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2011-626858D O C ## 2011 - 0626858 1111111111111111111111111111111111111111111111111111111111111 IIII ill FREE RECORDING REQUESTED NOV 22, 2011 4:59 PM PURSUANT TO GOV. CODE SECTION 27383 OFFICIAL RECORDS t SAN DIEGO COUNTY RECORDER'S OFFICE Ernest J Dronenburg, Jr , COUNTY RECORDER Recording Requested By: FEES 000 PAGES: to r r City Encinitas !IIIII ����� ����� ��� ����� ����� ����� ����� IIIII ����� ����� ����� ����� 11111111111111 IN r Planning and Building Department 505 S Vulcan Avenue I Encinitas, CA 92024 And When Recorded Mail To: City of Encinitas Planning and Building Department 505 S Vulcan Avenue Encinitas, CA 92024 Attn Housing Administrator A.P N 254 - 351 -32 " �1 \� AFFORDABLE HOUSING REGULATORY AGREEMENT � (Density Bonus) This Affordable Housing Regulatory Agreement hereinafter the "REGULATORY 9 9 rY 9 ( AGREEMENT ") is made and entered into and is effective as of this Zzl"/day of November, 2011 by and between the City of Encinitas (hereinafter the "CITY "), and Warmington Encinitas 41, LLC, a Delaware limited liability company (hereinafter the "OWNER ") RECITALS A Whereas, the OWNER is the owner of real property (hereinafter the "PROPERTY ") described in Attachment A, attached hereto and made a part hereof; B Whereas, the CITY approved a Density Bonus for Tentative Map 06 -111, in accordance with Government Code 65915, and under said law the OWNER must restrict occupancy in one unit to a very low- income household for a term of thirty (30) years, C Whereas, the OWNER has designated Lot 6 of TM 06 -111 as the required affordable unit and the OWNER has agreed to construct a new residential unit (hereinafter "UNIT ") on the PROPERTY, and, D Whereas, in order to restrict use of the affordable UNIT, the OWNER is bound by this REGULATORY AGREEMENT and has consented to be regulated and restricted as provided herein NOW, THEREFORE, the parties hereto agree as follows: TERM OF AGREEMENT The term of this REGULATORY AGREEMENT shall commence on the issuance of a certificate of occupancy for the UNIT and shall continue for thirty (30) years. 2 DEVELOPMENT OF THE AFFORDABLE UNIT A. OWNER shall construct a new residential unit on the PROPERTY B The exterior appearance of the affordable UNIT shall be compatible with units in the surrounding neighborhood, including units within TM 06 -111 The interior appearance finishes, and amenities of the affordable UNIT shall be comparable to new, affordable homes in the CITY or surrounding communities C Prior to the commencement of construction, the quality of materials, floor coverings, cabinets, fixtures, appliances, doors, and windows shall be specified in sufficient detail to ensure that the quality level is comparable to new affordable homes in the CITY or surrounding communities to the satisfaction of the Planning and Building Director (hereinafter, the "DIRECTOR ") D If lots in subdivision are marketed under a custom lot sale program, then the UNIT shall be constructed as the first unit in the subdivision If the subdivision is subjected to design review and /or constructed by a single builder in one or more phases, the UNIT shall be constructed and certification of occupancy issued prior to the construction of the fifth market rate unit. E The UNIT shall be made affordable to a very low- income household earning fifty percent (50 %) or less of the Area Median Income (AMI) for San Diego County, and adjusted for household size, as published periodically by the U.S Department of Housing and Urban Development (HUD) F Occupancy of the UNIT shall be appropriate to the number of bedrooms in the UNIT. As a general rule and policy, an appropriately sized household is no less than one person per bedroom and no more than two persons per bedroom, which is reasonable under the Fair Housing Act and intent of program assistance. G The UNIT shall be a minimum of 1,500 square feet of living space with a minimum of three bedrooms and two baths, plus a two -car garage Based on a significant reason, the UNIT size may be reduced through approval of a Design Review permit. H The UNIT shall be provided with adequate usable yard area comparable to new, affordable units in the community During the term of this agreement, the UNIT shall be utilized for residential use only in accordance with applicable local ordinances and regulations, any commercial use or transient habitation (of less than thirty days) is specifically prohibited 2 3 OPTION TO RENT OR SELL UNIT A. Upon completion of construction of the UNIT, the OWNER shall either rent or sell the UNIT to an eligible, very low- income household (as defined in Section 2.E), and in accordance with the terms and conditions contained herein B OWNER shall make the UNIT available for sale or rent to the general public through an advertisement in local newspaper(s). Applications shall be made available and accepted for a minimum of fourteen days. The OWNER may employ additional marketing methods that are in accordance with professional standards of the industry and fair housing laws The CITY will require documentation of the selection process and the CITY may additionally advertise the UNIT availability C OWNER is prohibited from renting or selling the UNIT to a family member, relative, employee, or pre- determined household. D OWNER may sell the property with the prior written approval of the DIRECTOR. The sale of the UNIT may be to a non - qualifying household, if the UNIT will be continuously rented to a qualifying very low- income household. At the time of said sale, the subsequent owner shall execute a new Affordable Housing Regulatory Agreement with the CITY The City shall require the subsequent owner to post a performance bond or provide other assurances of performance within the identified construction schedule (as described in Section 2 D). 4 OPTION TO SELL (Except as provided for in Section 3 D) A. The UNIT shall only be sold to a very low- income household (as defined in Section 2 E) In addition, the homebuyer must certify that the household will occupy the UNIT as owner - occupant and principal residence; and that the household does not own or have an interest in any real property B For any proposed homebuyer, the income of all adult members of the household must be verified by the OWNER using source documentation (e g , tax return, wage statement, bank statement, public benefit statement) C Prior to opening escrow to sell the UNIT, OWNER shall provide CITY with the proposed homebuyer's income statement and copies of the documentation of income The DIRECTOR shall confirm or deny eligibility based on the documentation provided. D The maximum affordable sales price for the UNIT shall be consistent with State law and be based on a total housing payment (including principal, interest, taxes, insurance, utility allowances, and any fees or assessments) of thirty percent (30 %) of fifty percent (50 %) of the AMI (as defined in Section 2 E), based on a five - person household 1) The calculation of the affordable sales price shall include a five percent downpayment. 2) The interest rate used in the calculation shall be based on the current Freddie Mac Monthly Average Commitment Rate on 30 -Year Fixed - Rate Mortgages 3) Actual financing to be obtained by any prospective homebuyer shall be a fixed rate loan fully amortized over thirty years Prior to the sale of the UNIT, the DIRECTOR shall approve the sales price (as described in Section 4 D). E. OWNER shall record deed restrictions, approved by the DIRECTOR, that restrict the resale of the property only to other eligible households for the term of the REGULATORY AGREEMENT The CITY shall enforce the deed restrictions by recording a second deed of trust on the property securing a note, the amount of the note shall be equal to the amount of subsidy provided by the OWNER (the difference between the market price and the affordable sales price) 5 OPTION TO RENT A. The UNIT shall be rented only to a very low- income household (as defined in Section 2 E) Prior to occupancy, the proposed tenant's household income must be verified using source documentation for all adult members of the household (e g., tax return, wage statement, bank statements, public benefit statements) B The maximum monthly rental rate to be charged for the UNIT shall be consistent with State law and be based on thirty percent (30 %) of fifty percent (50 %) of AMI (as defined in Section 2 E) for a five — person household (divided by 12 months) The DIRECTOR shall approve the maximum rental rate for the UNIT, including the applicable utility allowance. Rental rate may be adjusted periodically in accordance with the current AMI schedule (as defined in Section 2.E). C OWNER shall maintain tenant files containing information on the household income and the source documentation used by OWNER to determine household income. Said files shall be maintained for a period of three years from the termination of any tenancy Upon written request, OWNER shall allow the CITY access to review tenants' files and financial records for compliance with this REGULATORY AGREEMENT D OWNER shall re- certify the tenant's income status every twelve months In the event a tenant no longer qualifies as very low- income, the OWNER shall provide said tenant with the most expeditious eviction notice process, in accordance with applicable State law 6 MANAGEMENT AND MAINTENANCE (APPLIES TO RENTAL OPTION ONLY) A Any tenant selected to occupy the agreement or lease with the OWNER published by the California Apartmen t DIRECTOR. UNIT shall enter into a written occupancy OWNER shall use the standard lease form Association or other form approved by the B Leases and the landlord- tenant relationship shall be subject to California law and the provisions of this REGULATORY AGREEMENT. The OWNER shall establish reasonable rules of conduct and occupancy that comply with State and local laws and regulations. C OWNER is responsible to maintain the leased UNIT in a habitable condition and in good repair at all times OWNER is responsible for maintenance costs, including all repairs, corrections and replacements necessary to maintain and preserve the UNIT in a safe and sanitary condition in accordance with the U S. Department of Housing and Urban Development's (HUD) Housing Quality Standards (HQS) Upon written request by the CITY, the OWNER shall provide DIRECTOR or representative with access to inspect the UNIT for compliance with this section D OWNER shall obtain, and at all times during the term of this REGULATORY AGREEMENT shall maintain policies of general liability and property damage insurance from an insurance company authorized to be in business in the State of California The property damage insurance shall be in an amount sufficient to replace the UNIT in the event of fire or other major damage OWNER may self - insure, with the prior written approval of the DIRECTOR. E OWNER may contract with a management agent for the performance of the services or duties However, such an arrangement does not relieve the OWNER of responsibility for proper performance of these duties. F OWNER shall make a good faith effort to expeditiously re -rent the UNIT whenever it becomes vacant. In the event the UNIT is vacant for a period of more than thirty (30) days, the OWNER shall notify the CITY. If available, CITY shall provide OWNER with a list of eligible households seeking rental housing CITY can extend the affordable housing restriction period, if the UNIT is not continuously rented (i.e., vacancies of more than 30 days). 7 REPORTING REQUIREMENTS (APPLIES TO RENTAL OPTION ONLY) OWNER shall submit a report to the DIRECTOR immediately after initial lease -up of the UNIT and annually thereafter, on a form prescribed by the DIRECTOR. The report shall include information on the household(s) occupying the affordable UNIT during the prior year, household income, and the amount of rent collected Whenever requested by the CITY, the OWNER shall provide source documentation demonstrating the qualified status of the household(s) 8 NON - DISCRIMINATION OWNER shall not discriminate against any prospective tenant or homebuyer on the basis of race, color, religion, sex, national origin, familial status, disability or other individuals protected under State and Federal fair housing law N 10 11 12 13 CERTAIN ACTS PROHIBITED OWNER shall not make any sale, encumbrance (except for a first Deed of Trust associated with mortgage financing), assignment or conveyance, or transfer in any other form, of the PROPERTY or of its entire interest therein other than in accordance with the terms of this REGULATORY AGREEMENT VIOLATION OF REGULATORY AGREEMENT BY THE OWNER In the event of the violation of any of the provisions of this REGULATORY AGREEMENT by the OWNER, the CITY may give written notice thereof to the OWNER by registered or certified mail addressed to the OWNER at the address stated in this Regulatory Agreement, or to such other address as may have been designated by the OWNER, and if such violation is not corrected to the satisfaction of the CITY within thirty (30) days after the date such notice is mailed (or within such further time as the CITY, in its reasonable discretion, may permit), the CITY may, without further prior notice, declare in writing a default under this REGULATORY AGREEMENT effective on the date of such declaration of default, and upon any such declaration of default the CITY may apply to any court, State or Federal, for specific performance of this REGULATORY AGREEMENT, for an injunction against any violation by the OWNER of this REGULATORY AGREEMENT; for the appointment of a receiver to take over and operate the UNIT in accordance with the terms of this REGULATORY AGREEMENT, or for such other relief as may be appropriate, it being agreed by the OWNER that the injury to the CITY arising from a default under any of the terms of this REGULATORY AGREEMENT would be irreparable and that it would be extremely difficult to ascertain the amount of compensation to the CITY which would afford adequate relief, in light of the purposes of the Density Bonus program _u_►9u V, This REGULATORY AGREEMENT shall not be altered or amended except by writing executed between the parties SEVERABILITY. In the event that any provision or covenant of this REGULATORY AGREEMENT is held by a court of competent jurisdiction to be invalid or unenforceable, then it shall be severed from the remaining portions of this REGULATORY AGREEMENT, which shall remain in full force and effect. BINDING ON SUCCESSORS This REGULATORY AGREEMENT shall bind, and the benefits thereof shall inure to, the respective parties hereto, their legal representatives, executors, administrators, successors in the office or interest, and assigns, provided, however, that the OWNER may not assign this REGULATORY AGREEMENT or any of its obligations hereunder, voluntarily or by operation of law, without the prior approval of the CITY, excluding an assignment to an affiliate As used herein, "affiliate" means any entity in which OWNER 11 holds an ownership interest, or any person or entity that holds an ownership interest in the PROPERTY 14. GENDER. The use of the plural in this REGULATORY AGREEMENT shall include the singular and the singular shall include the plural, and the use of one gender shall be deemed to include all genders 15 ELECTION OF REMEDIES- EVENT OF DEFAULT. The remedies of the CITY hereunder or under any other instrument providing for or evidencing the financial assistance provided herein are cumulative, and the exercise of one or more of such remedies shall not be deemed an election of remedies and shall not preclude the exercise by the CITY of any one or more of its other remedies. 16 WAIVER No waiver by the CITY of any breach of or default under this REGULATORY AGREEMENT shall be deemed to be a waiver of any other or subsequent breach or default hereunder. 17. GOVERNING LAW. This REGULATORY AGREEMENT shall be construed in accordance with and governed by the laws of the State of California. 18 NOTICES Written notices and other written communications by and between the parties hereto shall be addressed as follows unless and until a party hereto has in writing, communicated a different address to the other party hereto. CITY City of Encinitas 505 S. Vulcan Ave Encinitas, CA 92024 Attn: Housing Administrator OWNER Warmington Encinitas 41 LLC c/o Warmington Residential California 3090 Pullman Street Costa Mesa, CA 92626 Attn: Brian Sinderhoff, President IN WITNESS WHEREOF, OWNER has executed this REGULATORY AGREEMENT as of the day and year first above written. OWNER Warmington Encinitas 41 LLC, a Delaware Limited Liability Company By Warmington 2011 Pool, LLC, a Delaware Limited Liability Company, Its Member h By- WRG Builder I, L.P., a California Limited Partnership, Managing Partner Partner By- Warmington Residential California, Inc, a California Corporation, General By- DATE. j -7/11 Matthew L. Tingler Executive Vice President CITY City of Encinitas By- (Notarization of signature must be attached) J� Tom Curriden, City Planner (Notarization not required) DATE- �� 2 ACKNOWLEDGMENT State of California County of Orange ) On November 21, 2011 before me, Catherine Goldman, Notary Public (insert name and title of the officer) personally appeared Matthew L. Tingler who proved to me on the basis of satisfactory evidence to be the persono whose name) is /ere subscribed to the within instrument and acknowledged to me that he /s *ek14ey executed the same in his /herftMr authorized capacity(*9), and that by his /henMr signature(s) on the instrument the person(!9j, or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. CATHERINE GOLDMAN WITNESS my hand and official seal Commission # 1940838 Notary Public - California Orange County MY Comm. Expires dun 19, 2015 Signature _ (Seal) ATTACHMENT A LEGAL DESCRIPTION PARCEL "C" AS SHOWN ON CERTIFICATE OF COMPLIANCE, AS EVIDENCED BY DOCUMENTS RECORDED SEPTEMBER 7, 2005 AS INSTRUMENT NO 2005 - 0773557, OF OFFICIAL RECORDS, BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS THOSE PORTIONS OF LOTS 35, 36, 37 AND 42 OF HILLSIDE ACRES, IN THE CITY OF ENCINITAS, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO MAP THEREOF NO 1992, RECORDED JANUARY 25, 1927 IN THE OFFICE OF THE COUNTY RECORDER OF SAID SAN DIEGO COUNTY DESCRIBED AS FOLLOWS- COMMENCING AT THE EASTERLY CORNER OF SAID LOT 42, THE NORTHERLY LINE OF SAID LOT HAVING A BEARING OF SOUTH 89° 13'28" EAST (RECORD SOUTH 89° 55 10" EAST), THENCE SOUTH 52° 39'38" WEST 206.06 FEET; THENCE SOUTH 15° 56'34' WEST 131.65 FEET TO THE TRUE POINT OF BEGINNING, THENCE SOUTH 39° 23' 15" EAST 196 02 FEET TO A POINT ON THE SOUTHEASTERLY LINE OF THE NORTHWESTERLY HALF OF SAID LOT 37, THENCE ALONG SAID LINE SOUTH 500 18' 30" WEST 140 06 FEET TO SOUTHERLY CORNER OF SAID NORTHWESTERLY HALF, THENCE SOUTH 390 41' 59" EAST 0 35 FEET TO A POINT ON THE SOUTHEASTERLY LINE OF THE NORTHWESTERLY 262 25 FEET OF SAID LOT 36, THENCE ALONG SAID LINE SOUTH 500 24' 11" WEST 24006 FEET TO THE SOUTHERLY CORNER NORTHWESTERLY 262.25 FEET OF SAID LOT 36, BEING THE EASTERLY CORNER OF THAT LAND DESCRIBED IN A DEED TO ROBERT N FRITZ AND DOROTHY A. FRITZ RECORDED OCTOBER 18, 1974 AS INSTRUMENT NO 74- 279015 IN THE OFFICE OF THE SAID COUNTY RECORDER, THENCE ALONG SAID FRITZ LAND SOUTH 500 14'36" WEST 96 54 FEET, THENCE NORTH 89° 16' 19" W 96 71 FEET TO A POINT IN THE WESTERLY LINE OF SAID LOT 35, THENCE ALONG SAID LINE NORTH 00" 43'41" EAST (RECORD NORTH 00° 04'50" EAST) 436 41 FEET TO A POINT THAT BEARS SOUTH 86° 50' 56" WEST FROM THE TRUE POINT OF BEGINNING, THENCE NORTH 860 50' 56" EAST 334 02 FEET TO THE TRUE POINT OF BEGINNING 9