Agenda — Fountain Valley City Council, December 19, 2023 (part 3 of 5)

Our Lady of Guadalupe Senior Residential Project Page 59 Mitigated Negative Declaration July 24, 2023
development standards and meet the definition of a concession as defined by the California Density Bonus Law. The project would not have any significant land use impacts to surrounding land uses, XII. MINERAL RESOURCES: Would the project:
a) Result in the loss of availability of a known mineral resource that would be of value to the region and the residents of the state? No Impact. The project site is in Mineral Resource Zone 3 (MRZ-3).35 Areas classified MRZ-3 contain mineral deposits, but their significance cannot be evaluated from available data.36 The Fountain Valley General Plan does not identify any locally important minerals either on or adjacent to the site. Furthermore, there are no mining activities either on or adjacent to the project site. Because there are no known mineral resources on the site or known mineral resources adjacent to or within close proximity of the site, the project would not result in the loss of a locally important mineral resource or impact mineral resources. b) Result in the loss of availability of a locally important mineral resource recovery site delineated on a local general plan, specific plan or other land use plan? No Impact. See Response to section II above of this MND.

XIII. NOISE: Would the project result in:
a) Generation of a substantial temporary or permanent increase in ambient noise levels in the vicinity of the project in excess of standards established in the local general plan or noise ordinance or applicable standards of other agencies? Potentially Significant Unless Mitigation Incorporated. A noise report37 was prepared for the project and is included in Appendix E. The project site is developed with Our Lady of Guadalupe that is a 62 plus senior apartment building with 62 studio and 1-bedroom senior apartments and three stories in height. The building totals approximately 50,932 square feet. The area of the project site that is proposed for the development of 29 low-income senior independent living units in an 18,039 square foot, two-story building is developed with a patio for the residents of the existing senior apartment building and parking lot. The noise that is generated from the portion of the site that is proposed for development includes cars moving throughout the parking lot and residents conversing while on the patio. There is minimal noise generated from the area of the site proposed for development. Other noise sources in the immediate project area impacting the project site includes traffic on Magnolia Street east of the site, traffic and truck deliveries at the shopping center north of the site and from the residential neighborhoods adjacent to and south and west of the site.

Noise Standards
The Noise Element of the City of Fountain Valley General Plan establishes noise quality standards for land use categories based on the State of California Office of Noise Control land use compatibility recommendations. Community noise exposures are recommended as normally acceptable, conditionally acceptable, normally unacceptable, and clearly unacceptable for various classes of land use sensitivity. As shown in Table 12, the City guidelines an exterior noise exposure standard of 60 dB CNEL is the most desirable level for single-family residential uses while levels of 70 dB CNEL are acceptable for usable outdoor space (patios, decks, pools, etc.). A level of 70 dB CNEL is considered onditionally acceptable I noise category, new construction should be 35 California Department of Conservation, file:///C:/Users/Phil/Downloads/ofr_94-15_plate_1%20(1).pdf 36 https://www.conservation.ca.gov/cgs/Documents/Publications/Special-Reports/SR_146-MLC-Report03.pdf 37 Noise Impact Analysis, Guadalupe Manor (17103 Magnolia) Residential Project, Gerrick Environmental, May 14, 2023.

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undertaken only after a noise analysis has been made and needed noise insulation features have been incorporated in the project design. These standards apply to exterior recreational noise.

Table 12
Fountain Valley Noise Ordinance Standards
Fountain Valley Municipal Code Section 6.28.050
Noise Zone 1 Time Period Exterior Noise Standard
All properties located in
residential zone districts
7 a.m.- 10 p.m. 55 dB
10 p.m.-7 a.m. 50 dB
It is unlawful for any person at any location within the city to create any noise, or to allow the creation of any noise on property owned, leased, occupied or otherwise controlled by such person, when the foregoing causes the noise level, when measured on any other residential property, either incorporated or unincorporated, to exceed:
1) The noise standard for a cumulative period of more than thirty (30) minutes in any hour; or 2) The noise standard plus five (5) dB(A) for a cumulative period of more than fifteen (15) minutes in any hour; or
3) The noise standard plus ten (10) dB(A) for a cumulative period of more than five (5) minutes in any hour; or
4) The noise standard plus fifteen (15) dB(A) for a cumulative period of more than one (1) minute in any hour; or
5) The noise standard plus twenty (20) dB(A) for any period of time.

An interior CNEL of 45 dB is mandated by the State of California Noise Insulation Standards (CCR, Title 24, Part 6, section T25-28) for multiple-family dwellings and hotel and motel rooms. In 1988, the State Building Standards Commission expanded that standard to include all habitable rooms in residential use, including single-family dwelling units. For this project an exterior noise level of 70 dB CNEL in any usable outdoor recreational area and interior noise level of 45 dB in any habitable residential indoor space are considered to be the appropriate compatibility standards for residential use.

Baseline Noise Levels
Baseline noise measurements were taken to document the existing noise levels on the site and the immediate project vicinity. The existing noise levels are shown in Table 13. The measured noise levels provide a basis to calculate the noise levels that project residents would be exposed to with the existing noise generating activities in the area. Short term (15-minute) noise measurements were conducted early afternoon on Wednesday, May 3, 2023 at two locations as shown in Figure 12.

Table 13
Measured Noise Levels (dBA)
Location Leq LMax LMin
On-site, approximate location of new structure 47.2 56.9 29.0 On-site, 60-feet to Magnolia Avenue centerline 62.4 72.6 45.6 The City of Fountain Valley considers a noise level accept for residential use. oise category, new construction should be undertaken

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Figure 12
Noise Monitor Locations
only after a noise analysis has been made and needed noise insulation features have been incorporated in the project design. The existing noise levels at the project site are within the noise levels of the city s residential compatibility guidelines.

According to Appendix G of the California Environmental Quality Act (CEQA) Guidelines noise impacts are considered significant if they result in:
a. Exposure of persons to or generation of noise levels in excess of standards established in the local general plan or noise ordinance, or applicable standards of other agencies. b. Exposure of persons to or generation of excessive groundborne vibration or groundborne noise levels.
c. A substantial permanent increase in ambient noise levels in the project vicinity above levels existing without the project.
d. A substantial temporary or periodic increase in ambient noise levels in the project vicinity above levels existing without the project.
"Substantially" is not defined in any noise guidelines. The accuracy of sound level meters and of sound propagation computer models is no better than ±1 dB. This is also the human loudness difference discrimination level under ideal laboratory conditions. Most people cannot distinguish a change in the noise environment that differs by less than 3 dB between the pre- and post-project exposure if the change occurs under ambient conditions. For the purposes of this analysis, a traffic noise increase of more than +3 dB that worsens an area of noise/land use incompatibility would be considered a significant noise impact.

Sensitive Receptors
The closest off-site noise sensitive receptors to the project are the residents west and south of the site.

The homes to the west and south have approximately a 20 setback from the shared property line. The Meter 1
Meter 2

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proposed project is setback approximately 80 from the west property line and approximately 66 from the south property line. Taking into account the setback of the off-site residents from the shared property lines, the proposed residential building would be approximately 100 from the closest resident west of the proposed residential building and approximately 88 from the closest resident south of the proposed residential building. The existing 6 masonry wall on the shared property line both west and south project boundaries would remain.

Temporary Noise Impacts
The existing noise levels on the site and the noise levels in the immediate vicinity of the site would increase temporarily during project construction. Short-term construction noise would be generated during grading and the construction of the residential building and other proposed site improvements.

Noise would also be generated by construction workers commuting to the site, the delivery of materials and supplies to the site and the operation of on-site electrical powered construction equipment, etc.

Temporary construction noise impacts vary markedly due to the noise level range of the various types of construction equipment, its activity level and the distance from the equipment to the closest noise sensitive land use. Short-term construction noise impacts typically occur in discrete phases dominated by large, earth-moving equipment that is used during for grading operations. The construction equipment that would be used to construct the residential building and pave the parking lot typically generates less noise than the grading equipment.

In 2006, the Federal Highway Administration (FHWA) published the Roadway Construction Noise Model that includes a national database of construction equipment reference noise emissions levels.

The database provides an acoustical usage factor to estimate the fraction of time each piece of construction equipment is operating at full power during a construction phase. The usage factor is a key input variable that is used to calculate the average Leq (Equivalent Continuous Sound Pressure Level) noise levels.

Table 14 shows the highest (Lmax) noise levels that is typically associated with each type of construction equipment that would be used by the project and then adjusts the noise level for distance to the closest sensitive receptor to the project and the extent of the use of the equipment (usage factor), which is represented as Leq. Table 13 also shows the noise level for each individual piece of equipment at a reference 50-foot distance.

Table 14
Construction Equipment Noise Levels
Phase Name and
Duration Equipment Usage Factor1
Noise @
50 feet
(dB)2
Hourly
Noise Level
@ 50 feet
(dB))
Demolition Concrete Saw 20% 90 83
Dozer 40% 85 82
Loader/Backhoe 37% 78 74
Grading
Grader 40% 85 81
Dozer 40% 85 82
Loader/Backhoe 37% 78 74
Construction
Crane 16% 81 73
Loader/Backhoe 37% 78 74
Forklift 20% 75 69

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Paving
Paver 50% 77 74
Mixer 40% 79 75
Loader/Backhoe 37% 78 74
Roller 20% 80 74
onstruction Noise Model, 2006

1. Estimates the fraction of time each piece of equipment is operating at full power during a construction operation

2. The Lmax values presented are the actual measured values summarized in the Roadway Noise Model User Guide (FHWA 2006) unless the actual is unavailable in which case the equipment specifications were used.

The noise levels that would be generated by the operation of on-site construction equipment would be less than the noise levels of the construction equipment shown in Table 13 because the construction equipment of the proposed project would be more than 50 feet from the closest off-site noise sensitive receptor. Residences to the west have a 100-foot separation distance to the proposed new building and the residences to the south have an 88-foot separation distance. The existing block wall along the west and south project boundaries would assist to block construction noise at the adjacent residents.

The existing block wall along the west and south project boundary would reduce off-site construction noise levels by 5 dBA.

Table 15 shows the noise levels that would occur at the adjacent off-site noise sensitive receptors during project construction taking into account the existing 6 wall along the project boundaries. Any existing homes with single pane windows would reduce noise levels by approximately 25 dB with the windows closed.38 However, homes with dual pane windows can result in up to a 30-dB exterior to interior noise level reduction with closed windows. Therefore, during project construction the homes west of the project would experience interior noise levels of approximately 38-47 dBA and the homes south of the project would experience an interior noise level of approximately 39-48 dBA based on single pane windows. These estimated interior noise levels are based on the existing windows of the residents west and south of the site remaining closed during project construction.

Table 15
Exterior Construction Noise Equipment Levels at Off-Site Sensitive Uses (dBA Leq) Phase Name and Duration Equipment Noise @ Western
Perimeter Homes
Noise @ Southern
Perimeter Homes
Demolition Concrete Saw 72 73
Dozer 71 72
Loader/Backhoe 63 64
Grading Grader 70 71
Dozer 71 72
Loader/Backhoe 63 64
Construction Crane 62 63
Loader/Backhoe 63 64
Forklift 58 59
Paving Paver 63 64
Mixer 64 65
Loader/Backhoe 63 64
Roller 63 64 38 U.S. Environmental Protection Agency, Information on Levels of Environmental Noise Requisite to Protect Public Health and Welfare with an Adequate Margin of Safety, 1974.

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The potential for construction-related noise to adversely affect nearby residential receptors would depend on the location and proximity of construction activities to these receptors. The operation of most of the construction equipment that would be used during construction would be located at a greater setback than the noise levels shown in Table 14 because the construction equipment would not always be operating at the edge of the project site where the distance measurements to the closest offsite residences were taken.

Construction noise levels at the residences south and west of the site would exceed the exterior noise standards of the Fountain Valley Noise Ordinance, Section 6.28.050. However, Municipal Code

6.28.070 exempts construction noise level restrictions during the hours of 7:00 a.m. and 8:00 p.m.

Monday through Friday and 9:00 a.m. and 8:00 p.m. on Saturdays and no construction on Sunday or legal holidays.

In addition to adhering to FVMC 6.28.070 to the allowable hours of construction (7 a.m. to 8 p.m.

Monday through Friday and 9 a.m. through 8 p.m. on Saturdays with no construction allowed on Sundays and any legal holiday) the following measure is recommended to reduce construction noise level impacts to the adjacent residents to the lowest level possible.

Mitigation Measure No. 9 The following measures shall be implemented at the start of construction and continued through project completion:

All stationary construction equipment shall be located a minimum of 75 feet from the adjacent occupied residential residences buildings; All construction equipment shall be shut off when not in use; and Electrical power shall run air compressors and similar power tools.

Vehicle Noise Impacts
As discussed in section XVII.a of this MND, the project is calculated to generate 94 daily vehicle trips.

The project is expected to generate 94 daily trips according to the traffic analysis prepared for this project. According to City of Fountain Valley s website, Magnolia Street between Warner Avenue on the north and Slater on the south, the average daily traffic count was 31,40039 in 2016. The addition of the project traffic to the existing traffic on Magnolia Street adjacent to the project would represent a less than a +0.01 dBA noise increase, which is below the noise threshold of significance of 3 dBA.

Therefore, the project traffic would not have any significant vehicular noise impacts.

Mechanical Equipment
The project proposes that all mechanical equipment would be roof mounted within a recessed well.

Based on the proposed roof plan there is sufficient distance between the mechanical equipment on the roof of the proposed building to the closest off-site sensitive noise receptors to ensure that noise from the operation of the mechanical equipment does not create a noise nuisance to the off-site residents.

The operation of the proposed mechanical equipment for the project would not have any significant offsite noise impacts to area residents.

Based on the noise analysis above, the project would not have any significant temporary (construction) or permanent (operational) noise level impacts.
39 https://ca-fountainvalley.civicplus.com/DocumentCenter/View/13818/1-Fountain-Valley-ADT-2016

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b) Generation of excessive ground borne vibration or ground borne noise levels? Potentially Significant Unless Mitigation Incorporated. There are residential homes west and south of the project, a shopping center adjacent to and north of the project and the existing Our Lady of Guadalupe senior housing project adjacent to and east of the proposed building and on the same site as the project. Magnolia Street is east of the site and forms the east project boundary. The site is subject to occasional ground borne vibration with heavy trucks traveling on Magnolia Street, however it is approximately 400 feet east of the proposed residential building. Therefore, the vibration levels at the proposed project site from the passing of heavy trucks on Magnolia Street is not significant and shortterm in duration.

Construction Activity Vibration
Construction activities generate ground-borne vibration when heavy equipment travels over unpaved surfaces or when it is engaged in soil movement, such as grading. The effects of ground-borne vibration include discernable movement of building floors, rattling of windows, shaking of items on shelves or hanging on walls, and rumbling sounds. Vibration related problems generally occur due to resonances in the structural components of a building because structures amplify groundborne vibration. Withi sedimentary surfaces of much of Southern California, ground vibration is quickly damped. Groundborne vibration is almost never annoying to people who are outdoors (FTA 2006).

Groundborne vibrations from construction activities rarely reach levels that can damage structures.

Vibration thresholds have been adopted for major public works construction projects, but these relate mostly to structural protection (cracking foundations or stucco) rather than for human annoyance.

The vibration descriptor commonly used to determine structural damage is the peak particle velocity (ppv) and defined as the maximum instantaneous positive or negative peak of the vibration signal, usually measured in in/sec. The range of vibration levels is shown in Table 16.

Table 16
Human Response to Transient Vibration
Average Human Response ppv (in/sec)
Severe 2.00
Strongly perceptible 0.90
Distinctly perceptible 0.24
Barely perceptible 0.03
Source: Caltrans Transportation and Construction Vibration Guidance Manual, 2013.

Over the years, numerous vibration criteria and standards have been suggested by researchers, organizations, and governmental agencies. However, there are no California Department of Transportation (Caltrans) or Federal Highway Administration standards for vibration.

According to Caltrans, the threshold for structural vibration damage for modern structures is 0.5 in/sec for intermittent sources, which include impact pile drivers, pogo-stick compactors, crack-and-seat equipment, vibratory pile drivers and vibratory compaction equipment. The American Association of State Highway and Transportation Officials (AASHTO) (1990) identifies maximum vibration levels for preventing damage to structures from intermittent construction or maintenance activities for residential

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buildings in good repair with gypsum board walls to be 0.4 0.5 in/sec. The damage threshold criterion of 0.2 in/sec is appropriate for fragile buildings. For this analysis because some of the area residential units adjacent to the site can be older, therefore the 0.2 in/sec damage threshold for older fragile buildings is used as the evaluation criteria. Below the level of 0.2 in./sec. there is virtually no risk of building damage. Table 17 below shows the predicted vibration levels at varying distances that are typically generated by various types of construction equipment that could be operational on the project site during construction.

Table 17
Estimated Vibration Levels During Project Construction
Equipment
PPV
at 10 ft
(in/sec)
PPV
at 15 ft
(in/sec)
PPV
at 25 ft
(in/sec)
PPV
at 40 ft
(in/sec)
PPV
at 50 ft
(in/sec)
Large bulldozer 0.352 0.191 0.089 0.044 0.031
Loaded trucks 0.300 0.163 0.076 0.037 0.027
Jackhammer 0.138 0.075 0.035 0.017 0.012
Small bulldozer 0.012 0.006 0.003 0.001 <0.001
Source: FHWA Transit Noise and Vibration Impact Assessment As shown in Table 16, the calculated vibration levels generated by the operation of construction equipment on the project site would be below the level of potential damage at the indicated setbacks to the closest adjacent off-site residences at 88-100 feet. The existing Our Lady of Guadalupe building is setback 20 feet from the proposed Our Lady of Guadalupe building. As shown in Table 16 the vibration levels at the Our Lady of Guadalupe building with the operation of a large bulldozer at 20 feet would be above levels that could create structural damage to the Our Lady of Guadalupe building (i.e.,

0.3 in/sec). However, if a large bulldozer operates closer than 15-feet from the Our Lady of Guadalupe building there is the potential for structural damage due to vibration impacts.

To minimize the potential for vibration impacts to the existing Our Lady of Guadalupe building the following measure is recommended to reduce potential vibration impacts to less than significant.

Mitigation Measure No. 10 Small bulldozers shall only operate within 15 feet of the existing Our Lady of Guadalupe building and the property line of the existing residences adjacent to and south and west of the project.

The project would not have any significant ground borne or vibration impacts and vibration impacts with the implementation of the recommended mitigation measure. c) For a project located within the vicinity of a private air strip or an airport land use plan or, where such a plan has not been adopted, within two miles of a public airport, would the project expose people residing or working in the project area to excessive noise levels? No Impact. There are no private air strips or public airports in the City of Fountain Valley or the immediate project vicinity.

John Wayne Airport is the closest public airport to the site and is located approximately 6.5 miles southeast of the project. The project site is not located within the land use plan of John Wayne Airport.

Because the project is more than seven miles from John Wayne Airport and outside of the airport plan for John Wayne Airport, the project would not be impacted by noise levels at John Wayne Airport.

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XIV. POPULATION AND HOUSING: Would the project:

Induce substantial unplanned population growth in an area, either directly (for example, by proposing new homes and businesses) or indirectly (for example through extension of roads or other infrastructure)? Less Than Significant Impact. The project proposes the development of 29 low-income senior independent living units. The existing Our Lady of Guadalupe senior independent living facility located adjacent to the project site has approximately 20 percent (15) of its 71 units that are occupied by two residents. The remaining 56 units are occupied by a single resident. If approximately 20 percent of the proposed 29 units are occupied by two residents the project could generate a population of approximately 35 residents. Project residents must be 62 years or older and make less than 80% of the median income in Orange County. The project would also accept Orange County housing vouchers.

The estimated population increase of approximately 35 residents would include residents that live in Fountain Valley and outside the city, but largely within Orange County. If project residents live in the city the population of Fountain Valley would not increase. However, residents that move to the project that live outside the city would incrementally increase the city s population. It is speculative at this time to estimate the exact number of Fountain Valley residents and non-city residents that would move into the project. While the c opulation is expected to increase due to the project, the increase would not significantly increase the population of Fountain Valley.

California State Housing Element Law enacted in 1980 requires the Southern California Association of Governments (SCAG) and other regional councils of government in California to determine the existing and projected regional housing needs for persons at all income levels. SCAG is also required by law to determine each ju the regional housing need in the six-county (Imperial, Los Angeles, Orange, Riverside, San Bernardino, and Ventura) Southern California region. State legislation and the Regional Housing Needs Assessment (RHNA) process are intended to address housing needs for projected state population and household growth, to create a better balance of jobs and housing in communities, and to ensure the availability of decent affordable housing for all income groups.

As the regional Council of Governments (COG) for Southern California, State law requires SCAG to e existing and projected housing need fo g
the assessment by identifying measures to gauge housing demand and comparing those numbers against socioeconomic factors throughout the region.

The RHNA consists of two measurements: 1) existing need for housing, and 2) future need for housing.

The existing need assessment examines key variables from census data, to measure ways in which the housing market is not meeting the needs of current residents. The future need assessment is determined by SC growth forecast and public participation process.

T using Element law requires local governments to make plans to adequately address their share of existing and projected population growth, taking into consideration affordability of available and future housing. Recognizing that the most critical decisions regarding housing development, occur at the local level, through a Cit Housing law seeks to adequately address housing needs and demands. The California Department of Housing and Community Development (HCD) enforces State Housing Element Law by requiring certified Housing Eleme s General Plan.

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Fount 2021-2029 Housing Element states the RHNA for Fountain Valley is 4,839 housing units, which includes 1,307 Very Low, 786 Low, 834 Moderate and 1,912 Above Moderate affordability levels. The city is required to ensure that the General Plan and Zoning Ordinance provide for the development of the 786 Low income residential units that are needed in Fountain Valley by 2029. The 29 low income residential units are accounted for in its adopted Housing Element and would contribute t s 2021-2029 RHNA housing need of 786 Low Income residential units and the city total 4 40
Fountain Valley Housing Element
The Fountain Valley Housing Element provides policy themes, goals, and policies to achieve t desired policy themes. The policy themes, goals and policies of the Housing Element that are applicable to the project are provided below:

Program Category #1: Adequate Housing Sites
The purpose of this program category is to describe the actions that the City will take to ensure that a variety of housing types can be accommodated, including multifamily rental housing, factory-built housing, emergency shelters, and transitional housing. Land Use Element, Development Code, and specific plans regulate the housing types permitted in the community.

Goal 1: Promote and encourage the development of a variety of housing opportunities to accommodate current and projected households.

Policies

1.1 Promote the construction of additional dwelling units to accommodate Fountain Valley s share of regional housing needs in accordance with adopted land use policies.

1.2 Provide a variety of housing opportunities for all income levels through different land uses and densities.

1.3 Coordinate new residential development with the provision of infrastructure and public services.

1.4 Locate higher density residential development close to public transportation Program Category #2: Housing Production
ting needs include 63% of renter and 42% of mortgage-holding households that are cost burdened, expending more than 30% of their income toward housing. new construction need includes 2,093 lower, 834 moderate, and 1,912 above moderate-income units, which can be supported by vacant and underutilized land.

Goal 2: Assist in the provision of housing affordable to lower income households.

Policies

2.1 Promote infill housing development through the adaptive reuse of underutilized parcels. 40 Future Ready Fountain Valley General Plan, Housing Element, Table H-22, page 58.

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2.2 Promote and encourage the use of innovative construction methods, design standards, lot configurations, and energy conservation techniques that will facilitate the production of quality, affordable, and attractive new housing which varies in type, design, form of ownership, and size, and is compatible with abutting development.

2.3 Encourage new housing construction for rental and ownership housing in a mixture of price ranges.

Program Category #3: Remove Governmental Constraints
Goal 3: Address and, where possible, remove governmental constraints to the maintenance, improvement, and development of housing, including housing for people at all income levels, as well as housing for people with disabilities.

Policies

3.1 Encourage regulatory incentives that streamline the development and maintenance of housing, with additional incentives to develop and retain affordable housing.

Program Category #5: Affordable Housing Opportunities
Goal 5: Conserve and support affordable housing opportunities in the City.

Policies

5.2 Pursue available housing funds provided by federal, state, private, and/or local sources to preserve affordable housing.

5.3 Continue to support innovative public, private, and non-profit housing developm efforts in the provision of affordable housing, particularly for special needs groups.

Program Category #6: Equal Housing Opportunities
Goal 6: Promote housing opportunities for all persons regardless of race, age, religion, sex, marital status, disability status, ancestry, national origin, or color.

Policies

6.4 Continue to require compliance with the Americans with Disabilities Act standards in all new residential developments and continue to enforce the building code provisions requiring accessible design.

6.8 Encourage and facilitate housing developments that provide units affordable to a mix of lower, moderate, and above moderate income households.

The proposed 29 residential units meets Goal #1 of Program Category #1 by promoting and encouraging the development of a variety of housing opportunities to accommodate current and projected households in Fountain Valley, which in this case includes low-income senior independent living apartments. The project meets policies 1.1, 1.2 and 1.3 of Goal #1 by providing housing to assist the city towards meeting its RHNA allocation of 4,839 residential units and 786 Low income units by the

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year 2029, provide housing opportunities for an income level based on the proposed housing type and density and has adequate infrastructure and public services to serve the project, respectively.

Program Category #2 states, The City includes 2,093 lower, 834 moderate, and 1,912 above moderate-income units, which can be supported by vacant and underutilized land. The project proposes the development of 29 residential units on an underutilized 2.1-acre parcel. The project design and size is compatible with the existing Our Lady Of Guadalupe senior housing development adjacent to the proposed Our Lady of Guadalupe and the existing single-family detached residential development adjacent to and west and south of the site.

The project meets Category #3 because the senior low-income housing apartment project is supported by the federal governments Housing and Urban Development Division (HUD) to develop affordable housing.

The project meets Category #5 because the project supports affordable housing opportunities in the City, which in this case is senior low-income housing that is supported by HUD federal housing funds and a private senior housing company.

The project meets Goal #6 of Program Category #6 by promoting housing opportunities for all persons regardless of race, age, religion, sex, marital status, disability status, ancestry, national origin, or color and also meets policies 6.4 and 6.8 by meeting all applicable Americans with Disabilities Act standards and provide all required building code provisions requiring accessible design and provide housing for senior low-income households. The City would require the project to comply with all Federal and State equal opportunity housing mandates.

It is anticipated that many of the project residents would be existing residents of Fountain Valley.

Therefore, the project is not anticipated to substantially increase the C population. b) Displace substantial numbers of existing people or housing, necessitating the construction of replacement housing elsewhere? No Impact. The area of the project site that is proposed for development is vacant and no existing housing would be demolished and replacement housing required elsewhere. Because no existing housing would be demolished the project would not displace any existing residents. The project would not have any impact by demolishing existing housing and requiring replacement housing elsewhere or displacing existing people.

XV. PUBLIC SERVICES:
a) Would the project result in substantial adverse physical impacts associated with the provision of new or physically altered governmental facilities, need for new or physically altered governmental facilities, the construction of which could cause significant environmental impacts, in order to maintain acceptable service ratios, response times or other performance objectives for any of the public services:
i. Fire protection? Less Than Significant Impact. The Fountain Valley Fire Department provides fire protection services to the site. The closest fire station to the site is Fire Station 1 and located at 17737 Bushard Street. Fire Station 1 is located approximately one mile southeast of the site. The other responding fire station is Fire Station 2 that is located at 16767 Newhope Street and approximately three miles east of the site. Once constructed, the project would require fire

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protection services that are typically required for senior residential development and a higher occurrence of medical emergency calls than the general public.41 The project developer would be required to pay an annual standardized fee to the fire department as part of the operation of the senior living facility. The fee is used to partially fund support staff to complete mission-critical tasks that emergency personnel no longer can accomplish because of the increased emergency response demand. The project would not require the construction of new or expanded fire stations and fire protection service impacts are less than significant.42 The impact of the project to fire protection services would be less than significant. ii. Police protection? Less Than Significant Impact. The Fountain Valley Police Department provides police protection services to the site from the police department located at 10200 Slater Avenue, which is approximately two miles southeast of the site. The project could require police protection services during project construction to respond to theft, vandalism, accidents and other construction related police emergencies. Once constructed, the project would require typical operational police services for residential development such as routine police patrols, vandalism, break-ins, and other service calls associated with residential development.

The project site is located in an area with a low crime rate and the police department does not anticipate an increase in service calls that would require an increase in staffing levels. The number of proposed dwelling units does not substantially increase the population to the extent that it would diminish the current level of police protection services.43 While the project would require police protection services during project construction and the life of the project, the project would not impact the Police Dep s ability to continue to provide an adequate level of service to the community.
iii. Schools? Less Than Significant Impact. The project is served by the Fountain Valley School District and the Huntington Beach Union High School District. The project is a designated senior facility, therefore, the project would not generate any students to area schools.

As required by Government Code Section 65995, the project would be required to pay a developer fee. The Huntington Beach Union High School District charges the commercial rate for senior housing, which currently is $0.78 per square foot. Based on the total habitable living area of the project the developer fee would be $10,528.44.44 The developer fee for commercial use in the Fountain Valley School District is $0.48 per square foot.45 The project developer would be required to pay the fee in place at the time the developer acquires building permits for the construction of the project. Payment of the required developer fee would reduce the impact of the project to both the Fountain Valley School District and the Huntington Beach Union High School District to less than significant.
iv. Parks? Less Than Significant Impact. The closest public park to the project is McDowell Park that is located at 17200 Oak Street and approximately 0.5 miles east of the site. McDowell Park is approximately 1-acres and includes a climbing unit, benches, drinking fountain, picnic tables, bar-ggrill, play area and swings. Because the project does not propose any on-site recreational facilities, project residents would incrementally increase the demand and use of existing park and 41 Fountain Valley Fire Department, Michelle Rudaitis, Battalion Chief, Administration/Fire Marshall, email dated May 2, 2023. 42 Fountain Valley Fire Department, Michelle Rudaitis, Battalion Chief, Administration/Fire Marshall, email dated May 2, 2023. 43 Fountain Valley Police Department, Chief Matthew Sheppard, letter dated May 10, 2023. 44 Jill Russo, Huntington Beach Union High School District, letter dated May 4, 2023. 45 Fountain Valley School District, Chris Fullerton, Assistant Superintendent, Business, email dated May 10, 2023.

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recreational facilities in Fountain Valley, which could include McDowell Park. Mile Square Regional Park, which is an Orange County regional park, is located at 16801 Euclid Street and approximately

1.5 miles northeast of the project. Mile Square Park includes soccer, basketball, baseball, softball, cross country track meets, fishing and archery, golf and other active and passive recreational facilities. Due to the small scale of the senior project it is anticipated the increased demand for both city and county park and recreational facilities would not have a significant impact to the existing park and recreational facilities in Fountain Valley.

In compliance with FVMC 21.79.260 the project is exempt and would not be required to pay a park fee because the project proposes to provide affordable housing for low and very low income households.

The project would not have a significant impact on existing park and recreational facilities in Fountain Valley.
v. Other public facilities? No Impact. There are no public facilities or services that would be impacted by the project.

XVI. RECREATION
a) Would the project increase the use of existing neighborhood and regional parks or other recreational facilities such that substantial physical deterioration of the facility would occur or be accelerated? Less Than Significant Impact. The project would not significantly impact recreation facilities. Please see Public Services s V.a. e of this MND. b) Does the project include recreational facilities or require the construction or expansion of recreational facilities that might have an adverse physical effect on the environment? Less Than Significant Impact. As discussed in Public Services section e of this MND, the project does not propose the construction of any on-site recreational facilities and would not require the construction or the expansion of other recreational facilities that would impact the environment.

XVII. TRANSPORTATION: Would the project:
a) Conflict with a program plan, ordinance or policy addressing the circulation system, including transit, roadway, bicycle and pedestrian facilities? Less Than Significant Impact. A Vehicles Miles Traveled (VMT) screening analysis46 was prepared for the project and is included in Appendix F.

The project is estimated to generate 94 daily vehicle trips, including 6 AM and 7 PM trips as shown in Table 18.

Table 18
Project Trip Generation Rates
AM Peak Hour PM Peak Hour
Land Use Source1 Unit % In % Out Rate % In % Out Rate Daily Senior
Adult
Housing
ITE 252 DU 34 66 0.20 56 44 0.25 3.24 46 Guadalupe Manor Project Transportation Screening Assessment, Ganddini Group, May 1, 2023.

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Trips Generated
AM Peak Hour PM Peak Hour
Land Use Quantity Unit2 In Out Total In Out Total Daily Senior
Adult
Housing
29 DU 2 4 6 4 3 7 94 1 Source: ITE = Institute of Transportation Engineers, Trip Generation Manual (11th Edition, 2021); ### = Land Use Code. 2 DU- Dwelling Units. Screening For Level of Service Analysis The City of Fountain Valley has guidelines for Level of Service (LOS) impact for General Plan operational compliance. As specified in the City of Fountain Valley Transportation Impact Assessment (TIA) Guidelines, the requirement to prepare a transportation impact study (with Level of Service analysis) should be based on the following criteria:

When either the AM or PM peak hour project trip generation exceeds 100 vehicle trips.

Projects that generate 1600 or more average daily trips (ADT) on the Arterial Highway System.

Projects that generate 51 or more vehicle trips during either the AM or PM peak hour to any intersection.

The project is calculated to generate 6 AM peak hour trips and 7 PM peak hour trips, which is less than 50 trips during the weekday AM and PM peak hours per the City of Fountain Valley Transportation Assessment Guidelines. Therefore, a Level of Service analysis is not warranted based on Fountain Valley s TIA Guidelines.47
Screening For Vehicles Miles Traveled Analysis
The project VMT impact was assessed in accordance with the City of Fountain Valley TIA Guidelines.

The TIA Guidelines establish screening thresholds for certain types of projects that may be presumed to cause a less than significant VMT impact based on substantial evidence provided in the Office of Planning and Research (OPR) Technical Advisory on Evaluating Transportation Impacts in CEQA (December 2018).

The Fountain Valley TIA Guidelines specify the following three screening steps: 1) Transit Priority Area (TPA) Screening; 2) Low VMT Area Screening; and 3) Project Type Screening. To qualify for screening, a project needs to fulfill only one of the listed screening types. The screening of the project for each of the three steps is presented below:

Transit Priority Area (TPA) Screening
Projects located within a TPA (half mile area around an existing major transit stop or an existing stop along a high-quality transit corridor) may be presumed to have a less than significant impact absent substantial evidence to the contrary. This presumption may not be appropriate if the project:

1. Has a Floor Area Ratio (FAR) of less than 0.75;

2. Includes more parking for use by residents, customers, or employees of the project than required by the jurisdiction (if the jurisdiction requires the project to supply parking); 47 Guadalupe Manor Project Transportation Screening Assessment, Ganddini Group, May 1, 2023, page 2.

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3. Is inconsistent with the applicable Sustainable Communities Strategy (as determined by the City with input from the Metropolitan Planning Organization): or

4. Replaces affordable residential units with a smaller number of moderate or high-income residential units.

The project is not located within a TPA based on the City TIA Guidelines. Therefore, the proposed project does not satisfy the city-established screening criteria for projects located within a TPA.

Low VMT Area Screening
Residential and office projects located within a low VMT generating area may be presumed to have a less than significant impact absent substantial evidence to the contrary. In addition, other employmentrelated and mixed-use land use projects may qualify for the use of screening if the project can reasonably be expected to generate VMT per resident, per worker, or per service population that is similar to the existing land uses in the low VMT area.

The Orange County Transportation Authority Model (OCTAM) measures the VMT performance for individual jurisdictions and for individual traffic analysis zones (TAZs). TAZs are geographic polygons similar to census block groups used to represent areas of homogenous travel behavior. A low VMTgenerating area is where the project-generated VMT per service population is less than the c General Plan Buildout average VMT per service population. The proposed project is located in an area that is 0 15% below the average for the City of Fountain Valley and is located within a low VMTgenerating area based on the City of Fountain Valley TIA Guidelines. Therefore, the project satisfies the city-established screening criteria for projects located within a low VMT-generating area and can be presumed to result in a less than significant VMT impact.

Project Type Screening
Local serving retail projects less than 50,000 square feet may be presumed to have a less than significant impact absent substantial evidence to the contrary. Local serving retail generally improves the convenience of shopping close to home and has the effect of reducing vehicle travel. Minor interior or exterior expansions could be screened from assessment. The increase in square footage applies to the net new or increase in square footage of a new project or re-tenanting of a project. The following uses can be presumed to have a less than significant impact absent substantial evidence to the contrary as their uses are local serving in nature:

Local-serving K-12 schools
Local parks
Day care centers
Local-serving retail uses less than 50,000 square feet including:

Gas stations
Banks
Restaurants, bars, cocktail lounges
Shopping center
Service uses such as hair salon, barbers, gyms, equipment sales and rental, home electronics and small appliance repair, laundromats, tailors and other uses listed as permitted in Section 21.10.030 of the Fountain Valley Municipal Code Local-serving hotels (e.g. non-destination hotels)
Student housing projects on or adjacent to college campuses Local-serving assembly uses (places of worship, community organizations)

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Community Institutions (Public libraries, fire stations, local government) Local serving community colleges that are consistent with the assumptions noted in the Regional Transportation Plan/Sustainable Communities Strategy (RTP/SCS) Affordable or supportive housing
Assisted living facilities
Senior housing (as defined by HUD)
Re-tenanting of existing non-residential space
Interior expansions
Minor exterior expansions
Projects generating less than 110 net new daily vehicle trips:
11 single family housing units
16 multi-family, condominiums, or townhouse housing units 10,000 square feet of office
15,000 square feet of light industrial
63,000 square feet of warehousing
79,000 square feet of high-cube transload and short-term storage warehouse Other local-serving projects as approved by the Planning and Building Director, City Engineer, and/or Public Works Director
The project proposes affordable housing and is calculated to generate less than 110 net new daily vehicle trips. Therefore, the project satisfies the City-established screening criteria for project type screening and the VMT impact is less than significant.

As stated above, a project only needs to fulfill one of three listed screening thresholds to meet the City of Fountain Valley TIA Guidelines for a less than significant VMT impact. As stated, the project satisfies the city-established screening criteria for projects within a low VMT-generating area.

The existing traffic circulation system can accommodate the project traffic without significantly impacting any local intersections, city policies regarding transportation or CMP roadways or cause roadway congestion. The project would not have any significant transportation impacts. b) Would the project conflict or be inconsistent with CEQA Guidelines Section 15064.3, subdivision (b)? No Impact. As stated in section XVII.a) above of this MND, in compliance with CEQA Guidelines Section 15064.3, subdivision (b) a VMT screening analysis was prepared and determined the project would not have a significant VMT impact. Therefore, the project would not be in conflict or inconsistent with CEQA Guidelines Section 15064.3, subdivision (b).
c) Substantially increase hazards due to a geometric design feature (e.g., sharp curves or dangerous intersections) or incompatible uses (e.g., farm equipment)? Less Than Significant Impact. Project ingress/egress would use the same driveway and drive aisle as the existing Our Lady of Guadalupe project at Magnolia Street and no new curve or intersections are proposed. The project does not propose any roadway or site access design features that would have significant traffic or circulation hazards or impacts.
d) Result in inadequate emergency access? Less Than Significant Impact. The existing public streets and circulation system would continue to provide adequate site access for emergency vehicle access.

Police, fire, paramedic/ambulance, and other emergency vehicles would have adequate site access to respond to on-site emergencies at the existing site access driveway at Magnolia Street and the on-site drive aisle. The project driveway and on-site drive aisle have been reviewed by the city, including the police and fire departments to ensure the site access driveway has adequate widths and turning radius

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for emergency vehicles to enter and exit the site. An existing emergency access gate with the shopping center adjacent to and north of the project site would provide emergency ingress/egress for the project. The project would not have any significant emergency access impacts to the site.

XVIII. TRIBAL CULTURAL RESOURCES: Would the project:
a) Would the project cause a substantial adverse change in the significance of a tribal cultural resource, defined in Public Resources Code Section 21074 as either a site, feature, place, cultural landscape that is geographically defined in terms of the size and scope of the landscape, sacred place, or object with cultural value to a California Native American tribe, and that is:
i. Listed or eligible for listing in the California Register of Historical Resources, or in a local register of historical resources as defined in Public Resources Code Section 5020.1 (k).

Potentially Significant Unless Mitigation Incorporated. As required by AB 52, the City mailed letters to ten area Native American Indians on October 18, 2022 that are on record with the City that may have cultural resources associated with the site. The Gabrieleño Band of Mission Indians Kizh Nation requested consultation because the project site lies within the ancestral tribal territory of the Kizh Nation. Thus, tribal cultural resources could exist on the site. After consultation with Kizh Nation in compliance with AB 52, the following mitigation measures are recommended to reduce potential impacts to Tribal resources, if present.

Mitigation Measure No. 11 Prior to the commencement of any ground disturbing activity at the project site, the project applicant shall retain a Native American Monitor approved by the Gabrieleño Band of Mission Indians-Kizh Nation. A copy of the executed contract shall be submitted to the City of Fountain Valley Planning and Building Department prior to the issuance of any permit necessary to commence a ground-disturbing activity. The Tribal monitor shall only be present on-site during the construction phases that involve ground-disturbing activities. Ground disturbing activities are defined by the Tribe as activities that may include, but are not limited to, pavement removal, potholing or auguring, grubbing, tree removals, boring, grading, excavation, drilling, and trenching, within the project area. The Tribal Monitor shall complete daily monitoring logs that shall provide descriptions of , locations, soil,
and any cultural materials identified. The on-site monitoring shall end when all ground-disturbing activities on the project site are completed, or when the Tribal Representatives and Tribal Monitor have indicated that all upcoming ground-disturbing activities at the project site have little to no potential to impact Tribal Cultural Resources.

Mitigation Measure No.12 Upon discovery of any Tribal Cultural Resources, construction activities shall cease in the immediate vicinity of the find (not less than the surrounding 50 feet) until the find can be assessed. All Tribal Cultural Resources unearthed by project activities shall be evaluated by the qualified archaeologist and Tribal monitor approved by the Consulting Tribe. If the resources are Native American in origin, the Consulting Tribe shall retain it/them in the form and/or manner the Tribe deems appropriate, for educational, cultural and/or historic

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purposes. If human remains and/or grave goods are discovered or recognized at the project site, all ground disturbance shall immediately cease, and the county coroner shall be notified per Public Resources Code Section 5097.98, and Health & Safety Code Section 7050.5. Human remains and grave/burial goods shall be treated alike per California Public Resources Code Section 5097.98(d)(1) and (2).

Work may continue on other parts of the project site while evaluation and, if necessary, mitigation takes place (CEQA Guidelines Section 15064.5[f]). If a non-Native American resource is determined by the qualified arc esour
archaeological resource, time allotment and funding sufficient to allow for implementation of avoidance measures, or appropriate mitigation, must be available. The treatment plan established for the resources shall be in accordance with CEQA Guidelines Section 15064.5(f) for historical resources and PRC Sections 21083.2(b) for unique archaeological resources. Preservation in place (i.e., avoidance) is the preferred manner of treatment. If preservation in place is not feasible, treatment may include implementation of archaeological data recovery excavations to remove the resource along with subsequent laboratory processing and analysis. Any historic archaeological material that is not Native American in origin shall be curated at a public, non-profit institution with a research interest in the materials, such as the Natural History Museum of Los Angeles County or the Fowler Museum, if such an institution agrees to accept the material. If no institution accepts the archaeological material, it shall be offered to a local school or historical society in the area for educational purposes.

Implementation of the recommended mitigation measures would reduce potential tribal cultural resource impacts to less than significant.
ii) A resource determined by the lead agency, in its discretion and supported by substantial evidence, to be significant pursuant to criteria set forth in subdivision (c) of Public Resources Code Section 5024.1. In applying the criteria set forth in subdivision (c) of Public Resources Code Section 5024.1, the lead agency shall consider the significance of the resource to a California Native American tribe. Potentially Significant Unless Mitigation Incorporated. As discussed in section XVIII.a.i above of this MND, the project could significantly impact tribal resources if present. The implementation of the recommended mitigation measures would reduce potential impacts to tribal resources to less than significant.

XIX. UTILITIES AND SERVICE SYSTEMS: Would the project:
a) Require or result in the relocation or construction of new or expanded water, wastewater treatment or storm water drainage, electric power, natural gas, or telecommunication facilities, the construction or relocation of which could cause significant environmental effects? Less Than Significant Impact. The existing water main in Magnolia Street adjacent to the site has capacity to provide the required water supply for both fire flow and the potable water demand of the project without the need to construct new water supply facilities or expand existing facilities. The existing sewer line in Magnolia Street has capacity to serve the project without a need to upgrade or increase the size of the sewer line. All other utilities required to serve the project, including drainage, electricity,

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natural gas, and telecommunications are in Magnolia Street and would not have to be expanded or relocated. The project developer would have to extend to the existing facilities to the site, but none of the existing facilities would have to be improved that could cause significant environmental impacts.

The project would not have any significant public utility impacts. b) Have sufficient water supplies available to serve the project and reasonably foreseeable future development during normal, dry and multiple dry years? Less Than Significant Impact. The project is estimated to consume approximately 2,900 gallons of water per day48 . s
Urban Water Management Plan the City has an adequate water supply to meet the demand of the project into the future. The project would have a less than significant impact on water supply. c) Result in a determination by the wastewater treatment provider that serves or may serve the project that it has adequate capacity to serve the p the xisting commitments? Less Than Significant Impact. Please see sect IX. above of this MND.
d) Be served by a landfill with sufficient permitt
waste disposal needs? Less Than Significant Impact. The construction of the project would generate various types of construction debris, including asphalt, metal, wood, etc. that cannot be recycled would be hauled to a landfill. Once operational, the project is estimated to generate approximately 116 pounds of solid waste per day.49
Republic Services is the current contract solid waste hauler for the City of Fountain Valley and would serve the project. The solid waste that is collected in Fountain Valley is taken to a Materials Recovery Facility (MRF) in Huntington Beach. All recyclables are recovered and the remaining solid waste is taken to the Frank R. Bowerman Landfill. The City of Fountain Valley adopted a Source Reduction and Recycling Element (SRRE) in 1992 that o lid waste reduction by 1995 and a 50% reduction by 2000. The solid waste generated by the project would be recycled and the materials that cannot be recycled would be hauled to the Frank R. Bowerman Landfill. The e the solid waste generated by the project to reduce the amount of material that is hauled to the landfill. The solid waste generated by the project would have a less than significant impact on the life expectancy of any of the landfills that serve the project. e) Comply with federal, state, and local statutes and regulations related to solid waste? Less Than Significant Impact. The City of Fountain Valley complies with all federal, state, and local statutes and regulations related to solid waste. The project would not have any solid waste impacts because the residents would be required to comply would all applicable solid waste statues and regulations and large quantities of solid waste would not be generated.

XX. WILDFIRE: If located in or near state responsibility areas or lands classified as very high fire hazard severity zones, would the project:
a) Substantially impair an adopted emergency response plan or emergency evacuation plan? No Impact. Based on review of the Very High Fire Hazard Severity Zones in Local Responsibility Areas and State and Federal Responsibility Areas map, the City of Fountain Valley is not located within a Very High Fire Hazard Severity Zone.50 Furthermore, a review of the Fire Hazard Severity Zones in State Responsibility Areas map, the City of Fountain Valley is not located in a Moderate, High or Very 48 100 gallons/person/day and 1.0 people/household. 49 http://www.calrecycle.ca.gov/. Residential - 4 pounds/day/unit. 50 http://frap.fire.ca.gov/webdata/maps/orange/fhszl_map.30.pdf

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High fire hazard zone.51 The closest Moderate, High or Very High fire hazard zone to the project site is the open space that extends along the south side of University Drive from Culver Drive east to Ridgeline Drive in the City of Irvine and approximately nine miles southeast of the project. The project would not impair or impact any emergency response or emergency evacuation plan associated with an emergency response to a fire in this specific Very High fire hazard zone or any other designated local, state or Federal fire hazard zone in Orange County.
b) Due to slope, prevailing winds, and other factors, exacerbate wildfire risks, and thereby expose project occupants to, pollutant concentrations from a wildfire or the uncontrolled spread of a wildfire? No Impact. As discussed in section XX. a. of this MND, the project is not in a Moderate, High, or Very High fire hazard zone and the closest designated fire hazard zone is approximately nine miles southeast of the project. The project site and surrounding properties are generally flat with no significant topographic relief and expose project occupants to wildfire risks. Santa Ana winds could expose project occupants to smoke and other pollutants associated with wildfires located east of the city. However, that exposure would not be site specific because much of the city and general geographic area would be exposed and not the project specifically. The project would not expose project occupants to pollutant concentrations from a wildfire due to slope, prevailing winds, or other factors.
c) Reguire the installation or maintenance of associated infrastructure (such as roads, fuel breaks, emergency water sources, power lines or other utilities) that may exacerbate fire risk or that may result in temporary or ongoing impacts to the environment? No Impact. The project would be required to install fire sprinklers as required by the City of Fountain Valley Fire Department standards. However, the project would not be required to install and maintain any roads, fuel breaks, emergency water sources, power lines or other utilities to protect the project and the immediate area from a wildfire because the project is not located in a Moderate, High, or Very High fire hazard zone as discussed in section XX. a. of this MND.
d) Expose people or structures to significant risks, including downslope or downstream flooding or landslides, as a result or runoff, post-fire slope instability, or drainage changes? No Impact.

As discussed in secti XX. a. of this MND, the project is not located within a Moderate, High, or Very High fire hazard zone. As discussed in section XX. b. above of this MND, the project site and surrounding properties are generally flat with no significant topographic relief that would expose structures or project occupants to significant risks due to downslope or downstream flooding or landslides. Because the project is not located in a fire hazard zone or downstream of any hillsides of areas of topographic relief the project would not expose either project residents or proposed structures to significant risks due to downstream or downstream flooding or landslides due to post-fire slope instabilities.

XXI. MANDATORY FINDINGS OF SIGNIFICANCE:
a) Does the project have the potential to substantially degrade the quality of the environment, substantially reduce the habitat of a fish or wildlife species, cause a fish or wildlife population to drop below self-sustaining levels, threaten to eliminate a plant or animal community, substantially reduce the number or restrict the range of a rare or endangered plant or animal, or eliminate important examples of the major periods of California history or prehistory? Potentially Significant Unless Mitigation Incorporated. The project site is developed with the existing Our Lady of Guadalupe senior care facility, parking lot, patio area, community garden for the residents and other site improvements. The habitat on the site includes introduced urban landscaping 51 http://frap.fire.ca.gov/webdata/maps/orange/fhszs_map.30.pdf

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including trees, shrubs, turf, ground cover, flowers, etc. The existing trees on the site could provide nesting sites for some bird species. Project construction could impact nesting birds if present. None of the trees are a candidate for a sensitive or special status plant species. The project could impact birds that are nesting in the existing on-site vegetation. Mitigation measures are recommended to reduce potential nesting bird impacts to less than significant. The project would not significantly impact any historical resources on the site. However, if present, cultural resources could be uncovered during project grading and construction. Mitigation measures are recommended to reduce potential cultural resources impacts to less than significant. The recommended mitigation measures to reduce potential biological and cultural resource impacts to less than significant as listed in sections IV and V respectively, are duplicated below.

Biological Resources
Mitigation Measure No. 3 Nesting Birds

All necessary clearing and removal of vegetation for project construction shall be conducted outside of the typical nesting season for birds (February 15 through September 1).

If any construction activities are scheduled to occur during the nesting bird season (February 15 through September 1), a qualified biologists shall conduct a survey to determine whether there are any active bird nests within the on-site trees.

The nesting bird survey shall occur no more than 7-days prior to the start of construction and include a search for nesting birds within the project site.

If any active nests are observed, they shall either be avoided until after all young have fledged from the nest, or an alternative as determined d by a biologist to ensure against negative impacts to nesting birds.

Cultural Resources
Mitigation Measure No. 4 The project developer shall retain a qualified professional archaeologist who meets U.S. sional Qualifications and
Standards, to conduct an Archaeological Sensitivity Training for construction personnel prior to commencement of excavation activities.

The training session shall be carried out by a cultural resource professional with expertise in archaeology, who meets the U.S. Secretary of the Interior s Professional Qualifications and Standards. The training session shall include a handout and focus on how to identify archaeological resources that may be encountered during earthmoving activities and the procedures to be followed in such an event, the duties of archaeological monitors, and the general steps a qualified professional archaeologist would follow in conducting a salvage investigation if one is necessary.

Mitigation Measure No. 5 In the event that archaeological resources are unearthed during grounddisturbing activities, ground-disturbing activities shall be halted or diverted

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away from the vicinity of the find so that the find can be evaluated. A buffer area of at least 50 feet shall be established around the find where construction activities shall not be allowed to continue until a qualified archaeologist has examined the newly discovered artifact(s) and has evaluated the area of the find. Work shall be allowed to continue outside of the buffer area. All archaeological resources unearthed by project construction activities shall be evaluated by a qualified professional archaeologist hired by the project developer, who meets the U.S.

Sec ional Qualifications and Standards.

Should the newly discovered artifacts be determined to be prehistoric, Native American Tribes/Individuals shall be contacted and consulted, and Native American construction monitoring shall be initiated. The City shall coordinate with the archaeologist to develop an appropriate treatment plan for the resources. The plan may include implementation of archaeological data recovery excavations to address treatment of the resource along with subsequent laboratory processing and analysis.

Mitigation Measure No. 6 The project developer s archaeological monitor, under the direction of a qualified professional archaeologist who meets the U.S. Secretary of the Qualifications and Standards, shall prepare a final
report at the conclusion of archaeological monitoring. The report shall be submitted to the City, the South Central Costal Information Center and representatives of other appropriate or concerned agencies to signify the satisfactory completion of the project and required mitigation measures.

The report shall include a description of resources unearthed, if any, evaluation of the resources with respect to the California Register and CEQA, and treatment of the resources.

The project would not have any significant biological or cultural resource impacts with the implementation of the recommended mitigation measures above. b) Does the project have impacts that are individually limited, but cumulatively considerable? ans that the incremental effects of a project are considerable when viewed in connection with the effects of past projects, the effects of other current projects, and the effects of probable future projects.) Less Than Significant Impact. The City of Fountain Valley has identified eight projects that, along with the proposed project, could have cumulative impacts. The cumulative projects are listed in Table 19. The location of the cumulative projects are shown in Figure 13.

Table 19
Cumulative Projects
Address Proposed Project Status
#1 17025 Brookhurst
Street
JUSU Retail Center:
10,232 sq. ft. 2-story building. Approved
#2 10201, 10221, 10231
Slater Avenue
Slater Mixed-Use Project:

One to five-story mixed use with 270
residential units.
5,000 sq. ft. restaurant with 2,000
Plan Check

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square feet of outdoor dining space.

Walk-up coffee and lunch bar.
1,660 sq. ft. art gallery.
6-level parking garage.
#3 - 9801 Starfish Avenue Villa Asteria:

Seven detached single-family homes. Under Construction
#4 8572 Talbert Avenue
Bonanni Development:
15 detached single-family residential
homes.

Approved
#5 9065 Warner Avenue
Dutch Brothers:
950 sq. ft. building with a double drivethrough. Plan Check #6 Northeast corner of
Magnolia Street and
Talbert Avenue
Dutch Brothers:
950 sq. ft. building with a double drivethrough. Plan Check #7 17071 Bushard Street 4,000 sq. ft. restaurant in an existing shopping center. Plan Check
#8 8546 Warner Avenue
Warner Avenue Animal Hospital:

Demolition of an existing animal
hospital building and construct a new
8,294 sq. ft. animal hospital building
and parking lot.

Plan Check
Based on the air quality report, the short-term construction emissions and the long-term operational emissions of the project would not exceed any adopted air emission thresholds. The project would not have any individual or cumulative noise or traffic impacts. In addition, the project would not have any significant individual or cumulative impacts associated with aesthetics, hydrology, soils and geology, land use, public services, or utilities that along with the cumulative projects would result in any significant cumulative impacts
c) Does the project have environmental effects that would cause substantial adverse effects on human beings, either directly or indirectly? Less Than Significant Impact. There are no significant impacts associated with the proposed project that would cause substantial adverse effects and significantly impact human beings either directly or indirectly.

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MITIGATED NEGATIVE DECLARATION
Mitigation Monitoring and Reporting Plan

OUR LADY OF GUADALUPE

SENIOR RESIDENTIAL PROJECT
Project Proponent:

Environmental Consultant:

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1.0 MITIGATION MONITORING AND REPORTING PLAN

1.1 Introduction

1.2 Project Overview

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1.3 Monitoring and Reporting Procedures

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Table 1 Our Lady of Guadalupe Senior Residential Project Mitigation Monitoring and Reporting Plan .Mitigation Number Mitigation Measure Timing Implementation Responsibility Monitoring/ Responsibility Verification of Compliance Initials Date Remarks Air Quality 1. 2.

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RESOLUTION NO. ____

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF FOUNTAIN VALLEY APPROVING GENERAL PLAN AMENDMENT NO. 22-01 FILED

BY IRWIN PARTNERS ARCHITECTS, ON BEHALF OF OUR LADY OF

GUADALUPE, TO CHANGE THE GENERAL PLAN MAP LAND USE

DESIGNATION FROM GENERAL COMMERCIAL TO HIGH DENSITY
RESIDENTIAL FOR THE PROPERTY LOCATED AT 17103 MAGNOLIA
STREET
WHEREAS, Irwin Partners Architects (“Applicant”), on behalf of Our Lady of Guadalupe, has submitted a request to construct 29 low-income senior independent living units in a new 18,039 square foot two-story building on the 2.1 acre site currently occupied by Our Lady of Guadalupe located at 17103 Magnolia Street (“Project”); and WHEREAS, Our Lady of Guadalupe, a California nonprofit public benefit corporation (“Owner” or “OLG”), is the owner of the Site at 17103 Magnolia Street (APN # 167-391-24), which is formally described in the legal description attached hereto as “Exhibit A” (“Site”); and WHEREAS, the General Plan is a long-range, comprehensive blueprint that guides the orderly development and growth of the City of Fountain Valley; and WHEREAS, by its very nature, the General Plan must be updated and refined to reflect changing community needs and attitudes; and
WHEREAS, the existing senior housing units on the Site were approved through Conditional Use Permit 757 in 1985 for housing units for the elderly in the C1 zone and, while the housing units are legal, they are non-conforming with the current Zoning Code; and WHEREAS, the current Zoning Code allows for senior affordable housing units to be constructed only in residential zones; and
WHERAS, therefore, the applicant has submitted an application for a General Plan Amendment and Zoning Map Amendment so the existing and proposed project, which are located on the same parcel, will conform with the General Plan and Zoning Code; and WHEREAS the Project includes the following applications in accordance with the Fountain Valley Municipal Code (FVMC):
 Per FVMC 21.34, a General Plan Amendment is required for a change in land use designation from General Commercial to High Density Residential for the approximate 2.1-acre Project Site.
 Per FVMC 21.34, a Zoning Map Amendment is required to rezone the Site from C1 – Local Business to R4 – High Density Multiple Dwelling.  Per FVMC Chapter 21.44, a Precise Plan is required for the development of any proposed structures in the City, except for structures in the R1 zoning district.  Acknowledgement and Approval of a Density Bonus and Affordable Housing

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Agreement (“DBAHA”) for the Project.
 Approval of a Mitigated Negative Declaration (MND) and Mitigation Monitoring and Reporting Plan (MMRP) to address the environmental impacts associated with the Project.

WHERAS, the 2021-2029 Housing Element, approved through Resolution No. 9853 by the City Council on October 4, 2022 and certified by the State Housing Community Development Department (“HCD”) on October 13, 2022, lists the real property located at 17103 Magnolia Street, Fountain Valley (“Site”) as an opportunity site to meet the City’s Regional Housing Needs Assessment (RHNA) allocation of 4,839 units. The Housing Element identifies the Site as a Pipeline Project in “Figure H-1 Housing Sites Inventory” and “Table H-22 Housing Sites Inventory” with 29 additional low income units and anticipated the Land Use designation of the General Plan for the Site would change to High Density Residential; and WHEREAS, the General Plan Amendment would change the General Plan land use designation from General Commercial to High Density Residential to allow for the development of the Project as shown in ”Exhibit B” attached to this Resolution; and WHEREAS, the Zoning Map Amendment would change the Zoning Map designation from C1 – Local Business to R4 – High Density Multiple Dwelling to align with the change in the General Plan Map land use designation; and
WHEREAS, the City has complied with the requirements of the Government Code Section 65300 et seq., the current State of California General Plan Guidelines, and the City’s applicable ordinances with respect to review and consideration of the proposed Project, including the General Plan and Zoning map amendments (together “Amendments”); and WHEREAS, per the California Environmental Quality Act (CEQA), the Fountain Valley Planning Commission first considered the accompanying Mitigated Negative Declaration (MND) and Mitigation Monitoring and Reporting Plan (MMRP) prepared for the Project in a separate action, as contained in Resolution 23-19, at its noticed public hearing on October 11, 2023; and WHEREAS, the Planning Commission also considered Precise Plan 570 in a separate action, as contained in Resolution 23-20, at its noticed public hearing on October 11, 2023; and WHEREAS, the Fountain Valley Planning Commission also considered the Amendments at its noticed public hearing on October 11, 2023; and WHEREAS, per the California Environmental Quality Act (CEQA), the Fountain Valley Planning Commission recommended the City Council approved the accompanying MND and MMRP prepared for the Project in a separate action, as contained in Resolution 23-19, by a vote of 5-0 at its noticed public hearing on October 11, 2023; and WHERAS, the Planning Commission considered and recommended the City Council approve General Plan Amendment 22-01 and Zoning Map Amendment 435 as contained in Resolution No.23-21 by a vote of 5-0 at its noticed public hearing on October 11, 2023; and WHEREAS, the Planning Commission approved Precise Plan 570 in a separate action, as contained in Resolution 23-20, by a vote of 5-0 at its noticed public hearing on October 11,

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2023, contingent upon City Council approval of General Plan Amendment 22-01, Zoning Map Amendment 435, and the MND and MMRP; and
WHEREAS, the City Council considered the Project and Amendments at its noticed public hearing on December 19, 2023; and
WHEREAS, per the California Environmental Quality Act (CEQA), the City Council of the City of Fountain Valley first considered the accompanying MND and MMRP prepared for the Project in a separate action, as contained in Resolution ___, at its noticed public hearing on December 19, 2023; and
WHEREAS, the City Council considered General Plan Amendment 22-01, an amendment that would change the General Plan land use designation from General Commercial to High Density Residential to allow for the development of the Project as shown in ”Exhibit B” attached to this Resolution, at its noticed public hearing on December 19, 2023; and WHEREAS, the proposed General Plan Amendment 22-01 has been publicly noticed in accordance with State Law and the Fountain Valley Municipal Code; and NOW, THEREFORE, the City Council of the City of Fountain Valley does hereby resolve as follows:

SECTION 1
The City Council finds that due notice of the public hearing on December 19, 2023, conducted in the Council Chambers, City Hall, 10200 Slater Avenue, was given as required by the FVMC, Title 21, and the Statutes of the State of California.

SECTION 2
Prior to consideration of the Project and Amendments as contained in Resolution No’s ____ and ____ Ordinance No. ____, the City Council found that the Project and Amendments would not have a significant adverse effect upon the environment and recommended approval of the MND and MMRP prepared for the Project. The City Council further found that the MMRP will ensure compliance during project implementation in that changes to the Project and/or mitigation measures have been incorporated into the Project and are fully enforceable through permit conditions, agreements, or other measures as required by Public Resources Code Section 21081.6.

The MND was circulated for public review from August 3, 2023 to August 23, 2023, and made available to the public and the City Council for review and consideration. The City Council has reviewed the MND, together will all comments and responses to those comments, and MMRP, and has found that the environmental document considers all environmental effects of the proposed Project, is complete and adequate, and fully complies with all requirements of CEQA and the CEQA Guidelines.

The City Council, as the Lead Agency, arrived at its independent judgement and found that on the basis of the MND and any comments received that there is no substantial evidence that the Project will have a significant adverse impact on the environment provided that the mitigation measures identified in the environmental document are incorporated into the Project.

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SECTION 3
Pursuant to Fountain Valley Municipal Code section 21.34.050 the City Council does hereby find as follows:

1. The proposed amendments ensure and maintain internal consistency with the actions, goals, objectives and policies of the general plan, and would not create any inconsistencies with this title, in the case of a title amendment.

The proposed Amendments (General Plan Amendment 22-01 and Zoning Map Amendment 435) will be internally consistent with each other and will provide for the orderly grown of the Project. The Amendments would not create any inconsistencies with the General Plan or within the Municipal Code with the approval of a density bonus to bring the project density to 47.6 units/acre. The Amendments support the implementation of various General Plan goals and policies. Specifically, the Amendments will:
 Promote residential, commercial and industrial development which achieves harmony without monotony in the built environment (Goal 2.6, Policy 2.6.1). The project will accommodate harmonious and attractive architectural design consisting with the existing building on the property. The Amendments will facilitate the development of new housing stock that is similar in layout, separation, design, height, and style to nearby high-density development.
 Promote and encourage the development of a variety of housing opportunities to accommodate current and projected households by promoting the construction of additional dwelling units to accommodate Fountain Valley’s share of regional housing needs in accordance with adopted land use policies (Housing Element Goal 1, Policy 1.1). The Amendments will help aid in meeting the City’s regional housing needs assessment of 4,839 units by the year 2029 in accordance with adopted land use policies and the draft 6th Cycle Housing Element.  Promote and encourage the development of a variety of housing opportunities to accommodate current and projected households by providing a variety of housing opportunities for all income levels through different land uses and densities (Housing Element Goal 1, Policy 1.2). The Amendments will allow for development that may utilize density bonus options pursuant to State Density Bonus Law consistent with Government Code Sections 65915-65918 including incentives such as concessions and waivers if 100 percent of the units are restricted as affordable benefiting low income persons as defined in the California Health and Safety Code.

2. The proposed amendments would not be detrimental to the public convenience, health, interest, safety or welfare of the city.

The project contains no features that could be detrimental to public health or safety. The Project meets Building and Fire Code requirements and will maintain an emergency access to the shopping center property to the north. The Project will provide gathering

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places for residents with open space consisting of a 713 square foot pet area, a 591 square foot walking path, 2 patios outside of the recreation room of 172 square feet and 495 square feet and a 421 square foot patio near the entry of the new building.

3. The proposed project has been reviewed in compliance with the provisions of the California Environmental Quality Act (CEQA) and the city’s environmental review procedures.

As contained in Resolution ____, a MND and MMRP were prepared and incorporated into the Project. The City Council finds that the MMRP will mitigate or avoid potential significant impacts created by the Project. The MND was circulated for public review from August 3, 2023 to August 23, 2023, and considered prior to consideration of the Project and Amendments.

SECTION 4
The City Council hereby amends the Land Use Element of the Fountain Valley General Plan for an approximate 2.1-acre property located at 17103 Magnolia Street from General Commercial to High Density Residential for the development of the Project as set forth in “Exhibit B”, and attached hereto.

SECTION 5
The City Clerk is hereby authorized to make the documents adopting or amending the plan, including the diagrams and text, available to the public for inspection per Government Code Section 65357.

PASSED, APPROVED AND ADOPTED THIS 19TH DAY OF DECEMBER, 2023.

ATTEST:

Rick Miller, City Clerk Glenn Grandis, Mayor

APPROVED AS TO FORM

HARPER & BURNS LLP
_____
Attorneys for the City
City of Fountain Valley
ATTACHED: “EXHIBIT A”
“EXHIBIT B”

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Exhibit A
Legal Description
The Land referred to herein below is situated in the City of Fountain Valley, County of Orange, State of California, and is described as follows:

PARCEL A:

PARCEL 1 AS SHOWN ON A MAP FILED IN BOOK 185, PAGES 32 TO 34 INCLUSIVE OF

PARCEL MAPS IN THE OFFICE OF THE COUNTY RECORDER OF ORANGE COUNTY, CALIFORNIA.

EXCEPT THEREFROM AN UNDIVIDED ONE-HALF INTEREST IN AND TO ALL OIL, GAS

AND OTHER HYDROCARBON SUBSTANCES AND MINERALS IN AND UNDER SAID LAND, AS RESERVED IN THE DEED FROM HOLMES LOAN & REALTY CO., TO JOE ISHIL AND OTHERS, RECORDED OCTOBER 1, 1941 IN BOOK 1112, PAGE 224 OF OFFICIAL RECORDS.

BY DEEDS RECORDED APRIL 11, 1961 IN BOOK 5685, PAGE 807 OF OFFICIAL RECORDS, AND IN BOOK 5685, PAGE 812 OF OFFICIAL RECORDS, ALL OIL, MINERALS AND OTHER HYDROCARBONS ABOVE A DEPTH OF 500 FEET FROM THE SURFACE OF SAID LAND, WERE QUITCLAIMED TO THE OWNERS OF RECORD.

BY QUITCLAIM DEEDS RECORDED JANUARY 28, 1988 AS INSTRUMENT NO. 88-040501 AND 88-040502 AND JUDGMENT BY COURT AFTER DEFAULT AND FINAL ORDER OF CONDEMNATION RECORDED APRIL 6, 1989 AS INSTRUMENT NO. 89-181685 ALL OF

OFFICIAL RECORDS, ALL RIGHTS OF SURFACE ENTRY WERE QUITCLAIMED TO THE OWNER OF RECORD.

PARCEL B:

AN EASEMENT FOR TRASH COLLECTION PURPOSES RECORDED APRIL 12, 1988 AS INSTRUMENT NO. 88-165632 OF OFFICIAL RECORDS OVER THE SOUTHERLY 25 FEET OF PARCEL 2 AS SHOWN ON PARCEL MAP NO. 82-431 FILED IN BOOK 185, PAGES 32 TO 34 INCLUSIVE OF PARCEL MAPS IN THE OFFICE OF THE COUNTY RECORDER OF ORANGE COUNTY, CALIFORNIA.

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Exhibit B
Existing General Plan Land Use Designations
General Commercial

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Proposed General Plan Land Use Designations
High Density Residential

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ORDINANCE NO.__________

AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF FOUNTAIN VALLEY APPROVING ZONING MAP AMENDMENT NO. 435 TO CHANGE THE ZONING MAP DESIGNATION FROM C1 – LOCAL BUSINESS TO R4 –

HIGH DENSITY MULTIPLE DWELLING FOR THE PROPERTY LOCATED AT 17103 MAGNOLIA STREET
WHEREAS, Irwin Partners Architects (“Applicant”), on behalf of Our Lady of Guadalupe, has submitted a request to construct 29 low-income senior independent living units in a new 18,039 square foot two-story building on the 2.1 acre site currently occupied by Our Lady of Guadalupe located at 17103 Magnolia Street (“Project”); and WHEREAS, Our Lady of Guadalupe, a California nonprofit public benefit corporation (“Owner” or “OLG”), is the owner of the Site at 17103 Magnolia Street (APN # 167-391-24), which is formally described in the legal description attached hereto as “Exhibit A” (“Site”); and WHEREAS, the existing senior housing units on the Site were approved through Conditional Use Permit 757 in 1985 for housing units for the elderly in the C1 zone and, while the housing units are legal, they are non-conforming with the current Zoning Code; and WHEREAS, the current Zoning Code allows for senior affordable housing units to be constructed only in residential zones; and
WHERAS, therefore, the applicant has submitted an application for a General Plan Amendment and Zoning Map Amendment so the existing and proposed project, which are located on the same parcel, will conform with the General Plan and Zoning Code; and WHEREAS the Project includes the following applications in accordance with the Fountain Valley Municipal Code (FVMC):
 Per FVMC 21.34, a General Plan Amendment is required for a change in land use designation from General Commercial to High Density Residential for the approximate 2.1-acre Project Site.
 Per FVMC 21.34, a Zoning Map Amendment is required to rezone the Site from C1 – Local Business to R4 – High Density Multiple Dwelling.  Per FVMC Chapter 21.44, a Precise Plan is required for the development of any proposed structures in the City, except for structures in the R1 zoning district.  Acknowledgement and Approval of a Density Bonus and Affordable Housing Agreement (“DBAHA”) for the Project.
 Approval of a Mitigated Negative Declaration (MND) and Mitigation Monitoring and Reporting Plan (MMRP) to address the environmental impacts associated with the Project.

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WHERAS, the 2021-2029 Housing Element, approved through Resolution No. 9853 by the City Council on October 4, 2022 and certified by the State Housing Community Development Department (“HCD”) on October 13, 2022, lists the real property located at 17103 Magnolia Street, Fountain Valley (“Site”) as an opportunity site to meet the City’s Regional Housing Needs Assessment (RHNA) allocation of 4,839 units. The Housing Element identifies the Site as a Pipeline Project in “Figure H-1 Housing Sites Inventory” and “Table H-22 Housing Sites Inventory” with 29 additional low income units and anticipated the Land Use designation of the General Plan for the Site would change to High Density Residential; and
WHEREAS, the Zoning Map Amendment would change the Zoning Map designation from C1 – Local Business to R4 – High Density Multiple Dwelling as shown in “Exhibit B” to align with the change in the General Plan Map land use designation; and WHEREAS, the City has complied with the requirements of the Government Code Section 65300 et seq., the current State of California General Plan Guidelines, and the City’s applicable ordinances with respect to review and consideration of the proposed Project, including the General Plan and Zoning map amendments (together “Amendments”); and WHEREAS, per the California Environmental Quality Act (CEQA), the Fountain Valley Planning Commission first considered the accompanying Mitigated Negative Declaration (MND) and Mitigation Monitoring and Reporting Plan (MMRP) prepared for the Project in a separate action, as contained in Resolution 23-19, at its noticed public hearing on October 11, 2023; and
WHEREAS, the Planning Commission also considered Precise Plan 570 in a separate action, as contained in Resolution 23-20, at its noticed public hearing on October 11, 2023; and
WHEREAS, the Fountain Valley Planning Commission also considered the Amendments at its noticed public hearing on October 11, 2023; and WHEREAS, per the California Environmental Quality Act (CEQA), the Fountain Valley Planning Commission recommended the City Council approve the accompanying MND and MMRP prepared for the Project in a separate action, as contained in Resolution 23-19, by a vote of 5-0 at its noticed public hearing on October 11, 2023; and WHERAS, the Planning Commission considered and recommended the City Council approve General Plan Amendment 22-01 and Zoning Map Amendment 435 as contained in Resolution No.23-21 by a vote of 5-0 at its noticed public hearing on October 11, 2023; and WHEREAS, the Planning Commission approved Precise Plan 570 in a separate action, as contained in Resolution 23-20, by a vote of 5-0 at its noticed public hearing on October 11, 2023, contingent upon City Council approval of General Plan Amendment 22-01, Zoning Map Amendment 435, and the MND and MMRP; and
WHEREAS, the City Council considered the Project and Amendments at its noticed public hearing on December 19, 2023; and
WHEREAS, per the California Environmental Quality Act (CEQA), the City Council

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of the City of Fountain Valley first considered the accompanying MND and MMRP prepared for the Project in a separate action, as contained in Resolution No. ____, at its noticed public hearing on December 19, 2023; and
WHEREAS, the City Council considered Zoning Map Amendment 435, an amendment that would change the zoning map designation from C1 – Local Business to R4 – High Density Multiple Dwelling to allow for the development of the Project as shown in ”Exhibit B” attached to this Resolution, at its noticed public hearing on December 19, 2023; and
WHEREAS, the proposed Zoning Map Amendment No. 435 has been publicly noticed in accordance with State Law and the Fountain Valley Municipal Code; and NOW, THEREFORE, the City Council of the City of Fountain Valley does ordain as follows:

SECTION 2
Prior to consideration of the Project and Amendments as contained in Resolution No’s ____ and ____ and Ordinance No. ____, the City Council found that the Project and Amendments would not have a significant adverse effect upon the environment and recommended approval of the MND and MMRP prepared for the Project. The City Council further found that the MMRP will ensure compliance during project implementation in that changes to the Project and/or mitigation measures have been incorporated into the Project and are fully enforceable through permit conditions, agreements, or other measures as required by Public Resources Code Section 21081.6.

The MND was circulated for public review from August 3, 20223 to August 23, 2023, and made available to the public and the City Council for review and consideration. The City Council has reviewed the MND, together will all comments and responses to those comments, and MMRP, and has found that the environmental document considers all environmental effects of the proposed Project, is complete and adequate, and fully complies with all requirements of CEQA and the CEQA Guidelines.

SECTION 3
Pursuant to Fountain Valley Municipal Code section 21.34.050 the City Council does hereby find as follows:

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The proposed Amendments (General Plan Amendment 22-01 and Zoning Map Amendment 435) will be internally consistent with each other and will provide for the orderly grown of the Project. The Amendments would not create any inconsistencies with the General Plan or within the Municipal Code with the approval of a density bonus to bring the density to 47.6 units/acre. The Amendments support the implementation of various General Plan goals and policies. Specifically, the Amendments will:
 Promote residential, commercial and industrial development which achieves harmony without monotony in the built environment (Goal 2.6, Policy 2.6.1). The project will accommodate harmonious and attractive architectural design consisting with the existing building on the property. The Amendments will facilitate the development of new housing stock that is similar in layout, separation, design, height, and style to nearby high-density development.  Promote and encourage the development of a variety of housing opportunities to accommodate current and projected households by promoting the construction of additional dwelling units to accommodate Fountain Valley’s share of regional housing needs in accordance with adopted land use policies (Housing Element Goal 1, Policy 1.1). The Amendments will help aid in meeting the City’s regional housing needs assessment of 4,839 units by the year 2029 in accordance with adopted land use policies and the draft 6th Cycle Housing Element.
 Promote and encourage the development of a variety of housing opportunities to accommodate current and projected households by providing a variety of housing opportunities for all income levels through different land uses and densities (Housing Element Goal 1, Policy 1.2). The Amendments will allow for development that may utilize density bonus options pursuant to State Density Bonus Law consistent with Government Code Sections 65915-65918 including incentives such as concessions and waivers if 100 percent of the units are restricted as affordable benefiting low income persons as defined in the California Health and Safety Code.

2. The proposed amendments would not be detrimental to the public convenience, health, interest, safety or welfare of the city.

The proposed Amendments would accommodate affordable senior housing residential development. Such development will be beneficial to the public convenience, interest, and welfare by providing new housing, including affordable units, in an urbanized area. The project contains no features that could be detrimental to public health or safety. The Project meets Building and Fire Code requirements and will maintain an emergency access to the shopping center property to the north. The Project will provide gathering places for residents with open space consisting of a 713 square foot pet area, a 591 square foot walking path, 2 patios outside of the recreation

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room of 172 square feet and 495 square feet and a 421 square foot patio near the entry of the new building.

3. The proposed project has been reviewed in compliance with the provisions of the California Environmental Quality Act (CEQA) and the city’s environmental review procedures.

4. Additional Finding for Zoning Map Amendments. The site(s) is/are physically suitable (including access, provision of utilities, compatibility with adjoining land uses and absence of physical constraints) for the requested zoning designation(s) and anticipated land use development(s).

The site is appropriate to accommodate the Project with the proposed Zoning Map Amendment. As detailed in the Staff Report for the Project, the Project is of an appropriate size (approximately 2.1 acres) and is adequately designed to accommodate a new 18,039 square foot two-story building with 29 low-income senior independent living units along with the 71 existing units on the property with the approval of a density bonus to bring the project site density to 47.6 units/acre. The project site is located within an urbanized area, with direct access to a fully improved roadway of Magnolia Street having the capacity to serve the project. Utilities are in place and will be improved as needed to accommodate the project. Although the adjacent land uses are different (single-family residential zoned to the south and west with commercial zoned to the north), the proposed project will act as a buffer between the two zones, thus producing a progression of compatibility and density between the uses. The project has been designed around the existing physical constraint of a 10 foot wide sewer easement – therefore there are no physical constraints to the proposed development.

SECTION 4
The City Council finds that the amendment noted in Zoning Map Amendment No. 435 as set forth in “Exhibit B”, and attached hereto is consistent with the Fountain Valley Municipal Code, as well as the Fountain Valley General Plan.

SECTION 5
If any section, subsection, sentence, clause or phrase of this ordinance is for any reason held to be invalid or unconstitutional by a decision of any court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of the ordinance. The City Council declares that it would have passed this ordinance and each and every section, subsection, sentence, clause or phrase not declared invalid or unconstitutional without regard to whether any portion of the ordinance would subsequently be declared invalid or unconstitutional.

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SECTION 6
The City Clerk shall certify to the adoption of this ordinance and cause it to be published as required by law. This ordinance shall become effective thirty (30) days after the date of its adoption.

PASSED, APPROVED AND ADOPTED THIS ___ DAY OF ______, 2021.

ATTEST:
____________________________
Glenn Grandis, Mayor
Rick Miller, City Clerk

APPROVED AS TO FORM

HARPER & BURNS LLP
_________________________________
Attorneys for the City
City of Fountain Valley
ATTACHED: “EXHIBIT A”
“EXHIBIT B”

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Exhibit A
Legal Description
The Land referred to herein below is situated in the City of Fountain Valley, County of Orange, State of California, and is described as follows:

PARCEL A:

PARCEL 1 AS SHOWN ON A MAP FILED IN BOOK 185, PAGES 32 TO 34 INCLUSIVE OF

PARCEL MAPS IN THE OFFICE OF THE COUNTY RECORDER OF ORANGE COUNTY, CALIFORNIA.

EXCEPT THEREFROM AN UNDIVIDED ONE-HALF INTEREST IN AND TO ALL OIL, GAS

BY QUITCLAIM DEEDS RECORDED JANUARY 28, 1988 AS INSTRUMENT NO. 88- 040501 AND 88-040502 AND JUDGMENT BY COURT AFTER DEFAULT AND FINAL ORDER OF CONDEMNATION RECORDED APRIL 6, 1989 AS INSTRUMENT NO. 89- 181685 ALL OF OFFICIAL RECORDS, ALL RIGHTS OF SURFACE ENTRY WERE QUITCLAIMED TO THE OWNER OF RECORD.

PARCEL B:

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Exhibit B
Existing Zoning Designation
C1 – Local Business

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Proposed Zoning Designation
R4 – High Density Multiple Dwelling

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RESOLUTION NO.________

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF

FOUNTAIN VALLEY APPROVING THE DENSITY BONUS AND
AFFORDABLE HOUSING AGREEMENT (17103 MAGNOLIA STREET,

FOUNTAIN VALLEY) BETWEEN THE CITY AND OUR LADY OF
GUADALUPE RELATED TO THE 29-UNIT DEVELOPMENT PROJECT
LOCATED AT 17103 MAGNOLIA STREET
WHEREAS, the City of Fountain Valley (“City”) is a California municipal corporation; and
WHEREAS, the City of Fountain Valley Planning Commission (“Planning Commission”) acts in accordance with the ordinances of the City and laws of the State of California (“State”) and thereby is authorized to make recommendations to the City Council and in certain instances to take final action with regard to certain land use decisions and approvals for development within the City; and WHEREAS, the Fountain Valley General Plan Update was approved by the City Council on March 21, 1995 through Resolution No. 8637; and WHEREAS, the City is obligated by State law and the Housing Element of the General Plan to plan for the community’s supply of low to moderate income housing to meet the City’s objectives to achieve its Regional Housing Needs Allocation (“RHNA”); and WHEREAS, in furtherance of the objectives of the Housing Element of the General Plan, the City has affirmed their intention to improve and increase the community’s supply of multi-family affordable housing available at an affordable rent and affordable housing cost and covenanted for the longest feasible period; and
WHEREAS, Our Lady of Guadalupe (“Developer” or “Owner”) is the owner of certain real property (2.1-acres) located at 17103 Magnolia Street (APN No 167-391-24) (“Site”), and the legal description of the Site is Attachment No. 2 to that certain Density Bonus and Affordable Housing Agreement (17103 Magnolia Street, Fountain Valley) (“DBAHA”) attached to and presented with this agenda item; and
WHEREAS, capitalized terms used in this Resolution are as defined in the DBAHA unless otherwise defined herein; and
WHEREAS, the Planning Commission on October 11, 2023, approved Developer’s application for land use entitlements to construct, develop and operate on the Site a 29-unit Senior Citizen Low Income independent living development in a new 18,039 square foot two-story building on the Site, as an expansion and new development on the Site paired with the existing 71-unit development (together, “Project”); and WHEREAS the land use entitlements approved for the Project include the following actions approved in accordance with the Fountain Valley Municipal Code (FVMC) and applicable State laws:

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 Per FVMC 21.34, the City Council approved a General Plan Amendment 22-01 for a change in land use designation of the Site from General Commercial to High Density Residential.
 Per FVMC 21.34, the City Council approved a Zoning Map Amendment 435 that rezoned the Site from C1 -Local Business to R4 – High Density Multiple Dwelling.  Per FVMC Chapter 21.44, by Resolution 23-20 the Planning Commission approved Precise Plan No. 570 required for the development of the structures that comprise the Project, which is contingent upon the City Council’s approval of the land use entitlement described above and approval to execute and enter into the DBAHA to obtain the requested density pursuant to the California Density Bonus Law, Government Code Section 65915, et seq. and Fountain Valley Municipal Code (FVMC), Chapter 21.08.050(a), (together, “DBL”).  Condition of Approval No. 30 of Planning Commission Resolution No. 23-20 requires the City and Developer to enter into the DBAHA as a condition precedent to the issuance of grading permits for the Project.  The City Council approved a Mitigated Negative Declaration (MND) and Mitigation Monitoring and Reporting Plan (MMRP) to address the environmental impacts associated with this Project.

WHEREAS, pursuant to the DBL, owners of residential projects that include certain levels of affordable housing are entitled to apply for and receive a density bonus and additional incentives/concessions in order to facilitate the economic feasibility of those projects; and
WHEREAS, the Developer, through its agent as Applicant, has submitted an application to the City evidencing its intention to reserve 100 percent of its base units as affordable to Low Income Households earning less than 80 percent of the Orange County area median income (“AMI”), which equates to a total of 29 on-site Affordable Units for occupancy by Low Income Households at an Affordable Rent for the 55-year Affordability Period; and
WHEREAS, by providing 100 percent of its base units as affordable, the Project will exercise an 80 percent (i.e., 50-unit) density bonus option pursuant to the DBL; and, although the DBL allows for a 50 unit density bonus, Developer elected, applied for and received approval to construct only 37 density bonus units for a density bonus of

58.8 percent; and
WHEREAS, the DBL allows the City to approve four incentives/concession for the Project because the Developer agrees to include 29 Affordable Units in the Project as restricted for occupancy by Low Income Households at an Affordable Rent for the Affordability Period, including the following incentives/concessions as granted by the City:
 Incentive/Concession #1 – An increase in the density of the Project Site from the maximum density of 30 du/ac as outlined in FVMC 21.08.040 to 47.6 du/ac.

The current density of the Project Site with 71 existing units is 33.8 du/ac.

With the addition of the proposed building, 29 units will be added to the Site.

This will bring the density of the Project Site up to 47.6 du/ac. The Applicant’s

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request is for a density bonus to accommodate 100 units (71 existing and 29 new) on the 2.1 acre property.
 Incentive/Concession #2 – A decrease in the minimum separation requirement between residential structures of 27.5 feet as outlined in FVMC 21.08.040 to 20 feet. The Applicant is unable to meet the required 27.5 feet requirement because doing so would reduce the number of units in the building as well as reduce the parking count. In order to meet the requirement, the building would need to shift 7.5 ft. This would put the building directly over the existing sewer easement as well as on top the sidewalk serving the parking along the west side of the building. It would also put the building too close to the trash enclosure and would require shifting the proposed building and parking lot locations putting the proposed building closer to the adjacent single-family homes to the west, thus making the Project incompatible with adjacent properties.  Incentive/Concession #3 – A decrease in the minimum required floor area for studio and 1-bedroom units from the code requirement of 500 square feet for a studio and 750 square feet for a 1-bedroom unit as outlined in FVMC 21.08.040 to 378 and 422 square feet for studio units and 556 square feet for 1-bedroom units. The Project is affordable senior housing and meets the CBC 11B requirements within the units. The size of the units also allows for 29 units constructed on the Site. If the units were revised to meet the requirements set forth by the Fountain Valley Municipal Code, then the number of units added would be reduced thus hindering the Projects economic feasibility.  Incentive/Concession #4 – A decrease in the required amount of private open space from the FVMC that requires 100 square feet of private open space per unit pursuant to FVMC 21.08.040 to zero square feet of private open space per unit. Due to the size of the overall size and configuration of the Site and the existing conditions, the Applicant is unable to meet the private open space requirement. To revise the building to meet the private open safe requirement, the size of the units will need to increase. This increase in unit size would reduce the number of units in the building as well as reduce the parking count.

The residents, however, will have access to other outdoor amenities on the Site.

These outdoor amenities include a pet area (713 sf), walking path (Length: 117’ & Area: 591 sf), two patios outside of the recreation room (172 sf & 495 sf), and a patio by the entry of the new building (421 sf). Residents of the new building will also have access to the amenities in the existing building. The amenities include a lounge/library (294 sf) and recreation rooms (1,222 sf and 603 sf) on the first floor and a TV/Game Room (399 sf) on the second floor; and WHEREAS, the DBAHA establishes the terms and conditions of Developer’s design, planning, construction, operation, management and maintenance of the Project on the Site and requires Developer to comply with all Conditions of Approval set forth in Precise Plan No. 570 (Resolution 23-20) approving development of the Project; and WHEREAS, the salient provisions of the DBAHA include: (1) the terms, conditions, and performance obligations of the parties to carry out the planning, design, construction, and operation of the affordable housing component of the Project in compliance with

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Precise Plan No. 570 and the DBAHA; (2) establish the senior, nonsubordinate City Covenants as required by the Entitlement and the DBAHA, (3) terms and conditions of the covenants and restrictions for the Affordable Units during the Affordability Period, and the property management and maintenance obligations related to ownership and operation of the Project; and (4) Developer’s rights and obligations with regard to construction, completion and operation of the Project on the Site; and WHEREAS, under the DBAHA, the Project is required to be covenanted for tenancy and occupancy by Senior Low Income Households and the Prescribed Rent Level and Unit Mix at the Project include:
• Low Income Units at an Affordable Rent: Total of 29 Affordable Units with (a) fifteen (15) studio units and (b) fourteen (14) 1-bedroom units.

WHEREAS, the approval and implementation of the DBAHA will meet all of the criteria of the DBL and related affordable housing laws and regulations; and WHEREAS, this DBAHA has been duly processed in accordance with the DBL and City rules and regulations; and
WHEREAS, the City Council on December 19, 2023 considered the DBAHA; and WHEREAS, the City Council intends by this Resolution to approve the DBAHA.

NOW, THEREFORE, the City Council of the City of Fountain Valley, DOES HEREBY RESOLVE as follows:

SECTION 1
Per the California Environmental Quality Act (CEQA), the City prepared an environmental document consisting of the Initial Study, MND, and a MMRP. The MND was distributed for a 20-day public review pursuant to State CEQA Guidelines Section 15105(b) on August 3, 2023 to August 23, 2023. During the 20-day comment period, the City did not receive any comment letters. The MND determined that the Project may have a potential significant effect on the environment and the mitigation measures imposed as conditions of approval on the Project avoid or mitigate any potential significant effects on the environment to a point below the threshold of significance.

SECTION 2
The City Council hereby finds:
a. The DBAHA implements the DBL and will be in the best interest of the City. (i) The DBAHA will reserve 100 percent of its base units as affordable to Low Income Households earning less than 80 percent of the County median income. This equates to a total of 29 on-site Affordable Units for occupancy by Low Income Households at an Affordable Rent to help meet the City’s RHNA allocation of 4,839 units. By providing 100 percent of its base units as affordable, the Project will exercise an 80 percent (i.e., 50 unit) density bonus option

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pursuant to the DBL. Although the DBL allows for a 50 unit density bonus, the Developer elected and the City approved only 37 density bonus units for a density bonus of 58.8 percent. Also, pursuant to the DBL, owners of residential projects that include certain levels of affordable housing are entitled to apply for and receive a density bonus and additional incentives in order to facilitate the economic feasibility of those projects. Annual monitoring will be conducted by the City, per the DBAHA, to confirm the Affordable Units remain in compliance.

Identification of Affordable Units shall be provided to the City prior to building permit issuance to ensure the Affordable Units will be spread throughout the development.
b. The DBAHA is consistent with the actions, goals, objectives and policies of General Plan, any applicable specific plan, and the FVMC. (i) The DBAHA will promote the construction of additional dwelling units to help accommodate Fountain Valley’s share of regional housing needs in accordance with adopted land use policies (Housing Element Goal 1, Policy 1.1).

The Amendments will help aid in meeting the City’s Regional Housing Needs Allocation (RHNA) of 4,839 units by the year 2029 in accordance with adopted land use policies and the draft 6th Cycle Housing Element. Also, the DBAHA will also promote and encourage the development of a variety of housing opportunities to accommodate current and projected households by providing a variety of housing opportunities for all income levels through different land uses and densities (Housing Element Goal 1, Policy 1.2). The Amendments will allow for development that may utilize density bonus options pursuant to State Density Bonus Law consistent with Government Code Sections 65915-65918 including incentives such as incentives/concessions if 100 percent of the units are restricted as affordable benefiting Low Income persons as defined in the California Health and Safety Code.
c. The DBAHA will promote the public convenience, health, interest, safety or welfare of the City.

SECTION 3
The City Manager (or her authorized representative) and the City’s legal counsel are authorized to finalize and execute the DBAHA on behalf of the City and approve and execute any necessary related additional documents and/or amendments. The final form of the DBAHA, when duly executed and attested, shall be placed on file in the office of the City Clerk and a complete copy shall be attached as a part of this Resolution. Further, the City Manager (or her authorized representative) is authorized to implement the DBAHA and take all further actions and execute all documents referenced therein, and/or necessary and appropriate to carry out the DBAHA and development of the Project. The City Manager (or her authorized representative) in consultation with legal counsel is authorized to the extent necessary during the implementation of the DBAHA to make technical or minor changes and interpretations thereto after execution, as necessary to properly implement and carry out the DBAHA, provided any and all such changes shall not in any manner materially affect the rights and obligations of the City thereunder.

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SECTION 4
The DBAHA incorporates the following conditions:
a. The DBAHA shall be approved by the City prior to issuance of grading permits. b. Prior to the issuance of any residential building permits, all implementing forms of the DBAHA shall be duly executed, and as applicable, recorded in the Official Records, County of Orange, State of California. c. Within 60 days of the adoption of this Resolution, or such earlier time as provided in the DBAHA, or the Memorandum of Agreement, Attachment No. 3 to the DBAHA, shall be recorded in the Official Records, County of Orange, State of California.

SECTION 5
The City Council hereby approves the Density Bonus and Affordable Housing Agreement (17103 Magnolia Street, Fountain Valley), in the form of Exhibit A.

SECTION 6
The City Clerk shall certify to the adoption of this Resolution.

THE FOREGOING RESOLUTION IS PASSED, APPROVED AND ADOPTED BY THE CITY COUNCIL THIS NINETEENTH (19TH) DAY OF DECEMBER 2023 BY THE FOLLOWING ROLL CALL VOTE:

AYES:

NOES:

ABSTAIN:

ABSENT:

CITY OF FOUNTAIN VALLEY
By:

Glenn Grandis, Mayor
ATTEST:

Rick Miller, City Clerk
APPROVED AS TO FORM:

City Legal Counsel

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“Exhibit A”
4872-0641-0356v5/200348-0010

DENSITY BONUS AND

AFFORDABLE HOUSING AGREEMENT
(17103 Magnolia Street, Fountain Valley)
by and between

CITY OF FOUNTAIN VALLEY
and

OUR LADY OF GUADALUPE

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TABLE OF CONTENTS
Page
i
4872-0641-0356v5/200348-0010
Section 1. DEFINITIONS AND INTERPRETATION..................................................................5

1.1. Defined Terms ...............................................................................................................5

1.2. Singular and Plural Terms ...........................................................................................13

1.3. References and Other Terms .......................................................................................13

1.4. Exhibits Incorporated ..................................................................................................14

1.5. Representations and Warranties ..................................................................................14

1.5.1. City Representations .......................................................................................14

1.5.2. Developer Representations..............................................................................14

1.5.3. No Material Adverse Change..........................................................................15

1.5.4. Survival of Representations ............................................................................15 Section 2. SITE CONTROL.........................................................................................................16

2.1. Ownership of the Site; Obligation to Develop and Operate........................................16

2.2. Environmental Condition of the Site ...........................................................................16

2.2.1. Studies and Reports.........................................................................................16

2.2.2. Indemnification ...............................................................................................16

2.2.3. Duty to Prevent Hazardous Material Contamination......................................17

2.2.4. Release of Indemnitees ...................................................................................17

2.2.5. Environmental Inquiries..................................................................................18 Section 3. CONDITIONS PRECEDENT TO COMMENCEMENT OF
CONSTRUCTION OF THE PROJECT ..................................................................................19

3.1. Conditions Precedent in Favor of City ........................................................................19

3.2. Payment of Certain Fees at Certificate of Occupancy.................................................20

3.3. Review of Title ............................................................................................................21

3.3.1. Preliminary Report..........................................................................................21

3.4. Recordation..................................................................................................................22 Section 4. DEVELOPMENT PLANS; INSURANCE AND INDEMNITY,
FINANCING............................................................................................................................22

4.1. Development................................................................................................................22

4.1.1. Site Preparation ...............................................................................................22

4.2. Design Review; Development Plans for Project .........................................................22

4.2.1. Grading Plans..................................................................................................23

4.2.2. Landscaping Plans...........................................................................................23

4.2.3. Construction Drawings ...................................................................................23

4.2.4. Development Plans; Review and Approval ....................................................23

4.2.5. Revisions.........................................................................................................23

4.2.6. Defects in Development Plans ........................................................................23

4.2.7. City and Other Governmental Permits............................................................24

4.2.8. Cooperation re Development Plans; Revisions and Change Orders...............24

4.2.9. Periodic Submittals to City during Construction ............................................25

4.2.10. Selection of General Contractor......................................................................25

4.3. Cost of Construction; Performance under other Agreements......................................25

4.4. Insurance Requirements ..............................................................................................25

4.4.1. Insurance Coverage from Commencement of Construction through the term of the Affordability Period................................................................25

4.4.2. Policy Provisions.............................................................................................26

4.4.3. Insurance Requirements of Contractors and Subcontractors ..........................27

4.4.4. Reduction in Requirements.............................................................................28

4.4.5. Waiver of Subrogation ....................................................................................28

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TABLE OF CONTENTS (continued)
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4.5. Indemnity.....................................................................................................................28

4.6. Rights of Access ..........................................................................................................29

4.7. Compliance with Laws ................................................................................................29

4.8. Nondiscrimination in Employment .............................................................................29

4.9. Taxes and Assessments ...............................................................................................29

4.10. Liens and Stop Notices ................................................................................................29

4.11. Further Assurances ......................................................................................................30

4.11.1. By Developer ..................................................................................................30

4.11.2. By City ............................................................................................................30

4.11.3. Mortgages, Deeds of Trust for the Project......................................................30

4.11.4. Holder Not Obligated to Construct Improvements .........................................30

4.11.5. Notice of Default to Mortgagee or Deed of Trust Holders; Right to Cure.................................................................................................................30 Section 5. COVENANTS AND RESTRICTIONS ......................................................................31

5.1. Use Covenants .............................................................................................................31

5.2. Affordable Housing Requirements..............................................................................31

5.2.1. Number of Affordable Units ...........................................................................31

5.2.2. Duration of Affordability Requirements.........................................................31

5.2.3. Selection of Tenants........................................................................................32

5.2.4. Income of Tenants...........................................................................................32

5.2.5. Determination of Affordable Rent for the Affordable Units ..........................32

5.2.6. Increases in Tenant Household Income ..........................................................33

5.2.7. Household Size Appropriate to an Affordable Unit........................................33

5.3. Verifications ................................................................................................................33

5.3.1. Income Verification ........................................................................................33

5.3.2. Annual Reports ...............................................................................................34

5.4. Maintenance of Site .....................................................................................................34

5.4.1. Maintenance Standards ...................................................................................34

5.4.2. Notice re Non-Compliance .............................................................................35

5.4.3. Program Maintenance .....................................................................................36

5.4.4. Occupancy Limits ...........................................................................................36

5.5. Nondiscrimination Covenants .....................................................................................36

5.5.1. Required Clauses.............................................................................................37

5.6. Management of the Project..........................................................................................37

5.6.1. Property Manager............................................................................................37

5.6.2. Property Management Plan.............................................................................38

5.6.3. Gross Mismanagement....................................................................................38

5.6.4. Code Enforcement...........................................................................................40

5.7. Capital Reserve Requirements.....................................................................................40

5.8. Effect of Violation of the Terms and Provisions of this Agreement after CoO Issued ...........................................................................................................................41 Section 6. DEVELOPER’S GENERAL REPRESENTATIONS AND WARRANTIES............41

6.1. Formation, Qualification and Compliance ..................................................................41

6.2. Execution and Performance of Project Documents.....................................................42 Section 7. DEFAULTS, REMEDIES, AND TERMINATION ...................................................42

7.1. Default Remedies ........................................................................................................42

7.2. Institution of Legal Actions.........................................................................................42

7.3. Acceptance of Service of Process................................................................................42

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TABLE OF CONTENTS (continued)
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7.4. Rights and Remedies Are Cumulative.........................................................................43

7.5. Inaction Not a Waiver of Default ................................................................................43

7.6. Applicable Law............................................................................................................43

7.7. Enforced Delay; Extension of Times of Performance.................................................43

7.8. Transfers ......................................................................................................................43

7.8.1. General Prohibition of a Transfer without City Consent; Covenant Not to Transfer Except in Conformity ............................................................43

7.8.2. City Consideration of Requested Transfer......................................................44

7.8.3. Permitted Transfers .........................................................................................44

7.9. Successors and Assigns ...............................................................................................45

7.10. Assignment by City .....................................................................................................45

7.11. Non-Liability of Officials and Employees of City ......................................................45

7.12. Relationship between City and Developer ..................................................................45

7.13. City Approvals and Actions ........................................................................................45

7.14. Real Estate Brokers .....................................................................................................45 Section 8. RELOCATION............................................................................................................45

8.1. Developer Responsible for Relocation ........................................................................45

8.2. Indemnification by Developer Relating to Relocation ................................................46

8.2.1. Release ............................................................................................................46 Section 9. MISCELLANEOUS....................................................................................................46

9.1. Obligations Unconditional and Independent ...............................................................46

9.2. Notices .........................................................................................................................47

9.3. No Third Parties Benefited ..........................................................................................47

9.4. Binding Effect; Assignment of Obligations ................................................................47

9.5. Counterparts.................................................................................................................48

9.6. Prior Agreements; Amendments; Consents.................................................................48

9.7. Developer’s Payment and Reimbursement of City’s Third Party Costs .....................48

9.7.1. Third Party Costs Defined; Obligation ...........................................................48

9.7.2. Payment of Third Party Costs .........................................................................48

9.7.3. Exception to Payment of Third Party Costs....................................................49

9.8. Governing Law ............................................................................................................49

9.9. Severability of Provisions............................................................................................49

9.10. Headings ......................................................................................................................49

9.11. Interpretation ...............................................................................................................49

9.12. Conflicts.......................................................................................................................49

9.13. Time of the Essence.....................................................................................................49

9.14. Conflict of Interest.......................................................................................................49

9.15. Warranty against Payment of Consideration ...............................................................49

9.16. Nonliability of City Officials, City Officials and Employees .....................................50

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ATTACHMENTS
iv
4872-0641-0356v5/200348-0010
ATTACHMENT NO. 1 SITE MAP
ATTACHMENT NO. 2 LEGAL DESCRIPTION OF THE SITE
ATTACHMENT NO. 3 MEMORANDUM OF AGREEMENT
ATTACHMENT NO. 4 CITY COVENANTS
ATTACHMENT NO. 5 REQUEST FOR NOTICE OF DEFAULT
ATTACHMENT NO. 6 DEVELOPER CERTIFICATE
ATTACHMENT NO. 7 CERTIFICATE OF CONTINUING PROGRAM COMPLIANCE ATTACHMENT NO. 8 CALCULATION OF AFFORABLE RENT
ATTACHMENT NO. 9 INCOME VERIFICATION

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1 4872-0641-0356v5/200348-0010

DENSITY BONUS AND AFFORDABLE HOUSING AGREEMENT
(17103 Magnolia Street, Fountain Valley)
This DENSITY BONUS AND AFFORDABLE HOUSING AGREEMENT (17103 Magnolia Street, Fountain Valley) (“Agreement” or “DBAHA”)) dated as of ________, 2023 (“Date of Agreement”) is entered into by and between the CITY OF FOUNTAIN VALLEY, a California municipal corporation, and OUR LADY OF GUADALUPE, a California nonprofit public benefit corporation (“Developer”). Capitalized terms used in this Agreement are as defined in Section 1.1 or otherwise stated or referenced herein.

R E C I T A L S
A. Developer is the owner of certain real property, approximately 2.1 acres in size and generally located at 17103 Magnolia Street, Fountain Valley, California (Assessor Parcel No. (APN) 167-391-24) (“Site”), as more particularly described in Attachment No. 2, Legal Description.

B. A Site Map of the Site is attached as Attachment No. 1 and fully incorporated by this reference.

C. A portion of the Site is improved with an existing 71-unit Senior affordable housing development owned and operated by Developer.

D. Developer, through its representative Irwin Partners Architects, submitted an application to the City for a land use entitlement to construct and operate a 29-unit Senior Citizen Low Income independent living development in a new 18,039 square foot two-story building on the Site, as an expansion and new development on the Site paired with the existing 71-unit development (“Project”).

E. The City is obligated by State law and the Housing Element of the General Plan to plan for the community’s supply of low to moderate income housing to meet the City’s objectives to achieve its Regional Housing Needs Assessment (“RHNA”) allocation.

F. The 2021-2029 Housing Element, approved through Resolution No. 9853 by the City Council on October 4, 2022 and certified by the State Housing Community Development Department (“HCD”) on October 13, 2022, lists the Site as an opportunity site to meet the City’s RHNA allocation of 4,839 units. The Housing Element identifies the Site as a Pipeline Project in “Figure H-1 Housing Sites Inventory” and “Table H-22 Housing Sites Inventory” with 29 additional low income units and anticipated the Land Use designation of the General Plan for the Site would change to High Density Residential.

G. In furtherance of the objectives of the Housing Element of the General Plan, the City has affirmed their intention to improve and increase the community’s supply of affordable housing available, both multifamily and senior units, available at an affordable rent and affordable housing cost and covenanted for the longest feasible period.

H. OLG proposes to construct, complete and operate on the Site twenty nine (29) additional, new independent living units for occupancy by Low Income Senior Households, for an

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2 4872-0641-0356v5/200348-0010
onsite total of 100 Senior Low Income covenanted units, all subject to the terms and conditions defined, described, and referenced herein.

I. The full Site currently has a General Plan and zoning designation for commercial use, however as a part of the Project, Developer applied for and the City has approved the rezoning of the Site to R4 high density multiple dwelling paired with a General Plan amendment to High Density Residential.

J. The maximum density in the R4 zone is 30 du/ac, and thereby the existing 71-unit building exceeds that density thus Developer applied to the City for, and the City Council has reviewed and approved, a density bonus to develop the Site at 47.6 du/ac. to allow for a total development on the Site of 100 units, comprised of 71 existing and 29 new Senior units all for occupancy and tenancy by qualified Senior Low Income Households at an Affordable Rent (as the terms are defined herein).

K. By providing 100 percent of its base units as affordable, the Project will exercise a

58.8 percent density bonus option pursuant to the Density Bonus Law, California Government Code Sections 65915, et seq. and the implementing ordinance in the Fountain Valley Municipal Code (“FVMC”) Chapter 21.08.050(a) (together, “DBL”).

L. The Project includes the following land use applications in accordance with the Fountain Valley Municipal Code (FVMC):
• Per FVMC 21.34, a General Plan Amendment is required for a change in land use designation from General Commercial to High Density Residential for the approximate 2.1-acre Project Site.
• Per FVMC 21.34, a Zoning Map Amendment is required to rezone the Site from C1 – Local Business to R4 – High Density Multiple Dwelling.
• Per FVMC Chapter 21.44, a Precise Plan is required for the development of any proposed structures in the City, except for structures in the R1 zoning district. • Acknowledgement and Approval of a Density Bonus and Affordable Housing Agreement (“DBAHA”) for the Project.
• Approval of a Mitigated Negative Declaration (MND) and Mitigation Monitoring and Reporting Plan (MMRP) to address the environmental impacts associated with the Project.

M. This Agreement implements, in party, the conditions of approval including the requirement for the City and Developer to enter into this Agreement that will evidence of record Developer’s intention and obligation to reserve and covenant one hundred percent (100%) of its base units (all 29 new units) for use, tenancy, and occupancy by Senior Citizen Households that qualify as Low Income Households and Lower Income Households that do not exceed eighty percent (80%) of the area median income for Orange County (“AMI”) as the term “Low Income” is defined in California Health and Safety Code (“HSC”) Section 50093 and the term “Lower Income” is defined in HSC Section 50079.5 and California Code of Regulations (“CCR”) Title 25 Section 6928, and at an affordable housing cost and affordable rent as defined and pursuant to HSC Sections 50052.5 and

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3 4872-0641-0356v5/200348-0010
50053 (“Affordable Rent”), the foregoing terms shall apply to the Project and shall be so stated in the conditions of approval for the land use entitlement for the Project and in the DBAHA.

N. Under this Agreement the terms “Senior”, “Senior Citizen” and “Senior Households” are defined as tenant households where at least one (1) person in residence in the unit is sixty-two (62) years of age or older and who resides, or intends to reside, in the unit as her or his primary residence on a permanent basis, and any other person residing in the unit is a “qualified permanent resident” or a “permitted health care resident” as provided in California Civil Code Section 51.3, et seq., or in the Federal Fair Housing Act, 42 U.S.C. Section 3607, and any other applicable federal, state or local laws and regulations governing the use and occupancy of senior housing developments, including the existing OLG development and the new construction Project on the Site.

O. Pursuant to the State DBL and FVMC Chapter 21.08.050(a), owners of residential projects that include certain levels of affordable housing are entitled to apply for and receive a density bonus and additional incentives in order to facilitate the economic feasibility of those projects.

P. The DBL allows four incentives or concessions for the type of development proposed in which a certain number of the “base” units are restricted for Low Income Households. Developer requested and has been granted the following:
• Waiver #1 – An increase in the density of the Project Site from the maximum density of 30 du/ac as outlined in FVMC 21.08.040 to 47.6 du/ac. The current density of the Project Site with 71 existing units is 33.8 du/ac. With the addition of the proposed building, 29 units will be added to the Site. This will bring the density of the Project Site up to 47.6 du/ac. The Applicant’s request is for a density bonus to accommodate 100 units (71 existing and 29 new) on the 2.1 acres property.
• Waiver #2 – A decrease in the minimum separation requirement between residential structures of 27.5 feet as outlined in FVMC 21.08.040 to 20 feet. The Applicant is unable to meet the required 27.5 feet requirement because doing so would reduce the number of units in the building as well as reduce the parking count. In order to meet the requirement, the building would need to shift 7.5 ft. This would put the building directly over the existing sewer easement as well as on top the sidewalk serving the parking along the west side of the building. It would also put the building too close to the trash enclosure and would require shifting the proposed building and parking lot locations putting the proposed building closer to the adjacent singlefamily homes to the west, thus making the Project incompatible with adjacent properties. • Waiver #3 – A decrease in the minimum required floor area for studio and 1-bedroom units from the code requirement of 500 square feet for a studio and 750 square feet for a 1-bedroom unit as outlined in FVMC 21.08.040 to 378 and 422 square feet for studio units and 556 square feet for 1-bedroom units. The project is affordable senior housing and meets the CBC 11B requirements within the units. The size of the units also allows for 29 units to the Site. If the units were revised to meet the requirements set forth by the Fountain Valley Municipal Code, then the number of units added would be reduced thus hindering the Projects economic feasibility.
• Waiver #4 – A decrease in the required amount of private open space from the FVMC that requires 100 square feet of private open space per unit pursuant to FVMC 21.08.040

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to zero square feet of private open space per unit. Due to the size of the overall size and configuration of the Site and the existing conditions, the Applicant is unable to meet the private open space requirement. To revise the building to meet the private open safe requirement, the size of the units will need to increase. This increase in unit size would reduce the number of units in the building as well as reduce the parking count. The residents, however, will have access to other outdoor amenities on the Site. These outdoor amenities include a pet area (713 sf), walking path (Length: 117’ & Area: 591 sf), two patios outside of the recreation room (172 sf & 495 sf), and a patio by the entry of the new building (421 sf). Residents of the new building will also have access to the amenities in the existing building. The amenities include a lounge/library (294 sf) and recreation rooms (1,222 sf and 603 sf) on the first floor and a TV/Game Room (399 sf) on the second floor.

Q. Under the Entitlement, Developer shall enter into this Agreement with the City prior to issuance of grading permits for the Project.

R. Under this Agreement and prior to the issuance of any building permits for the Project, a Memorandum of Agreement, Attachment No. 3 evidencing this DBAHA and the City Covenants, Attachment No.4, both attached hereto and fully incorporated by this reference shall each and both be recorded in the Official Records, County of Orange, State of California (“Official Records”) as senior, non-subordinate covenants running with the land for the 55-year Affordability Period as required by the Entitlement. In no event shall this Agreement or the City Covenants be made junior or subordinate to any other encumbrances, including deeds of trust, or other instruments providing financing, whether construction, permanent, equity or other financing, for the construction, ownership, and/or operation of the Project.

S. The Affordable Units for rental and occupancy by Lower Income tenants at an Affordable Rent shall be dispersed throughout the residential component of the Project, such Affordable Units shall not be segregated or located within a certain area of the development.

Pursuant to the Entitlement, Developer shall identify which housing units will be designated as the Affordable Units prior to issuance of building permits, which will evidence and ensure the Affordable Units will be spread throughout the residential component of the Project.

T. The Unit Mix by bedroom size of the 29 new Affordable Units shall include:
 fifteen (15) studio units; and
 fourteen (14) one-bedroom units.

U. By this Agreement, Developer intends and shall construct, develop, own, manage and maintain the Project, with appurtenant improvements, community facilities, and resident and guest parking, including the twenty-nine (29) Affordable Units for lease and occupancy by Senior Citizen Lower Income Households at an Affordable Rent for the 55-year Affordability Period.

V. The Project is intended to further and implement the City’s goals and objectives under the City’s Housing Element of the General Plan, including without limitation Program Category #1 by promoting and encouraging the development of a variety of housing opportunities to accommodate current and projected households in Fountain Valley, which in this case includes Low Income Senior independent living apartments. The Project meets policies 1.1, 1.2 and 1.3 of Goal #1 by providing housing to assist the City toward meeting its RHNA allocation of 4,839

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residential units and 786 Low income units by the year 2029, provide housing opportunities for an income level based on the proposed housing type and density and has adequate infrastructure and public services to serve the project, respectively.

W. This Agreement is in the vital and best interest of City and the health, safety and welfare of its residents and entire community.

NOW, THEREFORE, for and in consideration of the mutual promises, covenants, and conditions herein contained, City and Developer agree as follows:

Section 1. DEFINITIONS AND INTERPRETATION.

1.1. Defined Terms. As used in this Agreement (and in all other Project Documents, unless otherwise defined), the following capitalized terms shall have the following meanings:
“Affiliate” means any person or entity directly or indirectly, through one or more intermediaries, controlling, controlled by or under common control with Developer, which shall include each of the constituent members of Developer’s limited liability company. The term “control,” as used in the immediately preceding sentence, means, with respect to a person that is a corporation, the right to exercise, directly or indirectly, at least fifty percent (50%) of the voting rights attributable to the shares of the controlled corporation, and, with respect to a person that is not a corporation, the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of the controlled person.
“Affordable Rent” means the monthly housing cost (excluding any supplemental rental assistance from the State of California, the federal government or any other public agency) not in excess of the amount that may be charged by Developer to each and all tenant Senior Citizen Households of the Affordable Units in conformity with the Prescribed Rent Level and not to exceed HSC Sections 50052.5 and 50053 for Lower Income Households. This monthly housing cost means the maximum amount to be charged by Developer and paid by the Lower Income Households occupying the 29 Affordable Units at the Project. Further, the household income for Lower Income Households leasing an Affordable Unit shall not exceed the income standard set forth in HSC Section 50079.5 and Affordable Rent shall not exceed the standard and calculations set forth in HSC Sections 50052.5 and 50053.

In addition, the term Affordable Rent includes the total of monthly payments by the tenants of an Affordable Unit for (a) use and occupancy for an Affordable Unit and facilities associated therewith, (b) any separately charged fees or service charges assessed by Developer that are required of all tenants of the Affordable Units, other than security deposits, (c) a reasonable allowance for utilities not included in (a) or (b) above, including garbage collection, sewer, water, electricity and gas, as determined by regulation of the Orange County Housing City pursuant to 24 CFR Section

5.609 et seq. and (d) possessory interest, taxes or other fees or charges assessed for the use of the Affordable Units and facilities associated therewith by a public or private entity other than Developer.

Affordable Rent for the Lower Income Senior Citizen Household renting an Affordable Unit in the Project generally equates to the product of thirty percent times sixty percent (30% x 60%) of AMI adjusted for household size appropriate for the unit as set forth in HSC Sections 50052.5 and 50053; and, in practice, this necessitates a two-step process. Step 1 is qualification of the tenant

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Senior Citizen Household as Lower Income with gross income at or below eighty percent (80%) of AMI based on the actual size of the household per HSC §50052.5(b)(3); and, Step 2 is the calculation of monthly housing cost/rent based on a presumed household size for the number of bedrooms in the unit.
“Affordability Period” shall mean the duration of this Agreement and the City Covenants, including without limitation the affordable housing requirements that are required by the Entitlement and the DBL. The Affordability Period shall continue until the fifty-fifth (55th) anniversary of the date the issuance of the final certificate of occupancy by the City’s building official for completion of the Project.
“Affordable Unit” and “Affordable Units” means each and all of twenty-nine (29) apartment units required to be developed and operated by Developer as Low Income affordable housing for Senior Citizen Households under this Agreement for the 55-year Affordability Period. “Agreement” means this Density Bonus and Affordable Housing Agreement (17103 Magnolia Street, Fountain Valley) as defined in the first paragraph hereof. “AMI” or “Area Median Income” means area median income for the Orange County metropolitan statistical area as set forth in the HSC.
“Area” means the Orange County Statistical Area, as periodically defined by HUD. “Building Permit” or “Building Permits” shall mean each and all of the building permit(s) issued by the City and required to commence construction of the Project and includes any permit or other approval required by any other public agency with jurisdiction over the Site. “Calculation of Affordable Rent” means Attachment No. 6 to this Agreement. It is the responsibility of Developer to comply with the Entitlement and definitions of Lower Income Household and Affordable Rent for the Senior Citizen Households in occupancy at the Project. “Cal Code Regs” means the California Code of Regulations as such regulations are adopted, amended or repealed by state agencies pursuant to the Administrative Procedure Act (https://oal.ca.gov/publications/ccr/).
“Capital Replacement Reserve” means the greater of (i) a per unit reserve fund for each and all of the Affordable Units, or (ii) such higher per unit or annual amount required by a Lender of Developer, whether for the Affordable Units or all housing units within the Project, which reserve shall be established by Developer and maintained as set forth herein. “Certificate of Occupancy” or “CoO” means the final certificate of occupancy issued by the City’s building official for the Project.
“Certificate of Continuing Program Compliance” means a certificate in the form attached hereto as Attachment No. 8.
“City” means the City of Fountain Valley, California, a municipal corporation and general law city.

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“City Code” or “FVMC” means the Municipal Code of the City of Fountain Valley as may be amended from time to time, and includes, without limitation, the Uniform Codes. “City Covenants” means the City Covenants Agreement evidencing the non-subordinate, senior covenants related to use, ownership, and operation of the Affordable Units at the Site and within the Project for affordable housing purposes as expressly required by and related to the land use/zoning covenants imposed as a part of the conditions of approval of the land use Entitlement for the Site and Project and in compliance with the DBL as entered into between Developer and City which, together with the Memorandum of Agreement, shall be recorded against the Site in a senior, nonsubordinate position; and, the City Covenants shall be substantially in the form of Attachment No. 4 hereto. As provided in the Entitlement, in no event shall the City Covenants be made junior or subordinate to any deed of trust or other documents providing financing for the construction or operation of the Project on the Site or ownership of the Site, or any other lien or encumbrance whatsoever against the Site for the Affordability Period, except as expressly mandated by California statute or federal law.
“City Council” means the City Council of the City of Fountain Valley, California. “City Manager” means the City Manager of the City or her or his designee. “City Monitoring Fee” means a fee to be charged by City annually to defray costs of monitoring the creation and maintenance of the Affordable Units as rental units for occupancy by Lower Income Households at an Affordable Rent throughout the Affordability Period. The City Monitoring Fee shall be $125/Affordable Unit that equates to $3,625 per Year, and shall be payable on the first anniversary of the issuance of the final certificate of occupancy for the Project issued by the City’s building official. The City Monitoring Fee shall thereafter be payable as of each anniversary of the first payment thereof; and, the City Monitoring Fee shall be increased each year on an annual basis thereafter, but each of such annual increases shall not be more than the increase in the Consumer Price Index for the prior Year.
“County” means the County of Orange, California.
“Date of Agreement” means [_____].
“DBL” means California Government Code Section 65915, et seq. and Fountain Valley Municipal Code, Chapter 21.08.050(a) (together as the Density Bonus Law or DBL. “Developer” means Our Lady of Guadalupe, a California nonprofit public benefit corporation, or a permitted successor or assign, as provided below. “Developer Certificate” means a certificate in the form of Attachment No. 6 hereto. “Development Plans” means the Schematic Design Drawings, Design Development Drawings, Grading Plans, Landscape Plans, and Construction Drawings for the Project to be submitted to the City for review and approval pursuant to the Entitlement and this Agreement. “Entitlement” means the land use entitlement and approvals that the City (as applicable, by final action of the City Council, Planning Commission, zoning administrator, or other City board, commission or committee) has approved and granted to Developer for the Project, which comprises all City discretionary actions and any and all conditions of approval related thereto, and any

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amendments, supplements, and modifications thereto, which are set forth in and required by the DBL, City ordinances, resolutions, and related instruments as adopted or otherwise approved by the City and as such entitlement may be hereafter amended, and as summarized in the Recitals of this Agreement (together, “Entitlement”). Prior to the Date of Agreement, the City received from Developer an application for approval of a precise plan and all conditions of approval therefor (“Precise Plan No. 570”) for construction, development, and operation of the Project on the Site. “Environmental Laws” means all laws, ordinances and regulations relating to Hazardous Materials, including, without limitation: the Clean Air Act, as amended, 42 U.S.C. Section 7401, et seq.; the Federal Water Pollution Control Act, as amended, 33 U.S.C. Section 1251 et seq.; the Resource Conservation and Recovery Act of 1976, as amended, 42 U.S.C. Section 6901, et seq.; the Comprehensive Environment Response, Compensation and Liability Act of 1980, as amended (including the Superfund Amendments and Reauthorization Act of 1986, “CERCLA”), 42 U.S.C.

Section 9601, et seq.; the Toxic Substances Control Act, as amended, 15 U.S.C. Section 2601 et seq.; the Occupational Safety and Health Act, as amended, 29 U.S.C. Section 651, the Emergency Planning and Community Right to Know Act of 1986, 42 U.S.C. Section 11001 et seq.; the Mine Safety and Health Act of 1977, as amended, 30 U.S.C. Section 801 et seq.; the Safe Drinking Water Act, as amended, 42 U.S.C. Section 300f et seq.; all comparable state and local laws, laws of other jurisdictions or orders and regulations; and all laws, ordinances, statutes, codes, rules, regulations, orders and decrees of the United States, the State, the County, City, or any other political subdivision in which the Site is located, and of any other political subdivision, agency or instrumentality exercising jurisdiction over City, City, Developer, or the Site. “Escrow Holder” means the holder of the Escrow for the recordation of the Project Documents, which shall be First American Title Company, or another escrow holder mutually acceptable to City and Developer. For this Agreement and to implement the Project, Developer has opened with First American Title Company, Escrow and Title Order No. NCS-1189406-SA1. “Event of Default” and “Default” have the meaning set forth in Section 7.1. “Fannie Mae” means the Federal National Mortgage Association (FNMA) or typically known as Fannie Mae. Developer acknowledges and agrees that in no event shall any loan issued or underwritten or otherwise connected to Fannie Mae (or Freddie Mac) result in the subordination of this Agreement, the Memorandum of Agreement or the City Covenants, which shall remain senior, nonsubordinate encumbrances against the Site and Project. “Freddie Mac” means the Federal Home Loan Mortgage Corporation. Developer acknowledges and agrees that in no event shall any loan issued or underwritten or otherwise connected to Freddie Mac (or Fannie Mae) result in the subordination of this Agreement, the Memorandum of Agreement or the City Covenants, which shall remain senior, nonsubordinate encumbrances against the Site and Project.
“GAAP” means generally accepted accounting practices.
“Governmental Requirements” is defined within the definition of Hazardous Materials, below.
“Hazardous Material” or “Hazardous Materials” means and include any substance, material, or waste which is or becomes regulated by any local governmental authority, including the

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County, Orange County Health Care City, the Regional Water Quality Control Board, the State of California, or the United States Government, including, but not limited to, any material or substance which is: (i) defined as a “hazardous waste,” “acutely hazardous waste,” “restricted hazardous waste,” or “extremely hazardous waste” under Sections 25115, 25117 or 25122.7, or listed pursuant to Section 25140, of the California Health and Safety Code, Division 20, Chapter 6.5 (Hazardous Waste Control Law); (ii) defined as a “hazardous substance” under Section 25316 of the California Health and Safety Code, Division 20, Chapter 6.8 (Carpenter Presley Tanner Hazardous Substance Account Act); (iii) defined as a “hazardous material,” “hazardous substance,” or “hazardous waste” under Section 25501 of the California Health and Safety Code, Division 20, Chapter 6.95 (Hazardous Materials Release Response Plans and Inventory); (iv) defined as a “hazardous substance” under Section 25281 of the California Health and Safety Code, Division 20, Chapter 6.7 (Underground Storage of Hazardous Substances); (v) petroleum; (vi) asbestos and/or asbestos containing materials; (vii) lead based paint or any lead based or lead products; (viii) polychlorinated biphenyls, (ix) designated as a “hazardous substance” pursuant to Section 311 of the Clean Water Act (33 U.S.C. Section 1317); (x) defined as a “hazardous waste” pursuant to Section 1004 of the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq. (42 U.S.C. Section 6903); (xi) Methyl tertiary Butyl Ether; (xii) defined as “hazardous substances” pursuant to Section 101 of the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. Section 9601, et seq. (42 U.S.C. Section 9601); (xiii) any other substance, whether in the form of a solid, liquid, gas or any other form whatsoever, which by any “Governmental Requirements” (as defined herein) either requires special handling in its use, transportation, generation, collection, storage, handling, treatment or disposal, or is defined as “hazardous” or harmful to the environment; and/or (xiv) lead based paint pursuant to and defined in the Lead Based Paint Poisoning Prevention Act, Title X of the 1992 Housing and Community Development Act, 42 U.S.C. § 4800, et seq., specifically §§ 4821–4846, and the implementing regulations thereto. Notwithstanding the foregoing, “Hazardous Materials” shall not include such products in quantities below attainment levels identified in one or more of the enactments identified above as Governmental Requirements, including those product and amounts as are customarily used in the construction, maintenance, rehabilitation, management, operation and residence of residential developments or associated buildings and grounds, or typically used in residential activities in a manner typical of other comparable residential developments, or substances commonly ingested by a significant population living within the Project, including without limitation alcohol, aspirin, tobacco and saccharine. “Hazardous Materials Contamination” means the contamination (whether presently existing or hereafter occurring) of the Improvements, facilities, soil, groundwater, air or other elements on, in, or under the Site by Hazardous Materials, or the contamination of the buildings, facilities, soil, groundwater, air or other elements on, in or of any other property as a result of Hazardous Materials at any time (whether before or after the Date of Agreement) emanating from the Site.
“HSC” means and refers to the California Health and Safety Code. “Improvements” means all of the improvements described or referenced in the Entitlement and the approved Development Plans, and as herein further described. “Income Verification” means Attachment No. 7 to this Agreement. “Intercreditor and Subordination Agreement” means one or more estoppel, intercreditor and/or subordination agreement(s) or instrument(s) as may be requested by a Lender or other entity

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for approval by the City Manager and legal counsel, subject to the terms thereof and herein that in no event shall any Lender or other person or entity require or otherwise include subordination or modification of the City Covenants or the Memorandum of Agreement evidencing this agreement of record. Within five (5) business days of Developer’s receipt thereof, Developer shall provide to City complete, legible Word versions of each and any requested estoppel, intercreditor and/or subordination agreement(s) or instrument(s), and each form thereof, shall be subject to the review and approval of the City through the City Manager and legal counsel in his/her/their sole, reasonable discretion.
“Legal Description of the Site” means Attachment No. 2 to this Agreement. “Lender” means each of the responsible financial lending institutions or entities that may issue to Developer a loan or loans secured by the Site and/or Project relating in any manner to acquisition or assembly of the Site, construction financing, permanent financing, any other financing for construction, development, and/or operation of the Project on the Site. A Lender shall not include the financial entities or agencies commonly referred to as FannieMae or FreddieMac; provided however, the foregoing prohibition shall not be construed to prohibit a transfer or assignment of such loan on the secondary market so long as such transfer does not require a rider, amendment or other modification to this Agreement or the City Covenants, or Entitlement or other document to which the City is a party, signatory or intended beneficiary.
“Low Income” and “Low Income Households” are defined in in HSC Section 50093(a) and include “persons and families of low income” or “persons of low income” who are eligible for financial assistance specifically provided by a governmental agency for the benefit of occupants of housing financed pursuant to Division 31 of the HSC. The term Low Income also includes Lower Income.
“Lower Income” and “Lower Income Households” mean households earning not greater than eighty percent (80%) of Area Median Income, adjusted for family size and as defined in and provided under the income standard set forth in HSC Section 50079.5 and the implementing regulations in Title 25 CCR Section 6910, et seq., in particular Section 6928. “Material Adverse Change” shall mean any event any occurrence of which is reasonably likely to have a material adverse effect on Developer’s ability to fulfill its obligations under this Agreement or any form or type of implementing document (“Transaction Document”), including without limitation:
(a) a voluntary or involuntary bankruptcy of Developer (which is not dismissed within ninety (90) days of institution);
(b) a court order placing Developer under receivership; (c) a sale of all or substantially all of the assets held by Developer, except any such sale made in accordance with the terms of this Agreement; (d) any violation of Developer or other failure of Developer to comply at all times with any applicable law, statute, ordinance, code, rule, regulation, judgment, order, ruling, condition or other requirement of a statutory, regulatory, administrative, judicial or quasi-judicial nature or any other legal or governmental requirement of whatever kind or nature related to the

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Project, which violation is likely to have a material adverse effect on the ability of Developer to perform its duties and obligations under any Transaction Document; and/or (e) Developer incurs one or more liabilities, contingent or otherwise, or pending or threatened litigation or any asserted claim or unasserted claim known to the Developer exists against Developer with respect to the Project, which would have a material adverse effect on its ability to perform its duties and obligations under any Transaction Document. “Memorandum of Agreement” means a memorandum of agreement in the form of Attachment No. 3 to this Agreement.
“Notice” means a notice in the form prescribed by Section 9.2 hereof. “Official Records” means the official land records of the County Recorder of the County of Orange, State of California, unless the context otherwise requires another county of a state. “Operating Year” means the period commencing as of the Date of Agreement and ending as of December 31 of that calendar year, then each succeeding calendar year thereafter during the Affordability Period.
“Permitted Transfer” means any of the following:
(a) A conveyance of a security interest in Developer’s estate in the Site in connection with any monetary lien for construction or permanent financing of the Project that is junior and subordinate to this Agreement and the City Covenants, and any subsequent transfer of title by foreclosure, foreclosure deed, or other conveyance instrument in lieu of foreclosure in connection therewith, so long as this Agreement and the City Covenants are and remain senior and nonsubordinate to any and all monetary liens.

In furtherance and clarification of (a) above, in the event of (A) foreclosure initiated by a Lender for construction or permanent financing and conveyance of the Site and Project to a third party buyer (not an Affiliate of Developer) through a trustee’s sale, or (B) conveyance by a deed in lieu of foreclosure of the Site and Project to a third party (not an Affiliate of Developer) but only after at least 90 days have elapsed since the filing of the notice of default commencing foreclosure (described in (A)) and the Lender (or its agent) has caused to be recorded a notice of trustee's sale setting forth the date, time, and place of the trustee's sale, then commencing after recordation of the trustee’s deed or deed in lieu of foreclosure described in (A) or (B) above and continuing for the remainder of the 55-year Affordability Period the new owner of the Site and Project, also as “Developer”, shall ensure the twenty-nine (29) Affordable Units are operated and maintained in compliance with the income and rent standards for Lower Income Households at an Affordable Rent for the continued Unit Mix as follows: (15) fifteen studio units and (14) fourteen 1-bedroom units. (b) A conveyance of the Site by Developer to an Affiliate so long as such Affiliate (or Developer) retains a minimum of fifty-one percent (51%) of the ownership or beneficial interest and retains management control of the transferee entity or entities; (c) The lease for occupancy of all or any part of the Project, subject to the requirements of the Entitlement and this Agreement for operation of the Affordable Units; and (d) The granting of easements or permits to facilitate development of the Site in accordance with this Agreement and the Entitlement.

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“Portable Voucher” shall mean Section 8 rental vouchers under 24 Code of Federal Regulations (“CFR”) part 982 (Section 8 Tenant-Based Assistance: Housing Choice Voucher Program), and comparable documents evidencing participation in any tenant-based rental assistance program under any other federal or state or local tenant-based rental assistance programs as such now exist and as may hereafter be amended.
“Prescribed Rent Level” and “Unit Mix” or “Prescribed Rent Level and Unit Mix” for the 29 Senior Citizen Affordable Units means:
 fifteen (15) studio units for Senior Citizen Lower Income Households at an Affordable Rent; and
 fourteen (14) one-bedroom units for Senior Citizen Lower Income Households at an Affordable Rent.

The Affordable Units shall meet the Prescribed Rent Level and Unit Mix as required despite a temporary noncompliance with the defined Affordable Rent, if the noncompliance is caused by increases in the incomes of existing tenants and if actions are being taken by Developer to ensure that each and all vacancies of the Affordable Units at the Project are filled in accordance with the Prescribed Rent Level and Unit Mix until the noncompliance is corrected.

A tenant who qualified as a Senior Citizen Lower Income Household at initial occupancy of an Affordable Unit at the Project shall be deemed to continue to be so qualified until such time as reverification and certification of the tenant household’s gross income shows that such tenant no longer qualifies as a Senior Citizen Low Income Household. An existing tenant household occupying an Affordable Unit in the Project whose income exceeds the qualifying limit for a Senior Citizen Low Income Household may continue to occupy that Affordable Unit and be charged monthly rent including a reasonable utility allowance, equal to the lesser of thirty percent (30%) of the tenant household's adjusted monthly income, recertified annually, or the market rent applicable to the Affordable Unit as published by State HCD, so long as such continued tenancy does not exceed six (6) months. Such restrictions and requirements about reverification and recertification of household income to be and remain eligible for occupancy and tenancy of an Affordable Unit shall be expressly stated and separately initialed by each adult member of the tenant household in the lease or other rental agreement for each tenant of each Affordable Unit. “Project” means the new 29-unit apartment complex and Improvements and amenities as approved by the City under the Entitlement and further described therein, along with related offsite improvements, as more particularly described in the Entitlement and Development Plans , and as operated in conformity with the Entitlement, this Agreement, and the City Covenants. “Project Documents” means, collectively, this Agreement, City Covenants, Memorandum of Agreement, Request for Notice of Default, and all other Attachments to this Agreement, and any other agreement, document, or instrument that City requires in connection with the execution and implementation of the Entitlement and this Agreement as necessary from time-to-time to effectuate the purposes of the Entitlement and this Agreement.
“Property Management Plan” is defined in Section3.2(h). “Relocation” or “Relocation Laws” shall mean all federal and state relocation laws and regulations, as, if and when applicable, if at all, including without limitation, (i) the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (“URA”), 42 U.S.C.

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4601–4655, and the implementing regulations thereto set forth in 49 CFR Part 24, (ii) the California Relocation Assistance Act, Government Code Section 7260, et seq. and the implementing regulations thereto set forth in Title 25, Section 6000, et seq. of the California Code of Regulations, and (iii) any other applicable federal, state or local enactment, regulation or practice providing for relocation assistance, benefits, or compensation for moving and for property interests (including without limitation goodwill and furnishings, fixtures and equipment, and moving expenses), and (iv) any federal law or regulation prohibiting payment of relocation benefits or assistance to persons ineligible for relocation benefits or assistance. Developer shall be solely responsible for payment of all costs, expenses, and payments required to be made and/or incurred pursuant to any and all applicable Relocation Laws; City shall not incur any costs or expenses as a result of the application of the Relocation Laws to the Project or this Agreement.
“Request for Notice of Default” means Attachment No. 5. “Senior”, “Senior Citizen” and “Senior Households” are defined as tenant households where at least one (1) person in residence in the unit is sixty-two (62) years of age or older and who resides, or intends to reside, in the unit as her or his primary residence on a permanent basis, and any other person residing in the unit is a “qualified permanent resident” or a “permitted health care resident” as provided in California Civil Code Section 51.3, et seq., or in the Federal Fair Housing Act, 42 U.S.C. Section 3607, and any other applicable federal, state or local laws and regulations governing the use and occupancy of senior housing developments, including Developer’s existing 71-unit development and the new 29-unit new construction development on the Site. “Site” means that 2.1-acre parcel of real property depicted on the Site Map and described with greater particularity by the Legal Description of the Site, Attachment No. 2. “Site Map” means Attachment No. 1 to this Agreement.
“Third Party Costs” is defined and described in Section 9.7 herein. “Title Company” shall be First American Title Company or another title insurer mutually acceptable to City and Developer.
“Transfer” is defined and described in Section 7.8 herein. “Uniform Codes” means each of the following as in effect from time to time as approved by City: the Uniform Building Code, the Uniform Housing Code, the National Electrical Code, the Uniform Plumbing Code, the Uniform Mechanical Code, and the Uniform Code for the Abatement of Dangerous Buildings.
“Year” means a calendar year.

1.2. Singular and Plural Terms. Any defined term used in the plural in this Agreement or any Project Document shall refer to all members of the relevant class and any defined term used in the singular shall refer to any number of the members of the relevant class.

1.3. References and Other Terms. Any reference to this Agreement or any Project Document shall include such document both as originally executed and as it may from time to time be modified. References herein to Articles, Sections and Exhibits shall be construed as references to this Agreement unless a different document is named. References to subparagraphs shall be

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construed as references to the same Section in which the reference appears. The term “document” is used in its broadest sense and encompasses agreements, certificates, opinions, consents, instruments, and other written material of every kind. The terms “including” and “include” mean “including (include) without limitation.”

1.4. Exhibits Incorporated. All attachments and exhibits to this Agreement, as now existing and as the same may from time to time be modified, are incorporated herein by this reference.

1.5. Representations and Warranties.

1.5.1. City Representations. City represents and warrants to Developer as follows:
(a) City. City is a California municipal corporation and general law city and authorized to transact business pursuant to action of City Council. City has full right, power, and lawful authority with respect to the execution, performance, and delivery of this Agreement by City has been fully authorized by all requisite actions on the part of City. The parties who have executed this Agreement on behalf of City are authorized to bind City by their signatures hereto. (b) No Conflict. To the best of City Manager’s actual knowledge, City’s execution, delivery, and performance of its obligations under this Agreement will not constitute a default or a breach under any contract, agreement or order to which City is a party or by which it is bound.
(c) No City Bankruptcy. City is not the subject of a bankruptcy proceeding.

Until the recordation of the non-subordinate Memorandum of Agreement and the City Covenants, City shall, upon learning of any fact or condition which would cause any of the warranties and representations in this Section 1.5.1 not to be true, immediately give written Notice of such fact or condition to Developer.

1.5.2. Developer Representations. Developer represents and warrants to City as follows:
(a) Powers and Authorizations. Developer is a duly organized nonprofit public benefit corporation duly organized within and in good standing under the laws of the State of California. Developer has full right, power, and lawful authority to own and operate the Site and undertake all obligations as provided in the Entitlement and herein and the execution, performance and delivery of this Agreement and the City Covenants by Developer has been fully authorized by all requisite actions on the part of Developer. The parties who have executed this Agreement on behalf of Developer are authorized to bind Developer by their signatures hereto. (b) Litigation. To the best of Developer’s knowledge, there are no material actions, suits, claims, legal proceedings, or any other proceedings affecting Developer, at law or in equity before any court or governmental agency, domestic or foreign. (c) No Conflict. To the best of Developer’s knowledge, Developer’s execution, delivery, and performance of its obligations under this Agreement will not constitute a default or a breach under any contract, agreement or order to which Developer is a party or by which it is bound.

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(d) No Developer Bankruptcy. Developer is not the subject of a bankruptcy proceeding.
(e) Developer Experience; Sophisticated Party. The principals of Developer are sophisticated parties, with substantial experience in the acquisition, rehabilitation, development, financing, obtaining financing for, marketing, and operation of Senior residential development projects and with the negotiation, review, and preparation of agreements and other documents in connection with such activities. Developer is familiar with and has reviewed all laws and regulations pertaining to the development and operation of the Project and has obtained advice from any advisers of its own choosing in connection with this Agreement. (f) Ownership of the Site. As of the Date of Agreement, Developer holds fee simple marketable title to the Site.
(g) Due Authorization and Execution; Studies Completed. Developer has duly authorized the execution of this Agreement, the City Covenants, and all other Project Documents. Developer completed its due diligence as to the Site and hereby represents to its best knowledge that Developer is not aware of and has not received any notice or communication from any government agency having jurisdiction over the Site notifying Developer (or any Affiliate) of the presence of surface or subsurface zone Hazardous Materials in, on, or under the Site, or any portion thereof. “Best knowledge,” as used herein, shall not impose a duty of investigation, and shall be limited to the best knowledge of Developer.

After the Date of Agreement, Developer shall, upon learning of any fact or condition which would cause any of the warranties and representations in this Section 1.5.2 not to be true in all material respects, immediately give written Notice of such fact or condition to City. Such exception(s) to a representation shall not be deemed a breach by Developer hereunder, but shall constitute an exception which City shall have a right to approve or disapprove if such exception would have an effect on the development and/or operation of the Site.

1.5.3. No Material Adverse Change. Developer hereby represents and warrants, as of the Date of Agreement, that all documents, materials and information provided by Developer to City relating to Developer’s qualifications, financial strength, and ability to perform its obligations hereunder are true, correct and complete in all material respects as of their respective dates and no Material Adverse Change has occurred or is reasonably likely to occur that would make any such documents, materials or information incorrect, incomplete, or misleading in any material respect. (a) Developer shall, upon learning of any fact or condition which would cause any of the warranties and representations in Sections 1.5.2 and 1.5.3 above not to be true in all material respects, immediately give written Notice of such fact or condition to the City. Such exception(s) to a representation shall not be deemed a Default by the Developer hereunder, but shall constitute an exception which the City shall have a right to approve or disapprove if City, in its sole, reasonable discretion, determines that such exception would have an effect on the Project or Developer’s ability to perform Developer’s obligations under this Agreement or other Project Documents.

1.5.4. Survival of Representations. During the Affordability Period, within thirty (30) days following a written request from City, Developer shall either re-affirm in writing the material truth and accuracy of the representations and warranties set forth in Sections 1.5.2 and 1.5.3

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or identify any material inaccuracies of such representations and warranties. The fact that a representation or warranty contained in Sections 1.5.2 and 1.5.3 has become inaccurate or misleading shall not, in and of itself, constitute a breach under this Agreement or the Project Documents; however, (i) failure to notify City of material inaccuracies in these representations and warranties within thirty (30) calendar days of City’s request for such information, and (ii) any overt material misrepresentation by Developer relating to such representations and warranties shall each constitute a Default under this Agreement, subject to delivery of Notice and expiration of the cure rights provided in this Agreement.
(a) During the entire Affordability Period, the Developer shall have the ongoing obligation to promptly (but in no event later than 30 days following a Material Adverse Change) inform City (in writing) of the occurrence of any Material Adverse Change.

Section 2. SITE CONTROL.

2.1. Ownership of the Site; Obligation to Develop and Operate. Developer represents it owns the Site and has undertaken and completed at its expense investigations of the Site, including without limitation condition of title, the presence of any Hazardous Materials and other surface and subsurface conditions, and the suitability of the Site development of the Project.

2.2. Environmental Condition of the Site.

2.2.1. Studies and Reports. Developer may obtain data and make any other or additional surveys, tests, studies, and reports necessary to evaluate the suitability of the Site for the Project, including the investigation of the environmental condition of the Site (collectively, the “Studies”). Any studies undertaken on the Site by Developer shall be done at the sole expense of Developer. Any studies shall be undertaken only after Developer has secured the consent of any occupants or holders of interests in the Site and obtained any necessary permits therefor from the appropriate governmental agencies, including without limitation, City.

2.2.2. Indemnification. Developer agrees to and shall save, protect, pay for, defend (with counsel acceptable to City), indemnify and hold harmless City and its elected and appointed officials, officers, employees, attorneys, representatives, volunteers, contractors and agents (collectively, “Indemnitees”) from and against any and all liabilities, suits, actions, claims, demands, penalties, damages (including, without limitation, penalties, fines and monetary sanctions), losses, costs or expenses (including, without limitation, consultants’ fees, investigation and laboratory fees, attorneys’ fees and remedial and response costs and third-party claims or costs) (the foregoing are hereinafter collectively referred to as “Liabilities”) that may now or in the future be incurred or suffered by Indemnitees by reason of, resulting from, in connection with or arising in any manner whatsoever as a direct or indirect result of or any act, inaction or condition related to the Site, including without limitation: (i) any claim of damage to property, real or personal, or personal injury, including death, to any person arising from or related in any manner whatsoever to Hazardous Materials and Environmental Laws in connection with the Site and prior or current ownership thereof; (ii) the presence, use, release, escape, seepage, leakage, spillage, emission, generation, discharge, storage, or disposal of any Hazardous Materials in, on, under, or about, or the transportation of any such Hazardous Materials to or from, the Site without regard to the time of occurrence or discovery and without regard to the cause thereof; (iii) the violation, or alleged violation, of any statute, ordinance, order, rule, regulation, permit, judgment, or license relating to the use, generation, release, leakage, spillage, emission, escape, discharge, storage, disposal, or

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transportation of Hazardous Materials in, on, under, or about, or to or from, the Site; (iv) the physical and environmental condition of the Site, and (v) any Liabilities relating to any Environmental Laws and other Governmental Requirements relating to Hazardous Materials and/or the environmental and/or physical condition of the Site. The foregoing indemnification shall continue in full force and effect regardless of whether such condition, liability, loss, damage, cost, penalty, fine, and/or expense shall accrue or be discovered before or after the termination of the Affordability Period. This indemnification supplements and in no way limits the general indemnification provisions set forth herein.

2.2.3. Duty to Prevent Hazardous Material Contamination. During Developer’s ownership of the Site and during Developer’s construction, development, operation and management of the Project, Developer shall take all necessary precautions to prevent the release of any Hazardous Materials into the environment on or under the Site. Such precautions shall include, but not be limited to, compliance with all Environmental Laws and other Governmental Requirements.

Developer shall notify City, and provide to City a copy or copies of any notices of violation, notices to comply, citations, inquiries, clean up or abatement orders, cease and desist orders, reports filed pursuant to self-reporting requirements and reports filed or applications made pursuant to all Environmental Laws and other Governmental Requirements, and Developer shall report to City, as soon as possible after each incident, any unusual or potentially important incidents in the event of a release of any Hazardous Materials into the environment.

2.2.4. Release of Indemnitees. With respect to Hazardous Materials, Environmental Laws, and Liabilities relating to any Environmental Laws and other Governmental Requirements relating to Hazardous Materials and/or the environmental and/or physical condition of the Site (collectively, the “Environmental Liabilities”), Developer waives, releases and discharges forever the Indemnitees from all present and future claims, demands, suits, legal and administrative proceedings and from all liability for damages, losses, costs, liabilities, fees and expenses, including attorneys’ fees, court and litigation costs and fees of expert witnesses, present and future, arising out of or in any way connected with Developer’s possession or use of the Site, improvement of the Site in accordance with this Agreement and the Entitlement obtained by Developer for the Project, and for the operation of the Project at the Site, of any Hazardous Materials on the Site, or the existence of Hazardous Materials contamination in any state on, under, or about the Site, however they came to be located there.
(a) In connection with the foregoing, Developer acknowledges that it is aware of and familiar with the provisions of Section 1542 of the California Civil Code that provides as follows:

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE

CREDITOR OR RELEASING PARTY DOES NOT KNOW OR SUSPECT

TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING

THE RELEASE AND THAT, IF KNOWN BY HIM OR HER,

WOULDHAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT
WITH THE DEBTOR OR RELEASED PARTY.
_______________
Developer Initials: _____

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As such relates to this Section 2.2.4, Developer hereby waives and relinquishes all rights and benefits that it may have under Section 1542 of the California Civil Code in connection with the Environmental Liabilities.

2.2.5. Environmental Inquiries. Developer shall notify City upon receipt, and provide to City a copy or copies, of the following environmental permits, disclosures, applications, entitlements or inquiries relating to the Site and the Project: notices of violation, notices to comply, citations, inquiries, clean up or abatement orders, cease and desist orders, reports filed pursuant to self-reporting requirements and reports filed or applications made pursuant to any Environmental Laws and other applicable Governmental Requirements relating to Hazardous Materials and underground tanks, and Developer shall report to City, as soon as possible after each incident, all material information relating to or arising from such incident, including, but not limited to, the following:
(a) All required reports of releases of Hazardous Materials, including notices of any release of Hazardous Materials as required by any Governmental Requirements; (b) All notices of suspension of any permits relating to Hazardous Materials;
(c) All notices of violation from federal, state, or local environmental authorities relating to Hazardous Materials;
(d) All orders under the State Hazardous Waste Control Act and the State Hazardous Substance Account Act and corresponding federal statutes, concerning investigation, compliance schedules, clean up, or other remedial actions; (e) All orders under the Porter Cologne Act, including corrective action orders, cease and desist orders, and clean up and abatement orders; (f) Any notices of violation from OSHA or Cal OSHA concerning employees’ exposure to Hazardous Materials;
(g) All complaints and other pleadings filed against Developer relating to Developer’s storage, use, transportation, handling, or disposal of Hazardous Materials on or about the Site; and
(h) Any and all other notices, citations, inquiries, orders, filings, or any other reports containing information which would have a materially adverse effect on the Site or City’s liabilities or obligations relating to Hazardous Materials.

In the event of a release of any Hazardous Materials into the environment, Developer shall, as soon as possible after the release, furnish to City a copy of any and all reports relating thereto and copies of all correspondence with governmental agencies relating to the release. Upon request of City, but subject to any limitations imposed by law or by court order, Developer shall furnish to City a copy or copies of any and all other environmental entitlements or inquiries relating to or affecting the Site in Developer’s possession and/or shall notify City of any environmental entitlements or inquiries relating to or affecting the Site within Developer’s actual or constructive knowledge if Developer is not in possession of same, including, but not limited to, all permit

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applications, permits and reports including, without limitation, those reports and other matters which may be characterized as confidential.

Section 3. CONDITIONS PRECEDENT TO COMMENCEMENT OF CONSTRUCTION OF THE PROJECT.

3.1. Conditions Precedent in Favor of City. Upon satisfaction of the conditions set forth in this Section 3.1, Developer may commence construction of the Project. Each and every one of the following “Conditions Precedent” shall have been fully satisfied by Developer before it commences construction, which conditions are for the benefit of City, as determined in good faith by the City Manager (each of which condition(s), if it requires action by Developer, shall also be a covenant of Developer):
(a) Land Use Entitlements Conditions of Approval. Developer shall be in compliance with the applicable conditions of approval in the Entitlement that are required to have been satisfied by Developer prior to issuance of building permits for the construction of the Project on the Site. In connection therewith, the Entitlement requires that Developer cause to be entered into this Agreement and to cause recording of the Memorandum of Agreement and the City Covenants in a senior, non-subordinate lien position with respect to the Site and Project; and, in this regard, the Memorandum of Agreement and City Covenants shall be ready for recording prior to, or concurrently with, and in a first, senior lien position. (b) Title Insurance. Developer shall have and maintain fee title to the Site and shall have delivered to the City Manager a copy of its grant deed (duly recorded in the Official Records) and a title policy evidencing such fact along with evidence that the Memorandum of Agreement and City Covenants are the senior and nonsubordinate encumbrances against the Site. (c) Building Permit Readiness Letter; Payment of Fees for Building Permits. Developer shall have received from City a letter stating that the City is ready to issue all building permits to commence construction of the Project (“readiness letter”), which readiness letter shall include express conditions that concurrent with issuance of the building permits: (i) Developer shall pay to City all fees required for issuance of the Building Permits and such other fees as are customarily collected by City as of the time of issuance of Building Permits and as required under the Entitlement, and (ii) Developer shall timely pay all applicable fees charged and due to each and all other governmental agencies that charge fees in connection with the Project (such as fees assessed by school districts, sanitary districts, water districts, etc.), such payments being made to City (if City customarily collects such fees on behalf of the corresponding governmental agency for which the fee is being paid) or to the corresponding governmental agency (with submittal of evidence to City from such governmental agency that full payment has been received) or shall have delivered to City evidence satisfactory to the City Manager that Developer has made arrangements mutually agreeable by Developer and corresponding governmental agency (other than City) with regard to the payment of the applicable fees. Upon such full payment by Developer of (i) and (ii) in this paragraph (c), then Developer shall be eligible to obtain, and City shall cause City to issue, the Building Permits for the Project.
(d) Proof of Insurance. Developer shall have provided to City certificates of insurance and endorsements that satisfy all requirements of Section 4.4 hereof as to the Site and Project.

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(e) Corporate Resolution. Developer shall deliver to City certified copies of Developer resolution(s) specifically authorizing (or ratifying) the execution of this Agreement, Memorandum of Agreement, City Covenants, and all other implementing Project Documents and identifying the individual(s) with authority to enter into non-material implementation agreements and/or amendments to this Agreement, the construction of the Improvements, and operation of the Project.
(f) Lease/Rental Agreement. Developer shall have submitted to City and shall have approved the standard form lease/rental agreement in conformance with the City Covenants for rental of the Affordable Units to Lower Income Senior Citizen Households at an Affordable Rent in accordance with the terms of this Agreement, which approval shall not be unreasonably withheld or delayed. Developer shall include certain terms in the standard form lease/rental agreement which clearly describe the requirements of qualification and rental to Low Income Senior Citizen Households, including without limitation: (i) the obligation to provide complete and timely income verifications, as and when reasonably requested by Developer and/or City, but not less frequently than prior to initial occupancy and then annually during the term of tenancy, (ii) a description of the Affordable Rent for the Low Income Senior Citizen Households, (iii) the rules and regulations for use, occupancy, and quiet enjoyment of all housing units at the Site, (iv)tenant protections relating to notices, eviction, and such other matters as required by applicable laws, and (v) such other terms as Developer and/or City deem reasonably necessary. (g) Relocation. City shall be reasonably satisfied that Relocation, if any, is required from the Site, will be conducted in compliance with all applicable Relocation Laws, and this Agreement, and Developer and the Project shall be in compliance with all Relocation obligations pursuant to this Agreement and the Relocation Laws.
(h) Management Plan; Property Manager. Developer shall have submitted to City, and the City Manager shall have approved, which approval shall not be unreasonably withheld or delayed, the Management Plan for the Project. Developer shall identify the Property Manager and provide relevant background information and evidence of its experience as a professional property manager for first class and high quality housing projects that include affordable housing units in Southern California as required herein. City pre-approves [_______] to act as Property Manager, provided its Management Plan remains subject to City review and approval hereunder.
(i) Approval of Development Plans. City shall have approved the Development Plans for the Project prepared and submitted by Developer as being in substantial conformity with the Entitlement, this Agreement, and the Fountain Valley Municipal Code. (j) No Default; Representations and Warranties. Developer shall not be in Default of any of its obligations under the terms of this Agreement. All representations and warranties of Developer contained herein shall be true and correct in all material respects.

All conditions set forth in this Section 3.1, or to City’s obligations hereunder, are for City’s benefit only and City Manager may waive all or any part of such rights by written Notice to Developer.

3.2. Payment of Certain Fees at Certificate of Occupancy. In addition to those City fees and other fees required to have been paid as provided above in Section 3.1, prior to the issuance

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of the CoO for the Project by the City’s building official, Developer shall have delivered to City evidence that additional fees, if any, payable to any other governmental agency have been paid that may not have otherwise been required to have been remitted by Developer therefor shall have been paid in full by Developer.

3.3. Review of Title.

3.3.1. Preliminary Report. Within thirty (30) days of the Date of Agreement, Developer shall submit to City a true copy of an up to date (not older than thirty (30) days) preliminary report issued by the Title Company and shall include hyperlinks to complete and legible copies for each of the title exceptions set forth in said preliminary report. Developer acknowledges that City must be reasonably satisfied concerning the exceptions to title. All monetary encumbrances and exceptions to title are hereby objected to by City, and Developer is on notice to cause the title company to remove or evidence unconditional subordination thereof of any and all monetary exceptions (other than liens for current real property taxes and assessments not yet due and payable.) (a) Existing Encumbrances and/or Monetary Liens of Record. Based on Developer’s representation to the City that it owns fee simple marketable title to the Site, to the extent there exist, if any, monetary liens or other encumbrances of record presently, excepting only liens for current real property taxes and assessments not yet due, payable, or ascertainable, Developer covenants and agrees that as a Condition Precedent to receiving grading permits, Building Permits, or other permits (whichever are to be issued first) Developer shall cause the full and unconditional subordination of such liens and encumbrances to this DBAHA, and Memorandum of Agreement therefor, and the City Covenants Agreement, so that and to evidence that such instruments and agreements are and remain senior, nonsubordinate of record. (i) As provided in the Entitlement, in no event shall the Memorandum of Agreement or the City Covenants be made or become junior or subordinate to any deed of trust, encumbrance, or other documents including those providing financing for the construction or operation of the Project on the Site or ownership of the Site, or any other lien or encumbrance whatsoever against the Site for the Affordability Period, except as expressly mandated by California statute or federal law.
(ii) Each and any subordination agreement therefor shall be in a form and content acceptable to the City’s legal counsel. (b) Condition of Title. City shall be reasonably satisfied that Developer continues to have and hold an insured and insurable fee simple marketable title to the Site with no mortgage, lien, pledge, encroachment, exception, or other encumbrance of any character whatsoever, except the following:
(i) liens for current real property taxes and assessments not yet due, payable, or ascertainable;
(ii) as applicable, subordination or intercreditor instrument(s), subject to City’s right to review and approve such document(s), which approval shall not be unreasonably withheld or delayed, that evidence and cause subordination of each and any existing lien or encumbrance as required under subsection (a) of this Section 3.3.1 and in implementation of

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the Entitlement to ensure this DBAHA, Memorandum of Agreement and City Covenants are and remain senior, nonsubordinate encumbrances of record;
(iii) Memorandum of Agreement;
(iv) City Covenants;
(v) the deed of trust for any loan or loans to construct the Project, provided each Lender shall have agreed in writing to the senior nonsubordinate priority of this DBAHA, the Memorandum of Agreement, and the City Covenants; (vi) Request for Notice of Default;
(vii) other subordination or intercreditor instrument(s), subject to City’s right to review and approve such document(s), which approval shall not be unreasonably withheld or delayed; and
(viii) any other matters approved in writing by City.

3.4. Recordation. The Escrow Holder and Title Company shall be prepared to cause recording of the Memorandum of Agreement, City Covenants, and Request for Notice against the Site pursuant to the terms of this Agreement and the Project Documents.

Section 4. DEVELOPMENT PLANS; INSURANCE AND INDEMNITY, FINANCING.

4.1. Development. Developer shall develop the Project and Improvements (including all onsite and offsite improvements, if any), in particular the Affordable Units at the Project, in accordance with the Entitlement and the approved Development Plans.

4.1.1. Site Preparation. Developer is responsible to prepare the Site for construction, including the demolition, relocation of utilities insofar as necessary, grading and site preparation, and all other actions required to prepare the Site ready for the construction of all Improvements that comprise the Project.

4.2. Design Review; Development Plans for Project. Developer represents that it will cause the construction, operation, management, and maintenance of a first class and high quality housing and commercial development project. Therefore, the provisions of this section 4.2 set forth a process for review and approval of the Development Plans for the overall Project to be (or caused to be) designed, constructed, developed, and completed by the Developer hereunder. The parties acknowledge and agree the review process described in this section of the Agreement is in addition to, and is not and shall not be, a substitute for, any process or submittal required by the City (or any other governmental entity) relating in any respect to the Entitlement and/or obtaining all grading permits, Building Permits, or other permits necessary to undertake and complete the Project. The Site shall be developed as established in the approved Development Plans, except for such changes which may be mutually agreed upon between the Developer and City in writing and subject to the change order provisions in this Section 4.2. The parties agree that the final Development Plans shall evidence the first class and high quality development that Developer is required to construct and thereafter operate, manage, and maintain in compliance with and for the periods required under this Agreement.

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4.2.1. Grading Plans. Developer shall prepare and submit to the City for review and approval, 100% complete grading plans (“Grading Plans”). The Grading Plans shall be prepared by a registered civil engineer, who may be the same firm as the Developer’s architect. The grading plans shall be consistent with the Entitlement and all conditions of approval therein.

4.2.2. Landscaping Plans. The Landscaping Plans shall be consistent with the Entitlement and all conditions of approval therein. Developer shall prepare and submit to the City for review and approval, the 100% complete landscaping plans (for both hardscape and softscape) (“Landscape Plans”) with such plans depicting and evidencing the first class and high quality development required by this Agreement. The Landscaping Plans shall be prepared by a licensed landscape architect, who may be the same firm as the Developer’s architect.

4.2.3. Construction Drawings. Developer shall prepare and submit to City for review, and to City for review and approval 100% complete working drawings and construction plans that are consistent with the approved Design Development Drawings, Grading Plans and Landscaping Plans (“Construction Drawings”), which shall depict and evidence all Improvements, materials, interior and exterior improvements, all toward evidencing the first class and high quality development as intended by the Entitlement and this Agreement. The Construction Drawings shall be substantially consistent with the prior stages of the development plans submitted to and approved by the City, inclusive of changes, if any, thereto. The Construction Plans shall be prepared by a licensed architect in consultation with a licensed civil engineer. Particular attention and detail shall be evidenced in the Construction Drawings relating to all housing units, including the Affordable Units, common areas, common and other accessways, and interior and exterior improvements, and such submittal(s) shall identify materials to be used, including moveable and immoveable improvements (such as appliances, cabinetry, windows, HVAC, etc.) The 100% complete Construction Drawings, if and when approved by the City, shall be the final plans and specifications for construction of the Project.

4.2.4. Development Plans; Review and Approval. The cumulative stages of this design and working drawings submittal, review, and approval (or disapproval) process (Sections

4.2.1 through 4.2.5) include: (i) (iii) Grading Plans, (iv) Landscaping Plans and (v) Construction Drawings, which together are referred to as the “Development Plans”. (a) City shall have all rights to review and approve or disapprove each stage of the Development Plans and all other required submittals in accordance with the City Code, the City’s development standards, and the Entitlement and nothing set forth in this Agreement (nor City’s execution of this Agreement) shall be construed as the City’s prejudgment or approval, expressly or impliedly, thereof, or any other submittal required hereunder.

4.2.5. Revisions. Any and all change orders or revisions to the Development Plans required by the City and its inspectors that are required by the Fountain Valley Municipal Code and all other applicable Uniform Codes (e.g., Building, Plumbing, Fire, Electrical, etc.) and under other applicable laws and regulations shall be incorporated into and included by Developer in the Construction Drawings and shall be completed during the construction of the Project.

4.2.6. Defects in Development Plans. City shall not be responsible either to Developer or to third parties in any way for any defects in any of the Development Plans, nor for any structural or other defects in any work done according to the approved Development Plans, or for any delays reasonably caused by the review and approval processes established hereunder.

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4.2.7. City and Other Governmental Permits. Before commencement of construction of the Project, Developer shall secure or cause its contractor to be secured any and all building permits that may be required by the City or any other governmental agency affected by such construction. Developer shall pay all necessary fees and take all actions necessary to obtain any and all such permits. City will cause City staff, without obligation to incur liability or expense therefor, to use reasonable efforts to expedite the City’s issuance of building permits for construction that meets the requirements of the Fountain Valley Municipal Code, and all other applicable laws and regulations and that comply with the Development Plans.

4.2.8. Cooperation re Development Plans; Revisions and Change Orders.

During the preparation of the Development Plans and throughout construction of the Project, City staff and authorized representatives of Developer shall hold joint progress meetings to coordinate the preparation of, submission to, and review of the Development Plans. City staff and authorized Developer representatives shall communicate and consult informally as frequently as is necessary to ensure that the formal submittal of any documents to City can receive prompt and thorough consideration. City shall designate City staff persons or consultant to serve as the project manager for the Project, who shall be responsible for the coordination of City’s (and City’s) activities under this Agreement and for coordinating the permitting process. (a) In the event City disapproves or conditionally approves the Development Plans, or any part(s) thereof, or if Developer desires to propose any substantial revisions to the approved Development Plans, or any part(s) thereof, Developer shall submit its revisions or proposed changes thereto to City Manager (and Planning Director), and shall also proceed in accordance with any and all Governmental Requirements regarding such revisions, within the time frame set forth in the Schedule of Performance for the resubmittal of such Development Plans, or any part(s) thereof. Any revision or change to such Development Plans proposed by Developer may be disapproved by City its City Manager (and City Manager) in her or his reasonable discretion pursuant to subdivision (i) below. Any and all change orders or revisions required by the City and their inspectors that are required under the City Code and Uniform Codes or other governmental requirements shall be included by Developer in its Development Plans and completed during the construction of the Project. In the event Developer requests revisions, alterations, or modifications to the Development Plans, or any part(s) thereof, for any reason including increased construction costs because of unforeseen occurrences or conditions relating to the construction of the Project, any revisions, alterations, or modifications shall be subject to the approval of City in their reasonable discretion pursuant to subdivision (i) below. Developer shall be required to pay any and all increased costs of construction due to any such revisions, alterations, or modifications of the Development Plans, or any part(s) thereof.
(i) Developer shall not be required to obtain City approval of any change orders or other revisions or modifications to the Construction Drawings, so long as each change order, revision, or modification is consistent with the approved Development Plan, does not cause any value engineering not previously authorized by City and does not materially affect the design, materials, and architectural quality and integrity of the first class and high quality affordable housing Project intended by the parties (any such change order, revision or modification is referred to herein as an “Exempt Change Order”). Notwithstanding the immediately preceding sentence, Developer shall be required to obtain City approval, which approval shall not be unreasonably withheld or delayed, to the extent any change order, revision, or modification is inconsistent with the approved Development Plans, causes any value engineering not previously approved by City , or materially changes the design, materials or architectural quality and integrity of the Project “NonPage 375 25 4872-0641-0356v5/200348-0010
Exempt Change Order”). Further, the determination of whether any proposed change order constitutes an Exempt Change Order or a Non-Exempt Change Order shall be made jointly between and among City and Developer, each in their reasonable discretion, and promptly after receipt of any change order request.

4.2.9. Periodic Submittals to City during Construction. During the course of construction and until the final CoO for the Project is issued by City, Developer shall ensure that City (1) receives a copy of each Non-Exempt Change Order received by Developer from its Contractor or subcontractors within three (3) business days following Developer’s receipt. In no event shall any request for a Non-Exempt Change Order be deemed approved by City unless Developer provides additional written Notice to City (on or after the fifth (5th) business day following City’s receipt of such submittal) requesting affirmative approval or disapproval of such requested Non-Exempt Change Order and City fails to respond within an additional three (3) business days following such additional written Notice from Developer.

4.2.10. Selection of General Contractor. For the work of the General Contractor, Developer agrees to and shall select an experienced, qualified, licensed, insured, and bonded general contractor to be its General Contractor for construction of the Project.

4.3. Cost of Construction; Performance under other Agreements. The cost of planning, designing, developing, and constructing the Project shall be borne solely by Developer.

All fees imposed by any governmental entity in connection with the Site and Project shall be borne by Developer and shall be paid when due by Developer.

4.4. Insurance Requirements. As a Condition Precedent to issuance of Building Permits and continuing throughout the Affordability Period, Developer shall maintain at Developer’s sole expense, with insurers reasonably approved by City, the following policies of insurance in form and substance reasonably satisfactory to City with the coverage limits, conditions, and endorsements defined herein. Insurance for contractors and subcontractors shall be provided to City upon request within ten (10) days of request.

4.4.1. Insurance Coverage from Commencement of Construction through the term of the Affordability Period. From the date of the Closing of Financing through end of the Affordability Period, the Developer shall obtain and maintain the following policies of insurance covering all activities relating to construction and thereafter operation of the Project at the Site. All policies shall include an endorsement giving City thirty (30) days advance written notice of cancellation or termination of each policy. Insurers for each policy shall waive subrogation against the City of Fountain Valley and all Indemnitees. Insurers for each policy shall provide to City a waiver of subrogation evidencing the same.
(a) Workers’ compensation insurance. Developer shall maintain Workers Compensation Insurance in the amount and type required by California law. (i) Developer shall execute and deliver to City that certain Workers’ Compensation Certificate for limited liability companies and Sole Proprietors and fully incorporated herein by this reference, which certificate is Developer’s representation and warranty that it is a limited liability company or sole proprietorship and is not legally required to carry Workers’ Compensation Insurance at the time of execution of this Agreement.

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(b) Commercial general liability insurance, including mobile equipment and not excluding XCU, in an amount not less Ten Million Dollars ($10,000,000) per occurrence and Ten Million Dollars ($10,000,000) general aggregate for claims arising out of bodily injury, personal injury and property damage. Coverage shall include contractual, on-going operations and productscompleted operations (Claims made and modified occurrence policies are not acceptable.) (c) Automobile liability insurance, in an amount not less than Two Million Dollars ($2,000,000), combined single limit (bodily injury and property damage liability), including coverage for liability arising out of the use of owned, non-owned, leased, hired, or borrowed automobiles for performance of the work. As used herein the term “automobile” means any vehicle licensed or required to be licensed under the State of California. Such insurance shall apply to all operations of Developer both on and away from the Site. In the event that any drivers are excluded from coverage, such drivers will not be permitted to drive in connection with construction of the Project. (Claims made and modified occurrence policies are not acceptable.) (d) A policy of Builder’s All-Risk property insurance in an amount not less than one hundred percent (100%) of the full replacement value of the Project. (e) Follows Form Excess Liability coverage shall be provided for any underlying policy that does not meet the insurance requirements set forth herein. (Claims made and modified occurrence policies are not acceptable.)
(f) For any claims related to this Agreement, Developer’s insurance coverage shall be primary insurance as respects the City of Fountain Valley and its Indemnitees and shall not contribute with any insurance, or self-insurance, maintained by the parties.

All insurance coverage shall be placed with carriers admitted to write insurance in California, and with an A.M. Best’s Guide Rating of A-, class VII or better, as approved by City. Any deductibles or self-insured retentions in excess of $250,000 must be declared to and approved by City’s risk management director.

4.4.2. Policy Provisions. A certificate or certificates evidencing coverage described in 4.4.1 and 4.4.2 above (“Insurance”) shall be timely submitted to City. The certificates shall be accompanied by appropriate policy endorsements stating that:

Developer’s insurance coverage shall be primary insurance as respects the City of Fountain Valley and its respective officers, officials, agents, employees, representatives, and volunteers, and shall not contribute with any insurance or self- insurance maintained by the City of Fountain Valley, and/or its respective officers, officials, agents, employees, representatives, and volunteers. A primary-noncontributory endorsement shall be provided for each policy.
(a) Insurer shall provide to City not less than (30) days advance written notice for each policy prior to any, cancellation, termination, or non-renewal of the Insurance. (b) With the exception of the workers compensation policy, the City of Fountain Valley, and its Indemnitees shall be named as additional insureds on all policies, including the excess liability policy. Developer shall provide:

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(i) Additional Insured Endorsements, on-going and productscompleted operations, including mobile equipment and not excluding XCU, for the policy under

4.4.2(b), Commercial General Liability. Endorsements shall designate the City of Fountain Valley, and its Indemnitees as additional insureds for liability arising out of all work or operations performed by or on behalf of the Developer. Developer shall provide to City proof of insurance and endorsement forms that conform to City’s requirements, as approved by City. (Forms CG 20 26 07 04 and CG 20 37 07 04 or equivalent)
(c) An Additional Insured Endorsement for the policy under section

4.4.2(c), Automobile Liability, shall designate the City of Fountain Valley and Indemnitees as additional insureds for automobiles owned, leased, hired, or borrowed. Developer shall provide to City proof of insurance and endorsement forms that conform to City’s requirements, as approved by City. (Form CA 20 48 02 99 or equivalent).
(d) Additional Insured Endorsements, ongoing and products-completed operations, under Section 4.4.2(d), Environmental Liability and Remediation, if coverage is applicable to the Project. Endorsements shall designate the City of Fountain Valley and its Indemnitees as additional insureds for liability arising out of all work or operations performed by or on behalf of the Developer. Developer shall provide to City proof of insurance and endorsement forms that conform to City’s requirements, as approved by City. (e) A Loss Payee Endorsement for the policy under Section 4.4.2(e), Builder’s All Risk, shall designate the City of Fountain Valley as Loss Payee. Developer shall provide to City proof of insurance and endorsement forms that conform to City ’s requirements, as approved by the City.
(f) If any of the underlying policies do not meet policy limits as required herein, an Additional Insured Endorsement for the policy under section 4.4.2(f), Follows Form Excess Liability, shall designate the City of Fountain Valley and its Indemnitees as additional insureds under the follows form excess liability policy. Developer shall also provide to City a certificate of insurance stating the excess liability policy follows form and the schedule of underlying policies for the excess liability policy with policy numbers. Developer shall provide to City proof of insurance and endorsement forms that conform to City requirements. (g) Upon request by City, Developer shall, within 10 days of original request, provide City with complete certified copies of insurance policies evidencing coverage as required herein. Certificates and endorsements for each insurance policy shall be signed by a person authorized by the insurer to bind coverage on its behalf. If required by City, Developer and/or and subcontractors shall, from time to time, increase the limits of its insurance policies to reasonable amounts customary for owners of improvements similar to those on the Site. In the event any policy of insurance required under this Agreement does not comply with these requirements or is cancelled and not replaced, City have the right but not the duty to obtain the insurance it deems necessary and any premium paid by City will be promptly reimbursed by Developer.

4.4.3. Insurance Requirements of Contractors and Subcontractors. All Contractors and subcontractors shall be required to provide the same insurance as required of Developer herein, with the exception of policy limits required. Developer shall be responsible to collect and maintain insurance from all Contractors and subcontractors, which shall provide the following policy limits for the policies below:

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Workers’ compensation As required by California law
Commercial general liability policy Not less than $1,000,000 per occurrence and $2,000,000 general aggregate.

Automobile liability policy Not less than $1,000,000 combined single limit Environmental liability (if applicable) Not less than $1,000,000 per occurrence and $2,000,000 general aggregate

4.4.4. Reduction in Requirements. The City Manager, or if designated the City’s risk manager, is hereby authorized to reduce the insurance requirements set forth herein, on a temporary or permanent basis, in the event she/he determines, in her/his sole discretion, that such reduction is in City ’s best interest.

4.4.5. Waiver of Subrogation. Developer hereby waives all rights to recover against each of City (or any officer, employee, agent or representative of City and/or City) for any loss incurred by Developer from any cause insured against or required by any Project Document to be insured against; provided, however, that this waiver of subrogation shall not be effective with respect to any insurance policy if the coverage thereunder would be materially reduced or impaired as a result. Developer shall use its best efforts to obtain only policies which permit the foregoing waiver of subrogation.

4.5. Indemnity. Developer shall pay for, defend (by counsel reasonably satisfactory to City), indemnify and save and hold harmless the City and its Indemnitees from and against all claims, damages, demands, actions, losses, liabilities, costs and expenses (including, without limitation, attorneys’ fees and court costs) arising from or relating to: (i) this Agreement; (ii) a claim, challenge, or cause of action that any person has or asserts against the Project; (iii) a claim, challenge or cause of action that any person has or asserts against any approval, whether discretionary or ministerial, by the City, the City, zoning administrator, or any other board, commission or committee of the City; (iv) a claim, demand or cause of action that any person has or asserts against Developer (v) any act or omission of Developer, any Contractor, subcontractor or material supplier, engineer, architect or other person with respect to the Site or the Project; or (vi) the ownership, occupancy or use of the Site or the Project. Notwithstanding the foregoing, Developer shall not be obligated to indemnify City with respect to the consequences of any act of gross negligence or willful misconduct of City. Developer’s obligations under this Section 4.5 shall survive the issuance of the CoO. The requirements under this Section 4.5 are in addition to and do not limit the obligations of Developer under the City Covenants.
(a) Developer shall reimburse City immediately upon written demand for all fees and costs reasonably incurred by City (including the reasonable fees and expenses of attorneys, accountants, appraisers and other consultants, whether the same are independent contractors or employees of City) in connection with the enforcement of the Project Documents, and all related matters including the following: (a) City’s or City’s commencement of, appearance in, or defense of any action or proceeding purporting to affect the rights or obligations of the parties to any Project Document, and (b) all claims, demands, causes of action, liabilities, losses, commissions and other costs against which City is indemnified under the Project Documents. Such reimbursement obligations shall bear interest at the local agency investment fund rate (“LAIF”) based upon the amounts and times of disbursement by City, provided that City gives written demand to Developer.

Such reimbursement obligations shall survive the issuance of the CoO and termination of this

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Agreement and are in addition to and do not limit the obligations of Developer under the City Covenants.
(b) Developer indemnifies City from any real estate commissions or brokerage fees which may arise from the Site, or the leasing of dwelling units on the Site in conformity with this Agreement.

4.6. Rights of Access. Prior to the issuance of the CoO, for purposes of assuring compliance with this Agreement, representatives of City shall have the right of access to the Site, without charges or fees, at normal construction hours during the period of construction, including but not limited to, the inspection of the work being performed so long as City representatives comply with all safety rules. City representatives shall, except in emergency situations, notify Developer prior to exercising its rights pursuant to this Section 4.6. City shall have access as necessary to enforce all applicable laws.

4.7. Compliance with Laws. Developer shall carry out the design, construction and operation of the Project in conformity with all applicable laws, including all federal and state labor standards, as and when applicable, City zoning and development standards, building, plumbing, mechanical and electrical codes, and all other provisions of the City Code, and the Fair Housing Act, 42 U.S.C. Section 3601 et seq. (and 24 CFR Part 100), the Americans With Disabilities Act, 42 U.S.C. Section 12101, et seq., Government Code Section 4450, et seq., Government Code Section 11135, et seq., the Unruh Civil Rights Act, Civil Code Section 51, et seq., and the California Building Standards Code, HSC Section 18900, et seq., and Labor Code Section 218.7. Developer, including but not limited to its contractors and subcontractors, shall comply with applicable federal and state laws, including the California Labor Code with regard to the undertaking, constructing, and completing the Project. Developer shall be solely responsible for determining and effectuating compliance with the applicable laws, and City make no final representation as to the applicability or non-applicability of laws to the overall Project or construction thereof or any part thereof. Developer hereby releases from liability, and agrees to indemnify, defend, assume all responsibility for and hold City and its Indemnitees harmless from any and all claims, demands, actions, suits, proceedings, fines, penalties, damages, expenses resulting from, arising out of, or based upon Developer’s acts or omissions pertaining to the compliance with the laws.

4.8. Nondiscrimination in Employment. Developer certifies and agrees that all persons employed or applying for employment by it, its affiliates, subsidiaries, or holding companies are and will be treated equally by it without regard to, or because of race, color, religion, ancestry, national origin, sex, sexual orientation, age, pregnancy, childbirth or related medical condition, medical condition (cancer related) or physical or mental disability.

4.9. Taxes and Assessments. Developer shall pay prior to delinquency all ad valorem real estate taxes and assessments on the Site. Developer shall remove or have removed any levy or attachment made on the Site or any part thereof which is owned or leased by Developer, or shall assure the satisfaction thereof within a reasonable time, but in no event to exceed sixty (60) days.

Developer shall additionally defend, indemnify, and hold harmless City from and against any taxes, assessments, mechanic’s liens, claims of materialmen and suppliers, or other claims by private parties in connection with (a) activities undertaken by Developer or (b) the Site.

4.10. Liens and Stop Notices. Developer shall not allow to be placed on the Site or any part thereof any mechanic’s or materialmen’s lien or stop notice. If a claim of a lien or stop notice is

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given or recorded affecting the Project Developer shall within thirty (30) days of such recording or service or within five (5) days of City’s demand whichever last occurs:
(a) pay and discharge the same; or
(b) effect the release thereof by recording and delivering to City a surety bond in sufficient form and amount, or otherwise; or
(c) provide City with indemnification from the Title Company against such lien or other assurance which City deems, in its sole discretion, to be satisfactory for the payment of such lien or bonded stop notice and for the full and continuous protection of City from the effect of such lien or bonded stop notice.

4.11. Further Assurances.

4.11.1. By Developer. Developer shall execute and acknowledge (or cause to be executed and acknowledged) and deliver to City all documents, and take all actions, reasonably required by City from time to time to confirm the rights created or now or hereafter intended to be created under the Project Documents or otherwise to carry out the purposes of the Project Documents.

4.11.2. By City. City shall execute and acknowledge (or cause to be executed and acknowledged) and deliver to Developer all documents, and take all actions, reasonably required by Developer from time to time to confirm the rights created or now or hereafter intended to be created under the Project Documents or otherwise to carry out the purposes of the Project Documents.

4.11.3. Mortgages, Deeds of Trust for the Project. Mortgages and deeds of trust shall be permitted but only for the purpose of securing loans of funds to be used for financing the construction and operation of the Project (including architecture, engineering, legal, construction period carrying costs such as property taxes, insurance and interest, and related direct costs as well as indirect costs) on or in connection with the Project and the Site, and the obtaining of a permanent loan in the amount of the outstanding balance of the construction loan or such greater amount as may be permitted hereunder, subject to and so long as the Memorandum of Agreement and City Covenants are and shall remain senior, nonsubordinate encumbrances against the Site.

4.11.4. Holder Not Obligated to Construct Improvements. The holder of any mortgage or deed of trust on Developer’s interest in the Site authorized by this Agreement shall not be obligated by the provisions of this Agreement to construct, complete, or operate the Project or any portion thereof, or to guarantee such construction, completion, or operation; nor shall any covenant or any other provision in this Agreement be construed so to obligate such holder. Nothing in this Agreement shall be deemed to permit or authorize any such holder to devote the Site to any uses or to construct any improvements thereon, other than those uses or Improvements provided for or authorized by the Entitlement, this Agreement, and the City Covenants.

4.11.5. Notice of Default to Mortgagee or Deed of Trust Holders; Right to Cure.

With respect to any mortgage or deed of trust granted by Developer as to the Site as provided herein, whenever City may deliver any Notice or demand to Developer with respect to any breach or default by Developer under this Agreement, City shall at the same time deliver to each first lien holder of record of a mortgage or deed of trust a copy of such Notice or demand; provided that the failure to

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notify each or any holder of record shall not vitiate or affect the effectiveness of notice to Developer.

Each such holder shall (insofar as the rights granted by City, respectively, are concerned) have the right, at its option, within sixty (60) days after the receipt of the Notice, to cure or remedy or commence to cure or remedy and thereafter to pursue with due diligence the cure or remedy of any such default and to add the cost thereof to the mortgage debt and the lien of its mortgage or deed of trust.
(a) Nothing contained in this Agreement shall be deemed to permit or authorize such holder to undertake or continue the construction or completion of the Project, or any portion thereof (beyond the extent necessary to conserve or protect the Improvements or construction already made) without first having expressly assumed Developer’s obligations to City by written agreement reasonably satisfactory to City. The holder, in that event, must agree to complete the Project in compliance with the Entitlement and this Agreement, but on a schedule which takes into account the time reasonably required for the holder to obtain title to and possession of Developer’s interest in the Site, analyze and negotiate amendments to plans, specifications, construction contracts and operating contracts or to negotiate new construction contracts and operating contracts. Any such holder properly completing such Improvements shall be entitled, upon compliance with the requirements herein to a CoO. It is understood that a holder shall be deemed to have satisfied the sixty (60) day time limit set forth above for commencing to cure or remedy a Developer default which requires title and/or possession of Developer’s interest in the Site (or portion thereof) if and to the extent any such holder has within such sixty (60) day period commenced proceedings to obtain title and/or possession and thereafter the holder diligently pursues such proceedings to completion and cures or remedies the default.

Section 5. COVENANTS AND RESTRICTIONS.

5.1. Use Covenants. Developer covenants and agrees for itself, its successors, assigns, and every successor in interest to the Site or any part thereof, that Developer shall devote the Site, the Project, and all Improvements thereon to the uses and operational covenants specified in the Entitlement and this Agreement and shall own, manage, maintain and otherwise operate the Project on the Site in conformity with the DBL, Entitlement, this Agreement, and the City Covenants, whichever are the more restrictive in each case unless expressly provided to contrary effect herein.

All uses conducted on the Site, including, without limitation, all activities undertaken by Developer pursuant to this Agreement, shall conform to all applicable provisions of the City Code.

5.2. Affordable Housing Requirements.

5.2.1. Number of Affordable Units. Developer agrees to make available, restrict occupancy to, and rent all twenty-nine (29) Affordable Units at Affordable Rent in conformity with the Prescribed Rent Level and Unit Mix to Low Income Senior Citizen Households. An example of the calculation of Affordable Rent for the Affordable Units is attached hereto as Attachment No. 7 and incorporated herein. It is the responsibility of Developer to comply with all income and rent standards.

5.2.2. Duration of Affordability Requirements. The Affordable Units shall be maintained as rental units available at and rented to Low Income Senior Citizen Households throughout the 55-year Affordability Period, as more particularly set forth in the City Covenants.

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5.2.3. Selection of Tenants. Developer shall be responsible for the selection of tenants for the Affordable Units in compliance with the criteria set forth in Section 5.2 of this Agreement. All of the Affordable Units shall be restricted for occupancy by Senior Citizen Households and subject to the federal Fair Housing Law and the California Fair Employment and Housing Act (FEHA). In this regard, tenant selection for the Affordable Units shall comply with applicable provisions that are most restrictive and protective of tenants under federal and state laws, and all lawful and reasonable criteria, as set forth in the Management Plan that is required to be submitted to and approved by City under this Agreement. Developer shall use its commercially reasonable efforts to rent vacant Affordable Units to eligible Low Income Senior Citizen Households on City’s tenant interest list (if one is maintained by City). (a) Developer shall adopt a tenant selection system for the Affordable Units that shall be approved by City Manager in her or his reasonable discretion, which establishes a chronological waiting list system for selection of tenants and meets the requirements of this Section

5.2.3. (b) Developer shall provide written notice to City at least thirty (30) days prior to Developer commencing its marketing activities for the initial lease-up of the Affordable Units in conformance with the approved Management Plan. In addition, this prior notice from Developer to City also shall include a complete copy of the form of the “application” with a description of necessary supporting materials to be completed by applicants for prospective tenancy of an Affordable Unit.
(c) Posting advertisements and notices of the vacancy(ies) at the community center, senior center, other public buildings such as post offices located in the City, at City Hall, and on the City’s website.

5.2.4. Income of Tenants. Each tenant of an Affordable Unit shall qualify as a Low Income Senior Citizen Household (in accordance with the Prescribed Rent Level and Unit Mix) that meets the eligibility requirements established for an Affordable Unit, and Developer shall obtain a certification from each tenant renting or leasing each Affordable Unit that substantiates such fact.

Developer shall verify the income certification of each tenant household as set forth in Section 5.2 hereof. Prior to the first rental of an Affordable Unit, and in addition upon request therefor by City, Developer shall submit to City or its designee, at Developer’s expense, a completed income computation and certification form, in a form approved by the City.

5.2.5. Determination of Affordable Rent for the Affordable Units. Each and all Affordable Units shall be rented at an Affordable Rent as established and provided herein:
the maximum monthly rental amount for the Affordable Units shall be determined in accordance with the following and shall not to exceed affordable rent under HSC Sections 50052.5 and 50053 for each Senior Citizen Household qualifying as Lower Income. The monthly housing cost means the maximum amount to be charged by Developer and paid by the Low Income Senior Citizen Households occupying the Affordable Units at the Project. (a) Further, the term includes the total of monthly payments by the Senior tenants of an Affordable Unit for (a) use and occupancy for an Affordable Unit and facilities associated therewith, (b) any separately charged fees or service charges assessed by Developer that are required of all tenants, other than security deposits (but not including fees or charges in connection with voluntary items paid for, leased, or otherwise purchased by tenants of Affordable

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Units (and required to be paid for, leased or otherwise purchased by tenants of the market rate units) that, for example, might include additional parking spaces(s) above and beyond what is required to be provided to tenants under State and local laws and this Agreement, fees relating to pet ownership or amenities in connection therewith such as dog washing facilities, etc., (c) a reasonable allowance for utilities not included in (a) or (b) above, including garbage collection, sewer, water, electricity and gas, as determined by regulation of the Orange County Housing Authority pursuant to 24 CFR Section 5.609, et seq. and (d) possessory interest, taxes or other fees or charges assessed for the use of the unit and facilities associated therewith by a public or private entity other than Developer. (b) Under this Agreement and for purposes of Affordable Rent for Low Income Senior Citizen Households, each tenant shall meet the following requirements; (i) household income for Low Income Households shall not exceed the income standard of HSC Section 50079.5, and Affordable Rent shall not exceed the standard and rent calculation under HSC Sections 50052.5 and 50053.

5.2.6. Increases in Tenant Household Income. The Affordable Units shall meet the Prescribed Rent Level and Unit Mix as required despite a temporary noncompliance with the defined Affordable Rent, if the noncompliance is caused by increases in the incomes of existing tenants and if actions are being taken by Developer to ensure that each and all vacancies of the Affordable Units at the Project are filled in accordance with the Prescribed Rent Level and Unit Mix until the noncompliance is corrected.
(a) A tenant who qualified as a Senior Citizen Low Income Household at initial occupancy in the Project in compliance with this Agreement shall be deemed to continue to be so qualified until such time as reverification and certification of the tenant household’s gross income shows that such tenant no longer qualifies as a Senior Citizen Low Income Household. An existing tenant household occupying an Affordable Unit in the Project whose income exceeds the qualifying limit for a Senior Citizen Low Income Household may continue to occupy that Affordable Unit and be charged monthly rent including a reasonable utility allowance, equal to the lesser of thirty percent (30%) of the tenant household's adjusted monthly income, recertified annually, or the market rent applicable to the Affordable Unit as published by State HCD, so long as such continued tenancy does not exceed six (6) months. Such restrictions and requirements about verification and reverification of household income to be and remain eligible for occupancy and tenancy of an Affordable Unit shall be expressly stated and separately initialed by each adult member of the tenant household in the lease or other rental agreement for each tenant of each Affordable Unit.

5.2.7. Household Size Appropriate to an Affordable Unit. The term “household size appropriate to the unit” for the purpose of the calculation of Affordable Rent herein (and without regard to actual occupancy), means HSC Sections 50052.5 and 50053. Notwithstanding the foregoing portion of this Section 5.2.7, Developer agrees that Affordable Rent shall not exceed the Prescribed Rent Level. It is the responsibility of Developer to comply with all income and rent standards. Developer acknowledges that such Prescribed Rent Level may further diminish rental income from the overall Project.

5.3. Verifications.

5.3.1. Income Verification. Developer shall verify the income of each proposed and existing Senior Citizen Household as an existing tenant (or prospective tenant) of the each and every Affordable Unit in the Project.

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5.3.2. Annual Reports. Following the issuance of the final CoO, and on or before the next following March 30 and on or before March 30 in each following Year of the Affordability Period, Developer, at its expense, shall submit to City or its designee such reports as are designated from time to time by the City Manager, in the form prescribed by City. Each annual report shall cover the immediately preceding Year.
(a) Developer shall maintain on file each tenant’s executed lease and Income Verification and rental records for all Affordable Units. Developer shall maintain complete and accurate records for all Affordable Units and will permit any duly authorized representative of City to inspect the books and records of Developer pertaining to this Agreement and the Affordable Units. Developer shall prepare and submit to the City Manager on the first March 15 following the issuance of the final CoO and continuing on each Year on or before March 15 throughout the Affordability Period, a Certificate of Continuing Program Compliance. Such documentation shall state for each Affordable Unit: the unit size, the rental amount, the number of occupants, the income of the occupants, whether the tenant holds a Portable Voucher, and any other information which may be used to determine compliance with the terms of this Agreement and the City Covenants. (i) As provided in the Entitlement, Developer shall make all tenant files relating to the Affordable Units available to City and its representatives for review each Year of the Affordability Period; and, City will provide Developer a 24-hour notice prior to and related to such inspection.
(b) As part of its annual report, Developer shall include shall evidence in accordance with GAAP that the amounts on deposit and amounts expended, if any, in and form the Capital Replacement Reserve comply with this Agreement. (i) Developer agrees that Developer shall cooperate fully with City, its staff, counsel, and consultants in providing information necessary or convenient, in the reasonable judgment of City, and City may conduct an audit. Keyser Marston Associates or another firm or economist mutually acceptable to City and Developer, will be employed to determine compliance with the Entitlement, this Agreement, and the City Covenants. If an audit becomes necessary, the costs of employing such consulting professional(s) shall be borne by City initially; however, if any audit reveals noncompliance as to one or more Years, Developer shall reimburse City for costs of the audit and professional review (which may require engagement of accountants, attorneys, or other professionals).

5.4. Maintenance of Site. Developer agrees for itself and its successors in interest to the Site, to maintain the Project and the Site in conformity with this Agreement, the City Code, the Entitlement, and City Covenants, and shall keep the Site free from any accumulation of debris or waste materials. Developer shall also maintain the landscaping planted on the Site in a healthy condition.

5.4.1. Maintenance Standards. Developer and its maintenance staff, contractors or subcontractors shall comply with the following standards as to the Project (collectively, “Maintenance Standards”):
(a) The Project shall be maintained in conformance and in compliance with the approved final as-built plans, and reasonable Maintenance Standards that comply with industry standards (industry standards applicable at such time) for first class and high quality housing

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and commercial development projects in Southern California. In this regard the standard of maintenance and upkeep of the Project (both interior and exterior improvements), hardscape, and landscaping shall be commensurate with other first class and high quality projects in Southern California at such relevant time during the compliance periods required under this Agreement; provided however, when determining comparable projects, the age of the improvements shall be considered; provided that nothing in such comparison shall modify, expressly or impliedly, the maintenance and property management standards set forth in this Section 5.4.1 and otherwise in this Agreement.
(b) Landscape maintenance shall include, but not be limited to:
watering/irrigation; fertilization; mowing; edging; trimming of grass; tree and shrub pruning; trimming and shaping of trees and shrubs to maintain a healthy, natural appearance and safe road conditions and visibility, and irrigation coverage; replacement, as needed, of all plant materials; control of weeds in all planters, shrubs, lawns, ground covers, or other planted areas; and staking for support of trees.
(c) Clean-up maintenance shall include, but not be limited to:
(i) maintenance of all sidewalks, paths and other paved areas in clean and weed-free condition; (ii) maintenance of all such areas clear of dirt, mud, trash, debris or other matter which is unsafe or unsightly; (iii) removal of all trash, litter, bulky items, and other debris from improvements and landscaping prior to mowing; (iv) clearance and cleaning of all areas maintained prior to the end of the day on which the maintenance operations are performed to ensure that all cuttings, weeds, leaves, debris, and other discarded items are properly disposed of by maintenance workers. (d) Repair maintenance includes work to fix, repair, or correct exterior conditions of the Units, common areas, parking, and overall Project, including: (i) painted surfaces, materials, other surfaces, and all onsite amenities are maintained free from fading, peeling, chipping, cracked surfaces, holes or other damage; and (ii) all broken fixtures, lights, and other improvements are repaired or replaced.
(e) Repair maintenance also includes work to repair and fix broken or other non-functional appliances (only those provided by Developer as part of a Unit), plumbing, electrical, HVAC and structural improvements of the interiors of the commercial space and all housing units, including the Affordable Units, at the Project consistent with property management standards required herein, subject to exclusions referenced in a tenant’s lease for damages such as that caused by tenant’s intentional action or inaction from misuse or neglect within the housing unit.

5.4.2. Notice re Non-Compliance. City agrees to notify Developer in writing (including by email) if the conditions of the Project or Site do not meet with the Maintenance Standards and to specify the deficiencies and the actions required to be taken by Developer to cure the deficiencies. Upon notification of any maintenance deficiency, Developer shall have thirty (30) days within which to correct, remedy or cure the deficiency. If the written notification relates to a problem that is urgent and relating to the public health and safety as reasonably determined in writing by the police department, fire department, department of public works, building department or other first responder public agency, then Developer shall have forty-eight (48) hours (or any such longer time as may be reasonable under the circumstances) to rectify the problem. In the event Developer does not maintain the Site in the manner set forth herein and in accordance with the Maintenance Standards, City shall have, in addition to any other rights and remedies hereunder, the right to

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maintain the Site, or to contract for the correction of such deficiencies, after written Notice to Developer, and Developer shall be responsible for the payment of all such costs incurred by City.

5.4.3. Program Maintenance. In addition to the routine maintenance and repair required pursuant to Section 5.4 and the requirements set forth herein and in the City Covenants, Developer shall perform the following minimum programmed maintenance of the Project and Site:
(a) Interior painting, interior carpets in common areas, and window covering replacement at least every seven (7) years;
(b) Exterior painting at least every ten (10) years;
(c) Repair, resurfacing, and re-striping of parking areas and walkways at least every five (5) years;
(d) Replacement of all deteriorated or worn landscaping at least every five (5) years; and
(e) Replacement of all deteriorated or worn recreational and play equipment at least every five (5) years.

Notwithstanding the foregoing, if the City Manager reasonably determines that the Project suffers from significant and unexpected wear and tear requiring any of the above items of maintenance to be performed sooner than as set forth above, City may require that such maintenance actions be performed within a reasonable time, even if sooner than the time periods set forth above.

Upon the request of Developer, the City Manager, at her/his sole, reasonable discretion, may grant a waiver or deferral of any program maintenance requirement. Developer shall keep such records of maintenance and repair as are necessary to prove performance of the program maintenance requirements.

5.4.4. Occupancy Limits. Developer agrees to comply with the following minimum and maximum occupancy for the Affordable Units in the Project provided however, subject to applicable law, nothing herein shall prohibit the Developer from utilizing or complying with more restrictive occupancy limits imposed with respect to the Site or Project: (i) for the studio units the maximum occupancy is two persons, and (ii) for the one-bedroom units the maximum occupancy is four persons; in this regard, maximum occupancy is two persons per sleeping/bedroom and living area(s).

5.5. Nondiscrimination Covenants. Developer covenants by and for itself and any successors in interest that there shall be no discrimination against or segregation of any person or group of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the Site, nor shall the grantee or any person claiming under or through him or her, establish or permit any practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees of the Site or any portion thereof.

The foregoing covenants shall run with the land.

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5.5.1. Required Clauses. Developer shall refrain from restricting the rental, sale, or lease of the Site on the basis of race, color, religion, sex, marital status, ancestry, or national origin of any person. All such deeds, leases or contracts shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses:

In deeds: “The grantee herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the premises herein conveyed, nor shall the grantee or any person claiming under or through him or her, establish or permit any practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the premises herein conveyed. The foregoing covenants shall run with the land.” In leases: “The lessee herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assigns, and all persons claiming under or through him or her, and this lease is made and accepted upon and subject to the following conditions:
“That there shall be no discrimination against or segregation of any person or group of persons, on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of the premises herein leased nor shall the lessee himself or herself, or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy, of tenants, lessees, sublessees, subtenants, or vendees in the premises herein leased.”
In contracts: “There shall be no discrimination against or segregation of, any person or group of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the premises which are the subject of this Agreement, nor shall the grantee or any person claiming under or through him or her, establish or permit any practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the premises herein conveyed. The foregoing covenants shall run with the land.”

5.6. Management of the Project.

5.6.1. Property Manager. Developer shall, or shall cause, the Site and Project, in particular the Affordable Units, to be managed in a prudent and business-like manner, consistent with good property management standards for other first class and high quality developments in Southern California. Developer may contract with a property management company or property manager, to

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operate, manage, and maintain the Affordable Units in accordance with the terms of this Section 5.6 (“Property Manager”); provided, however, the selection and hiring of the Property Manager (and each successor or assignee), including any Affiliate, is and shall be subject to prior written approval of the City Manager (or designee) in her or his discretion. The Property Manager shall manage the Affordable Units in accordance with the definitions of Affordable Rent, the tenant selection requirements, and the definitions relating to Lower Income set forth herein. Developer shall conduct due diligence and background evaluation of any potential third party property manager or property management company to evaluate experience, references, credit worthiness, and related qualifications as a property manager of affordable housing. Any proposed property manager shall have significant and relevant prior experience with affordable housing properties comparable to the Project and the references and credit record of such property manager/company shall be investigated (or caused to be investigated) by Developer prior to submitting the name and qualifications of such proposed property manager to the City Manager for review and approval. A complete and true copy of the results of such background evaluation shall be provided to the City Manager. Approval of a Property Manager by City Manager shall not be unreasonably delayed but shall be in his/her sole reasonable discretion, and the City Manager shall use good faith efforts to respond as promptly as practicable in order to facilitate effective and ongoing property management of the Affordable Units at the Project. The replacement of a Property Manager by Developer and/or the selection by Developer of any new or different Property Manager during the Affordability Period shall also be subject to the foregoing requirements.

5.6.2. Property Management Plan. Prior to and as a Condition Precedent, Developer shall prepare and submit to the City Manager for review and approval, a management plan for the Affordable Units that includes a detailed plan and strategy for long term marketing, operation, maintenance, repair and security thereof at the Project, inclusive of the method of selection of tenants, rules and regulations for tenants, and other rental policies for the Affordable Units at the Project (“Property Management Plan”). City Manager shall review and shall act reasonably to approve or disapprove the Property Management Plan within a reasonable time. Subsequent to approval of the Property Management Plan by the City Manager, the ongoing management and operation of the Affordable Units at the Project shall be in compliance with the approved Property Management Plan. During the Affordability Period, Developer and its Property Manager may from time to time submit to the City Manager proposed amendments to the Property Management Plan, the implementation of which shall also be subject to the prior written approval of the City Manager.

5.6.3. Gross Mismanagement. During the Affordability Period, and in the event of “Gross Mismanagement” (as defined below) of the Affordable Units at the Project, and City (acting through the City Manager) shall have and retain the authority to direct and require any condition(s), acts, or inactions of Gross Mismanagement to cease and/or be corrected immediately, and further to direct and require the immediate removal of the Property Manager and replacement with a new qualified and approved Property Manager, if such condition(s) is/are not ceased and/or corrected after expiration of thirty (30) days from the date of written Notice from the City Manager. If Developer or Property Manager has commenced to cure such Gross Mismanagement condition(s) on or before the 20th day from the date of written Notice (with evidence of such submitted to the City Manager, as applicable), but has failed to complete such cure by the 30th day (or such longer period if the cure cannot reasonably be accomplished in thirty (30) days as reasonably determined by the nondefaulting party), then Developer and its Property Manager shall have an additional 10 days to complete the cure of Gross Mismanagement condition(s). In no event shall any condition of Gross Mismanagement continue uncured for a period exceeding forty-five (45) days from the date of the initial written Notice of such condition(s), except that the conditions described in subdivisions (d)

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and (e) below may exist for up to, but no longer than, seventy-five (75) days without triggering City’s right to remove the Property Manager as described in the immediately following sentence as long as Developer is diligently working to cure such conditions of Gross Mismanagement. If such condition(s) do persist beyond such period, the City Manager shall have the absolute right to immediately and without further notice to Developer (or to Property Manager or any other person/entity) to remove the Property Manager and replace the Property Manager with a new property manager of City Manager’s selection at the sole cost and expense of Developer. If Developer takes steps to select a new Property Manager that selection is subject to the requirements set forth above for selection of a Property Manager.
(a) For purposes of this Agreement, the term “Gross Mismanagement” means management of the Affordable Units at the Project in a manner that violates the terms and/or intention of the Entitlement, this Agreement, and the City Covenants for operation of a first class and high quality development, in particular the Affordable Units at the Project, and shall include, but is not limited to, any one or more of the following:
(i) Leasing Affordable Units to tenants who do not qualify as Low Income Households;
(ii) Leasing Affordable Units to tenants who do not qualify as Senior Citizen Households;
(iii) Charging rent in excess of Affordable Rent for the Affordable Units;
(iv) Allowing tenants of the Affordable Units to exceed the prescribed occupancy levels without taking immediate action to stop such overcrowding; (v) Under-funding required Capital Replacement Reserve
accounts;
(vi) Failing to timely maintain the Affordable Units at the Project in accordance with the Property Management Plan and the Project in compliance with the Maintenance Standards;
(vii) Failing to submit timely and/or adequate annual reports to City as required herein as to operation of the Affordable Units at the Project; (viii) Fraud or embezzlement of Project funds, including without limitation funds in reserve accounts;
(ix) Failing to fully cooperate with the Fountain Valley Police Department or other local law enforcement agency(ies) with jurisdiction over the Project, in maintaining a crime-free environment within the Project, in particular as to the Affordable Units, or in implementing measures recommended by the Fountain Valley Police Department; (x) Failing to fully cooperate with the Fountain Valley Fire Department or other local public safety agency(ies) with jurisdiction over the Project, in maintaining a safe and accessible environment within the Project, in particular as to the Affordable Units, or in implementing measures recommended by the Fountain Valley Fire Department;

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(xi) Failing to fully cooperate with the Fountain Valley Planning and Building Department, or other local health and safety enforcement agency(ies) with jurisdiction over the Project, in particular the Affordable Units, in maintaining a decent, safe, and sanitary environment within the Project or in implementing measures recommended by the Fountain Valley Planning and Building Department;
(xii) Failing to conduct, or refer to appropriate third party(ies) to conduct, health, safety and welfare checks as reasonable for residents who are reasonably known to Developer, its Property Manager, onsite resident manager(s), social and supportive services providers, or other onsite workers be infirm, ill, incapacitated, or otherwise in need of close supervision of their living arrangement and ability to conduct their basic activities of daily living; and (xiii) Maintaining or allowing the Site to be maintained as a public nuisance or in a manner in conflict with any provision of the City Code; and (xiv) Spending funds from the Capital Replacement Reserve account for items that are not defined as eligible costs, including eligible capital and/or replacement costs, under the standards imposed by GAAP (and/or, as applicable, generally accepted auditing principles).
(b) Notwithstanding the requirements of the Property Manager to correct any condition of Gross Mismanagement as described above, Developer is obligated and shall use its best efforts to correct any defects in property management or operations at the earliest feasible time and, if necessary, to replace the Property Manager of the Affordable Units as provided above.

Developer shall include advisement and provisions of the foregoing requirements and requirements of this Agreement within any contract between Developer and its Property Manager for the Affordable Units at the Project.

5.6.4. Code Enforcement. Developer acknowledges and agrees the City and its employees and authorized agents, shall have the right to conduct code compliance and/or code enforcement inspections of the Project, in particular the Affordable Units, both exterior and interior, at reasonable times and upon reasonable notice (not less than 48 hours prior notice, except in an emergency) to Developer and/or an individual tenant. If such notice is provided by City representative(s) to Developer, then Developer (or its Property Manager) shall immediately and directly advise any affected tenant of such upcoming inspection and cause access to the area(s) and/or Affordable Units at the Project to be made available and open for inspection. Developer shall include express advisement of such inspection rights within the lease/rental agreements for each Affordable Unit in the Project in order for each and every tenant and tenant household to be aware of this inspection right.

5.7. Capital Reserve Requirements. Commencing upon issuance of the CoO, Developer shall annually set aside an amount of not less than Three Hundred Dollars ($300.00) per Affordable Unit (29 Affordable Units times $300 equals $8,700) or such increased amount required by a Lender from the gross rents received from the Affordable Units at the Project, into a separate interest bearing trust account defined as the Capital Replacement Reserve. Funds in the Capital Replacement Reserve shall be used only for capital repairs, improvements, and replacements to the Project, including fixtures and equipment, which are normally capitalized under generally accepted accounting principles including “capital repair” as defined in the Internal Revenue Code. The nonavailability of funds in the Capital Replacement Reserve does not in any manner relieve or lessen

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Developer’s obligation to undertake any and all necessary capital repairs, improvements, or replacements and to continue to maintain the Affordable Units at the Project in the manner prescribed herein. Not less than once per year, Developer, at its expense, shall submit to the City Manager an accounting for the Capital Replacement Reserve for the Affordable Units at the Project. Capital improvements and repairs to, and replacements for Affordable Units at the Project shall include only those items with a long useful life, including without limitation the following: carpet and drapery replacement; appliance replacement; exterior painting, including exterior trim; hot water heater replacement; plumbing fixtures replacement, including tubs and showers, toilets, lavatories, sinks, faucets; air conditioning and heating replacement; asphalt repair and replacement, and seal coating; roofing repair and replacement; landscape tree replacement; irrigation pipe and controls replacement; sewer line replacement; water line replacement; gas line replacement; lighting fixture replacement; elevator replacement and upgrade work; miscellaneous motors and blowers; common area furniture replacement; and common area repainting. In connection with each annual report, to the City Manager by Developer, City Manager will evaluate the cumulative amount on deposit in the Capital Replacement Reserve account and exercise his/her sole, reasonable discretion to determine if existing balance(s) in, proposed deposits to, shortfalls, if any, and/or a cumulative unexpended/unencumbered account balance in such Capital Replacement Reserve account are adequate to provide for necessary capital repairs and improvement for the Affordable Units at the Project.

Notwithstanding the foregoing portion of this Section 5.7, in the event a Lender prescribes particular amounts to be set aside as a capital replacement reserve that exceeds the requirements of this Section 5.7, compliance therewith shall be deemed to comply with this Section 5.7.

5.8. Effect of Violation of the Terms and Provisions of this Agreement after CoO Issued. City is deemed the beneficiary of the terms and provisions of this Agreement and of the covenants running with the land, for and in its own right and for the purposes of protecting the interests of the community and other parties, public or private, in whose favor and for whose benefit this Agreement and the City Covenants running with the land have been provided, without regard to whether City has been, or is, or becomes, an owner of any land or interest in the Site. City shall have the right, if the Agreement or any covenants in any agreement pursuant to this Agreement, including without limitation the City Covenants, are breached, to exercise all rights and remedies, and to maintain any actions or suits at law or in equity or other proper proceedings to enforce the curing of such breaches to which it or any other beneficiaries of this Agreement and such covenants may be entitled.

Section 6. DEVELOPER’S GENERAL REPRESENTATIONS AND WARRANTIES.

In addition to the representations under Section 1.5, Developer represents and warrants to City that:

6.1. Formation, Qualification and Compliance. Developer (a) is a Delaware limited liability company validly existing and in good standing under both the laws of the State of Delaware and the State of California for its operations and property ownership in the State of California; (b) has all requisite authority to conduct its business and own, purchase, improve and sell its properties. Developer is in compliance in all material respects with all laws applicable to its business and has obtained all approvals, licenses, exemptions and other authorizations from, and has accomplished all filings, registrations and qualifications with any governmental agency that are necessary for the transaction of its business; (c) Developer has and will in the future duly authorize, execute and deliver this Agreement and any and all other agreements and documents required to be executed and delivered by Developer in order to carry out, give effect to, and consummate the transactions contemplated by this Agreement; (d) Developer does not have any material contingent

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obligations or any material contractual agreements which could materially adversely affect the ability of Developer to carry out its obligations hereunder; (e) There are no material pending or, so far as is known to Developer, threatened, legal proceedings to which Developer is or may be made a party or to which any of its property is or may become subject, which have not been fully disclosed by Developer to City in this Agreement which could materially adversely affect the ability of Developer to carry out its obligations hereunder; and (f) There is no action or proceeding pending or, to Developer’s best knowledge, threatened, looking toward the dissolution or liquidation of Developer and there is no action or proceeding pending or, to Developer’s best knowledge, threatened by or against Developer which could affect the validity and enforceability of the terms of this Agreement, or materially and adversely affect the ability of Developer to carry out its obligations hereunder.

Each of the foregoing items (a) to (f), inclusive, shall be deemed to be an ongoing representation and warranty. Developer shall advise City in writing if there is any change pertaining to any matters set forth or referenced in the foregoing items (a) to (f), inclusive.

6.2. Execution and Performance of Project Documents. Developer has all requisite authority to execute and perform its obligations under the Project Documents. The execution and delivery by Developer of, and the performance by Developer of its obligations under, each Project Document has been authorized by all necessary action and do not and will not violate any provision of, or require any consent or approval not heretofore obtained under, any articles of incorporation, by-laws, or other governing document applicable to Developer.

Section 7. DEFAULTS, REMEDIES, AND TERMINATION.

7.1. Default Remedies. Subject to the extensions of time set forth in this Section 7, failure by a party to perform any action or covenant required by this Agreement within the time periods provided herein following notice and failure to cure as described hereafter, constitutes a “Default” or “Event of Default” under this Agreement. A party claiming a Default shall give written Notice of Default to the other parties specifying the Default. Except as otherwise expressly provided in this Agreement, and without limiting or affecting rights of parties hereto to terminate this Agreement, the claimant shall not institute any proceedings against any other party, and such other party shall not be in Default if such party within thirty (30) days from receipt of such Notice, immediately and with due diligence, commences to cure, correct or remedy the specified Default and shall complete such cure, correction or remedy with diligence. In the event the party in Default, or causing such Default, fails to cure within said thirty (30) days, or if such breach is of a nature that it cannot be cured within said thirty (30) days, then the defaulting party shall commence to cure in an additional fifteen (15) days (i.e., within forty-five (45) days of Notice of Default) and the defaulting party shall diligently complete such cure, correction or remedy within a reasonable time thereafter but in no event later than one hundred twenty (120) days from the date of the Notice of Default.

7.2. Institution of Legal Actions. In addition to any other rights or remedies and subject to the restrictions otherwise set forth in this Agreement, any party may institute an action at law or equity to seek specific performance of the terms of this Agreement, or to cure, correct or remedy any Default, to recover damages for any Default, or to obtain any other remedy consistent with the purpose of this Agreement. Such legal actions must be instituted in the Superior Court of the County of Orange, State of California.

7.3. Acceptance of Service of Process. In the event that any legal action is commenced against City, service of process on City shall be made by personal service upon the City Clerk or in

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Fountain Valley City CouncilDecember 19, 2023

Fountain Valley City Council
December 19, 2023