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16-143 Marina Plaza, LLC, Affordable Housing Agreement and Declarations of Restrictive CovenantsRECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: City of Cup ertino 10300 ToITe Avenue Cupertino, CA 95014 Attn.: City Manager No fee for recording pursuant to Government Code Section 27383 23497716 Regina Alcomendras Santa Clara County -Clerk-Recorder 11/14/2016 02:58 PM Ti lies: 2 Fees : 10 .00 Taxes: 0.00 Total: 0 .00 Pages: 23 (Space above for Recorder's Use) AFFORDABLE HOUSING AGREEMENT AND DECLARATION OF RESTRICTIVE COVENANTS This AFFORDABLE HOUSING AGREEMENT AND DECLARATION OF RESTRICTIVE COVENANTS ("Agreement") is entered into as of this 20th day of October 2016 (''Effective _Date ") by and between the CITY OF CUPERTINO, a municipal corporation (the "~ity"), and MARINA PLAZA, LLC, a California limited liability company (the "Developer"), (indi vidually a "Paiiy" and together the "Pai1ies"), with reference to the following facts: A. Developer is the owner of that certain real property commonly known as l O 118- 10122 Bandley Drive (APN 326-34-066) in Cupertino, California (the "Property") more particularly described and depicted in Att<l;chment 1 attached to this Agreement and incorporated b y this reference. The Prope1iy, together with that certain real property cmmnonly known as 10145 North De Anza Boulevard (APN 326-34-043) ("Hotel_parcel") owned by Cupertino 10145 LLC , a California limited liability company ("Cupertino 10145"), comp1ise the "Site." B. The Site is the subject of a Dev elopment Agreement (DA-2016-01) (the "Development Agreement") concerning the redevelopment of the existing commercial buildings on the Site with two mixed-use buildings containing 188 dwelling units , approxi mately 22,600 square feet of commercial space on the Prope1iy as well as a 122-room full service neighborhood business hotel on the Hotel Parcel, and associated facilities and infrastructure ( collectively the "froiect"). On September 6, 2016, De Anza Venture LLC , a two member California limited liability company whose members consist of Developer and Cupertino 10145 ("D~_Apza Venture"), received discretionary approvals from the City for the Project, including a Development Pennit (DP-2015-05), an Architectural and Site Approval Pennit (ASA-2015-22), a Use Pennit (U-2015 -06), a Tree Removal Pennit (TR-2016-14), an exception to the Heart of the City Specific Plan for a setback (EXC-2016-03), a Fence Exception (EXC-2016-05), and the Development Agreement (collectively, the "Project Approvals"). Cupe1iino 10145 and Developer intend to transfer their respective interests in the Site, and concmTently assign their respective 1ights and obligations under the Development Agreement, to De Anza Venture, who will develop the Project on the Site. C. Cupe1i ino Municipal Code Ch apter 19.56 codifies the City's density bonus ordinance, which the City adopted to confonn to State Density Bonus Law (Govenm1ent Code 1 Section 65915 -65918) (together "Density Bonus Law"). Density Bonus Law allows a density bonus, concessions, and other regulatory incentives when a developer proposes to provide rental housing affordable to Very Low Income Households. D. As paii of the Project, Developer has sought and agreed to construct sixteen (16) dwelling units (11 % of the total 139 dwelling units otherwise pennitted in the Project) to be affordable and rented to Very Low Income Households (the "Very Low Income Units") for the Tem1 as defined below. Under Density Bonus Law, Developer has applied for, and the City has granted, the following modifications to its usual development standards in exchange for the Developer's provision of the Very Low Income Units: 1. A density bonus of thirty-five percent (35%), or forty-nine ( 49) additional dwelling units (the "Density Bonus"). 2. A reduction in parking otherwise required for the Very Low Income Units to provide one parking space per one-bedroom unit rather than two parking spaces (the "Parking Modification"). The Density Bonus and Parking Modification are collectively "Density Bonus Incentives." E. Density Bonus Law requires the City to ensure, and the Developer to agree to , continued affordability of the Very Low Income Units. To ensure their continued affordability for the Tem1, this Agreement shall be executed and recorded against the Prope1iy prior to the recordation of any parcel map or final subdivision map or issuance of building pem1its for the Project, whi che ver occurs first. F. In consideration of the valuable land use and economic benefits confened by the City upon the Property under Density Bonus Law, Developer, for itself, its successors, heirs , grantees and assigns , hereby desires through this Agreement to comply with the requirements of Density Bonus Law as applied to the Property. G . In addition, as a mate1ial consideration for the long tenn assurances , vested rights, and other City obligations provided by the Development Agreement and as a material inducement to City to enter into the Development Agreement, Developer offered and agreed to ce1iain tenns as specified in the Development Agreement. Section 3.12 of the Development Agreement specifies, among other provisions, that the Developer shall provide the sixteen (16) Very Low Income Units in the Project plus an additional two (2) dwelling unit to be affordable and rented to Moderate Income Households (the "Moderate Income Units") for the Tenn and that the Paiiies shall enter into and record this Agreement prior to or concunently with the recordation of the Development Agreement. Collectively, the eighteen (18) below-market-rate units may be refened to as the "Affordable Units._" NOW, THEREFORE, in consideration of the mutual covenants and promises contained in this Agreement and other valuable consideration, it is mutually agreed by and between the Paiiies as follows. 2 AGREEMENT The Parties agree and acknowledge that the above recitals are trne and accurate, and are incorporated into this Agreement by this reference. ARTICLE l. DEFINITIONS AND ATTACHMENTS Section 1.1. Definitions. When used in this Agreement, the following te1ms shall have the respective meanings assigned to them in this Article 1. (a) "Affordable Rent" is the maximum allowable Rent for an Affordable Unit, equal to one-twel fth (1112th) of thirty percent (30%) of fifty percent (50%) of Area Median Income for Very Low Income Households, one-twelfth (1112th) of thirty percent (30%) of sixty percent (60%) of Area Median Income for Low Income Households, and one-twelfth (1112th) of thirty percent (30%) of one hundred ten percent (110%) of Area Median Income for Moderate Income Households, adjusted for assumed household size of one person in a studio Affordable Unit, two persons in a one-bedroom Affordable Unit, three persons in a two-bedroom Affordable Unit, and one additional person for every additional bedroom thereafter. (b) "Affordable Units" are defined in Recital G. ( c) "Agreement" is defined in the first paragraph on page 1. ( d) "Area Median Income" is the median Household Income in Santa Clara County as determined pe1iodically by the State of California pursuant to California Code of Regulations, Title 25 , Section 6932 or successor provision. ( e) "City" is defined in the first paragraph on page 1 of this Agreement. (f) "City Council" is the City Council of the City of Cupe1iino. (g) "Cupertino 10145" is defined in Recital A. (h) "De Anza Venture" is defined in Recital B. (i) "Density Bonus" is defined in Recital D . (j) "Density Bonus Incentive" is defined in Recital D. (k) "Density Bonus Law" is defined in Recital C. (1) "Developer" is defined in the first paragraph on page 1 of this Agreement. (m) "Development Agreement" is defined in Recital B. (n) "Director" is the Community Development Director or successor position. 3 ( o) "Effective Date" 1s defined 111 the first paragraph on page 1 of this Agreement. (p) "Eligible Household" is a household which has been detennined to be eligible to rent an Affordable Unit in compliance with Density Bonus Law, the Development Agreement, and this Agreement. (q) "Hotel Parcel" is defined in Recital A. (r) "Household Income" of a Tenant is detennined as provided in the City's Policy and Procedures Manual or successor publication. (s) "Low Income Household" is a household with a Household Income between fifty percent (50%) and eighty percent (80%) of Area Median Income, adjusted for actual household size. (t) Affordable Units. "Market-Rate Units" are dwelling units 111 the Project that are not (u) "Moderate fr1come Household" is a household with a Household Income between eighty percent (80%) and one hundred twenty percent (120%) of Area Median Income, adj usted for actual household size. (v) "Moderate Income Unit" is defined in Article G. (w) "Mo1igagee" is the holder of any mo1igage, deed of trust, security agreement , and other like security instrument encumbering all or any po1iion of the Property or any of the Developer 's rights under this Agreement. (x) "Parking Modification" is defined in R eci tal D . (y) "Paiiy" or "Parties" are defined in the first paragraph on page 1 of this Agreement. (z) "Policy and Procedures Manual" is the Policy and Procedures Manual for Administering Deed Restricted Affordable Housing Units, or successor publication, adopted from time to time by the City Council. (aa) "Project" is defined in Recital B. (bb) "Project Approvals" are defined in Recital B. (cc) "Property" is defined in Recital A . ( dd) "Rent" includes monthly rent paid to the Developer, utilities, and all mandatory fees for parking and other housing services associated with the Affordable Unit, including but not limited to parking, bicycle storage, storage lockers , and use of all co1mnon areas. An allowance for utilities paid b y the Tenant is established by the Santa Clara County 4 Housing Authority, and includes garbage collection, sewer, water, electricity, gas and other heating, cooking and refrigeration fuel , but not telephone service or cable TV, and such allowance must be deducted from the monthly rent paid to the Developer. (ee) "Site" is defined in Recital A. (ff) "Tenant" is a household occupying an Affordable Unit pursuant to a valid lease or rental agreement with the Developer. (gg) "Tenant Lease" is defined in Section 3.5. (hh) "Tem1" is defined in Section 3 .1. (ii) "Unit" means either an Affordable Unit or a Market-Rate Unit in the Project. (jj) "Very Low Income Household" is a household with a Household Income at or below fifty percent (50%) of Area Median Income, adjusted for actual household size. (kk) "Very Low Income Unit" is defined in Recital D. Section 1.2. Attachment~. The following attachments are attached to and incorporated into this Agreement: Attachment l Legal Description of the Prope1iy. Attachment 2 Schedule of Affordable Units . Attaclm1ent 3 Example of Affordable Rents and Maximum Income Level of Tenants for Affordable Units. ARTICLE 2. CONSTRUCTION OF PROJECT AND AFFORDABLE RENTAL UNITS Section 2.1 . Affordable Units. To satisfy Developer's affordable housing requirements for the Project under Density Bonus Law and the Development Agreement, Developer shall rent eighteen (18) Affordable Units at Affordable Rents, sixteen (16) to Very Low Income Households and two (2) to Moderate Income Households as specified in Article 3 below, for the Tenn. Section 2.2. Construction of Affordable Units . The Affordable Units shall be constructed in propmiion to construction of the Market-Rate Units, at a ratio of one Affordable Unit to each ten (10) Market-Rate Units . No building pennit shall be issued for any Market-Rate Unit unless a proportional number of building permits have been issued for Affordable Units, and no certificates of occupancy or final inspections shall be issued for any Market-Rate Units unless a propmiional number of ce1iificates of occupancy or final inspections have been issued for Affordable Units. The Director may approve a modified construction schedule if this timing requirement will create umea sonable delays in the issuance of ce1iificates of occupancy for 5 Market-Rate Units and if the Developer provides satisfactory assurance, as approved by the Director, that the Affordable Units will be completed p1ior to completion of all of the Market- Rate Units . Each Affordable Unit shall be inspected by the City prior to occupancy to detennine that it meets the construction and other standards required by this Agreement. Section 2.3. Appearance, Size and Bedroom Count of Affordable Units. (a) Appearance and Maintenanc_e of Affordable Units. The Affordable Units in the Project shall be comparable to Market-Rate Units in te1ms of unit type, number of bedrooms per unit, quality of exterior appearance, and overall quality of construction, except that the Developer may elect to provide the Affordable Units with more bedrooms . Affordable Unit sizes should be generally representative of the unit sizes of the Market-Rate Units, and the Affordable Units shall be dispersed throughout the Project,. in accordance with Attachment 2. Interior features and finishes of Affordable Units shall be durable, of good quality, and consistent with contemporary standards for new housing . Developer shall allocate and assign bicycle storage, storage lockers, and other spaces reserved for use by individual units to the Affordable Units on the same basis as for the Market-Rate Units , and Tenants of the Affordable Units shall have equal access to the Project's common areas as is given to the residents of the Market-Rate Units, but any fee charged for use of common areas or for spaces reserved for individual units shall be included in the Tenant's Rent. Affordable Unit s with one bedroom shall have one parking space per unit pursuant to Municipal Code section 19.56.040(E). Affordable Units with two bedrooms sirnll have two parking spaces per unit pursuant to Municipal Code section 19 .124 .040. Once completed, the Affordable Units shall not be kept vacant or used for any purpose except for residential use and, if vacant , shall be marketed concurrently with the Market- Rate Units and offered for rent to Eligible Households at Affordable Rents. (b) Location of Affordable Units. As required by the Project Approvals , p1ior to issuance of any building pennit for the Project, Developer shall submit to the Director an A ffordable Housing Plan , as described in the Project Approvals, specifying the proposed location of the Affordable Units and the Project's consistency with this A1iicle 2, for the Director's reasonable approval. If, after recordation of this Agreement, Developer desires to change the location of any Affordable Unit within the Project, Developer shall submit a w1itten request for such change to the Director, who may approve such request provided that any relocated Affordable Units shall be consistent with this Article 2, be comparable to those listed in Attaclunent 2 , and contain the same number of bedrooms. ARTICLE 3. RENT REGULATORY PROVISIONS Section 3 .1. Tem1. The "Tenn" of this Agreement is the pe1iod in which each Affordable Unit shall be rented to Very Low Income Households . For all Affordable Units, the Tenn shall commence upon issuance of each ce1iificate of occupancy for an Affordable Unit and shall expire on the later of (a) fifty-five (55) years from the issuance of the final ce1iificate of occupancy for the Project or (b) the date the Project buildings are either (i) demolished or (ii) conve1ied to a non-residential use by Developer with any City-issued approvals and pe1mits that may be required. Upon issuance of the final certificate of occupancy, City and Developer shall record a certificate specifying the date of issuance of the final ce1iificate of occupancy. 6 Section 3.2 . Affordability and Occupancy Covenants. (a) Occupancy Regu_irements. Subject to the provisions of subsection (e) of this Section below, sixteen (16) Affordable Units shall be rented to and occupied by or, if vacant, available for occupancy by, Very Low Income Households and two (2) Affordable Units shall be rented to and occupied by or, if v acant , available for occupancy by, Moderate Income Households . (b) Allowable Rent. Subject to the provisions of subsection (e) of this Section below, the maximum Rent charged to Tenants of the Affordable Units shall not exceed . Affordable Rent. ( c) City Approval of Rents . The initial Rents for all Affordable Units shall be approved by the City piior to occupancy at the time the Developer submits to the City the marketing plan required by Section 3.6 below . The City shall review all proposed Rent increases to detem1ine whether the proposed increases are consistent with the provisions of this Agreement. Developer shall ce1iify to the City that Dev eloper is not charging any fee other than Affordable Rent to Tenants of the Affordable Units for all of the components of Rent defined in Section 1.1 ( dd) above. ( d) Schedule of Affordable Rent~. The City has provided the Developer with a schedule of Affordable Rents for the Affordabl e Units in effect on the date of this Agreement, set f01ih in attached Attachment 3. The City annually detennines Affordable Rents (including utility . allowances) based on changes in Area Median Income and utility allowances , and Developer s_hall obtain a copy of the s chedule from the Director. ( e) Increased Income of Tenants . (i) Increase from Very _Low Income to at or below Low Income. If, upon annual recertification of a Very Low Income Unit Tenant's income, the Developer detem1ines that a former Very Low Income Household's income has increased and exceeds the qualifying income for a Very Low Income Household, but does not exceed the qualifying limit for a Low Income Household, then, upon expiration of the Tenant's lease and after sixty (60) days w1itten notice to the Tenant, the Tenant's rent may be increased to Affordable Rent for Low Income Households. (ii) Increase to Above Low Income . If, upon recertification of a Very Low Income Unit Tenant's Household Income, the Developer detennines that the Tenant's Household Income has increased and exceeds the qualifying income for a Low Income Household, then the Tenant shall be gi v en written notice that Tenant shall vacate the Very Low Income Unit tlu·ee (3) months from the date of the notice or upon expiration of the Tenant's lease , whichever is later. A three (3) month extension may be granted by the Director in cases of extreme hardship . If, prior to the date by which the Tenant must vacate the Very Low Income Unit , a Moderate Income Unit is vacated and is of appropriate bedroom size, the Developer may, at the Developer's option, request the Director, pursuant to Section 2.3(b) above, to approv e a change in the location of the Very Low Income Unit and the Moderate Income Unit ; allow the Tenant to remain in the 01iginal Unit as a Moderate Income Unit; and designate the newly 7 vacated Unit as a Very Low Income Unit if approved by the Director. Alternatively, if another Unit in the Project is vacated which is not designated as an Affordable Unit and is of appropriate bedroom size, the Developer may, at the Developer's option, request the Director, pursuant to Section 2.3(b) above, to approve a change in the location of the Very Low Income Unit; allow the Tenant to r emain in the original Unit at market rent; and designate the newly vacated Unit as a Very Low Income Unit if approved by the Director. (iii) Increase to Above Moderate Income. If, upon recertification of a Moderate Income Unit Tenant's Household Income, the Developer detennines that the Tenant's Household Income has increased and exceeds the qualifying income for a Moderate Income Household, then the Tenant shall be given w1itten notice that Tenant shall vacate the Moderate Income Unit three (3) months from the date of the notice or upon expiration of the Tenant's lease, whichever is later. A three (3) month extension may be granted by the Director in cases of extreme hardship. If, prioi· to the date by which the Tenant must vacate the Moderate Income Unit, another Unit in the Project is vacated which is not designated as an Affordable Unit and is of appropriate bedroom size, the Developer may, at the Developer's option, request the Director, pursuant to Section 2.3(b) above, to approve a change in the location of the Moderate Income Unit; allow the Tenant to remain in the original Unit at market rent; and designate the newly vacated Unit as a Moderate Income Unit if approved by the Director. Section 3.3. Agreement to Limitation on Rents . The Project has received approval of a Development Agreement and Density Bonus Incentives under Density Bonus Law from the City. These are fonns of assistance specified in Chapter 4.3 (co1runencing with Section 65915) of Division 1 of Title 7 o f the Government Code. Sections 1954.52(b) and 1954.53(a)(2) of the Costa-Hawkins Act provide that, where a developer has received such assistance, certain provisions of the Costa-Hawkins Act do not apply if a developer has so agreed by contract. The Developer hereby agrees to limit Rents as provided in this Agreement in consideration of the Developer's re ceipt of the D ens ity Bonus Incentives and the City's approval of the Development Agreement and fmiher agrees that any limitations on Rents imposed on the Affordable Units are in conformance with the Costa-Hawkins Act. The Developer further wa1Tants and covenants that the tenns of this Agreement are fully enforceable. Section 3.4. Notice to Developer. Developer fu1iher acknowledges and agrees that the City, in its review of the Project Approvals, provided adequate and proper notice pursuant to Government Code Section 66020 of Developer's right to protest any requirements for fees, dedications , reservations , and other exactions as may be included in this Agreement, that no protest in compliance with Section 66020 was made within ninety (90) days of the date that notice was given, and that the pe1iod h as expired in which Developer may protest any and all fees, dedications, reservations, and other exactions as may be included in this Agreement. Section 3.5. Lease Pro v isions . The Developer shall use a forn1 of Tenant lease (the "Tenant Lease") approved b y the City for the Affordable Units. The Tenant Lease shall, among other matters: (a) provide for termination of the lease for failure: (1) to provide any information required under this Agreement or reasonably requested by the Developer to establish or rece1iify the Tenant's qualification, or the qualification of the Tenant's household, as an 8 Eligible Household in accordance with this Agreement, or (2) to qualify as an Eligible Household as a result of any material misrepresentation made by such Tenant with respect to the Household Income computation or certification; (b) provide that the Rent may not be raised more often than once every twelve (12) months . The Developer will provide each Tenant with at least sixty (60) days written notice of any increase in Rent applicable to such Tenant; (c) prohibit subleasing of the Affordable Unit or any portion of the Affordable Unit or any spaces reserved for the use of the Tenant, contain nondiscrimination provisions , and include the Tenant's obligation to infonn the Developer of any need for maintenance or repair (d) allow tem1ination of the tenancy only for an increase in Tenant's Household Income above qualifying income for Low Income Households or for good cause, . including violation of the te1ms and conditions of the Tenant Lease, violations of applicable federal, state, or local law, or other good cause; ( e) include, at Developer's option, the obligation for Tenant to provide a secmity deposit not exceeding two months' rent; (f) be for an initial tenn of one year; and (g) otherwise confonn to the Policy and Procedures Manual. Section 3.6. Marketing, Income Ce1iification and Re_gorting. (a) B.equired Cijy_AQ]lli)_Y.<!~-At least sixty (60) days before any Affordable Units in the Project receive a final inspection or certificate of occupancy, the Developer shall notify City of the availability of the Affo rdable Units and provide to the City its proposed marketing plan for the Affordable Units as described below ; the proposed fonn of Tenant Lease to confirm confonnance with the provisions of Section 3 .5 above; and proposed Affordable Rents for the Affordable Units, all for City review and approval. The Affordable Units shall be marketed concurrently with the marketing of the Market-Rate Units. (b) Marketing Plan. The Developer's marketing plan shall be consistent with the provisions of this subsection (b ). Upon receipt of the marketing plan, the City shall promptly review the marketing plan and shall approve or disapprove it within thi1iy (30) days after submission. If the marketing plan is not approved, the Developer shall submit a revised · marketing plan within thirty (30) days. (i) Section 8 Vouchers and Certificate Holders . The Developer will review applications from prospective tenants of Affordable Units , on the same basis as all other prospective tenants , of persons who are recipients of federal certificates for rent subsidies pursuant to the existing housing program under Section 8 of the United States Housing Act or any successor. The Developer shall not apply selection criteria to Section 8 ce1iificate or voucher holders that are more burdensome than criteria applied to all other prospective tenants for the Affordable Units, nor shall the Developer apply or pennit the application of management 9 policies or lease provisions with respect to the Project which have the effect of precluding occupancy of Affordable Units by such prospective tenants. (ii) Marketirrg_ Materials. The marketing plan submitted to the City shall include the following : means to be used to advertise Affordable Units to the public upon initial occupancy and as vacancies occur and maintenance of a waiting list; the amount of any application screening fee to be imposed by Developer, and infonnation to be provided to applicants, including conditions and restrictions applicable to occupancy of the Affordable Units, cmTent Affordable Rent, permitted Rent increases, maximum qualifying income for an Eligible Household, requirement for armual Household Income rece1iification, preferences, if any, and requirement to vacate the Affordable Unit if the Tenant's Household Income exceeds the maximum qualifying income. (c) Income Certification (i) Prior to Developer's entering into a lease with a prospective tenant of an Affordable Unit, the prospective tenant household shall be certified by the City or its assignee as an Eligible Household. (ii) Annually thereafter, the Developer will obtain, complete and maintain on file Household Income certifications for each Tenant renting any of the Affordable Units. Developer sh all make a good faith effort to verify that the Household Income statement prov ided by a Tenant is accurate by taking two or more of the following steps as a part of the verlfication process for all members of the Tenant household age eighteen (18) or older: (a) obtaining a minimum of tlie three (3) most cmTerit pay stubs; (b) obtaining an income tax return fq r the most recent tax year; ( c) conducting a credit agency or similar search; ( d) ob t aining the three (3) most cunent savings and checking account bank statements; (e) obtaining an income verification fo1m from a current employer; (f) obtaining an income verification fonn from the Social · Security Administration and/or the California Department of Social Services if an adult member of the Tenant's household receives assistance from either of such agencies; or (g) if the Tenant is _ unemployed and has no such tax return, obtain another fonn of independent ve1ification . Copies of ammal Tenant Household Income certifications shall be provided to the City or its assignee for review . (iii) As an alternative to the procedure described in subparagraph (ii) of this subsection ( c), Developer may contract with a provider approved by the City to ce1iify Tenant Household Incomes on an ammal basis . (d) Reports to City. (i) Ammal Rep01i. The Developer shall submit to the City on April 1st of each year a rep01i , in a fonn prescribed by or otherwise acceptable to the City, verifying compliance by Developer with the tenns of this Agreement and certified as con-ect by the Developer. The aimual report shall include without limitation: Household Income for all Tenants of Affordable Units at the time of initial occupancy and at recertification; number of persons in each Affordable Unit; amount of Rent charged; other infomrntion reasonably required by the City. 10 (ii) Other Repo1is. Within fifteen (15) days after receipt of a written request, Developer shall provide any other infonnation or completed fo1ms reasonably requested by the City to ensure compliance with this Agreement. Section 3.7. ~11ent of Property and Pr_QQer!Y]v1aintenance. (a) Management Responsibilities . Except for the City's initial ce1iification of a Tenant as an Eligible Household, the Developer is responsible for all management functions with respect to the Project, including, without limitation , the annual recertification of household size and Household Income (subject to review by the City or its assignee), selection of Tenants, evictions, collection of R ents and deposits , maintenance, landscaping, routine and extraordinary repairs, replacement of capital items , and security. The City shall have no responsibility over management of the Project. (b) Prope1iy Maintenance. The City places prime importance on quality maintenance to ensure that all deve lopments within the City which include affordable housing units are not allowed to deteriorate due to below-average maintenance. Developer shall provide the Affordable Units with the same level and quality of maintenance, including perfonnance of repairs and periodic replacement of fixtures as the Market-Rate Units. The Developer agrees to maintain all interior and exterior improvements, including landscaping, on the Property in good condition and repair (and , as to landscaping, in a healthy condition) and in accordance with all applicable laws, rules, ordi nances , orders and regulations of all federal , state, county, municipal , and other governmental agencies and bodi es having or claiming jurisdiction and all their respective departments , bureaus, and officials. (c) Taxes and Assessments. Developer shall pay all real and personal prope1iy taxes, assessments, if any, and charges and all franchise, income, employment, old age benefit, withholding, sales, and other taxes assessed against it , or payable by it, at such times and in such manner as to prevent any penalty from accruing, or any lien or charge from attaching to the Prope1iy; provided , however, that Developer shall have the 1ight to contest in good faith, any such taxes, assessments, or charges. In the event Developer exercises its right to contest any tax, assessment, or charge against it , Developer, on final determination of the proceeding or contest, shall immediately pay or discharge any decision or judgment rendered against it, together with all costs, charges and interest. ARTICLE 4. ENFORCEMENT Section 4 .1 . Covenants Running with the Land. The City and Developer hereby declare their express intent that the covenants and restrictions set fmih in this Agreement shall apply to and bind Developer and its heirs , executors, administrators, successors, transferees, and assignees having or acquiring any 1ight, title or interest in or to any paii of the Prope1iy and shall run with and burden such pmiions of the Prope1iy until te1minated in accordance with Section · 4.3. Until all or po1iions of the Property are expressly released from the burdens of this Agreement, each and every contract, deed or other instrument hereafter executed covering or conveying the Property or any p01iion thereof shall be held conclusively to have been executed, delivered, and accepted subject to such covenants and restrictions, regardless of whether such 11 covenants or restrictions are set forth in such contract, deed or other instrument. In the event of foreclosure or transfer by deed-in-lieu of all or any portion of the Prope1iy prior to completion and sale of all of the Affordable Units, title to all or any po1iion of the Prope1ty shall be taken subject to this Agreement. Developer acknowledges that compliance with this Agreement is a requirement -of Density Bonus Law and the Project Approvals, and that no event of foreclosure or trustee's sale may remove these requirements from the Property. Section 4.2. No Subordination; Notice to Mortgagees . In no event shall this Agreement be subordinated to, or recorded subordinate to, a mortgage, deed of trust, or other method of secmity encumbe1ing the Property, other than current unpaid taxes. If City recei ves a notice from a M01igagee requesting a copy of any notice of default given Developer hereunder and specifying the address for service thereof, then City agrees to use its diligent, good faith efforts to deliver to such M01igagee, concurrently with service thereon to Developer, any notice of default given to Developer. Each M01igagee shall have the right during the same period available to Developer to cure or remedy, or to commence to cure or remedy, the event of default claimed or the areas of noncompliance set forth in City's notice of default. If a Mortgagee is required to obtain possession in order to cure any default, the time to cure shall be tolled so long as the Mo1igagee is attempting to obtain possession, including by appointment of a receiver or foreclosure, but in no event may this period exceed 120 days from the date the City delivers the notice of default to Developer. Section 4.3. Release of Prope1iy from A_w_e ment. (a) Prior to the expiration of the Tenn, Develop er shall provide all notifications required by Government Code Sections 65863.10 and 65863.11 or successor provisions and any other notification required by any state, federal, or local law. In addition, at least six (6) months prior to the expiration of the Tern1 for an Affordable Unit, the Developer shall provide a notice by first-class mail, postage prepaid, to all Tenants in the Affordable Units whose Tenn is expi1ing. The riotice shall contain (a) the anticipated d_ate of the expiration of the Te1111, (b) any anticipated Rent increase upon the expiration of the Tenn, ( c) a statement that a copy ·of such notice will be sent to the City, and ( d) a statement that a public hearing may be held by the City on the issue and that the Tenant will receive notice of the hearing at least fifteen (15) days in advance of any such hearing. The Developer shall file a copy of the above-described notice with the City Manager. (b) Upon the expiration of the Tenn, City shall execute and record a release of the Project, the Prope1iy, and each Unit in the Project from the burdens of this Agreement within thi1iy (30) days following w1itten notice from the Developer, if at the time the Developer is in compliance with all terms of this Agreement. Section 4.4. Default. Failure of the Developer to satisfy any of Developer's obligations under the tern1s of this -Agreement within thi1iy (3 0) days after the delivery of a notice of default from the City will constitute a default under this Agreement, a default under the Development Agreement, and a failure to satisfy the Project Approvals and Density Bonus Law. In addition to remedies for breach of this Agreement, the City may exercise any and all remedies available to it under Density Bonus Law, or otherwise, including but not limited to: 12 (a) withholding, conditioning, suspending or revoking any pennit, license, subdi vision appro v al or map , or other entitl em ent for the Project, including without limitation final inspections for occupancy and/or certificates of occupancy; (b) instituting agairist the Dev eloper, or other parties , a civil action for declaratory relie±: injunction or any other equitable relief, or relief at law , including without limitation an action to rescind a transaction and/or to require repayment of any funds received in connection with such a vi o lation ; ( c) where one or more persons have receiv ed financial benefit as a result of violation of this Agreement or of any requirement imposed under the Density Bonus Law, the City may assess , and institute legal action to recover as necessary, a penalty in any amount up to and including the amount of financial benefit received, in addition to recovery of the benefit received; ( d) requi1ing the Dev eloper or his/her successors in interest to the Property to pay the City Rent or any other payment recei v ed by the Developer for the Affordable Unit from the date of an y unauthor ized u se of the Affo1:dable Unit or in excess of Affordable Rent ; and ( e) any oth er means authori z ed under the City of Cupertino Municipal Code, Dens ity Bonus L aw , or an y other federal or state statute. Section 4.5. Remedies Cumulative. No right, power, or remedy given to the City by the tenns of this Agreement or Density Bonus L aw is intended to be exclusiv e of any other right, power, or remedy; and each and every such ri ght, pow er, or remedy shall be cumulative and in addition to ev ery other right, po w er, or remedy given to the City by the tenns o f this Agreement, Density B o nus Law, or b y any statute or ordin ance or oth erwise against Developer and any other person. Neither the failure nor any delay on the paii of the City to exercis e any such rights and r emedies shall operate as a w ai v er thereof, nor shall any single or p artial exercis e by the City of any such right or remedy preclude any other or further exercise of such 1ight or remedy, or any other right or remedy. ARTICLES. GENERAL PROVISIONS Section 5.1 . Appointment of Other Agencies. At its sole discretion, the City may designate, appoint or contract with any other public agency, for-profit or non-profit organization to perfom1 some or all of the City's obligations under this Agreement. Section 5.2. Records. Developer shall r etain all records related to compliance with obligations under this Agreement for a pe1iod not le s s than five (5) years from the date of origination of such records , and make them available to City employees or others designated by the City for inspection and copying on five (5) business days' written notice. The City shall be entitled to monitor compliance w ith this Agreem ent and Density Bonus Law, and Developer shall cooperate with City monitoring, including obtaining Tenant Rent and Household Income ve1ification upon requ es t of th e Ci ty. 13 Section 5.3. Monitoring Fee. Developer agrees to pay an ammal monitoring fee as may be adopted by resolution of the City Council which is in force and effect for a similar class of affordable u nits. Section 5.4 . Nondiscrimination. All of the Affordable Units shall be available for occupancy to members of the general public. The Developer shall not give preference to any particular class or group of persons in renting or selling the Affordable Units, except to the extent that the Affordable Uni ts are required to be rented and sold to Eligible Households and as req uired by this Agreement; provided, however, there shall be no discrimination against or segregation of any person or group of persons, on account of race, color, creed, religion, sex, sexual orientation, marital status, national 01igin, source of income ( e.g., SSI), age ( except for lawful senior housing), ancestry, or disability, in the leasing, transferring, use, occupancy, tenure, or enjoyment of any Unit nor shall the Developer or any person claiming under or through the Developer, establish or pennit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy of Tenants of any Unit or in com1ection with the employment of persons for the construction, operation and management of the Project. Section 5.5. Hold Hmmle~~-Developer will indemnify and hold hannless (without limit as to amount) City and its elected officials , officers , employees and agents in their official capacity (hereinafter collectivel y referred to as "Indemnitees"), and any of them, from and agai nst all lo ss , all 1.isk of loss and all damage (including expense) sustained or incmTed because of or by reason of any and all claims, demands, sui ts, actions, judgments and executions for damages of any and every kind an d by whomever and whenever made or obtained, allegedly caused by, arising out of or relating in any 1nmmer to the Project, the Affordable Units, or Developer 's perfonnance or non-perfonnance under this Agreement, including claims pursuant to California Labor Code Section 1 720 et~., and shall protect and defend Indemnitees, and any of them with respect thereto , except to the extent arising from the gross negligence or willful misconduct of the I11dem~1itees. The provisions of this Section shall survive expiration or other termination of this Agreement or any release of part or all of the Property from the burdens of this Agreement, and the provisions of this Section shall remain in full force and effect. Section 5.6. Notices. All notices required pursuant to thi s Agreement shall be in w1iting and may be given by personal delivery or by registered or certified mail, return receipt requested, to the Party to receive such notice at the addressed set forth below: TO THE CITY: City of Cupe1iino Office of City Attorney l 0300 Torre Avenue Cupertino, CA 94301 14 TO THE DEVELOPER: Albert Wang Maiina Plaza, LLC 4546 El Camino Real , Suite 222 Los Altos, CA 94022 WITH A COPY TO: Samuel A. Chuck Rossi, Hamerslough, Reischl & Chuck, PLC 1960 The Alameda, Suite 200 San Jose, CA 95126 Any Party may change the address to which notices are to be sent by notifying the other Paiiies of the new address, in the manner set forth above. Section 5 . 7 . Integrated Agreement; Relationship to Other Related Agreements and Documents. This Agreement constitutes the entire Agreemerit between the Paiiies and no modification hereof shall be binding unless reduced to w1iting and signed by the Parties hereto . The paiiies acknowledge that this Agreement was negotiated concurrently with the Development Agreement. The Paiiies hereby agree that in the event of a direct conflict between this Agreement and the Development Agreement, this Agreement shall control. In addition, in the event of any direct conflict between a material term of this Agreement (including but not limited to , the Term) and the tenns of the Policy and Procedures Manual, this Agreement shall control. Section 5.8. Each Party's Role in Drafting the Agreement. Each Party to this Agreement has had an opportunity to revi ew the Agreement, confer with legal counsel regarding the meaning of the Agreement, and negotiate revisions to the Agreement. Accordingly, neither Party shall rely upon Civil Code Section 1654 in order to interpret any uncertainty in the meaning of the Agreement. Section 5.9. Amendment of Agreement; Approvals and Consents. (a) Amendments to this Agreement shall be subject to the review and approval of the City Council. No amendment may be approved that is inconsistent with State law, the Cupertino Municipal Code, the Development Agreement, or the Policy and Procedure Manual. Upon approval, a restated Agreement or amendments to this Agreement, as appropliate, shall be executed and recorded. (b) The City has authorized the City Manager to execute this Agreement and has auth01ized the Director to deliver such approvals or consents as are required by this Agreement. Any consents or approvals required under this Agreement shall not be unreasonably withheld or made, unless it is specifically provided that a sole discretion standard applies. Section 5 . 10 . No C@ims. Nothing contained in this Agreement shall create or justify any claim against the City by any person that Developer may have employed or with whom 15 Developer may have contracted relative to the purchase of materials, supplies or equipment, or the furnishing or the perfo1mance of any work or services with respect to the Property or the constrnction of the Project or construction of the Affordable Units. Section 5.11. Applicable Law. This Agreement shall be governed by California law . Venue shall be the County of Santa Clara. Section 5.12. Waivers. Any waiver by the City of any obligation or condition in this Agreement must be in writing. No waiver will be implied from any delay or failure by the City to take action on any breach or default of Developer or to pursue any remedy allowed under this Agreement or applicable law. Any extension of time granted to Developer to perfonn any obligation under this Agreement shall not operate as a waiver or release from any of its obligations under this Agreement. Consent by the City to any act or omission by Developer shall not be construed to be consent to any other or subsequent act or omission or to waive the requirement for the City's written consent to future waivers. Section 5.13. Title of Paiis and Sections. Any titles of the sections, subsections, or subparagraphs of this Agreement are inse1ied for convenience of reference only and shall be · disregarded in in terpreting any paii of the Agreement's provisions. Sectio n 5 .14 . Multiple Originals; Counterpart. This Agreement may be execute d in multiple 01iginals, e ach of which is deemed to be an original , and may be signed in counterparts. Section 5 .15. Recording of Agreeinent. This Agreement shall be recorded against the P ro perty in the Official Records of the County of Santa Clara prior to the recordation of any development a gr e ement, p arcel map or final subdi v ision map or issuance of any building permit fo r the Project, whichever occurs first. Section 5.16. Estoppel Ce1iificate. Developer or its lender may, at any time, and from time to time, deliver written notice to the City requesting the City to certify in writing that, to the knowledge of the City (a) this Agreement is in full force and effect and is a binding obligation of the Parties, (b) this Agreement has not been amended or modified or, if so amended or modified, identifying the amendments or modifications, and ( c) Developer is not in Default in the perfonnance of its obligations under this Agreement, or if in Default, to describe the nature of any Defaults . Developer and City acknowledge that a ce1iificate hereunder may be relied upon by the Developer and Mo1igagees . The Developer may request the estoppel ce1iificate to be in a recordable fom1 and may record such certificate in the Official Records of Santa Clara County at its sole cost and expense. The City Manager shall be auth01i z ed to execute a ny certificate requested by Developer in a fonn reasonably approved by the City Attorney. The Developer shall pay all costs borne by City in c01mection with its review of any proposed estoppel certificate. Section 5 .17 . Severability. In the event any limitation, condition, restriction , covenant, or provision contained in this Agreement is to be held invalid, void or unenforceable by any comi of competent jurisdiction, the remaining portions of this Agreement shall nevertheless be and remain in full. force and e ffect. [Signatur es on Follo wing Page} 16 IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed as of the day and year first above written. CITY: CITY O~IN : am,pal corporation B y : V .c.-J ~ David Brandt, City Manager [Signature must be notarized] ATTEST: By: ~4 1 ~ ltJ ·]{~{(o Grace Schmidt, City Clerk APPROVED AS TO FORM: .a_ n J ___ . _________ _ ~1-tevenson Hom , City Attorney DEVELOPER: . MARINA PLAZA, LLC , a California limi ted liability company By: 17 Albert Wang, Managing Member [Signatures must be notarized} A notary public or other officer co mpl eting this certi ficate verifi es onl y the ident ity of th e individual who signed th e document to which this certificate is attached, and not the truthfulness , acc uracy, or va lidity of that document. ALL-PURPOSE ACKNOWLEDGMENT NOTARY FOR CALIFORNIA STATE OF CALIFORNIA COUNTY OF SANTA CLARA On __,,Q"-=c.+.-'--=-.1,-'-~,_'---/'-1C-.-L-, _'2-o_...._(--'-'--·' before me, Kir~-+t!."7 /!..e,,,:U s:"1,cv---C4'"4. I /vo-f-,,.,,,ry fub/,;c.. Na me And Title Of d fficer (e.g. "Jane 6oe , Notary Public"( Da te personally appeared ________ f},__._-'-'( b~~'--1-'--_w_ ... _ ... +~------------ / Na me of Signer(s) KIRSTEN RENEE SOUARCIA Commission # 2080884 j Notary Public -California f z Santa Clara County -t • • • • ,MJ goz21T·Jx£i[!'5.oztj,J~1~l who proved to me on the basis of satisfactory evidence to be the person~ whose name~ j§/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in .!Ji.sLher/their authorized capacity~), and that by his/her/their signature(-s') on the instrument the person(Ja1, or 'the entity upon behalf of which the perso~ acted, executed the instrument. I certify under PENAL TY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. ~~~-~S"""ig.:...n..c,~,-,cur-e++N~o~ta-ry~P~u~bl~ic_ .. _~------· OPTIONAL Though this section is optional , completing this information can deter alternation of the document or fraudulent reattachment of this form to an unintended document. CAPACIT(IES) CLAIMED BY SIGNER(S) Signer's Name : D Individual D Corporate Officer Title (s) D Partner(s) D Attorney-In-Fact D Trustee(s) D Guardian/Conservator D Other: Signer is representing: Name Of Person (s) Or Entity(ies) D Limited D General DESCRIPTION OF ATTACHED DOCUMENT Title or Type of Document /7 Number Of Pages Date Of Do cu ment Signer(s) Other Th an Named Above Acknowledgment A notary public or 01l1er officer co mpleting this certificate verifies only the identity of the individual who s igne d the document to which this certific ate is attached , and n ot th e truthfulness, accuracy, or va lidity of th at do cument. ALL-PURPOSE ACKNOWLEDGMENT NOTARY FOR CALIFORNIA STATE OF CALIFORNIA COUNTY OF SANTA CLARA ) ) On Oc+ober 1~,1...o/t,,. , before me, l<rrs-:-./-e,.,, /<..e...v,ee. .$'" q__vc,rc. ... ~ I }J {) .f.-.v 'I t V" I; C. , Name And T(tle Of Offi cer (e.g. \Jane Doe , Notary Publ ic") Date personally appeared -KIRSTEN RENEE SOUARC IA Commission # 2080884 Name of Signer(s) who proved to me on the basis of satisfactory evidence to be the perso~ whose name,(.81 j§Lare subscribed to the within instrument and acknowledged to me that he/she/they executed the same in ..b.islher/their authorized capacity~, and that by his/her/their signaturet5) on the instrument the person,(g'J , orffie entity upon behalf of which the perso~ acted, executed the instrument. I ceriify under PENAL TY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. j Notary Public -California I z Santa Clara County :!:: WITNESS rny hand and official seal. J.. ~.· .. Mi 802'T-;Xfi[:Su°S'J,J~1tl OPTIONAL Though this section is optional, completing this informat ion can deter alternation of the document or fraudulent reat tachment of this form to an unintended document. CAPACIT(IES) CLAIMED BY SIGNER(S) Signer's Name: D Ind ividual D Corporate Offic er Titl e(s) D Partner(s) D Attorney-In-Fact D Trustee(s) D Guard ian /Conservator D Other : Signer is representing : Name Of Perso n(s ) Or Entity(ies) D Limit ed D General DESCRIPTION OF ATTACHED DOCUMENT Titl e or Type of Document Number Of Pages Date Of Document Signer(s) Other Than Named Above Acknowledgmen t ATTACHMENT 1 PROPERTY DESCRIPTION 10118-10122 BANDLEY DRIVE (APN 326-34-066) All that celiain Real Property in the City of Cupertino , County of Santa Clara, State of California, desc1ibed as follows: PARCEL ONE ALL OF PARCEL "A" AS SHOWN UPON THAT CERTAIN MAP ENTITLED, "PARCEL MAP BEING A PORTION OF NW¼ OF SECTION 13, T. 7S., R. 1 W., M.D.B.& M .", WHICH MAP WAS FILED FOR RECORD IN THE OFFICE OF THE RECORDER OF THE COUNTY OF SANTA CLARA, STATE OF CALIFORNIA, ON FEBRUARY 15, 1978 IN BOOK 412 OF MAPS , AT PAGE 50 . PARCELT\\10: AN EASEMENT FOR THE PURPOSE OF VEHICULAR AND PEDESTRIAN INGRESS AND EGRESS , AS CONVEYED BY THAT CERTAIN GRANT OF EASEMENT RECORDED JULY 17, 198 J IN BOOK G22 J , PAGE 162 , AND BY COVENANT REGARDING EASEMENT RECORDED JULY 17, 1981 IN BOOK 0221, PAGE 184, OFFICIAL RECORDS , BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS: THE SOUTHERLY 27 FEET OF PARCEL "B" AS SAID PARCEL "B" IS SHOWN UPON THAT CERTAIN PARCEL MAP RECORD ED IN BOOK 412 OF MAPS, AT PAGE 50 , SANTA CLARA COUNTY RECORDS. PARCEL THREE: RECIPROCAL EASEMENTS AS DES CRIBED IN THAT CERTAIN "RECIPROCAL EASEMENT AGREEMENT" EXECUTED BY NORCAL ASSOCIATES, A CALIFORNIA PARTNERSHIP AND COAST FEDERAL SAVINGS AND LOAN ASSOCIATION, A UNITED STATES CORPORATION, RECORDED JULY 18, 1979 IN BOOK E648, PAGE 568 AND BY THAT CERTAIN "DECLARATION OF ESTABLISHMENT OF COVENANTS, CONDITIONS AND RESTRICTIONS AND RECIPROCAL EASEMENTS" RECORDED AUGUST 22, 1979 IN BOOK E742, PAGE 703 AND AS AMENDED BY DOCUMENT RECORDED APRIL 15, 1980 IN BOOK F272, PAGE 71, OF OFFICIAL RECORDS. Attachment 1 f Number of Bedrooms One -- Two TOTALS: ATTACHMENT 2 SCHEDULE OF AFFORDABLE UNITS i J Unit - Numbers & I be provided Very Low _Eerate [Nlay Income Units me Un~ts . permit] 2 nd Floor 3 rd Floor 8 1 ~ 8 1 16 2 Attachment 2 Location at building 4th floor ATTACHMENT 3 EXAMPLE OF AFFORDABLE RENTS FOR AFFORDABLE UNITS AND MAXIMUM INCOME LEVEL OF TENANTS (Provided for reference. These limits are adjusted annually, as determined and published by the City. Project shall be subject to the Affordable Rents and Household Income limits in effect at the time Developer submits marketing plan to City.) A. Affordable Rents. Affordable Rent is defined in Section 1.1 (a) of this Agreement. The table below illustrates how Affordable Rent is calculated, based upon 2016 State Income Limits adopted by the California Department of Housing and Community Development and contained in California Code of Regulations , Title 25, Section 6932 . Number of Bedrooms AMI* for Assumed Household Size Percent of AMI Maximum Annual Rent Maximum Monthly Affordable Rent** (1/12 of Maximum -------------•--------+-----------------+---Ammal Rent) -- 50 One $8 5 ,7 00 60 110 ---------·-----·-------+-------- L/ Two $96,400 r- ------~___J__ * AM I is A rea Median In come. 50 60 110 - $12 ,8 55 $1,072 -~------<---------~-------i $15 ,426 $28 ,2 81 -----$14 ,460 $17,352 I $31 ,8 12 $1,286 -~ $2 ,357 ' ~~:!~~ ___ -·j __ $2,651 --, ~----~-----~--- **A reaso nable a llowan ce fo r te nant-paid utilities must be deducted from the Tenant 's m onthly payments to th e Developer. See definition of Rent in S ection I. I (aa) for other fees and charges that must be deducted fro m the Tenant's monthly pay ments to th e D evelop er. 2016 utility allo wa nces are available at: h ttp ://www. hacsc. org/assets/ I /6/2016 _Utility_ AllowancesJor _website_ update.pdf B. Maximum Household Income of Tenants (Income Limits) Household Size Maximum Gross Annual Household Income (Number of Persons) Very Low Income Low Income Moderate Income 1 $39,100 $59,400 $89,950 2 $44,650 $67,900 $102,800 3 $50,250 $76 ,400 $115,650 In come lim its for larger hou seho lds available upon request from the City . Attachment 3 VERIFICATION I have reviewed this Affordable Housing Agreement and Declaration of Restrictive Covenants and to the best of my knowledge, the information contained herein is true and complete. I verify under penalty of perjury under the laws of the State of California, that the foregoing is true and correct. Executed on the 1st day of November, 2016, at Cupertino, California. (){61~ Lauren Sapudar Senior Office As sistant