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HomeMy WebLinkAbout93-48 - Lease of Beacon BayRESOLUTION NO. 93 -48 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH APPROVING A LEASE FOR THE REAL PROPERTY COMMONLY REFERRED TO AS BEACON BAY. WHEREAS, the City of Newport Beach by virtue of a 1978 legislative grant found in Chapter 74 of the Statues of 1978 (the 'Beacon Bay Bill "), hold the right, title • and interest to certain tidelands and uplands commonly known as Beacon Bay; and WHEREAS, the Beacon Bay Bill frees the westerly portion of the filled tidelands from the public trust and specifically authorizes the lease of the property for residential purposes subject to certain expressed statutory conditions; and WHEREAS, Beacon Bay including the "westerly portion" thereof, has been divided into individual lots, with each lot leased by the City for residential purposes until June 30, 2006; and WHEREAS, on November 3, 1987 a majority of electors of the City approved a measure which authorized the City Council to enter into new leases of residential lots in Beacon Bay for a period not to exceed fifty years; and WHEREAS, on November 3, 1992 a majority of electors of the City approved Measure M which authorized the City Council to lease tidelands and waterfront property consistent with the provisions of state law; and WHEREAS, the City Council pursuant to the authority conferred by the electors entered into negotiations with current lessees, and the parties have agreed on the terms and conditions of a new lease with a fifty (50) year term, provision for adjustments in lease payments to reflect changes in the value of Beacon Bay leaseholds, and a recalculation of lease payments in the event of a transfer of the lease by the current lessee or any subsequent lessee (as defined therein); and WHEREAS, the Beacon Bay Community Association has approved the form and content of the proposed lease, NOW THEREFORE BE IT RESOLVED by the City Council of the City of Newport Beach that the lease attached hereto and made a part hereof is hereby approved subject to minor technical revisions as may be necessary and subject to approval by the State Lands Commission. BE IT FURTHER RESOLVED that the Mayor and City Clerk are authorized to execute leases in the form of that attached hereto with each of the individual leaseholders in Beacon Bay. ADOPTED this 28th date of June 1993. ATTEST: • C.. CITYCLERK C0 • Charter LEASE THIS LEASE, made and entered into on this _ day of 19_, by and between the CITY OF NEWPORT BEACH, a City and municipal corporation, ( "Lessor ") and ( "Lessee ") regards the real property commonly referred to as Beacon Bay Lot This Lease is made in the context of the following: RECITALS A. The City of Newport Beach, by virtue of a 1978 legislative grant found in Chapter 74 of the Statutes of 1978 (the "Beacon Bay Bill ") , holds the right, title and interest to certain tidelands and uplands commonly known as Beacon Bay and generally described in Exhibit "A." B. The Beacon Bay Bill frees the "Westerly portion" of the filled tidelands from the public trust and specifically authorizes the lease of the property for residential purposes subject to certain express statutory conditions. C. The "Westerly Portion" of Beacon Bay has been divided into individual lots, with each lot leased by the City for 3,,iY )) aooG residential purposes until 9a a 3�, 290�r D. On November 3, 1987, a majority of electors of the City approved a measure which authorized the City Council to enter into new leases of residential lots in Beacon Bay for a period not to exceed fifty (50) years. E. On November 3, 1992, a majority of electors of the City approved Measure M which authorized the City Council to lease tidelands and waterfront property consistent with the provisions of state law. 1 0 L F. The City Council, pursuant to the authority conferred by the electors, entered into negotiations with current lessees and the parties have agreed on the terms and conditions of a new lease with a fifty (50) year term, provision for adjustments in lease payments to reflect changes in the value of Beacon Bay leaseholds, and a recalculation of lease payments in the event of • a transfer of the Lease by the Current Lessee or any Subsequent Lessee. G. Lessee acknowledges that the terms and conditions of this Lease may result in Lessee paying substantially more or less than another Lessee for similar property depending upon the date this Lease is executed, the date of any subsequent transfer, and the consideration paid for transfers of similarly situated property. H. Lessee acknowledges that accurate and complete reporting to the City of all consideration paid for the transfer of this Lease is vitally important in that failure to fully report all consideration could dramatically reduce the amount of rent received by the City from other Beacon Bay Lessees. I. Lessor and Lessee acknowledge that the City has agreed to a fifty (50) year term and limited lease payment increases in consideration of provisions which require payment of rent approximating fair market rental value, without regard to any advantage maintained by Current Lessees, upon transfer by Current Lessees and payment of deferred rent in the event the Lease is not signed on or before the "Effective Date". J. The State Lands Commission has reviewed the form of this Lease and determined that it is in conformance with is the provisions of relevant statutes, rules and regulations, including, without limitation, the Beacon Bay Bill. E 0 K. Lessor has determined that this Lease is consistent with provisions of the Beacon Bay Bill, the Charter, General Plan and Zoning Ordinance of the City of Newport Beach, and to all other applicable state and local laws. • L. Lessor has determined it is in the best interests of the citizens of Newport Beach to maintain the residential character of that portion of Beacon Bay currently leased for residential purposes and to enter into new leases with Current Lessees under the terms and conditions specified in this document. NOW, THEREFORE, IN CONSIDERATION OF THE FOREGOING RECITALS AND THE COVENANTS IN THIS LEASE, THE PARTIES AGREE AS FOLLOWS: 1. LEASED LAND. Lessor hereby leases to Lessee the real property commonly known as Beacon Bay Lot , the ( "Leased Land ") which is more particularly described in Exhibit "B," and generally depicted on Exhibit "A," subject to the limitations on use specified in Paragraph 6. As used in this Lease, the term "Premises" shall refer to the Leased Land and any improvements constructed thereon. Lessor expressly reserves all oil, oil rights, gas, minerals, mineral rights, natural gas rights and other hydrocarbon substances in and under the Leased Land and the right to grant and transfer the same, together with all necessary and convenient rights to explore for, develop, produce and extract and take the same, subject to the express limitation that any and all operations for the exploration, development, production, extraction and taking . of any such substance shall be carried on at levels below the depth of five hundred feet (5001) from the surface of the land by means of wells, derricks and other equipment from surface locations on adjoining or neighboring land and subject further to all 3 0 0 restrictions and regulations concerning the drilling for, and production of, oil, gas, minerals, petroleum and other hydrocarbon substances specified in the Newport Beach City Charter or the Newport Beach Municipal Code. 2. TERM. • The term of this Lease shall commence on the date of execution, but in no event prior to expire termination as specified in Paragraph and shall , subject to earlier 3. RENTAL. A. Definitions. For the purposes of this Lease, the following terms shall be defined as specified in this paragraph. In certain cases, the definition of the term contains operative language that affects the rights of the parties: (1) The term "Effective Date" shall mean the day of _ _ , 19� (2) The term "Execution Date" shall mean the date when this Lease is executed by Lessee. (3) The term "Current Lessee" shall mean the 7-0N E aq I9q.3 person or persons who, as of was the Lessee under the Pre - existing Lease. (4) The term "Pre- existing Lease" shall mean the Lease for the leased premises which was effective on January 1, Johle 3Ci� oi00� 1988, and would, absent this Lease, expire (5) The term "Initial Rent" shall mean the fair market rental value of the leased premises as determined by the appraisal of George Hamilton Jones, with due consideration to the leasehold advantage created by the Pre - existing Lease, all as shown on Exhibit "C." (6) The term "Actual Sales Value" shall mean is the total of all consideration paid for the non - exempt transfer of this Lease or the Pre - existing Lease from the Current Lessee, or Subsequent Lessee, to another person. 4 0 0 (7) The term "Average Actual Sales Value Rent" shall mean two and one -half percent (2 -1/2%) of the mean of the Actual Sales Value of the non - exempt transfer of this Lease or the Pre - existing Lease of similarly situated (waterfront or interior) Beacon Bay parcels as specified in this subparagraph. Average Actual Sales Value Rent shall be the mean of the Actual Sales Value of the three similarly situated parcels most recently transferred. If only one or two parcels have transferred during the preceding seven years, that one transfer, or those two transfers, shall be used to calculate the mean. In the event no similarly situated parcel has transferred within the previous seven years, the mean shall be the Actual Sales Value of the most recent transfer. Exempt transfers as defined in paragraph (B)3 shall not be used to calculate Average Actual Sales Value rent. (8) The term "Deferred Rent" shall mean the total rent that a Current Lessee would have paid had this Lease been executed on the Effective Date, through and including the date on which this Lease was first executed, less the rent actually paid pursuant to the Pre - existing Lease, together with interest at the rate of eight percent (8%) per annum calculated on the balance due at the end of each Lease Year or portion thereof. (9) The term "transferred" shall mean any sale, assignment, sublease or other transaction pursuant to which the right to possession of the premises and the right to sign a new lease identical to this Lease is transferred to another person. (10) The term "person" shall mean any natural person or natural person(s) and does not include any corporation, association, or business entity in any form except a financial institution acting in the capacity of a lender. B. Rental Payments. 0 Lessee shall pay annual rent in the sum of ($ ), payable at the rate of ($ ) per month. Lessee shall also pay, if applicable, deferred rent in the sum of 5 0 0 ($ ) upon execution of this Lease. Rent shall /shall not (circle one) be adjusted every seven (7) years after the date of transfer in accordance with the provisions of subparagraph B.(4). Annual rent, deferred rent, and periodic adjustments are based upon the following: (1) Execution Before Effective Date. • In the event this Lease is fully executed on or before the Effective Date, Rent shall be paid as follows: (a) Current Lessee: Current Lessee shall pay annual rent equal to Initial Rent as specified in Exhibit "C." Thereafter, so long as the Current Lessee remains in possession and there has been no transfer of this Lease, rent shall remain as specified in this subparagraph notwithstanding the provisions of subparagraph B.4. (b) In the event of any transfer of this Lease to a Subsequent Lessee, the Subsequent Lessee shall pay annual rent equal to two and one -half percent (2 -1/2 %) of Actual Sales Value determined as of the date of the transfer in accordance with the provisions of subparagraph A(7). Thereafter, rent shall be adjusted every seven years after the date of the transfer in accordance with the provisions of subparagraph B.4. 2. Execution After the Effective Date: In the event this Lease is first executed after the Effective Date, rent shall be determined and paid as follows: (a) Current Lessee /Within Five Years After Effective Date: In the event this Lease is executed by the Current Lessee within five (5) years after the Effective Date, the Current Lessee shall pay annual rent equal to Initial Rent plus a sum calculated by multiplying the difference between Initial Rent and Average Actual Sales Value Rent by a fraction equal to the is number of months between the Effective Date and Execution Date, divided by sixty. The Current Lessee shall also pay all deferred rent concurrent with the execution of this Lease. Thereafter, so 6 0 0 long as Current Lessee remains in possession and there has been no transfer of this Lease, rent shall remain as specified in this subparagraph, notwithstanding the provisions of subparagraph B(4). (b) Current Lessee /More Than Five Years After Effective Date: In the event this Lease is executed by the • Current Lessee more than five (5) years after the Effective Date, the Current Lessee shall pay annual rent equal to Average Actual Sales Value Rent calculated as of the date of execution in accordance with the provisions of subsection A(7). The Current Lessee shall also pay all deferred rent concurrent with the execution of this Lease. Thereafter, rent shall be adjusted every seven (7) years after the date of execution in accordance with the provisions of subparagraph B.4. (c) Subsequent Lessee: In the event the Current Lessee signs this Lease after the Effective Date and transfers this Lease to any Subsequent Lessee, or the Current Lessee transfers the Pre- existing Lease to a Subsequent Lessee who wishes to sign this Lease after the Effective Date, the Subsequent Lessee shall pay annual rent equal to two and one -half percent (2- 1/2&) of Actual Sales Value determined as of the date of execution and in accordance with subparagraph A(7). The Subsequent Lessee shall also pay all deferred rent concurrent with the execution of this Lease. The annual rent shall be adjusted every seven (7) years following the Execution Date in accordance with the provisions of subparagraph B.4. 3. Exempt Transfers. The provisions of this subsection 3.B regarding transfers shall not operate to increase rent if: (a) Lessee is assigning an interest in this Lease to a trustee under a deed of trust for the benefit of a . lender; (b) the transfer is caused by the death of a spouse and the full interest of the deceased spouse is transferred to a surviving spouse; rA 0 0 (c) the transfer or assignment is by a bona fide lender acquiring title by foreclosure or deed in lieu of foreclosure of a trust deed; or (d) the transfer is a sublease of the premises for one year or less, provided, however, a sublease of the premises for one year or less shall not be considered an exempt • transfer if there is a second or successive sublease of the premises regardless of duration; (e) the transfer is caused by the dissolution of the marriage of Lessee and the full interest of one of the spouses is transferred to the other spouse; (f) the transfer is to an inter vivos trust, living trust or other similar estate planning arrangement of Lessee; provided, however, that the provisions of subsection 3.0 shall apply upon the death of such Lessee if the beneficiary of such trust or other arrangement is other than the surviving spouse; or (g) the transfer is to a guardian or custodian of Lessee appointed due to the physical or mental incapacity of Lessee provided, however, that the provisions of subsection 3.0 shall apply upon the death of such Lessee. 4. Rent Adjustments. Except as provided in subparagraphs B(1) (a) and B(2)(a), on the seventh (7th) anniversary of the Execution Date of this Lease, or the date of any transfer of this Lease by any Current or Subsequent Lessee, rent shall be adjusted to reflect the then current Average Actual Sales Value Rent. However, in no event shall rent be adjusted above a sum equal to the rent paid by Lessee as of the Execution Date increased at the rate of five percent (5 %) per annum (compounded annually), and in no event shall rent be adjusted below a sum equal to the rent paid on the Execution Date reduced by five percent (5 %) per annum. Lessor shall endeavor to notify Lessee of rental adjustments at least forty -five (45) days prior to the end of each seventh (7th) U 0 lease year; provided, however, failure of Lessor to give forty -five (45) days' notice does not relieve Lessee from the obligation to pay increased rent or the right to pay less rent in the event of a decrease in the Average Actual Sales Value Rent; and, provided further, that Lessee shall have no obligation to pay rent increases which apply to any period greater than ninety (90) days prior to • the receipt by Lessee of Lessor's notice of an increase in rent. 5. Installment Payments /Grace Period: Lessee shall pay rent in equal monthly installments, with payment due on or before the first day of the month preceding the month for which rent is paid. Rent shall be prorated during any month when a transaction which increases rent becomes effective other than the first day of that month. No late payment charge applies to payments received by Lessor on or before 5:00 P.M. on the fifteenth (15th) day of the month for which the payment is made ( "Grace Period "). If a rent payment, or any portion thereof, is received by Lessor after expiration of the Grace Period, Lessee shall pay Lessor a late payment charge equal to four percent (4$) of each late payment, or portion thereof. Rent payments shall be payable to the City of Newport Beach and sent, or delivered, to the Finance Director at the address specified for service of notices. Rent shall be payable by Lessee to Lessor in such coin or currency to the United States as at the time of payment is legal tender for public and private debts. Lessor and Lessee agree that late charges specified in this Paragraph represent a fair and reasonable estimate of the cost Lessor will incur by reason of any late payment by Lessee. Any late or missed payment of rent constitutes a default pursuant to Lessor to do so for that or any other late or missed payment. paragraph 13 of this Lease. Any failure by Lessor to declare a default and initiate termination of the Lease due to a late or • missed payment shall not be considered a waiver of the right of Lessor to do so for that or any other late or missed payment. 0 0 4. TRANSFER. Lessee may transfer this Lease subject to the prior written consent of Lessor. Lessor shall not unreasonably withhold or delay its consent to transfer. Lessor shall consent to any transfer when Lessee and the proposed Lessee have complied with the following: • (a) Lessee shall furnish Lessor with executed copies of each and every document used to effect the transfer. (b) Lessee shall pay to Lessor a transfer fee of one hundred dollars ($100.00); (c) Lessee shall execute a "Termination of Leasehold Interest" for recordation; (d) The new Lessee shall execute a new lease and execute a "Memorandum of Lease" for recordation. (e) The parties to any non - exempt transfer of this Lease shall provide Lessor with all information relevant to a determination of the total consideration paid for the transfer. Lessee and the prospective Lessee shall provide this information within ten (10) days after they reach agreement regarding total consideration to be paid for the transfer of this Lease. Lessor shall have the right, at its sole discretion, to commission an appraisal of the fair market value of this Lease and improvements thereon as of the date of transfer and the value as determined by the appraiser shall be deemed the Actual Sales Value for purposes of calculating Average Actual Sales Value Rent and rental payments. * *ttt* (OLD PARAG. TO BE MOVED SOMEWHERE ?) (e) Lessee and the prospective Lessee shall furnish Lessor with a statement of the total consideration paid for the transfer as well as all documents which are relevant to the total consideration paid for the transfer. 10 • Lessor's consent is not required for the "exempt transfers" referenced in subparagraph 3.B(3), provided, however, Lessee shall furnish Lessor with copies of all documents used to effect any exempt transfer. • 5. ENCUMBRANCES. A. Right to Encumber. Lessee may encumber this Lease by deed of trust, mortgage, or similar instrument, in favor of any institutional lender regulated by state or federal law ( "Lender ") for any purpose without the consent of Lessor. Neither Lessee nor Lessor shall have the power to encumber Lessor's interest in the premises. Any encumbrance shall be subject to all covenants, conditions and restrictions in this Lease and to all rights and interests of Lessor except as otherwise expressly provided in this Lease. Lessee shall give Lessor prior written notice of any encumbrance as well as a copy of all documents evidencing the encumbrance. B. Notice to Lender. Lessor shall have no obligation to give any Lender any written notice pursuant to this Lease unless the Lender has given Lessor written notice of its name, address, and nature of encumbrance ( "Complying Lender ") . Lessor shall give all Complying Lenders a copy of any written notice of default, notice of termination or other notice which may affect Lessee's rights under this Lease. Notice shall be deemed given by Lessor to Lender when deposited in the United States mail, first class postage pre -paid, and sent to Lender at the address furnished in writing by Lender. C. Modification. Lessor and Lessee agree that they will not modify this Lease by mutual agreement without the prior written • consent of Lender. D. Rights of Lender. Any Lender with an encumbrance on this Lease shall have the right, during the term of the Lease, to: 11 • • (1) perform any act required of Lessee pursuant to this Lease; (2) transfer this Lease to the purchaser at any foreclosure sale, the assignee in the event of an assignment in lieu of foreclosure, or to acquire the interest of Lessee pursuant to foreclosure or assignment and thereafter transfer this Lease to • the Lender's successor. Lender shall have no right to transfer this Lease unless and until Lender has cured all defaults requiring the payment or expenditure of money by Lessee. E. Right of Lender to Cure Default. Lessor shall give written notice of any default or breach of this Lease by Lessee to Lender and afford Lender the opportunity, after notice, to: (1) cure the breach or default within ten (10) days after expiration of the time period granted to Lessee for curing the default if the default can be cured by payment of money; (2) cure the breach or default within ten (10) days after expiration of the time period granted to Lessee for curing the default when the breach or default can be cured within that period of time; or (3) cure the breach or default in a reasonable time when something other than money is required to cure the breach or default and cannot be performed within ten (10) days after expiration of the time period granted to Lessee for curing the default, provided, the acts necessary to cure the breach are commenced within ten (10) days and thereafter diligently pursued to completion by Lender. F. Foreclosure in Lieu of Cure. Lender may forestall termination of this Lease . or a default or breach by Lessee by commencing foreclosure proceedings subject to strict compliance with the following: (1) proceedings are commenced within thirty 12 • • (30) days after service on Lender of the notice describing the breach or default; (2) the proceedings are diligently pursued to completion in the manner authorized by law; and (3) Lender perform all of the terms, covenants and conditions of this Lease requiring the payment or expenditure of money by Lessee until the proceedings are complete or are discharged by redemption, satisfaction, payment or conveyance of this Lease to Lender. G. New Lease. Notwithstanding any other provision of this Lease, should this Lease terminate because of any default or breach by Lessee, Lessor shall enter into a new lease with Lender as Lessee provided: (1) the written request for the new lease is served on Lessor by Lender within ten (10) days after service on Lender of any notice described in subparagraph (2) the new lease contains the same terms and conditions as this Lease except for those which have already been fulfilled or are no longer applicable. (3) on execution of the new lease by Lessor, Lender shall pay any and all sums that would be due upon execution of the new lease, but for its termination and shall fully remedy, or agree in writing to remedy, any other default or breach committed by Lessee that can be remedied. (4) Lender shall, upon execution of the new lease, pay all reasonable costs and expenses (including attorney's fees) incurred in terminating this Lease, recovering possession of the premises from Lessee, in preparing the new lease. • H. Miscellaneous. The following provisions shall apply to Lessor, Lessee and any Lender: (1) Any Lender shall be liable to perform the 13 0 • obligations of the Lessee under this Lease only so long as the Lender holds title to this Lease; (2) Lessee shall, within ten (10) days after the recordation of any trust deed or other security instrument, record, at Lessee's sole expense, Lessor's written request for a copy of any notice of default and /or notice of sale under any deed • of trust as provided by state law. 6. USE AND MAINTENANCE. A. The Leased Land shall be solely for residential purposes. Lessee may demolish, construct, remodel, reconstruct and maintain structures on the Leased Land for residential purposes so long as the structures and construction are authorized by appropriate City permit and fully comply with all City ordinances, resolutions, regulations, policies, and plans. Lessee shall also obtain permission to construct and /or maintain structures from the California Coastal Commission and any other state agency if required by law. B. Lessor shall not be required to make any changes, alterations, additions, improvements, or repairs in on or about all or part of the Premises. Lessee shall, at all times during the term of this Lease and without any cost or expense to Lessor, keep and maintain, the Premises, including, without limitation, all structures, facilities, walks, curbs, parkways and other improvements, in good order and repair and in a clean, safe, sanitary and orderly condition. Lessee shall repair or reconstruct any improvements on the Leased Land following any damage or destruction thereof, unless the improvements are being destroyed in conjunction with remodeling or reconstruction and Lessor has consented, in writing, to the damage or destruction. Lessee shall cause to be constructed, maintained and repaired all utilities, • pipes, walls, sewers, drains, and other improvements on the Premises to the extent required by law or as necessary to maintain the improvement in good order and repair and safe and sanitary 14 LI condition. Lessee shall make, or cause to be made, any additions, alterations or repairs to any structure or improvement on the Premises which may be required by, and Lessee shall otherwise observe and comply with, any law, statute, ordinance, plan, resolution or policy applicable to the Premises. Lessee shall indemnify, defend and hold Lessor harmless from and against any • loss, liability, action, claim or damage, arising out of, or in any way related, to Lessee's failure to comply with, and perform pursuant to, provisions of this section. C. All repairs, additions, and alterations to the structures or improvements on the Premises shall conform to all applicable laws, ordinances, regulations, plans, policies and resolutions and all work shall be performed with reasonable diligence, completed within a reasonable time, and performed at the sole cost and expense of Lessee. D. Lessee expressly accepts the Premises "as is" and acknowledges that Lessor has made no representations or warranties as to the suitability of the property or any construction or improvement. Lessee shall conduct all tests necessary to determine the suitability of the property for any proposed construction or improvement including, without limitation, the amount and extent of any fill, and related factors. Lessee expressly acknowledges that Lessor shall not be liable for any damage or loss resulting from any subsurface or soil condition in, on, or under the Premises or adjacent property. Lessee also expressly acknowledges that, while the Legislature has purportedly removed the public trust restrictions on use of the property pursuant to the provisions of the Beacon Bay Bill, the premises may constitute filled tidelands, and Lessor has made no representation • or warranty relative to the validity of the Beacon Bay Bill, the power of the Legislature to remove public trust restrictions through legislation, or otherwise guaranteed Lessee's right to the property as against any legal challenge as to the status or 15 • El suitability of the premises for residential use. 7. TAXES AND UTILITIES. It is understood by Lessor and Lessee that this Lease shall give rise to a possessory interest tax obligation and the potential for a significantly higher possessory interest tax payment. Lessee shall pay, before delinquent, all utility charges and any general and special taxes, assessments or other governmental charges, if any, which may be levied on the Leased Land, and /or any improvements, including, without limitation, any possessory interest tax. Any lien for unpaid utilities, taxes, assessments or charges shall not attach to the leasehold interest but only to improvements located on the leased premises. 8. USE AND MAINTENANCE OF COMMON AREA. Lessee shall have the right to use the streets, beaches, walkways, tennis courts, docks, piers, and common landscaped areas in Beacon Bay (as depicted on Exhibit "A") and which are leased to the Beacon Bay Community Association by Lessor in consideration of the maintenance thereof by such Association and rent to be paid by individual Lessees. 9. MAINTENANCE AND IMPROVEMENT OF INFRASTRUCTURE. Lessor has no obligation to install, improve, repair, or maintain streets, curbs, gutters, water lines, sewer lines, drainage facilities, street lighting or other facilities used by the residents of Beacon Bay (Infrastructure). Not- withstanding section 8 above, Lessor reserves the right, after a five (5) year period following the Effective Date and upon approval by the Lessees representing a majority of the lots in Beacon Bay, to improve and maintain streets, curbs, gutters, water lines, sewer lines, drainage facilities, street lighting and other Infrastructure facilities in Beacon Bay at its initial cost and to assess Lessee for a pro rata share of such costs, and to collect such costs from Lessee in the form of rent over the remaining term LE • • 0 0 of this Lease. 10. COMMUNITY ASSOCIATION. A. As a material part of the consideration of this Lease, and as an express condition to the continuance of any of the • rights of Lessee pursuant to this Agreement, Lessee agrees to become, and during the term of this Lease to remain, a member in good standing of the Beacon Bay Community Association. Lessee also agrees to abide by the Articles of Incorporation, bylaws, all rules and regulations of the Association and to pay to the Association, before delinquency, all valid dues, fees, assessments and other charges properly levied or assessed by the Association. Lessee's failure to comply with the provisions of this subsection shall constitute a material breach of this Lease. B. In addition to the rights reserved to Lessor pursuant to the provisions of Section 9, if the Community Association fails or ceases to maintain community facilities, Lessor may, at its option and without obligation, assume the obligations of the Community Association to maintain, repair, install or improve community facilities. In such event, Lessee shall pay a pro rata share of Lessor's reasonable expenses in maintaining and operating the community facilities, including a reasonable management fee or the fee charged by a management agent. Lessee's pro rata share shall be determined by dividing Lessor's costs by the number of residential lots within Beacon Bay (currently seventy-two lots) . Lessee's pro rata share of the annual costs incurred by Lessor shall be paid within thirty (30) days after written notice of the amount due, and any failure to pay shall constitute a material breach of this Lease. The costs of maintaining and operating community facilities shall be determined • annually and solely from the financial records of Lessor. 11. COVENANTS, CONDITIONS AND RESTRICTIONS. Lessee agrees to abide and be bound by all 17 0 • covenants, conditions, restrictions and reservations as contained in Exhibit " ," attached hereto and made a part hereof by this reference. Said covenants, conditions and restrictions shall run with the Leased Land and shall be binding on Lessee and Lessee's successors in interest. 12. INDEMNIFICATION • Lessee shall indemnify, defend and hold harmless Lessor, its City Council, Boards and Commissions, officers, agents, servants and employees from and against any and all actions, causes of action, obligations, costs, damages, losses, claims, liabilities and demands of any nature whatsoever, including reasonable attorneys' fees, regardless of the merit or outcome of any such claim or suit, arising out of, or in any way related, to the condition of the leased premises, common areas or improvements, or the use or possession of the leased premises, common areas or improvements by Lessee, or Lessee's employees, agents, representatives, guests or invitees, as well as any activity, work or things which maybe permitted or suffered by Lessee in or on the leased premises and improvements. Lessee shall indemnify, defend and hold harmless Lessor, its City Council, Boards and Commissions, officers, agents, servants and employees from and against any and all actions, causes of action, obligations, costs, damages, losses, claims, liabilities, and demands of any nature whatsoever, including reasonable attorneys' fees, accruing or resulting to any and all persons, firms, or corporations furnishing or supplying work, services, materials, equipment or supplies arising from or in any manner connected to the use or possession of the premises by Lessee or from any activity, work or things which may be permitted or suffered by Lessee in or about the Premises. Without limiting the generality of the foregoing, Lessee hereby assumes all risk of damage to property or injury to persons in or about the Premises • from any cause except for damage or injury resulting from the sole negligence or willful, fraudulent or criminal conduct by Lessor and /or its officers, employees, agents and representatives, and 18 0 0 Lessee hereby waives all claims in respect thereof against Lessor. 13. A. Fire Insurance. Lessee shall, during the term of this Lease, • insure all structures and improvements on the leased premises against loss or damage by fire or other risk typically included in an extended coverage endorsement and common use for residential structures, including vandalism and malicious mischief. The insurance shall provide coverage to at least ninety percent (90 %) of the full insurable replacement value of all improvements on the leased land, with the loss payable to Lessee unless this Lease is terminated pursuant to Section in which case the proceeds of insurance shall be paid to Lessor. The policy of insurance shall provide that Lessor receive at least ten (10) days prior written notice of any cancellation or reduction in coverage. B. Liability Insurance. Lessee shall, at Lessee's sole cost and expense, procure and maintain during the term of this Lease, a broad form comprehensive coverage policy of public liability insurance which insures Lessee and Lessor against any loss or liability caused by, or in any way related to, the condition, for Lessee's use and occupation, of the premises in amounts not less than: (1) $1 million dollars for injury to, or death of, one person, and not less than $2 million dollars for injury to, or death of, two or more persons as a result of any one occurrence; (2) $100,000.00 for damage to or destruction of property. 14. DEFAULTS. . A. Events of Default. The occurrence of any one or more of the following events shall constitute a material default and breach of this Lease by Lessee: 0 (1) the vacating or abandonment of the Premises by Lessee; (2) the failure by Lessee to make any payment of rent when due if the failure continues for three (3) days after written notice has been given to Lessee. In the event that Lessor serves Lessee with a Notice to Pay Rent or Quit pursuant to • applicable unlawful detainer statutes, such Notice to Pay Rent or Quit shall also constitute the notice required by this paragraph; (3) the failure by Lessee to perform any of the provisions of this Lease and any Exhibits attached hereto to be performed by Lessee, other than described in paragraph (2) above, if the failure to perform continues for a period of thirty (30) days after written notice thereof has been given to Lessee. If the nature of Lessee's default is such that more than thirty (30) days are reasonably required for its cure, then Lessee shall not be in default if Lessee commences the cure within said thirty (30) day period and thereafter diligently prosecutes the cure to completion; A34 (4) the failure of Lessee to provide Lessor with all relevant information regarding the total consideration paid in conjunction with any transfer of this Lease, or the execution of this Lease by a current Lessee or subsequent Lessee after the Effective Date of this Lease; (5) the making by Lessee of any general assignment, or general arrangement for the benefit of creditors; the filing by or against Lessee of a petition to have Lessee adjudged a bankrupt or a petition for reorganization or arrangement of any law relating to bankruptcy unless the same is dismissed within sixty (60) days; the appointment of a trustee or receiver to take possession of substantially all of Lessee's assets located at the Premises or of Lessee's interest in the Lease, where possession • is not restored to Lessee within thirty (30) days; or the attachment, execution or other judicial seizure of substantially all of Lessee's assets located at the Premises or of Lessee's interest in the Lease, where such seizure is not discharged within 20 thirty (30) days. Notices given under this paragraph shall specify the alleged default and the applicable lease provisions, and shall demand that Lessee perform the provisions of this Lease • or pay the rent that is in arrears as the case may be, within the applicable period of time. No such notice shall be deemed a forfeiture or a termination of this Lease unless Lessor so elects in the Notice. B. Landlord's Remedies In the event of any default by Lessee as defined in this Section, Lessor may, in addition to any rights or remedies permitted by law, do the following: 1. Terminate Lessee's right to possession of the Leased Premises by any lawful means, in which case this Lease shall terminate and Lessee shall immediately surrender possession of the Premises to Lessor. In such event, Lessor shall be entitled to recover from Lessee all amounts to which Lessor is entitled pursuant to Section 1951.2 of the California Civil Code, or any other provision of law, including, without limitation, the following: (i) The worth at the time of award of the amount by which the unpaid rent and additional rent for the balance of the term after the time of award exceeds the amount of the loss than Lessee proves could be reasonably avoided; and (ii) any other amount necessary to compensate Lessor for all detriment proximately caused by Lessee's failure to perform obligations pursuant to this Lease or which in the ordinary course of things would be likely to result from the • breach, including, without limitation, the cost of recovering possession, expenses of reletting (including necessary repair, renovation and alteration) reasonable attorneys' fees, and any other reasonable costs. 21 0 The "worth at the time of award" of all rental amounts other than that referred to in clause (i) above shall be computed by allowing interest at the rate of ten percent (10 %) per annum from the date amounts accrue to Lessor. The worth at the time of award of the amount referred to in clause (i) shall be computed by discounting such amount at one percentage point above the discount rate of the Federal Reserve Bank of San Francisco at the time of award. 2. Without terminating or affecting the forfeiture of this Lease or, in the absence of express written notice of Lessor's election to do so, relieving Lessee of any obligation pursuant to this Lease, Lessor may, but need not, relet all or a portion of the Premises at any time, or from time to time, and on such terms and conditions as Lessor, at its sole discretion, deems appropriate. Whether or not the Premises are relet, Lessee shall pay all amounts required by this Lease up to the date that Lessor terminates Lessee's right to possession of the Premises. Lessee shall make such payments at the time specified in the Lease and Lessor need not wait until termination of the Lease to recover sums due by legal action. If Lessor relets all or a portion of the Premises, the reletting shall not relieve Lessee of any obligation pursuant to this Lease, provided, however, Lessor shall apply the rent or other proceeds actually collected by virtue of the reletting against amounts due from Lessee. Lessor may execute any agreement reletting all or a portion of the leased premises and Lessee shall have no right to collect any proceeds due Lessor by virtue of any reletting. Lessor shall not, by any reentry or reletting or other act, be deemed to: (i) Have accepted any surrender by Lessee of this Lease or the leased premises; (ii) have terminated this Lease; or (iii) have relieved Lessee of any obligation pursuant to this Lease unless Lessor has given Lessee express written notice of Lessor's election to do so. 22 CJ J 9 0 3. Lessor may terminate this Lease by express written notice to Lessee of its election to do so. The termination shall not relieve Lessee of any obligation which has accrued prior to the date of termination. In the event of termination, Lessor shall be entitled to recover the amount specified in Paragraph 1. • C. Default By Lessor. Lessor shall not be in default unless Lessor fails to perform obligations required of Lessor within a reasonable time, but in no event later than thirty (30) days after written notice by Lessee to Lessor specifying wherein Lessor has failed to perform such obligation. If the nature of Lessor's obligation is such that more than thirty (30) days are required for performance, then Lessor shall not be in default if Lessor commences performance within such thirty (30) day period and thereafter diligently prosecutes the same to completion. D. Lessor shall be under no obligation to perform or comply with its obligations pursuant to this Lease after the date of any default by Lessee. E. In any action or unlawful detainer commenced by Lessor, the reasonable rental value of the leased premises shall be deemed to be the amount of rent and additional rent (such as reimbursement for costs of Infrastructure improvements or the payment of taxes or assessments) for the period of the unlawful detainer, unless Lessor /Lessee shall prove to the contrary by competent evidence. F. The failure or delay of Lessor to exercise any right or remedy shall not be construed as a waiver of such right or • remedy or any default by Lessee. Lessor's acceptance of any rent shall not be considered a waiver of any preexisting breach of default by Lessee other than the failure to pay the particular rent accepted regardless of Lessor's knowledge of the preexisting breach 23 0 0 of default at the time rent is accepted. G. Lessee waives any right of redemption or relief from forfeiture pursuant to Code of Civil Procedure Sections 1174 and 1179 and /or pursuant to any existing or future statutory or decisional law in the event Lessee is evicted or Lessor takes • possession by reason of Lessee's default. 15. SURRENDER OF POSSESSION UPON EXPIRATION OR TERMINATION. A. Upon the expiration or termination of this Lease, Lessee agrees to peaceably deliver possession of, and agrees to vacate without contest, legal or otherwise, the Leased Land. Lessor, at its sole discretion, may record a document evidencing the expiration or termination of the leasehold interest. Lessee waives any right to receive relocation assistance or similar form of payment. B. Upon the expiration of the term of this Lease, and on condition that Lessee is not then in default of any of the provisions of this Lease, Lessee shall have the right to remove, from the Premises, all buildings and improvements, exclusive of plantings, paving and underground installations, built or installed on the Premises by Lessee. Removal of any building or improvement shall be at the sole cost and expense of Lessee and removal must be complete no later than ninety (90) days after expiration of the term of this Lease. Lessee shall fill all excavations and remove all foundations, debris and other parts of the buildings or improvements remaining after removal and surrender possession of the Premises to Lessor in a clean and orderly condition. In the event any of the buildings and improvements are not removed within in this Section, they shall become the • the time provided property of Lessor without the payment of any consideration. 24 9 16. EMINENT DOMAIN. A. Definitions of Terms. 1. The term "total taking" as used in this paragraph shall mean the taking of the entire Premises under the power of eminent domain or the taking of so much of said Land as to • prevent or substantially impair the use thereof by Lessee for the residential purposes. 2. The term "partial taking" shall mean the taking of a portion only of the Premises which does not constitute a total taking as defined above. 3. The term "taking" shall include a voluntary conveyance by Lessor to an agency, authority or public utility under threat of a taking under the power of eminent domain in lieu of formal proceedings. 4. The term "date of taking" shall be the date upon which title to the Premises or portion thereof passes to and vests in the condemnor. B. Effect of Taking. If, during the term hereof, there shall be a total taking or partial taking under the power of eminent domain, then the leasehold estate of the Lessee in and to the Leased Premises or the portion thereof taken shall cease and terminate, as of the date of taking of said Land. If this Lease is so terminated in whole or in part, all rentals and other charges payable by Lessee to Lessor hereunder and attributable to the Premises or portion thereof taken shall be paid by Lessee up to the date of taking by the condemnor, and the parties shall thereupon be released from all further liability in relation thereto. C. Allocation of Award - Total Taking . All compensation and damages awarded for the total taking of the Premises and Lessee's leasehold interest therein shall be allocated as follows: 25 0 0 (1) The Lessor shall be entitled to an amount equal to the sum of the following: (a) The fair market value of the Premises as improved (exclusive of the dwelling and appurtenances to such dwelling) as of the date of taking, discounted by multiplying such fair market value by the factor for the present worth of one dollar ($1.00) at nine percent (9$) per annum compound interest for the • number of years remaining from the date of taking to the date of the expiration of the term of this Lease; and (b) The present worth of rents due during the period from the date of taking to the date of the expiration of the term of this Lease, computed by multiplying the annual rent then payable by the factor for the present worth of one dollar ($1.00) per annum at nine percent (9$) per annum compound interest (Inwood Coefficient) for the number of years in such period. (2) The Lessee shall be entitled to the amount remaining of the total award after deducting therefrom the sums to be paid to Lessor as hereinafter provided. D. Allocation of Award - Partial Taking. All compensation and damages awarded for the taking of a portion of the Leased Premises shall be allocated and divided as follows: (1) The Lessor shall be entitled to an amount equal to the sum of the following: (a) The proportionate reduction of the fair market value of the Premises as improved (exclusive of the dwelling and appurtenances to such dwelling) as of the date of taking, discounted by multiplying such proportionate reduction in fair market value by the factor for the present worth of one dollar ($1.00) at nine percent (9 %) per annum compound interest for the • number of years remaining from the date of taking to the date of expiration of the term of this Lease; and (b) The present worth of the amount by 26 0 0 which the rent is reduced computed by multiplying the amount by which the annual rent is reduced by the factor for the present worth of $1.00 per annum at 9% per annum compound interest (Inwood Coefficient) for the number of years remaining from the date of taking to the date of expiration of the term of this Lease. • (2) The Lessee shall be entitled to the amount remaining of the total award after deducting therefrom the sums to be paid to Lessor as hereinabove provided. E. Reduction of Rent on Partial Taking. In the event of a partial taking, the rent payable by Lessee hereunder shall be adjusted from the date of taking to the date of the expiration of the term of this Lease. Such rental adjustment will be made by reducing the basic rental payable by Lessee in the ratio that the Fair Market Rental Value of the Premises at the date of taking bears to the Fair Market Rental Value of the Premises immediately thereafter. 17. ATTORNEYS' FEES. Should either Lessor or Lessee be required to employ counsel to enforce the terms, conditions and covenants of this Lease Agreement, the prevailing party shall recover all reasonable attorneys' fees (and court costs if applicable) incurred therein, whether or not court proceedings were commenced. 18. REMEDIES CUMULATIVE. The rights, powers, elections and remedies of the Lessor or Lessee contained in this Lease shall be construed as cumulative and no one of them shall be considered exclusive of the other or exclusive of any rights or remedies allowed by law, and . the exercise of one or more rights, powers, elections or remedies shall not impair or be deemed a waiver of Lessor's or Lessee's rights to exercise any other. 27 19. NO WAIVER. No delay or omission of the Lessor to exercise any right or power arising from any omission, neglect or default of the Lessee or Lessor shall impair any such right or power or shall be construed as a waiver of any such omission, neglect or default on the part of the Lessor or Lessee or any acquiescence therein. • No waiver of any breach of any of the terms, covenants, agreements, restrictions or conditions of this Lease shall be construed as a waiver of any succeeding breach of the same or of any of the terms, covenants, agreements, restrictions or conditions of this Lease. 20. COMPLIANCE WITH LAWS. Lessee covenants and agrees to comply with all rules, regulations, statutes, ordinances and laws of the State of California, County of Orange, City of Newport Beach, or any other governmental body or agency having lawful jurisdiction over the Leased Land. 21. NOTICES. It is mutually agreed that any notice or notices provided for by this Lease or by law, to be given or served by Lessee, may be given or served by mail, registered or certified, with postage prepaid, on the City of Newport Beach, addressed to the Mayor, City Manager, or City Clerk, 3300 Newport Boulevard, P.O. Box 1768, Newport Beach, California 92659 -1768, or at such other address as may be hereafter furnished to Lessee in writing. If notice is intended to be served by Lessor on Lessee, it may be served either: or A. By delivering a copy to the Lessee personally; u B. By depositing the Notice in the United States Mail, registered or certified, with postage prepaid, the residence or business address furnished by Lessee; or 28 9 0 C. If he be absent from the Leased Land by leaving a copy with some person of suitable age and discretion who may be occupying the Leased Land; or D. If no one can be found, then by affixing a copy of the notice in a conspicuous place on the property or also • sending a copy through the mail addressed to the Lessee. Such service upon Lessor or Lessee shall be deemed complete at the expiration of seventy -two (72) hours from and after the deposit in the United States mail of such notice, demand or communication. 22. HOLDING OVER. This Lease shall terminate and become null and void without further notice upon the expiration of the term of this Lease. Any holding over by Lessee after expiration of the term shall not constitute a renewal of this Lease or give Lessee any rights in or to the Leased Premises except as expressly provided in this Section. The parties agree this Lease cannot be renewed, extended, or in any manner modified except in a writing signed by all parties. However, if Lessee, or anyone claiming under Lessee, shall remain in possession of the Leased Premises after expiration of the term of this Lease without any agreement in writing between the parties and Lessor accepts rent from Lessee, then Lessee shall be deemed a tenant from month -to -month subject to the provisions of this Lease insofar as they may be applicable to a month -to -month tendency. The month -to -month tendency may be terminated by Lessor or Lessor upon thirty (30) days' prior written notice to the other. 23. &'DIET ENJOYMENT. Lessor covenants and agrees that Lessee, upon paying the rent set forth herein and observing and keeping all covenants . and agreements to be observed or kept by Lessor hereunder, shall quietly have and enjoy the Leased Land during the term of this Lease without hindrance or molestation by anyone claiming by or through Lessor. 29 0 • 24. SEVERABILITY. If any term or provision of this Lease shall, to any extent be invalid or unenforceable, the remainder of this Lease shall not be affected thereby, and each term and provision of this Lease shall remain valid and enforceable to the fullest extent permitted by law. • 25. MISCELLANEOUS. A. Representations. Lessee agrees that no representations as to the Premises have been made by Lessor or by any person or agent acting for Lessor. Lessor and Lessee agrees and acknowledges that this document contains the entire agreement of the parties, that there are no verbal agreements, representations, warranties or other understandings affecting this agreement, and Lessor and Lessee, as a material part of the consideration of this Lease, waives all claims against the other for recision, damages, or otherwise by reason of any alleged covenant, agreement or understanding not contained in this Lease. B. Inurement. Each and all of the covenants, conditions and agreements herein contained shall, in accordance with the context, inure to the benefit of Lessor and Lessee and apply to and bind Lessor and Lessee, as the case may be, their respective heirs, legatees, devisees, executors, administrators, successors, assigns, licensees, permittees, or any person who may come into possession or occupancy of said Leased Land or any part thereof in any manner whatsoever. Nothing in this paragraph shall in any way alter the provisions herein contained against assignment or subletting. C. Joint Several Liability. If Lessee consists . of more than one person, the covenants, obligations and liabilities of Lessee pursuant to this Lease shall be the joint and several covenants, obligations and liabilities of such persons. e D. Captions. The section and paragraph captions used in this Lease are for the convenience of the parties and shall not be considered in the construction or interpretation of any provision. • E. Gender. In this Lease, the masculine gender includes the feminine and neuter and the singular number includes the plural whenever the context so requires. • IN WITNESS WHEREOF, the parties have caused this Lease to be executed on the date first above written. ATTEST: CITY CLERK APPROVED AS TO FORM: TY ATTORNEY kr \beacbay.1se \4 -21 -93 CITY OF NEWPORT BEACH, LESSOR By: Title: MAYOR LESSEE LESSEE 31 \ 7:S: r ��4� Z 0 .J cJ�. �• � a Z dN a ISI N. N ! f v i ' c c ( < �,, _ �. • -'mot++ :°,:yt . � -/f[��r � r � 9 as 9 °•d.�2a O '' Yom' • .o Q � e CS to 2 e l f,J I J 9 S „ r'g m D t r jl It 1 ' e RSA p If$09 hit" of ecr!'4;,�v 's < °� hit" o �4 ,, � N ~ ° 9 ' < � sa 8° AR ,�[ `� Exhibit fps• _ •� .