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HomeMy WebLinkAboutC-4532 - Zoning Implementation and Public Benefit AgreementRECORDING REQUESTED BY AND WHEN RECORDED RETURN TO: City Clerk City of Newport Beach P.O. Box 1768 Newport Beach, CA 92658-8915 Recorded in Officaal tM Dunty Tom Daly, Clerk -Recorder IIIIIIIIIINIIINIIINIIIIINIIIIIIIIIIIIIIIIIIIIIIIJI�gF.a to: t 7 2011000004170 11:47 am 01/04/11 153 415 Al2 29 OFFICE OF o.00 o.00 o.00 o.00 84.db16.00:430Koo OF P 'J'ORT BEACH THIS SPACE FOR RECORDER'S USE ONLY. TITLE OF DOCUMENT: Of Exempt Recording Request per Government Code 27383 ZONING IMPLEMENTATION AND PUBLIC BENEFIT AGREEMENT BETWEEN THE CITY OF NEWPORT BEACH AND MORNINGSIDE RECOVERY, LLC. ZONING IMPLEMENTATION AND PUBLIC BENEFIT AGREEMENT (Pursuant to California Government Code §§ 65864-65869.5) This Zoning Implementation and Public Benefit Agreement (the "ZONING AGREEMENT") isentered into on I'EPTt Mol,'r 2l , 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." 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 June 3, 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 September 14, 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 September 28, 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. 20/0-18 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. (L09-0011 J —Zoning Agreement - Momingside — 10.09.02 Final 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. "CLIENT BEDS" shall mean physical accommodations in each Facility where Clients sleep or otherwise overnight. E. "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. F. "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. G. "GENERAL PLAN" shall mean the 2006 General Plan adopted by the City Council on July 25, 2006, by Resolution No. 2006-76 as periodically amended. 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. H. "LICENSED FACILITIES" shall mean alcoholism and drug abuse recovery facilities licensed by the California Department of Alcohol and Drug Programs ("ADP"). I. "PARTY" or "PARTIES" shall mean either the CITY or MORNINGSIDE or any of MORNINGSIDE's affiliates or both, as determined by the context. J. "PROPERTY" or "PROPERTIES" shall mean MORNINGSIDE's facilities at 4823 A River Avenue and 4823 B River Avenue; 112 B 39th Street; 5015 A River Avenue and 5015 B River Avenue until September 30, 2010; 100 Via Antibes, 102 Via Antibes and 208 Via Lido Soud beginning September 1, 2010; and 29 Ima Loa Court in Newport Beach. Additionally, this ZONING AGREEMENT shall apply to parcels not yet identified upon which MORNINGSIDE may operate facilities within CITY in the future. K. "SOBER LIVING HOMES" shall mean alcoholism and/or drug abuse recovery facilities that are not licensed by the ADP. L. "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. Morningside Recovery, LLC Zoning Agreement Exhibit A to Settlement Agreement (L09-0011]—Zoning Agreement - Morningside — 10.09.02 Final 2 III. Agreement A. Terms of Agreement. This ZONING AGREEMENT allows MORNINGSIDE a vested right to the following: 1.) MORNINGSIDE may operate FACILITIES with up to thirty-six (36) CLIENTS and thirty-six (36) CLIENT BEDS 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 and 36 CLIENT BEDS in Newport Beach. 2.) MORNINGSIDE may house up to 30 of its 36 total CLIENTS and have up to 30 of its CLIENT BEDS 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 and 36 CLIENT BED 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 Conditions attached hereto as Exhibit 1. 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; b. No FACILITIES (licensed or unlicensed by ADP) within 1,000 feet of public elementary schools or large, state - 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; Morningside Recovery, LLC Zoning Agreement Exhibit A to Settlement Agreement (L09-0011.1 —Zoning Agreement - Morningside — 10.09.02 Final 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. 1.) 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; Morningside Recovery, LLC Zoning Agreement Exhibit A to Settlement Agreement [L09-0011] —Zoning Agreement - Morningside — 10.09.02 Final 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. Operation of Property: Applicable Regulations. Other than as expressly set forth in 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. 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 ZONING 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 PROPERTIES provided such powers are applied consistently with the provisions of state law and the terms of this ZONING 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. Reservations of Authority. Regardless of 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 below in this section: 1.) Procedural Regulations. Then current procedural regulations relating to hearing bodies, petitions, applications, notices, findings, records, hearings, reports, recommendations, Morningside Recovery, LLC Zoning Agreement Exhibit A to Settlement Agreement (L09-0011]-Zoning Agreement - Morningside - 10.09.02 Final 2.) appeals, and any other matter of procedure shall apply to the PROPERTY, provided that they are adopted and applied Citywide. Consistent City Regulations. Newport Beach City ordinances, resolutions, regulations, and official policies governing development and building that do not conflict with the ZONING AGREEMENT, or where MORNINGSIDE has consented in writing to the regulations, application 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. 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 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 91st 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 Morningside Recovery, LLC Zoning Agreement Exhibit A to Settlement Agreement Q (L09-0011J-Zoning Agreement - Morningside - 10.09.02 Final 6 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 31 st 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 25th 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. 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 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 such evidence of good faith compliance with this ZONING AGREEMENT as the CITY may require in the reasonable exercise of its discretion, and after reasonable notice to Morningside Recovery, LLC Zoning Agreement Exhibit A to Settlement Agreement [L09-0011]—Zoning Agreement - Morningside — 10.09.02 Final MORNINGSIDE. On or before March 31st, June 30th. September 30th and December 31st of each year during the term of this ZONING AGREEMENT, MORNINGSIDE shall submit a Compliance Review Report, whose template is attached hereto as Exhibit 3. The requirement of good faith compliance shall be met upon the submittal to the CITY of an accurate Compliance Review Report, signed by a principal of MORNINGSIDE certifying personally and on MORNINGSIDE's behalf, demonstrating MORNINGSIDE's compliance with operating conditions, facility locations and the number of CLIENTS and CLIENT BEDS at each MORNINGSIDE FACILITY. The CITY, shall have the right to audit the accuracy of the Compliance Review Report through on -site inspections of MORNINGSIDE's FACILITIES, including its administrative headquarters, upon reasonable notice to MORNINGSIDE and following the Inspection Protocol as shown in Exhibit 4. O. Events of Default and Remedies. 1.) Default by Morningside. Morningside's compliance with the terms of this Agreement is subject to the following enforcement provisions: a. For Violations of the Operational Conditions: The City may, at its sole discretion, follow its Administrative Citation process (Newport Beach Municipal Code Chapter 1.05) to remedy violations of the Operational Conditions until such time as the City Council, at a noticed public hearing, deems that Morningside is unable or unwilling to remedy the violations and comply with the terms of this ZONING AGREEMENT. At that point, subdivision (b) of this section applies. b. 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 efforts to achieve compliance within thirty (30) days after receipt of written notice from the CITY specifying the manner in which MORNINGSIDE has failed to comply and diligently pursue steps that 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 Morningside Recovery, LLC Zoning Agreement Exhibit A to Settlement Agreement [1.09-0011]—Zoning Agreement - Morningside — 10.09.02 Final 8 remedies as provided in Government Code section 65865.1, subsections (3) and (4), below, and section G above. 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 efforts to achieve 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 that achieve full compliance, then the CITY shall be deemed to be in default under the terms of this ZONING AGREEMENT. MORNINGSIDE may then seek specific performance or similar equitable remedy as provided in subsection (3) of Section 0, below. 3.) Specific Performance and Remedies. The PARTIES acknowledge that remedies at law are generally inadequate and that specific performance is appropriate for the enforcement of this ZONING AGREEMENT. Except as otherwise expressly provided in this section, 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. 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. 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. Morningside Recovery, LLC Zoning Agreement Exhibit A to Settlement Agreement 1L09-0011J—Zoning Agreement - Morningside — 10.09.02 Final Q. Force Maieure. 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 party 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. 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 certifying PARTY shall execute and forward the certificate within sixty (60) days following receipt of notice. Any assignee of a PARTY's rights and obligations hereunder, as referred to in this Section, shall be entitled to rely on the certificate. T. 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 Morningside Recovery, LLC Zoning Agreement Exhibit A to Settlement Agreement (L09-0011]—Zoning Agreement - Momingside — 10.09.02 Final 10 implement this ZONING AGREEMENT or to evidence or consummate the transactions contemplated by this ZONING AGREEMENT. U. 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: With a copy to: To Operator: With a copy to: City of Newport Beach 3300 Newport Boulevard Post Office Box 1768 Newport Beach, California 92663-3884 Attn: City Manager Fax: 949-644-3020 City Attorney City of Newport Beach 3300 Newport Boulevard Post Office Box 1768 Newport Beach, California 92663-3884 Morningside Recovery, LLC 3404 A Via Lido Newport Beach, California 92663 (949) 675-0006 Mary Helen Beatificato Beatificato & Associates, APC 28562 Oso Parkway, Ste. D-42 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. Morningside Recovery, LLC Zoning Agreement Exhibit A to Settlement Agreement [L09-0011] —Zoning Agreement - Morningside — 10.09.02 Final 11 V. 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. 4.) 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. 5.) 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. 6.) 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. Morningside Recovery, LLC Zoning Agreement Exhibit A to Settlement Agreement [L09-0011]—Zoning Agreement - Morningside — 10.09.02 Final 12 7.) 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. 8.) 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 District of California. The PARTIES waive all provisions of law providing for the removal or change of venue to any other court. 9.) Section Headings. All section headings and subheadings are inserted for convenience only and shall not affect construction or interpretation of this ZONING AGREEMENT. 10.) Authority to Execute. The persons executing this ZONING AGREEMENT warrant and represent that 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. The agreement of the parties to the terms and conditions of this Zoning Agreement is evidenced by the signatures below. "CITY": CITY OF NEWPORT BEACH "MORNINGSIDE": MORNINGSIDE RECOVERY, LLC By: li By: Keith D. Curry Title: Mayor of Newport Beach David Gates Title: Chief Operating Officer Morningside Recovery, LLC Zoning Agreement Exhibit A to Settlement Agreement (L09-0011)—Zoning Agreement - Momingside — 10.09.02 Final 13 APPROVED AS TO FORM: David R. Hunt Title: City Attorney City of Newport Beach ATTEST: (% By: V1 �Vlq,. Leilani Brown Title: City Clerk City of Newport Beach relAPPL— MORNINGSIDE RE VERY, LLC By: Candace Title: Chief Executive Officer APPROVED AS TO FORM: By: Mary Helen Beatificato Title: Counsel for Morningside Recovery, LLC [End of Document and Signatures] Morningside Recovery, LLC Zoning Agreement Exhibit A to Settlement Agreement 1L09-0011J —Zoning Agreement - Momingside — 10.09.02 Final 14 EXHIBIT 1 Exhibit 1 to Zoning Agreement City of Newport Beach Morningside Recovery, LLC EXHIBIT 1 OPERATIONAL CONDITIONS for MORNINGSIDE RECOVERY, LLC 1. Occupancy Level. The operator of Morningside Recovery, LLC, hereinafter referred to as "Operator," is limited to a total of thirty-six (36) Clients and thirty six (36) Client Beds in the City of Newport Beach, and shall limit occupancy of its current facilities to the following: a. 4823 A River Avenue — 6 Client and Client Bed maximum b. 4823 B River Avenue — 6 Client and Client Bed maximum c. 5015 A River Avenue — 6 Client and Client Bed maximum through September 30, 2010 only d. 5015 B River Avenue — 6 Client and Client Bed maximum through September 30, 2010 only e. 112 B 39th Street — 6 Client and Client Bed maximum f. 29 Ima Loa Court — 6 Client and Client Bed maximum g. 100 Via Antibes, 102 Via Antibes, and 208 Via Lido Soud — 12 Client and Client Bed maximum, beginning September 1, 2010 The above occupancy levels reflect a maximum of thirty-six (36) Clients and Client Beds citywide, with a maximum of thirty (30) Clients and Client Beds in the Peninsula Zone. The Client counts are exclusive of one staff member who also may reside at each facility. Morningside agrees to manage its Client populations during September 2010 so that its Client count and Client Bed count do not exceed thirty (30) within the Peninsula Zone. The boundaries of the Peninsula Zone are more particularly defined and depicted 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 and Client Bed cap in the Peninsula Zone and 36 total Client and Client Bed cap citywide, provided that Operator maintains 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). (L09-0011J Zoning Agreement - Momingside - Exhibit 1 10.08.04 11287-000711204428v3. doc ' 1 Exhibit 1 to Zoning Agreement City of Newport Beach Morningside Recovery, LLC 3. Governmental Referrals. Operator shall comply with the restrictions imposed by Newport Beach Municipal Code Section 20.05.030 which limits the number of parolees -probationers per residence with the additional limitation that Operator shall not house any client (1) who is required to register as a sex offender pursuant to Penal Code Sections 290, et seq.; or (2) who is required to register as a criminal street gang member pursuant to Penal Code Sections 186.30 et seq.; or (3) whose housing or other costs of treatment are paid for by the state in a funded Proposition 36 program. 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 make good faith 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 actively enforce, on the City's behalf, the City's prohibition tobacco use on beaches, boardwalks, and piers (NBMC §11.08.080). This includes any meetings Morningside's Clients participate in "off -site." 8. Parking. Operator shall keep garages and other parking spaces at its facilities clear, unobstructed 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. [L09-0011] Zoning Agreement- Morningside - Exhibit 1 10.09.02 11287-0007\1204428v3.doc Exhibit 1 to Zoning Agreement City of Newport Beach Morningside Recovery, LLC 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 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 or other enforcement action authorized under the Zoning Agreement. 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. Quiet Hours. Operator shall enforce the Quiet Hours of 9:00 p.m. to 8:00 a.m. daily to its patients, Clients and customers occupying beds in its facility. Quiet means noise, including music, television, and voices, is not audible beyond the perimeter of the facility except in a demonstrable emergency. 13. Route Plans. Operator shall adhere to the Route Plans for transport of its staff, residents, clients, and customers. The Route Plans for all Morningside facilities are attached hereto as Exhibit 5. Short-term interruptions, such as medical emergencies or street maintenance beyond Operator's control, are allowable modifications to the Route Plans. 14. 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. 15. 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 (L09-0011] Zoning Agreement — Momingside — Exhibit 1 10.09.02 11287-0007\1204428v3.doc Exhibit 1 to Zoning Agreement City of Newport Beach Morningside Recovery, LLC Operator's designated contact shall be returned promptly within a 24-hour period from receipt. 16. 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. 17. Persons per Bedroom. Operator shall not allow more than two clients in one bedroom unless the size of the structure warrants a larger occupancy for any single bedroom. 18. 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. 19. Facility Nuisances. The subject properties shall not be unsafe, unsightly or poorly maintained. If Operator receives notice of a nuisance violation from the City in regards to any of these issues, Operator shall correct the violation within seven calendar days. 20. 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). 21. Services to Facility's Clients or Residents. Operator will use industry's best practices to ensure that the facility's clients or residents stay in recovery (including scheduled substance testing, random substance testing, and required counseling). 22. 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. 23. 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. [L09-0011] Zoning Agreement - Morningside - Exhibit 1 10.09.02 11287-0007\1204428v3.doc EXHIBIT 2 Exhibit 2 Depiction and Description of "Peninsula Zone" Depiction of Peninsula Zone: The lands within the yellow boundary as shown below. Description of Peninsula Zone: Starting at the mouth of the Santa Ana River: • The land area southerly of the Newport and Seminouk Sloughs known as Newport Shores, and • The land coastward of Pacific Coast Highway to Newport Boulevard known as Balboa Coves, West Newport Beach, Lido Sands, and Newport Island; and • The land southerly of a line extending along the Federal Navigational Channel between Newport Boulevard and the Newport Harbor Jetty, known as the Balboa Peninsula, Lido Peninsula, Lido Isle, Bay Island, and Cannery Village; and • Southward on Newport Boulevard about 50 feet to Lower Newport Bay; and • All lands southerly of Lower Newport Bay between Newport Boulevard down the Federal Navigational Channel within the Lower Bay, inclusive of Lido Isle and Bay Island and inclusive of the Balboa Peninsula. [L 10-00111 10.16.14 Momingside — Zoning Agreement Exhibit 2 (Peninsula Zone) EXHIBIT 3 Exhibit 3 Morningside Recovery Quarterly Compliance Review Report Date Report Submitted: This form covers the 3-month period of through During the above period, Morningside Recovery managed or controlled the following facilities in Newport Beach: Morningside Recovery Facilities Date of Report: September 30, 2010 Location Peninsula Zone? Peninsula Clients & Client Beds Off -Peninsula Clients & Client Beds ADP Licensed? 1. 4823 River Avenue - A Y 6 N 2. 4823 River Avenue - B Y 6 N 3. 100 Via Antibes Y 4 N 4. 102 Via Antibes Y 4 N 5. 208 Via Lido Soud Y 4 N 6. 112 B 39th Street Y 6 Y 7. 29 Ima Loa Court N 6 N Total: 30 6 Note: In the above chart, "Clients" are subject to the same numerical restrictions as "Client Beds" in the Zoning Agreement. In other words, if Morningside is authorized to house six Clients in a particular facility, then it is limited to an equal number of Client Beds in that facility. The Morningside Staff Member to join the City in any inspection of the above facilities shall be: (e-mail: , phone #: ) By my signature below I certify and declare under the penalty of perjury under the laws of the State of California, in my personal capacity and on behalf of Momingside Recovery, LLC that Morningside Recovery has met all Operational Conditions as [L09-0011]-Zoning Agreement— Momingside — Exh. 3— Quarterly Compliance Report— 10-08-04 Exhibit 3 Morningside Recovery Quarterly Compliance Review Report described in Exhibit 1 to the Zoning Agreement during the above Compliance Review Period. DATE [Name], [Title] MORNINGSIDE RECOVERY, LLC By DATE [Name], [Title] [L09-0011J-Zoning Agreement — Morningside — Exh. 3— Quarterly Compliance Report — 10-08-04 EXHIBIT 4 Exhibit 4 Inspection Protocol The following protocol reflects the CITY's compliance review under Section N (Periodic Review of Compliance) of the Zoning Agreement between Morningside Recovery and the City of Newport Beach. 1. On or before March 31, June 30, September 30 and December 31 of each year, Morningside shall submit to the City's code enforcement division ("CED") the Compliance Review Report ("Report") shown in Exhibit 3 to the Zoning Agreement. At the same time, Morningside shall also submit the name, phone number, and e-mail of the Morningside staff member that Morningside designates to join any inspection ("Morningside Staff Member"). 2. On a quarterly basis, CED shall submit the list of Morningside facilities to the Police Department for verification that no persons known to have been referred to Morningside by the government (such as parolees) in violation of the Zoning Agreement live at any of the facilities. 3. On a quarterly basis, CED shall select up to two (2) facilities on the list to verify the Client count and Client Bed count through an onsite inspection during a weekday. CED and Morningside shall endeavor to schedule this inspection at a time when Clients are present. 4. CED shall notify the Morningside Staff Member by e-mail and telephone of the time of the inspection and which facilities will be inspected. Such notification will occur a reasonable amount of time prior to the inspection, generally four (4) but not less than two (2) hours prior to inspection. 5. While inspecting each facility, CED staff shall not obtain Client names nor take photos of Clients and shall be respectful at all times of Client privacy. CED staff shall count Clients or Client Beds and verify that the Client and Client Bed Count at each facility match those on the report submitted by Morningside. 6. An inspection report shall be made for each facility. 7. All inspection reports shall be submitted to the Planning Department for inclusion in the City's annual review of Morningside's compliance with the Zoning Agreement. fL09-0011)10-16-14 Morningside - Zoning Agreement Exhibit (Inspection Protocol) EXHIBIT 5 :l/lO• Cll�l ;�'y�icy y. 4) O cC Lo t +• O a 0 LE W s- N _ a `oiaoaovin Contract C-4532(A) See C-4532 2`a) (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 d'0E2 fl , 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." 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 June 3, 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 September 14, 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 September 28, 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. Flo- l0 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. [L09-0011J—Zoning Agreement - Momingside — 10.09.02 Final 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. "CLIENT BEDS" shall mean physical accommodations in each Facility where Clients sleep or otherwise overnight. E. "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. F. "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. G. "GENERAL PLAN" shall mean the 2006 General Plan adopted by the City Council on July 25, 2006, by Resolution No. 2006-76 as periodically amended. 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. H. "LICENSED FACILITIES" shall mean alcoholism and drug abuse recovery facilities licensed by the California Department of Alcohol and Drug Programs ("ADP"). I. "PARTY" or "PARTIES" shall mean either the CITY or MORNINGSIDE or any of MORNINGSIDE's affiliates or both, as determined by the context. J. "PROPERTY" or "PROPERTIES" shall mean MORNINGSIDE's facilities at 4823 A River Avenue and 4823 B River Avenue; 112 B 39th Street; 5015 A River Avenue and 5015 B River Avenue until September 30, 2010; 100 Via Antibes, 102 Via Antibes and 208 Via Lido Soud beginning September 1, 2010; and 29 !ma Loa Court in Newport Beach. Additionally, this ZONING AGREEMENT shall apply to parcels not yet identified upon which MORNINGSIDE may operate facilities within CITY in the future. K. "SOBER LIVING HOMES" shall mean alcoholism and/or drug abuse recovery facilities that are not licensed by the ADP. L. "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. Morningside Recovery, LLC Zoning Agreement Exhibit A to Settlement Agreement [L09-0011]—Zoning Agreement - Morningside — 10.09.02 Final ul. Agreement A. Terms of Agreement. This ZONING AGREEMENT allows MORNINGSIDE a vested right to the following: 1.) MORNINGSIDE may operate FACILITIES with up to thirty-six (36) CLIENTS and thirty-six (36) CLIENT BEDS 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 and 36 CLIENT BEDS in Newport Beach. 2.) MORNINGSIDE may house up to 30 of its 36 total CLIENTS and have up to 30 of its CLIENT BEDS 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 and 36 CLIENT BED 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 Conditions attached hereto as Exhibit 1. 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; b. No FACILITIES (licensed or unlicensed by ADP) within 1,000 feet of public elementary schools or large, state - 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; Morningside Recovery, LLC Zoning Agreement Exhibit A to Settlement Agreement [L09-0011] —Zoning Agreement - Morningside — 10.09.02 Final 3 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. 1.) 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; Morningside Recovery, LLC Zoning Agreement Exhibit A to Settlement Agreement [L09-00111—Zoning Agreement - Morningside— 10.09.02 Final 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. Operation of Property; Applicable Regulations. Other than as expressly set forth in 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. 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 ZONING 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 PROPERTIES provided such powers are applied consistently with the provisions of state law and the terms of this ZONING 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. Reservations of Authority. Regardless of 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 below in this section: 1.) Procedural Regulations. Then current procedural regulations relating to hearing bodies, petitions, applications, notices, findings, records, hearings, reports, recommendations, Morningside Recovery, LLC Zoning Agreement Exhibit A to Settlement Agreement (L09-0011]-Zoning Agreement - Momingside - 10.09.02 Final 5 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 ZONING AGREEMENT, or where MORNINGSIDE has consented in writing to the regulations, application 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. 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 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 91st 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 Morningside Recovery, LLC Zoning Agreement Exhibit A to Settlement Agreement [L09-0011]-Zoning Agreement - Morningside — 10.09.02 Final 6 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 31st 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 25th 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. 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 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 such evidence of good faith compliance with this ZONING AGREEMENT as the CITY may require in the reasonable exercise of its discretion, and after reasonable notice to Morningside Recovery, LLC Zoning Agreement Exhibit A to Settlement Agreement [L09-0011] -Zoning Agreement - Morningside - 10.09.02 Final 7 MORNINGSIDE. On or before March 31st, June 30th, September 30th and December 31st of each year during the term of this ZONING AGREEMENT, MORNINGSIDE shall submit a Compliance Review Report, whose template is attached hereto as Exhibit 3. The requirement of good faith compliance shall be met upon the submittal to the CITY of an accurate Compliance Review Report, signed by a principal of MORNINGSIDE certifying personally and on MORNINGSIDE's behalf, demonstrating MORNINGSIDE's compliance with operating conditions, facility locations and the number of CLIENTS and CLIENT BEDS at each MORNINGSIDE FACILITY. The CITY, shall have the right to audit the accuracy of the Compliance Review Report through on -site inspections of MORNINGSIDE's FACILITIES, including its administrative headquarters, upon reasonable notice to MORNINGSIDE and following the Inspection Protocol as shown in Exhibit 4. O. Events of Default and Remedies. 1.) Default by Morningside. Morningside's compliance with the terms of this Agreement is subject to the following enforcement provisions: a. For Violations of the Operational Conditions: The City may, at its sole discretion, follow its Administrative Citation process (Newport Beach Municipal Code Chapter 1.05) to remedy violations of the Operational Conditions until such time as the City Council, at a noticed public hearing, deems that Morningside is unable or unwilling to remedy the violations and comply with the terms of this ZONING AGREEMENT. At that point, subdivision (b) of this section applies. b. 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 efforts to achieve compliance within thirty (30) days after receipt of written notice from the CITY specifying the manner in which MORNINGSIDE has failed to comply and diligently pursue steps that 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 Morningside Recovery, LLC Zoning Agreement Exhibit A to Settlement Agreement (L09-0011J -Zoning Agreement - Morningside - 10.09.02 Final remedies as provided in Government Code section 65865.1, subsections (3) and (4), below, and section G above. 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 efforts to achieve 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 that achieve full compliance, then the CITY shall be deemed to be in default under the terms of this ZONING AGREEMENT. MORNINGSIDE may then seek specific performance or similar equitable remedy as provided in subsection (3) of Section 0, below. 3.) Specific Performance and Remedies. The PARTIES acknowledge that remedies at law are generally inadequate and that specific performance is appropriate for the enforcement of this ZONING AGREEMENT. Except as otherwise expressly provided in this section, 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. 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. 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. Morningside Recovery, LLC Zoning Agreement Exhibit A to Settlement Agreement (L09-0011]—Zoning Agreement - Momingside — 10.09.02 Final Q. Force Maieure. 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 party 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. 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 certifying PARTY shall execute and forward the certificate within sixty (60) days following receipt of notice. Any assignee of a PARTY's rights and obligations hereunder, as referred to in this Section, shall be entitled to rely on the certificate. T. 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 Morningside Recovery, LLC Zoning Agreement Exhibit A to Settlement Agreement [L09-0011J —Zoning Agreement - Morningside — 10.09.02 Final 10 implement this ZONING AGREEMENT or to evidence or consummate the transactions contemplated by this ZONING AGREEMENT. U. 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: With a copy to: To Operator: With a copy to: City of Newport Beach 3300 Newport Boulevard Post Office Box 1768 Newport Beach, California 92663-3884 Attn: City Manager Fax: 949-644-3020 City Attorney City of Newport Beach 3300 Newport Boulevard Post Office Box 1768 Newport Beach, California 92663-3884 Morningside Recovery, LLC 3404 A Via Lido Newport Beach, Califomia 92663 (949) 675-0006 Mary Helen Beatificato Beatificato & Associates, APC 28562 Oso Parkway, Ste. D-42 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. Morningside Recovery, LLC Zoning Agreement Exhibit A to Settlement Agreement [L09-00111—Zoning Agreement - Momingside — 10.09.02 Final 11 V. 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. 4.) 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. 5.) 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. 6.) 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. Morningside Recovery, LLC Zoning Agreement Exhibit A to Settlement Agreement [L09-0011] -Zoning Agreement - Morningside — 10.09.02 Final 12 7.) 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. 8.) 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 District of California. The PARTIES waive all provisions of law providing for the removal or change of venue to any other court. 9.) Section Headings. All section headings and subheadings are inserted for convenience only and shall not affect construction or interpretation of this ZONING AGREEMENT. 10.) Authority to Execute. The persons executing this ZONING AGREEMENT warrant and represent that 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. The agreement of the parties to the terms and conditions of this Zoning Agreement is evidenced by the signatures below. "CITY": CITY OF NEWPORT BEACH "MORNINGSIDE": MORNINGSIDE RECOVERY, LLC By: Keith D. Curry David Gates Title: Mayor of Newport Beach Title: Chief Operating Officer Morningside Recovery, LLC Zoning Agreement Exhibit A to Settlement Agreement [L09-00111 —Zoning Agreement - Momingside — 10.09.02 Final 13 APPROVED AS TO FORM: David R. Hunt Title: City Attorney City of Newport Beach ATTEST: By: � MM 9 Leilani Brown Title: City Clerk City of Newport Beach MORNINGSIDE RE VERY, LLC By: Candace Title: Chief Executive Officer APPROVED AS TO FORM: By: ttl�aivi Mary Helen Beatificato Title: Counsel for Morningside Recovery, LLC T'v [End of Document and Signatures] Morningside Recovery, LLC Zoning Agreement Exhibit A to Settlement Agreement [L09-0011] -Zoning Agreement - Momingside - 10.09.02 Final 14 EXHIBIT 1 Exhibit 1 to Zoning Agreement City of Newport Beach Morningside Recovery, LLC EXHIBIT 1 OPERATIONAL CONDITIONS for MORNINGSIDE RECOVERY, LLC 1. Occupancy Level. The operator of Morningside Recovery, LLC, hereinafter referred to as "Operator," is limited to a total of thirty-six (36) Clients and thirty six (36) Client Beds in the City of Newport Beach, and shall limit occupancy of its current facilities to the following: a. 4823 A River Avenue — 6 Client and Client Bed maximum b. 4823 B River Avenue — 6 Client and Client Bed maximum c. 5015 A River Avenue — 6 Client and Client Bed maximum through September 30, 2010 only d. 5015 B River Avenue — 6 Client and Client Bed maximum through September 30, 2010 only e. 112 B 39th Street — 6 Client and Client Bed maximum f. 29 lma Loa Court — 6 Client and Client Bed maximum g• 100 Via Antibes, 102 Via Antibes, and 208 Via Lido Soud — 12 Client and Client Bed maximum, beginning September 1, 2010 The above occupancy levels reflect a maximum of thirty-six (36) Clients and Client Beds citywide, with a maximum of thirty (30) Clients and Client Beds in the Peninsula Zone. The Client counts are exclusive of one staff member who also may reside at each facility. Morningside agrees to manage its Client populations during September 2010 so that its Client count and Client Bed count do not exceed thirty (30) within the Peninsula Zone. The boundaries of the Peninsula Zone are more particularly defined and depicted 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 and Client Bed cap in the Peninsula Zone and 36 total Client and Client Bed cap citywide, provided that Operator maintains 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). (L09-00111 Zoning Agreement — Momingside — Exhibit 1 10.08.04 11287-000711204428v3.doc Exhibit 1 to Zoning Agreement City of Newport Beach Morningside Recovery, LLC 3. Governmental Referrals. Operator shall comply with the restrictions imposed by Newport Beach Municipal Code Section 20.05.030 which limits the number of parolees -probationers per residence with the additional limitation that Operator shall not house any client (1) who is required to register as a sex offender pursuant to Penal Code Sections 290, et seq.; or (2) who is required to register as a criminal street gang member pursuant to Penal Code Sections 186.30 et seq.; or (3) whose housing or other costs of treatment are paid for by the state in a funded Proposition 36 program. 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 make good faith 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 actively enforce, on the City's behalf, the City's prohibition tobacco use on beaches, boardwalks, and piers (NBMC §11.08.080). This includes any meetings Morningside's Clients participate in "off -site." 8. Parking. Operator shall keep garages and other parking spaces at its facilities clear, unobstructed 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. (L09-0011] Zoning Agreement - Morningside - Exhibit 1 10.09.02 11287-0007\1204428v3.doc Exhibit 1 to Zoning Agreement City of Newport Beach Morningside Recovery, LLC 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 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 or other enforcement action authorized under the Zoning Agreement. 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. Quiet Hours. Operator shall enforce the Quiet Hours of 9:00 p.m. to 8:00 a.m. daily to its patients, Clients and customers occupying beds in its facility. Quiet means noise, including music, television, and voices, is not audible beyond the perimeter of the facility except in a demonstrable emergency. 13. Route Plans. Operator shall adhere to the Route Plans for transport of its staff, residents, clients, and customers. The Route Plans for all Morningside facilities are attached hereto as Exhibit 5. Short-term interruptions, such as medical emergencies or street maintenance beyond Operator's control, are allowable modifications to the Route Plans. 14. 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. 15. 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 (L09-0011] Zoning Agreement— Morningside — Exhibit 1 10.09.02 11287-0007\1204428v3.doc Exhibit 1 to Zoning Agreement City of Newport Beach Morningside Recovery, LLC Operator's designated contact shall be returned promptly within a 24-hour period from receipt. 16. 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. 17. Persons per Bedroom. Operator shall not allow more than two clients in one bedroom unless the size of the structure warrants a larger occupancy for any single bedroom. 18. 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. 19. Facility Nuisances. The subject properties shall not be unsafe, unsightly or poorly maintained. If Operator receives notice of a nuisance violation from the City in regards to any of these issues, Operator shall correct the violation within seven calendar days. 20. 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). 21. Services to Facility's Clients or Residents. Operator will use industry's best practices to ensure that the facility's clients or residents stay in recovery (including scheduled substance testing, random substance testing, and required counseling). 22. 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. 23. 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. [L09-0011] Zoning Agreement - Morningside- Exhibit 1 10.09.02 11287-0007\1204428v3.doc EXHIBIT 2 Exhibit 2 Depiction and Description of "Peninsula Zone" Depiction of Peninsula Zone: The lands within the yellow boundary as shown below. Description of Peninsula Zone: Starting at the mouth of the Santa Ana River: • The land area southerly of the Newport and Seminouk Sloughs known as Newport Shores, and • The land coastward of Pacific Coast Highway to Newport Boulevard known as Balboa Coves, West Newport Beach, Lido Sands, and Newport Island; and • The land southerly of a line extending along the Federal Navigational Channel between Newport Boulevard and the Newport Harbor Jetty, known as the Balboa Peninsula, Lido Peninsula, Lido Isle, Bay Island, and Cannery Village; and • Southward on Newport Boulevard about 50 feet to Lower Newport Bay; and • All lands southerly of Lower Newport Bay between Newport Boulevard down the Federal Navigational Channel within the Lower Bay, inclusive of Lido Isle and Bay Island and inclusive of the Balboa Peninsula. [L 10-00111 10.16.14 Momingside — Zoning Agreement Exhibit 2 (Peninsula Zone) EXHIBIT 3 Exhibit 3 Morningside Recovery Quarterly Compliance Review Report Date Report Submitted: This form covers the 3-month period of through During the above period, Morningside Recovery managed or controlled the following facilities in Newport Beach: Morningside Recovery Facilities Date of Report: September 30, 2010 Location Peninsula Zone? Peninsula Clients & Client Beds Off -Peninsula Clients & Client Beds ADP Licensed? 1. 4823 River Avenue - A Y 6 N 2: 4823 River Avenue - B Y 6 N 3. 100 Via Antibes Y 4 N 4. 102 Via Antibes Y 4 N 5. 208 Via Lido Soud Y 4 N 6. 112 B 39th Street Y 6 Y 7. 29 Ima Loa Court N 6 N Total: 30 6 Note: In the above chart, "Clients" are subject to the same numerical restrictions as "Client Beds" in the Zoning Agreement. In other words, if Morningside is authorized to house six Clients in a particular facility, then it is limited to an equal number of Client Beds in that facility. The Morningside Staff Member to join the City in any inspection of the above facilities shall be: (e-mail: , phone #: ) By my signature below I certify and declare under the penalty of perjury under the laws of the State of California, in my personal capacity and on behalf of Morningside Recovery, LLC that Morningside Recovery has met all Operational Conditions as fL09-0011J-Zoning Agreement— Momingside — Exh. 3— Quarterly Compliance Report — 10-08-04 Exhibit 3 Morningside Recovery Quarterly Compliance Review Report described in Exhibit 1 to the Zoning Agreement during the above Compliance Review Period. DATE [Name], [Title] MORNINGSIDE RECOVERY, LLC By DATE [Name], [Title] [L09-0011J-Zoning Agreement— Morningside — Exh. 3— Quarterly Compliance Report — 10-08-04 EXHIBIT 4 Exhibit 4 Inspection Protocol The following protocol reflects the CITY's compliance review under Section N (Periodic Review of Compliance) of the Zoning Agreement between Morningside Recovery and the City of Newport Beach. 1. On or before March 31, June 30, September 30 and December 31 of each year, Morningside shall submit to the City's code enforcement division ("CED") the Compliance Review Report ("Report") shown in Exhibit 3 to the Zoning Agreement. At the same time, Morningside shall also submit the name, phone number, and e-mail of the Morningside staff member that Morningside designates to join any inspection ("Morningside Staff Member"). 2. On a quarterly basis, CED shall submit the list of Morningside facilities to the Police Department for verification that no persons known to have been referred to Morningside by the government (such as parolees) in violation of the Zoning Agreement live at any of the facilities. 3. On a quarterly basis, CED shall select up to two (2) facilities on the list to verify the Client count and Client Bed count through an onsite inspection during a weekday. CED and Morningside shall endeavor to schedule this inspection at a time when Clients are present. 4. CED shall notify the Morningside Staff Member by e-mail and telephone of the time of the inspection and which facilities will be inspected. Such notification will occur a reasonable amount of time prior to the inspection, generally four (4) but not less than two (2) hours prior to inspection. 5. While inspecting each facility, CED staff shall not obtain Client names nor take photos of Clients and shall be respectful at all times of Client privacy. CED staff shall count Clients or Client Beds and verify that the Client and Client Bed Count at each facility match those on the report submitted by Morningside. 6. An inspection report shall be made for each facility. 7. All inspection reports shall be submitted to the Planning Department for inclusion in the City's annual review of Morningside's compliance with the Zoning Agreement. (L09-0011110-16-14 Morningside - Zoning Agreement Exhibit4 (Inspection Protocol) EXHIBIT 5 Exhibit 5 Client Transport Routes 1 HOSPITALI RD Q . 1 E - i �1hLIal� ;ol_� siisT Ii44, o • 'I'' a Fi G'j'c ID\ 4 �q 1 1-1771 24, 29THST�,r�2.(`,',.28THST cif 3 1 v 1065ft v NOTES: 1 — Within the boundaries of the above chart, Morningside's Client Transport Routes are limited the following streets, except during emergencies or if approved routes are closed: • Balboa Boulevard • Newport Boulevard • Superior Ave • 32nd Street • 39th Street, Seashore between 39th and 38th, and 38th Street • Ticonderoga • River Avenue (only between 51st Street and Balboa Boulevard — not the section of River Ave between 45th and 32nd Street) • Via Lido, Via Antibes, Via Lido Soud, Via Lido Nord • Coast Highway 2 — The General Rule for Morningside's Client Transport vans shall be that Morningside shall use major thoroughfares (Newport Boulevard and Balboa Boulevard) whenever possible, avoiding narrow neighborhood streets such as River Avenue between 45th and 32nd Street). 4 — The City and Morningside shall work cooperatively to amend these routes whenever Morningside moves a facility. SETTLEMENT AGREEMENT AND RELEASE 1. Introduction This Settlement and Release Agreement ("AGREEMENT") is made and entered into as of this27th 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 MORNINGSIDE RECOVERY and the CITY, including but not limited to the lawsuits captioned Newport Beach v. Morningside Recovery, LLC, et aL, (OCSC No. 07CC11694), and Concerned Citizens of Newport 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 11287-0007\1200955v3.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 MPR 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 39d' 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. 07CC11694), 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 al., (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\1200955v3.doc 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 (31) 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 (31) 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 (31) 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 11287-0007U200955v3.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 terms and conditions of the ZONING AGREEMENT, and have concluded that pursuant to California law and the Newport Beach Municipal Code, City Staff may 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 11287-0007\I200955v3.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 6 11287-0007\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. CROSS -CLAIMANT:_ By: KEITH D. CURRY The CITY OF NEWPORT BEACH MAYOR, CITY OF NEWPORT BEACH Date: APPROVIID AS TO FORM AND CONTENT By: PAT RICHARDS, WATSON & GERSHON Attorneys for CROSS -CLAIMANT Date: 26 Ape. I 0 [MORE SIGNATURES FOLLOW] SETTLEMENT AGREEMENT BY AND BETWEEN THE CITY OF NEWPORT BEACH AND MORNINGSIDE RECOVERY, LLC 9 11287-0007\1200955v3.doc CROSS-h By: JEFFREY [YA MORNINCrSIII • OVE ,LLC Title: PRESIDENT Date: By: CA DACE BRU MO INGSIDE 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\1200955v3.doc OR G _. -... CROSS-bl\ rE By: t JEFFREY `:YAE MORNINGSI Title: PRESIDENT Date: ,LLC By: %A,-/4 CAN P ACE BRU MORNINGSIDE RECOVERY, LLC Title: CHIEF EXECUTIVE OFFICER Date: APPRQ,VED AS TOA?QRM AND CONTENT By: MARY HELEN I3?AT "FICAT BEATIFICATO & tSSOCIAIES Attorneys for CROSS -DEFENDANT Date: 4 do SETTLEMENT AGREEMENT BY AND BETWEEN THE CITY OF NEWPORT BEACH AND MORNINGSIDE RECOVERY, LLC 10 I1287-000711200955v3.doc OR AL (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 39th 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. 1193897-7 Morningside Recovery, LLC Zoning Agreement Exhibit "A" to Settlement Agreement 2 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: 1193897-7 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 "1." 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 3 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. 1193897-7 Morningside Recovery, LLC Zoning Agreement Exhibit "A" to Settlement Agreement 4 1.) 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. Operation 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 1193897-7 Morningside Recovery, LLC Zoning Agreement Exhibit "A" to Settlement Agreement 5 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 govermnent 1193897-7 Morningside Recovery, LLC Zoning Agreement Exhibit "A" to Settlement Agreement 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 91st day following the City Council of the City of Newport Beach's passage of the ordinance approving this ZONING AGREEMENT, or If a referendum or other elective challenge to the ordinance approving this ZONING AGREEMENT qualifies for the ballot, then on the 31' 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 31st 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 25th 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 1193897-7 Morningside Recovery, LLC Zoning Agreement Exhibit "A" to Settlement Agreement 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 31 s` and June 30th of each year during the term of this ZONING AGREEMENT. MORNINGSIDE shall submit a Compliance Review Report, whose template is attached hereto as Exhibit "3." 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.) 1193897-7 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 8 1193897-7 (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 terns of this ZONING AGREEMENT. MORNINGSIDE may then seek a specific performance or similar equitable remedy as provided in subsection (3) of Section 0, 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 9 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 party 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. 1193897-7 Morningside Recovery, LLC Zoning Agreement Exhibit "A" to Settlement Agreement 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: 1193897-7 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 11 With a copy to: To Operator: With a copy to: Attn: City Manager Fax: 949-644-3020 City Attorney City of Newport Beach 3300 Newport Boulevard Post Office Box 1768 Newport Beach, California 92663-3884 Morningside Recovery, LLC 3404 A Via Lido Newport Beach, California 92663 (949) 675-0006 Mary Helen Beatificato 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. 1193897-7 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 12 1193897-7 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 13 1193897-7 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 By: JEFFREY YATES Title: President MORNINGSIDE RECOVERY, LLC By: CANDACE BRUCE Title: Chief Executive Officer Momingside Recovery, LLC Zoning Agreement Exhibit "A" to Settlement Agreement 14 1193897-7 APPROVED AS TO FORM: By: David R. Hunt Title: 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 15 Exhibit "1" to Zoning Agreement City of Newport Beach Morningside Recovery, LLC EXHIBIT "1" OPERATIONAL CONDITIONS for MORNINGSIDE RECOVERY, LLC 1. 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. 112 396 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 Morningside'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\1204428v1.doc Exhibit "2" to Settlement Agreement City of Newport Beach Morningside 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 Morningside facilities are attached hereto as "Exhibit 4." Short -tern 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\1204428v1.doc 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 "2" Depiction and Description of "Peninsula Zone" Depiction of Peninsula Zone: Description of Peninsula Zone: Starting at the mouth of the Santa Ana River: • The land area southerly of the Newport and Seminouk Sloughs known as Newport Shores, and • The land coastward of Pacific Coast Highway to Newport Boulevard known as Balboa Coves, West Newport Beach, Lido Sands, and Newport Island; and • The land southerly of a line extending along the Federal Navigational Channel between Newport Boulevard and the Newport Harbor Jetty, known as the Balboa Peninsula, Lido Peninsula, Lido Isle, Bay Island, and Cannery Village; and • Southward on Newport Boulevard about 50 feet to Lower Newport Bay; and • All lands southerly of Lower Newport Bay between Newport Boulevard down the Federal Navigational Channel within the Lower Bay, inclusive of Lido Isle and Bay Island and inclusive of the Balboa Peninsula. 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, Momingside Recovery, LLC, managed or controlled the following facilities in Newport Beach: Property Address Peninsula Zone? (Y or N) Bed Count Peninsula Off Peninsula ADP License? (Y or N) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 Total Bed Count 1287=0007\1213146v4.doc ._ A. • 40:: }'I,\ 40os I A05 r_ i Morningside Recovery Travel Routes (draft #1) ! r-/� r;>'^v/' 7- 3C3n ' I - �\ i �ti- i� .,HOAG11�ii.Q. (7 �e- ;ai yJa ve,t aCAL? i.)1te''u,� �___�� e4ti I 0.-o5'I��? �f Qp n PIe-Po O'Ap:.�a \11 IAoy c\,rJJ7PQ ,,k0A80k- -`- / - I i SPNSP PAST HWy W ~ --.� 8A080A COVES i� 0 0 - VIA MALAGA _I 32ND ST I I'� IF 3OTH ST--- , <t1w 994ft 20TH ST. g-- tQ'<- e'�28TH ST-. Rr NOTES: 1— Within the boundaries of the above chart, Morningside's Client Transport routes are limited the following streets, except during emergencies or if approved routes are closed: • Balboa Boulevard • Newport Boulevard • River Avenue (only between 51st Street and Balboa Boulevard — not the section of River Ave between 45`h and 32nd Street) • 32"d Street • Coast Highway 2 — The General Rule for Morningside's Client Transport vans shall be that Morningside shall use major thoroughfares (Newport Boulevard and Balboa Boulevard) whenever possible, avoiding narrow neighborhood streets such as River Avenue between 45`h and 32"d Street). 3 —Access to Morningside's facility at 112 39th Street shall be from 39`h Street, 40`h Street or 38th Street, and Seashore Drive. 4 — The City and Morningside shall work cooperatively to amend these routes whenever Morningside moves a facility. SETTLEMENT AGREEMENT AND RELEASE 1. Introduction This Settlement and Release Agreement ("AGREEMENT") is made and entered into as of this27th',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 MORNINGSIDE RECOVERY and the CITY, including but not limited to the lawsuits captioned Newport Beach v. Morningside Recovery, LLC, et al., (OCSC No. 07CC11694), and Concerned Citizens of Newport 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 11287-0007\1200955v3.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 39th 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 at, (OCSC No. 07CC11694), 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 at, (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\1200955v3.doc 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 (31) 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 (31) 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 (31) 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 11287-0007\1200955v3.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 terms and conditions of the ZONING AGREEMENT, and have concluded that pursuant to California law and the Newport Beach Municipal Code, City Staff may 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 11287-000711200955v1doc 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 6 11287-000711200955v3.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 1 1287-0007\ 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 11287-000711200955v3.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. CROSS-CLAIMANT:By: KEITH D. CURRY The CITY OF NEWPORT BEACH MAYOR, CITY OF NEWPORT BEACH Date: APPROVED AS TO FORM AND CONTENT By: PAT( K. BOBKO RIC ARDS, WATSON & GERSHON Attorneys for CROSS -CLAIMANT Date: Writ 90 [MORE SIGNATURES FOLLOW} SETTLEMENT AGREEMENT BY AND BETWEEN THE CITY OF NEWPORT BEACH AND MORNINGSIDE RECOVERY, LLC 9 11287-0007\1200955v3.doc CROSS-bl By: l JEFFREY {YAIE' MORNINGSII3E. OVI Title: PRESIDENT Date: j By: CAACE BRUC MO INGSIDE 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 I I287-0007\I200955v3.doc G IG NAL r` CROSS-D Bv: JEFFREY yYA MORNINGS' S OVEfl. LLC Title: PRESIDENT Date: ce/P2-- CANACEBRUCE MORNINGSIDE RECOVERY, LLC Title: CHIEF EXECUTIVE OFFICER Date: APPROVED AS TO4QR.M AND CONTENT By: MARY HELEN EA BEATIFICATr & iSSOCIATES, Attorneys for CROSS -DEFENDANT Date: 0-1 ID SETTLEMENT AGREEMENT BY AND BETWEEN THE CITY OF NEWPORT BEACH AND MORNINGSIDE RECOVERY, LLC 10 11287-000711200955 v3.doc OR1Gi.. SAL (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 tows 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 39th 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. 1193897-7 Momingside Recovery, LLC Zoning Agreement Exhibit "A" to Settlement Agreement 2 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: 1193897-7 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 "1." 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 3 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. 1193897-7 Morningside Recovery, LLC Zoning Agreement Exhibit "A" to Settlement Agreement 4 1.) 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. Operation 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 1193897-7 Morningside Recovery, LLC Zoning Agreement Exhibit "A" to Settlement Agreement 5 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 1193897-7 Momingside Recovery, LLC Zoning Agreement Exhibit "A" to Settlement Agreement 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 st day following the City Council of the City of Newport Beach's passage of the ordinance approving this ZONING AGREEMENT, or 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 31st 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 25th 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 1193897-7 Morningside Recovery, LLC Zoning Agreement Exhibit "A" to Settlement Agreement 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 31st and June 30th of each year during the term of this ZONING AGREEMENT, MORNINGSIDE shall submit a Compliance Review Report, whose template is attached hereto as Exhibit "3." 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.) 1193897-7 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 8 1193897-7 (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 0, 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. Momingside Recovery, LLC Zoning Agreement Exhibit "A" to Settlement Agreement 9 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 party 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. 1193897-7 Morningside Recovery, LLC Zoning Agreement Exhibit "A" to Settlement Agreement 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: 1193897-7 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 11 With a copy to: To Operator: With a copy to: Attn: City Manager Fax: 949-644-3020 City Attorney City of Newport Beach 3300 Newport Boulevard Post Office Box 1768 Newport Beach, California 92663-3884 Morningside Recovery, LLC 3404 A Via Lido Newport Beach, California 92663 (949) 675-0006 Mary Helen Beatificato 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 1193897-7 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, terns, 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 13 1193897-7 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 By: JEFFREY YATES Title: President MORNINGSIDE RECOVERY, LLC By: CANDACE BRUCE Title: Chief Executive Officer Momingside Recovery, LLC Zoning Agreement Exhibit "A" to Settlement Agreement 14 1193897-7 APPROVED AS TO FORM: By: David R. Hunt Title: 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 15 Exhibit "1" to Zoning Agreement City of Newport Beach Morningside Recovery, LLC EXHIBIT "1" OPERATIONAL CONDITIONS for MORNINGSIDE RECOVERY, LLC 1. 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 39`n 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 Morningside 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 subjectproperty 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 Morningside'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\1204428v1.doc 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 Morningside 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. 11287-000711204428v1.doc 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 "2" Depiction and Description of "Peninsula Zone" Depiction of Peninsula Zone: Description of Peninsula Zone: Starting at the mouth of the Santa Ana River: • The land area southerly of the Newport and Seminouk Sloughs known as Newport Shores, and • The land coastward of Pacific Coast Highway to Newport Boulevard known as Balboa Coves, West Newport Beach, Lido Sands, and Newport Island; and • The land southerly of a line extending along the Federal Navigational Channel between Newport Boulevard and the Newport Harbor Jetty, known as the Balboa Peninsula, Lido Peninsula, Lido Isle, Bay Island, and Cannery Village; and • Southward on Newport Boulevard about 50 feet to Lower Newport Bay; and • All lands southerly of Lower Newport Bay between Newport Boulevard down the Federal Navigational Channel within the Lower Bay, inclusive of Lido Isle and Bay Island and inclusive of the Balboa Peninsula. 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: Property Address Peninsula Zone? (Y or N) Bed Count Peninsula Off Peninsula ADP License? (Y or N) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 Total Bed Count 11287-0007\1213146v4.doc Morningside Recovery Travel Routes (draft #1) Legend: Acceptable Route = i—o. NOTES: 1— Within the boundaries of the above chart, Morningside's Client Transport routes are limited the following streets, except during emergencies or if approved routes are closed: • Balboa Boulevard • Newport Boulevard • River Avenue (only between 51st Street and Balboa Boulevard — not the section of River Ave between 45th and 32nd Street) • 32nd Street • Coast Highway 2 —The General Rule for Morningside's Client Transport vans shall be that Morningside shall use major thoroughfares (Newport Boulevard and Balboa Boulevard) whenever possible, avoiding narrow neighborhood streets such as River Avenue between 45th and 32nd Street). 3 —Access to Morningside's facility at 112 39th Street shall be from 39th Street, 40th Street or 38th Street, and Seashore Drive. 4 —The City and Morningside shall work cooperatively to amend these routes whenever Morningside moves a facility.