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HomeMy WebLinkAboutC-9332-1 - Affordable Housing Agreement (2510 W. Coast Highway Mixed Use Project)AFFORDABLE HOUSING AGREEMENT (2510 W. Coast Highway Mixed Use Project) BY AND BETWEEN THE City of Newport Beach, a California municipal corporation and 2510 W. Coast Hwy LLC, a Delaware limited liability company and 2510 W. Coast Hwy Eat LLC, a Delaware limited liability company AFFORDABLE HOUSING AGREEMENT (2510 W. Coast Highway Mixed Use Project) This AFFORDABLE HOUSING AGREEMENT ("Agreement") is dated as of cLq A. ® , 2023 ("Effective Date"), and is entered into between the CITY OF�NEWPORT BEACH, a California municipal corporation ("City"), and 2510 W. COAST HWY LLC, a Delaware limited liability company and 2510 W. COAST HWY EAT LLC, a Delaware limited liability company ("Developer"). City and Developer may be referred to herein as "Party" or "Parties". City and Developer enter into this Agreement with reference to the following recitals of fact (each, a "Recital"): RECITALS A. Developer is the owner of that certain real property consisting of approximately 42,821 square feet or 0.98 acres located in the Mariners' Mile area in the City of Newport Beach, County of Orange, State of California, addressed as 2510 and 2530 West Coast Highway [APN 425-471-55 and 425-471-56], as more particularly depicted in Exhibit "A" attached to this Agreement and incorporated herein ("Property"). B. On July 27, 2021, the City Council approved the 2510 W. Coast Highway Mixed Use Project (PA2019-249) which includes developing the Property into a residential project with thirty-six (36) dwelling units and 5,096 square feet of office space, as depicted on Exhibit "B" attached to this Agreement and incorporated herein ("Project"). C. Project approval included the adoption of an Affordable Housing Implementation Plan No. AH2O21-001, dated July 14, 2021 ("AHIP"), which implements affordable housing requirements for the Project by way of a density bonus and incentives/concessions pursuant to Chapter 20.32 (Density Bonus) of the Newport Beach Municipal Code ("NBMC") and California Government Code Section 65915 ("State Density Bonus Law"). The AHIP is attached hereto and incorporated herein by reference as Exhibit "C." D. Pursuant to the State Density Bonus Law and the City's density bonus requirements, the City granted a density bonus of thirty-five percent (35%) above the maximum number of units allowed by the City's General Plan and Title 20 (Planning and Zoning) of the NBMC in exchange for construction of a minimum number of affordable housing units. With the approved density bonus of thirty-five percent (35%), the Project is eligible for ten (10) additional units above the twenty- six (26) base units ("Base Units") for a total of thirty-six (36) dwelling units. E. The Mixed -Use Mariners' Mile Zoning District Development Standards ("Development Standards") provide for a maximum residential density of twenty- six -point -seven (26.7) dwelling units per acre. The Project is planned to consist of twenty-six (26) total dwelling units based on the current maximum residential density per the Development Standards ("Base Units") and ten (10) density bonus 2510 W. Coast Highway Affordable Housing Agreement Page 2 of 17 units. The Development Standards require that eleven percent (11 %) of the Base Units within a residential development shall be affordable to Lower Income Households. The affordable housing requirement for this Project is three (3) units ("Affordable Dwelling Units") (11% of 26 Base Units). F. Of the required three (3) Affordable Dwelling Units, Developer will provide three (3) units (11 % of Base Units) affordable to Very Low Income Households, which complies with the provisions of California Government Code Section 65915 and Chapter 20.32 of the NBMC applicable to a thirty-five percent (35%) density bonus. Rents for the Affordable Dwelling Units will be computed in accordance with California Health and Safety Code Section 50053, as required by California Government Code Section 65915(c)(1) and Section 20.32.160 of the NBMC. G. Developer intends to operate the Project in part as a rental community. The three (3) Affordable Dwelling Units will remain rent restricted for a minimum of fifty-five (55) years, per California Government Code Section 65915(c)(1). H. Section 20.32.160 of the NBMC requires that an applicant who seeks a density bonus enter into an affordable housing agreement with the City. The AHIP also requires that the applicant enter into an affordable housing agreement in recordable form prior to obtaining the first building permit for any residential unit and which ensures that the maximum rents for the affordable units will be calculated using the methodologies set forth in the AHIP. The Parties intend for the Declaration of Affordable Housing Covenants, Conditions, and Restrictions, substantially in the form as Exhibit "D" attached to this Agreement and incorporated herein ("Declaration"), to satisfy the requirement for a recorded affordable housing agreement. NOW, THEREFORE, FOR GOOD AND VALUABLE CONSIDERATION AND THE PROMISES AND COVENANTS OF CITY AND DEVELOPER SET FORTH IN THIS AGREEMENT, CITY AND DEVELOPER AGREE, AS FOLLOWS: TERMS AND CONDITIONS 1. DEFINITIONS Definitions. Unless terms are otherwise defined under different sections of this Agreement, the following words, terms and phrases are used in this Agreement with the following meanings: 1.1 Adjusted for Household Size Appropriate for the Unit. The number of bedrooms in an Affordable Dwelling Unit appropriate to a household size used to determine the maximum Affordable Rental Price for each unit size. The number of persons appropriate to a unit size shall mean household of one (1) person in the case of a studio unit, two (2) persons in the case of a one -bedroom unit, and three (3) persons in the case of a two -bedroom unit. 2510 W. Coast Highway Affordable Housing Agreement Page 3 of 17 1.2 Affordability Period. The period of time under which the Affordable Dwelling Units are subject to affordable housing restrictions, including an Affordable Rental Price. This period of time will commence on the date the final certificate of occupancy is issued for the last unit constructed in the applicable Phase providing such Affordable Dwelling Units and shall be a minimum of fifty-five (55) years for the three (3) Affordable Dwelling Units. Commencement of the Affordability Period shall be memorialized in writing pursuant to the Notice of Affordability Restrictions as set forth in the Declaration. 1.3 Affordable Dwelling Unit(s). The three (3) units within the Project that are required pursuant to density bonus laws, project entitlements and subject to affordable housing restrictions. 1.4 Affordable Rental Price. The maximum rent that, when added to the utility allowance, does not exceed thirty percent (30%) times fifty percent (50%) of the Orange County area median income as determined annually by the California Department of Housing and Community Development, Adjusted for Household Size Appropriate for the Unit. Current rents can be found in Exhibit "E" attached hereto and incorporated herein. 1.5 Area Median Income. The area median income for Orange County as published annually by the California Department of Housing and Community Development and determined in accordance with the U.S. Department of Housing and Urban Development ("HUD") criteria then in effect and published from time to time. For purposes of this Agreement, the qualifying limits shall be those limits for the County, as set forth in Title 25, California Code of Regulations, section 6932, as may be amended, modified or recodified from time to time ("Qualifying Households"). 1.6 Declaration of Affordable Housing Covenants, Conditions and Restrictions ("Declaration"). That certain Declaration of Affordable Housing Covenants, Conditions and Restrictions to be entered into by and between City and Developer, referencing the applicable Affordability Period and other affordability requirements for the Affordable Dwelling Units, substantially in the form of Exhibit "D", attached hereto and incorporated herein. The Declaration shall be recorded with the Orange County Clerk Recorder's Office following issuance of the certificate of occupancy for the final Affordable Dwelling Unit of each applicable Phase. 1.7 Very Low Income Households. As defined in California Health and Safety Code Section 50105, households earning fifty percent (50%) or less of area median income, adjusted for family size. 2. CONSTRUCTION OF AFFORDABLE DWELLING UNITS 2.1 Construction of Affordable Dwelling Units. The Project will be developed in compliance with a construction schedule as approved in writing by City prior to any commencement of construction of the Affordable Dwelling Units ("Construction Schedule") which may include phases in a scope, development proportion and interval as may be required by Developer to timely complete construction of the Project (hereinafter, "Phase" or "Phases"). 2510 W. Coast Highway Affordable Housing Agreement Page 4 of 17 2.2 Costs and Quality of Construction. All costs for acquiring the Property, planning, designing and constructing the Project shall be borne exclusively by Developer. Each Affordable Dwelling Unit shall meet HUD Section 8 Housing Quality Standards, local and state housing and building codes, and shall be free and clear of lead -based paint hazards. Developer shall maintain, at Developer's sole cost and expense, the Affordable Dwelling Units in good condition, good repair and in decent, safe, sanitary and habitable living conditions during the term of this Agreement. 2.3 Affordable Dwelling Unit Number, Size and Location. 2.3.1 Unit Location. The Affordable Dwelling Units shall be dispersed throughout the Project. 2.3.2 Unit Bedrooms and Size. Developer proposes to include the following unit types and quantities within the Project: Unit Type Total Units Total Affordable Units Studio 8 1 1 Bedroom 22 2 2 Bedroom 6 0 Total 36 3 Notwithstanding the foregoing, Developer may make minor changes to unit size and bedroom breakdown. 2.4 No Joint Venture. City and Developer are not entering into a joint venture. Nothing in this Agreement shall be deemed to constitute approval for Developer or any of Developer's employees or agents, to be the agents or employees of City. 3. TAXES AND ASSESSMENTS Developer, and any approved successor, shall pay prior to delinquency all real estate taxes and assessments on the Property so long as Developer or its approved successor retains any ownership interest therein. Developer shall remove or have removed any levy or attachment made on the Property or any part thereof, or assure the satisfaction thereof within a reasonable time but in any event prior to any sale or transfer of all or any portions thereof. Notwithstanding the above, Developer shall have the right to contest the validity or amounts of any tax, assessment, or encumbrance available to Developer in respect thereto, and nothing herein shall limit the remedies available to Developer in respect thereto. 4. COVENANTS 4.1 Income Restriction. The Affordable Dwelling Units shall be restricted to occupancy by Very Low Income Households at an Affordable Rental Price, as further set 2510 W. Coast Highway Affordable Housing Agreement Page 5 of 17 forth in the AHIP. Notwithstanding the foregoing, households with less income than the Very Low Income Households may also occupy the Affordable Dwelling Units. 4.2 Residential Use. Without the City's prior written consent, which consent may be given or withheld in its sole and absolute discretion, none of the Affordable Dwelling Units in the Project will at any time be utilized on a transient basis or will ever be used as a hotel, motel, dormitory, fraternity house, sorority house, rooming house, nursing home, hospital, sanitarium, or trailer court or park, nor shall the Affordable Dwelling Units be used as a place of business except as may otherwise be allowed by applicable law. 4.3 Term. The applicable parcel(s) of the Property with Affordable Dwelling Units shall be bound for a minimum of fifty-five (55) years for the three (3) Affordable Dwelling Units, commencing upon the issuance of the certificate of occupancy for the last unit constructed in the applicable Phase providing such Affordable Dwelling Units. For illustration purposes only, if one (1) Phase contains two (2) Affordable Dwelling Units, the term for the two (2) Affordable Dwelling Units will commence upon issuance of the certificate of occupancy for the second unit, and the term for Affordable Dwelling Units constructed on a separate Phase may be subject to a different term, based upon issuance of the certificate of occupancy for such separate Phase. 4.4 No Subordination. Developer agrees that any encumbrance to the Property, or part of the Property, or any improvements on the Property which contains the Affordable Dwelling Units, with any conventional mortgage, construction, bond financing or security interest to secure financing with respect to the construction, development, use, or operation of the Project, shall be subordinate to this Agreement and the Declaration. 4.5 Covenants Recorded Against The Property. 4.5.1 All of the covenants and restrictions set forth herein shall be equitable servitudes and covenants running with the land pursuant to applicable law, including, without limitation, California Civil Code Section 1468. Each covenant to do or refrain from doing some act on or affecting the Project is for the benefit of the Property. Each covenant shall run with the Project, and any portion thereof, as applicable, and shall benefit or be binding upon each successive owner during its ownership of the Property. The covenants herein contained shall, subject to the provisions as to assignment, apply to and bind the heirs, successors, executors, administrators and assigns of all the parties hereto; and all of the parties hereto shall be jointly and severally liable hereunder. 4.5.2 Recordation. The Declaration shall only be recorded on parcels containing Affordable Dwelling Units. 4.6 Termination. Upon expiration of the final Affordability Period, Developer and City shall execute and record necessary document(s) to terminate this Agreement and remove the effect of the recorded Declaration from the Property. The document(s) shall be provided by Developer and subject to verification and approval by the City Attorney. 2510 W. Coast Highway Affordable Housing Agreement Page 6 of 17 5. QUALIFYING PROSPECTIVE HOUSEHOLDS 5.1 Notice. At least thirty (30) days prior to offering the Affordable Dwelling Units for lease or rent to the general public, Developer shall provide City with notice of its intent to lease the Affordable Dwelling Units, specifying the proposed Affordable Rental Price and proposed location of such Affordable Dwelling Unit. 5.2 Initial Qualification. Developer shall determine if prospective occupants of the Affordable Dwelling Units qualify as Qualifying Households under this Agreement. Developer shall require each prospective occupant of an Affordable Dwelling Unit provide documentation supporting and certifying that the income of the occupants does not exceed the qualifying income limits ("Tenant Income Documentation"), and Developer may rely upon such certification and supporting documentation in qualifying the prospective occupant. A list of required Tenant Income Documentation supporting income qualification is set forth in Exhibit "F" attached hereto and incorporated herein. 5.3 Recertification of Qualification. Developer shall annually determine if occupants of the Affordable Dwelling Units continue to qualify as Qualifying Households under this Agreement. Developer shall require each occupant of an Affordable Dwelling Unit provide Tenant Income Documentation supporting and recertifying that the income of the occupants does not exceed the qualifying income limits, and Developer may rely upon such certification and supporting documentation supporting in qualifying the occupant. 5.4 Records. Developer shall make available at Developer's office copies of documents and information, including Tenant Income Documentation (collectively, "Records") upon which Developer relied upon to certify or recertify each occupant within a reasonable time after so qualifying or requalifying that occupant. Such Records shall be made available to City during Developer's normal business hours Monday through Friday, excluding Federal and State recognized holidays, between the hours of 9:00 a.m. and 5:00 p.m. Pacific Time. 5.5 Reliance on Tenant Representations. Each tenant lease shall contain a provision to the effect that Developer has relied on the income certification and supporting information supplied by the tenant in determining qualification for occupancy of the Affordable Dwelling Unit, and that any material misstatement in such certification (whether or not intentional) will be cause for immediate termination of such lease. 5.6 Annual Report. Developer shall provide to City such information as is reasonably requested by City or its agents in connection with City's annual monitoring of the Affordable Dwelling Units within ten (10) calendar days of the request and the information shall be verified in writing by Developer under penalty of perjury. For each Affordable Dwelling Unit, such information shall include, at a minimum, the documents listed in Exhibit "G" ("Annual Report") as attached hereto and incorporated herein by reference. 2510 W. Coast Highway Affordable Housing Agreement Page 7 of 17 6. ASSIGNMENT 6.1 Change in Ownership, Management and Control of Developer and Transfer of the Project. Developer shall have the right to assign this Agreement, including all benefits, covenants, duties and obligations contained herein, upon the City's prior written approval, which shall not be unreasonably withheld. A voluntary or involuntary sale or transfer of a controlling interest in the Developer or the Property during the term of this Agreement shall be deemed to constitute an assignment or transfer for the purposes of this Section 6.1, and the written approval by City shall be required prior to effecting such an assignment or transfer. Developer shall provide City with evidence reasonably satisfactory to City that the: (a) proposed transferee has financial strength and experience comparable to Developer; (b) the use of the Property by the proposed transferee is consistent with the terms of the Agreement; and (c) Developer is not then in default of this Agreement. Any purported transfer, voluntarily or by operation of law, except with the prior written consent by City, shall render this Agreement absolutely null and void and shall confer no rights whatsoever upon any purported assignee or transferee. During the term of this Agreement, Developer shall not, except as permitted by this Agreement, assign or attempt to assign this Agreement or any rights or duties herein, nor make any total or partial sale, transfer, conveyance, or assignment of the whole or any part of the Property or any of the improvements thereon, without the prior written approval by City. 6.2 Notwithstanding any other provision of this Agreement to the contrary, City approval of an assignment of this Agreement or transfer of the Project, or any interest therein, shall not be required in connection with: (a) the conveyance or dedication of any portion of the Property to City, or other appropriate governmental agency, including public utilities, where the granting of such conveyance or easement permits or facilitates the development of the Project on the Property; or (b) the transfer of all or any part of the Project or Property to an entity owned and controlled by Developer or the principals of Developer, including, without limitation, transfer to a limited partnership in which Developer, or an affiliate of Developer, is a general partner; (c) any mortgage, deed of trust, sale and leaseback, or other form of conveyance required for any reasonable method of financing or refinancing the development of the Project on the Property, including all direct and indirect costs related thereto; (d) transfers resulting from the death or mental or physical incapacity of an individual; (e) transfers in trust for the benefit of a spouse, children, grandchildren, or other family member, or for charitable purposes; or (f) transfers of less than controlling interest shares of stock in a publicly -held corporation or of the beneficial interest in any publicly -held partnership or real estate investment trust. 6.3 Notwithstanding anything in this Section 6 to the contrary, any transfer or assignment by Developer or any successor in interest to Developer not requiring the approval by City shall be effective when made but shall not be deemed to relieve Developer or any successor party from its obligations under this Agreement unless and until the transferor and transferee execute and deliver to City an assignment and assumption agreement. Any transfer or assignment by Developer or any successor in interest to Developer requiring the approval by City pursuant to this Section 6 shall be effective and shall be deemed to relieve Developer or any successor party from its obligations under this Agreement only upon execution and delivery to City by the 2510 W. Coast Highway Affordable Housing Agreement Page 8 of 17 transferor and transferee of an assignment and assumption agreement in a form and with content reasonably acceptable to City, and upon execution of an acknowledgment of same by City. 6.4 Developer, in exchange for the City entering into this Agreement, hereby agrees to hold, sell, and convey the Property subject to the terms of this Agreement. Developer also grants to the City the right and power to enforce the terms of this Agreement against the Developer and all persons having any right, title or interest in the Property or any part thereof, their heirs, successive owners and assigns. 6.5 This Section 6 shall not be applicable to the leasing of individual Affordable Dwelling Units to eligible tenants in accordance with this Agreement, and no assignment and assumption agreement shall be required in connection therewith. 6.6 Each covenant of this Agreement shall run with the Property, and any portion thereof, as applicable, and shall benefit or be binding upon each successive owner during its ownership of the Property. The covenants herein contained shall, subject to the provisions as to assignment, apply to and bind the heirs, successors, executors, administrators and assigns of all the parties hereto; and all of the parties hereto shall be jointly and severally liable hereunder. 7. COMPLIANCE WITH LAWS; INDEMNITY; ENVIRONMENTAL MATTERS 7.1 Compliance With Laws. Developer shall comply with (i) all ordinances, regulations and standards of the City, any regional governmental entity, the State of California, and the federal government applicable to the Project; (ii) all rules and regulations of any assessment district of the City with jurisdiction over the Project; and (iii) all applicable labor standards of California law and federal law; and (iv) the requirements of California law and federal law with respect to the employment of undocumented workers or illegal aliens. 7.2 Indemnity. Developer shall save, protect, defend, indemnify and hold harmless City and the City, in its own capacity, and all of the City's officers, officials, members, employees, agents, and representatives (collectively, the "Indemnified Parties") from and against any and all liabilities, suits, actions, claims, demands, penalties, damages (including, without limitation, penalties, fines and monetary sanctions), losses, costs or expenses (including, without limitation, consultants' fees, investigation and laboratory fees, reasonable attorneys' fees and remedial and response costs) (the foregoing are hereinafter collectively referred to as "Liabilities") which may now or in the future be incurred or suffered by any of the Indemnified Parties by reason of, resulting from, in connection with, or existing in any manner whatsoever as a direct or indirect result of (i) Developer's placement on or under the Project of any Hazardous Materials or Hazardous Materials Contamination, (ii) the escape, seepage, leakage, spillage, discharge, emission or release from the Project occurring on or after the Effective Date of any Hazardous Materials or Hazardous Materials Contamination, or (iii) any Liabilities incurred under any Governmental Requirements relating to the acts described in the foregoing clauses (i) and (ii). 2510 W. Coast Highway Affordable Housing Agreement Page 9 of 17 For the purposes of this Agreement, unless the context otherwise specifies or requires, the following terms shall have the meanings herein specified: The term "Hazardous Materials" shall mean any substance, material, or waste which is or becomes regulated by any local governmental authority, the City of Newport Beach, the County of Orange, the State of California, a regional governmental authority, or the United States Government, including, but not limited to, any material or substance which is (i) defined as a "hazardous waste," "extremely hazardous waste," or "restricted hazardous waste" under Sections 25115, 25117 or 25122.7, or listed pursuant to Section 25140 of the California Health and Safety Code, Division 20, Chapter 6.5 (Hazardous Waste Control Law)), (ii) defined as a "hazardous substance" under Section 25316 of the California Health and Safety Code, Division 20, Chapter 6.8 (Carpenter -Presley -Tanner Hazardous Substance Account Act), (iii) defined as a "hazardous material," "hazardous substance," or "hazardous waste" under Section 25501 of the California Health and Safety Code, Division 20, Chapter 6.95 (Hazardous Materials Release Response Plans and Inventory), (iv) defined as a "hazardous substance" under Section 25281 of the California Health and Safety Code, Division 20, Chapter 6.7 (Underground Storage of Hazardous Substances), (v) petroleum, (vi) friable asbestos, (vii) polychlorinated biphenyls, (viii) listed under Article 9 or defined as "hazardous" or "extremely hazardous" pursuant to Article 11 of Title 22 of the California Administrative Code, Division 4, Chapter 20, (ix) designated as "hazardous substances" pursuant to Section 311 of the Clean Water Act (33 U.S.C. § 1317), (x) defined as a "hazardous waste" pursuant to Section 1004 of the Resource Conservation and Recovery Act, 42 U.S.C. § 6901 et seq. (42 U.S.C. § 6903) or (xi) defined as "hazardous substances" pursuant to Section 101 of the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. § 9601 et seq. The term "Hazardous Materials Contamination" shall mean the contamination (whether presently existing or hereafter occurring) of the improvements, facilities, soil, groundwater, air or other elements on, in or of the Project by Hazardous Materials, or the contamination of the buildings, facilities, soil, groundwater, air or other elements on, in or of any other property as a result of Hazardous Materials at any time emanating from the Project. The term "Governmental Requirements" shall mean all past, present and future laws, ordinances, statutes, codes, rules, regulations, orders and decrees of the United States, the State of California, the County of Orange, the City of Newport Beach, or any other political subdivision in which the Project is located, and any other state, county, city, political subdivision, agency, instrumentality or other entity exercising jurisdiction over the Project. 7.3 Duty to Prevent Hazardous Material Contamination. Developer shall take commercially reasonable action to prevent the release of any Hazardous Materials into the environment. Such precautions shall include compliance with all Governmental Requirements with respect to Hazardous Materials. In addition, Developer shall install 2510 W. Coast Highway Affordable Housing Agreement Page 10 of 17 and utilize such equipment and implement and adhere to such procedures as are consistent with the standards generally applied by apartment complexes in Orange County, California as respects the disclosure, storage, use, removal, and disposal of Hazardous Materials. 7.4 Obligation of Developer to Remediate Premises. Notwithstanding the obligation of Developer to indemnify the Indemnified Parties pursuant to Section 7.2, Developer shall, at its sole cost and expense, promptly take (i) all actions required by any federal, state, regional, or local governmental agency or political subdivision or any Governmental Requirements and (ii) all actions necessary to make full economic use of the Project for the purposes contemplated by this Agreement, which requirements or necessity arise from the presence upon, about or beneath the Project of any Hazardous Materials or Hazardous Materials Contamination. Such actions shall include, but not be limited to, the investigation of the environmental condition of the Project, the preparation of any feasibility studies or reports and the performance of any cleanup, remedial, removal or restoration work. 7.5 Environmental Inquiries. Developer, when it has received any notices of violation, notices to comply, citations, inquiries, clean-up or abatement orders, or cease and desist orders related to Hazardous Materials or Hazardous Materials Contamination, or when Developer is required to report to any governmental agency any violation or potential violation of any Governmental Requirement pertaining to Hazardous Materials or Hazardous Materials Contamination, shall concurrently notify the City Manager and provide to him/her a copy or copies, of the environmental permits, disclosures, applications, entitlements or inquiries relating to the Project, the notices of violation, notices to comply, citations, inquiries, clean-up or abatement orders, cease and desist orders, reports filed pursuant to self -reporting requirements, and reports filed or applications made pursuant to any Governmental Requirement relating to Hazardous Materials and underground tanks, and Developer shall report to the City Manager, as soon as possible after each incident, any unusual, potentially important incidents. 7.6 In the event of a responsible release of any Hazardous Materials into the environment, Developer shall, as soon as possible after it becomes aware of the release, furnish to the City Manager a copy of any and all reports relating thereto and copies of all correspondence with governmental agencies relating to the release. Upon request of the City Manager, Developer shall furnish to the City Manager a copy or copies of any and all other environmental entitlements or inquiries relating to or affecting the Project including, but not limited to, all permit applications, permits and reports including, without limitation, those reports and other matters which may be characterized as confidential. 8. DEFAULTS AND REMEDIES 8.1 Termination for Cause. In the event the City determines that there has been any fraud or deceit by Developer including, but not limited to, any material misrepresentation by Developer, the City may, in its sole discretion, immediately terminate this Agreement. In the event that either party fails or refuses to perform any of the provisions of this Agreement at the time and in the manner required, that party shall 2510 W. Coast Highway Affordable Housing Agreement Page 11 of 17 be deemed in default in the performance of this Agreement. If such default is not cured within a period of five (5) calendar days, or if more than five (5) calendar days are reasonably required to cure the default and the defaulting party fails to give adequate assurance of due performance within five (5) calendar days after receipt of written notice of default, specifying the nature of such default and the steps necessary to cure such default, and thereafter diligently take steps to cure the default, the non -defaulting party may terminate the Agreement forthwith by giving to the defaulting party written notice thereof. 8.2 Acceptance of Service of Process. In the event that any legal action is commenced by the Developer against the City, service of process on the City shall be made by personal service upon the City Clerk, or in such other manner as may be provided by law. In the event that any legal action is commenced by City against Developer, service of process on Developer shall be made in such manner as may be provided by law, whether made within or outside the State of California. 9. NONDISCRIMINATION 9.1 Developer covenants by and for itself and any successors in interest that there shall be no discrimination against or segregation of any person, or group of persons on any basis listed in subdivision (a) or (d) of Section 12955 of the California Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the California Government Code, in the sale, rental, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Project, or any part thereof, nor shall Developer, or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the Project, or any part thereof. The foregoing covenants shall run with the land. All such deeds, leases or contracts shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses: 9.1.1 In deeds: "The grantee herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the California Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the California Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the premises herein conveyed, nor shall the grantee or any person claiming under or through him or her, establish or permit any practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the premises herein conveyed. Notwithstanding the forgoing, with respect to familial status, the forgoing shall not be construed to apply to housing for older persons, as defined in Section 12955.9 of the California Government Code. The foregoing covenants shall run with the land." 2510 W. Coast Highway Affordable Housing Agreement Page 12 of 17 9.1.2 In leases: "The lessee herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assigns, and all persons claiming under or through him or her, and this lease is made and accepted upon and subject to the following conditions: "That there shall be no discrimination against or segregation of any person or group of persons, on account of any basis listed in subdivision (a) or (d) of Section 12955 of the California Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the California Government Code, in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of the premises herein leased nor shall the lessee himself or herself, or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy, of tenants, lessees, sublessees, subtenants, or vendees in the premises herein leased. Notwithstanding the forgoing, with respect to familial status, the forgoing shall not be construed to apply to housing for older persons, as defined in Section 12955.9 of the California Government Code. 9.1.3 In contracts pertaining to the Project: "There shall be no discrimination against or segregation of, any person or group of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the California Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the California Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the premises which are the subject of this agreement, nor shall the grantee or any person claiming under or through him or her, establish or permit any practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the premises herein conveyed. Notwithstanding the forgoing, with respect to familial status, the forgoing shall not be construed to apply to housing for older persons, as defined in Section 12955.9 of the California Government Code. The foregoing covenants shall run with the land." 9.2 The covenants established in this Agreement shall, without regard to technical classification and designation, be binding for the benefit and in favor of the City and City's successors and assigns, and any successor in interest to the Project, together with any property acquired by the Developer pursuant to this Agreement, or any part thereof. The covenants against discrimination shall remain in effect in perpetuity. 10. EFFECT OF VIOLATION OF THE TERMS AND PROVISIONS OF THIS AGREEMENT The City is deemed the beneficiary of the terms and provisions of this Agreement and of the covenants running with the land, for and in its own rights and for the purposes of protecting the interests of the community and other parties, public or private, in whose favor and for whose benefit this Agreement and the covenants running with the land have been provided. This Agreement and the covenants shall run in favor of the City, without regard to whether the City has been, remains or is an owner of any land or interest therein in the Project. The City shall have the right, if this 2510 W. Coast Highway Affordable Housing Agreement Page 13 of 17 Agreement or covenants are breached, to exercise all rights and remedies, and to maintain any actions or suits at law or in equity or other property proceedings to enforce the curing of such breaches to which it or any other beneficiaries of this Agreement and covenants may be entitled. 11. NOTICES 11.1 All notices, demands, requests or approvals to be given under the terms of this Agreement shall be given in writing, to City by Developer and conclusively shall be deemed served when delivered personally, or on the third business day after the deposit thereof in the United States mail, postage prepaid, first-class mail, addressed as hereinafter provided. 11.2 All notices, demands, requests or approvals from Developer to City shall be addressed to City at: To Developer: Mark Moshayedi 2600 E. Coast Hwy, Ste. 240 Corona Del Mar, CA 92625 and Sean Matsler Cox, Castle & Nicholson LLP 3121 Michelson Drive, Ste. 200 Irvine, CA 92612 To City: City of Newport Beach 100 Civic Center Drive Newport Beach, California 92660 Attn: City Manager 12. STANDARD PROVISIONS 12.1 Recitals. City and Developer acknowledge that the above Recitals are true and correct and are hereby incorporated by reference into this Agreement. 12.2 Compliance with all Laws. Developer shall at its own cost and expense comply with all statutes, ordinances, regulations and requirements of all governmental entities, including federal, state, county or municipal, whether now in force or hereinafter enacted. In addition, the Project shall conform to applicable City, county, state and federal laws, rules, regulations and permit requirements and be subject to approval of City. 12.3 Waiver. A waiver by either party of any breach, of any term, covenant or condition contained herein shall not be deemed to be a waiver of any subsequent breach of the same or any other term, covenant or condition contained herein, whether of the same or a different character. 2510 W. Coast Highway Affordable Housing Agreement Page 14 of 17 12.4 Integrated Agreement. This Agreement represents the full and complete understanding of every kind or nature whatsoever between the parties hereto, and all preliminary negotiations and agreements of whatsoever kind or nature are merged herein. No verbal agreement or implied covenant shall be held to vary the provisions herein. 12.5 Conflicts or Inconsistencies. In the event there are any conflicts or inconsistencies between this Agreement and any other attachments attached hereto, the terms of this Agreement shall govern. 12.6 Interpretation. The terms of this Agreement shall be construed in accordance with the meaning of the language used and shall not be construed for or against either party by reason of the authorship of the Agreement or any other rule of construction which might otherwise apply. 12.7 Amendments. This Agreement may be modified or amended only by a written document executed by both Developer and City and approved as to form by the City Attorney. 12.8 Severability. If any term or portion of this Agreement is held to be invalid, illegal, or otherwise unenforceable by a court of competent jurisdiction, the remaining provisions of this Agreement shall continue in full force and effect. 12.9 Confidentiality. All documents, including drafts, notes and communications that result from this Agreement, shall be kept confidential unless City authorizes in writing the release of information. 12.10 Cooperation. Developer agrees to work closely and cooperate fully with City and any other agencies that may have jurisdiction or interest in this Agreement. City agrees to cooperate with the Developer in the implementation of this Agreement. 12.11 Controlling Law and Venue. The laws of the State of California shall govern this Agreement and all matters relating to it and any action brought relating to this Agreement shall be adjudicated in a court of competent jurisdiction in the County of Orange, State of California. 12.12 Equal Opportunity Employment. Developer represents that it is an equal opportunity employer and it shall not discriminate against any subcontractor, employee or applicant for employment because of race, religious creed, color, national origin, ancestry, physical handicap, medical condition, marital status, sex, sexual orientation, age or any other impermissible basis under law. 12.13 No Attorney's Fees. In the event of any dispute or legal action arising under this Agreement, the prevailing party shall not be entitled to attorneys' fees. 12.14 Counterparts. This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. 2510 W. Coast Highway Affordable Housing Agreement Page 15 of 17 12.15 No Third -Party Beneficiaries. Nothing in this Agreement, express or implied, is intended to confer any rights or remedies under or by reason of this Agreement on any person or entity other than the City on the one hand and Developer on the other and their respective permitted successors and assigns, nor is anything in this Agreement intended to relieve or discharge any obligation of any third person to any Party or give any third person any right of subrogation or action over or against any Party. 12.16 No Damages. Developer acknowledges that City would not enter into this Agreement if it were to be liable for damages (including, but not limited to, actual damages, economic damages, consequential damages, lost profits, loss of rents or other revenues, loss of business opportunity, loss of goodwill or loss of use) under, or relating to, this Agreement or any of the matters referred to in this Agreement, including, without limitation, any and all plans, permits, licenses or regulatory approvals, and CEQA documents related to the Property or Project. Accordingly, Developer covenants and agrees on behalf of itself and its successors and assigns, not to sue City (either in its capacity as a Party to this Agreement or in its capacity as the City of Newport Beach) for damages (including, but not limited to, actual damages, economic damages, consequential damages, lost profits, loss of rents or other revenues, loss of business opportunity, loss of goodwill or loss of use) or monetary relief for any breach of this Agreement by City or for any dispute, controversy, or issue between City and Developer arising out of or connected with this Agreement or any of the matters referred to in this Agreement, including, without limitation, any and all plans, permits, licenses or regulatory approvals, CEQA documents, or any future amendments or enactments thereto, the parties agreeing that declaratory relief, injunctive relief, mandate and specific performance shall be Developer's sole and exclusive judicial remedies. Notwithstanding the foregoing, nothing in this Section 12.16 shall limit Developer's remedies as expressly set forth in this Agreement. 12.17 Time Declared to be of the Essence. As to the performance of any obligation under this Agreement of which time is a component, the performance of such obligation within the time specified is of the essence. 12.18 Survival of Agreement. All of the provisions of this Agreement shall be applicable to any dispute between the Parties arising from this Agreement, whether prior to or following expiration or termination of this Agreement, until any such dispute is finally and completely resolved between the Parties, either by written settlement, entry of a non - appealable judgment or expiration of all applicable statutory limitations periods, and all terms and conditions of this Agreement relating to dispute resolution and limitations on damages or remedies shall survive any expiration or termination of this Agreement. 12.19 Binding Authority. By executing this Agreement, each person signing on behalf of the Developer warrants and represents to the City that Developer has the full power and authority to enter into this Agreement, that all authorizations required to make this Agreement binding upon the Developer have been obtained, and that the person or persons executing this Agreement on behalf of the Developer are fully authorized to do so. [Signatures on Following Page] 2510 W. Coast Highway Affordable Housing Agreement Page 16 of 17 SIGNATURE PAGE TO AFFORDABLE HOUSING AGREEMENT (2510 W. Coast Highway Mixed Use Project) IN WITNESS WHEREOF, the Parties have signed this Agreement by and through the signatures of their respective authorized representative(s) as follows: CITY OF NEWPORT BEACH, 2510 W. COAST HWY LLC, a California municipal corporation a Delaware limited liability company By: ;��By: Gr . Leung Mark Moshayedi Ci Manager Manager APPROVED AS TO FORM: 2510 W. COAST HWY EAT LLC, CITY ATTORNEY'S OFFICE a Delaware limited liability company By: By: Aaron Harp I 1 I» -w, Mehrdad Moshayedi, Co -Trustee City At rney M. and S. Moshayedi Revocable Trust, dated September 25, 1998 ATTEST: SEW PORT B By: e S r/losha� i, Co -Trustee Leilani I. row t= n and S. Moshayedi Revocable Trust, City Clerk `' z dated September 25, 1998 �qti Fo VL Exhibits: Exhibit "A" — Property Exhibit "B" — Project Exhibit "C" — Affordable Housing Implementation Plan No. AH2021- 001 Exhibit "D" — Declaration of Affordable Housing Covenants, Conditions and Restrictions Exhibit "E" — Affordable Rental Price Exhibit "F" — Tenant Income Documentation Exhibit "G" — Annual Report 2510 W. Coast Highway Affordable Housing Agreement Page 17 of 17 EXHIBIT "A" PROPERTY 2510 W. Coast Highway Affordable Housing Agreement Exhibit A-1 EXHIBIT "B" PROJECT 2510 W. Coast Highway Affordable Housing Agreement Exhibit B-1 r' N (M O w O 0 2 �5 zF 3 0� W J Z Q J (al aLU i � LL Z g w U) UZ JW J� OIL O li UW �❑ i ui UU on nX N EXHIBIT "C" AFFORDABLE HOUSING IMPLEMENTATION PLAN NO. AH2O21-001 2510 W. Coast Highway Affordable Housing Agreement Exhibit C-1 2510 W. COAST HIGHWAY12530 W. COAST HIGHWAY AFFORDABLE HOUSING IMPLEMENTATION PLAN AND DENSITY BONUS APPLICATION RESUBMITTED JULY 14, 2021 Prepared by Springbrook , I,j]' Realty Advisors, Inc. 080335\12939763v2 2510 W. COAST HIGHWAY12530 W. COAST HIGHWAY AFFORDABLE HOUSING IMPLEMENTATION PLAN AND DENSITY BONUS APPLI CATION RESUBMITTED JULY 14, 2021 Project Description & Affordability Level The developer, 2510 W. Coast Hwy LLC and 2510 W. Coast Hwy Eat LLC (collectively "Developer") is proposing the 2510 W. Coast Highway/2530 W. Coast Highway mixed -use development (described herein as "2510 W. Coast Highway" or "project") on a .98 net acre site located in the Mariner's Mile area. The site is located South of the intersection of Tustin Avenue and West Coast Highway. The Newport Beach General Plan designates the project site as Mixed - Use Horizontal and the zoning is Mixed -Use HI-MM. The project site was recently used as a boat sales facility and today is used as an office for an automobile auction company. The proposed project will consist of 36 residential units and approximately 5,096 square feet of commercial space to be used as an office. No office tenant has been identified yet. The Mixed -Use Hl-MM Zoning requires a minimum lot area of 1,631 square feet per residential unit. This results in a maximum of 26 residential units (before applying density bonus) Eligibility for Density Bonus The 2510 W. Coast Highway development will provide 3 units affordable to Very Low Income households, I I% of the Base Units as described in Table 1 on the next page. This will comply with the provisions of Government Code Section 65915 applicable to a 35% density bonus. Rents for the Very Low Income units will be computed in accordance with Health and Safety Code Sec. 50053, as required by Government Code Section 65915(c)(1). Density Bonus Computation and Term of Affordability The density bonus computation for the project per Government Code Section 65915 is shown in Table 1 on the next page: 080335\12939763v2 2510 West Coast High\hray Affordable HoL SiuL Plan July 14.2021 Table 1 Density Bonus Computation Project Area 42,821 s.f. Minimum Lot Area Per Unit 1,631 s.f. Allowable Residential Units Before Density Bonus (Base Units) 26 Eligible Density Bonus (35%) 10 Density Bonus Utilized 10 Total Units 36 The Developer intends to operate the apartment project as a rental community. The 3 Very Low Income units will remain rent restricted for a minimum of 55 years, per Government Code Section 65915(c)(1). Reduction in Parking The 2510 W. Coast Highway development meets the criteria of subdivision (b) of Government Code Sec. 65915 and Section 20.32.030 of the City's Zoning Code by providing more than five percent (5%) of the total units of a housing development (excluding any units permitted by the density bonus awarded pursuant to that section) for Very Low Income households. Government Code Section 65915(p) and Section 20.32.040 of the City's Zoning Code provides the following: (1) Upon the request of the developer, no city, county, or city and county shall require a vehicular parking ratio, inclusive of handicapped and guest parking, of a development meeting the criteria of subdivision (b), that exceeds the following ratios: a. Zero to one bedrooms: one onsite parking space. b. Two to three bedrooms: 1.5 onsite parking spaces. (2) If the total number of parking spaces required for a development is other than a whole number, the number shall be rounded up to the next whole number. For purposes of this subdivision, a development may provide "onsite parking" through tandem parking or uncovered parking, but not through street parking. Table 2 on the next page is a summary of Government Code Sec. 65915 parking requirements vs. spaces to be provided. The Developer requests that parking requirements for the residential units be calculated in accordance with Government Code Sec. 65915(p). As shown in Table 2, the project proposes five surplus parking spaces. 080335\12939763v2 2510 West Coast HIgIm,a. Affordable HoWAMU 1h111 ,iuly 14. 2021 Table 2 Parking Requirements Unit Type Number of Units Stalls/Unit Per Gov. Code Total Stalls Per Gov. Code Studio 8 1.0 8 1 BR 22 1.0 22 2 BR 6 1.5 9 Total Parking Stalls Required - r Residential Units 36 1.1 39 Parking Provided for Office 21 Total Parking Stalls Required 60 Total Parking Stalls Provided 65 Affordable Unit Mix The mix of the three affordable units to be provided will be in proportion to the overall unit mix as follows in Table 3: Table 3 Affordable Unit Mix Total Affordable Unit Type Total Units Units Studio 8 1 1 Bedroom 22 2 2 Bedroom 6 0 Total 36 3 Development Incentive Requests Pursuant to Government Code Section 65915(d)(1) and Section 20.32 of the City's Zoning Code, the Developer is entitled to two concessions or incentives as a result of providing at least eleven percent (11%) of the units as affordable for Very Low Income households. The Developer requests the following development incentives: 1. The Developer requests a waiver of the MU-MM zone's minimum 0.25 floor area ratio (FAR) for nonresidential development. The approximately 5,096 s.f. of commercial (office) space will result in a FAR of approximately 0.12. The proposed FAR waiver will reduce the cost of the nonresidential development, thus improving the economic viability of the overall project and helping to fund the cost of providing the affordable housing. It 3 080335\12939763v2 2510 West Coast Higli\vay, AttOrdable 1-10USi1111 Plan July 14, 20211 will also allow for the addition of various residential amenities (e.g., fitness rooms, outdoor open space areas, surplus parking spaces) which enhance the ability of the project's market rate residential units to support the affordable units. 2. The Developer requests a waiver of the 100 foot setback for residential units from Pacific Coast Highway. This waiver will permit additional parking to be provided on the site as well as result in articulation in the building mass, including setbacks on the East and West sides of the building, substantially improving the overall appearance of the development. This waiver will also enable the building to include windows on all sides of the project and will result in a more pleasing building mass. Finally, this waiver will provide view opportunities for the residential units, enhancing their value and thus helping to fund the cost of providing the affordable housing. Approval of these incentive requests will also enable the project to meet the goal of "Five Sided Architecture" as set forth in the Mariner's Mile Strategic Vision & Design Framework. The incentive requests are consistent with the City of Newport Beach Local Coastal Program Implementation Plan which provides that density bonuses, as set forth in Government Code Sections 65915 through 65917 (which includes the sections pertaining to incentive requests), may be granted for projects that offer units affordable to lower, low, and moderate -income households. As set forth in Government Code Section 659150)(1) the granting of a concession or incentive shall not require a local coastal plan amendment, zoning change study or other discretionary approval. Development Standards Waiver Request Government Code Sec. 65915(e)(1) provides that a city or county may not apply any development standard (including height limits) that will have the effect of physically precluding the construction of a density bonus project at the density permitted under the density bonus statute. The Mixed -Use HI-MM zoning specifies a maximum height of 26 ft. from the established grade for a roof with less than a 3/12 roof pitch which may be increased to as much as 35 ft. for properties in the Shoreline Height Limitation Zone through the approval of a coastal development permit application. The maximum height for the 2510 W. Coast Highway development is 35 ft. In accordance with Government Code Sec. 65915(e)(1) and as permitted pursuant to Section 21.30.060 of the Local Coastal Program Implementation Plan, the Developer requests that a waiver be granted for the 2510 W. Coast Highway development to permit a 35 ft. maximum height. Without this waiver, the project will not be able to accommodate the additional units permitted by the Zoning Code and Government Code Sec. 65915. Income Limits and Examples of Eligible Tenants for Affordable Homes Very Low Income Households are defined as households whose gross income does not exceed 80% of area median income, adjusted for household size. Table 4 below shows the maximum income limits for 2021 (effective through Spring 2022) as determined by the U.S. Department 4 080335\12939763v2 2510 West Coitst Higlmrzty Affordable Plan July 14.2021 of Housing and Urban Development and the California Department of Housing and Community Development ("HCD") for Very Low Income households with household sizes appropriate for the 2510 W. Coast Highway development: Table 4 Maximum Income Limits Very Low Income Units Maximum Annual Household Size Income - 2021/22 1 Person $47,100 2 Person 53,800 3 Person 60,550 Higher income limits apply to larger families; those families however are not considered to be a target market for 2510 W. Coast Highway, where the unit mix for the affordable homes is anticipated to consist of studios and one -bedroom apartment homes. The 3 affordable homes that Developer will provide will be rented to eligible Very Low Income Households. As shown in Table 4, Very Low Income Households includes incomes ranging from $47,100 per year for a one -person household to $60,550 per year for a three -person household. As such this could include retail and food service industry employees, certain City employees, school district employees, health care professionals, and other occupations which provide needed services to our community. In order to provide opportunities to workers to live in one of the affordable homes, the City could provide guidelines providing for acceptance of applications on a priority basis from classes of individuals who qualify under the income limits in effect. The guidelines could provide for priority treatment for local residents, City employees, employees of the local school district, and other categories identified by the City for priority treatment. Rental Rate Limits for Affordable Homes The 3 Very Low Income units shall be rented at an affordable rent calculated in accordance with the provisions of Section 50053 of the Health and Safety Code. Section 50053 of the Health and Safety Code limits affordable rent to 30% of total income for a Very Low Income household, as calculated in Table 5 below. That section also requires that the rent for a studio unit assumes a one -person household for rent calculation purposes and a one -bedroom unit assumes a two -person household. The rents calculated are then adjusted by a utility allowance as determined annually by the County of Orange Housing & Community Services Department. As of October 1, 2020, the reduction for the utility allowance is $141.00 per month for a studio unit and $155.00 per month for a one -bedroom unit. The utility allowance utilized assumes gas cooking, space heating, 080335\12939763v2 2510 Wesi Coast Hi Iiv,N,ay All'ordable Hous1111 Play Juty 14, 2021 and water heating, as well as electricity, water, and sewer, and trash fees which will be paid by the tenant. The maximum rent levels for 2021 are shown in Table 5 below: Table 5 Maximum Rents by Bedroom Count Maximum Maximum Utility Affordable Bedrooms Annual Rent Monthly Rent Allowance Rent Studio $11,205 $934 $141 $793 1 Bedroom 12,803 1,067 155 912 The Developer will enter into an affordable housing agreement, in recordable form, with the City prior to obtaining the first building permit for any residential unit. That agreement will ensure that the maximum rents for the affordable apartment homes will be calculated using the methodologies as utilized in Table 5. The rental rates shown will be updated prior to the commencement of rental activities and on an ongoing basis to reflect then current income limits, utility allowances, and any changes in applicable regulations and statutes. Unit Mix, Design, and Location of Affordable Homes While the exact location of each of the affordable homes within the 2510 W. Coast Highway development has not yet been determined, the affordable homes will be spread throughout the development to avoid concentration of affordable homes in any area. As required by Section 20.32.070 of the City's Zoning Code, the affordable homes shall be comparable in the facilities provided and in the quality of construction and exterior design to the market rate homes. Requested City of Newport Beach Assistance Financial Assistance The Developer is not requesting any direct financial assistance from the City of Newport Beach for this project. 11 080335\12939763v2 EXHIBIT "D" DECLARATION OF AFFORDABLE HOUSING COVENANTS, CONDITIONS AND RESTRICTIONS [Attached Behind This Page] 2510 W. Coast Highway Affordable Housing Agreement Exhibit D-1 RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: City of Newport Beach 100 Civic Center Drive Newport Beach, California 92660 Attn: City Clerk Exempt from Recording Fees pursuant to Govt. Code §§ 6103, 27383 Space above line for Recorder's use only APN: 425-471-55 AND 425-471-56 DECLARATION OF AFFORDABLE HOUSING COVENANTS, CONDITIONS AND RESTRICTIONS (2510 W. Coast Highway Mixed Use Project) THIS DECLARATION OF AFFORDABLE HOUSING COVENANTS, CONDITIONS AND RESTRICTIONS (this "Declaration") is dated as of , 20_ ("Effective Date"), and is made by and between the CITY OF NEWPORT BEACH, a California municipal corporation and charter city, as covenantee ("City"), and 2510 W. COAST HWY LLC, a Delaware limited liability company and 2510 W. COAST HWY EAT LLC, a Delaware limited liability company, as covenantor ("Owner"), with reference to the following recited facts (each, a "Recital"). RECITALS A. Owner is the owner of that certain real property consisting of approximately 42,821 square feet or .098 acres situated in the Mariners' Mile area in the City of Newport Beach, County of Orange, State of California, addressed as 2510 and 2530 West Coast Highway [APN 425-471-55 and 425-471-561, as more particularly depicted in Attachment 1" attached to this Declaration and incorporated herein (the "Property"). B. On July 27, 2021, the City Council approved the 2510 W. Coast Highway Mixed Use Project (PA2019-249) project which includes developing the Property into a residential project with up to thirty-six (36) residential units, of which three (3) shall be restricted for affordable housing ("Affordable Dwelling Units"), 5,096 square feet of office space ("Project"). C. Project approval included the adoption of Affordable Housing Implementation Plan No. AH2O21-001, dated July 14, 2021 (the "AHIP"), which implements affordable housing requirements for the Project pursuant to a density bonus and incentives/concessions pursuant to Chapter 20.32 (Density Bonus) of the Newport Beach Municipal Code and California Government Code Section 65915 ("State Density Bonus Law"). 2510 W. Coast Highway Affordable Housing Agreement Exhibit D-2 D. Owner and City have entered into an Affordable Housing Agreement, dated ("Affordable Housing Agreement") with respect to the Project. E. This Declaration shall be recorded upon the execution of that certain Affordable Housing Agreement. NOW, THEREFORE, IN CONSIDERATION OF THE PROMISES, COVENANTS AND UNDERTAKINGS SET FORTH IN THIS DECLARATION AND FOR OTHER GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND SUFFICIENCY OF WHICH IS HEREBY ACKNOWLEDGED, OWNER AND CITY COVENANT, DECLARE AND AGREE FOR THEMSELVES, THEIR SUCCESSORS AND ASSIGNS, AS FOLLOWS: 1. COVENANTS 1.1 Affordability Period. Owner agrees for itself and its successors and assigns, and every successor to Owner's interest in the Property, or any part thereof, that the Affordable Dwelling Units, comprising Development Standards, within the Property shall be designated as affordable and shall be held subject to this Declaration for an Affordability Period as follows: 1.1.1 Affordable Dwelling Units consisting of three (3) units will remain rent restricted for a minimum of fifty-five (55) years commencing upon the date the final certificate of occupancy is issued for the last Affordable Dwelling Unit constructed in the applicable Phase providing such Affordable Dwelling Unit. 1.2 Occupancy. The Affordable Dwelling Units shall only be rented and occupied by Very Low Income Households. Notwithstanding the foregoing, households with less income may also occupy the Affordable Dwelling Units. "Very Low Income Households" means an individual or family with an income fifty percent (50%) or less of the Orange County median income, adjusted for household size. 1.3 Rent. The Affordable Dwelling Units shall only be rented at an Affordable Rental Price to Very Low Income Households. 1.4 Notice. Commencement of the Affordability Period shall be memorialized in a Notice of Commencement of Affordability Restrictions ("Notice") or other instrument of similar format to Attachment "2" attached hereto and incorporated herein by reference and shall be recorded. 2. RENTERS 2.1 Qualification. Owner shall qualify prospective renters as set forth in the Affordable Housing Agreement. Furthermore, the Owner shall, on renewal of the annual lease for the particular Affordable Dwelling Unit, re -qualify the renter and obtain income certification from the renter. If, at the time of the annual lease renewal, the Owner learns that the renter's income increases above the income level permitted for that Affordable Dwelling Unit, the renter may continue to be permitted to reside in such Affordable Dwelling Unit for no more than one year. Notwithstanding the foregoing, the Owner, at 2510 W. Coast Highway Affordable Housing Agreement Exhibit D-3 the City's discretion, which shall not be unreasonably withheld or delayed, shall have the option to designate another dwelling unit as an Affordable Dwelling Unit during that one- year period so that the renter may continue to occupy a unit in the Project. 2.2 Affordable Rental Price. "Affordable Rental Price" shall refer to (i) thirty percent (30%) times fifty percent (50%) of the Orange County area median income as determined annually by the California Department of Housing and Community Development, Adjusted for Household Size Appropriate for the Unit for the Affordable Dwelling Unit. OWNER AND EACH SUCCESSOR, HEIR, OR ASSIGN OF OWNER UNDERSTANDS THAT THE MAXIMUM RENTAL PAYMENTS TO BE ESTABLISHED BY THIS FORMULA ARE NOT NECESSARILY EQUAL TO THE FAIR MARKET RENT FOR THE AFFORDABLE DWELLING UNITS AND MAY BE ESTABLISHED AT A LEVEL SUBSTANTIALLY BELOW THE FAIR MARKET RENT LEVELS. Owner's Initials 2.2 Restrictions. During the Affordability Period, Owner shall take all reasonable steps necessary to ensure that each household renting an Affordable Dwelling Unit has knowledge of all terms and conditions of this Declaration by including in each and every lease and rental agreement a clause which incorporates this Declaration by reference and makes this Declaration a part of an attachment to such lease or rental agreement. In addition, during the Affordability Period, each lease or rental agreement for any of the Affordable Dwelling Units shall contain provisions that failure to comply with this Declaration shall be a default under the renter's lease or rental agreement. 3. GENERAL PROVISIONS 3.1 Binding. The Property shall be subject to the covenants, conditions, and restrictions set forth herein, which shall run with the land, and shall apply to and bind the heirs, successors, executors, administrators and assigns of all the parties hereto; and all of the parties hereto shall be jointly and severally liable hereunder. 3.2 Covenants Do Not Impair Liens. No violation or breach of the covenants, conditions, restrictions, provisions or limitations contained in this Declaration shall defeat or render invalid or in any way impair the lien or charge of any mortgage or deed of trust or security interest. 3.3 Covenants for Benefit of City. This Declaration shall be binding for the benefit of City and such covenants shall run in favor of City for the entire period during which time such covenants shall be in force and effect, without regard to whether City is or remains an owner of any land or interest therein to which such covenants relate. City, in the event of any breach of any such covenants, shall have the right to exercise all the rights and remedies and to maintain any such action at law or suits in equity or other 2510 W. Coast Highway Affordable Housing Agreement Exhibit D-4 proper legal proceedings to enforce and to cure such breach to which it or any other beneficiaries of these covenants may be entitled during the term specified for such covenants. 3.4 Counterparts. This Declaration may be executed in a number of counterparts, each of which shall be an original, but all of which shall constitute one and the same document. 3.5 Applicable Law. If any provision of this Declaration or portion thereof, or the application of any provision to any person or circumstances, shall to any extent be held invalid, inoperative, or unenforceable, the remainder of this Declaration, or the application of such provision or portion thereof to any other persons or circumstances, shall not be affected thereby and it shall not be deemed that any such invalid provision affects the consideration for this Declaration; and each provision of this Declaration shall be valid and enforceable to the fullest extent permitted by law. This Declaration shall be construed in accordance with the laws of the State of California. 3.6 No Subordination. The Parties agree and acknowledge that any encumbrance to the Property, or part of the Property, or any improvements on the Property containing Affordable Dwelling Units with any conventional mortgage, construction bond financing or security interest to secure financing with respect to the construction, development, use, or operation of the Project shall be subordinate to this Declaration. 3.7 Recording. This Declaration shall be recorded upon the execution of the Affordable Housing Agreement. 3.8 Termination. Upon expiration of the Affordability Period for each category of Affordable Housing Units, Owner and City shall sign documents in recordable form (provided by Owner giving notice and subject to approval by the City Attorney) to remove the effect of the recorded Declaration from the Property. (Signatures on following page) 2510 W. Coast Highway Affordable Housing Agreement Exhibit D-5 IN WITNESS WHEREOF, City and Owner have caused this Declaration to be signed by themselves or on their behalf by their duly authorized representatives, as set forth below: CITY OF NEWPORT BEACH, a California municipal corporation Grace K. Leung City Manager APPROVED AS TO FORM: CITY ATTORNEYS OFFICE Aaron C. Harp City Attorney ATTEST: By: Leilani I. Brown City Clerk 2510 W. COAST HWY LLC, a Delaware limited liability company Mark Moshayedi Manager 2510 W. COAST HWY EAT LLC, a Delaware limited liability company By: Mehrdad Moshayedi, Co -Trustee M. and S. Moshayedi Revocable Trust, dated September 25, 1998 MM Semira Moshayedi, Co -Trustee M. and S. Moshayedi Revocable Trust, dated September 25, 1998 [SIGNATURES MUST BE NOTARY ACKNOWLEDGED FOR RECORDING] Attachments: Attachment 1 — Property Attachment 2 — Notice of Commencement of Affordability Restrictions 2510 W. Coast Highway Affordable Housing Agreement Exhibit D-6 ATTACHMENT "1" PROPERTY [Attached Behind this Page] 2510 W. Coast Highway Affordable Housing Agreement Exhibit D-7 ATTACHMENT "2" NOTICE OF COMMENCEMENT OF AFFORDABILITY RESTRICTIONS [Attached Behind this Page] 2510 W. Coast Highway Affordable Housing Agreement Exhibit D-8 RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: City of Newport Beach 100 Civic Center Drive Newport Beach, California 92660 Attn: City Clerk Exempt from Recording Fees pursuant to Govt. Code §§ 6103, 27383 Space above line for Recorder's use only APN: 425-471-55 AND 425-471-56 NOTICE OF COMMENCEMENT OF AFFORDABILITY RESTRICTIONS Important notice to owners, purchasers, tenants, lenders, brokers, escrow and title companies, and other persons regarding affordable housing restrictions on the real property described in this Notice: Affordable housing restrictions have been [or are being recorded] with respect to the property described below (referred to in this Notice as the "Property") which require that certain units of the Property be developed as Affordable Dwelling Units and be rented to and occupied by persons and households of limited income at affordable rents. 2510 W. COAST HWY LLC, a Delaware limited liability company and 2510 W. COAST HWY EAT LLC, a Delaware limited liability company, hereby provides notice that the Property is subject to certain affordable housing requirements: Location of Property: 2510 and 2530 West Coast Highway in the City of Newport Beach, California. 2. Assessor's Parcel Number(s) of Property: 425-471-55 and 425-471-56 3. Legal Description of Property: see Exhibit 1" attached hereto and incorporated herein by reference. 4. Title of Document(s) Containing the Affordable Housing Requirements: 4.1. Affordable Housing Agreement by and between City of Newport Beach, a California municipal corporation and charter city and 2510 W. COAST HWY LLC, a Delaware limited liability company and 2510 W. COAST HWY EAT LLC, a Delaware limited liability company, dated ("Agreement"). 4.2. Declaration of Affordable Housing Covenants, Conditions and Restrictions, as recorded with the Official Records of Orange County, California, on 20_ as Instrument No. ("Declaration"). 2510 W. Coast Highway Affordable Housing Agreement Exhibit D-9 5. Summary of Affordable Housing Restrictions: 5.1. Affordability Period. Three of the Property's Affordable Dwelling Units shall be subject to the affordable housing requirements for a minimum of fifty-five (55) years from the Commencement Date. 5.2. The Commencement Date is , which is the date City issued the final Certificate of Occupancy ("CofO") for the Affordable Dwelling Units. 6. This Notice does not contain a full description of the details of all the terms and conditions of the Agreement or the Declaration. You will need to obtain and read the Agreement and Declaration to fully understand the restrictions and requirements which apply to the Property. [Signatures on the following page] 2510 W. Coast Highway Affordable Housing Agreement Exhibit D-10 CITY OF NEWPORT BEACH, a California municipal corporation By: Grace K. Leung City Manager APPROVED AS TO FORM: CITY ATTORNEY'S OFFICE By: Aaron C. Harp City Attorney ATTEST: By: Leilani I. Brown City Clerk 2510 W. COAST HWY LLC, a Delaware limited liability company Mark Moshayedi Manager 2510 W. COAST HWY EAT LLC, a Delaware limited liability company By: Mehrdad Moshayedi, Co -Trustee M. and S. Moshayedi Revocable Trust, dated September 25, 1998 In Semira Moshayedi, Co -Trustee M. and S. Moshayedi Revocable Trust, dated September 25, 1998 [SIGNATURES MUST BE NOTARY ACKNOWLEDGED FOR RECORDING] Exhibit(s): Exhibit 1 — Legal Description of Property 2510 W. Coast Highway Affordable Housing Agreement Exhibit D-11 LEGAL DESCRIPTION OF PROPERTY All that certain real property situated in the County of Orange, State of California, described as follows: PARCEL A: PARCELS 1, 2 AND 3, IN THE CITY OF NEWPORT BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SHOWN ON A PARCEL MAP FILED IN BOOK 85, PAGES 30 AND 31 OF PARCEL MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. PARCEL B: THAT PORTION OF LOT A OF TRACT NO.919, IN THE CITY OF NEWPORT BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SHOWN ON MAP RECORDED IN BOOK 29, PAGES 31 TO 34 INCLUSIVE OF MISCELLANEOUS MAPS, RECORDS OF SAID COUNTY, DESCRIBED AS FOLLOWS: BEGINNING AT THE INTERSECTION OF THE SOUTHEASTERLY LINE OF TRACT NO. 1133, SEAVIEW HEIGHTS, AS SHOWN ON MAP RECORDED IN BOOK 36, PAGES 13 AND 14 OF MISCELLANEOUS MAPS IN SAID OFFICE, WITH THE NORTHEASTERLY LINE OF LOT 19 OF LAST SAID TRACT; THENCE ALONG THE SOUTHEASTERLY PROLONGATION OF SAID NORTHEASTERLY LINE SOUTH 61000' 30" EAST 57.10 FEET TO A POINT IN THE SOUTHWESTERLY PROLONGATION OF THE NORTHWESTERLY LINE OF THAT CERTAIN LAND DESCRIBED IN DEED RECORDED IN BOOK 1396, PAGE 168 OF OFFICIAL RECORDS IN SAID OFFICE; THENCE ALONG SAID SOUTHWESTERLY PROLONGATION SOUTH 39° WEST, 35.65 FEET TO THE NORTHWESTERLY LINE OF THE LAND DESCRIBED IN DEED RECORDED IN BOOK 975, PAGE 361 OF OFFICIAL RECORDS IN SAID OFFICE; THENCE ALONG SAID NORTHEASTERLY LINE NORTH 610 00' 30" WEST 57.10 FEET TO SAID SOUTHEASTERLY LINE; THENCE ALONG SAID SOUTHEASTERLY LINE NORTH 390 43' 30" EAST, 35.65 FEET TO THE POINT OF BEGINNING. PARCEL C: PARCEL 1 OF PARCEL MAP NO. 90-173, IN THE CITY OF NEWPORT BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS PER MAP FILED IN BOOK 256, PAGES 25 AND 26 OF PARCEL MAPS, RECORDS OF ORANGE COUNTY, CALIFORNIA. Assessor's Parcel Number: 425-471-55 & 425-471-56 2510 W. Coast Highway Affordable Housing Agreement Exhibit D-12 EXHIBIT "E" AFFORDABLE RENTAL PRICE [Attached Behind this Page] 2510 W. Coast Highway Affordable Housing Agreement Exhibit E-1 EXHIBIT "E" AFFORDABLE RENTAL PRICE (Current Affordable Rent Price & Income Limits for Very Low -Income Households) 2023 MAXIMUM AFFORDABE RENTAL COST FOR VERY LOW INCOME (0-50% of Orange County Median Income) Calculator 0-Bedroom 1-Bedroom 2-Bedroom 3-Bedroom 4-Bedroom Base Rent $2,132 $2,324 $2,792 $3,792 $4,435 Utility Cost (Enter utility cost based on chart below) - $ - $ - $ - $ - $ Maximum Rent (After utilities are subtracted) $ $ $ $ $ 2023 VERY LOW-INCOME LIMITS 0-50% of Orange CountyMedian Income Persons in 1 2 3 4 5 6 7 8 Household Maximum Gross Household $50,250 $57,400 $64,600 $71,750 $77,500 $83,250 $89,000 $94,750 Income 2510 W. Coast Highway Housing Agreement Exhibit E-1 Community Resources 2023 Utility Allowance Schedule The following utility allowances will be used by the Orange County Housing Authority for administration of the Housing Choice Voucher Program effective October 1, 2022. Bedroom 0 Gas Cooking 4 4 7 9 12 13 Heating 16 18 21 22 25 27 Water Heating 9 10 14 20 26 31 Natural Gas Base Charge 4 Electric Basic 30 35 49 65 82 100 Cooking 10 11 17 21 27 32 Heating 19 22 25 28 30 35 Water Heating 21 25 31 37 44 51 Other Air Conditioning 11 13 19 23 30 38 Water 45 49 71 104 138 171 Sewer 7 7 7 7 7 7 Trash 23 Refrigerator 12 Stove 11 CURRENT UTILITY ALLOWANCE PUBLISHED FOR THE COUNTY OF ORANGE SECTION 8 PROGRAM CAN BE FOUND AT: https://www. ochousinq orp/documents-forms 2510 W. Coast Highway Housing Agreement Exhibit E-2 EXHIBIT "F" TENANT INCOME DOCUMENTATION [Attached Behind this Page] 2510 W. Coast Highway Affordable Housing Agreement Exhibit F-1 Exhibit "F" TENANT FILE - INCOME DOCUMENTATION The tenant file must document the income of the persons occupying an assisted unit. At a minimum, the file must contain the following: Application/Certification A. Name, age and social security number of persons occupying the unit B. Source and amount of monthly income of persons 18 years of age and older C. Students over age of 18 — evidence of full-time status — 12 or more units D. Date and signature of each person 18 years of age and older II. Income support documents for each person occupying the unit A. Current copy of Section 8 certificate/voucher, if applicable B. Most recent federal income tax return C. Birth certificate of minors not showing on federal income tax return D. Social security award statement E. Retirement benefits statement F. Two months' most recent, consecutive paystubs G. Unemployment compensation statement H. Third -party verifications from employers, banks, or others with first-hand information about the applicant's finances. These verifications should be in writing and can include documented telephone interviews. I. Self-employed 1. Most recent Federal business tax return 2. 12 months business bank statements (12 months personal bank statements, if used for the business such as for a sole proprietor) 3. Profit and loss statement III. Asset support documents for each person occupying the unit A. Three months most recent checking and savings account statements B. Most recent asset statements such as CDs, 401 K, IRAs, investment portfolios (stocks, bonds, cryptocurrency, etc.) IV. Income Recertification support documents A. Recertification statement completed and signed by all adult persons occupying the unit certifying: 1. Name, age and social security number of persons occupying the unit 2510 W. Coast Highway Affordable Housing Agreement Exhibit F-1 2. Source and amount of monthly income of persons 18 years of age and older 3. Students over age of 18 — evidence of full-time status — 12 or more units 4. Date and signature of each person 18 years of age and older B. All documents listed in 2, above. 2510 W. Coast Highway Affordable Housing Agreement Exhibit F-2 OMMIU MIS ANNUAL REPORT [Attached Behind this Page] 2510 W. Coast Highway Affordable Housing Agreement Exhibit G-1 Exhibit "G" ANNUAL REPORT The following information will need to be retained and made available to the City of Newport Beach on an annual basis. I. Tenant (Qualifying Household) Roster A list of all current tenants (Qualifying Households) occupying an Affordable Dwelling Unit including but not limited to: • Property Name • Property Address • Unit number • Unit Size • Number persons in unit • Tenant Name • Move -In Date/Initial occupancy date • Monthly Rent Rate • Utility Allowance • Household Income (Refer to Exhibit F) II. Tenant (Qualifying Household) File At a minimum, the tenant (Qualifying Household) file must contain the following information. • Original and subsequent executed lease agreements; • Initial occupancy date of current tenant; • Rental rate; • Name of current tenant; • Household size of current tenant; • Household income of current tenant, and information upon which Developer relied to qualify current tenant; • Utility allowance schedule III. Interest and/or Waiting List A list of all persons that have expressed an interest in occupying an Affordable Housing Unit. 2510 W. Coast Highway Affordable Housing Agreement Exhibit G-1