BEVERLY HILLS AGENDA REPORT Meeting Date: August 22, 2017 Item Number: D-9 To: Honorable Mayor & City Council From: Ryan Gohlich, AICP Assistant Director of Community Development I City Planner Subject: AFFORDABLE HOUSING COVENANT AND REGULATORY AGREEMENT FOR THE PROJECT LOCATED AT 9265-9269 BURTON WAY Attachments: 1. Affordable Housing Covenant and Regulatory Agreement for the Project Located at 9265-9269 Burton Way RECOMMENDATION Staff recommends that the City Council approve the attached Affordable Housing Covenant and Regulatory Agreement for the project located at 9265-9269 Burton Way. DISCUSSION In 2014 the Planning Commission approved a Tentative Tract Map, Development Plan Review, R-4 Permit, and Density Bonus Permit to allow the construction of a 23-unit condominium project located at 9265-9269 Burton Way. This project contains two affordable units. Per the project conditions and record an affordable housing agreement memorializing the restrictions applicable to the two very-low income housing satisfy the conditions approval requiting documentation of the affordable housing requirements. of approval, the applicant is required to enter units. Approval and recordation of the covenant and agreement into will of The property may be operated as a rental property, or as a for-sale condominium project, and the obligations for both of those scenarios are addressed in the agreement. Further, to other remedies, the agreement entitles the City to liquidated damages breach of of a letter the agreement, of with the security provided for any such liquidated damages credit during any time when the property trust on the two affordable housing units condominium project. in is in in addition the event of the form managed as rental units, and deeds the event that the project is in turned into a of a
FISCAL IMPACT There is no direct fiscal impact to the City as a result of a decision on this matter. Susan Healy Keene, AICP ovep Page2of2
Attachment 1 Affordable Housing Covenant and Regulatory Agreement for the Project Located at 9265-9269 Burton Way
RECORDING REQUESTED BY, AND WHEN RECORDED MAIL TO: City of Beverly Hills 455 North Rexford Drive Beverly Hills, California 90210 Attn: City Clerk SPACE ABOVE THIS LINE FOR RECORDER S USE Recording fee: Exempt pursuant to California Government Code Section 27383. AFFORDABLE HOUSING COVENANT AND REGULATORY AGREEMENT (Condominium Units 103 and 104 at 9265-9269 Burton Way, Beverly Hills, California) THIS AFFORDABLE HOUSING COVENANT AND REGULATORY AGREEMENT (this Agreement ) is dated as of August 14, 2017 and is entered into by and between the CITY OF BEVERLY HILLS (the City ), and EMPIRE AT BURTON WAY, LLC, a California limited liability company, its successors and assigns (the Owner ). RECITALS A. Owner is the owner of two one-bedroom condominium units (Units 103 and 104) constructed or to be constructed in the City of Beverly Hills, California, described on Exhibit A attached hereto (the Affordable Units ). B. The Affordable Units are part of a twenty-three (23) unit condominium project at 9265-9269 Burton Way. in the City of Beverly Hills, California (the Project ) on the land described on Exhibit B. C. A tentative tract map, density bonus permit and development plan review permit were approved by the Planning Commission of the City by Resolution No. 1714 subject to conditions, including (but not limited to) the condition that Owner record restrictions to ensure that each Affordable Unit be restricted for thirty (30) years after the earlier of the initial sale or rental of the Affordable Unit by Owner to (i) in the case of a sale of the Affordable Unit, ownership and occupancy by very low income households (as defined in California Health & Safety Code Section 50105) at an affordable housing cost; and (ii) in the case of a rental of an Affordable Unit by Owner, occupancy by such very low income households at an affordable rent. D. This Agreement constitutes those restrictions. NOW, THEREFORE, THE PARTIES HERETO AGREE AS FOLLOWS: 1. Definitions. For purposes of this Agreement, the terms listed below shall have the meanings thereinafter specified. B0785-000 I\2 I 06559v2.doc Page 1 of9
(a) Affordable Housing Cost means a housing cost which does not exceed the limits set forth in California Health and Safety Code Section 50052.5(b), as amended from time to time and the applicable regulations for such statute, and for the purposes hereo1 the term housing cost shall include association fees and shall otherwise have the meaning ascribed to such term in Title 25 of the California Code of Regulations Section 6920, as such regulation may be amended from time to time, and the term Gross Income shall have the meaning ascribed to such term in Title 25 of the California Code of Regulations Section 6914, as such regulation may be amended from time to time, or other applicable regulations. (b) Affordable Rent means rent and other charges (including any association fees) to the Very Low Income Household that do not collectively exceed the applicable affordable rent described in California Health and Safety Code Section 50053(b)(1)(2) or (3). (c) an Affordable Unit. (d) Affordable Unit. Homeowner means any person (or persons) who has (or have) purchased Tenant means any person (or persons) who has (or have) leased an (e) Term means, with respect to each Affordable Unit, thirty (30) years from the earlier of the initial sale or rental of the Affordable Unit by Owner to a Very Low Income Household at an Affordable Housing Cost or Affordable Rent, as applicable. (f) Very Low Income Household means a person, family or household meeting the income qualification limits set forth in California Health and Safety Code Section 50105 and Title 25 of the California Code of Regulations Section 6910, et seq., as the case or context may require, as such statutes and regulations may be amended from time to time, and any successor statutes and regulations thereto. 2. Restrictions on Sale, Lease, Transfer. Neither the Owner nor any Homeowner shall sell, convey, transfer, or lease any of the Affordable Units or enter into an agreement to do so, except as expressly permitted by the terms of this Agreement. Any such sale, conveyance, transfer, or lease shall comply with the City s Affordable Housing Program Guidelines (the Guidelines ), initially adopted in February 2016, as may be amended from time to time. If there is a conflict between the provisions of the Agreement and the Guidelines, the provisions of the Guidelines shall govern. 3. Covenants to Maintain Affordability and Occupancy. During the Term applicable to a particular Affordable Unit: (i) any sale of the Affordable Unit shall be to a Very Low Income Household at a sales price that results in an Affordable Housing Cost for that Very Low Income Household, and the Affordable Unit sold may not be leased, but must be owner occupied; (ii) any lease of the Affordable Unit by Owner shall be to a Very Low Income Household at an Affordable Rent; (iii) no tenant of the Affordable Unit may assign its lease or sublet the Affordable Unit. B0785-000 l\2 I 06559v2.doc Page 2 of9
4. Resale Price Controls and Procedures. (a) Owner or the Homeowner, as applicable, shall notify any proposed purchaser in writing prior to the proposed purchaser s execution of escrow instructions, purchase and sale agreement or similar agreement, whichever is earliest, that the title to the Affordable Unit is and will be restricted in the manner described herein, and shall deliver a copy of this recorded Agreement to the purchaser at that time. Owner or the Homeowner, as applicable, shall deliver to City a copy of such written notification. (b) For the purpose of confirming with the City that a proposed purchaser is a Very Low Income Household that will be paying a purchase price that is in compliance with the terms hereof, the Owner or Homeowner, as applicable, shall notify the City in writing of any offer from a prospective purchaser which the Owner or Homeowner, as applicable, intends to accept, and shall provide the City with the following: names and ages. (i) (ii) Name and address of the purchaser. Number of persons comprising the purchaser s household and their (iii) Proposed purchase price of the Affordable Unit, and any other consideration for the purchase of the Affordable Unit. (iv) Amount of down payment. (v) Terms of any loan that will be used by the purchaser to finance the purchase of the Affordable Unit, including, but not limited to, principal, interest rate, term, and loan fees. (vi) (vii) Closing date. Aggregate annual income of the purchaser s household. (viii) Most recent federal and state income tax returns of the purchaser and all other members of the purchaser s household for the preceding two (2) calendar years, and verification of the proposed purchaser s salary or wages from the purchaser s employer. (ix) Copy of any proposed purchase and sale agreement, escrow instructions, loan application, and other agreements between the Owner or Homeowner, as applicable, and the proposed purchaser relating to the sale of the Affordable Unit. (x) A written statement signed by the proposed purchaser that the Affordable Unit will be occupied by the purchaser and used as his or her primary residence, and that the Affordable Unit will not be leased. (c) The City shall have fifleen (15) days after delivery of all required documents and information to review the information. The City Manager may require the purchaser to submit other written documentation to verify the information set forth herein and to B0785-0001\2 106559v2.doc Page 3 of9
determine that the income and Affordable Housing Cost restrictions of this instrument shall be satisfied. If the City receives all such information, the City Manager shall determine whether the prospective purchaser is qualified to purchase the Affordable Unit as a Very Low Income Household and shall thereafter notify the Owner or Homeowner, as applicable, in writing that the prospective sale is authorized and approved, or that the prospective purchaser does not qualify to purchase the Affordable Unit as a Very Low Income Household or that the sales price does not constitute an Affordable Housing Cost. (d) If the City Manager notifies the Owner or Homeowner, as applicable, that the proposed sale is authorized and approved, the Owner or Homeowner, as applicable, shall proceed to complete the sale of the Affordable Unit and shall within sixty (60) days after the date of such approval from the City, send City a copy of the escrow instructions and purchase agreement. Owner or Homeowner shall thereafter send a copy of the recorded deed to the City after the close of escrow. (e) If the City Manager notifies the Owner or Homeowner, as applicable, that the proposed sale does not comply with this Agreement, then the sale shall not occur. 5. Leasing Controls and Procedures. (a) Owner shall notify any proposed tenant in writing prior to the proposed tenant s execution of the lease, that the Affordable Unit is and will be restricted in the manner described herein, and shall deliver a copy of this recorded Agreement to the Tenant at that time. Owner shall deliver to City a copy of such written notification. (b) For the purpose of confirming with the City that a proposed lessee is a Very Low Income Household that will be paying an Affordable Rent in compliance with the terms hereof the Owner shall notify the City in writing of any offer from a prospective tenant which the Owner intends to accept, or any offer made to a prospective tenant, and shall provide the City with the following: names and ages. (i) (ii) (iii) (iv) (v) Name and address of the tenant. Number of persons comprising the tenant s household and their Proposed rent and other charges for the Affordable Unit. Amount of deposit. Aggregate annual income of the tenant s household. (vi) Most recent federal and state income tax returns of the tenant and all other members of the tenant s household for the preceding two (2) calendar years, and verification of the proposed tenant s salary or wages from the tenant s employer. (vii) Copy of the proposed lease, and any other agreements between the Owner or Homeowner, as applicable, and the proposed tenant. B0785-0001\2106559v2doc Page 4 of 9
(viii) A written statement signed by the proposed tenant that the Affordable Unit will be occupied by the tenant and used as his or her primary residence and that the lease will not be assigned and the Affordable Unit will not be sublet. (c) The City shall have fifteen (15) days after delivery of all required documents and information to review the information. The City Manager may require the tenant to submit other written documentation to verify the information set forth herein and to determine that the income and Affordable Rent restrictions of this instrument shall be satisfied. If the City receives all such information, the City Manager shall determine whether the proposed Tenant is qualified to lease the Affordable Unit as a Very Low Income Household and shall thereafter notify the Owner in writing that the proposed lease is authorized and approved, or that the prospective Tenant does not qualify or that the rent and other charges do not constitute an Affordable Rent. (d) If the City Manager notifies the Owner, that the proposed lease is authorized and approved, the Owner, shall proceed to complete the lease of the Affordable Unit within ten (10) days after the date of such approval from the City, and shall send a copy of the fully executed lease to the City. (e) If the City Manager notifies the Owner or Homeowner, as applicable, that the proposed lease transaction does not comply with this Agreement, then the lease transaction shall not occur. 6. Remedies of City. In addition to all of its rights and remedies available for Owner s breach of this Agreement, upon a breach by Owner. Homeowner or a Tenant under this Agreement (as described in Section 15 below), City may obtain specific performance of this Agreement and/or injunctive relief. In addition, City shall be entitled to liquidated damages as described in Section 16 below, which shall be secured by letter of credit in the amount of $60.000 in form and substance acceptable to the City Manager (Initial Collateral ) until a condominium Plan for the Project ( Condo Plan ) has been recorded, and shall thereafter be secured by deeds of trust recorded against the Affordable Units, and City may revoke the Certificate of Occupancy for the applicable Affordable Unit. Concurrently herewith, Owner shall deliver the Initial Collateral to City, and City shall return the Initial Collateral (subject to prior use to pay liquidated damages) to Owner upon (i) the recordation of the Condo Plan, (ii) the recording against the Affordable Units of the deeds of trust in a form satisfactory to the City Attorney securing the liquidated damages obligations described in Section 1 6 below, and (iii) the issuance at Owner s cost to City of lender s title policies for the deeds of trust (each in the amount of $60,000) insuring the priority and validity of each deed of trust. City shall reasonably subordinate such deeds of trust to deeds of trust securing reasonable ptirchase money loans that enable sales/purchases of the Affordable Units in accordance with this Agreement. Owner and each Homeowner, as applicable, shall comply with the deeds of trust. As an alternative to a letter of credit as the initial Collateral, Owner may deliver to City a cash deposit in the amount of $60,000. 7. Successors and Assigns; Covenants to Run With the Land. The covenants and restrictions contained herein shall run with the land for the term of this Agreement and shall be a BO?85OOO1\2 I 06559v2.doc Page 5 of9
burden upon each Affordable Unit and shall be enforceable by the City against the Owner, each Homeowner and the successors-in-interest of the Owner, and all Tenants of an Affordable Unit. 8. Independent and Severable Provisions. In the event that any provision of this instrument is held by a court of competent jurisdiction to be unenforceable or invalid, such holding shall not render unenforceable any other provision hereof, each provision hereof being expressly severable and independently enforceable to the fullest extent permitted by law. 9. Further Assurances. The City, Owner and any Homeowner, or any successorin-interest or Tenant shall execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, such further instruments and agreements and do such further acts as may be necessary, desirable or proper to carry out the purposes of this Agreement. Upon the recordation of the Condo Plan and recording of the deeds of trust described in Section 6 above, City shall execute, acknowledge and deliver a reasonable amendment to this Agreement containing the legal descriptions of the Affordable Units based on such Condo Map and terminating this Agreement with respect to any other portions of the Project that this Agreement may then encumber. 10. No Waiver. No waiver by the City of its rights hereunder, or of any breach by the Owner or a Homeowner of any covenant, restriction, or condition herein contained, shall be effective unless such waiver is in writing, signed by the City and delivered to the Owner or the Homeowner, as applicable. Any waiver by the City of its power to terminate any covenant, restriction, or condition herein contained, or the failure by the City to exercise any right or remedy with respect to any breach or breaches, shall not constitute a waiver or relinquishment for the future of any rights regarding subsequent sales, or of any such covenant or condition nor bar any right or remedy of the City in respect of any subsequent breach. 11. Notices. All notices to be delivered to the parties pursuant to the terms hereof shall be in writing and shall be delivered in person or by certified mail, return receipt requested, or by reputable overnight delivery service (such as Federal Express) to the addresses listed below. Any of the following addresses may for Owner or City (but not Homeowner) be changed by written notice given in accordance with this Section. BO7$5OOO1\2 I 06559v2.doc If to Owner: If to the City: With a copy to: Empire at Burton Way, LLC 11620 Wilshire Blvd., Suite 900 Los Angeles, CA 90025 City of Beverly Hills 455 North Rexford Drive Beverly Hills, California 90210 Attn: City Manager City of Beverly Hills 455 North Rexford Drive Beverly Hills, California 90210 Attn: City Attorney Page 6 of 9
If to a Homeowner or a Tenant: To the applicable Affordable Unit 12. Entire Agreement. This instrument constitutes the entire agreement of the parties hereto, and the provisions hereof may be modified or amended only by a written instrument signed by the party to be charged. 13. Attorneys Fees. In any action brought to declare the rights granted herein or to enforce or to interpret any of the terms of this Agreement. the prevailing party shall be entitled to an award of its attorneys fees and costs. 14. Representations and Warranties. Owner hereby represents and warrants that as of the date hereof, it is the sole owner of the Affordable Units and no deed of trust or other lien (other than the holder of liens for property taxes and assessments not yet due) encumbers the Affordable Units. or that all holders of any deeds of trust or liens (other than the holder of liens for property taxes and assessments not yet due) have executed and delivered to City, duly acknowledged and in recordable form (for recording with this Agreement), a Subordination Agreement in the form attached hereto. 15. Breach. Owner shall be deemed to be in breach of this Agreement if Owner: (i) fails to make application to the City for approval of a Tenant or buyer of an Affordable Unit; (ii) fails to notify a Tenant or buyer of an Affordable Unit of the restrictions imposed by this Agreement by providing them with a copy of this Agreement and the Guidelines; or (iii) rents or sells an Affordable Unit without the City s prior approval. A Homeowner shall be deemed to be in breach of this Agreement if Homeowner: (1) fails to make an application to the City for approval of a subsequent buyer of the Affordable Unit; (ii) fails to notify a subsequent buyer of an Affordable Unit of the restrictions imposed by this Agreement by providing such buyer with a copy of this Agreement and the Guidelines; (iii) sells an Affordable Unit without the Citys prior approval; (iv) rents the Affordable Unit without satisfying the requirements for such a rental as described in the preceding sentence; or (v) fails to occupy the Affordable Unit as required by the Guidelines. A Tenant shall be deemed to be in breach of this Agreement if Tenant: (1) fails to occupy the Affordable Unit as required by the Guidelines; (ii) subleases the Affordable Unit with satisfying the requirements of such a sublease as described in the first sentence of this section; or (iii) fails to comply with the Guidelines. 16. Liquidated Damages. Owner and City agree that in the event of a breach of this Agreement by Owner, a Homeowner or Tenant, the damages to City would be extremely difficult, very impractical or impossible to determine; consequently, the parties and all Homeowners and Tenants agree that City shall be entitled to the sum of $5,000.00 per month for each month during which a breach of this Agreement occurs for each unit involved in the breach as liquidated damages for each such violation (which shall be paid to City within ten (10) days after written demand from City), and that if the breach involves both the Owner and or Tenant, or Owner and a Homeowner, or a Homeowner and a Tenant or subsequent Homeowner, then both shall he jointly and severally liable for the liquidated damages. 17. Mortgagee/Lender Protection. No breach of any of the covenants, conditions and restrictions herein contained, nor the enforcement of Section 15 above, shall affect, defeat or render invalid the lien of any deed of trust on the Project made in good faith and for value, but all Bt)785-000I 2 I(]6559v2doc Page 7 of9
of said covenants, conditions and restrictions shall be binding upon and effective against any person or entity whose interest is derived through foreclosure or trustee s sale, or otherwise. OWNER: CITY: EMPIRE AT BURTON WAY, LLC. CITY OF BEVERLY HILLS a California limited liability company By: Burton Way Investors Group, LLC. a California limited liability company, Managei,,, By: Print Name: Title Craig Berberian, Manager By: Hratch Sarkis, Manager Attest: Byron Pope, City Clerk Approved as to form: Laurence S. Wiener, City Attorney B07$5-000 I I 06559v2.doc Page $ of 9
EXHIBIT A DESCRIPTION OF AFFORDABLE UNITS One bedroom, one-bathroom units with 949 square feet in the case of Unit #103 and 964 square feet in the case of Unit #104. both on the first (ground) floor of the Project. Unit #103 shall be entitled to use parking stall #16 on the first subterranean floor of the parking structure, and Unit #104 shall be entitled to use parking stall #39 on the second subterranean floor of the parking structure. Unit #103 faces South and West: Unit #104 faces North and West. B0785-000 I \2 I 06559v2doc Page 9 of 9
EXHIBIT B LEGAL DESCRIPTION OF LAND PARCEL 1: LOT $ TN BLOCK 16 Of TRACT NO. 5647, IN THE CITY Of BEVERLY HILLS, COUNTY Of LOS ANGELES, STATE Of CALIFORNIA, AS PER MAP RECORDED IN BOOK 60 PAGE 88 Of MAPS, IN THE OFFICE OF THE COUNTY RECORDER Of SAID COUNTY. EXCEPT THEREfROM ALL RIGHT, TITLE AND INTEREST IN AND TO ALL MINERAL, OIL, NATURAL GASES, ASPHALTUM AND OTHER HYDROCARBON FORMS LYING MORE THAN 500 feet BELOW THE SURfACE Of LAND, BUT WITHOUT ANY RIGHT TO THE SURFACE Of SAID LAND ABOVE A DEPTH OF 500 FEET, AS RESERVED BY MICHAEL R. GARY, NEIL A. CRISPO, JOSEPH A. GARY, AND CATALDO AND JEANNE CRISPO, IN DEED RECORDED JUNE 18, 1975 AS INSTRUMENT NO. 459, OFFICIAL RECORDS. APN: 4342-010-008 PARCEL 2: LOT 9 IN BLOCK 16 Of TRACT NO. 5647, IN THE CITY OF BEVERLY HILLS, COUNTY Of LOS ANGELES, STATE Of CALIFORNIA, AS PER MAP RECORDED IN BOOK 60 PAGE 88 Of MAPS, IN THE OFFICE OF THE COUNTY RECORDER Of SAID COUNTY. APN: 4342-010-008 & 009 B07$5-000I\21 06559v2.doc Page 1 of I
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 Los Angeles on thma ) ) ci3, before me, 7øA O5%ht4AA (insert name and title of the fficer) /Jg /c% Notary Public, personally appeared who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PTY Of PERJURY under the laws of the State of California that the foregoing pagrapj true and 4 I YELENAOSADCHAYA Notary Public - Calitornia Los Angeles County 26, 2020 B0785-000l\2 I 06559v2doc Page I of2
My 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 va]idity of that document. State of California ) County of Los Angeles ) On, before me, tiy Notary Public, personally appeared I (insert name and title of the officer) who proved to me on the basis of satisfactory evmence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature. ifl\ ri C IN CosArgeiesOnty (Seal) Commisson 212749 r Comm. Es4rs Feb 10, 2021 B0785-0001\21 06559v2,doe Page 2 of2
SUBORDINATION OF DEED OF TRUST The undersigned ( Lender ) represents to the City of Beverly Hills that Lender is the sole owner and holder of that certain Construction Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing dated February 1, 2015 executed by Empire at Burton Way LLC, a California limited liability company, in favor of City National Bank, a national banking association, which was recorded on February 5, 2015 as Document No. 20150131357 in the Official Records of Los Angeles County, California (the Deed of Trust ). Lender hereby subordinates said Deed of Trust to the attached Affordable Housing Covenant and Regulatory Agreement ( Agreement ) dated August 14, 2017 executed by Empire at Burton Way, LLC, a California limited liability company, in favor of the City of Beverly Hills, recorded in the Official Records of Los Angeles County, California. BENEFICIARY/LIENHOLDER: City National Bank, a national banking association By: Name: Monica Zhang Title: Vice President B0785-000 I\2 I 06559v2.doc
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 Los Angeles ) On4 %l/;, before me, (insert name and title of the officer) Notary Public, personally appeared who proved to me on the basis of satisfactory evidence to be the persor whose name( is/aie subscribed to the within instrument and acknowledged to me that.helshe/they executed the same in hsiher/their authorized capacity(i.es). and that by histher/the-ir signatures) on the instrument the person, or the entity upon behalf of which the person( acted, executed the instrument..t - -z I certify under PENALTY Of PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signatur (Seal) I g.elresjan22j B0785-000l 2106559v2doc