affairs of the Association shall be managed and
its rights, duties and obligations performed by an elected Board of Directors, as provided in
Article III of the Bylaws, which is hereby incorporated by reference.
Section 3.11 Inspection of Books and Records. Article XI of the Bylaws, governing the
duty of the Association to maintain certain books and records and the rights of Members and
Directors to obtain and inspect those books and records, is hereby incorporated by reference.
Section 3.12 Resolution of Disputes. As required by Civil Code Section 1363.820(a),
the Association shall offer a fair, reasonable, and expeditious procedure for resolving any dispute
between the Association and a member involving their rights, duties, or liabilities under the
Davis -Stirling Common Interest Development Act (Civil Code Section 1350 et seq.), the
Nonprofit Mutual Benefit Corporation Law (Corporations Cade Section 7110 et seq.), or under
the Association's governing documents. This dispute resolution procedure is supplementary to
the alternative dispute resolution procedure prescribed by Civil Code Section 1369, 510 et seq. as
a prerequisite to commencing civil action. The dispute resolution procedure shall consist of the
following:
(a) Either party may initiate the procedure by making a written request to the
other party to meet and confer in an effort to resolve the dispute. If the request is by the
Association, the member may refuse to participate. If the request is by a member, however, the
Association may not refuse to participate.
(b) Within 5 days of the written request, the Board of Directors shall
designate a member of the Board to meet and confer with the other party.
(c) Within 10 days of the Board member's designation, the parties shall meet
at a mutually convenient time and place, explain their positions to each other, and confer in good
faith in an effort to resolve the dispute.
(d) If the parties reach agreement on a resolution of the dispute, that
resolution shall be memorialized in writing and signed by the parties with the Board designee
signing on behalf of the Association.
(e) An agreement reached by the parties is binding on them and may be
judicially enforced provided the agreement is consistent with the authority granted by the Board
of Directors to its designee, and further provided the agreement is not in conflict with law or the
Association's governing documents.
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(f) A member of the Association may not be charged a fee to participate in
the dispute resolution procedure.
ARTICLE IV
ASSESSMENTS AND COLLECTION PROCEDURES
Section 4.01 Covenant to Pay. Each Member is deemed to covenant and agree to pay
to the Association the regular and special assessments levied pursuant to the provisions of this
Declaration. A regular or special assessment and any late charges, reasonable costs of collection,
and interest, as assessed in accordance with the provisions of this Article, shall be a debt of the
Member at the time the assessment or other sums are levied. The Member may not waive or
otherwise escape liability for these assessments by nonuse of the Common Area or abandonment
of the Member's Residence.
Section 4.02 Ppoose of Assessments. The assessments levied by the Association shall
be used exclusively to defray Common Expenses and to discharge any other obligations of the
Association under this Declaration. Subject to Section 4. 10, all assessment payments shall be put
into a maintenance fund to be used for the foregoing purposes.
Section 4.03 Assessment Period. The fiscal year for the Association shall commence
June 1 and end May 31, unless the Board decides otherwise. The regular assessment period shall
commence on June 1 and terminate on May 31 of each year.
Section 4.04 Regular Assessments. Within 60 days prior to the beginning of each fiscal
year of the Association, the Board shall estimate the net charges to be paid during that year,
including a reasonable provision for contingencies and replacements, with adjustments made for
any expected income and surplus from the prior year's fund. The estimated cash requirement
shall be assessed and allocated in an equal amount for each Residential Lot. Each Member is
obligated to pay assessments to the Board in equal monthly installments on or before the first day
of each month unless the Board adopts an alternative method for payment.
Section 4.05 'Special Assessments. If the Board determines that the amount to be
collected from regular assessments will be inadequate to defray the common expenses for the
year due to the cost of any construction, unexpected repairs or replacements of capital
improvements upon the Common Area, or any other reason, it shall make a special assessment
for the additional amount needed. Special assessments shall be levied and collected in the same
manner as regular assessments, except the method of payment shall be as determined by the
Board.
Section 4.06 Limitations on Assessments. The Board shall comply with the following
requirements governing the imposition and amounts of assessments:
(a) For any fiscal year, the Board may impose a regular assessment per
Residential Lot that is as much as 20 percent greater than the regular assessment for the
preceding fiscal year, provided (1) the Board has distributed the pro forma operating budget
described in Section 3.09(c) for the current fiscal year or (2) the increase is approved by Voting
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Members constituting a majority of the votes at a meeting or in an election of the Association
conducted in accordance with Corporations Code Sections 7510-7527 and 7613 .
(b) The Board may impose, for any fiscal year, a regular assessment per
Residential Lot that is more than 20 percent greater than the regular assessment for the preceding
fiscal year, or may levy special assessments that in the aggregate exceed 5 percent of the
budgeted gross expenses of the Association for that fiscal year, provided the increase or levy is
approved by Voting Members constituting a majority of the votes of the Association and casting
a majority of the votes at a meeting or election of the Association conducted in accordance with
Corporations Code Sections 7510-7527 and 7613 .
(c) The Board may, without complying with the foregoing requirements,
make an assessment increase that is necessary for an emergency situation. An emergency
situation is an extraordinary expense that is:
(1) Required by a court order.
(2) Necessary to repair or maintain the Common Area or any part of it
for which the Association is responsible when a threat to personal safety in the Development is
discovered.
(3) Necessary to repair or maintain the Common Area or any part of it
for which the Association is responsible that could not have been reasonably foreseen by the
Board in preparing and distributing the pro forma operating budget pursuant to Section 3.09(c).
Before the Board may impose or collect an assessment in the type of emergency situation
described in (3) above, it shall pass a resolution containing written findings as to the necessity of
the extraordinary expense and why the expense was not or could not have been reasonably
foreseen in the budgeting process, and shall distribute the resolution to the Members with the
notice of assessment.
(d) The Board shall notify the Members in writing of any increase in the
amount of a regular or special assessment. The Board shall provide this notice by first-class mail
not less than 30 or more than 60 days prior to the due date of the increased assessment.
Section 4.07 Late Charges. Late charges may be levied by the Association against a
Member for the delinquent payment of regular or special assessments. An assessment is
delinquent 15 days after its due date. If an assessment is delinquent the Association may recover
all of the following from the Member:
(a) Reasonable costs incurred in collecting the delinquent assessment,
including reasonable attorneys' fees.
(b) A late charge not exceeding ten (10) percent of the delinquent assessment
or $10, whichever is greater.
(c) Interest on the foregoing sums, at an annual percentage rate of ten (10)
percent, commencing 30 days after the assessment becomes due.
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No late charge may be imposed more than once for the delinquency of the same payment.
However, the imposition of a late charge on any delinquent payment shall not eliminate or
supersede charges imposed on prior delinquent payments.
Section 4.08 Enforcement of Assessments and Late Charges. At least 30 days before
the Association can place a lien on a Residence for a past due debt for a regular or special
assessment, the Association must notify the Member by certified mail of the following:
(a) A general description of the Association's collection and lien enforcement
procedures.
(b) The method of calculation of the amount due.
(c) A statement that the Member has the right to inspect the Association
records.
(d) A statement informing the Member that the Member's Residence may be
subject to foreclosure and sale without court action.
(e) An itemized statement of the charges owed by the Member, including
items on the statement that 'indicate the amount of any delinquent assessments, the fees and
reasonable costs of collection, reasonable attorney's fees, and any late charges and interest.
(f) A statement that the Member will not be liable to pay the charges, interest,
and costs of collection, if it is determined the assessment was paid on time.
(g) The Member's right to request a meeting with the Board if the Member
disputes the debt.
A Member may dispute the debt by submitting to the Board a written explanation within 15 days
of the mailing of the Association's notice. The Board must respond to a Member's timely
explanation within 15 days of the mailing of the Member's explanation.
A Member also may submit a written request to meet with the Board to discuss a payment plan
for the debt. The request must be mailed within 15 days of the mailing of the Board's notice. The
Board must then meet with the Member in executive session within 45 days of the mailing of the
Member's request. If there is no regularly scheduled Board meeting within that time period, the
Board may designate a committee of one or more members to meet with the Member.
Any partial payments made toward the debt will first be applied to the assessments owed, and
only after the principal owed is paid in full will the payments be applied to the fees and costs of
collection, attorneys' fees, late charges, or interest. When a Member makes a payment, the
Member may request a receipt and the Association shall provide it. The receipt shall indicate the
date of payment and the person who received it. The Association shall provide a mailing address
for overnight payment of assessments.
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A debt for a delinquent regular or special assessment and any late charges, reasonable fees and
costs of collection, reasonable attorneys' fees, and interest shall become a lien on the Residence
when a notice of delinquent assessment is duly recorded and mailed as provided in Section
1367.1 of the California Civil Code.
Except as provided below regarding debts arising from delinquent assessments when the debt
arose on or after January 1, 2006, and the delinquent amount is less than $1,800, any such lien
may be enforced in any manner permitted by law, including judicial foreclosure or nonjudicial
foreclosure. Any nonjudicial foreclosure shall be conducted by the trustee named in the notice of
delinquent assessment or by a trustee substituted pursuant to Section 2934a of the California
Civil Code, in accordance with the provisions of Sections 2924, 2924b, and 2924c of the
California Civil Code.
If the sums specified in the notice of delinquent assessment are paid before the completion of any
judicial or nonjudicial foreclosure, the Association shall record a notice of satisfaction and
release of the lien. On receipt of a written request by the Member, the Association shall also
record a notice of rescission of any declaration of default and demand for sale.
In accordance with Section 1367.4 of the California Civil Code, a lien securing a debt arising
from a delinquent regular or special assessment when the debt arose on or after January 1, 2006,
and the delinquent amount is less than $1,800, excluding accelerated assessments, late charges,
fees and costs of collection, attorney's fees, and interest, shall not be enforced by judicial or
nonjudicial foreclosure unless and until either (1) the debt equals or exceeds $1,800, excluding
accelerated assessments, late charges, fees and costs of collection, attorney's fees, and interest, or
(2) the debt secured by the lien is more than 12 months delinquent.
Section 4.09 Statement Regarding Assessments. The Association shall provide any
Member, upon written request, with a statement specifying (1) the amounts of the Association's
current regular and special assessments and fees, and (2) the amounts of any delinquent
assessments and related late charges, interest, and costs levied against the Member's Residential
Lot, as provided in Section 4.08 of this Declaration.
Section 4.10 Reserves. All amounts collected as reserves shall be deposited by the
Association in a separate bank account to be held in trust for the purposes for which they are
collected and are to be segregated from and not commingled with any other funds of the
Association.
ARTICLE V
USE RESTRICTIONS AND COVENANTS
Section 5.01 General Restrictions on Use. In exercising the right to occupy or use a
Residence, Residential Lot or the Common Area and its improvements, the Member and the
Member's family, guests, employees, tenants, and invitees shall not do any of the following:
(a) Attempt to further subdivide a Residential Lot without obtaining the prior
approval of the Association and the Declarant.
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(b) Occupy or use a Residential Lot, or permit all or any part of a Residential
Lot to be occupied or used, for any purpose other than as a private residence. Nothing in this
Declaration shall prevent a Member from leasing or renting out his or her Residence, provided
that it is not for transient or hotel purposes, is for a period of at least 60 days, and is subject to the
Governing Instruments.
(c) Permit anything to obstruct the Common Area or store anything in the
Common Area without the prior consent of the Board, except as otherwise provided in the
Governing Instruments.
(d) Perform any act or keep anything on or in any Residential Lot or in the
Common Area that will increase the rate of insurance on the Common Area without the Board's
prior written consent. Further, no Member shall permit anything to be done or kept in his or her
Residential Lot or in the Common Area that would result in the cancellation of insurance on any
Residence or Exclusive Use Common Area or on any part of the Common Area or that would
violate any law.
(e) Display any sign to the public view on or from any Residential Lot or the
Common Area without the prior written consent of the Board, except a sign advertising the
property for sale, lease, or exchange, or advertising directions to the property, as provided in
Section 712 of the California Civil Code and display any sign that discourages visitor and public
use of the tidelands around Beacon Bay
(f) Raise, breed, or keep animals, livestock, or poultry of any kind on a
Residence or in the Common Area, except dogs, cats, or other household pets, which may be
kept on Residences, subject to the Rules and Regulations.
(g) Engage in any noxious or offensive activity in any part of the
Development.
(h) Alter or modify the exterior of any Residence without first obtaining the
written consent of the Architectural Control Committee.
(i) Alter, construct, or remove anything on or from the Common Area, except
upon the written consent of the Board.
Section 5.02 _Damage Liability. Each Member shall be liable to the Association for all
damage to the Common Area or other Association property that is sustained by reason of the
negligence or willful misconduct of that Member or his or her family, guests, employees, tenants,
and invitees to the extent that the damage is not covered by the casualty insurance obtained and
maintained by the Association pursuant to Section 7.01 of this Declaration.
Section 5.03 Equitable Servitudes. The covenants and restrictions set forth in this
Declaration shall be enforceable equitable servitudes and shall inure to the benefit of and bind all
Members. These servitudes may be enforced in accordance with the provisions of Section 12.02
of Article XII.
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ARTICLE VI
ARCHITECTURAL AND DESIGN CONTROL
Section 6.01 Architectural and Design Approval. No building, addition, wall, fence, or
alteration shall be begun, constructed, maintained, or permitted to remain on any Residential Lot,
or on the Common Area, until complete plans and specifications of the proposed work have been
submitted to the Architectural Committee and approved by the Board as to harmony of external
design and location in relation to surrounding structures and topography. The Architectural
Committee shall review the plans and specifications to determine whether they are compatible
with the aforementioned standards and, if they are not, shall require that changes be made before
recommending approval to the Board.
Section 6.02 Architectural Committee. The Architectural Committee shall consist of
not less than three nor more than five members, as fixed by the Board from time to time.
(a) The Board shall have the right to appoint all members of the Committee.
(b) Members appointed to the Committee shall be Members of the
Association.
(c) The term of the appointees shall be one year. Notwithstanding the
foregoing, all members of the Committee shall serve at the will of the Board, and may be
removed by the Board at any time with or without cause.
(d) The Committee shall meet as often as it deems necessary to properly carry
out the obligations imposed on it, unless otherwise directed by the Board.
Section 6.03 Procedural Rules and Fees. The Board may establish reasonable
procedural rules and assess a fee in connection with review of plans and specifications including,
without limitation, the number of sets of plans to be submitted. In the event the Board fails to
approve or disapprove such plans and specifications within thirty (30) days after the same have
been properly submitted in accordance with any rules regarding such submission adopted by the
Board, such plans and specifications will be deemed approved.
Section 6.04 The Board of Directors. After the Architectural Committee has completed
its review of plans and specifications submitted under this Article, the Architectural Committee
shall submit such plans and specifications, together with its recommendation as to approval or
disapproval, to the Board for approval or disapproval by the Board. Thereafter, the Board shall
take any actions it deems necessary, in accordance with the provisions of this Declaration.
Section 6.05 No Power to Modify Setback Re Nothing in this Declaration
or in the Association's Articles, Bylaws or Rules shall be construed or amended to allow the
Board to modify or eliminate the Setback requirements shown on the Beacon Bay Subdivision
Survey Map, and any attempt to do so shall have no effect.
Section 6.06 Nonliability for Approval of Plans. Plans and specifications shall be
approved by the Board as to style, exterior sign, appearance and Iocation, and are not approved
for engineering design or for compliance with zoning and building ordinances, and by approving
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such plans and specifications neither the Architectural Committee, the members thereof, the
Association, the Members, the Board nor Declarant assumes liability or responsibility therefor,
or for any defect in any structure constructed from such plans and specifications.
ARTICLE VII
INSURANCE
Section 7.01 Fire and Casualty Insurance. The Association shall obtain and maintain a
policy or policies of fire and casualty insurance with an extended coverage endorsement for the
full insurable replacement value of the improvements in the Common Area. The amount of
coverage shall be determined by the Board. This insurance shall be maintained for the benefit of
the Association, the Members, and their Mortgagees, as their interests may appear as named
insured, subject, however, to any loss payment requirements set forth in this Declaration.
Section 7.02 General Liability and Individual Liability Insurance. The Association
shall obtain and maintain one or more policies of insurance that must include coverage for (1)
general liability of the Association and (2) individual liability of Officers and Directors of the
Association for negligent acts or omissions in that capacity. Both of the above types of coverage
shall not be less than $1,000,000 covering all claims for death, personal injury, and property
damage arising out of a single occurrence. The limits and coverage shall be reviewed at least
annually by the Board and increased in its discretion.
Section 7.03 Other Association Insurance. The Association shall purchase and
maintain workers' compensation insurance to the extent necessary to comply with any applicable
laws. The Association also shall purchase and maintain fidelity bond coverage that names the
Association as an obligee, for any person or entity handling funds of the Association, whether or
not such persons or entities are compensated for their services. This coverage shall be in an
amount that is at Ieast equal to the estimated maximum of funds, including reserve funds, in the
custody of the Association or the Manager at any given time during the term of each bond.
However, the aggregate amount of these bonds must not be less than 150 percent of each year's
estimated annual operating expenses and reserves. The Association also may purchase and
maintain a blanket policy of flood insurance, and demolition insurance in an amount that is
sufficient to cover any demolition that occurs following the total or partial destruction of the
Development and a decision not to rebuild.
Section 7.04 Trustee for Policies. The Association, acting through its Board, is hereby
appointed and shall be deemed trustee of the interests of all named insureds under all insurance
policies purchased and maintained by the Association. All insurance proceeds under any of those
policies shall be paid to the Board as trustee. The Board shall use the proceeds for any of the
purposes specified in Article VIII of this Declaration. The Board also is authorized to negotiate
loss settlements with the appropriate insurance carriers, to compromise and settle any claim or
enforce any claim by any lawful action, and to execute loss claim forms and release forms in
connection with such settlements.
Section 7.05 Individual Insurance. Each Member shall provide fire and casualty
insurance for the improvements on his or her Residence. A Member may separately insure his or
her personal property, and may obtain and maintain personal liability and property damage
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liability insurance for his or her Residence, provided that the insurance contains a waiver of
subrogation rights by the carrier as to the Association, Declarant, and the institutional First
Mortgagees of the Member's Residential Lot.
Section 7.06 Insurance Premiums. Insurance premiums for any insurance coverage
obtained by the Association shall be included in the regular assessments. That portion of the
regular assessments necessary for the required insurance premiums shall be used solely for the
payment of the premiums when due.
Section 7.07 Additional Provisions. The Association shall file a copy of each of the
above insurance policies with Declarant. Except for workers compensation insurance, all of the
above insurance policies shall include Declarant and its elected officials, officers, agents,
representatives and employees as additional insureds. Except for worker's
compensationinsurance, all policies shall be endorsed to state that coverage shall not be canceled
by the insurer except after thirty (30) days' prior written notice to Declarant. The Assocaition
shall give Declarant prompt and timely notice of claim made or suit instituted againt the
Associaton. The Association shall grant to Declarant, on behalf of the insurer providing general
liability insurance to the Association, a waiver of any right of subrogation which any such
insurer may acquire against Declarant by virtue of the payment of any loss under such insurance.
ARTICLE VIII
DAMAGE OR DESTRUCTION
Section 8.01 Duty to Restore and Replace. If any of the improvements in the Common
Area are destroyed or damaged, the Association shall restore and replace the improvements,
using the proceeds of insurance maintained pursuant to Article VII of this Declaration, subject to
the provisions of this Article.
Section 8.02 Proceeds Justifying Automatic Restoration and Repair, If the proceeds of
any insurance maintained pursuant to Article VII of this Declaration for reconstruction or repair
of the Common Area are equal to at least eighty-five (85) percent of the estimated cost of
restoration and repair, the Board shall use the insurance proceeds for that purpose, shall levy a
special assessment to provide the necessary additional funds, and shall have the improvements
promptly rebuilt, unless the Members by the vote or written consent of not less than seventy-five
(75) percent of the total voting power of the Association object to the restoration or repair work
within sixty (60) days of the damage or destruction.
Section 8.03 Approval by Members of Special Assessment for Certain Restorations and
Repairs. If the proceeds of any insurance maintained pursuant to Article VII of this Declaration
for reconstruction or repair of the Property are less than eighty-five (85) percent of the estimated
cost of restoration and repair, any restoration and repair work must be authorized by the vote or
written consent of Members representing at least seventy-five (75) percent of the total voting
power of the Association. This authorization must be given within ninety (90) days of the
damage or destruction and must authorize the Board to levy a special assessment to provide the
necessary funds over and above the amount of any insurance proceeds available for the work.
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Section 8.04 Ordering Reconstruction or Repair. If reconstruction or repair work is to
take place pursuant to this Article, the Board shall take the following steps:
(a) Prepare the necessary documents, including an executed and
acknowledged certificate stating that damage has occurred, describing it, identifying the
improvement suffering the damage, the name of any insurer against whom claim is made, and
the name of any insurance trustee, stating (if applicable) that the consent described in Section
8.03 has been obtained, and reciting that the certificate is recorded pursuant to this paragraph.
That declaration shall be recorded with the Recorder of Orange County within ninety (90) days
from the date of the damage or destruction.
(b) Should the Association elect to replace rather than repair the improvement
suffering the damage, obtain the approval of Declarant of the architectural plans of the proposed
improvement.
(c) Obtain firm bids (including the obligation to obtain a performance bond)
from two or more responsible contractors to rebuild the Common Area in accordance with its
original plans and specifications and, as soon as possible thereafter, call a special meeting of the
voting Members to consider the bids. If the Board fails to do so within 60 days after the casualty
occurs, any Member may obtain the bids and call and conduct the special meeting in the manner
required by this paragraph. At the meeting, Members representing at least 67 percent of the total
voting power may elect to reject all of the bids and thus not to rebuild, or Members representing
at least 51 percent of the total voting power may elect to reject all bids requiring amounts
exceeding the available insurance proceeds by more than $25,000. Failure to reject all bids shall
authorize the Board to accept the unrejected bid it considers most favorable. Failure to call the
special meeting or to repair the casualty damage within 12 months from the date the damage
occurred shall be deemed for all purposes to be a decision not to rebuild.
(d) If a bid is accepted, let the contract to the successful bidder and distribute
the insurance proceeds to the contractor as required by the contract.
(e) Levy a special assessment to make up any deficiency between the total
insurance proceeds and the contract price for the repair or rebuilding, with the assessment and all
insurance proceeds, whether or not subject to liens of mortgagees, to be used solely for the
rebuilding. This assessment shall be apportioned equally to each Residential Lot. If any Member
fails to pay the special assessment within 15 days after it is levied, the Board shall enforce the
assessment in the manner described in Section 4.08 of this Declaration.
Section 8.05 Election Not to Rebuild. Upon an election not to rebuild, the Board, as
soon as reasonably possible and as agent for the Members, shall execute and record a certificate
stating that the Association shall not rebuild. The net proceeds shall then be distributed to the
owners of the Residential Lots equally.
Section 8.06 Minor Restoration and Repair Work. The Association shall order
restoration or repair work without complying with the other provisions of this Article whenever
the estimated cost of the work does not exceed Twenty-five Thousand Dollars ($25,000). If
insurance proceeds are unavailable or insufficient, the Association shall levy a special
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assessment for the cost of the work. The Assessment shall be levied in the manner described in
Section 4.05 of this Declaration.
ARTICLE IX
EMINENT DOMAIN
Section 9.01 Sale to Condemning _Authority, If a governmental agency proposes to
condemn all or a portion of the Common Area, the Association, with the approval of the
Declarant, may sell all or any portion of its interest in the Common Area to the condemning
authority if seventy-five (75) percent of the voting power of the Associations and sixty (60)
percent of all institutional First Mortgagees approve the sale in advance. Any such sale shall be
made by the Association in the capacity of attorney-in-fact for the Members, acting under an
irrevocable power of attorney which each Member grants to the Association. The sales price
shall be any amount deemed reasonable by the Board.
Section 9.42 Distribution of Sales Proceeds. That portion of proceeds of a sale
conducted pursuant to Section 9.01 which constitutes compensation for the condemnation of all
or any portion of the improvements constructed by the Association on the Common Area and
any and all compensation for the termination or diminution of the Association's interest in the
Common Area Lease shall be distributed among the Members and their respective Mortgagees,
as their interests may appear, and the balance of such proceeds shall be paid to the Declarant.
Section 9.03 Taking and Condemnation Awards. If there is a taking by a governmental
agency of all or any portion of the Common Area, the condemnation award shall be distributed
to among the Declarant, the Members and their respective Mortgagees in accordance with the
court judgment, if any such judgment exists. In all other cases, the proceeds shall be distributed
as set forth in Section 9.02 above,
ARTICLE X
RIGHTS OF MORTGAGEES
Section 10.01 Warranty. The Association hereby warrants that Mortgagees of
Residential Lots in the Development shall be entitled to the rights and guaranties set forth in this
Article. No amendment of this Article shall affect the rights of the holder of any Mortgage
recorded prior to the recordation of the amendment who does not join in the execution of the
amendment.
Section 10.02 Subordination. Notwithstanding any other provision of this Declaration,
liens created under Section 4.08 of this Declaration upon any Residential Lot shall be subject and
subordinate to, and shall not affect the rights of the holder of, the indebtedness secured by any
recorded First Mortgage upon such an interest made in good faith and for value, provided that
any transfer of a Residential Lot as the result of a foreclosure or exercise of a power of sale shall
not relieve the new Member from liability for assessments that become due after the transfer.
Such a transfer shall extinguish the lien of assessments that were due and payable prior to the
transfer of the Residential Lot.
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Section 10.03 Notice of Default. A First Mortgagee, upon request, shall be entitled to
written notification from the Association of any default in the performance by the Mortgagor of
any obligation under the Association's Governing Instruments that is not cured within 60 days.
Section 10.04 Unpaid Assessments. Any First Mortgagee who obtains title to a
Residential Lot pursuant to the remedies provided in the Mortgage or foreclosure of the
Mortgage shall not be liable for the Residential Lot's unpaid assessments that accrue prior to the
acquisition of title to the Residential Lot by the Mortgagee.
Section 10.05 Mortgagee Approval of Material Amendments. Notwithstanding Article
XI of this Declaration, any amendments governing any of the following shall require the prior
written approval of at least 51 percent of the First Mortgagees and at Ieast 67 percent of the total
voting power of the Members:
(a) Rights to use the Common Area;
(b) Members' interests in the Common Area; and
(c) Any provisions expressly benefiting First Mortgagees or insurers or
governmental guarantors of First Mortgages.
Notwithstanding the foregoing, any First Mortgagee who receives a written request from
the Board to approve a proposed amendment or amendments requiring consent under this
Section who does not deliver a negative response to the Board within 30 days of the receipt of
the request shall be deemed to have approved the proposed amendment or amendments.
Section 10.06 Mortgagee Approval of Other Actions. Unless at least 67 percent of the
First Mortgagees (based upon one vote for each First Mortgage owned), or 67 percent of the total
voting power of the Members, have given their prior written approval, the Association shall not
be entitled to:
(a) Change the pro rata interest or obligations of any individual Residential
Lot for either of the following purposes:
(1) Levying assessments or charges, or allocating distributions of
hazard insurance proceeds or condemnation awards; or
(2) Determining the pro rata interest of each Member in the Common
Area and the improvements thereon.
(b) By act or omission, seek to abandon, partition, subdivide, encumber, sell,
or transfer the Common Area (the granting of easements for public utilities or for other public
purposes consistent with the intended use of the Common Area shall not be deemed a transfer
within the meaning of this clause),-
(c)
lause);(c) Use hazard insurance proceeds for losses to the Common Area for other
than the repair, replacement, or reconstruction of that property, except as provided by statute in
case of substantial loss to the Common Area.
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Section 10.07 Liens. All taxes, assessments, and charges that may become liens prior to
the First Mortgage under local law, shall relate only to the individual Residential Lot and not to
the Development as a whole.
Section 10.08 Priority. No provision of the Governing Instruments gives any Member,
or any other party, priority over any rights of the First Mortgagee of the Residential Lot pursuant
to its Mortgage in the case of a distribution to the Member of insurance proceeds or
condemnation awards for losses to, or a taking of, all or a portion of the Common Area.
Section 10.09 Reserve Fund. Association assessments shall be large enough to provide
for an adequate reserve fund for maintenance, repairs, and replacement of those common
elements that must be replaced on a periodic basis. The reserve fund shall be funded by the
regular assessments rather than by special assessments.
Section 10. 10 Management. Any agreement for professional management of the
Development shall not exceed three years and shall provide that either party may terminate the
agreement, with or without cause and without the imposition of a termination fee, on 90 days
written notice.
Section 10.11 Richt to Inspect Books and Records. Institutional First Mortgagees, upon
written request, shall have the right to (1) examine the books and records of the Association
during normal business hours; and (2) require the submission of any financial data furnished to
the Members by the Association.
Section 10.12 Right to Furnish Mormau Information. Each Member hereby authorizes
the First Mortgagee of a First Mortgage on the Member's Residential Lot to furnish information
to the Board concerning the status of the First Mortgage and the loan that it secures.
ARTICLE XI
AMENDMENTS
Section 11.01 Amendments by Members. Subject to the other provisions of this
Declaration, this Declaration may be amended as follows:
(a) Any amendment or modification of the Articles hereof entitled "Covenant
for Maintenance Assessments," "Nonpayment of Assessments," "Architectural Control," and
"Repair and Maintenance," or of this Section shall require the affirmative vote or written
approval of not less than sixty percent (60%) of the of the voting power of the Association.
(b) Any amendment or modification of any Article other than those specified
in subparagraph (a) above shall require the affirmative vote or written approval of a majority of
the voting power of the Association.
(c) An amendment or modification that requires the vote and written assent of
the of the voting power of the Association as hereinabove provided shall be effective when
executed by the President and Secretary of the Association who shall certify that the amendment
or modification has been approved as hereinabove provided, and when recorded in the Official
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Records of the County. The notarized signatures of the Members shall not be required to
effectuate an Amendment of this Declaration.
(d) Notwithstanding the foregoing, any provision of this Declaration, or the
Articles, Bylaws or Association Rules which expressly requires the approval of a specified
percentage of the voting power of the Association for action to be taken under said provision can
be amended only with the affirmative vote or written assent of not less than the same percentage
of the Voting Power of the Association.
Section 11.02 Amendments Pursuant to Court Order. If this Declaration requires a
proposed amendment to be approved by the affirmative vote of a specified percentage
(exceeding 50 percent) of the voting power of the Association, and more than 50 percent but less
than the required supermajority of the voting power of the Association approve the amendment,
the Association or any Member may petition the Superior Court of Orange County, California,
subject to the requirements, limitations, and exceptions set forth in Civil Code Section 1356 , for
an order reducing the percentage of the affirmative votes necessary for the amendment or
approving the amendment. If such an order is issued, the amendment shall be acknowledged by
any person designated by the Association for that purpose or, if no such designation is made, by
the President of the Association, and that person shall have the amendment and the court order
recorded in Orange County, California. Upon recordation, the amended provision or provisions
of this Declaration shall have the same force and effect as if the amendment were adopted in
compliance with every requirement imposed by this Declaration and the other governing
documents. Within a reasonable time after recordation, the Association shall mail a copy of the
amendment and a statement regarding the amendment to each Member.
ARTICLE XII
GENERAL PROVISIONS
Section 12.01 Term. The provisions of this Declaration shall continue in effect for a
term of twenty-five (25) years from the date of execution. Thereafter, it shall be automatically
extended for successive periods of ten (10) years, until the membership of the Association
decides to terminate it.
Section 12.02 Enforcement. The Association, or any Member, shall have the right to
enforce by proceedings at law or in equity, all restrictions, conditions, covenants and
reservations, now or hereafter imposed by the provisions of this Declaration or any amendment
thereto, including the right to prevent the violation of such restrictions, conditions, covenants, or
reservations and the right to recover damages or other dues for such violation. The Association
or any Member shall also have the right to enforce by proceedings at law or in equity the
provisions of the Articles or Bylaws and any amendments thereto. With respect to architectural
control and Association Rules, the Association shall have the exclusive right to the enforcement
thereof unless the Association refuses or is unable to effectuate such enforcement, in which case
any Member who otherwise has standing shall have the right to undertake such enforcement.
With respect to Assessment Liens, the Association shall have the exclusive right to the
enforcement thereof.
311112 10120.4
4114293 v1 26
SS2-66
Section 12.03 Cumulative Remedies. All rights, options and remedies of Declarant, the
Association, or the Members under this Declaration are cumulative, and no one of them shall be
exclusive of any other, and Declarant, the Association, and the Members shall have the right to
pursue any one or all of such rights, options and remedies or any other remedy or relief which
may be provided by law, whether or not stated in this Declaration.
Section 12.04 Nonwaiver of Remedies. Each remedy provided for in this Declaration is
separate, distinct, and nonexclusive. Failure to exercise a particular remedy shall not be
construed as a waiver of the remedy.
Section 12.05 Attorneys' __Fees. In any action to enforce this Declaration, the prevailing
party shall be entitled to recover reasonable attorneys' fees and costs.
Section 12.06 Severabilit . The provisions of this Declaration shall be deemed
independent and severable, and the invalidity or partial invalidity or unenforceability of any one
provision shall not affect the validity or enforceability of any other provision.
Section 12.07 Binding. This Declaration, as well as any amendment to it and any valid
action or directive made pursuant to it, shall be binding on the Declarant and the Members and
their heirs, grantees, tenants, successors, and assigns.
Section 12.08 Interpretation. The provisions of this Declaration shall be liberally
construed and interpreted to effectuate its purpose of creating a uniform plan for the operation of
a planned development. Failure to enforce any provision of this Declaration shall not constitute a
waiver of the right to enforce that provision or any other provision of this Declaration.
Section 12.09 Effect of Declaration. This Declaration is made for the purpose set forth
in the Recitals to this Declaration and Declarant makes no warranties or representations, express
or implied as to the binding effect or enforceability of all or any portion of this Declaration, or as
to the compliance of any of these Provisions with public laws, ordinances and regulations
applicable thereto.
Section 12.10 Limitation of Liability. The liability of any Member for performance of
any of the provisions of this Declaration shall terminate upon sale, transfer, assignment, or other
divestment of the Member's entire interest in his or her Residential Lot with respect to
obligations arising from and after the date of the divestment.
Section 12.11 Nonliability of Officials. To the fullest extent permitted by law, neither
the Board, the Architectural Committee, and other committees of the Association or any member
of such Board or committee shall be liable to any Member or the Association for any damage,
loss or prejudice suffered or claimed on account of any decision, approval or disapproval of
plans or specifications (whether or not defective), course of action, act, omission, error,
negligence or the like made in good faith within which such Board, committees or persons
reasonably believed to be the scope of their duties.
Section 12.12 Fair Housing. Neither Declarant nor any Member shall, either directly or
indirectly, forbid the conveyance, encumbrance, renting, leasing, or occupancy of the Member's
Residence or Residential Lot to any person on the basis of race, color, sex, religion, ancestry, or
national origin.
311!12 10120.4
# 114293 vl 27
SS2-67
Section 12.13 Subleases. Any agreement for the subleasing or rental of a Residence or
Residential Lot (hereinafter in this Section referred to as a "sublease") shall provide that the
terms of such sublease shall be subject in all respects to the provisions of this Declaration, the
Articles, the Bylaws and the Association Rules. Said sublease shall further provide that any
failure by the sublessee thereunder to comply with the terms of the foregoing documents shall be
a default under the sublease. All subleases shall be in writing. Any Member who shall sublease
his Residence or Residential Lot shall be responsible for assuring compliance by such Member's
sublessee with this Declaration, the Articles, the Bylaws and the Association Rules.
Section 12.14 Notices. Any notice to be given hereunder shall be in writing and may be
delivered as follows:
(a) Notice to a Member shall be deemed to have been properly delivered
when delivered to the Member's Residence, or placed in first class United States mail, postage
prepaid, to the most recent address furnished by such Member in writing to the Association for
the purpose of giving notice, or if no such address shall have been furnished, then to the street
address of such Member's Residence. Any notice so deposited in the mail within the City shall
be deemed delivered forty-eight (48) hours after such deposit. in the case of joint owners of a
Residence any such notice may be delivered or sent to any one of the joint owners on behalf of
all joint owners and shall be deemed delivery on all such joint owners.
(b) Notice to the Association shall be deemed to have been properly delivered
when placed in the first class United States mail, postage prepaid, to the address furnished by the
Association or the address of its principal place of business.
(c) The affidavit of an officer or authorized agent of the Association declaring
under penalty of perjury that a notice has been mailed to any Member or Members, or to all
Members, to the address or addresses shown on the records of the Association, shall be deemed
conclusive proof of such mailing, whether or not such notices are actually received.
Section 12.15 Numbers and Headings. As used in this Declaration, the singular shall
include the plural, unless the context requires the contrary. The headings are not a part of this
Declaration, and shall not affect the interpretation of any provision.
Executed on ?(I C1 /12' at Newport Beach, Orange, California.
3/1/12 10120.4
#114293 v1
28
DECLARANT
CITY OF NEWPORT BEACH, a California
chartered municipal c
By:
Nancy G er, Mayor
SS2-68
AcknowIedgment
STATE OF CALIFORNIA )
ss
COUNTY OF ORANGE )
On (U , befor me, L, f 'f Ac CP4 _S , a Notary Public,
personall)appeared , who proved to me on the basis of
satisfactory evidence to be the person(s) whose nameN is/�%g subscribed to the within
instrument, and acknowledged to me that Nshe/tf�ky executed the same in Yl /her/tblijZ
authorized capacity(k), and that by)tWher/*r signature(>)= the instrument the person(s), or
the entity upon behalf of which the person(;kacted, 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.
N6dry Puglic
3/1/12 10120.4
#114293 vl
99
L. HARRIS
Commission #F 1640150
Notary Public • California
KWU Orange County
M Comm. ExiresMar 12, 2019
SS2-69
EXHIBIT A
LEGAL DESCRIPTION
A parcel of land situatbd in the projected Northwest quarter of Section 35, Township 6
South, Range 10 West, S.B.B. & M., Orange County, California, more particularly
described as follows, to -wit:
Beginning at the U.S. Bulkhead Station No. 200, as shown upon a map entitled "Harbor
Trines, Newport Bay Harbor, Callfomia", approved May 2"d, 1936, by the Secretary of
War and on file in the office of the United States District Engineer at Los Angles,
California; running thence Vilest along the U.S. Bulkhead line 147.50 feet to U.S. Station
No. 137; thence North 391 48' West along said Bulkhead line 535.53 feet; thence North
230 57' 30" East 126.34 feet to an angle point in the ordinary high tide of the Pacific
Ocean in Newport Bay, as described in Court Case No. 24026 of the Superior Court of
the State of California, in and for the County of Orange; thence South 39° 48' East
along said ordinary high tide Ane 334.47 feet to the most Westerly comer of that certain
parcel of land conveyed to the City of Newport Beach by the Irvine Company, as
described in deed recorded September 25th, 1929, in Book 305, page 375 of Official
Records of Orange County, California, thence North 230 57' 30" East along the
Northwesterly line of said parcel of land 317.57 feet, thence South 711, 54' East along
the Northerly line of said parcel of land 290.24; them South 850 43' East along the
Northerly line of said parcel of land, said Northerly line being the Southerly line of
Bayside Drive, 606.01 feet; thence South 424,71 feet to a point In the U.S. Gout.
Bulkhead line between U.S. Statlnns Nos. 101 and 200; thence West along said
Bulkhead line 784.25 feet to the point of beginning containing approximately twelve (12)
acres.
3/1/12 10120.4
#114293 v A-1
SS2-70
EXHIBIT B
COMMON AREA LEGAL DESCRIPTION
Lots fit and A through J as shown on that certain record of Survey fled in the Official
Records of the County of Orange, State of Catiforriia, as Instrument Number 5383 on
February 28, 1939 covering a portion of the projected Northwest one-quarter (1/4) of
section 35, Township 8 South, Range 14 West, S.B.B.Ni.
3/1112 10120.4
# 114293 v I
M.
SS2-71
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60 52 5z 33 z
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BEACON DAY LOT It
6 7 8 9"71' 10 ,11.E 12 13 14. N 15 16 17 1'8 . 19 20 21. 22 62 53 E }
uaa,Itt�a u,r
-----------------------------------------------------------
us Ps"r..d Ia—
SS2-72
EXHIBIT "E"
Recording Requested By
and When Recorded Return To:
City of Newport Beach
3300 Newport Beach Blvd.
P.O. Box 1768
Newport Beach, California 92658-8915
Attn: City Clerk
(Exempt From Recording Fees Pursuant to Government Code § 27383)
(SPACE ABOVE THIS LINE FOR RECORDER'S USE)
MEMORANDUM OF LEASE
THIS LEASE is made and entered into between the City of Newport Beach, a
California municipal corporation and charter city ("Lessor") and
a ("Lessee").
Lessor hereby leases to Lessee that real property located in the City of Newport
Beach, County of Orange, California, described in Exhibit 1" attached hereto
("Property"). The term of the Lease is (_) years, commencing and
ending
This Lease is subject to the terms, conditions and provisions of an unrecorded
lease between the parties dated , which is incorporated herein by reference.
Unless extended by a recorded amendment or supplement hereto, this Memorandum of
Lease will automatically terminate as of , 20
APPROVED AS TO FORM:
OFFICE OF THE CITY ATTORNEY
Date:
By:
Aaron Harp
City Attorney
ATTEST:
Date:
By:
Leilani I. Brown
CITY OF NEWPORT BEACH,
A California municipal corporation
Date:
By:
Grace K. Leung
City Manager
LESSEE
Date:
By:
3
SS2-73
City Clerk
Date:
SS2-74
EXHIBIT "1"
LEGAL DESCRIPTION OF THE PROPERTY
That certain real property located in the City of Newport Beach, County of
Orange, California, described as follows:
SS2-75
Attachment B
City Council Policy F-7 — Income Property
SS2-76
F-7
INCOME PROPERTY
The City owns and manages an extensive and valuable assortment of property
including streets, parks, beaches, public buildings and service facilities. The City also
owns and operates a yacht basin, a mobile home park, a luxury residential development
and various other income properties. Most of the income property is tidelands, filled
tidelands or waterfront. Unencumbered fee value of income property is estimated at
upwards of one hundred million dollars, and income typically contributes ten percent
of all City revenues.
As owner/manager of property, the City is the steward of a public trust, and state law
requires the City to maximize its returns on state -managed property or be subject to a
charge of making a gift of public funds. Nevertheless, the City Council recognizes the
importance of this property not only as a revenue generator, but also as a means to
provide otherwise unfeasible uses and facilities to benefit the community.
In managing its property, the City will continually evaluate the potential of all City
owned property to produce revenue. This may include leasing unused land, renting
vacant space, and establishing concessions in recreation areas or other similar
techniques. The City Council will evaluate the appropriateness of establishing new
income properties using sound business principles and after receiving input from
neighbors and users.
The policy of the City Council is that income property be managed in accordance with
the following:
A. Whenever a lease, management contract, concession, sale or similar action
regarding income property is considered by the City, an analysis shall be
conducted to determine the maximum or open market value of the property.
This analysis shall be conducted using appraisals or other techniques to
determine the highest and best use of the property and the highest value of the
property.
B. All negotiations regarding the lease, management contract, concession, sale or
similar action regarding income property shall include review of an appraisal or
analysis of the use being considered for the property conducted by a reputable
and independent professional appraiser, real estate consultant or business
consultant.
C. The City shall seek, whenever practical and financially advantageous, to operate
or manage all property and facilities directly with City staff or contractors.
D. In all negotiations regarding the lease, management contract, concession, sale or
similar action regarding a non-residential income property, the City shall seek
1
SS2-77
F-7
revenue equivalent to the open market value of the highest and best use; and,
whenever possible the City shall conduct an open bid or proposal process to
insure the highest financial return.
E. Whenever less than the open market or appraised value is received or when an
open bid process is not conducted, the City shall make specific findings setting
forth the reasons thereof.
Such findings may include but need not be limited to the following:
1. The City is prevented by tideland grants, Coastal Commission guidelines or
other restrictions from selling the property or converting it to another use.
2. Redevelopment of the property would require excessive time, resources and
costs which would outweigh other financial benefits.
3. Converting the property to another use or changing the manager,
concessionaire or lessee of the property would result in excessive vacancy,
relocation or severance costs, which would outweigh other financial benefits.
4. Converting residential property to another use or opening residential leases
to competitive bid would create recompensable liabilities and other inequities
for long-term residents.
5. The property provides an essential or unique service to the community that
might not otherwise be provided were full market value of the property be
required.
6. The property serves to promote other goals of the City such as affordable
housing, preservation of open space or marine related services.
F. Generally, lengths of leases, management contracts, concessions or similar
agreements will be limited to the minimum necessary to meet market standards
and will contain appropriate reappraisal and inflation protection provisions.
Also, all agreements shall contain provisions to assure complete audits
periodically through their terms.
G. All negotiations regarding the lease, management contract, concession, sale or
similar action regarding income property shall be conducted by the City
Manager or his/her designee under the direction of any appropriate City
committees.
H. To provide an accurate accounting of actual net revenues generated by the City's
income property, all costs and charges directly attributable to the management of
2
SS2-78
F-7
a specific income property shall be debited against the gross revenues collected
on that property in the fiscal year the costs are incurred. Costs and charges
include property repairs and maintenance, property appraisals, and consultant
fees, as authorized by the City Council, City Manager or by this Income Property
Policy.
I. The City Manager or his/her designee is authorized to sign a lease, management
contract, concession or similar agreement or any amendment thereto, on behalf
of the City. Notwithstanding the foregoing, the City Manager or his/her
designee, or a City Council member, may refer any lease, management contract,
concession or similar agreement or any amendment thereto, to the City Council
for its consideration and/or action.
Adopted - July 27,1992
Amended - January 24,1994
Amended - February 27,1995
Amended - February 24,1997
Amended - May 26,1998
Amended - August 11, 2009
Amended - May 14, 2013
Formerly F-24
3
SS2-79
Attachment C
HOA Proposed Changes to Lease Terms
ss2-80
From: Drew Lawler
To: Woodina, Lauren; Jeff Herdman; Jim Helfrich
Subject: Positional Summary for Beacon Bay Lease Correction and Comps
Date: Wednesday, May 02, 2018 10:28:43 AM
Attachments: Beacon Bay Lease Correction Meeting with City Council and City Manaaement.doc
Beacon Bay Lease Comps.xls
Hi Lauren:
Please find attached the positional summary for the Beacon Bay lease correction and lease
comps for our meeting this afternoon at 3pm. I will also bring with me the revenue projection
forecast showing projected revenue with the new lease rate phased in over four years and how
increased revenue from future home sales mitigates a revenue dip from current levels while
also providing for generous increases into the future. Thanks and,
Best regards,
Drew Lawler
240 Newport Center Drive
Suite 205
Newport Beach, CA 92660
drewna-jlawler.com
Phone: 949-631-7660 / Fax: 949-631-7661
SS2-81
Beacon Bay Lease Correction Meeting w/Councilman Jeff Herdman
TYPE OF LEASES
There are currently three types of leases in Beacon Bay as follows:
"1994 Leases" that expire in 2044 with no CPI increase
"1994 Leases" that expire in 2044 with an annual CPI increase
"2012 Leases" on an automatic 50 year roll-over with an annual CPI increase
Each of these above leases are calculated at the rate of 2.5% of the original purchase price of the home divided into 12
monthly lease payments. Each homeowner has their own lease with the city.
PRIMARY REASON WHY THE LEASE RATE NEEDS TO BE RESET
• The current lease rate of 2.5% of the purchase price was initiated 35 years ago back in 1983 and has become
economically obsolete.
So much so, that the City is now charging at least 4x more for Beacon Bay leases than the Irvine Company is
charging for its comparable residential leasehold properties on Linda Isle, Bayshores, Irvine Terrace, Bayside
Drive.
• The Irvine Company owns 106 residential leasehold properties in Newport. As the largest private landowner,
they are the market. It is indefensible for the City to charge 4x more than the Irvine Company.
SECONDARY REASON WHY THE LEASE RATE NEEDS TO BE RESET
The recent change to the airport flight path now takes jets overhead of Beacon Bay. This is a significant
change of circumstance that adversely affects the quality of life in Beacon Bay. Any time a landlord owns
residential property where — for example — a freeway is built adjacent to their property, that landlord will
not be able to charge the same rents. In effect, a "freeway" — only much louder -- has been redirected
overhead Beacon Bay and thus a similar economic reset needs to apply.
PROPOSED RESTRUCTURE
Instead of 2.5% of the purchase price, the rate would be 1% of the purchase price. This new rate would apply as follows:
• 1994 LESSEES: would have the option but not the obligation to roll into a new 50 year lease by:
1. Having their home appraised for current value.
2. Rate is reduced to 1% of the appraised value
3. New rate goes into effect immediately.
4. Conversion fee is waived
5. No CPI increase.
2012 LESSEES
1. Reduces the rate to 1% of their original purchase price. However, this rate is phased in over a four year
period as follows:
• Months 1-12: 2.5% of the first $3 million in purchase price and 1% for remaining value
• Months 13-24: 2.5% of the first $2.5 million in purchase price and 1% for remaining value
• Months 25-36: 2.5% of the first $2 million in purchase price and 1% for remaining value
• Months 37-48: 2.5% of the first $1.5 million in purchase price and 1% for remaining value
• Months 49-61: 2.5% of the first $1 million in purchase price and 1% for remaining value
• Months 62 and beyond: 1% of the purchase price
2. No CPI Increase
NEW BUYERS
1. 1% of the purchase price
2. No CPI increase.
SS2-82
JUSTIFICATION FOR NO CPI INCREASE
Unlike Irvine Company residential leases where lease payments are assumable, Beacon Bay lease
payments are not assumable but instead reset to the selling price. If they were assumable, a CPI index
may be warranted. Because they are not assumable, the lease resets and becomes based on the current
sales price of the house, thereby generating a huge "waterfall" increase in revenue to the city which
negates the need for a CPI index increase and more than satisfies the State's requirement that Newport
Beach obtains a "reasonable return" on Beacon Bay.
Since homeowners are paying the property tax for land owned by the city (in addition to a significant
possessory interest surcharge tax adding upwards of $1 million in appraised value) of which
approximately 17% of both taxes flows through to the city, this results in substantial additional annual
revenue the city collects from Beacon Bay lessees and once again, more than compensates the city for
any annual CPI increase.
SUMMARY AND IMPACT TO THE CITY
This newly proposed rate is still an aggressive posture for the city to take and will continue to put Beacon Bay rates well
ahead of what the Irvine Company is charging.
• SHORTERM: No anticipated revenue dip to city because huge revenue "waterfall" events occur for city's
benefit each time a house sells in Beacon Bay and rents reset to current home value (see projected revenue
chart). If there is any dip it will be minor and short-lived.
• LONGTERM: This new lease rate with no CPI increase provides for generous — and sustainable -- revenue
increases to the city over a 5, 10 and 20 year horizon and beyond, resulting in responsible economic
planning for the City.
• Property prices will be allowed to appreciate more commensurate with market, which benefits city.
SS2-83
BEACON BAY LEASE COMPS VS. IRVINE COMPANY
NOTES:
1. The Irvine Company currently has over
103 residential leases including leases in Bayshores, Linda Isle, Irvine Terrace, etc.
2. Unlike Beacon Bay leases, their leases can be assumed at the same monthly amount by the buyer.
3. Irvine Company Leases can be converted to a purchase at any time. As such, city leases should be less
than Irvine Co
because we do not have an option to purchase.
Proposed Rate at
Address
1201 Sand Key
At 1% across
Close of Escrow
05/03/2017
the board
Sale / Listing Price without land
$1,550,000
Annual Assumable Irvine Co Lease
$3,504
Annual Lease at Beacon Bay 2.5% Rate
$38,750
$15,500
Multiplier City is ahead of Irvine Co
11x
4.5x
Address
336 Otero
Close of Escrow
05/24/2016
Sale / Listing Price without land
$855,000
Annual Assumable Irvine Co Lease
$3,667
Annual Lease at Beacon Bay 2.5% Rate
$21,375
$8,550
Multiplier City is ahead of Irvine Co
6x
2.4x
Address
2685 Bayshore Drive
Close of Escrow
02/01/2014
Sale / Listing Price without land
$2,200,000
Annual Assumable Irvine Co Lease
$13,565
Annual Lease at Beacon Bay 2.5% Rate
$55,000
$22,000
Multiplier City is ahead of Irvine Co
4x
1.6x
Address
409 Bayside Drive
Close of Escrow
03/01/2016
Sale / Listing Price without land
$2,000,000
Annual Assumable Irvine Co Lease
$3,809
Annual Lease at Beacon Bay 2.5% Rate
$50,000
$20,000
Multiplier City is ahead of Irvine Co
13x
5.2x
SS2-84
From: Drew Lawler
To: Juriis, Seimone; Wooding, Lauren; Jim Helfrich; Jeff Herdman; Duffield, Duffy; Muldoon, Kevin
Subject: Beacon Bay Lease Revenue Projections
Date: Wednesday, May 02, 2018 6:11:06 PM
Attachments: Beacon Bay Rent Proiections Cover Page Notes.doc
Beacon Bay Lease Comps.As
Beacon Bay Rent Proiections at 1% with phase in for 2012 lessees.xls
Hi Seimone and Lauren:
Thank you for your time today. We appreciate it. Attached are the spreadsheet projections in
Excel along with a cover page detailing the assumptions and the comps. There are two tabs.
The second tab projects the revenue by year going out 20 years. Please let me know what other
questions you may have.
One point I forgot to make is this: The Irvine Company residential leases can be converted to a
land purchase at any time. As such, the Beacon Bay leases should be LESS than the Irvine
Company leases as we do not have the option to purchase. Yet, even after adjusting the lease
to 1% of the purchase price, Beacon Bay leases will still average something like 3.5X more
than the 100 -plus Irvine Company leases. That said, we can live with the 1% rate but if the
City would like to offer half or three quarters of 1% -- which would put us closer to Irvine
Company rates (and keeping in mind we pay the property tax on land owned by the city plus
the possessory property tax surcharge of which 17% of both taxes flow back to the city) we
would be grateful!
Thanks and,
Best regards,
Drew Lawler
jp logo
I
240 Newport Center Drive
Suite 205
Newport Beach, CA 92660
drew &aj1awler.com
Phone: 949-631-7660 / Fax: 949-631-7661
SS2-85
BEACON BAY REVENUE PROJECTIONS WITH LEASE CORRECTION
OVERVIEW
We have a strategic moment in time to correct the economically obsolete lease rate and reset it to a
sustainable market rate of 1% of the purchase price (or current appraisal). This is accomplished by:
Phasing in the new rate of 1% over a five year period for all 2012 Lessees which will align the city
closer to — but still substantially ahead of -- comparable Irvine Company residential leases.
Using the increased revenue resulting from ongoing home sales to mitigate a revenue dip from
current levels which will also provide for generous and sustainable annual revenue increases to
the City.
ASSUMPTIONS FOR PROJECTIONS
11ease rate for new sales is calculated at 1% of the purchase price
2. All 2012 leases are phased in over a 5 year schedule to 1% of their original purchase price
See Phase in rate table
below.
3. Current ave. sales price of bayfront home at $5.3 million / ave. interior home $2.8 million
4. Under new lease, home prices increase 5% per year
5. No CPI rent increases. As homes turn over the leases reset to market providing
more than ample increases on macro basis. Plus BB residents are paying
the property tax for land owned by the city which also more than compensates for CPI increases.
6. Assumes on average 5 homes per year will be resold and/or convert to new 50 year lease
of which one is a bayfront home and the remaining 4 are on the strada
7. Projected increases begin with lowest lease rates on the books as they will be long time residents
and hence more likely to be among the first to turnover.
PHASE IN RATE FOR 2012 LESSEES
Year 1: 2.5% of the first $3 million in purchase price and 1% of the remainder
Year 2: 2.5% of the first $2.5 million in purchase price and 1% of the remainder
Year 3: 2.5% of the first $2 million in purchase price and 1% thereafter
Year 4: 2.5% of the first $1.5 million in purchase price and 1% thereafter
Year 5: 2.5% of the first $1 million in purchase price and 1% thereafter
Year 6: 1% of the purchase price
SS2-86
BEACON BAY LEASE COMPS VS. IRVINE COMPANY
NOTES:
1. The Irvine Company currently has over
103 residential leases including leases in Bayshores, Linda Isle,
Irvine Terrace, etc.
2. Unlike Beacon Bay leases, their leases can
be assumed at the same monthly amount by the buyer.
3. Irvine Company Leases can be converted
to a purchase at any time. As such, city leases should be less
than Irvine Co
because we do not have an option to purchase.
Proposed Rate at
Address
1201 Sand Key
At 1% across
Close of Escrow
05/03/2017
the board
Sale / Listing Price without land
$1,550,000
Annual Assumable Irvine Co Lease
$3,504
Annual Lease at Beacon Bay 2.5% Rate
$38,750
$15,500
Multiplier City is ahead of Irvine Co
11x
4.5x
Address
336 Otero
Close of Escrow
05/24/2016
Sale / Listing Price without land
$855,000
Annual Assumable Irvine Co Lease
$3,667
Annual Lease at Beacon Bay 2.5% Rate
$21,375
$8,550
Multiplier City is ahead of Irvine Co
6x
2.4x
Address
2685 Bayshore Drive
Close of Escrow
02/01/2014
Sale / Listing Price without land
$2,200,000
Annual Assumable Irvine Co Lease
$13,565
Annual Lease at Beacon Bay 2.5% Rate
$55,000
$22,000
Multiplier City is ahead of Irvine Co
4x
1.6x
Address
409 Bayside Drive
Close of Escrow
03/01/2016
Sale / Listing Price without land
$2,000,000
Annual Assumable Irvine Co Lease
$3,809
Annual Lease at Beacon Bay 2.5% Rate
$50,000
$20,000
13x
5.2x
SS2-87
1994 Lease w/o annual CPI adjustments expiring in 2044
1994 Leases w/annual CPI adjustments expiring 2044
____ ______ __, � CPI adjustments on 50 year
rollovers
10 years
15 years
20 years
BAYFRONT LOTS
at $5.5m
at $5.8m
at $6.1m at $6.3m
at $6.7m
at $7.Om
at $7.4m
at $7.7m
at $8.1m
at $8.5m
at $10.8m
at $13.9m
2017 Actual Rents
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2032
2037
(Monthly)
$1,625
$4,583
$4,583
$4,583
$4,583
$4,583
$4,583
$4,583
$4,583
$4,583
$4,583
$4,583
$4,583
$1,686
$1,686
$4,833
$4,833
$4,833
$4,833
$4,833
$4,833
$4,833
$4,833
$4,833
$4,833
$4,833
$1,771
$1,771
$1,771
$5,083
$5,083
$5,083
$5,083
$5,083
$5,083
$5,083
$5,083
$5,083
$5,083
$2,403
$2,403
$2,403
$2,403
$5,250
$5,250
$5,250
$5,250
$5,250
$5,250
$5,250
$5,250
$5,250
$2,435
$2,435
$2,435
$2,435
$2,435
$5,583
$5,583
$5,583
$5,583
$5,583
$5,583
$5,583
$5,583
$2,454
$2,454
$2,454
$2,454
$2,454
$2,454
$5,833
$5,833
$5,833
$5,833
$5,833
$5,833
$5,833
$2,630
$2,630
$2,630
$2,630
$2,630
$2,630
$6,166
$6,166
$6,166
$6,166
$6,166
$6,166
$6,166
$2,795
$2,795
$2,795
$2,795
$2,795
$2,795
$2,795
$6,458
$6,458
$6,458
$6,458
$6,458
$6,458
$2,855
$2,855
$2,855
$2,855
$2,855
$2,855
$2,855
$2,855
$6,750
$6,750
$6,750
$6,750
$6,750
$3,695
$3,695
$3,695
$3,695
$3,695
$3,695
$3,695
$3,695
$3,695
$3,695
$7,083
$7,083
$7,083
$2,578
$2,578
$2,578
$2,578
$2,578
$2,578
$2,578
$2,578
$2,578
$2,578
$2,578
$7,416
$7,500
$2,754
$2,754
$2,754
$2,754
$2,754
$2,754
$2,754
$2,754
$2,754
$2,754
$2,754
$7,833
$7,833
$2,905
$2,905
$2,905
$2,905
$2,905
$2,905
$2,905
$2,905
$2,905
$2,905
$2,905
$8,166
$8,166
$5,124
$5,124
$5,124
$5,124
$5,124
$5,124
$5,124
$5,124
$5,124
$5,124
$5,124
$8,583
$8,583
$7,267
$7,267
$7,267
$7,267
$7,267
$7,267
$7,267
$7,267
$7,267
$7,267
$7,267
$9,000
$9,083
$7,969
$7,969
$7,969
$7,969
$7,969
$7,969
$7,969
$7,969
$7,969
$7,969
$7,969
$7,969
$9,500
$11,180
$11,180
$11,180
$11,180
$11,180
$11,180
$11,180
$11,180
$11,180
$11,180
$11,180
$11,180
$10,000
$3,476
$3,333
$3,476
$3,476
$3,476
$2,500
$1,333
$1,333
$1,333
$1,333
$1,333
$1,333
$10,500
$6,035
$5,833
$5,375
$4,750
$4,125
$3,500
$2,333
$2,333
$2,333
$2,333
$2,333
$2,333
$11,000
$6,789
$6,416
$5,625
$5,000
$4,375
$3,750
$2,666
$2,666
$2,666
$2,666
$2,666
$2,666
$11,583
$7,407
$6,666
$5,958
$5,333
$4,708
$4,083
$2,916
$2,916
$2,916
$2,916
$2,916
$2,916
$2,91
$7,888
$6,833
$6,125
$5,500
$4,875
$4,250
$3,083
$3,083
$3,083
$3,083
$3,083
$3,083
$3,08
$8,303
$7,000
$6,291
$5,666
$5,041
$4,416
$3,250
$3,250
$3,250
$3,250
$3,250
$3,250
$3,25
$8,774
$7,166
$6,458
$5,833
$5,208
$4,583
$3,416
$3,416
$3,416
$3,416
$3,416
$3,416
$3,41
$9,415
$7,416
$6,708
$6,083
$5,458
$4,833
$3,666
$3,666
$3,666
$3,666
$3,666
$3,666
$3,666
$9,868
$7,583
$6,875
$6,250
$5,625
$5,000
$3,833
$3,833
$3,833
$3,833
$3,833
$3,833
$3,83
$10,937
$8,166
$7,541
$6,916
$6,291
$5,666$4,416
$4,416
$4,416
$4,416
$4,416
$4,416
$143,018 sub -total $133,496 $130,663 $128,350 $125,572 $122,119 $117,365 $121,028 $124,923 $124,923 $128,311 $148,681 $175,950
SS2-88
INTERIOR LOTS
2017 Actual Rents
(Monthly)
$504
$526
$578
$601
$608
$613
$639
$654
$706
$707
$860
$876
$963
$1,009
$1,014
$1,072
$1,102
$1,131
$694
$836
$1,194
$1,315
$1,350
$1,360
$1,530
$1,883
$2,120
$2,138
at $2.94m at $3.08m at $3.24m at $3.40m at $3.57m at $3.75m at $3.93m at $4.12m at $4.33m at $4.54m at $5.7m at $7.4m
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2032 2037
$2,450
$2,450
$2,450
$2,450
$2,450
$2,450
$2,450
$2,450
$2,450
$2,450
$4,166
$4,166
$2,450
$2,450
$2,450
$2,450
$2,450
$2,450
$2,450
$2,450
$2,450
$2,450
$4,166
$4,166
$2,450
$2,450
$2,450
$2,450
$2,450
$2,450
$2,450
$2,450
$2,450
$2,450
$4,166
$4,166
$2,450
$2,450
$2,450
$2,450
$2,450
$2,450
$2,450
$2,450
$2,450
$2,450
$4,333
$4,333
$608
$2,566
$2,566
$2,566
$2,566
$2,566
$2,566
$2,566
$2,566
$2,566
$4,333
$4,333
$613
$2,566
$2,566
$2,566
$2,566
$2,566
$2,566
$2,566
$2,566
$2,566
$4,333
$4,333
$639
$2,566
$2,566
$2,566
$2,566
$2,566
$2,566
$2,566
$2,566
$2,566
$4,333
$4,333
$654
$2,566
$2,566
$2,566
$2,566
$2,566
$2,566
$2,566
$2,566
$2,566
$4,583
$4,583
$706
$706
$2,700
$2,700
$2,700
$2,700
$2,700
$2,700
$2,700
$2,700
$4,583
$4,583
$707
$707
$2,700
$2,700
$2,700
$2,700
$2,700
$2,700
$2,700
$2,700
$4,583
$4,583
$860
$860
$2,700
$2,700
$2,700
$2,700
$2,700
$2,700
$2,700
$2,700
$4,583
$4,583
$876
$876
$2,700
$2,700
$2,700
$2,700
$2,700
$2,700
$2,700
$2,700
$4,750
$4,750
$963
$963
$963
$2,833
$2,833
$2,833
$2,833
$2,833
$2,833
$2,833
$4,750
$4,750
$1,009
$1,009
$1,009
$2,833
$2,833
$2,833
$2,833
$2,833
$2,833
$2,833
$4,750
$4,750
$1,014
$1,014
$1,014
$2,833
$2,833
$2,833
$2,833
$2,833
$2,833
$2,833
$4,750
$4,750
$1,072
$1,072
$1,072
$2,833
$2,833
$2,833
$2,833
$2,833
$2,833
$2,833
$2,833
$5,000
$1,102
$1,102
$1,102
$1,102
$2,975
$2,975
$2,975
$2,975
$2,975
$2,975
$2,975
$5,000
$1,131
$1,131
$1,131
$1,131
$2,975
$2,975
$2,975
$2,975
$2,975
$2,975
$2,975
$5,000
$694
$694
$694
$694
$2,975
$2,975
$2,975
$2,975
$2,975
$2,975
$2,975
$5,000
$836
$836
$836
$836
$2,975
$2,975
$2,975
$2,975
$2,975
$2,975
$2,975
$5,250
$1,194
$1,194
$1,194
$1,194
$1,194
$3,125
$3,125
$3,125
$3,125
$3,125
$3,125
$5,250
$1,315
$1,315
$1,315
$1,315
$1,315
$3,125
$3,125
$3,125
$3,125
$3,125
$3,125
$5,250
$1,350
$1,350
$1,350
$1,350
$1,350
$3,125
$3,125
$3,125
$3,125
$3,125
$3,125
$5,250
$1,360
$1,360
$1,360
$1,360
$1,360
$3,125
$3,125
$3,125
$3,125
$3,125
$3,125
$5,500
$1,530
$1,530
$1,530
$1,530
$1,530
$1,530
$3,275
$3,275
$3,275
$3,275
$3,275
$5,500
$1,883
$1,883
$1,883
$1,883
$1,883
$1,883
$3,275
$3,275
$3,275
$3,275
$3,275
$5,500
$2,120
$2,120
$2,120
$2,120
$2,120
$2,120
$3,275
$3,275
$3,275
$3,275
$3,275
$5,500
$2,138
$2,138
$2,138
$2,138
$2,138
$2,138
$3,275
$3,275
$3,275
$3,275
$3,275
$5,833
SS2-89
$2,360
$2,360
$2,360
$2,360
$2,360
$2,360
$2,360
$2,360
$3,433
$3,433
$3,433
$3,433
$5,833
$2,380
$2,380
$2,380
$2,380
$2,380
$2,380
$2,380
$2,380
$3,433
$3,433
$3,433
$3,433
$5,833
$2,689
$2,689
$2,689
$2,689
$2,689
$2,689
$2,689
$2,689
$3,433
$3,433
$3,433
$3,433
$5,833
$2,790
$2,790
$2,790
$2,790
$2,790
$2,790
$2,790
$2,790
$3,433
$3,433
$3,433
$3,433
$6,166
$2,808
$2,808
$2,808
$2,808
$2,808
$2,808
$2,808
$2,808
$2,808
$3,608
$3,608
$3,608
$6,166
$3,363
$3,363
$3,363
$3,363
$3,363
$3,363
$3,363
$3,363
$3,363
$3,608
$3,608
$3,608
$6,166
$3,843
$3,843
$3,843
$3,843
$3,843
$3,843
$3,843
$3,843
$3,843
$3,608
$3,608
$3,608
$6,166
$2,018
$2,018
$2,018
$2,018
$2,018
$2,018
$766
$766
$766
$3,608
$3,608
$3,608
$5,700
$2,565
$2,500
$2,500
$2,500
$2,500
$2,250
$1,000
$1,000
$1,000
$1,000
$3,783
$3,783
$5,985
$2,678
$2,500
$2,500
$2,500
$2,500
$2,250
$1,000
$1,000
$1,000
$1,000
$3,783
$3,783
$5,985
$3,013
$2,916
$2,916
$2,916
$2,916
$2,416
$1,166
$1,166
$1,166
$1,16CP
$3,783
$3,783
$5,985
$3,177
$2,916
$2,916
$2,916
$2,916
$2,416
$1,166
$1,166
$1,166
$1,166
$3,783
$3,783
$5,985
$3,725
$3,541
$3,541
$3,541
$3,291
$2,666
$1,416
$1,416
$1,416
$1,416
$1,416
$3,9161
$6,335
$4,166
$3,958
$3,958
$3,958
$3,458
$2,833
$1,583
$1,583
$1,583
$1,583
$1,583
$3,916
$6,335
$4,241
$3,958
$3,958
$3,958
$3,458
$2,833
$1,583
$1,583
$1,583
$1,583
$1,583
$3,916
$6,335
$4,444
$4,166
$4,166
$4,166
$3,541
$2,916
$1,666
$1,666
$1,666
$1,666
$1,666
$3,916
$6,335
$5,306
$5,000
$5,000
$4,500
$3,875
$3,250
$2,000
$2,000
$2,000
$2,000
$2,000
$4,166
$6,700
$84,149 sub -total
$89,880
$97,630
$104,781
$109,555
$113,067
$107,846
$113,275
$116,788
$120,440
$131,240
$170,621
$239,838
$227,167 TOTAL $223,376 $228,293 $233,131 $235,127 $235,186 $225,211 $234,303 $241,711 $245,363 $259,551 $319,302 $415,788
10 years 15 years 20 years
2017 Annual Revenue: $2,726,004
2027 Proj. Annual Revenue: $3,114,612
2032 Proj. Annual Revenue: $3,831,624
2037 Proj. Annual Revenue: $4,989,456
SS2-90
1994 Lease w/o annul CPI adjustments expiring in 2044 1994 Leases w/annual CPI adjustments expiring 2044
2012 Leases w/ anny3 CPI adjustments on 50 year rollovers
BAYFRONT LOTS
at $5.5m
at $5.8m
at $6.1m
at $6.3m
at $6.7m
at $7.Om
at $7.4m
at $7.7m
at $8.1m
at $8.5m
AT $8.9M
at $9.4m
at $9.8m
at $10.3m
at $10.8m
at $11.4m
at $11.9m
at $12.5m
at $13.1m
at $13.9m
2017 Actual Rents
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
(Monthly)
$1,621
$4,583
$4,583
$4,583
$4,583
$4,583
$4,583
$4,583
$4,583
$4,583
$4,583
$4,583
$4,583
$4,583
$4,583
$4,583
$4,583
$4,583
$4,583
$4,583
$4,583
$1,686
$1�6f
$4,833
$4,833
$4,833
$4,833
$4,833
$4,833
$4,833
$4,833
$4,833
$4,833
$4,833
$4,833
$4,833
$4,833
$4,833
$4,833
$4,833
$4,833
$4,833
$1,771
$1,771
$1,771
$5,083
$5,083
$5,083
$5,083
$5,083
$5,083
$5,083
$5,083
$5,083
$5,083
$5,083
$5,083
$5,083
$5,083
$5,083
$5,083
$5,083
$5,083
$2,403
$2,403
$2,403
.M
$5,250
$5,250
$5,250
$5,250
$5,250
$5,250
$5,250
$5,250
$5,250
$5,250
$5,250
$5,250
$5,250
$5,250
$5,250
$5,250
$5,250
$2,435
$2,435
$2,435
$2,435
$2,435
$5,583
$5,583
$5,583
$5,583
$5,583
$5,583
$5,583
$5,583
$5,583
$5,583
$5,583
$5,583
$5,583
$5,583
$5,583
$5,583
$2,454
$2,454
$2,454
$2,454
$2,454
$2,454
$5,833
$5,833
$5,833
$5,833
$5,833
$5,833
$5,833
$5,833
$5,833
$5,833
$5,833
$5,833
$5,833
$5,833
$5,833
$2,630
$2,630
$2,630
$2,630
$2,630
$2,630
$6,166
$6,166
$6,166
$6,166
$6,166
$6,166
$6,166
$6,166
$6,166
$6,166
$6,166
$6,166
$6,166
$6,166
$6,166
$2,795
$2,795
$2,795
$2,795
$2,795
$2,795
$2,795
$6,458
$6,458
$6,458
$6,458
$6,458
$6,458
$6,458
$6,458
$6,458
$6,458
$6,458
$6,458
$6,458
$6,458
$2,855
$2,855
$2,855
$2,855
$2,855
$2,855
$2,855
$2,855
$6,77
$6,750
$6,750
$6,750
$6,750
$6,750
$6,750
$6,750
$6,750
$6,750
$6,750
$6,750
$6,750
$3,695
$3,695
$3,695
$3,695
$3,695
$3,695
$3,695
$3,695
$3,695
$3,695
$7,083
$7,083
$7,083
$7,083
$7,083
$7,083
$7,083
$7,083
$7,083
$7,083
$7,083
$2,578
$2,578
$2,578
$2,578
$2,578
$2,578
$2,578
$2,578
$2,578
$2,578
$2,578
$7,416
$7,416
$7,416
$7,416
$7,416
$7,416
$7,416
$7,416
$7,416
$7,500
$2,754
$2,754
$2,754
$2,754
$2,754
$2,754
$2,754
$2,754
$2,754
$2,754
$2,754
$2,754
$7,833
$7,833
$7,833
$7,833
$7,833
$7,833
$7,833
$7,833
$7,833
$2,905
$2,905
$2,905
$2,905
$2,905
$2,905
$2,905
$2,905
$2,905
$2,905
$2,905
$2,905
$2,905
$8,166
$8,166
$8,166
$8,166
$8,166
$8,166
$8,166
$8,166
$5,124
$5,124
$5,124
$5,124
$5,124
$5,124
$5,124
$5,124
$5,124
$5,124
$5,124
$5,124
$5,124
$5,124
$8,583
$8,583
$8,583
$8,583
$8,583
$8,583
$8,583
$7,267
$7,267
$7,267
$7,267
$7,267
$7,267
$7,267
$7,267
$7,267
$7,267
$7,267
$7,267
$7,267
$7,267
$7,267
$9,000
$9,000
$9,000
$9,000
$9,000
$9,083
$7,969
$7,969
$7,969
$7,969
$7,969
$7,969
$7,969
$7,969
$7,969
$7,969
$7,969
$7,969
$7,969
$7,969
$7,969
$7,969
$9,500
$9,500
$9,500
$9,500
$9,500
$11,180
$11,180
$11,180
$11,180
$11,180
$11,180
$11,180
$11,180
$11,180
$11,180
$11,180
$11,180
$11,180
$11,180
$11,180
$11,180
$11,180
$9,916
$9,916
$9,916
$10,000
$10,416
$10,416
$10,500
$6,035
$5,833
$5,375
$4,750
$4,125
$3,500
$2,333
$2,333
$2,333
$2,333
$2,333
$2,333
$2,333
$2,333
$2,333
$2,333
$2,333
$2,33
$10,916
$11,000
$6,789
$6,416
$5,625
$5,000
$4,375
$3,750
$2,666
$2,666
$2,666
$2,666
$2,666
$2,666
$2,666
$2,666
$2,666
$2,666
$2,666
$2,666
$11,583
$7,407
$6,666
$5,958
$5,333
$4,708
$4,083
$2,916
$2,916
$2,916
$2,916
$2,916
$2,916
$2,916
$2,916
$2,916
$2,916
$2,916
$2,916
$2,916
$2,916
$2,91al
$7,888
$6,833
$6,125
$5,500
$4,875
$4,250
$3,083
$3,083
$3,083
$3,083
$3,083
$3,083
$3,083
$3,083
$3,083
$3,083
$3,083
$3,083
$3,083
$3,083
$3,083
$8,303
$7,000
$6,291
$5,666
$5,041
$4,416
$3,250
$3,250
$3,250
$3,250
$3,250
$3,250
$3,250
$3,250
$3,250
$3,250
$3,250
$3,250
$3,250
$3,250
$3,250
$8,774
$7,166
$6,458
$5,833
$5,208
$4,583
$3,416
$3,416
$3,416
$3,416
$3,416
$3,416
$3,416
$3,416
$3,416
$3,416
$3,416
$3,416
$3,416
$3,416
$3,416
$9,415
$7,416
$6,708
$6,083
$5,458
$4,833
$3,666
$3,666
$3,666
$3,666
$3,666
$3,666
$3,666
$3,666
$3,666
$3,666
$3,666
$3,666
$3,666
$3,666
$3,666
$9,868
$7,583
$6,875
$6,250
$5,625
$5,000
$3,833
$3,833
$3,833
$3,833
$3,833
$3,833
$3,833
$3,833
$3,833
$3,833
$3,833
$3,833
$3,833
$3,833
$3,833
$10,937
$8,166
$7,541
$6,916
$6,291
$5,666
$4,416
$4,416
$4,416
$4,416
$4,416
$4,416
$4,416
$4,416
$4,416
$4,416
$4,416
$4,416
$4,416
$4,416
$4,416
$143,018 sub -total
$133,496
$130,663
$128,350
$125,572
$122,119
$117,365
$121,028
$124,923
$124,923
$128,311
$133,149
$138,228
$143,489
$146,948
$148,681
$150,212
$148,948
$158,031
$166,614
$175,950
SS2-91
INTERIOR LOTS
2017 Actual Rents
(Monthly)
4
$526
$578
$601
$608
$613
$639
$654
$706
$707
$860
$876
$963
$1,009
$1,014
$1,072
$1,102
$1,131
$694
$836
$1,194
$1,315
$1,350
$1,360
$1,530
$1,883
$2,120
$2,138
$2,360
$2,380
$2,689
$2,790
$2,808
$3,363
$3,843
$2,565
$2,678
$3,013
$3,177
$3,725
$4,166
j$4,2
$4
$84,149 sub -total
at $2.94m at $3.08m at $3.24m at $3.40m at $3.57m at $3.75m at $3.93m at $4.12m at $4.33m at $4.54m at $4.7m at $5m at $5.2m at $5.5m at $5.7m at $6m at $6.3m at $6.6m at $7m at $7.4m
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037
$2,450
$2,450
$2,450
$2,450
$2,450
$2,450
$2,450
$2,450
$2,450
$2,450
$2,450
$2,450
$2,450
$2,450
$2,450
$2,450
$2,450
$2,450
$2,450
$2,450
$2,450
$2,450
$2,450
$2,450
$2,450
$2,450
$2,450
$2,450
$2,450
$2,450
$2,450
$2,450
$2,450
$2,450
$2,450
$2,450
$6
$2,566
$2,566
$2,566
$2,566
$2,566
$2,566
$2,566
$2,566
$61
$2,566
$2,566
$2,566
$2,566
$2,566
$2,566
$2,566
$2,566
$63
$2,566
$2,566
$2,566
$2,566
$2,566
$2,566
$2,566
$2,566
$654
$2,566
$2,566
$2,566
$2,566
$2,566
$2,566
$2,566
$2,566
$706
$706
$2,700
$2,700
$2,700
$2,700
$2,700
$2,700
$2,700
$707
$707
$2,700
$2,700
$2,700
$2,700
$2,700
$2,700
$2,700
$860
$860
$2,700
$2,700
$2,700
$2,700
$2,700
$2,700
$2,700
$876
$876
$2,700
$2,700
$2,700
$2,700
$2,700
$2,700
$2,700
$963
$963
'M
$2,833
$2,833
$2,833
$2,833
$2,833
$2,833
$1,009
$1,009
$1,009
$2,833
$2,833
$2,833
$2,833
$2,833
$2,833
$1,014
$1,014
$1,014
$2,833
$2,833
$2,833
$2,833
$2,833
$2,833
$1,072
$1,072
$1,072
$2,833
$2,833
$2,833
$2,833
$2,833
$2,833
$1,102
$1,102
$1,102
$1,10?
$2,975
$2,975
$2,975
$2,975
$2,975
$1,131
$1,131
$1,131
$1,131
$2,975
$2,975
$2,975
$2,975
$2,975
$694
$694
$694
$694
$2,975
$2,975
$2,975
$2,975
$2,975
$836
$836
$836
$836
$2,975
$2,975
$2,975
$2,975
$2,975
$1,194
$1,194
$1,194
$1,194
$1,194
$3,125
$3,125
$3,125
$3,125
$1,315
$1,315
$1,315
$1,315
$1,315
$3,125
$3,125
$3,125
$3,125
$1,350
$1,350
$1,350
$1,350
$1,350
$3,125
$3,125
$3,125
$3,125
$1,360
$1,360
$1,360
$1,360
$1,360
$3,125
$3,125
$3,125
$3,125
$1,530
$1,530
$1,530
$1,530
$1,530
$1,530
$3,275
$3,275
$3,275
$1,883
$1,883
$1,883
$1,883
$1,883
$1,883
$3,275
$3,275
$3,275
$2,120
$2,120
$2,120
$2,120
$2,120
$2,120
$3,275
$3,275
$3,275
$2,138
$2,138
$2,138
$2,138
$2,138
$2,138
$3,275
$3,275
$3,275
$2,360
$2,360
$2,360
$2,360
$2,360
$2,360
$2,360
$3,433
$3,433
$2,380
$2,380
$2,380
$2,380
$2,380
$2,380
$2,380
$3,433
$3,433
$2,689
$2,689
$2,689
$2,689
$2,689
$2,689
$2,689
$3,433
$3,433
$2,790
$2,790
$2,790
$2,790
$2,790
$2,790
$2,790
$3,433
$3,433
$2,808
$2,808
$2,808
$2,808
$2,808
$2,808
$2,808
$2,808
$3,608
$3,363
$3,363
$3,363
$3,363
$3,363
$3,363
$3,363
$3,363
$3,608
$3,843
$3,843
$3,843
$3,843
$3,843
$3,843
$3,843
$3,843
$3,608
$2,500 $2,500 $2,500 $2,500 $2,250 $1,000 $1,000 $1,000
$2,500 $2,500 $2,500 $2,500 $2,250 $1,000 $1,000 $1,000
$2,916 $2,916 $2,916 $2,916 $2,416 $1,166 $1,166 $1,166
$2,916 $2,916 $2,916 $2,916 $2,416 $1,166 $1,166 $1,166
$3,541 $3,541 $3,541 $3,291 $2,666 $1,416 $1,416 $1,416
$3,958 $3,958 $3,958 $3,458 $2,833 $1,583 $1,583 $1,583
$3,958 $3,958 $3,958 $3,458 $2,833 $1,583 $1,583 $1,583
$4,166 $4,166 $4,166 $3,541 $2,916 $1,666 $1,666 $1,666
$5,000 $5,000 $4,500 $3,875 $3,250 $2,000 $2,000 $2,000
$89,880 $97,630 $104,781 $109,555 $113,067 $107,846 $113,275 $116,788
$2,450
$2,450
$2,450
$2,450
$2,566
$2,566
$2,566
$2,566
$2,700
$2,700
$2,700
$2,700
$2,833
$2,833
$2,833
$2,833
$2,975
$2,975
$2,975
$2,975
$3,125
$3,125
$3,125
$3,125
$3,275
$3,275
$3,275
$3,275
$3,433
$3,433
$3,433
$3,433
$3,608
$3,608
$3,608
$3,608
$3,783
$3,783
$3,783
$3,783
$1,416
$1,583 $1,58
$1,583 $1,58
$1,666 $1,66
$2,000 $2,000
$120,440 $131,240
$227,167 TOTAL $223,376 $228,293 $233,131 $235,127 $235,186 $225,211 $234,303 $241,711 $245,363 $259,551
2017 Annual Revenue: $2,726,004
2027 Proj. Annual Revenue: $3,114,612
2032 Proj. Annual Revenue: $3,831,624
2037 Proj. Annual Revenue: $4,989,456
$2,450 $4,166 $4,166 $4,166 $4,166 $4,166 $4,166 $4,166 $4,166 $4,166
$2,450 $4,166 $4,166 $4,166 $4,166 $4,166 $4,166 $4,166 $4,166 $4,166
$2,450 $4,166 $4,166 $4,166 $4,166 $4,166 $4,166 $4,166 $4,166 $4,166
$2,450 $2,450 $4,333 $4,333 $4,333 $4,333 $4,333 $4,333 $4,333 $4,333
$2,566 $2,566 $4,333 $4,333 $4,333 $4,333 $4,333 $4,333 $4,333 $4,333
$2,566 $2,566 $4,333 $4,333 $4,333 $4,333 $4,333 $4,333 $4,333 $4,333
$2,566 $2,566 $4,333 $4,333 $4,333 $4,333 $4,333 $4,333 $4,333 $4,333
$2,566 $2,566 $2,566 $4,583 $4,583 $4,583 $4,583 $4,583 $4,583 $4,583
$2,700 $2,700 $2,700 $4,583 $4,583 $4,583 $4,583 $4,583 $4,583 $4,583
$2,700 $2,700 $2,700 $4,583 $4,583 $4,583 $4,583 $4,583 $4,583 $4,583
$2,700 $2,700 $2,700 $4,583 $4,583 $4,583 $4,583 $4,583 $4,583 $4,583
$2,700 $2,700 $2,700 $2,700 $4,750 $4,750 $4,750 $4,750 $4,750 $4,750
$2,833 $2,833 $2,833 $2,833 $4,750 $4,750 $4,750 $4,750 $4,750 $4,750
$2,833 $2,833 $2,833 $2,833 $4,750 $4,750 $4,750 $4,750 $4,750 $4,750
$2,833 $2,833 $2,833 $2,833 $4,750 $4,750 $4,750 $4,750 $4,750 $4,750
$2,833 $2,833 $2,833 $2,833 $2,833 $5,000 $5,000 $5,000 $5,000 $5,000
$2,975 $2,975 $2,975 $2,975 $2,975 $5,000 $5,000 $5,000 $5,000 $5,000
$2,975 $2,975 $2,975 $2,975 $2,975 $5,000 $5,000 $5,000 $5,000 $5,000
$2,975 $2,975 $2,975 $2,975 $2,975 $5,000 $5,000 $5,000 $5,000 $5,000
$2,975 $2,975 $2,975 $2,975 $2,975 $2,975 $5,250 $5,250 $5,250 $5,250
$3,125 $3,125 $3,125 $3,125 $3,125 $3,125 $5,250 $5,250 $5,250 $5,250
$3,125 $3,125 $3,125 $3,125 $3,125 $3,125 $5,250 $5,250 $5,250 $5,250
$3,125 $3,125 $3,125 $3,125 $3,125 $3,125 $5,250 $5,250 $5,250 $5,250
$3,125 $3,125 $3,125 $3,125 $3,125 $3,125 $3,125 $5,500 $5,500 $5,500
$3,275 $3,275 $3,275 $3,275 $3,275 $3,275 $3,275 $5,500 $5,500 $5,500
$3,275 $3,275 $3,275 $3,275 $3,275 $3,275 $3,275 $5,500 $5,500 $5,500
$3,275 $3,275 $3,275 $3,275 $3,275 $3,275 $3,275 $5,500 $5,500 $5,500
$3,275 $3,275 $3,275 $3,275 $3,275 $3,275 $3,275 $3,275 $5,833 $5,833
$3,433 $3,433 $3,433 $3,433 $3,433 $3,433 $3,433 $3,433 $5,833 $5,833
$3,433 $3,433 $3,433 $3,433 $3,433 $3,433 $3,433 $3,433 $5,833 $5,833
$3,433 $3,433 $3,433 $3,433 $3,433 $3,433 $3,433 $3,433 $5,833 $5,833
$3,433 $3,433 $3,433 $3,433 $3,433 $3,433 $3,433 $3,433 $3,433 $6,166
$3,608 $3,608 $3,608 $3,608 $3,608 $3,608 $3,608 $3,608 $3,608 $6,166
$3,608 $3,608 $3,608 $3,608 $3,608 $3,608 $3,608 $3,608 $3,608 $6,166
$3,608 $3,608 $3,608 $3,608 $3,608 $3,608 $3,608 $3,608 $3,608 $6,166
$3,608 $3,608 $3,608 $3,608 $3,608 $3,608 $3,608 $3,608 $3,608 $5,700
$3,783 $3,783 $3,783 $3,783 $3,783 $3,783 $3,783 $3,783 $3,783 $5,985
$3,783 $3,783 $3,783 $3,783 $3,783 $3,783 $3,783 $3,783 $3,783 $5,985
$3,783 $3,783 $3,783 $3,783 $3,783 $3,783 $3,783 $3,783 $3,783 $5,985
$3,783 $3,783 $3,783 $3,783 $3,783 $3,783 $3,783 $3,783 $3,783 $5,985
$3,916 $3,916 $3,916 $3,916 $3,916 $3,916 $3,916 $3,916 $3,916 $6,335
$3,916 $3,916 $3,916 $3,916 $3,916 $3,916 $3,916 $3,916 $3,916 $6,335
$3,916 $3,916 $3,916 $3,916 $3,916 $3,916 $3,916 $3,916 $3,916 $6,335
$3,916 $3,916 $3,916 $3,916 $3,916 $3,916 $3,916 $3,916 $3,916 $6,335
_m"m $4,166 $4,166 $4,166 $4,166 $4,166 $4,166 $4,166 $4,166 $6,700
$140,656 $147,970 $155,154 $162,820 $170,621 $178,863 $187,513 $196,563 $206,321 $239,838
$273,805 $286,198 $298,643 $309,768 $319,302 $329,075 $336,461 $354,594 $372,935 $415,788
SS2-92
From:
Drew Lawler <drew@ajlawler.com>
Sent:
Wednesday, January 23, 2019 11:43 AM
To:
Wooding, Lauren
Cc:
Jim Helfrich
Subject:
Re: Beacon Bay - Revenue Modeling
Attachments:
image003.jpg
Hi Lauren:
Jim and I have been reviewing this and we anticipate having a response to you later today.
Thanks.
Best regards,
Drew Lawler
240 Newport Center Drive
Suite 205
Newport Beach, CA 92660
drewA ilawler.com
Phone: 949-631-7660 / Fax: 949-631-7661
On Wed, Jan 23, 2019 at 9:47 AM Wooding, Lauren <LWooding9newportbeachca. og_v> wrote:
Hi Drew,
Wanted to check in regarding your review of Kathe's tables, and any changes to your
assumptions. She will be going out of town, and needs your revisions by Monday of next week,
January 28, in order to revise her modeling before we take this to City Council on February 12.
Please let me know if you have any questions.
Thank you,
Lauren
SS2-93
a LAUREN WOODING WHITLINGER
Community Development Department
f8
Real Property Administrator
Iwooding(cil newportbeachca.4ov
949-644-3236
CA Broker License #01943711
From: Drew Lawler [mailto:drewgailawler.com]
Sent: Wednesday, January 16, 2019 1:49 PM
To: Wooding, Lauren <LWooding�rc,neMortbeachca.gov>
Cc: Jim Helfrich <Jhghmcassets.com>
Subject: Re: Beacon Bay - Revenue Modeling
Thanks Lauren. We will review and circle back. Thank you also for your time as well.
Drew Lawler
AJ LAWLER Partners
Land Line: 949-631-7660
Cell: 949-275-1810
www.ajlawler.com
Drew(a),ailawler.com
240 Newport Center Drive
Suite 205
Newport Beach, CA 92660
Sent from my iPhone
SS2-94
On Jan 16, 2019, at 11:18 AM, Wooding, Lauren <LWoodingknewportbeachca.gov> wrote:
Hi Jim and Drew,
Thanks for taking the time to meet with us yesterday afternoon to review the
revenue modeling with Kathe from Keyser Marston Associates, Inc.
Attached are the tables Kathe prepared using your proposed change in lease
terms, and an electronic copy of the summary sheet we discussed at the meeting.
Please let us know if some of the assumptions should be changed to reflect your
intended proposal.
Thank you,
Lauren
<image003.jpg>LAUREN WOODING WHITLINGER
Community Development Department
Real Property Administrator
Iwooding(anew,00rtbeachca.gov
949-644-3236
CA Broker License #01943711
CITY OF NEWPORT BEACH
100 Civic Center Drive, First Floor Bay D, Newport Beach, California 92660
newportbeachca.gov
<Beacon Bay Modeling Revenue Projections (KMA)_01152019.pdf>
<Beacon Bay Revenue Modeling - Methodology Analysis
(KMA)_01152019.pdf>
SS2-95
image003.jpg
SS2-96
From: Drew Lawler <drew@ajlawler.com>
Sent: Thursday, January 24, 2019 3:22 PM
To: Wooding, Lauren; Jurjis, Seimone
Cc: Herdman, Jeff; Jim Helfrich
Subject: Follow up to our meeting on the Beacon Bay Ground Lease Restructure
Attachments: image003.jpg
Hi Seimone and Lauren:
Thank you for the meeting last week.
We appreciate the opportunity to discuss what we believe
are excessive and unfair Ground Rents and to work with the
city on restructuring the Beacon Bay Lease. Beacon Bay
believes that the existing Ground Rents charged to residents
is far in excess of what is fair, equitable and market. We
believe that the existing terms of the Ground Leases will
continue to exacerbate this issue and we ask that the City
make changes to the existing Leases. With that in mind,
Beacon Bay has proposed restructuring the lease that
would:
a) Use a Phased -In program to bring the ground leases from
their existing above -market levels to Fair Market levels and,
b) Help retain the existing rental income levels to the City.
SS2-97
The consultant's formula is off significantly from ours and we
disagree with their assumptions and conclusions. For
example, in the first year we show annual revenue moving
very little. Current revenue is approximately $2.72 million.
We estimate it becoming:
$2.67 in year one of the phase in period;
$2.73 in year two of the phase in period;
$2.79 in year three of the phase in period;
$2.82 in year four of the phase in period;
$2.7 in year five of the phase in period;
And then it begins to climb from there above the current
2018 levels. Our assumptions, as provided, are based on
existing conditions in Beacon Bay.
Our math is straightforward, color coded and easy to follow.
There could be several reasons for the
differences, including:
We are basing sales going forward starting at an
average basis for bayfront and interior homes of $5.3
million and $2.8 million respectively. As I understand
it, her basis is much lower. However, we would argue
two points:
• Once the new rate of 1 % goes into effect, it
will unleash value increases in Beacon Bay that
has been stymied due to the above market rate of
2.5%. In fact, our table which shows a 5% annual
increase may be too conservative.
• Recent comps place the value of the Beacon
Bay waterfront homes at $5.3m. Yes, depending
on their condition, in the short term bayfront
homes may trade for less than $5.3 million while
others will trade for significantly more. And the
same applies to the interior lots.
SS2-98
2. The consultant assumes that homes will trade on a
rotating basis between newer residents and longer
term residents. We would argue that:
• Once the lease resets to market, newer
residents that otherwise have not been able to
afford the significant annual increases will now be
able to afford to live in their homes and will not
have to put them on the market. Thus, the older
leases primarily are the ones that will trade hands
first going forward due to the advancing age of the
residents.
Notwithstanding the above, while Beacon Bay
has proposed a five year "phase in period" to help mitigate a
dip in revenue to the city, it's important to keep in mind that
the current annual $2.7 million in revenue to the city is an
inflated (above Fair Market Value) amount to begin
with. Beacon Bay residents have been charged above
market rates for years. This is evidenced by the fact that
according to the market study by Leaper Appraisal,
comprised of nine recent residential ground lease comps in
Newport Beach, the current market average for ground lease
rents of like -residential properties in comparable
neighborhoods is 4/10ths of 1 % of the selling price vs. the
2.5% the city is currently charging. Thus, while we are willing
to help by phasing in the new rate over a five year period
which very well may mitigate a dip in revenue, it should not
be incumbent upon the residents to make the city whole on
the current above market and unfair revenue of $2.7 million
which is artificially too high to begin with.
While these differences cause the study not to match up with
our study and findings, we think that our proposal will never
the less accomplish the goals of both parties in helping to
maintain income levels constant to the City. We would also
like to share these additional thoughts.
1. We encourage the city to hire its own appraiser for a
Ground Rent Study to confirm accuracy of the
SS2-99
residential ground lease comps Leaper Appraisal was
able to find.
2. As an option, we could collectively decide on
arbitration to resolve this matter which could move the
needle in unforeseen ways. For example, while a
judge could decide to set the lease at an amount
higher than our proposed 1 %, he or she could also
decide to set the rate at the current rolling average of
4/10ths of 1 %, resulting in revenue to the city that
would be 60% less than what we are proposing.
Further, the judge may decide that rate should take
effect immediately, without a five year phase in
period. Thus when you consider all factors, we trust
you will agree that the 1 % rate phased in over a five
year period is in fact a fiscally prudent solution
Beacon Bay is offering to the city.
3. We want to make sure that we are on the same page
with regards to eliminating the CPI annual increases.
Again our position is that because ground lease rents
are not assumable to the buyer but instead reset to
the selling price each time a property sells --
generating huge "waterfall" increases to the city -- this
negates the need for CPI increases. These waterfall
increases are a hidden burden to Beacon Bay
residents in that the substantial increase is rent that a
new buyer has to incur acts to reduce the
appreciating value of Beacon Bay homes. Years ago
the city recognized this which is why 28 of the homes
in Beacon Bay are not subject to CPI increases. Thus
to be fair, all 72 homes should have no CPI increases
because all Beacon Bay leases reset to the selling
price. Secondary to this fundamental reason is that
Beacon Bay residents pay property tax based on their
purchase price plus an additional "possessory interest
surcharge" that can add upwards of $10,000 or more
in property tax on land that is owned by city. Not only
are Beacon Bay residents paying property tax on
behalf of land owned by the city, approximately 17%
of both of these taxes paid by Beacon Bay residents
flow back to the city in additional revenue.
SS2-100
In conclusion, restructuring the lease to "PHASE IN"
a 1 % ground rent with no CPI increases is the right thing to
do. While still substantially higher than the average
comparable residential ground lease rate of 4/10ths of 1 %, it
at least brings Beacon Bay closer to market. But more than
that, it also creates a financially -wise and sustainable
pathway forward for the city. Nobody lives forever and
eventually all 72 homes will continue to turn over time and
time again resulting in ever increasing revenue streams well
above the current $2.7 million.
We believe that this immediate revision to the Ground
Leases in Beacon Bay is both fair and equitable.
Best regards,
Drew Lawler
71
240 Newport Center Drive
Suite 205
Newport Beach, CA 92660
drewgai lawler. com
Phone: 949-631-7660 / Fax: 949-631-7661
SS2-101
image003.jpg
SS2-102
Attachment D
Keyser Marston Associates, Inc. Beacon Bay Revenue Modeling
SS2-103
BEACON BAY GROUND LEASE ANALYSIS
FEBRUARY 4, 2019
The City of Newport Beach (City) holds the ground leases for the 72 Beacon Bay properties. At
your request, Keyser Marston Associates, Inc. (KMA) evaluated the proposal submitted by the
Lease Committee of the Beacon Bay Home Owners Association (HOA) to modify the financial
terms of the existing ground leases.
BACKGROUND INFORMATION
The following tables provide summaries of the key financial terms of the Beacon Bay ground
leases.
Existing Ground Lease Structures
Pre -Existing Leases
1994 Leases
2012 Leases
Distribution of Leases
Description
These leases were converted to
1994 leases that expire in 2044.
These leases expire in 2044.
These leases expire 50 years after
execution. The lease term restarts
on each sale.
CPllncreases
No CPI adjustments are
applied.
CPI adjustments are
applied once every 7 years.
Annual CPI adjustments
are applied.
Number of Leases
Bayfront Lots Interior Lots
Lease Category
Pre -Existing Leases 10 17
1994 Leases 6 16
2012 Leases 11 12
Tota 1 27 45
1902002. N B: KH H
16092.008.003
Page 1
SS2-104
HOA PROPOSAL
Premise
The stated premise of the HOA's proposed ground lease restructuring can be summarized as
follows:
To reduce the ground lease payment obligation to 1% of each home's value; and
2. To phase in the ground lease payment reductions over time to minimize the near-term
impacts on the revenues to be received by the City of Newport Beach (City).
Proposed Structuring Modifications
The HOA is proposing to make the following modifications to the existing ground leases:
Pre -Existing Leases & 1994 Leases
The home owners with 1994 Leases have the option, but not the requirement, to convert to a
50 year lease with a lease payment set at 1% of the property's appraised value at the time of
conversion. 1 No CPI escalations are applied.
When the home is sold the ground lease payment is set at 1% of the sale price. No CPI
escalations are applied.
2012 Leases
The purchase price paid when the home was acquired is used as the basis for the ground lease
payments. The ground lease payment reduction is phased in over five years to reach 1% of the
original acquisition cost of the home. No CPI escalations are applied. The thresholds are:
Year 1: 2.5% of the first $3.0 million acquisition price & 1% of the balance
Year 2: 2.5% of the first $2.5 million acquisition price & 1% of the balance
Year 3: 2.5% of the first $2.0 million acquisition price & 1% of the balance
Year 4: 2.5% of the first $1.5 million acquisition price & 1% of the balance
1 The HOA proposal does not specifically call out the Pre -Existing Leases in the lease conversion section of the
proposal. However, it can be inferred from the HOA cash flow projections that the conversion proposal includes a
conversion option for the Pre -Existing Leases.
Beacon Bay Ground Lease Analysis
1902002. N B: KH H / 16092.008.003
Page 2
February 4, 2019
SS2-105
Year 5: 2.5% of the first $1.0 million acquisition price & 1% of the balance
Year 6+: 1% of the acquisition price
COMPARISON OF ASSUMPTIONS
The HOA submitted a cash flow projection to illustrate the ground lease revenues anticipated to
be generated under the modified ground lease structure. KMA reviewed the HOA projections
and then independently prepared a set of projections. The results of the comparative analysis
are presented in Table 1, and the differences are summarized in the following table:
NPV at a 6%
Projected Ground Lease Revenues 2 Total Discount Rate 3
Proposed Lease Modifications
HOA Projections $65,228,000 $36,209,000
KMA Projections $41,299,000 $23,298,000
Difference $23,929,000 $12,911,000
Existing Lease Structure — No Resales $72,931,000 $40,972,000
It is also important to note that the ground lease revenues generated under the existing ground
lease terms are projected to be higher than the revenue generated under the proposed ground
lease structure even if it is assumed that the no homes will be resold during the projection
period. The reduction in ground lease revenue is estimated at $7.7 million under the HOA
projections and $31.6 million under the KMA projections. 4
As can be seen in the preceding table, the ground lease revenues projected by KMA are
significantly lower than the HOA revenue projections. The key differences in assumptions
relate to the following factors:
2 Based on the projection period set by the HOA. Covers 18 years, from 2019 through 2037.
3 NPV = Net Present Value.
4 See Table 1. The net present values of the differences are estimated at $4.76 million and $17.67 million,
respectively.
Beacon Bay Ground Lease Analysis
1902002. N B: KH H / 16092.008.003
Page 3
February 4, 2019
SS2-106
Differences in Assumptions
Projected Average Home Sales Prices
Conversion Timing for 1994 Leases
Order of Home Sales
Difference
NPV at a 6%
Total Discount Rate
$11,199,000
$5,431,000
5,930,000
3,581,000
6,800,000
3,899,000
$23,929,000
$12,911,000
The differences in assumptions can be described as follows:
Average Home Sales Prices — ($11,199,000 Total Difference/$5,431,000 NPV)
The HOA projections are based on the assumption, in 2018 dollars, that Bayfront homes
will sell at an average price of $5.5 million and that homes on interior lots will sell at an
average value of $2.94 million. These prices are projected to increase at an average rate
of 5% annually.
2. KMA compiled historical sales information for each home, and then escalated the price
at 5% annually to arrive at estimates of each home's value in 2018 dollars. The resulting
average values are $4.31 million for the Bayfront homes and $1.81 million for the homes
on the interior lots. The values for each individual home were then escalated at 5%
annually throughout the projection period.
The HOA representatives contend that using historical sales values understates the values that
will be achieved if the ground lease terms are modified. However, it should be noted that the
home values would have to increase by an average rate of approximately 42% over the current
average to achieve the sales price projections being used by the HOA.
Conversion Timing for 1994 Leases — ($5,930,000 Total Difference/$3,581,000 NPV)
The HOA proposal provides the option for home owners with Pre -Existing Leases and
1994 Leases to convert to new 50 year leases at 1% of the home's appraised value at the
time of conversion. The HOA projections comingle the 1994 Ground Lease conversions
with the future home sales.
2. KMA reviewed the ground rent revenue being generated by each of the Pre -Existing
Leases and the 1994 Leases to evaluate the benefits home owners would potentially
receive from converting to the proposed structure. Based on that review and given that
Beacon Bay Ground Lease Analysis Page 4
1902002.NB:KHH / 16092.008.003 February 4, 2019
SS2-107
a large number of factors go into a home owner's decision making process, KMA applied
the assumption that none of the Pre -Existing Leases and all of the 1994 Leases would be
converted immediately to the 1% of value lease option being proposed.
It is KMA's opinion that the HOA's projected conversion timing likely underestimates how
quickly the Pre -Existing Leases and 1994 Leases ground leases would be converted. Both the
number and the timing of the conversions are important, because each conversion reduces the
ground lease revenues that will be received by the City.
Order of Home Sales — ($6,800,000 Total Difference/$3,899,000 NPV)
The HOA projections are based on the assumption that homes are sold in chronological
order from the oldest to the newest ground leases.
2. The data indicates that historically home sales are a mix of old and new leases. The
KMA projections are based on the assumption that home sales alternate between old
and new ground leases.
ISSUES FOR CONSIDERATION
By their nature, projections are based on a variety of assumptions and estimates
regarding future market and financial conditions. The actual results will vary from the
projections, and the differences may be material. The revenue projections for the
existing lease structure and the modified structure being proposed should only be used
to provide an order -of -magnitude perspective on the revenues that could potentially be
generated.
2. The HOA's stated objective is to minimize the City's revenue loss impact during the first
five years following the proposed modifications to the ground leases. However, it is
important to understand that factors such as the conversion rate for the 1994 Leases
could have a significant impact on the ground lease revenue generation.
3. It needs to be understood that the City's ground lease revenue is predicated on the
sales price of the home, not the home's value after any remodeling/modernization work
performed by the new owner:
a. It is reasonable to assume the sales prices generated by the homes located on
lots with the oldest ground leases will be lower than the sales prices achieved by
homes that were recently renovated or constructed.
Beacon Bay Ground Lease Analysis
1902002. N B: KH H / 16092.008.003
Page 5
February 4, 2019
SS2-108
b. The HOA projections can be considered aggressive given that they are based on
home values that exceed the prices that have actually been achieved historically.
This issue is magnified by the HOA assumption that the homes on the properties
with the oldest ground leases will be sold first.
POLICY DECISIONS
The policy decisions for the City to consider are:
It should be assumed that the existing home owners factored the ground rent payment
obligation into the price they were willing to pay to purchase a home. If the ground rent
payment amount is reduced, the home owners will effectively be receiving a windfall
financial benefit.
2. The HOA's contention is that the ground lease payment obligations exceed the current
market rate, and that the City should be required to reduce the ground rent to the
current market level. The key matters to consider are:
Market conditions change overtime. It should be assumed that at different
points in time a long-term ground lease will carry above market and below
market rent payment obligations.
b. If the City wishes to consider modifying the ground lease terms a qualified
appraiser should be engaged to identify the appropriate terms given the specific
characteristics of the property.
3. If it is the City's goal is to maintain the existing revenue stream the ground lease
structure should not be modified.
Beacon Bay Ground Lease Analysis
1902002. N B: KH H / 16092.008.003
Page 6
February 4, 2019
SS2-109
TABLE 1
PROJECTED ANNUAL GROUND LEASE PAYMENTS
GROUND LEASE ANALYSIS
BEACON BAY - NEWPORT BEACH
i Assumes five resales or conversion of 2014 leases to 50 year leases at 1% of the 2018 value per year:
One Bayfront Lot and Four Interior Lots are sold or leases are converted per year.
Sales are in chronological order, with the properties with the oldest leases sold first.
In the Proposer's submission, appreciation in home prices ranges from 3.28% to 6.35% per year. The
average appreciation rate equates to 5% per year.
The home values in 2018 are set at: $5.50 million for Bayfront Lots and $2.94 million for Interior Lots.
z Assumes that in Year 1 all the 1994 leases convert to 50 year leases at 1% of the 2018 values.
Assumes four resales per year based on historical sales activity. The projected sales prices are based
on the last actual sale or appraisal escalated at 5% per year through 2018:
One Bayfront Lot is sold per year alternating between 1994 and 2012 Lease Lots.
Three Interior Lots are sold each year, allocated to two 1994 and one 2012 Lease Lots.
Appreciation in home prices is set at 5.0% per year based on Proposer's stated assumption.
3 Assumes no resales. As pertinent, the average annual inflation rate is set at 2.5%.
Prepared by: Keyser Marston Associates, Inc.
File name: BB Projections 2 4 19, Sum
SS2-110
PROPOSER'S 1
KMA PROJECTIONS z
EXISTING LEASE 3
SUBMISSION
BASED ON PROPOSED
STRUCTURE WITH NO
PROJECTIONS
STRUCTURE
RESALES
2019
$2,739,556
$2,132,045
$3,057,908
2020
2,797, 616
2,048, 235
3,111, 720
2021
2,821, 584
1,988, 351
3,181, 518
2022
2,822,296
1,887,348
3,245,712
2023
2,702,611
1,831,009
3,306,761
2024
2,811,715
1,651,413
3,399,810
2025
2,900,627
1,712,427
3,476,018
2026
2,944,463
1,785, 853
3,656,180
2027
3,114,722
1,888,284
3,722,361
2028
3,285,776
1,971,214
3,808,204
2029
3,455,120
2,083, 263
3,887,155
2030
3,603,060
2,182, 824
3,959, 740
2031
3,734, 972
2,298,508
4,074,178
2032
3,824, 768
2,433, 828
4,167,904
2033
3,942,040
2,571,552
4,389,481
2034
4,030,680
1,988,351
4,470,876
2035
4,248,284
2,824,985
4,576,451
2036
4,468,388
2,964,808
4,673,551
2037
4,979,616
3,054,860
4,765,320
Total
$65,227,894
$41,299,156
$72,930,850
NPV @ 6% Discount Rate
$36,209,000
$23,298,000
$40,972,000
i Assumes five resales or conversion of 2014 leases to 50 year leases at 1% of the 2018 value per year:
One Bayfront Lot and Four Interior Lots are sold or leases are converted per year.
Sales are in chronological order, with the properties with the oldest leases sold first.
In the Proposer's submission, appreciation in home prices ranges from 3.28% to 6.35% per year. The
average appreciation rate equates to 5% per year.
The home values in 2018 are set at: $5.50 million for Bayfront Lots and $2.94 million for Interior Lots.
z Assumes that in Year 1 all the 1994 leases convert to 50 year leases at 1% of the 2018 values.
Assumes four resales per year based on historical sales activity. The projected sales prices are based
on the last actual sale or appraisal escalated at 5% per year through 2018:
One Bayfront Lot is sold per year alternating between 1994 and 2012 Lease Lots.
Three Interior Lots are sold each year, allocated to two 1994 and one 2012 Lease Lots.
Appreciation in home prices is set at 5.0% per year based on Proposer's stated assumption.
3 Assumes no resales. As pertinent, the average annual inflation rate is set at 2.5%.
Prepared by: Keyser Marston Associates, Inc.
File name: BB Projections 2 4 19, Sum
SS2-110
BEACON BAY GROUND LEASE ANALYSIS
KEYSER MARSTON ASSOCIATES, INC. (KMA)
METHODOLOGY AND FINDINGS
JANUARY 15, 2019
Existing Ground Lease Types
Pre -Existing Leases
1994 Leases
2012 Leases
Distribution of Leases
Description
These leases were converted to
1994 leases that expire in 2044.
These leases expire in 2044.
These leases expire 50 years after
execution. The lease term restarts
on each sale.
CPllncreases
No CPI adjustments are
applied.
CPI adjustments are
applied once every 7 years.
Annual CPI adjustments
are applied.
Number of Leases
Bayfront Lots Interior Lots
Lease Category
Pre -Existing Leases 10 17
1994 Leases 6 16
2012 Leases 11 12
Total 27 45
Table 1: This is a re-creation of Mr. Lawler's projections. The table is annotated to identify
issues identified in preparing this scenario.
Page 1
SS2-111
Table 2:
KMA Lease Projections — Before Resales
Pre -Existing Leases — The projections are based on the 2018 lease payments. No
CPI escalations are applied.
1994 Leases — Assumes that all the lessees choose to convert to a lease payment
set at 1% of the 2018 home value with no CPI increases. The 2018 home value
was projected based on the original acquisition price for the home escalated at
5% annually to reach the estimated 2018 value.
2012 Leases — Based on a five year phase in period to reach 1% of the original
acquisition cost of the home. No CPI escalations are applied. The thresholds
are:
Year 1: 2.5% of the first $3.0 million acquisition price & 1% of the balance
Year 2: 2.5% of the first $2.5 million acquisition price & 1% of the balance
Year 3: 2.5% of the first $2.0 million acquisition price & 1% of the balance
Year 4: 2.5% of the first $1.5 million acquisition price & 1% of the balance
Year 5: 2.5% of the first $1.0 million acquisition price & 1% of the balance
Table 3:
Home Sales Projections
Home values are projected to increase at an average rate of 5% per year. Four
homes are projected to be sold each year based on historical activity. Sales are
allocated as follows:
One home located on a Bayfront Lot is sold per year, alternating between Pre -
Existing Leases and 2012 Leases. Once all the Pre -Existing Bayfront Lease Lots
have been sold once, homes on Bayfront Lots with 1994 Leases are sold. Once
all the 2012 Bayfront Lease Lots have been sold once, the remaining Bayfront
Lots with 1994 Leases are sold.
Three homes located on Interior Lots are sold each year, allocated to two Pre -
Existing Lease Lots and one 2012 Lease Lot. Once all the Pre -Existing Lease
Lots are sold once, two 1994 Interior Lease Lots are sold. Once all the 2012
Interior Lease Lots have been sold once, the remaining 1994 Interior Lease
Lots are sold. Once all the Interior Lots have been sold, the pattern repeats.
Table 4:
KMA Ground Lease Projections — this table incorporates the assumptions presented
in Tables 2 and 3 to provide ground lease revenue projections based on the
proposed ground lease restructuring terms.
Beacon Bay Ground Lease Analysis
Methodology and Findings
Page 2
January 15, 2019
SS2-112
Assumptions Comparisons
Lease Rate Upon Sale Mr. Lawler and KMA both set the lease rates for new sales at 1% of
the sales price of the home.
Five Year Phase In of KMA was unable to identify a consistent methodology to the 2012
2012 Leases to 1% of Lease rates applied in Mr. Lawler's projections. In Table 1, KMA
Value hard coded the lease rates shown in Mr. Lawler's projections and
provided notes on the assumptions that appeared to be applied.
KMA applied the phase-in schedule methodology identified in Mr.
Lawler's proposal. The first year lease payment was based on the
original acquisition price of the home with no escalation for passage
of time.
Sales Price Projections As the basis for projecting future sales prices, Mr. Lawler used
average current prices of $5.3 million for homes on Bayfront Lots
and $2.8 million for homes on Interior Lots.
KMA projected sales prices for each home based on the home's
original acquisition price escalated at 5% per year from the date the
home was originally acquired through the projected sale date.
Sales Price Appreciation Mr. Lawler's assumptions sheet indicates that appreciation is
estimated at an average rate of 5% per year. The projections use
escalations that range from a low of 3.28% to a high of 6.11%. The
overall average equals 5.0%
The KMA projections are based on a straight line escalation of 5%
per year. It should be noted that a long-term projection based on an
average appreciation rate of 5% per year should be considered
aggressive. KMA used the 5% rate applied by Mr. Lawler to provide
for a consistent comparison.
CPI Increases No CPI increases were applied to the lease payments in either Mr.
Lawler's projections or KMA's projections.
Beacon Bay Ground Lease Analysis
Methodology and Findings
Page 3
January 15, 2019
SS2-113
Timing of Resales Mr. Lawler assumed that five homes will be sold per year. One
home is assumed to be on a Bayfront Lot and four homes are
assumed to be located on Interior Lots.
Based on historical sales information, KMA assumed that four
homes will be sold per year. One home is assumed to be located on
a Bayfront Lot and three homes are assumed to be located on
Interior Lots.
Order of Lot Sales Mr. Lawler assumed that the homes will be sold in chronological
order with the homes located on lots with the oldest ground leases
being sold first.
KMA alternated the sales between the oldest leases and the 2012
leases.
Summary
A summary comparison table is attached. The results of the comparison can be summarized as
follows:
1. In Mr. Lawler's projections, the ground lease revenues total $65.2 million over the 19
year projection period. Comparatively, the KMA projections result in total ground lease
revenues of $41.3 million. This represents a $23.9 million difference.
2. When the projected revenues are discounted to present value at a 6% rate, Mr. Lawler's
projections generate $36.2 million in revenues versus $23.3 million in the KMA
projections. This represents a $12.9 million difference.
3. KMA also prepared a ground lease revenue projection based on the terms imposed by
the executed ground leases for the 72 lots. This projection is also based on the
assumption that no homes will be resold during the 19 year projection period. Even
given the assumption that no homes are resold, the total ground lease revenues are
projected to be $7.7 million higher than the revenues projected by Mr. Lawler in
nominal terms, and $4.7 million in present value terms.
Beacon Bay Ground Lease Analysis
Methodology and Findings
Page 4
January 15, 2019
SS2-114
COMPARISON TABLE
PROJECTED ANNUAL GROUND LEASE PAYMENTS
GROUND LEASE ANALYSIS
BEACON BAY - NEWPORT BEACH
i See TABLE 1.
Assumes five resales per year:
One Bayfront Lot and Four Interior Lots are sold per year.
Sales are in chronological order, with the properties with the oldest leases sold first.
In the Proposer's submission, appreciation in home prices ranges from 3.28% to 6.35% per
year. Proposer's stated average annual appreciation rate is 5%.
The home values in 2018 are set at: $5.50 million for Bayfront Lots and $2.94 million for
Interior Lots.
z See TABLE 4.
Assumes four resales per year based on historical sales activity:
One Bayfront Lot is sold per year alternating between 1994 and 2012 Lease Lots.
Three Interior Lots are sold each year, allocated to two 1994 and one 2012 Lease Lots.
Appreciation in home prices is set at 5.0% per year based on Proposer's stated assumption.
Each home is valued based on the last sale price escalated to 2018 at 5.0% per year.
3 See TABLE 5. As pertinent, the average annual inflation rate is set at 2.5%.
Prepared by: Keyser Marston Associates, Inc.
File name: BB Projections 115 19, Sum
SS2-115
PROPOSER'S 1
KMA PROJECTIONS z
EXISTING LEASE 3
SUBMISSION
BASED ON PROPOSED
STRUCTURE WITH NO
PROJECTIONS
STRUCTURE
RESALES
2019
$2,739,556
$2,132,045
$3,057,908
2020
2,797, 616
2,048, 235
3,111, 720
2021
2,821, 584
1,988, 351
3,181, 518
2022
2,822,296
1,887,348
3,245,712
2023
2,702,611
1,831,009
3,306,761
2024
2,811,715
1,651,413
3,399,810
2025
2,900,627
1,712,427
3,476,018
2026
2,944,463
1,785, 853
3,656,180
2027
3,114,722
1,888,284
3,722,361
2028
3,285,776
1,971,214
3,808,204
2029
3,455,120
2,083, 263
3,887,155
2030
3,603,060
2,182, 824
3,959, 740
2031
3,734, 972
2,298,508
4,074,178
2032
3,824, 768
2,433, 828
4,167, 904
2033
3,942,040
2,571,552
4,389,481
2034
4,030,680
1,988,351
4,470,876
2035
4,248,284
2,824,985
4,576,451
2036
4,468,388
2,964,808
4,673,551
2037
4,979,616
3,054,860
4,765,320
Total
$65,227,894
$41,299,156
$72,930,850
NPV @ 6% Discount Rate
$36,209,000
$23,298,000
$40,972,000
i See TABLE 1.
Assumes five resales per year:
One Bayfront Lot and Four Interior Lots are sold per year.
Sales are in chronological order, with the properties with the oldest leases sold first.
In the Proposer's submission, appreciation in home prices ranges from 3.28% to 6.35% per
year. Proposer's stated average annual appreciation rate is 5%.
The home values in 2018 are set at: $5.50 million for Bayfront Lots and $2.94 million for
Interior Lots.
z See TABLE 4.
Assumes four resales per year based on historical sales activity:
One Bayfront Lot is sold per year alternating between 1994 and 2012 Lease Lots.
Three Interior Lots are sold each year, allocated to two 1994 and one 2012 Lease Lots.
Appreciation in home prices is set at 5.0% per year based on Proposer's stated assumption.
Each home is valued based on the last sale price escalated to 2018 at 5.0% per year.
3 See TABLE 5. As pertinent, the average annual inflation rate is set at 2.5%.
Prepared by: Keyser Marston Associates, Inc.
File name: BB Projections 115 19, Sum
SS2-115
TABLE 1
PROPOSER'S ANNUAL RENT PROJECTIONS
MODIFIED TO INCLUDE FORMULAS 1
BEACON BAY - NEWPORT BEACH
1994 Lease without annual CPI adjustments expiring in 2044
1994 Leases with annual CPI adjustments expiring 2044
-2012 Leases with annual CPI adjustments on 50 year rollovers
I. Bayfront Lots
Projected Home Value $5,500,000 $5,800,000 $6,100,000 $6,300,000 $6,700,000 $7,000,000 $7,400,000 $7,700,000 $8,100,000 $8,500,000
Projected Appreciation 5.45% 5.17% 3.28% 6.35% 4.48% 5.71% 4.05% 5.19% 4.94%
3 Beacon Bay
Adjusted Projected Home Value 7,749,600
Rent as a Percentage of Home Value 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0%
2017 Actual
Rents
19 Beacon Bay
$19,500
$55,000
$55,000
$55,000
$55,000
$55,000
$55,000
$55,000
$55,000
$55,000
$55,000
15 Beacon Bay
20,232
20,232
58,000
58,000
58,000
58,000
58,000
58,000
58,000
58,000
58,000
4 Beacon Bay
21,252
21,252
21,252
61,000
61,000
61,000
61,000
61,000
61,000
61,000
61,000
5 Beacon Bay
28,836
28,836
28,836
28,836
63,000
63,000
63,000
63,000
63,000
63,000
63,000
63 Beacon Bay
29,220
29,220
29,220
29,220
29,220
67,000
67,000
67,000
67,000
67,000
67,000
13 Beacon Bay
29,448
29,448
29,448
29,448
29,448
29,448
70,000
70,000
70,000
70,000
70,000
Beacon Bay
31,560
31,560
31,560
31,560
31,560
31,560
74,000
74,000
74,000
74,000
74,000
10 Beacon Bay
33,540
33,540
33,540
33,540
33,540
33,540
33,540
77,496
77,496
77,496
77,496
6 Beacon Bay
34,260
34,260
34,260
34,260
34,260
34,260
34,260
34,260
81,000
81,000
81,000
9 Beacon Bay
44,340
44,340
44,340
44,340
44,340
44,340
44,340
44,340
44,340
44,340
85,000
115 Harbor Island Road (C)
30,936
30,936
30,936
30,936
30,936
30,936
30,936
30,936
30,936
30,936
30,936
7 Beacon Bay
33,048
33,048
33,048
33,048
33,048
33,048
33,048
33,048
33,048
33,048
33,048
17 Beacon Bay
34,860
34,860
34,860
34,860
34,860
34,860
34,860
34,860
34,860
34,860
34,860
8 Beacon Bay
61,488
61,488
61,488
61,488
61,488
61,488
61,488
61,488
61,488
61,488
61,488
12 Beacon Bay
87,204
87,204
87,204
87,204
87,204
87,204
87,204
87,204
87,204
87,204
87,204
11 Beacon Bay
95,628
95,628
95,628
95,628
95,628
95,628
95,628
95,628
95,628
95,628
95,628
101 Harbor Island Road (A)
134,160
134,160
134,160
134,160
134,160
134,160
134,160
134,160
134,160
134,160
134,160
Prepared by: Keyser Marston Associates, Inc.
Based on HOA Representative's Projections
File name: BB Projections 115 19, HOA Annual with formulas
P e2of52
S92-116
TABLE 1
PROPOSER'S ANNUAL RENT PROJECTIONS
MODIFIED TO INCLUDE FORMULAS
BEACON BAY - NEWPORT BEACH
Prepared by: Keyser Marston Associates, Inc.
Based on HOA Representative's Projections
File name: BB Projections 115 19, HOA Annual with formulas
P e3of52
S92-117
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
I. Bayfront Lots
Projected Home Value
$8,900,000
$9,400,000
$9,800,000
$10,300,000
$10,800,000
$11,400,000
$11,900,000
$12,500,000
$13,100,000
$13,900,000
Projected Appreciation
4.71%
5.62%
4.26%
5.10%
4.85%
5.56%
4.39%
5.04%
4.80%
6.11%
Adjusted Projected Home Value
Rent as a Percentage of Home Value
1.0%
1.0%
1.0%
1.0%
1.0%
1.0%
1.0%
1.0%
1.0%
1.0%
19 Beacon Bay
$55,000
$55,000
$55,000
$55,000
$55,000
$55,000
$55,000
$55,000
$55,000
$55,000
15 Beacon Bay
58,000
58,000
58,000
58,000
58,000
58,000
58,000
58,000
58,000
58,000
4 Beacon Bay
61,000
61,000
61,000
61,000
61,000
61,000
61,000
61,000
61,000
61,000
5 Beacon Bay
63,000
63,000
63,000
63,000
63,000
63,000
63,000
63,000
63,000
63,000
63 Beacon Bay
67,000
67,000
67,000
67,000
67,000
67,000
67,000
67,000
67,000
67,000
13 Beacon Bay
70,000
70,000
70,000
70,000
70,000
70,000
70,000
70,000
70,000
70,000
Beacon Bay '
74,000
74,000
74,000
74,000
74,000
74,000
74,000
74,000
74,000
74,000
10 Beacon Bay
77,496
77,496
77,496
77,496
77,496
77,496
77,496
77,496
77,496
77,496
6 Beacon Bay
81,000
81,000
81,000
81,000
81,000
81,000
81,000
81,000
81,000
81,000
9 Beacon Bay
85,000
85,000
85,000
85,000
85,000
85,000
85,000
85,000
85,000
85,000
115 Harbor Island Road (C)
89,000
89,000
89,000
89,000
89,000
89,000
89,000
89,000
89,000
89,000
7 Beacon Bay
33,048
94,000
94,000
94,000
94,000
94,000
94,000
94,000
94,000
94,000
17 Beacon Bay
34,860
34,860
98,000
98,000
98,000
98,000
98,000
98,000
98,000
98,000
8 Beacon Bay
61,488
61,488
61,488
103,000
103,000
103,000
103,000
103,000
103,000
103,000
12 Beacon Bay
87,204
87,204
87,204
87,204
108,000
108,000
108,000
108,000
108,000
108,000
11 Beacon Bay
95,628
95,628
95,628
95,628
95,628
114,000
114,000
114,000
114,000
114,000
101 Harbor Island Road (A)
134,160
134,160
134,160
134,160
134,160
134,160
119,000
119,000
119,000
119,000
Prepared by: Keyser Marston Associates, Inc.
Based on HOA Representative's Projections
File name: BB Projections 115 19, HOA Annual with formulas
P e3of52
S92-117
TABLE 1
PROPOSER'S ANNUAL RENT PROJECTIONS
MODIFIED TO INCLUDE FORMULAS
BEACON BAY - NEWPORT BEACH
Bayfront Lots
Projected Home Value
Projected Appreciation
Adjusted Projected Home Value
Rent as a Percentage of Home Value
19 Beacon Bay
15 Beacon Bay
4 Beacon Bay
5 Beacon Bay
63 Beacon Bay
13 Beacon Bay
Beacon Bay
10 Beacon Bay
6 Beacon Bay
9 Beacon Bay
115 Harbor Island Road (C)
7 Beacon Bay
17 Beacon Bay
8 Beacon Bay
12 Beacon Bay
11 Beacon Bay
101 Harbor Island Road (A)
This is a lease that was transferred in 2018. Also, the escalation occurred one year earlier than it should under the proposed formula.
Mathematically this lease payment is based on a home value not listed on the HOA representative's projections.
Based on the 2026 value.
This is a Pre -Existing lease with no CPI adjustments. Incorrectly treated as a lease with CPI adjustments.
Prepared by: Keyser Marston Associates, Inc.
Based on HOA Representative's Projections
File name: BB Projections 115 19, HOA Annual with formulas
Page 4 of 52
SS2-118
TABLE 1
PROPOSER'S ANNUAL RENT PROJECTIONS
MODIFIED TO INCLUDE FORMULAS 1
BEACON BAY - NEWPORT BEACH
1 Beacon Bay
2 Beacon Bay
18 Beacon Bay
14 Beacon Bay
62 Beacon Bay
16 Beacon Bay
21 Beacon Bay
20 Beacon Bay
107 Harbor Island Road (B)
22 Beacon Bay
Bayfront Lots Total
1994 Lease without annual CPI adjustments expiring in 2044
1994 Leases with annual CPI adjustments expiring 2044
-2012 Leases with annual CPI adjustments on 50 year rollovers
2018 2019 2020 2021 2022
01 ENJEW low
2023 2024 2025 2026 2027
41,71 39,996 41,712 41,712 0,000 15,996 15,996 15,996 15,996 15,99
72,420 69,996 64,500 57,000 49,500 42,000 27,996 27,996 27,996 27,996 27,99
81,468
76,992
67,500
60,000
52,500
45,000
31,992
31,992
31,992
31,992
31,992
88,884
79,992
71,496
63,996
56,496
48,996
34,992
34,992
34,992
34,992
34,992
94,656
81,996
73,500
66,000
58,500
51,000
36,996
36,996
36,996
36,996
36,996
99,636
84,000
75,492
67,992
60,492
52,992
39,000
39,000
39,000
39,000
39,000
105,288
85,992
77,496
69,996
62,496
54,996
40,992
40,992
40,992
40,992
40,992
112,980
88,992
80,496
72,996
65,496
57,996
43,992
43,992
43,992
43,992
43,992,
118,416
90,996
82,500
75,000
67,500
60,000
45,996
45,996
45,996
45,996
45,996
131,244
97,992
90,492
82,992
75,492
67,992
52,992
52,992
52,992
52,992
52,992
$1,716,216 $1,601,956 $1,567,964 $1,540,212 $1,506,876 $1,465,444 $1,408,408 $1,452,364 $1,499,104 $1,499,104 $1,539,764
Prepared by: Keyser Marston Associates, Inc.
Based on HOA Representative's Projections
File name: BB Projections 115 19, HOA Annual with formulas
P e5of52
S92-119
TABLE 1
PROPOSER'S ANNUAL RENT PROJECTIONS
MODIFIED TO INCLUDE FORMULAS
BEACON BAY - NEWPORT BEACH
1 Beacon Bay
2 Beacon Bay
18 Beacon Bay
14 Beacon Bay
62 Beacon Bay
16 Beacon Bay
21 Beacon Bay
20 Beacon Bay
107 Harbor Island Road (B)
22 Beacon Bay
Bayfront Lots Total
15,996
15,996
15,996
15,996
15,996
15,996
15,996
125,000
125,000
126,000
27,996
27,996
27,996
27,996
27,996
27,996
27,996
27,996
131,000
132,000
31,992
31,992
31,992
31,992
31,992
31,992
31,992
31,992
31,992
139,000
34,992
34,992
34,992
34,992
34,992
34,992
34,992
34,992
34,992
34,992
36,996
36,996
36,996
36,996
36,996
36,996
36,996
36,996
36,996
36,996
39,000
39,000
39,000
39,000
39,000
39,000
39,000
39,000
39,000
39,000
40,992
40,992
40,992
40,992
40,992
40,992
40,992
40,992
40,992
40,992
43,992
43,992
43,992
43,992
43,992
43,992
43,992
43,992
43,992
43,992
45,996
45,996
45,996
45,996
45,996
45,996
45,996
45,996
45,996
45,996
52,992
52,992
52,992
52,992
52,992
52,992
52,992
52,992
52,992
52,992
$1,597,828 $1,658,780 $1,721,920 $1,763,432 $1,784,228 $1,802,600 $1,787,440 $1,896,444 $1,999,448 $2,108,456
Prepared by: Keyser Marston Associates, Inc.
Based on HOA Representative's Projections
File name: BB Projections 115 19, HOA Annual with formulas
P e6of52
S92-120
TABLE 1
PROPOSER'S ANNUAL RENT PROJECTIONS
MODIFIED TO INCLUDE FORMULAS
BEACON BAY - NEWPORT BEACH
1 Beacon Bay
2 Beacon Bay
18 Beacon Bay
14 Beacon Bay
62 Beacon Bay
16 Beacon Bay
21 Beacon Bay
20 Beacon Bay
107 Harbor Island Road (B)
22 Beacon Bay
Bayfront Lots Total
Prepared by: Keyser Marston Associates, Inc.
Based on HOA Representative's Projections
File name: BB Projections 115 19, HOA Annual with formulas
2018 rent is $1,716 less than 2017 rent. Then it reverts to the 2017 rent for three years. Then it decreases by $11,712 for one
year. Then it decreases by 38.35% held flat for 12 years. Sale in 2035 based on formula assumptions, flat in 2036 and
38% unexplained escalation in 2037.
2018 rent is $2,424 less than 2017 rent. Then it reverts to the 2017 rent for three years. Then it decreases by $7,500 for one
year. Then it decreases by 38.66% held flat for 13 years. Sale in 2036 based on formula assumptions, and unexplained
39% escalation in 2037.
Five years of rent reductions: $4,476; $9,492; $7,500; $7,500; and $7,500. Then it decreases by 39.27% held flat for 14 years.
39% Sale in 2037 based on formula assumptions.
39% Five years of rent reductions: $8,892; $8,496; $7,500; $7,500; and $7,500. Then it decreases by 39.37% held flat for 15 years.
39% Five years of rent reductions: $12,660; $8,496; $7,500; $7,500; and $7,500. Then it decreases by 39.08% held flat for 15 years
39% Five years of rent reductions: $15,636; $8,508; $7,500; $7,500; and $7,500. Then it decreases by 39.14% held flat for 15 years
39% Five years of rent reductions: $19,296; $8,496; $7,500; $7,500; and $7,500. Then it decreases by 38.93% held flat for 15 years
39% Five years of rent reductions: $23,988; $8,496; $7,500; $7,500; and $7,500. Then it decreases by 38.94% held flat for 15 years
39% Five years of rent reductions: $27,420; $8,496; $7,500; $7,500; and $7,500. Then it decreases by 38.84% held flat for 15 years
40% Five years of rent reductions: $33,252; $7,500; $7,500; $7,500; and $7,500. Then it decreases by 40.38% held flat for 15 years
Page 7 of 52
SS2-121
TABLE 1
PROPOSER'S ANNUAL RENT PROJECTIONS
MODIFIED TO INCLUDE FORMULAS 1
BEACON BAY - NEWPORT BEACH
Prepared by: Keyser Marston Associates, Inc.
Based on HOA Representative's Projections
File name: BB Projections 115 19, HOA Annual with formulas
P e8of52
S924 22
1994 Lease without annual CPI adjustments expiring in 2044
1994 Leases with annual CPI adjustments expiring 2044
-2012 Leases with annual CPI adjustments on 50 year rollovers
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
II. Interior Lots
Projected Home Value
$2,940,000
$3,080,000
$3,240,000
$3,400,000
$3,570,000
$3,750,000
$3,930,000
$4,120,000
$4,330,000
$4,540,000
Projected Appreciation
4.76%
5.19%
4.94%
5.00%
5.04%
4.80%
4.83%
5.10%
4.85%
Rent as a Percentage of Home Value
1.0%
1.0%
1.0%
1.0%
1.0%
1.0%
1.0%
1.0%
1.0%
1.0%
2017 Actual
Rents
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
68 Beacon Bay
$6,048
$29,400
$29,400
$29,400
$29,400
$29,400
$29,400
$29,400
$29,400
$29,400
$29,400
65 Beacon Bay
6,312
29,400
29,400
29,400
29,400
29,400
29,400
29,400
29,400
29,400
29,400
26 Beacon Bay
6,936
29,400
29,400
29,400
29,400
29,400
29,400
29,400
29,400
29,400
29,400
32 Beacon Bay
7,212
29,400
29,400
29,400
29,400
29,400
29,400
29,400
29,400
29,400
29,400
33 Beacon Bay
7,296
7,296
30,800
30,800
30,800
30,800
30,800
30,800
30,800
30,800
30,800
47 Beacon Bay
7,356
7,356
30,800
30,800
30,800
30,800
30,800
30,800
30,800
30,800
30,800
42 Beacon Bay
7,668
7,668
30,800
30,800
30,800
30,800
30,800
30,800
30,800
30,800
30,800
51 Beacon Bay
7,848
7,848
30,800
30,800
30,800
30,800
30,800
30,800
30,800
30,800
30,800
61 Beacon Bay
8,472
8,472
TT)T'
32,400
32,400
32,400
32,400
32,400
32,400
32,400
32,400
46 Beacon Bay
8,484
8,484
8,484
32,400
32,400
32,400
32,400
32,400
32,400
32,400
32,400
64 Beacon Bay
10,320
10,320
10,320
32,400
32,400
32,400
32,400
32,400
32,400
32,400
32,400
31 Beacon Bay
10,512
10,512
10,512
32,400
32,400
32,400
32,400
32,400
32,400
32,400
32,400
39 Beacon Bay
11,556
11,556
11,556
11,556
34,000
34,000
34,000
34,000
34,000
34,000
34,000
50 Beacon Bay
12,108
12,108
12,108
12,108
34,000
34,000
34,000
34,000
34,000
34,000
34,000
59 Beacon Bay
12,168
12,168
12,168
12,168
34,000
34,000
34,000
34,000
34,000
34,000
34,000
55 Beacon Bay
12,864
12,864
12,864
12,864
34,000
34,000
34,000
34,000
34,000
34,000
34,000
43 Beacon Bay
13,224
13,224
13,224
13,224
13,224
35,700
35,700
35,700
35,700
35,700
35,700
40 Beacon Bay
13,572
13,572
13,572
13,572
13,572
35,700
35,700
35,700
35,700
35,700
35,700
36 Beacon Bay
8,328
8,328
8,328
8,328
8,328
35,700
35,700
35,700
35,700
35,700
35,700
57 Beacon Bay
10,032
10,032
10,032
10,032
10,032
35,700
35,700
35,700
35,700
35,700
35,700
35 Beacon Bay
14,328
14,328
14,328
14,328
14,328
14,328
37,500
37,500
37,500
37,500
37,500
29 Beacon Bay
15,780
15,780
15,780
15,780
15,780
15,780
37,500
37,500
37,500
37,500
37,500
34 Beacon Bay
16,200
16,200
16,200
16,200
16,200
16,200
37,500
37,500
37,500
37,500
37,500
28 Beacon Bay
16,320
16,320
16,320
16,320
16,320
16,320
37,500
37,500
37,500
37,500
37,500
30 Beacon Bay
18,360
18,360
18,360
18,360
18,360
18,360
18,360
39,300
39,300
39,300
39,300
Prepared by: Keyser Marston Associates, Inc.
Based on HOA Representative's Projections
File name: BB Projections 115 19, HOA Annual with formulas
P e8of52
S924 22
TABLE 1
PROPOSER'S ANNUAL RENT PROJECTIONS
MODIFIED TO INCLUDE FORMULAS
BEACON BAY - NEWPORT BEACH
Prepared by: Keyser Marston Associates, Inc.
Based on HOA Representative's Projections
File name: BB Projections 115 19, HOA Annual with formulas
P e9of52
S924 23
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
II. Interior Lots
Projected Home Value
$4,700,000
$5,000,000
$5,200,000
$5,500,000
$5,700,000
$6,000,000
$6,300,000
$6,600,000
$7,000,000
$7,400,000
Projected Appreciation
3.52%
6.38%
4.00%
5.77%
3.64%
5.26%
5.00%
4.76%
6.06%
5.71%
Rent as a Percentage of Home Value
1.0%
1.0%
1.0%
1.0%
1.0%
1.0%
1.0%
1.0%
1.0%
1.0%
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
68 Beacon Bay
$29,400
$50,000
$50,000
$50,000
$50,000
$50,000
$50,000
$50,000
$50,000
$50,000
65 Beacon Bay
29,400
50,000
50,000
50,000
50,000
50,000
50,000
50,000
50,000
50,000
26 Beacon Bay
29,400
50,000
50,000
50,000
50,000
50,000
50,000
50,000
50,000
50,000
32 Beacon Bay
29,400
50,000
50,000
50,000
50,000
50,000
50,000
50,000
50,000
50,000
33 Beacon Bay
30,800
30,800
52,000
52,000
52,000
52,000
52,000
52,000
52,000
52,000
47 Beacon Bay
30,800
30,800
52,000
52,000
52,000
52,000
52,000
52,000
52,000
52,000
42 Beacon Bay
30,800
30,800
52,000
52,000
52,000
52,000
52,000
52,000
52,000
52,000
51 Beacon Bay
30,800
30,800
52,000
52,000
52,000
52,000
52,000
52,000
52,000
52,000
61 Beacon Bay '
32,400
32,400
32,400
55,000
55,000
55,000
55,000
55,000
55,000
55,000
46 Beacon Bay
32,400
32,400
32,400
55,000
55,000
55,000
55,000
55,000
55,000
55,000
64 Beacon Bay
32,400
32,400
32,400
55,000
55,000
55,000
55,000
55,000
55,000
55,000
31 Beacon Bay
32,400
32,400
32,400
55,000
55,000
55,000
55,000
55,000
55,000
55,000
39 Beacon Bay
34,000
34,000
34,000
34,000
57,000
57,000
57,000
57,000
57,000
57,000
50 Beacon Bay
34,000
34,000
34,000
34,000
57,000
57,000
57,000
57,000
57,000
57,000
59 Beacon Bay
34,000
34,000
34,000
34,000
57,000
57,000
57,000
57,000
57,000
57,000
55 Beacon Bay
34,000
34,000
34,000
34,000
34,000
60,000
60,000
60,000
60,000
60,000
43 Beacon Bay
35,700
35,700
35,700
35,700
35,700
60,000
60,000
60,000
60,000
60,000
40 Beacon Bay
35,700
35,700
35,700
35,700
35,700
60,000
60,000
60,000
60,000
60,000
36 Beacon Bay
35,700
35,700
35,700
35,700
35,700
60,000
60,000
60,000
60,000
60,000
57 Beacon Bay
35,700
35,700
35,700
35,700
35,700
35,700
63,000
63,000
63,000
63,000
35 Beacon Bay
37,500
37,500
37,500
37,500
37,500
37,500
63,000
63,000
63,000
63,000
29 Beacon Bay
37,500
37,500
37,500
37,500
37,500
37,500
63,000
63,000
63,000
63,000
34 Beacon Bay
37,500
37,500
37,500
37,500
37,500
37,500
63,000
63,000
63,000
63,000
28 Beacon Bay
37,500
37,500
37,500
37,500
37,500
37,500
37,500
66,000
66,000
66,000
30 Beacon Bay
39,300
39,300
39,300
39,300
39,300
39,300
39,300
66,000
66,000
66,000
Prepared by: Keyser Marston Associates, Inc.
Based on HOA Representative's Projections
File name: BB Projections 115 19, HOA Annual with formulas
P e9of52
S924 23
TABLE 1
PROPOSER'S ANNUAL RENT PROJECTIONS
MODIFIED TO INCLUDE FORMULAS
BEACON BAY - NEWPORT BEACH
II. Interior Lots
Projected Home Value
Projected Appreciation
Rent as a Percentage of Home Value
68 Beacon Bay
65 Beacon Bay
26 Beacon Bay
32 Beacon Bay
33 Beacon Bay
47 Beacon Bay
42 Beacon Bay
51 Beacon Bay
M Beacon Bay
46 Beacon Bay
64 Beacon Bay
31 Beacon Bay
39 Beacon Bay
50 Beacon Bay
59 Beacon Bay
55 Beacon Bay
43 Beacon Bay
40 Beacon Bay
36 Beacon Bay
57 Beacon Bay
35 Beacon Bay
29 Beacon Bay
34 Beacon Bay
28 Beacon Bay
30 Beacon Bay
Transferred to Peter Crow in 2018 upon death of Sally Crow - now an annual increase property
The escalation occurred one year later than it should have under the formula
This is a Pre -Existing lease with no CPI adjustments. Incorrectly treated as a lease with CPI adjustments.
The escalation occurred one year later than it should have under the formula
The escalation occurred one year later than it should have under the formula
Prepared by: Keyser Marston Associates, Inc.
Based on HOA Representative's Projections
File name: BB Projections 115 19, HOA Annual with formulas
Page 10 of 52
SS2-124
TABLE 1
PROPOSER'S ANNUAL RENT PROJECTIONS
MODIFIED TO INCLUDE FORMULAS 1
BEACON BAY - NEWPORT BEACH
1994 Lease without annual CPI adjustments expiring in 2044
Prepared by: Keyser Marston Associates, Inc.
Based on HOA Representative's Projections
File name: BB Projections 115 19, HOA Annual with formulas
Page 11 of 52
SS2-125
1994 Leases with annual CPI adjustments expiring 2044
-2012 Leases with annual CPI
adjustments on
50 year rollovers
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
22,3MW 22,596 W
222,596
22,59.
39,300
39,300
39,300
39,300
45 Beacon Bay
25,440
25,440
25,440
25,440
25,440
25,440
25,440
39,300
39,300
39,300
39,300
69 Beacon Bay
25,656
25,656
25,656
25,656
25,656
25,656
25,656
39,300
39,300
39,300
39,300
67 Beacon Bay
28,320
28,320
28,320
28,320
28,320
28,320
28,320
28,320
41,200
41,200
41,200
25 Beacon Bay
28,560
28,560
28,560
28,560
28,560
28,560
28,560
28,560
41,200
41,200
41,200
27 Beacon Bay
32,268
32,268
32,268
32,268
32,268
32,268
32,268
32,268
41,200
41,200
41,200
44 Beacon Bay
33,480
33,480
33,480
33,480
33,480
33,480
33,480
33,480
41,200
41,200
41,200
23 Beacon Bay
33,696
33,696
33,696
33,696
33,696
33,696
33,696
33,696
33,696
43,300
43,300
56 Beacon Bay
40,356
40,356
40,356
40,356
40,356
40,356
40,356
40,356
40,356
43,300
43,300
54 Beacon Bay
46,116
46,116
46,116
46,116
46,116
46,116
46,116
46,116
46,116
43,300
43,300
Bacon Esay
mor, Z1b
24,216
24,216
24,216
24,216
24,216
9,192
9,19243,296
43,296
48 Beacon Bay
30,780
30,000
30,000
30,000
30,000
27,000
12,001
12,001
12,001
12,001
45,396
38 Beacon Bay
32,136
30,000
30,000
30,000
30,000
27,000
12,000
12,000
12,000
12,000
45,396
60 Beacon Bay
36,156
34,992
34,992
34,992
34,992
28,992
13,992
13,992
13,992
13,99 45,396
49 Beacon Bay
38,124
34,992
34,992
34,992
34,992
28,992
13,992
13,992
13,992
13,99
45,396
37 Beacon Bay
44,700
42,492
42,492
42,492
39,492
31,992
16,990
16,990
16,990
16,990
16,990
53 Beacon Bay
49,992
47,496
47,496
47,496
41,496
33,996
18,997
18,997
18,997
18,997
18,997
24 Beacon Bay
50,892
47,496
47,496
47,496
41,496
33,996
18,998
18,998
18,998
18,998
18,998
66 Beacon Bay
53,328
49,992
49,992
49,992
42,492
34,992
19,993
19,993
19,993
19,993
19,993
52 Beacon Bay
63,672
60,000
60,000
4,000
46,500
39,000_ 24,000
� 24,000
4,000
24,000
124,000M
Interior Lots Total
$1,009,788
$1,078,560
$1,171,592
$1,257,404 $1,314,708
$1,356,852
$1,294,203
$1,359,351
$1,401,523
$1,445,359
$1,574,958
Prepared by: Keyser Marston Associates, Inc.
Based on HOA Representative's Projections
File name: BB Projections 115 19, HOA Annual with formulas
Page 11 of 52
SS2-125
TABLE 1
PROPOSER'S ANNUAL RENT PROJECTIONS
MODIFIED TO INCLUDE FORMULAS
BEACON BAY - NEWPORT BEACH
52 Beacon Bay 49,992 49,992 49,992 49,992 49,992 49,992 49,992 49,992 80,400
Interior Lots Total $1,687,948 $1,796,340 $1,881,140 $1,971,540 $2,040,540 $2,139,440 $2,243,240 $2,351,840 $2,468,940 $2,871,160
Prepared by: Keyser Marston Associates, Inc.
Based on HOA Representative's Projections
File name: BB Projections 115 19, HOA Annual with formulas Page 12 of 52
SS2-126
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
39,300
39,300
39,300
39,300
39,300
39,300
39,300
66,000
66,000
66,000
45
Beacon
Bay
39,300
39,300
39,300
39,300
39,300
39,300
39,300
66,000
66,000
66,000
69
Beacon
Bay
39,300
39,300
39,300
39,300
39,300
39,300
39,300
39,300
70,000
70,000
67
Beacon
Bay
41,200
41,200
41,200
41,200
41,200
41,200
41,200
41,200
70,000
70,000
25
Beacon
Bay
41,200
41,200
41,200
41,200
41,200
41,200
41,200
41,200
70,000
70,000
27
Beacon
Bay
41,200
41,200
41,200
41,200
41,200
41,200
41,200
41,200
70,000
70,000
44
Beacon
Bay
41,200
41,200
41,200
41,200
41,200
41,200
41,200
41,200
41,200
74,000
23
Beacon
Bay
43,300
43,300
43,300
43,300
43,300
43,300
43,300
43,300
43,300
74,000
56
Beacon
Bay
43,300
43,300
43,300
43,300
43,300
43,300
43,300
43,300
43,300
74,000
54
Beacon
Bay
43,300
43,300
43,300
43,300
43,300
43,300
43,300
43,300
43,300
74,000
Bacon
Esay
43,296
43,296
43,296
43,296
43,296
43,296
43,296
43,296
43,296
68,400
48
Beacon
Bay
45,396
45,396
45,396
45,396
45,396
45,396
45,396
45,396
45,396
71,820
38
Beacon
Bay
45,396
45,396
45,396
45,396
45,396
45,396
45,396
45,396
45,396
71,820
60
Beacon
Bay
45,396
45,396
45,396
45,396
45,396
45,396
45,396
45,396
45,396
71,820
49
Beacon
Bay
45,396
45,396
45,396
45,396
45,396
45,396
45,396
45,396
45,396
71,820
37
Beacon
Bay
46,992
46,992
46,992
46,992
46,992
46,992
46,992
46,992
46,992
76,020
53
Beacon
Bay
46,992
46,992
46,992
46,992
46,992
46,992
46,992
46,992
46,992
76,020
24
Beacon
Bay
46,992
46,992
46,992
46,992
46,992
46,992
46,992
46,992
46,992
76,020
66
Beacon
Bay
46,992
46,992
46,992
46,992
46,992
46,992
46,992
46,992
46,992
76,020
52 Beacon Bay 49,992 49,992 49,992 49,992 49,992 49,992 49,992 49,992 80,400
Interior Lots Total $1,687,948 $1,796,340 $1,881,140 $1,971,540 $2,040,540 $2,139,440 $2,243,240 $2,351,840 $2,468,940 $2,871,160
Prepared by: Keyser Marston Associates, Inc.
Based on HOA Representative's Projections
File name: BB Projections 115 19, HOA Annual with formulas Page 12 of 52
SS2-126
TABLE 1
PROPOSER'S ANNUAL RENT PROJECTIONS
MODIFIED TO INCLUDE FORMULAS
BEACON BAY - NEWPORT BEACH
58 Beacon Bay Transferred to Greg Denk in 2018
45 Beacon Bay
69 Beacon Bay
The escalation occurred one year later than it should have under the formula
67 Beacon Bay
25 Beacon Bay
27 Beacon Bay
44 Beacon Bay
The escalation occurred one year later than it should have under the formula
23 Beacon Bay
56 Beacon Bay
54 Beacon Bay
1 Beacon Bay
38% 2017 lease payment for five years. 37.96% reduction held flat for two years. Then sale based on the formula assumptions.
2018 rent is $780 less than 2017 rent, then held flat for four years, then a $3,000 decrease. Then a 38.99% decrease from
48 Beacon Bay
39% 2017 held flat for four years. Then sale based on the formula assumptions.
2018 rent is $2,136 less than 2017 rent, then held flat for four years, then a $3,000 decrease. Then a 37.34% decrease from
38 Beacon Bay
37% 2017 held flat for four years. Then sale based on the formula assumptions.
2018 rent is $1,164 less than 2017 rent, then held flat for four years, then a $6,000 decrease. Then a 38.70% decrease from
60 Beacon Bay
39% 2017 held flat for four years. Then sale based on the formula assumptions.
2018 rent is $3,132 less than 2017 rent, then held flat for four years, then a $6,000 decrease. Then a 36.70% decrease from
49 Beacon Bay
37% 2017 held flat for four years. Then sale based on the formula assumptions.
2018 rent is $2,208 less than 2017 rent, then held flat for three years, then a $3,000 decrease, then a $7,500 decrease. Then
37 Beacon Bay
38% a 38.01% decrease from 2017 held flat for five years. Then sale based on the formula assumptions.
2018 rent is $2,496 less than 2017 rent, then held flat for three years, then a $6,000 decrease, then a $7,500 decrease. Then
53 Beacon Bay
38% a 38.00% decrease from 2017 held flat for five years. Then sale based on the formula assumptions.
2018 rent is $3,396 less than 2017 rent, then held flat for three years, then a $6,000 decrease, then a $7,500 decrease. Then
24 Beacon Bay
37% a 37.33% decrease from 2017 held flat for five years. Then sale based on the formula assumptions.
2018 rent is $3,336 less than 2017 rent, then held flat for three years, then a $7,500 decrease, then another $7,500
66 Beacon Bay
37% decrease. Then a 37.49% decrease from 2017 held flat for five years. Then sale based on the formula assumptions.
2018 rent is $3,672 less than 2017 rent, then held flat for two years, then a $6,000 increase, then a $7,500 decrease, then
another $7,500 decrease. Then a 37.69% decrease from 2017 held flat for five years. Then sale based on the formula
38% assumptions.
Interior Lots Total
Prepared by: Keyser Marston Associates, Inc.
Based on HOA Representative's Projections
File name: BB Projections 115 19, HOA Annual with formulas
Page 13 of 52
SS2-127
TABLE 1
PROPOSER'S ANNUAL RENT PROJECTIONS
MODIFIED TO INCLUDE FORMULAS 1
BEACON BAY - NEWPORT BEACH
1994 Lease without annual CPI adjustments expiring in 2044
1994 Leases with annual CPI adjustments expiring 2044
-2012 Leases with annual CPI adjustments on 50 year rollovers
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
Grand Total - Annual Rent $2,726,004 $2,680,516 $2,739,556 $2,797,616 $2,821,584 $2,822,296 $2,702,611 $2,811,715 $2,900,627 $2,944,463 $3,114,722
2017 Annual Revenue: $2,726,004
2027 Projected Annual Revenue: $3,114,722
2032 Projected Annual Revenue: $3,824,768
2037 Projected Annual Revenue: $4,979,616
1 There are slight variations from the HOA representative's estimates due to rounding issues. There are numerous irregularities in the HOA
representative's estimates. These irregularities are described in the columns following the rent projections.
Prepared by: Keyser Marston Associates, Inc.
Based on HOA Representative's Projections
File name: BB Projections 115 19, HOA Annual with formulas
Page 14 of 52
SS2-128
TABLE 1
PROPOSER'S ANNUAL RENT PROJECTIONS
MODIFIED TO INCLUDE FORMULAS
BEACON BAY - NEWPORT BEACH
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
Grand Total - Annual Rent $3,285,776
$3,455,120
$3,603,060
$3,734,972
$3,824,768
$3,942,040
$4,030,680
$4,248,284
$4,468,388
$4,979,616
Prepared by: Keyser Marston Associates, Inc.
Based on HOA Representative's Projections
File name: BB Projections 115 19, HOA Annual with formulas
Page 15 of 52
SS2-129
TABLE 1
PROPOSER'S ANNUAL RENT PROJECTIONS
MODIFIED TO INCLUDE FORMULAS
BEACON BAY - NEWPORT BEACH
Grand Total - Annual Rent
Prepared by: Keyser Marston Associates, Inc.
Based on HOA Representative's Projections
File name: BB Projections 115 19, HOA Annual with formulas
Page 16 of 52
SS2-130
TABLE 2
KMA LEASE PROJECTIONS -BEFORE RESALES
PROPOSED LEASE RESTRUCTURING
BEACON BAY - NEWPORT BEACH
Prepared by: Keyser Marston Associates, Inc.
File name: BB Projections 115 19, Proposed Lse Structure Page 17 of 52
SS2-131
2019
2020
2021
2022
2023
2024
2025
2026
2027
I. Pre -Existing Leases 1
A. Bayfront Lots
63 Beacon Bay
$29,220
$29,220
$29,220
$29,220
$29,220
$29,220
$29,220
$29,220
$29,220
13 Beacon Bay
$29,450
$29,450
$29,450
$29,450
$29,450
$29,450
$29,450
$29,450
$29,450
19 Beacon Bay
$19,500
$19,500
$19,500
$19,500
$19,500
$19,500
$19,500
$19,500
$19,500
6 Beacon Bay
$34,260
$34,260
$34,260
$34,260
$34,260
$34,260
$34,260
$34,260
$34,260
9 Beacon Bay
$44,350
$44,350
$44,350
$44,350
$44,350
$44,350
$44,350
$44,350
$44,350
15 Beacon Bay
$20,240
$20,240
$20,240
$20,240
$20,240
$20,240
$20,240
$20,240
$20,240
4 Beacon Bay
$21,260
$21,260
$21,260
$21,260
$21,260
$21,260
$21,260
$21,260
$21,260
5 Beacon Bay
$28,840
$28,840
$28,840
$28,840
$28,840
$28,840
$28,840
$28,840
$28,840
10 Beacon Bay
$33,540
$33,540
$33,540
$33,540
$33,540
$33,540
$33,540
$33,540
$33,540
7 Beacon Bay
$33,055
$33,055
$33,055
$33,055
$33,055
$33,055
$33,055
$33,055
$33,055
B. Interior Lots
51 Beacon Bay
$7,857
$7,857
$7,857
$7,857
$7,857
$7,857
$7,857
$7,857
$7,857
40 Beacon Bay
$13,572
$13,572
$13,572
$13,572
$13,572
$13,572
$13,572
$13,572
$13,572
42 Beacon Bay
$7,672
$7,672
$7,672
$7,672
$7,672
$7,672
$7,672
$7,672
$7,672
46 Beacon Bay
$8,492
$8,492
$8,492
$8,492
$8,492
$8,492
$8,492
$8,492
$8,492
43 Beacon Bay
$13,232
$13,232
$13,232
$13,232
$13,232
$13,232
$13,232
$13,232
$13,232
65 Beacon Bay
$6,322
$6,322
$6,322
$6,322
$6,322
$6,322
$6,322
$6,322
$6,322
64 Beacon Bay
$10,325
$10,325
$10,325
$10,325
$10,325
$10,325
$10,325
$10,325
$10,325
32 Beacon Bay
$7,217
$7,217
$7,217
$7,217
$7,217
$7,217
$7,217
$7,217
$7,217
47 Beacon Bay
$7,365
$7,365
$7,365
$7,365
$7,365
$7,365
$7,365
$7,365
$7,365
26 Beacon Bay
$6,942
$6,942
$6,942
$6,942
$6,942
$6,942
$6,942
$6,942
$6,942
55 Beacon Bay
$12,865
$12,865
$12,865
$12,865
$12,865
$12,865
$12,865
$12,865
$12,865
33 Beacon Bay
$7,307
$7,307
$7,307
$7,307
$7,307
$7,307
$7,307
$7,307
$7,307
31 Beacon Bay
$10,515
$10,515
$10,515
$10,515
$10,515
$10,515
$10,515
$10,515
$10,515
39 Beacon Bay
$11,557
$11,557
$11,557
$11,557
$11,557
$11,557
$11,557
$11,557
$11,557
59 Beacon Bay
$12,175
$12,175
$12,175
$12,175
$12,175
$12,175
$12,175
$12,175
$12,175
50 Beacon Bay
$12,111
$12,111
$12,111
$12,111
$12,111
$12,111
$12,111
$12,111
$12,111
68 Beacon Bay
$6,057
$6,057
$6,057
$6,057
$6,057
$6,057
$6,057
$6,057
$6,057
Prepared by: Keyser Marston Associates, Inc.
File name: BB Projections 115 19, Proposed Lse Structure Page 17 of 52
SS2-131
TABLE 2
KMA LEASE PROJECTIONS -BEFORE RESALES
PROPOSED LEASE RESTRUCTURING
BEACON BAY - NEWPORT BEACH
Prepared by: Keyser Marston Associates, Inc.
File name: BB Projections 115 19, Proposed Lse Structure Page 18 of 52
SS2-132
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
I. Pre -Existing
Leases
A. Bayfront Lots
63
Beacon
Bay
$29,220
$29,220
$29,220
$29,220
$29,220
$29,220
$29,220
$29,220
$29,220
$29,220
13
Beacon
Bay
$29,450
$29,450
$29,450
$29,450
$29,450
$29,450
$29,450
$29,450
$29,450
$29,450
19
Beacon
Bay
$19,500
$19,500
$19,500
$19,500
$19,500
$19,500
$19,500
$19,500
$19,500
$19,500
6 Beacon Bay
$34,260
$34,260
$34,260
$34,260
$34,260
$34,260
$34,260
$34,260
$34,260
$34,260
9 Beacon Bay
$44,350
$44,350
$44,350
$44,350
$44,350
$44,350
$44,350
$44,350
$44,350
$44,350
15
Beacon
Bay
$20,240
$20,240
$20,240
$20,240
$20,240
$20,240
$20,240
$20,240
$20,240
$20,240
4 Beacon Bay
$21,260
$21,260
$21,260
$21,260
$21,260
$21,260
$21,260
$21,260
$21,260
$21,260
5 Beacon Bay
$28,840
$28,840
$28,840
$28,840
$28,840
$28,840
$28,840
$28,840
$28,840
$28,840
10
Beacon
Bay
$33,540
$33,540
$33,540
$33,540
$33,540
$33,540
$33,540
$33,540
$33,540
$33,540
7 Beacon Bay
$33,055
$33,055
$33,055
$33,055
$33,055
$33,055
$33,055
$33,055
$33,055
$33,055
B. Interior Lots
51
Beacon
Bay
$7,857
$7,857
$7,857
$7,857
$7,857
$7,857
$7,857
$7,857
$7,857
$7,857
40
Beacon
Bay
$13,572
$13,572
$13,572
$13,572
$13,572
$13,572
$13,572
$13,572
$13,572
$13,572
42
Beacon
Bay
$7,672
$7,672
$7,672
$7,672
$7,672
$7,672
$7,672
$7,672
$7,672
$7,672
46
Beacon
Bay
$8,492
$8,492
$8,492
$8,492
$8,492
$8,492
$8,492
$8,492
$8,492
$8,492
43
Beacon
Bay
$13,232
$13,232
$13,232
$13,232
$13,232
$13,232
$13,232
$13,232
$13,232
$13,232
65
Beacon
Bay
$6,322
$6,322
$6,322
$6,322
$6,322
$6,322
$6,322
$6,322
$6,322
$6,322
64
Beacon
Bay
$10,325
$10,325
$10,325
$10,325
$10,325
$10,325
$10,325
$10,325
$10,325
$10,325
32
Beacon
Bay
$7,217
$7,217
$7,217
$7,217
$7,217
$7,217
$7,217
$7,217
$7,217
$7,217
47
Beacon
Bay
$7,365
$7,365
$7,365
$7,365
$7,365
$7,365
$7,365
$7,365
$7,365
$7,365
26
Beacon
Bay
$6,942
$6,942
$6,942
$6,942
$6,942
$6,942
$6,942
$6,942
$6,942
$6,942
55
Beacon
Bay
$12,865
$12,865
$12,865
$12,865
$12,865
$12,865
$12,865
$12,865
$12,865
$12,865
33
Beacon
Bay
$7,307
$7,307
$7,307
$7,307
$7,307
$7,307
$7,307
$7,307
$7,307
$7,307
31
Beacon
Bay
$10,515
$10,515
$10,515
$10,515
$10,515
$10,515
$10,515
$10,515
$10,515
$10,515
39
Beacon
Bay
$11,557
$11,557
$11,557
$11,557
$11,557
$11,557
$11,557
$11,557
$11,557
$11,557
59
Beacon
Bay
$12,175
$12,175
$12,175
$12,175
$12,175
$12,175
$12,175
$12,175
$12,175
$12,175
50
Beacon
Bay
$12,111
$12,111
$12,111
$12,111
$12,111
$12,111
$12,111
$12,111
$12,111
$12,111
68
Beacon
Bay
$6,057
$6,057
$6,057
$6,057
$6,057
$6,057
$6,057
$6,057
$6,057
$6,057
Prepared by: Keyser Marston Associates, Inc.
File name: BB Projections 115 19, Proposed Lse Structure Page 18 of 52
SS2-132
TABLE 2
KMA LEASE PROJECTIONS -BEFORE RESALES
PROPOSED LEASE RESTRUCTURING
BEACON BAY - NEWPORT BEACH
Prepared by: Keyser Marston Associates, Inc.
File name: BB Projections 115 19, Proposed Lse Structure Page 19 of 52
SS2-133
2038
2039
2040
2041
2042
2043
2044
2045
I. Pre -Existing
Leases
A. Bayfront Lots
63
Beacon
Bay
$29,220
$29,220
$29,220
$29,220
$29,220
$29,220
$29,220
$29,220
13
Beacon
Bay
$29,450
$29,450
$29,450
$29,450
$29,450
$29,450
$29,450
$29,450
19
Beacon
Bay
$19,500
$19,500
$19,500
$19,500
$19,500
$19,500
$19,500
$19,500
6 Beacon Bay
$34,260
$34,260
$34,260
$34,260
$34,260
$34,260
$34,260
$34,260
9 Beacon Bay
$44,350
$44,350
$44,350
$44,350
$44,350
$44,350
$44,350
$44,350
15
Beacon
Bay
$20,240
$20,240
$20,240
$20,240
$20,240
$20,240
$20,240
$20,240
4 Beacon Bay
$21,260
$21,260
$21,260
$21,260
$21,260
$21,260
$21,260
$21,260
5 Beacon Bay
$28,840
$28,840
$28,840
$28,840
$28,840
$28,840
$28,840
$28,840
10
Beacon
Bay
$33,540
$33,540
$33,540
$33,540
$33,540
$33,540
$33,540
$33,540
7 Beacon Bay
$33,055
$33,055
$33,055
$33,055
$33,055
$33,055
$33,055
$33,055
B. Interior Lots
51
Beacon
Bay
$7,857
$7,857
$7,857
$7,857
$7,857
$7,857
$7,857
$7,857
40
Beacon
Bay
$13,572
$13,572
$13,572
$13,572
$13,572
$13,572
$13,572
$13,572
42
Beacon
Bay
$7,672
$7,672
$7,672
$7,672
$7,672
$7,672
$7,672
$7,672
46
Beacon
Bay
$8,492
$8,492
$8,492
$8,492
$8,492
$8,492
$8,492
$8,492
43
Beacon
Bay
$13,232
$13,232
$13,232
$13,232
$13,232
$13,232
$13,232
$13,232
65
Beacon
Bay
$6,322
$6,322
$6,322
$6,322
$6,322
$6,322
$6,322
$6,322
64
Beacon
Bay
$10,325
$10,325
$10,325
$10,325
$10,325
$10,325
$10,325
$10,325
32
Beacon
Bay
$7,217
$7,217
$7,217
$7,217
$7,217
$7,217
$7,217
$7,217
47
Beacon
Bay
$7,365
$7,365
$7,365
$7,365
$7,365
$7,365
$7,365
$7,365
26
Beacon
Bay
$6,942
$6,942
$6,942
$6,942
$6,942
$6,942
$6,942
$6,942
55
Beacon
Bay
$12,865
$12,865
$12,865
$12,865
$12,865
$12,865
$12,865
$12,865
33
Beacon
Bay
$7,307
$7,307
$7,307
$7,307
$7,307
$7,307
$7,307
$7,307
31
Beacon
Bay
$10,515
$10,515
$10,515
$10,515
$10,515
$10,515
$10,515
$10,515
39
Beacon
Bay
$11,557
$11,557
$11,557
$11,557
$11,557
$11,557
$11,557
$11,557
59
Beacon
Bay
$12,175
$12,175
$12,175
$12,175
$12,175
$12,175
$12,175
$12,175
50
Beacon
Bay
$12,111
$12,111
$12,111
$12,111
$12,111
$12,111
$12,111
$12,111
68
Beacon
Bay
$6,057
$6,057
$6,057
$6,057
$6,057
$6,057
$6,057
$6,057
Prepared by: Keyser Marston Associates, Inc.
File name: BB Projections 115 19, Proposed Lse Structure Page 19 of 52
SS2-133
TABLE 2
KMA LEASE PROJECTIONS -BEFORE RESALES
PROPOSED LEASE RESTRUCTURING
BEACON BAY - NEWPORT BEACH
II. 1994 Leases
A. Bayfront Lots
101 Harbor Island Road (A)
17 Beacon Bay
8 Beacon Bay
11 Beacon Bay
115 Harbor Island Road (C)
12 Beacon Bay
B. Interior Lots
36 Beacon Bay
30 Beacon Bay
28 Beacon Bay
34 Beacon Bay
57 Beacon Bay
35 Beacon Bay
29 Beacon Bay
45 Beacon Bay
44 Beacon Bay
56 Beacon Bay
25 Beacon Bay
67 Beacon Bay
27 Beacon Bay
69 Beacon Bay
54 Beacon Bay
23 Beacon Bay
Prepared by: Keyser Marston Associates, Inc.
File name: BB Projections 115 19, Proposed Lse Structure Page 20 of 52
SS2-134
2019
2020
2021
2022
2023
2024
2025
2026
2027
z 2018 Est
Home Value
$4,595,000
$45,950
$45,950
$45,950
$45,950
$45,950
$45,950
$45,950
$45,950
$45,950
$950,000
$9,500
$9,500
$9,500
$9,500
$9,500
$9,500
$9,500
$9,500
$9,500
$1,750,000
$17,500
$17,500
$17,500
$17,500
$17,500
$17,500
$17,500
$17,500
$17,500
$3,277,000
$32,770
$32,770
$32,770
$32,770
$32,770
$32,770
$32,770
$32,770
$32,770
$625,000
$6,250
$6,250
$6,250
$6,250
$6,250
$6,250
$6,250
$6,250
$6,250
$3,488,000
$34,880
$34,880
$34,880
$34,880
$34,880
$34,880
$34,880
$34,880
$34,880
$548,000
$5,480
$5,480
$5,480
$5,480
$5,480
$5,480
$5,480
$5,480
$5,480
$450,000
$4,500
$4,500
$4,500
$4,500
$4,500
$4,500
$4,500
$4,500
$4,500
$450,000
$4,500
$4,500
$4,500
$4,500
$4,500
$4,500
$4,500
$4,500
$4,500
$450,000
$4,500
$4,500
$4,500
$4,500
$4,500
$4,500
$4,500
$4,500
$4,500
$546,000
$5,460
$5,460
$5,460
$5,460
$5,460
$5,460
$5,460
$5,460
$5,460
$400,000
$4,000
$4,000
$4,000
$4,000
$4,000
$4,000
$4,000
$4,000
$4,000
$440,000
$4,400
$4,400
$4,400
$4,400
$4,400
$4,400
$4,400
$4,400
$4,400
$775,500
$7,755
$7,755
$7,755
$7,755
$7,755
$7,755
$7,755
$7,755
$7,755
$980,000
$9,800
$9,800
$9,800
$9,800
$9,800
$9,800
$9,800
$9,800
$9,800
$1,185,600
$11,856
$11,856
$11,856
$11,856
$11,856
$11,856
$11,856
$11,856
$11,856
$839,325
$8,393
$8,393
$8,393
$8,393
$8,393
$8,393
$8,393
$8,393
$8,393
$825,000
$8,250
$8,250
$8,250
$8,250
$8,250
$8,250
$8,250
$8,250
$8,250
$1,116,250
$11,163
$11,163
$11,163
$11,163
$11,163
$11,163
$11,163
$11,163
$11,163
$842,160
$8,422
$8,422
$8,422
$8,422
$8,422
$8,422
$8,422
$8,422
$8,422
$1,700,000
$17,000
$17,000
$17,000
$17,000
$17,000
$17,000
$17,000
$17,000
$17,000
$1,348,000
$13,480
$13,480
$13,480
$13,480
$13,480
$13,480
$13,480
$13,480
$13,480
Prepared by: Keyser Marston Associates, Inc.
File name: BB Projections 115 19, Proposed Lse Structure Page 20 of 52
SS2-134
TABLE 2
KMA LEASE PROJECTIONS -BEFORE RESALES
PROPOSED LEASE RESTRUCTURING
BEACON BAY - NEWPORT BEACH
II. 1994 Leases
A. Bayfront Lots
101 Harbor Island Road (A)
17 Beacon Bay
8 Beacon Bay
11 Beacon Bay
115 Harbor Island Road (C)
12 Beacon Bay
B. Interior Lots
36 Beacon Bay
30 Beacon Bay
28 Beacon Bay
34 Beacon Bay
57 Beacon Bay
35 Beacon Bay
29 Beacon Bay
45 Beacon Bay
44 Beacon Bay
56 Beacon Bay
25 Beacon Bay
67 Beacon Bay
27 Beacon Bay
69 Beacon Bay
54 Beacon Bay
23 Beacon Bay
2028 2029 2030 2031 2032 2033 2034 2035 2036 2037
$45,950
$45,950
$45,950
$45,950
$45,950
$45,950
$45,950
$45,950
$45,950
$45,950
$9,500
$9,500
$9,500
$9,500
$9,500
$9,500
$9,500
$9,500
$9,500
$9,500
$17,500
$17,500
$17,500
$17,500
$17,500
$17,500
$17,500
$17,500
$17,500
$17,500
$32,770
$32,770
$32,770
$32,770
$32,770
$32,770
$32,770
$32,770
$32,770
$32,770
$6,250
$6,250
$6,250
$6,250
$6,250
$6,250
$6,250
$6,250
$6,250
$6,250
$34,880
$34,880
$34,880
$34,880
$34,880
$34,880
$34,880
$34,880
$34,880
$34,880
$5,480
$5,480
$5,480
$5,480
$5,480
$5,480
$5,480
$5,480
$5,480
$5,480
$4,500
$4,500
$4,500
$4,500
$4,500
$4,500
$4,500
$4,500
$4,500
$4,500
$4,500
$4,500
$4,500
$4,500
$4,500
$4,500
$4,500
$4,500
$4,500
$4,500
$4,500
$4,500
$4,500
$4,500
$4,500
$4,500
$4,500
$4,500
$4,500
$4,500
$5,460
$5,460
$5,460
$5,460
$5,460
$5,460
$5,460
$5,460
$5,460
$5,460
$4,000
$4,000
$4,000
$4,000
$4,000
$4,000
$4,000
$4,000
$4,000
$4,000
$4,400
$4,400
$4,400
$4,400
$4,400
$4,400
$4,400
$4,400
$4,400
$4,400
$7,755
$7,755
$7,755
$7,755
$7,755
$7,755
$7,755
$7,755
$7,755
$7,755
$9,800
$9,800
$9,800
$9,800
$9,800
$9,800
$9,800
$9,800
$9,800
$9,800
$11,856
$11,856
$11,856
$11,856
$11,856
$11,856
$11,856
$11,856
$11,856
$11,856
$8,393
$8,393
$8,393
$8,393
$8,393
$8,393
$8,393
$8,393
$8,393
$8,393
$8,250
$8,250
$8,250
$8,250
$8,250
$8,250
$8,250
$8,250
$8,250
$8,250
$11,163
$11,163
$11,163
$11,163
$11,163
$11,163
$11,163
$11,163
$11,163
$11,163
$8,422
$8,422
$8,422
$8,422
$8,422
$8,422
$8,422
$8,422
$8,422
$8,422
$17,000
$17,000
$17,000
$17,000
$17,000
$17,000
$17,000
$17,000
$17,000
$17,000
$13,480
$13,480
$13,480
$13,480
$13,480
$13,480
$13,480
$13,480
$13,480
$13,480
Prepared by: Keyser Marston Associates, Inc.
File name: BB Projections 115 19, Proposed Lse Structure Page 21 of 52
SS2-135
TABLE 2
KMA LEASE PROJECTIONS -BEFORE RESALES
PROPOSED LEASE RESTRUCTURING
BEACON BAY - NEWPORT BEACH
II. 1994 Leases
A. Bayfront Lots
101 Harbor Island Road (A)
17 Beacon Bay
8 Beacon Bay
11 Beacon Bay
115 Harbor Island Road (C)
12 Beacon Bay
B. Interior Lots
36 Beacon Bay
30 Beacon Bay
28 Beacon Bay
34 Beacon Bay
57 Beacon Bay
35 Beacon Bay
29 Beacon Bay
45 Beacon Bay
44 Beacon Bay
56 Beacon Bay
25 Beacon Bay
67 Beacon Bay
27 Beacon Bay
69 Beacon Bay
54 Beacon Bay
23 Beacon Bay
2038 2039 2040 2041 2042 2043 2044 2045
$45,950
$45,950
$45,950
$45,950
$45,950
$45,950
$45,950
$45,950
$9,500
$9,500
$9,500
$9,500
$9,500
$9,500
$9,500
$9,500
$17,500
$17,500
$17,500
$17,500
$17,500
$17,500
$17,500
$17,500
$32,770
$32,770
$32,770
$32,770
$32,770
$32,770
$32,770
$32,770
$6,250
$6,250
$6,250
$6,250
$6,250
$6,250
$6,250
$6,250
$34,880
$34,880
$34,880
$34,880
$34,880
$34,880
$34,880
$34,880
$5,480
$5,480
$5,480
$5,480
$5,480
$5,480
$5,480
$5,480
$4,500
$4,500
$4,500
$4,500
$4,500
$4,500
$4,500
$4,500
$4,500
$4,500
$4,500
$4,500
$4,500
$4,500
$4,500
$4,500
$4,500
$4,500
$4,500
$4,500
$4,500
$4,500
$4,500
$4,500
$5,460
$5,460
$5,460
$5,460
$5,460
$5,460
$5,460
$5,460
$4,000
$4,000
$4,000
$4,000
$4,000
$4,000
$4,000
$4,000
$4,400
$4,400
$4,400
$4,400
$4,400
$4,400
$4,400
$4,400
$7,755
$7,755
$7,755
$7,755
$7,755
$7,755
$7,755
$7,755
$9,800
$9,800
$9,800
$9,800
$9,800
$9,800
$9,800
$9,800
$11,856
$11,856
$11,856
$11,856
$11,856
$11,856
$11,856
$11,856
$8,393
$8,393
$8,393
$8,393
$8,393
$8,393
$8,393
$8,393
$8,250
$8,250
$8,250
$8,250
$8,250
$8,250
$8,250
$8,250
$11,163
$11,163
$11,163
$11,163
$11,163
$11,163
$11,163
$11,163
$8,422
$8,422
$8,422
$8,422
$8,422
$8,422
$8,422
$8,422
$17,000
$17,000
$17,000
$17,000
$17,000
$17,000
$17,000
$17,000
$13,480
$13,480
$13,480
$13,480
$13,480
$13,480
$13,480
$13,480
Prepared by: Keyser Marston Associates, Inc.
File name: BB Projections 115 19, Proposed Lse Structure Page 22 of 52
SS2-136
TABLE 2
KMA LEASE PROJECTIONS -BEFORE RESALES
PROPOSED LEASE RESTRUCTURING
BEACON BAY - NEWPORT BEACH
Prepared by: Keyser Marston Associates, Inc.
File name: BB Projections 115 19, Proposed Lse Structure Page 23 of 52
SS2-137
2019
2020
2021
2022
2023
2024
2025
2026
2027
3 Original Acq
III. 2012 Leases
Price
A. Bayfront Lots
14 Beacon Bay
$3,310,000
$78,100
$70,600
$63,100
$55,600
$48,100
$33,100
$33,100
$33,100
$33,100
1 Beacon Bay
$1,550,000
$38,750
$38,750
$38,750
$38,000
$30,500
$15,500
$15,500
$15,500
$15,500
2 Beacon Bay
$2,770,000
$69,250
$65,200
$57,700
$50,200
$42,700
$27,700
$27,700
$27,700
$27,700
107 Harbor Island Road (B)
$4,500,000
$90,000
$82,500
$75,000
$67,500
$60,000
$45,000
$45,000
$45,000
$45,000
18 Beacon Bay
$3,095,000
$75,950
$68,450
$60,950
$53,450
$45,950
$30,950
$30,950
$30,950
$30,950
21 Beacon Bay
$4,000,000
$85,000
$77,500
$70,000
$62,500
$55,000
$40,000
$40,000
$40,000
$40,000
62 Beacon Bay
$3,600,000
$81,000
$73,500
$66,000
$58,500
$51,000
$36,000
$36,000
$36,000
$36,000
20 Beacon Bay
$4,400,000
$89,000
$81,500
$74,000
$66,500
$59,000
$44,000
$44,000
$44,000
$44,000
16 Beacon Bay
$3,900,000
$84,000
$76,500
$69,000
$61,500
$54,000
$39,000
$39,000
$39,000
$39,000
22 Beacon Bay
$5,250,000
$97,500
$90,000
$82,500
$75,000
$67,500
$52,500
$52,500
$52,500
$52,500
3 Beacon Bay
$3,800,000
$83,000
$75,500
$68,000
$60,500
$53,000
$38,000
$38,000
$38,000
$38,000
B. Interior Lots
61 Beacon Bay
$588,000
$14,700
$14,700
$14,700
$14,700
$14,700
$5,880
$5,880
$5,880
$5,880
41 Beacon Bay
$900,000
$22,500
$22,500
$22,500
$22,500
$22,500
$9,000
$9,000
$9,000
$9,000
37 Beacon Bay
$1,710,000
$42,750
$42,750
$42,750
$39,600
$32,100
$17,100
$17,100
$17,100
$17,100
66 Beacon Bay
$2,000,000
$50,000
$50,000
$50,000
$42,500
$35,000
$20,000
$20,000
$20,000
$20,000
60 Beacon Bay
$1,350,000
$33,750
$33,750
$33,750
$33,750
$28,500
$13,500
$13,500
$13,500
$13,500
24 Beacon Bay
$1,900,000
$47,500
$47,500
$47,500
$41,500
$34,000
$19,000
$19,000
$19,000
$19,000
38 Beacon Bay
$1,200,000
$30,000
$30,000
$30,000
$30,000
$27,000
$12,000
$12,000
$12,000
$12,000
48 Beacon Bay
$1,175,000
$29,375
$29,375
$29,375
$29,375
$26,750
$11,750
$11,750
$11,750
$11,750
49 Beacon Bay
$1,450,000
$36,250
$36,250
$36,250
$36,250
$29,500
$14,500
$14,500
$14,500
$14,500
52 Beacon Bay
$2,480,000
$62,000
$62,000
$54,800
$47,300
$39,800
$24,800
$24,800
$24,800
$24,800
53 Beacon Bay
$2,000,000
$50,000
$50,000
$50,000
$42,500
$35,000
$20,000
$20,000
$20,000
$20,000
58 Beacon Bay
$2,950,000
$73,750
$67,000
$59,500
$52,000
$44,500
$29,500
$29,500
$29,500
$29,500
1 The projections are based on the 2018 lease payments. No CPI escalations are applied.
z Assumes that
all the lessees opt to convert to
a lease payment
equal to 1.0% of the 2018
home value. No
CPI escalations
are applied.
3 Based on a five
year phase in
period to reach 1.0% of the original acquisition
cost of the home. No CPI Escalations are applied.
The thresholds are:
Year 1:
2.5% of the first
$3.0 million acquisition price
and 1.0% of the
remainder.
Year 2:
2.5% of the first
$2.5 million acquisition price
and 1.0% of the
remainder.
Year 3:
2.5% of the first
$2.0 million acquisition price
and 1.0% of the
remainder.
Year 4:
2.5% of the first
$1.5 million acquisition price
and 1.0% of the
remainder.
Year 5:
2.5% of the first
$1.0 million acquisition price
and 1.0% of the
remainder.
Prepared by: Keyser Marston Associates, Inc.
File name: BB Projections 115 19, Proposed Lse Structure Page 23 of 52
SS2-137
TABLE 2
KMA LEASE PROJECTIONS -BEFORE RESALES
PROPOSED LEASE RESTRUCTURING
BEACON BAY - NEWPORT BEACH
Prepared by: Keyser Marston Associates, Inc.
File name: BB Projections 115 19, Proposed Lse Structure Page 24 of 52
SS2-138
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
III. 2012 Leases
A. Bayfront Lots
14
Beacon
Bay
$33,100
$33,100
$33,100
$33,100
$33,100
$33,100
$33,100
$33,100
$33,100
$33,100
1 Beacon Bay
$15,500
$15,500
$15,500
$15,500
$15,500
$15,500
$15,500
$15,500
$15,500
$15,500
2 Beacon Bay
$27,700
$27,700
$27,700
$27,700
$27,700
$27,700
$27,700
$27,700
$27,700
$27,700
107 Harbor
Island Road (B)
$45,000
$45,000
$45,000
$45,000
$45,000
$45,000
$45,000
$45,000
$45,000
$45,000
18
Beacon
Bay
$30,950
$30,950
$30,950
$30,950
$30,950
$30,950
$30,950
$30,950
$30,950
$30,950
21
Beacon
Bay
$40,000
$40,000
$40,000
$40,000
$40,000
$40,000
$40,000
$40,000
$40,000
$40,000
62
Beacon
Bay
$36,000
$36,000
$36,000
$36,000
$36,000
$36,000
$36,000
$36,000
$36,000
$36,000
20
Beacon
Bay
$44,000
$44,000
$44,000
$44,000
$44,000
$44,000
$44,000
$44,000
$44,000
$44,000
16
Beacon
Bay
$39,000
$39,000
$39,000
$39,000
$39,000
$39,000
$39,000
$39,000
$39,000
$39,000
22
Beacon
Bay
$52,500
$52,500
$52,500
$52,500
$52,500
$52,500
$52,500
$52,500
$52,500
$52,500
3 Beacon Bay
$38,000
$38,000
$38,000
$38,000
$38,000
$38,000
$38,000
$38,000
$38,000
$38,000
B. Interior Lots
61
Beacon
Bay
$5,880
$5,880
$5,880
$5,880
$5,880
$5,880
$5,880
$5,880
$5,880
$5,880
41
Beacon
Bay
$9,000
$9,000
$9,000
$9,000
$9,000
$9,000
$9,000
$9,000
$9,000
$9,000
37
Beacon
Bay
$17,100
$17,100
$17,100
$17,100
$17,100
$17,100
$17,100
$17,100
$17,100
$17,100
66
Beacon
Bay
$20,000
$20,000
$20,000
$20,000
$20,000
$20,000
$20,000
$20,000
$20,000
$20,000
60
Beacon
Bay
$13,500
$13,500
$13,500
$13,500
$13,500
$13,500
$13,500
$13,500
$13,500
$13,500
24
Beacon
Bay
$19,000
$19,000
$19,000
$19,000
$19,000
$19,000
$19,000
$19,000
$19,000
$19,000
38
Beacon
Bay
$12,000
$12,000
$12,000
$12,000
$12,000
$12,000
$12,000
$12,000
$12,000
$12,000
48
Beacon
Bay
$11,750
$11,750
$11,750
$11,750
$11,750
$11,750
$11,750
$11,750
$11,750
$11,750
49
Beacon
Bay
$14,500
$14,500
$14,500
$14,500
$14,500
$14,500
$14,500
$14,500
$14,500
$14,500
52
Beacon
Bay
$24,800
$24,800
$24,800
$24,800
$24,800
$24,800
$24,800
$24,800
$24,800
$24,800
53
Beacon
Bay
$20,000
$20,000
$20,000
$20,000
$20,000
$20,000
$20,000
$20,000
$20,000
$20,000
58
Beacon
Bay
$29,500
$29,500
$29,500
$29,500
$29,500
$29,500
$29,500
$29,500
$29,500
$29,500
Prepared by: Keyser Marston Associates, Inc.
File name: BB Projections 115 19, Proposed Lse Structure Page 24 of 52
SS2-138
TABLE 2
KMA LEASE PROJECTIONS -BEFORE RESALES
PROPOSED LEASE RESTRUCTURING
BEACON BAY - NEWPORT BEACH
Prepared by: Keyser Marston Associates, Inc.
File name: BB Projections 115 19, Proposed Lse Structure Page 25 of 52
SS2-139
2038
2039
2040
2041
2042
2043
2044
2045
III. 2012 Leases
A. Bayfront Lots
14
Beacon
Bay
$33,100
$33,100
$33,100
$33,100
$33,100
$33,100
$33,100
$33,100
1 Beacon Bay
$15,500
$15,500
$15,500
$15,500
$15,500
$15,500
$15,500
$15,500
2 Beacon Bay
$27,700
$27,700
$27,700
$27,700
$27,700
$27,700
$27,700
$27,700
107 Harbor
Island Road (B)
$45,000
$45,000
$45,000
$45,000
$45,000
$45,000
$45,000
$45,000
18
Beacon
Bay
$30,950
$30,950
$30,950
$30,950
$30,950
$30,950
$30,950
$30,950
21
Beacon
Bay
$40,000
$40,000
$40,000
$40,000
$40,000
$40,000
$40,000
$40,000
62
Beacon
Bay
$36,000
$36,000
$36,000
$36,000
$36,000
$36,000
$36,000
$36,000
20
Beacon
Bay
$44,000
$44,000
$44,000
$44,000
$44,000
$44,000
$44,000
$44,000
16
Beacon
Bay
$39,000
$39,000
$39,000
$39,000
$39,000
$39,000
$39,000
$39,000
22
Beacon
Bay
$52,500
$52,500
$52,500
$52,500
$52,500
$52,500
$52,500
$52,500
3 Beacon Bay
$38,000
$38,000
$38,000
$38,000
$38,000
$38,000
$38,000
$38,000
B. Interior Lots
61
Beacon
Bay
$5,880
$5,880
$5,880
$5,880
$5,880
$5,880
$5,880
$5,880
41
Beacon
Bay
$9,000
$9,000
$9,000
$9,000
$9,000
$9,000
$9,000
$9,000
37
Beacon
Bay
$17,100
$17,100
$17,100
$17,100
$17,100
$17,100
$17,100
$17,100
66
Beacon
Bay
$20,000
$20,000
$20,000
$20,000
$20,000
$20,000
$20,000
$20,000
60
Beacon
Bay
$13,500
$13,500
$13,500
$13,500
$13,500
$13,500
$13,500
$13,500
24
Beacon
Bay
$19,000
$19,000
$19,000
$19,000
$19,000
$19,000
$19,000
$19,000
38
Beacon
Bay
$12,000
$12,000
$12,000
$12,000
$12,000
$12,000
$12,000
$12,000
48
Beacon
Bay
$11,750
$11,750
$11,750
$11,750
$11,750
$11,750
$11,750
$11,750
49
Beacon
Bay
$14,500
$14,500
$14,500
$14,500
$14,500
$14,500
$14,500
$14,500
52
Beacon
Bay
$24,800
$24,800
$24,800
$24,800
$24,800
$24,800
$24,800
$24,800
53
Beacon
Bay
$20,000
$20,000
$20,000
$20,000
$20,000
$20,000
$20,000
$20,000
58
Beacon
Bay
$29,500
$29,500
$29,500
$29,500
$29,500
$29,500
$29,500
$29,500
Prepared by: Keyser Marston Associates, Inc.
File name: BB Projections 115 19, Proposed Lse Structure Page 25 of 52
SS2-139
TABLE 3
HOME SALES PROJECTIONS
PROPOSED LEASE RESTRUCTURING
BEACON BAY - NEWPORT BEACH
I. Pre -Existing Leases
A. Bayfront Lots
63 Beacon Bay
13 Beacon Bay
19 Beacon Bay
6 Beacon Bay
9 Beacon Bay
15 Beacon Bay
4 Beacon Bay
5 Beacon Bay
10 Beacon Bay
7 Beacon Bay
B. Interior Lots
51 Beacon Bay
40 Beacon Bay
42 Beacon Bay
46 Beacon Bay
43 Beacon Bay
65 Beacon Bay
64 Beacon Bay
32 Beacon Bay
47 Beacon Bay
26 Beacon Bay
55 Beacon Bay
33 Beacon Bay
31 Beacon Bay
39 Beacon Bay
59 Beacon Bay
50 Beacon Bay
68 Beacon Bay
Prepared by: Keyser Marston Associates, Inc.
File name: BB Projections 115 19, Home Sale Projs
I
Estimated
2018 Value
2019
2020 2021 2022
2023 2024
2025 2026 2027
$4,054,394
$4,257,113
$4,213,894
$4,878,109
$4,209,239
$5,372,174
$4,321,942
$6,081,407
$6,044,644
$9,377,226
$4,283,739
$4,463,216
$3,811,953
$4,116,136
$1,722,980
$1,760,905
$1,848,950
$1,923,264
$2,019,428
$1,855,723
$2,045,934
$1,913,291
$2,109,403
$1,852,261
$2,144,224
$1,605,132
$1,858,141
$1,838,672
$2,234,917
$1,760,905
$2,140,391
$1,825,245
$2,329,527
$1,730,427
$2,208,513
$1,749,358
$2,344,307
$1,787,995
$2,396,085
$1,512,680
$2,128,492
$1,826,164
$2,569,596
$1,512,050
$2,233,986
$1,771,064
$2,616,668
$1,561,110
$2,421,793
Page 26 of 52
SS2-140
TABLE 3
HOME SALES PROJECTIONS
PROPOSED LEASE RESTRUCTURING
BEACON BAY - NEWPORT BEACH
Prepared by: Keyser Marston Associates, Inc.
File name: BB Projections 115 19, Home Sale Projs Page 27 of 52
SS2-141
2028 2029 2030 2031 2032 2033 2034 2035
2036
2037
I. Pre -Existing Leases
A. Bayfront Lots
63 Beacon Bay
13 Beacon Bay
19 Beacon Bay
6 Beacon Bay
9 Beacon Bay
15 Beacon Bay
$7,326,647
4 Beacon Bay
$8,416,059
5 Beacon Bay
$7,924,777
10 Beacon Bay
$9,434,258
7 Beacon Bay
$4,353,885
B. Interior Lots
51 Beacon Bay
$3,843,834
40 Beacon Bay
$4,408,157
42 Beacon Bay
$4,253,350
46 Beacon Bay
$4,604,562
43 Beacon Bay
$4,457,687
65 Beacon Bay
$4,056,089
64 Beacon Bay
$4,646,232
32 Beacon Bay
47 Beacon Bay
26 Beacon Bay
55 Beacon Bay
33 Beacon Bay
31 Beacon Bay
39 Beacon Bay
59 Beacon Bay
50 Beacon Bay
68 Beacon Bay
Prepared by: Keyser Marston Associates, Inc.
File name: BB Projections 115 19, Home Sale Projs Page 27 of 52
SS2-141
TABLE 3
HOME SALES PROJECTIONS
PROPOSED LEASE RESTRUCTURING
BEACON BAY - NEWPORT BEACH
2038 2039 2040 2041 2042 2043 2044 2045
Pre -Existing Leases
A. Bayfront Lots
63 Beacon Bay
13 Beacon Bay
19 Beacon Bay
6 Beacon Bay
9 Beacon Bay
15 Beacon Bay
4 Beacon Bay
5 Beacon Bay
10 Beacon Bay
7 Beacon Bay
B. Interior Lots
51 Beacon Bay $5,963,048
40 Beacon Bay $6,512,856
42 Beacon Bay $6,598,342
46 Beacon Bay $6,803,035
43 Beacon Bay $6,915,336
65 Beacon Bay $5,992,691
64 Beacon Bay
32 Beacon Bay $4,672,204
47 Beacon Bay $4,842,919
26 Beacon Bay $4,820,906
55 Beacon Bay $4,873,645
33 Beacon Bay $5,230,353
31 Beacon Bay $4,424,983
39 Beacon Bay $5,609,106
59 Beacon Bay $4,644,297
50 Beacon Bay $5,711,857
68 Beacon Bay $5,034,735
Prepared by: Keyser Marston Associates, Inc.
File name: BB Projections 115 19, Home Sale Projs Page 28 of 52
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TABLE 3
HOME SALES PROJECTIONS
PROPOSED LEASE RESTRUCTURING
BEACON BAY - NEWPORT BEACH
II. 1994 Leases
A. Bayfront Lots
101 Harbor Island Road (A)
17 Beacon Bay
8 Beacon Bay
11 Beacon Bay
115 Harbor Island Road (C)
12 Beacon Bay
B. Interior Lots
36 Beacon Bay
30 Beacon Bay
28 Beacon Bay
34 Beacon Bay
57 Beacon Bay
35 Beacon Bay
29 Beacon Bay
45 Beacon Bay
44 Beacon Bay
56 Beacon Bay
25 Beacon Bay
67 Beacon Bay
27 Beacon Bay
69 Beacon Bay
54 Beacon Bay
23 Beacon Bay
Prepared by: Keyser Marston Associates, Inc.
File name: BB Projections 115 19, Home Sale Projs
I
Estimated
2018 Value 2019
$8,664,558
$2,520,633
$4,211,584
$6,179,272
$1,828,288
$4,674,254
$1,855,723
$1,316,367
$1,253,683
$1,253,683
$1,848,950
$1,010,780
$1,058,912
$1,692,819
$2,037,350
$2,464,777
$1,744,896
$1,715,116
$2,210,099
$842,160
$2,907,577
$1,896,771
2020 2021 2022 2023 2024 2025 2026 2027
$2,878,835
Page 29 of 52
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TABLE 3
HOME SALES PROJECTIONS
PROPOSED LEASE RESTRUCTURING
BEACON BAY - NEWPORT BEACH
2028 2029 2030 2031 2032 2033
II. 1994 Leases
A. Bayfront Lots
101 Harbor Island Road (A)
17 Beacon Bay
8 Beacon Bay
11 Beacon Bay
115 Harbor Island Road (C)
12 Beacon Bay
B. Interior Lots
36 Beacon Bay
30 Beacon Bay $2,144,224
28 Beacon Bay $2,042,118
34 Beacon Bay $2,144,224
57 Beacon Bay $3,162,332
35 Beacon Bay $1,815,216
29 Beacon Bay $1,901,655
45 Beacon Bay $3,192,063
44 Beacon Bay $3,841,727
56 Beacon Bay $4,880,090
25 Beacon Bay $3,454,776
67 Beacon Bay $3,395,812
27 Beacon Bay $4,594,636
69 Beacon Bay $1,750,790
54 Beacon Bay $6,044,644
23 Beacon Bay
Prepared by: Keyser Marston Associates, Inc.
File name: BB Projections 115 19, Home Sale Projs
2034
$4,140,414
2035 2036 2037
Page 30 of 52
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TABLE 3
HOME SALES PROJECTIONS
PROPOSED LEASE RESTRUCTURING
BEACON BAY - NEWPORT BEACH
II. 1994 Leases
A. Bayfront Lots
101 Harbor Island Road (A)
17 Beacon Bay
8 Beacon Bay
11 Beacon Bay
115 Harbor Island Road (C)
12 Beacon Bay
B. Interior Lots
36 Beacon Bay
30 Beacon Bay
28 Beacon Bay
34 Beacon Bay
57 Beacon Bay
35 Beacon Bay
29 Beacon Bay
45 Beacon Bay
44 Beacon Bay
56 Beacon Bay
25 Beacon Bay
67 Beacon Bay
27 Beacon Bay
69 Beacon Bay
54 Beacon Bay
23 Beacon Bay
2038 2039 2040 2041 2042 2043 2044 2045
$24,139,134
$7,742,184
$13,582,778
$20,925,209
$6,500,794
$17,451,122
Prepared by: Keyser Marston Associates, Inc.
File name: BB Projections 115 19, Home Sale Projs Page 31 of 52
SS2-145
TABLE 3
HOME SALES PROJECTIONS
PROPOSED LEASE RESTRUCTURING
BEACON BAY - NEWPORT BEACH
III. 2012 Leases
A. Bayfront Lots
14 Beacon Bay
1 Beacon Bay
2 Beacon Bay
107 Harbor Island Road (B)
18 Beacon Bay
21 Beacon Bay
62 Beacon Bay
20 Beacon Bay
16 Beacon Bay
22 Beacon Bay
3 Beacon Bay
B. Interior Lots
61 Beacon Bay
41 Beacon Bay
37 Beacon Bay
66 Beacon Bay
60 Beacon Bay
24 Beacon Bay
38 Beacon Bay
48 Beacon Bay
49 Beacon Bay
52 Beacon Bay
53 Beacon Bay
58 Beacon Bay
I
Estimated
2018 Value 2019 2020 2021 2022 2023 2024 2025 2026 2027
$4,435,717 $4,890,378
$2,181,006 $2,651,026
$3,535,300 $4,737,640
$5,743,267 $8,485,421
$3,761,992
$4,862,025
$4,167,450
$4,851,000
$4,299,750
$5,512,500
$3,800,000
$1,991,177 $2,090,736
$1,206,086 $1,329,710
$2,182,441 $2,526,449
$2,552,563 $3,102,656
$1,722,980 $2,199,008
$2,424,935 $3,249,645
$1,531,538 $2,155,028
$1,428,220 $2,110,131
$1,678,556 $2,603,992
$2,734,200
$2,100,000
$2,950,000
1 Home values are projected to increase at an average annual rate of 5%. Four homes per year are projected to be sold based on historical activity.
Sales are allocated in lease date order as follows:
One Bayfront Lot is sold per year alternating between Pre -Existing Leases and 2012 Leases. Once all the Pre -Existing Bayfront Lease
Lots have been sold once, Bayfront Lots with 1994 Leases are sold. Once all the 2012 Bayfront Lease Lots have been sold once, the
remaining Bayfront Lots with 1994 Leases are sold.
Prepared by: Keyser Marston Associates, Inc.
File name: BB Projections 115 19, Home Sale Projs Page 32 of 52
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TABLE 3
HOME SALES PROJECTIONS
PROPOSED LEASE RESTRUCTURING
BEACON BAY - NEWPORT BEACH
2028 2029 2030 2031 2032 2033 2034 2035 2036 2037
III. 2012 Leases
A. Bayfront Lots
14 Beacon Bay
1 Beacon Bay
2 Beacon Bay
107 Harbor Island Road (B)
18 Beacon Bay $6,127,888
21 Beacon Bay $8,731,498
62 Beacon Bay $8,251,266
20 Beacon Bay $10,589,125
16 Beacon Bay $10,347,861
22 Beacon Bay
3 Beacon Bay
B. Interior Lots
61 Beacon Bay $4,346,489
41 Beacon Bay $2,764,371
37 Beacon Bay $5,252,306
66 Beacon Bay $6,450,200
60 Beacon Bay
24 Beacon Bay
38 Beacon Bay
48 Beacon Bay
49 Beacon Bay
52 Beacon Bay $4,453,724
53 Beacon Bay $3,591,713
58 Beacon Bay $5,297,776
Prepared by: Keyser Marston Associates, Inc.
File name: BB Projections 115 19, Home Sale Projs Page 33 of 52
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TABLE 3
HOME SALES PROJECTIONS
PROPOSED LEASE RESTRUCTURING
BEACON BAY - NEWPORT BEACH
III. 2012 Leases
A. Bayfront Lots
14 Beacon Bay
1 Beacon Bay
2 Beacon Bay
107 Harbor Island Road (B)
18 Beacon Bay
21 Beacon Bay
62 Beacon Bay
20 Beacon Bay
16 Beacon Bay
22 Beacon Bay
3 Beacon Bay
B. Interior Lots
61 Beacon Bay
41 Beacon Bay
37 Beacon Bay
66 Beacon Bay
60 Beacon Bay
24 Beacon Bay
38 Beacon Bay
48 Beacon Bay
49 Beacon Bay
52 Beacon Bay
53 Beacon Bay
58 Beacon Bay
2038
$14,626,304
$4,571,579
2039
$6,755,778
2040
$11,115,991
$4,480,148
2041
$4,386,811
2042
$5,413,512
2043
$9,258,972
2044
$7,466,913
2045
$11,013,696
Prepared by: Keyser Marston Associates, Inc.
File name: BB Projections 115 19, Home Sale Projs Page 34 of 52
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TABLE 3
HOME SALES PROJECTIONS
PROPOSED LEASE RESTRUCTURING
BEACON BAY - NEWPORT BEACH
Prepared by: Keyser Marston Associates, Inc.
File name: BB Projections 115 19, Home Sale Projs
Estimated
2018 Value 2019 2020 2021 2022 2023 2024 2025 2026 2027
Three Interior Lots are sold each year, allocated to two Pre -Existing Lease Lots and one 2012 Lease Lot. Once all the Pre -Existing
Interior Lease Lots are sold once, two 1994 Interior Lease Lots are sold. Once all the 2012 Interior Lease Lots have been sold once,
the remaining 1994 Interior Lease Lots are sold. Once all the Interior Lots have been sold, the sales pattern repeats.
Page 35 of 52
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TABLE 3
HOME SALES PROJECTIONS
PROPOSED LEASE RESTRUCTURING
BEACON BAY - NEWPORT BEACH
Prepared by: Keyser Marston Associates, Inc.
File name: BB Projections 115 19, Home Sale Projs
2028 2029 2030 2031 2032 2033 2034 2035 2036 2037
Page 36 of 52
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TABLE 3
HOME SALES PROJECTIONS
PROPOSED LEASE RESTRUCTURING
BEACON BAY - NEWPORT BEACH
2038 2039 2040 2041 2042 2043 2044 2045
Prepared by: Keyser Marston Associates, Inc.
File name: BB Projections 115 19, Home Sale Projs Page 37 of 52
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TABLE 4
KMA GROUND LEASE PROJECTIONS 1
PROPOSED LEASE RESTRUCTURING
BEACON BAY - NEWPORT BEACH
Prepared by: Keyser Marston Associates, Inc.
File name: BB Projections 115 19, Grd Lse Projs Page 38 of 52
SS2-152
2019
2020
2021
2022
2023
2024
2025
2026
2027
I. Pre -Existing
Leases
A. Bayfront Lots
63
Beacon
Bay
$42,571
$42,571
$42,571
$42,571
$42,571
$42,571
$42,571
$42,571
$42,571
13
Beacon
Bay
$29,450
$29,450
$48,781
$48,781
$48,781
$48,781
$48,781
$48,781
$48,781
19
Beacon
Bay
$19,500
$19,500
$19,500
$19,500
$53,722
$53,722
$53,722
$53,722
$53,722
6 Beacon Bay
$34,260
$34,260
$34,260
$34,260
$34,260
$34,260
$60,814
$60,814
$60,814
9 Beacon Bay
$44,350
$44,350
$44,350
$44,350
$44,350
$44,350
$44,350
$44,350
$93,772
15
Beacon
Bay
$20,240
$20,240
$20,240
$20,240
$20,240
$20,240
$20,240
$20,240
$20,240
4 Beacon Bay
$21,260
$21,260
$21,260
$21,260
$21,260
$21,260
$21,260
$21,260
$21,260
5 Beacon Bay
$28,840
$28,840
$28,840
$28,840
$28,840
$28,840
$28,840
$28,840
$28,840
10
Beacon
Bay
$33,540
$33,540
$33,540
$33,540
$33,540
$33,540
$33,540
$33,540
$33,540
7 Beacon Bay
$33,055
$33,055
$33,055
$33,055
$33,055
$33,055
$33,055
$33,055
$33,055
B. Interior Lots
51
Beacon
Bay
$18,489
$18,489
$18,489
$18,489
$18,489
$18,489
$18,489
$18,489
$18,489
40
Beacon
Bay
$20,194
$20,194
$20,194
$20,194
$20,194
$20,194
$20,194
$20,194
$20,194
42
Beacon
Bay
$7,672
$20,459
$20,459
$20,459
$20,459
$20,459
$20,459
$20,459
$20,459
46
Beacon
Bay
$8,492
$21,094
$21,094
$21,094
$21,094
$21,094
$21,094
$21,094
$21,094
43
Beacon
Bay
$13,232
$13,232
$21,442
$21,442
$21,442
$21,442
$21,442
$21,442
$21,442
65
Beacon
Bay
$6,322
$6,322
$18,581
$18,581
$18,581
$18,581
$18,581
$18,581
$18,581
64
Beacon
Bay
$10,325
$10,325
$10,325
$22,349
$22,349
$22,349
$22,349
$22,349
$22,349
32
Beacon
Bay
$7,217
$7,217
$7,217
$21,404
$21,404
$21,404
$21,404
$21,404
$21,404
47
Beacon
Bay
$7,365
$7,365
$7,365
$7,365
$23,295
$23,295
$23,295
$23,295
$23,295
26
Beacon
Bay
$6,942
$6,942
$6,942
$6,942
$22,085
$22,085
$22,085
$22,085
$22,085
55
Beacon
Bay
$12,865
$12,865
$12,865
$12,865
$12,865
$23,443
$23,443
$23,443
$23,443
33
Beacon
Bay
$7,307
$7,307
$7,307
$7,307
$7,307
$23,961
$23,961
$23,961
$23,961
31
Beacon
Bay
$10,515
$10,515
$10,515
$10,515
$10,515
$10,515
$21,285
$21,285
$21,285
39
Beacon
Bay
$11,557
$11,557
$11,557
$11,557
$11,557
$11,557
$25,696
$25,696
$25,696
59
Beacon
Bay
$12,175
$12,175
$12,175
$12,175
$12,175
$12,175
$12,175
$22,340
$22,340
50
Beacon
Bay
$12,111
$12,111
$12,111
$12,111
$12,111
$12,111
$12,111
$26,167
$26,167
68
Beacon
Bay
$6,057
$6,057
$6,057
$6,057
$6,057
$6,057
$6,057
$6,057
$24,218
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KMA GROUND LEASE PROJECTIONS
PROPOSED LEASE RESTRUCTURING
BEACON BAY - NEWPORT BEACH
Prepared by: Keyser Marston Associates, Inc.
File name: BB Projections 115 19, Grd Lse Projs Page 39 of 52
SS2-153
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
I. Pre -Existing
Leases
A. Bayfront Lots
63
Beacon
Bay
$42,571
$42,571
$42,571
$42,571
$42,571
$42,571
$42,571
$42,571
$42,571
$42,571
13
Beacon
Bay
$48,781
$48,781
$48,781
$48,781
$48,781
$48,781
$48,781
$48,781
$48,781
$48,781
19
Beacon
Bay
$53,722
$53,722
$53,722
$53,722
$53,722
$53,722
$53,722
$53,722
$53,722
$53,722
6 Beacon Bay
$60,814
$60,814
$60,814
$60,814
$60,814
$60,814
$60,814
$60,814
$60,814
$60,814
9 Beacon Bay
$93,772
$93,772
$93,772
$93,772
$93,772
$93,772
$93,772
$93,772
$93,772
$93,772
15
Beacon
Bay
$20,240
$73,266
$73,266
$73,266
$73,266
$73,266
$73,266
$73,266
$73,266
$73,266
4 Beacon Bay
$21,260
$21,260
$21,260
$84,161
$84,161
$84,161
$84,161
$84,161
$84,161
$84,161
5 Beacon Bay
$28,840
$28,840
$28,840
$28,840
$28,840
$79,248
$79,248
$79,248
$79,248
$79,248
10
Beacon
Bay
$33,540
$33,540
$33,540
$33,540
$33,540
$33,540
$33,540
$94,343
$94,343
$94,343
7 Beacon Bay
$33,055
$33,055
$33,055
$33,055
$33,055
$33,055
$33,055
$33,055
$33,055
$43,539
B. Interior Lots
51
Beacon
Bay
$18,489
$18,489
$18,489
$18,489
$18,489
$18,489
$38,438
$38,438
$38,438
$38,438
40
Beacon
Bay
$20,194
$20,194
$20,194
$20,194
$20,194
$20,194
$20,194
$44,082
$44,082
$44,082
42
Beacon
Bay
$20,459
$20,459
$20,459
$20,459
$20,459
$20,459
$20,459
$42,533
$42,533
$42,533
46
Beacon
Bay
$21,094
$21,094
$21,094
$21,094
$21,094
$21,094
$21,094
$21,094
$46,046
$46,046
43
Beacon
Bay
$21,442
$21,442
$21,442
$21,442
$21,442
$21,442
$21,442
$21,442
$44,577
$44,577
65
Beacon
Bay
$18,581
$18,581
$18,581
$18,581
$18,581
$18,581
$18,581
$18,581
$18,581
$40,561
64
Beacon
Bay
$22,349
$22,349
$22,349
$22,349
$22,349
$22,349
$22,349
$22,349
$22,349
$46,462
32
Beacon
Bay
$21,404
$21,404
$21,404
$21,404
$21,404
$21,404
$21,404
$21,404
$21,404
$21,404
47
Beacon
Bay
$23,295
$23,295
$23,295
$23,295
$23,295
$23,295
$23,295
$23,295
$23,295
$23,295
26
Beacon
Bay
$22,085
$22,085
$22,085
$22,085
$22,085
$22,085
$22,085
$22,085
$22,085
$22,085
55
Beacon
Bay
$23,443
$23,443
$23,443
$23,443
$23,443
$23,443
$23,443
$23,443
$23,443
$23,443
33
Beacon
Bay
$23,961
$23,961
$23,961
$23,961
$23,961
$23,961
$23,961
$23,961
$23,961
$23,961
31
Beacon
Bay
$21,285
$21,285
$21,285
$21,285
$21,285
$21,285
$21,285
$21,285
$21,285
$21,285
39
Beacon
Bay
$25,696
$25,696
$25,696
$25,696
$25,696
$25,696
$25,696
$25,696
$25,696
$25,696
59
Beacon
Bay
$22,340
$22,340
$22,340
$22,340
$22,340
$22,340
$22,340
$22,340
$22,340
$22,340
50
Beacon
Bay
$26,167
$26,167
$26,167
$26,167
$26,167
$26,167
$26,167
$26,167
$26,167
$26,167
68
Beacon
Bay
$24,218
$24,218
$24,218
$24,218
$24,218
$24,218
$24,218
$24,218
$24,218
$24,218
Prepared by: Keyser Marston Associates, Inc.
File name: BB Projections 115 19, Grd Lse Projs Page 39 of 52
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TABLE 4
KMA GROUND LEASE PROJECTIONS
PROPOSED LEASE RESTRUCTURING
BEACON BAY - NEWPORT BEACH
Prepared by: Keyser Marston Associates, Inc.
File name: BB Projections 115 19, Grd Lse Projs Page 40 of 52
SS2-154
2038
2039
2040
2041
2042
2043
2044
2045
I. Pre -Existing
Leases
A. Bayfront Lots
63
Beacon
Bay
$42,571
$42,571
$42,571
$42,571
$42,571
$42,571
$42,571
$42,571
13
Beacon
Bay
$48,781
$48,781
$48,781
$48,781
$48,781
$48,781
$48,781
$48,781
19
Beacon
Bay
$53,722
$53,722
$53,722
$53,722
$53,722
$53,722
$53,722
$53,722
6 Beacon Bay
$60,814
$60,814
$60,814
$60,814
$60,814
$60,814
$60,814
$60,814
9 Beacon Bay
$93,772
$93,772
$93,772
$93,772
$93,772
$93,772
$93,772
$93,772
15
Beacon
Bay
$73,266
$73,266
$73,266
$73,266
$73,266
$73,266
$73,266
$73,266
4 Beacon Bay
$84,161
$84,161
$84,161
$84,161
$84,161
$84,161
$84,161
$84,161
5 Beacon Bay
$79,248
$79,248
$79,248
$79,248
$79,248
$79,248
$79,248
$79,248
10
Beacon
Bay
$94,343
$94,343
$94,343
$94,343
$94,343
$94,343
$94,343
$94,343
7 Beacon Bay
$43,539
$43,539
$43,539
$43,539
$43,539
$43,539
$43,539
$43,539
B. Interior Lots
51
Beacon
Bay
$38,438
$38,438
$38,438
$38,438
$38,438
$59,630
$59,630
$59,630
40
Beacon
Bay
$44,082
$44,082
$44,082
$44,082
$44,082
$65,129
$65,129
$65,129
42
Beacon
Bay
$42,533
$42,533
$42,533
$42,533
$42,533
$42,533
$65,983
$65,983
46
Beacon
Bay
$46,046
$46,046
$46,046
$46,046
$46,046
$46,046
$68,030
$68,030
43
Beacon
Bay
$44,577
$44,577
$44,577
$44,577
$44,577
$44,577
$44,577
$69,153
65
Beacon
Bay
$40,561
$40,561
$40,561
$40,561
$40,561
$40,561
$40,561
$59,927
64
Beacon
Bay
$46,462
$46,462
$46,462
$46,462
$46,462
$46,462
$46,462
$46,462
32
Beacon
Bay
$46,722
$46,722
$46,722
$46,722
$46,722
$46,722
$46,722
$46,722
47
Beacon
Bay
$48,429
$48,429
$48,429
$48,429
$48,429
$48,429
$48,429
$48,429
26
Beacon
Bay
$22,085
$48,209
$48,209
$48,209
$48,209
$48,209
$48,209
$48,209
55
Beacon
Bay
$23,443
$48,736
$48,736
$48,736
$48,736
$48,736
$48,736
$48,736
33
Beacon
Bay
$23,961
$23,961
$52,304
$52,304
$52,304
$52,304
$52,304
$52,304
31
Beacon
Bay
$21,285
$21,285
$44,250
$44,250
$44,250
$44,250
$44,250
$44,250
39
Beacon
Bay
$25,696
$25,696
$25,696
$56,091
$56,091
$56,091
$56,091
$56,091
59
Beacon
Bay
$22,340
$22,340
$22,340
$46,443
$46,443
$46,443
$46,443
$46,443
50
Beacon
Bay
$26,167
$26,167
$26,167
$26,167
$57,119
$57,119
$57,119
$57,119
68
Beacon
Bay
$24,218
$24,218
$24,218
$24,218
$50,347
$50,347
$50,347
$50,347
Prepared by: Keyser Marston Associates, Inc.
File name: BB Projections 115 19, Grd Lse Projs Page 40 of 52
SS2-154
TABLE 4
KMA GROUND LEASE PROJECTIONS
PROPOSED LEASE RESTRUCTURING
BEACON BAY - NEWPORT BEACH
II. 1994 Leases
A. Bayfront Lots
101 Harbor Island Road (A)
17 Beacon Bay
8 Beacon Bay
11 Beacon Bay
115 Harbor Island Road (C)
12 Beacon Bay
B. Interior Lots
36 Beacon Bay
30 Beacon Bay
28 Beacon Bay
34 Beacon Bay
57 Beacon Bay
35 Beacon Bay
29 Beacon Bay
45 Beacon Bay
44 Beacon Bay
56 Beacon Bay
25 Beacon Bay
67 Beacon Bay
27 Beacon Bay
69 Beacon Bay
54 Beacon Bay
23 Beacon Bay
Prepared by: Keyser Marston Associates, Inc.
File name: BB Projections 115 19, Grd Lse Projs
I
2019
2020
2021
2022
2023
2024
2025
2026
2027
$45,950
$45,950
$45,950
$45,950
$45,950
$45,950
$45,950
$45,950
$45,950
$9,500
$9,500
$9,500
$9,500
$9,500
$9,500
$9,500
$9,500
$9,500
$17,500
$17,500
$17,500
$17,500
$17,500
$17,500
$17,500
$17,500
$17,500
$32,770
$32,770
$32,770
$32,770
$32,770
$32,770
$32,770
$32,770
$32,770
$6,250
$6,250
$6,250
$6,250
$6,250
$6,250
$6,250
$6,250
$6,250
$34,880
$34,880
$34,880
$34,880
$34,880
$34,880
$34,880
$34,880
$34,880
$5,480
$5,480
$5,480
$5,480
$5,480
$5,480
$5,480
$5,480
$28,788
$4,500
$4,500
$4,500
$4,500
$4,500
$4,500
$4,500
$4,500
$4,500
$4,500
$4,500
$4,500
$4,500
$4,500
$4,500
$4,500
$4,500
$4,500
$4,500
$4,500
$4,500
$4,500
$4,500
$4,500
$4,500
$4,500
$4,500
$5,460
$5,460
$5,460
$5,460
$5,460
$5,460
$5,460
$5,460
$5,460
$4,000
$4,000
$4,000
$4,000
$4,000
$4,000
$4,000
$4,000
$4,000
$4,400
$4,400
$4,400
$4,400
$4,400
$4,400
$4,400
$4,400
$4,400
$7,755
$7,755
$7,755
$7,755
$7,755
$7,755
$7,755
$7,755
$7,755
$9,800
$9,800
$9,800
$9,800
$9,800
$9,800
$9,800
$9,800
$9,800
$11,856
$11,856
$11,856
$11,856
$11,856
$11,856
$11,856
$11,856
$11,856
$8,393
$8,393
$8,393
$8,393
$8,393
$8,393
$8,393
$8,393
$8,393
$8,250
$8,250
$8,250
$8,250
$8,250
$8,250
$8,250
$8,250
$8,250
$11,163
$11,163
$11,163
$11,163
$11,163
$11,163
$11,163
$11,163
$11,163
$8,422
$8,422
$8,422
$8,422
$8,422
$8,422
$8,422
$8,422
$8,422
$17,000
$17,000
$17,000
$17,000
$17,000
$17,000
$17,000
$17,000
$17,000
$13,480
$13,480
$13,480
$13,480
$13,480
$13,480
$13,480
$13,480
$13,480
Page 41 of 52
SS2-155
TABLE 4
KMA GROUND LEASE PROJECTIONS
PROPOSED LEASE RESTRUCTURING
BEACON BAY - NEWPORT BEACH
Prepared by: Keyser Marston Associates, Inc.
File name: BB Projections 115 19, Grd Lse Projs Page 42 of 52
SS2-156
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
II. 1994 Leases
A. Bayfront Lots
101 Harbor
Island Road (A)
$45,950
$45,950
$45,950
$45,950
$45,950
$45,950
$45,950
$45,950
$45,950
$45,950
17
Beacon
Bay
$9,500
$9,500
$9,500
$9,500
$9,500
$9,500
$9,500
$9,500
$9,500
$9,500
8 Beacon Bay
$17,500
$17,500
$17,500
$17,500
$17,500
$17,500
$17,500
$17,500
$17,500
$17,500
11
Beacon
Bay
$32,770
$32,770
$32,770
$32,770
$32,770
$32,770
$32,770
$32,770
$32,770
$32,770
115 Harbor
Island Road (C)
$6,250
$6,250
$6,250
$6,250
$6,250
$6,250
$6,250
$6,250
$6,250
$6,250
12
Beacon
Bay
$34,880
$34,880
$34,880
$34,880
$34,880
$34,880
$34,880
$34,880
$34,880
$34,880
B. Interior Lots
36
Beacon
Bay
$28,788
$28,788
$28,788
$28,788
$28,788
$28,788
$28,788
$28,788
$28,788
$28,788
30
Beacon
Bay
$21,442
$21,442
$21,442
$21,442
$21,442
$21,442
$21,442
$21,442
$21,442
$21,442
28
Beacon
Bay
$20,421
$20,421
$20,421
$20,421
$20,421
$20,421
$20,421
$20,421
$20,421
$20,421
34
Beacon
Bay
$4,500
$21,442
$21,442
$21,442
$21,442
$21,442
$21,442
$21,442
$21,442
$21,442
57
Beacon
Bay
$5,460
$31,623
$31,623
$31,623
$31,623
$31,623
$31,623
$31,623
$31,623
$31,623
35
Beacon
Bay
$4,000
$4,000
$18,152
$18,152
$18,152
$18,152
$18,152
$18,152
$18,152
$18,152
29
Beacon
Bay
$4,400
$4,400
$19,017
$19,017
$19,017
$19,017
$19,017
$19,017
$19,017
$19,017
45
Beacon
Bay
$7,755
$7,755
$7,755
$31,921
$31,921
$31,921
$31,921
$31,921
$31,921
$31,921
44
Beacon
Bay
$9,800
$9,800
$9,800
$38,417
$38,417
$38,417
$38,417
$38,417
$38,417
$38,417
56
Beacon
Bay
$11,856
$11,856
$11,856
$11,856
$48,801
$48,801
$48,801
$48,801
$48,801
$48,801
25
Beacon
Bay
$8,393
$8,393
$8,393
$8,393
$34,548
$34,548
$34,548
$34,548
$34,548
$34,548
67
Beacon
Bay
$8,250
$8,250
$8,250
$8,250
$33,958
$33,958
$33,958
$33,958
$33,958
$33,958
27
Beacon
Bay
$11,163
$11,163
$11,163
$11,163
$11,163
$45,946
$45,946
$45,946
$45,946
$45,946
69
Beacon
Bay
$8,422
$8,422
$8,422
$8,422
$8,422
$17,508
$17,508
$17,508
$17,508
$17,508
54
Beacon
Bay
$17,000
$17,000
$17,000
$17,000
$17,000
$60,446
$60,446
$60,446
$60,446
$60,446
23
Beacon
Bay
$13,480
$13,480
$13,480
$13,480
$13,480
$13,480
$41,404
$41,404
$41,404
$41,404
Prepared by: Keyser Marston Associates, Inc.
File name: BB Projections 115 19, Grd Lse Projs Page 42 of 52
SS2-156
TABLE 4
KMA GROUND LEASE PROJECTIONS
PROPOSED LEASE RESTRUCTURING
BEACON BAY - NEWPORT BEACH
Prepared by: Keyser Marston Associates, Inc.
File name: BB Projections 115 19, Grd Lse Projs Page 43 of 52
SS2-157
2038
2039
2040
2041
2042
2043
2044
2045
II. 1994 Leases
A. Bayfront Lots
101 Harbor
Island Road (A)
$45,950
$241,391
$241,391
$241,391
$241,391
$241,391
$241,391
$241,391
17 Beacon
Bay
$9,500
$9,500
$9,500
$77,422
$77,422
$77,422
$77,422
$77,422
8 Beacon Bay
$17,500
$17,500
$17,500
$17,500
$135,828
$135,828
$135,828
$135,828
11 Beacon
Bay
$32,770
$32,770
$32,770
$32,770
$32,770
$209,252
$209,252
$209,252
115 Harbor
Island Road (C)
$6,250
$6,250
$6,250
$6,250
$6,250
$6,250
$65,008
$65,008
12 Beacon
Bay
$34,880
$34,880
$34,880
$34,880
$34,880
$34,880
$34,880
$174,511
B. Interior Lots
36 Beacon
Bay
$28,788
$28,788
$28,788
$28,788
$28,788
$28,788
$28,788
$28,788
30 Beacon
Bay
$21,442
$21,442
$21,442
$21,442
$21,442
$21,442
$21,442
$21,442
28 Beacon
Bay
$20,421
$20,421
$20,421
$20,421
$20,421
$20,421
$20,421
$20,421
34 Beacon
Bay
$21,442
$21,442
$21,442
$21,442
$21,442
$21,442
$21,442
$21,442
57 Beacon
Bay
$31,623
$31,623
$31,623
$31,623
$31,623
$31,623
$31,623
$31,623
35 Beacon
Bay
$18,152
$18,152
$18,152
$18,152
$18,152
$18,152
$18,152
$18,152
29 Beacon
Bay
$19,017
$19,017
$19,017
$19,017
$19,017
$19,017
$19,017
$19,017
45 Beacon
Bay
$31,921
$31,921
$31,921
$31,921
$31,921
$31,921
$31,921
$31,921
44 Beacon
Bay
$38,417
$38,417
$38,417
$38,417
$38,417
$38,417
$38,417
$38,417
56 Beacon
Bay
$48,801
$48,801
$48,801
$48,801
$48,801
$48,801
$48,801
$48,801
25 Beacon
Bay
$34,548
$34,548
$34,548
$34,548
$34,548
$34,548
$34,548
$34,548
67 Beacon
Bay
$33,958
$33,958
$33,958
$33,958
$33,958
$33,958
$33,958
$33,958
27 Beacon
Bay
$45,946
$45,946
$45,946
$45,946
$45,946
$45,946
$45,946
$45,946
69 Beacon
Bay
$17,508
$17,508
$17,508
$17,508
$17,508
$17,508
$17,508
$17,508
54 Beacon
Bay
$60,446
$60,446
$60,446
$60,446
$60,446
$60,446
$60,446
$60,446
23 Beacon
Bay
$41,404
$41,404
$41,404
$41,404
$41,404
$41,404
$41,404
$41,404
Prepared by: Keyser Marston Associates, Inc.
File name: BB Projections 115 19, Grd Lse Projs Page 43 of 52
SS2-157
TABLE 4
KMA GROUND LEASE PROJECTIONS 1
PROPOSED LEASE RESTRUCTURING
BEACON BAY - NEWPORT BEACH
IV. Grand Total - Annual Rent $2,132,045 $2,048,235 $1,988,351 $1,887,348 $1,831,009 $1,651,413 $1,712,427 $1,785,853 $1,888,284
i See TABLE 2 for the ground lease projections under the proposed restructuring assuming no resales occur. See TABLE 3 for home sales
projections. The projections in this table apply the ground lease payments as scheduled in TABLE 2 until the home is resold. At that point the
ground lease is fixed at 1.0% of the sales price until the home is resold again. No CPI escalations are applied.
Prepared by: Keyser Marston Associates, Inc.
File name: BB Projections 115 19, Grd Lse Projs Page 44 of 52
SS2-158
2019
2020
2021
2022
2023
2024
2025
2026
2027
III. 2012 Leases
A. Bayfront Lots
14 Beacon Bay
$78,100
$48,904
$48,904
$48,904
$48,904
$48,904
$48,904
$48,904
$48,904
1 Beacon Bay
$38,750
$38,750
$38,750
$26,510
$26,510
$26,510
$26,510
$26,510
$26,510
2 Beacon Bay
$69,250
$65,200
$57,700
$50,200
$42,700
$47,376
$47,376
$47,376
$47,376
107 Harbor Island Road (B)
$90,000
$82,500
$75,000
$67,500
$60,000
$45,000
$45,000
$84,854
$84,854
18 Beacon Bay
$75,950
$68,450
$60,950
$53,450
$45,950
$30,950
$30,950
$30,950
$30,950
21 Beacon Bay
$85,000
$77,500
$70,000
$62,500
$55,000
$40,000
$40,000
$40,000
$40,000
62 Beacon Bay
$81,000
$73,500
$66,000
$58,500
$51,000
$36,000
$36,000
$36,000
$36,000
20 Beacon Bay
$89,000
$81,500
$74,000
$66,500
$59,000
$44,000
$44,000
$44,000
$44,000
16 Beacon Bay
$84,000
$76,500
$69,000
$61,500
$54,000
$39,000
$39,000
$39,000
$39,000
22 Beacon Bay
$97,500
$90,000
$82,500
$75,000
$67,500
$52,500
$52,500
$52,500
$52,500
3 Beacon Bay
$83,000
$75,500
$68,000
$60,500
$53,000
$38,000
$38,000
$38,000
$38,000
B. Interior Lots
61 Beacon Bay
$20,907
$20,907
$20,907
$20,907
$20,907
$20,907
$20,907
$20,907
$20,907
41 Beacon Bay
$22,500
$13,297
$13,297
$13,297
$13,297
$13,297
$13,297
$13,297
$13,297
37 Beacon Bay
$42,750
$42,750
$25,264
$25,264
$25,264
$25,264
$25,264
$25,264
$25,264
66 Beacon Bay
$50,000
$50,000
$50,000
$31,027
$31,027
$31,027
$31,027
$31,027
$31,027
60 Beacon Bay
$33,750
$33,750
$33,750
$33,750
$21,990
$21,990
$21,990
$21,990
$21,990
24 Beacon Bay
$47,500
$47,500
$47,500
$41,500
$34,000
$32,496
$32,496
$32,496
$32,496
38 Beacon Bay
$30,000
$30,000
$30,000
$30,000
$27,000
$12,000
$21,550
$21,550
$21,550
48 Beacon Bay
$29,375
$29,375
$29,375
$29,375
$26,750
$11,750
$11,750
$21,101
$21,101
49 Beacon Bay
$36,250
$36,250
$36,250
$36,250
$29,500
$14,500
$14,500
$14,500
$26,040
52 Beacon Bay
$62,000
$62,000
$54,800
$47,300
$39,800
$24,800
$24,800
$24,800
$24,800
53 Beacon Bay
$50,000
$50,000
$50,000
$42,500
$35,000
$20,000
$20,000
$20,000
$20,000
58 Beacon Bay
$73,750
$67,000
$59,500
$52,000
$44,500
$29,500
$29,500
$29,500
$29,500
IV. Grand Total - Annual Rent $2,132,045 $2,048,235 $1,988,351 $1,887,348 $1,831,009 $1,651,413 $1,712,427 $1,785,853 $1,888,284
i See TABLE 2 for the ground lease projections under the proposed restructuring assuming no resales occur. See TABLE 3 for home sales
projections. The projections in this table apply the ground lease payments as scheduled in TABLE 2 until the home is resold. At that point the
ground lease is fixed at 1.0% of the sales price until the home is resold again. No CPI escalations are applied.
Prepared by: Keyser Marston Associates, Inc.
File name: BB Projections 115 19, Grd Lse Projs Page 44 of 52
SS2-158
TABLE 4
KMA GROUND LEASE PROJECTIONS
PROPOSED LEASE RESTRUCTURING
BEACON BAY - NEWPORT BEACH
IV. Grand Total - Annual Rent $1,971,214 $2,083,263 $2,182,824 $2,298,508 $2,433,828 $2,571,552 $2,703,874 $2,824,985 $2,964,808 $3,054,860
Prepared by: Keyser Marston Associates, Inc.
File name: BB Projections 115 19, Grd Lse Projs Page 45 of 52
SS2-159
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
III. 2012 Leases
A. Bayfront Lots
14 Beacon Bay
$48,904
$48,904
$48,904
$48,904
$48,904
$48,904
$48,904
$48,904
$48,904
$48,904
1 Beacon Bay
$26,510
$26,510
$26,510
$26,510
$26,510
$26,510
$26,510
$26,510
$26,510
$26,510
2 Beacon Bay
$47,376
$47,376
$47,376
$47,376
$47,376
$47,376
$47,376
$47,376
$47,376
$47,376
107 Harbor Island Road (B)
$84,854
$84,854
$84,854
$84,854
$84,854
$84,854
$84,854
$84,854
$84,854
$84,854
18 Beacon Bay
$61,279
$61,279
$61,279
$61,279
$61,279
$61,279
$61,279
$61,279
$61,279
$61,279
21 Beacon Bay
$40,000
$40,000
$87,315
$87,315
$87,315
$87,315
$87,315
$87,315
$87,315
$87,315
62 Beacon Bay
$36,000
$36,000
$36,000
$36,000
$82,513
$82,513
$82,513
$82,513
$82,513
$82,513
20 Beacon Bay
$44,000
$44,000
$44,000
$44,000
$44,000
$44,000
$105,891
$105,891
$105,891
$105,891
16 Beacon Bay
$39,000
$39,000
$39,000
$39,000
$39,000
$39,000
$39,000
$39,000
$103,479
$103,479
22 Beacon Bay
$52,500
$52,500
$52,500
$52,500
$52,500
$52,500
$52,500
$52,500
$52,500
$52,500
3 Beacon Bay
$38,000
$38,000
$38,000
$38,000
$38,000
$38,000
$38,000
$38,000
$38,000
$38,000
B. Interior Lots
61 Beacon Bay
$20,907
$20,907
$20,907
$20,907
$20,907
$20,907
$43,465
$43,465
$43,465
$43,465
41 Beacon Bay
$13,297
$13,297
$13,297
$13,297
$13,297
$13,297
$13,297
$27,644
$27,644
$27,644
37 Beacon Bay
$25,264
$25,264
$25,264
$25,264
$25,264
$25,264
$25,264
$25,264
$52,523
$52,523
66 Beacon Bay
$31,027
$31,027
$31,027
$31,027
$31,027
$31,027
$31,027
$31,027
$31,027
$64,502
60 Beacon Bay
$21,990
$21,990
$21,990
$21,990
$21,990
$21,990
$21,990
$21,990
$21,990
$21,990
24 Beacon Bay
$32,496
$32,496
$32,496
$32,496
$32,496
$32,496
$32,496
$32,496
$32,496
$32,496
38 Beacon Bay
$21,550
$21,550
$21,550
$21,550
$21,550
$21,550
$21,550
$21,550
$21,550
$21,550
48 Beacon Bay
$21,101
$21,101
$21,101
$21,101
$21,101
$21,101
$21,101
$21,101
$21,101
$21,101
49 Beacon Bay
$26,040
$26,040
$26,040
$26,040
$26,040
$26,040
$26,040
$26,040
$26,040
$26,040
52 Beacon Bay
$44,537
$44,537
$44,537
$44,537
$44,537
$44,537
$44,537
$44,537
$44,537
$44,537
53 Beacon Bay
$20,000
$35,917
$35,917
$35,917
$35,917
$35,917
$35,917
$35,917
$35,917
$35,917
58 Beacon Bay
$29,500
$29,500
$52,978
$52,978
$52,978
$52,978
$52,978
$52,978
$52,978
$52,978
IV. Grand Total - Annual Rent $1,971,214 $2,083,263 $2,182,824 $2,298,508 $2,433,828 $2,571,552 $2,703,874 $2,824,985 $2,964,808 $3,054,860
Prepared by: Keyser Marston Associates, Inc.
File name: BB Projections 115 19, Grd Lse Projs Page 45 of 52
SS2-159
TABLE 4
KMA GROUND LEASE PROJECTIONS
PROPOSED LEASE RESTRUCTURING
BEACON BAY - NEWPORT BEACH
IV. Grand Total - Annual Rent $3,222,800 $3,504,720 $3,652,439 $3,797,626 $4,001,130 $4,267,904 $4,410,849 $4,651,581
Prepared by: Keyser Marston Associates, Inc.
File name: BB Projections 115 19, Grd Lse Projs Page 46 of 52
SS2-160
2038
2039
2040
2041
2042
2043
2044
2045
III. 2012 Leases
A. Bayfront Lots
14 Beacon Bay
$48,904
$48,904
$48,904
$48,904
$48,904
$48,904
$48,904
$48,904
1 Beacon Bay
$26,510
$26,510
$26,510
$26,510
$26,510
$26,510
$26,510
$26,510
2 Beacon Bay
$47,376
$47,376
$47,376
$47,376
$47,376
$47,376
$47,376
$47,376
107 Harbor Island Road (B)
$84,854
$84,854
$84,854
$84,854
$84,854
$84,854
$84,854
$84,854
18 Beacon Bay
$61,279
$61,279
$61,279
$61,279
$61,279
$61,279
$61,279
$61,279
21 Beacon Bay
$87,315
$87,315
$87,315
$87,315
$87,315
$87,315
$87,315
$87,315
62 Beacon Bay
$82,513
$82,513
$82,513
$82,513
$82,513
$82,513
$82,513
$82,513
20 Beacon Bay
$105,891
$105,891
$105,891
$105,891
$105,891
$105,891
$105,891
$105,891
16 Beacon Bay
$103,479
$103,479
$103,479
$103,479
$103,479
$103,479
$103,479
$103,479
22 Beacon Bay
$146,263
$146,263
$146,263
$146,263
$146,263
$146,263
$146,263
$146,263
3 Beacon Bay
$38,000
$38,000
$111,160
$111,160
$111,160
$111,160
$111,160
$111,160
B. Interior Lots
61 Beacon Bay
$43,465
$43,465
$43,465
$43,465
$43,465
$43,465
$43,465
$43,465
41 Beacon Bay
$27,644
$27,644
$27,644
$27,644
$27,644
$27,644
$27,644
$27,644
37 Beacon Bay
$52,523
$52,523
$52,523
$52,523
$52,523
$52,523
$52,523
$52,523
66 Beacon Bay
$64,502
$64,502
$64,502
$64,502
$64,502
$64,502
$64,502
$64,502
60 Beacon Bay
$45,716
$45,716
$45,716
$45,716
$45,716
$45,716
$45,716
$45,716
24 Beacon Bay
$32,496
$67,558
$67,558
$67,558
$67,558
$67,558
$67,558
$67,558
38 Beacon Bay
$21,550
$21,550
$44,801
$44,801
$44,801
$44,801
$44,801
$44,801
48 Beacon Bay
$21,101
$21,101
$21,101
$43,868
$43,868
$43,868
$43,868
$43,868
49 Beacon Bay
$26,040
$26,040
$26,040
$26,040
$54,135
$54,135
$54,135
$54,135
52 Beacon Bay
$44,537
$44,537
$44,537
$44,537
$44,537
$92,590
$92,590
$92,590
53 Beacon Bay
$35,917
$35,917
$35,917
$35,917
$35,917
$35,917
$74,669
$74,669
58 Beacon Bay
$52,978
$52,978
$52,978
$52,978
$52,978
$52,978
$52,978
$110,137
IV. Grand Total - Annual Rent $3,222,800 $3,504,720 $3,652,439 $3,797,626 $4,001,130 $4,267,904 $4,410,849 $4,651,581
Prepared by: Keyser Marston Associates, Inc.
File name: BB Projections 115 19, Grd Lse Projs Page 46 of 52
SS2-160
TABLE 5
ANNUAL GROUND RENT PROJECTIONS
EXISTING LEASE TERMS: NO RESALES
GROUND LEASE ANALYSIS
BEACON BAY - NEWPORT BEACH
Total 2012 Leases $1,070,836 $1,117,058 $1,150,569 $1,185,086 $1,220,639 $1,257,258 $1,294,976 $1,333,825 $1,373,840 $1,415,055
Prepared by: Keyser Marston Associates, Inc.
File name: BB Projections 115 19, KMA Base_No Resales Page 47 of 52
SS2-161
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
I. Bayfront Lots
A. Pre -Existing Leases 1
63 Beacon Bay
$29,220
$29,220
$29,220
$29,220
$29,220
$29,220
$29,220
$29,220
$29,220
$29,220
13 Beacon Bay
29,450
29,450
29,450
29,450
29,450
29,450
29,450
29,450
29,450
29,450
19 Beacon Bay
19,500
19,500
19,500
19,500
19,500
19,500
19,500
19,500
19,500
19,500
6 Beacon Bay
34,260
34,260
34,260
34,260
34,260
34,260
34,260
34,260
34,260
34,260
9 Beacon Bay
44,350
44,350
44,350
44,350
44,350
44,350
44,350
44,350
44,350
44,350
15 Beacon Bay
20,240
20,240
20,240
20,240
20,240
20,240
20,240
20,240
20,240
20,240
4 Beacon Bay
21,260
21,260
21,260
21,260
21,260
21,260
21,260
21,260
21,260
21,260
5 Beacon Bay
28,840
28,840
28,840
28,840
28,840
28,840
28,840
28,840
28,840
28,840
10 Beacon Bay
33,540
33,540
33,540
33,540
33,540
33,540
33,540
33,540
33,540
33,540
7 Beacon Bay
33,055
33,055
33,055
33,055
33,055
33,055
33,055
33,055
33,055
33,055
Total Pre -Existing Leases
$293,715
$293,715
$293,715
$293,715
$293,715
$293,715
$293,715
$293,715
$293,715
$293,715
B. 1994 Leases z
101 Harbor Island Road (A)
$134,171
$154,302
$154,302
$154,302
$154,302
$154,302
$154,302
$154,302
$189,772
$189,772
17 Beacon Bay
34,867
40,098
40,098
40,098
40,098
40,098
40,098
40,098
49,316
49,316
8 Beacon Bay
61,500
61,500
61,500
75,637
75,637
75,637
75,637
75,637
75,637
75,637
11 Beacon Bay
95,629
109,977
109,977
109,977
109,977
109,977
109,977
109,977
135,258
135,258
115 Harbor Island Road (C)
30,943
35,585
35,585
35,585
35,585
35,585
35,585
35,585
43,766
43,766
12 Beacon Bay
87,215
100,300
100,300
100,300
100,300
100,300
100,300
100,300
123,356
123,356
Total 1994 Leases
$444,325
$501,763
$501,763
$515,900
$515,900
$515,900
$515,900
$515,900
$617,105
$617,105
C. 2012 Leases s
14 Beacon Bay
$92,248
$96,230
$99,117
$102,090
$105,153
$108,308
$111,557
$114,904
$118,351
$121,901
1 Beacon Bay
41,714
43,515
44,820
46,165
47,550
48,976
50,445
51,959
53,518
55,123
2 Beacon Bay
74,670
77,893
80,229
82,636
85,115
87,669
90,299
93,008
95,798
98,672
107 Harbor Island Road (B)
122,663
127,958
131,796
135,750
139,823
144,018
148,338
152,788
157,372
162,093
18 Beacon Bay
84,418
88,062
90,703
93,424
96,227
99,114
102,087
105,150
108,305
111,554
21 Beacon Bay
109,102
113,811
117,226
120,742
124,365
128,096
131,938
135,897
139,973
144,173
62 Beacon Bay
98,094
102,328
105,398
108,560
111,816
115,171
118,626
122,185
125,850
129,626
20 Beacon Bay
117,071
122,124
125,788
129,562
133,449
137,452
141,576
145,823
150,198
154,703
16 Beacon Bay
99,645
103,946
107,064
110,276
113,585
116,992
120,502
124,117
127,841
131,676
22 Beacon Bay
136,211
142,091
146,353
150,744
155,266
159,924
164,722
169,664
174,754
179,996
3 Beacon Bay
95,000
99,101
102,074
105,136
108,290
111,539
114,885
118,331
121,881
125,538
Total 2012 Leases $1,070,836 $1,117,058 $1,150,569 $1,185,086 $1,220,639 $1,257,258 $1,294,976 $1,333,825 $1,373,840 $1,415,055
Prepared by: Keyser Marston Associates, Inc.
File name: BB Projections 115 19, KMA Base_No Resales Page 47 of 52
SS2-161
TABLE 5
ANNUAL GROUND RENT PROJECTIONS
EXISTING LEASE TERMS: NO RESALES
GROUND LEASE ANALYSIS
BEACON BAY - NEWPORT BEACH
I. Bayfront Lots
A. Pre -Existing Leases
63 Beacon Bay
13 Beacon Bay
19 Beacon Bay
6 Beacon Bay
9 Beacon Bay
15 Beacon Bay
4 Beacon Bay
5 Beacon Bay
10 Beacon Bay
7 Beacon Bay
Total Pre -Existing Leases
B. 1994 Leases
101 Harbor Island Road (A)
17 Beacon Bay
8 Beacon Bay
11 Beacon Bay
115 Harbor Island Road (C)
12 Beacon Bay
Total 1994 Leases
C. 2012 Leases
14 Beacon Bay
1 Beacon Bay
2 Beacon Bay
107 Harbor Island Road (B)
18 Beacon Bay
21 Beacon Bay
62 Beacon Bay
20 Beacon Bay
16 Beacon Bay
22 Beacon Bay
3 Beacon Bay
Total 2012 Leases
2028 2029 2030 2031 2032 2033 2034 2035 2036 2037
$29,220
$29,220
$29,220
$29,220
$29,220
$29,220
$29,220
$29,220
$29,220
$29,220
29,450
29,450
29,450
29,450
29,450
29,450
29,450
29,450
29,450
29,450
19,500
19,500
19,500
19,500
19,500
19,500
19,500
19,500
19,500
19,500
34,260
34,260
34,260
34,260
34,260
34,260
34,260
34,260
34,260
34,260
44,350
44,350
44,350
44,350
44,350
44,350
44,350
44,350
44,350
44,350
20,240
20,240
20,240
20,240
20,240
20,240
20,240
20,240
20,240
20,240
21,260
21,260
21,260
21,260
21,260
21,260
21,260
21,260
21,260
21,260
28,840
28,840
28,840
28,840
28,840
28,840
28,840
28,840
28,840
28,840
33,540
33,540
33,540
33,540
33,540
33,540
33,540
33,540
33,540
33,540
33,055
33,055
33,055
33,055
33,055
33,055
33,055
33,055
33,055
33,055
$293,715
$293,715
$293,715
$293,715
$293,715
$293,715
$293,715
$293,715
$293,715
$293,715
$189,772
$189,772
$189,772
$189,772
$189,772
$233,396
$233,396
$233,396
$233,396
$233,396
49,316
49,316
49,316
49,316
49,316
60,652
60,652
60,652
60,652
60,652
93,024
93,024
93,024
93,024
93,024
93,024
93,024
114,407
114,407
114,407
135,258
135,258
135,258
135,258
135,258
166,350
166,350
166,350
166,350
166,350
43,766
43,766
43,766
43,766
43,766
53,826
53,826
53,826
53,826
53,826
123,356
123,356
123,356
123,356
123,356
151,713
151,713
151,713
151,713
151,713
$634,491
$634,491
$634,491
$634,491
$634,491
$758,961
$758,961
$780,345
$780,345
$780,345
$125,558
$129,325
$133,205
$137,201
$141,317
$145,557
$149,923
$154,421
$159,054
$163,825
56,777
58,480
60,235
62,042
63,903
65,820
67,795
69,828
71,923
74,081
101,632
104,681
107,822
111,056
114,388
117,820
121,354
124,995
128,745
13 2, 607
166,956
171,964
177,123
182,437
187,910
193,547
199,354
205,335
211,495
217,839
114,900
118,347
121,898
125,555
129,321
133,201
137,197
141,313
145,552
149,919
148,498
152,953
157,541
162,268
167,136
172,150
177,314
182,634
188,113
193,756
133,515
137,520
141,646
145,895
150,272
154,780
159,424
164,206
169,132
174,206
159,345
164,125
169,049
174,120
179,344
184,724
190,266
195,974
201,853
207,908
135,626
139,695
143,886
148,202
15 2, 648
157,228
161,945
166,803
171,807
176,961
185,396
190,958
196,687
202,587
208,665
214,925
221,373
228,014
234,854
241,900
129.304
133.183
137.178
141.294
145.533
149.899
154.396
159.027
163.798
168.712
$1,457,507 $1,501,232 $1,546,269 $1,592,657 $1,640,437 $1,689,650 $1,740,339 $1,792,549 $1,846,326 $1,901,716
Prepared by: Keyser Marston Associates, Inc.
File name: BB Projections 115 19, KMA Base_No Resales Page 48 of 52
SS2-162
TABLE 5
ANNUAL GROUND RENT PROJECTIONS
EXISTING LEASE TERMS: NO RESALES
GROUND LEASE ANALYSIS
BEACON BAY - NEWPORT BEACH
Prepared by: Keyser Marston Associates, Inc.
File name: BB Projections 115 19, KMA Base_No Resales Page 49 of 52
SS2-163
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
II. Interior Lots
A. Pre -Existing Leases
51 Beacon Bay
$7,857
$7,857
$7,857
$7,857
$7,857
$7,857
$7,857
$7,857
$7,857
$7,857
40 Beacon Bay
13,572
13,572
13,572
13,572
13,572
13,572
13,572
13,572
13,572
13,572
42 Beacon Bay
7,672
7,672
7,672
7,672
7,672
7,672
7,672
7,672
7,672
7,672
46 Beacon Bay
8,492
8,492
8,492
8,492
8,492
8,492
8,492
8,492
8,492
8,492
43 Beacon Bay
13,232
13,232
13,232
13,232
13,232
13,232
13,232
13,232
13,232
13,232
65 Beacon Bay
6,322
6,322
6,322
6,322
6,322
6,322
6,322
6,322
6,322
6,322
64 Beacon Bay
10,325
10,325
10,325
10,325
10,325
10,325
10,325
10,325
10,325
10,325
32 Beacon Bay
7,217
7,217
7,217
7,217
7,217
7,217
7,217
7,217
7,217
7,217
47 Beacon Bay
7,365
7,365
7,365
7,365
7,365
7,365
7,365
7,365
7,365
7,365
26 Beacon Bay
6,942
6,942
6,942
6,942
6,942
6,942
6,942
6,942
6,942
6,942
55 Beacon Bay
12,865
12,865
12,865
12,865
12,865
12,865
12,865
12,865
12,865
12,865
33 Beacon Bay
7,307
7,307
7,307
7,307
7,307
7,307
7,307
7,307
7,307
7,307
31 Beacon Bay
10,515
10,515
10,515
10,515
10,515
10,515
10,515
10,515
10,515
10,515
39 Beacon Bay
11,557
11,557
11,557
11,557
11,557
11,557
11,557
11,557
11,557
11,557
59 Beacon Bay
12,175
12,175
12,175
12,175
12,175
12,175
12,175
12,175
12,175
12,175
50 Beacon Bay
12,111
12,111
12,111
12,111
12,111
12,111
12,111
12,111
12,111
12,111
68 Beacon Bay
6,057
6,057
6,057
6,057
6,057
6,057
6,057
6,057
6,057
6,057
Total Pre -Existing Leases
$161,583
$161,583
$161,583
$161,583
$161,583
$161,583
$161,583
$161,583
$161,583
$161,583
B. 1994 Leases
36 Beacon Bay
$8,336
$8,336
$8,336
$8,336
$8,336
$8,336
$10,252
$10,252
$10,252
$10,252
30 Beacon Bay
18,362
18,362
18,362
18,362
18,362
18,362
22,582
22,582
22,582
22,582
28 Beacon Bay
4 18,650
21,449
21,449
21,449
21,449
21,449
21,449
21,449
26,379
26,379
34 Beacon Bay
16,205
18,615
18,615
18,615
18,615
18,615
18,615
18,615
22,894
22,894
57 Beacon Bay
10,034
11,540
11,540
11,540
11,540
11,540
11,540
11,540
14,192
14,192
35 Beacon Bay
14,331
14,331
17,625
17,625
17,625
17,625
17,625
17,625
17,625
21,677
29 Beacon Bay
15,785
15,785
15,785
19,414
19,414
19,414
19,414
19,414
19,414
19,414
45 Beacon Bay
25,442
25,442
25,442
25,442
25,442
31,290
31,290
31,290
31,290
31,290
44 Beacon Bay
33,490
33,490
33,490
33,490
33,490
33,490
41,189
41,189
41,189
41,189
56 Beacon Bay
40,367
40,367
40,367
40,367
40,367
40,367
49,646
49,646
49,646
49,646
25 Beacon Bay
28,564
28,564
28,564
28,564
28,564
28,564
35,131
35,131
35,131
35,131
67 Beacon Bay
28,323
28,323
28,323
28,323
28,323
28,323
34,833
34,833
34,833
34,833
27 Beacon Bay
38,468
38,468
38,468
38,468
38,468
38,468
38,468
47,311
47,311
47,311
Prepared by: Keyser Marston Associates, Inc.
File name: BB Projections 115 19, KMA Base_No Resales Page 49 of 52
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TABLE 5
ANNUAL GROUND RENT PROJECTIONS
EXISTING LEASE TERMS: NO RESALES
GROUND LEASE ANALYSIS
BEACON BAY - NEWPORT BEACH
Prepared by: Keyser Marston Associates, Inc.
File name: BB Projections 115 19, KMA Base_No Resales Page 50 of 52
SS2-164
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
II. Interior Lots
A. Pre -Existing Leases
51 Beacon Bay
$7,857
$7,857
$7,857
$7,857
$7,857
$7,857
$7,857
$7,857
$7,857
$7,857
40 Beacon Bay
13,572
13,572
13,572
13,572
13,572
13,572
13,572
13,572
13,572
13,572
42 Beacon Bay
7,672
7,672
7,672
7,672
7,672
7,672
7,672
7,672
7,672
7,672
46 Beacon Bay
8,492
8,492
8,492
8,492
8,492
8,492
8,492
8,492
8,492
8,492
43 Beacon Bay
13,232
13,232
13,232
13,232
13,232
13,232
13,232
13,232
13,232
13,232
65 Beacon Bay
6,322
6,322
6,322
6,322
6,322
6,322
6,322
6,322
6,322
6,322
64 Beacon Bay
10,325
10,325
10,325
10,325
10,325
10,325
10,325
10,325
10,325
10,325
32 Beacon Bay
7,217
7,217
7,217
7,217
7,217
7,217
7,217
7,217
7,217
7,217
47 Beacon Bay
7,365
7,365
7,365
7,365
7,365
7,365
7,365
7,365
7,365
7,365
26 Beacon Bay
6,942
6,942
6,942
6,942
6,942
6,942
6,942
6,942
6,942
6,942
55 Beacon Bay
12,865
12,865
12,865
12,865
12,865
12,865
12,865
12,865
12,865
12,865
33 Beacon Bay
7,307
7,307
7,307
7,307
7,307
7,307
7,307
7,307
7,307
7,307
31 Beacon Bay
10,515
10,515
10,515
10,515
10,515
10,515
10,515
10,515
10,515
10,515
39 Beacon Bay
11,557
11,557
11,557
11,557
11,557
11,557
11,557
11,557
11,557
11,557
59 Beacon Bay
12,175
12,175
12,175
12,175
12,175
12,175
12,175
12,175
12,175
12,175
50 Beacon Bay
12,111
12,111
12,111
12,111
12,111
12,111
12,111
12,111
12,111
12,111
68 Beacon Bay
6,057
6,057
6,057
6,057
6,057
6,057
6,057
6,057
6,057
6,057
Total Pre -Existing Leases
$161,583
$161,583
$161,583
$161,583
$161,583
$161,583
$161,583
$161,583
$161,583
$161,583
B. 1994 Leases
36 Beacon Bay
$10,252
$10,252
$10,252
$12,609
$12,609
$12,609
$12,609
$12,609
$12,609
$12,609
30 Beacon Bay
22,582
22,582
22,582
27,774
27,774
27,774
27,774
27,774
27,774
27,774
28 Beacon Bay
26,379
26,379
26,379
26,379
26,379
32,443
32,443
32,443
32,443
32,443
34 Beacon Bay
22,894
22,894
22,894
22,894
22,894
28,157
28,157
28,157
28,157
28,157
57 Beacon Bay
14,192
14,192
14,192
14,192
14,192
17,455
17,455
17,455
17,455
17,455
35 Beacon Bay
21,677
21,677
21,677
21,677
21,677
21,677
26,660
26,660
26,660
26,660
29 Beacon Bay
23,876
23,876
23,876
23,876
23,876
23,876
23,876
29,365
29,365
29,365
45 Beacon Bay
31,290
31,290
35,985
35,985
35,985
35,985
35,985
35,985
35,985
44,257
44 Beacon Bay
41,189
41,189
41,189
50,657
50,657
50,657
50,657
50,657
50,657
50,657
56 Beacon Bay
49,646
49,646
49,646
61,059
61,059
61,059
61,059
61,059
61,059
61,059
25 Beacon Bay
35,131
35,131
35,131
43,206
43,206
43,206
43,206
43,206
43,206
43,206
67 Beacon Bay
34,833
34,833
34,833
42,841
42,841
42,841
42,841
42,841
42,841
42,841
27 Beacon Bay
47,311
47,311
47,311
47,311
58,186
58,186
58,186
58,186
58,186
58,186
Prepared by: Keyser Marston Associates, Inc.
File name: BB Projections 115 19, KMA Base_No Resales Page 50 of 52
SS2-164
TABLE 5
ANNUAL GROUND RENT PROJECTIONS
EXISTING LEASE TERMS: NO RESALES
GROUND LEASE ANALYSIS
BEACON BAY - NEWPORT BEACH
69 Beacon Bay
54 Beacon Bay
23 Beacon Bay
Total 1994 Leases
C. 2012 Leases
61 Beacon Bay
41 Beacon Bay
37 Beacon Bay
66 Beacon Bay
60 Beacon Bay
24 Beacon Bay
38 Beacon Bay
48 Beacon Bay
49 Beacon Bay
52 Beacon Bay
53 Beacon Bay
58 Beacon Bay
Total 2012 Leases
Grand Total - Annual Rent
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
4 25,660
29,476
29,476
29,476
29,476
29,476
29,476
29,476
36,252
36,252
46,117
46,117
46,117
46,117
56,718
56,718
56,718
56,718
56,718
56,718
38,290
38,290
38,290
38,290
38,290
38,290
38,290
47,092
47,092
47,092
$406,424
$416,954
$420,248
$423,877
$434,478
$440,326
$476,518
$494,163
$512,801
$516,852
$39,375
$41,075
$42,307
$43,576
$44,883
$46,230
$47,617
$49,045
$50,517
$52,032
24,221
25,267
26,025
26,805
27,609
28,438
29,291
30,170
31,075
32,007
46,096
48,085
49,528
51,014
52,544
54,121
55,744
57,416
59,139
60,913
53,334
55,636
57,305
59,024
60,795
62,619
64,498
66,432
68,425
70,478
36,166
37,727
38,859
40,025
41,225
42,462
43,736
45,048
46,400
47,792
50,900
53,097
54,690
56,331
58,021
59,762
61,555
63,401
65,303
67,262
32,148
33,535
34,541
35,578
36,645
37,744
38,877
40,043
41,244
42,481
31,896
33,273
34,271
35,299
36,358
37,449
38,573
39,730
40,922
42,149
39,510
41,215
42,452
43,725
45,037
46,388
47,780
49,213
50,690
52,210
65,985
68,834
70,899
73,026
75,216
77,473
79,797
82,191
84,657
87,196
50,000
52,158
53,723
55,335
56,995
58,705
60,466
62,280
64,148
66,073
73.750
76.933
79.241
81.619
84.067
86.589
89.187
91.862
94.618
97.457
$543,381 $566,836 $583,841 $601,356 $619,397 $637,979 $657,118 $676,832 $697,137 $718,051
$2,920,264 $3,057,908 $3,111,720 $3,181,518 $3,245,712 $3,306,761 $3,399,810 $3,476,018 $3,656,180 $3,722,361
1 Pre-existing leases that were converted to 1994 leases that expire in 2044. No CPI adjustments are applied.
z 1994 leases that expire in 2044. CPI adjustments are applied once every seven years.
3 2012 leases that expire 50 years after execution. Annual CPI adjustments are applied.
4 The adjustment dates for these leases is in December. For projection purposes, the leases were escalated at the beginning of the following year.
Prepared by: Keyser Marston Associates, Inc.
File name: BB Projections 115 19, KMA Base_No Resales Page 51 of 52
SS2-165
TABLE 5
ANNUAL GROUND RENT PROJECTIONS
EXISTING LEASE TERMS: NO RESALES
GROUND LEASE ANALYSIS
BEACON BAY - NEWPORT BEACH
69 Beacon Bay
54 Beacon Bay
23 Beacon Bay
Total 1994 Leases
C. 2012 Leases
61 Beacon Bay
41 Beacon Bay
37 Beacon Bay
66 Beacon Bay
60 Beacon Bay
24 Beacon Bay
38 Beacon Bay
48 Beacon Bay
49 Beacon Bay
52 Beacon Bay
53 Beacon Bay
58 Beacon Bay
Total 2012 Leases
Grand Total - Annual Rent
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
36,252
36,252
36,252
36,252
36,252
44,585
44,585
44,585
44,585
44,585
56,718
69,756
69,756
69,756
69,756
69,756
69,756
69,756
85,791
85,791
47,092
47,092
47,092
47,092
57,917
57,917
57,917
57,917
57,917
57,917
$521,315
$534,353
$539,047
$583,559
$605,259
$628,182
$633,165
$638,653
$654,688
$662,960
$53,593
$55,201
$56,857
$58,563
$60,319
$62,129
$63,993
$65,913
$67,890
$69,927
32,967
33,956
34,975
36,024
37,105
38,218
39,364
40,545
41,762
43,015
62,741
64,623
66,561
68,558
70,615
72,733
74,915
77,163
79,478
81,862
72,593
74,770
77,013
79,324
81,704
84,155
86,679
89,280
91,958
94,717
49,225
50,702
52,223
53,790
55,404
57,066
58,778
60,541
62,357
64,228
69,280
71,359
73,499
75,704
77,975
80,315
82,724
85,206
87,762
90,395
43,756
45,069
46,421
47,813
49,248
50,725
52,247
53,814
55,429
57,092
43,414
44,716
46,058
47,439
48,863
50,328
51,838
53,393
54,995
56,645
53,777
55,390
57,052
58,763
60,526
62,342
64,212
66,138
68,123
70,166
89,812
92,507
95,282
98,140
101,085
104,117
107,241
110,458
113,772
117,185
68,055
70,096
72,199
74,365
76,596
78,894
81,261
83,699
86,210
88,796
100.381
103.392
106.494
109.689
112.979
116.369
119.860
123.455
127.159
130.974
$739,593 $761,780 $784,634 $808,173 $832,418 $857,390 $883,112 $909,606 $936,894 $965,000
$3,808,204 $3,887,155 $3,959,740 $4,074,178 $4,167,904 $4,389,481 $4,470,876 $4,576,451 $4,673,551 $4,765,320
Prepared by: Keyser Marston Associates, Inc.
File name: BB Projections 115 19, KMA Base_No Resales Page 52 of 52
SS2-166
Attachment E
State Lands Commission Letter, dated September 5, 2018
SS2-167
STATE OF CALIFORNIA EDMUND G. BROWN JR., Governor
CALIFORNIA STATE LANDS COMMISSION
100 Howe Avenue, Suite 100 -South
Sacramento, CA 95825-8202
��CVVED BY
COMMUNITY
DEVELOPMENT
SEP 112018
JENNIFER LUCCHESI, Executive Officer
(916) 574-1800 Fax (916) 574-1810
California Relay.5ervice TDD Phone 1-800-735-2929
from Voice Phone 1-800-735-2922
Contact Phone: (916) 574-1800
Contact Fax: (916) 574-1810
crrY or September 5, 2018
File Ref: G 09-02.6
�I`'FWP BEPG�
Honorable Duf'yR buffield
Mayor, City of Newport Beach
100 Civic Center Drive
Newport Beach, CA 92660
RE: Potential change to the terms of the Beacon Bay leases
Dear Mayor Duffield:
It is the California State Lands Commission staffs' understanding that the City of
Newport Beach is considering contracting with an appraiser to assess the fair market
value of the lease governing the 72 residential lots located in Beacon Bay. The
appraisal would consider the possibility of lowering the consideration set in the existing
lease at 2.5 percent of the appraised value of the property. It is also our understanding
that the City is considering eliminating the Consumer Price Index adjustment, a
standard element in Commission leases and other leases for granted Public Trust
lands.
The area known as Beacon Bay is owned in part by the City in its capacity as a
municipality and in part in its capacity as a trustee for the State under Chapter 74,
Statutes of 1978, as amended. The Legislature has found that while the Beacon Bay
lots located within the trust grant are no longer needed for purposes of navigation,
commerce and fisheries, the City should continue to hold them in trust. State law
requires that the City.lease the lots for fair market value and that the revenues derived
from the lease are used for purposes consistent with the City's statutory trust grant
and the Public Trust Doctrine. An amendment or modification to the form of the lease
requires Commission approval.
In 1994, the City hired an appraiser to determine the fair market rental value of
the Beacon Bay lots. Commission and City staff collaborated closely during the
appraisal process and in May 1994, the Commission approved the lease rental
consideration. The Commission approved a revised lease form in March 2012, which
set the rent at 2.5 percent of appraised value with annual Consumer Price Index
adjustments. Consistent with our past practice, should the City proceed with
developing a new appraisal, we recommend that the City direct any contracted
appraiser to work closely with the Commission staff.
The Commission and staff intends to thoroughly analyze any proposed reduction
in lease consideration. The lands underlying the Beacon Bay lots are Public Trust lands
and the statute requires fair market value for their use. If the City proceeds with revising
SS2-168
Honorable Duffy Duffield
September 5, 2018
Page 2
the rental amount, it must provide ironclad and indisputable justification and rationale to prove
that the reduced amount reflects fair market value. And any decision to change the rental
amount or amend the lease terms will require Commission approval to be effective.
We also wanted to point out that the State Legislature has recently scrutinized rental
rates for State sovereign land and will likely closely review any proposed rental reductions
affecting the Beacon Bay lease. For example, earlier this year the State Legislature reviewed
rental rates for sovereign land at Lake Tahoe and provided funding for the Commission to
contract for an independent study and evaluation of rent -setting methodologies. The results of
this evaluation, which are expected later this year or early next year, may be of interest to the
C ity.
Commission staff appreciates its long history of working collaboratively with the City to
manage the State's Public Trust lands in Newport Beach. Please do not hesitate to contact me
at (916) 574-1800 if you have questions about our letter or the City's granted lands.
Sincerely,
SHERIPEMBERTON
Chief, External Affairs Division
cc: Councilmembers, City of Newport Beach
Reid Boggiano, Public Lands Management Specialist, California State Lands Commission
Ben Johnson, Staff Attorney, California State Lands Commission
Lauren Wooding Whitlinger, Community Development Department, City of Newport Beach
SS2-169