HomeMy WebLinkAboutCT 2022-0001; Hope Apartments Owner, LLC; 2025-0182638; Affordable Housing-Regulatory Agreement & Dec. of Restrictive CovenantsRECORDING REQUESTED BY AND
WHEN RECORDED MAIL TO:
City of Carlsbad
City Clerk's Office
Attn. City Clerk
1200 Carlsbad Village Drive
Carlsbad, CA 92008
No fee for recording pursuant to
Government Code Section 27383
DOC# 2025-0182638
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Jul 10, 2025 08:45 AM
OFFICIAL RECORDS
JORDAN Z. MARKS,
SAN DIEGO COUNTY RECORDER
FEES: $0.00 (SB2 Atkins: $0.00)
PCOR: N/A PAGES: 20
(Space above for Recorder's Use)
REGULATORY AGREEMENT AND
DECLARATION OF RESTRICTIVE COVENANTS
(lnclusionary & Density Bonus)
This Regulatory Agreement and Declaration of Restrictive Covenants ("Agreement") is made
and entered into as of this 2..c;-H'\ day of ,J\A Vl{'. , 20 L') , by and between the City
of Carlsbad, a California municipal corporation and charter city ("City"), and Hope Apartments
Owner, LLC, a Delaware limited liability company ("Developer").
RECITALS
1. The Developer is the owner of and intends to develop one hundred and fifty-six (156)
units on the real property as more particularly set forth on Exhibit A, attached hereto and incorporated
herein.
2. The City has adopted an Inclusionary Housing Ordinance as Carlsbad Municipal Code
(CMC) Chapter 21.85 requiring a percentage of new housing development to be developed as
affordable housing for vety low and low-income households.
3. The City has adopted a Density Bonus Ordinance as CMC Chapter 21.86 to confonn
with state density bonus law (Government Code Sections 65915 -65918), together referred to herein
as the "Density Bonus Law" which allows increases to density and concessions and waivers in the
development of new residential housing in exchange for provision of affordable units.
4. The City approved the Project by Planning Commission Resolution No. 7486 on June
21 , 2023. As part of the Project, the Developer agreed to restrict 20 units (12.8% of the total units) of
the Project to be affordable to Very Low-Income Households (defined below).
5. The number of restricted units was based on provisions in CMC Chapter 21 . 85
requiring the number of units to be a percentage of the total approved residential units, including
density bonus units.
6. After the Project's approval, on April 2, 2025, the California Attorney General issued
Opinion No. 24-501 stating, "A city ... may not impose affordable housing requirements on density-
bonus units that are awarded under the Density Bonus Law because it would impermissibly conflict
with the state law formula for calculating how many density-bonus units are awarded per affordable
unit under state law. Because of this conflict, the state Density Bonus Law would preempt the
contemplated local legislation."
7. CMC Chapter 21.85 includes a severability provision stating, "If any provision of this
chapter ... is held invalid, the remainder of the chapter ... shall not be affected thereby." Based on
this severability provision, the City has adjusted the number ofrestricted units to conforn1 to California
Attorney General Opinion No. 24-501 .
8. In accordance with Density Bonus Law, the Developer has applied for, and the City
has granted the following regulatory incentives with respect to the Project, in exchange for the
Developer's provision of affordable units: (i) a density bonus of fifty-two (52) additional market-rate
units for a total maximum Project size of one hundred fifty-six (156) units; (ii) one (1)
incentive/concession, described as follows: Carlsbad Municipal Code Section 21.85.070 provides
alternatives to construction of inclusionary units, including reducing the required number of
inclusionary units to twelve and a half percent for projects that restrict all affordable units to extremely
low or very-low-income households therefore, the very low income inclusionary units shall be twelve
and a half (12.5) percent of the total residential units; (iii) three (3) waivers or modifications to
development standards, as follows: reduction of private open space requirement for each unit, waiver
of requirement limiting the enclosed fourth floor space to eighty percent (80%) of the largest enclosed
fourth ( 4th) floor space below, and waiver of requirement for facades visible from any public street or
the I-5 freeway to provide a five-foot minimum variation in the wall plane every fifty (50) feet of
length of the fac;ade; and (iv) parking ratios and standards consistent with Density Bonus Law.
9. Sixteen (16) of the Project's units, i.e. the Very Low-Income Units (defined below),
will be restricted to occupancy by, and affordable to, Very Low-Income Households as required by
the Density Bonus Law and/or Carlsbad Municipal Code 21.86.
10. All sixteen (16) Very Low-Income Units will be identified as "Density Bonus
Affordable Units" (which are described and defined as the "Density Bonus Very Low-Income
Units" below). The Density Bonus Affordable Units will be developed to meet the affordable housing
obligations for the Development as required by the Density Bonus Law.
11. Thirteen (13) of the Very Low-Income Units will be identified as "lnclusionary
Affordable Units" (which are described and defined as the "lnclusionary Very-Low Income Units"
below) and therefore restricted as required by the Inclusionary Housing Ordinance and/or Carlsbad
Municipal Code 21.85 .
12. In accordance with the requirements of Government Code Section 65915 and Carlsbad
Municipal Code Chapters 21.85 and 21.86, Developer is obligated to enter into this Agreement, for
the benefit of the City, and to observe all the terms and conditions set forth below.
13. In order to ensure that the entire Project will be used and operated in accordance with
these conditions and restrictions, City and Developer wish to enter into this Agreement.
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THEREFORE, City and Developer hereby agree as follows:
ARTICLE 1. DEFINITIONS
1.1 Definitions. When used in the Agreement, the following terms shall have the respective
meanings assigned to them in this Article 1.
(a) "Agreement" shall mean this Regulatory Agreement and Declaration of
Restrictive Covenants.
(b) "City" shall mean the City of Carlsbad, a chartered municipal corporation.
(c) "Density Bonus Law" shall mean the City's density bonus ordinance, set forth
in Chapter 21.86 of the City's municipal code and California Government Code
Section 65915.
(d) "Density Bonus Very Low-Income Units" shall mean the units limited to
occupancy by Very Low-Income Households and restricted in rental cost
pursuant to Section 2.2 (a) below.
(e) "Developer" shall mean Hope Apartments Owner, a Delaware limited liability
company, and its successors in interest to the Property.
(f) "Development" shall mean the real property identified in Exhibit A and all
residential units developed pursuant to the Conditions identified in Planning
Commission Resolution 7486.
(g) "Gross Income" shall mean the total anticipated annual income of all persons
in a household, as calculated in accordance with Title 25 of the California Code
of Regulations, Section 6914, or pursuant to a successor State housing program
that utilizes a reasonably similar method of calculation of gross income. In the
event that no such successor program exists, City shall provide Developer with
a reasonably similar method of calculation of gross income as provided in said
Section 6914.
(h) "HCD" shall mean the California Department of Housing and Community
Development.
(i) "Inclusionary Very Low-Income Units" shall mean the units limited to
occupancy by Very Low-Income Households and restricted in rental cost
pursuant to Section 2.2(b) below.
(j) "Inclusionary Housing Ordinance" shall mean the City's inclusionary •
housing ordinance, set forth in Chapter 21.85 of the City's municipal code, as
it may be amended from time to time.
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(k) "Median Income" or "Area Median Income" shall mean the area median
income adjusted for actual household size, in the County of San Diego,
California, as determined from time to time by the U.S. Department of Housing
and Urban Development and published by HCD. In the event that such income
determinations are no longer published or are not updated for a period of at least
eighteen (18) months, City shall provide Developer with other income
determinations which are reasonably similar with respect to methods of
calculation to those previously published by HCD.
(I) "Project" shall mean the one-hundred fifty-six ( 156) units to be constructed on
the Property, as well as all other improvements, landscaping, roads and parking
spaces associated with the one-hundred fifty-six (156) units, as the same may
from time to time exist.
(m) "Property" shall mean the real property described in Exhibit A attached hereto
and incorporated herein.
(n) "Rent" means the total monthly expenses required to obtain a unit and shall
include the following: use and occupancy of the unit and land and associated
facilities, including parking; any separately charged fees or service charges
assessed by Developer which are required of all tenants, other than security
deposits or other refundable amounts deposited or paid by tenants; an allowance
for the cost of an adequate level of service for utilities paid by the tenant,
including garbage collection, sewer, water, electricity, gas and other heating,
cooking and refrigeration fuel, but not telephone service; any other interest,
taxes, fees or charges for use of the land or associated facilities and assessed by
a public or private entity other than Developer and paid by tenants. Rent shall
not include: fees or charges resulting from any default by a tenant of a unit or
damage caused by a tenant.
( o) "Term" shall mean the period of time beginning on the date of recordation of
this Agreement in the Official Records, and ending on the earlier of: (i) fifty-
five (55) years after the final inspection approval by the City for the Project, or
the issuance of the certificate of occupancy for the Project ( or equivalent
documentation from the City evidencing that the Project may be utilized for
multifamily housing); or (ii) fifty-seven (57) years after the date ofrecordation
of this Agreement in the Official Records.
(p) "Very Low-Income Household" shall mean a household whose annual Gross
Income does not exceed fifty percent ( 50%) of the Area Median Income,
adjusted for household size.
(q) "Very Low-Income Units" shall mean the sixteen (16) units, as identified in
Exhibit B, limited to occupancy by Very Low-Income Households and
restricted in rental cost as set forth in this Agreement.
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ARTICLE 2. AFFORDABILITY COVENANTS
2.1 Occupancy Requirements.
Each of the Very Low-Income Units shall only be rented to, and occupied by, or, if vacant,
shall only be available for rental and occupancy by Very Low-Income Households.
2.2 Allowable Rent.
(a) The maximum monthly Rent for each of the sixteen (16) Density Bonus Very Low-
Income 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 these provisions, shall result in a maximum monthly Rent charged the occupants of
the Density Bonus Very Low-Income Units which does not exceed one-twelfth (1/12) of thirty-percent
(30%) of fifty percent (50%) of Area Median Income, adjusted for household size as defined below in
Section 2.2(c). The maximum Rent includes a utility allowance based on the City's published and
standard utility allowance schedule.
(b) The maximum monthly Rent for each of the thirteen (13) Inclusionary Very Low-
Income Units shall be calculated in accordance with Carlsbad Municipal Code Section 21.85.020(A),
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 these provisions, shall result in a
maximum monthly Rent charged the occupants of the Inclusionary Very Low-Income Units which
does not exceed one-twelfth (1/12) of thirty-percent (30%) of fifty percent (50%) of Area Median
Income, adjusted for household size as defined below in Section 2.2( c ). The maximum Rent includes
a utility allowance based on the City's published and standard utility allowance schedule.
(c) Subject to Section 2.3 below, in calculating the allowable Rent for all Very Low-
Income Units, the following assumed household sizes shall be utilized:
Number of Bedrooms Assumed Household Size
Studio
One
Two
Three
1
2
3
4
2.3 Increased Income of Occupying Households. Developer shall re-certify that the Very
Low-Income Units are occupied only by eligible tenants in compliance with this Agreement every
twelve (12) months. If, upon recertification or otherwise, the Developer determines that that the Gross
Income of the tenant(s) occupying a Very Low-Income Unit has subsequently increased so as to
exceed the income to qualify as an eligible tenant (an "Increased Income Occupant"), but the
Increased Income Occupant's Gross Income does not exceed one hundred twenty percent (120%) of
Area Median Income, adjusted for household size, then, to the extent permitted by applicable law and
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notwithstanding Sections 2.1 and 2.2, the Rent may be increased to thirty percent (30%) of the
Increased Income Occupant's actual Gross Income, minus the applicable utility allowance, on the later
of the expiration of the Increased Income Occupant's lease or upon ninety (90) days written notice
from Developer to the Increased Income Occupant. In the event that the Increased Income Occupant's
income exceeds Area Median Income, adjusted for household size, then, subject to and to the extent
permitted under applicable law, the Increased Income Occupant shall be given written notice that the
Increased Income Occupant must vacate the Very-Low Income Unit on the later of the expiration of
the Increased Income Occupant's lease or upon ninety (90) days written notice to the Increased Income
Occupant.
2.4 Lease Provisions. To the extent permitted under applicable law, Developer shall
include in leases for all Very Low-Income Units provisions which authorize Developer to immediately
terminate the tenancy of any household where one (1) or more household members misrepresented
any fact material to the household's qualification as a Very Low-Income Household. To the extent
permitted under applicable law, each lease or rental agreement shall also provide that the household is
subject to annual certification in accordance with Section 3.1 below, and that, if the household's Gross
Income increases above the applicable limits for a Very Low-Income Household, such household's
Rent may be subject to increase.
2.5 Section 8 Voucher Holders. Developer will accept as tenants of the Very Low-Income
Units, on the same basis as all other prospective tenants, persons who are recipients of federal vouchers
for rent subsidies pursuant to the existing housing subsidy program under Section 8 of the United
States Housing Act, or its successor. Developer shall not apply selection criteria for available Very
Low-Income Units to Section 8 voucher holders that is more burdensome than criteria applied to all
other prospective tenants, nor shall Developer apply or permit the application of management policies
or lease provisions with respect to the Project which have the intended effect of precluding occupancy
of Very Low-Income Units by such prospective tenants.
2.6 Condominium Conversion. Developer shall not convert the Project or the Very Low-
Income Units to condominium or cooperative ownership, or sell condominium or cooperative
conversion rights to the Project, during the Term, without first having obtained all necessary
entitlements and approvals from the City and any other applicable government authority and
complying with all then-applicable laws (for example, any Subdivision Map Act requirements, notices,
and any other condo conversion laws and requirements) and entering into a replacement agreement
with the City to ensure the continued affordability of the Very Low-Income Units.
ARTICLE 3. INCOME CERTIFICATION AND REPORTING
3 .1 Income Certification. Developer will obtain, complete, and maintain on file,
immediately prior to initial occupancy of a Very Low-Income Unit and annually thereafter, copies of
income certifications from each Very Low-Income Household. Developer shall make a good faith
effort to verify that the stated income, in a certification provided by an applicant or a household
residing in a Very Low-Income Unit, is accurate by one or more of the following steps as a part of the
verification process: (1) obtain pay stubs for the four (4) most recent pay periods; (2) obtain income
tax returns for the two (2) most recent tax years; (3) conduct a credit agency or similar search; (4)
obtain an income verification fotm from the applicant's current employer; (5) obtain an income
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verification form from the Social Security Administration and/or the California Department of Social
Services if the applicant receives assistance from either of such agencies; or ( 6) if the applicant is
unemployed/or and has no such tax return, obtain another form of independent verification. Copies of
tenant income certifications shall be available to City upon written request.
3.2 Annual Report to City. Developer shall submit, no later than February 1 of each year,
an annual report to City for the immediately preceding year, in a form approved by City. The annual
report shall include for each Very Low-Income Unit covered by this Agreement, the Rent and the
reported income and household size of the household occupying the Very Low-Income Unit. The
report shall also state the date the tenancy commenced for each Very Low-Income Unit and such other
information as City may reasonably require but solely for the purpose of verifying Developer's
compliance with this Agreement.
3.3 Records. Developer shall maintain complete, accurate and current records pertaining
to the Very Low-Income Units, pursuant to this Agreement, and, upon five (5) business days prior
written request by City, shall pern1it any duly authorized representative of City to inspect records,
including records pertaining to income and household size of tenant households occupying such Very
Low-Income Units (but specifically excluding any attorney-client privileged information of
Developer).
ARTICLE 4. OPERATION OF THE PROJECT
4.1 Residential Use. The Project shall be operated only for residential use. No part of the
Project shall be operated as transient housing, such as short-term vacation rental, with a tenancy less
than thirty (30) days.
4.2 Compliance with Regulatory Agreement and Applicable Laws. Developer shall comply
with all the tern1s and provisions of this Agreement to the extent applicable to the Property, the City's
Inclusionary Housing Ordinance and Density Bonus Ordinance, and all applicable local, state, and
federal laws and regulations governing the ownership, use, and occupancy of the Project (whether
existing as of the date of this Agreement or later enacted). In the case of an inconsistency or conflict
between this Agreement and the City's Inclusionary Housing Ordinance, Density Bonus Ordinance,
or applicable laws or regulations, the City's Inclusionary Housing Ordinance, Density Bonus
Ordinance and applicable local, state and federal laws and regulations take precedence. In such an
instance, violation of any term or provision of this Agreement shall not constitute a breach of this
Agreement.
4.3 Taxes and Assessments. Developer shall pay, or cause to be paid, all real and personal
property taxes, assessments and charges and all franchise, income, employment, old age benefit,
withholding, sales, and other taxes assessed against it, or payable by it, or shall acquire such tax credits
or other methods of satisfaction of any such tax liabilities, at such times and in such manner as to
prevent any penalty from accruing, or any lien or charge from attaching to the Property; provided,
however, that Developer shall have the right 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. Nothing
herein shall be interpreted as prohibiting Developer from appealing its valuation for the determination
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of property taxes or applying for the Welfare Tax Exemption or other property tax relief resulting from
the reduced value of the Very Low-Income Units.
4.4 Nondiscrimination. All of the Very Low-Income Units shall be available for occupancy
on a continuous basis to members of the general public who qualify as a Very Low-Income Household.
Developer shall not give preference to any particular class or group of persons in renting the Very
Low-Income Units, except to the extent that the Very Low-Income Units are required to be leased to
Very Low-Income Households. There shall be no unlawful discrimination against or segregation of
any person or group of persons, on account of race, color, creed, religion, sex, sexual orientation,
marital status, national origin, ancestry, or any other classification protected by law, in the leasing,
use, occupancy, tenure, or enjoyment of any Very Low-Income Unit nor shall Developer or
Developer's agents, establish or permit any such practice or practices of discrimination or segregation
with reference to the selection, location, number, use, or occupancy of tenants or lessees of any Very
Low-Income Unit or in connection with the employment of persons for the operation and management
of the Project. All deeds, leases or contracts made or entered into by Developer as to the leasing,
occupancy, or tenancy of the Very Low-Income Units or portion thereof, shall contain covenants
concerning discrimination as prescribed by this Agreement.
ARTICLE 5. PROPERTY MANAGEMENT AND MAINTENANCE
5.1 Management Responsibilities. Developer acknowledges and agrees Developer, and not
City, is responsible for all management functions with respect to the Project, including without
limitation, the selection of tenants, certification and recertification of household size and income,
evictions, collection of rents and deposits, maintenance, landscaping, routine and extraordinary
repairs, replacement of capital items, and security. City shall have no responsibility over the
management or operation of the Project. Developer shall retain a third-party property management
company approved by City in the City's reasonable discretion to perform Developer's management
duties hereunder, unless Developer demonstrates to City that Developer has the capacity to self-
manage the Project and receives written approval from the City for self-management. A resident
manager shall also be required, the selection of whom shall be at the discretion of Developer.
5.2 Management Agent. The Project shall at all times either be: (i) managed by an
experienced management agent ("Management Agent") acceptable to and approved in writing by
City or (ii) self-managed by Developer or by an affiliate of Developer (in, each case, "Self-
Management"), provided that the City approves of such Self-Management. Management Agent or
Self-Management shall have a demonstrated ability to operate residential facilities like the Project in
a manner that will provide decent, safe, and sanitary housing. City's approval of a Managing Agent
or Self-Management will not be unreasonably withheld, conditioned or delayed. Prior to the issuance
of a Certificate of Occupancy for any building within the Project, Developer shall submit for City's
approval the identity of any proposed Management Agent or Self-Management. Developer shall also
submit such additional information about the background, experience and financial condition of the
proposed Management Agent or Self-Management as is reasonably necessary for City to determine
whether the proposed Management Agent or Self-Management meets the standard for a qualified
Management Agent or Self-Management as set forth above. If the proposed Management Agent or
Self-Management meets the standard set forth above, the City shall approve the proposed Management
Agent or Self-Management by notifying Developer in writing within thirty (30) days of Developer's
submission of a proposed Management Agent or Self-Management.
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If City determines that the proposed Management Agent or Self-Management does not meet
the standard set forth above, the City shall notify Developer in writing within thirty (30) days of
Developer's submission of a proposed Management Agent or Self-Management. The City's
notification shall state with reasonable specificity the reasons for the disapproval. Developer shall
have fifteen (15) days to respond in writing to the City's notification of disapproval by providing
documentation to address in good faith the concerns raised by the City, and thereafter, City shall have
fifteen ( 15) days to respond in writing to the Developer and either approve or provide final disapproval
of the proposed Management Agent or Self-Management.
If the City fails to approve or disapprove the proposed Management Agent or Self-
Management within the time limits provided in this Section 5.2, the proposed Management Agent or
Self-Management shall be deemed approved. If City disapproves a proposed Management Agent or
Self-Management, Developer shall not be in default under this Section 5.2, so long as Developer
actively seeks and submits a new Management Agent or Self-Management for City's consideration
within thirty (30) days of the City's final disapproval. For the purposes of this Section 5.2, R&V
Management Investment Corporation is approved by City as the initial Management Agent for the
Project.
5.3 Performance Review. City reserves the right to conduct an annual, or more frequent
review of the management practices of the Very Low-Income Units if deemed necessary by City. The
purpose of each periodic review will be to enable City to determine if the Very Low-Income Units are
being operated and managed in accordance with the requirements and standards of this Agreement.
Developer shall cooperate with City in such reviews.
5 .4 Replacement of Management Agent. If, as a result of a periodic review, City determines
in its reasonable judgment that the Very Low-Income Units are not being operated and managed in
accordance with any of the material requirements and standards of this Agreement, City shall deliver
written notice to Developer of any such failure to comply with this Agreement and provide Developer
an opportunity to cure such failure within thirty (30) days of the notice, provided, however, that if the
nature of such failure is such that more than thirty (30) days are reasonably required for its cure, then
Developer shall be provided an additional ninety (90) days thereafter to diligently pursue such cure to
completion. If Developer is unable to timely cure any such failure identified by the City in writing,
then the City shall deliver a second written notice to Developer. No later than thirty (30) days after
receipt by Developer of such written notice, City staff and Developer shall meet in good faith to
consider methods for improving the operating status of the Very Low-Income Units, including,
without limitation, the possible replacement of the Management Agent in the event such Management
Agent is unable to comply with the requirements of this Agreement.
If, after such meeting, City staff reasonably determines that the Management Agent is not
adequately performing and City requires, in writing, the replacement of the Management Agent,
Developer shall dismiss the Management Agent within thirty-five (35) days of City's written demand
to replace the Management Agent, and shall appoint a replacement Management Agent, or seek Self-
Management, in accordance with the terms set forth in Section 5.2 above.
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Any contract with a Management Agent for the operation or management of the Very Low-
Income Units entered into by Developer shall provide that the contract can be tem1inated as set forth
above. Failure to remove the Management Agent in accordance with the provisions of this Section
shall constitute a default under this Agreement, and City may enforce this provision through legal
proceedings as specified in Section 6.3.
5.5 City Approval of Management Policies. Upon written request by City (but in any event
no more than two (2) times per calendar year), Developer shall submit its written management policies
in connection with the rental of Very Low-Income Units to City for its review and shall amend such
policies in any way necessary to ensure that such policies comply with the provisions of this
Agreement. This includes a marketing plan establishing the process for seeking, selecting and
determining the eligibility of tenants of the Very Low-Income Units.
5.6 Property Maintenance. Developer agrees, for the entire Term, to maintain all interior
and exterior improvements, including common area 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, ordinances, order and regulations of all federal, state, county, municipal, and other governmental
agencies and bodies having or claiming jurisdiction and all their respective departments, bureaus, and
officials.
City places prime importance on quality maintenance to ensure that all affordable housing
projects within the City are not allowed to deteriorate due to below-average maintenance. Normal
wear and tear of the Project will be acceptable to City assuming Developer agrees to provide all
necessary improvements to assure the Project is maintained in good condition. Developer shall make
all repairs and replacements necessary to keep the improvements in good condition and repair.
In the event that Developer breaches any of the covenants contained in this section and such
default continues for a period of five (5) business days after written notice from City with respect to
graffiti, debris, waste material, and any other matter posing a threat to the health and safety of the
tenants, or thi1iy (30) days after written notice from City with respect to general maintenance,
landscaping and building improvements (and subject to any stricter requirements included in any
applicable City ordinance), then City, in addition to whatever other remedy it may have at law or in
equity, shall have the right to enter upon the Property ( or any portion thereof), following at least
seventy-two (72) hours' prior written notice to Developer, and perform or cause to be performed all
such acts and work necessary to cure the default. Provided however, that if Developer demonstrates
the nature of such failure is such that more than thirty (30) days are reasonably required to cure the
breach and City determines Developer is diligently pursuing such cure, then City shall provide
Developer an additional ninety (90) days thereafter as to diligently pursue such cure to completion.
By execution of this Agreement, Developer hereby irrevocably grants the City, and the City's
employees and agents, a right of entry for such purpose. Pursuant to such right of entry, City shall be
permitted (but is not required) to enter upon the Property and perform all acts and work necessary to
protect, maintain, and preserve the improvements and landscaped areas on the Property, and to demand
reimbursement from Developer, in the amount of the actual expenditures arising from such acts and
work of protection, maintenance, and preservation by City and/or costs of such cure, including an
administrative charge equal to ten percent ( 10%) of such expenditures, which amount shall be
promptly paid by Developer to City upon written demand.
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ARTICLE 6. MISCELLANEOUS
6.1 Term. The provisions of this Agreement shall apply to the Property for the entire Term
as defined in Section 1 above. This Agreement shall bind any successor, heir or assign of Developer,
whether a change in interest occurs voluntarily or involuntarily, by operation of law or otherwise,
except as expressly released by City in writing and recorded in the Official Records.
6.2 Covenants to Run With the Land. City and Developer hereby declare their express
intent that the covenants and restrictions set forth in this Agreement shall run with the land and shall
bind all successors in title to the Property, provided, however, that on the expiration of the Term of
this Agreement, this Agreement and said covenants and restrictions shall expire. On the expiration of
the Term of this Agreement, Developer may deliver a written notice to City requesting a tennination
agreement or such other commercially reasonable instrument requested by Developer or a title
insurance company to tem1inate and remove this Agreement from the real property records. Each and
every contract, deed or other instrument hereafter executed covering or conveying the Property or any
portion thereof shall be held conclusively to have been executed, delivered and accepted subject to
such covenants and restrictions, regardless of whether such covenants or restrictions are set forth in
such contract, deed or other instrument, unless City expressly releases such conveyed portion of the
Property from the requirements of this Agreement.
6.3 Enforcement by City. If Developer fails to perform any obligation under this
Agreement, and fails to cure the default within thirty (30) days after City has notified Developer in
writing of the default or, if the default cannot be cured within thirty (30) days, fails to commence to
cure within thirty (30) days and thereafter diligently pursue such cure to completion within ninety (90)
days, or such mutually agreeable period as is necessary so long as Developer continuous and diligently
pursues such cure, City shall have the right to enforce this Agreement by any or all of the following
actions, or any other remedy provided by law.
(a) Action to Compel Performance or for Damages. City may bring an action at law or in
equity to compel Developer's performance of its obligations under this Agreement, and/or for
damages. Developer acknowledges that any breach in Developer's performance of Developer's
obligations under this Agreement shall cause in-eparable harm to the City and materially impair the
public policy objectives set fotih in the Carlsbad Municipal Code. Therefore, Developer agrees that
the City is entitled to equitable relief in the form of specific performance, and that an award of damages
may not be adequate to compensate the City for Developer's failure to perform according to the terms
of this Agreement. Notwithstanding the foregoing, the City, in its sole and absolute discretion, may
elect the appropriate remedy for Developer's default under this Agreement.
(b) Remedies Provided Under Ordinance. City may exercise any other remedy available
under the Inclusionary Housing Ordinance or the Density Bonus Law in effect as of the date of this
Agreement.
6.4 Attorneys' Fees and Costs. In the event any action or proceeding in court or other
dispute resolution mechanism permitted under this Agreement is commenced by either party to
interpret or enforce the terms of this Agreement, the prevailing party therein shall be entitled to recover
11
from the non-prevailing party all of the prevailing party's reasonable costs and expenses in connection
therewith, including on any appeal and including expert witness fees, document copying expenses,
exhibit preparation costs, carrier expenses and postage and communication expenses, and reasonable
attorneys' fees and costs for the services rendered to the prevailing party in such action or proceeding
(which shall include the reasonable costs for services of the prevailing party's in-house counsel and
any third-party counsel retained by the prevailing party).
6.5 Recording and Filing. City and Developer shall cause this Agreement, and all
amendments and supplements to it, to be recorded against the Property in the Official Records.
6.6 Governing Law; Venue. This Agreement shall be governed by the laws of the State of
California. Venue for any dispute arising out of this Agreement shall be San Diego County.
6.7 Amendments. This Agreement may be amended only by a written instrument executed
by all the parties hereto or their successor in title, duly recorded in the Official Records.
6.8 Notice. All notices given or certificates delivered under this Agreement shall be
deemed received on the delivery or refusal date shown on the delivery receipt, if: (i) personally
delivered by a commercial service which furnishes signed receipts of delivery; or (ii) mailed by
certified mail, return receipt requested, postage prepaid, addressed to the party to receive such notice
at the addresses set forth below. Any of the parties may, by notice given hereunder, designate any
further or different addresses to which subsequent notices, certificates or communications shall be
sent.
To City:
City of Carlsbad
Housing & Homeless Services Department
1200 Carlsbad Village Drive
Carlsbad, CA 92008-1949
Attn: Housing & Homeless Services Director
To Developer:
Hope Apartments Owner, LLC
9191 Towne Centre Drive #180
San Diego, CA 92122
Attn: Chris Schoeneck, Director of Development
6.9 Entire Agreement. The Recitals set forth above, and all exhibits attached hereto, are
hereby incorporated into this Agreement by this reference. This Agreement contains the entire
agreement between the parties as to the subject matter hereof and supersedes any and all prior
arrangements and understandings between the parties, and no other agreement, statement or promise
made by either party hereto which is not contained herein shall be binding or valid provided, however,
that nothing in this Section limits the effect or enforceability of the City of Carlsbad Municipal Code.
This Agreement shall not be construed as if it had been prepared by one of the parties, but rather as if
12
both parties had prepared it. The parties have read and reviewed this Agreement and agree that any
rule of construction to the effect that ambiguities are to be resolved against the drafting party (including
but not limited to Civil Code Section 1654 as may be amended from time to time) shall not apply to
the interpretation of this Agreement.
6.10 Waiver. The waiver of or failure to enforce any provision of this Agreement shall not
operate as a waiver of any future breach of any such provision or any other provisions hereof.
6.11 Relationship of Parties. Nothing contained in this Agreement shall be deemed or
construed by the parties or any third party to create the relationship of principal and agent or of
partnership or of joint venture or of association. The relationship of the parties is that of an owner and
developer of real property and an administrator of a municipal inclusionary housing program;
furthetmore, the parties agree and acknowledge that this Agreement is in furtherance of the inherent
power of City to regulate the use of land within City's jurisdiction. Developer further acknowledges,
understands and agrees that the City does not undertake or assume any responsibility for or duty to
Developer to select, review, inspect, supervise, pass judgment on, or inform Developer of the quality,
adequacy or suitability of the Very Low-Income Units (or any other portion of the Property). The City
owes no duty of care to protect Developer against negligent, faulty, inadequate or defective building
or construction or any condition of the Property and Developer agrees that neither Developer, or
Developer's heirs, successors or assigns shall ever claim, have or assert any right or action against the
City for any loss, damage or other matter arising out of or resulting from any condition of the Property
and will hold the City harmless from any liability, loss or damage as set forth below. Any review by
the City of any documents submitted by the Developer to the City pursuant to this Agreement,
including, but not limited to the form of any tenant lease, is solely to confirm compliance with the
requirements of this Agreement and shall not be deemed to be a representation of any kind of the
validity, business advantage, or legal enforceability of such document(s ).
6.12 Hold Harmless; Indemnity. Developer shall indemnify, defend (with counsel
reasonably selected by the City), and hold harmless the City and its councilmembers, officers,
officials, agents, and employees against any and all liability, claims, actions, causes of action or
demands whatsoever against any of them, for the following: (i) any injury or death of any person or
damage to property or other liability of any nature arising out of Developer's ownership or operation
of the Property or Project; (ii) any claims arising out of Developer's performance or non-performance
of its obligations hereunder; or (iii) otherwise related to Developer's ownership or operation of the
Property or Project, except where the cause of such is the gross negligence or willful misconduct of
the City. The indemnification obligations set forth in this Section shall survive any termination or
expiration of this Agreement.
6.13 Time is of the Essence. In all matters under this Agreement, the parties agree that time
is of the essence. References in this Agreement to days shall be to calendar days. If the last day of any
period to give or reply to a notice, meet a deadline or undertake any other action occurs on a day that
is not a day of the week on which the City of Carlsbad is open to the public for carrying on substantially
all business functions ( a "Business Day"), then the last day for giving or replying to such notice,
meeting such deadline or undertaking any such other action shall be the next succeeding Business
Day. In no event shall a Saturday or Sunday be considered a Business Day.
13
6.14 Interpretation. The use in this Agreement of the words "including", "such as" or words of
similar import when used with reference to any general term, statement or matter shall not be
construed to limit such statement, term or matter to the specific statements, terms or matters, unless
language of limitation, such as "and limited to" or words of similar import are used with reference
thereto. The headings of this Agreement are for convenience only and do not in any way limit or
amplify the terms or provisions hereof. All pronouns and variations thereof shall be deemed to refer
to the masculine, feminine, or neuter, and to the singular or plural, as the identity of the party or parties
may require.
6.15 No Limitation on Municipal Powers. Nothing in this Agreement shall limit, waive, or
otherwise impair the authority and discretion of: (a) the City's Building Department, in connection
with the review and approval of any proposed construction plans for the Property ( or any change to
such plans), or any use, or proposed use, of the Property; or (b) any other office or department of the
City acting in its capacity as a governmental regulatory authority with jurisdiction over the
development, use, or operation of the Property.
6.16 Severability. If any provision of this Agreement shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining portions of this Agreement
shall not in any way be affected or impaired thereby.
6.17 State Law Requirements.
(a) Enforcements by Certain Third Parties. Pursuant to California Health and Safety Code
Section 33334.3(f)(7), a default under this Agreement, including the rental of a Very Low-Income
Unit by the Developer to a household not eligible under this Agreement, may be enforceable by the
City, a residents' association, a resident of another affordable unit, a former resident of a Very Low-
Income Unit, a person on an affordable housing waiting list, and others who are listed in any applicable
state law. The parties to this Agreement agree and acknowledge that such rights shall only exist during
such time that the Property 1s subject to the requirements of California Health and Safety Code Section
33334.3(f)(7), or any successor statute.
(b) Developer Obligations Prior to Expiration of Term. At least six (6) months prior to the
expiration of the Tenn, Developer shall provide by first-class mail, postage prepaid, a notice to all
tenants in the Very Low-Income Units containing: (i) the anticipated date of the expiration of the
Term; (ii) any anticipated Rent increase upon the expiration of the Term; (iii) a statement that a copy
of such notice will be sent to the City; and (iv) 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. Developer shall also file a copy of the above-described notice with the
City's Department of Housing and Homeless Services, or successor City department. In addition,
Developer shall comply with the requirements set forth in California Government Code Sections
65863.10 and 65863.11, to the extent then applicable. Nothing in this subsection shall be deemed to
waive, limit, or otherwise impair the Developer's obligation to comply with Section 21.85.155 of the
Inclusionary Housing Ordinance.
14
6.18 Counterparts. This Agreement may be executed in multiple originals, each of which is
deemed to be an original, and may be executed in counterparts, which shall constitute one and the
same agreement.
6.19 Project Financing. No later than thirty (30) days after Developer's written request for
an estoppel certificate, the City shall provide an estoppel certificate to the Developer in favor of any
person identified by Developer, that ( except as set forth on a schedule to the estoppel certificate) there
are (a) no defaults by Developer under this Agreement, (b) the City has neither made nor investigated
nor is the City about to make, any claim, pursue any judgment, cause of action, and Developer has no
unfulfilled monetary obligations in favor of the City, any of which such matters have arisen out of or
related to this Agreement, except as set forth in the copy of the attached instrument, ( d) the attached
copy of the Agreement is a true and correct and complete copy of the Agreement, and ( e) any other
matter that Developer or any lender, prospective lender, purchaser or prospective purchaser may
reasonably request.
[Remainder of page left intentionally blank]
15
IN WITNESS WHEREOF, City and Developer have executed this Agreement by duly
authorized representatives, all on the date first written above.
CITY:
CITY OF CARLSBAD,
a chartered municipal corporation
By:
Geoff Patnoe, City Manager
APPROVED AS TO FORM:
DALTON SORICH, ASSISTANT CITY
ATTORNEY
By:
Signatures continue on following page
Signatures must be notarized
16
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 June 25, 2025 before me, Shelby M. Nelson, Notary Public
(insert name and title of the officer)
personally appeared Geoff Patnoe ,
who proved to me on the basis of satisfactory evidence to be the person{/,, whose name~) is/a~
subscribeg to the within instrument and acknowledged to me that hets'/i e/th1y executed the same in
his/~r/th/ir authorized capacity(ies), and that by his/~rttt).e'ir 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 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.
Signatur (Seal)
DEVELOPER:
Hope Apartments Owner, LLC
a Delaware limited liability company
By: R&V Management Investment Corporation,
a California corporation,
its Manager
C f! By:",,,,,~ ,,J;;;~~~~ \,,
Scott Dale, President ',
State of California
County of San Diego
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.
On~~-=-----'-+-=.::=-=-'-"----' before me, Lesli Palmer , a Notary Public, personally
appeared Scott Dale who proved to me on the basis of satisfactory evidence to be the
person(}'.) whose name(t) is/~ subscribed to the within instrument and acknowledged to me that he/~
executed the same in his/~ authorized capacity(~, and that by his/hert#teir signature(}'.) on the instrument
the person(,>, or the entity upon behalf of which the personC,, acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California
paragraph is true and correct.
WITNESS my hand and official seal.
17
LESLI PALMER
Notary Public • California
San Diego County f
Commission fl 24691121
Comm. Expires Nov 6, 2027
that the foregoing
EXHIBIT A
LEGAL PROPERTY DESCRIPTION
THE LAND REFERRED TO HEREIN BELOW IS SITU A TED IN THE CITY OF CARLSBAD,
COUNTY OF SAN DIEGO, STATE OF CALIFORNIA AND IS DESCRIBED AS FOLLOWS:
LOT 1 OF CITY OF CARLSBAD TRACT 2022-0001, MAP NO. 16623, IN THE CITY OF
CARLSBAD, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, FILED IN THE OFFICE
OF THE COUNTY RECORDER, DECEMBER 11, 2024.
APN: 203-320-57-00
A-1
EXHIBITB
Bedroom/ Total Units Market-Rate Affordable Units Affordability
Bathrooms Units (lnclusionary and Rent Level
Density Bonus)
Studio/I Bath 8 6 2 50%AMI
1 Bed/1 Bath 69 62 7 50%AMI
2 Bed/2 Bath 67 61 6 50%AMI
3 Bed/2 Bath 12 11 1 50%AMI
Total 156 136 16
B-1