HomeMy WebLinkAbout2008/05/27 Item 4
CITY COUNCIL
AGENDA STATEMENT
:Sw~ Cln' OF
~CHULA VISTA
MA Y 27, 2008, Item~
ITEM TITLE:
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
CHULA VISTA APPROVING THE APPROPRlA TION OF AN
ADDITIONAL $195,000 FROM THE A V AILABLE BALANCE
IN THE CITY'S HOME INVESTMENT PARTNERSHIP
PROGRAM (HOME) FUNDS, APPROVING THE FIRST
AMENDMENT TO THE LANDINGS LOAN AGREEMENT
BETWEEN THE CfTY OF CHULA VISTA AND CIC
LANDINGS, L.P. INCREASING THE LOAN AMOUNT BY
$180,000, AND AUTHORIZING THE CITY MANAGER TO
EXECUTE THE FIRST AMENDMENT TO THE LANDINGS
LOAN AGREEMENT AND ALL OTHER NECESSARY LOAN
DOCUMENTS TO PROVIDE THE ADDITIONAL FINANCIAL
ASSISTANCE FOR THE DEVELOPMENT AND OPERATION
OF THE LANDINGS APARTMENTS
SUBMITTED BY:
ASSISTANT mRE<;:TgRL.<!OF
HOUSING // ~
CITY MANAGE~. c:: /~
lJ.e;,
REDEVELOPMENT &
REVIEWED BY:
SUMMARY
On August 7, 2007, the City of Chula Vista and CIC Landings, L.P. (CIC) entered into a
Loan Agreement to provide $920,000 from the City's HOME Investment Partnership
Program (HOME) to assist in funding the construction of a 92-unit low-income apartment
development, known as the Landings within the Winding Walk master planned
community. To achieve compliance with Section 504 of the Rehabilitation Act of 1973
(Section 504), CIC is requesting an additional $180,000. Staff is also requesting an
additional $15,000 to fund City costs related to loan underwriting, legal services, and
environmental review. The total proposed City contribution to the Landings project is
$1,155,000, which includes a $1,100,000 loan to CIC and $55,000 for City costs.
4/5THS VOTE: YES 0 NO D
ENVIRONMENTAL REVIEW
The Environmental Review Coordinator has reviewed the proposed project for
compliance with the California Environmental Quality Act (CEQA) and has determined
that the proposed project was adequately covered in a previously adopted Final Second
Tier Environmental Impact Report, EIR 01-02. Thus, no further CEQA review is
necessary.
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MA. Y 27, 2008, Item~
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Based upon the proposed financing through HOME, the Environmental Review
Coordinator has also reviewed the proposed project for compliance with the National
Environmental Policy Act (NEPA). Based upon the results of the environmental
assessment, the Environmental Review Coordinator has determined that there is no
substantial evidence, in light of the whole record before the City of Chula Vista, that the
project may have a significant impact on the environment; therefore, the Environmental
Review Coordinator has prepared and published a Finding of No Significant Impact
(FONSI). An amendment detailing the increase in fmancing was prepared and published
on April 25, 2008.
RECOMMENDA nON
The City Council adopt the Resolution.
BOARDS/COiVIMISSION RECOMMENDA nON
On April 2, 2008, the Housing Advisory Commission voted to recommend additional
financial assistance (a maximum of $250,000) from the City's available HOME funds for
the development of the Landings affordable rental community.
DISCUSSION
Background
The Landings, a 92-unit affordable rental development, will be built within the Winding
Walk subdivision of eastern Chula Vista in satisfaction of the requirements of the City's
Balanced Communities - Affordable Housing Policy of the Housing Element (Policy
5.1.1). To assist in the financing for the construction of the Landings, the City Council,
through Resolution No. 2007-442, provided a loan for $920,000 from the City's available
HOME funds. Of the 92-units, II units will be HOME-assisted and affordable to
extremely low income households.
Section 504 - HOME Requirement
The Landings was originally contemplated as an affordable for-sale 92-unit condominium
development. The project was, therefore, designed and approved, as townhome style
units with garages on the first floor level and all living areas provided on the second
floor.
During the close of escrow for the Landings, ere and its funding representatives
determined that as a result of the City's loan from its HOME funds, Section 504 of the
Rehabilitation Act of 1973 would be applicable to the project.
As stated in Title 24 of the Code of Federal Regulations 8.22, new multifamily housing
projects funded through federal programs, such as HOME, "shall be designed and
constructed to be readily accessible to and usable by individuals with handicaps". A
minimum of five percent of the total dwelling units shall be made accessible for persons
with mobility impairments and two percent of the units shall be accessible for persons
with hearing or vision impairments.
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The Landings will be required to provide a total of five units for persons with mobility
impairments and persons with hearing or vision impairments. In analyzing various
options to accommodate this requirement, CIC determined the most cost effective
approach was to redesign and modify four residential buildings to provide elevators to
allow access to the living areas for five individual units.
Proposed Increase in HOil;JE Financial Assistance
CIC is requesting additional financial assistance as a direct result of the accessibility
requirements for the HOME funds. Total costs associated with redesign of the Landings
and the addition of the five elevators is approximately $381,919. To fund the additional
costs, several sources are being proposed. As a result of the increased costs, the project is
eligible to receive an increase in Low Income Housing Ta'( Credits ($153,000). Both
CIC and Shea Homes (the master developer) are contributing a total of $35,961, towards
these costs. CIC is requesting that the City provide an additional $180,000 to close the
remaining financing gap.
Staff is also requesting an appropnatlOn of $15,000 for project management costs
incurred by the City, which include staff time and overhead costs related to loan
underwriting, legal services, and environmental review.
Staff Analysis
Staff has reviewed the additional costs and the available sources and has determined that
the costs are reasonable and funding of the additional financing gap is necessary to make
the Project feasible. The City's financial participation in the development of the
Landings is a sound investment based upon Developer's ability to effectively serve the
City's housing needs and priorities as expressed in the Housing Element, the
Consolidated Plan and the cost effectiveness of the City's financial assistance based upon
the leveraging of such resources.
By providing the assistance, households comprised of individuals with physical
limitations will have a home that is accessible. Additionally, funding of this project
offers Chula Vista opportunities to meet the needs of its low income andlor disabled
households and the City's obligations for the expenditure of HOME funds. The Landings
will provide a balance of housing opportunities within the master planned communities
located east of 1-805 with the development of affordable rental housing. Designed with
all three-bedroom units, the Landings will offer affordable housing for large-sized very
low and low income families. With five units accessible by elevator, persons with
mobility impairments, including seniors, will have an appropriate and accessible living
environment.
Lastly, the requested $195,000 in financial assistance will come from the City's HOME
funds. HOME funds must be committed to eligible projects within two years and
expended within five years. There is approximately $465,000 in HOME funds that must
be committed by June 30, 2008. The allocation and expenditure of the $195,000 in
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additional fmancim! for the Landings and related City staff costs will assist the City in
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complying with the HOME regulations.
Terms of City Loan
CIC entered into a Loan Agreement with the City on August 7, 2007 for $920,000 from
the City's HOME funds and subsequently entered into the associated loan documents (i.e.
Deed of Trust and Promissory Note) in December 2007. .A.n amendment to the Loan
Agreement and each of the associated loan documents will be executed based upon
Council's action, to reflect the proposed additional mcrease in City assistance. The
original terms of the City's loan will continue.
DECISION lYU.KER CONFLICT
Staff has reviewed the property holdings of the City Council and has found no property
holdiIlgs within 500 feet of the boundaries of the property which is the subject of this action.
FISCAL IMPACT
The requested $195,000 will be set aside from the available balance in the HOME
Investment Partnership Program and appropriated in the City's HOME Investment
Partnership Program Budget for the Landings. It includes additional financing in the
amount of $] 80,000 to CIC for costs related to the development of the Landings, and
$15,000 for project management costs; which will offset staff time and overhead costs
related to loan underwriting, legal services, environmental review, and other related
internal project staff costs. The total financial assistance toward this project is
$],155,000, which includes the loan of $1,100,000 to CIC Landings, L.P. (CIC) and
$55,000 for City processing costs.
Any repayment of the loan will be deposited into the HOME funds as program income
for further use in providing affordable housing programs.
ATTACHMENTS
1. Location Map
2. Summary of Financial Analysis
3. A First Amendment to the Landings Loan Agreement By and Between The City
ofChula Vista and CIC Landings, L.P.
Prepared by: Leilani Hines, Principal Projecl Coordinalor, Redevelopmenl & Housing
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ATTACHMENT 1
The Landings at Winding Walk
92-unit affordable renral housing community
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Attachment 2
PROFORlWA SUBSIDY ANALYSIS
Cost
Funds
Financing
Gap
Proiect Cost:
Land, Construction, Fees (oso/12/04/07) $
Elevators (Redesign & other costs) $
Subtotal $
Sources of Funds:
State MHP
Tax Credits (as 0/12/04/07)
Tax Credits (as a/05/27/08)
Permanent Loan
Subtotal
Subsidies:
Master Developer Contribution (as of 12/04/07)
Developer Deferred Fee
Developers Equity Contribution (as 0/05/27/08)
City Loan (HOME)
Subtotal
TOTAL
Cost per Unit (92 Unils)
City Subsidy per HOME Assisted Unit
4-6
27,772,087
381,919
28,154,006
$ 28,154,006
$ 6,931,052
$ 11,820,000
$ 153,000
$ 5,950,000
$ 24,854,052 $ 3,299,954
$ 1,300,000
$ 863,993
$ 35,961
$ I, I 00,000
$ 3,299,954
$ 28,154,006 $
$ 306,022
$ 100,000
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THE A TT ACHED AGREEMENT HAS BEEN REVIEWED
AND APPROVED AS TO FORM BY THE CITY
ATTORNEY'S OFFICE AND WILL BE
FORMALLY SIGNED UPON APPROVAL BY
THE ClTY COUNCIL
Jy~~ U~~
Ann Moore .
City Attorney
Dated: S- / ~I / 0 11
I I
First Amendment to the Landings Loan Agreement
By and between the City ofChula Vista and CIC landings, LP.
Attachment 3
FIRST A..I\1ENDMENT TO THE LANDINGS LOA..N AGREEMENT
BY AND BETWEEN THE CITY OF CHULA VISTA A1"1D CIC LA.NDINGS, L.P.
This First Amendment to the Landings Loan Agteemelll ("First .A.mendment") is entered
into on the 27th day of May, 2008, by and between the CITY OF CHULA VISTA, a public
body, corporate and politic, of the State of California ("City") and eIC Landings, L.P. a
California limited partnership ("Borrower"). The City and the Borrower may be referred to
herein individually as "Party" and collectively as "Parties".
RECIT ALS
A. The Borrower intends to construct a 92-unit affordable apartment community
located at on the corner of Discovery Falls Road and Crossroads Street in Otay Ranch Village II
in the City ofChula Vista to be known as "The Landings Apartments" (the "Project").
B. On August 7, 2007, pursuant to Resolution No. 2007-209, the City Council
approved the Landings Loan Agteement (the "Loan Agteement") between the City and Borrower
in which the City agteed to loan to the Borrower $920,000 (the "City Loan") to assist in the
construction and operation of the Project.
C. The City has agteed to loan Borrower an additional One Hundred Eighty
Thousand Dollars ($180,000) to finance additional costs related to development of the Project
bringing the loan total to One Million One Hundred Thousand Dollars ($1,100,000).
D. On December 4, 2007, pursuant to Housing Authority Resolution No.2007-036, the
Housing Authority of the City of Chula Vista authorized the issuance of Multifamily Housing
Revenue Bonds in an aggregate principal amount of $16,670,000 (the "Bonds") instead of the
aggregate principal amount as $6,004,000 cited in the Loan Agreement.
E. As a prerequisite to the disbursement of the City Loan funds, the Borrower is
required by the City to have a firm commitment for an equity contribution from the Borrower's
Limited Partner of not less than $11,792,000 (the "Equity Contribution") instead of the
$11,863,000 cited in the Loan Agteement.
F. The Parties desire to execute this First Amendment to the Loan Agreement to
reflect the additional funds being provided by the City, to correct estimates of the dollar amounts
of the Bonds, and correct the eq uity contribution required by the City.
NOW, THEREFORE, the Parties agree to amend the Loan Agreement as follows:
1. ARTICLE 2 - Definitions
In Section 2.4, "Certificate of Completion", delete "9.8" and replace with "9. T.
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2. ARTICLE 2 - Definitions
. In Section 2.6, "City Loan", delete "Nine Hundred Twenty Thousand Dollars
($920,000)" and replace with "One Million One Hundred Thousand Dollars ($1,100,000)".
3. ARTICLE 2 - Definitions
In Section 2.12, "Bonds", delete "$6,004,000" and replace with "Sixteen Million Six
Hundred Seventy Thousand Dollars ($16,670,000)".
4. ARTICLE 3 - Financing of the Project
In Section 3.1, SummarY of Financim!. third sentence, delete "$6,004,000" in both places
in that semence and replace with "$16,670,000" in both places in that semence.
5. ARTICLE 3 - Financing of the Project
In Section 3.1, Summarv of Financing. fourth sentence, delete "920,000" and replace
with "$1,100,000".
6. ARTICLE 3 - Financing the Project
In Section 3.1, Summary of Financing, fifth sentence, delete "$11,863,000" in both
places in that sentence and replace with $11,768,000" in both places in that sentence.
7. ARTICLE 4 - City Loan
In Section 4.1, Amount of Disbursement. delete "$920,000" and replace with
"$1, I 00,000".
8. ARTICLE 4 - City Loan
In Section 4.3, Borrower's Obligations, subsection (c), delete "$11,863,000" and replace
with "$11,768,000".
9. ARTICLE 4 - City Loan
In Section4.5, Repavment, subsection a, in the first sentence after "in an amount equal
to", delete "fifty percent (50%) of the "Residual Receipts" (defined below) derived from the
Property and/or the operation of the Project" and insert "the City's proportionate share of the
Residual Receipts (defmed below) for the previous calendar year based upon a pro rata share of
fifty percent (50%) of Residual Receipts with the California State Department of Housing and
Community Development and its Multifamily Housing Program loan ("MHP Loan") to the
Project in the amount of $6,931 ,052"
In Section 4.5, Repavment, subsection b. "Residual Receipts", subsection (ii)
"Reasonable Operating Expenses", delete "any fees payable to Borrower's Limited Partner
pursuant to the Partnership Agreement, including but not limited to the Asset Management Fee,
as such terms are defined in the Partnership Agreement, debt service on any loan made to the
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Borrower by any partner of Borrower to cover operating expenses;" and replace with "any fees
and distribution payable to Borrower's Investor Limited Partner pursuant to the Parrnership
Agreement, including but not limited to the Cumulative Priority Distribution, as such terms are
defined in the Partnership Agreement, debt service on any loan made to the Borrower by any
partner of Borrower to cover operating expenses;".
10. ARTICLE 9 - Development of the Project
In Section 9.1, Work to be Performed, delete "Exhibit _" and replace with "Exhibit E".
11. Borrower and City agree that for all purposes Residual Receipts shall be calculated
and paid by Borrower to the City as set forth in the City Note. If any provisions of the City Note
and Loan Agreement conflict or differ from one another regarding the calculation of Residual
Receipts, the provisions of the City Note shall apply.
12. Miscellaneous.
a. Any references to the Loan Agreement in any of the Loan Documents shall be
deemed a reference to the Loan Agreement as amended by this First Amendment.
b. Except as amended by this First Amendment, the Loan Agreement shall continue
unmodified and in full force and effect.
c. Each of the Parties represents and warrants that it has the full power and authority
to enter into this First Amendment and perform its respective obligations
hereunder.
d. This First Amendment may be executed in counterparts, each of which shall be
deemed an original and all of which, when taken together, shall constirute one
document.
[SIGNATURES ON THE FOLLOWING PAGE]
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IN WITN'ESS WlIEREOF, the Parties have executed this First Amendment as of the
day and year fIrst written above.
CITY OF CHULA VISTA
By:
David Garcia, City Manager
ATTEST:
Donna Norris, Interim City Clerk
APPROVED AS TO FOR..M:
Ann Moore, City Attorney
[SIGNATURES CONTINUED ON THE FOLLOWING PAGE]
44-10
CIC LA...NDINGS, L.P.,
a California limited partnership
By: Ajax-Landings, LLC,
a California limited liability company,
its Administrative General Partner
By: Chelsea Investment Corporation,
a California corporation,
its Manager v.
i/\~ ~ ,/ jJ
By:"~. ~
JtJes J. SCLf' Pres~ent
By: Pacific Southwest Community Development
Corporation,
a California nonprofit public benefit corporation,
its Managing General Partner
By: ~/{~~, .~
Jack K. Jaynes,
Executive Director/President
54-11
RESOLUTION NO. 2008-
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
CHULA VISTA APPROVING THE APPROPRIATION OF AN
ADDITIONAL $195,000 FROM THE AVAILABLE BALAt'\ICE
IN THE CITY'S HOME INVESTMENT PARTNERSHIP
PROGR.A.M (HONlE) FlJNDS, APPROVING THE FIRST
AMENDMENT TO THE LANDINGS LOAN AGREEMENT
BETWEEN THE CITY OF CHULA VISTA AND CIC
LANDINGS, L.P. INCREASING THE LOAN A.l\10UNT BY
$180,000, AND AUTHORIZING THE CITY MANAGER TO
EXECUTE THE FIRST AI'vlENTII'vlENT TO THE LANDINGS
LOAN AGREEMENT AND ALL OTHER NECESSARY LOAN
DOCU1vlENTS TO PROVIDE THE ADDITIONAL FINANCIAL
ASSISTANCE FOR THE DEVELOPMENT AND OPERATION
OF THE LANDINGS APARTMENTS
WHEREAS, CIC Landings, L.P. (the "Developer") has proposed to construct a 92-unit
apartment community, known as the Landings, in Neighborhood R-19 of Otay Ranch Village
Eleven (the "Project") in satisfaction of Housing Element Policy 5.1 - Balanced Communities
Affordable Housing of the City's General Plan; and
WHEREAS, Housing Element Policy 7.4.5 sets forth the objective of providing financial
assistance to new residential developments affordable to very low and low-income households,
particularly those developments addressing the City's underserved housing needs of very low
income households and rental housing for large families; and
WHEREAS, the City receives Home lnvestment Partnership Program ("HOME") funds
from the United States Department of Housing and Urban Development ("HUD") exclusively for
the creation of affordable housing opportunities for very low and low-income households; and
WHEREAS, the Project furthers the goals set forth in City's 2005-2010 Housing Element
of the General Plan and 2005-20 10 Consolidated Plan for the HOME Program; and
WHEREAS, on August 7, 2008, pursuant to Resolution 2007-209, the City Council
approved the Landings Loan Agreement between the City and the Developer (the "Loan
Agreement") in which the City agreed to loan Developer $920,000 in HOME funds; and
WHEREAS, the Developer has requested an additional loan of HOME funds not to
exceed $180,000 for additional costs related to compliance with the accessibility requirements of
the HOME funds; and
WHEREAS, the additional funds will bring the total amount of City HOME assistance to
$1, I 00,000 for the construction ofthe Project; and
WHEREAS, it is necessary to fund additional $15,000 in project management costs
related to the Project, which will offset staff time and overhead costs related to loan
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underwriting, legal services, environmental review, and other related internal project staff costs;
and
WHEREAS, the total amount of City assistance through the HOME Program is
consistent with the maximllm per-lll1it HOME subsidy and such subsidy has been evaluated for
reasonableness; and
WHEREAS, the City Council has considered all terms and conditions of the proposed
First Amendment to the Landings Loan Agreement and believes that the First Amendment is in
the best interest of the City and the health, safety, and welfare of the residents of the City, and in
accord with the public purposes and provisions of applicable Federal, State and local law
requirements.
NOW, THEREFORE, be it resolved by the City Council of the City of Chula Vista as
follows:
I. That it approves an amendment of the Fiscal Year 2007-2008 Home Program
Budget to appropriate an additional $195,000 from the available balance in the City' Home
Investment Partnership Program (HOME) funds to the non-CIF project, "Landings Project".
2. That it approves the First Amendment to the Landings Loan Agreement
increasing the loan amount by $180,000 for a total loan amount of $1,100,000.
J. That it authorizes the City Manager or his designee to execute the First
Amendment to the Landings Loan Agreement and all related loan documents, to make all
approvals and take all actions necessary or appropriate to carry out and implement the Landings
Loan Agreement, as amended, and to administer the obligations, responsibilities and duties ofthe
City to be perforn1ed under the Landings Loan Agreement, as amended, and related documents.
4. That it authorizes the City Manager to make revisions to the Landings Loan
Agreement, as amended, and all other related loan documents, which do not materially or
substantially increase the obligations of the City under those agreements or matet-ially or
substantially change any aspect of the Project.
Presented by
Approved as to form by
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{L LLc'~"6> /in
1/
Eric Crockett
Assistant Director Redevelopment & Housing
" -"li
\--C~~
Ann Moore
City Attomey
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