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HomeMy WebLinkAboutRDA Reso 1997-1549 AGENCY RESOLUTION NO. 1549 (COUNCIL RESOLUTION NO. 18755) 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 FOR LOW INCOME FAMILIES WHEREAS, the original Cordova Viltage Disposition and Development Agreement ("DDA") was approved by the Council on January 7, 1997 by Council Resolution #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 ~ Director of Community Development ~,~z~ency Attorney ~ Resolution 1 549 Page 2 PASSED, APPROVED and ADOPTED BY THE REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA, CALIFORNIA this 5th day of August, 1997 by the following vote: AYES: Members Padilla, Rindone, Salas, Horton, Moot NOES: None ABSENT: None ABSTENTIONS: None Shirley Hort~ Chairman ATTEST: ~,~"' ~. Chris Salomone Executive Secretary STATE OF CALIFORNIA ) COUNTY OF SAN DIEGO ) ss: CITY OF CHULA VISTA ) I, Chris Salomone, Executive Secretary to the Redevelopment Agency of the City of Chula Vista, California DO HEREBY CERTIFY that the foregoing is a full, true and correct copy of Resolution No. 1549 and that the same has not been amended or repealed. Dated: August 6, 1997 ~/0j~, ~ Chris Salomone Executive Secretary ATTACHMENT A - Page '1 of 5 2.14 City/Aqency 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 USC 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 re~scn=b!~ ""sset cr!cnted" operating expenses for the same period. For purposes of this calculation, - ...... ~-~'- "~o~* '--~'-*~'~" -. .... *~ ........... ~-.-,, ;.-.-~,,,~ ....... ,~ ... .... :. for pit ~ .......... +- +..,~+ ~v~l,.~h,~l,, ¢ .... e~ ¢~. +kam.;.+ ........ A .... ~.,~*l~. ~¢ +g* D .... ~,, For purposes of the foregoing definition of "Residual Receipts," any prope~ management fee or padnership management fee which is paid to Developer shall at no time exceed an amount as is customa~ and standard for affordable housing projects similar in size and scope to the Project. No~ithstanding the foregoing, for purposes of this calculation, reasonable operating expenses shall not include: (i) programmatic or other similar sewice oriented operating expenses, or (ii) principal and interest payments on any debt subordinate to the Ci~ Note or the Agency Note. c. The ~enty-five (25%) percent of Residual Receipts remaining after the annual payments on the Ci~/Agency Notes shall be used by Developer only for costs and improvements related to the Prope~ or sewices provided directly to the occupants of the Restricted Units by Developer. ATTACHMENT A - Page 2 of 5 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) 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 refinance 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 prier 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 ATTACHMENT A - Page 3 of 5 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. 2.20 Developer 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 $168,394 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"). n~,,,,~ Deve~f~-~= 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 shall be 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 ATTACHMENT A - Page 4 of 5 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 Against Assignment 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. (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. ATTACHMENT A - Page $ of 5 (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. 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.