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HomeMy WebLinkAboutItem 18 - Density Bonus Agreement No. 2026-03 – Watermarke Sandpointe Mixed-Use Development (200 East Sandpointe Ave.) Planning and Building Agency 71 www.santa-ana.org/pb Item # 18 City of Santa Ana 20 Civic Center Plaza, Santa Ana, CA 92701 Staff Report July 7, 2026 TOPIC: Density Bonus Agreement No. 2026-03 — Watermarke Sandpointe Mixed-Use Development (200 East Sandpointe Avenue) AGENDA TITLE Density Bonus Agreement No. 2026-03 — Watermarke Sandpointe Mixed-Use Development (200 East Sandpointe Ave.) RECOMMENDED ACTIONS 1. Adopt a resolution approving Density Bonus Agreement No. 2026-03; and RESOLUTION NO. 2026-XXX entitled A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA ANA APPROVING DENSITY BONUS AGREEMENT NO. 2026-03 FOR A MIXED-USE DEVELOPMENT WITH 400 UNIT RESIDENTIAL UNITS, INCLUDING 20 UNITS PROPOSED AS AFFORDABLE TO EXTREMELY LOW-INCOME HOUSEHOLDS, AND 13,887 SQUARE FEET OF COMMERCIAL SPACE FOR THE PROPERTY LOCATED AT 200 EAST SANDPOINTE AVENUE (APNS: 411-111-07, 411-111-09, 411-111-10, AND 411- 111-11) 2. Authorize the City Manager to execute a Density Bonus Agreement with CM Sandpointe, LLC, GH Sandpointe LLC, VMT Sandpointe LLC, and QC Sandpointe LLC, with a 55-year covenant term, for a rental residential development consisting of a 400 unit multi-family residential development, including 20 affordable units (5% of the total units) proposed as affordable to extremely low-income households, at the property located at 200 East Sandpointe Avenue (Agreement No. A-2026-XXX); and 3. Determine that, pursuant to the California Environmental Quality Act (CEQA) and the CEQA Guidelines, the recommended action (below) is exempt from further review under Sections 15183 and 15162. GOVERNMENT CODE §84308 APPLIES: Yes EXECUTIVE SUMMARY CM Sandpointe, LLC, GH Sandpointe LLC, JMT Sandpointe LLC, and QC Sandpointe LLC (collectively, "Applicant" and "Owner"), is requesting approval of Density Bonus Agreement (DBA) No. 2026-03 to allow the construction of a mixed-use development Density Bonus Agreement No. 2026-03—Watermarke Sandpointe (200 East Sandpointe Avenue) July 7, 2026 Page 2 consisting of 400 rental units, including 20 affordable units (5% of the total units) reserved for extremely low-income households, and 13,887 square feet of ground-floor commercial at the property located at 200 East Sandpointe Avenue ("Project"). As proposed, the Project does not request a numerical density bonus nor does it seek to utilize any concessions or waivers to deviate from development standards pursuant to California Government Code Sections 65915 through 65918 and Santa Ana Municipal Code (SAMC) Sections 41-1600 through 41-1607. Staff recommends approval of the Applicant's request as the Project is consistent with the General Plan, will add 400 units to the City's housing stock, satisfies inclusionary housing requirements through on-site affordable units, reinvests in an underutilized site, and would not result in adverse environmental or public health impacts. Planninq Commission Action On May 11, 2026, the Planning Commission held a public hearing for the Project and voted 6:0:1, with Commissioner Oliva absent, to approve Conditional Use Permit ("CUP") No. 2025-16 for proposed multifamily development and commercial uses, based on the required findings. Density Bonus Agreement No. 2026-03 was not considered by the Planning Commission, as no concessions or waivers were requested requiring documentation in a DBA pursuant to SAMC Section 41-1607. In accordance with SAMC Section 41-1602(d), approval of the DBA is under the jurisdiction of the City Council. DISCUSSION Table 1: Project and Location Information Item Information Project Address and 200 East Sandpointe Avenue—Ward 4 Council Ward Nearest Intersection Main Street and Sandpointe Avenue General Plan Designation District Center—Medium Low DC-1.5 Zoning Designation Hutton Centre Mixed Use Specific Development District— Specific Development No. 76 SD-76 , Zone 1 North Multifamily Residential, Office, Restaurant Surrounding Land Uses East Hotel and Surface Parkin South Manufacturing, Wholesale, Warehouse, Office, Parking Garage West Single-Family Residential across Main Street Property Size 5.37 acres 233,831 square feet Existing Site Development 158,178 s . ft. (gross floor area eight-story office building and surface parking Use Permissions Multi-Family Residential, Live-Work, Retail and Service (permitted under SD- 76, Zone 2, as part of SB 330 request) Zoning Code Sections Uses SD-76, Section 7, #5; SAMC Section 41-593 and 41-638(a)(1); Affected Article XVI.I (Density Bonus Project Description The Applicant proposes a two-phase multi-family mixed-use development incorporating rental apartments and ground-floor commercial units. Upon completion of both phases, the Project will include a total of 400 residential units and approximately 13,887 square Density Bonus Agreement No. 2026-03—Watermarke Sandpointe (200 East Sandpointe Avenue) July 7, 2026 Page 3 feet of commercial space. Phase 1, located on the western portion of the site, includes redevelopment of the existing surface parking area with 224 apartment units, 5,818 square feet of ground-floor commercial space, and a structured parking facility, while retaining the existing eight-story office building. Phase 2, located on the eastern portion of the site, includes demolition of the existing office building and construction of 176 apartment units and approximately 8,069 square feet of commercial space. The Project's residential component consists of a mix of studio, one-, and two-bedroom units ranging in size from approximately 576 square feet to 1,115 square feet offered in seven different floor plan layouts. Some residential units will feature private balconies or patios to enhance building articulation and provide additional outdoor living space for residents. The proposed residential density is 74.5 dwelling units per acre (du/acre), which is below the permitted maximum density of 90 du/acre. The Project features a contemporary architectural style consistent with multi-family and mixed-use developments currently under construction throughout Santa Ana and the surrounding region. Building massing is articulated through varied wall planes, material transitions, and six plaster color tones. Exterior materials include metal trim, railings, and awnings, horizontal wood-like cement panels, metal panels, vertical cement board siding, and glass railings. Ground-floor commercial frontages incorporate curtain wall glazing, muted black-and-white brick veneer, and taller ceiling heights for greater transparency into the spaces. A mural wall is proposed to wrap the corner of the commercial area near Main Street by the western courtyard. The Project provides approximately 85,960 square feet of common open space, representing 37% of the site area. Open space amenities include landscaped courtyards, private balconies, and patios for select residential units. Although not all units include private balconies, every resident gains access to generous common open space distributed site-wide, offering seating, landscaping, and massing breaks, with select areas designed for public accessibility. The highly amenitized resident-only space on Level 7 of the parking structure provides substantial recreational and social opportunities that fully compensate for any lack of private outdoor areas on select units. This space is designed for social and recreational use and features a 1,873-square-foot clubroom and a 2,476- square-foot fitness space with showers and restrooms, fitness, and yoga facilities. The rooftop amenity deck also includes an outdoor swimming pool and spa, cabanas, outdoor dining areas with barbeques, dining tables, trellised shade structures, lounge seating, lounge chairs, daybeds, and a fitness lawn. Lighting at the amenity deck will be conditioned to be equipped with dimmers and light shields, and fixtures shall be directed downward and away from adjacent properties to minimize spillover and glare. At the ground level, publicly accessible open space along Sandpointe Avenue will feature retail plazas with decorative accent paving, pedestrian lighting, and a variety of seating options. The resident-only east courtyard will provide additional recreational opportunities, including outdoor dining areas with barbeques, a game garden, a movie Density Bonus Agreement No. 2026-03—Watermarke Sandpointe (200 East Sandpointe Avenue) July 7, 2026 Page 4 screen, a bocce ball court, and a shaded olive grove. Additional ground-level resident amenities will include a 735-square-foot business lounge, dedicated dog park and dog spa, with lighting integrated throughout the resident courtyards, public plazas, and common open space areas. Density Bonus Under California Density Bonus law, developers proposing five or more residential units are allowed to seek increases in base density for providing on-site housing units in exchange for providing affordable units on site. To help make constructing on-site affordable units feasible, the law allows developers to seek up to five incentives/concessions and an unlimited number of waivers. The incentives/concessions are generally reductions in site development standards or modification of zoning code requirements or architectural design requirements, and waivers are essentially variances from development standards (a site or construction condition). The first version of the Density Bonus Law was adopted in 1979 and has since been amended at various times. Recent revisions allow affordable housing developers to request incentives/concessions and/or waivers or reductions for affordable or mixed- income developments, even if they do not require a numerical density bonus. Moreover, in early 2017, the law was amended to restrict the ability of local jurisdictions to require studies to "justify" the density bonus and requested incentives/waivers and places the onus on local jurisdictions to prove that the incentives/concessions or waivers are not financially warranted. For this Project, the developer is not requesting a State density bonus for additional units, incentive/concessions, or waivers as part of the Project. Due to the Project's five-percent (5%) affordability rate, the developer can seek one density bonus incentive/concession and unlimited waivers, pursuant to Section 65915 et al. of the California Government Code (Density Bonuses and Other Incentives). In addition, California Assembly Bill No. 2345, approved September 28, 2020, revised the State Density Bonus Law originally adopted in 1979 to provide additional benefits for projects that include qualifying affordable housing. The purpose of the State Density Bonus Law is to encourage the development and availability of affordable housing. Pursuant to California Government Code sections 65915 (d)(1) and 65915 (e)(1), a local jurisdiction is limited in its ability to deny requested incentives, concessions, and waivers. The City has analyzed the Project and has identified several areas of potential impacts; however, the conditions of approval proposed for the Project are intended to address the Project's potential impacts. Onsite Parking Density Bonus Agreement No. 2026-03—Watermarke Sandpointe (200 East Sandpointe Avenue) July 7, 2026 Page 5 The Project proposes to utilize the State's parking ratios for qualifying affordable housing projects pursuant to Government Code Section 65915(p), which require a maximum of one space per studio and one-bedroom unit and 1.5 spaces per two-bedroom unit. This reduction in parking standards is permitted by State Density Bonus Law and does not constitute an incentive/concession or waiver. At full buildout, the Project will provide a total of 718 parking spaces, exceeding the overall requirement of 516 spaces by 202 spaces. The residential component requires 447 parking spaces pursuant to California Government Code Section 65915(p), which establishes the applicable parking ratios for qualifying affordable housing developments. The commercial component requires 69 parking spaces based on a ratio of five spaces per 1,000 square feet of floor area. Table 2: Required and Provided Parking Unit Type Required Ratio Units/S . Ft. Retail Parking Spaces Studio 1.0 spaces 29 29 spaces required One1-Bedroom 1.0 space 277 277 spaces required Two-Bedroom 1.5 spaces 94 141 spaces required Retail 5 spaces per 1,000 s . ft. 13,887 s . ft. retail 69 spaces required 447 spaces required, Total 718 spaces provided The Project is not anticipated to have any parking impacts. However, to proactively address any neighborhood parking impacts that could result from the Project, the conditions of approval require a post-occupancy parking utilization survey and provisions requiring ongoing parking management practices throughout the life of the Project, including and measures such as: • Requiring onsite parking permits (such as stickers or hang-tags) for any parking in the onsite parking spaces for both residents and guests; • Policies for maximum time vehicles may be parked in the surface parking spaces, including any guest parking; • Requiring that overflow parking be directed to available spaces at the 6 Hutton Centre Drive (Griffin Towers) and 203 East Sandpointe Avenue garages; • Policies for towing unauthorized vehicles, vehicles parked in unauthorized locations (such as fire lanes), vehicles parking in surface guest parking without a sticker, hang- tag, or other identifiers, and vehicles parked longer than any maximum guest parking timeframes allowed; and • Routine garage inspections to ensure garage is available for vehicle parking. Collectively, these design and operational measures ensure that the Project is compatible with its surroundings and will not be detrimental to the health, safety, or general welfare of nearby residents or workers. Affordable Housing Opportunity and Creation Ordinance Density Bonus Agreement No. 2026-03—Watermarke Sandpointe (200 East Sandpointe Avenue) July 7, 2026 Page 6 The Project meets the affordable housing goal for the rental category of the City's Affordable Housing Opportunity and Creation Ordinance (AHOCO) by providing 20 onsite units designated for households earning 30% of the AMI (extremely low-income), which is currently set at $50,750 for a four-person, significantly enhancing the opportunity for income eligible Santa Ana households to rent a home in the City at a lower cost. The units will be dispersed throughout the community. These affordable units will consist of one studio, 14 one-bedroom, and five two-bedroom units, ranging from 576 to 1,115 square feet in size and will contain full kitchens, bathrooms, and open/common (living) areas. The developer's Inclusionary Housing Plan has been reviewed and approved by the City's Housing Division. Table 3: Affordable Unit Breakdown Unit Type Units Units in Affordable Project Percent of Unit Type Studio 576 s . ft. 1 29 3% One-Bedroom 710-735 s . ft. 14 277 5% Two-Bedroom 1,067-1,115 s . ft. 5 141 4% Total 20 400 Public Notification and Community Outreach As the City Council's approval of this agreement does not constitute a public hearing, no public notification or community outreach is required under applicable state law or local ordinances prior to Council action. However, staff notes that project notifications were posted, published, and mailed in accordance with City and State regulations for the required Planning Commission public hearing. In addition, staff contacted the provided contacts for the Sandpointe Neighborhood Association to ensure they were aware of the project and Planning Commission public hearing. ENVIRONMENTAL IMPACT Pursuant to the California Environmental Quality Act (CEQA) and CEQA Guidelines, the Applicant submitted CEQA analysis for a project consisting of 400 dwelling units, 13,887 square feet of commercial space, and eight levels of parking. The City retained Ascent Environmental, Inc. to conduct an independent peer review, which concluded that the analysis and findings are adequate to support the City's determination. The Project was subsequently revised to remove one dwelling unit, redesignating it as a residential amenity/business lounge, remove basement parking, and to provide 5% affordability for extremely low-income households. Because the Project does not increase the project footprint or building envelope and is equal to or less intensive than the project originally analyzed, the environmental analysis remains valid. The Project qualifies for exemption from further environmental review under Sections 15183 and 15162. Section 15183 applies to projects consistent with the General Plan or zoning where redevelopment impacts have been adequately analyzed for the area, while Density Bonus Agreement No. 2026-03—Watermarke Sandpointe (200 East Sandpointe Avenue) July 7, 2026 Page 7 Section 15162 applies when a previously certified Program Environmental Impact Report (Program EIR) adequately analyzed the environmental effects of an activity and no new significant impacts would result from the proposed Project. The Project is within the scope of the 2022 Santa Ana General Plan EIR (SCH No. 2020029087). CEQA Guidelines Section 15162 prohibits a subsequent or supplemental EIR unless: (1) substantial changes are proposed in the project; (2) substantial changes occur in circumstances under which the project is undertaken; or (3) new information of substantial importance becomes available. The Project is consistent with the land use designation analyzed in the General Plan EIR. No supplemental or subsequent EIR is required because: (1)the amendment will not require major revisions of the EIR; (2) there have been no substantial changes with respect to circumstances under which the General Plan was approved that will require major revisions; and (3) no new information, which was not known and could not have been known at the time the EIR was certified as complete, has become available. The prior EIR adequately describes the environmental setting, impacts, and mitigation measures. Therefore, a Notice of Exemption, Environmental Review No. ER-2024-45, will be filed for the Project. FISCAL IMPACT There is no fiscal impact associated with this action. EXHIBITS 1. Resolution — Density Bonus Agreement 2. Draft Density Bonus Agreement 3. May 11, 2026 — Planning Commission Staff Report and Exhibits (hyperlink) Submitted By: Ali Pezeshkpour, AICP, Executive Director of Planning and Building Agency and Michael L. Garcia, Executive Director of Community Development Agency Approved By: Alvaro Nunez, City Manager RESOLUTION NO. 2026-XX A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA ANA APPROVING DENSITY BONUS AGREEMENT NO. 2026-03 FOR A MIXED-USE DEVELOPMENT WITH 400 RESIDENTIAL UNITS, INCLUDING 20 UNITS PROPOSED AS AFFORDABLE TO EXTREMELY LOW-INCOME HOUSEHOLDS, AND 13,887 SQUARE FEET OF COMMERCIAL SPACE FOR THE PROPERTY LOCATED AT 200 EAST SANDPOINTE AVENUE (APNS: 411-111-07, 411-111-09, 411-111-10, AND 411-111-11) BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SANTA ANA AS FOLLOWS: Section 1. The City Council of the City of Santa Ana hereby finds, determines and declares as follows: A. CM Sandpointe, LLC, GH Sandpointe LLC, JMT Sandpointe LLC and QC Sandpointe LLC (collectively, "Applicant" and "Owner"), request approval of Density Bonus Application (DBA) No. 2026-03 to facilitate the construction of a mixed-use development, with 400 apartment units, including 20 affordable units (five percent of the total units) reserved for extremely low- income households, and 13,887 square feet of ground-floor commercial space for the property located at 200 East Sandpointe Avenue ("Project"). B. California Government Code Sections 65915 through 65918 (State Density Bonus Law) and Santa Ana Municipal Code (SAMC) Sections 41-1600 through 41-1607 authorize qualifying housing developments that provide affordable housing units to enter into a Density Bonus Agreement to document affordability obligations and related requirements. C. The Project includes 20 affordable housing units reserved for extremely low- income households, representing five percent of the total residential units, and is therefore eligible to utilize the provisions of State Density Bonus Law. D. As proposed, the Project does not request a numerical density bonus, incentive, concession, waiver, or reduction in development standards pursuant to California Government Code Sections 65915 through 65918 or SAMC Sections 41-1600 through 41-1607. E. The Project proposes to utilize the parking standards set forth in California Government Code Section 65915(p) for qualifying affordable housing developments. The Project provides 718 parking spaces, which exceeds the applicable parking requirement of 516 spaces. Utilization of the parking standards established by State Density Bonus Law does not constitute an incentive, concession, waiver, or reduction in development standards. F. On May 11 , 2026, the Planning Commission of the City of Santa Ana held a duly noticed public hearing and, at that time, considered all testimony, written and oral, and approved, based on findings, Conditional Use Permit ("CUP") No. 2025-16 for proposed multifamily development and commercial uses. Density Bonus Agreement No. 2026-03 was not considered by the Planning Commission because the Project does not request any incentives, concessions, waivers, or reductions requiring Planning Commission action pursuant to Santa Ana Municipal Code Section 41-1607. G. Pursuant to SAMC Section 41-1602(d), approval of Density Bonus Agreement No. 2026-03 is within the purview of the City Council. H. On July 7, 2026, the City Council of the City of Santa Ana held a regular meeting and considered approval of Density Bonus Agreement No. 2026- 03. I. The City Council hereby approves Density Bonus Agreement No. 2026-03. This Agreement allows for the construction of the proposed Project in accordance with the provisions of State Density Bonus Law and SAMC Section 41-1607, as conditioned. Section 2. Pursuant to the California Environmental Quality Act (CEQA) and CEQA Guidelines, the Project qualifies for exemption from further environmental review under Sections 15183 and 15162. Section 15183 applies to projects consistent with the General Plan or zoning where redevelopment impacts have been adequately analyzed for the area, while Section 15162 applies when a previously certified Program Environmental Impact Report (Program EIR) adequately analyzed the environmental effects of an activity and no new significant impacts would result from the proposed Project. The Project is within the scope of the 2022 Santa Ana General Plan EIR (SCH No. 2020029087). CEQA Guidelines Section 15162 prohibits a subsequent or supplemental EIR unless: (1) substantial changes are proposed in the project; (2) substantial changes occur in circumstances under which the project is undertaken; or (3) new information of substantial importance becomes available. The Project is consistent with the land use designation analyzed in the General Plan EIR. No supplemental or subsequent EIR is required because: (1) the amendment will not require major revisions of the EIR; (2)there have been no substantial changes with respect to circumstances under which the General Plan was approved that will require major revisions; and (3) no new information, which was not known and could not have been known at the time the EIR was certified as complete, has become available. The prior EIR adequately describes the environmental setting, impacts, and mitigation measures. Therefore, a Notice of Exemption, Environmental Review No. ER-2024-45, will be filed for the Project. Section 3. The Applicant shall indemnify, protect, defend and hold the City and/or any of its officials, officers, employees, agents, departments, agencies, authorized volunteers, and instrumentalities thereof, harmless from any and all claims, demands, lawsuits, writs of mandamus, referendum, and other proceedings (whether legal, equitable, declaratory, administrative or adjudicatory in nature), and alternative dispute resolution procedures (including, but not limited to arbitrations, mediations, and such other procedures), judgments, orders, and decisions (collectively "Actions"), brought against the City and/or any of its officials, officers, employees, agents, departments, agencies, and instrumentalities thereof, that challenge, attack, or seek to modify, set aside, void, or annul, any action of, or any permit or approval issued by the City and/or any of its officials, officers, employees, agents, departments, agencies, and instrumentalities thereof (including actions approved by the voters of the City) for or concerning the Project, whether such Actions are brought under the Ralph M. Brown Act, California Environmental Quality Act, the Planning and Zoning Law, the Subdivision Map Act, Code of Civil Procedure sections 1085 or 1094.5, or any other federal, state or local constitution, statute, law, ordinance, charter, rule, regulation, or any decision of a court of competent jurisdiction. It is expressly agreed that the City shall have the right to approve the legal counsel providing the City's defense, and that Applicant shall reimburse the City for any costs and expenses directly and necessarily incurred by the City in the course of the defense. City shall promptly notify the Applicant of any Action brought and City shall cooperate with Applicant in the defense of the Action. Section 4. The City Council of the City of Santa Ana, at its regular meeting, hereby approves Density Bonus Agreement No. 2026-03 and authorizes the City Manager to execute the Agreement in a form approved by the City Attorney. This approval is based on the written materials submitted, including:The Planning Commission Staff Report dated May 11, 2026; and the Request for City Council Action dated July 7, 2026, and their respective exhibits. Section 5. This resolution shall take effect immediately upon its adoption by the City Council, and the City Clerk shall attest to and certify the vote adopting this resolution. ADOPTED this day of , 2026. Valerie Amezcua Mayor APPROVED AS TO FORM: Sonia R. Carvalho, City Attorney B Y: t Melissa M. Crosthwaite Senior Assistant City Attorney AYES: Councilmembers NOES: Councilmembers ABSTAIN: Councilmembers NOT PRESENT: Councilmembers CERTIFICATE OF ATTESTATION AND ORIGINALITY I, Jennifer L. Hall, City Clerk, do hereby attest to and certify the attached Resolution No. 2026-XX to be the original resolution adopted by the City Council of the City of Santa Ana on ) 2026. Date: City Clerk City of Santa Ana RECORDING REQUESTED BY: AND WHEN RECORDED MAIL TO: City of Santa Ana Clerk of the Council 20 Civic Center Plaza(M-30) P.O.Box 1988 Santa Ana, California 92702 Attention: Clerk of the Council Free Recording pursuant to Government Code 27383 DENSITY BONUS HOUSING AGREEMENT WITH DECLARATION OF COVENANTS,CONDITIONS AND RESTRICTIONS 200 E. Sandpointe Avenue,Santa Ana,California (APN: 411-111-07,411-111-09,411-111-10,411-111-11) This DENSITY BONUS HOUSING AGREEMENT WITH DECLARATION OF COVENANTS, CONDITIONS AND RESTRICTIONS ("Agreement"), is made and entered into this_day of ,2026,for reference purposes only,by and between the City of Santa Ana, California, a charter city and municipal corporation of the State of California ("City"), and the following entities: CM Sandpointe, LLC, a California limited liability company; GH Sandpointe, LLC, a California limited liability company; JMT Sandpointe, LLC, a California limited liability company; QC Sandpointe, LLC, a California limited liability company (collectively,the "Developer"). City and Developer are sometimes referred to collectively as the "Parties"and individually as a"Party." RECITALS A. Developer is the owner of that certain property located at and commonly known as 200 E. Sandpointe Avenue,Santa Ana,California,California,and legally described as set forth in Exhibit A attached hereto and incorporated herein by this reference as if set forth in full("Property"). B. Developer is proposing to develop a housing development project with a total of four hundred (400) residential apartment units, with related improvements and amenities, as more particularly set forth in Density Bonus Application No. DBA- 2026-06 ("Project"). The Project will include twenty (20) units restricted for occupancy by Extremely Low Income Households for an Affordable Rent,on terms and conditions further set forth herein. C. Santa Ana Santa Ana Municipal Code sections 41-1600, et seq. ("City Density Bonus for Affordable Housing"),and California Government Code sections 65915, et seq. ("State Density Bonus Law"), set forth a process to provide increased 1 200 E. Sandpointe Avenue Density Bonus Agreement residential densities and incentives,concessions,and waivers to property owners or developers who restrict a portion of their residential development to low income, very-low income, extremely-low income, seniors or other qualified households, as specified. These regulations are intended to materially assist the housing industry in providing adequate and affordable housing for all economic segments of the community and to provide a balance of housing opportunities for very-low income, low income, seniors and other qualified households throughout the City. D. The allowable base density for the Property under the City's Municipal Code is ninety (90) dwelling units per acre. The Project site is 5.37 acres, resulting in a maximum allowable density for the Project of four hundred and eighty four(484) units. The Project proposes restricting twenty (20) units for Extremely Low Income Households. E. The Project complies with the affordability requirements for a housing development as set forth in the State Density Bonus Law and City Density Bonus for Affordable Housing. F. In light of the purpose of the State Density Bonus Law and City Density Bonus for Affordable Housing, and the express provisions of Government Code Sections 65915(d)(1)(2)(C),the City has determined that the Project is eligible for a density bonus, one (1) incentive or concession, and waivers as prescribed by the State Density Bonus Law. G. By providing affordable housing for Extremely Low Income Households in accordance with this Agreement, the Project will also comply with the City's Affordable Housing Opportunity and Creation Ordinance, as set forth in Article XVIII.1 of the Santa Ana Municipal Code. H. This Agreement, and the exhibits attached hereto and incorporated herein by reference,are intended to set forth the terms and conditions for the implementation of the Project's requirement to provide affordable housing units in exchange for receiving the density bonus, concession and waivers set forth herein. NOW,THEREFORE,in consideration of the above recitals,which are incorporated herein by this reference, and of the mutual covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows: 1. DEFINYTIONS AND EXHIBITS 1.1 Definitions. In addition to the terms that may be defined elsewhere in this Agreement,the following terms when used in this Agreement shall be defined as follows: 1.1.1 "Adjusted for family size appropriate to the unit" shall have the meaning set forth by Health and Safety Code Section 50052.5(h). 2 200 E.Sandpointe Avenue Density Bonus Agreement 1.1.2 "Affordable Rent" means the maximum Monthly Rent that may be charged to and paid by an Eligible Household for the Affordable Units, as required by the terms of this Agreement, and which shall not exceed the amount of Affordable Rent authorized by California Health and Safety Code Section 50053 and pursuant to implementing regulations published by the California Department of Housing and Community Development, as determined from the Median Income for Orange County, as defined below in Section 1.1.16. The Affordable Rent shall be adjusted to reflect a reasonable utilities allowance for utilities paid by the household using the Santa Ana Housing Authority Multi-Family Housing Utility Allowance Schedule, and shall be updated no less than annually. 1.1.3 "Affordable Rent Schedule" means a rent schedule established as of the date of issuance of an occupancy permit(exclusive of tenant utility payments or security deposits) for the required number/percentage of the total number of units in the Project which are to be rented or available for rent to Eligible Households. The Affordable Rent Schedule shall be established at the time of the issuance of the occupancy permit("Initial Rent Schedule")and shall be created in accordance with the Orange County,California Primary Metropolitan Statistical Area ("PMSA") as published by the California Department of Housing and Community Development ("HCD"), adjusted for family size,and shall be updated no less than annually. 1.1.4 "Affordable Units(s)" means the twenty(20)unit(s), which shall comply with the Affordable Unit Mix set forth in Section 2.6.2. Any change to the number,bedroom size, or distribution of Affordable Units is subject to City Manager approval. 1.1.5 "Agreement" means this Density Bonus Housing Agreement with Declaration of Covenants, Conditions, and Restrictions. 1.1.6 "City" means the City of Santa Ana, California 1.1.7 "City Council" means the City Council of the City of Santa Ana. 1.1.8 "City Attorney" means the City Attorney for the City of Santa Ana. 1.1.9 "City Manager" means the City Manager for the City of Santa Ana. 1.1.10 "City's Planning Commission" means the Planning Commission for the City of Santa Ana. 1.1.11 "Density Bonus Application" shall mean the Density Bonus Application No. DBA-2026-06 for the Project. 1.1.12 "Developer" means, individually and collectively, CM Sandpointe, LLC, a California limited liability company; GH Sandpointe, LLC, a California limited liability company; JMT Sandpointe,LLC, a California limited liability company; QC Sandpointe, LLC, a California limited liability company, and their permitted successors and assigns to all or any part of the Property,Project or this Agreement. 3 200 E.Sandpointe Avenue Density Bonus Agreement 1.1.13 "Effective Date" means the date the Developer and the City shall record or cause to be recorded in the Official Records for Orange County, California, an executed original of this Agreement,pursuant to section 4.1 herein. 1.1.14 "Eligible Household" means a Household whose income does not exceed the qualifying limits for an Extremely Low Income Household, as defined below. 1.1.15 "Extremely Low Income Household(s)" means a Household whose income does not exceed the limits for"extremely low-income"as defined in California Health and Safety Code section 50106. Pursuant to Health and Safety Code section 50105,an Extremely Low Income Household is also a"very low income household." 1.1.16 "Household" means all persons residing in a Unit. 1.1.17 "Median Income" means the Orange County, California area median income, adjusted for family size pursuant to California Health and Safety Code § 50052.5(h), as periodically published by HCD. 1.1.18 "Monthly Rent" means the total of monthly payments for: (a) use and occupancy of each Affordable Unit and land and facilities associated therewith; (b)any separately charged fees or service charges-assessed by Developer which are required of all tenants,other than security deposits, application fees or credit check fees; (c)a reasonable allowance for an adequate level of service of utilities not included in (a) or (b) above, including garbage collection, sewer, water, electricity, gas and other heating, cooking and refrigeration fuels, but not including telephone or cable service, to the extent applicable and charged to tenant; and, (d) possessory interest, taxes or other fees or charges assessed for use of the land and facilities associated therewith by a public or private entity other than Developer.In the event that certain utility charges are paid by the landlord rather than the tenant,no utility allowance shall be deducted from the rent for that type of utility charge. 1.1.19 "Official Records" means the Official Records for the County of Orange, where the Property is located. 1.1.20 "Project" means that certain affordable residential development as more particularly described in the Recitals and Section 2 of this Agreement. 1.1.21 "Project Approvals" means the entitlements for the Project approved by the City's Planning Commission or about ,2026,and any subsequent approvals of the Project by the City Council. 1.1.22 "Property"means that certain real property more particularly described in the legal description in Exhibit A and improvements thereon. 1.1.23 "State Density Bonus Law" means Government Code sections 65915, et seq., as they exist on the Effective Date. 4 200 E.Sandpointe Avenue Density Bonus Agreement 1.1.24 "Term" means the period during which this Agreement shall be in full force and effect, as provided for in Section 5.1 below. 1.1.25 "Unit" means a residential dwelling unit within the Project to be constructed or caused to be constructed by Developer pursuant to this Agreement. 1.1.26 "Unrestricted Units" means the Units within the Project to be constructed or caused to be constructed by Developer to a Household without any income or affordability restriction. 1.2 Exhibits. The following documents are attached to, and by this reference made a part of,this Agreement: 1.2.1 Exhibit A—Legal Description of the Property 1.2.2 Exhibit B—Tenant Verification 1.2.3 Exhibit C—Annual Tenant Recertification 1.2.4 Exhibit D—Annual Rental Housing Compliance Report 1.2.5 Exhibit E—Notice of Affordability Restrictions on Transfer of Property 2. DEVELOPMENT OF THE PROPERTY 2.1 Project. Developer shall develop, operate, and maintain, or cause the development, operation and maintenance of, the Property as four hundred (400) unit rental residential community,with twenty(20)Affordable Units for Eligible Households. 2.2 Density Bonus. Developer agrees that it is not requesting additional density for the Project. 2.3 Development Concessions,Incentives,and Waivers. Under State Density Bonus Law, a housing development may be entitled to concessions, incentives, and waivers. Developer agrees that it is not requesting any concessions,incentives, or waivers for the Project. 2.4 Parking Requirements. The Project shall provide seven hundred eighteen (718) individual parking spaces on the Property to residents and guests of the Project. Developer agrees and acknowledges that this parking requirement exceeds the minimum parking ratio under Government Code section 65915(p), and that Developer agrees to the parking required herein due to other benefits received under this Agreement and the Project Approvals. 2.5 No Concessions, Incentives, or Waivers. Developer acknowledges and agrees that no further concessions,incentives,waivers or parking requirements are requested,and that the terms set forth in Section 2.3 and 2.4 fully satisfies any duty City may have under the City Density Bonus for Affordable Housing, the Density Bonus Law, or any other law or regulation to provide any density bonus incentive or to waive any building, zoning, or other requirement in connection 5 200 E. Sandpointe Avenue Density Bonus Agreement with a density bonus. By this Agreement, Developer releases any and all claims Developer may have against City in any way relating to or arising from City's obligation to waive requirements of or provide development incentives pursuant to the City Density Bonus for Affordable Housing and the Density Bonus Law applicable to the Project. 2.6 Unit Mix. 2.6.1 Unrestricted Units. The Project, for purposes of this Agreement, may have no more than three hundred eighty(380)Unrestricted Units, inclusive of one (1) manager's unit , as set forth in sub-paragraph 2.6.3, below, and pursuant to the terms and conditions of this Agreement. Any change to the unit distribution of the Unrestricted Units may affect the comparability of the Affordable Units and is subject to City Manager approval. 2.6.2 Affordable Units. The Project, for purposes of this Agreement, shall have no less than twenty(20) Affordable Units, for Eligible Households, as set forth in sub-paragraph 2.6.3, and pursuant to the terms and conditions of this Agreement. The Affordable Units shall be consistent with all City approvals, comparable in bedroom distribution and amenities to the Unrestricted Units, and shall be located throughout the Project as required under Santa Ana Municipal Code section 41-1602(c)(5). 2.6.3 Unit Mix. Unit Type Plan Total Units Affordable Unit Phase I Phase II Total Units Mix Studio S1 20 9 29 1 3% 1 Bedroom Al 103 80 183 9 5% 1 Bedroom A2 51 40 91 5 5% 1 Bedroom A3 1 1 2 0 0% 2 Bedrooms B1 21 32 53 3 6% 2 Bedrooms B2 15 0 15 1 7% 2 Bedrooms B3 13 14 27 1 4% TOTAL 224 176 400 20 5% 2.7 Minimum Development Standards for Affordable Units; Phasing Plan. 2.7.1 The Affordable Units shall be constructed with the same exterior appearance and interior features, fixtures, and amenities, and shall use the same type and quality of materials as provided for any Unrestricted Units. 2.7.2 The Project Approvals authorize construction of the Units in two phases, with initial construction of two hundred twenty four(224) Units ("Phase 1"), followed by one hundred seventy six (176) Units ("Phase 2"). Phase 1 shall include not less than eleven(11) Affordable Units and, upon completion of Phase 2, the Project shall have all twenty (20) Affordable Units. Phase 1 shall include not less than one(1)studio unit, eight(8) 1-bedroom units and two (2)2-bedroom units. 6 200 E.Sandpointe Avenue Density Bonus Agreement 2.7.3 The Affordable Units shall be reasonably disbursed through the Project. The phasing for construction of the Affordable Units is intended to ensure the required number of Affordable Units are constructed. 2.8 Permits and Processing_ Compliance with Laws. Developer, at its sole cost and expense, or as otherwise set forth in a separate written agreement, shall secure or cause to be secured any and all permits that may be required for development of the Project by City or any other federal, state, or local governmental entity having or claiming jurisdiction over the Property or Project. Upon securing any and all permits, and all necessary financing and property interests, Developer shall carry out and perform the development,operation,and maintenance of the Project or cause the performance of the development, operation, and maintenance of the Project, in conformity with all applicable federal, state, and local laws and regulations, and all conditions of approval issued by the City Council and City's Planning Commission for the Project. Any changes to the Project shall be reviewed by the City to determine compliance with this Agreement. If any changes to the Project shall materially alter the ability of Developer to comply with any terms of this Agreement in City's sole determination, then City and Developer shall meet and confer to address amendments and revisions to this Agreement as necessary. 2.9 Relocation Prior to Development of Project. Developer represents and warrants that the Project does not require relocation of any existing residents, occupants, or other persons or entities who may be entitled to relocation assistance.In addition to any other indemnity provided by Developer under this Agreement, Developer shall indemnify, defend (with counsel of City's choosing and the consent of Developer,which shall not be unreasonably withheld,and which may be joint defense counsel upon City's and Developer's consent), and hold harmless City and all of its officials, officers, employees, representatives, volunteers and agents from any and all alleged or actual claims, causes of action, liabilities, and damages from any third party for relocation assistance,benefits and costs prior to the completion of the development of the Project. 2.10 Mechanic's Liens; Indemnification. Developer shall take all actions reasonably necessary to remove any future mechanic's liens or other similar liens (including design professional liens) against the Property or Project, or any part thereof, by reason of work, labor, services,or materials supplied or claimed to have been supplied to Developer or caused by, at the direction of, or on behalf of Developer. Prior to the recording of this Agreement(or memorandum thereof)pursuant to Section 4.1 below,Developer shall provide evidence from the Title Company of any new recordings against the Property or Project.City hereby reserves all rights to post notices of non-responsibility and any other notices as may be appropriate upon a filing of a mechanic's lien. In addition to any other indemnity provided by Developer under this Agreement, Developer shall indemnify,defend(with counsel of City's choosing and the consent of Developer,which shall not be unreasonably withheld, conditioned or delayed and which may be joint defense counsel upon City's and Developer's consent), and hold harmless City and all of its officials, officers, employees,representatives,volunteers and agents from any and all alleged or actual claims,causes of action, liabilities, and damages from any third party by reason of a mechanic's lien or work, labor, services,or materials supplied or claimed to have been supplied to Developer or caused by, at the direction of,or on behalf of Developer. 7 200 E. Sandpointe Avenue Density Bonus Agreement 3. AFFORDABILITY 3.1 Affordability Term. Each Affordable Unit shall be restricted to use and occupancy by Eligible Households for a term of not less than fifty-five (55)years ("Affordability Term"). The Affordability Term shall commence on the date when an Affordable Unit receives all required occupancy permits from the City and expire on the date that is fifty-five (55) years after the date when the Affordable Unit is first made available for occupancy to Eligible Households pursuant to this Agreement. The Affordability Term shall be determined for each individual Affordable Unit. 3.2 Memorializing Commencement of Affordabili y Term. Developer shall keep or cause to be kept detailed records of the commencement date of the Affordability Term for each Affordable Unit. City shall have the right to review and verify said records to ensure that the commencement date specified by Developer for an Affordable Unit coincides with the date that the Affordable Unit received all permits from City required for occupancy of the Unit.In the event that a conflict exists between the date specified by Developer for the commencement of the Affordability Term for an Affordable Unit and the date specified by City's issuance of all required permits for occupancy of the Unit, the date specified by City's issuance of all required permits for occupancy of the Unit shall control. 3.3 Levels of Affordability. 3.3.1 Affordable Rent. Developer covenants that all Affordable Units in the Project shall at all times during the Affordability Term be rented to, or held vacant and available for immediate occupancy by, an Eligible Household at an Affordable Rent. 3.3.2 Affordable Rent for Eligible Households. The Affordable Rent for Eligible Households shall not exceed the limits set forth in California Health and Safety Code Section 50053 and implementing regulations, which provide that the Affordable Rent shall not exceed thirty percent(30%)times thirty percent(30%) of the Median Income, as adjusted for family size appropriate to the unit. Affordable Rent shall comply with implementing regulations by HCD. 3.3.3 Affordable Rent Schedule. Prior to issuance of a Certificate of Occupancy for the Project, and thereafter within thirty (30) days of receipt of a written request by the City, Developer shall provide to the City the Affordable Rent Schedule,which City shall have not less than thirty (30) days to review and approve or disapprove, which approval shall not be unreasonably withheld. 4. OPERATION OF THE PROJECT BY DEVELOPER 4.1 Payment of Density Bonus Setup Fee. Developer shall pay a Density Bonus Setup Fee in the amount of One Hundred Seventy Three Thousand Three Hundred Seventy Two Dollars and One Cent ($173,372.01) on or before the date this Agreement is considered by the City's Planning Commission. 8 200 E.Sandpointe Avenue Density Bonus Agreement 4.2 Recording of Documents; Priority. 4.2.1 The terms and conditions of this Agreement are a condition for issuance of a building permit, and this Agreement is recorded to ensure that the Developer and subsequent successors in interest have notice of and comply with the requirements herein. Prior to recording a final map for the Project or, if no map is required, issuance of building permits for the Project, Developer and the City shall record or cause to be recorded in the Official Records for Orange County, California, an executed original of this Agreement. City shall cooperate with Developer in promptly executing in recordable form this Agreement. The date of recording of the Agreement shall be the Effective Date of the Agreement. Upon the date of recording,the terms and conditions of this Agreement shall be binding upon and run with the Property and Project for the Term of this Agreement. It is the express intent and agreement between the Parties that this Agreement shall remain binding and enforceable against the Property, the Project, and the Units to ensure compliance with the State Density Bonus Law and City Density Bonus Law, and to ensure the continued supply of Affordable Units in the Project, except as expressly set forth in this Agreement. 4.2.2 The Agreement shall be recorded against the Property and have priority over those matters of public record, except as approved in writing by the City. For purposes of this paragraph, Developer shall provide the City with a preliminary title report for the Property dated not less than thirty (30) days prior to the execution of this Agreement, and updates to the preliminary title report as reasonably requested by the City. Developer agrees and warrants that it will exercise reasonable efforts to obtain the consent or approval to a subordination agreement with any senior lienholders and that failure to obtain such consent or approval may constitute a default of this Agreement. 4.3 Rental of Units. Upon the completion of construction of the Project and receipt by Developer of all required permits for the occupancy of the Units,Developer shall rent or cause to be rented each Affordable Unit to Eligible Households for the Affordability Term for such Affordable Unit in accordance with the terms and conditions set forth in this Agreement, which provide among other terms and conditions for the rental of each Affordable Unit at an Affordable Rent to an Eligible Household for the Affordability Term. 4.4 Occupancy Levels. Subject to state or federal laws and regulations, the number of persons permitted to occupy each Affordable Unit shall not exceed two persons per bedroom, plus one person. If an Eligible Household, during the terms of its tenancy, adds members that exceed the maximum occupancy allowed under this section, Developer shall provide written notification informing the household that: it is over-occupancy; has been placed on a waiting list for up to one-hundred and eighty(180) days; the expiration date of the waiting list; and the terms for terminating the lease. A written status update will be provided to the household at one-hundred and twenty(120) days,ninety(90) days, sixty(60) days and thirty(30)days if applicable. 4.5 Use of the Property. All uses conducted on the Property by Developer, including, without limitation, all activities undertaken by the Developer pursuant to this Agreement, shall conform to all applicable provisions of the Santa Ana Municipal Code and other applicable federal,state,and local laws,rules,and regulations. The Project shall at all times during 9 200 E.Sandpointe Avenue Density Bonus Agreement the Term of this Agreement be used in accordance with the Project Approvals and provide for the Affordable Units as required herein. Unless specifically authorized by the Project Approvals,the Property or any portion thereof shall not be used as a hotel,motel,dormitory, fraternity or sorority house, rooming house, hospital, nursing home, sanitarium or rest home, or be converted to condominium ownership. All of the community facilities and any social programs provided to the Project's residents shall be available on an equal,nondiscriminatory basis to residents of all Units at the Project. 4.6 Maintenance. Developer shall, at all times during the term of this Agreement, cause the Property and the Project to be maintained in a decent, safe and sanitary manner, regardless of cause of the disrepair. Owner shall be fully and solely responsible for costs of maintenance, repair, addition and improvements. City, and any of its employees, agents, contractors or designees shall have the right to enter upon the Property at reasonable times and in a reasonable manner to inspect the Project, after providing notice as follows: (i) at least a 24-hour notice to Developer and Tenants of the Affordable Unit which will be inspected, or(ii) at least 48 hours' notice to Developer,which shall promptly give notice to Tenants of the Affordable Unit to be inspected. 4.7 Affordable Rental Lease Agreement. Developer shall prepare and obtain City's approval, which approval shall not be unreasonably withheld, conditioned or delayed, of a rental lease agreement for the Affordable Unit("Affordable Unit Lease Agreement")for the Affordable Unit. All Affordable Unit Lease Agreements must 1) identify the names and ages of all members of the household who will occupy the Affordable Unit; and 2) state that the Household's right to occupy the Affordable Unit is subject to compliance with the Affordable Rent requirements, adjusted for family size appropriate to the unit,as periodically published by HCD. All Affordable Unit Lease Agreements must be consistent with the terms contained in this Density Bonus Agreement. 4.8 Selection of Tenants. 4.8.1 Developer shall be responsible for the selection of tenants for the Affordable Units in compliance with lawful and reasonable criteria and the requirements of this Agreement. 4.8.2 Local preference for Santa Ana residents and workers in tenant selection for the Affordable Units shall be a requirement of the Project. Subject to applicable laws and regulations governing nondiscrimination and preferences in housing occupancy required by the State of California and Federal law,the Developer shall give preference in leasing the Affordable Units to households that live and/or work in the City of Santa Ana or who have an active Housing Choice Voucher issued by the Housing Authority of the City of Santa Ana or any other Public Housing Authority. 4.8.3 A waiting list must be created from a lottery generated from the initial pool of rental applications for the Affordable Units. The waiting list will track applicant name and contact information, lottery number (or designated number after the initial lottery), local preference, household income, household size, status of application, and any other information deemed necessary. The waiting list will be maintained as an electronic file and available for audit 10 200 E. Sandpointe Avenue Density Bonus Agreement by the City of Santa Ana in accordance with resident selection procedures as set forth herein. Prior to any applicants being removed from the waiting list for the Affordable Units,the Developer must market the units to Santa Ana residents (e.g. social media post, etc.) and the City must verify that the local preference has been correctly applied in the lottery and application process. 4.8.4 Prior to the rental or lease of an Affordable Unit to a tenant(s), Developer shall require the tenant(s)to execute a written lease and to complete a Tenant Income Verification Form (in substantially the form attached hereto as Exhibit B) certifying that the tenant(s) occupying the Affordable Unit is/are an Eligible Household and otherwise meet(s)the eligibility requirements established for the Affordable Unit. Developer shall verify the income of the tenant(s)as set forth herein. 4.8.5 The Developer may rent or lease an Affordable Unit(s) to a nonprofit organization or an entity affiliated with a nonprofit organization, provided that the nonprofit organization or entity is required as a condition of that lease (a "Master Lease") to sublease the Affordable Unit to an Eligible Household. The Master Lease shall be provided to the City,which shall have thirty (30) days to review and approve, which approval shall not be unreasonably withheld. Prior to the rental or lease of an Affordable Unit under a Master Lease,Developer shall require the lessee thereunder to require each prospective sub-tenant to complete a Tenant Income Verification Form (in substantially the form attached hereto as Exhibit B) certifying that the resident(s) occupying the Affordable Unit is/are an Eligible Household and otherwise meet(s)the eligibility requirements established for the Affordable Unit under this Agreement. If an Affordable Unit subject to a Master Lease is not rented within thirty (30) days, then the City shall have the right to require termination of the Master Lease or declare a default under this Agreement for failure to fully utilize the Affordable Unit. The Master Lease shall require compliance with this Agreement, and nothing in this paragraph or the Master Lease shall relieve Developer from compliance with the obligations of this Agreement. 4.9 Income Verification and Certification. Developer shall make reasonable efforts to verify or cause to be verified that the income and asset statement provided by an applicant in an income certification is accurate by taking, at a minimum, at least one of the following steps as a part of the verification process: (1) obtain three months consecutive pay stubs for the most recent pay period,(2)obtain an income tax return for the most recent tax year, (3) obtain an income verification form from the applicant's current employer, (4) 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 (5) if the applicant is unemployed and has no such tax return, obtain another form of independent verification. 4.9.1 Gross Household Income. Gross household income means all income from whatever source from all adult Household members,which is anticipated to be received during the 12-month period following the date of the determination of Gross Household Income. The applicable sources of income are defined in California Code of Regulations Title 25 Housing and Community Development Section 6914. 11 200 E.Sandpointe Avenue Density Bonus Agreement 4.9.2 Annual Recertification. Developer agrees to recertify or cause to be recertified household eligibility annually. Notification of Annual Tenant Recertification shall be sent to the household in substantially the form attached hereto as Exhibit C. An Annual Rental Housing Compliance Report("Annual Compliance Report")shall be sent by Developer to the City in substantially the form attached hereto as Exhibit D for City's review and approval. The Annual Compliance Report shall be due to the City within 30 days of the anniversary of the commencement of the Affordability Term,which is the date that each building receives all required occupancy permits from the City. 4.9.3 Continued Income Qualification and Vacated Affordable Units. If the annual recertification demonstrates that a previously Eligible Household's gross household income exceeds the allowed Median Income for the Affordable Unit, the Developer will be considered in compliance with this agreement so long as one of the following pertinent actions from the following list is taken: (a) The Developer may offer to rent the unit to the previously, but no longer,Eligible Household as an Unrestricted Unit without any limitations on rental rates. In that case,the Developer must then make available for rent to an Eligible Household another unit within the Project that meets the size and location requirements for Affordable Units under this Density Bonus Agreement. If there are no vacant units meeting those requirements,then the next available unit within the Project which does meet those requirements must be rented to an Eligible Household. (b) If the no longer Eligible Household either moves to another Unrestricted Unit within the Project or leaves the Project altogether,then the vacated Affordable Unit, or, at Developer's election, any other Unrestricted Unit within the Project which meets the size and location requirements for Affordable Units under this Density Bonus Housing Agreement and has the same number of bedrooms as the vacated unit,shall be rented as an Affordable Unit to an Eligible Household. (c) Developer may proceed to terminate the tenancy and pursue any and all remedies in accordance with law or contract. 4.10 Monitoring and Recordkeeping. Throughout the Term of this Agreement, Developer shall annually complete or cause to be completed and submit to City the Annual Compliance Report. Developer agrees to pay a reasonable fee, as set by City resolution, for the purpose of paying the actual costs associated with the City's obligation to monitor Developer's compliance with the affordability restrictions contained in this Agreement related to the Affordable Units,not to exceed monitoring costs for up to three(3)Affordable Units.Representatives of City shall be entitled to enter the Property if necessary after review of above documentation, upon at least forty-eight(48)hour notice,to monitor compliance with this Agreement,and shall be entitled to inspect the records of the Project relating to the Affordable Units and to conduct an independent audit or inspection of such records at a location within the City that is reasonably acceptable to the City without a fee from the City. Developer agrees to cooperate with City in making the Property and the records of the Project relating to the Affordable Unit reasonably available for such inspection or audit. Developer agrees to maintain or cause for the maintenance of each record of 12 200 E. Sandpointe Avenue Density Bonus Agreement the Project for no less than five(5)years after creation of each such record,including the five-year period following the expiration of the Term of this Agreement. Developer shall allow the City to conduct annual inspections of the Affordable Unit on the Property after the date of construction completion, with reasonable notice, which shall be at least twenty four (24) hours in advance, unless a shorter time is required in an emergency, to Developer of the Affordable Unit. Developer shall commence to cure or cause the commencement to cure any defects or deficiencies found by the City while conducting such inspections within ten (10)business days of written notice thereof, or such longer period as is reasonable within the sole discretion of the City. 4.11 Notice of Affordability Restrictions on Transfer of Pro ee . In the event the Developer wishes to sell or transfer the Project, during the Term of this Agreement, the City and the Developer shall execute and deposit into escrow, a Notice of Affordability Restrictions on Transfer of the Property,to be executed by the City and Developer in a form substantially similar to Exhibit E,which is attached hereto and must be executed by the parties prior to any transfer of the Property. 4.12 Emergency Evacuation Plan. Developer shall submit and obtain approval of an Emergency Evacuation Plan (the EEP) from City Police and Fire Protection agencies prior to issuance of a Certificate of Occupancy. Up-to-date 24-hour emergency contact information for the on-site personnel shall be provided to the City on an ongoing basis and the approved EEP shall be kept onsite and also be submitted to the following City Agencies: (a) Police Department (b) Fire Department (c) Planning and Building Agency (d) Community Development Agency 4.13 Crime Free Housing. Developer shall work with City staff to formalize a crime free housing policy, procedure, and design plan (the "CFH Plan"), which includes the following provisions: (a) Requiring parking areas and common interior areas (lobbies, elevators, etc.)to contain security cameras; (b) Requiring routine unit inspections; (c) Ensuring lobby/other entrance doors are secured and accessed via remote controls,fobs,etc.; and (d) Have policies in place to ensure that common use areas such as hallways and trash enclosures are maintained in good condition and repair(e.g.,well- lit,kept clean, etc.). 13 200 E.Sandpointe Avenue Density Bonus Agreement Developer shall submit and obtain approval from the City's Planning and Building Agency ("PBA") that the CFH Plan meets the requirements of this Subsection 4.13 prior to issuance of the Certificate of Occupancy. The approved CFH Plan shall be implemented and administered by Developer or its designated property manager. 4.14 Onsite Parking Management Plan. Developer shall provide onsite parking for residents and visitors of the Project and actively monitor the parking demand of the Project site. Developer shall continually monitor and take the following measures to manage the parking demand of the Project site to mitigate the use of offsite parking spaces on private or public properties and/or right-of-way: (a) Requiring onsite parking permits(such as stickers or hang-tags)for any parking in the onsite parking spaces for both residents and guests; (b) Policies for maximum time vehicles may be parked in the surface parking spaces, including any guest parking; (c) Requiring that overflow parking be directed to available spaces at the 6 Hutton Centre Drive (Griffin Tower) and 203 E. Sandpointe garages; (d) Policies for towing unauthorized vehicles, vehicles parked in unauthorized locations (such as fire lanes),vehicles parking in surface guest parking without a sticker,hang-tag, or other identifiers, and vehicles parked longer than any maximum guest parking timeframes allowed; and (e) Routine garage inspections to ensure garages are available for vehicle parking. Prior to building permit issuance,the Applicant shall submit a Parking Management Plan (PUT) for Planning Division approval, to remain in effect for the life of the Project. The approved PMP shall be implemented continuously, maintained onsite for City inspection, and updated by Planning Manager direction following parking complaints. In the event that the City determines, based on complaints, monitoring, or other information, that parking demand associated with the Project is resulting in adverse impacts to surrounding properties or the public right-of-way, the Developer shall, upon written notice from the City,meet and confer with the City to evaluate such conditions. The Developer shall work in good faith with the City to identify and implement reasonable measures, subject to City approval, to address such parking-related impacts. Such measures may include,but are not limited to, operational,management, or physical modifications to the Project, as deemed appropriate by the City and agreed to by the developer. Any agreed-upon measures shall be incorporated into an updated Parking Management Plan, subject to approval by the Planning Manager, and shall be implemented by the Developer within a timeframe reasonably established by the City. 14 200 E.Sandpointe Avenue Density Bonus Agreement 4.15 Marketing and Resident Selection Plan. 4.15.1 Each Affordable Unit shall be leased to Eligible Households selected by Developer who meet all of the requirements provided herein. Prior to Certificate of Occupancy, Developer shall prepare and obtain City's approval of a marketing program and resident selection plan for the leasing of the Affordable Units at the Project("Marketing Program"). The leasing of the Affordable Units shall thereafter be marketed in accordance with the Marketing Program as the same may be amended from time to time with City's prior written approval. Upon request, Developer shall provide City with periodic reports with respect to the leasing of the Housing Units. 4.15.2 The Marketing Program shall include, but is not limited to, marketing and community outreach activities, proposed tenant selection criteria, occupancy standards, income requirements,timeline and details for outreach and marketing,data collection,record keeping and monitoring, procedures for complaints, and compliance assessment. Components of the resident selection plan shall include, but are not limited to, the application process, interview procedure, apartment offer and assignment,rejected applications,and wait list management. All requirements set forth herein shall be incorporated in the Marketing Program. 5. TERM OF THIS AGREEMENT 5.1 Term. The term of this Agreement ("Term") shall commence on the Effective Date and shall continue until the expiration of the Affordability Term for all Affordable Units, as set forth in Section 3.1, above. 6. DEFAULT AND TERMINATION, INDEMNIFICATION 6.1 Default. Failure or delay by any Party to perform any term or provision of this Agreement, which is not cured within thirty(30) days after receipt of notice from the other Party specifying the default (or such other period specifically provided herein), constitutes a default under this Agreement; provided, however, if such default is of the nature requiring more than thirty(30)days to cure,the defaulting Party shall avoid default hereunder by commencing to cure within such thirty(30)day period,and thereafter diligently pursuing such cure to completion within an additional sixty(60)days following the conclusion of such thirty(30) day period(for a total of ninety(90)days). Except as required to protect against further damages,the injured Party may not institute proceedings against the Party in default until the time for cure has expired. Failure or delay in giving such notice shall not constitute a waiver of any default, nor shall it change the time of default. Notwithstanding the above, should the Developer elect to not proceed with the Project, or Phase 2 of the Project, prior to commencement of construction, the Developer shall submit written notice of such termination("Termination Letter")to the City,which Developer,for itself,its successors and assigns,states that it waives,forfeits,and relinquishes any and all benefits under this Agreement. Upon City's receipt of the Termination Letter,the Parties agree to terminate this Agreement, except that the obligations of Section 4.1 and 6.4 shall survive termination. 15 200 E. Sandpointe Avenue Density Bonus Agreement Developer shall, at its sole cost and expense, prepare and record a Termination of Agreement, which City shall review and approve, in the exercise of reasonable discretion. Such termination shall not be considered a default by any Party,but it shall result in a termination of the Agreement as provided for herein. 6.2 City's Remedies. In the event of a Default, the City shall have all rights and remedies available at law, and may seek any or all of the following remedies: 6.2.1 Any individual who sells or rents(including subleasing)an Affordable Unit in violation of the provisions of this Agreement shall be required to forfeit to City all monetary amounts so obtained. 6.2.2 City may exercise any rights or institute any appropriate legal actions or proceedings necessary to ensure compliance with this Agreement, including but not limited to: (a) Actions to revoke,deny or suspend any permits and/or certificate of occupancy; and (b) Actions for injunctive relief or damages. 6.3 Rights and Remedies Cumulative. The rights and remedies of the Parties are cumulative, and the exercise by either Party of one or more of its rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default by the other Party. Notwithstanding anything to the contrary contained in this Agreement,in no event shall either Party be liable for speculative,consequential, punitive or other indirect damages, and each Party waives any right to collect speculative, consequential,punitive or other indirect damages against the other Party. 6.4 Indemnification. In addition to any other indemnity specifically provided in this Agreement, Developer agrees to defend (with counsel of City's choosing and the consent of Developer, which shall not be unreasonably withheld, conditioned or delayed and which may be joint defense counsel upon City's and Developer's consent) indemnify and hold harmless City and its respective officers, officials, agents, employees, representatives, and volunteers (collectively, "Indemnitees") from and against any loss, liability, claim, or judgment arising from any claims, demands, or causes of action arising from or related to this Agreement, including the approval thereof,except to the extent caused by.the active negligence or willful misconduct of Indemnitees. 7. ASSIGNMENT; COVENANTS RUN WITH THE LAND 7.1 Assignment by Developer. 7.1.1 Prohibited Transfers or Assigments. Developer shall not sell, transfer, or assign the Property or Project in whole or in part, or transfer or assign Developer's rights and obligations in this Agreement,in whole or in part,unless the sale,transfer,or assignment complies with this Section 7. If Developer seeks to sell, transfer or assign the Property or Project, or any rights and obligations in this Agreement,Developer shall request City's written consent, and City shall respond within thirty(30)days with a written approval or denial,which City may determine 16 200 E. Sandpointe Avenue Density Bonus Agreement in its sole and absolute discretion. If City approves such a request, then prior to any such sale, transfer or assignment,Developer shall pay City's reasonable fees as compensation for the City's review of the request. City's failure to respond to the request within thirty (30) days shall be deemed an disapproval. 7.1.2 Sale of Property. Developer agrees and declares that the Property and the Project shall be held,conveyed,mortgaged,encumbered,leased,rented,used,occupied,operated, sold, and approved subject to all obligations set forth or incorporated in this Agreement, all of which are for the purpose of enhancing and protecting the value and attractiveness of the Property and the Project. All of the obligations set forth or incorporated in this Agreement shall constitute covenants which run with the land and shall be binding on Developer and its successors and assigns, and all parties having or acquiring any right, title or interest in, or to any part of the Property or Project. Developer further understands and agrees that the approvals received for this Project have been made on the condition that Developer and all subsequent owners, or other successors and assigns of the Property and/or Project lease and rent the Affordable Units in accordance with the terms and conditions stipulated in Sections 4, 5 and 6 of this Agreement for a term of fifty five (55) consecutive years commencing upon the date that the Project is first occupied. 7.1.3 Subsequent Assignment. As used in this Agreement,the term"Developer" shall be deemed to include any such transferee or assignee after the date such sale, transfer, or assignment occurs in compliance with this Agreement. 7.1.4 Unpermitted Assignments Void. Any sale,transfer,or assignment made in violation of this Agreement shall be null and void,and City shall have the right to pursue any right or remedy at law or in equity to enforce the provisions of the restriction against unpermitted sales, transfers, or assignments. 7.2 Covenants Run with the Land. The Property shall be used, occupied and improved subject to the covenants, conditions, and restrictions set forth herein. The covenants, conditions, restrictions, reservations, equitable servitudes, liens and charges set forth in this Agreement shall run with the Property and shall be binding upon Developer and all persons having any right, title or interest in the Property, or any part thereof, their heirs, and successive owners and assigns, shall inure to the benefit of City and its successors and assigns, and may be enforced by City and its successors and assigns. The covenants established in this Agreement shall,without regard to technical classification and designation, be binding for the benefit and in favor of City and its successors and assigns, and the parties hereto expressly agree that this Agreement and the covenants herein shall run in favor of City. City is deemed the beneficiary of the terms and provisions of this Agreement and of the covenants running with the land, for and in its own right and for the purposes of protecting the interests of the community and other parties, public or private,in whose favor and for whose benefit this Agreement and the covenants running with the land have been provided. Developer hereby declares its understanding and intent that the burden of the covenants set forth herein touch and concern the land and that the Developer's interest in the Property is rendered less valuable thereby. Developer hereby further declares its understanding and intent that the agreement provides a public benefit in furtherance of benefit of such covenants 17 200 E. Sandpointe Avenue Density Bonus Agreement touch and concern the land by enhancing and increasing the enjoyment and use of the Property by the citizens of City and by furthering the health, safety, and welfare of the residents of City. 8. MISCELLANEOUS 8.1 Entire Agreement. This Agreement and all of its exhibits and attachments set forth and contain the entire understanding and agreement of the parties with respect to the density bonus of the Project, and there are no oral or written representations, understandings or ancillary covenants, undertakings or agreements which are not contained or expressly referred to herein. No testimony or evidence of any such representations, understandings or covenants shall be admissible in any proceeding of any kind or nature to interpret or determine the terms or conditions of this Agreement. 8.2 Amendment. Any alteration,change or modification of or to this Agreement,in order to become effective, shall be made in writing and in each instance approved by the City Council, or through the City Manager as detailed herein, and signed on behalf of each party. The City Manager shall have the authority to make approvals,issue interpretations,execute documents, waive provisions, and/or enter into amendments of this Agreement on behalf of City that further the intent of this Agreement and are consistent with the Project Approvals. Any proposed change that is in conflict or inconsistent with the Project Approvals shall require review and approval by the City's Planning Commission or City Council, in accordance with the Santa Ana Municipal Code. Any requested alteration, change or modification of the Agreement by Developer shall require the payment of fees or deposit by Developer to City, as applicable, for the City's review of the request. Each alteration,change,or modification to this Agreement shall be recorded against the Property in the Official Records. 8.3 Notices. 8.3.1 Delivery. As used in this Agreement, "notice" includes, but is not limited to, the communication of notice, request, demand, approval, statement, report, acceptance, consent,waiver,appointment or other communication required or permitted hereunder. All notices shall be in writing and shall be considered given either: (i) when delivered in person to the recipient named below; or(ii)on the date of delivery shown on the return receipt, after deposit in the United States mail in a sealed envelope as either registered or certified mail with return receipt requested,and postage and postal charges prepaid,and addressed to the recipient named below;or (iii) two (2) days after deposit in the United States mail in a sealed envelope, first class mail and postage prepaid,and addressed to the recipient named below;or(iv)one(1)day after deposit with a known and reliable next-day document delivery service (such as Federal Express), charges prepaid and delivery scheduled next-day to the recipient named below,provided that the sending party receives a confirmation of delivery from the delivery service provider; or (v) the first business day following the date of transmittal of any facsimile, provided confirmation of successful transmittal is retained by the sending Party; or (vi) upon transmission thereof (as evidenced by the recipient's reply to such notice or other competent evidence of actual receipt) if transmitted by electronic transmission(email),provided that a copy of such notice is concurrently sent by first-class mail postage prepaid. All notices shall be addressed as follows: 18 200 E.Sandpointe Avenue Density Bonus Agreement If to City: City of Santa Ana Community Development Agency 20 Civic Center Plaza(M-26) P.O. Box 1988 Santa Ana, California 92702 Attention: Housing Manager With a copy to: Office of the City Attorney City of Santa Ana 20 Civic Center Plaza, 7th Floor(M-29) Santa Ana, California 92702 If to Developer: CM Sandpointe,LLC; GH Sandpointe,LLC; JMT Sandpointe,LLC; and QC Sandpointe,LLC c/o Watermarke Properties 1370 Jetstar Drive, Suite 100 Henderson,NV 89052 Attention: Jonathan Schneider Phone: (909) 913-9003 E-mail:jonny@wpipm.com With a copy to: Cox, Castle&Nicholson LLP 3121 Michelson Drive, Suite 200 Irvine, CA 92612 Attention: Sean Matsler Phone: (949)260-4652 E-mail: SMatsler@coxcastle.com 8.3.2 Change of Address. Either Parry may,by notice given at any time,require subsequent notices to be given to another person or entity, whether a party or an officer or representative of a party, or to a different address, or both. Notices given before actual receipt of notice of change shall not be invalidated by the change. 8.4 Severability. If any term, provision, covenant or condition of this Agreement shall be determined invalid, void or unenforceable, the remainder of this Agreement shall not be affected thereby to the extent such remaining provisions are not rendered impractical to perform, taking into consideration the purposes of this Agreement. 8.5 Interpretation and Governing Law. This Agreement and any dispute hereunder shall be governed and interpreted in accordance with the laws of the State of California without regard to conflict of law principles. This Agreement shall be construed as a whole according to its fair language and common meaning to achieve the objectives and purposes of the Parties hereto, and the rule of construction to the effect that ambiguities are to be resolved against the drafting 19 200 E. Sandpointe Avenue Density Bonus Agreement Parry shall not be employed in interpreting this Agreement,all Parties having been represented by counsel in the negotiation and preparation hereof. 8.6 Section Headings. All section headings and subheadings are inserted for convenience only and shall not affect any construction or interpretation of this Agreement. 8.7 Singular and Plural. As used herein,the singular of any word includes the plural, and vice versa, as context so dictates. Masculine, feminine, and neuter forms of any word include the other as context so dictates. 8.8 Joint and Several Obligations. If at any time during the term of this Agreement the Property and/or Project is owned, in whole or in part, by more than one Developer, all obligations of such Developer under this Agreement shall be joint and several, and the default of any such Developer shall be the default of all such Developers. 8.9 Time of Essence. Time is of the essence in the performance of the provisions of this Agreement as to which time is an element. 8.10 Computation of Days. Unless otherwise specified in this Agreement or any Exhibit attached hereto, use of the term "days" shall mean calendar days. For purposes of this Agreement and all Exhibits attached hereto, "business days" shall mean every day of the week except Saturdays, Sundays, official State holidays as recognized in Government Code Section 19853(a) or successor statute, and any days in which Santa Ana City Hall is closed for business. .8.11 Waiver. Failure by a Party to insist upon the strict performance of any of the provisions of this Agreement by the other Party,or the failure by a Party to exercise its rights upon the default of the other Party,shall not constitute a waiver of such Party's right to insist and demand strict compliance by the other Party with the terms of this Agreement thereafter. 8.12 Non-Discrimination. In performing its obligations under this Agreement, Developer shall not discriminate because of race, color, creed, religion, sex, gender, gender identity, gender expression, marital status, sexual orientation, familial status, source of income, veteran or military status, age, national origin, ancestry, disability or genetic information, as defined and prohibited by applicable law, in the recruitment, selection, training, utilization, promotion,termination or other related activities.Developer affirms that it is an equal opportunity employer and shall comply with all applicable federal, state and local laws and regulations. 8.13 Third Party Beneficiaries. No person or entity, other than City and Developer shall have any right of action based upon any provision of this Agreement. 8.14 Force Majeure. Neither Party shall be deemed to be in default where failure or delay in performance of any of its obligations under this Agreement is caused by floods, earthquakes, other Acts of God,fires,pandemics as declared by federal, state, or local emergency resolution, wars, riots or similar hostilities, strikes and other labor difficulties beyond the Party's control (including the Party's employment force), court actions (such as restraining orders or injunctions), or other causes beyond the Party's control, including delays by any governmental 20 200 E. Sandpointe Avenue Density Bonus Agreement entity (although the City may not benefit from this provision for a delay that results from City's failure to perform its obligations under this Agreement), or an insurance company of either party. If any such events shall occur,the term of this Agreement and the time for performance by either Party of any of its obligations hereunder may be extended by the written agreement of the Parties for the period of time that such events prevented such performance. 8.15 Mutual Covenants. The covenants contained herein are mutual covenants and also constitute conditions to the concurrent or subsequent performance by the Party benefited thereby of the covenants to be performed hereunder by such benefited Party. 8.16 Successors in Interest. The burdens of this Agreement shall be binding upon, and the benefits of this Agreement shall inure to, all permitted successors in interest to the Parties to this Agreement. All provisions of this Agreement shall be enforceable as equitable servitudes and constitute covenants running with the land. Each covenant to do or refrain from doing some act hereunder with regard to development of the Property: (a)is for the benefit of and is a burden upon every portion of the Property; (b)runs with the Property and each portion thereof; and(c)is binding upon each Party and each successor in interest approved pursuant to this Agreement during ownership of the Property or any portion thereof. 8.17 Counterparts. This Agreement may be executed by the Parties in counterparts, which counterparts shall be construed together and have the same effect as if all of the Parties had executed the same instrument. 8.18 Jurisdiction and Venue. Any action at law or in equity under this Agreement or brought by a Party hereto for the purpose of enforcing, construing or determining the validity of any provision of this Agreement shall be filed and tried in the Superior Court of the County of Orange, State of California, or to the extent allowed by law, in the federal court district covering the City, and the Parties hereto waive all provisions of law providing for the filing, removal or change of venue to any other court. 8.19 Project as a Private Undertaking. It is specifically understood and agreed by and between the Parties hereto that the development of the Project is a private development,that neither Party is acting as the agent of the other in any respect hereunder, and that each Party is an independent contracting entity with respect to the terms, covenants and conditions contained in this Agreement. No partnership,joint venture or other association of any kind is formed by this Agreement. The only relationship between City and Developer is that of a government entity regulating the development of private property and the Developer of such property. 8.20 Further Actions and Instruments. Each of the Parties shall cooperate with and provide reasonable assistance to the other to the extent contemplated hereunder in the performance of all obligations under this Agreement and in the satisfaction of the Project and conditions of this Agreement. Upon the request of either Party at any time,the other Party shall promptly execute, with acknowledgment or affidavit if reasonably required, and file or record such required instruments and writings and take any actions as may be reasonably necessary under the terms of this Agreement to carry out the intent and to fulfill the provisions of this Agreement or the Project or to evidence or consummate the transactions contemplated by this Agreement. City hereby 21 200 E.Sandpointe Avenue Density Bonus Agreement authorizes City Manager to take such other actions and negotiate and execute any additional agreements or amendments to this agreement as may be reasonably necessary or proper to fulfill the City's obligations under this Agreement. The City Manager may delegate her or his powers and duties under this Agreement to an authorized management level employee of the City. 8.21 Estoppel Certificate. Within ten(10)business days following a written request by any of the Parties, the other Party shall execute and deliver to the requesting Party a statement certifying that (i) either this Agreement is unmodified and in full force and effect or there have been specified (date and nature) modifications to the Agreement, but it remains in full force and effect as modified; and (ii) either there are no known current uncured defaults under this Agreement or that the responding Party alleges that specified(date and nature)defaults exist. The statement shall also provide any other reasonable information requested. The failure to timely deliver this statement shall constitute a conclusive presumption that this Agreement is in full force and effect without modification, except as may be represented by the requesting Party, and that there are no uncured defaults in the performance of the requesting Party, except as may be represented by the requesting Party. 8.22 No Subordination. City's approval of the necessary land use entitlements that authorize Developer to develop, operate, and maintain the Project was based upon Developer's obligation to provide the Affordable Units pursuant to the State Density Bonus Law, City Density Bonus for Affordable Housing, and the terms and conditions of this Agreement. For the duration of the Term, this Agreement shall have priority over any and all mortgages, deeds of trust, and other similar forms of secured financing recorded against the Property or any portion thereof. Developer expressly understands and acknowledges that state law requires preservation of affordability covenants in connection with the approval of this density bonus project. 8.23 Attorneys' Fees and Costs. If either Party to this Agreement commences an action against the other Party to this Agreement arising out of or in connection with this Agreement, the prevailing Party shall be entitled to recover reasonable attorneys' fees, expert witness fees, costs of investigation,and costs of suit from the losing Party. 8.24 Authority to Execute. The person or persons executing this Agreement on behalf of each Party warrants and represents that he or she/they have the authority to execute this Agreement on behalf of his or her/their corporation, partnership or business entity and warrants and represents that he or she/they has/have the authority to bind the Party to the performance of its obligations hereunder. (Signatures on following page) 22 200 E.Sandpointe Avenue Density Bonus Agreement IN WITNESS WHEREOF, the parties hereto have caused this Density Bonus Housing Agreement to be executed on the date set forth at the beginning of this Agreement. ATTEST: CITY OF SANTA ANA Jennifer Hall Alvaro Nunez City Clerk City Manager APPROVED AS TO FORM: CITY ATTORNEY By: RECOMMEND FOR APPROVAL: DEVELOPER: Michael L. Gifcia By: onathan Schneider Executive Director Its: Authorized Agent Community Development Agency CM Sandpointe, LLC, a California limited liability company; GH Sandpointe, LLC, a California limited liability company; JMT Sandpointe, LLC, a California limited liability company; QC Sandpointe, LLC, a California limited liability company 23 200 E.Sandpointe Avenue Density Bonus Agreement IN WITNESS WHEREOF, the parties hereto have caused this Density Bonus Housing Agreement to be executed on the date set forth at the beginning of this Agreement. ATTEST: CITY OF SANTA ANA Jennifer Hall Alvaro Nunez City Clerk City Manager APPROVED AS TO FORM: CITX ATTj/TOR R NEEY N &✓ 66 By: Matthew R. Cody Best, Best& Krieger Special Counsel for the City RECOMMEND FOR APPROVAL: DEVELOPER: Michael L. Garcia By: Jonathan Schneider Executive Director Its: Authorized Agent Community Development Agency CM Sandpointe, LLC, a California limited liability company; GH Sandpointe, LLC, a California limited liability company; JMT Sandpointe, LLC, a California limited liability company; QC Sandpointe, LLC, a California limited liability company 23 200 E.Sandpointe Avenue Density Bonus Agreement EXIIIBIT A LEGAL DESCRIPTION OF THE PROPERTY Exhibit A to 200 E. Sandpointe Avenue Density Bonus Agreement LEGAL DESCRIPTION: Real property in the City of Santa Ana, County of Orange, State of California, described as follows: PARCEL D: ALL OF PARCELS 4, 5, 6 AND 8, TOGETHER WITH A PORTION OF PARCEL 7 IN THE CITY OF SANTA ANA, COUNTY OF ORANGE, STATE OF CALIFORNIA, ACCORDING TO PARCEL MAP NO. 79-879 FILED IN BOOK 151, PAGES 21 THROUGH 23, INCLUSIVE OF PARCEL MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, MORE PARTICULARLY DESCRIBED AS ALL OF PARCELS 4, 5, 6 AND 8 IN LOT LINE ADJUSTMENT LL 83-2 RECORDED MAY 20, 1983 AS INSTRUMENT NO. 83-215091 OF OFFICIAL RECORDS. PARCEL E: AN APPURTENANT NON-EXCLUSIVE EASEMENT FOR PARKING OVER PARCEL 7, AS SHOWN ON EXHIBIT A ATTACHED TO THAT CERTAIN LOT LINE ADJUSTMENT NO. LL 83-2 RECORDED MAY 20, 1983 AS INSTRUMENT NO. 83-215091, AND AS SET FORTH IN THAT CERTAIN GRANT OF EASEMENT RECORDED FEBRUARY 11, 1987 AS INSTRUMENT NO. 87-077357, BOTH OF OFFICIAL RECORDS OF ORANGE COUNTY, CALIFORNIA. APN 411-111-07 (Affects Adjusted Parcel 8 of Parcel D) 411-111-09 (Affects Adjusted Parcel 6 of Parcel D) 411-111-10 (Affects Adjusted Parcel 5 of Parcel D) 411-111-11 (Affects Adjusted Parcel 4 of Parcel D) EXHIBIT B TENANT VERIFICATION [SEE FOLLOWING PAGES] Exhibit B to 200 E. Sandpointe Avenue Density Bonus Agreement TENANT INCOME VERIFICATION FORM Head of Household (Print Name): Address: Telephone Number: Home: Work: Cell: Date of Birth: Social Security#: Household Composition List All Household Members Living in the Inclusionary Unit Dependent Name Sex Age (Y/N) Social Security# List additional household members on a separate sheet of paper. Tenant Income Verification Form Page 1 Santa Ana, California August 8,2014 TENANT INCOME VERIFICATION FORM Monthly Gross Income* List All Sources of Income of All Household Members Living in the Inclusionary Unit Part 1: Earned Income Other Adult Head of Household Household Members Total 1. Gross amount, before payroll deductions of wages, $ $ $ salaries, overtime pay, commissions, fees, tips and bonuses. 2. Net income from business. $ $ $ 3. Social security, annuities, insurance policies, $ $ $ pension/retirement funds, disability or death benefits received periodically. 4. Payment in lieu of earnings, such as $ $ $ unemployment, disability compensation, worker's compensation and severance pay. 5. Public assistance, welfare payments $ $ $ 6. Alimony, child support, other periodic allowances $ $ $ 7. Regular pay, special pay and allowances of $ $ $ members of the Armed Forces 8. Other $ $ $ Subtotal: Monthly Earned Income $ Total Monthly Earned Income x 12 = $ Total Annual Household Gross Earned Income Tenant Income Verification Form Page 2 Santa Ana, California August 8,2014 TENANT INCOME VERIFICATION FORM Monthly Gross Income* List All Sources of Income of All Household Members Living in the Inclusionary Unit Part 2: Investment Income Total Other Adult Household Head of Household Investment Household Members Income 1. Interest paid on Bank and Savings accounts $ $ $ 2. Dividends and other payments from stocks and $ $ $ bonds 3. Income from real property (i.e. rental property) $ $ $ 4. Other(describe) $ $ $ Subtotal: Monthly Investment Income: $ Total Monthly Investment Income x 12 = $ Total Annual Household Investment Income *Note: The following items are not considered income: casual or sporadic gifts; amounts specifically for or in reimbursement of medical expenses; lump sum payments such as inheritances, insurance payments, capital gains and settlement for personal or property losses; educational scholarships paid directly to the student or educational institution; special pay to a serviceman head of family away from home and under hostile fire; relocation payments under federal, state or local law; foster child care payments; value of coupon allotments for purpose of food under Food Stamp Act of 1964 which is in excess of amount actually charged the eligible household; payments received pursuant to participation in the following programs: VISTA, Service Learning Programs, and Special Volunteer Programs, SCORE, ACE, Retired Senior Volunteer Program, Foster Grandparent Program, Older American Community Services Program, and National Volunteer Program to Assist Small Business Experience. Tenant Income Verification Form Page 3 Santa Ana, California August 8,2014 TENANT INCOME VERIFICATION FORM Assets ** List the Current Value of All Assets of All Household Members Living in the Inclusionary Unit If the Asset generates income, that income must be specified In Part 2 above Other Adult Head of Household Household Members Total Value of Value Value Assets 1. Bank and Savings accounts $ $ $ 2. Stocks and bonds $ $ $ 3. Real property(i.e. rental property) $ $ $ 4. Other(describe) $ $ $ Total Asset Value $ **Note: Necessary items, such as furniture and automobiles, used for personal use are excluded from household assets. Collections of items for hobby, investment or business purposes must be included in household assets. If the total value of household assets exceeds $5,000, the calculation of the household's annual income shall include the greater of the actual amount of income, if any, derived from all of the household assets; or 10% of the total value of the assets. Tenant Income Verification Form Page 4 Santa Ana, California August 8,2014 TENANT INCOME VERIFICATION FORM If the total asset value exceeds $5,000, perform the calculations in the following table. If the total asset value is less than $5,000, the amount of investment income to be included in annual household income is $0. Calculation of Investment Income to be Included in Annual Household Income 1. Total Annual Household Investment Income $ 2. Total Asset Value $ x 10% $ The Greater of#1 or#2 = Investment Income to be Included in Annual Household Income$ Calculation of the Household's Total Annual Income Total Annual Household Gross Earned Income $ Total Investment Income to be Included in Annual Household Income $ Total Household Income $ Documentation Attach True Copies of the Relevant Documents Listed Below Paycheck stubs from two most recent pay periods Bank/Savings account verification Employment verification Self-employment verification Income tax return Unemployment verification Social security verification Welfare verification Alimony/child support verification Disability income verification Other(Describe) Tenant Income Verification Form Page 5 Santa Ana, California August 8,2014 AFFIDAVIT This Affidavit is made with the knowledge that it will be relied upon by the City of Santa Ana, our landlord and the owner of our apartment building, to determine maximum income for eligibility. (1/we) warrant that all information set forth in this document is true, correct and complete and based upon information (1/we) deem reliable and based upon such investigation as (1/we) deemed necessary. (Mte) acknowledge that(1/we) have been advised that the making of any misrepresentation or misstatement in this affidavit will constitute a material breach of(my/our) rental agreement with the property owner to rent the unit and will additionally enable the property owner to initiate and pursue all applicable legal and equitable remedies with respect to the unit and to me/us. (Mte) do hereby swear under penalty of perjury that the foregoing statements are true and correct and that this affidavit has been executed as of the date specified below by each adult member of the household which intends to occupy an Inclusionary Unit located at Santa Ana, California. Signature Date Printed Name Executed at Santa Ana, California Signature Date Printed Name Executed at Santa Ana, California Affidavit Page 6 Santa Ana, California August 8,2014 EXHIBIT C ANNUAL TENANT RECERTIFICATION [SEE FOLLOWING PAGES] Exhibit C to 200 E. Sandpointe Avenue Density Bonus Agreement ANNUAL TENANT RECERTIFICATION CITY OF SANTA ANA AFFORDABLE RENTAL HOUSING PROGRAM Date: Tenant Name: Unit Address: Dear In accordance with the requirements imposed by the City of Santa Ana (City), and your lease, the City requires that we review your income and family composition every year. To complete our review, the Property Owner or Property Manager will set up a meeting with you to receive the necessary information. When you attend the meeting with the Property Owner or Property Manager you must bring documents that verify the income of all the adult members of your household. This information can include income tax returns, employment verification, wage statements, interest statements, and/or unemployment compensation statements. Cooperation with the recertification requirement is a condition of continuing tenancy in an Inclusionary Unit. You must report the required information to enable the Property Owner to process the recertification by Month/Day. Sincerely, Property Manager/ Property Owner Annual Tenant Recertification Form Page 1 Santa Ana, California August 8,2014 EXHIBIT D ANNUAL RENTAL HOUSING COMPLIANCE REPORT [SEE FOLLOWING PAGES] Exhibit D to 200 E.Sandpointe Avenue Density Bonus Agreement 3 £ 0 r £ } 2 u / > § Rom . 0 2 / k \ / e \ E { 2 o = } § E _ /_ / \ § ƒ « / e k4� / / > o � O kw L) 2 « z w w a z » m � K 2 2 o -1 § 2 u 0. ;R b z q z Q § 2 0: o 0 I § / Z \ LU 3 ca a � O \ \ v \ R ) £ _ 2 \ k CL cu/ 0 k _ \ { £ \ j ) � f � ) ° i § k k aj LA 0z } \ C 0 = .E ƒ { \ j = S E 0 ; k # » u m # ± � \ / j � 11 EXHIBIT E FORM OF NOTICE OF AFFORDABILITY RESTRICTIONS ON TRANSFER OF PROPERTY RECORDING REQUESTED BY, ) AND WHEN RECORDED MAIL TO: ) City of Santa Ana ) 20 Civic Center Plaza, 6th Floor ) Santa Ana, California 92702 ) Attn: Executive Director ) This document is exempt from payment of a recording fee pursuant to Government Code Sections 27383 and 6103. NOTICE OF AFFORDABILITY RESTRICTIONS ON TRANSFER OF PROPERTY This Notice of Affordability Restrictions on Transfer of Property (or "Notice of Affordability Restrictions") is executed and recorded pursuant to Section 65915 of the California Government Code, and affects that certain real property generally located at [ADDRESS], California (APN XXXXXX) (hereafter, the "Property") as legally described in Exhibit A hereto("Property"). The City of Santa Ana, a charter city and municipal corporation of the State of California (referred to hereafter as ,,City"), and ("Developer/Property Owner") have entered into that certain Density Bonus Housing Agreement With Declaration of Covenants, Conditions and Restrictions, dated as of , 2026 ("Density Bonus Housing Agreement"). 1. The Density Bonus Housing Agreement provides for affordability restrictions and restrictions on the transfer of the Property, as more particularly set forth in the Density Bonus Housing Agreement. A copy of the Density Bonus Housing Agreement is on file with City as a public record and is deemed incorporated herein. Reference is made to the Density Bonus Housing Agreement with regard to the complete text of the provisions of such agreement and all defined terms therein, which provides for affordability restrictions and restrictions on the transfer of the Property. Exhibit E to 200 E.Sandpointe Avenue Density Bonus Agreement 2. For a period commencing upon the date on which the Affordable Unit receives all required occupancy permits from the City and terminating on the fifty- fifth (55th) anniversary thereof, the Property must comply with the affordability covenants limiting the occupancy and rental of the Affordable Units as set forth in the Density Bonus Housing Agreement; such restrictions are set forth at greater length in the Density Bonus Housing Agreement, which is expected to be recorded substantially concurrently herewith among the Official Records of Orange County, California. 3. Section 4.12 of the Density Bonus Housing Agreement provides as follows: "Notice of Affordability Restrictions on Transfer of Property. In the event of the sale or resale of an Affordable Unit during the Total Affordability Term, the City and the transferor shall execute and deposit into escrow, or record against the Affordable Unit, a Notice of Affordability Restrictions on Transfer of the Property as contained herein (Exhibit E). The sale or transfer of the Property, shall not be effective unless and until the City and the transferee execute the documents necessary to transfer the Density Bonus Agreement obligations from the transferor to the transferee." In the event that Developer/Property Owner desires to Transfer the Property during the Affordability Period, prior to the Transfer the owner shall notify City by delivering a Notice of Intent to Transfer to City, which shall indicate the identity of the proposed Transferee who desires to purchase the Property, and an assignment and assumption of the terms and conditions of the Density Bonus Housing Agreement. The following procedure shall apply: a. Notice to City. Developer/Property Owner shall send the Notice of Intent to Transfer to City at the address set forth in the Density Bonus Housing Agreement. b. Qualification of Proposed Transferee. The City shall have the right to review the qualifications of the proposed Transferee for purposes of determining compliance with the Density Bonus Housing Agreement. C. Certificates from Parties. Developer/Property Owner and proposed Transferee each shall certify in writing, in a form acceptable to City, that the Transfer shall be closed in accordance with, and only with, the terms of the approved assignment and assumption agreement. The written certificate shall also include a provision that in the event a Transfer is made in violation of the terms of Exhibit E to 200 E. Sandpointe Avenue Density Bonus Agreement this Restriction or false or misleading statements are made in any documents or certificate submitted to City for its approval of the Transfer, City shall have the right to file an action at law or in equity to make the parties terminate and/or rescind the sales contract and/or declare the sale void notwithstanding the fact that the Transfer may have closed and become final as between Developer/Property Owner and Transferee. d. Written Consent of City Required Before Transfer. During the Affordability Period,the Property, and any interest therein, shall not be conveyed by any Transfer except with the express written consent of the City, which consent shall be given only if the Transfer is in accordance with the provisions of this Restriction. This provision shall not prohibit the encumbering of title for the sole purpose of securing financing of the purchase price of the Property. f. Delivery of Documents. Upon the close of the proposed Transfer,Developer/Property Owner and Transferee, as applicable, shall provide the City with a copy of the final sales contract, settlement statement,escrow instructions, all certificates required by this Section 3 and any other documents the City may request. 4. The restrictions contained in the Density Bonus Housing Agreement commence upon the date on which the Affordable Unit receives all required occupancy permits from the City and terminate on the fifty-fifth (55th) anniversary thereof. 5. The commonly known addresses for the Property [ADDRESS]. 6. The assessor's parcel numbers for the Property is 7. The legal description of the Property is attached hereto as Attachment No. 1 and is incorporated herein by reference. 8. The Density Bonus Housing Agreement, which includes the affordability restrictions referenced above, is expected to be submitted for recordation in the Office of the Orange County Recorder contemporaneously with this Notice of Affordability Restrictions. 9. The Density Bonus Housing Agreement remains in full force and effect and is not amended or altered in any manner whatsoever by this Notice of Affordability Restrictions. Exhibit E to 200 E.Sandpointe Avenue Density Bonus Agreement 10. Capitalized terms shall have the meaning established under the Density Bonus Housing Agreement(including all Attachments thereto) excepting only to the extent as otherwise expressly provided under this Notice of Affordability Restrictions. 11. Persons having questions regarding this Notice of Affordability Restrictions, the Density Bonus Housing Agreement or the Attachments thereto should contact the City at its offices (20 Civic Center Plaza, Santa Ana, California 92701, or such other address as may be designated by the City from time to time). Exhibit E to 200 E.Sandpointe Avenue Density Bonus Agreement DEVELOPER/ PROPERTY OWNER: By: Printed Name: [Signature to be acknowledged] THE CITY OF SANTA ANA, By: Executive Director ATTEST: APPROVED AS TO FORM: SONIA R. CARVALHO, City Attorney By: City Attorney Dated: Exhibit E to 200 E. Sandpointe Avenue Density Bonus Agreement