HomeMy WebLinkAboutReso 1997-18755 RESOLUTION NO. 18755
(AGENCY RESOLUTION NO, 1549)
JOINT RESOLUTION OF THE CITY COUNCIL AND THE
REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA TO
APPROVE CHANGES IN THE CORDOVA VILLAGE DISPOSITION
AND DEVELOPMENT AGREEMENT WITH SOUTH BAY
COMMUNITY SERVICES FOR THE DEVELOPMENT OF A FORTY
(40) UNIT AFFORDABLE HOUSING RENTAL PROJECT IN
RANCHO DEL REY TO SATISFY RANCHO DEL REY'S SPA III
OBLIGATION TO BUILD HOUSING FDR LOW INCOME FAMILIES
WHEREAS, the original Cordova Village Disposition and Development Agreement
("DDA") was approved by the Council on January 7, 1997 by Council Resolution No. 18548;
and
WHEREAS, the necessary funding for the development of Cordova Village has been
committed and the non City/Agency funding parties are now requesting minor amendments
to the DDA to be consistent with their lending requirements; and
WHEREAS, the requested changes to the Cordova Village Disposition and Development
Agreement have no significant fiscal impact nor significant regulatory implications to the
City/Agency; and
NOW, THEREFORE, BE IT RESOLVED the Redevelopment Agency of the City of Chula
Vista does hereby authorize staff to take all necessary measures to amend the Cordova Village
Disposition and Development Agreement as indicated on Attachment A attached hereto and
incorporated herein by this reference.
Presented by Approved as to form by
Chris Salomone
Community Development Director ~ty
Resolution 18755
Page 2
ATTACHMENT A
2.14 Citv/Aqencv Loan Repayment Obliqations
a. Payment of principal and interest on the City Note and the Agency Note
(hereinafter sometimes collectively referred to as the "City/Agency Notes") shall be made, on
an annual basis, out of a fund equal to seventy-five (75%) percent of the '"Residual Receipts""
(defined below) derived from the Property and/or the operation of the Project. Payments on
the City/Agency Notes from said fund shall be made on a pro rata basis in accordance with
the proportion the City Loan and the Agency Loan bear to the total amount loaned to
Developer by the City and the Agency. Such amounts shall be paid on a priority basis to all
other debt service on the property except for the CHFA Permanent Loan, the LISC Loan and
the Deferred Developer Fee (as defined below). Residual Receipts shall be calculated by
Developer each and every year commencing with the first year anniversary of the issuance
of the certificate of occupancy by the City. The seventy-five (75%) percent Residual Receipts
payments, if any, shall be made on or before thirty (30) days after the first year anniversary
of the date on which the Deferred Development Fee (as defined below), has been paid in full,
and on or before 30 days after each subsequent yearly anniversary of said date thereafter.
b. "Residual Receipts" is specifically defined as the rental income from the
Project minus the reasonable "asset oriented" operating expenses for the same period. For
purposes of this calculation, reasonable "asset oriented" operating expenses shall include any I
and all costs associated with operating thc Property including, without limitation, debt service
on the CI-IFA Permanent Loan, a property management fcc not to cxocod eight (8%) percent
of all other such operating expenses, a partnership management foe, salaries and benefits of
ar~ OH-.,;ik~.f~il,l~t!){.~r. "O[)~}lalirtg Exp(;rl~;I.;r:;" rTioRns all rl)asonable ~,rld proper expenses of the
operation st the Developtracer. includir~g. bur net limited to. real estate taxes, ordinary
rriainter~ant:e and repa;r, costs of rtlarkt;ting and i~er~Ejgenlertt (not-to exceed industry
star~dar(I$) fuel. uhl'lms, garbage disposa'., sewer charges, audit expenses, all sunis due or
currently required h} be paid unde~ the lenns el the Note or Deed of Trust, required
Replacement Reserve deposits and Sdch other paymerits as the City/Agency may require or
soecifically approve in wr,tmg as Operating Expenses. In no even[ shall att~irrley lees or
litigalion costs nor exponditteres nornlally roqtjaed to be pa~d out el the Replacement Reserve
be treated as Operating Expenses unless specifically approved in writing by the
C.Ty.'AgOnCy."lnaif~t{~f~iin,;o. It~tf'~tliCO, t~)peH ye~l olhe~ la~.;.~, H~paffO, appio~i alloFado;;s;
trash collection, reasonable legal fees, maintenance supplies, administrative overhead directly
attributable to the Property, replenishment of capital reserves accounts included in
Dcvclopcr's approvcd budgets, such amount to be held in trust exclusively for use for capital
improvements to the Property, and reasonable "asset oriented" operational reserves not to
exceed at any time an amount equal to 5% of the upcoming ycar's Effective Gross Income,
ouch amounts to bc hold in trust cxclusivcly for usc for the maintenance and preservation of
the Property. For purposes of the foregoing definition of "Residual Receipts," any property
management fee or partnership management fee which is paid to Developer shall at no time
exceed an amount as is customary and standard for affordable housing projects similar in size
and scope to the Project. Notwithstanding the foregoing, for purposes of this calculation,
reasonable operating expenses shall not include: (i) programmatic or other similar service
oriented operating expenses, or (ii) principal and interest payments on any debt subordinate
to the City Note or the Agency Note.
· ~1 T
Resolution 18755
Page 3
c. The twenty-five (25%) percent of Residual Receipts remaining after the
annual payments on the City/Agency Notes shall be used by Developer only for costs and
improvements related to the Property or services provided directly to the occupants of the
Restricted Units by Developer.
d. Except as otherwise expressly provided hereunder, Developer's obligation
to repay the City/Agency Loan shall be limited to Developer's annual payment of seventy-five
(75%) percent of the Residual Receipts as described above for a period of fifty-five (55) years
following execution of the City/Agency Note (the "Conditional Maturity Date"). Upon the
Conditional Maturity Date, City/Agency shall have the option, at any time, in its sole
discretion, but after good faith discussions with Developer as to available options, upon ninety
(90) days' written notice to Developer, to (a) declare all amounts owed under the City/Agency
Notes immediately due and payable, or (b) to require installment payments under the
City/Agency Notes based upon (i) a restated principal balance comprised, in the aggregate,
of any and all outstanding principal and interest under the City/Agency Notes existing as of
the date of City/Agency election, (ii) a prospective interest rate per annum equal to the Prime
Rate then in effect for Bank of America, San Diego office, or such other rate mutually agreed
to by the City/Agency and Developer, and (iii) monthly installments of principal and interest
paid over the course of an amortization schedule to be determined by the City/Agency in their
sole discretion, not to be less than ten (10) years. In the event that City/Agency elects
repayment approach (b), Developer agrees to execute an endorsement to the Note in favor of
City/Agency, and/or other appropriate loan document amendments, reflecting the amended
repayment terms described above.
e. Notwithstanding the foregoing, in the event that Developer, or any
successors thereto, materially breaches the terms of this Agreement, the City/Agency Notes,
or the City/Agency Trust Deeds, or triggers a due on sale, transfer or encumbrance provision
set forth in the City/Agency Note or City/Agency Trust Deeds, the City/Agency shall have the
right in its sole discretion, to declare immediately due and payable all outstanding principal and
interest due under the Note, or to pursue any and all other remedies provided, herein, under
the Note or Trust Deed, or as otherwise provided at law or in equity.
2.16 Subordination; Refinancinq.
City/Agency agrees to subordinate the City Trust Deed, the Agency Trust Deed and
the Covenants Agreement to any construction and permanent financing obtained by Developer
to develop the Project thereon in an amount not to exceed the amounts listed in the Project
Budget attached hereto as Attachment No. 6, as well as any refinancing of said amount;
provided, however, that
a. any such subordination shall be evidenced by a recorded subordination
agreement containing such notice, cure, loan purchase or assumption
and Project purchase rights as may be reasonably required by the
City/Agency in a form to be approved by the City Attorney, which
approval shall not be unreasonably withheld; and
b. during the period commencing on the Effective Date of this Agreement
and ending on the earlier of (a) the date after which Developer or its
successor has repurchased the tax credit limited partners' interests in
the partnership created for tax credit purposes, or (b) eighteen (18)
Resolution 18755
Page 4
years after the date the City issues the certificate of occupancy for the
Project, if any such refinance during such period results in an increase
in the amount owing over the principal balance due at the time of
refinancing, or otherwise a distribution of retinarice proceeds, then an
amount equal to the greater of the difference between the amount of
the principal balance due at the time of the refinancing and the new
principal balance upon the refinancing or such refinance proceeds
("Refinance Proceeds") shall, within six (6) months after such refinance,
be used only to benefit the Project and prior to using the Refinance
Proceeds for such permitted purpose Developer shall notify Agency's
Executive Director of such refinance, the amount of the Refinance
Proceeds, and the proposed use of the Refinance Proceeds to benefit the
Project; and
c. Upon the repurchase of the tax credit partners' interests in the
partnership Developer agrees to exercise good faith efforts to explore
the feasibility of refinancing the project in order to provide proceeds to
pay down any outstanding amounts owed under the City loan and the
Agency loan. If such a refinance proves to be feasible on terms
favorable to the project, Developer shall exercise good faith efforts to
proceed to close on such a refinance. If not feasible, developer shall
prepare a written report explaining such infeasibility to the City/Agency
and Developer shall have no further obligations under this Section
2.16.c.
d. During the period following the conclusion of the period described in
subparagraph (i) immediately above, any such refinance that results in
an increase in the amount owing over the principal balance due at the
time of refinancing, or otherwise a distribution of refinance proceeds,
shall be approved in advance by the Agency's Executive Director and an
amount equal to the greater of the difference between the amount of
the principal balance due at the time of the refinancing and the new
principal balance upon the refinancing or such refinance proceeds shall
be paid to City/Agency to reduce the outstanding principal and accrued
interest due on the City/Agency Notes.
e. This agreetruant and Ihe Deed of Trust shall be subordinate to any
regHlatory allrecreants or deed of trust imposed by the California
Hrnism!j F~:~ance Agency ("CHFA") in carInaction with their permar~ent
financing at tile Development subject To the terms above and the terms
of the suho:dirlation agreement. Generally, the Borrower shall comply
with the more restrictive of the requirements of this Agreement and the
CHFA re!]ulatcrV agreements. provided however that, in tile event of
conflict, the CHFA regularcry agreements shall govern. With respect to
Ihe reserve rerluiremerlts and rnanagement issue of this Agreement, the
CHFA regularcry agreement shall be valid without the wrilten approval
el CHFA as long as CHFA, or its successors or assigns, shall have an
o~.;nership. financial or regulatory interest in the Development.
Resolution 18755
Page 5
2.20 Develooer Fee.
Developer shall be entitled to a developer fee, which includes general overhead and
profit, in the amount of ~300,000 (the "Developer Fee"). It is anticipated that a total of
8168,394 of the Developer Fee shall be paid to Developer as follows: $30,000 shall be paid
to Developer upon closing of the BACDB Construction Loan; $30,000 shall be paid to
Developer 270 calendar days after closing of the BACDB Construction Loan; and $108,394
shall be paid to Developer upon the issuance by the City of the certificate of occupancy. It
is expressly understood that the foregoing payment amounts are subject to adjustments based
upon availability of funds. Any unpaid balance of the Developer Fee (the "Deferred
Development Fee") remaining after the issuance of the certificate of occupancy shall be
evidenced by a promissory note executed in favor of Developer (the "Deferred Developer Fee
Note"). Developer shall not be entitled to any interest on the Deferred Developer Fee. In the
event there are any cost savings realized in the construction of the Project, all available funds
attributable to such cost savings shall be applied to the Deferred Developer Fee upon closing
made on an annual basis, out of one hundred (100%) percent of the Residual Receipts as
defined and calculated in Section 2.14. Such amounts shall be paid to Developer on a priority
basis to all other debt service on the Property except for the BACDB Construction Loan, the
CHFA Permanent Loan and the LISC Loan. Developer shall specifically be entitled to payment
of the Deferred Developer Fee from one hundred (100%) percent of Residual Receipts, if any,
before payment of the installment amounts due to City and Agency pursuant to the City Note
and Agency Note. The Residual Receipts payments, if any, shall be paid to Developer on or
before 30 days after the first year anniversary of the date on which the City issues the
certificate of occupancy, and on or before 30 days after each subsequent yearly anniversary
of said date thereafter until the Deferred Developer Fee has been paid in full. Developer may
record a deed of trust securing the Developer Fee Note, but such deed of trust shall be
subordinate to the City Trust Deed, the Agency Trust Deed, the Covenants Agreement, the
TCAC Regulatory Agreement, any deed of trust securing the repayment of the LISC Loan, and
any deeds of trust securing the construction and permanent financing.
4.14 Prohibition Aaainst Assiqnment and Transfer.
The qualifications and identity of Developer are of particular concern to City and
Agency. It is because of those qualifications and identity that City and Agency have entered
into this Agreement with Developer. Accordingly, for a period of fifty-five (55) years from the
Effective Date, (1) Developer, without City's or Agency's prior written approval, shall not,
whether voluntarily, involuntarily, or by operation of law, and except as permitted in this
Section 4.14, undergo any significant change in ownership or assign all or any part of this
Agreement or any rights hereunder, and (2) Developer without City's or Agency's prior written
approval, shall not, whether voluntarily, involuntarily, or by operation of law, and except as
permitted in this Section 4.14, assign all or any part of the Property or Project.
Notwithstanding the foregoing, the following shall not be considered a significant
change in ownership or an assignment or transfer and shall not require City or Agency
approval for purposes of this Section 4.14:
(i) Transfers to any entity or entities owned or controlled by
Developer.
Resolution 18755
Page 6
(ii) Transfers to a non-profit public benefit corporation sponsored by
Developer whose board of directors shall be comprised of five
members, three (3) of which shall be designated by Developer
and two (2) of which shall be designated by a tenant association
to be organized by the occupants of the Project. Pending
formation of the tenant association, Developer shall designate all
directors, two (2) of which shall, if possible, be tenants of the
Project.
(iii) Transfers to any partnership formed by Developer pursuant to which
Developer retains operational and managerial control (Agency
acknowledges that Developer intends to assign this Agreement to a
limited partnership, the managing general partner of which shall be
Developer) and sale of such partnership interests to the general partners
at the conclusion of the 15-year tax credit period.
(iv) The conveyance or dedication of portions of the Property to the
City or other appropriate governmental agency for the formation
of an assessment district, or the granting of easement or permits
to facilitate the development of the Property.
(v) A sale or transfer of some or all of Developer's interest in the
Property to investors or syndicators or a sale or transfer of some
or all of the investor's interest in the limited partnership by the
investors or syndicators, or to a limited partnership of which
Developer is a partner.
(vi) The leasing of all or any part or parts of a building or structure.
(vii) Transfer of property management responsibilities, provided, however,
that Developer shall provide City/Agency thirty (30) days prior written
notice of any such management change, and that this exception shall be
limited to transfers to property managers with significant experience in
managing projects similar to the Project.
Any such assignee shall be subject to all terms and conditions of this Agreement,
including, without limitation, all affordability restrictions concerning the occupancy of the
Property.
Developer shall deliver written notice to City or Agency requesting approval of any
assignment or transfer requiring City or Agency approval hereunder. Such notice shall be
given prior to Developer entering into a formal written agreement with the proposed assignee.
In considering whether it will grant approval to any assignment by Developer of its
interest in the Property or any portion thereof, which assignment requires City or Agency
approval, City or Agency, as applicable, shall consider factors such as (i) the financial strength
and capability of the proposed assignee to perform Developer's obligations hereunder and (ii)
the proposed assignee's experience and expertise in the planning, financing, development, and
operation of similar projects.
Resolution 18755
Page 7
,,f-
No assignment, including assignments which do not require City or Agency approval
hereunder, but excluding assignments for financing purposes, shall be effective unless and
until the proposed assignee executes and delivers to Agency and City an agreement, in form
satisfactory to City's or Agency's attorney, assuming the obligations of the assignor which
have been assigned. Thereafter, the assignor shall be relieved of all responsibility to City and
Agency for performance of the obligations assumed by the assignee.
No lender approved by Agency or City pursuant to Section 4.16 shall be required to
execute an assumption agreement and such lender's rights and obligations hereunder shall be
as set forth in Section 4.16.
The withdrawal, re:moral. arld"(>r rep~a~:eln~;nt of the general partner ~)f the Partnership
mLISt be approved by the City,Agency and tho California Equity Fund. Any such rernova] with
1he consenl [)f tl~e Cily.tAgency and Ihe Cali~orl,ia E(lL;liy Fur:d shall n[)t (:(}nstdute a default
under any of the Loan Documents, and ony such aotioqs Srlall not acc~}lerate the maturiLy of
flu} Loan. provided that any r{~qusred subst=luh~ general [)FiI tner is e(}as()flrlhly anceplable to the
City.'Agoncy arid is selected w~th reasonable promptr~ess. =q a'W app, cval, Csty:Ager~cy and
California Eq~jily Fund shall ~lcI reas[)n~lbly
Resolution 18755
Page 8
PASSED, APPROVED, and ADOPTED by the City Council of the City of Chula Vista,
California, this 5th day of August, 1997, by the following vote:
AYES: Councilmembers: Moot, Padilia, Rindone, Salas, and Horton
NAYES: Councilmembers: None
ABSENT: Councilmembers: None
ABSTAIN: Councilmembers: None
Shi~~
ATTEST:
Aut e,et, city C,erk
STATE OF CALIFORNIA )
COUNTY OF SAN DIEGO )
CITY OF CHULA VISTA )
I, Beverly A. Authelet, City Clerk of the City of Chula Vista, California, do hereby certify that
the foregoing Resolution No. 18755 was duly passed, approved, and adopted by the City
Council at a regular meeting of the Chula Vista City Council held on the 5th day of August,
1997.
Executed this 5th day of August, 1997
Authelet, City Clerk