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HomeMy WebLinkAbout11 - Affordable Housing Agreement with Seaview Lutheran PlazaCITY OF NEWPORT BEACH CITY COUNCIL STAFF REPORT Agenda Item No. 11 October 12, 2010 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: Planning Department Kathlyn Bowden, AICP, Economic Development Coordinator 949 - 644 -3230, kbowden(a)newportbeachca.gov SUBJECT: First Amendment to Affordable Housing Agreement with Seaview Lutheran Plaza ISSUE Request to amend agreement with Seaview Lutheran Plaza, which provides very low and extremely -low income housing for seniors, to increase its grant of in -lieu affordable housing funds by $6,300, not to exceed a total of $141,300, so that Seaview Lutheran may install the City required backflow prevention device. RECOMMENDATION 1. Approve and authorize the Mayor and City Clerk to execute the attached amendment (Exhibit A); and 2. Approve a budget amendment transferring $6,300 from the Affordable In -Lieu Housing reserve account #010 -3619 to the Economic Development Other Miscellaneous Expenses account #2720 -8300, to provide funding for Seaview Lutheran to install the required backflow prevention device. DISCUSSION Background Seaview Lutheran Plaza is a senior citizen residential complex consisting of 100 affordable dwelling units located at 2800 Pacific View Drive. A break in the Seaview Lutheran Plaza's water delivery system occurred in November 2008 due to electrolysis /corrosion and caused major damage to several apartments. A replacement of the water system was necessary to comply with health and safety codes and to prevent further damage to the building and avoiding the displacement of residents. While HUD requires the maintenance of a minimal reserve for repair and displacement, Seaview Lutheran's reserves were insufficient to meet the needs of the project. Amendment No. 1 to Seaview Lutheran Plaza Affordability Agreement October 12, 2010 Page 2 On September 22, 2009, City Council approved an affordable housing agreement with Seaview Lutheran Plaza, Inc. for disbursement of up to $135,000 in affordable housing in lieu funds so that Seaview Lutheran could replace its deteriorated water system. As part of the agreement, Seaview Lutheran paid $150,000 from their reserves towards the cost of the improvements and the City paid an additional $128,951 to complete the project. In February 2010, Seaview Lutheran Plaza received notice from the City Utilities Department that, due to the improvements made to the property, Seaview would need to remove their single check valve and install an approved double check detector assembly as soon as possible. The cost estimate for this installation is $12,320, including a 10% contingency. Seaview Lutheran Plaza has appealed to staff regarding assistance with the cost of the required backflow device, as it was not an anticipated cost of the project. Because the requirement was triggered by the recent improvements to the property, staff views the installation of the device as an extension of the original project. A balance of $6,049 remains in the existing agreement with Seaview Lutheran Plaza. Approval of the proposed amendment would grant an additional amount of $6,300 in affordable in -lieu housing funds over and above the original amount of $135,000. Justification for Use of In -Lieu Funds The affordable housing in -lieu fund is a local housing resource that can be used for land write - downs, construction, rehabilitation, and acquisition of properties. Goal 4 of the City of Newport Beach Housing Element relates to the preservation and increased affordability of the City's housing stock for very low -, low -, and moderate - income households. Seaview Lutheran Plaza is one of few affordable housing developments in the City with a significant number of very low- income rental units, and the only affordable housing development serving extremely low- income households. Furthermore, Housing Element Policy 4.1 encourages the extension of affordability contracts for the developments listed in Table H12. ( Seaview Lutheran Plaza is listed in Table H12.) Program 4.1.2 states that the City will consult with the property owners regarding the utilization of CDBG funds and in -lieu housing funds to maintain affordable housing opportunities in those developments listed in Table H12. Program 4.1.4. also encourages the pursuit of local programs, including in -lieu funds, for the preservation of existing low- income housing. In accordance with the September 22, 2009 agreement, Seaview Lutheran extended the affordability of its units an additional eighteen (18) years beyond the date that its Section 202 mortgage expires with HUD, or until March 26, 2039. Staff believes that the proposed amendment is consistent with and serves to implement the Housing Element, and assists in the preservation of Seaview's affordable units. Amendment No. 1 to Seaview Lutheran Plaza Affordability Agreement October 12, 2010 Page 3 Environmental Review Staff recommends the City Council find this action is not subject to the California Environmental Quality Act ( "CEQA ") pursuant to Sections 15060(c)(2) (the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment) and 15060(c)(3) (the activity is not a project as defined in Section 15378) of the CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has no potential for resulting in physical change to the environment, directly or indirectly. Furthermore, the installation of a backflow prevention device is exempt from environmental review under Section 15301(a) of the CEQA Guidelines, which exempts repair and maintenance of existing facilities involving no negligible expansion of use, including plumbing. Public Notice No notice other than posting of the agenda is required for this action. Fundino Availability The City's affordable housing in -lieu fund (010 -3619) has a balance of $1,017,773.25. Staff is not aware of any other pending requests for these funds at this time. If Council were to approve the attached amendment as proposed in Exhibit A, the remaining balance of the in -lieu fund would be $1,011,473.25. Prepared by: Kathlyn Bowden AICP Economic Development Coordinator Attachments: Submitted by: mes W. C mpbell Acting Planning Director Draft Agreement (Exhibit A) Original Recorded Agreement September 22, 2009 Staff Report Budget Amendment Exhibit A Draft Agreement 4 "w WHEN RECORDED, RETURN TO: City of Newport Beach 3000 Newport Beach Blvd. P.O. Box 1768 Newport Beach, California 92658 -8915 Attn: City Clerk (No Recording Fees Pursuant to Government Code §§ 6103 and 27383) (SPACE ABOVE THIS LINE FOR RECORDER'S USE). APN: 458 - 321 -04 FIRST AMENDMENT TO THE AFFORDABLE HOUSING AGREEMENT BETWEEN THE CITY OF NEWPORT BEACH AND SEAVIEW LUTHERAN PLAZA, INC., REGARDING THE PROPERTY LOCATED AT 2800 PACIFIC VIEW DRIVE, NEWPORT BEACH This first amendment to the AFFORDABLE HOUSING AGREEMENT ( "Amendment ") is entered into this day of October 2010, by and between the City of Newport Beach, a California municipal corporation and Charter City, ( "City ") and Seaview Lutheran Plaza, Inc., a California nonprofit corporation ( "Owner "), and is made on the basis of the following facts, intentions and understandings: RECITALS A. Owner is the owner of the fee interest of that certain senior citizen residential project of 100 affordable dwelling units commonly known as Seaview Lutheran Plaza located at 2800 Pacific View Drive in the City of Newport Beach, County of Orange, State of California, as more particularly described in the legal description attached hereto as Exhibit "A" ( "Property "). B. City and Owner entered into an Affordable Housing Agreement on September 22, 2009 ( "Agreement "). C. Pursuant to the Agreement, the City has paid One Hundred Twenty -Eight Thousand Nine Hundred Fifty -One Dollars ($128,951) to date for work related to the replacement of the Property's water distribution system ( "Improvements "). D. As a result of the Improvements made to the Property, the City, in accordance with Title 17 of the California Administrative Code, has required the installation of an approved backflow prevention device to prevent backflow into the public water supply. City of Newport Beach 1 Affordable Housing Agreement Amendment No. 9 E. The double check detector assembly necessary to replace the Property's unapproved single check valve is estimated to cost Twelve Thousand Three Hundred Twenty Dollars ($12,320), including a ten percent (10 %) contingency. F. The remaining balance of funds remaining in the Agreement is Six Thousand Forty -Nine Dollars ($6,049). G. The parties desire to amend the Agreement to provide adequate funds to cover the unanticipated cost related to the installation of an approved backflow prevention device and to correct a scribner's error included in Exhibit "A" related to the Property's APN. NOW, THEREFORE, it is mutually agreed by and between the undersigned parties as follows: 1. AGREEMENT FUNDS Section 2, Agreement Funds, is amended to provide Owner funds for all work performed in accordance with this Agreement in a not to exceed dollar amount of One Hundred Forty -One Thousand Three Hundred Dollars ($141,300). The amended sum is reflective of the additional Six - Thousand Three Hundred Dollars ($6,300) necessary to cover unanticipated expenses associated with the City's requirement to install an approved backflow prevention device. 2. REPLACEMENT OF EXHIBIT "A" Exhibit "A" to the Agreement is deleted in its entirety and replaced with the Exhibit "A" attached to this Amendment. 3. NO AMENDMENTS TO REMAINDER OF AGREEMENT All other provisions of the Agreement shall remain in force and effect in their original form. IN WITNESS WHEREOF, the parties have caused this Amendment to be executed on the day and year first written above. CITY OF NEWPORT BEACH, SEAVIEW LUTHERAN PLAZA, INC., a municipal corporation a California nonprofit corporation By: Name: Keith Curry Title: Mayor Bv: Name: Charles P. Gross Title: Board President City of Newport Beach 2 Affordable Housing Agreement Amendment No. 1 21 APPROVED AS TO FORM: OFFICE OF THE CITY ATTORNEY By',.1V Name: David R. Hunt' Title: City Attorney ATTEST: By: Name: Leilani I. Brown Title: City Clerk By: Name: Joan E. Lambert Title: Board Treasurer City of Newport Beach 3 Affordable Housing Agreement Amendment No. 1 I Exhibit "A" Property's Legal Description Parcel 1, in the City of Newport Beach, County of Orange, State of California, as shown on a Map filed in Book 149, Pages 25 and 26 of Parcel Maps, in the Office of the County Recorder of Orange County, California on August 25, 1980. Copy of Parcel Map 80 -712 Attached Aka: Assessor's Parcel No. 458 - 321 -04 City of Newport Beach 4 Affordable Housing Agreement Amendment No. 1 I AfhYE ?(Yµ dJVffli 64GY M peMY() L _ px. �Of A4I l:;t Y xYUSi. 'Y/u. tlff4N LE. MW41 St �OV. • R'ff'f lx ♦uyfy Sxlp S( /((. AIP50x #lr 'µF0 xx9k1 M1S fP K /1e CCV ME6T Ovav VIC9. kK t'+RUT xxx9 4Y/.5W66 Wvµ iE[ne 4v. Sy}M1ECTiVrtie, Cf. (.T EEK iNEk45 CMM Q 5 HR,V CMf x4Mp¢/..I fyx t "C Y1L ([ �Dp Ylhlx INSIFVVC Mp pPV O ('G. (4 YE o {'DNI\e(ti Qll µGCxf�xpµ(pfpNl^` 4 IKKf � � �IAY fF' SRI P.tGVSEf.eK 5/K. Svix cov'a5Ait9x 'ss ca:;f}sfw ernac:.G,x. INax }J1�x455 x!. xAxePj¢rrD K ' ^II.? >Wra.t $X M}�fllR $AFD SEAL( vpf( Q HMIpSC.Of THIS N! l5 to 141Z P xn 1 -111 lllH 11 F6 >S:IRt f4'TB aury'Ey. I ±G:PJ A t0 qr li 1za 5 fla -° PARCEL MAP NO 80-712 SUBf.I'.IQY0.'S :4u. Ir...rtli s !t f onr ,:Q-1 L (t0 leiO n...f.. K 3� ♦� N9oI V10'(: cus[[IC. -: ;.tlKa.n ..vno. w ..agr.4:En, ..agApiprtJ+.a+ Gu !s" ..r'ify.. yrul fJ �=.•/Ai.'./ em �. v.... rl ... vY ipllpni ei!r. I;d�x _ +i 5Yx41 �2'R[C ,r Im M1KM p 9tamcfa r - xw,nwx_ REt8.i4 UVY(F EvµiL(IICn', tG +.aP.tu .ILL- fl Mi MSIEf. A PP.164a:1fn ['lVxfl SA,!£tW.'S CER'1[I CA +f !NIl aW :,ptHgfry x111 In %RYS #FE ,N �Kl.IND 1 M SA[f 5!<E> f Y .M IS 1[�- v.(.v.I fa SGKCIaFf.nii YE 1 ,p t IyjpEx AM fUMPUa. t p0 15�t11 17 11- 1 x `IftlpxlA Cpp�Cx /i1DY. a11f (x15 IIF6x1 y iLl ..n !v5f5 3. rG N5. 4 Ul /�3[�v Nwg56in Ra ea.� v.^G Y.. o:4nfaYembm AfhYE ?(Yµ dJVffli 64GY M peMY() L _ px. �Of A4I l:;t Y xYUSi. 'Y/u. tlff4N LE. MW41 St �OV. • R'ff'f lx ♦uyfy Sxlp S( /((. AIP50x #lr 'µF0 xx9k1 M1S fP K /1e CCV ME6T Ovav VIC9. kK t'+RUT xxx9 4Y/.5W66 Wvµ iE[ne 4v. Sy}M1ECTiVrtie, Cf. (.T EEK iNEk45 CMM Q 5 HR,V CMf x4Mp¢/..I fyx t "C Y1L ([ �Dp Ylhlx INSIFVVC Mp pPV O ('G. (4 YE o {'DNI\e(ti Qll µGCxf�xpµ(pfpNl^` 4 IKKf � � �IAY fF' SRI P.tGVSEf.eK 5/K. Svix cov'a5Ait9x 'ss ca:;f}sfw ernac:.G,x. INax }J1�x455 x!. xAxePj¢rrD K ' ^II.? >Wra.t $X M}�fllR $AFD SEAL( vpf( Q HMIpSC.Of THIS N! l5 to 141Z P xn 1 -111 lllH 11 F6 >S:IRt f4'TB aury'Ey. I ±G:PJ A t0 qr li 1za 5 ire PARCEL MAP NO. 80-712 A .(A_9,X4W YqTE�5 I A� PARCEL 2 GS 3 N T I Ul T (A 12b it) 34 -ARC61 ;e< ZZI 6 za, A .(A_9,X4W YqTE�5 I A� PARCEL 2 GS 3 N T I Ul T (A 12b it) Attachment No. CC 1 Original Recorded Agreement RECORDED AT THE REQUEST OF AND WHEN RECORDED, RETURN TO City of Newport Beach 3000 Newport Beach Blvd. P.O. Box 1768 Newport Beach, California 92658 -8915 Attu: City Clerk R �aonaecl in Ofl'iciat Records, Orange County +'�%'� y C; ck corder ' �l lli ll� l� !� (,il,liilll'lll!IiI,h!iIliNO FEE ?0i�OQ 6�,19�5 08:36am 11/05/09 'I''rAPUft,z ", " 0.00 0 00 000 0.00 0,00 0.00 0.00 0.00 (Recording Fees Exempt Pursuant to Govemment Code §§ 6103 and 27383) APN: 458- 321 -04 (SPACE ABOVE THIS LINE FOR RECORDER'S USE) AFFORDABLE HOUSING AGREEMENT -1`'�Ci BETWEEN THE CITY OF NEWPORT BEACH AND RME,) SEAVIEW LUTHERAN PLAZA, INC., REGARDING THE PROPERTY LOCATED AT 2800 PACIFIC VIEW DRIVE, CORONA DEL MAR This AFFORDABLE HOUSING AGREEMENT ( "Agreement ") is entered into as of this day of 22 , September 2009 by and between the City of Newport Beach, a California municipal corporation and Charter City, ( "City") and Seaview Lutheran Plaza, Inc., a California nonprofit corporation ( "Owner "), and is made on the basis of the following facts, intentions and understandings: RECITALS WHEREAS, providing and maintaining low and moderate income housing options in the City of Newport Beach furthers the City's affordable housing goals and objectives as expressed in the Housing Element; and WHEREAS, City is a municipal corporation which has received funds from the payment of affordable housing in -lieu fees by previous developers of market rate housing who did not provide affordable housing units in compliance with City's Housing Element; and WHEREAS, Owner is the owner of the fee interest of that certain senior citizen residential project of 100 affordable dwelling units commonly known as Seaview Lutheran Plaza located at 2800 Pacific View Drive in the City of Newport Beach, County of Orange, State of California, as more particularly described in the legal description attached hereto as Exhibit A (the "Property "); and WHEREAS, Owner currently provides extremely -low and very low- income senior housing under the Section 8 Program and intends to continue to use the Property to provide extremely -low and very low-income senior housing; and WHEREAS, the Property experienced a failure in the water distribution system during the past year, which caused the temporary relocation of elderly tenants and emergency repairs by Owner; and City of Newport Beach Affordable Housing Agreement 1�4 /G j1� WHEREAS, Owner wishes to replace the entire water distribution system for the purpose of avoiding future system failures and disruptions to tenants and preserving an affordable housing resource for the future of Newport Beach; and WHEREAS, Owner has invested approximately $66,000 in a project to replace the horizontal water distribution system, which is complete. Further, Owner has agreed that it shall use at least $84,000 released by the United States Department of Housing and Urban Development ( "HUD ") from Owner's project reserves or from Owner's operating funds to replace fifteen (15) of the thirty -five (35) vertical water distribution lines, exhausting all funds available to Owner. Owner has applied to the City for funds from the City's affordable housing reserve to complete replacement of the water distribution system (the "Improvements'); and WHEREAS, City has relied on the information submitted by Owner therein, including the Owner's financial resources, ownership and commitment to maintaining the affordable housing use of the Property, to determine Owner's eligibility to receive assistance; and WHEREAS, funding from City is essential for preserving the supply of affordable rental units in the City of Newport Beach; and WHEREAS, City desires to expend affordable housing in -lieu funds to complete the Improvements and preserve the affordable housing units. NOW, THEREFORE, the Recitals set forth above are a substantive part of this Agreement and for good and valuable consideration the parties agree as follows: Section 1. The term of this Agreement shall commence on the above written date, and shall terminate on the March 26, 2039, unless terminated earlier as set forth herein. Section 2. Agreement Funds. City does hereby agree to disburse to the Owner an amount not to exceed One Hundred Thirty -five Thousand Dollars ($135,000) (the "Agreement Funds') solely to pay for the Improvements in accordance with and subject to the terms and conditions of this Agreement. The Agreement Funds shall only be disbursed by the City to Owner for the properly documented costs of constructing the improvements as set forth in these Recitals that exceed the Owner's expenditure of at least One Hundred and Fifty Thousand Dollars ($150,000), or such other amount agreed to by City and Owner. Section 3. Conditions Precedent to Fund Disbursement. (a) The Agreement Funds shall be disbursed in accordance with the following procedures: 1. Prior to disbursement of any Agreement Funds, Owner shall execute and deliver to the City this Agreement and a copy of an executed contract by and between Owner and each contractor providing for the completion of the Improvements, which agreements shall provide the total costs of completing the Improvements; and 2. Prior to disbursement of any Agreement Funds, Owner shall obtain a Plumbing Permit for the Improvements by City's Building Department; and 3. Prior to disbursement of any Agreement Funds, Owner shall provide the City certificates of insurance by each contractor with original endorsements effecting coverage City of Newport Beach Affordable Housing Agreement 1,3 required by this Agreement and as set forth in detail in Exhibit B, which is attached hereto and incorporated herein by this reference; and 4. Prior to disbursement of any Agreement Funds, Owner shall provide invoices and other documents showing that Owner has expended the $150,000 to be used by Owner for construction of the Improvements. 5. Upon verification by the City that Owner has complied with Section 3 Subsections (a) (1) through (4), the City shall disburse Owner for work in excess of $150,000, within in ten (10) business days upon: i. The submittal of invoices, documents and other information requested by the City for work associated with the Improvements for which Owner is seeking disbursement; and ii. Written verification by Owner that the work has been satisfactorily performed; and iii. The submittal of conditional lien releases from the contractor, subcontractor and suppliers, in a form approved by the City, releasing Owner of liability upon making of progress or final payments. (b) The parties hereto agree that the City shall not be obligated to reimburse Owner and Owner shall be required to reimburse the City within ten (10) business days, the entire amount of any Agreement Funds paid Owner under this Agreement if any of the following conditions occur: 1. The Owner does not obtain a final inspection for the Improvements by the City Building Department; or 2. Owner fails to submit a lien release in such form as approved by City; or 3. Owner defaults in the performance of Owner's obligations under this Agreement; or 4. If any of the Agreement Funds disbursed by City are not used for the construction of the Improvements. Section 4. Owner Responsibility. The parties hereto acknowledge and agree as follows: (a) The City and Owner are not entering into a joint venture. Nothing in this Agreement shall be deemed to constitute approval for Owner or any of Owner's employees or agents, to be the agents or employees of City. (b) Owner shall contract for and be responsible for the Improvements. City and all officers, employees and representatives thereof shall not be responsible in any manner: for any loss or damages that may happen as a result of this Agreement; the construction of the Improvements or any part thereof; for any loss or damage to any of the materials or other things used or employed in performing the construction of the Improvements, for injury to or death of City of Newport Beach 3 Affordable Housing Agreement iLf any person either workers or the public; or for damage to property from any cause arising from the construction of the Improvements by the Owner, its contractor or subcontractor, or its workers, or anyone employed by Owner. The manner and means of conducting the work on the Improvements are under the control of Owner, except to the extent they are limited by statute, rule or regulation and the express terms of this Agreement. (c) City shall have no responsibility or liability to Owner or any third party regarding any action or failure of any contractor, subcontractor, supplier or third party and that City in no way guarantees any of the work to be done or the materials to be supplied. City's sole obligation with respect to the Improvements shall be for disbursement of the Agreement Funds in accordance with the terms of this Agreement. Section 5. Owner's Covenants to Maintain as Affordable Senior Housing. Owner shall maintain all units at the Property, except for the Building Relief staff unit, defined below, ( "Affordable Units ") as affordable senior housing according to the following conditions: (a) All one hundred (100) of the Affordable Units shall be one - bedroom units. One (1) of these units may be utilized as an on -site "Building Relief' staff unit. (b) With the exception of one (1) "Building Relief' staff unit, all Affordable Units shall be rented to persons or families earning no more than fifty percent (50 %) of the County annualized median income ( "Very Low - Income "), The wait -list for Affordable Units shall give alternating preference to persons or families earning no more than thirty percent (30 %) of the Orange County ( "County "), California annualized median family income ( "Extremely -Low Income ") in such a way as to ensure that fifty percent (50 %) of the annual new rentals are rented to Extremely - Low Income persons or families. (c) The annual gross rent shall be set by Owner's Section 8 contract with HUD. Owner's Section 8 contract for 2009 sets gross rent for all one hundred (100) of the one- bedroom units at $971 per month. Owner's HUD agreement limits the tenant's share of the total monthly rent to no more than thirty percent (30 %) of the tenant's adjusted monthly net income. In the event that no Section 8 Contract is entered into with HUD for the Property or Affordable Units, all Affordable Units shall be rented for an Affordable Rent. As used herein, "Affordable Rent" means rent, a monthly amount which, together with utility allowance, does not exceed: one twelfth (1 /12th) of thirty percent (30 %) of the fifty percent (50 %) of Median Income, adjusted by household size based on the number of bedrooms in the unit. (d) Owner will limit public occupancy of the Project to elderly and /or mobility - impaired handicapped persons and families as defined in Section 202 of the Housing Act of 1959 and applicable HUD regulations. The criteria governing eligibility of tenants for admission to Section 8 units and the conditions of continued occupancy shall be in accordance with the Housing Assistance Payments contract on the Property and the HUD approved Resident Selection Plan (RSP), (e) Each Affordable Unit shall meet the affordability and eligibility criteria and requirements of Section 4(b) of this Agreement for eighteen (18) years from the City of Newport Beach Affordable Housing Agreement 15 date the Section 202 Loan Agreement expires on, which occurs on March 26, 2021. (f) Owner will be responsible for ensuring that persons or families who rent the Affordable Units properly qualify to occupy the units under the terms of this Agreement. Selection of the tenants of the Affordable Units shall be made on the basis of criteria that are neutral as to race, religion, sex, creed, ethnic origin, marital status, or any other constitutionally impermissible standard. (g) Owner shall provide to City such information as is reasonably requested by City or its agents in connection with City's annual monitoring of the Affordable Units within ten (10) calendar days of the request and the information shall be verified in writing by Owner under penalty of perjury. Such information shall include, at a minimum, the following for each Affordable Unit: i. Rental rate; ii. Name of current tenant; iii. Initial occupancy date of current tenant; iv. Household size of current tenant; v. Household income of current tenant, and information upon which Owner relied to qualify current tenant. Once a tenant is qualified for occupancy of an Affordable Unit, that tenant shall be deemed to have qualified for occupancy. Thereafter, each tenant must be re- certified annually as to his or her income for the purposes of determining their 30% monthly rent share; and vi. Interest and /or waiting list. (h) Each Affordable Unit shall meet Section 8 Housing Quality Standards, local and state housing and building codes, and be free and clear of lead -based paint hazards. Owner shall maintain, at Owner's sole cost and expense, the Affordable Units and Property in good condition, in good repair, and in decent, safe, sanitary and habitable living conditions during the term of this Agreement. Section 6. Covenants Recorded Against the Property. This Agreement shall be recorded in the Official Records of Orange County, California. All of the covenants and restrictions set forth in this Agreement shall be equitable servitudes and covenants running with the land pursuant to applicable law, including, without limitation, California Civil Code section 1468. Each covenant to do or refrain from doing some act on or affecting the Project is for the benefit of the Property. Each covenant shall run with the Project, and any portion thereof, as applicable, and shall benefit or be binding upon each successive owner during its ownership of the Property. The covenants herein contained shall, subject to the provisions as to assignment, apply to and bind the heirs, successors, executors, administrators and assigns of all the parties hereto; and all of the parties hereto shall be jointly and severally liable hereunder. Upon expiration this Agreement or after termination for cause and the repayment of the Agreement Funds and interest, Owner and the City shall sign documents in recordable form (provided by the owner giving notice and subject to approval by the City Attorney) as may be necessary to remove the effect of this Agreement from the Property in the Official Records of Orange County. Section 7. Indemnity; Hold Harmless. To the fullest extent permitted by law, Owner shall indemnify, defend and hold harmless City, its City Council, boards and commissions, officers, agents, volunteers, and employees (collectively, the "Indemnified Parties ") from and against any City of Newport Beach Affordable Housing Agreement 1� and all claims (including, without limitation, claims for bodily injury, death or damage to property), demands, obligations, damages, actions, causes of action, suits, losses, judgments, fines, penalties, liabilities, costs and expenses (including, without limitation, attorney's fees, disbursements and court costs) of every kind and nature whatsoever (individually, a Claim; collectively, "Claims "), which may arise from or in any manner relate (directly or indirectly) to this Agreement, any breach of the terms and conditions of this Agreement, any work performed or services provided under this Agreement including, without limitation, defects in workmanship or materials or Owner's presence or activities related to the Improvements or pursuant to this Agreement (including, but not limited to, the negligent and /or willful acts, errors and /or omissions of Owner, its principals, officers, agents, employees, vendors, suppliers, contractors, consultants, subcontractors, suppliers anyone employed directly or indirectly by any of them or for whose acts they may be liable or any or all of them). Notwithstanding the foregoing; nothing herein shall be construed to require Owner to indemnify the Indemnified Parties from any Claim arising from the sole negligence or willful misconduct of the Indemnified Parties. Nothing in this indemnity shall be construed as authorizing any award of attorney's fees in any action on or to enforce the terms of this Agreement. This indemnity shall apply to all claims and liability regardless of whether any insurance policies are applicable. The policy limits do not act as a limitation upon the amount of indemnification to be provided by the Owner. Section 8. Non - Discrimination. (a) Owner shall be responsible for ensuring that persons or families who rent the Affordable Units properly qualify to occupy the units under the terms of this Agreement. Selection of the tenants of the Affordable Units shall be made on the basis of criteria that are neutral as to race, religion, sex, creed, ethnic origin, marital status, or any other constitutionally impermissible standard. (b) Owner represents that it is an equal opportunity employer and it shall not discriminate against any contractor, subcontractor, supplier, employee or applicant for employment because of race, religion, sex, creed, ethnic origin, marital status, or any other constitutionally impermissible standard. Section 9. Compliance. Owner agrees to strictly comply with all requirements of this Agreement. Section 10. Default. (a) Termination for Cause. In the event the City determines that there has been any fraud or deceit by Owner including, but not limited to, any material misrepresentation by Owner, the City may, in its sole discretion, immediately terminate this Agreement. In the event that either party fails or refuses to perform any of the provisions of this Agreement at the time and in the manner required, that party shall be deemed in default in the performance of this Agreement. If such default is not cured within a period of five (5) calendar days, or if more than five (5) calendar days are reasonably required to cure the default and the defaulting party fails to give adequate assurance of due performance within five (5) calendar days after receipt of written notice of default, specifying the nature of such default and the steps necessary to cure such default, and thereafter City of Newport Beach Affordable Housing Agreement E� diligently take steps to cure the default, the non - defaulting party may terminate the Agreement forthwith by giving to the defaulting party written notice thereof. (b) Repayment. In the event of termination for cause as provided in Subsection (a) of Section 9 of this Agreement, Owner shall within ten (10 calendar days repay the entire amount of the Agreement Funds to the City plus interest which shall bear a rate of ten percent (10 %) from the date the Agreement Funds were distributed to Owner. Agreement (c) Acceptance of Service of Process. In the event that any legal action is commenced by the Owner against the City, service of process on the City shall be made by personal service upon the City Clerk, or in such other manner as may be provided by law. In the event that any legal action is commenced by City against Owner, service of process on Owner shall be made in such manner as may be provided by law, whether made within or outside the State of California. Section 11. General Provisions. (a) Notices, All notices, demands, requests or approvals to be given under the terms of this Agreement shall be given in writing, and conclusively shall be deemed served when delivered personally, or on the third business day after the deposit thereof in the United States mail, postage prepaid, first -class mail, addressed as hereinafter provided. All notices, demands, requests or approvals from Owner to City shall be addressed to City at: To City: City of Newport Beach City Manager 3300 Newport Boulevard P.O. Box 1768 Newport Beach, CA 92658 -1768 All notices, demands, requests or approvals from City to Owner shall be addressed to Owner at: To Owner: Attn: Board of Directors Seaview Lutheran Plaza, Inc. 2800 Pacific View Drive Corona del Mar, CA 92625 -1138 With a copy to: To Agent: Agent for Service of Process CARING Housing Ministries 2320 South Fremont Avenue Alhambra, CA 91803 Either party may change its address for notice by giving written notice thereof to the other party. City of Newport Beach Affordable Housing Agreement N (b) Amendment of Agreement. No modification, rescission, waiver, release or amendment of any provision of this Agreement shall be made except by a written agreement executed by Owner and City. (c) Owner Assignment Prohibited. In no event shall Owner assign or transfer any portion of its rights or obligations under this Agreement without the prior express written consent of City, which consent may be given or withheld in City's sole discretion. The sale, assignment, transfer or other disposition of any of the issued and outstanding capital stock of Owner which results in changing the control of Owner shall be considered a prohibited assignment. Control means fifty percent (50 %) or more of the voting power or twenty -five percent (25 %) or more of the assets of the corporation. (d) Owner to File Notices. Owner shall file or record any notices of completion, cessation of labor, or any other notice that City deems necessary or desirable to protect its interest hereunder. (e) Actions. City shall have the right to commence, appear in, or defend any action or proceeding purporting to affect the rights, duties, or liabilities of the parties hereunder, or the disbursement of any proceeds of the Agreement Funds. (f) Applicable Law. The laws of the State of California shall govern the interpretation and enforcement of this Agreement and any action brought relating to this Agreement shall be adjudicated in a court of competent jurisdiction in the County of Orange. (g) Construction of Words. Except where the context otherwise requires, words imparting the singular number shall include the plural number and vice versa, words imparting persons shall include firms, associations, partnerships and corporations, and words of either gender shall include the other gender. (h) Partial Invalidity. If any provisions of this Agreement shall be declared invalid, illegal, or unenforceable, the validity, legality, and enforceability of the remaining provisions hereof shall continue in full force and effect. (i) Captions and Headings. Captions and headings in this Agreement are for convenience of reference only, and are not to be considered in construing the Agreement. G) Joint and Several Liability. If Owner consists of more than one person, the obligations of this Agreement shall be the joint and several obligations of all of them. (k) Entire Agreement. This Agreement constitutes the entire understanding and agreement of the parties. This Agreement integrates all of the terms and conditions mentioned herein or incidental thereto, and supersedes all prior negotiations, discussions and previous agreements between City and Owner concerning all or any part of the subject matter of this Agreement. No verbal agreement or implied covenant shall be held to vary the provisions herein. (t) Interpretation. The terms of this Agreement shall be construed in accordance with the meaning of the language used and shall not be construed for or against either party by reason of the authorship of the Agreement or any other rule of construction which might otherwise apply. City of Newport Beach Affordable Housing Agreement 19 (m) Waiver. A waiver by either party of any breach, of any term, covenant or condition contained herein shall not be deemed to be a waiver of any subsequent breach of the same or any other term, covenant or condition contained herein, whether of the same or a different character. (n) Compliance with all Laws. Owner shall at its own cost and expense comply with all statutes, ordinances, regulations and requirements of all governmental entities, including federal, state, county or municipal, whether now in force or hereinafter enacted. In addition, all work prepared by Owner, its contractors and subcontractors shall conform to applicable City, county, state and federal laws, rules, regulations and permit requirements. The parties expressly agree that it shall be Owner's obligation to determine whether the use of the Agreement Funds requires the payment of prevailing wages for the construction of the Improvements and to comply with any applicable laws, rules and regulations related to the payment of prevailing wages. (o) Conflicts of Interest. The Owner or its employees may be subject to the provisions of the California Political Reform Act of 1974 (the "Act "), which (1) requires such persons to disclose any financial interest that may foreseeably be materially affected by this Agreement, and (2) prohibits such persons from making, or participating in making, decisions that will foreseeably financially affect such interest. If subject to the Act, Owner shall conform to all requirements of the Act. Failure to do so constitutes a material breach and is grounds for immediate termination of this Agreement by City. Owner shall indemnify and hold harmless City for any and all claims for damages resulting from Owner's violation of this Subsection. (p) Records. Owner shall keep records and invoices in connection with the Improvement work. Owner shall maintain complete and accurate records with respect to the costs incurred in the Improvement work and any expenditures and disbursements of the Agreement Funds, for a minimum period of four (4) years, or for any longer period required by law, from the date of final payment of any Agreement Funds under this Agreement. All such records and invoices shall be clearly identifiable. Owner shall allow a representative of City to examine, audit and make transcripts or copies of such records and invoices during regular business hours. Owner shall allow inspection of all work, data, documents, proceedings and activities related to the Agreement during the term of this Agreement and for a period of three (3) years from the termination of this Agreement. (q) Confidentiality. All documents, including drafts, notes and communications that result from this Agreement, shall be kept confidential unless City authorizes in writing the release of information. (r) Cooperation. Owner agrees to work closely and cooperate fully with City and any other agencies that may have jurisdiction or interest in this Agreement. City agrees to cooperate with the Owner in the implementation of this Agreement. (s) Non- Liability of Officials, Employees and Agents. No official, officer, employee, agent, or representative of City shall be personally liable to Owner or its successors and assigns for any loss arising out of or connected with this Agreement and no judgment or execution thereon entered in any action hereon shall be personally enforced against any such official, officer or employee. City of Newport Beach 9 Affordable Housing Agreement (t) No Third Party Beneficiaries. The only parties to this Agreement are City and Owner. This Agreement does not involve any third party beneficiaries, and it is not intended and shall not be construed to benefit or be enforceable by any other person or entity. IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year written below. CITY OF NEWPORT B A H, a municipal' corporation Name: Edward O. SericH Title: Mayor APPROVED AS TO FORM: OFFICE OF TN -, CITY ATTORNEY' By: Name: David R. Hunt Title: City Attorney ATTEST: 1 By: Name: Leilani I. Brown Title City Clerk SEAVIEW LUTHERAN PLAZA, INC., a California nonprofit corporation E&JC41 ce City of Newport Beach 10 Affordable Housing Agreement CALIFORNIA ALL - PURPOSE ACKNOWLEDGMENT State of California 1 1 � County of l.7`- On^�ir ST before me, %�,� s_�l �f?�_� iI: r�/ �,i I,� f / 111 c, ff, -, eats ' re Insert N1me 31tl Prle r the Olficer personally appeared" } /Zt ] ,I(/ ,i J L_A /i l i l fJame(s!o�igner(s) 1 Signer(s) Other Than Named Above: Capacity(ies) Claimed by Signer(s) Signer's Name Individual Corporate Officer—Title(s): _ Partner— Limited General Attorney in Fact Trustee Guardian or Conservator I::. Other: Signer Is Representing: RIGHTTHUMBPRINi OF SIGNER I Signer's Name Individual Corporate Officer — Title(s):.__. Partner Limited General Attorney in Fact -] Trustee Guardian or Conservator Other: Signer Is Representing: RiGHTTHUMBPRINr, OF SIGNER .�L?': Le`L`�xlcL e�2r'z.?�= 'L�:c' ✓'6�� = .��'�'"U�Grzr- "G��.(Q`� czrecrrrkX= ����z�L,�i'zz,` E2007 Nal•niNOlary A,, cClg,- 935o oe Solo AM, P.O. Box N62.Omt 111h. CAA 'I'll 1 02-4 .NaliortalNo1aryor5 Item45907 Reortler Call Toll- Frcel- buu�8>6r692] who proved to me on the basis of satisfactory evidence to be the personrSs� whose narri -isA e'subscribed to the within instrument and acknowledged to me that Qshe /t��iy executed the same in Y)s /her /tli'lr aujhorized L WASHINGTON capacity�),.and that by IGflher /th�i _signatu �1,on the Commission te40150 instrument the pers n(s),.'or the entity upon behalf of -: Notary Public • California zz which the personKsicted, executed the instrument. zz Orange: County M Comm, Expires Mar 12.2013+ 1 certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. /J WITNF�S i afarrd9fficial seal. , Place Nolary Seal Ateova Sig'nature:r Si � Slgnalure of Notary Public OPTIONA- Though the information below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent removal and reattachment of this form to another document. Description of Attached Document Title or Type of Document: Document Dater Number of Pages: Signer(s) Other Than Named Above: Capacity(ies) Claimed by Signer(s) Signer's Name Individual Corporate Officer—Title(s): _ Partner— Limited General Attorney in Fact Trustee Guardian or Conservator I::. Other: Signer Is Representing: RIGHTTHUMBPRINi OF SIGNER I Signer's Name Individual Corporate Officer — Title(s):.__. Partner Limited General Attorney in Fact -] Trustee Guardian or Conservator Other: Signer Is Representing: RiGHTTHUMBPRINr, OF SIGNER .�L?': Le`L`�xlcL e�2r'z.?�= 'L�:c' ✓'6�� = .��'�'"U�Grzr- "G��.(Q`� czrecrrrkX= ����z�L,�i'zz,` E2007 Nal•niNOlary A,, cClg,- 935o oe Solo AM, P.O. Box N62.Omt 111h. CAA 'I'll 1 02-4 .NaliortalNo1aryor5 Item45907 Reortler Call Toll- Frcel- buu�8>6r692] CALIFORNIA ALL - PURPOSE ACKNOWLEDGMENT .:'. 4. Y' S��CrrC •vcrl•r;'x`cr•v^t.:...;_45'" < rk'i. -�;r n,(�:ti.4YF_a <.).. G �,'..r, ,y .,, .:.: ': .i.':. <fn <<.uC<:: c..t..tir State of California l County of L' CIF , J1i On'. ^!Z %�� ; ! L {�efore me L rf, ? g i l 'III ! /!U hY , //i 4` ,/ D-ele /t -HUre Insert Name and T,Ile of the Olfcar personally appeared Names) cl N gner(sl J who proved to me on the basis of satisfactory evidence to be the person('b`�,whose namgrs) isl�r/q subscribed to the +� within instrument and acknowledged to me that L. WASHINGTON [ he /s ty executed the same in his/A�Fltyr authorized Commission 41 840150 [ capacity s), and that by his /¢her /#tE�ir signatures on the i , =i Notary Pphlic •California i instrument the persoon((,S , or the entity upon behalf of Z Orange Coonty which the person(M acted, executed the instrument. My Comm. Expires Mar 12, 2013 I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my and an fficial seal. Place Notary SoalAbove Signature i l Signature of Notary Prattle OPTIONAL Though the information below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent removal and reattachment of this form to another document. Description of Attached Document Title or Type of Document: Document Date: Signer(s) Other Than Named Above: Capacity(ies) Claimed by Signer(s) Number of Pages: Signer's Name: Signer's Name: .._: Individual Individual Corporate Officer —Title(s): Corporate Officer — Title(s): -' Partner— .1 Limited i General _ Partner —:_: Limited ._, General J Attorney in Fact Attorney in Fact • - Trustee Top Of thumb here _ Trustee Top Of'Immb here -: Guardian or Conservator Guardian or Conservator Other: _ Other: Signer Is Representing: Signer is Representing; ! L� - Lei. - ".l6m Cd2U0]National NOlyry ASa0.^Ia000.93500e Soto AVa.,PD Be P.g2•Che4tiearUa CA 9l 913132402 .5mrva.Na9ocalNC : aryag Ilem%49] Reorder. Call7of4Frec fiB90e]9 -GB22 X Exhibit "A" Legal Description Parcel 1, in the City of Newport Beach, County of Orange, State of California, as shown on a Map filed in Book 149, Pages 25 and 26 of Parcel Maps, in the Office of the County Recorder of Orange County, California on August 25, 1980. Copy of Parcel Map 80 -712 Attached Aka: Assessor's Parcel No. 458 32105 12 City of Newport Beach Affordable Housing Agreement M srv(!: 3 �IfF. is PARCEL MAP N4. 80-712 NSYPbIr151�.515 S v0 IN IRE CI Ir Uf tic III flETD,, CSUXSi O[ ORANGE. STATE OF CAL vopg,1A 30090 TIC n su SRI r It, oX of n a eep °[ sl bf Inrl x('s sp6o1 :SIM ru E nmb:os ac oaµEtfOO�10, I [A voPVA. vatf(LnnmyS uEbno oars. w rJ q 1995 Uelt lOT SURVE f�R551, 1.3. JIC9 APRIL l0. 96U SUBRI V (5EP'S LEPiIEIGatF SVNVFICT? s'GCRIiIICAIE 4[. Ix�Vxp,CSl CCCb. i[IaE IM SYp 0l vi b(1 Of 1,1[ Lµ0 EOr[x„0 p fnE P OEGnCxS .1 MC L1, C nCl ( ECr Ixli nM Af. IREPMCp IT I( bR vxE (x n bl x (cllvx .G 'f [[T[1 r' f f[qb Ryx[ N M1 10 C P�EPM ] IRON IE(D 1 B. f vl1 R [ C f Ix( Eb Moa IX 1 qlx Il�E IX Ep BDgb[P I[xE. 5 Ca p ( CA E.01' rf C [5 Y CE IPA[ tY xERAN fMMEx.11 IXC 1s [R 1 P t 1 1.1.I AIV rn„ERa FAP SVBS fA xitu t� c 1 Ix( APY Yfv b1 I1 xxl[ 111 is 11 vC nµ. G SUSOI Y]DER E avxLR if At LY1 x£gM LNygCN Er In]- ,�n,ASIf R. A [AGlpflnllbM an.�v... RECORD OWER Evµ Gf LlCµ (V(x[RV O"IRT p! rxL NSILR. A.610MLL0n TRUSTEE o IxSWµ[C A[E xcS. ixC.. A'µ"TRR'A fOPPMA510x, rovn.r[ vutta r.Eas cvfmcv aL<,yccv v[h fnH+. 4a ¢,9. I - n ma..w' o, .1 1 Ioaq tA¢E.[Nr •oa ao.o wansis "vm ee nz, 1]S T �m �i uxro5E4 ¢yr o. Ildc!¢.gr wtasCinfM G5 [ME 0f Rµ1fU1xIM 55 OWfi p pgNICE px Cx15. G^ Dnq pP PU115 r. if50. Sf III, K. R,DT.,TA�OV xD SAAgf P41C,fq O. iOq Eglo ETAS C. PLg50/N[r Pf n11E0 v: AO. "aN0 NAYGN61 6': S¢EOEa� xxOMV1:0K tp IE. IXE Co4 GFE6ATIp9aA ycC pRCf�xvT I Tic µ0 C 6DGALIOHA! EC¢E TG ¢Y. 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RM M a H 3 Al V• 5NET2p$ "" PARCEL MAP N0. 80 -712 P!= "30090 SCALE: V. so 30090 � "� +, �� +� , s scz <cs[st:ue., ./ /N T/!E C /TY OFNEWPORT HEACH,.COUNTY OF OR/JNGE STATE OF CAL /FORN /A WILL /AM d FROSTY MJE OF S: /.YYE✓ A, M<./Q.vh PARCEL 2 I..O KIglr< l C A MONUMENT NOTES I M4VU EP S Lb '.J f M'SO 'A' ES FO[WO UA.'nLJ M14+M.f /ice -�• MON ryEx fM1f JN! Y �' ✓Ct5 d ac r[rer / ,ti r vto x[e s S3' "Yi". %Q'AA •, "R k.lmf \ BA 6/5. OF BEAR/N6S r Y 12b ' •atf pt 't �7' Sal ' f 4_ I2 j • fp // u0 _ k Y1\ PARCEL I'll A. C.a + r { r i PARCEL 2 I..O KIglr< l C A MONUMENT NOTES I M4VU EP S Lb '.J f M'SO 'A' ES FO[WO UA.'nLJ M14+M.f /ice -�• MON ryEx fM1f JN! Y �' ✓Ct5 d ac r[rer / ,ti r vto x[e s S3' "Yi". %Q'AA •, "R k.lmf \ BA 6/5. OF BEAR/N6S r Y 12b i V VI ' f 4_ I2 j u0 _ k Y1\ i V VI Exhibit "B" Insurance Requirements Insurance is to be placed with insurers with a Best's rating of no less than A:VII and insurers must be a California Admitted Insurance Company, Each Contractor shall furnish Owner with original certificates of insurance and with original endorsements effecting coverage. The certificates and endorsements for each insurance policy are to be signed by a person authorized by that insurer to bind coverage on its behalf. All certificates and endorsements are to be received and approved by Owner and the City's Risk Manager before work commences. Owner shall reserve the right to require from contractor complete, certified copies of all required insurance policies, at any time, which shall be made available by Owner to the City upon request. Each contractor shall procure and maintain for the duration of the contract for the Improvements insurance against claims for injuries to persons or damages to property, which may arise from or in connection with the performance of the work by each contractor, his agents, representatives, employees or subcontractors Minimum Scope of Insurance Coverage shall be at least as broad as: (a) Insurance Services Office Commercial General Liability coverage "occurrence" form number CG 0002 (Edition 11/85) or Insurance Services Office form number GL 0002 (Edition 1/73) covering Comprehensive General Liability and Insurance Services Office form number GL 0404 covering Broad Form Comprehensive General Liability. (b) Insurance Services Office Business Auto Coverage form number CA 0002 0287 covering Automobile Liability, code 1 "any auto' and endorsement CA 0029 1288 Changes in Business Auto and Truckers Coverage forms - Insured Contract. (c) Workers' Compensation insurance as required by the Labor Code of the State of California and Employers Liability insurance. 2. Minimum Limits of Insurance Coverage limits shall be no less than: (a) General Liability: $1,000,000.00 combined single limit per occurrence for bodily injury, personal injury and property damage. If Commercial Liability Insurance or other form with a general aggregate limit is used, either the general aggregate limit shall apply separately to the Project/location or the general aggregate limit shall be twice the required occurrence limit. (b) Automobile Liability: $1,000,000.00 combined single limit per accident for bodily injury and property damage. City of Newport Beach 13 Affordable Housing Agreement (c) Workers' Compensation and Employers Liability: Workers' compensation limits as required by the Labor Code of the State of California and Employers Liability. 3. Other Insurance Provisions The policies are to contain, or be endorsed to contain, the following provisions: (a) General Liability and Automobile Liability Coverages i. Owner, City, their officers, agents, officials, employees and volunteers are to be covered as additional insureds as respects: liability arising out of activities performed by or on behalf of each contractor, including the insured's general supervision of each contractor; products and completed operations of each contractor; premises owned, occupied or used by each contractor; or automobiles owned, leased, hired or borrowed by each contractor. The coverage shall contain no special limitations on the scope of protection afforded to Owner, City, their officers, officials, employees or volunteers. ii. Each contractor's insurance coverage shall be primary insurance and /or primary source of recovery as respects Owner, City, their officers, officials, employees and volunteers. Any insurance or self- insurance maintained by Owner, City, their officers, officials, employees and volunteers shall be excess of the Contractor's insurance and shall not contribute with it. iii. Any failure to comply with reporting provisions of the policies shall not affect coverage provided to Owner, City, their officers, agents, officials, employees and volunteers. iv. Each contractor's insurance shall apply separately to each insured against whom claim is made or suit is brought, except with respect to the limits of the insurer's liability. (b) Workers' Compensation and Employers Liability Coverage The insurer shall agree to waive all rights of subrogation against Owner, City, their officers, agents, officials, employees and volunteers for losses arising from work performed. (c) All Coverages Each insurance policy required shall be endorsed to state that coverage shall not be suspended, voided, canceled, rescinded by either party, reduced in coverage or in limits except after thirty (30) days' prior written notice by certified mail, return receipt requested, has been given to Owner and City. City of Newport Beach 14 Affordable Housing Agreement Attachment No. CC 2 September 22, 2009 Staff Report ®9 CITY OF NEWPORT BEACH CITY COUNCIL STAFF REPORT Agenda Item No. September 22, 2009 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: Planning Department Kathlyn Bowden, AICP, Economic Development Coordinator 949 - 644 -3230, kbowden(a)newportbeachca.gov SUBJECT: Affordable Housing Agreement with Seaview Lutheran Plaza ISSUE: Should the City Council enter into an agreement with Seaview Lutheran Plaza, which provides very low and extremely -low income senior housing, for a grant not to exceed $135,000 in affordable housing in -lieu funds so that Seaview Lutheran may replace its deteriorated water delivery system? RECOMMENDATION: 1. Approve and authorize the Mayor and City Clerk to execute the attached agreement; and 2. Approve a budget amendment transferring $135,000 from the Affordable In -Lieu Housing reserve account #010 -3619 to the Economic Development Other Miscellaneous Expenses account #2720 -8300, to provide funding for Seaview Lutheran to replace its water delivery system. DISCUSSION: Background: On December 12, 2008, the City published a Notice of Funding Availability (NOFA) in the Daily Pilot newspaper to announce the availability of CDBG funds and solicit proposals from tax - exempt nonprofit organizations that provide eligible CDBG services or projects that benefit Newport Beach residents. In response to the NOFA, Seaview Lutheran Plaza submitted a capital project application. The project request would leverage the City's CDBG funds in order to replace the deteriorating water delivery system of the existing low- income seniors' apartment complex. I' Seaview Lutheran Plaza Affordability Agreement September 22, 2009 Page 2 Seaview Lutheran Plaza serves only residents who are over the age of 62 and a limited number of mobility impaired residents over the age of 18, all of whom have extremely low- and very low- incomes. Seaview Lutheran receives HUD federal restricted funds for repairs and replacements in addition to Section 8 rental assistance to aid in the rent payments. Seaview Lutheran's request to replace its deteriorated water delivery system met the Consolidated Plan objective to maintain an existing level of Section 8 housing and rent - restricted units within the City. However, staff did not recommend the use of the City's 2009 -2010 CDBG allocation to fund Seaview Lutheran's request. Staff felt that the limited amount of available CDBG funds would make a far greater impact if distributed amongst the other funding requests, as there were not adequate funds available through the CDBG allotment to fund the full Seaview Lutheran project as well as other social service agencies the City has traditionally supported. While staff felt that CDBG funds were not an appropriate funding mechanism for the replacement of Seaview Lutheran's water delivery system, staff recognized the need to replace the system in order to preserve this supply of affordable rental units. At their April 14, 2009 meeting, in addition to approving the 2009 -2010 CDBG Action Plan, City Council directed staff to enter into discussions with Seaview Lutheran Plaza regarding a grant of affordable housing in -lieu funds for the replacement of its deteriorated water delivery system and to bring a draft agreement before Council for their consideration. Alternative Fundinq Source: In -Lieu Funds Staff met with Seaview Lutheran Plaza representatives on May 4, 2009 and July 1, 2009. Seaview Lutheran's representatives shared their bids for the replacement of the water delivery system and identified the total cost of replacement to be $290,545.95. Seaview Lutheran requests $128,239.40 in assistance from the City to cover the portion of cost that Seaview is unable to pay through the use of their operations and reserve accounts. Staff proposes a small contingency fund to cover any unexpected costs, bringing the total not -to- exceed grant amount to $135,000. Justification for Use of In -Lieu Funds: A break in the Seaview Lutheran Plaza's water delivery system occurred in November 2008 as a result of electrolysis /corrosion and caused major damage to several apartments and imminent concern for the health and safety of the residents. Seaview Lutheran's CDBG application explained that "the replacement of the deteriorated water delivery system is necessary to comply with current code requirements and to prevent further damage to the building and the displacement of its residents." The application further states that, while HUD requires the maintenance of a minimum reserve for repair and replacement, the available funds in that reserve are currently insufficient to meet the needs of the project. 31 Seaview Lutheran Plaza Affordability Agreement September 22, 2009 Page 3 The affordable housing in -lieu fund is a local housing resource that can be used for land write - downs, construction, rehabilitation, and acquisition of properties. Because it is a local housing resource, the City has a large degree of flexibility for the use of in -lieu funds. Goal 4 of the City of Newport Beach Housing Element relates to the preservation and increased affordability of the City's housing stock for very low -, low -, and moderate - income households. Seaview Lutheran Plaza is one of few affordable housing developments in the City with a significant number of very low- income rental units, and the only affordable housing development serving extremely low- income households. Furthermore, Housing Element Policy 4.1 encourages the extension of affordability contracts for the developments listed in Table H12. (Seaview Lutheran Plaza is listed in Table H12.) Program 4.1.2 states that the City will consult with the property owners regarding the utilization of CDBG funds and in -lieu housing funds to maintain affordable housing opportunities in those developments listed in Table H12. Program 4.1.4. also encourages the pursuit of local programs, including in -lieu funds, for the preservation of existing low- income housing. In exchange for a grant of affordable in -lieu housing funds, Seaview Lutheran has agreed to extend the affordability of its units an additional eighteen (18) years beyond the date that its Section 202 mortgage expires with HUD. Staff believes that the proposed agreement is consistent with and serves to implement the Housing Element, and the preservation of Seaview's affordable units is of utmost importance. Alternative Funding Source: HOME Funds Staff investigated the possibility of applying for HOME funds as an alternative funding source to affordable housing in -lieu funds. However, these funds are awarded on a competitive basis with no guarantee that the project will be funded. If awarded HOME funds, the replacement of Seaview Lutheran's water delivery system would be delayed until 2010. Due to the need for expediency so as to avoid another potentially serious break in the system, staff does not recommend this funding approach. Environmental Review: Not subject to CEQA, as the agreement with Seaview Lutheran Plaza, Inc. is not a project, as defined in Section 15378(b) (4). The water delivery project itself is exempt from environmental review under Section 15301 of the CEQA Guidelines, which exempts repair and maintenance of existing facilities involving no negligible expansion of use, including plumbing. Public Notice: No notice other than posting of the agenda is required for this action. 32 Seaview Lutheran Plaza Affordability Agreement September 22, 2009 Page 4 Funding Availability: The City's affordable housing in -lieu fund (010 -3619) has a balance of $1,146,724.25. Staff is not aware of any other pending requests for these funds at this time. If Council were to approve the attached agreement as proposed in Exhibit A, the remaining balance of the in -lieu fund would be $1,011,724.25. Prepared by: Kathlyn Bowden, AICP Economic Development Coordinator Submitted by: Sharon Wood Assistant City Manager Attachments: Draft Agreement (Exhibit A) July 1, 2009 Description of Work & Cost Estimates 33 � Attachment No. CC 3 Budget Amendment City of Newport Beach NO. BA- 11BA -012 BUDGET AMENDMENT 2010 -11 AMOUNT: $s,3ao.00 EFFECT ON BUDGETARY FUND BALANCE: Increase Revenue Estimates X Increase Expenditure Appropriations AND Transfer Budget Appropriations SOURCE: from existing budget appropriations from additional estimated revenues qX from unappropriated fund balance EXPLANATION: Increase in Budgetary Fund Balance X Decrease in Budgetary Fund Balance No effect on Budgetary Fund Balance This budget amendment is requested to provide for the following: To increase expenditure appropriations from the Affordable Housing Reserve to install a backflow device at Seaview Lutheran Plaza. ACCOUNTING ENTRY: BUDGETARY FUND BALANCE Fund Account 010 3619 REVENUE ESTIMATES (3601) Fund /Division Account EXPENDITURE APPROPRIATIONS (3603) Division Number Account Number Division Number Account Number Division Number Account Number Division Number Account Number Signed: / r_. l LXl Financial Signed: Signed Description General Fund - Affordable Housing Resen Description Description 2720 Planning - Economic Development 8300 Other Miscellaneous Expense Administrative Services Director AdmiWtrative Approval: Cloy Manager City Council Approval: City Clerk Amount Debit Credit $6,300.00 . Automatic $6,300.00 0.4 lb Date Date Date