Loading...
2023-294131FREE RECORDING REQUESTED PURSUANT TO GOV. CODE SECTION 27383 Recording Requested By: City of Encinitas Development Services Department 505 S. Vulcan Avenue Encinitas, CA 92024 And When Recorded Mail To: City of Encinitas City Clerk's Office 505 S. Vulcan Avenue Encinitas, CA 92024 A.P.N: 266-090-06 and 266-090-07 DOC# 2023-0294131 111111111111111 11111111111111111111111111111111111111111111111111 IT IN Oct 26, 2023 09:25 AM OFFICIAL RECORDS JORDAN Z. MARKS, SAN DIEGO COUNTY RECORDER FEES: $0.00 SB2 Atkins: $0.00) POOR: N/A PAGES: 20 REGULATORY AGREEMENT AND DECLARATION OF COVENANTS, CONDITIONS AND RESTRICTIONS FOR AFFORDABLE HOUSING UNITS (Affordable Housing Ordinance/Density Bonus) THIS REGULATORY AGREEMENT AND DECLARATION OF COVENANTS, CONDITIONS AND RESTRICTIONS FOR AFFORDABLE HOUSING UNITS (hereafter "REGULATORY AGREEMENT" or ."AGREEMENT') is made and entered into and is effective as of this 16"' of _0 cb ber - 2023 by and between the City of Encinitas (hereafter "CITY") and DLSI?Holdings LP, a California limited partnership (hereafter "OWNER"). RECITALS A. Whereas, the CITY has adopted an affordable housing ordinance, Encinitas Municipal Code ("EMC") Chapter 30.41 (hereafter "Affordable Housing Ordinance") to enhance the public welfare by establishing policies which require the development of housing affordable to households of very low, low, and moderate incomes, meet the CITY'S regional share of housing needs, and implement the goals and objectives of the general plan and housing element, and which requires that a percentage of residential units that are developed be affordable to very low or low income households; B. Whereas, the CITY has adopted a density bonus ordinance, EMC §30.16.020(C) ("Density Bonus Ordinance") in conformance with state density bonus law, Government Code §§ 65915 — 65918 (Density Bonus Ordinance and state law collectively, the "Density Bonus Law"). Density Bonus Law allows a density bonus, concessions, and other regulatory incentives when a developer proposes to provide affordable housing meeting the standards of Density Bonus Law; FREE RECORDING REQUESTED PURSUANT TO GOV. CODE SECTION 27383 Recording Requested By: City of Encinitas Development Services Department 505 S. Vulcan Avenue Encinitas, CA 92024 And When Recorded Mail To: City of Encinitas City Clerk's Office 505 S. Vulcan Avenue Encinitas, CA 92024 A.P.N: 266-090-06 and 266-090-07 REGULATORY AGREEMENT AND DECLARATION OF COVENANTS, CONDITIONS AND RESTRICTIONS FOR AFFORDABLE HOUSING UNITS (Affordable Housing Ordinance/Density Bonus) THIS REGULATORY AGREEMENT AND DECLARATION OF COVENANTS, CONDITIONS AND RESTRICTIONS FOR AFFORDABLE HOUSING UNITS (hereafter "REGULATORY AGREEMENT" or "AGREEMENT") is made and entered into and is effective as of this 2� , W or O chber 2023 by and between the City of Encinitas (hereafter "CITY") and DLS- Holdings LP, a California limited partnership (hereafter "OWNER"). RECITALS A. Whereas, the CITY has adopted an affordable housing ordinance, Encinitas Municipal Code ("EMC") Chapter 30.41 (hereafter "Affordable Housing Ordinance") to enhance the public welfare by establishing policies which require the development of housing affordable to households of very low, low, and moderate incomes, meet the CITY'S regional share of housing needs, and implement the goals and objectives of the general plan and housing element, and which requires that a percentage of residential units that are developed be affordable to very low or low income households; B. Whereas, the CITY has adopted a density bonus ordinance, EMC §30.16.020(C) ("Density Bonus Ordinance") in conformance with state density bonus law, Government Code §§ 65915 — 65918 (Density Bonus Ordinance and state law collectively, the "Density Bonus Law"). Density Bonus Law allows a density bonus, concessions, and other regulatory incentives when a developer proposes to provide affordable housing meeting the standards of Density Bonus Law; C. Whereas, the OWNER is the owner of real property (hereafter "PROPERTY") located in the City of Encinitas, County of San Diego, California, described in Exhibit A attached hereto and made a part hereof; D. Whereas, the CITY approved the development of a housing project MULTI- 002569-2018; SUB-002571-2020; DR-002572-2018; BADJ-003989-2020 & CDPNF-002573- 2018; 18-220 TMDB/DR/CDP consisting of twelve (12) units by City Council Resolution (Reso. 2020-85) on October 28, 2020 ("PROJECT"); E. Whereas, a total of one (1) unit located at the PROJECT are subject to affordable housing requirements (hereafter "AFFORDABLE UNITS" or "UNITS") under the Affordable Housing Ordinance and/or Density Bonus Law, and the OWNER has agreed to construct the AFFORDABLE UNITS on the PROPERTY; F. Whereas, one (1) AFFORDABLE UNIT is required by the Affordable Housing Ordinance to be maintained as affordable to VERY LOW-INCOME HOUSEHOLDS in perpetuity in accordance with EMC § 30.41.060(A)(1); G. Whereas, in accordance with Density Bonus Law, OWNER acknowledges and agrees that, in addition to the Density Bonus, OWNER is receiving incentives and concessions pursuant to and in accordance with the requirements of the State Density Bonus Law; H. Whereas, the OWNER has designated the descriptions and location(s) of the AFFORDABLE UNITS on Exhibit "B"; I. Whereas, in order to obtain the Density Bonus, the OWNER: (i) has agreed to restrict the use of the AFFORDABLE UNITS; (ii) agrees that the OWNER and the PROPERTY are bound by this REGULATORY AGREEMENT; (iii) agrees that this REGULATORY AGREEMENT shall run with the land and shall be binding upon the PROPERTY and upon every person having any interest therein at any time and from time to time during the term of this REGULATORY AGREEMENT; and (iv) has consented to regulation and restriction of the OWNER and the PROPERTY as provided herein; provided, however, if the PROJECT is mapped as individual condominium units, the OWNER and CITY shall amend the definition of the term "PROPERTY" and Exhibit A to this REGULATORY AGREEMENT, so that this REGULATORY AGREEMENT will encumber only the AFFORDABLE UNITS. NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration, the parties hereto agree as follows: 1. RECITALS. The foregoing recitals and City Council Resolution No. 2020-85 and that certain Covenant of Real Property which was recorded as Document No. 2023-0206616 in the Official Records of the San Diego County Recorder on August 1, 2023 are a part of this REGULATORY AGREEMENT. 2. TERM OF AGREEMENT. The term of this REGULATORY AGREEMENT shall commence on the date hereof and shall continue to govern the PROPERTY and the K AFFORDABLE UNITS thereon from issuance of Certificate of Occupancy and in perpetuity for the one (1) unit specified in Exhibit B as "Inclusionary Housing Affordable Units," in accordance with EMC §§ 30.16.020(C)(9) and 30.41.100 as applicable. 3. DEVELOPMENT OF THE AFFORDABLE UNITS A. OWNER shall construct the AFFORDABLE UNITS on the PROPERTY. The AFFORDABLE UNITS are described on Exhibit B. Issuance of building permits for construction of the one (1) AFFORDABLE UNITS shall occur on or before the earliest of (i) issuance of building permits for the construction of the 6th market rate dwelling unit; or (ii) the date which is twenty-four (24) months after the issuance of the first building permit for a market rate dwelling unit. In no event shall issuance of a building permit for the construction of the 6th market rate dwelling unit occur until building permits are issued for the construction of the one (1) AFFORDABLE UNITS. Further, if individual parcels are sold by OWNER prior to obtaining building permits for the construction of dwelling units on such parcels, every such parcel sold shall nonetheless be included in the calculation of the total number of building permits issued, regardless of whether such building permits have actually been issued. Time is of the essence in the completion and occupancy of the AFFORDABLE UNITS. No final inspection may be completed or certificate of occupancy may be issued for the 6th market rate dwelling unit, until final inspections have been completed and certificates of occupancy have been issued for all of the AFFORDABLE UNITS. B. Pursuant to EMC §§30.16.020(C)(10)(b) and 30.41.060(A), the exterior appearance and overall quality of construction of the AFFORDABLE UNITS and the appearance and landscaping and the availability of amenities for the AFFORDABLE UNITS shall be comparable to that of market -rate units within the PROPERTY. C. Pursuant to EMC §§ 30.16.020(C)(10)(b) and 30.41.060(A), prior to the commencement of construction, the quality of materials, floor coverings, cabinets, fixtures, appliances, doors, and windows shall be specified by the OWNER to the CITY in sufficient detail to ensure that the exterior appearance and overall quality of construction of the AFFORDABLE UNIT is comparable to that of market -rate units at the PROPERTY and that interior finishes and amenities are not of substandard or inferior quality, to the satisfaction of the Development Services Director (hereinafter, the "DIRECTOR"). D. The AFFORDABLE UNIT sizes and bedroom mix shall be as set forth on Exhibit "B," which the parties acknowledge is proportional to the unit mix and bedroom count of the market -rate units. AFFORDABLE UNITS shall be dispersed throughout the PROJECT, on each floor, elevation, and section of the building(s) and throughout the site pursuant to EMC §§ 30.16.020(C)(10)(c) and 30.41.060(A). 4. GENERAL CONDITIONS A. OWNER shall either: (i) rent each AFFORDABLE UNITS to QUALIFIED TENANT HOUSEHOLDS; or (ii) sell each AFFORDABLE UNIT to QUALIFIED HOMEBUYER HOUSEHOLDS. If the AFFORDABLE UNITS are initially rented, the AFFORDABLE UNITS may not subsequently be sold. It] B. OWNER shall advertise the availability of the AFFORDABLE UNITS for a minimum of two consecutive weeks. The OWNER may employ additional marketing methods that are in accordance with industry standards. The CITY may also advertise the AFFORDABLE UNITS and provide contact information to interested households. The advertisements must include the following details: that the AFFORDABLE UNITS are subject to affordability restrictions, set forth the application instructions and deadlines, contact information, and fair housing statement. OWNER shall utilize an advertisement template provided by the CITY and the advertisement period shall be for a minimum of two weeks. OWNER shall not begin the selection process until after the two -week advertisement period has ended. OWNER shall maintain a record of all interested households and applications and shall provide such documentation to the CITY upon request. C. OWNER shall comply with all applicable State, Federal and local laws, including but not limited to the Americans with Disabilities Act, Fair Housing Act and California Fair Employment and Housing Act and shall not discriminate against any prospective tenant or homebuyer on the basis of race, color, religion, sex, national origin, familial status, disability, gender, gender identity, gender expression, sexual orientation, marital status, national origin, ancestry, familial status, source of income, disability, veteran or military status, or genetic information of that person or any other status protected under State and Federal fair housing laws. D. OWNER shall not rent any AFFORDABLE UNIT to OWNER or any relative (by blood or marriage) of OWNER or any person employed by OWNER or any individuals who are members, principals, executives, directors, partners or shareholders of OWNER or in any entity having an ownership interest in OWNER or in the Property, or to any pre -determined household. A "pre -determined household" is any household with a pre-existing relationship with the OWNER, such as a friend, associate, or any other household that has an existing relationship with the OWNER, or whose occupancy of the AFFORDABLE UNIT would decrease its availability to the general public as intended by DENSITY BONUS LAW. E. Other than renting or leasing to a QUALIFIED TENANT HOUSEHOLD, as defined below, or a sale to a QUALIFIED OWNERSHIP HOUSEHOLD, as defined below, or PERMITTED TRANSFERS as defined below, OWNER shall not lease, sell, transfer, allow the possession of, and/or dispose of the AFFORDABLE UNITS to any person and/or entity, unless the proposed transferee shall have executed and delivered to the CITY an express written assumption of all of OWNER's obligations under this REGULATORY AGREEMENT, on a form reasonably acceptable to the CITY. Upon any PERMITTED TRANSFER, and upon the transferee's express written assumption, the transferor shall be released from, and the CITY shall look solely to the transferee for, the performance of any and all obligations under this REGULATORY AGREEMENT. Any purchaser of the AFFORDABLE UNITS shall be, and must agree in writing, to bound by the terms of this REGULATORY AGREEMENT. F. "Permitted Transfer" means any of the following: (i) A conveyance of a security interest in the AFFORDABLE UNITS in connection with any permitted mortgage; 4 (ii) Any transfer of title by foreclosure, deed or other conveyance in lieu of foreclosure in connection with a loan security interest; (iii) The granting of easements or permits to facilitate the development of the Property in accordance with this REGULATORY AGREEMENT; G. During the term of this REGULATORY AGREEMENT, the PROPERTY and the AFFORDABLE UNITS 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. H. Occupancy of the AFFORDABLE UNITS shall be appropriate to the number of bedrooms in each AFFORDABLE UNIT. As a general rule and policy, an appropriately sized household is no less than one person per bedroom, unless a reasonable accommodation must be made under federal or state fair housing laws in conformance with HUD guidelines set forth in FR Doc. 98-33568, published on December 18, 1998 at 63 FR 70256-70257 -- Fair Housing Enforcement— Occupancy Standards; Notice of Statement of Policy. I. The OWNER has received regulatory incentives and waivers from the CITY under the DENSITY BONUS LAW. The OWNER hereby agrees to limit rents or sales prices as provided in this REGULATORY AGREEMENT in consideration of the OWNER's receipt of the incentives and waivers and further agrees that any limitations on rents imposed on the AFFORDABLE UNITS are in conformance with the Costa -Hawkins Act. 6. QUALIFIED HOUSEHOLDS. A. QUALIFIED TENANT HOUSEHOLDS. 1. QUALIFICATION OF ELIGIBLE TENANT HOUSEHOLD. If the AFFORDABLE UNITS are rented, the AFFORDABLE UNITS shall only be rented to QUALIFIED TENANT HOUSEHOLDS as defined herein. OWNER shall provide the CITY with any proposed QUALIFIED TENANT HOUSEHOLD'S recent income qualifying source documentation, including, but not limited to, tax returns, W2's, paystubs, social security statements, bank statements, etc. The CITY may require additional documentation to verify eligibility. The. DIRECTOR shall confirm or deny eligibility based on the documentation provided. QUALIFIED TENANT HOUSEHOLD means a household meeting all of the following requirements: i. The household is a VERY LOW-INCOME HOUSEHOLD, which means a household with household income that does not exceed the very low-income limits applicable to San Diego County as published annually by the Department of Housing and Community Development under Title 25 of the California Code of Regulations, Section 6932 (or successor provision), adjusted for actual household size. ii. No persons in the household own any other real property. k, 2. CALCULATION OF AFFORDABLE RENTAL RATE. i. The maximum monthly rents for the AFFORDABLE UNITS shall be calculated in accordance with California Health and Safety Code Section 50053 and Title 25 of the California Code of Regulations, Section 6918 (or successor provision), and, in accordance with such published rents, shall result in a monthly housing cost that does not exceed 1 /12 of thirty percent (30%) of fifty percent (50%) of AREA MEDIAN INCOME, adjusted for assumed household size. "AREA MEDIAN INCOME" is the median income for to San Diego County as published annually by the Department of Housing and Community Development under Title 25 of the California Code of Regulations, Section 6932 (or successor provision), adjusted for actual household size. ii. No additional fees or charges shall be charged to the QUALIFIED TENANT HOUSEHOLD in excess of the affordable rent. iii. An allowance for tenant -paid utilities shall be deducted from the maximum affordable rent as set forth in the then -current Utility Allowance Schedule, published by the Encinitas Housing Authority. iv. The DIRECTOR shall approve the initial maximum rental rate for the AFFORDABLE UNITS. B. QUALIFIED HOMEBUYER HOUSEHOLDS. 1. QUALIFICATION OF HOMEBUYER HOUSEHOLDS. If the AFFORDABLE UNITS are sold, the AFFORDABLE UNITS shall only be sold to QUALIFIED HOMEBUYER HOUSEHOLDS as defined herein. OWNER shall provide the CITY with any proposed QUALIFIED HOMEBUYER HOUSEHOLD'S recent income qualifying source documentation, including, but not limited to, tax returns, W2's, paystubs, social security statements, bank statements, etc. The CITY may require additional documentation to verify eligibility. The DIRECTOR shall confirm or deny eligibility based on the documentation provided. QUALIFIED HOMEBUYER HOUSEHOLD means a household meeting all of the following requirements: i. The household is a VERY LOW-INCOME HOUSEHOLD, which means a household with household income that does not exceed the very low-income limits applicable to San Diego County as published annually by the Department of Housing and Community Development under Title 25 of the California Code of Regulations, Section 6932 (or successor provision), adjusted for actual household size. ii. No persons in the household own any other real property. 2. ADDITIONAL REQUIREMENTS FOR QUALIFIED HOMEBUYER HOUSEHOLDS. Each QUALIFIED HOMEBUYER HOUSEHOLD must certify that they will occupy the AFFORDABLE UNIT as owner -occupant and principal residence; and that the household does not own or have an interest in any real property. Each purchaser of an AFFORDABLE UNIT must agree in writing to bound by the restrictive covenants and shall P execute a note and deed of trust in an amount equal to the difference between fair market value of the AFFORDABLE UNIT and the affordable housing price. 3. CALCULATION OF AFFORDABLE HOUSING COST. i. Prior to. opening escrow, the sale price of each AFFORDABLE UNIT shall be approved by the DIRECTOR. The maximum affordable sales price for the AFFORDABLE UNIT shall be calculated in accordance with California Health and Safety Code Section §50052.5 and Title 25 of the California Code of Regulations, Section 6920 (or successor provision), and, in accordance with these provisions, shall result in a monthly housing cost that does not exceed 1/12 of thirty percent (30%) of fifty percent (50%) of AREA MEDIAN INCOME, adjusted for assumed household size. "AREA MEDIAN INCOME" is the median income for to San Diego County as published annually by the Department of Housing and Community Development under Title 25 of the California Code of Regulations, Section 6932 (or successor provision), adjusted for actual household size. ii. The following conditions shall also be applied when determining the maximum affordable sales price: (a) The calculation shall include a five percent down payment. (b) The calculation shall include an interest rate which is based on the current Fannie Mae Monthly Average Commitment Rate on 30-Year Fixed -Rate Mortgages. (c) The calculation shall include reasonable housing costs, which includes, but not limited to, principal and interest, property taxes and assessments, property insurance, a reasonable allowance for property maintenance and repairs, Homeowners' Association fees, additional district fees (if applicable), and an allowance for utilities based on the current Utility Allowance Schedule, published by the Encinitas Housing Authority. (d) Actual financing to be obtained by any prospective homebuyer shall be a fixed rate loan fully amortized over thirty years. 4. ADDITIONAL REQUIREMENTS. i. At the times of the initial sales, each QUALIFIED HOMEBUYER HOUSEHOLD shall execute a new Affordable Housing Agreement ("REPLACEMENT HOUSING AGREEMENT') with the CITY in accordance with Encinitas Municipal Code 30.16.020(C)(9). ii. Each QUALIFIED HOMEBUYER HOUSEHOLD shall submit a report to the DIRECTOR at initial occupancy and annually thereafter, on a form prescribed by the DIRECTOR. The report shall certify that the QUALIFIED HOMEBUYER HOUSEHOLD occupies the AFFORDABLE UNIT as their primary residence. The QUALIFIED HOMEBUYER HOUSEHOLD shall provide source documentation verifying the occupancy status of the QUALIFIED HOMEBUYER HOUSEHOLD. 7 iii. Each QUALIFIED HOMEBUYER HOUSEHOLD agrees to give the CITY notice of any prospective transfer, sale, or conveyance of the AFFORDABLE UNIT not less than forty-five (45) days before the proposed sale, transfer, or conveyance by personal delivery of a notice at the address set forth for the CITY set forth in the REPLACEMENT HOUSING AGREEMENT. Time is of the essence. iv. During the term of the REPLACEMENT HOUSING AGREEMENT, HOMEBUYER HOUSEHOLD shall not rent or sublet the AFFORDABLE UNIT, or any part thereof, to any person and/or entity. Provided however, the CITY may grant temporary waivers of this requirement in the event of hardship affecting the QUALIFIED HOMEBUYER HOUSEHOLD, such as illness in the family, military deployment or re -assignment, need to relocate to obtain employment, and the like. V. The sale, transfer and/or conveyance of each for -sale AFFORDABLE UNIT is restricted as follows: (a) except as otherwise provided herein, each AFFORDABLE UNIT shall only be sold, transferred or conveyed to a QUALIFIED HOMEBUYER HOUSEHOLD or to the CITY; (b) each AFFORDABLE UNIT must be used only as the principal residence of the subsequent purchaser during the time of ownership; (c) sale price to the subsequent purchaser must be at a price that is affordable to such subsequent purchaser(s) using the methodology set forth in this REGULATORY AGREEMENT; and (d) transfer of the AFFORDABLE UNIT in accordance with the terms hereof must be accompanied by a recordable assignment and assumption of the REPLACEMENT HOUSING AGREEMENT executed by the transferee. vi. Notwithstanding the foregoing, the following limited circumstances are acknowledged by the CITY to be permitted transfers: (a) the transfer results from the death of a spouse, and the transfer is to the surviving spouse who is also a member of the QUALIFIED HOMEBUYER HOUSEHOLD; (b) a transfer to a spouse when the spouse becomes, by such a transfer, a co-owner of the AFFORDABLE UNIT; (c) a transfer of the AFFORDABLE UNIT resulting from a decree of dissolution of the marriage or legal separation or from a property settlement agreement incidental to such a decree and by which a spouse who is already an co- owner as part of the QUALIFIED HOMEBUYER HOUSEHOLD becomes the sole owner of the AFFORDABLE UNIT; and (d) a transfer by the HOMEBUYER HOUSEHOLD to an inter vivos trust in which the QUALIFIED HOMEBUYER HOUSEHOLD is the sole current beneficiary. 6. MANAGEMENT AND MAINTENANCE A. 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. B. OWNER shall re -certify each QUALIFIED TENANT HOUSEHOLD's income eligibility every twelve months. If, upon recertification of a QUALIFIED TENANT HOUSEHOLD's income, the QUALIFIED TENANT HOUSEHOLD's income exceeds the income for a VERY LOW-INCOME HOUSEHOLD, but the QUALIFIED TENANT HOUSEHOLD's income does not exceed the AREA MEDIAN INCOME, adjusted for household size, then the VERY LOW- INCOME HOUSEHOLD shall continue to pay rent as restricted by this REGULATORY AGREEMENT. In the event that the TENANT HOUSEHOLD's income exceeds AREA MEDIAN INCOME, adjusted for household size, then the TENANT HOUSEHOLD shall be given written notice that the TENANT HOUSEHOLD must vacate the AFFORDABLE UNIT on the later of the expiration of the TENANT HOUSEHOLD's lease or upon ninety (90) days written notice to the TENANT HOUSEHOLD. C. Each QUALIFIED TENANT HOUSEHOLD shall enter into a written occupancy agreement or lease with the OWNER, which shall incorporate the provisions contained hereinabove. D. OWNER shall maintain the AFFORDABLE UNITS and the PROPERTY in a decent, safe, sanitary and habitable condition and in good repair. OWNER is responsible for maintenance costs, including all repairs, corrections, and replacements necessary to maintain and preserve the AFFORDABLE UNITS in a safe and sanitary condition in accordance with the U.S. Department of Housing and Urban Development's (HUD) Housing Quality Standards (HQS) and State Law. Upon written request by the CITY, the OWNER shall provide DIRECTOR or representative with access to inspect the AFFORDABLE UNITS and the PROPERTY for compliance with this section. Failure by the OWNER to maintain the AFFORDABLE UNITS shall constitute a default under this REGULATORY AGREEMENT. E. 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 AFFORDABLE UNITS in the event of fire or other major damage. F. OWNER may contract with a management agent for the performance of the obligations and duties required under this REGULATORY AGREEMENT. However, such an arrangement shall not relieve the OWNER of responsibility for proper performance of these duties. OWNER shall notify the CITY in writing within thirty (30) days of any change of property management of the AFFORDABLE UNIT and/or PROPERTY. G. OWNER shall cause the AFFORDABLE UNIT to be continually rented to a QUALIFIED TENANT HOUSEHOLD and shall expeditiously re -rent the AFFORDABLE UNIT whenever the AFFORDABLE UNIT becomes vacant. In the event the AFFORDABLE 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. H. OWNER shall submit a report to the DIRECTOR at initial occupancy and annually thereafter, on a form prescribed by the DIRECTOR. The report shall include information on the households occupying the AFFORDABLE UNITS, including, without limitation, the 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 households occupying the AFFORDABLE UNITS. 9 7. VIOLATION OF REGULATORY AGREEMENT BY THE OWNER. In the event of any breach, default or other violation of any of the provisions of this REGULATORY AGREEMENT by the OWNER, that remains uncured following thirty (30) days (or within such further time as the CITY, in its reasonable discretion, may permit) written notice to OWNER from the CITY, the CITY may, without further notice, declare a default under this REGULATORY AGREEMENT and the CITY shall have standing to initiate and pursue any and all actions or proceedings, at law or in equity, to enforce the provisions of this this REGULATORY AGREEMENT and/or to recover damages for any default hereunder, notwithstanding the fact that such damages or the detriment arising from such a default may have actually been suffered by some other person or by the public at large. Further, OWNER expressly agrees that injunctive relief and specific performance are proper pre-trial and/or post -trial remedies hereunder to assure compliance with this REGULATORY AGREEMENT. Nothing in this Section and no recovery by the CITY shall restrict or limit the rights or remedies of persons or entities other than the CITY, against OWNER in connection with the same or related acts by OWNER, provided that OWNER shall not be subject to duplicate awards or recoveries. The remedies set forth in this Section are cumulative and not mutually exclusive, except to the extent that their award is specifically determined to be duplicative by final order of a court of competent jurisdiction. Further, an award of damages hereunder shall not bar the exercise of police power or other governmental powers, or the pursuit of criminal, civil or administrative penalties by the CITY in connection with any default under this REGULATORY AGREEMENT. OWNER acknowledges that a default under this REGULATORY AGREEMENT that remains uncured may constitute a violation of state law. 8. ENFORCEMENT. OWNER expressly agrees and declares that the CITY or any successor public agency is a proper party and shall have standing to initiate and pursue any and all actions or proceedings, at law or in equity to enforce the provisions hereof and/or to recover damages for any default hereunder and/or to enforce the terms of this REGULATORY AGREEMENT. Further, the CITY or any successor public agency shall be the proper party to waive, relinquish, release or modify the rights, covenants, obligations, or restrictions contained in or arising under this REGULATORY AGREEMENT. 9. ATTORNEYS' FEES. In the event of any litigation for the enforcement or interpretation of this REGULATORY AGREEMENT, whether an action -at -law, arbitration or any manner of non -judicial dispute resolution agreed to by both parties by reason of the breach of any condition or covenant, representation or warranty in this REGULATORY AGREEMENT or otherwise arising out of this REGULATORY AGREEMENT, the prevailing party in such action, arbitration or proceeding shall be entitled to recover from the other reasonable attorneys' fees to be fixed by the court which shall render a judgment, as well as the costs of suit. 10. AMENDMENT. This REGULATORY AGREEMENT shall not be altered or amended except by writing executed by the CITY and the owner of the PROPERTY at the time of such amendment. Any such amendment shall be recorded against the PROPERTY. 11. 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. 10 12. BINDING ON SUCCESSORS. This REGULATORY AGREEMENT shall inure to the benefit of and be binding upon the parties and their respective successors and assigns, heirs, personal representatives, grantees, and successors -in -interest. 13. COVENANTS TO RUN WITH THE LAND. The covenants contained herein shall constitute "covenants running with the land" pursuant to Civil Code Sections 1460, 1462, 1463, 1464, 1465, 1467 and 1468, to the extent applicable, and shall bind the PROPERTY and every person having an interest therein during the term of this REGULATORY AGREEMENT, including OWNER and its successors, heirs, and assigns. OWNER agrees for itself and its successors that, in the event that, for any reason whatsoever, a court of competent jurisdiction determines that the foregoing covenants do not run with the land, such covenants shall be enforced as an equitable servitude against the PROPERTY. 14. RECORDATION. This REGULATORY AGREEMENT shall be recorded in the Office of County Recorder of San Diego, California, senior to all monetary liens. Any amendments to this REGULATORY AGREEMENT, shall at the expense of the OWNER, be acknowledged by each of the parties and recoded in the official records of the County of San Diego. 15. MORTGAGEE PROTECTION. No violation or breach of the covenants, conditions, restrictions, provisions or limitations contained in this REGULATORY AGREEMENT shall defeat, render invalid or, in any way, impair the lien or charge of any permitted deed of trust recorded on the Property provided, however, that any subsequent owner of the PROPERTY shall be bound by the covenants, conditions, restrictions, limitations and provisions of this REGULATORY AGREEMENT, whether such owner's title was acquired by foreclosure, deed in lieu of foreclosure, trustee's sale or otherwise. 16. HEADINGS. The headings used in this REGULATORY AGREEMENT are for convenience only and are not to be used to interpret the meaning of any of the provisions of this REGULATORY AGREEMENT. 17. LIBERAL CONSTRUCTION. The provisions of this REGULATORY AGREEMENT shall be liberally construed to effectuate its purpose. Failure to enforce any provision of this REGULATORY AGREEMENT by the CITY shall not constitute a waiver of the right to enforce the provision later. 18. NUMBER, GENDER. The singular shall include the plural and the plural the singular, unless the context requires the contrary; and the masculine, feminine and neuter shall include the masculine, feminine or neuter, as the context requires. 19. EXHIBITS. Any exhibits referenced herein and attached to this REGULATORY AGREEMENT are hereby incorporated by reference. 20. 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. 11 21. GOVERNING LAW. This REGULATORY AGREEMENT shall be construed in accordance with and governed by the laws of the State of California. Venue shall be San Diego County. 22. 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 OWNER City of Encinitas DLS Holdings LP 505 S. Vulcan Ave. P.O. Box 743. Encinitas, CA 92024 Rancho Santa Fe, CA 92067 Attn: Housing Attn: Daniel Frye 23. INDEMNIFICATION AND WAIVER. OWNER agrees to defend with attorneys of CITY's choosing and indemnify the CITY and its agents, elected officials, employees, and officers (collectively, the "Indemnitees"), and hold the Indemnitees harmless from, any losses, damages, liabilities, claims, actions, judgments, costs, and legal or other expenses (including attorneys' fees) of every name, kind and description, which any of the Indemnitees may incur as a direct or indirect consequence of (i) OWNER's failure to perform any obligations as and when required by this REGULATORY AGREEMENT; (ii) any failure at any time of any of the OWNER's representations or warranties to be true and correct; (iii) any act or omission by the OWNER, any contractor, subcontractor, material supplier, engineer, architect, or other person or entity with respect to the PROPERTY or the construction, management, maintenance or operation of the PROJECT; (iv) the presence of hazardous substances at the PROJECT or on the PROPERTY; (v) otherwise arising in any way from the construction, sale, rental or operation of the PROPERTY and/or any of the PROJECT; or (vi) third party claims related to the PROPERTY; provided, however, that OWNER shall not be required to indemnify, defend or hold harmless any of the Indemnitees from claims, losses, damages, costs and expenses related to the sole negligence or willful misconduct of the Indemnitees. The duty of the OWNER to indemnify and hold harmless includes the duties to defend as set forth in Section 2778 of the Civil Code. OWNER shall indemnify and hold harmless the Indemnitees as set forth herein regardless of the existence or degree of fault or negligence of the OWNER, whether active or passive, primary or secondary. OWNER's duty to indemnify the Indemnitees shall survive the termination of this REGULATORY AGREEMENT. 24. ACCEPTED AND AGREED. OWNER: DLS Holdings LP, a California limited partnership By: DLS North Vulcan LLC, a California limited liability company Its: General Partner By: /�j Dated Daniel Frye, an er 12 (Notarization of OWNER signature is attached.) [SIGNATURES CONTINUED ON FOLLOWING PAGE] 13 CITY OF ENCINITAS: Dated / o , 2 5-1 2 b`2-,R by Pamela Antil, City Manager (Notarization of CITY signature is attached.) Approved as to Form for City: Dated ( by (Notarization not required) ar,gUin Preziosi, City Attorney 14 CALIFORNIA ACKNOWLEDGMENT CIVIL CODE § 1189 A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. State of California j County of SOt EN i ® J} On &kvibeV 95,e 2'3 before me, i kJ® ^W is Date Here Insert Name and Title of the Officer personally appeared vamxa,I, Name(s) of Signer(s) who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. - *my BRAM L. LEWIS Notary Rubik - California San Diego County Commission M 2402633 Comm. Expires May 14, 2026 Place Notary Seal and/or Stamp Above I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature "�---"� L•' Signature of Nota ublic Completing this information can deter alteration of the document or fraudulent reattachment of this form to an unintended document. Description of Attached Document A Mret&4k 440 1 - VtQtj w%iit -- Title or Type of Document: &Rml r .Pe f" t heaar&Hev, Document Date: Signer(s) Other Than Named Above: Capacity(ies) Claimed by Signer(s) Signer's Name: ❑ Corporate Officer - Title(s): ❑ Partner - ❑ Limited ❑ General ❑ Individual ❑ Attorney in Fact ❑ Trustee ❑ Guardian or Conservator ❑ Other: Signer is Representing: ^► i 02019 National Notary Association Number of Pages: Signer's Name: ❑ Corporate Officer - Title(s): ❑ Partner - ❑ Limited ❑ General ❑ Individual ❑ Attorney in Fact ❑ Trustee ❑ Guardian or Conservator ❑ Other: Signer is Representing: A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. State of California County of San Diego On 1KGi4"/Cr -12 2'� 2023Aefore Me, notary public, personally appeared who proved to me on the basis of satisfactory evidehe to be the pe/rsop(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in "/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the perso '0(s), or the entity upon behalf of which tlie—person(s) acted, 6xecuted the instrument. I' -- I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. MARIA DEWITT WITNESS my hand and official sea[. 6 COMM. -42331655 Notary Public - California Z San Diego County 0 Signature/ � M Comm. Expires Aug. 15, 2024 — (Seal) 15 ACKNOWLEDGMENT A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. State of California County of San Diego On , 2023, before me, , notary public, personally appeared who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), 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. WITNESS my hand and official seal. Signature (Seal) 16 EXHIBIT A LEGAL DESCRIPTION OF THE PROPERTY Lot 1 of City of Encinitas TM 18-220, in the City of Encinitas, County of San Diego, State of California, according to Map thereof No. 16574 filed in the office of the San Diego County Recorder on July 23, 2023. 17 EXHIBIT B AFFORDABLE UNITS Location and Unit Mix Breakdown Tables Inclusionary and Density Bonus Housing Affordable Unit Unit Type Sq. Ft. Bedroom(s) Quantity # of Affordable Units /o of Total Affordable ffordability Rate Deed Restriction SFD — Unit 6 1531 3 1 1 8% 50% AMI perpetuity EXHIBIT C AFFORDABLE HOUSING UNIT APN: 256-090-06 & 256-090-07 Affordable Housing Unit #6 Vulcan 12 P S N F GRAPHIC SCALE: 1" = 40' 40 20 0 40 80 120 19