HomeMy WebLinkAbout08 - Beacon Bay Lease TemplateCITY OF
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C''CIF�P "`P City Council Staff Report Agenda Item No. $
June 26, 2012
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: City Manager's Office
Dave Kiff, City Manager
949 - 644 -3002, dkiff @newportbeachca.gov
PREPARED BY: Rob Houston — Assistant to the City Manager
APPROVED: C-- l
TITLE: Approval of New Lease Template for Beacon Bay
ABSTRACT:
Beacon Bay is a residential community consisting of 72 single - family homes located
upon land either owned or held in trust by the City of Newport Beach ( "City "). The
residents of these homes are lessees of the City and currently have a fixed lease term
that is set to expire on July 1, 2044. City staff worked in conjunction with current
residents of Beacon Bay and a City Council working group to create a new lease with
improved terms.
RECOMMENDATION:
1. Review and approve the new lease template for Beacon Bay and authorize the City
Manager or his /her designee to enter into the new leases with current and future
lessees on behalf of the City of Newport Beach.
2. Authorize the Mayor to sign the attached amended and restated declaration for
Beacon Bay Community Association, a planned development in a form similar to that
attached in Exhibit D of the new lease template for Beacon Bay.
FUNDING REQUIREMENTS:
There is no fiscal impact related to this item.
DISCUSSION:
The Beacon Bay Community consists of 72 residential homes located immediately west
of the Balboa Yacht Basin on property that is made up of both City owned land and
State Tidelands held in trust by the City. Homes in the neighborhood either sit entirely
on City land, entirely on Tidelands, or have a delineation line bisecting their property in
Approval of New Lease Template for Beacon Bay
June 26, 2012
Page 2
some manner_ This comingling led to the creation of a lease document that covered all
properties in Beacon Bay, regardless of whether they are situated on City -owned land,
Tidelands, or a combination of the two.
The current lease document has served as the core lease for all homes in the
community since 1994. All 72 residential homes in Beacon Bay are under this lease
and have the same fixed end date of July 1, 2044. The current rent is set at 2.5% of
home value (at time of purchase) divided into 12 equal monthly installments. The lease
revenue goes both to the General Fund (for homes sitting on City land) and to the
Tidelands Fund (for homes sitting on Tidelands), or a split between the funds if the lot is
on both.
The current lease with its date certain end date of July 1, 2044 has begun to create
problems for both existing lessees looking to refinance and potential new lessees
attempting to obtain conventional loans. This is because the lease will expire in less
than 35 years and conventional lenders require that a loan for a home on leased
property have a lease term that is at least 5 years longer than the term of the mortgage
(30 years + 5 years = 35 years).
Both the City and the Beacon Bay Home Owners Association ( "HOA ") were concerned
this financing difficulty could negatively impact home sales and therefore the value of
this community. Given this concern a City Council working group along with City staff
and representatives of the HOA reviewed the lease terms and created a revised
document that contained a number of changes that are favorable to both the City and
the lessees in Beacon Bay.
Key provisions of new lease
Some key provisions in the new lease are highlighted in the list below;
• Section 2.1 -- This new lease has a 50 year term that begins at the point a lessee
signs the lease. This removes the date certain termination date from the previous
lease and allows for a new 50 year term each time a home is purchased and a
new lease is executed.
• Section 2.2 -- This new lease contains a provision that allows a lessee, with the
City's consent, to purchase additional years (i.e., 30 years into a 50 year lease a
lessee may purchase an additional 30 years to have a 50 year term). The
purchase price for the additional years Is based upon a formula developed by
George Jones.
Sections 3.1and 3.2 — The base rent remains at 2.5% of the home's sale price or
in the absence of a sale at 2.5% of the appraised value. For appraisals, the City
will provide a list of 3 City approved appraisers from which the lessee can choose
a single appraiser. The lessee pays for the appraisal under Section 3.6(b).
Approval of New Lease Template for Beacon Bay
June 26, 2012
Page 3
• Section 3.3 — The base rent is adjusted annually by CPI. The City also reserves
the right to adjust the base rent at the 30 year point of any lease if in the City's
judgment the rent collected does not accurately reflect current fair market value.
• Section 3.6 — The City will offer all existing lessees a 3 year window (until January
1, 2015) to switch to the new lease with a new 50 year term. The switch will
require an appraisal of the property and cannot result in a lower payment of rent
to the City when compared to the payments on the current lease. Lessees that
choose not to switch to the new lease will remain under the current lease.
• Section 3.8 — The new lease allows for the same transferability provisions as the
former lease, with the inclusion of LLC's under certain circumstances.
• Section 8.1 — If a home on leased land is damaged or destroyed the lessee must
commence rebuilding within 90 days or such other time period mutually agreeable
to the City and the lessee.
The State Tidelands portion of the Beacon Bay property requires proposed lease
changes to be approved by the State Lands Commission. The attached lease was
approved by the State Land Commission at their April 2012 meeting. The Beacon Bay
HOA also reviewed and approved the attached lease at their June 2012 meeting. The
lease is now ready for City Council review and approval.
ENVIRONMENTAL REVIEW:
Staff recommends the City Council find this action is not subject to the California
Environmental Quality Act ( "CEQX) 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.
NnT1r1Nr;-
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).
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Approval of New Lease Template for Beacon Bay
June 26. 2012
Page 4
Submitted by:
ca LL
Rob Houston
Assistant to the City Manager
Attachments: A. New Beacon Bay Lease Template
B. Letter of approval from State Lands Commission
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BEACON BAY LEASE
THIS BEACON BAY LEASE ( "Lease ") is entered into as of the _ day of
20 ( "Effective pate "), 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.
1. 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 %) 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 vafue 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 16(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 rental 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.i 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 32.
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 (15�h) 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 Ad'ustments. Monthly Base Rent may be adjusted on July 1S1 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
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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 & months nor later than three (3) months prior to the expiration of the twenty -ninth
(29t ) 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 (3 01h)
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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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 33.
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.
S. 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, wails, 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
61 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
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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.
9
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. 7o 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;
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(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 Lenders 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 Rioht 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
(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 attomey'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 Miscellaneous. -rhe following provisions shall apply to Lessee and any
Lender:
(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.
a. 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:
0) 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
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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 6571; 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 Califomia 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
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.
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(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.
103 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
Lessee. Lessee shall indemnify City from any and al) 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 ")_
IL
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
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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.
12A 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
131 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
18
d -:
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.
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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;
(1) 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.
461
(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 Riqhts. 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
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
6�,
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 O 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
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
�� d
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:
By:
Aaron Harp
City Attorney
ATTEST:
Date:
By:
Leilani I. Brown
City Clerk
CITY OF NEWPORT BEACH,
A California municipal corporation
Date:
By:
David Kiff
City Manager
LESSEE
Date:
0
Date:
M1
Attachments: Exhibit "A" — Depiction of Beacon Say
Exhibit "B" — Legal Description of Property
Exhibit "C" — Option Fee Percentages
Exhibit "D" — CC &Rs
Exhibit "E" — Memorandum of Lease
[END OF SIGNATURES]
25
EXHIBIT "A"
DEPICTION OF BEACON BAY
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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:
LEI
;%'7
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%
EXHIBIT "D"
CC &Rs
See Attached
RECORDING REQUEST BY, AND
WHEN RECORDED MATL T0:
City Clerk
City of Newport Beach
3300 Newport Boulevard
P.O. Box 1768
Newport Beach, CA 92659 -1768
(Space above this line for Recorder's use)
AMENDED AND RESTATED
DECLARATION FOR
BEACON BAY COMMUNITY ASSOCIATION,
A PLANNED DEVELOPMENT
3/U12 10120,4
#114293 v
JC
TABLE OF CONTENTS
Pie
ARTICLE I DEPIN7TIONS .............................................................................
..............................2
Section 1.01
"Architectural Committee" ... ............................. ........................
.................. 2
Section1.02
"Articles" .......................................................................
..............................2
Section 1.03
"Assessments,"-. ....................... .......................
....................................... 2
Section1.04
" Association" .................................................................
..............................3
Section1.05
"Board"...... .......................................... ......................................
................ 3
Section1.06
` Bylaws" ...............................................................
...............................
Section1.07
" City ..............................................................................
..............................3
Section 1.03
"Common Area" ................. .............................................
........... ................ 3
Section 1.09
"Common Expenses" .....................................................
..............................3
Section 1.10
"Covered Property" ........................................................
..............................4
Sectiont.l I
"Declarant" .............. ......... ................... ........................................................
4
Section 1.12
"Declaration" .................................................................
..............................4
Section 1.13
"Development" ..............................................................
..............................4
Section 1.14
" 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
SectionL21
" Mortgagor" ...................................................................
..............................5
Section1.22
" Person" .........................................................................
..............................5
Section 123
" Residence" ........ ............................... . ....................
..............................5
Section 1.24
"Residential Lot" ...........................................................
..............................5
Section 1.25
"Rules and Regulations" ................................................
..............................5
SectionL26
"Setback" .......................................................................
..............................5
Section 1.27
"Subdivision Map ...........................................................
..............................5
ARTICLE Il THE PROPERTY ......................................................................... ..............................5
Section 2.Ot 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
Membersbip ...................................................................
..............................8
Section3.03
Transfer ..........................................................................
..............................8
Section 3.04
Classes of Membership .................................................
..............................8
Section3.05
Voting Rights ............:....................................................
..............................8
Section 3.06
Approval of Members ....................................................
..............................9
Section 3.07
Membership Meetings ...................................................
..............................9
311/12 10120.4
#114293 v
i
'y
Section
3.08
General Powers and Authority ... .............. ..................................................
0
Section
3.09
Duties Vf the Association. ......................................................................
-)0
Section
3.10
Board of Directors ........ --_...... .................... .......................................
1]
Section
3.11
Inspection Of Books and Records ..............................................................
|3
Section
3.12
Resolution Vf Disputes .... ..........................................................................
l3
ARTICLE {l/ ASSESSMENTS AND COLLECTION PROCEDURES ......................................
}4
Section
4.01
Covenant tO Pay .........................................................................................
)4
Section
4.02
Purpose of Assessments, ................... ... ............ ................... ...................
14
Section
4.03
Assessment Period ....................................................... .............................
14
Section
404
Regular Assessments ................... ^...........................................................
14
Sudinn4.05
Insurance Prenoimms. ... .............................. ............................... ............
Special Assessments ..................... ............................................................
l4
Section
4.06
Limitations Ou Assessments .................. ................ .......................
........... 14
Section4.07
Duty t0 Restore and Replace ..... ... .- ......... --- ... .................... -.-......
Late Charges ................................................................. .......... ................
15
Section
4.08
Enforcement of Assessments and Late Charges ...................................
.... 16
Section
4.09
Statement Regarding Assessments ... .........................................................
]7
Section4.l0
Ordering Reconstruction or Repair ............ .~ ............................ ........
Reserves .................................................. ..................................................
|7
ARTICLE \/USE R.ESTRJ[,TIONS AND COVENANTS ......... .............. .......... ........ .-.'|7
Section 5.01 General Restrictions ou Use .................. ................................. .......... ....... l7
Section 5.02 Damage Liability ........................ .............................................................. |8
,Section 5.03 Equitable Servitudes ................................................................... .............. )8
/\R.[[C[El/T ARCHITECTURAL AND DESIGN CONTROL ...... .................... ...................
14
Section 6.01
Architectural and Design Approval ......... .................................................
|4
Section 6.02
A.rohiteoturulCononittet- ... ---................. ----...............................
14
Section 6-03
Procedural Rules and Fees . ...... ----...... ........... .... -. .............
14
Section 6.04
The Board o[ Directors ........... ............................................. -..............
l4
Section 6.05
N8 Power &V Modify Setback cots.-,--,.^-.-..--.,.14
Section 6.06
N8nliability for Approval of Plans ... ........................ .......... ...................
14
ARTICLE VII INSURANCE
..................................... .................................................................
20
Section 7.01
Fire and Casualty Insurance .................................. ....................................
20
Section 7. 02
General Liability and Individual iiubiLtY Insurance ................. ...............
70
Section 7.03
Other Association T8suranCe .......................................... ......... ..............
-20
Section 7.04
Trustee for PO6cies. ... ... ............................ .. ..................................
.-20
Section 7,05
Individual Insurance ........................ ...... ........ ............ . ........... ..............
20
Section 7.06
Insurance Prenoimms. ... .............................. ............................... ............
}1
Section 7.07
Additional Provisions ... ......... ,......,........ ............... ......................
2)
ARTICLE VIII DAMAGE [)R DESTRUCTION ....... ................. .............................................
21
Section 8.0.1
Duty t0 Restore and Replace ..... ... .- ......... --- ... .................... -.-......
21
Section 8.02
Proceeds Justifying Automatic Res{urudunand Repair, .......... .................
21
Section 8.03
Approval by Mcrubc,s of Special Assessment for Certain
Restorations and Repairs .............................. ....... .......................... ......
2|
Section 8.04
Ordering Reconstruction or Repair ............ .~ ............................ ........
^.22
Section 8.05
Election Not b} Rebuild .............................................................................
2}
Section 8,06
M�nur Restoration and Repair Work ...... -......................................
2}
VIM 10120A
4)w20Uv|
�'
ARTICLE IX EMINENT DOMAIN ................................................................ .............................23
Section 9.01 Sale to Condemning Authorit) ...................................... .............................23
Section 9.02 Distribution of Sales Proceeds ...................................... .............................23
Section 9.03 Taking and Condemnation Awards .............................. .............................23
ARTICLE X RIGHTS OF MORTGAGEES .................................................... .............................23
................... .... .. ....26
Section 10.01
Warranty .............................................. ............................... ..................
. ...23
Section 10.02
Subordination ................................................................ .............................23
.............................26
Section 10.03
Notice of Default ........................................................... .............................24
.............................27
Section 10.04
Unpaid Assessments ..................................................... .............................24
.............................27
Section 10.05
Mortgagee Approval of Material Amendments ............ .............................24
.............................27
Section 10.06
Mortgagee Approval of Other Actions ......................... .............................24
.............................27
Section10.07
Liens ........................................................................... .............................25
.............................27
Section10.08
Priority .......................................................................... .............................25
.............................27
Section10.09
Reserve Fund ........................................................... ._...........
.. ... - ---25
Section 10.10
Management ......... ... ----- . .... . ... .... . .... ,......, .... . ...............................................
25
Section 10,11
Right to Inspect Books and Records ............................. .............................25
.............................27
Section 10.12
Right to Fumish Mortgage Information ........................ .............................25
.............................27
ARTICLE X1 AMENDMENTS ....................................................................... .............................25
Section l 1.01 Amendments by Members ............................................ .............................25
Section 11.02 Amendments Pursuant to Court Order .......................... .............................26
ARTICLE XI I GENERAL PROVISIONS .......................................................
................... .... .. ....26
Section12.01
Term ...........................................................................
.............................26
Section 12.02
Enforcement ..................................................................
.............................26
Section 12.03
Cumulative Remedies ...................................................
.............................27
Section 12.04
Nonwaiver of Remedies ................................................
.............................27
Section 12.05
Attorneys' Fees .............................................................
.............................27
Section12.06
Sevcrability ..................................................................
.............................27
Section12.07
Binding.— ......................................................................
.............................27
Section 12.08
Interpretation .................................................................
.............................27
Section 1109
Effect of Declaration ................................ .. ...... .......
..................... .............. 27
Section 12.10
Limitation of Liability.... .... _ ...................................................
.................. 27
Section 12.11
NonliabilityofOfficials ................................................
.............................27
Section 12.12
Fair Housing ..................................................................
.............................27
Section12.13
Subleases .......................................................................
.............................28
Section1114
Notices ..........................................................................
.............................28
Section 12.15
Numbers and Headings .................................................
.............................28
EXHIBITS
Exhibit A Legal Description
Exhibit B Common Area Legal Description
3/1112 10120.4
4114293 v1 ill
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
I 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 Lou 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 end 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 beld, 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
3A/12 10120,4
N 114293 y
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 leasehold 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
3/1112 10120.4
4114293 v1 2
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 Califomia.
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.
Seetioo 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, attorneys 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 bandling the funds of the Association;
(i) taxes paid by the Association;
3 /1/12 10120.4
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(j) 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 1. 13 "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 I .I 5 "Governing Instruments" means this Declaration, the Articles and Bylaws
of the Association, and any Rules and Regulations of the Association.
Section 1.16 "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.
Section 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 (ONMA). "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 anotber (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 11.
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 11
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 pass 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
(8) 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.
(0 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 cc-
owners and the Association have agreed in writing to an alternative allocation of liability.
(g) Nothing in this Declaration shall limit Declarant's right to use any
properties held in mast 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 ibis Declaration, every Member shall:
(a) maintain all portions of the exterior of his Residence, including witbout
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 3.03 Membershio. 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 wMch 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 vole 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 sball 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 Meetines. Article It of the Bylaws governing meetings of the
Members is hereby incorporated by reference.
Section 3.08 General Powers and Authori ty. 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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#11420 v 1 9
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
limitations:
(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(6).
(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 shal I 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 disbibute 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 legal 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) al 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(d) 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 tares 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, goveruing 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 Code Section 7110 e[ 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 S 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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4114293 vi 13
(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 stuns 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 Purpose 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 ahemative 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 goveming 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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is
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 wrrinen 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. 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 $l0, 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, attomeys' 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 permined by law, including judicial foreclosure or nonjudicial
foreclosure. Any nonjudicial foreclosure shall be conducted by the trustee named in the nonce of
delinquent assessment or by a trustee substituted pursuant w Section 29340 of the California
Civil Code, in accordance with the provisions of Sections 2924, 29246, and 2924c of the
California Civil Code.
If the stuns 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 shal l not do any of the following:
(a) Attempt to furtber 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 XIt.
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ARTICLE VI
ARCMTECTURAL 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 Requirements. 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 location, 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 YR
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 a( least 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 blankel 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 no( 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 (he 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. Fach 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 tamer 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 Assocaation
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 VIIC
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 Justifyine 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 hustee, 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 uruejected 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 mariner described in
Section 4.05 of this Declaration.
ARTICLE IX
EMINENT DOMAIN
Section 9.01 Sale to Condemnint=. Authonty. 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 9.02 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.
�KQa WI
RIGHTS OF MORTGAGEES
Section 10.01 Waria-rity. 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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(- I
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 ApprovaJ 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 least 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) Use hazard iosurance 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 Lund 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 10.1 1 Right 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 famished to
the Members by the Association.
Section 10.12 Right to Furnish Mortgage Information. Each Member hereby authorizes
the First Mortgagee of a First Mortgage on the Member's Residential Lot to famish 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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9 114293 v 1 25
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 Deets-ration 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 taw 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 rigbt 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
lbereof 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.
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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 staled 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 Severability. 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 0 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 sball 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.
3/1/12 10120.4
n 114293 v1 27
X15
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 shalt 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 Heading . As used in this Declaration, the singular shall
include the plural, unless the context requires the contTary. The headings are not a part of this
Declaration, and shall not affect the interpretation of any provision.
Executed on at Newport Beach, Orange, California.
3/1111 10120.4
X114293 vi
011
DECLARANT
CITY OF NEWPORT BEACH, a California
chartered municipal corporation
0
r�
1'r
Acknowledgment
STATE OF CALIFORNIA
ss
COUNTY OF ORANGE )
On , before me, , a Notary Public,
personally appeared who proved to me on the basis of
satisfactory evidence to be the person(s) whose name(s) is /are subscribed to the within
instrument, and acknowledged to me that he /she /they executed the same in his/her /their
authorized capacity(ies), and that by his/her /their signature(s) on the instrument the person(s), or
the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERMY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Notary Public
311112 10120,4
#114293 v 1 29
0
EXHIBIT A
LEGAL DESCRIPTION
A parcel of land situated Ih the projected Northwest quarter of Section 35, Township 6
South, Range 10 West, S.B.B. & M., Orange County, California, more particularfy
described as follows, to-%it:
Beginning at the U.S. Bulkhead Station No. 200, as shown upon a map entitled'Hator
Lines, Newport Bay Harbor, California', approved May 2nd, 1936, by the Secretary of
War and on file In the offlce of the United States District Engineer at Los Angles,
California: running thence West along the U.S. Bulkhead line 147.50 feet to U.S. Station
No, 137; thence North 39° 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 Pactfic
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 tine 334.47 feet to the most Westeriy comer of that certain
parcel of land conveyed to the City of Newport Beach by the Irvine Company, as
described in deed recorded September 25h, 1929, in Book 306, page 375 of Official
Records of Orange County, Callfomla; thence North 23° 5T 30" East along the
Northwesterly line of said parcel of land 317.57 feet; thence South 710 54' East along
the Northerly line of said parcel of land 290.24; then South 85° 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. Govt.
Bulkhead line between U.S. Stations Nos. 101 and 200; thence West along said
Bulkhead line 784.25 feet to the point of beginning containing approximately twelve (12)
acres.
311/12 10120.4
W 114293 yr
A -1
EXHIBIT B
COMMON AREA LEGAL DESCRIPTION
Lots 62 and A through J as shown on that certain record of Survey filed In the Official
Records of the County of Orange, State of Callfomla, as Instnm3ent Number 6383 on
February 28, 1939 covering a portion of the projected Northwest on"uarter (1/4) of
section 35, Township 6 South, Range 10 West, S.B.B.M.
311112 10120.4
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EXHIBIT "E"
Recording Requested By
and When Recorded Return To:
City of Newport Beach
3300 Newport Beach Blvd.
P,O. Box 1768
Newport Beach, Caffomia 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:
CITY OF NEWPORT BEACH,
A California municipal corporation
Date:
By.
David Kiff
City Manager
LESSEE
Date:
By: By:
Leilani I. Brown
City Clerk
3
Date:
" l'1
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:
as
�J
STATE OF CALIFORNIA
CALIFORNIA STATE LANDS COMMISSION
100 Howe Avenue, Suite 100-South
Sacramento, CA 95825 -8202
Rob Houston
City of Newport Beach
3300 Newport Blvd.
Newport, CA 92658
April 9, 2012
EDMUND G. BROWN JR., Govemor
CURTIS L. FOSSUM, Executive O deer
(918) 574-1800 FAX (916) 574 -1810
CalNomla Raley Sarvlce hom TOO Phone 1400 - 735-2929
from Voh;e Phone 1400- 735-2922
Contact Phone: (916)574 -0200
Contact FAX: (916)574 -1925
File Ref: G09 -02.6
RE: Review of the City of Newport Beach proposed Beacon Bay Lease
Dear Houston:
This is to advise you that on March 29, 2012, the California State Lands
Commission found that in accordance with Chapter 74, Statutes of 1978, the City of
Newport Beach may enter into leases of filled tide and submerged lands for a period not
to exceed 50 years. In addition, the Commission approved the City of Newport Beach's
proposed form of lease and range of consideration for the Beacon Bay Lease between
the City of Newport Beach and residents of Beacon Bay. A copy of the agenda item is
available on our website at www.slc.ca.gov-.
If you have any questions, please do not hesitate to contact me at 916 -574 -0200.
Sincerely,
X�t" jkbk6�-
Michelle Andersen
Public Land Management Specialist
1"I