09-18-18 Item #17 Development Agreement Clarificationsfeet of retail) without provision of above-standard community benefits; and (2) Tier 2
allows for a greater amount of office and residential development, as described in the
Valko Specific Plan, provided the Developer enters into a Development Agreement with
the City which provides for certain above-standard community benefits (collectively, the
"Project"); and
WHEREAS, Valko has proposed to provide certain community benefits and to
develop the Tier 2 program in accordance with the Specific Plan; and
WHEREAS, the City and Valko have negotiated the terms of a Development
Agreement to vest the Tier 2 program in consideration of the community benefits and
provide limited vesting of the Tier 1 program; and
WHEREAS, the terms of the Development Agreement include the following
community benefits to be provided by Vallco, which are described in more detail in the
proposed Development Agreement:
• Performing Arts Center -Valko would either, at City's option: (i) build and
lease to City a 60,000 square foot "warm shell" space suitable for a performing
arts center (PAC), or (ii) pay the City a $22,800,000 in lieu payment.
• City Hall -Vallco would either (i) demolish the existing City Hall building and
then build and deliver to City a 40,000 square foot "warm shell" new City Hall
including underground parking, substantially consistent with the City's 2015
civic center master plan, or (ii) pay the City a $30,000,000 in lieu payment.
• School District Benefits -
o FUHSD -Valko would commit to either (i) build and lease to FUHSD a
25,000 square foot "warm shell" space, or (ii) pay FUHSD a $9,500,000
in lieu payment, with terms to be set forth in a separate agreement to be
entered into between Developer and FUHSD.
o CUSD -Vallco would make a payment to CUSD in the amount of
8,9,500,000$14,250,000 pursuant to a separate agreement, which would
decrease to $9,500,000 if there is a challenge to the Project.
• Affordable Housing -Vallco would agree that 20% of the residential units
would be provided as affordable housing at the following percentages: 15% at
extremely low, very low and low income levels and 5% at moderate income
level.
• Transportation Benefits -
o Vallco would implement a TDM Program.
open space, the locations , sizes and amenities of which will be specified in the MSDP and shall
be consistent with the crite1ia set forth in the Vallco Specific Plan; and
7 . Within the existing air space easement, or modified easement subject to
City approval , and subject to the c1ite1ia in the Vallco Specific Plan, a pedestrian bridge over
Wolfe Road, which may be open space and include retail and restaurant uses , provided such uses
are consistent with public access and comply with the design requirements set forth in the
Specific Plan .
P. Under this Development Agreement, Developer will provide substantial public
benefits for the Tier 2 Project as more specifically described in Article 5, including:
1. BMR Units . Project will include 20% BMRUnits;
2. New City Hall. Re-constmction of a core and wann-shell for a new City
Hall, to be located on the site of the ex isting City Hall , or payment of an in-lieu fee of Thirty
Million Dollars ($30,000,000);
3. Perfonning Arts Center. Construction of a core and warm-shell for a new
60,000 sq. ft . performing arts center, to be located on a site in the vicinity of the proposed Town
Square, or payment to City of an in-lieu fee of Twenty Two Million Eight Hundred Thousand
Dollars ($22 ,800 ,000);
4. FUHSD. Construction of a 25 ,000 sq. ft. core and warm-shell space, for
use as an adult school and high school innovation center, to be leased for 34 years to FUHSD at
no cost , or payment to FUHSD of an in-lie u fee of Nine Million Five Hundred Thousand Dollars
($9 ,500 ,000);
5. CUSD . Payment of N-i-fle-Fo utteen Million F-t-veT wo Hundred F ift y
Thousand Dollars ($9,50 0 ,00 01 4,2 50 ,0 00);
6. Co-Working Incubator-Space. Good faith efforts to provide F01ty
Thousand (40 ,000) square feet of co-working or incubator space in the Project ;
7 . Funding for TDM. Implementation of a Project TDM Program with a
goal of 34% non-single occupancy vehicles for office uses ;
8. Mobility/Bike Hub. A mobility hub of at least 1,000 sq. ft ., which may
include a bicycle facilities and services hub with bike storage, sales, rentals and repair facilities ;
a transit stop and /or an ancillary use cafe;
9 . Pilot Community Shuttle. $1 ,000 ,000 initial funding and operating a
community shuttle from Vallco to local schools and other transportation hubs and, if successful,
an ongoing $750,000 per year contribution for up to 9 additiona l years (subject to reduction per
Section 9.3.4); and
10. Transportation Infrastructure Contributions, Bike/Pedestrian Trail.
Contribution to City of Eleven Million Dollars ($11 ,000,000) ((subject to reduction per Section
4
fees are imposed upon Developer and are in excess of those allowed by Applicable Law and
Developer wishes to object to such fees , Developer may pay such fees under protest. City agrees
not to delay issuance of permits or other Subsequent Approvals and entitlements under these
circumstances, provided Developer provides City with proof of payment of such fees.
3 .13 Public Infrastrncture. City shall use good faith, diligent efforts to work with
Developer to ensure that all public infrastructure required in connection with the Project is
expeditiously reviewed and considered for acceptance by City on a phased basis as discrete
components of the public infrast:rncture is completed. Developer's obligation to construct the
public improvements shall be set forth in one or more public improvement agreements to be
entered into by the Paiiies on or before approval of final subdivision maps for the Project.
3.1-1-Sanil:11°\ Se\\ er C'ap,Kit\ . .-'\.::, c,r the Ellcdi\ e Dale. Cit\ belie\ C">. ba~c:u l>l1
e\.i-.,tin'..! sewer cap,1cit\ studies. that Cupertino Sanit,lr\ Di:-,triet·~ Clll1t1·a,.:tut1! cc1pc1~·it\· limih \\ ith
rc"11ect tt1 Lbe ilf the Cit\ nt· Santa CLua '>cll1it<..11Y sc:\1cr ~vs tern ;_ue adcquc1tc [{) :-.enc the Prnjcct
,b \1dl Js all other de\el1.1pmen1 conlempL1tccl b\ the Citv·s Cicnernl Plan .. .\ccu1·di11'..!I\. subject
tc, continued accun:1-.:1,, 0l'thosecapc1cit\' :;tuclics and assumptions ,111d subic:ct Lo the limits of its
clulhoritY. CitY a,u-ecs tl, rc:;cr\c suniwn se11·cr capc1cit, for the: Project as ft,llm\ s:
(a) F1.1r the l'ir'.'>t Li1e ( 5) vears follu,\ in!..: the ElTcdi\ c Date. Cit, ct'..!re1:s t() ad in '..!llL)d
foith t11 ensure tl1c1L nc\\ de\ eloprnc:nt proie\ . .'L:i beinL!: considered l'or apJ2.D.11 alb\ Cit\
\\ ithin such time period\.\ ill not, in cnrnbi11atiut1 \\ ith th..: Prni..:ct. cc1us..: permitted pc;..1k
\Yd\\ cathc:r t10\1 tn C.\ce..:d Cunerti110 Sa111tc1r\, Di-.,trict"s c·crntradual s,mit,1rv :c.e\\er
caoaciL\ limit:,.
( b J If upon the fi l'th ( 5th) ,111ni \ crsc1n cl r th..: Efi'ccti vc Date . D..:,dorc:r ha:-. pu l kc!
buildinu permits for 13° o uf the: tlltal number ot'rc:-.idential unit:, and 31n,> (1[· th..: total
commercial squ,1re lootage \\ ithin the Prc,ject. then until the Sth c1t1niwrsar\ \)[' Lhe
ElTecti\e Date. Cit, d!..(rees Lo <..!CL in Lmod Ltith Lu ensure tha t 11e \1. de\ck1p111enl pruiects
bcin~ considcrcc.l for appruv,11 b\ Cit\ 11 ill not. in C<.lmbinatil)n with the rcmaininl.'. un-
huilt purtic1n llf the Pniied. c,1usc p..:rrnittcd pe,1k ,1 ct \\·s::ither tlo,\ to e\-.:eed Cupertino
Sanitan· DisLrit:t ·s contractual sanitarv sc1.1 er capacit, lirnib. Ir De1 ell1per l~1il::i to meet
the rore!.!oin'-'. 5111 nnnin:1·:::,:.ir, cle\·elupment rnik~ll)l1e. then Cit\ shall ha,e m1 obliuation
to cnntinue n:sen inl! lt•r the Prujcct a1w pf Cupertim1 Sanitan· Distri-.:r·., c1,11tr,1ctu,il
sc111itarv sc\1er capacitv l im its.
tel If upon the eiuhth (8th) ,mni\ er-,an ur the Elfrcti1. e Date. De\ eloper hns pulled
buildim: permits for 66°0 pf th..: tota! number ofresidc:nti,il urnts and 66nn t)l'thc tl1tal
commercial squc1re fcwta~c 1\·ithin the: Project, then until the c:'\.pirntion \ll' the initial
T crm. Citv uurecs lo ~1..::l in c:uod foith tn ensure that ne,1 de, elcrnrnenl prnic-.:b bein-;:
considered for appro\ al b, Citv \\ ill lll)l. in cPrnbi11c1tio11 \\ itli the rernainirn! un-buill
portit1n uf the Project. cause permittcd neak II ct\\ e~1thcr tll•\\ tl1 exceed Cupi.:rti1w
Sanitarv Di~tril'.l-~cnntractual :--.anitarv se\iercapacir, limib. lt'De1clllper r',1ils tn rn..:ct
the l't11\::!.!uinu ~th cll111i1ersan de\ el\lpmenl mi L;:-,wne. then Cit\ :-;_lnll ha 1. e nu ohli~:1tiu11
lo -.:ontinue re sen inc!: IL1r the: Project am nt· Cupc:rti1w Sanitmv Di:-;trict ·:c; C!l!1lrnctu,ll
s:mitarv sewer ca11:1cit\ limits.
19
Id J In all e\ cnh . l1.111c)\\ in<.: e,piratiun Pl. Lile !nil.Id! T"errn. ( it· -.,ii,ill h,1, c 11u 1,hl1..-::Jti1)11 LL,
1·cv:nc: fr,r the: Pnijc:-...:t am()[ Cupc:1ti11(1 Sc1niL,1n Di.:;u ·ict"-., c1inlr,11.:tual ,aliiLin ,e,,er
CJ[' h:it\ [irnih
\c,t1.1 ith::-.L,111 d in'..'. i.111\ uLher pr\,\ i-.,iL'il hc:rcr,t" tu Lhc ·.::L·,ntr,11",. ii'. ltillu11, i11c2 the Ellecti, c D,1te.
upd,1kd -,J11itm1 ,c'\\ cr ec1p,11.:it, .:;tudie-., rc\ eal Lh,ll there i:-. insullicie11t c-1p.1L·it\ L11 .:;en e lwth the
Pr1)j,.;L"t ,1ml all other de, elopment t,ruj,xh c:c,nkrnpLitcd under the Cit\·::-. (iener,ll Plan in cfkct
,b 1) r the E ffccti, c Dcitc. thcn the sJ.n i tarY se\1 ·c:r capaci rv anwunr:-; tP hi.: n:scrvcd bv C i tv under
thi:-; S<:;'cl1c•ll .\. l ..J. ..;hall be reduced p1·or,nni1maLcl1 b~bec.l 1,11 the ~lllH>L!!ll 11!' th,: c,:q,aciL\ sll(lrtfoll
,b iLklllilicd i11 the upcL1tccl stulh.
ARTICLE4
FEES
4.1 Impact Fees. Except as otherwise expressly provided herein, for eight (8) years
from the Effective Date, subject to no more than a cumulative two-year extension for Permitted
Delays ("Impact Fee Lock Period"), City shall have the right to impose and Developer shall
pay only those Impact Fees, as adopted as of the Effective Date, as and when due under those
existing adopted Impact Fees. During the Impact Fee Lock Period, the City may increase the
existing adopted Impact Fees by the amount of any built in escalators , or in the absence of a built
in escalator, by the annual increase in the cumulative Consumer Price Index for All Urban
Consumers ("CPI-U"), as defined in Cupe11ino 's CMC Section 5.04.460 (and as reflected in the
most recent rep011 of consumer prices for the San Francisco/Bay Area Standard Metropolitan
Statistical Area as published by the U.S. Department of Labor, Bureau of Labor Statistics) or if
such index is no longer available by a comparable index as reasonably selected by City. E x cept
as otherwise provided in this Agreement, during the Impact Fee Lock Period no other increases
to Impact Fees in existence on the Effective Date and no new City Impact Fees imposed after the
Effective Date shall apply to the Project. Absent agreement of the Parties, Impact Fees will be
paid when specified under this Agreement or, in the absence of any specified time frame , when
due under the City Municipal Code. Developer will have the right, at any time during the Impact
Fees Lock Period to pre-pay any future Impact Fees at the then applicable rate. Following
expiration of the Impact Fee Lock Period, Developer shall pay all applicable Impact Fees,
including Impact Fees adopted by City after the Effective Date, at the rates in effect when due.
4.1.1 Transp011 ation Impact Fee. City shall give credit to Developer for (i) the
reduction of existing non-residential uses and (ii) any transpo11ation improv ements Developer
funds and constrncts that are capital projects identified by the Transportation Impact F ee
Program ("TIF"). Credit given under clause (ii) above shall be based on the engineer's cost
estimate used as a basis for establishing the TIF. If Developer still owes a TIF after accounting
for the credits, Developer will pay the applicable TIF, upon issuance of each building permit.
City agrees that no TIF will be charged for Office Amenity Space, or for BMR Units or for the
PAC or Adult School and Innovation Center (to the extent City and/or FUHSD elect to accept
delivery of the PAC or Adult School and Innovation Center spaces for the d esignated civic u s es).
4.1 .2 Parkland Fees . Developer will satisfy park and open space requirements
and no park fees will be required, provided the Project includes a minimum of 11 .5 acres of
20
the time of certificate of occupancy for the building in which the leased space is agreed to be
located); (f) FUHSD , a s tenant, will participate in the Project master association and fair share
cost contribution for typical c01mnon area maintenance in the Project component in which the
Adult School and Innovation Center is located ; a nd (g) provide for FUHSD to elect at its sole
discretion , in lieu of the leased space, to receive a one-time payment of Nine Million Five
Hundred Thousand Dollars ($9 ,500 ,000), including the tenns on which Developer shall make the
payment; provided, however, in no event shall the payment be made later than issuance of the
last residential building certificate of occupancy. If Developer and FUHSD are unable to reach
agreement on the construction of the Adult School and Innovation Center after good faith efforts ,
Developer shall have the option of making the payment described above. D eve loper 's
obli gat ions und er thi s Secti on 5.3 .1 are in additi o n to D eve lo pe r's obli gat ion t o pay Oth er
Agen cy Fees im posed b y th e FUHS D .
5.3.2 Payment to CUSD. Developer will enter into a separate agreement with
the Cupertino Unified School District ("CUSD") setting forth the following tenns, or tenns
acceptable to CUSD: Developer will make a one-time payment in the total amount of Nine
Fo mt een Million Ftve-T wo Hundred Fifty Thousand Dollars ($9 ,500 ,000 14,250,000) te----tlte
CUS D (s ubj ect t o r edu cti on as pro vided in Secti o n 9.3.4) as directed by CUSD but in any event
by no later than issuance of the last residential building certificate of occupancy. D evelop er 's
obli gati ons und er thi s Secti on 5.3.2 are in additi o n to D eve loper 's ob li gati o n t o pay Other
Age ncy Fe es im pose d b y CU S D.
5.3.3 Co-Working/Incubator Space. Developer will use good faith efforts to
provide approximately forty thousand (40 ,000) square feet in co-working ( e.g., NeueHouse,
Bespoke, HanaHaus , WeWork, Nextspace , Regus , etc.) or incubator space , in one or more
locations, as determined by Developer. Such space, at Developer's election, may be counted
against the minimum retail use requirement under the Vallco Specific Plan, provided that the
credit shall not exceed 40 ,000 sq. ft. of the total retail use requirement.
5.4 Transportation and Transportation Demand Management (TDM) Program.
5.4.1 TDM. Developer shall fund and fully implement the TDM Program as
required by the Vallco FEIR MMRP incorporated herein by this reference . The further
particulars of the TDM program and its ongoing impl ementation shall be set forth in a recordable
TDM Agreement the form of which shall be prepared and mutually agreed upon by the Parties
no later than issuance of the first certificate of occupancy for any building. The TDM
Agreement shall be recorded against each parcel no later than issuance of the first building
permit for vertical construction within that parcel. The term of the TDM Agreement shall
continue as required in the Vested Approvals .
5.4 .2 Mobility/Bike Hub . Developer shall include in th e Project a mobility
hub , which may include a transit stop , community shuttle stop, a help station, bike hub and/or
cafe ("Mobility Hub"). Developer and City shall cooperate to establish a location , design and
program for the Mobility Hub that is reasonably acceptable to the Parties. The size and capacity
of Mobility Hub will vary depending on anticipated demand and location context, but shall be at
least 1,000 sq . ft . Uses may include a concierge station, bike hub staffed for bicycle-related
services including secured bike storage, peak-hour staff availability, folding bike or scooter
29
("Litigation Challenge"), and the Parties shall keep each other informed of all developments
relating to such defense , subject only to confidentiality requirements that may prevent the
communication of such information. To the extent Developer desires to contest or defend such
Litigation Challenge , (a) Developer shall take the lead role defending such Litigation Challenge
and may, in its sole discretion, elect to be represented by the legal counsel of its choice , with the
costs of such representation, including Developer 's administrative, legal and court costs , paid by
Developer; (b) City may, in its sole discretion , elect to be separately represented by the legal
counsel of its choice in any such action or proceeding with the costs of such representation,
including City's administrative, legal , and court costs and City Attorney oversight expenses , paid
by City; and (c) Developer shall indemnify, defend , and hold hannless City Parties from and
against any damages , attorneys ' fees or cost awards , including attorneys ' fees awarded under
Code of Civil Procedure section 1021.5 , assessed or awarded against City by way of judgment,
settlement, or stipulation. Any proposed settlement of a Litigation Challenge shall be subject to
Developer's and City's approval not to be unreasonably withheld, conditioned or delayed. If the
terms of the proposed settlement would constitute an amendment or modification of this
Agreement or any Project Approvals, the settlement shall not become effective unless such
amendment or modification is approved by Developer and City in accordance with Applicable
Law , and City reserves its full legislative discretion with respect to any such City approval. If
Developer opts not to contest or defend such Litigation Challenge, City shall have no obligation
to do so. Developer's obligations under this Section 9 .3 .1 shall survive the expiration or earlier
tennination of this Agreement.
9.3.2 Processing Subsequent Approvals . Unless prevented by law or court
order, City shall continue to process applications for Subsequent Appro v als during the pendency
of any Litigation Challenge and until the Project Approval which is the subject of such Litigation
Challenge is Final in accordance with this Agreement.
9.3.3 Public Benefit Funds. Dming the pendency of any Litigation Challenge or
referendum or initiative, and until the Project A pproval which is the subj ect of such Litigation
Challenge or referendum or initiative is Final , Developer may request that City not expend or
c01mnit to third parties arty portion of the public benefits funds described in Article 5. Upon
receipt of such request City shall sequester the portions of such public benefit funds , if any, not
previously c01mnitted , expended, or transferred to third party until such time as the Project
Approval which is the subject of such Litigation Challenge or referendum or initiative becomes
Final.
9.3.4 Effect of Litigation Challenge on Developer Obligations . If a Litigation
Challenge or referendum or initiative is brought with respect to the validity of the Vested
Approvals , then the dollar amount of the Transportation Infrastructure Contiibution will be
reduced by fifty percent (50%), the doll ar a mount of the paym e rit t o CUS D sh all b e r edu ced to
N in e M illi o n Five Hundre d Th ou sand D oll ars ($9,5 00 ,000), and the maximum time period for
the Annual Shuttle Contribution will be reduced to 4 years.
40
EXHIBIT D
HOUSING PLAN
1. Residential Development. A total of 2,668 Residential Units can be developed on
the site, including the applicable density bonus, as described in the Vallco Specific Plan. There
are no restrictions on rental or for sale rates for Market Rate Units. No more than 50% of the
total number of Residential Units, excluding any units financed with Low Income Housing Tax
Credits, may be parcelized as condominium units for individual sale.
2 . BMR Units. A total of twenty percent (20%) of all Residential Units developed
on the Property shall be affordable to E"(Lrernel\ LO\\ lncurne 1-lou:,ehnlds, Very Low Income
Households , Low Income ~1-e-hl-HL1ust'110lcls and Moderate Income Households
(collectively, the "BMR Units"). Residential Units that are not BMR Units are pe1mitted to be
Market Rate Units. Based on the maximum development of2,668 Residential Units pe1mitted
under this Agreement, 534 Residential Units would be BMR Units.
a. Very Low Income Units. Eleven percent of the base permitted density, or
196 Residential Units (7.34 percent of the total maximum permitted density with the applicable
density bonus), would be Very Low Income Residential Units . Very Low Income means the
rental rate is set such that it is affordable to a household with an income that is not more than
50% of area median income ("AMI"), adjusted for household size appropriate for the unit. Fon,.
( --1-0 l o l' Lhe V erv Lo,, Income Res iderniu I uni ts would bc rurther resLricted as Extreme! v Lm,
lnctltnC Rl'sidcnti:1l Lnits. ··Ex.tn:rneh Ltl\\ lnc(1mc" (1r ··EU .. means the rental rate is set sL11.:h
Lh<1L it is affPrLLlbk to a lrnuscholcl ,,ith crn income th,1L is not n1()re than 30°0 ot· A\lL adjusted
!'or household si1c appropriate l't1r the uniL. All EU Lnits shall indude a prel'erenee fur
indi,iduals ,, iLh disabilities. De, eloper shall coordinate with servil'e prO\ ider(s) Lu provide
ncccssan supporti, c sc1·, ices for units occLtpicd bv indi, iduab with disabilities. All Extrcmch
L()\\ Inc()rnc and Very Low Income Units will be rental units. Rents for the Extn.:mdv LLl\\
lncnrne ~rncl Very Low Income Units shall be set at an affordable rent as defined in Section
50053 of the Health and Safety Code-'-
b. Low Income Units. 7.66 percent of the Residential Units (when combined
with the E\trcm~h Le)\\ lnc(lrnc and Very Low Income Units , 15% of the total Residential
Units), or 205 Residential Units based on the maximum pe1mitted density, would be Low
Income Residential Units. Low Income means the rental rate is set such that it is affordable to a
household with an income that is not more than the 80% AMI level, adjusted for household size
appropriate for the unit, and may be set lower at the Developer's discretion to compete for Low
Income Housing Tax Credit (LIHTC) financing. All Low Income Units will be rental units.
c. Moderate Income Units. Five percent of the Residential Units, or 133
Residential Units would be Moderate Income Residential Units. Moderate Income means the
rental rate is set such that it is affordable to a household with an income that is at the 120% AMI
level for rental units , adjusted for household size appropriate for the unit, and the sales price is
affordable to a household with an income that is at the 150% AMI level for for-sale units.
Exhibit D-1
i. Moderate Income Residential Units may be for lease or sale, as
determined by Developer in Developer 's discretion; provided that any for-sale
Moderate Income Residential Units elected to be provided shall count towards the
maximum number of condominium units permitted under Paragraph 1, above .
ii . Prior to issuance of a building permit for a residential building
including moderate income BMR units , the BMR units will be designated per the
BMR Manual. Deed restrictions will be completed for units in each building
before ce1iificates of occupancy for the building are issued.
d. BMR Units . All BMR Units shall be identified before building permits are
issued for constmction of the building in which the BMR Units are located and deed restrictions
recorded prior to issuance of the ce1iificate of occupancy of the building in which the BMR Units
are located.
3. BMR Units -Tenn.
a. E\li.c'l1H:~I, Lm\ Income. Very Low Income and Low Income Residential
Units. E:-;rrcrn<..'iv Lrn, lncl)!l1C. Very Low Income and Low Income Residential Units must have
a restrictive covenant with a te1m of 55 years and may be located as provided in Paragraph 4(a).
W ithout limiting the affordability requirements in Paragraph 2, above , Developer shall retain
flexibility to program BMR buildings with unit types and income levels consistent with then-
cmTent LIHTC requirements. CmTently for 4% tax credits, household income limits may range
up to 80% AMI, as long as the project's average targeting does not exceed 50% AMI. CmTently
for 9% tax credits, household income limits may range up to 80% AMI, as long as the project's
average targeting does not exceed 50% AMI. Accordingly, Low Income Units up to 80% AMI
shall be allowed as long as the average targeting complies with LIHTC requirements . The parties
acknowledge and agree that averaging may change to confo1m with then-cmTent LIHTC
requirements, and that deeper affordability levels may be required for Developer's tax credit
application to be successful.
b. Moderate Income Residential Units . Moderate Income Residential Units
must have a restrictive covenant term of 99 years and be located as provided in Paragraph 4(b ).
4 . Distribution of BMR Units.
a. E\Lrcrncl\ Ll11, Income. Very Low Income and Low Income Residential
Units . E\tr<..'rn<..'l v l (111 ln1..·umc. Very Low Income and Low Income Residential Units can be
consolidated in separate buildings and/or on separate legal parcels and lots from Market Rate
Residential Units to the extent consistent with Section 7 .6 of this Development Agreement.
b . Moderate Income Residential Units . Ex cept for separate buildings that are
made up entirely of BMR Units , approximately 5% of each residential building must consist of
Moderate Income Residential Units and such Moderate Income Residential Units must be
disbursed proportionally throughout each residential building .
5. Timing of Delive ry of BMR Units .
Exhibit D -2
consistent with the City's BMR Manual , provided that the Developer may substitute 2-bedroom
Moderate Income Residential Units for Market Rate Units with three or more bedrooms. The
number of bedrooms per unit shall be "generally proportional" if the Moderate Income
Residential Unit bedroom mix is within 10% of the Market Rate Unit bedroom mix. The
bedroom mix for Ex tr em ely Low In co me, Very Low Income and Low Income Residential Units
may be flexible to optimize the unit mix for a competitive LIHTC application.
c. Unit sizes of Moderate Income Residential Units may be flexible,
provided that the bedroom requirements establishing in Paragraph 7(b) are satisfied . Unit sizes
·may be reduced for Very Low Income and Low Inco1ne Residential Units that are provided in
separate buildings.
d. For all BMR Units, automobile parking spaces shall be provided
consistent with the Specific Plan, with the Developer retaining flexibility to assign such spaces
based on household requirements, and if parking for the Market-Rate Units is unbundled, then
Developer may do the same for Moderate Income Residential Units. In Moderate Income
Residential Units distributed throughout the Project, Developer shall allocate and assign bicycle
storage, storage lockers , and other spaces reserved for use by individual units to the Moderate
Income Residential Units on the same basis as fo r the Market Rate Units.
e. Tenants of all BMR Units shall generally have equal access to the
Project's common areas as is given to the residents of the Market Rate Units , provided that (i)
residents of one building are not required to be given access to amenities in other buildings
where such amenities are limited for the use of residents of that building and (ii) residents of
BMR units, as well as residents of certain types of Market Rate Units , will not have access to
ce1iain common area amenities offered exclusively to (a) residents of premium Market Rate
Units or (b) residents of senior Residential Units , at the sole discretion of Developer.
8. Affordable Housing Agreement. P1ior to issuance of the first building permit,
Developer and City shall enter into and record an Affordable Housing Agreement, which shall
address , among other things: BMR Unit delivery schedule and locations , a definition of what is
included in rent, unit comparability, marketing guidelines , tenant selection and income
certification processes , affordability covenants and enforcement provisions , occupancy
requirements , income monit01ing , provisions regarding termination of occupancy, forms oflease
or key lease provisions , records and reporting, operation, management, use and maintenance of
property, including with respect to landscaping and open space and participation in Project
owners' /tenants' association and transportation program. The Affordable Housing Agreement
shall have priority over the liens of any Mortgages, and Developer shall use good faith diligent
efforts to cause any Mortgagees with Mmigages in place at the time the Affordable Housing
Agreement is recorded to execute, acknowledge and deliver to City subordination agreements in
a form reasonably acceptable to the City Attorney subordination the liens of such Mortgages to
the Affordable Housing Agreement.
9. Senior Housing. The pennitted Market-Rate Residential Units include at least 80
senior Residential Units , whether for rent or for sale at Developer's discretion, provided that any
for-sale senior units elected to be provided shall count towards the maximum number of
Exhibit D-4