14 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 Project Documents, 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 Phase 1, which violation is likely to have a material adverse effect on the ability of Developer to perform its duties and obligations under any Project 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 Phase 1 , which would have a material adverse effect on its ability to perform its duties and obligations under any Project Document.
“North Lot” is defined in Recital A.
“Notice” means a notice in the form prescribed by Section 9.2 hereof. “OCFCD Easement” is defined in Recital A.
“OCFCD Property” is defined in Recital A.
“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. “Permitted Transfer” means any of the following (a) to (g), inclusive, and subject to the terms and conditions of Section 7.8.3 herein:
(a) A conveyance of a security interest in Developer’s estate in the North Lot in connection with any monetary lien for construction or permanent financing of Phase 1 that is junior and subordinate to the Phase 1 Memorandum of Agreement and the Phase 1 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 (i) Phase 1 Memorandum of Agreement (ii) Phase 1 City Covenants and (iii) Development Deed Restriction and Conditions of Approval Covenant, are and remain senior and nonsubordinate to any and all monetary liens, and the Lender or other transferee of the security interest, if any, entersinto and causesrecording in the Official Records of a Lender Consent substantially in the form of Attachment No. 12.
15 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 North Lot and Phase 1 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 North Lot and Phase 1 to a third party (not an Affiliate of Developer), (each a “Foreclosure”) and continuing for the remainder of the Affordability Period the new owner as a result of such Foreclosure of the North Lot and the North Lot Improvements, also as “Developer,” shall be bound by the Phase 1 Memorandum of Agreement, the Phase 1 City Covenants, and the Development Deed Restriction and Conditions of Approval Covenant and will, at the request of the City, execute an instrument confirming that such new owner as a result of such Foreclosure continues to be bound by such instruments.
(b) The lease for occupancy of all or any part of Phase 1; the form of each tenant’s lease of an Affordable Unit shall be in the form approved by the City pursuant hereto. (c) The granting of easements or permits to facilitate development of Phase 1 which are not in contravention of or violation of this Agreement and the Entitlement. (d) A conveyance of fee title to the North Lot by Developer to an Affiliate of Developer so long as (i) Magnolia I Owner, LLC, or an Affiliate thereof, retains a minimum of 51% of the ownership or beneficial interest, and (ii) for which Holland Partner Group, LLC a Washington limited liability company (“Holland Partner Group”), or its Affiliate, remains a ten percent (10%) member of Magnolia I Investor, LLC (which entity is the sole member of the Developer LLC entity), and (iii) Holland Partner Group or its Affiliate maintains management, decision-making, and control of day-to-day operations of the Phase 1 Project.
(e) The inclusion of equity participation by Developer by addition of members to Developer’s limited liability company, or similar mechanisms, so long as (i) Phase 1 Memorandum of Agreement, (ii) Phase 1 City Covenants, and (iii) Development Deed Restriction and Conditions of Approval Covenant are and remain senior and nonsubordinate to any and all such equity participants, and the Developer or its Affiliate retains a minimum of 51% of the ownership or beneficial interest, and (ii) for which Holland Partner Group, LLC a Washington limited liability company (“Holland Partner Group”), or its Affiliate, remains a ten percent (10%) member of Magnolia I Investor, LLC (which entity is the sole member of the Developer LLC entity), and (iii) Holland Partner Group or its Affiliate maintains management, decision-making, and control of day-to-day operations of the Phase 1 Project.
(f) A sale, assignment or other conveyance or transfer of all or any part of the North Lot or Phase 1, or any interest therein, to a person or entity meeting all of the qualifications of (f)(i), (f)(i)(A), (f)(ii), and (f)(iii) below, for which Developer first shall submit to City verifiable and complete supporting documentation evidencing to the City that the following criteria and that the assignment and assumption agreement evidences the following:
(i) such person or entity (or its Affiliate) owns at least one hundred (100) apartment rental units of which not less than fifteen percent (15%) of the total units are subject to 55- year (or longer) affordable housing restrictions of record that establish covenants restricting occupancy to Lower Income, very low or extremely low income tenant households (as such terms are defined in the HSC) available at an affordable rent pursuant to the HSC or a tax credit regulatory agreement or bond regulatory agreement; and
16 (A) the project(s) in (i) above are then in compliance with the applicable affordable housing regulatory agreement(s) or covenants of record; and (ii) such person or entity operates the project(s) described in (i), or retains and utilizes property management entity(ies) experienced in management and operation of affordable housing units comparable to the project(s) described in clause (i); and (iii) such person or entity (or its Affiliate) has at least one hundred million dollars ($100 million) in assets that include one or more project(s) described in clause (i). “Phase 1” is defined in Recital G.
“Phase 2” is defined in Recital G.
“Phase 1 City Covenants” or “City Covenants” means the Phase 1 City Covenants Agreement evidencing the nonsubordinate, senior covenants related to the Affordable Units on the North Lot 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 Entitlement for the Project Site and Project and in compliance with this Phase 1 DBAHA which, together with the Phase 1 Memorandum of Agreement, shall be recorded against the North Lot in a senior, nonsubordinate position; and, the Phase 1 City Covenants shall be substantially in the form of Attachment No. 4 hereto. As provided in the Entitlement, in no event shall the Phase 1 City Covenants be made junior or subordinate to any deed of trust or other documents providing financing for the construction or operation of Phase 1 on the North Lot or ownership of Phase 1 or the North Lot or any other lien or encumbrance whatsoever against the North Lot for the Affordability Period, except as required by local, state, or federal law, or as may be agreed to by the City.
“Phase 1 Memorandum of Agreement” or “Memorandum of Agreement”) means a Phase 1 Memorandum of Agreement in the form of Attachment No. 3 to this Agreement. “Portable Voucher” shall mean Section 8 rental vouchers under 24 CFR part 887 (Rental 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” means for the thirty-nine (39) Affordable Units in the Phase 1 Residential Component generally as depicted on the Designated Affordable Units Map, Attachment No. 10:
• Building No. 1:
• seven (7) studio units;
• nineteen (19) 1 bedroom units;
• twelve (12) 2-bedroom units; and
• one (1) 3-bedroom unit,
each and all for tenancy and occupancy by qualified Lower Income Households at an Affordable Rent;
17 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 within the Phase 1 Residential Component are filled in accordance with the Prescribed Rent Level and Unit Mix, and generally in accordance with the Designated Affordable Units Map, Attachment No. 10, until the noncompliance is corrected. Changes to the Designated Affordable Units Map as to location of one or more Affordable Units as shown on the Designated Affordable Units Map may occur during permitting, construction or operation during the Affordability Period, provided that the Developer shall first obtain the City’s prior consent in writing. In such request, Developer shall demonstrate to the City that the proposed change or changes do not cause or exacerbate racial, ethnic, or economic segregation and comply with applicable provisions of the City’s Inclusionary Ordinance or other applicable law governing the location of the Affordable Units and with this Agreement.
A tenant who qualified as a Lower Income Household at initial occupancy of an Affordable Unit in Phase 1 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 Lower Income Household. An existing tenant household occupying an Affordable Unit in Phase 1 whose income exceeds the qualifying limit for a Lower 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” is defined in Recital B.
“Project Documents” means, collectively, this Agreement, inclusive of all Attachments hereto, including Phase 1 City Covenants, Phase 1 Memorandum of Agreement, Development Deed Restriction and Conditions of Approval Covenant, and Request for Notice. The Phase 1 City Covenants, Phase 1 Memorandum of Agreement, and Development Deed Restriction and Conditions of Approval Covenant and remain senior and nonsubordinate to any and all monetary liens. “Project Site” is defined in Recital A.
“Property Management Plan” is defined in Section 3.1(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. 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 CCR Section 6000, et seq., 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
18 relocation benefits or assistance to persons ineligible for relocation benefits or assistance. Developer shall be solely responsible, legally and financially, 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 Phase 1 or this Agreement.
“Request for Notice of Default” means Attachment No. 5. “Site Map” means Attachment No. 1 to this Agreement.
“South Lot” is defined in Recital A.
“Third Party Costs” is defined and described in Section 9.6.1 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 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
19 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 Phase 1 Memorandum of Agreement and the Phase 1 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 Delaware limited liability company (“LLC”), and in good standing under the laws of the State of California.
Under the LLC, Developer has full right, power, and lawful authority to develop and operate Phase 1 on the North Lot and undertake all obligations with respect to Phase 1 as provided in the Entitlement and herein and the execution, performance and delivery of this Agreement, Phase 1 Memorandum of Agreement, and the Phase 1 City Covenants by Developer has been fully authorized by all requisite actions on the part of Developer. Further, under the LLC, Holland Partner Group Investments, LLC, a Washington limited liability company, or its Affiliate, has management and control over the construction of the Phase 1 development on the North Lot. The party(ies) who have executed this Agreement on behalf of Developer are authorized to bind Developer by their signatures hereto. (b) 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.
(c) No Developer Bankruptcy. Developer is not the subject of a bankruptcy proceeding.
(d) 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 commercial and 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 Phase 1 and has obtained advice from any advisers of its own choosing in connection with this Agreement. (e) Ownership of the North Lot. As of the Date of Agreement, Developer holds fee simple marketable title to the North Lot.
20 (f) Due Authorization and Execution; Studies Completed. Developer has duly authorized the execution of this Agreement, the Phase 1 City Covenants, and all other Project Documents. Developer completed its due diligence as to the North Lot 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 North Lot notifying Developer (or any Affiliate) of the presence of surface or subsurface zone Hazardous Materials in, on, or under the North Lot, 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 (and each of the member persons or entities that comprise the LLC entity).
After the Date of Agreement, Developer, and permitted successor(s)-in-interest, shall, upon learning of any fact or condition which would cause any of the ongoing warranties and representations in subparts (b), (c) and (d) of this Section 1.5.2 not to be true in all material respects, immediately give written Notice of such fact or condition to City.
1.5.3. No Material Adverse Change. Developer hereby represents and warrants, as of the Date of Agreement (and permitted successor(s)-in-interest as of the date of their succession), that any and all documents, materials and information provided by Developer to City for purposes of demonstrating 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 Phase 1 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 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. Environmental Condition of the North Lot.
21 2.1.1. Investigation of Site. Developer represents it shall undertake and complete at its expense investigations of the North Lot, including without limitation condition of title, the presence of any Hazardous Materials and other surface and subsurface conditions, and the suitability of the North Lot and portions of the OCFCD Property as necessary for construction, completion and operation of Phase 1.
(a) 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 North Lot and the OCFCD Property for Phase 1 , including the investigation of the environmental condition (collectively, the “Studies”). Any studies undertaken 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 North Lot and OCFCD Property and obtained any necessary permits therefor from the appropriate governmental agencies, including without limitation, City.
2.1.2. Environmental 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, “City 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 City 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 North Lot and OCFCD Property in connection with this Agreement, 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 North Lot and OCFCD Property 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 North Lot or the OCFCD Property 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 transportation of Hazardous Materials in, on, under, or about, or to or from, the North Lot and OCFCD Property; (iv) the physical and environmental condition of the North Lot and OCFCD Property, 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 North Lot and OCFCD Property. 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; provided, however, that the foregoing indemnification shall not apply to any Liabilities that arise out of the Indemnitees’ active, sole gross negligence or sole willful misconduct. This indemnification supplements and in no way limits the general indemnification provisions set forth herein.
2.1.3. Duty to Prevent Hazardous Material Contamination. During Developer’s ownership of the North Lot and during Developer’s construction, development, operation and management of Phase 1 , Developer shall comply with all applicable law to prevent the release of any Hazardous Materials into the environment on or under the North Lot and the OCFCD Property. Such
22 compliance shall include, but not be limited to, compliance with all applicable 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 the release of any Hazardous Materials into the environment.
2.1.4. Release of City 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 North Lot and OCFCD Property (collectively, the “Environmental Liabilities”), Developer waives, releases and discharges forever the City 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 North Lot and OCFCD Property, improvement of the North Lot and OCFCD Property in accordance with this Agreement and the Entitlement obtained by Developer for Phase 1, and for the operation of Phase 1 on the North Lot and OCFCD Property, of any Hazardous Materials on the North Lot and OCFCD Property, or the existence of Hazardous Materials contamination in any state on, under, or about the North Lot and OCFCD Property, 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
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.
2.1.5. 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 North Lot and OCFCD Property and Phase 1: 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:
23 (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 North Lot and OCFCD Property; 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 North Lot and OCFCD Property 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 copy(ies) of any and all non-attorney/client privileged 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 North Lot and OCFCD Property in Developer’s possession and/or shall notify City of any environmental entitlements or inquiries relating to or affecting the North Lot and OCFCD Property within Developer’s actual or constructive knowledge if Developer is not in possession of same, including, but not limited to, all permit applications, permits and reports including, without limitation, those reports and other matters which may be characterized as confidential; provided however, that nothing in this Agreement shall require the disclosure of information or materials protected by the attorney-client privilege or attorney work product.
Section 3 CONDITIONS PRECEDENT TO DEVELOPMENT OF PHASE 1.
3.1. Phase 1 Development on North Lot and Portions of the OCFCD Property.
3.1.1. Conditions Precedent to Initial City Permit in Favor of City.
Upon satisfaction of the conditions set forth in this Section 3.1.1, the City may issue the Initial City Permit, and Developer may commence grading and/or other construction work related to development of Phase 1. Each and every one of the following are “Conditions Precedent” and shall have been fully satisfied by Developer before the City issues the Initial City Permit, which conditions are for the benefit
24 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) Execution of this Agreement. The Entitlement conditions of approval require that Developer and City shall have duly executed this Agreement. (b) 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 the Initial City Permit for the construction of Phase 1 on the North Lot and portions of the OCFCD Property. In connection therewith, the Entitlement requires that Developer cause to be entered into this Agreement and to cause recording of the (i) Phase 1 Memorandum of Agreement, and (ii) Phase 1 City Covenants in a senior, non-subordinate lien position with respect to the North Lot and Building No. 1; and, in this regard, (i) and (ii) shall be ready for recording (in that order) in pari passu prior to, or concurrently with, and as the senior, nonsubordinate encumbrances.
(c) Beneficiary Consent and Subordination Agreement(s)/Lender Consent(s)(North Lot)). As of the Date of Agreement, the existing Lender for the North Lot is U.S.
Bank National Association, in its capacity as Administrative Agent, as reflected in the Construction Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing recorded on July 23, 2026 in Official Records as Instrument No. 2026000210279 (the “North Lot Deed of Trust”).
U.S. Bank National Association, in its capacity as Administrative Agent for the North Lot Deed of Trust, will be required to execute a Lender Consent substantially in the form of Attachment No. 12 excepting only liens for current real property taxes and assessments not yet due, payable, or ascertainable, Developer covenants and agrees to cause the full and unconditional subordination of such liens and encumbrances in the Lender Consent(s).
(d) Recording of Phase 1 Memorandum of Agreement and Phase 1 City Covenants. Developer and City shall have duly executed, notarized, and caused the recording of the Phase 1 Memorandum of Agreement and Phase 1 City Covenants in the Official Records against the North Lot as the senior, nonsubordinate encumbrances in pari passu. The Phase 1 Memorandum of Agreement and Phase 1 City Covenants shall be and remain senior to all monetary or other liens against the North Lot excepting property tax liens or other liens required by law to be senior thereto. In this regard, title to the North Lot shall be in the condition required by Section 3.3.1 herein. (i) In furtherance of subsection(d) above, the Development Deed Restriction and Conditions of Approval Covenant shall be recorded in the Official Records first and prior to the Phase 1 Memorandum of Agreement and Phase 1 City Covenants. Further, as of the Date of Agreement, and as reflected in the preliminary report for the South Lot issued by First American Title Company and dated August 26, 2026, Commitment No.: NCS-1320029-OR1, the existing monetary lien on the South Lot (other than any liens for current real property taxes and assessments not yet due, payable, or ascertainable) is the Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing recorded on July 23, 2026 in Official Records as Instrument No. 2026000210280 (the “South Lot Deed of Trust”). Developer shall cause U.S. Bank National Association, as the beneficial holder of the South Lot Deed of Trust, to execute a Lender Consent with respect to the Development Deed Restriction and Conditions of Approval Covenant substantially in the form of Attachment No. 13, excepting only liens for current real property taxes and assessments not yet due, payable, or ascertainable, Developer covenants and agrees to cause the full and
25 unconditional subordination of such liens and encumbrances to the Development Deed Restriction and Conditions of Approval Covenant in the Lender Consent(s). (e) Title Insurance for Phase 1. Developer shall have fee title to the North Lot and shall have delivered to the City Manager a copy of the grant deed (duly recorded in the Official Records) and a title policy evidencing such fact along with evidence from the insurer that (i) Development Deed Restriction and Conditions of Approval Covenant, (ii) Phase 1 Memorandum of Agreement, and (iii) Phase 1 City Covenants are the senior and nonsubordinate encumbrances against the North Lot. Such owner policy issued to Developer shall also evidence, or be issued a downdate endorsement evidencing, the recordation of the Beneficiary Consent and Subordination Agreement(s) for each monetary lien, in particular for the North Lot Deed of Trust. (f) Initial City Permit and Permit Readiness. Developer shall have received from City a readiness letter or other objective evidence issued by the City verifying that the City is ready to issue the Initial City Permit to commence construction of Phase 1 (“City readiness action”), which City readiness action shall include express conditions, or otherwise require, that concurrent with issuance of the Initial City Permit: (i) subject to Government Code Section 66007, Developer shall pay to City all fees required for issuance of the Initial City Permit and such other fees as required for Phase 1 under the Entitlement and Government Code 66007, if any, and (ii) subject to Government Code Section 66007, Developer shall timely pay all applicable fees, if any, charged and due for Phase 1, prior to issuance of the Initial City Permit, to each and all other governmental agencies (which could include, as applicable, fees assessed by school districts, sanitary districts, water districts, etc.), such payments being made to City or to the corresponding governmental agency (with submittal of evidence to City from such governmental agency that full payment has been received) as required by applicable law or mutual agreement by City and the other governmental agency for Phase 1, 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. (g) 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 North Lot and the OCFCD Property and Phase 1.
(h) Corporate Resolution. Developer shall deliver to City certified copies of Developer resolution(s) specifically authorizing (or ratifying) the execution of this Agreement, Development Deed Restriction and Conditions of Approval Covenant, Phase 1 Memorandum of Agreement, Phase 1 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 Phase 1. (i) Relocation. City shall be reasonably satisfied that Relocation, if any, is required from the North Lot and OCFCD Property, will be conducted in compliance with all applicable Relocation Laws, and this Agreement, and Developer and Phase 1 shall be in compliance with all Relocation obligations pursuant to this Agreement and the Relocation Laws. (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.
26 3.1.2. Condition to Issuance of CoO for all Affordable Units in Phase 1.
As express conditions to the City’s building official issuing the temporary and/or final Certificate of Occupancy that authorizes occupancy of each and all Affordable Units, Developer shall submit to City for review and City shall have approved the following:
(a) Lease/Rental Agreement. The standard form lease/rental agreement in conformance with the Phase 1 City Covenants for rental of the Affordable Units to Lower Income eligible tenants at Affordable Rent, 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 Lower Income 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 Lower Income Households, (iii) the rules and regulations for use, occupancy, and quiet enjoyment of all housing units in Phase 1, (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.
(i) In addition, this submittal by 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. (b) Management Plan; Property Manager. The Management Plan for the Affordable Units within the Phase 1 Residential Component. Developer shall identify the Property Manager and provide relevant background information and evidence of its experience as a professional property manager for high quality housing projects that include affordable housing units, including covenanted density bonus units, in Southern California as required in Section 5.6, et seq. herein. (i) The Management Plan shall include the “rules and regulations” for tenants in the Affordable Units within the Phase 1 Residential Component, which rules shall not be more strict than for market-rate units with the exception of the tenants and members of the Lower Income Households occupying the Affordable Units shall be subject to the terms and conditions of the Lease/Rental Agreement for Affordable Units and the Phase 1 City Covenants. (ii) The Management Plan shall include the steps for marketing and tenant selection of the Affordable Units within the Phase 1 Residential Component. (c) All conditions set forth in this Section 3.1, inclusive of Section 3.1.1 and 3.1.2, 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 3.1.1 prior to the issuance by the City’s building official of the temporary and/or final Certificate of Occupancy that authorizes occupancy of the Affordable Units, Developer shall have delivered to City evidence that additional fees, if any, for Phase 1 payable to the City and all other governmental agency(ies) have been paid, which based on Government Code Section 66007 or otherwise may not have been required to have been remitted by Developer therefor shall have been paid in full by Developer.
27 3.3. Review of Title.
3.3.1. Preliminary Report. Prior to the Date of Agreement, Developer has obtained and submitted to the City a preliminary report for the North Lot with hyperlinks to complete and legible copies for each of the title exceptions, which report that includes the North Lot was issued by First American Title Company and dated August 17, 2026, Commitment No.: NCS-1318908-OR1 (“PTR”). (a) Objection to Monetary Encumbrance(s). All monetary encumbrances and exceptions to title for the North Lot (including in amendments and updates to the PRT) as of recordation of the Phase 1 Memorandum of Agreement and Phase 1 City Covenants 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.) (i) In this regard, Developer covenants and agrees that as a Condition Precedent to receiving the Initial City Permit, Developer shall cause the full and unconditional subordination of the North Lot Deed of Trust to the Phase 1 Memorandum of Agreement and the Phase 1 City Covenants Agreement, to evidence that such instruments shall be recorded as, and shall remain, senior, nonsubordinate of record.
(ii) As provided in the Entitlement, in no event shall the Phase 1 Memorandum of Agreement or the Phase 1 City Covenants be made or become junior or subordinate to any deed of trust, monetary encumbrance, or other documents including those providing financing for the construction or operation of Phase 1 on the North Lot or ownership of the North Lot, or any other lien or monetary encumbrance whatsoever against the North Lot for the Affordability Period, except as expressly mandated by California statute or federal law, or as agreed to by the City. (iii) The Estoppel or Intercreditor Instrument, if any, 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 North Lot 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) Development Deed Restriction and Conditions of Approval Covenant (and the same against the South Lot);
(iii) Phase 1 Memorandum of Agreement;
(iv) Phase 1 City Covenants;
(v) The North Lot Deed of Trust, provided U.S. Bank National Association, in its capacity as Administrative Agent, shall have duly executed and caused recording in the Official Records of Lender Consent(s) evidencing the senior nonsubordinate priority of (A) Development Deed Restriction and Conditions of Approval Covenant, (B) this Phase 1 DBAHA by the recorded Phase 1 Memorandum of Agreement, and (C) the Phase 1 City Covenants;
28 (vi) Estoppel or other Intercreditor Instrument(s), if any, subject to City’s right to review and approve such document(s), which approval shall not be unreasonably withheld or delayed;
(vii) Request for Notice of Default; and
(viii) any other matters approved in writing by City.
3.4. Recordation. Pursuant to Section 3.1.1 and timing therefor, the Escrow Holder and Title Company shall be prepared to cause recording against the North Lot only of the Phase 1 Memorandum of Agreement, Phase 1 City Covenants, and Request for Notice. The parties acknowledge and agree that this Agreement, the Phase 1 Memorandum of Agreement, and the Phase 1 City Covenants are intended to encumber only the North Lot. Further, Developer shall cause U.S.
Bank National Association, as the beneficial holder of the South Lot Deed of Trust, to execute a Lender Consent with respect to the Development Deed Restriction and Conditions of Approval Covenant substantially in the form of Attachment No. 13, excepting only liens for current real property taxes and assessments not yet due, payable, or ascertainable, Developer covenants and agrees to cause the full and unconditional subordination of such liens and encumbrances to the Development Deed Restriction and Conditions of Approval Covenant in the Lender Consent(s).
3.4.1. Development Deed Restriction and Conditions of Approval Covenant. In furtherance of Section 3.4 above, the Development Deed Restriction and Conditions of Approval Covenant, as to each of North Lot and South Lot, respectively, shall be duly executed and caused to be recorded in the Official Records IN THE FOLLOWING ORDER and substantially in the form, as applicable, of Attachment Nos. 3, 4, 5, 11, 12, and 13: (i) Development Deed Restrictions, as to each of North Lot and South Lot with City Consent and Acknowledgment (form of Attachment No. 11), (ii) Phase 1 Memorandum of Agreement (form of Attachment No. 3)(North Lot only), (iii) Phase 1 City Covenants (form of Attachment No. 4) (North Lot only), (iv) Beneficiary Consent and Subordination (Phase I North Lot) (form of Attachment No. 12) (North Lot only), (v) Beneficiary Consent and Subordination (Phase 2 South Lot – Development Deed Restriction) (form of Attachment No. 13)(South Lot only), and (vi) Request for Notice with Instrument Nos. 2026000210279 (North Lot US Bank DoT) (form of Attachment No. 5) (North Lot only); and (vii) Request for Notice with Instrument Nos. 2026000210280 (US Bank DoT for South Lot) (form of Attachment No. 5) (South Lot only).
Section 4 DEVELOPMENT PLANS; INSURANCE AND INDEMNITY, FINANCING.
4.1. Development. Developer shall develop Phase 1 and the Phase 1 Improvements (including all onsite and offsite improvements, if any, located within or appurtenant to the North Lot or the OCFCD Property), in particular the thirty-nine (39) Affordable Units within the Phase 1 Residential Component, in accordance with the Entitlement and the approved Development Plans.
4.1.1. Site Preparation. Developer is responsible to prepare the North Lot and the OCFCD Property for construction of Phase 1, including the demolition, relocation of utilities insofar as necessary, grading and site preparation, and all other actions required to prepare the North Lot and the OCFCD for the construction of all Improvements that comprise Phase 1.
4.2. Development Plans for Phase 1. Developer represents that all construction, operation, management, and maintenance of Phase 1 shall be in accordance with that of a high quality affordable housing project, with the term “high quality” meaning a successfully developed and wellPage 122 of 227 29 managed and maintained housing project that includes affordable housing units in Southern California.
The North Lot and the Phase 1 OCFCD Property Improvements shall be developed in compliance with the Entitlement and the approved Development Plans. The Development Plans, and any changes or modifications thereto, shall be approved by the City in accordance with the Entitlement, the FVMC and through the City’s customary process for review and approval of the applicable permit. The parties agree that the final Development Plans shall evidence the high quality development as set forth in this Section 4.2 in compliance with and for the periods required under this Agreement.
4.2.1. Grading Plans. Developer shall prepare and submit to the City for review and approval, 100% complete grading plans (“Grading Plans”) for Phase 1. 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 as they relate to Phase 1, except as may be modified as approved through the City’s customary process for any changes or revisions.
4.2.2. Landscaping Plans. The Landscaping Plans for Phase 1 shall be consistent with the Entitlement and all conditions of approval therein except as may be modified as approved through the City’s customary process for any changes or revisions. 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 a high quality development as provided for in 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 for Phase 1 that are consistent with the Entitlement, except as may be modified as approved through the City’s customary process for any changes or revisions (“Construction Drawings”), which shall depict and evidence all Improvements, materials, interior and exterior improvements, all toward evidencing the high quality development as intended by the Entitlement and this Agreement, all in compliance with applicable plan check requirements for issuance of a grading, engineering or building permit, as applicable.
4.2.4. 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.
4.2.5. City and Other Governmental Permits. Developer shall secure or cause its General Contractor (and all Subcontractors) to secure any and all building permits that may be required by the City or any other governmental agency for Phase 1. 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 grading permits, engineering permits, and building permits for construction of Phase 1 that meet the requirements of the FVMC, and all other applicable laws and regulations and that comply with the Entitlement, and to reasonably assist Developer where necessary to secure permits from any other governmental agency provided that (i) City staff shall not be required to dedicate more than a few hours in such assistance, and (ii) City shall not incur any out-of-pocket fees or costs to provide such assistance, provided however, the City Manager has sole discretion to authorize City legal counsel or
30 other consultant to provide such reasonable assistance and all fees and costs therefor shall be deemed Third Party Costs due and paid to City.
4.2.6. Cooperation re Development Plans. 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 Phase 1, who shall be responsible for the coordination of City’s (and City’s) activities under this Agreement and for coordinating the permitting process.
4.2.7. 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 Phase 1 .
4.3. Cost of Construction; Performance under other Agreements. The cost of planning, designing, developing, and constructing Phase 1 shall be borne solely by Developer. All fees imposed by any governmental entity in connection with the North Lot and Phase 1 OCFCD Property Improvements shall be borne by Developer and shall be paid when due by Developer.
4.4. Insurance Requirements. As a Condition Precedent to issuance of the Initial City Permit 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 Initial City Permit through the term of the Affordability Period.
From the date of the recording in the Official Records of the City Covenants and Memorandum of Agreement as to Phase 1, and as a Condition Precedent to issuance of the Initial City Permit for Phase 1 and continuing through end of the Affordability Period, Developer shall obtain and maintain the following policies of insurance covering all activities relating to construction and thereafter operation of Phase 1. 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 City 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 and Employer’s Liability insurance with limits of at least $1,000,000.
(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.
31 (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, rented, 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 City 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 $500,000 must be declared to and approved by City’s risk manager.
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 selfinsurance maintained by the City of Fountain Valley, and/or its respective officers, officials, agents, employees, representatives, and volunteers. A primarynoncontributory 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.
32 (b) With the exception of the workers compensation policy, the City of Fountain Valley, and its City Indemnitees shall be named as additional insureds on all policies, including the excess liability policy. Developer shall provide:
(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 City 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 City 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 City 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 City 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.
33 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:
Workers compensation As required by California law
Employer’s Liability Not less than $1,000,000.
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 City Indemnitees from and against all third-party 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 Phase 1; (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 North Lot/Building No. 1 including Phase 1 OCFCD Property Improvements; or (vi) the ownership, occupancy or use of the North Lot or Building No. 1. Notwithstanding the foregoing, Developer shall not be obligated to indemnify City with respect to the consequences of any act of sole gross negligence or sole willful misconduct of City. Developer’s obligations under this Section 4.5
34 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 Phase 1 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. (b) 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 Agreement and are in addition to and do not limit the obligations of Developer under the Phase 1 City Covenants. (c) Developer indemnifies City from any real estate commissions or brokerage fees which may arise from the North Lot, or the leasing of dwelling units on the North Lot 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 North Lot and OCFCD Property and improvements under construction, 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 Phase 1 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 C.F.R. 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 and its General Contractor subcontractors, shall comply with applicable federal and state laws, including the California Labor Code with regard to the undertaking, constructing, and completing Phase 1.
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 Phase 1 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 City Indemnitees harmless from any and all third-party 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.
35 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 North Lot. Developer shall remove or have removed any levy or attachment made on the North Lot 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 ninety (90) 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 North Lot.
4.10. Liens and Stop Notices. Developer shall not allow to be placed on the North Lot or OCFCD Property or any part thereof any mechanic’s or materialmen’s lien or stop notice. If a claim of a lien or stop notice is given or recorded affecting Phase 1 Developer shall within sixty (60) days of such recording or service or within fifteen (15) 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 Phases 1. 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 Phase 1 (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 Phase 1 and North Lot , 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 Phase 1 Memorandum of Agreement and Phase 1 City Covenants are and shall remain senior, nonsubordinate encumbrances against the North Lot.
36 4.11.4. Holder Not Obligated to Construct Improvements. The holder of any mortgage or deed of trust on Developer’s interest in the North Lot authorized by this Agreement shall not be obligated by the provisions of this Agreement to construct, complete, or operate Phase 1 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 North Lot 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 Phase 1 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 North Lot 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 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, but not the obligation, to cure any breach or default within thirty (30) days after the expiration of any cure period, provided that such 30-day period shall be extended for such additional time as Lender may reasonably require to expeditiously either: (i) obtain possession and control of the North Lot or Phase I Improvements and thereafter cure the breach(es) or default(s) with reasonable diligence and continuity, or (ii) obtain the appointment of a receiver and give such receiver a reasonable period of time in which to expeditiously cure the default; provided that in no event shall such cumulative Lender cure period exceed ninety (90) days in total for a breach or default bearing on the health or safety of residents of any Affordable Unit without the consent of the City Manager after consultation with City legal counsel.
(a) Nothing contained in this Agreement shall be deemed to permit or authorize such holder to undertake or continue the construction or completion of Phase 1, 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 and such holder. In this regard and in the event the holder in its discretion chooses to assume Developer’s obligations, holder must agree to complete the Phase 1 development in compliance with the Entitlement and this Agreement. In this regard, Developer (holder’s borrower) and thereby holder will have availed the benefit of the density bonus granted by the Entitlement, so all 39 Affordable Units in Phase 1 (of 78 required under the Entitlement) are required onsite and within the Phase 1 Residential Component. Any such holder properly completing such Phase 1 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 thirty (30) 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 North Lot (or portion thereof) if and to the extent any such holder has within such 30-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. Operational and Use Covenants. Developer covenants and agrees for itself, its successors, assigns, and every successor in interest to the North Lot or any part thereof, that during the Affordability Period, Developer shall devote the North Lot and all North Lot Improvements to the uses and operational covenants specified in the Entitlement (including any future modifications or changes
37 thereto) and such uses shall conform to all applicable provisions of the City Code and other applicable local, state and federal laws. As to the Affordable Units within the Phase 1 Residential Component, Developer shall own, operate, manage, and maintain the Affordable Units in conformity with the DBL, Inclusionary Ordinance, Entitlement, this Agreement, and the Phase 1 City Covenants, whichever are the more restrictive in each case unless expressly provided to contrary effect herein or prohibited by the DBL or other applicable law.
5.2. Affordable Housing Requirements.
5.2.1. Affordable Units. During the Affordability Period, Developer agrees to operate, make available, restrict occupancy to, and rent all thirty-nine (39) Affordable Units in conformity with the Prescribed Rent Level and Unit Mix and generally as denoted on the Designated of Affordable Units Map, Attachment No. 10. An example of the Calculation of Affordable Rent for Low Income Households for tenancy of the Affordable Units is set forth in Attachment No. 8. It is the responsibility of Developer to comply with all applicable income and rent standards. (a) Residents of the Affordable Units shall have access to and use of North Lot Improvements, including onsite amenities and appurtenant improvements, in a manner comparable and equivalent to the residents of the Phase 1 market-rate units, including the residents’ invited guests of all tenants in good standing within the Phase 1 Residential Component, as set forth in the rules and regulations for tenants and other rental policies.
5.2.2. Duration of Affordability Requirements. The Affordable Units shall be maintained as rental apartments available, and rented, to Lower Income Households at an Affordable Rent throughout the 55-year Affordability Period, as more particularly set forth in the Phase 1 City Covenants.
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. No Affordable Unit shall be restricted on the basis of age or any protected category set forth in the federal Fair Housing Law or state Fair Employment and Housing Act (FEHA). In this regard, tenant selection for the Affordable Units shall comply with 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 and Phase 1 City Covenants.
(a) As required by Section 3.1.2, Developer shall adopt a tenant selection system for the Affordable Units that shall be submitted to, reviewed, and approved (or disapproved) by City Manager in her or his reasonable discretion, which meets the requirements of this Section 5.2.3.
If upon review, the submittal is disapproved, Developer shall provide requested supplemental information and documents for City review. In this regard, Developer and City shall cooperate in good faith toward approval thereof.
(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”, if such has been updated since submittal of the form of lease/rental agreement under Section 3.1.2 above., including with a description of necessary supporting materials to be completed by applicants for prospective tenancy of the Affordable Units.
38 (c) Posting advertisements and notices of the vacancy(ies) in locations agreed upon by the City Manager and Developer, which may include the community center, senior center, City Hall, other public buildings such as post offices located in the City, and on the City’s website (https://www.fountainvalley.gov/).
5.2.4. Income of Tenants. Each tenant household of an Affordable Unit shall qualify as a Lower Income 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 Section 50053 for each household qualifying as Lower Income. The monthly housing cost means the maximum amount to be charged by Developer and paid by the Lower Income Households occupying the Affordable Units. (a) Further, the term includes the total of monthly payments by the tenants of an Affordable Unit for (i) use and occupancy for an Affordable Unit and facilities associated therewith, (ii) 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 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., (iii) a reasonable allowance for utilities not included in (i) or (ii) above, including garbage collection, sewer, water, electricity and gas, as determined by regulation of the Orange County Housing Authority pursuant to 24 C.F.R. Section 5.600 et seq. and (iv) 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 Lower Income Households, each tenant shall meet the following requirements; (i) household income for Lower 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 Section 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 are filled in accordance with the Prescribed Rent Level and Unit Mix until the noncompliance is corrected. (a) A tenant who qualified as a Lower Income Household at initial occupancy in Phase 1 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
39 such tenant no longer qualifies as a Lower Income Household. An existing tenant household occupying an Affordable Unit whose income exceeds the qualifying limit for a Lower 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 Section 50053.
5.3. Verifications.
5.3.1. Income Verification. Developer shall verify the income of each proposed and existing tenant household of every Affordable Unit.
(a) Not less than annually, Developer shall re-certify with verifiable supporting documentation the annual gross income of each proposed and existing tenant household of every Affordable Unit to evidence his/her/their continued qualification as a Lower Income Household.
A form of Income Verification is included as Attachment No. 9.
5.3.2. Annual Reports. Following the issuance of the final CoO for Building No. 1, 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 for Phase 1 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, a complete rent roll, with identification of units, if any, for tenants holding Portable Vouchers, 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 compliance with this Agreement and the Affordable Units. Developer shall prepare and submit to the City Manager on the first March 30 following the issuance of the final CoO, as described in 5.3.2 above, and continuing on each Year on or before March 30 throughout each applicable 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 Phase 1 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.
40 (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 with respect to Phase 1. Keyser Marston Associates, Inc., or another firm or economist mutually acceptable to City and Developer, will be employed to determine compliance with the Entitlement, this Agreement, and the Phase 1 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 North Lot. Developer agrees for itself and its successors in interest to the North Lot, to maintain the North Lot and North Lot Improvements in conformity with this Agreement, the City Code, the Entitlement, and Phase 1 City Covenants, and shall keep the North Lot and North Lot Improvements free from any accumulation of debris or waste materials. Developer shall also maintain the landscaping planted on the North Lot 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 North Lot Improvements (collectively, “Maintenance Standards”) described below. Developer’s application for the approved Entitlement, and Development Plans envision, and therefore, Developer shall operate and maintain a high quality mixed-use development with residential and commercial components, common areas, parking areas, North Lot Improvements, and other onsite amenities and/or any joint use improvements, associated with the Phase 1 Residential Component including the Affordable Units. (a) The North Lot Improvements 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 high quality projects that include affordable housing units including those with or without commercial components and located in Southern California. In this regard the standard of maintenance and upkeep of the North Lot Improvements (both interior and exterior improvements), hardscape, and landscaping shall be commensurate with other for high quality projects that include affordable housing 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;
41 (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 Affordable Units, the North Lot Improvements, parking areas, and common areas and any other onsite amenities and/or any joint use improvements available to all residential tenants, which includes (i) painted surfaces, materials, other surfaces 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 an Affordable Unit), plumbing, electrical, HVAC and structural improvements of the interiors of the commercial space and all housing units, including the Affordable Units, 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 North Lot or the North Lot Improvements 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; provided, however, that if the nature of the deficiency(ies) is such that it cannot reasonably be cured within thirty (30) days, then such cure period shall be extended for an additional thirty (30) days, or such longer time as may be reasonably necessary to cure such default with such extended period subject to the prior written consent of the City Manager, and so long as the defaulting party commences to cure within thirty (30) days of written notice and thereafter diligently and continuously prosecutes such cure to completion. (a) 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 as directed by first responders or other public safety officials. (b) In the event Developer does not maintain the North Lot, in particular the Affordable Units, North Lot Improvements, and common areas and any other onsite amenities and/or any joint use improvements available to all residential tenants, 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, and following expiration of any applicable cure period, the right to maintain and correct the deficiency(ies), or to contract for the correction of such deficiency(ies), after written Notice to Developer at least ten (10) days in advance, and Developer shall be responsible for the payment of all such costs reasonably 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 Phase 1 City
42 Covenants, Developer shall perform the following minimum programmed maintenance of the Affordable Units and common areas and amenities available to all residential tenants:
(a) Interior painting of deteriorated or worn common areas at least every six (6) years;
(i) Interior painting of all common areas at least every twelve (12) years;
(b) Interior painting of deteriorated or worn Affordable Units at least every five (5) years;
(i) Interior painting of all Affordable Units at least every ten (10) years;
(c) Replacement of deteriorated or worn interior carpets in common areas at least every six (6) years;
(i) Replacement of interior carpets in common areas at least every twelve (12) years;
(d) Replacement of deteriorated or worn window coverings in common areas at least every six (6) years;
(i) Replacement of all window coverings in common areas at least every twelve (12) years;
(e) Replacement of all deteriorated or worn window coverings in Affordable Units at least every six (6) years;
(i) Replacement of all window coverings in Affordable Units at least every twelve (12) years;
(f) Exterior painting at least every twelve (12) years; (g) Repair, resurfacing, or re-striping of deteriorated or worn exterior parking areas, cross-walks and non-concrete pathways at least every eight (8) years; (i) Repair, resurfacing, and re-striping of all exterior parking areas, cross-walks and non-concrete pathways at least every fifteen (15) years; (h) Replacement of all deteriorated or worn landscaping at least every five (5) years; and
(i) Maintenance, repair, replacement, as applicable and reasonably necessary based on comparable residential developments of the rooftop amenities including the swimming pool, spa, appurtenant improvements and equipment, clubhouse, roof deck amenities.
Notwithstanding the foregoing, if the City Manager reasonably determines that the North Lot Improvements suffer from significant and unexpected wear and tear requiring any of the
43 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 his/her sole, reasonable discretion, may grant a waiver or deferral of any program maintenance requirement, including based on the then physical condition of such improvements. 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. Subject to contrary requirements, if any, under applicable law, Developer agrees to comply with the following minimum and maximum occupancy limits for the Affordable Units 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 North Lot or North Lot Improvements: (a) for the studio units the maximum occupancy is two (2) persons, (b) for the one-bedroom units the maximum occupancy is three (3) persons, (c) for the two bedroom units the maximum occupancy is five persons and the minimum occupancy is two persons, and (d) for the three bedroom units the maximum occupancy is seven (7) persons and the minimum occupancy is three (3) persons; in this regard, maximum occupancy is two persons per bedroom plus one.
5.5. Nondiscrimination Covenants. Developer covenants by and for itself and any successors in interest that there shall be no unlawful 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 North Lot, 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 North Lot or any portion thereof. The foregoing covenants shall run with the land.
5.5.1. Required Clauses. Developer shall refrain from restricting the rental, sale, or lease of the North Lot 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:
44 “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 North Lot Improvements.
5.6.1. Property Manager. Developer shall, or shall cause, the North Lot and North Lot Improvements, in particular the Affordable Units, to be managed in a prudent and business-like manner, consistent with good property management standards for other high quality projects that include residential housing with long-term covenanted affordable housing units and located within Southern California. Developer may contract with (a) a property management company or property manager to operate, manage, and maintain the North Lot and North Lot Improvements inclusive of Affordable Units, or (b) a separate property management company or property manager in accordance with the terms of this Section 5.6 (herein, as selected, “Property Manager”). The Property Manager shall manage the Affordable Units in accordance with the Prescribed Unit Mix including definitions of Lower Income Household and Affordable Rent, the Management Plan, including tenant selection process, as set forth in this Agreement and the Phase 1 City Covenants. A copy of the agreement between Developer and a selected Property Manager shall be provided to the City Manager, and each agreement shall include reference to this Agreement, the Phase 1 City Covenants, and the approved Management Plan. The Property Manager shall comply with the insurance requirements of Section
4.4, except as otherwise reviewed and approved by the City through the Risk Manager. (a) A proposed new Project Manager with the following qualifications as submitted to the City Manager for review will be approved to act as the Property Manager for the North Lot Improvements, in particular the Affordable Units, so long as Developer has submitted to the City verifiable, supporting documentation evidencing the following (“PM Qualifications”):
(i) the proposed Property Manager has at least five (5) years’ experience managing one or more residential projects with at least 50 or more apartments, of which not less than fifteen percent (15%) of the total apartment units are subject to a regulatory agreement or covenant of record with a term of not less than 55 years that restrict occupancy as to income category
45 and affordable rent with no major compliance violations. The qualifying residential projects shall include one or more projects that include affordable units required under the DBL and apply income qualification and affordable rent pursuant to the DBL and HSC; thus, such portfolio of affordable housing projects shall not be solely tax credit, bond, or other state and federal funding sources, that apply different income and affordable rent standards.
(b) Commencing on the date of issuance of the CoO for occupancy of Building No. 1 and ending on the fourth (4th) anniversary of that commencement date, the following property management entities are hereby pre-approved to be the Property Manager for the North Lot Phase 1 development, in particular the Affordable Units, so long as each entity, at the time of selection, (i) continues to meet the PM Qualifications of 5.6.1(a)(i) above, and (ii) agrees to comply with this Agreement, the Phase 1 City Covenants, and the approved Management Plan, including tenant selection criteria, in the retention agreement between Developer and such proposed Property Manager:
(i) Holland Residential;
(ii) Greystar;
(iii) Asset Living;
(iv) RPM Living;
(v) Cushman & Wakefield;
(vi) UDR, Inc.;
(vii) Essex Property Trust;
(viii) Camden Property Trust; and
(ix) Related Management Company (RMC).
(c) Upon written request by Developer submitted no earlier than one hundred twenty (120) days prior to the expiration of the initial four (4) year pre-approval period provided in subsection 5.6.1(b) above (or any subsequent extension period), Developer shall submit a written extension request to the City Manager with Developer’s representation and affirmation that each entity for which an extension is requested has and continues to meet the PM Qualifications and provisions of Section 5.6.1(b). Upon receipt of the complete request, the City Manager will review and respond to Developer within sixty (60) days stating either (i) the City’s approval and extension of such entity on the pre-approved list for a certain period, or (ii) City’s disapproval with a statement of City’s reasonable determination that good cause exists to not extend such entity’s pre-approved status.
Developer may resubmit any disapproved entity for subsequent consideration pursuant to Section
5.6.1(d).
(d) Developer may, at any time, submit a written request to the City Manager to add one or more property management entities to the pre-approved list set forth in Section
5.6.1(b), which request shall include supporting documentation evidencing the PM Qualifications and provisions of this Section 5.6.1. Within sixty (60) days of the Developer’s complete submittal, the City Manager shall reasonably approve or disapprove the proposed entity(ies) for inclusion in the list of pre-approved entities under Section 5.6.1(b). If the City disapproves a proposed entity, the City shall provide written notice to Developer specifying the grounds for such disapproval, and Developer may resubmit any disapproved entity for subsequent consideration together with an explanation and supporting documentation as to how the City Manager’s stated grounds for disapproval have been cured or no longer apply.
46 5.6.2. Due Diligence Review. Subject to Section 5.6.1 above, including subsections (a) - (d), 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 high quality project with residential component and affordable housing units 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, subject to Section 5.6.1 above, 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. 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.
5.6.3. Property Management Plan. Prior to and as a Condition Precedent in Section 3.1.2, Developer shall prepare and submit to the City Manager for review and approval, a management plan for the Affordable Units, including the common areas, parking areas, and onsite amenities on or serving the North Lot for the Phase 1 Residential Component (together, "Affordable Improvements”), which shall include a detailed plan and strategy for long term marketing, operation, maintenance, repair and security thereof, inclusive of the method of selection of tenants for the Affordable Units, rules and regulations for tenants (both for Affordable Units and market-rate apartments), and other rental policies for the Affordable Units (“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 Improvements 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.
(a) As noted in the operational covenants, the Property Manager shall ensure that residents of the Affordable Units shall have access to and use of onsite amenities, ingress/egress, and other appurtenant improvements in a manner comparable and equivalent to the residents of the market-rate units in the Phase 1 Residential Component, including the residents’ invited guests of all tenants in good standing within the Phase 1 Residential Component, all pursuant to and as set forth in the rules and regulations for tenants and other rental policies.
5.6.4. Lease/Rental Agreement. Prior to and as a condition precedent to the issuance by the City’s building official of the first CoO for Building No. 1, Developer shall have submitted to City and shall have approved the standard form lease/rental agreement in conformance with the Phase 1 City Covenants for rental of the Affordable Units to eligible Lower Income 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 Lower Income Households, including without limitation: (i) the obligation to provide complete and timely income verifications and re-certifications prior to initial occupancy and then annually during the term of tenancy, (ii) a description of the Affordable Rent for the Lower Income Households, (iii) the
47 rules and regulations for use, occupancy, and quiet enjoyment of the Affordable Units, (iv) rules and regulations for access to and use of the Affordable Improvements, (v) advisement of the provisions of
5.6.6 related to City’s right to conduct inspections of Affordable Units and Affordable Improvements for code compliance and/or code enforcement, (vi) tenant protections relating to notices, eviction, and such other matters as required by applicable laws, and (vii) such other terms as Developer and/or City deem reasonably necessary.
5.6.5. Gross Mismanagement. During the Affordability Period, and in the event of “Gross Mismanagement” (as defined below) of the North Lot Improvements, in particular the Affordable Units and Affordable Improvements, the 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 forty-five (45) days from the date of written Notice to Property Manager and Developer from the City Manager.
If Developer or Property Manager has commenced to cure such Gross Mismanagement condition(s) on or before the 30th 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 45th day then Developer and its Property Manager shall have an additional fifteen (15) 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 sixty (60) days from the date of the initial written Notice of such condition(s), provided, however, that in the event the Gross Mismanagement is of a nature that it cannot reasonably be cured within sixty (60) days, then such cure period shall be extended for an additional thirty (30) days, or such longer time as may be reasonably necessary to cure such Gross Mismanagement condition(s) with such extended period beyond ninety (90) days subject to the prior written consent of the City Manager, and so long as Developer or its Property Manager commences to cure within thirty (30) days of written notice and thereafter diligently and continuously prosecutes such cure to completion, without triggering City’s right to remove the Property Manager as described in the immediately following sentence. If such condition(s) do persist beyond such periods as provided above, the City Manager shall have the right 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 and Affordable Improvements in a manner that violates the terms and/or intention of the Entitlement, this Agreement, and the Phase 1 City Covenants applicable to the Affordable Units and Affordable Improvements available to the residents of the Affordable Units, 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 Lower Income Households;
(ii) Charging rent in excess of Affordable Rent for the Affordable Units;
(iii) Allowing tenants of the Affordable Units to exceed the prescribed occupancy levels without taking immediate lawful action to stop such overcrowding;
48 (iv) Under-funding required Capital Replacement Reserve accounts;
(v) Failing to timely maintain the Affordable Units in accordance with the Property Management Plan and North Lot Improvements in compliance with the Maintenance Standards;
(vi) Failing to submit timely and/or adequate annual reports to City as required herein as to operation of the Affordable Units; (vii) Fraud or embezzlement of funds allocable to the Affordable Units and Affordable Improvements, including without limitation funds in reserve accounts; (viii) Failing to fully cooperate with the Fountain Valley Police Department or other local law enforcement agency(ies) with jurisdiction over the North Lot, in efforts to maintain a crime-free environment within the North Lot, in particular as to the Affordable Units, which cooperation shall include reasonable onsite public safety measures directed by the Police Chief and lawfully required to be undertaken by Developer or Property Manager; (ix) Failing to fully cooperate with the Fountain Valley Fire Department or other local public safety agency(ies) with jurisdiction over the North Lot, in maintaining a safe and accessible environment within the North Lot, in particular as to the Affordable Units, which cooperation shall include reasonable onsite fire safety measures directed by the Fire Chief and lawfully required to be undertaken by Developer or Property Manager; (x) 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 North Lot, in particular the Affordable Units, in maintaining a decent, safe, and sanitary environment within the North Lot, which cooperation shall include reasonable onsite health and safety measures directed by the City Manager and lawfully required to be undertaken by Developer or Property Manager;
(xi) Maintaining or allowing the North Lot to be maintained as a public nuisance or in a manner in conflict with any provision of the City Code; and (xii) 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.
5.6.6. 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
49 enforcement inspections of the North Lot Improvements, in particular the Affordable Units and Affordable Improvements, 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 an individual tenant, if applicable, all in accordance with applicable law. 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(s) of such upcoming inspection and cause access to the area(s) and/or Affordable Unit(s) to be made available and open for inspection in accordance with any applicable law. Developer shall include express advisement of such inspection rights within the lease/rental agreements for each Affordable Unit in order for each and every tenant household to be aware of this inspection right.
5.7. Capital Reserve Requirements. Commencing upon issuance of the CoO for Building No. 1, Developer shall annually set aside an amount of not less than Three Hundred Dollars ($300.00) per Affordable Unit (39 Affordable Units times $300 equals $11,700) or such increased amount required by a Lender from the gross rents received from the Affordable Units, 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 Building No. 1 (including the Affordable Units therein), including fixtures and equipment, which are normally capitalized under generally accepted accounting principles including “capital repair” as defined in the Internal Revenue Code. The non-availability of funds in the Capital Replacement Reserve does not in any manner relieve or lessen Developer’s obligation to undertake any and all necessary capital repairs, improvements, or replacements and to continue to maintain the Affordable Units 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. Capital improvements and repairs to, and replacements for Affordable Units 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.
5.7.1. Lender Reserve Requirement. 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 Section 5.7 above, compliance therewith shall be deemed to comply with Section 5.7.
5.8. Effect of Violation of the Terms and Provisions of this Agreement after CoO Issued for Building No. 1. City is deemed the beneficiary of the terms and provisions of this Agreement and the Phase 1 City Covenants, 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 Phase 1 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 North Lot .
50 City shall have the right, if the Agreement or any covenants in any agreement pursuant to this Agreement, including without limitation the Phase 1 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 has obtained or will timely obtain all approvals, licenses, exemptions and other authorizations from, and has accomplished or will timely accomplish all filings, registrations and qualifications with any governmental agency that are necessary for the transaction of its business as the same relate to the North Lot and the North Lot Improvements; (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, and cause performance of, this Agreement; (d) Developer does not have any material contingent 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, and each successor-in-interest, shall advise City in writing if there is any change pertaining to any matters set forth or referenced in the foregoing items (b) 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, bylaws, 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
51 “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 of Default, 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 reasonably be cured within said thirty (30) days, and then such cure period shall be extended for an additional thirty (30) days, or such longer time as may be reasonably necessary to cure such default with such extended period beyond sixty (60) days subject to the prior written consent of the City Manager, and so long as the defaulting party commences to cure within thirty (30) days of written notice and thereafter diligently and continuously prosecutes such cure to completion.
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 pursuant to this Agreement to cure, correct, or remedy any Default, or to obtain any other remedy, legal and/or equitable, 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, or, if applicable, in the Central District 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 such other manner as may be provided by law. In the event that any legal action is commenced against Developer, service of process on Developer shall be made in such manner as may be provided by law and shall be effective whether served inside or outside of California.
7.4. Rights and Remedies Are Cumulative. Except as otherwise expressly stated in this Agreement, the rights and remedies of the parties are cumulative, and the exercise by a party of one or more of such rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default by another party.
7.5. Inaction Not a Waiver of Default. Any failures or delays by either party in asserting any of its rights and remedies as to any Default shall not operate as a waiver of any Default or of any such rights or remedies, or deprive either such party of its right to institute and maintain any actions or proceedings which it may deem necessary to protect, assert or enforce any such rights or remedies.
7.6. Applicable Law. The laws of the State of California shall govern the interpretation and enforcement of this Agreement.
7.7. Enforced Delay; Extension of Times of Performance. In addition to specific provisions of this Agreement, performance by any party hereunder shall not be deemed to be in Default, and all performance and other dates specified in this Agreement shall be extended, where delays or Defaults are due to: war; insurrection; riots; floods; pandemic; unusually severe weather; earthquakes; fires; casualties; acts of God; acts of the public enemy; acts or omissions of another party, or acts or failures to act of City or any other public or governmental agency or entity (excepting that acts or failures to act of City shall not excuse performance by City. Notwithstanding anything to the contrary in this Agreement, an extension of time for any such cause shall be for the period of the enforced delay and shall commence to run from the time of the commencement of the cause (or such longer period as
52 is reasonably needed under the circumstances), if Notice by the party claiming such extension is sent to the other party within thirty (30) days of the commencement of the cause. Times of performance under this Agreement may also be extended in writing by the mutual agreement of City and Developer.
The City Manager shall have authority to approve extensions on behalf of City not to exceed a cumulative total of one hundred eighty (180) days unless otherwise provided herein or by applicable law.
7.8. Transfers.
7.8.1. General Prohibition of a Transfer without Prior City Consent; Covenant Not to Transfer Except in Conformity; Exceptions. Developer has demonstrated to the City the qualifications and experience of Developer and its Affiliates as an experienced developer of residential and mixed use projects, along with the experience and qualifications of the approved property management entities (listed in Section 5.4.1 and during the term thereof). In this regard, the long-term ownership, operation, and property management of the Affordable Units and Affordable Improvements are of particular concern to the City. Accordingly, commencing upon the recordation of the Phase 1 City Covenants and continuing to the end of the Affordability Period, and except for Permitted Transfers and as otherwise expressly set forth herein, no voluntary or involuntary successor-in-interest of Developer shall acquire any rights or powers under this Agreement or the Phase 1 City Covenants, nor shall Developer make any total or partial sale, transfer, conveyance, or assignment, of the North Lot the North Lot Improvements or any part thereof that includes the Phase 1 Residential Component with the 39 Affordable Units, or this Agreement or the Phase 1 City Covenants (each and collectively referred to herein as a “Transfer”) without the prior written approval of the City, acting through its City Manager, which approval shall not be unreasonably withheld or delayed. (a) Therefore, for each proposed Transfer (other than a Permitted Transfer), Developer shall first obtain the prior written consent of the City, through the City Manager, which consent shall not be unreasonably withheld or delayed. The City Manager retains all rights to submit a proposed Transfer to the City Council for consideration and action to approve (or disapprove) in their reasonable discretion, based on the criteria set forth in this Section 7.8. In connection with and prior to any Transfer, (i) Developer, as transferor, shall evidence its compliance with this Agreement and the Phase 1 City Covenants, (ii) Developer shall submit supporting documentation evidencing the proposed transferee’s development experience and qualifications in the ownership and operation of facilities similar to the Affordable Units, its financial commitments and resources; (iii) information about the transferee’s property manager and its qualifications; and (iv) Developer shall provide to City the proposed assignment by Developer, as transferor, and assumption by transferee, of this Agreement, the Phase 1 Memorandum of Agreement, and the Phase 1 City Covenants Agreement, and that such instruments are and shall remain senior and nonsubordinate as to the North Lot as required under the DBL for the Affordability Period. Any Transfer without such prior consent shall, at City’s option, be void. For the avoidance of doubt, no provision of this Section 7.8.1 shall apply to Permitted Transfers, but all provisions of that definition and the requirements of Section 1.1 and 7.8.3 shall apply thereto.
7.8.2. City Consideration of Requested Transfer. City agrees that it will consider in good faith Developer’s request for a Transfer provided Developer delivers written Notice and complete submittal to City requesting such approval and provided that the Phase 1 City Covenants remain in full force and effect and Developer is in compliance therewith. As described herein, each Notice shall be accompanied by information, evidence and supporting documentation about the proposed Transfer and transferee (assignee or purchaser) in sufficient detail to enable City to
53 reasonably evaluate and approve (or disapprove) the proposed assignee or purchaser pursuant to the criteria set forth in this Section 7.8 shall apply.
(a) Within sixty (60) days after the receipt of Developer’s complete written Notice with legible supporting documentation, along with the proposed form of assignment and assumption agreement requesting approval of a proposed Transfer pursuant to this Section 7.8, City shall either approve or disapprove such proposed Transfer or shall respond in writing by stating what further information, if any, City reasonably requires in order to complete a good faith review of the request for Transfer and determine whether or not to grant the requested approval. Upon receipt of such a response, Developer shall cooperate in good faith with the City and promptly furnish to City such further information as may be reasonably requested. (b) Notwithstanding the foregoing, a Transfer shall not entitle City to receive compensation in connection therewith, excepting the City shall be reimbursed and paid for all Third Party Costs incurred related to such request for Transfer and assignment. (c) The form of the assignment and assumption agreement required for each Transfer shall be reviewed by and satisfactory to City’s legal counsel. (d) For the avoidance of doubt, Section 7.8.2 shall not apply to Permitted Transfers; provided however, for Permitted Transfers (other than a Foreclosure), the form of the assignment and assumption agreement is subject to review and approval by the City’s legal counsel.
7.8.3. Permitted Transfers. The term Permitted Transfer is defined in Section 1.1; in such regard, each Permitted Transfer shall be subject to the terms and conditions in that definition.
In the event of a Permitted Transfer as set forth in subsections (a)(other than a Foreclosure), (d), (e), (f) and/or (g) of such definition, Developer nevertheless agrees that at least thirty (30) calendar days prior to such Permitted Transfer (subsections (a)(other than a Foreclosure), (d), (e), (f) and/or (g) thereof) it shall give written notice to City of such assignment and satisfactory evidence that the assignor is then presently in compliance with this Agreement and the Phase 1 City Covenants, and that the assignee will assume all of the obligations thereof of this Agreement, the Phase 1 Memorandum of Agreement, and the Phase 1 City Covenants Agreement in writing through an assignment and assumption agreement in a form reasonably acceptable to the City and its legal counsel. As noted in Section 7.8.2(d) above, the form of each assignment and assumption agreement, and as applicable supporting documentation therefor, shall be submitted to the City for review and reasonable approval by the City’s counsel not later than twenty-one (21) calendar days prior to the proposed date of the Permitted Transfer.
7.8.4. Claims under Assignment and Assumption. Whether a Transfer or Permitted Transfer, upon the effective date of the approved Transfer or Permitted Transfer, the assignment and assumption agreement to be reviewed and approved by City (and its counsel) may include release provisions as between assignor and assignee provided however any provision that attempts to release assignor as to all claims post-assignment, and release assignee pre-assignment shall not release assignor from any “claims” arising prior to the effective date of the assignment even if notice of any claim or claims is/are received after the effective date of assignment provided that City agrees to look first to the assignor (rather than assignee) of the North Lot the North Lot Improvements and then to other potential responsible party(ies) (including assignee or other person or entity) with respect to any liability for claims. The term “claims” in this Section 7.8 means, collectively, claims, liens, damages, demands, causes of action, liabilities, lawsuits, judgments, losses, costs, and expenses,
54 including without limitation reasonable attorneys' fees and expenses, arising out of or related in any manner to the North Lot the North Lot Improvements or any part thereof that includes the Phase 1 Residential Component with the 39 Affordable Units.
7.9. Successors and Assigns. All of the terms, covenants and conditions of this Agreement shall be binding upon Developer and its permitted successors and assigns, subject to the provisions of an assignment and assumption agreement, so long as such assignment/assumption does not amend or modify this Agreement. Whenever the term “Developer” is used in this Agreement, such term shall include any other permitted successors and assigns as herein provided.
7.10. Assignment by City. City may assign or transfer any of its rights or obligations under this Agreement and/or the Phase 1 City Covenants to the Fountain Valley Housing Authority without the consent or other approval of Developer.
7.11. Non-Liability of Officials and Employees of City. No member, official, officer or employee of City shall be personally liable to Developer, or any successor in interest, in the event of any Default or breach by City or for any amount which may become due to Developer or its successors, or on any obligations under the terms of this Agreement.
7.12. Relationship between City and Developer. It is hereby acknowledged that the relationship between City and Developer is not that of a partnership or joint venture and that City, on the one hand, and Developer, on the other hand, shall not be deemed or construed for any purpose to be the agent of the other. Accordingly, except as expressly provided in this Agreement, including the Attachments hereto, City shall not have any rights, powers, duties, or obligations with respect to the development, operation, maintenance or management of Phase 1 or the Affordable Units thereon.
7.13. City Approvals and Actions. Whenever a reference is made herein to an action or approval to be undertaken by City, the City Manager is authorized to act on behalf of City (and, if applicable, when action or approval of City is necessary, then the City Manager is authorized to act on behalf of City), unless specifically provided otherwise or the law otherwise requires. Nonetheless, the City Manager may in her or his sole discretion present the proposed request or action to the City Council for its review, direction, and approval (or disapproval) in accordance with this Agreement and applicable law.
7.14. Developer Termination. Prior to the commencement of construction of Building No. 1, Developer may terminate this Agreement by written notice to the City withdrawing its applications, or terminating its approvals and abandoning the approvals of the Entitlement that authorized development of the Site with the Project. In such event the City shall cooperate and take such steps as Developer may reasonably request to confirm termination of this Agreement and promptly remove the Phase 1 Memorandum of Agreement and Phase 1 City Covenants as encumbrances upon title.
7.14.1. Expiration of Affordability Period. Upon expiration of the Affordability Period, this Agreement and the restrictions imposed thereby on the North Lot and the Affordable Units shall expire and terminate automatically and, upon the written request of the Developer to City following the conclusion of the Affordability Period, the City shall execute and record one or more instruments terminating and releasing this Agreement, the Phase 1 Memorandum of Agreement and the Phase 1 City Covenants for the benefit of Developer, or its successors and assigns, which shall not be unreasonably delayed by the City.
55 7.15. Estoppel Certificate. Within thirty (30) calendar days following a written request by any of the Parties, the other Party shall execute and deliver to the requesting Party a statement certifying that this Agreement is unmodified and in full force and effect or there have been specified (date and nature) modifications to this Agreement, but it remains in full force and effect as modified, and either (i) there are no known current uncured defaults under this Agreement, or (ii) the responding Party alleges that specified (date and nature) defaults exist. The statement shall also provide any other reasonable information requested, but in no event shall amend or modify the terms and conditions of this Agreement or the Phase 1 City Covenants. All fees and costs incurred by the City in connection with the review, preparation, and issuance of each and any estoppel certificates under this Section 7.15 shall be at no expense to City.
7.16. Real Estate Brokers. Developer represents and warrants to City that no broker or finder is entitled to any commission or finder’s fee in connection with this transaction and agrees to defend and hold harmless City from any claim to any such commission or fee resulting from any action on its part.
Section 8 RELOCATION.
8.1. Developer Responsible for Relocation. Developer is not aware of any requirement for Relocation in connection with the North Lot or the OCFCD Property or any portion thereof.
Nonetheless, Developer agrees to and shall be fully responsible for administering Relocation, if any is required, including determinations of eligibility, extent of advisory assistance, and scope and amount of benefits and monetary payments pursuant to the applicable Relocation Laws, subject to review by the City Manager. Developer shall cause to be provided and shall pay any and all Relocation assistance and benefits, if any due, in accordance with Relocation Laws and in a manner and in amounts expressly approved by City Manager to each eligible displaced person or business, if any. City Manager’s approval rights in the preceding sentence shall be limited solely to determining compliance with Relocation Laws. Developer is and shall remain solely responsible to pay all out-of-pocket costs for direct payments to eligible person(s), household(s) and business(es), if any, for Relocation assistance and benefits due and paid and for any other costs incurred related to Relocation, including a Relocation consultant, and any and all costs or fees incurred pursuant to Section 8.2 below.
8.2. Indemnification by Developer Relating to Relocation. Developer hereby covenants and agrees to indemnify, save, protect, hold harmless, pay for, and defend the City and City 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’ and attorneys’ fees, or relocation benefits claimed or payable under the Relocation Laws (for purposes of this Section 8.2, the foregoing shall be referred to as “Liabilities”) which may now or in the future be incurred or suffered by City Indemnitees by reason of, or resulting, in full or in part, or in any respect whatsoever from the displacement and Relocation of persons or businesses pursuant to or resulting from the implementation of this Agreement. At the request of Developer, City shall cooperate with and assist Developer in its defense of any such claim, action, suit, proceeding, loss, cost, damage, liability, deficiency, fine, penalty, punitive damage, or expense; provided that City shall not be obligated to incur any expense in connection with such cooperation or assistance.
8.2.1. Release. Developer, on behalf of itself and its Affiliates, and any and all successors and assigns hereby fully and finally releases the City Indemnitees from any and all manner of actions, causes of action, suits, obligations, liabilities, judgments, executions, debts, claims and
56 demands of every kind and nature whatsoever, known and unknown, which Developer and any of its affiliates, successors or assigns may now have or hereafter obtain against the City Indemnitees by reason of, arising out of, relating to, or resulting from in full or in part, the election of Developer to proceed with the Project pursuant to this Agreement except to the extent arising out of the sole gross negligence or sole willful misconduct of any of the City Indemnitees or a breach by City of any representation, warranty or covenant contained in this Agreement, any of the other Project Documents, or any other contract, agreement, permit, entitlement, law, or regulation (collectively, “Claims”), which release shall include but not be limited to any Claims for Relocation assistance or benefits under federal, state, local, or any other applicable laws or Governmental Requirements. The parties agree that, with respect to the release of Claims as set forth above, all rights under Section 1542 of the California Civil Code and any similar law of any state or territory of the United States are expressly waived. Section 1542 reads 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 AND THAT, IF KNOWN BY HIM OR HER,
WOULD HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT
WITH THE DEBTOR OR RELEASING PARTY.
Developer Initials: ______
Section 9 MISCELLANEOUS.
9.1. Notices. All Notices, demands, approvals and other communications provided for in the Project Documents shall be in writing and be delivered to the appropriate party at its address as follows:
If to Developer: Magnolia I Owner, LLC
808 Washington St, Ste 500
Vancouver, WA 98660
Attn: George Elum
With a copy to: Loeb & Loeb LLP
10100 Santa Monica Boulevard, Suite 2200
Los Angeles CA 90067
Attn: Elizabeth Camacho
If to City: City of Fountain Valley
10200 Slater Avenue
Fountain Valley, CA 92708
Attn: City Manager and City Clerk
with a copy (the mailing of which shall not constitute notice to City) to:
Harper & Burns
Legal Counsel, City of Fountain Valley
453 S. Glassell Street
Orange, California 92866
Attn: Colin R. Burns, Esq.
57 and, copy to (the mailing of which shall not constitute notice to City):
Stradling Yocca Carlson & Rauth
660 Newport Center Drive, Suite 1600
Newport Beach, CA 92660
Attn: Celeste Stahl Brady, Special Counsel
Addresses for Notice may be changed from time to time by written Notice to all other parties.
All communications shall be effective when actually received; provided, however, that nonreceipt of any communication as the result of a change of address of which the sending party was not notified or as the result of a refusal to accept delivery shall be deemed receipt of such communication.
9.2. No Third Parties Benefited. This Agreement is made for the purpose of setting forth rights and obligations of Developer and City in implementation of the Entitlement as such relates to the Affordable Units, and no other person; provided however, the Fountain Valley Housing Authority is an intended third party beneficiary of this Agreement and there are no other third party beneficiaries hereunder.
9.3. Binding Effect; Assignment of Obligations. This Agreement shall bind, and shall inure to the benefit of, Developer and City and their respective successors and assigns. With the exception of Permitted Transfers and subject to the conditions thereof, Developer shall not assign any of its rights or obligations under any Project Document without the prior written consent of the City Manager, which consent may be withheld in her or his sole and absolute discretion. Any such assignment without such consent shall, at City’s option, be void.
9.4. Counterparts. The Project Documents may be executed in counterparts, all of which, taken together, shall be deemed to be one and the same document.
9.5. Prior Agreements; Amendments; Consents. This Agreement and other Project Documents, and the Entitlement referenced herein, contain the entire terms and conditions by and between City and Developer with respect to the Affordable Units within the Phase 1 Residential Component and all prior negotiations, understandings and agreements with respect to such matters, any such agreements being superseded by this Agreement and such other Project Documents (excepting that all conditions of the Entitlement as to the Affordable Units shall remain in full force and effect, unless modified by the City in accordance with applicable law). No modification of any Project Document (including waivers of rights and conditions) shall be effective unless in writing and signed by the party against whom enforcement of such modification is sought, and then only in the specific instance and for the specific purpose given, provided, however, that nothing in this Section
9.5 is intended nor shall be construed to impose an additional requirement on the City’s customary process for granting entitlements, permits or other development approvals for Phase 1 or the Project.
This Agreement is executed in three (3) duplicate originals, each of which is deemed to be an original.
This Agreement includes pages 1 through [58] inclusive, plus two signature pages, S-1 and S-2, and Attachments 1 through 12, inclusive, which together constitutes the entire understanding and agreement of the parties as to the Affordable Units required for Phase 1 under the Entitlement the DBL (as well as the Inclusionary Ordinance as referenced herein) as implemented by this Agreement and the Phase 1 City Covenants.
58 All waivers of the provisions of this Agreement must be in writing by the appropriate authorities of City (and City, if applicable) and Developer, and all amendments hereto must be in writing by the appropriate authorities of City (and City, if applicable) and Developer.
9.6. Developer’s Payment and Reimbursement of City’s Third Party Costs.
9.6.1. Third Party Costs Defined; Obligation. Developer shall pay for and reimburse City for the following out-of-pocket, third party costs (but not in-house staff time), fees, and expenses reasonably incurred by City for any and all of the following from the period of time commencing upon the Date of Agreement and through the end of the term of the Affordability Period (together, “Third Party Costs”): (a) implementation of this Agreement, (b) , any escrow company fees and title company fees incurred in connection with the Project Documents; (c) drafting, negotiation, and execution of implementing agreements and/or amendments after the Date of Agreement; (d) enforcement of this Phase 1 DBAHA, the Phase 1 City Covenants or any other Project Documents, including the following: (i) commencement of, appearance in, or defense of any action or proceeding purporting to affect the rights or obligations of the parties to any implementing documents hereunder, and (ii) all claims, demands, causes of action, liabilities, losses, commissions and other costs against which City and its City Indemnitees are indemnified hereunder, provided as to defense of any action which City (or any Indemnitee) has or have tendered the defense to Developer and Developer fails to defend any such action; and (e) other costs incurred related to requests by Developer to City for or provision of estoppel certificates or comparable creditor and/or intercreditor instruments, subordination agreements, affirmation thereof, plans, or review and approval of any other matters requiring City review, consideration and/or approval (or disapproval) hereunder or under any implementing documents.
9.6.2. Payment of Third Party Costs. Within forty-five (45) days of the submittal by City to Developer of an invoice for Third Party Costs incurred, which invoice will summarize in general terms the matter or issue for which legal or consulting services performed and costs incurred for those services, it is and shall be the obligation of Developer to reimburse and pay to City one hundred percent (100%) of these Third Party Costs. Notwithstanding the first sentence of this Section
9.6.2, for any Permitted Transfer, and/or Transfer, Developer (or other person or entity) shall pay and/or reimburse the City for Third Party Costs as a condition to City executing and authorizing release, use, recordation, or implementation of any assignment, assumption, or other instrument related to a pending Permitted Transfer or Transfer.
(a) This reimbursement obligation shall bear interest from the date occurring forty-five (45) days after City gives written demand to Developer at the LAIF rate or the maximum rate then permitted by law.
(b) This reimbursement obligation shall remain in effect for the Affordability Period.
9.6.3. Exception to Payment of Third Party Costs. Notwithstanding Section 9.7.1, and 9.7.2 above, Developer shall not be responsible to pay and reimburse for Third Party Costs if the costs incurred are attributable to an Event of Default by City or the City’s sole gross negligent acts or willful misconduct under this Agreement.
9.7. Governing Law. All of the Project Documents shall be governed by, and construed and enforced in accordance with, the laws of the State of California. Developer irrevocably and
59 unconditionally submits to the jurisdiction of the Superior Court of the State of California for the County of Orange as well as the Federal District Court for the Central District of the State of California in connection with any legal action or proceeding arising out of or relating to this Agreement or the other Project Documents. Assuming proper service of process, Developer also waives any objection regarding personal or in rem jurisdiction or venue.
9.8. Severability of Provisions. No provision of any Project Document that is held to be unenforceable or invalid shall affect the remaining provisions, and to this end all provisions of the Project Documents are hereby declared to be severable.
9.9. Headings. Article and Section headings are included in the Project Documents for convenience of reference only and shall not be used in construing the Project Documents.
9.10. Interpretation. This Agreement shall be construed as if equally prepared by all parties A reference to a Section shall be deemed to include all subsections thereof. Nothing in this Agreement or the Phase 1 City Covenants shall be construed in a manner that would violate DBL or any other state law.
9.11. Conflicts. In the event of any conflict between or among the provisions of the Entitlement, this Agreement, the Phase 1 City Covenants or any other Project Document, the most restrictive provisions and covenants shall prevail; provided however that, with respect to any matter addressed in both such documents, the fact that one document provides for greater, lesser or different rights or obligations than the other shall not be deemed a conflict unless the applicable provisions are inconsistent and could not be simultaneously enforced or performed.
9.12. Time of the Essence. Time is of the essence of all of the provisions of this Agreement.
9.13. Conflict of Interest. No member, official or employee of City shall have any direct or indirect interest in this Agreement, nor participate in any decision relating to the Agreement which is prohibited by law.
9.14. Warranty against Payment of Consideration. Developer warrants that it has not paid or given, and will not pay or give, any third person any money or other consideration for obtaining this Agreement.
9.15. Nonliability of City Officials and Employees. No member, official or employee of City shall be personally liable to Developer, or any successor in interest, in the event of any default or breach by City or for any amount which may become due to Developer or successor, or on any obligation under the terms of this Agreement.
9.16. City Manager Authority; Approvals and Actions. City maintains authority for implementation of this Agreement through the City Manager (or her or his duly authorized representative(s)) subject to her or his consultation with City legal counsel. The City Manager shall have the authority to make approvals, issue interpretations, waive provisions, and if applicable, request issuance of warrants or make payment(s) authorized hereunder, make and execute further agreements and/or enter into amendments of this Agreement on behalf of City so long as such actions do not materially or substantially change or modify: (i) the City and/or Developer’s performance obligations hereunder, or (ii) the use, operation, management, and maintenance of the Affordable Units within the Phase 1 development, or (iii) add to the costs (if any), responsibilities, or liabilities incurred or to be
60 incurred by City. Such interpretations, waivers, and/or amendments may include reasonable and necessary extensions of time to perform based on the facts and circumstances at such applicable time.
Except as provided herein, all material and/or substantive interpretations, waivers, or amendments shall require the consideration, action, and written consent of the City Council. Further, the City Manager in all respects hereby does and shall retain and maintain the right to submit to the City Council for consideration and action her or his interpretation, waiver, or amendment under this Agreement, if in her or his reasonable judgment she or he considers consideration and action by the City Council is in the best interest of the City. In this regard, so long as the City Manager (or her or his duly authorized representative) is acting with due diligence and expeditiously, the parties acknowledge and agree that presentation to the City Council will require a reasonable number of days to agendize and comply with applicable laws for open meeting, or closed session (if applicable), consideration and action. [Signature blocks begin on next page]
S-1
IN WITNESS WHEREOF, the parties hereto have caused this Density Bonus and Affordable Housing Agreement (Phase 1 – North Building at 16800 Magnolia Street, Fountain Valley) to be effective as of the Date of Agreement.
DEVELOPER:
MAGNOLIA I OWNER, LLC,
a Delaware limited liability company
By: Magnolia I Investor, LLC,
a Delaware limited liability company,
its sole Member
By: HPG Magnolia, LLC,
a Washington limited liability company,
its Managing Member
By: Holland Partner Group Management, Inc.,
a Delaware corporation,
its Manager
By: ____________________________
Name:
Title:
APPROVED AS TO FORM:
__________________________
Developer Counsel
Date of Developer’s execution:
[__________________]
[Signatures continued on next page]
S-2
[Signatures continued from previous page]
CITY
CITY OF FOUNTAIN VALLEY, a California
municipal corporation
By: _________________________________
Mayor or Authorized Designee
Date of Mayor’s execution: [_______], 2026
ATTEST:
Rick Miller, City Clerk
or Authorized Designee
APPROVED AS TO FORM:
HARPER & BURNS
Colin R. Burns, City Attorney
or Authorized Designee
and
STRADLING YOCCA CARLSON & RAUTH
Celeste Stahl Brady, Special Counsel
or Authorized Designee
Attachment No. 1
Site Map (Phase 1 and Phase 2)
ATTACHMENT NO. 1
SITE MAP
(Phase 1 and Phase 2)
[attached]
Attachment No. 2
Legal Description of the North Lot
ATTACHMENT NO. 2
LEGAL DESCRIPTION OF THE NORTH LOT
Real property in the City of Fountain Valley, County of Orange, State of California, legally described as follows:
PARCEL A (APN: 143-294-04)
THAT PORTION OF THE SOUTHWEST QUARTER OF THE SOUTHWEST QUARTER OF THE SOUTHWEST QUARTER OF SECTION 19, TOWNSHIP 5 SOUTH, RANGE 10 WEST,
IN THE RANCHO LAS BOLSAS, CITY OF FOUNTAIN VALLEY, COUNTY OF ORANGE, STATE OF CALIFORNIA, PER MAP RECORDED IN BOOK 51, PAGE 12 OF
MISCELLANEOUS MAPS IN THE OFFICE OF THE COUNTY RECORDER OF SAID
COUNTY, AS DESCRIBED IN THE DEED TO THE ORANGE COUNTY FLOOD CONTROL DISTRICT, RECORDED JULY 14, 1984 IN BOOK 7133, PAGE 509 OF OFFICIAL RECORDS IN THE OFFICE OF SAID COUNTY RECORDER.
EXCEPT THAT PORTION THEREOF LYING EASTERLY AND SOUTHEASTERLY OF THE FOLLOWING DESCRIBED LINES:
BEGINNING AT THE NORTHWEST CORNER OF THE SOUTHWEST QUARTER OF THE SOUTHWEST QUARTER OF THE SOUTHWEST QUARTER OF SAID SECTION 19;
THENCE ALONG THE NORTH LINE OF SAID SOUTHWEST QUARTER OF THE SOUTHWEST QUARTER OF THE SOUTHWEST QUARTER NORTH 87° 34' 01" EAST,
98.94 FEET TO THE TRUE POINT OF BEGINNING, SAID POINT BEING ON A NONTANGENT CURVE CONCAVE SOUTHEASTERLY AND HAVING A RADIUS OF 179.84 FEET, A RADIAL LINE OF SAID CURVE THROUGH SAID POINT BEARS NORTH 52° 19' 55" WEST; THENCE SOUTHWESTERLY 67.46 FEET ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 21° 29' 33" TO THE BEGINNING OF A REVERSE CURVE CONCAVE NORTHWESTERLY AND HAVE A RADIUS OF 122.50 FEET; THENCE SOUTHERLY AND SOUTHWESTERLY 33.95 FEET ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 18° 13' 08" TO THE EASTERLY LINE OF THE LAND DESCRIBED AS "PARCEL 2A" IN THE FINAL ORDER OF CONDEMNATION RENDERED IN SUPERIOR COURT CASE NO. 105675 A CERTIFIED COPY OF WHICH WAS RECORDED AUGUST 05, 1963 IN BOOK 6662, PAGE 132 OF SAID OFFICIAL RECORDS.
EXCEPTING THEREFROM THAT PORTION OF THE LAND CONDEMNED TO ORANGE
COUNTY TRANSPORTATION AUTHORITY, A PUBLIC ENTITY AS EVIDENCED BY FINAL ORDER OF CONDEMNATION RECORDED ON JULY 08, 2021 AS INSTRUMENT NO. 2021-441526 OF OFFICIAL RECORDS.
Attachment No. 2
Legal Description of the North Lot
PARCEL B (APN: 143-294-03)
THAT PORTION OF THE SOUTHWEST QUARTER OF SECTION 19, TOWNSHIP 5 SOUTH, RANGE 10 WEST, IN THE RANCHO LAS BOLSAS, AS SHOWN ON A MAP RECORDED IN BOOK 51, PAGE 12 OF MISCELLANEOUS MAPS IN THE OFFICE OF
THE COUNTY RECORDER OF ORANGE COUNTY, CALIFORNIA, AS ACQUIRED BY THE STATE OF CALIFORNIA BY DEED RECORDED IN BOOK 5957, PAGE 902 OF
OFFICIAL RECORDS IN SAID OFFICE, BOUNDED GENERAL SOUTHERLY BY THAT
CERTAIN PARCEL OF LAND CONVEYED BY THE STATE OF CALIFORNIA BY DEED RECORDED IN BOOK 7374, PAGE 521 OF SAID OFFICIAL RECORDS; BOUNDED
WESTERLY BY THE NORTHERLY PROLONGATION OF THAT CERTAIN COURSE HAVING A BEARING OF SOUTH 03 DEGREES 29' 51" WEST, AS SHOWN IN PARCEL 7 OF STATE HIGHWAY RELINQUISHMENT NO. 553 RECORDED IN BOOK 8387, PAGE 528 OF SAID OFFICIAL RECORDS; AND BOUNDED NORTHEASTERLY AND NORTHWESTERLY BY THE FOLLOWING DESCRIBED LINE:
BEGINNING AT THE NORTHWESTERLY TERMINUS OF THAT CERTAIN COURSE HAVING A BEARING OF NORTH 46 DEGREES 53' 32" WEST, AS DESCRIBED IN SAID CERTAIN PARCEL OF LAND SO CONVEYED, RECORDED IN BOOK 7374, PAGE 521 OF SAID OFFICIAL RECORDS; THENCE ALONG THE NORTHWESTERLY PROLONGATION OF LAST SAID COURSE, NORTH 46 DEGREES 53' 32" WEST 99.93 FEET; THENCE NORTH 44 DEGREES 01' 46" WEST 536.68 FEET; T0HENCE SOUTH 59 DEGREES 07' 27" WEST TO SAID NORTHERLY PROLONGATION.
EXCEPTING THEREFROM THAT PORTION OF THE LAND CONDEMNED TO ORANGE
COUNTY TRANSPORTATION AUTHORITY, A PUBLIC ENTITY AS EVIDENCED BY FINAL ORDER OF CONDEMNATION RECORDED ON JULY 08, 2021 AS INSTRUMENT NO. 2021-441526 OF OFFICIAL RECORDS.
EXCEPTING THEREFROM, ALL OIL, OIL RIGHTS, MINERALS, MINERAL RIGHTS,
NATURAL GAS, NATURAL GAS RIGHTS, AND OTHER HYDROCARBONS BY
WHATSOEVER NAME KNOWN THAT MAY BE WITHIN OR UNDER THE PARCEL OF
LAND HEREINABOVE DESCRIBED, TOGETHER WITH THE PERPETUAL RIGHT OF
DRILLING, MINING, EXPLORING AND OPERATING THEREFROM, AND REMOVING
THE SAME FROM SAID LAND OR ANY OTHER LAND, INCLUDING THE RIGHT TO
WHIPSTOCK OR DIRECTIONALLY DRILL AND MINE FROM LANDS OTHER THAN
THOSE HEREINABOVE DESCRIBED, OIL OR GAS WELLS, TUNNELS AND SHAFTS
INTO, THROUGH OR ACROSS THE SUBSURFACE OF THE LAND HEREINABOVE
DESCRIBED, AND TO BOTTOM SUCH WHIPSTOCKED OR DIRECTIONALLY
DRILLED WELLS, TUNNELS AND SHAFTS UNDER AND BENEATH OR BEYOND THE
EXTERIOR LIMITS THEREOF, AND TO REDRILL, RETUNNEL, EQUIP, MAINTAIN,
REPAIR, DEEPEN AND OPERATE ANY SUCH WELLS OR MINES, WITHOUT,
HOWEVER, THE RIGHT TO DRILL, MINE, EXPLORE AND OPERATE THROUGH THE SURFACE OR THE UPPER 100 FEET OF THE SUBSURFACE OF THE LAND
HEREINABOVE DESCRIBED, OR OTHERWISE IN SUCH MANNER AS TO ENDANGER
THE SAFETY OF ANY HIGHWAY THAT MAY BE CONSTRUCTED ON SAID LANDS,
Attachment No. 2
Legal Description of the North Lot
IN INSTRUMENT RECORDED AUGUST 5, 1963 IN BOOK 6662, PAGE 34 OF OFFICIAL RECORDS.
Attachment No. 3
Memorandum of Agreement
ATTACHMENT NO. 3
PHASE 1 MEMORANDUM OF AGREEMENT
Recording Requested By and
When Recorded Mail To:
City of Fountain Valley
10200 Slater Avenue
Fountain Valley, California 92708
Attention: City Clerk
SPACE ABOVE THIS LINE FOR RECORDER’S USE
(This document is exempt from the payment of a recording fee under Government Code Section 27383.)
PHASE 1 MEMORANDUM OF AGREEMENT
THIS PHASE 1 MEMORANDUM OF AGREEMENT (“Memorandum”) dated as of ________, 2026 is entered into by and between the CITY OF FOUNTAIN VALLEY, a California municipal corporation (“City”), and MAGNOLIA I OWNER, LLC, a Delaware limited liability company (“Developer”).
1. Density Bonus and Affordable Housing Agreement. City and Developer have executed an unrecorded Density Bonus and Affordable Housing Agreement (Phase 1 – North Building at 16800 Magnolia Street, Fountain Valley) (“Agreement”) dated as of ______, 2026 covering that certain real property located in the City of Fountain Valley, County of Orange, State of California, more fully described in Exhibit “A” attached hereto and incorporated herein by this reference.
The Agreement is on file as a public record with the City at its offices at 10200 Slater Avenue, Fountain Valley, California 92708. All of the terms, conditions, provisions, and covenants of the Agreement are incorporated in this Memorandum by reference as though written out at length herein, and the Agreement and this Memorandum shall be deemed to constitute a single instrument or document.
2. Purpose of Memorandum. This Memorandum is prepared for recordation purposes only, and in no way modifies the terms, conditions, provisions, and covenants of the Agreement. In the event of any inconsistency between the terms, conditions, provisions and covenants of this Memorandum and the Agreement, the terms, conditions, provisions, and covenants of the Agreement shall prevail.
[Signature Blocks begin on next page]
Attachment No. 3
Memorandum of Agreement
DEVELOPER:
MAGNOLIA I OWNER, LLC,
a Delaware limited liability company
By: Magnolia I Investor, LLC,
a Delaware limited liability company,
its sole Member
By: HPG Magnolia, LLC,
a Washington limited liability company,
its Managing Member
By: Holland Partner Group Management, Inc.,
a Delaware corporation,
its Manager
By: ____________________________
Name:
Title:
CITY:
CITY OF FOUNTAIN VALLEY, a California municipal corporation By:
City Manager or Authorized Designee
ATTEST:
Rick Miller, City Clerk
or Authorized Designee
Exhibit A to Attachment No. 3
Legal Description to Memorandum of Agreement
EXHIBIT “A”
LEGAL DESCRIPTION OF NORTH LOT
Real property in the City of Fountain Valley, County of Orange, State of California, legally described as follows:
PARCEL A (APN: 143-294-04):
THAT PORTION OF THE SOUTHWEST QUARTER OF THE SOUTHWEST QUARTER OF THE SOUTHWEST QUARTER OF SECTION 19, TOWNSHIP 5 SOUTH, RANGE 10 WEST,
IN THE RANCHO LAS BOLSAS, CITY OF FOUNTAIN VALLEY, COUNTY OF ORANGE, STATE OF CALIFORNIA, PER MAP RECORDED IN BOOK 51, PAGE 12 OF
MISCELLANEOUS MAPS IN THE OFFICE OF THE COUNTY RECORDER OF SAID
COUNTY, AS DESCRIBED IN THE DEED TO THE ORANGE COUNTY FLOOD CONTROL DISTRICT, RECORDED JULY 14, 1984 IN BOOK 7133, PAGE 509 OF OFFICIAL RECORDS IN THE OFFICE OF SAID COUNTY RECORDER.
EXCEPT THAT PORTION THEREOF LYING EASTERLY AND SOUTHEASTERLY OF THE FOLLOWING DESCRIBED LINES:
BEGINNING AT THE NORTHWEST CORNER OF THE SOUTHWEST QUARTER OF THE SOUTHWEST QUARTER OF THE SOUTHWEST QUARTER OF SAID SECTION 19;
THENCE ALONG THE NORTH LINE OF SAID SOUTHWEST QUARTER OF THE SOUTHWEST QUARTER OF THE SOUTHWEST QUARTER NORTH 87° 34' 01" EAST,
98.94 FEET TO THE TRUE POINT OF BEGINNING, SAID POINT BEING ON A NONTANGENT CURVE CONCAVE SOUTHEASTERLY AND HAVING A RADIUS OF 179.84 FEET, A RADIAL LINE OF SAID CURVE THROUGH SAID POINT BEARS NORTH 52° 19' 55" WEST; THENCE SOUTHWESTERLY 67.46 FEET ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 21° 29' 33" TO THE BEGINNING OF A REVERSE CURVE CONCAVE NORTHWESTERLY AND HAVE A RADIUS OF 122.50 FEET; THENCE SOUTHERLY AND SOUTHWESTERLY 33.95 FEET ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 18° 13' 08" TO THE EASTERLY LINE OF THE LAND DESCRIBED AS "PARCEL 2A" IN THE FINAL ORDER OF CONDEMNATION RENDERED IN SUPERIOR COURT CASE NO. 105675 A CERTIFIED COPY OF WHICH WAS RECORDED AUGUST 05, 1963 IN BOOK 6662, PAGE 132 OF SAID OFFICIAL RECORDS.
EXCEPTING THEREFROM THAT PORTION OF THE LAND CONDEMNED TO ORANGE
COUNTY TRANSPORTATION AUTHORITY, A PUBLIC ENTITY AS EVIDENCED BY FINAL ORDER OF CONDEMNATION RECORDED ON JULY 08, 2021 AS INSTRUMENT NO. 2021-441526 OF OFFICIAL RECORDS.
Exhibit A to Attachment No. 3
Legal Description to Memorandum of Agreement
PARCEL B (APN: 143-294-03)
THAT PORTION OF THE SOUTHWEST QUARTER OF SECTION 19, TOWNSHIP 5 SOUTH, RANGE 10 WEST, IN THE RANCHO LAS BOLSAS, AS SHOWN ON A MAP RECORDED IN BOOK 51, PAGE 12 OF MISCELLANEOUS MAPS IN THE OFFICE OF
THE COUNTY RECORDER OF ORANGE COUNTY, CALIFORNIA, AS ACQUIRED BY THE STATE OF CALIFORNIA BY DEED RECORDED IN BOOK 5957, PAGE 902 OF
OFFICIAL RECORDS IN SAID OFFICE, BOUNDED GENERAL SOUTHERLY BY THAT
CERTAIN PARCEL OF LAND CONVEYED BY THE STATE OF CALIFORNIA BY DEED RECORDED IN BOOK 7374, PAGE 521 OF SAID OFFICIAL RECORDS; BOUNDED
WESTERLY BY THE NORTHERLY PROLONGATION OF THAT CERTAIN COURSE HAVING A BEARING OF SOUTH 03 DEGREES 29' 51" WEST, AS SHOWN IN PARCEL 7 OF STATE HIGHWAY RELINQUISHMENT NO. 553 RECORDED IN BOOK 8387, PAGE 528 OF SAID OFFICIAL RECORDS; AND BOUNDED NORTHEASTERLY AND NORTHWESTERLY BY THE FOLLOWING DESCRIBED LINE:
BEGINNING AT THE NORTHWESTERLY TERMINUS OF THAT CERTAIN COURSE HAVING A BEARING OF NORTH 46 DEGREES 53' 32" WEST, AS DESCRIBED IN SAID CERTAIN PARCEL OF LAND SO CONVEYED, RECORDED IN BOOK 7374, PAGE 521 OF SAID OFFICIAL RECORDS; THENCE ALONG THE NORTHWESTERLY PROLONGATION OF LAST SAID COURSE, NORTH 46 DEGREES 53' 32" WEST 99.93 FEET; THENCE NORTH 44 DEGREES 01' 46" WEST 536.68 FEET; T0HENCE SOUTH 59 DEGREES 07' 27" WEST TO SAID NORTHERLY PROLONGATION.
EXCEPTING THEREFROM THAT PORTION OF THE LAND CONDEMNED TO ORANGE
COUNTY TRANSPORTATION AUTHORITY, A PUBLIC ENTITY AS EVIDENCED BY FINAL ORDER OF CONDEMNATION RECORDED ON JULY 08, 2021 AS INSTRUMENT NO. 2021-441526 OF OFFICIAL RECORDS.
EXCEPTING THEREFROM, ALL OIL, OIL RIGHTS, MINERALS, MINERAL RIGHTS,
NATURAL GAS, NATURAL GAS RIGHTS, AND OTHER HYDROCARBONS BY
WHATSOEVER NAME KNOWN THAT MAY BE WITHIN OR UNDER THE PARCEL OF
LAND HEREINABOVE DESCRIBED, TOGETHER WITH THE PERPETUAL RIGHT OF
DRILLING, MINING, EXPLORING AND OPERATING THEREFROM, AND REMOVING
THE SAME FROM SAID LAND OR ANY OTHER LAND, INCLUDING THE RIGHT TO
WHIPSTOCK OR DIRECTIONALLY DRILL AND MINE FROM LANDS OTHER THAN
THOSE HEREINABOVE DESCRIBED, OIL OR GAS WELLS, TUNNELS AND SHAFTS
INTO, THROUGH OR ACROSS THE SUBSURFACE OF THE LAND HEREINABOVE
DESCRIBED, AND TO BOTTOM SUCH WHIPSTOCKED OR DIRECTIONALLY
DRILLED WELLS, TUNNELS AND SHAFTS UNDER AND BENEATH OR BEYOND THE
EXTERIOR LIMITS THEREOF, AND TO REDRILL, RETUNNEL, EQUIP, MAINTAIN,
REPAIR, DEEPEN AND OPERATE ANY SUCH WELLS OR MINES, WITHOUT,
HOWEVER, THE RIGHT TO DRILL, MINE, EXPLORE AND OPERATE THROUGH THE SURFACE OR THE UPPER 100 FEET OF THE SUBSURFACE OF THE LAND
HEREINABOVE DESCRIBED, OR OTHERWISE IN SUCH MANNER AS TO ENDANGER
THE SAFETY OF ANY HIGHWAY THAT MAY BE CONSTRUCTED ON SAID LANDS,
Exhibit A to Attachment No. 3
Legal Description to Memorandum of Agreement
IN INSTRUMENT RECORDED AUGUST 5, 1963 IN BOOK 6662, PAGE 34 OF OFFICIAL RECORDS.
Attachment No. 4
Phase 1 City Covenants
ATTACHMENT NO. 4
CITY COVENANTS (PHASE 1)
Recording Requested By and
When Recorded Mail To:
City of Fountain Valley
10200 Slater Avenue
Fountain Valley, California 92708
Attention: City Clerk
SPACE ABOVE THIS LINE FOR RECORDER’S USE
(This document is exempt from the payment of a recording fee under Government Code Section 27383.)
CITY COVENANTS AGREEMENT (PHASE 1)
This CITY COVENANTS AGREEMENT (PHASE 1) (“Phase 1 City Covenants”) is dated as of [_________,] 2026 and made and entered into by and between MAGNOLIA I OWNER, LLC., a Delaware limited liability company (“Developer”), and CITY OF FOUNTAIN VALLEY, a California municipal corporation (“City”), each of which is a signatory hereto.
R E C I T A L S
A. Each of Developer and City is a party to these Phase 1 City Covenants and may be referred to as a “Declarant”, and collectively may be referred to as “Declarants”.
B. City and Developer have entered into that certain unrecorded Density Bonus and Affordable Housing Agreement (Phase 1 – North Building at 16800 Magnolia Street, Fountain Valley) dated as of _____, 2026 (“Phase 1 DBAHA”) for the improvement and development of certain real property referred to as the “North Lot” and described in the attached and fully incorporated Exhibit A hereto. A copy of the Phase 1 DBAHA is on file with City as a public record. Capitalized terms not defined herein shall have the meaning established and set forth in the Phase 1 DBAHA.
C. The Recitals in the Phase 1 DBAHA summarize the land use approvals that comprise the “Entitlement” for a Project on certain real property referred to as the “Project Site,” which includes the North Lot. Any other or additional modifications to the Entitlement, if any, shall be appended to and deemed a part of these Phase 1 City Covenants and the Phase 1 DBAHA. Nothing summarizing the Entitlement therein or herein modifies such discretionary approvals as set forth in the series of resolutions, ordinances, conditions of approval and related findings, but the Phase 1 DBAHA and these Phase 1 City Covenants implement the Developer’s obligation to include, operate and maintain on the North Lot thirty-nine (39) Affordable Units for occupancy and tenancy by qualified Lower Income Households at an Affordable Rent for the 55-year Affordability Period.
Attachment No. 4
Phase 1 City Covenants
D. The Entitlement requires as a condition of approval the entering into and recordation of these Phase 1 City Covenants (and Phase 1 Memorandum of Agreement) against the North Lot as senior, nonsubordinate encumbrances to ensure that Phase 1 Improvements and North Lot ownership, use, operation, maintenance, and property management remain subject hereto and thereto for the entire Affordability Period; in particular these Phase 1 City Covenants are applicable to the North Lot and Phase 1 of the Project for the intended provision of thirty-nine (39) Affordable Units of rental housing available to and occupied by qualified Lower Income Households at an Affordable Rent at the Prescribed Rent Level.
E. Under the Phase 1 DBAHA, Developer represents and covenants that, as of the recordation of this Phase 1 City Covenants Agreement, Developer holds fee simple marketable title to the North Lot subject to and excepting that Developer holds easement rights to the dominant estate of the OCFCD Easement that is within the Site.
F. These Phase 1 City Covenants impose certain affordable housing restrictions for a period that will commence on the date of issuance of the temporary and/or final certificate of occupancy that authorizes occupancy of each and all Affordable Units located in Building No. 1 and thereafter continue until the fifty-fifth (55th) anniversary of the issuance of such temporary and/or final CoO as further provided in the Phase 1 DBAHA (“Affordability Period”).
G. This Phase 1 City Covenants shall be recorded, prior to and as a condition precedent to the issuance of Initial City Permit for Phase 1, in the Official Records, Orange County, California as senior, unsubordinated covenants and an encumbrance running with the land for the full Affordability Period. In no event shall these Phase 1 City Covenants be made junior or subordinate to any deed of trust or other documents providing financing for the construction or operation of Phase 1 on the North Lot or ownership of the North Lot, or any other lien or encumbrance whatsoever against the North Lot for the Affordability Period, except as expressly mandated by California statute or federal law.
H. Declarants wish to adopt these Phase 1 City Covenants to further govern the use of the North Lot in conjunction and along with the Phase 1 DBAHA in compliance with the Entitlement, and applicable law.
NOW, THEREFORE, City and Developer (as owner of the North Lot), declares that the North Lot shall be held, transferred, encumbered, used, sold, conveyed, leased, and occupied subject to these Phase 1 City Covenants hereinafter set forth. Each and all of these Phase 1 City Covenants shall run with the land and be recorded on title to the North Lot and shall be binding on Declarants, their grantees, successors, heirs, executors, administrators, devisees or assigns, and all subsequent owner of all or any part of the North Lot for the Affordability Period.
ARTICLE I
DEFINITIONS
Capitalized terms not defined herein shall have the respective meanings established therefor in the Phase 1 DBAHA; such definitions shall be applicable to these Phase 1 City Covenants and also to any amendment or supplement to these Phase 1 City Covenants (unless the context implicitly or explicitly shall prohibit), recorded against the North Lot pursuant to the provisions of these Phase 1 City Covenants.
Attachment No. 4
Phase 1 City Covenants
ARTICLE II
LAND USE RESTRICTIONS; IMPROVEMENTS
Section 1. Uses. Developer shall develop the North Lot and the Improvements on the North Lot, in particular the Affordable Units, in conformity with the Entitlement and the affordable housing restrictions and covenants provided under the Phase 1 DBAHA. All uses conducted on the North Lot, including, without limitation, all activities undertaken by Developer on the North Lot pursuant to the Entitlement shall conform to all applicable provisions of the City Code, the Entitlement, and other applicable federal and state laws and regulations.
(a) Ownership of Site. The North Lot shall be owned, used, maintained, managed, and operated in accordance with these Phase 1 City Covenants and the Entitlement for the Affordability Period. None of the Affordable Units shall at any time be utilized on a transient basis or for an emergency shelter, or for short term rental such as AirBnB, VRBO, or HomeAway. No Affordable Units shall be or will at any time be owned or used as a cooperative housing corporation or a stock cooperative.
(b) Permitted Transfers; Transfers. Transfers, both Permitted Transfers and other Transfers of the North Lot are subject to the provisions of the Phase 1 DBAHA, in particular Section
7.8 as to Transfers and the definition of Permitted Transfer therein.
Section 2. Affordable Housing; Eligible Households.
(a) Number of Units. Throughout the Affordability Period each and all thirty-nine (39) Affordable Units shall be rented at an Affordable Rent to Lower Income Households. Developer agrees to make available, restrict occupancy to, and rent all of the Affordable Units at Affordable Rent in conformity with the Prescribed Rent Level and Unit Mix. (b) Duration of Affordability Requirements. The Affordable Units shall be maintained as rental units available at and rented to Lower Income Households throughout the 55-year Affordability Period.
(c) Prescribed Rent Level and Unit Mix. The Prescribed Rent Level and Unit Mix for the Affordable Units in the Phase 1 Residential Component includes:
Building No. 1 (North) -- 39 total Affordable Units allocated as follows:
seven (7) studio 0-bedroom units
nineteen (19) 1-bedroom units
twelve (12) 2-bedroom units, and
one (1) 3-bedroom unit.
each and all for tenancy and occupancy by qualified Lower Income Households at an Affordable Rent. (i) 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
Attachment No. 4
Phase 1 City Covenants
by Developer to ensure that each and all vacancies of the Affordable Units within the Phase 1 Residential Component are filled in accordance with the Phase 1 DBAHA and these Phase 1 City Covenants until the noncompliance is corrected.
(ii) A tenant who qualified as a Lower Income Household at initial occupancy of an Affordable Unit in Phase 1 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 Lower Income Household. An existing tenant household occupying an Affordable Unit in Phase 1 whose income exceeds the qualifying limit for a Lower 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.
(d) Income of Tenants. Each tenant household of an Affordable Unit shall qualify as a Lower Income Household and shall meet the eligibility requirements established for the corresponding Unit Mix requirements, 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 herein. (e) 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:
(i) 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 households of the Affordable Units in conformity with the Prescribed Rent Level and not to exceed HSC Section 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 39 Affordable Units within Phase 1. 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 Section 50053. (ii) 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 Authority pursuant to 24 C.F.R. Section 5.600 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.
Section 3. Developer Verification and Compliance; Annual Reports. Developer shall obtain and maintain on file an Income Verification from each tenant household, including all adult members of
Attachment No. 4
Phase 1 City Covenants
each such household, for each Affordable Unit dated immediately prior to the initial occupancy of such tenant in Phase 1. Commencing on or before the first March 30 after the City issues the final CoO for Building No. 1, and thereafter on or before March 30 of each Year of the Affordability Period, Developer shall file with City or its designee a Certificate, containing all information required to demonstrate that rents and income levels for the Affordable Units comply with the requirements of the Phase 1 DBAHA and these Phase 1 City Covenants regarding income (Lower Income) and rent (Affordable Rent) and containing such information as City additionally requires, in a form prescribed by City. Each Certificate shall cover the immediately preceding Year. (a) To the extent necessary and based on facts and circumstances as to one or more Affordable Units, tenant reverification and recertification may occur more often than annually as reasonably requested by the City or as otherwise determined by Developer or its Property Manager in accordance with tenant leases and other applicable law.
Section 4. 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 the standards in HSC Section 50053.
Section 5. Occupancy Limits. Subject to contrary requirements, if any, under applicable law, including Fair Housing Law, Developer agrees to comply with the following minimum and maximum occupancy for the Affordable Units in Phase 1: (a) for the studio/0-bedroom units the maximum occupancy is two (2) persons, (b) for the one-bedroom units the maximum occupancy is three (3) persons, (c) for the two-bedroom units the maximum occupancy is five (5) persons and the minimum occupancy is two (2) persons, and (d) for the three-bedroom units the maximum occupancy is seven (7) persons and the minimum occupancy is three (3) persons; in this regard, maximum occupancy is two persons per bedroom plus one.
Section 6. Rental Agreement. Prior to the rental or lease of each Affordable Unit to an eligible, qualified Lower Income Household, Developer shall require the tenant to execute a written lease and to complete an Income Verification certifying that the tenant(s) occupying the Affordable Unit is/are a Lower Income Household and meets the eligibility requirements established for the Affordable Unit.
Developer shall verify the income of all adult members of the household. Developer shall accept as tenants on the same basis as all other prospective tenants, including persons holding Portable Vouchers.
Developer shall not apply selection criteria to Portable Voucher holders that are more burdensome than criteria applied to any other prospective tenants.
Section 7. Verifications.
(a) Income Verification. Developer shall verify the income of each proposed and existing tenant household of each and every Affordable Unit in Phase 1. (b) Records of Leases. 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 compliance with the Phase 1 DBAHA and the Phase 1 City Covenants.
Section 8. Nondiscrimination. Developer shall refrain from restricting the rental, sale or lease of North Lot, or any portion thereof, on the basis of race, color, creed, religion, sex, marital status, national
Attachment No. 4
Phase 1 City Covenants
origin, or ancestry 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.”
The covenants established in these Phase 1 City Covenants shall, without regard to technical classification and designation, be binding for the benefit and in favor of City and their successors and assigns, and any successor in interest to the North Lot, together with any property, or any part thereof.
Section 9. Compliance with Laws. Developer shall carry out the design, development and operation of Phase 1, in particular the Affordable Units, in conformity with all applicable federal, state and local laws and regulations, including applicable Uniform Codes, City Code, Uniform Codes, building, plumbing, mechanical and electrical codes, and all other provisions thereof, City zoning and
Attachment No. 4
Phase 1 City Covenants
development standards, and all applicable disabled and handicapped access requirements, including without limitation 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., and the Unruh Civil Rights Act, Civil Code Section 51, et seq., California Fair Employment and Housing Act (FEHA), Government Code Section 65008, laws and regulations related to affirmatively furthering fair housing (“AFFH”), and other state and federal fair housing laws and regulations (together, “Fair Housing Law”).
ARTICLE III
DUTIES OF DEVELOPER RE
MANAGEMENT, MAINTENANCE, AND OPERATIONAL RESPONSIBILITIES Section 1. Management of the Affordable Units in Phase 1. (a) Property Manager. Developer shall, or shall cause, the North Lot and North Lot Improvements, in particular the Affordable Units in the Phase 1 Residential Component, to be managed in a prudent and business-like manner, consistent with good property management standards for other for high quality housing projects that include residential housing with long-term covenanted affordable housing units and located within Southern California. Developer may contract with (a) a property management company or property manager, to operate, manage, and maintain the Affordable Units or (b) a separate property management company or property manager in accordance with the terms of the Phase 1 DBAHA; provided, however, the selection and hiring of the Property Manager (and each successor or assignee), shall comply with the applicable provisions of the Phase 1 DBAHA.
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 Low Income and 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, consistent with the provisions of the Phase 1 DBAHA. Any proposed property manager shall have significant and relevant prior experience with high quality project with residential component and affordable housing units 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, subject to the provisions of the Phase 1 DBAHA, 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. 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 and the Phase 1 DBAHA.
(b) Compliance with Property Management Plan. The Property Management Plan, and all amendments thereto approved by the City Manager, shall evidence and include a detailed plan and strategy for long term marketing, operation, maintenance, repair and security thereof of the Affordable Units in Phase 1, inclusive of the method of selection of tenants, rules and regulations for tenants, and other rental policies, for the Affordable Units. The ongoing management and operation of the Affordable Units 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
Attachment No. 4
Phase 1 City Covenants
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 in accordance with the Phase 1 DBAHA.
(c) Gross Mismanagement. During the Affordability Period, and in the event of Gross Mismanagement of the Affordable Units, the City (through 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 forty-five (45) days from the date of written Notice to Property Manager and Developer from the City Manager. If Developer or Property Manager has commenced to cure such Gross Mismanagement condition(s) on or before the 30th 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 45th day, then Developer and its Property Manager shall have an additional fifteen (15) 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 sixty (60) days from the date of the initial written Notice of such condition(s), provided, however, that in the event the Gross Mismanagement is of a nature that it cannot reasonably be cured within sixty (60) days, then such cure period shall be extended for an additional thirty (30) days, or such longer time as may be reasonably necessary to cure such Gross Mismanagement condition(s) with such extended period beyond ninety (90) days subject to the prior written consent of the City Manager, and so long as Developer or its Property Manager commences to cure within thirty (30) days of written notice and thereafter diligently and continuously prosecutes such cure to completion, without triggering City’s right to remove the Property Manager. If such condition(s) do persist beyond such periods as provided above, the City Manager shall have the right 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 and in the Phase 1 DBAHA for selection of a Property Manager. The term Gross Mismanagement is as defined in the Phase 1 DBAHA. (d) 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 North Lot Improvements, 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 an individual tenant, if applicable, all in accordance with applicable law; provided however, City shall not be required to seek or obtain an administrative inspection warrant to carry out code enforcement duties. 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 to be made available and open for inspection in accordance with any applicable law; provided however, City shall not be required to seek or obtain an administrative inspection warrant to carry out code enforcement duties. Developer shall include express advisement of such inspection rights within the lease/rental agreements for each Affordable Unit in order for each and every tenant household to be aware of this inspection right.
(e) Capital Reserve Requirements. Commencing upon issuance of the CoO for Building No. 1, Developer shall annually set aside an amount of not less than Three Hundred Dollars ($300.00) per Affordable Unit (39 Affordable Units times $300 equals $11,700) or such increased
Attachment No. 4
Phase 1 City Covenants
amount required by a Lender from the gross rents received from the Affordable Units in Phase 1, 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 Building No. 1 (including the Affordable Units therein), including fixtures and equipment, which are normally capitalized under generally accepted accounting principles including “capital repair” as defined in the Internal Revenue Code. The non-availability of funds in the Capital Replacement Reserve does not in any manner relieve or lessen Developer’s obligation to undertake any and all necessary capital repairs, improvements, or replacements and to continue to maintain the Affordable Units in Phase 1 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 in Phase 1. Capital improvements and repairs to, and replacements for Affordable Units in Phase 1 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 in Phase
1. Notwithstanding the foregoing portion of this Article III, in the event a Lender prescribes particular amounts to be set aside as a capital replacement reserve that exceeds the requirements herein, compliance therewith shall be deemed compliance herewith.
Section 2. General Maintenance.
(a) Maintenance of North Lot. Developer agrees for itself and its successors in interest to the North Lot, to maintain the North Lot Improvements and the North Lot in conformity with the City Code and the conditions set forth in the Phase 1 DBAHA and these Phase 1 City Covenants, and shall keep the North Lot from any accumulation of debris or waste materials. During such period, Developer shall also maintain the landscaping planted on the North Lot in a healthy condition.
(b) Maintenance Standards; Program Maintenance. Developer and its maintenance staff, contractors or subcontractors shall comply with the Maintenance Standards and Program Maintenance as set forth in the Phase 1 DBAHA.
(i) Notwithstanding the foregoing, if the City Manager reasonably determines that the North Lot Improvements suffer from significant and unexpected wear and tear requiring any of the above items of maintenance to be performed sooner than as set forth in the Phase 1 DBAHA. Upon the request of Developer, the City Manager, at his/her sole, reasonable discretion, may grant a waiver or deferral of any program maintenance requirement. Developer shall keep such records
Attachment No. 4
Phase 1 City Covenants
of maintenance and repair as are necessary to prove performance of the program maintenance requirements.
Section 3. Duty to Prevent Hazardous Material Contamination. During the development and operation of Phase 1, Developer shall comply with all applicable law to prevent the release of any Hazardous Materials into the environment on or under the North Lot and the OCFCD Property. Such compliance shall include but not be limited to, compliance with all applicable Environmental Laws and other applicable Governmental Requirements relating to Hazardous Materials. 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 selfreporting requirements and reports filed or applications made pursuant to all Environmental Laws and other Governmental Requirements relating to Hazardous Materials, and Developer shall report to City, as soon as possible after each incident, any unusual, potentially important incidents in the event of a release of any Hazardous Materials into the environment. (a) For purposes of this Article III, “Governmental Requirements” means 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 North Lot is located, and of any other political subdivision, agency or instrumentality exercising jurisdiction over City, Developer or Phase 1, relating to Hazardous Materials.
(b) For purposes of this Article III the term, “Hazardous Materials” is defined in the Phase 1 DBAHA.
Section 4. Parking of Vehicles. Developer shall not permit the parking, storing or keeping of any vehicle except wholly within the Phase 1 parking areas designated for commercial and residential uses, including parking for tenants and visitors of the Affordable Units. Developer shall not permit the parking, storing or keeping of any large commercial-type vehicle (dump truck, cement mixer truck, oil or gas truck, etc.), or any recreational vehicle over twenty (20) feet in length (camper unit, motor home, trailer, mobile home or other similar vehicle), boats over twenty (20) feet in length, or any vehicle other than a private passenger vehicle, upon any portion of the common areas, including parking spaces. For purposes of Article III, a pickup truck with a pickup bed mounted camper shall be considered a private passenger vehicle; provided however, that no such vehicle shall be used for residential purposes while parked on the premises.
(a) No Onsite Major Repairs. Developer shall not permit major repairs or major restorations of any motor vehicle, boat, trailer, aircraft or other vehicle to be conducted upon any portion of the common areas of Phase 1, including the parking areas, except for emergency repairs thereto and then only to the extent necessary to enable movement of the vehicle to a proper repair facility. No inoperable vehicle shall be stored or kept in the common areas of Phase 1. Developer shall give the vehicle owner not less than four (4) days, nor more than seven (7) days’ notice and an opportunity to remove any vehicle parked, stored or kept in violation of the provisions hereof. Notice shall consist minimally of a reasonably diligent attempt to personally notify the vehicle owner or alternatively leaving written notice on the subject vehicle. After due notice and opportunity have been given to the vehicle owner, Developer shall have the right to remove, at the vehicle owner’s expense, any vehicle parked, stored or kept in violation of the provisions of these Phase 1 City Covenants.
Attachment No. 4
Phase 1 City Covenants
Section 5. Signs Required. “No loitering” signs will be posted at each building in Phase 1 and enforced by the owner(s). “Illegally parked vehicles will be towed” signs in compliance with California Vehicle Code requirements will be posted and enforced by Developer.
ARTICLE IV
TENANT SELECTION
Section 1. Selection of Tenants. Developer shall be responsible for the selection of tenants for the Affordable Units in compliance with the criteria set forth herein and in the Phase 1 DBAHA. (a) Process for Tenant Selection. Developer shall implement a tenant selection system for the Affordable Units as approved by the City Manager under the Phase 1 DBAHA. (b) Marketing. 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,” if such has been updated since submittal of the form of lease/rental agreement prior to issuance of CoO in accordance with the Phase 1 DBAHA, including with a description of necessary supporting materials to be completed by applicants for prospective tenancy of the Affordable Units. (i) Posting advertisements and notices of the vacancy(ies) in locations agreed upon by the City Manager and Developer, which may include 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.
ARTICLE V
ENFORCEMENT
Section 1. Remedies. Breach of the covenants contained in these Phase 1 City Covenants may be enjoined, abated, or remedied by appropriate legal proceeding by City, following expiration of any applicable cure periods as provided in the Phase 1 DBAHA. These Phase 1 City Covenants do not in any way infringe on the right or duties of the City to enforce any of the provisions of the City Code including, but not limited to, the abatement of dangerous buildings.
Section 2. Nuisance. The result of every act or omission whereby any of the covenants contained in these Phase 1 City Covenants are violated in whole or in part is hereby declared to be and constitutes a nuisance, and every remedy allowable at law or equity, against a nuisance, either public or private, shall be applicable against every such result and may be exercised by any owner or its successors in interest, without derogation of City’s rights under law.
Section 3. Right of Entry. In addition to the above general rights of enforcement, City shall have the right through its agents and employees, to enter upon any part of the North Lot for the purpose of enforcing the California Vehicle Code, and the ordinances and other regulations of City, and for maintenance and/or repair of any or all publicly owned utilities. Subsequent to sixty (60) days written notice to Developer specifically outlining Developer’s noncompliance, City shall have the right of entry on the North Lot at reasonable hours to enforce compliance with these Phase 1 City Covenants which Developer has failed to perform. In addition, City has the right of entry onto any part of the
Attachment No. 4
Phase 1 City Covenants
North Lot at reasonable hours and upon and after reasonable attempts to contact Developer, to effect emergency repairs or maintenance that Developer has failed to perform.
Section 4. Costs of Repair. The reasonable costs borne by City of any such repairs or maintenance emergency and/or non-emergency, shall become a charge for which Developer shall be responsible.
Developer agrees that City’s rights related to charges and collection thereof hereunder include the City’s right to impose a lien against the Site comparable to the process undertaken by public agencies for similar lien collection such as for weed abatement.
Section 5. Cumulative Remedies. The remedies herein provided for breach of the covenants contained in these Phase 1 City Covenants shall be deemed cumulative, and none of such remedies shall be deemed exclusive.
Section 6. Failure to Enforce. The failure to enforce any of the covenants contained in these Phase 1 City Covenants shall not constitute a waiver of the right to enforce the same thereafter.
Section 7. Enforcement and Nonliability. The City may from time to time make such efforts, if any, as it shall deem appropriate enforce and/or assist in enforcing these Phase 1 City Covenants.
However, neither City nor City will be subject to any liability for failure to affirmatively enforce any provision of these Phase 1 City Covenants.
ARTICLE VI
GENERAL PROVISIONS
Section 1. Covenant against Partition. Developer covenants for itself and for its heirs, representatives, successors, and assigns, that it will not institute legal proceedings or otherwise seek to effect partition of its rights and interests in the North Lot, or the burdens running with the land as a result of these Phase 1 City Covenants.
Section 2. Severability. Invalidation of any one of these covenants or restrictions by judgment or court order shall in no way affect any other provisions which shall remain in all force and effect.
Section 3. Term. These Phase 1 City Covenants shall run with and bind the interest of Developer in the North Lot, and shall inure to the owner(s) of any property subject to these Phase 1 City Covenants, his legal representatives, heirs, successors and assigns, and be enforceable by City, for a term equal to the Affordability Period as defined in the Phase 1 DBAHA.
Section 4. Construction. The provisions of these Phase 1 City Covenants shall be liberally construed to effectuate its purpose ensuring the continued affordability and operation of the Affordable Units in Phase 1 in accordance with and as permitted by the DBL, as more particularly set forth herein and in the Phase 1 DBAHA. The article and section headings have been inserted for convenience only, and shall not be considered or referred to in resolving questions of interpretation or construction.
Developer shall be obligated by these Phase 1 City Covenants to comply with the provisions hereof.
Section 5. Amendments. These Phase 1 City Covenants may be amended only by the written agreement of Developer and City.
Section 6. Notices. Any Notice permitted or required to be delivered as provided herein to Developer shall be in writing and may be delivered either personally or by certified mail. Notice to
Attachment No. 4
Phase 1 City Covenants
City shall be made by certified mail to: City Manager (with copies to both City Clerk and City Legal Counsel), City Hall 10200 Slater Avenue, Fountain Valley, California 92708 and shall be effective upon receipt. Notice to Developer shall be made by certified mail to Magnolia I Owner, LLC, 808 Washington St, Ste 500, Vancouver, WA 98660, Attn: George Elum, and shall be effective upon receipt. Such address may be changed from time to time by notice in writing.
DEVELOPER:
MAGNOLIA I OWNER, LLC,
a Delaware limited liability company
By: Magnolia I Investor, LLC,
a Delaware limited liability company,
its sole Member
By: HPG Magnolia, LLC,
a Washington limited liability company,
its Managing Member
By: Holland Partner Group Management, Inc.,
a Delaware corporation,
its Manager
By: ____________________________
Name:
Title:
APPROVED AS TO FORM:
__________________________
Developer Counsel
[Signatures continued on next page]
Attachment No. 4
Phase 1 City Covenants
[Signatures continued from previous page]
CITY:
CITY OF FOUNTAIN VALLEY,
a California municipal corporation
By:
City Manager or Authorized Designee
ATTEST:
Rick Miller, City Clerk
APPROVED AS TO FORM:
HARPER & BURNS
Colin R. Burns, City Legal Counsel
APPROVED AS TO FORM:
STRADLING YOCCA CARLSON & RAUTH
Celeste Stahl Brady, Special Counsel
Exhibit A to Attachment No. 4
Legal Description to Phase 1 City Covenants
EXHIBIT A
LEGAL DESCRIPTION
Real property in the City of Fountain Valley, County of Orange, State of California, legally described as follows:
PARCEL A: (APN: 143-301-31 AND 143-301-32)
PARCEL 1, IN THE CITY OF FOUNTAIN VALLEY, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SHOWN ON A MAP FILED IN BOOK 82, PAGE 19 OF PARCEL MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID ORANGE COUNTY.
EXCEPTING THEREFROM, ALL OIL, PETROLEUM, NATURAL GAS, MINERAL RIGHTS, AND OTHER HYDROCARBON SUBSTANCES LYING BELOW A DEPTH OF 500 VERTICAL
FEET FROM SURFACE OF SAID LAND, OR THROUGH ANY PORTION THEREOF ABOVE SAID 500-FOOT DEPTH, FOR THE PURPOSE OF EXPLORING FOR, EXTRACTING, MINING,
BORING, REMOVING OR MARKETING SAID SUBSTANCES, AS RESERVED BY GULF OIL CORPORATION, A PENNSYLVANIA CORPORATION, IN A DEED RECORDED OCTOBER 12, 1967 IN BOOK 8401, PAGE 398 OF OFFICIAL RECORDS.
ALSO EXCEPTING THEREFROM, ALL RIGHTS TO UNDERGROUND WATER, WITHOUT
THE RIGHT OF SURFACE ENTRY, AS DEDICATED TO THE CITY OF FOUNTAIN VALLEY ON THE MAP OF SAID TRACT.
PARCEL B:
A NON-EXCLUSIVE EASEMENT FOR INGRESS, EGRESS AND SURFACE USE TOGETHER
WITH THE RIGHT TO PAVE OVER OR CONSTRUCT BUILDINGS OR OTHER PERMANENT
STRUCTURES UPON THE LAND IN THE CITY OF FOUNTAIN VALLEY, COUNTY OF ORANGE, STATE OF CALIFORNIA, DESCRIBED AS:
THAT PORTION OF THE SOUTHWEST QUARTER OF THE SOUTHWEST QUARTER OF SECTION 19, TOWNSHIP 5 SOUTH, RANGE 10 WEST, IN THE RANCHO LAS BOLSAS, CITY
OF FOUNTAIN VALLEY, COUNTY OF ORANGE, STATE OF CALIFORNIA, PER MAP RECORDED IN BOOK 51, PAGE 12 OF MISCELLANEOUS MAPS IN THE OFFICE OF THE
COUNTY RECORDER OF SAID COUNTY, AS DESCRIBED IN THE DEED TO THE ORANGE COUNTY FLOOD CONTROL DISTRICT, RECORDED JULY 14, 1964 IN BOOK 7133, PAGE 509 OF OFFICIAL RECORDS IN THE OFFICE OF SAID COUNTY RECORDER.
EXCEPT THAT PORTION THEREON DESCRIBED IN THE DEED TO THE FOUNTAIN VALLEY GOLF PARK, INC., A CORPORATION, RECORDED MAY 19, 1970 IN BOOK 9293, PAGE 143 OF SAID OFFICIAL RECORDS.
PARCEL C: (APN: 143-294-02)
THAT PORTION OF THE SOUTHWEST QUARTER OF THE SOUTHWEST QUARTER OF THE SOUTHWEST QUARTER OF SECTION 19, TOWNSHIP 5 SOUTH, RANGE 10 WEST, IN THE
Exhibit A to Attachment No. 4
Legal Description to Phase 1 City Covenants
RANCHO LAS BOLSAS, CITY OF FOUNTAIN VALLEY, COUNTY OF ORANGE, STATE OF CALIFORNIA, PER MAP RECORDED IN BOOK 51, PAGE 12 OF MISCELLANEOUS MAPS IN
THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, AS DESCRIBED IN THE DEED TO THE ORANGE COUNTY FLOOD CONTROL DISTRICT, RECORDED JULY 14, 1984 IN BOOK 7133, PAGE 509 OF OFFICIAL RECORDS IN THE OFFICE OF SAID COUNTY RECORDER.
EXCEPT THAT PORTION THEREOF LYING EASTERLY AND SOUTHEASTERLY OF THE FOLLOWING DESCRIBED LINES:
BEGINNING AT THE NORTHWEST CORNER OF THE SOUTHWEST QUARTER OF THE SOUTHWEST QUARTER OF THE SOUTHWEST QUARTER OF SAID SECTION 19; THENCE
ALONG THE NORTH LINE OF SAID SOUTHWEST QUARTER OF THE SOUTHWEST QUARTER OF THE SOUTHWEST QUARTER NORTH 87° 34' 01" EAST, 98.94 FEET TO THE
TRUE POINT OF BEGINNING, SAID POINT BEING ON A NON-TANGENT CURVE CONCAVE SOUTHEASTERLY AND HAVING A RADIUS OF 179.84 FEET, A RADIAL LINE OF SAID CURVE THROUGH SAID POINT BEARS NORTH 52° 19' 55" WEST; THENCE SOUTHWESTERLY 67.46 FEET ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 21° 29' 33" TO THE BEGINNING OF A REVERSE CURVE CONCAVE NORTHWESTERLY AND HAVE A RADIUS OF 122.50 FEET; THENCE SOUTHERLY AND SOUTHWESTERLY 33.95 FEET ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 18° 13' 08" TO THE EASTERLY LINE OF THE LAND DESCRIBED AS "PARCEL 2A" IN THE FINAL ORDER OF CONDEMNATION RENDERED IN SUPERIOR COURT CASE NO. 105675 A CERTIFIED COPY OF WHICH WAS RECORDED AUGUST 05, 1963 IN BOOK 6662, PAGE 132 OF SAID OFFICIAL RECORDS.
PARCEL D: (APN: 143-294-01)
THAT PORTION OF THE SOUTHWEST QUARTER OF SECTION 19, TOWNSHIP 5 SOUTH, RANGE 10 WEST, IN THE RANCHO LAS BOLSAS, AS SHOWN ON A MAP RECORDED IN BOOK 51, PAGE 12 OF MISCELLANEOUS MAPS IN THE OFFICE OF THE COUNTY
RECORDER OF ORANGE COUNTY, CALIFORNIA, AS ACQUIRED BY THE STATE OF CALIFORNIA BY DEED RECORDED IN BOOK 5957, PAGE 902 OF OFFICIAL RECORDS IN
SAID OFFICE, BOUNDED GENERAL SOUTHERLY BY THAT CERTAIN PARCEL OF LAND CONVEYED BY THE STATE OF CALIFORNIA BY DEED RECORDED IN BOOK 7374, PAGE 521 OF SAID OFFICIAL RECORDS; BOUNDED WESTERLY BY THE NORTHERLY PROLONGATION OF THAT CERTAIN COURSE HAVING A BEARING OF SOUTH 03 DEGREES 29' 51" WEST, AS SHOWN IN PARCEL 7 OF STATE HIGHWAY RELINQUISHMENT NO. 553 RECORDED IN BOOK 8387, PAGE 528 OF SAID OFFICIAL RECORDS; AND BOUNDED NORTHEASTERLY AND NORTHWESTERLY BY THE
FOLLOWING DESCRIBED LINE
Attachment No. 5
Request for Notice of Default
ATTACHMENT NO. 5
REQUEST FOR NOTICE OF DEFAULT
Recording Requested By and
When Recorded Mail To:
City of Fountain Valley
10200 Slater Avenue
Fountain Valley, California 92708
Attention: City Clerk
SPACE ABOVE THIS LINE FOR RECORDER’S USE
(This document is exempt from payment of a recording
fee under Gov’t Code Section 27383.)
REQUEST FOR NOTICE UNDER SECTION 2924b CIVIL CODE
In accordance with Section 2924b, Civil Code, request is hereby made that a copy of any Notice of Default and a copy of any Notice of Sale under the Deed of Trust recorded as Instrument No. _____ on _____________, 20__, in Book ______, Page ______, Official Records of Orange County, California, and describing land therein as
See Exhibit A attached hereto
executed by ____________________, as Trustor, in which ____________________ is named as Beneficiary, and _________________ as Trustee, be mailed to CITY OF FOUNTAIN VALLEY, at 10200 Slater Avenue, Fountain Valley, California 92708, Attention: City Manager.
NOTICE: A COPY OF ANY NOTICE OF DEFAULT AND OF ANY NOTICE OF SALE
WILL BE SENT ONLY TO THE ADDRESS CONTAINED THIS RECORDED REQUEST. IF YOUR ADDRESS CHANGES, A REQUEST MUST BE
RECORDED.
CITY OF FOUNTAIN VALLEY, a California
municipal corporation
By:
City Manager or Authorized Designee
ATTEST:
Rick Miller, City Clerk
Exhibit A to Attachment No. 5
Legal Description for Request for Notice of Default
EXHIBIT A TO REQUEST FOR NOTICE OF DEFAULT
LEGAL DESCRIPTION
Real property in the City of Fountain Valley, County of Orange, State of California, legally described as follows:
PARCEL A (APN:143-294-04)
THAT PORTION OF THE SOUTHWEST QUARTER OF THE SOUTHWEST QUARTER OF THE SOUTHWEST QUARTER OF SECTION 19, TOWNSHIP 5 SOUTH, RANGE 10 WEST,
IN THE RANCHO LAS BOLSAS, CITY OF FOUNTAIN VALLEY, COUNTY OF ORANGE, STATE OF CALIFORNIA, PER MAP RECORDED IN BOOK 51, PAGE 12 OF
MISCELLANEOUS MAPS IN THE OFFICE OF THE COUNTY RECORDER OF SAID
COUNTY, AS DESCRIBED IN THE DEED TO THE ORANGE COUNTY FLOOD CONTROL DISTRICT, RECORDED JULY 14, 1984 IN BOOK 7133, PAGE 509 OF OFFICIAL RECORDS IN THE OFFICE OF SAID COUNTY RECORDER.
EXCEPT THAT PORTION THEREOF LYING EASTERLY AND SOUTHEASTERLY OF THE FOLLOWING DESCRIBED LINES:
BEGINNING AT THE NORTHWEST CORNER OF THE SOUTHWEST QUARTER OF THE SOUTHWEST QUARTER OF THE SOUTHWEST QUARTER OF SAID SECTION 19;
THENCE ALONG THE NORTH LINE OF SAID SOUTHWEST QUARTER OF THE SOUTHWEST QUARTER OF THE SOUTHWEST QUARTER NORTH 87° 34' 01" EAST,
98.94 FEET TO THE TRUE POINT OF BEGINNING, SAID POINT BEING ON A NONTANGENT CURVE CONCAVE SOUTHEASTERLY AND HAVING A RADIUS OF 179.84 FEET, A RADIAL LINE OF SAID CURVE THROUGH SAID POINT BEARS NORTH 52° 19' 55" WEST; THENCE SOUTHWESTERLY 67.46 FEET ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 21° 29' 33" TO THE BEGINNING OF A REVERSE CURVE CONCAVE NORTHWESTERLY AND HAVE A RADIUS OF 122.50 FEET; THENCE SOUTHERLY AND SOUTHWESTERLY 33.95 FEET ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 18° 13' 08" TO THE EASTERLY LINE OF THE LAND DESCRIBED AS "PARCEL 2A" IN THE FINAL ORDER OF CONDEMNATION RENDERED IN SUPERIOR COURT CASE NO. 105675 A CERTIFIED COPY OF WHICH WAS RECORDED AUGUST 05, 1963 IN BOOK 6662, PAGE 132 OF SAID OFFICIAL RECORDS.
EXCEPTING THEREFROM THAT PORTION OF THE LAND CONDEMNED TO ORANGE
COUNTY TRANSPORTATION AUTHORITY, A PUBLIC ENTITY AS EVIDENCED BY FINAL ORDER OF CONDEMNATION RECORDED ON JULY 08, 2021 AS INSTRUMENT NO. 2021-441526 OF OFFICIAL RECORDS.
Exhibit A to Attachment No. 5
Legal Description for Request for Notice of Default
PARCEL B (APN: 143-294-03)
THAT PORTION OF THE SOUTHWEST QUARTER OF SECTION 19, TOWNSHIP 5 SOUTH, RANGE 10 WEST, IN THE RANCHO LAS BOLSAS, AS SHOWN ON A MAP RECORDED IN BOOK 51, PAGE 12 OF MISCELLANEOUS MAPS IN THE OFFICE OF
THE COUNTY RECORDER OF ORANGE COUNTY, CALIFORNIA, AS ACQUIRED BY THE STATE OF CALIFORNIA BY DEED RECORDED IN BOOK 5957, PAGE 902 OF
OFFICIAL RECORDS IN SAID OFFICE, BOUNDED GENERAL SOUTHERLY BY THAT
CERTAIN PARCEL OF LAND CONVEYED BY THE STATE OF CALIFORNIA BY DEED RECORDED IN BOOK 7374, PAGE 521 OF SAID OFFICIAL RECORDS; BOUNDED
WESTERLY BY THE NORTHERLY PROLONGATION OF THAT CERTAIN COURSE HAVING A BEARING OF SOUTH 03 DEGREES 29' 51" WEST, AS SHOWN IN PARCEL 7 OF STATE HIGHWAY RELINQUISHMENT NO. 553 RECORDED IN BOOK 8387, PAGE 528 OF SAID OFFICIAL RECORDS; AND BOUNDED NORTHEASTERLY AND NORTHWESTERLY BY THE FOLLOWING DESCRIBED LINE:
BEGINNING AT THE NORTHWESTERLY TERMINUS OF THAT CERTAIN COURSE HAVING A BEARING OF NORTH 46 DEGREES 53' 32" WEST, AS DESCRIBED IN SAID CERTAIN PARCEL OF LAND SO CONVEYED, RECORDED IN BOOK 7374, PAGE 521 OF SAID OFFICIAL RECORDS; THENCE ALONG THE NORTHWESTERLY PROLONGATION OF LAST SAID COURSE, NORTH 46 DEGREES 53' 32" WEST 99.93 FEET; THENCE NORTH 44 DEGREES 01' 46" WEST 536.68 FEET; T0HENCE SOUTH 59 DEGREES 07' 27" WEST TO SAID NORTHERLY PROLONGATION.
EXCEPTING THEREFROM THAT PORTION OF THE LAND CONDEMNED TO ORANGE
COUNTY TRANSPORTATION AUTHORITY, A PUBLIC ENTITY AS EVIDENCED BY FINAL ORDER OF CONDEMNATION RECORDED ON JULY 08, 2021 AS INSTRUMENT NO. 2021-441526 OF OFFICIAL RECORDS.
EXCEPTING THEREFROM, ALL OIL, OIL RIGHTS, MINERALS, MINERAL RIGHTS,
NATURAL GAS, NATURAL GAS RIGHTS, AND OTHER HYDROCARBONS BY
WHATSOEVER NAME KNOWN THAT MAY BE WITHIN OR UNDER THE PARCEL OF
LAND HEREINABOVE DESCRIBED, TOGETHER WITH THE PERPETUAL RIGHT OF
DRILLING, MINING, EXPLORING AND OPERATING THEREFROM, AND REMOVING THE
SAME FROM SAID LAND OR ANY OTHER LAND, INCLUDING THE RIGHT TO
WHIPSTOCK OR DIRECTIONALLY DRILL AND MINE FROM LANDS OTHER THAN
THOSE HEREINABOVE DESCRIBED, OIL OR GAS WELLS, TUNNELS AND SHAFTS INTO,
THROUGH OR ACROSS THE SUBSURFACE OF THE LAND HEREINABOVE DESCRIBED,
AND TO BOTTOM SUCH WHIPSTOCKED OR DIRECTIONALLY DRILLED WELLS,
TUNNELS AND SHAFTS UNDER AND BENEATH OR BEYOND THE EXTERIOR LIMITS
THEREOF, AND TO REDRILL, RETUNNEL, EQUIP, MAINTAIN, REPAIR, DEEPEN AND
OPERATE ANY SUCH WELLS OR MINES, WITHOUT, HOWEVER, THE RIGHT TO DRILL, MINE, EXPLORE AND OPERATE THROUGH THE SURFACE OR THE UPPER 100 FEET OF
THE SUBSURFACE OF THE LAND HEREINABOVE DESCRIBED, OR OTHERWISE IN SUCH
MANNER AS TO ENDANGER THE SAFETY OF ANY HIGHWAY THAT MAY BE CONSTRUCTED ON SAID LANDS, IN INSTRUMENT RECORDED AUGUST 5, 1963 IN BOOK 6662, PAGE 34 OF OFFICIAL RECORDS.
Attachment No. 6
Developer Certificate
ATTACHMENT NO. 6
DEVELOPER CERTIFICATE
_________________, 20__ (“Date of Certificate”)
City of Fountain Valley
Attention: City Manager
10200 Slater Avenue
Fountain Valley, California 92708
Density Bonus and Affordable Housing Agreement (Phase 1 – North Building at 16800 Magnolia Street, Fountain Valley) by and between CITY OF FOUNTAIN VALLEY (“City”) and MAGNOLIA I OWNER, LLC (“Developer”), dated as of ___, 2026 (“Phase 1 DBAHA”) Ladies and Gentlemen:
The undersigned as Developer under the Phase 1 DBAHA does hereby state, declare, certify, represent, and warrant to City and their respective officers, agents and employees as follows:
1. Developer has reviewed, executed and is familiar with the terms of the Phase 1 DBAHA.
All capitalized terms herein shall have the meanings established therefor in the Phase 1 DBAHA.
2. The Phase 1 DBAHA is in full force and effect and shall remain in full force and effect pursuant to its terms.
3. The Phase 1 Memorandum of Agreement and Phase 1 City Covenants have been recorded among the official land records of the County of Orange in conformity with the Phase 1 DBAHA.
4. All of the insurance policies required to obtained and maintained by Developer under the Phase 1 DBAHA are in full force and effect.
5. Upon completion of Phase 1, the Affordable Units shall be occupied in accordance with the Phase 1 DBAHA by qualified Lower Income Households at an Affordable Rent.
6. The representations and warranties of Developer contained in the Phase 1 DBAHA are true and correct in all material respects as of date of this Developer Certificate.
7. No uncured Event of Default by Developer has occurred under the Phase 1 DBAHA and no event shall have occurred which, with the giving of notice or the passage of time or both, would constitute an uncured Event of Default by Developer under the Phase 1 DBAHA.
8. Developer has not, prior to the date of this Developer Certificate transferred the Phase 1 DBAHA, the North Lot, or any rights of Developer therein.
9. Developer affirms that Section 4.5 of the Agreement shall survive for the Affordability Period, including without limitation the provisions thereof under which Developer shall
Attachment No. 6
Developer Certificate
defend, indemnify, and hold harmless City from any claims, losses, liabilities, and damages arising out of Developer as set forth in Section 4.5.
10. Developer has received no notice from any governmental agency that there are Hazardous Materials on or about the North Lot in excess of amounts prescribed by law and is not aware of the presence of Hazardous Materials on or about the North Lot in excess of amounts permitted by law.
11. Developer is operating and in good standing as a qualified Delaware limited liability company and is qualified and authorized to transact intrastate business in the State of California under the laws of the State of California and as reflected in the records of the California Secretary of State.
12. Developer executes this Developer Certificate for the benefit and protection of City with full knowledge that City is relying on this Developer Certificate in entering into and performing its obligations under the Phase 1 DBAHA.
IN WITNESS WHEREOF, the undersigned, as Developer, has executed this Developer Certificate as of the date first written above.
DEVELOPER:
MAGNOLIA I OWNER, LLC,
a Delaware limited liability company
By: Magnolia I Investor, LLC,
a Delaware limited liability company,
its sole Member
By: HPG Magnolia, LLC,
a Washington limited liability company,
its Managing Member
By: Holland Partner Group Management, Inc.,
a Delaware corporation,
its Manager
By: ____________________________
Name:
Title:
Attachment No. 7
Certificate of Continuing Program Compliance
ATTACHMENT NO. 7
CERTIFICATE OF CONTINUING PROGRAM COMPLIANCE
TO: City of Fountain Valley
10200 Slater Avenue
Fountain Valley, California 92708
Attention: City Manager
The undersigned,____________________________, being duly authorized to execute this Certificate of Continuing Program Compliance (“Certificate”) on behalf of Magnolia I Owner, LLC, a Delaware limited liability company (“Developer”), hereby represents and warrants that:
1. She/He has read and is thoroughly familiar with the provisions of the Density Bonus and Affordable Housing Agreement (Phase 1 – North Building at 16800 Magnolia Street, Fountain Valley) (“Phase 1 DBAHA”) by and among City and Developer dated as of _______, 2026 including without limitation the Phase 1 City Covenants and other attachments thereto. Capitalized terms used herein shall have the same meaning as that set forth in the Phase 1 DBAHA.
2. As of the date of this Certificate, the following number of completed residential units on the North Lot: (i) [____] studio units are currently occupied by Lower Income Households at Affordable Rent; (ii) [_____] one-bedroom units are currently occupied by Lower Income Households at Affordable Rent; (iii) [______] two-bedroom units are currently occupied by Lower Income Households at Affordable Rent; or (iv) [______] three-bedroom units are currently vacant and being held available for occupancy by Lower Income Households and have been so held continuously since the date the immediately prior Lower Income Household vacated such unit:
• Occupied at an Affordable Rent by:
Lower Income Households # of Units, Nos.:
• Vacant:
a. Held for occupancy by:
Lower Income Households # of Units, Nos.:
b. Last occupied by:
Lower Income Households # of Units, Nos.:
3. At no time since the date of filing of the last Certificate of Continuing Program Compliance have less than one hundred percent (100%) of the Affordable Units as completed units in Phase 1 been occupied by, or been last occupied, or have been available for tenancy and occupancy by Lower Income Households at an Affordable Rent.
Attachment No. 7
Certificate of Continuing Program Compliance
4. Developer is not in default under the terms of the Phase 1 DBAHA, including without limitation the attachments, in particular the Phase 1 City Covenants.
DEVELOPER:
MAGNOLIA I OWNER, LLC,
a Delaware limited liability company
By: Magnolia I Investor, LLC,
a Delaware limited liability company,
its sole Member
By: HPG Magnolia, LLC,
a Washington limited liability company,
its Managing Member
By: Holland Partner Group Management, Inc.,
a Delaware corporation,
its Manager
By: ____________________________
Name:
Title:
Attachment No. 8
Calculation of Affordable Rent
ATTACHMENT NO. 8
CALCULATION OF AFFORDABLE RENT
(under HSC 50053)
1. Income Eligibility1
The first step in determining eligibility for tenancy and occupancy of the Affordable Units (that include studios/0-bedroom, 1-bedroom, 2-bedroom, and 3-bedroom units) is determining whether the person or family that will be renting the housing unit meets the following income standards applicable to Orange County, based upon the size of the household:
Income
Level
1 person
household
2 person
household
3 person
household
4 person
household
5 person
household
6 person
household
7 person
household
8 person
household
Acutely Low $14,550 $16,650 $18,700 $20,800 $22,450 $24,150 $25,800 $27,450 Extremely
Low
$39,100 $44,700 $50,300 $55,850 $60,350 $64,800 $69,300 $73,750 Very Low $65,150 $74,450 $83,750 $93,050 $100,500 $107,950 $115,400 $122,850 Low/Lower $104,200 $119,100 $134,000 $148,850 $160,800 $172,700 $184,600 $196,500 Median $97,000 $110,900 $124,750 $138,600 $149,700 $160,800 $171,850 $182,950 Moderate $116,400 $133,050 $149,650 $166,300 $179,600 $192,900 $206,200 $219,500
2. Determining Affordable Rent
For rental housing, the second step in determining compliance with affordable housing requirements is determining whether the total rent costs payable by the tenant are within allowable amounts. Rent figures below are rent plus/inclusive of applicable utilities allowance (i.e., rents stated are set at the gross rents minus the currently applicable utilities allowances based on basic cooking, heating, and electric per the applicable regulation.)
For Lower Income Households:2
• renting a 0 bedroom unit, monthly rent may not exceed $1,455.00 • renting a 1 bedroom unit, monthly rent may not exceed $1,664.00 • renting a 2 bedroom unit, monthly rent may not exceed $1,871.00 • renting a 3 bedroom unit, monthly rent may not exceed $2,079.00 • renting a 4 bedroom unit, monthly rent may not exceed $2,246.00 1 Based on currently effective median income of Orange County, as released by the Department of Housing and Community Development (“HCD”) by memorandum issued on June 3, 2026 with effective date of May 29, 2026 as posted to the HCD website. These median income numbers are revised annually. 2 Affordable Rent for Lower Income Households is the product of 30 percent times 60 percent of the area median income adjusted for family size appropriate to the unit. Health and Safety Code Section 50053(b)(3).
Attachment No. 8
Calculation of Affordable Rent
• renting a 5 bedroom unit, monthly rent may not exceed $2,412.00 In addition, for any Lower Income Household renter whose income falls within the following guidelines, it is optional for the agency to require that affordable rent not exceed 30 percent of the gross income of the household:
3 • 1 person households whose income is between $59,170 and $104,200 • 2 person households whose income is between $67,649 and $119,100 • 3 person households whose income is between $76,098 and $134,000 • 4 person households whose income is between $84,546 and $148,850 • 5 person households whose income is between $91,317 and $160,800 • 6 person households whose income is between $98,088 and $172,700 • 7 person households whose income is between $104,829 and $184,600 • 8 person households whose income is between $111,600 and $196,500 For purposes of determining Affordable Rent, “Rent” is an average of estimated housing costs for the next twelve months. “Rent” includes the total of monthly payments for all of the following:4
• Use and occupancy of a housing unit and land and facilities associated therewith. • Any separately charged fees or service charges assessed by the lessor which are required of all tenants, other than security deposits.
• A reasonable allowance for utilities not included in the above costs, including garbage collection, sewer, water, electricity, gas, and other heating, cooking, and refrigeration fuels.
Utilities does not include telephone service. Such an allowance shall take into consideration the cost of an adequate level of service. • Possessory interest taxes or other fees or charges assessed for use of the land and facilities associated therewith by a public or private entity other than the lessor. 3 Health and Safety Code Section 50053(b)(3).
4 25 California Code of Regulations Section 6918.
Attachment No. 9
Income Verification
ATTACHMENT NO. 9
INCOME VERIFICATION
Part I -- General Information
1. Project Location:
2. Landlord’s Name:
Part II -- Unit Information
3. Unit Number of Monthly Number of
Number Bedrooms Rent Occupants
[ ]
Part III -- Affidavit of Tenant
I, ______________, and I, ______________, as applicants for rental of an Apartment Unit at the above-described location, do hereby represent and warrant as follows:
(My/Our) gross income (anticipated total annual income) does not exceed 80% of the Area Median Income for Orange County as defined by California Health and Safety Code Section 50079.5 and the implementing regulations issued by State Housing and Community Development as such income levels are established and amended from time to time pursuant to Section 8 of the United States Housing Act of 1937 and published by the State Department of Housing and Community Development in the California Code of Regulations. (I/We) understand that the applicable Median Income is [$ ]. The following computation includes all income (I/we) anticipate receiving for the 12-month period beginning on the date (I/we) execute a rental agreement for an Affordable Unit or the date on which (I/we) will initially occupy such unit, whichever is earlier.
Tenant(s)’ Initials
Attachment No. 9
Income Verification
1. Tenants qualifying as A, B., or C above, must complete the following:
Monthly Gross Income
(All Sources of Income of All Adult Household Members Must be Listed) Source Head of
Household
Co-Tenants Total
Gross amount, before payroll
deductions of wages, salaries, overtime
pay, commissions, fees, tips, and
bonuses
Interest and/or dividends
Net income from business or from
rental property
Social security, annuities, insurance
policies, pension/retirement funds,
disability or death benefits received
periodically
Payment in lieu of earnings, such as
unemployment and disability
compensation, worker’s compensation
and severance pay
Alimony, child support, other periodic
allowances
Public assistance, welfare payments
Regular pay, special pay, and
allowances of members of Armed
Forces
Other
Total:
Attachment No. 9
Income Verification
Total x 12 _________________ = Gross Annual Household Income Note: The following items are not considered income: casual or sporadic gifts; amounts specifically for or in reimbursement of medical expenses; lump sum payments such as inheritances, insurance payments (including payments under health and accident insurance and worker’s compensation), capital gains and settlement for personal or property losses; educational scholarships paid directly to the student or educational institution; government benefits to a veteran for education; special pay to a serviceman head of family away from home and under hostile fire; foster child care payments; value of coupon allotments for purpose of food under Food Stamp Act of 1964 which is in excess of amount actually charged the eligible household; relocation payments under Title II of Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970; payments received pursuant to participation in the following programs: VISTA, Service Learning Programs, and Special Volunteer Programs, SCORE, ACE, Retired Senior Volunteer Program, Foster Grandparent Program, Older American Community Services Program, and National Volunteer Program to Assist Small Business Experience.
2. This affidavit is made with the knowledge that it will be relied upon by the Landlord to determine maximum income for eligibility and (I/we) warrant that all information set forth in this document is true, correct and complete and based upon information (I/we) deem reliable and that the estimate contained in paragraph 1 of this Part III is reasonable and based upon such investigation as the undersigned deemed necessary.
3. (I/We) will assist the Landlord in obtaining any information or documents required to verify the statements made in this Part III and have attached hereto copies of federal income tax return for most recent tax year in which a return was filed (past two years federal income tax returns for self-employed persons).
4. (I/We) acknowledge that (I/we) have been advised that the making of any misrepresentation or misstatement in this affidavit will constitute a material breach of (my/our) agreement with the Landlord to rent an Affordable Unit and will additionally enable the Landlord and/or the Fountain Valley Housing City to initiate and pursue all applicable legal and equitable remedies with respect to an Affordable Unit and to me/us.
(I/We) do hereby swear under penalty of perjury that the foregoing statements are true and correct.
Date Tenant
Date Tenant
Attachment No. 9
Income Verification
INCOME VERIFICATION
(for employed persons)
The undersigned employee has applied for a rental unit that is subject to affordability covenants pursuant to California Government Code Section 65915 for households of Lower Income. Every income statement of a prospective tenant must be stringently verified. Please indicate below the employee’s current annual income from wages, overtime, bonuses, commissions, or any other form of compensation received on a regular basis.
Annual wages
Overtime
Bonuses
Commissions
Total current income
I hereby certify that the statements above are true and complete to the best of my knowledge.
Signature Date Title
I hereby grant you permission to disclose my income to in order that they may determine my income eligibility for rental of an apartment that is subject to affordability covenants pursuant to California Government Code Section 65915 for households of Lower Income.
Signature Date
Please send to:
Attachment No. 9
Income Verification
INCOME VERIFICATION
(for self-employed persons)
I hereby attach copies of my individual federal and state income tax returns for the immediately preceding calendar year and certify that the information shown in such income tax returns is true and complete to the best of my knowledge.
Signature Date
Attachment No. 10
Designated Affordable Units Map
ATTACHMENT NO. 10
DESIGNATED AFFORDABLE UNITS MAP
BUILDING NO. 1 (NORTH)
[TO BE ATTACHED]
Attachment No. 11
Development Deed and Restriction Covenant
ATTACHMENT NO. 11
Recording Requested By and
When Recorded Mail To:
City of Fountain Valley
10200 Slater Avenue
Fountain Valley, California 92708
Attention: City Clerk
SPACE ABOVE THIS LINE FOR RECORDER’S USE
(This document is exempt from the payment of a recording fee under Government Code Section 27383.)
DEVELOPMENT DEED RESTRICTION AND COVENANT
(Magnolia I and Magnolia II Project)
This DEVELOPMENT DEED RESTRICTION AND COVENANT (“Covenant”“) is dated as of this ______ day of , 2026 and entered into by and between (i) MAGNOLIA I OWNER, LLC, a Delaware limited liability company (“North Lot Owner”), and (ii) HPG MAGNOLIA II , LLC, a Washington limited liability company (“South Lot Owner”), to, for and intentionally for the benefit of (iii) CITY OF FOUNTAIN VALLEY, a California municipal corporation (“City”) and for which the City consents and acknowledges this Covenant.
RECITALS
A. North Lot Owner is the owner of certain real property with common address of 16800 Magnolia Street (identified as Assessor Parcel Nos. 143-294-03, 143-294-04) (“North Lot”).
The North Lot is located at the common address of 16800 Magnolia Street, City of Fountain Valley, County of Orange, State of California, and more particularly described in the legal description attached hereto as Exhibit A. North Lot Owner also holds an easement (“OCFCD Easement”) for non-exclusive ingress, egress, and surface use together with the right to pave over or construct buildings or other permanent structures upon the land, over an approximately 44,075 square feet parcel of real property, identified as Assessor Parcel No. 143-301-37 (“OCFCD Property”) which property is owned in fee by the Orange County Flood Control District (“OCFCD”).
B. South Lot Owner is the owner of certain real property adjacent to the North Lot and the OCFCD Property, with such real property having the common addresses of 9025-9063 Recreation Circle (identified as Assessor Parcel Nos. 143-301-42 and 143-301-32) and more particularly described in the legal description attached hereto as Exhibit B (“South Lot”).
C. This Covenant shall be recorded against the North Lot and South Lot (each a “Lot”), but not the OCFCD Property.
Attachment No. 11
Development Deed and Restriction Covenant
D. The North Lot and South Lot together may be referred to as the “Project Site.” North Lot Owner and South Lot Owner may each be referred to herein as an “Owner.” E. Holland Partner Group as applicant (“Applicant”), prepared and submitted to the City an application for a land use entitlement for the development on the Project Site of two mixed-use seven-story buildings (one on the North Lot and one on the South Lot) together containing 657 apartments, consisting of one seven-story building on the North Lot (“Building No. 1”) containing a total of 339 apartments, including 39 affordable units (“Phase 1 Residential Component”) and one seven-story building on the South Lot (“Building No. 2”) containing a total of 318 apartments including 39 affordable units (“Phase 2 Residential Component”). The application also included a total of 4,460 sq.ft. of retail (“Retail Component”), two seven-level parking garages and appurtenant onsite amenities associated with the overall residential and retail development on each Lot (with some amenities and other improvements located on the OCFCD Property) (together, the “Project”).
F. The entitlements approved by the City for the Project (together, the “Entitlement”) include the following actions affecting North Lot and South Lot developments, each with specified numbers of market rate and affordable units, and identifies that the Project would be developed in two phases, both of which phases together are covered by the Entitlement, which is summarized as follows:
• Precise Plan No 580 (Fountain Valley Municipal Code, Chapter 21.44) adopted by Planning Commission Resolution No. 25-09 and City Council Resolution No. 9960 for development of the structures and improvements that comprise the total 657-unit Mixed Use Development Project; and
• Addendum to the Fountain Valley General Plan Update EIR and Mitigation Monitoring and Reporting Plan (MMRP) adopted by Planning Commission Resolution No. 25-08 and City Council Resolution No. 9960 to address the environmental impacts associated with Project on the Project Site (and the OCFCD Property) • Application of the City’s Inclusionary Ordinance to development of the Project.
G. As part of the Entitlement and pursuant to California Government Code Section 65915, et seq. and Fountain Valley Municipal Code, Chapter 21.08.050(a) (together “Density Bonus Law” or “DBL”), the City approved a density bonus to increase the density as described in FVMC § 21.15.040 for the MU-2 zone of 75 dwelling units per acre (“du/ac”) to 96 du/ac spread over the entire 6.87-acre site (for a total of 657 units), and which density bonus requires the developer to enter into one or more density bonus and affordable housing agreements evidencing the developer’s intention, agreement, and obligation to reserve a total of seventy-eight (78) units (which comprises fifteen percent (15%) of the base units under Density Bonus Law) in the residential component of the Project as covenanted affordable housing available to Lower Income Households that do not exceed eighty percent (80%) of the area median income for Orange County (“AMI”) as 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 rent as defined herein pursuant to HSC Section 50053 (“Affordable Rent”). By providing fifteen percent (15%) of the base units as units affordable to lower income households, as defined in Section 50079.5 of the Health and Safety Code, the Project is entitled to a 27.5 percent (i.e., total 142-unit) density bonus pursuant to the DBL, allowing a total of 657 units in the Project. Also pursuant to the DBL, as an owner of a residential development project that includes a certain level of affordable housing and as a part of the Entitlement, the DBL allowed Applicant one concession and certain
Attachment No. 11
Development Deed and Restriction Covenant
waivers for the Project and thereby as part of the Entitlement, the City approved one concession and eight (8) waivers allowed for under the DBL.
H. Pursuant to Precise Plan No. 580 condition of approval 54, the Community Development Director has approved phasing of the Project, consisting of two phases (each a “Phase”).
The first Phase of the Project (“Phase 1”), to be developed and operated by the North Lot Owner, or its successors and assigns, shall consist of (1) Building No. 1, the Phase 1 parking garage, Phase 1 retail space, and residential and retail amenities located on the North Lot, including rooftop amenities of the pool, deck, clubhouse (collectively, the “North Lot Improvements”); and (2) the Central Paseo ingress/egress to/from Phase 1 and Phase 2, the dog park, surface level parking, loading area(s), and drive aisles located on the OCFCD Property, and any other improvements on the OCFCD Property that specifically support the North Lot Improvements (collectively, the “Phase 1 OCFCD Property Improvements”), all in accordance with the Entitlement. The second Phase of the Project (“Phase 2”), to be developed and operated by the South Lot Owner, or its successors and assigns, shall consist of (1) Building No. 2, the Phase 2 parking garage, Phase 2 retail space, and residential and retail amenities located on the South Lot (collectively, the “South Lot Improvements”); and (2) the residential and/or retail amenities and improvements that are located on the OCFCD Property and specifically support the South Lot Improvements (collectively, the “Phase 2 OCFCD Property Improvements”), all in accordance with the Entitlement. The continued affordability of the units in each of Phase 1 and Phase 2 that will be reserved for occupancy for Lower Income Households at an Affordable Rent for 55 years as provided in the Entitlement will be addressed in separate density bonus and affordable housing agreements for each of the North Lot and the South Lot, respectively.
I. For good and valuable consideration, including, but not limited to, the issuance of the Entitlement described above, Owners, North Lot Owner and South Lot Owner, each acknowledge for itself and its successors and assignees, that but for the Entitlement, the Project as proposed could not be found consistent with the provisions of the Fountain Valley Municipal Code, DBL, and/or Inclusionary Ordinance, and that grading, building and other permits could therefore not have been granted by the City without the approval of the Entitlement, including imposition of this Covenant to be recorded in the Official Records, County of Orange, State of California (“Official Records”) against the Project Site.
COVENANT
NOW, THEREFORE, in consideration of the Entitlement and in implementation of the DBL and Inclusionary Ordinance for the Project and the public purposes served by development of the Project and inclusion of Phase 1’s thirty-nine (39) Affordable Units in Building No. 1 on the North Lot, and Phase 2’s thirty-nine (39) Affordable Units in Building No. 2 on the South Lot, the North Lot Owner and South Lot Owner agree to this Development Deed Restriction and Covenant and the recordation thereof in the Official Records as the senior, nonsubordinate covenant against the Project Site, each of the North Lot and South Lot, respectively, as follows: below; provided, however that the obligations of North Lot Owner and South Lot Owner under this Covenant with respect to the use and development on their respective Lot (i.e., the North Lot or the South Lot) are several and not joint; each Owner shall be responsible solely for compliance with the Entitlement with respect to (i) the uses and improvements required on its own Lot, and (ii) the uses and improvements on the OCFCD Property required for such Owner’s respective Phase (i.e., the Phase 1 OCFCD Property Improvements or the Phase 2 OCFCD Property Improvements).
Attachment No. 11
Development Deed and Restriction Covenant
1. Covenant and Entitlement Effective against Project Site. The North Lot Owner and South Lot Owner, respectively, including each and all of their respective successors and assignees (together hereinafter “Owners”) shall each severally, and not jointly, at all times abide by, adhere to, and perform and comply with all applicable conditions of approval, and all applicable terms and provisions of the Entitlement, the DBL, and Inclusionary Ordinance, in each case solely with respect to (i) such Owner’s respective Lot and the uses and improvements required thereon and (ii) the uses and improvements required on the OCFCD Property for such Owner’s respective Phase, (i.e., the Phase 1 OCFCD Property Improvements or the Phase 2 OCFCD Property Improvements), as set forth and more fully described in the Entitlement, which by this reference is and shall be deemed incorporated into this Development Deed Restriction and Covenant by reference, as though set forth in full word for word.
2. Notice to Successors-in-Interest. Owners agree to and shall provide notice to each and all their future buyers and successors-in-interest or assignees of their Lot of this Covenant and the Entitlement.
3. Rights Appurtenant. Owners hereby declare their express intent that this Covenant shall run with the land, and shall pass to and be binding upon all parties having any interest in the North Lot/Building No. 1, or South Lot/Building No. 2, as applicable, but solely as to such Owner’s respective ownership of the North Lot and/or South Lot as provided herein. Each and every contract, deed, lease or other instrument covering, conveying or otherwise transferring all or part of the North Lot or the South Lot, or any interest therein, as the case may be, shall conclusively be held to have been executed, delivered and accepted subject to the obligations of this Covenant applicable to the respective Lot regardless of whether the other party or parties to such contract or other instrument have actual knowledge of this Covenant.
4. Enforcement. Any violation of this Covenant may result in the imposition of fines or other enforcement action available at law or equity under the Fountain Valley Municipal Code, DBL, Inclusionary Ordinance, or other applicable federal, state, or local laws and regulations. The City as an intended and named beneficiary of this Covenant, and the Fountain Valley Housing Authority, a public body corporate and politic, may enforce the provisions hereof through any proceedings at law or in equity. Notwithstanding the foregoing, enforcement of this Covenant against any Owner shall be limited to the obligations under the Entitlement with respect to (i) the uses and improvements required on such Owner’s own Lot, and (ii) the uses and improvements required on the OCFCD Property for such Owner’s respective Phase (i.e., the Phase 1 OCFCD Property Improvements or the Phase 2 OCFCD Property Improvements); no Owner shall be liable for the default or noncompliance of the other Owner with respect to the uses or improvements required on the other Owner’s Lot or the uses or improvements on the OCFCD Property that are not required for such Owner’s respective Phase. A default by one Owner relating to requirements on its respective Lot, or as part of its respective Phase, shall not constitute or be deemed a default by the other Owner.
5. No Waiver. No delay or omission in the exercise of any right or remedy of City (and/or Housing Authority) against North Lot Owner and/or South Lot Owner, respectively, shall impair such right or remedy or be construed as a waiver. The City’s failure to insist in any one or more instance upon the strict observance of the terms of this Covenant shall not be considered a waiver of the City’s right thereafter to enforce the provisions of the Covenant. The City shall not waive its rights to enforce any provision of this Covenant unless it does so in writing, signed by the City Manager.
Attachment No. 11
Development Deed and Restriction Covenant
6. Term of Covenant; Authorized Execution of Covenant. This Covenant shall remain in full force and effect for the period commencing on the date of execution by each of the North Lot Owner and South Lot Owner, severally, and continuing until the expiration of the 55-year Affordability Period applicable to such Owner’s Lot, as required by the Entitlement, DBL, and Inclusionary Ordinance. The complete and lawful execution and then recording in the Official Records of this Covenant is and shall remain a condition precedent to the issuance of any permit, whether grading, building, or other permit to be issued by the City to North Lot Owner or South Lot Owner.
7. Amendments in Writing. This Covenant may not be amended, modified, or terminated expressly or impliedly except by a written agreement amending, modifying or terminating this Covenant duly executed by the City Manager.
8. City Approval. The City Manager her or his duly authorized designee, in consultation with the City Legal Counsel, may, on behalf of the City, deliver such approval or consent that this Covenant may require; and, the City Manager retains full and sole discretion to present a request from either Owner for an approval or consent affecting this Covenant to the City Council for consideration and action to approve or disapprove the requested matter.
9. Notice. All notices required under this Covenant shall be sent by certified mail, return receipt requested, express delivery service with a delivery receipt, or personal delivery with a delivery receipt and shall be deemed to be effective as of the date received, the date delivery was refused, or the date returned as undeliverable as indicated on the return receipt as follows:
To Magnolia I Owner, LLC:
808 Washington St, Ste 500, Vancouver, WA 98660, Attn: George Elum To HPG Magnolia II, LLC:
808 Washington St, Ste 500, Vancouver, WA 98660, Attn: George Elum To the City:
City of Fountain Valley
City Hall
10200 Slater Avenue
Fountain Valley, California 92708
Attention: City Manager
(with copies to both City Clerk and City Legal Counsel at same address)
10. Severability. If any one or more of the provisions contained in this Covenant shall for any reason be held to be invalid, illegal or unenforceable in any respect, then such provision or provisions shall be deemed severable from the remaining provisions contained in this Covenant, and this Covenant shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein.
11. Several Obligations. The obligations, covenants, representations, and liabilities of the North Lot Owner and the South Lot Owner under this Covenant are several and not joint. Each Owner is solely responsible for compliance with and performance of the obligations under this Covenant with
Attachment No. 11
Development Deed and Restriction Covenant
respect to (i) such Owner’s respective Lot and the uses and improvements required thereon under the Entitlement and (ii) the uses and improvements required on the OCFCD Property for each Owner’s respective phase of development (i.e., the Phase 1 OCFCD Property Improvements or the Phase 2 OCFCD Property Improvements). No Owner shall have any liability or obligation with respect to uses or development on the other Owner’s Lot, or on the OCFCD Property for the other Owner’s Phase, and no default by one Owner shall in and of itself create or give rise to any liability of, or constitute a default by, the other Owner. The City’s remedies for a default by one Owner are limited to such Owner and the City shall have no right to pursue any claim against a non-defaulting Owner on account of the defaulting Owner’s breach.
[Signatures begin on next page]
Attachment No. 11
Development Deed and Restriction Covenant
IN WITNESS WHEREOF, the parties have executed this Development Deed Restriction and Covenant on or as of the date first written above.
North Lot Owner:
MAGNOLIA I OWNER, LLC,
a Delaware limited liability company
By: Magnolia I Investor, LLC,
a Delaware limited liability company,
its sole Member
By: HPG Magnolia, LLC,
a Washington limited liability company,
its Managing Member
By: Holland Partner Group Management, Inc.,
a Delaware corporation,
its Manager
By: ____________________________
Name:
Title:
Date of North Lot Owner execution: [__________________] and
South Lot Owner
HPG MAGNOLIA II, LLC,
a Washington limited liability company
By: Holland Partner Group Management, Inc.,
a Delaware corporation,
its Manager
By: ____________________________
Name:
Title:
Date of South Lot Owner execution: [__________________] APPROVED AS TO FORM:
__________________________
Developer Counsel
Attachment No. 11
Development Deed and Restriction Covenant
[City Consent on next page]
Attachment No. 11
Development Deed and Restriction Covenant
City of Fountain Valley Consent and Acknowledgement of
Development Deed Restriction and Covenant
The CITY OF FOUNTAIN VALLEY, a California municipal corporation, acknowledges and consents to each and all of the terms, restrictions and covenants of that certain Development Deed Restriction and Covenant (“Covenant”) that shall apply to and burden, the North Lot and South Lot, respectively, for the duration of the applicable Affordability Period, respectively, as to certain real property site described in Exhibit A and Exhibit B, hereto, and expressly acknowledges that such terms, restrictions and covenants are intended to run with the Owners’ legal interest in their respective property (North Lot or South Lot) pursuant to such Covenant and as required by the Entitlement, DBL and Inclusionary Ordinance as described therein.
CITY
CITY OF FOUNTAIN VALLEY,
a California municipal corporation
By:
City Manager or Authorized Designee
Date of City execution: [_______], 2026
ATTEST:
Rick Miller, City Clerk
or Authorized Designee
(Provisions of this Covenant may not be altered)
(Jurats/Notary Acknowledgments attached)
Attachment No. 11
Exhibit A - North Lot Legal Description
Development Deed and Restriction Covenant
ATTACHMENT A
Legal Description of the North Lot
The North Lot Property consists of the following parcel located in the City of Fountain Valley, County of Orange, State of California:
PARCEL A (APN: 143-294-04):
THAT PORTION OF THE SOUTHWEST QUARTER OF THE SOUTHWEST QUARTER OF THE SOUTHWEST QUARTER OF SECTION 19, TOWNSHIP 5 SOUTH, RANGE 10 WEST,
IN THE RANCHO LAS BOLSAS, CITY OF FOUNTAIN VALLEY, COUNTY OF ORANGE, STATE OF CALIFORNIA, PER MAP RECORDED IN BOOK 51, PAGE 12 OF
MISCELLANEOUS MAPS IN THE OFFICE OF THE COUNTY RECORDER OF SAID
COUNTY, AS DESCRIBED IN THE DEED TO THE ORANGE COUNTY FLOOD CONTROL DISTRICT, RECORDED JULY 14, 1984 IN BOOK 7133, PAGE 509 OF OFFICIAL RECORDS IN THE OFFICE OF SAID COUNTY RECORDER.
EXCEPT THAT PORTION THEREOF LYING EASTERLY AND SOUTHEASTERLY OF THE FOLLOWING DESCRIBED LINES:
BEGINNING AT THE NORTHWEST CORNER OF THE SOUTHWEST QUARTER OF THE SOUTHWEST QUARTER OF THE SOUTHWEST QUARTER OF SAID SECTION 19;
THENCE ALONG THE NORTH LINE OF SAID SOUTHWEST QUARTER OF THE SOUTHWEST QUARTER OF THE SOUTHWEST QUARTER NORTH 87° 34' 01" EAST,
98.94 FEET TO THE TRUE POINT OF BEGINNING, SAID POINT BEING ON A NONTANGENT CURVE CONCAVE SOUTHEASTERLY AND HAVING A RADIUS OF 179.84 FEET, A RADIAL LINE OF SAID CURVE THROUGH SAID POINT BEARS NORTH 52° 19' 55" WEST; THENCE SOUTHWESTERLY 67.46 FEET ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 21° 29' 33" TO THE BEGINNING OF A REVERSE CURVE CONCAVE NORTHWESTERLY AND HAVE A RADIUS OF 122.50 FEET; THENCE SOUTHERLY AND SOUTHWESTERLY 33.95 FEET ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 18° 13' 08" TO THE EASTERLY LINE OF THE LAND DESCRIBED AS "PARCEL 2A" IN THE FINAL ORDER OF CONDEMNATION RENDERED IN SUPERIOR COURT CASE NO. 105675 A CERTIFIED COPY OF WHICH WAS RECORDED AUGUST 05, 1963 IN BOOK 6662, PAGE 132 OF SAID OFFICIAL RECORDS.
EXCEPTING THEREFROM THAT PORTION OF THE LAND CONDEMNED TO ORANGE
COUNTY TRANSPORTATION AUTHORITY, A PUBLIC ENTITY AS EVIDENCED BY FINAL ORDER OF CONDEMNATION RECORDED ON JULY 08, 2021 AS INSTRUMENT NO. 2021-441526 OF OFFICIAL RECORDS.
Attachment No. 11
Development Deed and Restriction Covenant
PARCEL B (APN: 143-294-03)
THAT PORTION OF THE SOUTHWEST QUARTER OF SECTION 19, TOWNSHIP 5 SOUTH, RANGE 10 WEST, IN THE RANCHO LAS BOLSAS, AS SHOWN ON A MAP RECORDED IN BOOK 51, PAGE 12 OF MISCELLANEOUS MAPS IN THE OFFICE OF
THE COUNTY RECORDER OF ORANGE COUNTY, CALIFORNIA, AS ACQUIRED BY THE STATE OF CALIFORNIA BY DEED RECORDED IN BOOK 5957, PAGE 902 OF
OFFICIAL RECORDS IN SAID OFFICE, BOUNDED GENERAL SOUTHERLY BY THAT
CERTAIN PARCEL OF LAND CONVEYED BY THE STATE OF CALIFORNIA BY DEED RECORDED IN BOOK 7374, PAGE 521 OF SAID OFFICIAL RECORDS; BOUNDED
WESTERLY BY THE NORTHERLY PROLONGATION OF THAT CERTAIN COURSE HAVING A BEARING OF SOUTH 03 DEGREES 29' 51" WEST, AS SHOWN IN PARCEL 7 OF STATE HIGHWAY RELINQUISHMENT NO. 553 RECORDED IN BOOK 8387, PAGE 528 OF SAID OFFICIAL RECORDS; AND BOUNDED NORTHEASTERLY AND NORTHWESTERLY BY THE FOLLOWING DESCRIBED LINE:
BEGINNING AT THE NORTHWESTERLY TERMINUS OF THAT CERTAIN COURSE HAVING A BEARING OF NORTH 46 DEGREES 53' 32" WEST, AS DESCRIBED IN SAID CERTAIN PARCEL OF LAND SO CONVEYED, RECORDED IN BOOK 7374, PAGE 521 OF SAID OFFICIAL RECORDS; THENCE ALONG THE NORTHWESTERLY PROLONGATION OF LAST SAID COURSE, NORTH 46 DEGREES 53' 32" WEST 99.93 FEET; THENCE NORTH 44 DEGREES 01' 46" WEST 536.68 FEET; T0HENCE SOUTH 59 DEGREES 07' 27" WEST TO SAID NORTHERLY PROLONGATION.
EXCEPTING THEREFROM THAT PORTION OF THE LAND CONDEMNED TO ORANGE
COUNTY TRANSPORTATION AUTHORITY, A PUBLIC ENTITY AS EVIDENCED BY FINAL ORDER OF CONDEMNATION RECORDED ON JULY 08, 2021 AS INSTRUMENT NO. 2021-441526 OF OFFICIAL RECORDS.
EXCEPTING THEREFROM, ALL OIL, OIL RIGHTS, MINERALS, MINERAL RIGHTS,
NATURAL GAS, NATURAL GAS RIGHTS, AND OTHER HYDROCARBONS BY
WHATSOEVER NAME KNOWN THAT MAY BE WITHIN OR UNDER THE PARCEL OF
LAND HEREINABOVE DESCRIBED, TOGETHER WITH THE PERPETUAL RIGHT OF
DRILLING, MINING, EXPLORING AND OPERATING THEREFROM, AND REMOVING THE
SAME FROM SAID LAND OR ANY OTHER LAND, INCLUDING THE RIGHT TO
WHIPSTOCK OR DIRECTIONALLY DRILL AND MINE FROM LANDS OTHER THAN
THOSE HEREINABOVE DESCRIBED, OIL OR GAS WELLS, TUNNELS AND SHAFTS INTO,
THROUGH OR ACROSS THE SUBSURFACE OF THE LAND HEREINABOVE DESCRIBED,
AND TO BOTTOM SUCH WHIPSTOCKED OR DIRECTIONALLY DRILLED WELLS,
TUNNELS AND SHAFTS UNDER AND BENEATH OR BEYOND THE EXTERIOR LIMITS
THEREOF, AND TO REDRILL, RETUNNEL, EQUIP, MAINTAIN, REPAIR, DEEPEN AND
OPERATE ANY SUCH WELLS OR MINES, WITHOUT, HOWEVER, THE RIGHT TO DRILL, MINE, EXPLORE AND OPERATE THROUGH THE SURFACE OR THE UPPER 100 FEET OF
THE SUBSURFACE OF THE LAND HEREINABOVE DESCRIBED, OR OTHERWISE IN SUCH
MANNER AS TO ENDANGER THE SAFETY OF ANY HIGHWAY THAT MAY BE CONSTRUCTED ON SAID LANDS, IN INSTRUMENT RECORDED AUGUST 5, 1963 IN BOOK 6662, PAGE 34 OF OFFICIAL RECORDS.
Attachment No. 11
Exhibit B – South Lot Legal Description
Development Deed and Restriction Covenant
ATTACHMENT B
Legal Description of the South Lot
The South Lot Property consists of the following parcel located in the City of Fountain Valley, County of Orange, State of California:
(APN: 143-301-32 and 143-301-42)
PARCEL 1, IN THE CITY OF FOUNTAIN VALLEY, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SHOWN ON A MAP FILED IN BOOK 82, PAGE 19 OF PARCEL MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID ORANGE COUNTY.
EXCEPTING THEREFROM THAT PORTION OF THE LAND CONDEMNED TO ORANGE
COUNTY TRANSPORTATION AUTHORITY, A PUBLIC ENTITY AS EVIDENCED BY FINAL ORDER OF CONDEMNATION RECORDED ON JULY 08, 2021 AS INSTRUMENT NO. 2021-441526 OF OFFICIAL RECORDS.
EXCEPTING THEREFROM, ALL OIL, PETROLEUM, NATURAL GAS, MINERAL
RIGHTS, AND OTHER HYDROCARBON SUBSTANCES LYING BELOW A DEPTH OF 500 VERTICAL FEET FROM SURFACE OF SAID LAND, OR THROUGH ANY PORTION THEREOF ABOVE SAID 500-FOOT DEPTH, FOR THE PURPOSE OF EXPLORING FOR,
EXTRACTING, MINING,
BORING, REMOVING OR MARKETING SAID SUBSTANCES, AS RESERVED BY GULF
OIL CORPORATION, A PENNSYLVANIA CORPORATION, IN A DEED RECORDED OCTOBER 12, 1967 IN BOOK 8401, PAGE 398 OF OFFICIAL RECORDS.
ALSO EXCEPTING THEREFROM, ALL RIGHTS TO UNDERGROUND WATER,
WITHOUT THE RIGHT OF SURFACE ENTRY, AS DEDICATED TO THE CITY OF FOUNTAIN VALLEY ON THE MAP OF SAID TRACT.
Attachment No. 12
Beneficiary Consent and Subordination Agreement
ATTACHMENT NO. 12
BENEFICIARY CONSENT AND SUBORDINATION AGREEMENT [LENDER]
BENEFICIARY CONSENT AND SUBORDINATION
(Phase I North Lot)
[insert name of Lender]
DATED AS OF: , 2026
NOTICE: THIS BENEFICIARY CONSENT AND SUBORDINATION
EVIDENCES LENDER’S KNOWLEDGE THAT ITS SECURITY INTERESTS IN THE NORTH LOT AND PHASE 1 PROJECT SHALL BE AND REMAIN SUBJECT TO AND OF A LOWER PRIORITY THAN THE CERTAIN (i) DEVELOPMENT DEED RESTRICTION AND COVENANT AND (ii) DENSITY BONUS AND AFFORDABLE HOUSING AGREEMENT (PHASE 1 NORTH BUILDING AT 16800 MAGNOLIA STREET, FOUNTAIN VALLEY).
The undersigned, [insert name of Lender] (“Beneficiary” and “Lender”), in its capacity as Beneficiary under that certain [Construction Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing] dated as of [insert date], from MAGNOLIA I OWNER, LLC, a Delaware limited liability company (“North Lot Owner”), as trustor to [_______] Title Company, as trustee for the benefit of the Beneficiary, which was recorded in the Official Records/Recorder’s Office of Orange County, California on [insert date] as Document No. [_______] (“Deed of Trust”), and all of its other and/or additional security interests (together with Deed of Trust, “Security Interests”), encumbering the North Lot owned by North Lot Owner as described in the Deed of Trust (“Property” or “North Lot”) does hereby subordinate and consent to the subordination of the lien of the Deed of Trust to the certain (i) Development Deed Restriction and Covenant, (ii) Phase 1 City Covenants , and (iii) Memorandum of Agreement, (together, “Covenants”) entered into and executed by North Lot Owner and the parties thereto and agrees that the lien of the Deed of Trust is, and shall at all times remain, subject and subordinate to the Covenants. In the event Beneficiary or any other party shall obtain record title to the Property through foreclosure or deed-in-lieu of foreclosure, the Covenants shall be binding upon the party obtaining record title as the then owner of the Property. The North Lot is legally described in Exhibit A, attached hereto and fully incorporated by this reference.
Lender hereby acknowledges its understanding of, and consent to, the terms and provisions of the Covenants. The undersigned further agrees that its Security Interests are and shall unconditionally be and remain at all times junior, subordinate and subject to the terms, covenants, conditions and restrictions of the Covenants, provided that a violation of the Covenants will not defeat, render invalid or limit the Security Interests. In consideration of Lender’s covenants and agreements contained in therein, City and its designated agencies hereby agree for the benefit of Lender that concurrently with any notice from City to Developer that a default or breach exists under the terms of the Phase 1 DBAHA and Phase 1 City Covenants, City shall send a copy of such notice to Lender and Lender shall have the right, but not the obligation, to cure any breach or default within thirty (30) days after the expiration of any cure period set forth in the Notice from City to Developer regarding such Developer breach or default, provided that such 30-day period shall be extended for such additional time as Lender may reasonably require to expeditiously either: (i) obtain possession and control of the North Lot or Phase I Improvements and thereafter cure the breach(es) or default(s) with reasonable diligence and continuity or (ii) obtain the appointment of a receiver and give such receiver a reasonable period of
Attachment No. 12
Beneficiary Consent and Subordination Agreement
time in which to expeditiously cure the default; provided that in no event shall such cumulative Lender cure period exceed ninety (90) days in total for a breach or default bearing on the health or safety of residents of any Affordable Unit without the consent of the City Manager. The provisions of this Lender Consent are intended to supplement, and not to limit, waive, modify or replace, those provisions of law pertaining to notice and cure rights of junior lenders including, without limitations, those set forth in California Civil Code Sections 2924b and 2924c. Lender intentionally and unconditionally subordinates the lien or charge of the Security Interests and Deed of Trust in favor of the Phase 1 DBAHA and Phase 1 City Covenants.
IN WITNESS WHEREOF, the Beneficiary, by its officer thereunto duly authorized, has executed this Beneficiary Consent and Subordination of the day and year first above written.
BENEFICIARY:
[Lender]
By:
Name:
Title:
Attachment No. 12
Exhibit A – Legal Description of North Lot
Beneficiary Consent and Subordination Agreement
EXHIBIT A
Legal Description of North Lot
The North Lot Property consists of the following parcel located in the City of Fountain Valley, County of Orange, State of California:
PARCEL A (APN: 143-294-04):
THAT PORTION OF THE SOUTHWEST QUARTER OF THE SOUTHWEST QUARTER OF THE SOUTHWEST QUARTER OF SECTION 19, TOWNSHIP 5 SOUTH, RANGE 10 WEST,
IN THE RANCHO LAS BOLSAS, CITY OF FOUNTAIN VALLEY, COUNTY OF ORANGE, STATE OF CALIFORNIA, PER MAP RECORDED IN BOOK 51, PAGE 12 OF
MISCELLANEOUS MAPS IN THE OFFICE OF THE COUNTY RECORDER OF SAID
COUNTY, AS DESCRIBED IN THE DEED TO THE ORANGE COUNTY FLOOD CONTROL DISTRICT, RECORDED JULY 14, 1984 IN BOOK 7133, PAGE 509 OF OFFICIAL RECORDS IN THE OFFICE OF SAID COUNTY RECORDER.
EXCEPT THAT PORTION THEREOF LYING EASTERLY AND SOUTHEASTERLY OF THE FOLLOWING DESCRIBED LINES:
BEGINNING AT THE NORTHWEST CORNER OF THE SOUTHWEST QUARTER OF THE SOUTHWEST QUARTER OF THE SOUTHWEST QUARTER OF SAID SECTION 19;
THENCE ALONG THE NORTH LINE OF SAID SOUTHWEST QUARTER OF THE SOUTHWEST QUARTER OF THE SOUTHWEST QUARTER NORTH 87° 34' 01" EAST,
98.94 FEET TO THE TRUE POINT OF BEGINNING, SAID POINT BEING ON A NONTANGENT CURVE CONCAVE SOUTHEASTERLY AND HAVING A RADIUS OF 179.84 FEET, A RADIAL LINE OF SAID CURVE THROUGH SAID POINT BEARS NORTH 52° 19' 55" WEST; THENCE SOUTHWESTERLY 67.46 FEET ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 21° 29' 33" TO THE BEGINNING OF A REVERSE CURVE CONCAVE NORTHWESTERLY AND HAVE A RADIUS OF 122.50 FEET; THENCE SOUTHERLY AND SOUTHWESTERLY 33.95 FEET ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 18° 13' 08" TO THE EASTERLY LINE OF THE LAND DESCRIBED AS "PARCEL 2A" IN THE FINAL ORDER OF CONDEMNATION RENDERED IN SUPERIOR COURT CASE NO. 105675 A CERTIFIED COPY OF WHICH WAS RECORDED AUGUST 05, 1963 IN BOOK 6662, PAGE 132 OF SAID OFFICIAL RECORDS.
EXCEPTING THEREFROM THAT PORTION OF THE LAND CONDEMNED TO ORANGE
COUNTY TRANSPORTATION AUTHORITY, A PUBLIC ENTITY AS EVIDENCED BY FINAL ORDER OF CONDEMNATION RECORDED ON JULY 08, 2021 AS INSTRUMENT NO. 2021-441526 OF OFFICIAL RECORDS.
Attachment No. 12
Beneficiary Consent and Subordination Agreement
PARCEL B (APN: 143-294-03)
THAT PORTION OF THE SOUTHWEST QUARTER OF SECTION 19, TOWNSHIP 5 SOUTH, RANGE 10 WEST, IN THE RANCHO LAS BOLSAS, AS SHOWN ON A MAP RECORDED IN BOOK 51, PAGE 12 OF MISCELLANEOUS MAPS IN THE OFFICE OF
THE COUNTY RECORDER OF ORANGE COUNTY, CALIFORNIA, AS ACQUIRED BY THE STATE OF CALIFORNIA BY DEED RECORDED IN BOOK 5957, PAGE 902 OF
OFFICIAL RECORDS IN SAID OFFICE, BOUNDED GENERAL SOUTHERLY BY THAT
CERTAIN PARCEL OF LAND CONVEYED BY THE STATE OF CALIFORNIA BY DEED RECORDED IN BOOK 7374, PAGE 521 OF SAID OFFICIAL RECORDS; BOUNDED
WESTERLY BY THE NORTHERLY PROLONGATION OF THAT CERTAIN COURSE HAVING A BEARING OF SOUTH 03 DEGREES 29' 51" WEST, AS SHOWN IN PARCEL 7 OF STATE HIGHWAY RELINQUISHMENT NO. 553 RECORDED IN BOOK 8387, PAGE 528 OF SAID OFFICIAL RECORDS; AND BOUNDED NORTHEASTERLY AND NORTHWESTERLY BY THE FOLLOWING DESCRIBED LINE:
BEGINNING AT THE NORTHWESTERLY TERMINUS OF THAT CERTAIN COURSE HAVING A BEARING OF NORTH 46 DEGREES 53' 32" WEST, AS DESCRIBED IN SAID CERTAIN PARCEL OF LAND SO CONVEYED, RECORDED IN BOOK 7374, PAGE 521 OF SAID OFFICIAL RECORDS; THENCE ALONG THE NORTHWESTERLY PROLONGATION OF LAST SAID COURSE, NORTH 46 DEGREES 53' 32" WEST 99.93 FEET; THENCE NORTH 44 DEGREES 01' 46" WEST 536.68 FEET; T0HENCE SOUTH 59 DEGREES 07' 27" WEST TO SAID NORTHERLY PROLONGATION.
EXCEPTING THEREFROM THAT PORTION OF THE LAND CONDEMNED TO ORANGE
COUNTY TRANSPORTATION AUTHORITY, A PUBLIC ENTITY AS EVIDENCED BY FINAL ORDER OF CONDEMNATION RECORDED ON JULY 08, 2021 AS INSTRUMENT NO. 2021-441526 OF OFFICIAL RECORDS.
EXCEPTING THEREFROM, ALL OIL, OIL RIGHTS, MINERALS, MINERAL RIGHTS,
NATURAL GAS, NATURAL GAS RIGHTS, AND OTHER HYDROCARBONS BY
WHATSOEVER NAME KNOWN THAT MAY BE WITHIN OR UNDER THE PARCEL OF
LAND HEREINABOVE DESCRIBED, TOGETHER WITH THE PERPETUAL RIGHT OF
DRILLING, MINING, EXPLORING AND OPERATING THEREFROM, AND REMOVING THE
SAME FROM SAID LAND OR ANY OTHER LAND, INCLUDING THE RIGHT TO
WHIPSTOCK OR DIRECTIONALLY DRILL AND MINE FROM LANDS OTHER THAN
THOSE HEREINABOVE DESCRIBED, OIL OR GAS WELLS, TUNNELS AND SHAFTS INTO,
THROUGH OR ACROSS THE SUBSURFACE OF THE LAND HEREINABOVE DESCRIBED,
AND TO BOTTOM SUCH WHIPSTOCKED OR DIRECTIONALLY DRILLED WELLS,
TUNNELS AND SHAFTS UNDER AND BENEATH OR BEYOND THE EXTERIOR LIMITS
THEREOF, AND TO REDRILL, RETUNNEL, EQUIP, MAINTAIN, REPAIR, DEEPEN AND
OPERATE ANY SUCH WELLS OR MINES, WITHOUT, HOWEVER, THE RIGHT TO DRILL, MINE, EXPLORE AND OPERATE THROUGH THE SURFACE OR THE UPPER 100 FEET OF
THE SUBSURFACE OF THE LAND HEREINABOVE DESCRIBED, OR OTHERWISE IN SUCH
MANNER AS TO ENDANGER THE SAFETY OF ANY HIGHWAY THAT MAY BE CONSTRUCTED ON SAID LANDS, IN INSTRUMENT RECORDED AUGUST 5, 1963 IN BOOK 6662, PAGE 34 OF OFFICIAL RECORDS.