HomeMy WebLinkAboutReso 44-2016 RESOLUTION NO. 44-2016
CITY COUNCIL OF THE CITY OF SOUTH SAN FRANCISCO, STATE OF CALIFORNIA
A RESOLUTION APPROVING AN AFFORDABLE HOUSING
REGULATORY AGREEMENT WITH ROTARY PLAZA, INC
FOR 300 MILLER AVENUE AND AUTHORIZING THE CITY
MANAGER TO EXECUTE SAID AGREEMENT.
WHEREAS, the City of South San Francisco ("City") is the owner of certain property
certain real property (the "Property") located in the City, known as County Assessor's Parcel
Numbers 012-311-230(3 10 Miller Avenue),012-311-240(312 Miller Avenue), 012-311-250(314
Miller Avenue and 012-311-260; and,
WHEREAS,on June 29,2011 the legislature of the State of California(the"State")adopted
Assembly Bill x1 26 ("AB 26"), which amended provisions of the Redevelopment Law; and,
WHEREAS, pursuant to AB 26 and the California Supreme Court decision in California
Redevelopment Association, et al. v.Ana Matosantos, et al.,which upheld AB 26(together with AB
1484, the "Dissolution Law"), the former South San Francisco Redevelopment Agency was
dissolved on February 1, 2012; and,
WHEREAS,pursuant to the Dissolution Law,the State of California Department of Finance
("DOF"), on August 31, 2012, approved transfer of certain properties to the City of South San
Francisco in its capacity as the Successor Housing Agency; and,
WHEREAS,in January of 2015,the City and Rotary Plaza, Inc("Developer")entered into
an Exclusive Negotiation Rights Agreement ("ENRA") that established a mutual understanding
among the City and the Developer regarding the potential development of the Property; and,
WHEREAS, the Developer has proposed construction of a mixed-use residential
development ("Project"), consisting of 80 affordable senior housing units, I manager's unit and
1,993 square feet of community assembly space over.56 acres at the following addresses:310 Miller
Avenue,312 Miller Avenue,314 Miller Avenue and a municipal parking lot(collectively referred to
as "300 Miller Avenue" or "Project Site") in the City; and,
WHEREAS,the City is interested in selling the Property to the Developer as contemplated
in the ENRA, contingent upon approval of a Purchase and Sale Agreement, an Affordable Housing
Regulatory Agreement, a Performance Deed of Trust and a Development Agreement by the City
Council,Developer securing all funding for the Project,and Developer obtaining all applicable land
use entitlements from the City necessary to construct the Project on the Project Site; and,
WHEREAS,in order to ensure that the Project will be restricted to affordable units,the City
and the Developer wish to enter into an Affordable Housing Regulatory Agreement("Affordability
Agreement"), attached hereto and incorporated herein as Exhibit A-, and,
WHEREAS,approval of a Purchase and Sale Agreement,a Performance Deed of Trust and
a Development Agreement are being undertaken in separate resolutions and an ordinance; and,
WHEREAS,Developer seeks approval of a Conditional Use Permit,Design Review,Waiver
and Modification,Density Bonus and Parking Reduction for the Project("Land Use Entitlements")
through a separate resolution; and,
WHEREAS,approval of the Developer's proposal is considered a"project"for purposes of
the California Environmental Quality Act, Pub. Resources Code § 21000, et seq. ("CEQA"); and,
WHEREAS, on January 28, 2015, the City Council certified an Environmental Impact
Report("EIR") (State Clearinghouse number 201310200 1)in accordance with the provisions of the
California Environmental Quality Act (Public Resources Code, §§ 21000, et seq., "CEQA") and
CEQA Guidelines, which analyzed the potential environmental impacts of the development of the
Downtown Station Area Specific Plan ("DSASP"); and,
WHEREAS,on January 28,2015,the City Council also adopted a Statement of Overriding
Considerations("S(OC") in accordance with the provisions of the California Environmental Quality
Act(Public Resources Code, §§ 21000, et seq., "CEQA") and CEQA Guidelines, which carefully
considered each significant and unavoidable impact identified in the EIR and found that the
significant environmental impacts are acceptable in light of the project's economic, legal, social,
technological and other benefits; and,
WHEREAS,the Project is statutorily exempt from CEQA pursuant to Government Code §
65457 as a residential development project that is undertaken to implement and is consistent with the
DSASP and none of the conditions specified in CEQA § 21166 or CEQA Guidelines § 15162 have
occurred; and
WHEREAS, the Project is also categorically exempt from CEQA pursuant to CEQA
Guidelines § 15332 as an infill development project and none of the exceptions to the exemption
specified in CEQA Guidelines § 15300.2 have occurred; and
WHEREAS, the City prepared an Environmental Consistency Analysis for the Project
pursuant to CEQA Guidelines § 15168(c)(2) and concluded that in accordance with the requirements
of CEQA Guidelines § 15162, as a result of the Project, no new effects could occur and no new
mitigation would be required even if the Project was not exempt from CEQA. The Environmental
Consistency Analysis demonstrates that the Project would not result in any new significant
environmental effects or a substantial increase in the severity of any previously identified effects
beyond those disclosed and analyzed in the DSASP EIR certified by City Council nor would any
new mitigation measures be required; and,
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of South San
Francisco does hereby take the following actions:
(1) Finds and determines that the recitals are true and correct;
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(2) Approves the Affordability Agreement in substantially the same form attached hereto
as Exhibit A, and,
(3) Authorizes the City Manager to enter into and execute the Affordability Agreement
on behalf of the City, in substantially the same form as attached hereto as Exhibit A; to make any
revisions, amendments, or modifications, subject to review and approval of City Attorney, deemed
necessary to carry out the intent of this Resolution and which do not materially alter or increase the
City's obligations thereunder.
I hereby certify that the foregoing Resolution was regularly introduced and adopted by the
City Council of the City of South San Francisco at a regular meeting held on the 13th day of April,
2016 by the following vote:
AYES: Councilmembers Karel Matsumoto, Richard A. Garbarino and Liza Normandy
Vice Mayor Pradeep Gupta and Mayor Mark N. Addiego
NOES: None
ABSTAIN: None
ABSENT: None
ATTEST:
to inell Clerk
i/Ily
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EXHIBIT A
Affordable Housing Regulatory Agreement
2629615.1
4
Recording requested by and when recorded
mail to:
City of South San Francisco
400 Grand Ave
South San Francisco,CA 94080
Attention: City Manager
EXEMPT FROM RECORDING FEES PER
GOVERNMENT CODE §§ 6103,27383
Space above this line for Recorder's use.
APNs: 012-311-230, 240, 250 and 260
AFFORDABLE HOUSING REGULATORY AGREEMENT
AND
DECLARATION OF RESTRICTIVE COVENANTS
by and between
THE CITY OF SOUTH SAN FRANCISCO
and
ROTARY PLAZA, INC.
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This Affordable Housing Regulatory Agreement and Declaration of Restrictive
Covenants (this "Agreement") is entered into effective as of , 2016
("Effective Date") by and between the City of South San Francisco, a municipal corporation
(the "City") and Rotary Plaza, Inc., a California nonprofit public benefit corporation
("Owner"). City and Owner are hereinafter collectively referred to as the "Parties."
RECITALS
A. City is owner of certain real property located at 300 Miller Avenue, South San
Francisco, California, also known as San Mateo Assessor's Parcel Numbers 012-311-230,
240, 250 and 260, as more particularly described in Exhibit A attached hereto and
incorporated herein (the "Property").
B. City has agreed to sell the Property to Owner, and Owner has agreed to
purchase the Property from the City pursuant to the terms set forth in that certain Purchase
and Sale Agreement (the "PSA") and that certain development agreement between City and
Owner dated (the "DA").
C. Owner intends to construct, own and operate on the Property a multi-family
residential building with eighty-one (81) dwelling units (the "Project"). The Project will
consist of thirty-nine (39) units restricted to very-low income households, forty-one (41)
units restricted to moderate-income households families, and one (1) manager's-unit. All
residential units in the Project, except for the manager's unit, shall be restricted to senior
households.
D. The DA provides that the occupancy restrictions described in recital C above
shall remain in effect for a period of not less than fifty-five years.
E. The full and timely performance of Owner's obligations under this Agreement
are secured by a Performance Deed of Trust, Assignment of Rents, Security Agreement and
Fixture Filing ("Performance Deed of Trust"), dated as of , 2016 and
executed by Owner for the benefit of City. The Performance Deed of Trust shall be recorded
concurrently herewith.
F. As a condition to its agreement to sell the property to the Owner, City requires
the Property to be subject to the conditions, restrictions, reservations and rights of the City
set forth herein.
G. The Parties have agreed to enter into and record this Agreement in order to
satisfy the conditions described in the foregoing Recitals. The purpose of this Agreement is
to regulate and restrict the occupancy and rents of the Project's Restricted Units for the
benefit of the Project occupants. The covenants in this Agreement are intended to run with
the land and be binding on the Owner and Owner's successors and assigns for the full term of
this Agreement.
NOW THEREFORE, in consideration of the foregoing, and other valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties
hereby agree as follows:
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I, Definitions. The following terms have the meanings set forth in this Section wherever
used in this Agreement or the attached exhibits.
"Area Median Income" or "AMI11 means the area median income for San
Mateo County, California, adjusted for household size, determined periodically by the
California Department of Housing and Community Development ("HCD") as published
in Section 6932 of Title 25 of the California Code of Regulations ("Regulations") or
successor provision published pursuant to California Health and Safety Code Section
500�93(c). If HCD ceases to make such determination, Area Median Income shall be the
median income applicable to San Mateo County, with adjustments for household size, as
determined from time to time by the U.S. Department of Housing and Urban Development
("HUD")pursuant to the United States Housing Act of 1937 as amended, or such other method
of median income calculation applicable to the City of South San Francisco that HUD may
hereafter adopt in connection with such Act.
"Eligible Household" means a household for which total income upon initial
occupancy does not exceed the maximum income level for a Restricted Unit as specified in
Subsection 2.2, and that meets the requirements set forth in Section 2.1.
"Moderate-income" means an annual gross income that is not greater than one
hundred twenty percent (120%) of Area Median Income, as adjusted for household size, as
determined by HUD.
"Qualifying Rent" means a monthly rent which does not exceed one-twelfth of 30%
of the applicable income level set forth for a Restrict Unit.
"'Restricted Unit" means a dwelling unit which is reserved for occupancy at a
Qualifying Rent by a Very Low-Income or Moderate-Income senior household in accordance
with and as set forth in Sections 2.1 and 2.2.
"Very Low-Income" means an annual gross income that is not greater than fifty
percent (50%) of Area Median Income, as adjusted for household size, as determined by
HUD.
2. Use and Affordability Restrictions. Owner hereby covenants and agrees, for itself
and its successors and assigns, that the Property shall be used solely for the construction and
operation of an eighty-one (8 1) unit senior rental housing development in compliance with
the DA, the development approvals granted by the City of South San Francisco, and the
requirements set forth herein. Owner represents and warrants that it has not entered into any
agreement that would restrict or compromise its ability to comply with the occupancy and
affordability restrictions set forth in this Agreement, and Owner covenants that it shall not
enter into any agreement that is inconsistent with such restrictions without the express written
consent of City. Notwithstanding the foregoing or anything to the contrary contained
herein, if the terms of financing for the Project require greater affordability restrictions than
those imposed hereby, the requirements of such other financing shall prevail for the term
thereof.
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2.1 Senior Housing. For a term of fifty-five (55) years commencing upon the date
of issuance of a final certificate of occupancy for the Project, eighty (80�) units in the Project
shall be restricted for occupancy by households with at least one person who is fifty-five (55)
years of age or older in compliance with Section 51.3 of the California Civil Code.
Residency by other persons in such dwelling units shall be in compliance with Section 51.3
of the California Civil Code.
2.2 Affordability Requirements. For a term of fifty-five (55) years commencing upon
the date of issuance of a final certificate of occupancy for the Project, a minimum of thirty-nine
(39) units of the dwelling units in the Project shall be both Rent-Restricted (as defined below)
and occupied (or if vacant, available for occupancy) by Eligible Households whose income does
not exceed Very Low-Income, and forty-one (41) of the dwelling units shall be both Rent-
Restricted and occupied (or if vacant, available for occupancy)by Eligible Households whose
income does not exceed Moderate-Income. In the event that recertification of household income
indicates that the number of Restricted Units actually occupied by Eligible Households falls
below the number required as specified in this Section, Owner shall rectify the condition by
renting the next available unit(s) in the Project to Eligible Household(s) until the requirements of
this Agreement are satisfied. A residential unit shall qualify as "Rent-Restricted" if the gross
rent charged for such unit does not exceed the Qualifying Rent, as adjusted for assumed
household size in accordance with the Department of Housing and Community Development
('Wff') guidelines.
2.3 Rents for Restricted Units. Rents for Restricted Units shall be limited to
Qualifying Rents. Notwithstanding the foregoing, no household qualifying for a Restricted
Unit shall be denied continued occupancy of a unit in the Project because, after admission,
such household's adjusted income increases to exceed the qualifying limit for such Restricted
Unit. .A household who at initial occupancy qualifies as Very Low-Income shall be treated
as continuing to be of Very Low-Income, as applicable, as long as the household's income
does not exceed 140% of the income limit for Very Low Income. A household who at initial
occupancy qualifies as Moderate-Income shall be treated as continuing to be of Moderate-
Income, as applicable, as long as the household's income does not exceed 140% of the
income limit for Moderate Income.
2.4 Unit Sizes, Affirmative MarketinR. The Restricted Units shall consist of
eighty-one (81) dwelling units. In renting Restricted Units, and subject to applicable fair
housing laws, Owner shall affirmatively market the Restricted Units primarily to Eligible
Households in who live or work in the City of South San Francisco, and secondarily to Eligible
Households who live or work in the County of San Mateo.
2.5 Manager's Unit. One dwelling unit in the Project may be used as a resident
manager's unit, and shall be exempt from the occupancy and rent restrictions set forth in this
Agreement.
2.5 No Condominium Conversion, Owner shall not convert the Project to
condominium or cooperative ownership or sell condominium or cooperative rights to the
Project during the term of this Agreement.
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2.6 Non-Discrimination-, Compliance with Fair Housing Laws.
2.6.1 Fair Housing. Owner shall comply with state and federal fair housing
laws in the marketing and rental of the units in the Project. Owner shall accept as tenants, on
the same basis as all other prospective tenants, persons who are recipients of federal
certificates or vouchers for rent subsidies pursuant to the existing Section 8 program or any
successor thereto.
2.6.2 Non-Discrimination. Owner covenants for itself and its successors and
assigns 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 (in)
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 Project or the Property, nor shall Owner or any person claiming under or through
Owner 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, or
vendees in the Property. Owner shall each ensure that language prohibiting such
discrimination shall be included in all deeds, leases and contracts executed by Owner or its
successors and assigns with respect to the Project. The foregoing covenants shall run with
the land.
3, Reporting Requirements.
3.1. Household Certification. Owner or Owner's authorized agent shall obtain
from each household prior to initial occupancy of each Restricted Unit, and on every
anniversary thereafter, a written certificate containing all of the following in such format and
with such supporting documentation as City may reasonably require:
(a) The identity and age of the resident who is age fifty-five or older;
(b) The identity and age of each other member of the household or any
other information reasonably required to demonstrate compliance with Section
2.l above, and
(c) Total household income.
Owner shall retain such certificates for not less than three (3) years, and upon City's
request, shall make the originals available for inspection by City and shall provide copies of
such certificates to City.
3.2 Annual Report; Inspection . Owner shall submit an annual report ("Annual
Report") to the City in form satisfactory to City, together with a certification that the Project
is in compliance with the requirements of this Agreement. The Annual Report shall, at a
minimum, include the following information for each dwelling unit in the Project: (i) unit
number; (ii) current rent and other charges; (iii) dates of any vacancies during the previous
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year; (iv) total income of residents; (v) documentation of source of household income; and
(vi) the information required by Section 3.1..
Upon City's request, Owner shall include with the Annual Report, an income
recertification for each household, documentation verifying household eligibility, and such
additional information as City may reasonably request from time to time in order to show
compliance with this Agreement. The Annual Report shall conform to the format requested
by City; provided however, during such time that the Project is subject to a regulatory
agreement restricting occupancy and/or rents pursuant to requirements imposed in
connection with the use of federal low-income housing tax credits or tax-exempt financing,
Owner may satisfy the requirements of this Section by providing City with a copy of
compliance reports required in connection with such financing.
Owner shall permit representatives of City to enter and inspect the Property and the
Project during reasonable business hours in order to monitor compliance with this Agreement
upon 24-hours advance notice of such visit to Owner or to Owner's management agent.
4. Term of Agreement,
4,1 Term of Restrictions. This Agreement shall remain in effect through the 55h
anniversary of the issuance of the final certificate of occupancy for the Project.
4.2 Effectiveness Succeeds Conveyance of Property. This Agreement shall remain
effective and fully binding for the full term hereof regardless of(i) any sale, assignment,
transfer, or conveyance of the Property or the Project or any part thereof or interest therein,
(ii) any payment, prepayment or extinguishment of any loan or note, or(iii) any reconveyance
of the Performance Deed of Trust, unless this Agreement is terminated earlier by City in a
recorded writing.
4.3 Reconveyance. Upon the termination of this Agreement, the Parties agree to
execute and record appropriate instruments to release and discharge the terms of this
Agreement; provided, however, the execution and recordation of such instruments shall not
be necessary or a prerequisite to the termination of this Agreement in accordance with its
terms.
5. Binding Upon Successors; Covenants to Run with the Land. Owner hereby
subjects its interest in the Property and the Project to the covenants and restrictions set forth
in this Agreement. The City and Owner hereby declare their express intent that the
covenants and restrictions set forth herein shall be deemed covenants running with the land
and shall be binding upon and inure to the benefit of the heirs, administrators, executors,
successors in interest, transferees, and assigns of Owner and City, regardless of any sale,
assignment, conveyance or transfer of the Property, the Project or any part thereof or interest
therein. Any successor-in-interest to Owner, including without limitation any purchaser,
transferee or lessee of the Property or the Project (other than the households of the dwelling
units within the Project) shall be subject to all of the duties and obligations imposed hereby
for the full term of this Agreement. Each and every contract, deed, ground lease or other
instrument affecting or conveying the Property or the Project or any part thereof, shall
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conclusively be held to have been executed, delivered and accepted subject to the covenants,
restrictions, duties and obligations set forth herein, regardless of whether such covenants,
restrictions, duties and obligations are set forth in such contract, deed, ground lease or other
instrument. If any such contract, deed, ground lease or other instrument has been executed
prior to the date hereof, Owner hereby covenants to obtain and deliver to City an instrument
in recordable form signed by the parties to such contract, deed, ground lease or other
instrument pursuant to which such parties acknowledge and accept this Agreement and agree
to be bound hereby.
Owner agrees for itself and for its successors that in the event that a court of
competent jurisdiction determines that the covenants herein do not run with the land, such
covenants shall be enforced as equitable servitudes against the Property and the Project in
favor of City.
6. Property Management; Repair and Maintenance-, Marketing.
6.1 Management Responsibilities. Owner shall be responsible for all management
functions with respect to the Property and the Project, including without limitation the
selection of households, certification and recertification of income and eligibility,
evictions, collection of rents and deposits, maintenance, landscaping, routine and
extraordinary repairs, replacement of capital items, and security. Except as City may
otherwise agree in writing, City shall have no responsibility for management or maintenance
of the Property or the Project.
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6.3 Repair, Maintenance and Security. Throughout the term of this Agreement,
Owner shall at its own expense, maintain the Property and the Project in good physical
condition, in good repair, and in decent, safe, sanitary, habitable and tenantable living
conditions in conformity with all applicable state, federal, and local laws, ordinances, codes,
and regulations. Without limiting the foregoing, Owner agrees to maintain the Project and
the Property (including without limitation, the residential units, common meeting rooms,
common areas, landscaping, driveways and walkways) in a condition free of all waste,
nuisance, debris, unmaintained landscaping, graffiti, disrepair, abandoned
vehicles/appliances, and illegal activity, and shall take all reasonable steps to prevent the
same from occurring on the Property or at the Project. Owner shall prevent and/or rectify
any physical deterioration of the Property and the Project and shall make all repairs,
renewals and replacements necessary to keep the Property and the improvements located
thereon in good condition and repair. Owner shall provide adequate security services for
occupants of the Project.
6.3.1 City's Right to Perform Maintenance. In the event that Owner breaches
any of the covenants contained in Section 6,.,3, and such default continues for a period of ten
(10) days after written notice from City (with respect to graffiti, debris, and waste material) or
thirty (30) days after written notice from City (with respect to landscaping, building
improvements and general maintenance), then City, in addition to any other remedy it may
have under this Agreement or at law or in equity, shall have the right, but not the obligation,
to enter upon the Property and perform all acts and work necessary to protect, maintain, and
preserve the improvements and the landscaped areas on the Property. All costs expended by
City in connection with the foregoing, shall constitute an indebtedness secured by the
Performance Deed of Trust, and shall be paid by Owner to City upon demand. All such sums
remaining unpaid thirty (30) days following delivery of City's invoice therefor shall bear
interest at the rate of 10% per annum.
6.4 Marketing and Management Plan. Not later than 180 calendar days
following the issuance of the first building permit for the Project, Owner shall submit for
City review and approval, a plan for marketing and managing the Property ("Marketing and
Management Plan"). The Marketing and Management Plan shall address in detail how
Owner plans to market the Restricted Units to prospective Eligible Households in accordance
with fair housing laws and this Agreement, Owner's tenant selection criteria, and how Owner
plans to certify the eligibility of Eligible Households. The Plan shall also describe the
management team and shall address how the Owner and the management entity plan to
manage and maintain the Property and the Project. The Plan shall include the proposed
management agreement and the form of rental agreement that Owner proposes to enter into
with Project tenants. Owner shall abide by the terms of the Marketing and Management Plan
in marketing, managing, and maintaining the Property and the Project, and throughout the
term of this Agreement, shall submit proposed modifications to City for its review and
approval.
6,5 Approval of Amendments. If City has not responded to any submission of the
Management and Marketing Plan, the proposed management entity, or a proposed
amendment or change to any of the foregoing within 30 days following City's receipt of such
plan, proposal or amendment, the plan, proposal or amendment shall be deemed approved by
City,
6.6 Fees, Taxes, and Other Levies. Owner shall be responsible for payment of all fees,
assessments,taxes, charges, liens and levies, including without limitation possessory interest taxes,
if applicable, imposed by any public authority or utility company with respect to the Property or
the Project, and shall pay such charges prior to delinquency. However, Owner shall not be
required to pay any such charge so long as (a) Owner is contesting such charge in good faith
and by appropriate proceedings, (b) Owner maintains reserves adequate to pay any contested
liabilities, and (c) on final determination of the proceeding or contest, Owner immediately pays
or discharges any decision or judgment rendered against it, together with all costs, charges and
interest.
6.7 Insurance Coverage. Prior to issuance of building permits for the Project, and
continuing throughout the term of this Agreement Owner shall comply with the requirements
set forth in Exhibit B, and shall, at Owner's expense, maintain in full force and effect insurance
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coverage as specified in Exhibit B; provided however, during such time that lenders
providing financing for the Project impose insurance requirements that are inconsistent with
the requirements set forth in Exhibit B, Owner may satisfy the requirements of this Section
by meeting the requirements of such lenders. Notwithstanding the foregoing, throughout the
term hereof, Owner shall comply with the provisions of Exhibit B pertaining to (i) provision
to City of proof of insurance for the Project, (ii) naming of City as additional insured, and
(iii) provision to City of notice of cancellation or reduction in coverage.
6.8 Property Damage or Destruction. If any part of the Project is damaged or
destroyed, Owner shall repair or restore the same, consistent with the occupancy and rent
restriction requirements set forth in this Agreement. Such work shall be commenced
within 120 days after the damage or loss occurs and shall be completed within one year
thereafter, provided that insurance proceeds are available to be applied to such repairs or
restoration within such period and the repair or restoration is financially feasible. During
such time that lenders or low-income housing tax credit investors providing financing for
the Project impose requirements that differ fi-om the requirements of this Section the
requirements of such lenders and investors shall prevail.
7. Recordation; No Subordination. This Agreement shall be recorded in the Official
Records of San Mateo County. Owner hereby represents, warrants and covenants that with the
exception of the Permitted Exceptions (as defined in the DA) and casements of record, if any,
absent the written consent of City, this Agreement shall not be subordinated in priority to any
lien (other than those pertaining to taxes or assessments), encumbrance, or other interest in the
Property or the Project. If at the time this Agreement is recorded, any interest, lien, or
encumbrance has been recorded against the Project in position superior to this Agreement,
upon the request of City, Owner hereby covenants and agrees to promptly undertake all
action necessary to clear such matter from title or to subordinate such interest to this
Agreement consistent with the intent of and in accordance with this Section 7, and to provide
such evidence thereof as City may reasonably request.
8. Transfer and Encumbrance.
8.1 Restrictions on Transfer and Encumbrance. During the term of this Agreement,
except as permitted pursuant to the DA or this Agreement, Owner shall not make or permit the
occurrence of any Transfer (as defined in the DA) of the Project or the Property without the
prior written consent of the City; provided however, neither the admission of an investor
limited partner, nor the transfer by the investor limited partner to an entity in which an
affiliate is the general partner or managing member shall require City consent.
8.2 Permitted Transfers, The City shall not withhold its consent to the following
Transfers: (i) a transfer from Owner to an entity which is controlled by the Owner; or (ii) a
transfer to the construction or permanent lender for the Project or to a third party by
foreclosure, deed in lieu of foreclosure or comparable conversion of any lien on the Project
or to any subsequent transfer by such lender or third party following such foreclosure, deed
in lieu of foreclosure or comparable conversion; provided that: (a) prior to any of the
foregoing transfers (other than to a third party following foreclosure), Owner or the proposed
owner shall provide City with a copy of the transferee's organizational documents and the
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final form of the agreement effectuating such transfer, (b) the Project is and shall continue to
be operated in compliance with this Agreement, and (c) the transferee executes all documents
reasonably requested by the City with respect to the assumption of the Owner's obligations
under this Agreement, and upon reasonable request of City, delivers to the City an opinion of
transferee's counsel to the effect that this Agreement is the valid, binding and enforceable
obligation of such transferee.
In addition, City shall not unreasonably withhold its consent to the sale, transfer or
other disposition of the Project, in whole or in part, provided that (1) the Project is and shall
continue to be operated in compliance with this Agreement; (2) the transferee expressly
assumes all obligations of Owner imposed by this Agreement; (3) the transferee executes all
documents reasonably requested by the City with respect to the assumption of the Owner's
obligations under this Agreement, and upon City's request, delivers to the City an opinion of
its counsel to the effect that such document and this Agreement are valid, binding and
enforceable obligations of such transferee; and (4) either (A) the transferee has at least three
years' experience in the ownership, operation and management of low-income senior rental
housing projects of similar size to that of the Project, without any record of material
violations of nondiscrimination provisions or other state or federal laws or regulations
applicable to such projects, or (B); the transferee agrees to retain a property management firm
with the experience and record described in subelause (A).
8.3 Encumbrances. Owner agrees to use best efforts to ensure that any deed of
trust secured by the Project for the benefit of a lender other than City ("Third-Party
Lender") shall contain each of the following provisions: (i) Third-Party Lender shall use its
best efforts to provide to City a copy of any notice of default issued to Owner concurrently
with provision of such notice to Owner (provided however, the failure to do so shall not
impair such Third-Party Lender's rights and remedies); (ii) City shall have the reasonable
right, but not the obligation, to cure any default by Owner within the same period of time
provided to Owner for such cure; (111) provided that City has cured any default under Third-
Party Lender's deed of trust and other loan documents, City shall have the right to foreclose
City's Performance Deed of Trust and take title to the Project without acceleration of Third-
Party Lender's debt; and (iv) City shall have the right to transfer the Project without
acceleration of Third-Party Lender's debt to a nonprofit corporation or other entity which
shall own and operate the Project as an affordable rental housing Project, subject to the prior
written consent of the Third-Party Lender. Owner agrees to provide to City a copy of any
notice of default Owner receives from any Third-Party Lender within three (3) business days
following Owner's receipt thereof. Notwithstanding any other provision in this Agreement,
City agrees to subordinate this Agreement to the lien of a senior lender providing funds to
develop the Project in accordance with the terms of this Agreement.
8.4 Mortgagee,Protection. No violation of any provision contained herein shall
defeat or render invalid the lien of any mortgage or deed of trust made in good faith and for
value upon all or any portion of the Project or the Property, and the purchaser at any trustee's
sale or foreclosure sale shall not be liable for any violation of any provision hereof occurring
prior to the acquisition of title by such purchaser. Such purchaser shall be bound by and
subject to this Agreement from and after such trustee's sale or foreclosure sale. Promptly
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upon determining that a violation of this Agreement has occurred, City shall give written
notice to the holders of record of any mortgages or deeds of trust encumbering the Project or
the Property that such violation has occurred.
9. Default and Remedies.
9.1 Events of Default. The expiration of any applicable notice and cure periods
following the occurrence of any one or more of the following events shall constitute an event
of default hereunder ("Event of Default"):
(a) The occurrence of a Transfer in violation of Section 8 hereof,
(b) Owner's failure to maintain insurance on the Property and the Project
as required hereunder, and the failure of Owner to cure such default within 10 days;
(c) Subject to Owner's right to contest the following charges, Owner's
failure to pay taxes or assessments due on the Property or the Project or failure to pay any
other charge that may result in a lien on the Property or the Project, and Owner's failure to
cure such default within 10 days.;
(d) Owner's default in the performance of any term, provision or covenant
under this Agreement or under the DA (other than an obligation enumerated in this
Subsection E11, and unless such provision specifies es a sho rt er cure period for such def ault,
the continuation of such default for ten (10) days in the event of a monetary default or thirty
(30) days in the event of a non-monetary default following the date upon which City shall
have given written notice of the default to Owner, or if the nature of any such non-monetary
default is such that it cannot be cured within 30 days, Owner's failure to commence to cure
the default within thirty (30) days and thereafter prosecute the curing of such default with
due diligence and in good faith, but in no event longer than 120 days from receipt of the
notice of default.
9.2 Remedies. If within the applicable cure period, Owner fails to cure a default or
fails to commence to cure and diligently pursue completion of a cure, as applicable, or if a cure
is not possible, City may proceed with any of the following remedies:
A. Bring an action for equitable relief seeking the specific performance of the teens
and conditions of this Agreement, and/or enjoining, abating, or preventing any
violation of such terms and conditions, and/or seeking declaratory relief,
B. Pursuant to the Perforinance Deed of Trust, foreclose on the Property;
C. For violations of obligations with respect to rents for Restricted Units, impose
as liquidated damages a charge in an amount equal to the actual amount
collected in excess of the Qualifying Rent;
D. Pursue any other remedy allowed at law or in equity,
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Each of the remedies provided herein is cumulative and not exclusive. The City may
exercise from time to time any rights and remedies available to it under applicable law or in
equity, in addition to, and not in lieu of, any rights and remedies expressly provided in this
Agreement.
10. Indemnification. Notwithstanding the insurance coverage required hereunder, Owner
shall defend, indemnify and hold the City and its officials, officers, directors, employees,
and agents (collectively, the "Indemnified Parties") harmless from and against any and all
losses, damages, liabilities, claims, demands,judgments, actions, court costs, and legal or other
expenses (including reasonable attorneys' fees) which an Indemnified Party may incur, directly
or indirectly, as a result of, in whole or in part, from (1) Owner's development or
management of the Property and the Project, (2) Owner's failure to perform any obligation as
and when required by this Agreement; (3) any failure of Owner's representations or warranties
to be true and complete in all material respects when made; or (4) any act or omission by
Owner, or any of Owner's contractors, subcontractors, agents, employees, licensees or
suppliers with respect to the Project or the Property, except to the extent that such losses are
caused by the gross negligence or willful misconduct of such Indemnified Party. Owner
shall pay immediately upon an Indemnified Party's demand any amounts owing under the
indemnity provided under this Section. The duty of Owner to indemnify includes the duty to
defend the Indemnified Party in any court action, administrative action, or other proceeding
brought by any third party arising in connection with the Project or the Property with counsel
reasonably approved by City. Owner's duty to indemnify the Indemnified Parties shall
survive the expiration or earlier termination of this Agreement. It is further agreed that City
does not and shall not waive any rights against Owner that they may have by reason of this
indemnity and hold harmless agreement because of the acceptance by City, or the deposit
with City by Owner, of any of the insurance policies described in this Agreement or the DA.
11, Miscellaneous.
11.1 Amendments. This Agreement may be amended or modified only by a written
instrument signed by both Parties.
11.2 No Waiver. Any waiver by City of any term or provision of this Agreement
must be in writing. No waiver shall be implied from any delay or failure by City to take
action on any breach or default hereunder or to pursue any remedy allowed under this
Agreement or applicable law. No failure or delay by City at any time to require strict
performance by Owner of any provision of this Agreement or to exercise any election
contained herein or any right, power or remedy hereunder shall be construed as a waiver of
any other provision or any succeeding breach of the same or any other provision hereof or a
relinquishment for the future of such election.
11.3 Notices. Except as otherwise specified herein, all notices to be sent pursuant
to this Agreement shall be made in writing, and sent to the Parties at their respective
addresses specified below or to such other address as a Party may designate by written notice
delivered to the other parties in accordance with this Section. All such notices shall be sent
by:
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(i) personal delivery, in which case notice is effective upon delivery;
(ii) certified or registered mail, return receipt requested, in which case notice
shall be deemed delivered upon receipt if delivery is confirmed by a return receipt;
(iii) nationally recognized overnight courier, with charges prepaid or charged
to the sender's account, in which case notice is effective on delivery if delivery is
confirmed by the delivery service;
(iv) facsimile transmission, in which case notice shall be deemed delivered
upon transmittal, provided that (a) a duplicate copy of the notice is promptly delivered
by first-class or certified mail or by overnight delivery, or (b) a transmission report is
generated reflecting the accurate transmission thereof. Any notice given by facsimile
shall be considered to have been received on the next business day if it is received
after 5:00 p.m. recipient's time or on a nonbusiness day.
City: City of South San Francisco
400 Grand Avenue
South San Francisco, CA 94080
Attention: City Manager
Owner: Rotary Plaza, Inc.
c/o Beacon Development Group
6120 Stoneridge Mall Road, Suite 300
Pleasanton, CA 94588
Attention: Ancel Romero
11.4 Further Assurances. The Parties shall execute, acknowledge and deliver to the
other such other documents and instruments, and take such other actions, as either shall
reasonably request as may be necessary to carry out the intent of this Agreement.
11.5 Parties Not Co-Venturers. Nothing in this Agreement is intended to or shall
establish the Parties as partners, co-venturers, or principal and agent with one another.
11.6 Action bythe City. Except as may be otherwise specifically provided herein,
whenever any approval, notice, direction, consent or request by the City is required or
permitted under this Agreement, such action shall be in writing, and such action may be
given, made or taken by the City Manager or by any person who shall have been designated
by the City Manager, without further approval by the City Council.
11.7 Non-Liability of City and City Officials, Employees and Agents. No member,
official, employee or agent of the City shall be personally liable to Owner or any successor in
interest, in the event of any default or breach by the City, or for any amount of money which
may become due to Owner or its successor or for any obligation of City under this
Agreement.
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11.8 Headings; Construction. The headings of the sections and paragraphs of this
Agreement are for convenience only and shall not be used to interpret this Agreement. The
language of this Agreement shall be construed as a whole according to its fair meaning and
not strictly for or against any Party.
11.9 Time is of the Essence. Time is of the essence in the performance of this
Agreement.
11.10 Governing Law. This Agreement shall be construed in accordance with the
laws of the State of California without regard to principles of conflicts of law,
11.11 Attorneys' Fees and Costs. If any legal or administrative action is brought to
interpret or enforce the terms of this Agreement,the prevailing p arty shall be entitled to recover
all reasonable attorneys' fees and costs incurred in such action.
11.12 Severability. If any provision of this Agreement is held invalid, illegal, or
unenforceable by a court of competent jurisdiction, the validity, legality, and
enforceability of the remaining provisions shall not be affected or impaired thereby,
11.13 Entire Agreement Exhibits. This Agreement, together with the DA contains
the entire agreement of Parties with respect to the subject matter hereof, and supersedes all
prior oral or written agreements between the Parties with respect thereto. The exhibits
attached hereto are incorporated by reference.
11.14 Counterparts. This Agreement may be executed in multiple counterparts, each
of which shall be an original and all of which together shall constitute one agreement.
SIGNATURES ON FOLL OWING PAGE.
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IN WITNESS WHEREOF, the Parties have executed this Affordable Housing
Regulatory Agreement and Declaration of Restrictive Covenants as of the date first written
above.
ROTARY PLAZA, INC.
By:
Name:
Title:
CITY OF SOUTH SAN FRANCISCO
By:
Mile Futrell, City Manager
ATTEST:
By .___.____................
Krista Martinelli, City Clem
APPROVED AS TO :FORM:
By:
Jason Rosenberg, City Attorney
SIGNATURES MUST BE NOTARIZED.
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Exhibit A
LEGAL DESCRIPTION
(Attach legal description of Property.)
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Exhibit B
INSURANCE REQUIREMENTS
Prior to issuance of building permits for the Project and throughout the term of this Agreement, Owner shall
obtain and maintain, at Owner's expense, the following policies of insurance.
A. Prope[!y Insurance. Insurance for the risks of direct physical loss, with minimum coverage
being the perils insured under the standard Causes of Loss - Special form (ISO Form CP 10 30) or its
equivalent, covering all improvements, all fixtures, equipment and personal property, located on or in,
or constituting a part of, the Property ("Improvements"), in an amount equal to one hundred percent
(100%) of the full replacement cost of all such property. The insurance shall (a) cover explosion of
steam and pressure boilers and similar apparatus, if any, located on the Property, and (b) cover floods
if the Property is in a Special Hazard Area, as determined by the Federal Emergency Management City
or as shown on a National Flood Insurance Program flood map. The insurance required hereunder
shall be in amounts sufficient to prevent Owner from becoming a co-insurer under the terms of the
applicable policies, with not more than a Twenty Five Thousand Dollars ($25,000) deductible (or such
higher deductible approved by the City, which approval shall not be unreasonably withheld) from the
loss payable for any casualty, The policies of insurance carried in accordance with this Paragraph A
shall contain a "replacement cost endorsement" and an "increased cost of construction endorsement."
B. Liability Insurance. Commercial general liability insurance on an "occurrence basis" covering all
claims with respect to injury or damage to persons or property occurring on, in or about the Property and
the Improvements. The limits of liability under this Paragraph B shall be not less than Two Million Dollars
($2,000,000) combined single limit per occurrence, with a deductible no greater than Twenty-Five
Thousand Dollars ($25,000) or such higher deductible as may be approved by City, which approval shall
not be unreasonably withheld.
The insurance shall also include coverage for:
(i) liability for bodily injury or property damage arising out of the use, by or on behalf of
Owner, of any owned, non-owned, leased or hired automotive equipment in the conduct of any and
all operations conducted in connection with the Project or the Property;
(ii) premises and operations including, without limitation, bodily injury, personal injury, death
or property damage occurring upon, in or about the Property or the Improvements on any elevators
or any escalators therein and on, in or about the adjoining sidewalks, streets and passageways;
(iii) broad form property damage liability;
(iv) additional insured and primary insured endorsements protecting the City, the City of South
San Francisco and their respective elected and appointed officials, officers, employees and
agents;
(v) personal injury endorsement,
C. Worker's Compensation Insurance, Worker's compensation insurance, in the amount required
under then applicable state law, covering Owner's employees, if any, at work in or upon the Property or
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engaged in services or operations in connection with the Project or the Property. Owner shall require that
any contract entered into by Owner with regard to work to be undertaken on the Property include a
contractual undertaking by the contractor to provide worker's compensation insurance for its employees in
compliance with applicable state law.
D. Course of Construction Insurance. Course of construction insurance in the same amount as
required in Paragraph A above for property insurance, covering all construction activities on the Property.
E. General Insurance Provisions. All policies of insurance provided for in this Exhibit shall be
provided under valid and enforceable policies, in such forms and amounts as hereinbefore specified, issued
by insurers licensed to do business in the State of California (or approved to do business in California and
listed on the California Department of Insurance list of Eligible Surplus Lines Insurers or successor listing)
and having a rating of AM I or better in Best Insurance Guide or, if Best Insurance Guide is no longer in
existence, a comparable rating from a comparable rating service. Prior to the issuance of building permits
for the Project, and thereafter, not less than W&(q.0) days prior to the expiration date of each policy
furnished pursuant to this Exhibit C, Owner shall deliver to City certificates evidencing the insurance
required to be carried by Owner under this Exhibit C. If requested by City, Owner shall deliver within ten
(10) days following such request, certified, complete copies of the insurance policies required hereunder.
Insurance policies to be provided hereunder shall meet the following requirements:
(a) Each policy of insurance obtained pursuant to this Agreement, other than worker's
compensation insurance, !shall contain endorsements which provide (i) a waiver by the insurer of the right
of subrogation against City, the City of South San Francisco , Owner or any tenant of the Project for
negligence of any such person, (ii) a statement that the insurance shall not be invalidated should any
insured waive in writing prior to the loss any or all right of recovery against any party for loss accruing to the
property described in the insurance policy, and (iii) a provision that no act or omission of Owner which
would otherwise result in forfeiture or reduction of the insurance therein provided shall affect or limit the
obligation of the insurance company to pay the amount of any loss sustained.
(b) By endorsements, City and the City of South San Francisco , and their respective
elected and appointed officials, officers, employees and agents shall be named as additional insured under
the liability insurance required to be maintained by Owner hereunder. City shall be named as loss payee
on the property insurance policies required to be maintained hereunder.
(c) Each policy required hereunder shall include a Notice of Cancellation or Change in
Coverage Endorsement which shall provide that such policy shall not be cancelled or materially changed
without at least thirty(30) days' prior written notice by registered or cerfified, mail to City.
(d) All insurance policies shall provide that there shall be no exclusion from coverage for
cross liability among the listed insureds.
(e) Any certificate of insurance applicable to course of construction insurance to be
maintained shall be deposited with City prior to commencement of construction of any Improvements.
(f) Each policy shall contain an endorsement that provides that the insurance applies
separately to each insured that is seeking coverage or against whom a claim is made, except with respect
to the limits of liability,
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(g) Each policy shall be written as a primary policy not contributing with and not in excess
of coverage that City may carry.
(h) Each policy shall expressly provide that City shall not be required to give notice of
accidents or claims and that City shall have no liability for premiums.
F Blanket Policies. Any insurance provided for in this Exhibit C may be placed by a policy or policies
of blanket insurance; provided, however, that such policy or policies provide that the amount of the total
insurance allocated to the Property and the Project shall be such as to furnish protection the equivalent of
separate policies in the amounts herein required, and provided further that in all other respects any such
policy or policies shall comply with the other provisions of this Agreement.
G. Waiver of Subrogation. To the extent permitted by law and the policies of insurance required to be
maintained hereunder, and without affecting such insurance coverage, City and Owner each waive any
right to recover against the other (a)damages for injury or death of persons, (b) damage to property, (c)
damage to the Property or the Improvements or any part thereof, or(d) claims arising by reason of any of
the foregoing, to the extent that such damages and/or claims are covered (and only to the extent of such
coverage) by insurance actually carried by either City or Owner. This provision is intended to restrict each
party (as permitted by law) to recover against insurance carriers to the extent of such coverage, and waive
fully, and for the benefit of each, any rights and/or claims which might give rise to a right of subrogation in
any insurance carrier.
H. Compliance with Policy,Reguirements. Owner shall observe and comply with the requirements of
all policies of public liability, fire and other policies of insurance at any time in force with respect to the
Property, and Owner shall so perform and satisfy the requirements of the companies writing such policies
that at all times companies of good standing shall be willing to write or to continue such insurance,
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STATE OF CALIFORNIA
COUNTY OF SAN MATEO
On 20_ before me, the undersigned,
personally appeared
personally known to me
proved to me on the basis of satisfactory evidence
to be the person(s) whose name(s) (is/are) subscribed to the within instrument and acknowledged to
me that (he/she/they) executed the same in (his/her/their) authorized capacity(les), and that by
(his/herfth6o signature(s) on the instrument the person(s), or the entity upon behalf of which the
person(s) acted, executed the instrument.
WITNESS my hand and official seal.
Signature
2630883.1
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