HomeMy WebLinkAbout; Fabric 2621Roosevelt LLC; 2025-0336219; Affordable Housing-Regulatory Agreement & Dec. of Restrictive Covenants12/1/25, 9:13AM
RECORDING 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
Batch 20245936 Confirmation
DOC# 2025-0336219
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Nov 26, 2025 11 :07 AM
OFFICIAL RECORDS
JORDAN Z. MARKS,
SAN DIEGO COUNTY RECORDER
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PCOR: N/A
PAGES:22
(Space above for Recorder's Use)
REGULATORY AGREEMENT AND
DECLARATION OF RESTRICTIVE COVENANTS
(lnclusionary & Density Bonus)
This Regulatory Agreement and Declaration of RM rictive Covenants ("Agreement")
is made and entered into as of this ( t?/·.UJ day of O{ , 20 'Z,':;: , by and
between the City of Carlsbad, a California municipal corporation and charter city ("City"), and
Fabric 2621 Roosevelt, LLC, a California Limited Liability Company ("Developer").
RECITALS
1. The Developer is the owner of and intends to develop 5,406 square feet of
commercial space and twenty-three (23) residential units on the real property as more
particularly set forth on Exhibit A, attached hereto and incorporated herein.
2. The City has adopted an lnclusionary Housing Ordinance as Carlsbad
Municipal Code (CMC) Chapter 21.85 requiring a percentage of new housing development
to be developed as affordable housing for Very low and Moderate-income Households.
3. The City has adopted a Density Bonus Ordinance as CMC Chapter 21.86 to
conform 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 City Council Reso. No. 2025-192 on July 29,
2025. As part of the Project, the Developer agreed to restrict four (4) units (17% of the total
units) of the Project to be affordable to Very Low and Moderate-Income Households (defined
below).
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https://gs.secure-erds.com/Batch/Confirmation/20245936 1/2
5. The number of restricted units was based on provisions in CMG 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. CMG 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 of restricted
units to conform 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 eight (8) additional
market-rate units for a total maximum Project size of twenty-three (23) units; (ii) two
concessions , as follows ; concession to waive the requirement that the current water main
servicing the property be upsized from a six-inch water main to an eight-inch water main,
and concession to wave all commercial parking requirements for the project; and (iii) eight
(8) waivers or modifications to development standards, as follows: waiver of VBMP
Standard 2.7.2(A)(1) requiring a front setback minimum of 5 feet; maximum of 10 feet to
bu ilding; waiver of VBMP 2.7.2 (G) limiting the maximum height of a building to 35 feet and
3 stories; waiver of CMG Section 21.44.060(A)(3) (Table D) requiring enclosed parking
garages with multiple, open parking spaces to maintain a standard stall size of 8.5 feet by
20 feet, exclusive of supporting columns or posts; waiver of VMBP Appendix E, Table 3.1.4
prohibiting Large-Mixed use building types from Village General Subdistrict; waiver of
VBMP 2.6.2 .A (1) requiring fifty (50%) percent or more of the Primary Building's floor area
face onto a primary and/or secondary street(s); waiver of VBMP 4.8(8)(3) requiring
Shopfront facade area to be a minimum of 90% glazed transparent and clear; waiver of
VBMP 4.8(C)(2) requiring upper stories to occupy the full ground floor footprint area; and
waiver of VBMP 5.8(8)(3) requiring upper stories to occupy the full ground floor footprint
area.
9. With the city's approval of the project, four (4) of the Project's units, i.e. the Very
Low-Income Units and the Moderate-Income Units (defined below), will be restricted to
occupancy by, and affordable to Very Low-Income Households and Moderate-Income
Households as required by the Density Bonus Law and Carlsbad Municipal Code Chapter
21 .86 .
10. With the city's approval of the project, two (2) Very Low-Income Units will be
described and defined as the "Very Low-Income Units" below. The Very Low-Income Units
will be developed to meet the affordable housing obligations for the Development as
required by the Density Bonus Law.
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11. With the city's approval of the project, two (2) Moderate-Income Units will be
described and defined as the "Moderate-Income Units" below. The Moderate-Income
Units will be developed to meet the affordable housing obligations for the Development as
required by the Density Bonus Law.
12. With the city's approval of the project, two (2) Very Low-Income Units, as
described and defined as the "Very-Low Income Units" below and two (2) Moderate-
Income Units, as described and defined as the "Moderate-Income Units" below, will also
satisfy the lnclusionary Housing Ordinance requirement and therefore restricted as required
by the lnclusionary Housing Ordinance and/or Carlsbad Municipal Code Chapter 21.85. If
there is any discrepancy between Density Bonus Law and the lnclusionary Housing
Ordinance regarding affordability or occupancy requirements, the strictest requirement shall
prevail.
13. In accordance with the requirements of Density Bonus Law, the City's
lnclusionary Housing Ordinance, and the Project's approval by the City 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.
14. 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.
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) "Affordable Rent" shall be calculated in accordance with CMC 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 Section 2.2 below
(b) "Agreement" shall mean th is Regulatory Agreement and Declaration of
Restrictive Covenants.
(c) "City" shall mean the City of Carlsbad, California municipal corporation
and charter city.
(d) "Density Bonus Law" shall mean the City's density bonus ordinance,
set forth in CMC Chapter 21.86, and California Government Code
Sections 65915 -65918, as they may be amended from time to time.
(e) "Developer" shall mean Fabric 2621 Roosevelt, LLC, a California
Limited Liability Company, and its successors in interest to the Property.
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(f) "Development" shall mean the real property identified in Exhibit A and
all residential units developed pursuant to the Conditions identified in
City Council Resolution No. 2025-192.
(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 25 CCR Section 6914.
(h) "HCD" shall mean the California Department of Housing and Community
Development.
(i) "lnclusionary Housing Ordinance" shall mean the City's inclusionary
housing ordinance, set forth in Chapter 21 .85 of the CMC, as it may be
amended from time to time.
U) "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 .
(k) "Moderate-Income Household" shall mean a household whose annual
Gross Income does not exceed one hundred twenty percent (120%) of
the Area Median Income, adjusted for household size.
(I) "Moderate-Income Units" shall mean the units limited to occupancy by
Moderate-Income Households and restricted in rental cost pursuant to
Section 2.2(b) below, and in Exhibit B.
(m) "Project" shall mean the 5,406 square feet of commercial space and
twenty-three (23) residential units to be constructed on the Property, as
well as all other improvements, 5,406 square feet of commercial space
and twenty-three (23) residential units, as the same may from time to
time exist.
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(n) "Property" shall mean the real property described in Exhibit A attached
hereto and incorporated herein.
(o) "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.
(p) "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 of recordation of this Agreement in the Official
Records.
(q) "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.
(r) "Very Low-Income Units" shall mean the units limited to occupancy by
Moderate-Income Households and restricted in rental cost pursuant to
Section 2.2(b) below, and in Exhibit B.
ARTICLE 2. AFFORDABILITY COVENANTS
2.1 Occupancy Requirements.
Each of the Very Low-Income Units and Moderate-Income Units shall only be rented
to , and occupied by, or, if vacant, shall only be available for rent and occupancy by Very Low-
Income Households and Moderate-Income Households.
2.2 Affordable Rent.
(a) The maximum monthly Rent for the two (2) Very low-Income Units shall be
calculated in accordance with CMC Section 21 .85.020(A), California Health and Safety Code
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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 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 the two (2) Moderate-Income Units shall be
calculated in accordance with CMC 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 Moderate-Income Units which does not exceed one-twelfth
(1/12) of thirty-percent (30%) of one-hundred ten percent (110%) 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 the Very low-
Income Units and Moderate-Income Units, the following assumed household sizes shall be
utilized:
Number of Assumed
Bedrooms Household Size
One 2
2.3 Increased Income of Occupying Households. Developer shall re-certify that the
Very Low-Income Units and the Moderate-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 and the Moderate-Income 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 eighty percent (80%) of
Area Median Income -applicable for the Very low-Income Units, and one-hundred forty
percent (140%) of Area Median Income -applicable for the Moderate-Income Units, adjusted
for household size, then, to the extent permitted by applicable law and 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 and Moderate-Income Units provisions
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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 or Moderate-Income Household . To the extent permitted
under the 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 the Very Low-Income and Moderate-
Income Households, such household's Rent may be subject to increase.
2.5 Section 8 Voucher Holders. Developer shall accept as tenants of the Very Low-
Income Units and Moderate-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
and Moderate-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
appl ication of management policies or lease provisions with respect to the Project which have
the intended effect of precluding occupancy of Very Low-Income Units and Moderate-Income
Units by such prospective tenants.
2.6 Condominium Conversion. Developer shall not convert the Project 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
and Moderate-Income Units.
ARTICLE 3. INCOME CERTIFICATION AND REPORTING
3.1 Income Certification. Developer shall obtain, complete, and maintain on file,
immediately prior to initial occupancy of a Very Low-Income Units and Moderate-Income
Units and annually thereafter, copies of income certifications from each Very Low and
Moderate-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 Un it and Moderate-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 form from the applicant's
current employer; (5) obtain an income 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.
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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 Units and Moderate-Income Units
covered by this Agreement, the Rent and the reported income and household size of the
household occupying the Very Low-Income Units and Moderate-Income Units. The report
shall also state the date the tenancy commenced for each Very Low-Income Units and
Moderate-Income Units 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 and Moderate-Income Units, pursuant to this
Agreement, and, upon five (5) business days prior written request by City, shall permit 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
and Moderate-Income Units (but specifically excluding any attorney-client privileged
information of Developer).
ARTICLE 4. OPERATION OF THE PROJECT
4.1 Residential Use. The twenty-three (23) residential units within the Project shall
be operated only for residential use, not including the approved 5,406 square feet of
commercial space. No part of the residential units within the Project shall be operated as
transient housing, such as a 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 terms and provisions of this Agreement to the extent applicable to the
Property, the City's lnclusionary 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 lnclusionary
Housing Ordinance, Density Bonus Ordinance, or applicable laws or regulations, the City's
lnclusionary 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
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determination 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 and Moderate-
Income Units.
4.4 Nondiscrimination. All of the Very Low-Income Units and Moderate-Income
Units shall be available for occupancy on a continuous basis to members of the general
publ ic who qualify as a Very Low-Income Household and Moderate-Income Household .
Developer shall not give preference to any particular class or group of persons in renting the
Very Low-Income Units and Moderate-Income Units, except to the extent that the Very Low-
Income Units and Moderate-Income Units are required to be leased to Very Low-Income
Households and Moderate-Income Households. There shall be no unlawful discrimination
aga inst or segregation of any person or group of persons, on account of race, color, creed,
rel igion , 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 Units and Moderate-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 Units and Moderate-Income Units 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 and Moderate-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 extraord inary repairs , replacement of capital items , and security.
City will have no responsibility over the management or operation of the Project. 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 and professional management agent with at least fifty (50) units under
management ("Management Agent") or (ii) self-managed by Developer or by an affiliate of
Developer who is also an experienced and professional management agent (in, each case ,
"Self-Management"). Property managers must either hold a real estate license or perform
licensed activities under a licensed Broker. 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 . For the purposes of this Section 5.2, Fabric
Investments, Inc., a California corporation, is approved by City as the initial Management
Agent for the Project.
5.3 Performance Review. City reserves the right to conduct review of the
management practices of the Very Low-Income Units and Moderate-Income Units, outside
of the annual reporting required under 3.2 of th is Agreement, if deemed necessary by City,
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such as, in response to allegations of misconduct. The purpose of each review will be to
enable City to determine if the Very Low-Income Units and Moderate-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 review, City determines
in its reasonable judgment that the Very Low-Income Units and Moderate-Income Units are
not being operated and managed in accordance with any of the material requirements and
standards of this Agreement, City will deliver written notice to Developer of any such failure
to comply with this Agreement and provide Developer an opportunity to cure such failure
within sixty (60) days of the notice, provided, however, that if the nature of such failure is
such that more than sixty (60) 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 will 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 and Moderate-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.
Any contract with a Management Agent for the operation or management of the Very
Low-Income Units and Moderate-Income Units entered into by Developer shall provide that
the contract can be terminated 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. Developer shall submit its written
management policies in connection with the rental of Very Low-Income Units and Moderate-
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 and Moderate-Income Units. The management
policies and marketing plan must be submitted to the city for review and approval a minimum
of thirty (30) days prior of the availability of applications for initial lease-up.
The Developer shall advertise the availability of the Very Low-Income Units and
Moderate-Income Units for a minimum of two consecutive weeks in a local newspaper or
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other local media platform. The Developer may employ additional marketing methods that
are in accordance with professional standards. The City may also advertise the Very Low-
Income Units and Moderate-Income Units to provide contact information to interested
households. The Developer advertisement must include the following details: units are
subject to affordability restrictions, application deadline, contact information, fair housing
statement, and application instructions. City shall approve advertisement prior to publication.
Developer shall maintain a record of all interested households and applications. Developer
must provide such documentation to the City upon request.
Developer shall provide City with notice of not less than thirty (30) days prior to
advertising the availability of the affordable units.
Developer is prohibited from renting Very Low-Income Units and Moderate-Income
Units to a family member, relative, employee, or any pre-determined household. A 'pre-
determined' household is any household with a pre-existing relationship with the Developer,
such a friend , associate, or any other household that has an existing relationship with the
Developer whose occupancy of the Very Low-Income Units and Moderate-Income Units
would decrease their availability to the general public as intended by Density Bonus Law and
the City's lnclusionary Housing Ordinance.
5.6 Property Maintenance. Developer agrees, for the entire Term of this
Agreement, 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 ensure 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 thirty (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, will 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
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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
will 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.
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 termination agreement or such other commercially reasonable
instrument requested by Developer or a title insurance company to terminate 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 will have the right to
enforce this Agreement by any or all of the following actions, or any other remedy provided
bylaw.
(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
12
of Developer's obligations under this Agreement shall cause irreparable harm to the City and
materially impair the publ ic policy objectives set forth in the CMC. 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 lnclusionary 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 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 (wh ich 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
13
Attn: Housing & Homeless Services Director
1200 Carlsbad Village Drive
Carlsbad , CA 92008-1949
To Developer:
Fabric Investments, Inc.
Brendan Foote, President
2676 State Street, 100
Carlsbad , CA 92008
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 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; furthermore, 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 and Moderate-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
bu ilding 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 cond ition 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 th is Agreement, including, but not limited to the form of any
tenant lease, is solely to confirm compliance with the requirements of this Agreement and
14
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 th is Agreement.
6.13 Time is of the Essence. In all matters under th is 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.
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 Lim itation 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 valid ity, 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
15
Very Low, Low, and Moderate-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 Units and Moderate-
Income Units, 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 is 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 Term, Developer shall provide by first-class mail , postage prepaid, a
notice to all tenants in the Very Low-Income Units and Moderate-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 shall 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
CMC Section 21 .85 .155 of the lnclusionary Housing Ordinance.
6.18 Counterparts. This Agreement may be executed in multiple originals, each of
wh ich 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 th irty (30) days after Developer's written
request for an estoppel certificate, the City will 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
cla im, 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]
16
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:
C. DAL TON SORICH,
ASSISTANT CITY ATTORNEY
By:
ATTEST:
Sherry Freisinger
City Clerk
Signatures continue on following page
Signatures must be notarized
17
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 ____ S_a_n_D_i_e_go ____ ~)
on November20,2025 before me, Shelby Nelson, Notary Public
(insert name and title of the officer)
personally appeared _G_e_o_ff_P_a_t_n_o_e _____________________ _
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 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.
(Seal)
DEVELOPER:
FABRIC 2621 Roosevelt, LLC
a California Limited Liability Company
By : Fabric Investments, Inc., a California Corporation, its manager
B~t
18
State of C.J,k, .-,A
County of ~ r\, u., ?'. c;J
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 //-17 • 202-:,.,,, , before me,
-~-~--~_6_ .. -1_-_µ_._v;_~~-------' a Notary Public, personally appeared
--~--_:,-(,,4, __ --~P_A_t/._;v __ Yc~_°'_o_~_:..L. ___ who proved to me on the basis of satisfactory evidence to be
the person(s) whose name(s) is/a11e-subscribed to the within instrument and acknowledged to me that
he/shefthey executed the same in his/het¥their authorized capacity(ies), and that by his/her:AReir
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 ~/, h ,,,,,..,,,.,,;( that the
foregoing paragraph is true and correct.
I
I
19
~OB~~T O.~A~;•1
\ COMM. #2404784 i!;;
, NOTARY PUBLIC-CALIFORNIA :;:::
SAN DIEGO COUNTY I
My Comm. Expires June 11, 2026 • •• •
EXHIBIT A
LEGAL PROPERTY DESCRIPTION
THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF
CARLSBAD, IN THE COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, AND IS
DESCRIBED AS FOLLOWS: THAT PORTION OF LOT 23 OF SEASIDE LANDS, IN
THE CITY OF CARLSBAD, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA,
ACCORDING TO MAP THEREOF NO. 1722, FILED IN THE OFFICE OF THE COUNTY
RECORDER OF SAN DIEGO COUNTY, JULY 28, 1921 , LYING NORTHEASTERLY OF
A STRAIGHT LINE CONNECTING THE MID POINTS OF THE NORTHWESTERLY
AND SOUTHEASTERLY LINES OF SAID LOT.
APN : 203-101 -23-00
B-1
EXHIBIT B
Bedroom/ Total Market-Affordable Units Affordability
Bathrooms Units Rate Units (lnclusionary and
Density Bonus)
2 units per California Health
and Safety Code 50053
(b )( 1 )( C) very low-income
1 bed/1 bath 19 15 4
2 units per California Health
and Safety Code 50053
(b )(1 )(E) moderate-income
2 bed/ 1 bath 1 1 0 -
2 bed/ 2 bath 3 3 0 -
Total 23 19 4
B-1