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HomeMy WebLinkAboutC-5387(B) - Affordable Housing Agreementid RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: City Of Newport Beach 100 Civic Center Drive P.O. Box 1768 Newport Beach, California 92660 Attn: City Clerk Recorded in Official Records, Orange County Hugh Nguyen Cle k-Recorder 11$) III II IIIIII hI HIM � l� �s� �� $ �� NO FEE 2015000465265 9:57 am 09109115 90 413 Al2 36 0.00 0.00 0.00 0.00 105.00 0.00 0.00 0.00 APN: 445-131-02, 445-131-03 Space above line for Recorder's use only Exempt from Recording Fees pursuant to Govt. Code §§ 6103, 27383 AFFORDABLE HOUSING AGREEMENT (Uptown Newport Planned Community) by and between the City of Newport Beach, a California municipal corporation and Uptown Newport Jamboree, LLC a Delaware limited liability company and TPG/TSG Venture I Acquisition, LLC, a Delaware limited liability company 6655-100442\1222688.2 9/22/14 AFFORDABLE HOUSING AGREEMENT (Uptown Newport Planned Community) This AFFORDABLE HOUSING AGREEMENT (Uptown Newport) ("Agreement") is dated as of%N2U £L) ati.j , 29i4 ("Effective Date"), and is entered into between the CITY OF NEWPORl' BEACH, a California municipal corporation ("City"), UPTOWN NEWPORT JAMBOREE, LLC, a Delaware limited liability company ("Uptown Newport") and TPG/TSG VENTURE I ACQUISITION, LLC, a Delaware limited liability company ("TPG/TSG). Uptown Newport and TPG/TSG may be referred to herein collectively as the "Developers." City, Uptown Newport and TPG/TSG enter into this Agreement with reference to the following recitals of fact (each, a "Recital"): RECITALS A. Uptown Newport and TPG/TSG are the owners of that certain real property located at 4311-4321 Jamboree Road in the City of Newport Beach, County of Orange, State of Califomia (the "Property"), as more particularly described in the legal description attached hereto as Exhibit "1," which is incorporated herein by reference. Uptown Newport is the owner of Parcel 4 of Parcel Map 2013-108 (Instrument Number 201300700771, Book 378, Pages 10- 12), and TPG/TSG is the owner of Parcel 3 of Parcel Map 2013-108. B. On March 12, 2013, the City Council approved the Uptown Newport Planned Community Development Plan (PA2011-134) project (the "Project") which includes developing the Property into a high -density mixed use residential project with up to 1,244 residential units, 11,500 square feet of retail space, and 2 acres of park space. C. Project approval included the adoption of an Affordable Housing Implementation Plan (the "AHIP"), dated February 26, 2014, which implements affordable housing requirements for the Project pursuant to the State Density Bonus Law (codified at Government Code Section 65915-65918), the City's former Inclusionary Code that was in place and effective at the time the Project was approved (previously codified at Title 19 Chapter 19.54 of the Newport Beach Municipal Code), and the City's Density Bonus Code (codified at Newport Beach Municipal Code Chapter 20.32). All terms not otherwise defined in this Agreement shall have the meanings given them in the AHIP, which is attached hereto and incorporated herein by reference as Exhibit "2." D. Pursuant to the State Density Bonus Law and the City's Density Bonus Code, the City granted a maximum density bonus of thirty-five percent (35%) above the maximum number of units allowed by the City's General Plan in exchange for construction of a minimum number of affordable housing units. With the approved maximum density bonus of 35%, the Project is permitted to construct up to 322 additional units above the 922 base units for a total of 1,244 dwelling units. E. The AHIP allows the affordability requirement to be satisfied for the Project through construction of 102 Very Low Income affordable rental housing units ("Affordable Dwelling Units") on the Property. The Parties intend to develop the Affordable Dwelling Units on Parcels 3 and 4 of Parcel Map 2013-108, and not on Parcels 1 and 2 of Parcel Map 2013-108. 6655-100442\1222688.2 9/22/14 1 F. Section 20.32.100 of the Density Bonus Code requires that an applicant who seeks a density bonus enter into an Affordable Housing Agreement with the City, and Section 19.54.020(A) of the former Inclusionary Code stated that the agreement must provide legal restrictions by which the affordable units are restricted to ensure that the units remain affordable to very low-, low-, or moderate -income households, as applicable. The AHIP also provides that an agreement referencing the terms of the AHIP must be executed and recorded. The Parties intend for this Agreement to serve as the required affordable housing agreement. NOW, THEREFORE, FOR GOOD AND VALUABLE CONSIDERATION AND THE PROMISES AND COVENANTS OF CITY, UPTOWN NEWPORT AND TPG/TSG SET FORTH IN THIS AGREEMENT, CITY, UPTOWN NEWPORT AND TPG/TSG AGREE, AS FOLLOWS: TERMS AND CONDITIONS 1. DEFINITIONS 1.1 Definitions. The following words, terms and phrases are used in this Agreement with the following meanings, unless the particular context or usage of a word, term or phrase requires another interpretation: 1.1.1 Adjusted for Household Size. A household size based upon two (2) persons per bedroom except for efficiency units where the household size shall be one (1) person. 1.1.2 Affordable Rental Price. For any Affordable Dwelling Unit, annual rent shall not exceed thirty percent (30%) of the maximum income level for Very Low Income households, as Adjusted for Household Size. 1.1.3 Area Median Income. Orange County Area Median Income utilized for setting the Affordable Rental Price and Very Low Income figure. "Area Median Income" shall mean the area median income for the County as published annually by the California Department of Housing and Community Development and determined in accordance with the U.S. Department of Housing and Urban Development ("HUD") criteria then in effect and published from time to time. For purposes of this Agreement, the qualifying limits shall be those limits for the County, as set forth in Title 25, California Code of Regulations, section 6932, as that Section may be amended, modified or recodified from time to time. 1.1.4 City. The City of Newport Beach, a California municipal corporation. 1.1.5 City Parties. Collectively, City, its goveming body, elected officials, officers, commissioners, employees, agents and attorneys. 1.1.6 City Party. Individually, City, its governing body, elected officials, officers, commissioners, employees, agents or attorneys. 1.1.7 Claim. Any claim, loss, cost, damage, expense, liability, lien, action, cause of action (whether in tort, contract, under statute, at law, in equity or otherwise), charge, 6655-100442\1222688.2 9/22/14 2 award, assessment, fine or penalty of any kind (including consultant and expert fees and expenses and investigation costs of whatever kind or nature, and if an Indemnitor improperly fails to provide a defense for an Indemnitee, then Legal Costs) and any judgment. 1.1.8 County. The County of Orange, California. 1.1.9 Default. A Monetary Default or Non -Monetary Default. 1.1.10 Event of Default. The occurrence of any one or more of the following: (a) Monetary Default. A Monetary Default that continues for seven (7) calendar days after Notice from the non -defaulting Party, specifying in reasonable detail the amount of money not paid and the nature and calculation of each such payment; (b) Non -Monetary Default. Any Non -Monetary Default that is not cured within sixty (60) days after Notice to the Party alleged to be in Default describing the Non - Monetary Default in reasonable detail, or, in the case of a Non -Monetary Default that cannot with reasonable diligence be cured within sixty (60) days after the effective date of such Notice, if the Party alleged to be in Default does not do all of the following: (a) within sixty (60) days after Notice of such Non -Monetary Default, advise the other Party of the intention of the Party alleged to be in Default to take all reasonable steps to cure such Non -Monetary Default; (b) duly commence such cure within such period; and (c) diligently prosecute such cure to completion within a reasonable time under the circumstances. 1.1.11 HCD. The California Department of Housing and Community Development. 1.1.12 Indemnify. Where this Agreement states that any Indemnitor shall "indemnify" any Indemnitee from, against, or for a particular Claim, that the Indemnitor shall indemnify the Indemnitee and defend and hold the Indemnitee harmless from and against such Claim (alleged or otherwise). "Indemnified" shall have the correlative meaning. 1.1.13 Indemnitee. Any Person entitled to be Indemnified under the terms of this Agreement. 1.1.14 Indemnitor. A Party that agrees to Indenmify any other Person under the terms of this Agreement. 1.1.15 Legal Costs. In reference to any Person, all reasonable costs and expenses such Person incurs in any legal proceeding (or other matter for which such Person is entitled to be reimbursed for its Legal Costs), including reasonable attorneys' fees, court costs and expenses and consultant and expert witness fees and expenses. 1.1.16 Monetary Default. Any failure by either Party to pay or deposit, when and as this Agreement requires, any amount of money required to be provided under this Agreement, whether to or with a Party or a third Person. 9/22/14 6655-100442\1222688.2 3 1.1.17 Non -Monetary Default. The occurrence of any of the following: (a) any failure of a Party to perform any of its obligations under this Agreement; (b) any failure of a Party to comply with any material restriction or prohibition in this Agreement; or (c) any other event or circumstance that, with passage of time or giving of Notice, or both, or neither, would constitute a breach of this Agreement by a Party. 1.1.18 Normal Business Hours. Any weekday, Monday through Friday, excluding Federal and State recognized holidays, between the hours of 9:00 a.m. and 5:00 p.m. Pacific Time. 1.1.19 Notice. Any consent, demand, designation, election, notice, or request relating to this Agreement, including any Notice of Default. All Notices must be in writing. 1.1.20 Notice of Default. Any Notice claiming or giving Notice of a Default or alleged Default. 1.1.21 Notify. To give a Notice. 1.1.22 Parties. Collectively, City, Uptown Newport and TPG/TSG. 1.1.23 Party. Individually, either City, Uptown Newport or TPG/TSG, as applicable. 1.1.24 Person. Any association, corporation, govemmental entity, individual, joint venture, joint-stock company, limited liability company, partnership, trust, unincorporated organization, or other entity of any kind. 1.1.25 Renter -Occupied Regulatory Agreement. That certain "Declaration of Affordable Housing Conditions, Covenants and Restrictions (Uptown Newport Planned Community Renter -Occupied)" to be entered into by and between City and either Uptown Newport or TPG/TSG, as applicable, and recorded following issuance of the last certificate of occupancy for the Affordable Dwelling Units for each parcel providing such Affordable Dwelling Units, substantially in the form of Exhibit "3" attached to this Agreement. 1.1.26 TPG/TSG. TPG/TSG Venture I Acquisition, LLC, a Delaware limited liability company, and any assignee of or successor to its rights, duties or responsibilities. 1.1.27 TPG/TSG Parties. Collectively, TPG/TSG and the directors, officers, employees, agents, shareholders, members, managers and partners of TPG/TSG. 1.1.28 TPG/TSG Party. Individually, TPG/TSG or the directors, officers, employees or agents, shareholders, members, managers or partners of TPG/TSG. 1.1.29 Uptown Newport. Uptown Newport Jamboree, LLC, a Delaware limited company, and any assignee of or successor to its rights, duties or responsibilities. 9/22714 6655-100442\1222688.2 4 1.1.30 Uptown Newport Parties. Collectively, Uptown Newport and the directors, officers, employees, agents, shareholders, members, managers and partners of Uptown Newport. 1.1.31 Uptown Newport Party. Individually, Uptown Newport or the directors, officers, employees or agents, shareholders, members, managers or partners of Uptown Newport. 1.1.32 Unavoidable Delay. A delay in either Party performing any obligation under this Agreement, except payment of money, arising from or on account of any cause whatsoever beyond the Party's reasonable control, including strikes, labor troubles or other union activities, casualty, war, acts of terrorism, riots, litigation, governmental action or inaction, regional natural disasters, or inability to obtain materials. Unavoidable Delay shall not include delay caused by a Party's financial condition, illiquidity, or insolvency. 1.1.33 Very Low Income. Income fifty percent (50%) or less of the Area Median Income, Adjusted for Household Size. 2. CONSTRUCTION OF AFFORDABLE DWELLING UNITS 2.1 Construction of Affordable Dwelling Units. The Project will be developed in phases: TPG/TSG shall develop Phase 1 and be responsible for all rights, duties and obligations of this Agreement for the Phase 1 Affordable Dwelling Units, including but not limited to qualifying households and restricting affordability, and Uptown Newport shall develop Phase 2 and be responsible for all rights, duties and obligations of this Agreement for Phase 2, including but not limited to qualifying households and restricting affordability for the Phase 2 Affordable Dwelling Units. 2.1.1 Phase 1. TPG/TSG shall construct a portion of the Affordable Dwelling Units or all of the Affordable Dwelling Units, in its sole and absolute discretion, but no less than fifty five percent (55%) of the total number of Affordable Dwelling Units, in Phase 1 of the Project. The Parties anticipate that approximately twenty percent (20%) of the total number of rental units constructed in Phase 1 will be set -aside as Affordable Dwelling Units. 2.1.2 Phase 2. Uptown Newport shall construct the remaining required number of Affordable Dwelling Units (for a total of 102 units), if any, in Phase 2 of the Project. For illustration purposes only, if TPG/TSG constructs 90 Affordable Dwelling Units in Phase 1, Uptown Newport will be responsible for providing the remaining 12 Affordable Dwelling Units in Phase 2. 2.2 Affordable Dwelling Unit Number, Size and Location. 2.2.1 Unit Location. The Affordable Dwelling Units may be dispersed throughout the Project or clustered in one more sections of the Project. 2.2.2 Unit Bedrooms and Size. For Phase 1, TPG/TSG proposes to provide: 14 Studio units, 49 One Bedroom units and 29 Two -Bedroom units. Notwithstanding the foregoing, TPG/TSG may make minor changes to unit size and bedroom breakdown. For Phase 9/22/14 6655-100442\1222688.2 5 2, Uptown Newport shall provide the City with Notice of the anticipated number of bedrooms and size for the remaining Affordable Dwelling Units, and Uptown Newport may make minor changes to such size and bedroom breakdown. 3. COVENANTS 3.1 Renter -Occupied Covenants. 3.1.1 Income Restriction. The Affordable Dwelling Units shall be restricted to occupancy by Very Low Income households at an Affordable Rental Price, as set forth further in the Renter -Occupied Regulatory Agreement. Notwithstanding the foregoing, households with less income may also occupy the Affordable Dwelling Units. 3.1.2 Term. The Renter -Occupied Regulatory Agreement shall bind the applicable parcel of the Property with such Affordable Dwelling Units for a minimum of thirty (30) years commencing with issuance of the last certificate of occupancy for the Affordable Dwelling Units constructed on the applicable parcel providing such Affordable Dwelling Units. For illustration purposes only, if one parcel contains 56 Affordable Dwelling Units, the term of the Renter -Occupied Regulatory Agreement for those 56 Affordable Dwelling Units will commence upon issuance of the certificate of occupancy for the 56th Affordable Dwelling Unit, and the term of the Renter -Occupied Regulatory Agreement for Affordable Dwelling Units constructed on a separate parcel may be subject to a different term, based upon issuance of the last certificate of occupancy for Affordable Dwelling Units within such separate parcel. For purposes of this Agreement, the term "parcel" means an area of land under one ownership which is identified as a lot or parcel on a recorded final map, parcel map, record of survey recorded pursuant to an approved division of land, certificate of compliance or lot line adjustment. 3.1.3 Subordination. The Parties agree that this Agreement and the Renter - Occupied Regulatory Agreement shall not prevent or limit Uptown Newport or TPG/TSG in any manner from encumbering the Property, any part of the Property, or any improvements on the Property with any conventional mortgage, construction, bond fmancing or security interest to secure financing with respect to the construction, development, use, or operation of the Project. This Agreement and the Renter -Occupied Regulatory Agreement shall be subordinate to any conventional mortgage, construction or bond financing that has a first trust deed position against the legal parcel(s) within the Project subject to this Agreement and/or the Renter -Occupied Regulatory Agreement. No Default or breach of this Agreement or the Renter -Occupied Regulatory Agreement shall defeat, render invalid, diminish, or impair the lien of any conventional mortgage, construction or bond financing with a first trust deed position. 3.1.4 Recordation. The Renter -Occupied Regulatory Agreement shall only be recorded on parcels containing Affordable Dwelling Units. 4. QUALIFYING PROSPECTIVE HOUSEHOLDS. 4.1 Notice. At least thirty days prior to offering the Affordable Dwelling Units for lease to the general public, Uptown Newport and TPG/TSG, as applicable, shall provide City with Notice of its intent to lease the Affordable Dwelling Units, specifying the proposed Affordable Rent and proposed location of such Affordable Dwelling Unit. 922/14 6655-100442\1 222688.2 6 4.2 Qualification. Uptown Newport and TPG/TSG, as applicable, shall determine if prospective occupants of the Affordable Dwelling Units qualify as Very Low Income households under this Agreement. Uptown Newport and TPG/TSG, as applicable, shall require each prospective renter of an Affordable Dwelling Unit certify that the income of the occupants does not exceed the qualifying income limits, and Uptown Newport and TPG/TSG may rely upon such certification in qualifying the prospective renter. Uptown Newport and TPG/TSG shall make available at Uptown Newport's and TPG/TSG's, as applicable, office for review by the City during Normal Business Hours, copies of documents and information upon which Uptown Newport and TPG/TSG, as applicable, relied upon to qualify each prospective renter within a reasonable time after so qualifying that renter. 5. REMEDIES AND INDEMNITY 5.1 Legal Actions. Either Party may institute legal action, at law or in equity, to enforce or interpret the rights or obligations of the Parties under this Agreement or recover damages. 5.2 Rights and Remedies are Cumulative. Except as otherwise expressly stated in this Agreement, the rights and remedies of the Parties set forth in this Agreement are cumulative and the exercise by a Party of one or more of such rights or remedies shall not preclude the exercise by such Party, at the same or different times, of any other rights or remedies for the same Default or the same rights or remedies for any other Default by the other Party or Parties. 5.3 Three Party Agreement. The Parties agree that a Default or breach of the Renter - Occupied Regulatory Agreement or this Agreement by Uptown Newport shall not, in and of itself, constitute a Default or breach by TPG/TSG, and that a Default or breach of the Renter - Occupied Regulatory Agreement or this Agreement by TPG/TSG shall not, in and of itself, constitute a Default or breach by Uptown Newport. 5.4 Indemnification. 5.4.1 City Indemnity Obligations. City shall Indemnify the Uptown Newport Parties and the TPG/TSG Parties against any Claim to the extent such Claim arises from any wrongful intentional act or negligence of the City Parties. Nothing in this Agreement is intended nor shall be interpreted to waive any limitation on City's liability, any exemption from liability in favor of City, any claim presentment requirement for bringing an action regarding any liability of City or any limitations period applicable to liability of City, all as set forth in Government Code Sections 800, et seq., Sections 900, et seq., or in any other law, or require City to Indemnify any Person beyond such limitations on City's liability. 5.4.2 Uptown Newport Indemnity Obligations. Uptown Newport shall Indemnify the City Parties and TPG/TSG Parties against any Claim to the extent such Claim arises from any wrongful intentional act or negligence of the Uptown Newport Parties. 5.4.3 TPG/TSG Indemnity Obligations. TPG/TSG shall Indemnify the City Parties and Uptown Newport Parties against any Claim to the extent such Claim arises from any wrongful intentional act or negligence of the TPG/TSG Parties. 6655-100442\1222688.2 9/22/14 7 5.4.4 Survival of Indemnification and Defense Obligations. The indemnity and defense obligations of the Parties under this Agreement shall survive the expiration or earlier termination of this Agreement, until any and all actual or prospective Claims regarding any matter subject to an indemnity obligation under this Agreement are fully, finally, absolutely and completely barred by applicable statutes of limitations. 6. GENERAL PROVISIONS 6.1 Incorporation of Recitals. The Recitals of fact set forth preceding this Agreement are true and correct and are incorporated into this Agreement in their entirety by this reference. 6.2 Notices, Demands and Communications Between the Parties. 6.2.1 Delivery. Any and all Notices submitted by any Party to the another Party pursuant to or as required by this Agreement shall be proper, if in writing and dispatched by messenger for immediate personal delivery, nationally recognized overnight (one business day) courier (i.e., United Parcel Service, Federal Express, etc.) or by registered or certified United States mail, postage prepaid, return receipt requested, to the address of the recipient Party, as designated in this Section. Notices may be sent in the same manner to such other addresses as the Parties may from time to time designate by Notice in accordance with this Section. Notice shall be deemed received by the addressee, regardless of whether or when any return receipt is received by the sender or the date set forth on such return receipt, on the day that it is dispatched by messenger for immediate personal delivery, one business day after delivery to a nationally recognized overnight carrier or two (2) calendar days after it is placed in the United States mail in accordance with this Section 6.2.1. Any attorney representing a Party may give any Notice on behalf of such Party. 6.2.2 Addresses. The Notice addresses for the Parties, as of the Effective Date, are as follows: To Uptown Newport: With Copy to: To TPG/TSG: Uptown Newport Jamboree, LLC c/o Shopoff Realty Investments, L.P. 2 Park Plaza, Suite 700 Irvine, CA 92614 Attn: John Santry Jackson DeMarco Tidus Peckenpaugh 2030 Main Street, 12th Floor Irvine, CA 92614 Attn: Gregory P. Powers, Esq. TPG/TSG Venture I Acquisition, LLC c/o The Picerne Group 30950 Rancho Viejo Road, Suite 200 San Juan Capistrano, CA 92675 Attn: Jon Demorest 6655-100442\1222688.2 922/14 8 With Copy to: With Copv to: To City: Shopoff Realty Investments, L.P. 2 Park Plaza, Suite 700 Irvine, CA 92614 Attn: John Santry Jackson DeMarco Tidus Peckenpaugh 2030 Main Street, 12`s Floor Irvine, CA 92614 Attn: Gregory P. Powers, Esq. City of Newport Beach 100 Civic Center Drive Newport Beach, Califomia 92660 Attn: City Manager 6.3 Relationship of Parties. The Parties each intend and agree that City and Developers are independent contracting entities and do not intend by this Agreement to create any partnership, joint venture, or similar business arrangement, relationship or association between them. 6.4 Covenants Recorded Against the Property. This Agreement shall be recorded in the Official Records of Orange County, Califomia. All of the covenants and restrictions set forth in this Agreement shall be equitable servitudes and covenants running with the land pursuant to applicable law, including, without limitation, Califomia Civil Code Section 1468. Each covenant to do or refrain from doing some act is for the benefit of the Property. This Agreement and each covenant shall run with the applicable portion of the Property, and shall benefit or be binding upon each successive owner during its ownership of the applicable portion of the Property. This Agreement and the covenants herein contained shall, subject to the provisions as to assignment, apply to and bind the heirs, successors, executors, administrators and assigns of all the Parties hereto, as applicable. Upon expiration or termination of this Agreement, Uptown Newport and TPG/TSG, as applicable, and the City shall sign documents in recordable form (provided by Uptown Newport and TPG/TSG, as applicable, giving notice and subject to approval by the City Attorney, which shall not be unreasonably withheld or delayed) as may be necessary to remove the effect of this Agreement from the Property in the Official Records of Orange County. 6.5 Release of the Agreement. The City shall, upon written request from Uptown Newport and/or TPG/TSG, as applicable, release the encumbrance of this Agreement and terminate this Agreement as to all parcels not containing Affordable Dwelling Units within a phase, upon issuance of the first certificate of occupancy for the Affordable Dwelling Units within said phase. The City shall promptly execute, acknowledge and deliver for recordation such instrument(s) as reasonably necessary to cause such release and termination. Upon the execution of such release and termination, Uptown Newport and/or TPG/TSG, as applicable, shall have no further obligations or liability hereunder with respect to such portion of the Property. 6.6 Termination. Except as set forth in Section 6.5 above, this Agreement shall be effective until the expiration of the "Affordability Period" (as that term is defined in the Renter- 9/22/14 6655-100442\1222688.2 9 Occupied Regulatory Agreement) for the applicable portion of the Property. Upon expiration of the Affordability Period, this Agreement and the Renter -Occupied Regulatory Agreement shall automatically and immediately terminate and shall have no further force and effect with respect to the applicable portion of the Property. Upon the termination of this Agreement, Uptown Newport and/or TPG/TSG shall have no further obligations or liability hereunder, or under the applicable Renter -Occupied Regulatory Agreement, or any responsibility with respect to such Affordable Dwelling Units. The City shall promptly execute, acknowledge and deliver for recordation any documents that may be reasonably necessary to remove this Agreement and the Renter -Occupied Regulatory Agreement as an encumbrance against title to the applicable portion of the Property. 6.7 Calculation of Time Periods. Unless otherwise specified, all references to time periods in this Agreement measured in days shall be to consecutive calendar days, all references to time periods in this Agreement measured in months shall be to consecutive calendar months and all references to time periods in this Agreement measured in years shall be to consecutive calendar years. 6.8 Principles of Interpretation. No inference in favor of or against any Party shall be drawn from the fact that such Party has drafted any part of this Agreement. The Parties have participated substantially in the negotiation, drafting, and revision of this Agreement, with advice from legal and other counsel and advisers of their own selection. A word, term or phrase defined in the singular in this Agreement may be used in the plural, and vice versa, all in accordance with ordinary principles of English grammar, which shall govern all language in this Agreement. The words "include" and "including" in this Agreement shall be construed to be followed by the words: "without limitation." Each collective noun in this Agreement shall be interpreted as if followed by the words "(or any part of it)," except where the context clearly requires otherwise. Every reference to any document, including this Agreement, refers to such document, as modified from time to time (excepting any modification that violates this Agreement), and includes all exhibits, schedules, addenda and riders to such document. The word "or" in this Agreement includes the word "and." Every reference to a law, statute, regulation, order, form or similar governmental requirement refers to each such requirement as amended, modified, renumbered, superseded or succeeded, from time to time. 6.9 Governing Law. The procedural and substantive laws of the State of California shall govern the interpretation and enforcement of this Agreement, without application of conflicts or choice of laws principles. The Parties acknowledge and agree that this Agreement is entered into, is to be fully performed in and relates to real property located in the County of Orange, State of California. A11 legal actions arising from this Agreement shall be filed in the Superior Court of the State in and for the County or in the United States District Court with jurisdiction in the County. 6.10 No Third -Party Beneficiaries. Nothing in this Agreement, express or implied, is intended to confer any rights or remedies under or by reason of this Agreement on any person or entity other than the City on the one hand and Uptown Newport and TPG/TSG on the other and their respective permitted successors and assigns, nor is anything in this Agreement intended to relieve or discharge any obligation of any third person to any Party or give any third person any right of subrogation or action over or against any Party. 6655-100442112226882 9/22/14 10 6.11 Time Declared to be of the Essence. As to the performance of any obligation under this Agreement of which time is a component, the performance of such obligation within the time specified is of the essence. 6.12 Legal Costs. In the event that a Party brings an action to enforce this Agreement or otherwise arising out of this Agreement, the prevailing Party in such action shall be entitled to recover from the other Party its Legal Costs. 6.13 Entire Agreement. This Agreement integrates all of the terms and conditions mentioned in this Agreement or incidental to this Agreement, and supersedes all negotiations or previous agreements between the Parties with respect to all or any portion of the Property and the development of the Project, except for the AHIP and the Development Agreement for the Project. 6.14 Waivers and Amendments. All waivers of the provisions of this Agreement and all amendments to this Agreement must be in writing and signed by the appropriate authorities of the Parties. Failure to insist on any one occasion upon strict compliance with any term, covenant, condition, restriction or agreement contained in this Agreement shall not be deemed a waiver of such term, covenant, condition, restriction or agreement, nor shall any waiver or relinquishment of any rights or powers under this Agreement, at any one time or more times, be deemed a waiver or relinquishment of such right or power at any other time or times. 6.15 Assignment. Uptown Newport and TPG/TSG shall have the right to assign this Agreement, including all benefits, covenants, duties, and obligations contained herein, upon the City's prior approval, which shall not be unreasonably withheld or delayed. Uptown Newport and TPG/TSG, as applicable, shall notify the City in writing of the assignment at least thirty (30) days prior to completion of the assignment. Notice of assignment to the City shall include the name of, and contact information for the assignee. Upon completion of the assignment, the assignee shall assume and perform all duties and obligations set forth in this Agreement, excepting only those duties and obligations expressly retained by Uptown Newport and TPG/TSG, as applicable, if any, as part of the assignment. 6.16 Survival of Agreement. All of the provisions of this Agreement shall be applicable to any dispute between the Parties arising from this Agreement, whether prior to or following expiration or termination of this Agreement, until any such dispute is finally and completely resolved between the Parties, either by written settlement, entry of a non -appealable judgment or expiration of all applicable statutory limitations periods and all terms and conditions of this Agreement relating to dispute resolution and limitations on damages or remedies shall survive any expiration or termination of this Agreement. 6.17 City Authorization. The City Manager of the City of Newport Beach is hereby authorized, on behalf of the City, to sign all documents that are approved as to form by the City Attomey and are necessary and appropriate to carry out and implement this Agreement and to administer the City's obligations, responsibilities and duties to be performed under this Agreement. 6655-100442\1222688.2 9/22/14 11 6.18 Counterparts. This Agreement shall be signed in three (3) originals each of which is deemed to be an original. This Agreement constitutes the entire understanding and Agreement of the Parties regarding the subject matter of this Agreement. 6.19 Facsimile or Electronic Signatures. Signatures delivered by facsimile or electronic means shall be binding as originals upon the Party so signing and delivering; provided, however, that original signature(s) of each Party shall be required for each document to be recorded. 6655-10044211222688.2 9/22/14 12 SIGNATURE PAGE TO AFFORDABLE HOUSING AGREEMENT (Uptown Newport Planned Community) IN WITNESS WHEREOF, the Parties have signed this Agreement by and through the signatures of their respective authorized representative(s) as follow: CITY: UPTOWN NEWPORT: CITY OF NEWPORT BEACH, a California UPTOWN NEWPORT JAMBOREE, LLC, a municipal corporation Delaware limited liability co u pany By: Name: Kimberly Brandt Title: Director of Community Development Name: Leilani Brown By: Name: Title: T if- I ag-4— TPG/TSG: TPG/TSG VENTURE I ACQUISITION, LLC, a Delaware limited iabilitcompany By: Title: City Clerk Name: --TiAl lit ltil C& I Title: i� V 1 ) APPROVED AS TO FORM: Name: Leonie Mulvihill Title: Assistant City Attorney 9/22/14 6655-100442\1222688.2 13 CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT CIVIL CODE § 1189 A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. State of California County of t1 On May 'tom before me, Rer✓ etui 11eww iw �, ?Ja(I° / Date Here Insert Name and Title of th Officer Up-nf Demacec personally appeared Name(s) of Signer(s) who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/ere- subscribed to the within instrument and acknowledged to me that he/ciRc/they executed the same in his/herktieir authorized capacity(ies»and that by his/hen/444: signature(s)-on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of Califomia that the foregoing paragraph is true and correct. ROMELY T. LEVEZOW _ Commission X 2032462 h� .) Notary Public - California I �`—"Orange County My Comm. Expires Jol 4: 201J I Place Notary Seal Above WITNESS my hand and official seal. Signature OPTIONAL gnature of Notarlf jublic Though this section is optional, completing this information can deter alteration of the document or fraudulent reattachment of this form to an unintended document. Description of Attached Doc ent Title or Type of Document: `T� or+- n �`,van7t pp1�n nil -- Title cument Date: Number of Pages: Signer(s) Other Than Named Above: Capacity(ies) Claimed by Signer(s) Signer's Name: 0 Corporate Officer — Title(s): ❑ Partner — 0 Limited ❑ General ❑ Individual ❑ Attorney in Fact ❑ Trustee ❑ Guardian or Conservator 0 Other: Signer Is Representing: Signer's Name: 0 Corporate Officer — Title(s): ❑ Partner — ❑ Limited ❑ General El Individual ❑ Attorney in Fact ❑ Trustee ❑ Guardian or Conservator 0 Other: Signer Is Representing: '=zsucacc.MIE aulu,s.-vGcs 4,,,a^ ; vus:ax ©2014 National Notary Association • www.NationalNotary.org • 1-800-US NOTARY (1-800-876-6827) Item #5907 CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT ss rre,Lcws c r ,a s-rz-rsrscr,.�,;Er ., CIVIL CODE § 1189 s-ra 5creG ver . A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. State of Caliilomia County of &tot On)lho 5,a-ol5 Date personally appeared (Qn;]4bvdmfad Here Insert Nam' and Title ofrthe Officer W�llian ,zy\opocc Name(s) of Signer(s) before me who proved to me on the basis of satisfactory evidence to be the person) whose name isiare subscribed to the within instrument and acknowledged to me that he/she%sey executed the same in his/her/theicauthorized capacity and that by his/Fier./it/sir signatures on the instrument the persoft(g), or the entity upon behalf of which the personKacted, executed the instrument. TERRI HOVDESTAD Commission it 2070020 Notary public • CaIHornia Orange County Comm. E ire! Jun 28 2018 E Place Notary Seal Above I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official -seat: -- Signore OPTIONAL Signature of Notary Public Though this section is optional, completing this information can deter alteration of the document or fraudulent reattachment of this form to an unintended document. Description of Attached Document Title or Type of Document: Document Date: Number of Pages: Signer(s) Other Than Named Above: Capacity(ies) Claimed by Signer(s) Signer's Name: Signer's Name: ❑ Corporate Officer — Title(s): ❑ Partner — E Limited ❑ General ❑ Individual ❑ Attorney in Fact ❑ Trustee ❑ Guardian or Conservator ❑ Other: Signer Is Representing: O Corporate Officer — Title(s): ❑ Partner — ❑ Limited ❑ General • Individual ❑ Attomey in Fact ❑ Trustee ❑ Guardian or Conservator O Other: Signer Is Representing: ©2014 National Notary Association • www.NationalNotary.org • 1-800-US NOTARY (1-800-876-6827) Item #5907 CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT CIVIL CODE § 1189 A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. State of California County of !`i2oIV (cc. On _ U% VC. 1'75 Date before me,. )'c{v(v1(E42,. VllVt (NIL) L..\4E 4KC7CH12--t ?uP tC Here Insert Name and Title of the Officer personally appeared \LVf \ Name(s) of Signer(s) who proved to me on the basis of satisfactory evidence to be the persons} whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. _...�..~ JENNIF ER ANN Mt OE Public - California z otary Cs-r'i - Orange County My Comm, Wires Oct 12, 2017 Place Notary Seal Above WITNESS my hand and official seal. Signature OPTIONAL Public Though this section is optional, completing this information can deter alteration of the document or fraudulent reattachment of this form to an unintended document. Description of Attached Document Title or Type of Document: Document Date: Number of Pages: Signer(s) Other Than Named Above: Capacity(ies) Claimed by Signer(s) Signer's Name: ❑ Corporate Officer — Title(s): Partner — ❑ Limited ❑ General Individual ❑ Attorney in Fact ❑ Trustee ❑ Guardian or Conservator P Other: Signer Is Representing: Signer's Name: LI Corporate Officer — Title(s): ❑ Partner — 0 Limited ❑ General • Individual ❑ Attorney in Fact ❑ Trustee ❑ Guardian or Conservator O Other: Signer Is Representing: ©2014 National Notary Association • www.NationalNotary.org • 1-800-US NOTARY (1-800-876-6827) Item #5907 EXHIBIT 1 TO AFFORDABLE HOUSING AGREEMENT (Uptown Newport Planned Community) Property Legal Description [Attached behind this cover page] 6655-100442\1222688.2 9/22/14 N Property Legal Description REAL PROPERTY IN THE CITY OF NEWPORT BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA, DESCRIBED AS: LOTS 3 AND 4 OF TRACT NO. 17763 IN THE CITY OF NEWPORT BEACH, COUNTY OF ORANGE STATE OF CALIFORNIA AS SHOWN ON A MAP FILED IN BOOK 937, PAGES 17 THROUGH 23, INCLUSIVE OF MISCELLANEOUS MAPS, REOCRDS OF ORANGE COUNTY, CALFORINA. PARCELS 1, 2, 3 AND 4 OF PARCEL MAP NO. 2013-108 IN THE CITY OF NEWPORT BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA AS SHOWN ON A MAP FILED IN BOOK 378, PAGES 10 THROUGH 12, INCLUSIVE , OF PARCEL MAPS, RECORDS OF ORANGE COUNTY CALIFORNIA. EXCEPT THEREFOR ALL OF TRACT NO. 17763 IN THE CITY OF NEWPORT BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA AS SHOWN ON A MAP FILED IN BOOK 937, PAGES 17 THROUGH 23, INCLUSIVE, OF MISCELLANEOUS MAPS, RECORDS OF ORANGE COUNTY, CALFORNIA. AS DESCRIBED IN THAT CERTAIN CERTIFICATE OF COMPLAINCE RECORDED TUNE 19, 2015 AS INSTRUMENT 2015000320677 OF OFFICIAL RECORDS OF SAID COUNTY. 6655-100442\1222688.2 9/22/14 0 EXHIBIT 2 TO AFFORDABLE HOUSING AGREEMENT (Uptown Newport Planned Community) AHIP [Attached Behind This Page] 6655-100442\1222688.2 9/22/14 P UPTOWN NEWPORT AFFORDABLE HOUSING IMPLEMENTATION PLAN Approved February 26, 2013 (Resolution No. 2014-24) Modified February 25, 2014 (Resolution No. 2014-18) Uptown NewportAHIP Page 1 Contents i Introduction 3 |i Project Description 3 |||. Affordable Housing Obligation 4 |V. Methods inmeet Affordability Requirements 5 V. Definitions 5 V|. Assurance Vfthe Development OfAffordable Housing. 8 V||. Phasing nfthe Affordable Housing Production 8 V|||. Affordable Housing Agreement g |>(. Amendments ofthe AH|P. Q X. Successors inInterest. 0 X|. Right t0Assign. Q Uptown Newport AHIP Page 2 L Introduction Uptown Newport consists of 25 acres of developed land located in the City of Newport Beach on the north side of Jamboree Road at the intersection of Fairchild Road. The property was originally developed as part of the Koll Center, and has been used for manufacturing telecommunications equipment and computer chips since the 1970's. The property currently includes two industrial buildings that are leased to multiple tenants including TowerJazz, who manufactures computer chips onsite. The property is currently accessed via two entries on Jamboree Road, a drive access via Birch, and a drive access via Von Karman Avenue. The City's General Plan allows for infill development and redevelopment of the Airport Business Area including up to 2,200 residential units. In September of 2010, the City approved the Koll-Conexant Integrated Conceptual Development Plan (ICDP), which provides a framework for residential development on both the Koll and Conexant properties within the Airport Business Area. The ICDP allocated a maximum of 1,244 residential units and up to 11,500 square feet of retail to be developed on the Uptown Newport (formerly Conexant) property, and up to 260 residential units to be developed on the Koll property. II. Project Description The Uptown Newport Planned Community Development Plan (PA2011-134) project will include redevelopment of the 25-acre property into a high -density mixed use residential project. Up to 1,244 residential units, 11,500 square feet of retail, and 2 acres of park space are planned as part of the project. The project is anticipated to be developed in two primary phases. Phase 1 will include demolition of the existing single -story office building at 4311 Jamboree, and development of the westerly portion of the property, including the frontage along Jamboree Road. Phase 1 will include development of up to 680 residential units and up to 11,500 square feet of retail space, and is projected to commence in 2013. Phase 2 will include demolition of the existing TowerJazz fabrication building, and development of approximately 564 residential units on the easterly portion of the property. The number of residential units planned to be developed is based upon replacement units allocated to the site based on conversion of existing office and industrial uses to residential uses, additive units allocated pursuant to the General Plan, and density bonus units allowed pursuant to Government Code Section 65915-65918 ("State Density Bonus Law") and City of Newport Beach Municipal Code Chapter 20.32 (the "Density Bonus Code"). On the Uptown Newport site, up to 632 units would replace the existing industrial and office uses which are to be demolished, 290 units are additive for a total of 922 units ("Base Units"). Up to 322 additional units can be developed as density bonus units pursuant to the State Bonus Density law and the Density Bonus Code. Uptown Newport AHIP Page 3 Replacement Units 632 Additive Units 290 Subtotal — Base Units 922 Density Bonus Units @ 35% 322 Total Units 1,244 The State Density Bonus Law and the City's Density Bonus Code provide for an increase in the number of units of up to thirty-five percent (35%) above the maximum number of units allowed by the General Plan provided the project constructs a minimum number of affordable units depending upon what income category is served. At the maximum density bonus of 35%, the Project could accommodate up to 322 additional units above the 922 Base Units for a total of 1,244 total units. This AHIP is intended to implement affordable housing requirements for the Uptown Newport project pursuant to the State Bonus Density Law, Title 19 Chapter 19.54 of the Newport Beach Municipal Code ( the "Inclusionary Code"), and the Density Bonus Code. ❑I. Affordable Housing Obligation Subdivision projects that result in a net increase of residential units have a requirement to provide affordable housing pursuant to the City's inclusionary housing requirements that are set forth in chapter 19.54 of the Municipal Code as well as the Density Bonus Code set forth in chapter 20.32 of the Municipal Code (combined, the "Affordability Requirements" or "Affordable Housing Requirements"). The Owner seeks to achieve the maximum 35% density bonus, and will meet the Affordable Housing Requirements by the construction of affordable housing as follows: • By providing a minimum of eleven percent (11 %) of the Base Units (102 units) for Very -Low Income households for rent, or • By providing a minimum of twenty percent (20%) of the Base Units (185 units) for Low -Income households for rent, or • By providing a minimum of forty percent (40%) of the Base Units (369 units) for Moderate -Income households for ownership, or • By providing a combination of the above. In the event a combination of the above housing types is constructed, a Very -Low Income unit shall be deemed to be the equivalent of 3.6 Moderate Income units or 1.8 Low -Income units. A Low -Income unit shall be the equivalent of 2 Moderate -Income units. For example, if 30 Very -Low Income units are constructed, either 131 Low - Income or 261 Moderate Income units would be required to complete the affordability requirements. If 89 Low -Income units are constructed, 191 Moderate -Income units are required. For this conversion the required number of units shall be rounded up to the nearest whole number. Uptown Newport AHIP Page 4 In the event that the Project utilizes a density bonus of less than 35%, then the Affordability Requirements would be reduced pro-rata with the reduction of market rate units through an amendment to this AHIP. IV. Methods to meet Affordability Requirements The Owner shall meet its Affordable Housing Requirements by developing the affordable units on site. Affordable units may be dispersed throughout the Planned Community or clustered in one or more sections of the Planned Community. V. Definitions The City's Affordability Requirements and Affordable Housing Requirements set out certain definitions and descriptions to assist in the implementation of the requirements, many of which are indicated below. These definitions and descriptions will be utilized in the interpretation of the requirements under this AHIP: A. Affordable Housing Agreement (AHA). Section 20.32.100 of the Density Bonus Code requires that an applicant that seeks a density bonus shall enter into an Affordable Housing Agreement ("AHA") with the City. Section 19.54.020(A) of the Inclusionary Code states that the AHA shall provide legal restrictions by which the affordable units shall be restricted to ensure that the units remains affordable to very low-, low-, or moderate -income households, as applicable. With respect to rental units, rent restrictions shall be in the form of a regulatory agreement recorded against the applicable property. With respect to owner - occupied units, resale controls shall be in the form of resale restrictions, deeds of trust, and/or other similar documents recorded against the applicable property. B. Affordable Housing Cost. Pursuant to State of California Health & Safety Code Section 50052.5, affordable housing costs for any owner -occupied for -sale affordable units shall be as follows: a. The affordable housing costs for very low-income households shall not exceed thirty (30) percent of fifty (50) percent of area median income for Orange County adjusted for household size appropriate for the unit. b. For low-income households the affordable housing costs shall not exceed thirty (30) percent of seventy (70) percent of area median income for Orange County adjusted for household size appropriate for the unit. For those low-income households with incomes above seventy (70) percent of area median income the maximum affordable housing cost may be increased to thirty (30) percent of the income of the household. c. For moderate -income households the affordable housing costs shall not be less than twenty-eight (28) percent of the gross income of the household nor exceed thirty-five (35) percent of one hundred ten (110) percent of Orange County area median income adjusted for household size appropriate for the unit. Furthermore, for those moderate -income households with incomes above one hundred ten (110) percent of area median income the affordable housing costs may be increased to thirty- five (35) percent of the gross income of the household. Uptown Newport AHIP Page 5 d. Pursuant to sections 19.54.020 (C) and (D) of the City's Municipal Code "Adjusted for household size appropriate for the unit" shall mean a household size based upon two (2) persons per bedroom except for efficiency units where the household size shall be one (1) person. C. Affordable Rental Price. — Municipal Code section 19.54.020(D) defines an affordable rental price as an annual rent that does not exceed thirty (30) percent of the maximum income level for very low-, low-, and moderate -income households, as adjusted for household size. In determining the maximum household income for a given affordable unit, it shall be based upon each bedroom being occupied by two persons, except for efficiency units (one person). D. Affordable Unit. - Municipal Code section 19.54.020 (E) defines an Affordable Unit as an ownership or rental -housing unit, including senior housing, affordable to households with very low-, low-, and moderate -incomes as defined herein. E. Low -Income.- Municipal Code section 19.54.020 (G) defines low-income as an income between fifty (50) percent and eighty (80) percent of the Orange County median income, adjusted for actual household size, as determined by the California Department of Housing and Community Development ("HCD"). Within this AHIP "low-income" and "lower -income" shall have the same meaning. F. Moderate -income. - Municipal Code section 19.54.020 (H) defines moderate - income as an income between eighty (80) percent and one hundred twenty (120) percent of the Orange County median Income, adjusted for actual household size, as determined by the HCD. G. Very low-income. - Municipal Code section 19.54.020 (I) defines very low- income to mean income fifty (50) percent or less of the Orange County median income, adjusted for actual household size, as determined by the HCD. H. Annual Adjustments. - Orange County Area Median Incomes utilized for setting the Affordable Housing Price, Affordable Housing Costs, and Affordable Rental Price shall be those published annually by HCD. I. Permissible Residency. - Whenever an occupancy restriction identifies a particular household category for occupancy, households with less income may also occupy that unit. So, for example, if a unit has a Moderate -Income restriction, Low -Income and Very -Low Income households may occupy that unit. Similarly, if a unit has a Low -Income restriction, Very Low -Income households may occupy that unit. J. Rental Income Limits Established. - The permissible rental rates for the affordable units shall not exceed the Affordable Rental Price described earlier in this AHIP. K. Affordable Housing Costs Established. - The permissible Affordable Housing Costs for the affordable units shall not exceed the Affordable Housing Costs described earlier in this AHIP. Uptown Newport AHIP Page 6 L. Term of Affordability Restrictions. a. The affordable rental units provided through the implementation of this AHIP shall be legally restricted to occupancy by, and affordable to, households meeting the income requirements designated herein for a minimum duration of thirty (30) years from the date of the certificate of occupancy for the affordable units. b. Any affordable owner -occupied units of this AHIP will be restricted to moderate income households. The the earlier of (i) the termination accordance with the equity sharing below or (ii) thirty (30) years from Occupancy. provided through the implementation occupancy by, and affordable to, term of the restrictions will run until of the affordability restrictions in provisions described in section c(i) the date of the initial Certificate of c. The affordability restrictions will be documented by the recording of the following documents against the affected units: i. In the case of owner -occupied for -sale units a Regulatory Agreement, Restrictive Covenant, or equivalent will be recorded against each affordable unit upon the sale to the initial occupant. The new qualified owner will also sign a promissory note with the City as beneficiary in the amount of the City's initial subsidy, which shall be as defined in section 20.32.090 B 2 (a) of the Density Bonus Code. The promissory note will be secured by a trust deed, which will be recorded against the unit and subordinated to conventional financing secured by the buyer, which will be in first position on title. The affordable units shall be subject to the City's equity sharing requirements which are described in section 20.32.090 B of the City's Density Bonus Code. ii. In the case where the restricted units are rental units, a Regulatory Agreement or equivalent will be recorded against the apartment project assuring the continued affordability of the restricted units for a minimum of 30 years. The Regulatory Agreement will be subordinate to any conventional mortgage or bond financing which has a first trust deed position against the apartment project. M. Units Applicable against RHNA Requirements. - The City and Owner agree that any affordable units produced through the implementation of this AHIP may be used by the City to meet its Regional Housing Needs Assessments ("RHNA") specified by the Southern California Association of Governments ("SCAG"). Uptown Newport AHIP Page 7 N. Orange County Area Median Income. - Annually HCD publishes area median incomes ("AMI") for each county in California. HCD revised and updated its 2012 income limits on February 1, 2012. The 2012 income limits for Orange County are as follows: Orange County Median Income - 2012 Household Size 1 2 3 4 5 Income Category: Extremely Low Income $20,250 $23,150 $26,050 $28,900 $31,250 Very Low Income $33,750 $38,550 $43,350 $48,150 $52,050 Lower Income $53,950 $61,650 $69,350 $77,050 $83,250 Median Income $59,700 $68,250 $76,750 $85,300 $92,100 Moderate Income $71,650 $81,900 $92,100 $102,350 $110,550 Source: Department of Housing & Community Development, revised 2/1/12 VI. Assurance of the Development of Affordable Housing. 1. If the Owner has not commenced the development of affordable units in accordance with the phasing plan described in section VII below then the City may withhold Certificates of Occupancy for the market rate units under construction until the Owner or successor in interest has commenced or completed the development of the affordable units. 2. For purposes of this section "commence the development" shall mean (i) commence or complete the construction of the affordable units, or (ii) issuance of building permits for or completion of the construction of the affordable units. VII. Phasing of the Affordable Housing Production. 1. Affordable housing shall be constructed in the project. Based upon the current phasing plan where 680 units are proposed for Phase 1 (55% of the project) and 564 units are proposed for Phase 2 (45% of the project), the minimum number of affordable units to be constructed in Phase 1 shall be 55% of the total affordable housing obligation for the Uptown Newport project. The remaining affordable housing obligation, if any, shall be constructed in Phase 2. 2. Prior to the issuance of a certificate of occupancy for fifty percent (50%) of the market rate units planned in a Phase, the Owner shall commence construction or complete the construction of a minimum of fifty percent (50%) of the affordable units required to be constructed within that Phase. 3. Prior to the issuance of a certificate of occupancy for ninety percent (90%) of the market -rate units within a Phase, the Owner shall obtain a certificate of occupancy for all affordable units required to be constructed within that Phase. Uptown Newport AHIP Page 8 VIII. Affordable Housing Agreement - An AHA referencing the terms of this AHIP shall be executed and recorded between the City and Owner prior to recordation of the Final Map for the project. IX. Amendments of the AHIP. - This AHIP may be amended by mutual agreement of the parties which will require City Council approval pursuant to section 19.54.060 of the Municipal Code. X. Successors in Interest. - The obligations and benefits applying to the Owner under this AHIP shall also apply to any successors in interest to the Owner. XI. Right to Assign. - Owner shall have the right to assign the AHA or this AHIP, including all benefits, covenants, duties, and obligations contained herein, upon the City's prior approval, which shall not be unreasonably withheld or delayed. Owner shall notify the City in writing of the assignment at least thirty (30) days prior to completion of the assignment. Owner's notice of assignment to the City shall include the name of, and contact information for the assignee. Upon completion of the assignment, the assignee shall assume and perform all duties and obligations set forth in the AHA and this AHIP, excepting only those duties and obligations expressly retained by Owner, if any, as part of the assignment. Uptown Newport AHIP Page 9 EXHIBIT 3 TO AFFORDABLE HOUSING AGREEMENT (Uptown Newport Planned Community) Declaration of Conditions, Covenants and Restrictions [Attached Behind This Pagel 6655-100442\1222688.2 9/22/14 RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: City Of Newport Beach 100 Civic Center Drive Newport Beach, California 92660 Attn: City Clerk APN: [TBD] Space above line for Recorder's use only Exempt from Recording Fees pursuant to Govt. Code §§ 6103, 27383 CITY OF NEWPORT BEACH DECLARATION OF AFFORDABLE HOUSING COVENANTS, CONDITIONS AND RESTRICTIONS (Uptown Newport Planned Community Renter -Occupied) THIS DECLARATION OF AFFORDABLE HOUSING COVENANTS, CONDITIONS AND RESTRICTIONS (this "Declaration") is dated as of [INSERT DATE] ("Effective Date"), and is made by and between the CITY OF NEWPORT BEACH, a California municipal corporation ("City" or "Covenantee"), and [INSERT UPTOWN NEWPORT OR TPG/TSG AS APPLICABLE] ("Owner" or "Covenantor"), with reference to the following recited facts (each, a "Recital"). RECITALS A. Covenantor is the owner of record of that certain real property ("Property") located in the City of Newport Beach, County of Orange, State of Califomia legally described in the attached Exhibit "A." [NOTE: For applicable parcel] B. On , the (City Council or City Engineer) approved (Final Tract Map or Parcel Map) Number for the Uptown Newport Planned Community Project. City required that certain dwelling units within the Uptown Newport Project be restricted for affordable housing, including [INSERT NUMBER FOR THIS PARCEL] of the dwelling units ("Affordable Dwelling Units") to be restricted for Very Low Income Households, at an Affordable Rental Price, for a period of thirty years from the date of the initial certificate of occupancy for the applicable parcel with the Affordable Dwelling Units. The execution and recordation of this Declaration is intended to satisfy the requirement for restricting and providing Affordable Dwelling Units. C. For purposes of this Declaration, the term "Very Low Income Households" shall refer to an individual or family with an income fifty (50) percent or less of the Orange County median income, adjusted for household size, and "Affordable Rental Price" shall refer to annual rent that does not exceed thirty (30) percent of the maximum income level for Very Low Income Households, as adjusted for household size. 6655-10044211222688.2 922/14 NOW, THEREFORE, IN CONSIDERATION OF THE PROMISES, COVENANTS AND UNDERTAKINGS SET FORTH IN THIS DECLARATION AND FOR OTHER GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND SUFFICIENCY OF WHICH IS HEREBY ACKNOWLEDGED, OWNER AND CITY COVENANT, DECLARE AND AGREE FOR THEMSELVES, THEIR SUCCESSORS AND ASSIGNS, AS FOLLOWS: COVENANTS 1.1 Affordability. Covenantor agrees for itself and its successors and assigns, and every successor to Covenantor's interest in the Property, or any part thereof, that the Affordable Dwelling Units within the Property shall be designated as affordable and shall be held subject to this Declaration for thirty years from the date of the certificate of occupancy as follows: 1.1.1 The Affordable Dwelling Units shall only be rented and occupied by Very Low Households. Notwithstanding the foregoing, households with less income may also occupy the Affordable Dwelling Units. 1.1.2 The Affordable Dwelling Units shall only be rented at an Affordable Rental Price to Very Low Income Households. 1.1.3 The term of this Declaration shall commence on the date this document is recorded with the Orange County Recorder's Office and shall expire thirty (30) years from the date of the initial certificate of occupancy for the Property, which was issued on [INSERT DATE] (collectively, the "Affordability Period"). The covenant contained in this Section 1 shall run with the Property and shall automatically terminate and be of no further force or effect upon the expiration of the Affordability Period. 2. RENTERS 2.1 Qualification. Covenantors shall qualify prospective renters as set forth in the Affordable Housing Agreement, executed between Owner and City on Furthermore, the Covenantors shall, on renewal of the annual lease for the particular Affordable Dwelling Unit, re -qualify the renter and obtain income certification from the renter. If, at the time of the annual lease renewal, the Covenantors learn that the renter's income increases above the income level permitted for that Affordable Dwelling Unit, the renter may continue to be permitted to reside in such Affordable Dwelling Unit for no more than one year. Notwithstanding the foregoing, the Covenantors, at the City's discretion, which shall not be unreasonably withheld or delayed, shall have the option to designate another dwelling unit as an Affordable Dwelling Unit during that one year period so that the renter may continue to occupy a unit in the Project. 2.2 Affordable Rental Price. The Affordable Rental Price shall be adjusted annually based upon the publication of the revised Orange County median income. THE COVENANTOR AND EACH SUCCESSOR, HEIR, OR ASSIGN OF COVENANTOR UNDERSTANDS THAT THE MAXIMUM RENTAL PAYMENTS TO BE ESTABLISHED BY THIS FORMULA ARE NOT NECESSARILY EQUAL TO THE FAIR MARKET RENT FOR THE - 3- 6655-100442\1222688.2 922/14 AFFORDABLE DWELLING UNITS AND MAY BE ESTABLISHED AT A LEVEL SUBSTANTIALLY BELOW THE FAIR MARKET RENT LEVELS. Covenantor's Initials 2.2 Restrictions. During the Affordability Period, Covenantor shall take all reasonable steps necessary to ensure that each household renting an Affordable Dwelling Unit has knowledge of all terms and conditions of this Declaration by including in each and every lease and rental agreement a clause which incorporates this Declaration by reference and makes this Declaration a part of an attachment to such lease or rental agreement. In addition, during the Affordability Period, each lease or rental agreement for any of the Affordable Dwelling Units shall contain provisions that failure to comply with this Declaration shall be a default under the renter's lease or rental agreement. 3. GENERAL PROVISIONS 3.1 Covenants Do Not Impair Liens. No violation or breach of the covenants, conditions, restrictions, provisions or limitations contained in this Declaration shall defeat or render invalid or in any way impair the lien or charge of any mortgage or deed of trust or security interest. 3.2 Covenants for Benefit of City. This Declaration shall be binding for the benefit of the Covenantee and such covenants shall run in favor of Covenantee for the entire period during which time such covenants shall be in force and effect, without regard to whether the Covenantee is or remains an owner of any land or interest therein to which such covenants relate. The Covenantee, in the event of any breach of any such covenants, shall have the right to exercise all the rights and remedies and to maintain any such action at law or suits in equity or other proper legal proceedings to enforce and to cure such breach to which it or any other beneficiaries of these covenants may be entitled during the term specified for such covenants. 3.3 Counterparts. This Declaration may be executed in a number of counterparts, each of which shall be an original, but all of which shall constitute one and the same document. 3.4 Applicable Law. If any provision of this Declaration or portion thereof, or the application of any provision to any person or circumstances, shall to any extent be held invalid, inoperative, or unenforceable, the remainder of this Declaration, or the application of such provision or portion thereof to any other persons or circumstances, shall not be affected thereby and it shall not be deemed that any such invalid provision affects the consideration for this Declaration; and each provision of this Declaration shall be valid and enforceable to the fullest extent permitted by law. This Declaration shall be construed in accordance with the laws of the State of California. 3.5 Subordination. This Declaration shall not prevent or limit Covenantor in any manner from encumbering the Property, any part of the Property, or any improvements on the Property with any conventional mortgage, construction, bond financing or security interest to secure financing with respect to the construction, development, use, or operation of the Uptown - 4- 6655-100442\1222688.2 922/14 Newport Project. This Declaration shall be subordinate to any conventional mortgage, construction or bond financing that has a first trust deed position against the Property. No default or breach of this Declaration shall defeat, render invalid, diminish, or impair the lien of any conventional mortgage, construction or bond financing with a first trust deed position. City agrees, upon payment of any applicable fee, to execute such documents as may be reasonably requested by Covenantor, and successor or assign to Covenantor's right, title and interest in and to all or any portion of the Property, or lender of such person subordinating City's rights and interest under this Declaration to a lien of trust deed in first position recorded or to be recorded by a lender securing a loan of the Property. Covenantor, Covenantor's successor or assign, or the benefited lender shall be responsible for preparing the document(s) creating such subordination of City's interest. IN WITNESS WHEREOF, City and Owner have caused this Declaration to be signed by themselves or on their behalf by their duly authorized representatives, as set forth below: CITY: OWNER: CITY OF NEWPORT BEACH, a California municipal corporation By: Name: Title: ATTEST: By: Name: Title: City Clerk APPROVED AS TO FORM: By: Name: Title: City Attorney By: Name: Title: [SIGNATURES MUST BE NOTARY ACKNOWLEDGED FOR RECORDING] - 5- 6655-100442%12226882 9/22/14 EXHIBIT "A" TO DECLARATION OF AFFORDABLE HOUSING COVENANTS, CON➢ITIONS AND RESTRICTIONS Legal Description [Attached behind this cover page] - F- 6655-100442\1222688.2 922/14 Property Legal Description REAL PROPERTY IN THE CITY OF NEWPORT BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA, DESCRIBED AS: - G- 6655-100442\1222688.2 9/22/14