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HomeMy WebLinkAboutMorningside Recovery PA2010-069CITY OF NEWPORT BEACH PLANNING COMMISSION STAFF REPORT June 3, 2010 Agenda Item No. 5 SUBJECT: Morningside Recovery Development Agreement - (PA2010 -069) 4823 A, 4823 B, 5015 A, 5015 B River Avenue, 112 39th Street, and 29 Ima Loa Court Development, Agreement No. DA2010 -001 APPLICANT: City of Newport Beach PLANNER: Patrick J. Alford, Planning Manager (949) 644 - 3235, palfordCa)newportbeachca.gov PROJECT SUMMARY The application consists of a development agreement between Morningside Recovery and the City of Newport Beach that provides an entitlement for the operation of residential care facilities in the City while also containing limitations on the total number of clients in recovery for drug and alcohol abuse in the City, on occupancies at its current facilities and within the Peninsula Zone, and controls on the operation of these facilities. 1) Conduct a public hearing; and 2) Adopt R esolution No. _ recommending approval of Development Agreement DA2010 -001 to the City Council (Attachment No. PC 1). a Morningside Recovery Development Agreement June 3, 2010 Page 2 W. ^c ^ I { r GENERAL PLAN 051RY, �` t.v� ` a ` � ROW t p t `1 --------- \ ZONING a 4FR'MEUi VGV `3 .'mot yv, yyy��� S^ � a --------- \ ZONING a 4FR'MEUi VGV Morningside Recovery Development Agreement June 3, 2010 Page 3 INTRODUCTION Project Setting The project site consists of four separate parcels: • 4823 A and 4823 B River Avenue are located in a two -unit dwelling on a 3,420 - square -foot lot. The zoning classification is Two - Family Residential (R -2) and the General Plan land use designation is Two -Unit Residential (RT). The surrounding land uses are Two -Unit Residential and Single -Unit Residential (RS). • 5015 A and 5015 B River Avenue are located in a two -unit dwelling on a 3,250 - square -foot lot. The zoning classification is Two - Family Residential (R -2) and the General Plan land use designation is Two -Unit Residential (RT). The surrounding land uses are Two -Unit Residential and Single -Unit Residential (RS). • 112 39th Street is located in a two -unit dwelling on a 3,598- square -foot lot. The zoning classification is Two - Family Residential (R -2) and the General Plan land use designation is Two -Unit Residential (RT). The surrounding land uses are Two -Unit Residential. • 29 Ima Loa Court is a residential condominium in a 7 -unit building in the Newport Crest Planned Community. The zoning classification is PC -14 and the General Plan land use designation is Multiple Unit Residential (RM 460 DU). Surrounding land uses are Multiple Unit residential (Newport Crest), Open Space /Residential Village (Newport Banning Ranch property), and Parks and Recreation (Sunset Ridge Park). The dwelling at 112 39`" Street is licensed by the State of California's Department of Alcohol and Drug Programs (ADP) to house and provide treatment services to six individuals in recovery from drug and /or alcohol abuse. The dwellings at 4823 A River Avenue, 4823 B River Avenue, 5015 A River Avenue, 5015 B River Avenue, and 29 Ima Loa Court each operate as non - licensed, non - treatment sober living facilities capable of housing six individuals in recovery from drug and /or alcohol abuse. Background On January 22, 2008, the City Council adopted the Group Residential Uses Ordinance (Ordinance No. 2008 -05) to protect the integrity of residentially -zoned areas of the City. Group residential uses like boarding houses and fraternities /sororities have been prohibited in all residential districts, and additional regulations were established for residential uses that do not constitute a single housekeeping unit, but allow group home Morningside Recovery Development Agreement June 3, 2010 Page 4 living arrangements for the disabled, including sober living homes and alcohol and drug recovery treatment homes licensed by the ADP. The key elements of Ordinance No. 2008 -05 are summarized in Attachment No. PC 2. For detailed background about Ordinance No. 2008 -05, please see the City's website at hftp:/Iwww.newportbeachca.gov/index.aspx?pa.qe=l 04. On April 27, 2010, the City entered into a Settlement and Release Agreement (Attachment PC 3) with Morningside Recovery which would allow the operation of its residential care facilities with limitations on the total number of clients and controls on the operation of these facilities. DISCUSSION The Development Agreement DA2010 -001 will serve as a "Zoning Implementation and Public Benefit Agreement" (Zoning Agreement) and will be included as an attachment to the Settlement and Release Agreement (Settlement Agreement) between the City and Morningside Recovery. The Settlement Agreement itself is not under consideration by the Planning Commission. Rather, the Planning Commission is tasked with making a recommendation to the City Council as to the Zoning Agreement consistency with Chapter 15.45 (Development Agreements) of the City of Newport Beach Municipal Code and the General Plan. The Zoning Agreement (DA2010 -001) The key elements of the Zoning Agreement are summarized as follows: Occupancy Levels Morningside Recovery operations would be subject to the following limits: • No more than 36 clients citywide • No more than six clients at each of its current facilities • No more than 30 clients within the Peninsula Zone (See Exhibit 2 of Attachment PC 3) • No more than six clients outside of the Peninsula Zone Morningside Recovery may move clients from its current facilities to other properties, but must maintain the 30- client cap in the Peninsula Zone and 36- client cap citywide. Morningside Recovery Development Agreement June 3, 2010 Page 5 Location Requirements Existing and new Morningside Recovery facilities will have to comply with the following dispersal and distancing requirements: • Only one facility permitted in each block (as "block' is defined in the Agreement) • No facilities may face each other across a street. • No facility may be located within 1000 feet of elementary schools or large, licensed day care facilities. Other Operational Conditions • Staffing — At least one qualified manager must be on -site or on -call at all times. • No Probationers /Paroles — No services or housing may be provided to clients referred by a governmental agency. • Assembly Uses — Limited to residents and staff of the facility • Medical Waste — Must be disposed of in accordance with the Municipal Code and other laws and best industry standards and practices. • Trash — Operator must provide sufficient trash containers; Agreement establishes requirements on when trash may be placed out for collection. • Smoking — Secondhand smoke may not be detected off site. Operator shall use best efforts to contain smoke and shall prohibit cigarette butt litter by clients. • Parking — Parking spaces must remain available for staff and visitors; clients are prohibited from having personal vehicles at the facility. • Client Transport — Restricts the loading and unloading of passengers and requires adherence to approved route plans. • Nuisance Behavior — Operator must control noise and lewd behavior, lewd speech, and profanity at the facilities; facilities may not be unsafe, unsightly, or poorly maintained. • Deliveries — Limited to weekdays between 9:00 am and 5:00 pm. • Hotline — Must establish and maintain a 24 -hour inquiry/complaint hotline. Morningside Recovery Development Agreement June 3, 2010 Page 6 ® Stakeholder Group — Must participate in any stakeholder committee or group established by the City. • Persons Per Room — Limited to three clients per bedroom. • Compliance with Federal, State, and Local Laws. These restrictions are consistent with Section 15.45.040 (Contents) of the Municipal Code, which requires a development agreement to specify the permitted uses of the property and the density or intensity of use. Section 15.45.040 also provides that a development agreement may contain such other provisions as may be considered necessary or proper by the City Council to further legitimate City interest or to protect the public health, safety and welfare so long as such terms are not inconsistent with the provisions of state law relating to development agreements, nor inconsistent with the ordinances, policies, plans or resolutions of the City. Public Benefits of the Zoning Agreement Section III B of the Zoning Agreement lists the following significant public benefits: 1. Settlement and avoidance of litigation costs, including continued expenditure of attorney's fees; 2. Preservation of the regulatory ordinance that was the subject matter of the lawsuit; 3. Avoidance of potential federal administrative proceedings; 4. A reduction and limitation on the size of a residential care operation in Newport Beach, including limitation on six -or -under licensed facilities; 5. Dispersal of licensed facilities and sober living homes to reduce the concentration thereof in the City's residential districts; 6. The placement of operational controls on said facilities to reduce the perceived negative impacts on the City's residential neighborhoods. Term Section 15.45.040 (Contents) of the Municipal Code requires the development agreement to specify the duration of the agreement. The term of the Zoning Agreement would commence on the effective date (30 days after adoption by the City Council) and will expire 25 years thereafter. Morningside Recovery Development Agreement June 3, 2010 Page 7 General Plan Consistency Land Use Policy LU 6.2.7 (Care Facilities) states: Regulate Day Care and Residential Care facilities to the maximum extent allowed by federal and state law to minimize impacts on residential neighborhoods, and actively pursue federal and state legislation that would give cities the ability to prohibit an over - concentration of recovery homes or sober living homes in residential areas. The operational conditions contained in the Zoning Agreement will minimize impacts to residential neighborhoods. The occupancy level limits and dispersal requirements contained in the Zoning Agreement will assist in reducing the over - concentration of recovery homes and sober living homes in residential areas. Environmental Review Consideration and adoption of the Development Agreement has been determined to be categorically exempt under the requirements of the California Environmental Quality Act (CEQA) under Class 1 (Existing Facilities). This class of projects has been determined not to have a significant effect on the environment and is exempt from the provisions of CEQA. This activity is also covered by the general rule that CEQA applies only to projects that have the potential for causing a significant effect on the environment (Section 15061(b)(3) of the CEQA Guidelines). It can be seen with certainty that there is no possibility that this activity will have a significant effect on the environment and it is not subject to CEQA. Public Notice Notice of this hearing was published in the Daily Pilot, mailed to property owners and occupants within 300 feet of the property and posted at the site a minimum of 10 days in advance of this hearing consistent with the Municipal Code. Additionally, the item appeared upon the agenda for this meeting, which was posted at City Hall and on the City website. Furthermore, pursuant to Section 15.45.050 (Public Hearing — Notice) of the Municipal Code, this meets the public notice requirements provided in Sections 65090 and 65091 of the California Government Code. Morningside Recovery Development Agreement June 3, 2010 Page 8 CONCLUSION The Zoning Agreement is consistent with Chapter 15.45 of the Municipal Code and the General Plan. Prepared by: Patrick J. Afford, Planning Manager ATTACHMENTS Submitted by: R. PC 1 Draft Resolution PC 2 Key Elements Ordinance 2008 -05 PC 3 Development Agreement (Zoning Implementation and Public Benefit Agreement) PC 4 Residential Care Facilities: Licensed and Unlicensed F:\ Users \PLN\ Shared \PAs \PA2010 - 069\2010 -06 -03 PC staff rpt.doex Attachment No. PC 1 Draft Resolution RESOLUTION NO. _ A RESOLUTION OF THE PLANNING COMMISSION OF THE CITY OF NEWPORT BEACH RECOMMENDING CITY COUNCIL ADOPTION OF DEVELOPMENT AGREEMENT 2010 -001 (ZONING IMPLEMENTATION AND PUBLIC BENEFIT AGREEMENT BETWEEN THE CITY OF NEWPORT BEACH AND MORNINGSIDE RECOVERY, LLC) (PA2010 -069) THE PLANNING COMMISSION OF THE CITY OF NEWPORT BEACH HEREBY FINDS AS FOLLOWS: SECTION 1. STATEMENT OF FACTS. 1. On April 27, 2010, the City of Newport Beach entered into a Settlement and Release Agreement with Morningside Recovery, LLC, which would allow the operation of its residential care facilities with limitations on the total number of clients and controls on the operation and location of these facilities. 2. Development Agreement DA2010 -001 consists of a Zoning Implementation and Public Benefit Agreement between the City of Newport Beach and Morningside Recovery, LLC. 3. The subject properties are: • 4823 A and 4823 B River Avenue. The zoning classification is Two - Family Residential (R -2) and the General Plan land use designation is Two -Unit Residential (RT). • 5015 A and 5015 B River Avenue. The zoning classification is Two - Family Residential (R -2) and the General Plan land use designation is Two -Unit Residential (RT). • 112 39th Street. The zoning classification is Two - Family Residential (R -2) and the General Plan land use designation is Two -Unit Residential (RT). • 29 Ima Loa Court. The zoning classification is PC -14 and the General Plan land use designation is Multiple Unit Residential (RM 460 DU). 4. A public hearing was held on June 3, 2010 in the City Hall Council Chambers, 3300 Newport Boulevard, Newport Beach, California. A notice of time, place and purpose of the meeting was given in accordance with the Newport Beach Municipal Code. Evidence, both written and oral, was presented to, and considered by, the Planning Commission at this meeting. Pursuant to Section 15.45.050 of the Municipal Code, this meets the public notice requirements provided in Sections 65090 and 65091 of the California Government Code. Planning Commission Resolution No. Paqe 2 of 3 SECTION 2. CALIFORNIA ENVIRONMENTAL QUALITY ACT DETERMINATION. Consideration and adoption of the Development Agreement has been determined to be categorically exempt under the requirements of the California Environmental Quality Act (CEQA) under Class 1 (Existing Facilities). This class of projects has been determined not to have a significant effect on the environment and is exempt from the provisions of CEQA. This activity is also covered by the general rule that CEQA applies only to projects that have the potential for causing a significant effect on the environment (Section 15061(b)(3) of the CEQA Guidelines). It can be seen with certainty that there is no possibility that this activity will have a significant effect on the environment and it is not subject to CEQA. SECTION 3. FINDINGS. 1. The Development Agreement is consistent with Chapter 15.45 of the Municipal Code and California Government Code Section 65865.2. The Zoning Implementation and Public Benefit Agreement specifies the permitted uses of the property the density or intensity of use, and the duration of the Agreement. The occupancy level limits, location requirements, and operational conditions contained in the Zoning Agreement will protect the public health, safety and welfare. 2. The Development Agreement is consistent with the General Plan. The operational conditions contained in the Zoning Implementation and Public Benefit Agreement will minimize impacts to residential neighborhoods. The occupancy level limits and dispersal requirements contained in the Zoning Agreement will assist in reducing the over - concentration of recovery homes and sober living homes in residential areas. SECTION 4. DECISION. NOW, THEREFORE, BE IT RESOLVED: 1. The Planning Commission of the City of Newport Beach hereby recommends that the City Council adopt Development Agreement 2010 -001 (Zoning Implementation and Public Benefit Agreement Between the City of Newport Beach and Morningside Recovery, LLC) PASSED, APPROVED AND ADOPTED THIS 3RD DAY OF JUNE, 2010. AYES: \PROW ABSTAIN: Tmpit: 04/14/10 Planning Commission Resolution No. I"T Robert Hawkins, Chairman BY: Charles Unsworth, Secretary Tmpit: 04/14/10 Attachment No. PC 2 Key Elements Ordinance 2008 -05 Key Elements of Group Residential Uses Ordinance (Ordinance 2008 -05) A. Reasonable Accommodation. The concept of reasonable accommodation is a process by which a disabled person in need of housing, or provider of housing for the disabled, can request an exception from an existing local law to allow that disabled person or persons to obtain or retain housing. This process is fully described in Chapter 20.98 of the Newport Beach Municipal Code (NBMC). B. Integral Facilities & Integral Uses, Ordinance 2008 -05 defines "Integral Facilities" and "Integral Uses." In addition to defining the terms, the Ordinance states that the City can consider small (housing six or fewer clients) ADP - licensed treatment and recovery facilities that operate integrally to be uses subject to a Use Permit and regulated similarly to small unlicensed facilities or general ( "7 and over ") facilities. We defined "Integral Facility" and "Integral Uses" as follows: Integral Facility. Any combination of two or more Residential Care (Small Licensed, Small Unlicensed, or General) facilities which may or may not be located on the same or contiguous parcels of land, that are under the control and management of the same owner, operator, management company, or licensee or any affiliate of any of them, and are integrated components of one operation shall be referred to as Integral Facilities and shall be considered one facility for purposes of applying federal, state, and local laws to its operation. Examples of such Integral Facilities include, but are not limited to, the provision of housing in one facility and recovery programming, treatment, meals, or any other service or services to program participants in another facility or facilities or by assigning staff or a consultant or consultants to provide services to the same program participants in more than one licensed or unlicensed facility. Integral Uses. Any two or more licensed or unlicensed residential care programs commonly administered by the same owner, operator, management company, or licensee, or any affiliate of any of them, in a manner in which participants of two or more care programs participate simultaneously in any care or recovery activity or activities so commonly administered. Any such Integral Use shall be considered one use for purposes of applying federal, state, and local laws to its operation. In early May, 2008, Judge James Selna of the US District Court blocked the City's enforcement of the "integral facilities" definition within Ordinance 2008 -05 as it applies to ADP - licensed "6 and Unders ". Special Counsel Jim Markman of Richards, Watson, Gershon ( "RWG ") believes that the Judge's stay applies to the City's "integral uses" concept, too. C. Siting of New Facilities. Ordinance 2008 -05 allows various group residential uses in the following zones as shown in Table 1: Table 1 Zoning for New Group Residential Uses Facility Type R -1 R -1.5 R -2 MFR ADP Licensed 6 and Under ADP Licensed and Under . . . . . (operating integrally) Unlicensed and Under ® . . . . ®® . . (integral or not) 7 and Over WE "Ift ME . . ® . . ®® . . (Licensed or Unlicensed) All Other ® ® ®® Group Residential Uses * This provision of the Ordinance was blocked via Judge Selna's actions of May 2008. The prohibitions of certain group residential uses in the R -1, R -1.5, and R -2 Districts apply to new facilities. Many existing group residential facilities became "non- conforming" after February 20, 2008. All non - conforming uses in residential zones then became subject to abatement. However, to accommodate disabled housing uses, all non - conforming residential care uses had the opportunity to apply for a Use Permit to remain in their current locations, so long as the applications were submitted by May 22, 2008. Ordinance No. 2008 -05 also allowed residential care facility uses to apply for a reasonable accommodation at any time. The residential care facilities that have received Use Permits and reasonable accommodations to continue in their current locations are listed in Section E.4, below. D. Abatement. Ordinance No. 2008 -05 directed that any operator within one of the zones shown in Table 1 where their operation is either prohibited or allowed with a Use Permit but who did not apply for or obtain a Use Permit or secure Reasonable Accommodation in a timely manner must have ceased this use no later than: • February 20, 2009; or The date an operator's lease expired to use the property. (This was only applicable if the lease was entered into prior to December 7, 2007); or The date that an operator's State license expires (ADP licenses are good for up to 24 months if not revoked or if uses are unchanged). ... whichever of the above three criteria occurred sooner. An operator can ask a Hearing Officer for an extension of the abatement period, subject to certain findings. The Hearing Officer's extension decision can be appealed to the City Council. E. The Use Permit Process. As noted in Table 1, existing non - conforming uses and new uses in the Multi- Family Residential ( "MFR ") District had to apply for a Use Permit to remain in operation or to start operation. The key provisions of this process follow: 1 — Timing. Any existing operator had to apply for a Use Permit by May 22, 2008. Applications for new facilities in MFR Districts may be submitted at any time. 2 — Application. Applicants have been asked to provide information to ensure that any use is operated in compliance with applicable laws, that the operator has a history of operating facilities consistent with any applicable laws, and that the applicant operating under a Use Permit will operate in a manner that minimizes adverse impact on facility residents, neighbors, the community, or the character of the neighborhood and that the use conforms with established industry standards for the well -being of the facility residents. 3 — Notice and Hearing. Following Council Policy F -26, the City Council designates hearing officers to approve, conditionally approve, or disapprove group residential Use Permits at noticed public hearings. Decisions of the hearing officers may be appealed to the City Council. In 2008 and 2009, hearings were held on use permits and reasonable accommodations for the following residential care facilities: • Balboa Horizons (Use Permit granted for 11 beds, female) • Newport Coast Recovery (Use Permit denied for 18 beds, male) • Ocean Recovery (Use Permits granted for two separate facilities - 18 beds, male, and 16 beds, female) • Kramer Center (Applications for Use Permit and reasonable accommodation withdrawn for 12 -bed facility; facility closed.) • Yellowstone Women's First Step House (Use Permits and reasonable accommodations for four facilities denied; currently in litigation) • Pacific Shores Properties, LLC (Reasonable accommodation denied by Hearing Officer; amended reasonable accommodation request granted with conditions by City Council on appeal for 24 beds at one duplex building.) • Balboa Recovery (Reasonable accommodation granted for two duplexes with 6 residents per duplex building; accommodation request denied for third duplex with 10 residents per duplex building. Applicant has requested reconsideration of the reasonable accommodation request at the third building for 6 residents in the duplex building, hearing pending.) • LMS Properties (Reasonable accommodation granted for 4 residents in one unit of a duplex building.) 4 — Revocation of the Use Permit. The Ordinance provides that the Hearing Officer can revoke a UP (similar to other uses subject to a UP) if these findings are made: • The permit was issued under erroneous information or misrepresentation; or • The applicant made a false or misleading statement of material fact, or omitted a material fact; or • The conditions of use or other regulations or laws have been violated; or • There has been a discontinuance of use for 180 days or more. Attachment No. PC 3 Development Agreement (Zoning Implementation and Public Benefit Agreement) a SETTLEMENT AGREEMENT AND RELEASE c 1. Introduction This Settlement and Release Agreement ( "AGREEMENT ") is made and entered k into as of this2ith'•day of April , 2010 by and between the CITY OF NEWPORT BEACH (the "CITY") on one hand, and MORNINGSIDE RECOVERY, LLC, ( "MORNINGSIDE ") on the other. The CITY and MORNINGSIDE are collectively referred to as the "PARTIES." 2. Definitions For the purposes of this AGREEMENT only, the following capitalized terms shall have the following meanings: 2.1 "ACTION" or "ACTIONS" shall refer to all claims, charges, liabilities, damages, obligations, costs, expenses, rights of action and causes of action, whether known or unknown, between MORNINGSME RECOVERY and the CITY, including but not limited to the lawsuits captioned Newport Beach v. Morningside Recovery, LLC, el aL, (OCSC No. 07CC 11694), and Concerned Citizens of Newporl Beach v. City of Newport Beach, et aL, (USDC Case No. CV 08 -00192 JVS (RNBx)). 2.2 The "CITY" shall mean the City of Newport Beach, and its City Council, Boards and Commissions, elected and appointed Officers, Agents, Employees and Attorneys. 2.3, "CONTROL," "CONTROLLING ", "CONTROLLED BY," and "UNDER COMMON CONTROL WITH" as used in this AGREEMENT shall mean the possession, direct or indirect, or the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract or otherwise. 2.4 "EFFECTIVE DATE" shall mean the date upon which the PARTIES incur the rights and obligations of this AGREEMENT, as defined in Paragraph 4, below. 2.5 "MORNINGSIDE" shall refer to the business known as Morningside Recovery LLC, and its Directors, Trustees, Beneficiaries, Officers, Agents, Employees, Successors, Heirs, Lessees, Assigns and Attorneys. 2.6 The "ORDINANCE" shall refer to Newport Beach Municipal Ordinance No. 2008 -5. SETTLEMENT AGREEMENT BY AND BETWEEN THE CITY OF NEWPORT BEACH AND MORNINGSIDE RECOVERY, LLC 11287- 000711200955v3.doc 3. Recitals 3.1 WHEREAS the City of Newport Beach is a municipal corporation and Charter City under the laws of the State of California. On January 8, 2008, the City Council of the City of Newport Beach conducted a public hearing on a proposed . ordinance modifying the City's municipal code provisions regulating group residential uses in the City and, thereafter, conducted the first reading of the ORDINANCE. 3.2 WHEREAS, on January 22, 2008, the Newport Beach City Council passed the ORDINANCE, which, among other things, included provisions requiring then current operators of certain residential care facilities (as defined in the ORDINANCE) in R -1, R- 1.5, R -2 and MFR Zones to obtain use permits to continue those operations at their pre- existing locations or to seek alternate forms of relief provided in the ORDINANCE or to abate those operations within defined time periods. 3.3 WHEREAS MORNINGSIDE is a limited liability company whose principal place of business is the City of Newport Beach, California. MORNINGSIDE CONTROLS and operates a facility licensed by the California Department of Alcohol and Drug Programs capable of housing six individuals in recovery for drug and/or alcohol abuse located at 112 39`h Street in Newport Beach. MORNINGSIDE CONTROLS and operates non - licensed, non - treatment facilities capable of housing six individuals in recovery for drug and/or alcohol abuse at 4823 A River Avenue, 4823 B River Avenue, 5015 A River Avenue, and 5015 B River Avenue in the City of Newport Beach. 3.4 WHEREAS at the time of the passage of the ORDINANCE, MORNINSGIDE operated and CONTROLLED, and presently operates and CONTROLS drug and/or alcohol recovery facilities in R -2 Zones, but failed to file with the CITY an application for a Use Permit pursuant to the ORDINANCE to continue it operations in Newport Beach. 3.5 WHEREAS on March 17, 2008, the City of Newport Beach filed its first amended complaint in the lawsuit in the Orange County Superior Court captioned Newport Beach v. Morningside Recovery, LLC, et al., (OCSC No. 07CC 11694), seeking to enforce moratorium ordinances enacted while it was developing the ORDINANCE against MORNINGSIDE. 3.6 WHEREAS on January 22, 2008, a group of Newport Beach residents filed a lawsuit captioned Concerned Citizens of Newport Beach v. City of Newport Beach, et ab, (USDC Case No. CV 08 -00192 JVS (RNBx)), against the operators of sober living homes in Newport Beach and the CITY. SETTLEMENT AGREEMENT BY AND BETWEEN THE CITY OF NEWPORT BEACH AND MORNINGSIDE RECOVERY, LLC 2 11287- 0007\ 1200955 v3.dm 3.7 WHEREAS on February 22, 2008, the CITY filed a cross -claim against MORNINGSIDE and all the sober living homes named in the lawsuit. The CITY's cross -claim asserted, among other things, that the ORDINANCE does not, on its face, violate State of California or federal fair housing laws. On November 2, 2009, the Court granted the CITY leave to amend its cross -claim to include a claim for injunctive relief, and to add Barry Saywitz Properties — One LP, as a party. 3.8 WHEREAS MORNINGSIDE has not filed, and does not intend to file, any complaints regarding the CITY or the ORDINANCE with either the United States Department of Justice ( "DOJ ") or Department of Housing and Urban Development ( "HUD") 3.9 WHEREAS MORNINGSIDE and the CITY have engaged in a court - ordered settlement conference before the Honorable Judge Robert N. Block, and desire to enter into this AGREEMENT to finally, fully, comprehensively and conclusively settle all ACTIONS between the PARTIES, and all underlying and related contentions and allegations, by and through this AGREEMENT and through the passage of an ordinance that would approve a Zoning Implementation and Public Benefit Agreement ("ZONING AGREEMENT ") substantially identical to that document attached hereto as Exhibit "A." NOW, THEREFORE, in consideration of the above Recitals, covenants and agreements therein, the PARTIES agree.as follows: 4. Effective Date of Agreement 4.1 This AGREEEMENT shall not become effective, and neither party shall have any rights or obligations hereunder, until the EFFECTIVE DATE. The EFFECTIVE DATE of this AGREEMENT is: 4.1.1. The thirty-first (3 1) day after the City Council's passage of the ordinance approving the ZONING AGREEMENT, or 4.1.2 If a referendum or other elective challenge to the ordinance approving this AGREEMENT qualifies to be placed on the ballot, then on the thirty -first (3 1) day after the City Clerk certifies that the referendum or other elective challenge has failed to pass, or 4.1.3 If litigation is instituted to challenge this AGREEMENT prior to the EFFECTIVE DATE, then on the thirty -first (3 1) day after the litigation is terminated either by dismissal, or by judgment after it becomes final. SETTLEMENT AGREEMENT BY AND BETWEEN THE CITY OF NEWPORT BEACH AND MORNINGSIDE RECOVERY, LLC .3 1 1287-0007\1 200955v3.doc 5. Release Concurrent With Effective Date 5.1 The CITY shall dismiss its cross -claim filed in the action captioned Concerned Citizens of Newport Beach v. City of Newport Beach, et al., (Case No. CV 08 -00192 JVS (RNBx)), against MORNINGSIDE and supply a Stipulation for Dismissal (with prejudice) to MORNINGSIDE within three (3) business days of the EFFECTIVE DATE of this AGREEMENT. The CITY hereby authorizes counsel for MORNINGSIDE to file the Dismissal with the Court, and counsel for MORNINGSIDE agrees to file the Stipulation for Dismissal with the Court within seven (7) business days of the EFFECTIVE DATE of this AGREEMENT. 5.2 In consideration for that dismissal, MORNINGSIDE hereby knowingly and intelligently waives and relinquishes any right to challenge the facial legality or facial validity of the ORDINANCE in any court or administrative proceeding and hereby agrees that, on its face, the ORDINANCE does not violate any state or federal housing laws and is not discriminatory. . 5.3 This release shall be a fully binding and complete settlement of all ACTIONS between the CITY, MORNINGSIDE, and their Counsel. and respective assigns and successors save only the executory provisions of this AGREEMENT. 5.4 The PARTIES understand that the approval of the ZONING AGREEMENT is subject to the following: 5.4.1 Conduct of public hearings required by law and the open and unbiased application of the CITY's police powers to its Planning Commission and City Council's consideration of that approval. 5.4.2 Referendum power of the City's electorate. 5.4.3 Legal challenge by any interested party. 5.5 Nothing in this AGREEMENT is intended to or shall have the lawful effect of contracting away the CITY's zoning authority or any other aspect of the CITY's police power. City Staff and the City Council have previously reviewed the terns and conditions of the ZONING AGREEMENT, and have concluded that pursuant to California law and the Newport Beach Municipal Code, City Staff lawfully present the,ZONING AGREEMENT to the City's Planning Commission and City Council for approval or disapproval, subject to duly noticed public hearings. City Staff has further preliminarily concluded that no CEQA analysis shall be required to be completed prior to the CITY considering approval of the ZONING AGREEMENT. SETTLEMENT AGREEMENT BY AND BETWEEN THE CITY OF NEWPORT BEACH AND MORNINGSIDE RECOVERY, LLC 4 1 1287-0007\1 200955v3.doc 5.5.1 The CITY shall schedule public hearings on the ordinance that, if adopted, would approve the ZONING AGREEMENT. If the City Council fails to approve the ordinance within thirty (30) days following the conclusion of the public hearings thereon, this AGREEMENT shall be of no further force or effect. 5.5.2 At the CITY's sole and absolute discretion, the CITY shall timely file a Notice of Determination, Notice of Exemption, or other appropriate CEQA notice if the ordinance approving the ZONING AGREEMENT is passed, and shall pay the cost of any environmental assessment, negative declaration or environmental impact report that is determined to be required.. 5.6 The PARTIES stipulate that the Court retain jurisdiction over the PARTIES to enforce the settlement until performance in full of the terms of the settlement. 5.7 Except as expressly excluded herein, the CITY and MORNINGSIDE waive all rights or benefits that they may have under California Civil Code section 1542, with regard to this AGREEMENT. Civil Code section 1542 provides: "A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor." 6. Actions Pending Effectiveness of this Agreement 6.1 The PARTIES agree that prior to the EFFECTIVE DATE of this AGREEMENT, the PARTIES shall jointly seek to maintain a stay of the litigation pending in federal court captioned Concerned Citizens of Newport Beach v City of Newport Beach, et al., (Case No. CV 08 -00192 JVS (RNBx)). During this same period of time: 6.1.1 The CITY shall not enforce any provision of the ORDINANCE against MORNINGSIDE. 6.1.2 MORNINSIDE agrees to abide by the Operational Conditions attached as Exhibit "1" to the ZONING AGREEMENT. 7. Ownership of Released Claims 7.1 The CITY and MORNINGSIDE represent and warrant that none of the matters or rights released herein has been assigned or transferred, in whole or in part, to SETTLEMENT AGREEMENT BY AND BETWEEN THE CITY OF NEWPORT BEACH AND MORNINGSIDE RECOVERY, LLC 5 11287.0007\1200955v3.doc any person, organization, partnership or any other entity, nor has any person, organization, partnership or any other entity become subrogated to such rights. 8. All Parties to Bear Own Costs 8.1 The CITY and MORNINGSIDE agree to bear their own attorneys' fees and costs incurred in connection with this ACTION. 9. Entire Agreement 9.1 This AGREEMENT contains the entire understanding and agreement between the CITY and MORNINGSIDE with respect to the matters referred to herein. No other representations, covenants, undertakings or other prior or contemporaneous agreements, oral or written, respecting those matters, which are not specifically incorporated herein, may be deemed in any way to exist or to bind any of the PARTIES. 9.2 The CITY and MORNINGSIDE acknowledge that they have not executed this AGREEMENT in reliance on any such promise, representation or warranty. This AGREEMENT may not be modified except by a written instrument signed by authorized representatives of the CITY and MORNINGSIDE. 10. Warranties and Indemnification for Successors in Interest 10.1 This AGREEMENT contains the entire agreement between the CITY and MORNINGSIDE with regard to the matters set forth herein and shall be binding upon and inure to the benefit of the executors, administrators, personal representatives, heirs, successors and assigns of each. 10.2 Without limiting the foregoing, the PARTIES hereby represent and warrant that the releases herein are expressly made on behalf of all council, boards and commissions, elected and appointed officers, agents, and employees of CITY, as well as all owners, partners, agents, employees and affiliates of MORNINGSIDE, and their heirs, assigns and successors in interest, as well as any affected property owners, their spouses, children, or any other family member, descendant, heir or assign of MORNINGSIDE. SETTLEMENT AGREEMENT BY AND BETWEEN . THE CITY OF NEWPORT BEACH AND MORNINGSIDE RECOVERY, LLC 1 1287 -0007 \1200955v3.doc 11. Local California Law to Apply 11.1 This AGREEMENT shall be deemed to have been executed and delivered within the State of California and the rights and obligations of the CITY and MORNINGSIDE hereunder shall be construed and enforced in accordance with, and governed by the local law of the State of California. 12. Construction and Waiver of Benefits of Doctrine of Contra Proferentum 12.1 The CITY and MORNINGSIDE have jointly drafted this AGREEMENT. Hence, the CITY and MORNINGSIDE agree that the terms of this AGREEMENT, or any of them, shall not be interpreted against or in favor of any party on the ground that any party participated in the drafting of this AGREEMENT. The CITY and MORNINGSIDE accordingly expressly and specifically waive the right to benefit from application of the doctrine of contra proferentum in any subsequent dispute concerning interpretation of the provisions of this AGREEMENT. 13. Headings 13.1 The various headings of the sections and paragraphs of this AGREEMENT have been inserted for convenience of reference only and do not affect the meaning or interpretation of this AGREEMENT or any provision of it. 14. Signatories Authority 14.1 Each and every one of the persons executing this AGREEMENT expressly warrants that he or she is authorized to do so on behalf of the entity for which he or she is executing this agreement. The CITY and MORNINGSIDE represent and warrant that this agreement is executed voluntarily, with full knowledge of its significance. 15. No Admission of Liability 15..1 The CITY and MORNINGSIDE have entered into this AGREEMENT. solely to compromise and settle disputed claims: The signatories do not admit, concede or otherwise acknowledge liability in this matter. The PARTIES hereto expressly deny and disclaim any liability or that either has engaged in any wrongful conduct whatsoever. SETTLEMENT AGREEMENT BY AND BETWEEN THE CITY OF NEWPORT BEACH AND MORNINGSIDE RECOVERY, LLC 7 11287- 0007\1200955v3.doc 16. Waiver of Breach 16.1 No waiver of any breach of any term or provision of this AGREEMENT shall be construed to be, or shall be, a waiver of any other breach of this AGREEMENT. No waiver is binding unless in writing and signed by the party or PARTIES waiving the breach. 17. Further Documents and Ongoing Duty of Cooperation 17.1 The CITY and MORNINGSIDE and their Attorneys will cooperate in executing and delivering all documents necessary to effectuate the agreements set forth herein. 17.2 MORNINGSIDE shall not oppose the CITY's approval of the ZONING AGREEMENT and shall support, both verbally and in writing, if requested by the CITY, the approval of the ZONING AGREEMENT. 17.3 MORNINGSIDE shall not file any lawsuits, administrative appeals pursuant to the CITY's municipal code, or take any other action whatsoever, in whatever shape or form, to challenge, appeal, or otherwise seek to influence, in any respect, approval of the ZONING AGREEMENT, with the sole exception of the activity described in the preceding paragraph (17.2). 18. Execution and Counterparts 18.1 This AGREEMENT may be executed in multiple counterparts, each of which shall be deemed an original AGREEMENT, and all of which shall constitute one AGREEMENT. These counterparts may be transmitted by facsimile with the originals to be thereafter provided by the PARTIES. Such facsimiles shall be deemed original signatures. 19. Confidentiality 19.1 All PARTIES agree that neither they nor their representatives shall disclose the terms of this Agreement to any individual or entity not a Party hereto. This Agreement may be disclosed only if such disclosure is required; (i) in response to an order of a court of competent jurisdiction; (ii) in response to an inquiry or order issued by a state or federal agency of competent jurisdiction; (iii) to comply with any reporting SETTLEMENT AGREEMENT BY AND BETWEEN THE CITY OF NEWPORT BEACH AND MORNINGSIDE RECOVERY, LLC 8 11287- 0007 \1200955v3.doc obligation of any federal or state law and agency, including without limitation the Internal Revenue.Service or the State Franchise Tax Board; (iv) in response to a request from the PARTIES' insurers or prospective insurers; (v) in connection with any future litigation between the PARTIES hereto; (vi) to the PARTIES legal, tax, and financial advisors; (vii) in order to account to the PARTIES shareholders, partners, or investors; or (viii) in response to a Public Records Act request made pursuant to section 6253 of the Government Code. 20. Invalid Clause May Be Severed 20.1 If any provision, clause, or part of the AGREEMENT is adjudged illegal, invalid or unenforceable, the balance of this AGREEMENT shall remain in full force and effect. By: 2J�/ KEITH D. CURRY The CITY OF NEWPORT BEACH MAYOR, CITY OF NEWPORT BEACH Date: r� , h AS TO FORM AND CONTENT By: ' PAT K. BO KO RIC ARDS, WATSON. & GERSHON Attorneys for CROSS - CLAIMANT Date: zahpL to [MORE SIGNATURES FOLLOW] SETTLEMENT AGREEMENT BY AND BETWEEN THE CITY OF NEWPORT BEACH AND MORNINGSIDE RECOVERY, LLC 9 11287.0007\1200955v3.doc ,11 �is? La MORNINGSIDE RECOVERY, LLC Title: CHIEF EXECUTIVE OFFICER Date: APPROVED AS TO FORM AND CONTENT By: MARY HELEN BEATIFICATO BEATIFICATO & ASSOCIATES, Attorneys for CROSS - DEFENDANT Date: SETTLEMENT AGREEMENT BY AND BETWEEN THE CITY OF NEWPORT BEACH AND MORNINGSIDE RECOVERY, LLC 10 11287- 0007\1200955v1doc ORIGINAL. MORI4INGSIDE RECOVERY, LLC Title: CHIEF EXECUTIVE OFFICER Date: AS By: I I It U MARY HELEN IBI BEATIFIC Date: a{ Attomeys for CROSS - DEFENDANT SETTLEMENT AGREEMENT BY AND BETWEEN THE CITY OF NEWPORT BEACH AND MORNINGSIDE RECOVERY, LLC 10 11287- 0007%1200955v3.doc (EXHIBIT «A') ZONING IMPLEMENTATION AND PUBLIC BENEFIT AGREEMENT (Pursuant to California Government Code §§ 65864- 65869.5) This Zoning Implementation and Public Benefit Agreement (the "ZONING AGREEMENT ") is entered into on 2010, by and between the CITY OF NEWPORT BEACH, a charter city ( "CITY ") on the one hand, and MORNINGSIDE RECOVERY, LLC, ( "MORNINGSIDE ") on the other. The CITY and MORNINGSIDE are collectively referred to as the "PARTIES." I. Recitals A. The City Council hereby finds this ZONING AGREEMENT is consistent with the provisions of California Government Code §65867, the City of Newport Beach Municipal Code Chapter 15.45, and the City's General Plan. B. On , 2010, the City's Planning Commission held a public hearing on this ZONING AGREEMENT, made findings and determinations with respect to this ZONING AGREEMENT, and recommended to the City Council that the City Council approve this ZONING AGREEMENT. C. On , 2010, the City Council also held a public hearing on this ZONING AGREEMENT and considered the Planning Commission's recommendations and testimony and information submitted by City staff, MORNINGSIDE, and members of the public. On , 2010, pursuant to applicable state law (California Government Code §§ 65864- 65869.5) and local law (City of Newport Beach Municipal Code Chapter 15.45), the City Council passed its Ordinance No. finding this ZONING AGREEMENT to be consistent with the City of Newport Beach General Plan and approving this ZONING AGREEMENT. II. Definitions The following terms when used in this ZONING AGREEMENT shall have the meanings set forth below: A. "BLOCK' shall mean an area that is bounded on all sides by streets. In the Peninsula Zone, a BLOCK length is 617 feet, which is the calculable median block length within the City of Newport Beach's Nonstandard Subdivision Areas. B. "CITY" shall mean the City of Newport Beach and its City Council. C. "CLIENT" (or "CLIENTS ") shall mean any persons residing at any MORNINGSIDE FACILITY for the purpose of recovering from drug and/or alcohol abuse. D. "CONTROL" (including the terms "controlling," "controlled by," and "under common control with, ") shall mean the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract, or otherwise. E. "FACILITY" (or "FACILITIES ") is a residential unit used or occupied by persons in recovery from alcoholism and/or drug abuse. Facilities may be "licensed facilities" or unlicensed "sober living homes." As used in this AGREEMENT, all facilities constitute "residential care facility" uses within the context of the City's zoning ordinance. D. "GENERAL PLAN" shall mean the 2006 General Plan adopted by the City Council on July 25, 2006, by Resolution No. 2006 -76. The Land Use Plan of the Land Use Element of the General Plan was approved by Newport Beach voters in a general election on November 7, 2006. E. "LICENSED FACILITIES" shall mean alcoholism and drug abuse recovery facilities licensed by the California Department of Alcohol and Drug Programs ( "ADP "). F. "PARTY" or "PARTIES" shall mean either the CITY or MORNINGSIDE or any of MORNINGSIDE's affiliates or both, as determined by the context. G. "PROPERTY" or "PROPERTIES" shall mean MORNINGSIDE's facilities at 112 39`s Street, 4823 A River Avenue, 4823 B River Avenue, 5015 A River Avenue, 5015 B River Avenue, and 29 Ima Loa Court in Newport Beach. Additionally, this AGREEMENT may apply to parcels not yet identified upon which MORNINGSIDE may operate facilities pursuant to this AGREEMENT in the future. Morningside Recovery, LLC Zoning Agreement Exhibit "A" to Settlement Agreement 1193897 -7 H. "SOBER LIVING HOMES" shall mean alcoholism and/or drug abuse recovery facilities that are not licensed by the ADP. I. "7- and - OVER" shall mean any FACILITY licensed by the ADP to house more than 7 persons in recovery for drug and/or alcohol abuse. III. Agreement A. Terms of Agreement. This ZONING AGREEMENT allows MORNINGSIDE a vested right to the following: 1.) MORNINGSIDE may operate FACILITIES housing up to thirty - six (36) CLIENTS in Newport Beach pursuant to certain operational guidelines described more particularly in Exhibit "1" attached hereto. Except as described in Section A (3), below, MORNINGSIDE may not exceed 36 CLIENTS in Newport Beach. 2.) MORNINGSIDE may house up to 30 of its 36 total CLIENTS in the Newport Beach "Peninsula Zone." The Peninsula Zone is more particularly defined in Exhibit "2" attached hereto; 3.) MORNINGSIDE can exceed its 36 CLIENT maximum only by acquiring 7- and -OVER FACILITIES that have obtained use permits under Chapter 20.91A of the Newport Beach Municipal Code. 4.) MORNINGSIDE shall conduct its OPERATIONS in Newport Beach in conformance with the Operational Guidelines attached hereto as Exhibit "L" 5.) MORNINGSIDE will comply with the following dispersal and distancing requirements for its FACILITIES in Newport Beach: a. Only one (1) treatment home or sober living facility (licensed or unlicensed by ADP) is allowed per BLOCK, and no FACILITIES facing each other; Morningside Recovery, LLC Zoning Agreement Exhibit "A" to Settlement Agreement 1193897 -7 b. No FACILITIES (licensed or unlicensed by ADP) within 1000 feet of elementary schools or large, licensed day -care facilities. B. Significant Public Benefits. The significant public benefits that this ZONING AGREEMENT provides include, but are not limited to, the following: 1.) Settlement and avoidance of litigation costs, including the continued expenditure of attorneys' fees; 2.) Preservation of the regulatory ordinance that was the subject matter of this lawsuit; 3.) Avoidance of potential federal administrative proceedings; 4.) A reduction and limitation on the size of a residential care operation in Newport Beach, including a limitation on LICENSED FACILITIES; 5.) Dispersal of LICENSED FACILITIES and SOBER LIVING HOMES to reduce the concentration thereof in the City's residential districts; 6.) The placement of operational controls on said FACILITIES to reduce the perceived negative impacts on the City's residential neighborhoods; C. General Plan Consistency and Zoning Implementation. This ZONING AGREEMENT and the regulations applied herein to MORNINGSIDE will cause the City of Newport Beach's zoning and other land use regulations to remain consistent with the GENERAL PLAN. D. Warranties and Representations. Both PARTIES represent they have legal authority to enter into this ZONING AGREEMENT and the remainder of the agreements and documents that comprise the settlement documents herein, and that the necessary authorizations have been obtained, by resolution or other action, and that the persons whose names appear as signatories below were authorized to accept this ZONING AGREEMENT on behalf of the PARTY under whose name they signed. Morningside Recovery, LLC Zoning Agreement Exhibit "A" to Settlement Agreement 1193897 -7 4 l.) Each PARTY specifically represents and warrants that it has the legal authority to enter into a ZONING AGREEMENT of the type and kind herein, and, 2.) The City of Newport Beach represents and warrants that this ZONING AGREEMENT and the regulations applied to PROPERTY are: a. Consistent with the GENERAL PLAN for the City of Newport Beach and any Specific Plans that apply to the area in which any portion of MORNINGSIDE's PROPERTIES are located, and; b. Consistent with the Local Coastal Land Use Plan ( "CLUP ") for the City of Newport Beach and that the CLUP has been approved by the California Coastal Commission. E. Oneration of Property; Applicable Regulations. Other than as expressly set forth in this ZONING AGREEMENT, during the term of this ZONING AGREEMENT, the terms and conditions concerning the operation of the PROPERTIES, including but not limited to the permitted uses, density, intensity of use, and the location of buildings involved, shall be those set forth in the City of Newport Beach's ordinances and regulations, and the City of Newport Beach shall not prevent operation of the PROPERTIES in compliance with the applicable regulations and all other applicable laws and regulations in Section I, below. F. Vested Rights. During the term of this ZONING AGREEMENT, except to the extent the City of Newport Beach reserves its discretion as expressly set forth in this ZONING AGREEMENT or in the applicable regulations and all other applicable laws and regulations specified in Section I, MORNINGSIDE shall have the vested right, within the limits and constraints of the applicable regulations, to conduct OPERATIONS of LICENSED FACILITIES and SOBER LIVING HOMES at its PROPERTIES. In the event Ordinance 2008 -5 is repealed by action of the City Council of the City of Newport Beach or the electorate, or if a court of competent jurisdiction declares the Ordinance invalid or unenforceable, this AGREEMENT shall remain in full force and effect. G. Police Power. In all respects not provided for in this ZONING AGREEMENT, the City of Newport Beach shall retain full rights to exercise its police power to regulate the operation of residential care facilities on the Morningside Recovery, LLC Zoning Agreement Exhibit "A" to Settlement Agreement 1193897 -7 PROPERTIES provided such powers are applied consistently with the provisions of state law and the terms of this AGREEMENT. H. No Conflicting Enactments. During the term of this ZONING AGREEMENT the City of Newport Beach shall not apply to the PROPERTIES any City- adopted ordinance, policy, rule, regulation, or other measure relating to OPERATION of the FACILITIES to the extent it conflicts with this ZONING AGREEMENT. I. Reservations of Authority. Notwithstanding any provisions set forth in this ZONING AGREEMENT to the contrary, the laws, rules, regulations, and official policies set forth herein shall apply to and govern OPERATIONS at the PROPERTIES: 1.) Procedural Regulations. Then current procedural regulations relating to hearing bodies, petitions, applications, notices, findings, records, hearings, reports, recommendations, appeals, and any other matter of procedure shall apply to the PROPERTY, provided that they are adopted and applied Citywide. 2.) Consistent City Regulations. Newport Beach City ordinances, resolutions, regulations, and official policies governing development and building that do not conflict with the AGREEMENT, or where MORNINGSIDE has consented in writing to the regulations, shall apply to the PROPERTIES. 3.) Public Health and Safety. Any Newport Beach City ordinance, regulation, rule, program, or official policy of general application that is necessary to protect persons on the PROPERTIES or in the immediate community from conditions dangerous to their health or safety, shall apply to the PROPERTIES. The City of Newport Beach may unilaterally enact any ordinance, regulation, rule, program, or official policy of general application necessary to protect persons from conditions dangerous to their health of safety. J. No Agency. Neither PARTY is acting as the agent of the other in any respect. Each PARTY is an independent contracting entity with respect to the terms, covenants, and conditions contained in this ZONING AGREEMENT. This ZONING AGREEMENT forms no partnership, joint venture, or other association of any kind. The only relationship between the PARTIES is that of a government Morningside Recovery, LLC Zoning Agreement Exhibit "A" to Settlement Agreement 1193897 -7 6 entity regulating the operation of private property by the owner or lessee of the property. K. Effective Date. This ZONING AGREEMENT shall not become effective, and except as set forth in subsection (1) of this Section, neither PARTY shall have any rights or obligations hereunder, until the "Effective Date." 1.) This ZONING AGREEMENT shall become effective on: a. The 91" day following the City Council of the City of Newport Beach's passage of the ordinance approving this ZONING AGREEMENT, or b. If a referendum or other elective challenge to the ordinance approving this ZONING AGREEMENT qualifies for the ballot, then on the 31St day after the City Clerk of the City of Newport Beach certifies that the referendum or other elective challenge has failed to pass, or C. If litigation is initiated to challenge this ZONING AGREEMENT prior to the Effective Date established in accordance with Section K (1) (a), and (b), above, then on the 315` day after the litigation has terminated, or the time for appeal has expired, and the legal challenge has been unsuccessful. 2.) The term of this ZONING AGREEMENT shall commence on the Effective Date and shall expire at the conclusion of the 25"' year thereafter. However in no event shall the term of this ZONING AGREEMENT exceed thirty (30) years after its execution. 3.) Stay of Ordinance 2008 -5 Pending Effective Date. Prior to the effective date of the ordinance adopting this ZONING AGREEMENT, or that date upon which it becomes clear that there will be no Effective Date, whichever is later, the CITY shall not otherwise enforce the provisions of Ordinance 2008 -5 against MORNINGSIDE or its AFFILIATES. L. Amendment or Cancellation of the Zoning Agreement. Other than modifications of this ZONING AGREEMENT under section I subsection (3) of this ZONING AGREEMENT, this ZONING AGREEMENT may be amended or Morningside Recovery, LLC Zoning Agreement Exhibit "A" to Settlement Agreement 1193897 -7 7 cancelled in whole or in part only by mutual written and executed consent of the PARTIES in compliance with California Government Code section 65868, and City of Newport Beach Municipal Code section 15.45.070. M. Enforcement. Unless amended or cancelled as provided in Section L, above, or modified or suspended pursuant to California Government Code section 65869.5, this ZONING AGREEMENT is enforceable by either PARTY despite any change in any applicable GENERAL PLAN or Specific Plan, zoning, subdivision, or building regulation, or other applicable ordinance or regulation adopted by the City (including by the City's electorate,) that purports to apply to any or all of the PROPERTIES. N. Periodic Review of Compliance. CITY and MORNINGSIDE shall each comply in good faith with the terms of this ZONING AGREEMENT. The PARTIES shall review this ZONING AGREEMENT at least once every 12 months from the Effective Date for good faith compliance with its terms, consistent with Government Code sections 65865 and 65865.1 and City of Newport Beach Municipal Code section 15.45.080. At the reviews, MORNINGSIDE shall document the current status of its OPERATIONS. MORNINGSIDE also agrees to furnish evidence of good faith compliance with this AGREEMENT as the CITY may require in the reasonable exercise of its discretion, and after reasonable notice to MORNINGSIDE. On or before December 3151 and June 30a' of each year during the term of this ZONING AGREEMENT, MORNINGSIDE shall submit a Compliance Review Report, whose template is attached hereto as Exhibit 113:' The requirement of good faith compliance shall be met upon the submittal to the CITY of an accurate Compliance Review Report showing information relating to facility locations and the number of CLIENTS at each MORNINGSIDE FACILITY. The CITY shall have the right to audit the accuracy of the Compliance Review Report through the on -site inspections of MORNINGSIDE's FACILITIES at mutually agreeable times during regular business hours. O. Events of Default. 1.) Default by Morningside. Pursuant to California Government Code section 65865.1, if the CITY determines that MORNINGSIDE has not complied in good faith with its obligations pursuant to this ZONING AGREEMENT, the CITY shall by written notice to MORNINGSIDE specify the manner in which MORNINGSIDE has failed to comply and state the steps MORNINGSIDE must take to bring itself into compliance. If MORNINGSIDE does not commence compliance within thirty Morningside Recovery, LLC Zoning Agreement Exhibit "A" to Settlement Agreement 1193897 -7 8 (30) days after receipt of written notice from the CITY specifying the manner in which MORNINGSIDE has failed to comply and diligently pursue steps to achieve full compliance, then MORNINGSIDE shall be deemed to be in default under the terms of this ZONING AGREEMENT. The CITY may then seek available remedies as provided in subsections (3) and (4), below. 2.) Default by City. If the CITY has not complied with any of its obligations and limitations under this ZONING AGREEMENT, MORNINGSIDE shall by written notice to the CITY specify the manner in which the CITY has failed to comply and state the steps necessary for the CITY to bring itself into compliance. If the CITY does not commence compliance within thirty (30) days after receipt of the written notice from MORNINGSIDE specifying the manner in which the CITY has failed to comply and diligently pursue steps to achieve full compliance, then the CITY shall be deemed to be in default under the terms of this ZONING AGREEMENT. MORNINGSIDE may then seek a specific performance or similar equitable remedy as provided in subsection (3) of Section O, below. 3.) Specific Performance and Damages Remedies. The PARTIES acknowledge that remedies at law are generally inadequate and that specific performance is appropriate for the enforcement of this ZONING AGREEMENT. The remedy of specific performance or, in the alternative, a writ of mandate, shall be the sole and exclusive remedy available to either PARTY in the event of the default, or alleged default, by the other. Prior to exercising such a remedy, the PARTY seeking to do so shall submit the matter to non- binding arbitration through JAMS or another mutually acceptable arbitrator. 4.) Recovery of Legal Expenses by Prevailing Party in Any Action. In any judicial proceeding between the PARTIES that seeks to enforce the provisions of this ZONING AGREEMENT, the prevailing party shall recover all of its actual and reasonable costs and expenses. These costs and expenses shall include expert witness fees, attorneys' fees, and costs of investigation and preparation before the initiation of the action. The right to recover these costs and expenses shall accrue upon initiation of the action. Morningside Recovery, LLC Zoning Agreement Exhibit "A" to Settlement Agreement 1193897 -7 P. Cooperation. Each PARTY covenants to take all reasonable actions and execute all documents that may be necessary to achieve the purposes and objectives of this ZONING AGREEMENT. Q. Force Majeure. Neither PARTY shall be deemed to be in default where failure or delay in performance of any of its obligations under this ZONING AGREEMENT is caused, through no fault of the PARTY whose performance is prevented or delayed, by floods, earthquakes, other acts of God, fires, war, riots or other hostilities, strikes or other labor hostilities, state or federal regulations, or court actions. R. Third Party Legal Challenge. If a third party brings a legal action challenging the validity or enforceability of any provision of this ZONING AGREEMENT or the applicable regulations or the manner in which the ordinance approving this ZONING AGREEMENT was processed and approved, including the application of the California Environmental Quality Act ( "CEQA ") to that process, the PARTIES shall defend the third party challenge jointly, and each parry shall be responsible for its legal expenses incurred in connection with the challenge, except that either or both parties may seek recovery of all legal expenses from the third party challenger. S. Right to Assign. MORNINGSIDE shall have the right to transfer or assign the rights and obligations contained herein in whole to any person, partnership, joint venture, firm, or corporation at any time during the term of this ZONING AGREEMENT without the consent of the CITY. Upon the effective date of any such transfer or assignment, the transferor - assignor shall notify the CITY of the name and address of the transferee. Any assignment of this ZONING AGREEMENT must be pursuant to a sale or transfer of MORNINGSIDE's rights in their entirety. Any sale or transfer of the PROPERTY shall include the assignment and assumption of the rights, duties, and obligations arising from this ZONING AGREEMENT to the transferee with respect to all of the PROPERTIES. MORNINGSIDE shall no longer be obligated under this ZONING AGREEMENT for the PROPERTY if MORNINGSIDE is not in default under this ZONING AGREEMENT at the time of the sale or transfer. T. Zoning Agreement Binding on Successors and Assigns. The burdens of this ZONING AGREEMENT are binding upon, and the benefits of this ZONING AGREEMENT shall inure to, all successors in interest of the parties to this ZONING AGREEMENT. Morningside Recovery, LLC Zoning Agreement Exhibit "A" to Settlement Agreement 1193897 -7 10 U. Estoppel Certificate. At any time, either PARTY may deliver written notice to the other PARTY that the PARTY certify in writing that, to the best of its knowledge: 1.) This ZONING AGREEMENT is in full force and effect and is binding on the PARTY; 2.) This ZONING AGREEMENT has not been amended or modified either orally or in writing. If this ZONING AGREEMENT has been amended, the PARTY providing the certification shall identify the amendments; and, 3.) The requesting PARTY is not in default in the performance of its obligations under this ZONING AGREEMENT. If the requesting PARTY is in default, the other PARTY must describe the nature of the default. The requesting PARTY shall execute and return the certificate within sixty (60) days following receipt. Any assignee of a PARTY's rights and obligations hereunder, as referred to in this Section, shall be entitled to rely on the certificate. V. Further Actions and Instruments. Each PARTY shall cooperate with and provide reasonable assistance to the other PARTY to the extent consistent with and necessary to implement this ZONING AGREEMENT. Upon the request of a PARTY at any time, the other PARTY shall promptly execute, with acknowledgement or affidavit if reasonably required, and file or record the required instruments and writings and take any actions as may be reasonably necessary to implement this ZONING AGREEMENT or to evidence or consummate the transactions contemplated by this ZONING AGREEMENT. W. Notices. Any notice or demand that shall be required or permitted by law or any provision of this ZONING AGREEMENT shall be in writing. If the notice or demand will be served upon a PARTY, it shall be personally served to the PARTY; deposited in the U.S. Mail, certified, return receipt requested, and postage prepaid; or delivered by a reliable courier service that provides a receipt showing date and time of delivery with courier charges prepaid. The notice or demand shall be addressed as follows: To City: City of Newport Beach 3300 Newport Boulevard Post Office Box 1768 Newport Beach, California 92663 -3884 Morningside Recovery, LLC Zoning Agreement Exhibit "A" to Settlement Agreement 1.193897 -7 11 Attn: City Manager Fax: 949-644-3020 With a copy to: City Attorney City of Newport Beach 3300 Newport Boulevard Post Office Box 1768 Newport Beach, California 92663 -3884 To Operator: Morningside Recovery, LLC 3404 A Via Lido Newport Beach, California 92663 (949) 675 -0006 With a copy to: Mary Helen Beatifrcato Beatificato & Associates, APC 28562 Oso Parkway, Ste. D -424 Rancho Santa Margarita, California 92688 Either PARTY may change the address stated in this Section by notice to the other PARTY in the manner provided in this Section, and notices shall be addressed and submitted to the new address. Notice shall be deemed to be delivered upon the earlier of: (a) the date received; or (b) three business days after deposit in the mail as provided above. X. Rules of Construction and Miscellaneous Terms. 1.) Rules of Construction. The singular includes the plural; the masculine and neuter include the feminine; "shall" is mandatory; "may" is permissive. 2.) Time is of the essence. Time is of the essence regarding each provision of this ZONING AGREEMENT in which time is an element. 3.) Waiver. Failure by a PARTY to insist upon the strict performance of any of the provisions of this ZONING AGREEMENT by the other PARTY, and failure by a PARTY to exercise its rights upon a default by the other PARTY, shall not constitute a waiver of that PARTY's right to demand strict compliance by the other PARTY in the future. Morningside Recovery, LLC Zoning Agreement Exhibit "A" to Settlement Agreement 1193897 -7 12 5.) Counterparts. This ZONING AGREEMENT may be executed in two or more counterparts, each of which shall be identical and may be introduced in evidence or used for any other purpose without any other counterpart, but all of which shall together constitute one and the same ZONING AGREEMENT. 6.) Entire Agreement. Except for the Settlement Agreement, this ZONING AGREEMENT constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, between the PARTIES with respect to the subject matter addressed in this ZONING AGREEMENT. 7.) Construction. This ZONING AGREEMENT has been drafted after extensive negotiation and revision. Both the CITY and MORNINGSIDE are sophisticated parties who were represented by independent counsel throughout these negotiations. The CITY and MORNINGSIDE each agree and acknowledge that the terms of this ZONING AGREEMENT are fair and reasonable, taking into account their respective purposes, terms, and conditions. This ZONING AGREEMENT shall therefore be construed as a whole consistent with its fair meaning, and no principle or presumption of contract construction or interpretation shall be used to construe the whole or any part of this ZONING AGREEMENT in favor of, or against, either PARTY. 8.) No Third Party Beneficiaries. The only parties to this ZONING AGREEMENT are the CITY and MORNINGSIDE. This ZONING AGREEMENT does not involve any third party beneficiaries, and it is not intended and shall not be construed to benefit or to be enforceable by any other person or entity. 9.) Applicable Law and Venue. This ZONING AGREEMENT shall be construed and enforced consistent with the internal laws of the State of California. Any action arising under this ZONING AGREEMENT or brought by any PARTY for the purpose of enforcing, construing, or determining the validity of any provision of this ZONING AGREEMENT shall be filed and tried in the Superior Court of the County of Orange, State of California, or the United States District Court for the Central Morningside Recovery, LLC Zoning Agreement Exhibit "A" to Settlement Agreement 1193897 -7 13 District of California. The PARTIES waive all provisions of law providing for the removal or change of venue to any other court. 10.) Section Headings. All section headings and subheadings are inserted for convenience only and shall not affect construction or interpretation of this ZONING AGREEMENT. 11.) Authority to Execute. The persons executing this ZONING AGREEMENT warrant and represent that they have they have the authority to execute this ZONING AGREEMENT on behalf of the entity for which they are executing this ZONING AGREEMENT. They further warrant and represent that they have the authority to bind their respective PARTIES to the performance of its obligations under the ZONING AGREEMENT. CITY: CITY OF NEWPORT BEACH By: Keith D. Curry Title: MAYOR of Newport Beach MORNINGSIDE RECOVERY, LLC M. JEFFREY YATES Title: President MORNINGSIDE RECOVERY, LLC By: CANDACEBRUCE Title: Chief Executive Officer Morningside Recovery, LLC Zoning Agreement Exhibit "A" to Settlement Agreement 1193897 -7 14 APPROVED AS TO FORM: By: Leonie H. Mulvihill Title: ACTING CITY ATTORNEY CITY OF NEWPORT BEACH ATTEST: By: Leilani Brown Title: CITY CLERK CITY OF NEWPORT BEACH Morningside Recovery, LLC Zoning Agreement Exhibit "A" to Settlement Agreement 1193897 -7 15 Exhibit "I" to Zoning Agreement City of Newport Beach Morningside Recovery, LLC EXHIBIT "1" OPERATIONAL CONDITIONS for MORNINGSIDE RECOVERY, LLC Occupancy Level. The operator of Morningside Recovery, LLC, hereinafter referred to as "Operator," is limited to housing a total of thirty -six (36) clients in recovery from drug and alcohol abuse in the City of Newport Beach, and shall limit occupancy of its current facilities to the following: a. 4823 A River Avenue — 6 client maximum b. 4823 B River Avenue — 6 client maximum c. 5015 A River Avenue — 6 client maximum d. 5015 B River Avenue — 6 client maximum e. 112 39th Street — 6 client maximum f. 29 Ima Loa Court — 6 client maximum The above occupancy levels reflect a maximum of thirty (30) clients in the Peninsula Zone and a maximum of six (6) outside of the Peninsula Zone. The boundaries of the Peninsula Zone are more particularly defined in Exhibit "2" of the corresponding Zoning Agreement. Operator may move clients from the above properties into other properties but must maintain the 30 client cap in the .............. Peninsula Zone and 36 total client cap citywide, provided that Operator maintain the dispersion standards in Section III A, subsections 5 (a) & (b) of the Zoning Agreement. 2. Staffing. Operator shall have enough staff to appropriately and responsibly manage each facility; including at least one qualified manager on -site or on -call at all times (24 hours a day, seven days each week). 3. Governmental Referrals. Operator shall not provide any services to any client or house any client who has been referred or caused to be referred to a Morningside Recovery facility by any governmental agency, including but not limited to probationers or parolees, due to the limitations that Section 509.9 of the California Building Code places on Group I and R occupancies. 11287- 0007 \1204428v1.doc Exhibit "2" to Settlement Agreement City of Newport Beach Momingside Recovery, LLC 4. Assembly Uses. Assembly uses are prohibited in these facilities, except those that are limited solely to client residents of the facility and facility staff (and in some cases small meetings of a client's family members with facility staff). 5. Medical Waste. Any and all medical waste generated through the operation of the facility shall be disposed of in accordance with the City of Newport Beach's Municipal Code, all other laws and best industry standards and practices. 6. Trash and Trash Enclosures. Operator shall comply with City code provisions pertaining to trash enclosures, and if directed by the Planning Director, shall secure and maintain commercial bin service at the subject properties. Operator shall provide a sufficient number of plastic trash cans with sealable covers to contain all of the refuse generated by the facility, which are to be used at all times. Trash cans shall be put out for pick up no earlier than 7:00 p.m. and before 8:00 p.m. on the evening before trash collection day, and shall be put back within the property by 6:00 p.m. on the day of collection. 7. Smoking and Tobacco Products. Per NBMC Section 20.91A.050(A), no clients, guests, or any other users of the subject. property may smoke in an area from which the secondhand smoke may be detected on any parcel other than the parcel upon which the use is located. Operator shall use its best efforts to contain secondhand smoke generated by .patients, clients, customers, and staff within the lot line of the subject property. In addition, Operator will not allow clients, staff, or residents to litter cigarette butts on the ground, floor, deck, sidewalk, gutter, boardwalk or street. ,Operator's administrators and managers shall use their best efforts to ensure that its clients comply with the City's prohibition on clients' tobacco use on beaches, boardwalks, and piers .(NBMC §11.08.080). This includes any meetings Mortingside's clients participate in "off- site." 8. Parking. Operator shall keep garages and other parking spaces at. its facilities open and available for parking for staff, and visiting family members' .vehicles, cleaning persons' vehicles, and client transport vans at all times. Clients to the facility are not permitted to have. personal vehicles at the facility. 9. Client Transport. Operator shall ensure that loading and unloading of passengers of the facility's transportation van shall occur only in open parking spaces or garage spaces. The van driver is prohibited from stopping or double- parking in a traffic lane to load and unload passengers. In addition, client drivers shall respect all City rules regarding parking and/or stopping and waiting to load residents.. Client transport vehicles shall not block adjacent alleys or street ends. Client drivers shall not leave vehicles in reverse gear if reverse has an audible back -up 11287 - 0007 \1204428vLdoc Exhibit "2" to Settlement Agreement City of Newport Beach Momingside Recovery, LLC warning sound. Client drivers shall speak to residents at a level protective of neighborhood peace, cognizant of the hour, to avoid waking neighbors. 10. Profanity and Lewd Behavior. Operator shall not tolerate lewd behavior, lewd speech, or profanity at the subject property. Profanity at a level audible to neighboring residents may result in an administrative citation issued by the City upon the property owner and operator. 11. Noise. Operator shall strictly adhere to the City's noise standards (NBMC §10.26.025; 10.26.030). Operator shall be responsible for minimizing clapping, stomping, or other noises at meetings or gatherings at the subject property, consistent with NBMC §10.26.030. 12. Route Plans. Operator shall adhere to the Route Plans for transport of its staff, residents, clients, and customers. The Route Plans for all Momingside facilities are attached hereto as "Exhibit 4." Short-term interruptions, such as medical emergencies or street maintenance beyond Operator's control, are allowable modifications to the Route Plans. 13. Deliveries. Staff members in their private vehicles may deliver business products and other packages and goods to the facility during weekdays between the hours of 9:00 a.m. to 5:00 p.m. 14. Hotline. Operator shall establish, provide public.notice of, and operate a hotline for receiving inquiries and /or complaints in reference to its operation of its facility. .The phone number need not be staffed 24 hours a day seven days a week, but callers should be responded to within the next 24 -hour period. Alternatively, the Operator shall provide area residents and the City with a contact name, phone number, and e-mail address that is available 24 hours a day, seven days each week. This contact shall be available to assist residents and the City with any problems or concerns arising from the facility. E -mails or messages left for the Operator's designated contact shall be returned promptly within a 24 -hour period from receipt. 15. Stakeholder Group. Upon invitation by the City, Operator shall participate in the activities of any stakeholder committee or group established by the City to address complaints and concerns of residents of the City regarding the operation of Residential Care Facilities in the City. 16. Persons per Bedroom. Operator shall not allow more than three clients to sleep in one bedroom. 11287- 0007 \1204428vlAm Exhibit "2" to Settlement Agreement City of Newport Beach . Morningside Recovery, LLC 17. Building and Zoning. Operator recognizes that each of its facilities have specific setbacks from the side yards, front yard, and/or back yards per the City's Building and Zoning Codes. Operator will keep these setbacks clear of obstruction, including building obstruction. The orderly storage of trashcans is acceptable in setbacks. 18. Facility Nuisances. The subject properties shall not be unsafe, unsightly or poorly maintained. If Operator receives a nuisance violation from the City in regards to any of these issues, Operator, shall correct the violation within seven days or contact the City directly to negotiate a mutually agreeable timeline. 19. Beaches and Other Common Gathering Areas. Operator's use of the beaches for meetings, prayer, conversation, or other gatherings shall show due respect to non - resident visitors, residents, and other beachgoers, thus allowing them to take full enjoyment of the beach. Operator shall not conduct business on the beach (per NBMC § 10.08.030). 20. Federal, State and Local Laws. Operator shall comply with all federal, state, and local laws. The issuance of this use permit shall not constitute a waiver of the requirements of any federal, state or local law, including the requirements of the California Building Code. 21. Affidavit of Disability. The Operator shall execute an affidavit declaring that all clients receiving services from this facility are disabled persons, as that term is defined by federal and state fair housing laws. 11287- 0007 \1204428v1.doc Exhibit "3" to the Zoning Agreement Compliance Report Template (Date Report Submitted) This form covers the period of (month, day) through 20 (month, day), During the above period, Morningside Recovery, LLC, managed or controlled the following facilities in Newport Beach: 1-1281 - i00'7\3213146v4.doc > 0 U cc 40 K R N W O Z ti v 0 u v m y W O v 0 a d w O 'o N 3 O an m O n m v Y N a N M C Ln c v v 3 m Q N K O C 0 U 01 N t 0 C > m 0 m m 0 s m C m Q) Y N N N C yN w v � i _T 7 C N � T m m C Y L C j N M �s o 3 ' m Z M m U o • * • a v v Y N N M C m in a C a v Y N v 3 C m Q N K m L v v N O r o .a t m c 0 L L m G tw C ia 0 m O1 4 .N a `v N C L '6 m v 0 m m O m N `1 O t m m N a c m N co M O N m Y N O d v v N M E O w v t Y v Y N CA M N N N Y 'u N N CO C C O 0 N V Q M T N 'u w m N m > 0 E v bb C O N C N L 3 v 5 O d L v c m E m 0 T d > Y m d D_ 0 0 u Y m t v v h0 C .0 O a c m Y v a S F V Attachment No. PC 4 Residential Care Facilities: Licensed and Unlicensed • l 1I ppp 9 � c b � m v i lip r � o h get e'lala�i�68 a 7�rlll u \ v m �9� aa$6SSF LL C to fW 1 U � g ,� 5 °•3�3�A�` a, C