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HomeMy WebLinkAbout03 SETTLEMENT AGREE 05-15-00 NO. 3 05-15-00 DATE: MAY 15, 2000 Inter-Oom TO: FROM' SUBJECT: WILLIAM A. HUSTON, CITY MANAGER COMMUNITY DEVELOPMENT DEPARTMENT SETTLEMENT AGREEMENT WITH OWNER OF 17432/42 MITCHELL AVE. SUMMARY: Mitsui/SBD America Fund is the current owner of record of the 20-unit Tustin Terrace Apartment complex located at 17432-17442 Mitchell Avenue. Completed in 1986, the complex was approved with reduced parking and increased density with the stipulation that at least one resident of each apartment be at least 62 years of age. In 1999 the City learned that the complex was no longer itt compliance with the age restriction. The proposed settlement agreement would rentedy the non-compliance by December 31, 2002 and would minimize the displacement of current residents who do not meet the age requiremen£ Pursuant to the settlement agreement, the owner of record shall defend, indemnify and hold the City harmless for any relocation claims and shall reimburse the City for its administrative and legal costs to bring the property into compliance. RECOMMENDATION That the City Council approve a settlement agreement between the City of Tustin and Mitsui/SBD America Fund, the current owner of record of the real property located at 17432- 17442 Mitchell Avenue and authorize the Community Development Director, subject to approval by the City Attorney, to execute the agreement on behalf of the City. FISCAL .IMPACT The cost estimate for all tasks associated with the preparation of the settlement agreement is $5,000. Pursuant to the Settlement Agreement, Mitsui shall reimburse the City for administrative costs and legal fees in the amount of $5,000. DISCUSSION On November 19, 1984, the Tustin City Council approved Zone Change 84-6 for the property located at 17432-17442 Mitchell Avenue, Tustin. The zone change was subsequently amended by the Council on May 20, 1985. The zoning was changed from Multiple Family Residential (R-3, 2000) to Planned Community Multiple Family (PC-MF) to allow the development of a twenty (20) unit apartment complex for seniors. The City Council granted a 21-parking space reduction and an increase in density by nine units with the stipulation that occupancy be limited to persons 62 years of age or older for at least one tenant per unit. in addition, twelve of the units were to accommodate Section 8 certificate holders for at least five (5) years. City Council Report Mitsui Settlement Agreement May 15, 2000 Page 2 In 1999, Community Development Department staff researched the files on the Tustin Terrace Apartments in response to a public inquiry and subsequently learned that the property was not in compliance with its occupancy requirement as a senior housing complex. The property owner was contacted and discussions were initiated in an attempt to remedy the non- compliance. The option to convert the complex to unrestricted apartments was discussed but would require significant alterations to meet the City's parking requirements for apartment developments. Furthermore, the maintenance of the apartment complex for senior housing is one of the housing programs identified in the City's Housing Element of the General Plan. Settlement Agreement Terms and Conditions The following terms and conditions are set forth in the Settlement Agreement: · The time for the owner of record to bring the property into compliance shall be as follows: · At least six units shall comply by December 31,2000. · At least twelve units shall comply by December 31, 2001. · All units shall comply by December 31,2002. · After December 31, 2002, the owner of record shall continue to keep the property in compliance. · The owner of record shall record a covenant that requires the occupancy of each occupied residential unit in the building to include at least one person 62 years of age or older. The owner of record shall provide biannual written audits to the City. The audits shall specify the number of units in compliance, the address of each complying unit, and the name and age of each person who is 62 years of age or older. The owner of record shall defend, indemnify and hold City harmless from any claims for relocation assistance made to City under state law by any non-complying tenant who is required to be relocated in accordance with the Settlement Agreement. The City Attorney has reviewed and approved the Agreement as to content and form, with two exceptions. The property owner name indicated in the draft Agreement needs to be changed to the correct owner name, Mitsui/SBD America Fund, and the date in Recital A needs to be corrected to read November 19, 1984. These minor corrections will be made prior to execution of the Agreement. Scott Reekstin Acting Senior Planner E~abeth A. Bins'ack .... Director of Community Development Exhibits: Settlement Agreement Declaration of Covenants, Conditions and Restrictions Memorandum of Agreement ccreport:mitsuisettlementagreement-doc SETTLEMENT AGREEMENT This Settlement Agreement ("Agreement") is entered into effective May ~., 2000 by and between Mitsui Real Estate Sales, USA, Ltd., a California corporation ("Mitsui'), on one side, and the City of Tustin, a municipal corporation (the "City"), on the other side. The Agreement is based on the following recitals of fact: RECITALS A. On or about November 9, 1984, the City adopted Ordinance No. 922 ("Ordinan:.e No. 922"), which provides in relevant part as follows: Covenants, conditions and restrictions shall be recorded on the subject property limiting occupancy to tenants 55 years of age or older, Also the CC & Rs shall prohibit conversion to any other form of occupancy without the review and approval of the City of Tustin. B. On or about May 20, 1985, the City amended Ordinance No. 922, by adopting Ordinance No. 931 ("Ordinance No. 931"). Condition No. 12 of Ordinance No. 931 provides as follows: Covenants, conditions and restrictions shall be recorded on the subject propen-y to limit occupancy to 62 years of age or older for at least one (1) tenant per unit. The CC & Rs shall prohibit conversion to any other form of occupancy without the review and approval of the CiD~ of Tustin. C. Mitsui is the current owner ofrecord of the real property in the City located at 17432-17442 Mitchell Avenue, improved by a 20-unit apartment building in the City commonly referred to as the Tustin Terrace Apartments (the "Property"). D. The City represents and warrants that Ordinance Nos. 922 and 931 were and me lawful under state and federal law and that they apply to the Property. E. Mitsui and the City desire to bring the Property in compliance with Ordinance No. 922, as amended by Ordinance No. 931, such that any occupied unit shall be occupied by at' least one person 62 years of age or older, wkile minimizing the displacement of current tenants whose occupancy is not in compliance. Unoccupied units are deemed inherently to be in compliance. F. To avoid the expense and risk inherent in litigation, the parties desire to compromise and settle the claims and issues relating to the Ordinances and the Property, on the terms and conditions set forth in this Agreement. NOW, THEREFOP~, in reliance on these recitals of fact, and in order fully and finally to compromise, settle and release the claims of the parties on certain terms and conditions, and in consideration of the recitals, covenants and representations set forth in this Agreement, the parties hereby agree as follows: 40066162v6 -1- 1. Extension of Time for Compliance. The time for the owner ofrecord of the Property to bring the Property in' compliance with Ordinance No. 922, as amended by Ordinance No. 931, shall be ext~ded to December 31, 2002, in accordance with the following terms: (a) At least six units shall be in compliance on or before December 31, 2000; 2001; and (b) At least twelve units shall be in compliance on Or before December 31, (c) All units shall be in compliance on or before December 31, 2002. (d) After December 31, 2002, the owner of record of the Property shall continue to keep the Property in compliance with Ordinance No. 922, as amended by Ordinan:e No. 931. A covenant running with the land, in the form attached hereto as Exhibit A, shall be recorded to that effect on or before December 31, 2002. 2. Recordation of Memorandum of A~reement. Mitsui shall execute a Memorandum of A~eement, in the form attached as Exhibit B, and such Memorandum may be recorded by the Ci~~ in the office of the County Recorder of Orange County. 3. Biannual Audits. The owner of record of the Property shall provide biannual written audits to the City on or within five business days before the following dates: July 1, 2000; December 31, 2000; July 1, 2001; December 31,2001; July 1,2002; and December 31, 2002. The audits shall state the following: (1) the total number of units at the Property in compliance with Ordinance No. 922, as amended by Ordinance No. 931; (2) the unit numbsr of each complying unit; (3) as to each complying unit that is occupied, the name and age of the person within the occupied unit that brings it into compliance with Ordinance No. 922, as amended by Ordinance'No. 931. If the audit is not submitted timely, or if the audit does not contain the required information as set forth above, the City shall be entitled to ~ve ,~.~tten notice to the owner of record of the Property specifying the nature of the noncompliance. If the owner of record of the Property does not submit an audit to cure the deficiency set forth in the notice within 30 days of receipt, the City shall be entitled to demand a penalty of $500.00 per day for each day after the failure to submit an audit to cure the deficiency by the expiration of the 30-day notice period and until such audit is submitted. 4. Pawnent of City's Administrative and Legal Fees. Upon execution of this Agreement, Mitsui shall pay to the City the amount of $5,000.00 to reimburse the City for administrative and legal fees with regard to this matter. The City shall not be required to provide an accounting of fees actually incurred, ahd Mitsui's obligation for any such fees shall be limited to the $5,000.00 amount. 5. Relocation of Tenants. If any tenant is required by the owner of record of the Property to be relocated to bring the unit in compliance in accordance with this A~eement, the owner of record of the Property shall be obligated for reasonable relocation expenses for such tenant. Relocation of a tenant may be required by the owner of record of the Property only if the tenant has entered into a long-term lease and therefore has contractual rights not to have the lease terminated upon thirty days notice. For any tenant with a month-to-month lease whose lease will be terminated to bring the unit in compliance in accordance with this Ageement, the o,amer of 40066162v6 -2- record of the Property agrees to give such tenant sixty days notice. The owner, of record of the Property shall defend, indemnify and hold City harmless from any claims for relocation assistance made to City under state law by any tenant who is required to be relocated in accordance with this Section 5. With regard to those leases in existence at the time of the execution of this Agreement, the owner of record of the Property agrees not to raise the rents with regard to those existing leases more than once every twelve months and then not to rates higher than the fair market rental value for comparable apartments in the City. 6. Forbearance with Enforcement. The City agrees that, so long as the owner of record of'the Property is in compliance with its obligations as set forth in paragraph 1 above, the City shall forbear in bringing or prosecuting any action of any nature, whether civil, legislative, administrative or oth~,~rwise, to enforce Ordinance No. 922, as amended by Ordinance No. 931, with regard to the Property. 7. Approval by City Council. By executing this Agreement on behalf o~ th,~ City, the undersigned represents and warrants that this Agreement has been properly approVed by the City Council in accordance with applicable law. 8. Mutual Releases. In consideration of this Agreement and upon its execution, the parties' agree to the mutual releases as set forth herein. Except as to the rights and obligations arising under this Agreement, Mitsui and the City hereby fully release, discharge and acquit each other and each of their respective r~resentatives, agents, employees, partners, officers, directors, parents, subsidiaries, affiliates, related companies, independent contractors, attorneys, successors and assigns from an,, and all claims, demands, causes of action, obligations, fights, and/or liabilities which relate to Ordinance No. 922, as amended by Ordinance No. 931 or the PropeR'. Whenever !~itsui, or its successors and assigns ("Transferor"), sells, conveys, assigns or otherwise transfers ("Transfer") its interest in the Property to one or more third parties (collectively, the "Transferee") and upon such Transfer is no longer an owner of record of fne Property, then such Transferor shall become a "Prior O~mer of Record". Upon such Transfer, City agrees that the above release shall apply and release any Prior Owner of Record and its representatives, agents, employees, partners, officers, directors, parents, subsidiaries, affiliates, related companies, independent contractors and attorneys from any and all claims, demands, causes of action, obligations, rigjats, losses and/or liabilities relating to Ordinance No. 922, as amended by Ordinance No. 931, or the Property, which are based on acts, events or omissions occurring on or after the date on which the Property is Transferred to a Transferee ("Transfer Date"). Notwithstanding the foregoing, a Prior Owner of Record shall still be liable for any and all claims, losses or liabilities related to Ordinance No. 922, as amended by Ordinance No. 931, or the Property, which relate to of an action brought by a third party after the Transfer Date, but which arise out of or are based on acts, events or omissions occurring before the Transfer Date and during such time the Prior Owner of Record was still an owner of record of the Property. 9. Mutual Rer~resentafions, Covenants and Warranties. Each of the parties to this Agreement represents, warrants and agrees as follows: (a) Each party has obtained independent legal advice from attorneys of its choosing with respect to the adxSsability of making the settlement provided for in this Agreement, with respect to the advisability of executing this Agreement and with respect to the -3- 40066162v6 meaning of the terms of the Agreement, and each party has obtained such legal advice as it deems necessary; (b) No party, or any agent, representative or attorney for any party, has made any statement or representation to any other party regarding any fact relied upon in entering into this Agreement, and no party is relying on any statement, representation or promise of any other party or of any agent, representative or attorney for any other party in executing this Agreement or in making the settlement provided for in this Agreement, except as expressly state:l in this Agreement; (c) Each party to this Agreement has made such investigation of the facts and of all the matters pertaining to this settlement and this Agreement as deemed n~cessaw; (d) There has been no assi~munent, sale or transfer of any claim, fight, cause of action, demand, obligation, liability or interest to be released by any party as provided in this Agreement; (e) Each individual executing this Agreement on behalf of a pa:'ty is fully authorized and empowered to do so to bind such party to the terms of this Agreement; and (f) The Recitals of Fact set forth in paragraphs A through F above are incorporated by reference and constitute continuing representations, warranties and covenants by the parties. . 10. Entire A~eement. This Agreement is the entire agreement between the pa~ies with respect to the subject matter of this Agreement and supersedes any and all prior or contemporaneous oral and written agreements and discussions between or among any of them. The parties to this Agreement acknowledge and agree that there are no conditions, covenants, agreements or Understandings between or among any of them except as set fo~h in rJa/s Agreement. This Agreement may be amended only by a further signed '~ting. 11. Beneficiaries. This Agreement is binding upon and shall inure to the benefit of each of the parties to this Agreement and their respective beneficiaries, successors and assig-ns. 12. Attorneys' Fees and Costs. The prevailing party shall be entitled to recover its attorneys' fees and costs in any litigation regarding the enforcement or interpretation of this Agreement. 13. Notices. Any notices that shall or may be ~ven pursuant to this Agreement shall be sent by certified mail, return receipt reqUested, to the following addresses: (a) If to Mitsui, addressed to Asset Management Department, 19191 S. Vermont Ave, Suite 590, Torrance CA 90502. (b) If to the City, addressed to Community Development Director, City of Tustin, 300 Centennial WaY, Tustin CA 92780. 40066162v6 -4- If the address above changes, written notice of change of address shall be given. No notice shall be effective unless and until it is actually received. 14. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one document. Mitsui Real Estate Sales, USA, Ltd., a California corporation City ofTustin, a municipal corporation By: By: Its: Its: Approved as to form: PILLSBURY MADISON & SUTRO LLP By: ALAN J. DROSTE Attorneys for Mitsui Real Estate Sales, USA, Ltd. WOODRUFF SPKADLIN & SMART LOIS E. JEFFREY/ Attorneys for the City of Tustin 40066162v6 -5- EXHIBIT A RECORDING REQLT_.STED BY AND WHEN RECORDED, MAIL TO: Community Development Dept. City of Tt/stin 300 Centmknial Way Tustin, CA' 92780 Space Above This Line for Recorder's Use DECLARATION OF COVENANTS, CONDITIONS AND RESTRICTIONS COVENANTOR: Mitsui Real Estate Sales, USA, Ltd., a California co~oration SUBJECT PROPERTY: Commonly known as 17432-17442 Mitchell Avenue in the Ci~, of Tustin, County of Orange, State of California, (hereinafter refe~ed to as the "Subject Property") and more particularly described as: Parcel 1' All that certain real property situated in the Rancho Santiago de Santa .~a, Co,nV of Or,ge, State of California, described as follows: A portion of the land shmxm on Lots 39 and 40 on the map of"A" part of Tustin Cit3,, as per map thereof recorded in. book 4 at pages 218 and 219 of Miscellaneous Records of Orange Count3', California, described as commencing at an iron rail at the Southeast comer of the .allotment to N. O. Stafford and C. Tustin by Final Decree in Partition of the Rahcho Santiago de Santiago de Santa Ana; running thence North 42° 25' West 30 feet to the intersection of the North line of McFadden Street with the Northwest line of Ne~x'port Avenue; thence North 39° 49' 30" East along the Northwesterly line of said Nexx,port Avenue, 524.74 feet; thence North 50° 10' 30" West 210 feet to the true point of beginning of the boundary of the land herein described; running thence North 50° 10' 30"' West 70 feet;, thence North 39° 49' 30" East 164 feet; thence South 50° 10' 30" East 70 feet; thence South 39° 49' 30" West 164 feet to the said true point of beginning. Parcel 2: A portion of the land sho'am as Lots 39 and 40 on the map of "A" part .of Tustin City, recorded in book 4, pages 218 and 219 of Miscellaneous Records of Orange Count3,, 40074117v3 -1- California, described as beginning at an Iron Rail at the Southeast corner of the Allotmsnt to N. O. Stafford and C. Tustin by final decree in partition of said Rancho; running thence North 42° 25' West 30 feet to the intersection of the North line of McFadden Street with the Northwest line of Newport Avenue, thence North 39° 49' 30" East along the Northwesterly line of said Newport Avenue 524.74 feet to a point; thence North 50° 10' 30" West 280 feet to a point, being the true point of beginning of the land herein described; running thence North 50° 10' 30" West 70 feet to a point; thence North 39° 49' 30" East 164 feet to a point; thence South 50° 10' 30" East 70 feet to a point; thence South 39° 49' 30" West 164 feet to said true point of beginning, subject to an agreement hereinafter shown. RECITALS A. As a condition of Ordinance No. 922, as amended by Ordinance No. 931, and a Settlement Agreement between Covenantor and the City of Tustin regarding the Subject Property, the City has required the Covenantor to execute and record this Declaration of Covenants, Conditions and Restrictions. B. Covenantor desires to make and record this Declaration of Covenants, Conditions and Restrictions as required by the City. DECLARATION Covenantor hereby covenants that the Subject Property shall be held, conveyed, encumbered, used, occupied, developed, maintained, and improved subject to the follow':.ng covenants, conditions and restrictions, all of which are for the purpose of ensuring conformmn:e with the zoning requirements applicable to the Subject Property. Each of the covenants, conditions and restrictions contained in this Declaration of Covenants, Conditions and Restrictions (the "Declaration") shall run with the Subject Property and shall be incorporat:d imo any deeds or leases transferring any legal or equitable interest in the Subject Prope~wy and shall be binding on each successive owner or lessee of the Subject Property and his heks, administrators, successors and assigns during their respective ownership thereof. 1. In accordance with Ordinance No. 922, as amended by Ordinance No. 931, of th: City of Tustin, the occupancy of each occupied residential unit in the building on the Subject Property shall include at least one person 62 years of age or older. ~-~ 2. The above-mentioned occupancy restriction shall not be chan_,,d without the review and approval of the City of Tustin. 3. The provisions of this Declaration are intended to ensure compliance Mth proxSsions of the Tustin Zoning Code applicable to the Subject Property and benefit adjacent public and private properties. Accordingly, it is agreed that the City shall have the fight to enforce this Declaration by any legal or equitable means against the Property O~mer and such person or persons in actual possession of the Subject Property who directly or through any agent violate the terms hereof. All obligations of the Covenantor under this Statement shall inure solely to the benefit of the City. There are no beneficiaries of said obligations nor shall the right 40074117v3 -2- of the City be transferable in any manner to any person other than a successor municipal corporation whose geographic boundaries include the Subject Property. 4. The owner of'record of the Subject Property at the time that any claims or liabilities arise shall hold harmless and defend the City of Tustin for all such claims and liabilities with regard to the making and recording of the Statement of Covenants, Conditions and Restrictions on the Subject Property. 5. Covenantor shall pay for all recording costs required by the office of the Orange County Recorder, and' cause the recordation of this Statement. Evidence of such recordation shall be provided to the City. 6. The provisions of this Declaration shall be deemed independ:nt and severable and the invalidity or partial invalidity or unenforceability of any one provision or portion thereof shall not affect the validity or enforceability of any other provigion hereof. Any titles of sections or paragraphs of this Statement are for the convenience of the reader only and no presumption or implication of the intent of the parties hereof as to the construction of the Statement shall be drawn therefrom. Executed this __. day of ., 2000, at Tustin, California. ACCEPTED BY: CITY COVENANTOR CITY OF TUSTIN, a municipal corporation MITSUI REAL ESTATE SALES, USA, LTD., a California corporation By: By: (Signatures must be properly ac -knowledged and notarized) 40074117v3 -3- STATE OF CALIFORNIA COUNTY OF On , 2000, before me, , a Notary Public in and for the State of California, personally appeared Amanda, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument, and actmowledged to me that he or she executed the same in his or her authorized capacity and that, by his or her signature on the instrument, the person or the entity upon behalf of which he or she acted, executed the instrument. WITNESS my hand and official seal. Notary Public in and for said State (Notarial Seal) 4007411%'3 STATE OF CALIFORNIA COU.'N'TY OF On , 2000, before me, ., a Notary Public in and for the State of California, personally appeared Amanda, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument, and actmowlsdgsd to me that he or she executed the same in his or her author/zed capacity and that, by his or hsr signature on the instrument, the person or the entity upon behalf of which he or she acted, executed the instrument. WITNESS my hand and official seal. Notary Public in and for said State (Notarial Seal) 40074117v3 EXBIHIT B RECORDING REQUESTED AND WHEN RECORDED RETUR~N TO: Mitsui Real Estate Sales, USA, Ltd. Attn: Asset Management Department 19191 South Vermont Avenue, Suite 590 Torrance, CA 90502 MEMORANDUM OF AGREEMENT reeardine property located at 17432-17442 Mitchell Avenue. Tustin. CA This Memorandum of Agreement ("Memorandum"), dated for reference purposes as of ,2000, is made and entered into between Mitsui Real Estate Saies, USA, Ltd., a California corporation ("Mitsui"), and the City of Tustin, a municipal corporation (the "City"), as follows: mo Mitsui and the City have entered into a Settlement Agreement dated ., 2000 (the "Agreement") with regard to City Ordinance No. 922, as amended by Ordinanze No. 931, and certain real property commonly referred to as the Tustin Terrace Apartments, a 20-unit apartment building located at 17432-17442 Mitchell Avenue, Tustin, and more particularly described as follows: Parcel i: All that certain real property situated in the Rancho Santiago de Santa gma, Coun~ of Orange, State of California, described as follows: A portion of the land shown on Lots 39 and 40 on the map of"A" part of Tustin CID', as per map thereof recorded in book 4 at pages 218 and 219 of Miscellaneous Records of Orange County, California, described as commencing at an iron rail at the Southeast comer of the Allotment to N. O. Stafford and C. Tustin by Final Decree in partition of the Rancho Santiago de Santiago de Santa Ana; running thence North 42° 25' West 30 feet to the intersection of the North line of McFadden Street with the Northwest line of Newport Avenue, thence North 39° 49' 30" East along the Northwesterly line of said Newport Avenue, 524.74 feet; thence North 50° 10' 30" West 210 feet to the true point of be~nning of the boundary of the land herein described; nmning thence North 50° 10' 30" West 70 feet; thence North 39° 49' 30" East 164 feet; thence South 50° 10' 30" East 70 feet; thence South 39° 49' 30" West 164 feet to the said true point of the be~4nning. Parcel 2: A portion of the land shown as Lots 39 and 40 on the map of"A" part of Tustin City, recorded in book 4, pages 218 and 219 of Miscellaneous Records of Orange Count),, California, described as beginning at an iron rail at the Southeast comer of the Allotment to N. O. Stafford and C. Tustin by final decree in partition of said Rancho; running thence North 42° 25' West 30 feet to the intersection of the North line of McFadden 40066372V3 EXHIBIT B FORM OF MEMORANDUM OF AGREEMENT Bo Street with the Northwest line of Newpo~ Avenue, thence North 39° 49' 30" East along the Northwesterly line of said Newport Avenue 524.74 feet to a point; thence North 50° 10' 30" West 280 feet to a point, being the tree point of beginning of the land herein described; running thence North 50° 10' 30" West 70 feet to a point; thence North 39° 49' 30" East 164 feet to a point; thence South 50° 10' 30" East 70 feet to a point; thence South 39° 49' 30" West 164 feet to said true point of beginning, subject to an agreement hereinafter shown. This Memorandum is made for the purpose of giving public notice of the Agreement and for no other purpose. The provisions of this Memorandum shall not in any way change or affect the provisions of the Agreem~t. Mitsui Real Estate Sales, USA, Ltd., a California corporation By: Its: City ofTustin, a municipal corporation By: Its: 40066372V3 EXHIBIT B FORM OF MEMORANDUM OF AGREEMENT