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HomeMy WebLinkAbout6.6 Eden Loan Commitment CI'TY CLERK AGENDA STATEMENT CITY COUNCIL MEETING DATE: June 3, 2003 SUBJECT: Letter Of Support and Commitment of Financial Contribution to Eden Housing, Inc. for Senior Housing Project and Option to Lease and Memorandum of Option to Lease for Property at 7606 Amador Valley Blvd and Resolution providing for the Option to Lease and the Memorandum of Option to Lease. Report Prepared By: Julia Abdala, Housing Specialist ATTACHMENTS: 1. Letter of Support of Senior Housing to Eden Housing, Inc.' for HUD Section 202 Supportive Housing for the Elderly Application 2. Eden Housing, Inc.'s Initial Financial Spreadsheet for Senior Housing Project from September 2002 3. Eden Housing, Inc.'s recent Financial Spreadsheet for Senior Housing Project with adjusted Line Items 4. Resolution for Option to Lease and Memorandum of Option to Lease RECOMMENDATION: Staff recommends that the City Council:  ~ 1. Approve the letter of support for Eden Housing (Attachment 1), including the commitment of Affordable Housing City funds in support of the Senior Housing Project and authorize the Mayor to sign on behalf of the City; and 2. Adopt a resolution (Attachment 4) approving the Option to Lease and Memorandum of Option to Lease documents and authorizing the Mayor to sign on behalf of the City. FINANCIAL STATEMENT: The letter of support for the HUD 202 Application commits the City to a loan, not to exceed $2,400,000 of Affordable Housing In-lieu fee funds toward the Senior Housing Project. $280,000 has previously been committed to Eden Housing when the City Council approved the Predevelopment Loan Agreement. The $280,000 is included in the "not to exceed" amount listed above. The amount expected to be needed from the City of Dublin in gap financing was previously $1,721,132. The commitment amount now being requested is an increase of $ 678,868. DESCRIPTION: On September 23, 2002 the City Council selected Eden Housing, Inc. as developer for affordable senior housing at the site of the former library located at 7606 Amador Valley Blvd. This site will also house a senior center that the City will construct during FY 2003-2004. F:XDocuments from old computerLAgreements & Staff Rpts\CC Staff Report Eden Loan Commitment etc.II.DOC ~$~ ~'~ i ~ ?~ :~'~ ITEM NO. On February 4, 2003 the City Council approved a Predevelopment Loan Agreement with Eden Housing, Inc. to provide the funding necessary to begin the pre-construction phase of the Senior Housing Project. On May 13, 2003 the Planning Commission approved a Site Development Review and a Tentative Parcel Map for the project and recommended that the City Council certify a Mitigated Negative Declaration, and approve a General Plan Amendment and a Downtown Core Specific Plan Amendment. The Planning Commission further recommended approval of the Planned Development Rezone/Stage I & II Development Plan. On May 20, 2003 the City Council approved the above recommended entitlements. Eden Housing, Inc. is preparing an application for the HUD Section 202 Supportive Housing for the Elderly that is due on June 13, 2003. To be able to effectively compete for this program the following items are required to be submitted by the City of Dublin, as the local contributor: 1. A letter of support for the project; 2. Agreement for the provision of local contributions such as financing and land; and 3. A Lease Option and Memorandum of Option to Lease to demonstrate site control. ANALYSIS Letter of Support - A letter of support (Attachment 1) is required by HUD to be included in the application for the Section 202 Supportive Housing for the Elderly. This HUD program provides money, up front, for the construction of affordable housing for the elderly and continues to provide funds on an annual basis to allow the project to continue to function without a deficit. HUD also provides financing for supportive services such as a Senior Coordinator. This added advantage serves as a plus to a population that begins to need assistance with various facets of living, yet may not have the financial resources to procure such services without assistance. The letter of support indicates where the project is to be constructed, explains the proximity to the new senior center and other amenities, and demonstrates the need for the affordable project. The letter further indicates the level of commitment that the City of Dublin is providing and would continue to provide. HUD requires a minimum 75-year ground lease, when leases rather than ownership are used to secure the property for a project. The City of Dublin intends to provide a ground lease to Eden Housing for the project on very favorable terms. Staff has determined that the application may be more competitive if a 99-year lease is provided and no rent, other than a dollar per year, is required of the developer. Because the City of Dublin is unable to subordinate the fee title to the property, it may be that this application would suffer a disadvantage, compared to other applications. To help offset this possibility, a longer-term lease will be provided to Eden Housing, Inc. Agreement for the Provision of a Local Contribution - Description of local government support for the project (including financial assistance, donation of land, provision of services, etc.) is required by HUD to be included in the application for the Section 202 Program. The City of Dublin is able to provide a long- term lease as well as financing to close the gap remaining after HUD provides the major financing for the project. When Eden Housing, Inc. first responded to the City's Request for Proposals, their funding request from the City of Dublin to close the gap was under 1.8 million dollars. This was a preliminary request based on previous projects of this nature. As the project took shape, several things occurred. The largest increases were construction costs, which became higher than initially anticipated and permits and fees, which were substantially higher than initially anticipated. Attachments 2 and 3 are the Financial spreadsheet that Eden 2 Housing provided at the time the proposal for the project ~vas submitted and the revised Financial spreadsheet. Initially, Eden Housing estimated $15,000 per unit in permit and fees. Because Eden Housing did not have all the systems developed for the proposed project there was an element of uncertainty in the actual permits and fees that would result. Other assumptions that Eden Housing used in establishing the fees and permits needed when the proposal was submitted may be false. Eden Housing assumed since this was a senior project there would be reduced school impact fees. At this time, it does not seem to be the situation and the revised numbers allow for $25,000 per unit, a more realistic amount to account for the fees and permits that will be required of this development. The level of financial commitment that the City of Dublin is willing to make, should help to make the application competitive, along with the long-term lease. At this time, Eden Housing, Inc. is requesting a maximum of $2.4 million as a residual receipts loan to close the gap between the anticipated funding that HUD would provide and the amount needed to complete this project. The revised Financial spreadsheet anticipates that Eden Housing, Inc. will be applying to the County of Alameda for HOME funds next January to help close the gap in financing. Other funding sources exist and will be utilized, such as the Federal Home Loan Bank's Affordable Housing Fund (AHF), however this resource is not available until the very end of the predevelopment period, when all other financing is secured. The amounts secured in HOME funds and in AHP funds may reduce the amount of financing needed from the City. The amount of this reduction cannot be estimated at this point, since there is no way to know, with any certainty, how much Eden Housing, Inc. may receive from the County of Alameda in HOME funds or the Federal Home Loan Bank. A Lease Option and Memorandum of Grant of Option to Lease - The City Attorney has drafted an Option to Lease document and a Memorandum of Option to Lease document to be signed substantially in the form included as Attachment 4. Eden Housing, Inc. must have site control to apply for the HUD Section 202 Program. Eden Housing must be able to demonstrate that the land where the project is to be constructed is actually land that is available for this project, whether it is through ownership of the property or a lease. The City of Dublin will retain ownership of the property at 7606 Amador Valley Blvd, so a lease will be the mechanism necessary for Eden Housing, Inc. to be able to utilize a section of that property. When both parties sign these documents, it indicates that the City and Eden Housing, Inc. are committed to entering into a lease for this site once all financing is in place. The accompanying document; the Memorandum of Option to Lease is the document that will be recorded, once signed and executed. Since Eden Housing, Inc. does not have the financing necessary to begin this project, yet, it was determined that an Option to Lease, rather than a lease would be the better instrument to demonstrate site control. A lease would be entered into when all financing is secured and less than 90 days remain before construction on the project begins. The County Board of Supervisors is scheduled to transfer the property from County ownership to the City June 3, 2003. As soon as this transfer is completed, the City of Dublin and Eden Housing, Inc. may sign the Option to Lease and the Memorandum of Option to Lease. This Option to Lease has the following features: 1. This document acknowledges that the lot will be spilt to accommodate the Senior Center as well as the Senior Housing Project; 2. The term of the lease will be for 99 years; 3. The site will be exclusively used for affordable rental housing for seniors; and 4. Both parties will carry out negotiations, in good faith, to establish a Ground Lease. CONCLUSION In conclusion, Eden Housing, Inc. is prepared to apply to HUD for financing through the Section 202 Supportive Housing for the Elderly Program. This program is highly competitive and Eden Housing, Inc. is working toward providing a thorough and convincing application. The City of Dublin has demonstrated a strong interest in affordable senior housing at this site and has provided measures to Eden Housing that would facilitate development of the site. It is in the interest of the City of Dublin and Eden Housing to cooperate in the effort to secure financing for this Senior Housing Project. Staff has provided a letter of support (Attachment 1) that includes the City's financial contribution and the City Attorney has provided two documents, an Option to Lease and a Memorandum of Option to Lease that would allow for Eden Housing to demonstrate site control of the subject parcel. RECOMMENDATION: Staff recommends that the City Council: 1. Approve the letter of support for Eden Housing (Attachment 1), including the commitment of Affordable Housing City funds in support of the Senior Housing Project and authorize the Mayor to sign on behalf of the City; and 2. Adopt a resolution (Attachment 4) approving the Option to Lease and Memorandum of Option to Lease documents and authorizing, the Mayor to sign on behalf of the City. CITY OF DUBLIN 100 Civic Plaza, Dublin, California 94568 Website: http:/lwww.ci.dublin.ca.us June 3, 2003 Linda Mandolini Executive Director Eden Housing, Inc. 409 Jackson Street Hayward, CA 94544 SUBJECT: SENIOR HOUSING PROJECT AT 7606 AMADOR VALLEY BLVD. Dear Linda Mandolini: The City of Dublin strongly supports Eden Housing, Inc.'s efforts to develop 54 units of affordable senior housing at 7606.Amador Valley Blvd. next to the new Senior Center. The depth of affordability and quality of the proposed development will significantly address the City's lack of affordable senior housing. The project will also greatly assist the City in meeting its goal of providing affordable rental housing to very tow-income households. In March 2000, the City of Dublin, as a particfpant in the Urban County Program, approved the five-year Consolidated Plan developed by the County of Alameda. This document includes an analysis of hoUSing needs and strategies for the County and City of Dublin. One Objective was "Promote the production of affordable rental housing by supporting the acquisition, rehabilitation, and new constrUction of units by non-profit developers." This project clearly WOuld address this objective along with providing affordable housing for very iow-income seniors, another urgent need in Alameda County. Additionally, the recently completed Human Services Needs Assessment for the Tri- Valley indicates that the Tri-Valley's senior population is the fastest growing age group in the region, Both Pleasanton and Dublin had their senior population grow by more than 70% between 1990-2000. As this segment of the population ages, they will need the service-enhanced type of housing being proposed at this site. Eden Housing, !nc. has worked closely with the staff and community to ensure that the proposed project is sensitive to the needs of our senior population. This site located next to the Senior Center, currently in development, would be the f~rst dedicated affordable senior housing project in the City of Dublin. The units would all be available to Very low-income seniors. This is important for the City. It is also important that any senior development be located close to amenities. This site is ideal, just a block away from a major market, and also less than a block from a major shopping center, Dublin Place, and across the street from a local medical complex. ATTACHMENT Area Code (925)- City Manager 833-6650 · City' Council 833-6650 · Personnel 833-6605 · Economic Development 833-6650 Finance 833-6640 · Public Works/Engineering 833-6630 ' Parks & Community Services 833-6645 · Police 833-6670 Planning/Housing/Code Enforcement 833-6610 - Building InSpection 833-6620 · Fire Prevention Bureau 833-6606 The City is very enthusiastic about this project and will provide a 99-year land lease for one dollar a year. At this time the City of Dublin has provided Eden Housing, Inc. with a Lease Option for the property. In addition $2.4 million in a residual receipts loan from Affordable Housing In-Lieu Fee Funds has been committed for this project. This is substantial from a City with no Redevelopment Agency and limited avenues to receive affordable housing revenue. The City of Dublin has also awarded Eden Housing a predevelopment contract for $280,000. With the very limited resources available for any affordable project in our community, it is absolutely necessary to leverage our funds with the resources of the HUD 202 Senior Supportive Housing Program. Once again, the City of Dublin offers full support of this development and full support of Eden Housing, Inc.'s application for HUD 202 funds for this senior housing project. Sincerely, Janet Lockhart Mayor, City of Dublin Area Code (925) - City Manager 833-6650 - City Council 833-6650 · Personnel 833-6605 - Economic Development 833-6650 Finance 833-6640 - Public Works/Engineering 833-6630. Parks & Community Services 833-6645 · Police 833-6670 Planning/Housing/Code Enforcement 833-6610 - Building Inspection 833-6620 · Fire Prevention Bureau 833-6606 Response to Request for Proposals DUBLIN SENIOR HOUSING SEPTEMBER 20'02 ~ \'~ 20,800 Site Sci, Ft. 14,600 Structured psrldnQ 37,440 Unit BuiWtng Area 6,200.00 Landscaped Area/Walks 3,560 Community Room 0.48 Tot, at Acres 0 Nonbasw Square Footage 1 t3 D.UJAcre Basis as % of 221 (d) (3) Limit ,~ D.U. is actualBa~sbe~owthe boosteo 0.00% Nonbasis % Basis % Par Unit Acq./Pmdev, Construction 0,00% :)utian 0 0 0 Construction Loan @ 0.00% iht 0 Months Current P~te: . n Financing 0 0 0 0 < Credit Limited Partner Capital Cor~ibutlan ~ Loan 115,377 §,230,339 0 6,230,339 ¢ C redlt General Para'er Capital C~n~lbution Section 202 Capital Advance 0 0 Crsdlt-GP 0.0% 0 0 Permanent Mortgage 0.00% iht 0 Months 0 0 0 0 Funds ~,000 219,000 0 0. 0 0 0 Bridge Loan Developer Fee 0 0 ~ HiP Grant 8,t67,471 447,171 7,504,300 Surplusl(Deficlt) 0 o 0 o ' BUDGET TOTAL Jisltion 0 0 0 0 0 0 ~ Demolition 0 0 D .e. Sec0flty, Clean-Up) 0 0 0 Value Beyond Cost Total Land ~12,228 309,171 103,057 50,000 10,000 40,000 Construction Management Services 15,000 0 Engineering Reports (i.e. Tope, Acoustics, Soils Report) 35,000 5,000 5,000 0 Envlronmentai 24.000 0 24,000 Testing & InSPection Total Constr Consult ] 25,000 25,000 -- improvements 166,400 0 166,400 759,200 0 759,200 Structure 4 760,300 0 4,760,30.0 51,398 0 51,398 tend 55,000 0 55,000 miture, Fixtures & Equipment (common area) 285,545 0 285,545 3onstructten Contingency Total Constr ] 810,000 9,000 801,000 . & Fees 35,000 8,000 22,000 Legs{ Fees ..:' 11,000 0 0 Fees 540,000 50,000 320,000 Sponsor Administration 0 0 0 Sponsor/GP ContdbuUon 0 0 Sponsor Net Worth Requirement 0 0 Sponsor Operating Guarantee 0 0 0 Market Study 25,000 0 0 s Reserve 0 0 0 and Other Reserves: 32,400 0 32,400 Rent/Up Marketing 0 0 0 TCAC Reserves 0 0 Initial Project Reserves 40,000 20,000 20,000 Soft Costs Contingency Total Indirect Costs ;ARRYING COSTS: ] 30,000 1,000 29,000 insurance 0 0 0 0 0 0 0 0 9 Permanent Financing Points 0 0 0 AHP Points 0 0 0 Acquisition Loan Fees (Mid-Pen) 0 0 0 0.31% interim Acquisition Loan ~nterest 25,000 10,000 10,000 0.12% Escrow & Other Financing Fees 10,000 10,000 O D,O0% o 0 0 0.80% Construction Loan interest Total F'm & Carq/Costs TAX CREDITS/SYNDICATION EXPENS~'S: 0.00% 0 0 0 0.00% TCAC Application Fee 0 ' 0 0 0.00% TOAC.Reservation/Attecation Fee 0 0 0 0.00% TCAC Deposit 0 0 0 0.00% TCAC Monitoring Fee 0 0 0 0.00°A TCAC Deposit Refund 0 0 0 0 Syndication Consuttant 0 0 0 0.005~ Syndication Legal Fees 0 0 0 0.00~/ ~yndicatten-lnvestor Legal 0 0 0 ~ Loan Fees 0 0 0 syndication Other:. Bridge Lea.n/Day Fee Interest Total TCAC/Synd qT EXPENSES dan.o .i.g,,no. ATTACHMENT 2 i:. 409 Jackson Street Hayward, CA 94544 DUBLIN SENIOR HOUSING MAY 2003 ..~0E~{.~¢~i¢~,~'%.~E~j.¢~,,*.?~2~':~ii~i 38,657 UnitBuildingArea 20,800 SiteSq. Ft. 14,944 Structured Parking ~Y;~"T PRO~ORM~ Ii 2,~ Community Room 0.46 Total Acres 6,200.00 Landscaped Ama/Walks $~'~"- 0 N~nbasis Square Footage 113 D.UJAcre Basis as % of 221 (d) (3)Limit ~5-May-03 . 0.00% Nonbaals % Basis % 54 D.U. m actual oasis below the boosted cap? ~UNDING SOURCES J ~ I Par Unit TOTAL Acq.IPredev. Construction Psrmane~ % of Total TERMS ~_0~el ConiriDutien - Ci{y 44,444 2,400,000 474,600 1,925,400 0 26.54% Residual Receipts/Amsdized 0.00% iht Local Contribution -Alameda Co. HOME 163,045 0 163,045 0 1.80% Construction Financing 0 0 0 0 0.00% Construction Loan @ 6.75% tnt 0 Months Acquisition Loan D D . · 0 O 0 0.00%lCurrent Rats: 0% HUD Section 202 Capital Advance 26,999 1 ~5,877 ~!~.~' 0 6,205,242 ~2,096 69.21% Tax Credit Limited Psrtner Capital Contribution LIH Tax Credit~GP 0.0% 0 0 0 0 0 0,00% Tax Credit General Parmer Cap~l Contrlbdtier~ Permanent Financing 0 0 0 0 0 0.00% Permanent Mortgage 7.75% iht 0 Months AHP Funds 4,000 · 216~000 0 0 216,000 2.39% ACWMA Grant 5,000 8,000 0 0 0,06%i Bddge Loan 6.00% TOTALS0URCES =,0~,383 479,600 I 6.2.=.567 I 268,096II 100.00% Surplusl(Deficit) 0% o 6 0 0 DEvELOpMIENT BUDGET I .... TOTAL Tax Credit CosuUnit LAND & IMPROVEMENTS: TOTAL Acq,IPredev. Construction Permanent COST! 9% Basis CostJsqFt % Total Site Acquisit'ion ~ 0 0 0 0 0 0 0 0.00 0.00% Relocation 0 ~ 0 0 0 0 j 0 0 0.00 0.00% Site Demolition 0 0 0 0 0 J 0 0 0.00 0.00% ~)te Maintenance (i.e. Security, Clean-Up) 5,000 5,000 0 0 5,000 5,000 93 0.13 0.00% Sits Value Beyond Cost 0 0 0 0 0 0 0 0.O0 0.00% Total Land & Improv 5,000 5,000 0 0 5,000 5,000 93 0,13 0.06% CONSTRUCTION CONSULTANTS: Architect & Engineering 7.30% 448,800 336,600 112,200 o 448,800 448,800 8,311 0,13 4.96% Construction Management Services 55,000 10,000 45,000 0 55,000 56,ooa 1,019 1.42 0,61% Engineenng Reports (i.e. Tope, Acoustics, Soils Report) 15,000 15,000 0 0 15,000 15,000 278 0.39 0.17% Envircmmentaf 5,000 5,000 0 0 5,000 5,000 I 93 0.13 0.06%! Testing & inspection 30,000 0 30,000 0 30,000 30,000I 556 0.78 0.33o/, Total Constr Consult 553,800 366,600 187,200 0 553,800 553,800 10,256 2.85 6.13% CONSTRUCTION: Off-Site improvements $5,870,504 25,000 25,000 0 25,000 0 463 0.65 0.28% On.Site Improvements 266,846 0 266.846 0 266,846 266,846 4,942 6.90 2.95% Podium Straoture 5,898,339 859,662 0 859,662 0 859,662 859,682 15,820 22.24 9.51% Unit Coosiruction 4,718,996 0 4,718,996 0 4,718,996 4,718,996 87,389 122,07 52.19% Pricing/Design Escatation (3%) 50,000 0 i 50,000 0 60,000 50,000 926 1.29 0.55% Contractors Bond 82,835 0: 52,835 0 82,835 52,835 978 1.37 0.58% Furniture, Fixtures & Equipment (common area) 60,000 0 ! 60,000 0 60,000 60,000 1,111 1.55 0.66% ~ConstroctJon Contingency 298.525 0 293,525 0 293,525 293,525 i 5,436 7.59 3.25% Total Constr 6,326,864 0 6,326,864 0 ! 6,326,864 6,301,864 t17,164 163,67 69.98% [SOFT COSTS: =Permits & Fees 1,350,000 g,000 1,341,000 · 0 1,350,000 1,350,000 25~000 34.92 14.93% Legal Fees 35,000 B,00~ 22,000 5,000 35,000 30,060 648 0.91 0.39% Audit Fees 12,000 0 0 12,800 12,000 0 222 0.31 0.13% S pon sot Administration 540,000 50,000 320,000 170,000 540,000 540,000 10,000 13.97 5.97% Sponsor/GP Contribution 0 0 0 0 0 0 0 0,00 0,00~/ SPonsor Net Worth Requirement 0 0 0 0 0 0 0,00 0.00% Sponsor Operating Guarantee 0 0 0 0 0 0 0.00 0.00% Market Study . 0 0 0 0 0 0 0 0,00 0,00% HUD Consultant Fee 25,000 0 0 25,000 25.000 25,000 463 0,65 0.28% Other Consultant Fee 0 0 0 0 0 0 0 i 0.00 0.00% Services Reserve 51,096 0 0 51,096 51,096 0 946 1.32 0.57% Leasing and Other Reserves: Rent/Up Marketing 32,400 0 32,400 0 321400 0 600 0.84 0.36% TCAC Reserves D, 0 0 0 0 0 0.00 0.00% Initial Project Reserves · 0 ! 0 0 0 0 0 0.00 0.00% Soft Costs Contingency 40,000 I 20,000 20,000 0 40,000 40,000 74t 1.03 0,44% TotaIlndirect Costs ' 2,0~,5,496 I 87,000 1,735,400 263,096 2,08~,496 1,906,000 36,620 53,95 23.07% FINANCE & CARRYING COSTS: I Liability/CCC Insurance 35,223 1,000 34,223 0 35,223 35,223 852 0.91 0.39% Taxes 0 0 0 0 0 0 0 0.00 0.00% Construction Loan Points 0 0 0 0 0 0 0 0.00 0.00% Permanent Financing Points 0 0 O 0 0 0 0 o,00 0.00% AHP Points ~ 0 0 0 0 9 0 0 0.00 I 0.00% Acquisition Loan Fees (Mid-Pen)T O 0 6 0 0 0 O.00 I 0.00%; Intenm Loan InteresFFees 0 0' 0 0 0 0 0.00 0,00% Title, Escrow & Other Financing Fees 25,000 10,000 10,000 5,000 18,750 463 0.65 2~,000 0.280/0I ~ppraisal 10,000 10,000 0 0 10,000 7,500 185 0.26 0.J1% 3onstFuctian Loan Interest 0 0 0 I 00 B 0 0.00 0.00% Total Fin & Carry Costs 70,223 21,000 44,22;3 5,OD0 70,223 61,473 1,300 1.82 0.78% tAX CREDITS/SYNDICATiON EXPENSES: rsx Credit Expenses: 0 I TCAO Application Fee 0 0 ~ 9 0 0 0 0.00 TCAC Reservation/AliocatJon Fee 0 0 0 0 0 0 0 0.00 0,00% TCAC Deposit 0 0 0 0 0 0 0 9.05 0.00% TCAC Monitoring Fee 0 0 0 0 0 0 0 0.00 0.00% TCAC Deposit Refund 0 0 0 0 0 0 0 O.00 0.00% Syndication Consultant 0 0 0 0 0 0 0 0.06 0.00% Syndication Legal Fees 0 0 0 . 0 0 0 0 0.00 Syndication-investor Legal 0 0 0 0 0 0 0 0.00 0.00% Syndication Other: Bridge Loan Fees 0 0 0 0 0 0 . 0 0.00 0.00% Syndication OIher: Bddge Loan/Dev Fee Interest 0 0 0 0 0 0 0 0.00 0.00% Total TCAClSynd 0 0 0 0 6 0 0 0.00 0.00% TOTAL DEVELOPMENT EXPENSES I 9,041,303 [ 479,600 t 8,293,687 I 268,096 II 9,041,363 I 8'907'137 I 167,433 I 222.41 I 100.00% Eden Housing, inc. 409 Jackson Street Hayward, CA 94544 <,1o)582.1460 ATTACHMENT 3 RESOLUTION NO. - 03 .~ ,~ A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF DUBLIN AUTHORIZING THE GRANT OF A LEASE OPTION TO EDEN HOUSING, INC. AND RECORDATION OF A MEMORANDUM OF OPTION WHEREAS, the City Council finds that there is a severe shortage in the City of Dublin of housing affordable to lower-income seniors; and WHEREAS, development of affordable senior housing in close proximity to a senior center will serve a public purpose; and WHEREAS, the City Council selected Eden Housing, Inc. ("Eden") to develop affordable senior housing on the southerly portion of the property located at 7606 Amador Valley Boulevard (the "Site") adjacent to the senior center that the City will develop; and WHEREAS, Eden will now be applying to the federal department of Housing and Urban Development ("HUD") for Section 202 Supportive Housing for the Elderly funds to finance the development of senior housing on the Site, and Eden will also apply to other sources of financing for the development; and WHEREAS, it is necessary for Eden to demonstrate to HUD and such other financing sources that the Site is available to Eden for development; and WHEREAS, the City of Dublin is willing and able to lease the Site to Eden for a term of 99 years for the sole purpose of developing and operating affordable senior rental housing; and WHEREAS, to facilitate Eden's application for financing, the City of Dublin is now interested in providing Eden with an option to lease the Site which shall be exercisable when Eden receives financing commitments or a HUD reservation of funds for the development. NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Dublin, a Municipal Corporation, approves the Option to Lease Real Property and the Memorandum of Option to Lease Real Property ("Memorandum") attached hereto as Attachments 4A and 4B. FURTHER RESOLVED, the City Council authorizes and directs the Mayor to execute such documents substantially in the form attached hereto and to undertake such further action as may be necessary and desirable to carry out the intent of this resolution, including without limitation the recordation of the Memorandum in the official records of Alameda County. PASSED, APPROVED, AND ADOPTED this 3rd day of June 2003. AYES: NOES: ABSENT: ABSTAIN: ATTEST: Mayor City Clerk g:\cdbgkstfrpts\4-01 CC Reso - City-County Agreement ATTACHMENT 4 OPTION TO LEASE REAL PROPERTY This Option to Lease Real Property (this "Option Agreement" or this "Agreement") dated as of ,2003, is entered into by and between the City of Dublin, a municipal corporation ("City") and Eden Housing, Inc., a California nonprofit public benefit corporation ("Ground Lessee"). City and Lessee are hereafter collectively referred to as the "Parties." A. City is, or shall on the Effective Date, be the owner of that unimproved parcel of real property located on Amador Valley Boulevard in the City of Dublin, California, which is identified as Alameda County Assessor's Parcel Number 941-0305-0 t 2-02, and more particularly described in Exhibit A attached hereto and incorporated herein (the "Property"). B. Ground Lessee is a nonprofit public benefit corporation which was formed to develop, own and operate affordable housing for very low- to low- and moderate-income households and to provide related services. C. Ground Lessee desires to lease that portion of the Property designated as the Dublin Senior Housing Site (the "Site") in Exhibit FI attached hereto, and to construct, own and operate approximately 54 units of affordable rental housing units for senior households (the "Development") thereon. D. Ground Lessee intends to apply for construction and permanent financing for the Development from sources which may include: (i) the U.S. Department of Housing and Urban Development ("HUD") Section 202 Program; (ii) the California Tax Credit Allocation Committee (and private investors if an award of tax credits is received); (iii) private institutional lenders; (iv) the State of California Department of Housing and Community Development ("HCD") Multifamily Housing Program ("MHP"); (v) the California Housing Finance Agency; (vi) County of Alameda Community Development Block Grant CCDBG") Program or HOME Program; (vii) the Federal Home Loan Bank Affordable Housing Program ("AHP"); and (viii) the City of Dublin. E. Ground Lessee desires to acquire the exclusive legally binding right to lease the Site, and City desires to provide Ground Lessee an option to lease the Site, on the terms and conditions set forth herein. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows. 1. Effective Date. This Agreement shall be effective immediately upon the City's acquisition of fee title to the Property from Alameda County, which shall occur on or before June 12, 2003. The date of such acquisition shall be the "Effective Date." 2. Option Agreement to l,ease. City hereby grants to Ground Lessee, and Ground Lessee hereby accepts, an exclusive legally binding option to lease the Site (the "Option") on the following terms and conditions. ATTACHMENT 4A 3. Term of' Option. The term of the Option (the "Option Term") shall commence on the date first written above and shall end at 11:59 p.m. on December 31, 2004. Ground Lessee shall have the right to extend the Option Term on a month-to-month basis for an additional twelve (12) months if such extension is necessary or desirable for Ground Lessee to close any of the financing described in Recital D, above, provided that Ground Lessee has obtained and delivered to City copies of the commitment(s) for such financing or a Section 202 reservation of funds. 4. ! ~ot Split. The Parties acknowledge that the Property will be divided into two parcels as shown on the Dublin Senior Housing Ske Plan attached hereto as FJ×hibit lq. The Parties agree that as soon as practical after the documents reflecting the lot split are recorded, City and Ground Lessee shall execute an amendment to this Option Agreement and shall execute and record an amendment to the Memorandum of Option (as described in Section 29) in order to amend the legal description attached hereto so that this Option Agreement and the Memorandum of Option shall apply only to the Site. 5. F, xercise nf Option. At any time during the Option Term, Ground Lessee may exercise the Option by delivering written notice to City that it intends to exercise the Option, together with evidence acceptable to City that Ground Lessee has received a HUD reservation of funds for the Development or other commitments for construction financing for the Development. Ground Lessee's delivery to City of evidence of commitments for construction and permanent financing for the Development is a condition precedent to the execution and delivery of the Ground Lease. 6. Escrow. The Parties agree that North American Title Company ("Title Company") shall act as title insurer and escrow agent in connection with the lease of the Site. Escrow has been or will be opened with the Title Company at its office located at 21060 Redwood Road, Suite 110, Castro Valley, CA 94546, phone (510) 537-8300, fax (510) 537-0928, escrow no. 54605- 53221852-SHS, Suzanne Smith, Escrow Officer. 7. F~.qcrow ln~tnmtions. At least 48 hours prior to Closing, City and Ground Lessee agree to execute such escrow instructions as may be appropriate to enable the Title Company to close escrow in compliance with the terms of this Option Agreement. 8. Closing. Simultaneously with the closing of Ground Lessee's construction financing for the Development, Ground Lessee and City shall close escrow in accordance with the terms of this Option Agreement. 9. Depo.qit of Documents. (a) At or before the Closing, City and Ground Lessee shall each deposit into escrow (i) a duly executed and acknowledged counterpart copy of a ground lease' ("Ground Lease") pursuant to which Ground Lessee shall lease the Site from City, and (ii) a duly executed and acknowledged Memorandum of Ground Lease in recordable form. The Parties shall each deposit such other instruments as are reasonably required by the Title Company or otherwise required to close the escrow and consummate.the lease of the Site in accordance with the terms hereof. 10. Ground l~ease. City and Ground Lessee acknowledge and agree that the terms of the Ground Lease shall not be inconsistent with the following: 631410-2 2 (a) Term: 99 years commencing on the date the Memorandum of Ground Lease is recorded in the official records of Alameda County. (b) Ground Rent: One dollar ($1.00) per year, prepaid at the commencement of the Ground Lease term. (c) Use of Site: The Site shall be used exclusively for affordable rental housing for senior households, operated in compliance with the HUD Section 202 Program Use Agreement and Regulatory Agreement or other lender regulatory agreements and requirements if HUD financing is not used. (d) Construction: Construction of the Improvements shall commence within sixty (60) days following execution of the Ground Lease. (e) Indemnification: Ground Lessee shall indemnify and hold City harmless from any and all claims arising from the construction or operation of the Development, and if allowed by HUD, if HUD is a lender, City shall be a co-obligee on payment and performance bonds. (f) Title to Improvements: Ground Lessee shall own all improvements it constructs on the Site ("Improvements") in fee title. (g) Liens: Ground Lessee's fee interest in the Improvements and leasehold interest in the Site shall be encumbered by the deeds of trust, use agreements, regulatory agreements and other documents required by the construction and permanent lenders for the Development. (h) Taxes and assessments: Real property and personal property taxes and assessments shall be paid by Ground Lessee. Ground Lessee shall seek to obtain a welfare exemption from property taxes. (i) Utilities, maintenance and repairs shall be the responsibility of Ground Lessee unless otherwise agreed by the Parties. (j) Insurance: Ground Lessee shall carry insurance reasonably required by City. (k) Lender and Investor Requirements: The Parties agree to carry out negotiations in good faith regarding Ground Lease provisions or addenda reasonably requested by lenders and investors supplying financing for the Development, including without limitation, HUD Lease Addendum (Directive No. 4571.5) if HUD provides financing. 11. ?rotations a~ Closing. (a) Real property taxes and assessments, and water, sewer and utility charges, if any, relating to the Site shall be prorated as of 12:01 A.M. on the date the Memorandum of Ground Lease is recorded. 631410-2 B (b) Ground Lessee shall pay all premiums for any policies of title insurance required by Ground Lessee, transfer taxes, escrow fees and recording fees for any documents recorded for the benefit of Ground Lessee. City shall pay recording fees for documents, if any, recorded for City's benefit. 12. Conditions of'Title. At the Closing, City shall convey a leasehold interest in the Site to Ground Lessee subject to no exceptions, rights of others, or possession by others, except for: (a) liens for real estate taxes and assessments not yet due or payable; (b) the standard printed exceptions, as shown on the preliminary title report for the Property; and (c) such other exceptions approved by Ground Lessee (collectively the foregoing are hereafter referred to as "Permitted Exceptions." 13. F, vidence r~f Title. Delivery of the leasehold interest in the Site in accordance with the preceding Section shall be evidenced by Title Company's issuance, effective as of the close of escrow of its standard ALTA or CLTA title insurance policy in the amount of the value of the Site as approved by City, which approval shall not be unreasonably withheld, showing Ground Lessee's leasehold interest in the Site and fee interest in the Improvements vested in Ground Lessee subject only to the Permitted Exceptions and the Deeds of Trust, Use Agreement, Regulatory Agreements, and other documents required by the Deyelopment lenders (the "Title Policy"). 14. Posse~qsion; Assignment. Possession of the Site shall be delivered to Ground Lessee at the Close of Escrow. Ground Lessee may not assign this Option Agreement by operation of law or otherwise absent the prior written consent of the City. The City shall not withhold its consent to an assignment: (i) to a nonprofit corporation which is under the direct control or under the common control of Ground Lessee ("Controlled Affiliate") and meeting the requirements of' HUD, if HUD provides financing, or (ii) to a limited parmership in which Ground Lessee or a Controlled Affiliate is the general partner; provided that prior to any such assignment, Ground Lessee shall deliver to City for its review and approval, a copy of the assignee's organizational documents and the final form of the assignment and assumption agreement effectuating such assignment. 15. Crronnd I.essee'~ l~ight t~ Inspections. Ground Lessee and Ground Lessee's agents and employees shall have the right, upon reasonable notice to City, to enter upon the Property for the purpose of inspecting, examining, surveying and reviewing the Property during the Option Term. Ground Lessee's inspection, examination, survey and review of the Property shall be at Ground Lessee's sole expense. Ground Lessee shall obtain City's advance consent in writing to any proposed physical testing of the Property by Ground Lessee or Ground Lessee's agents, which consent shall not be unreasonably conditioned, withheld or delayed. Ground Lessee shall repair, restore and return the Property to its original condition after such physical testing, at Ground Lessee's sole expense. Ground Lessee shall schedule any such physical tests during normal business hours unless otherwise approved by City. Ground Lessee agrees to indemnify City and hold City harmless from and against all liability, loss, cost, damage and expense (including, without limitation, reasonable attorney's fees and costs of litigation) resulting from entry upon the Property by Ground Lessee or its employees, consultants, contractors or agents, except to the extent that such liability, loss, cost, damage and expense arises as a result of the negligence or 631410-2 4 other wrongful conduct of City or its emplOyees, consultants, contractors or agents. Prior to Ground Lessee's entry upon the Property, Ground Lessee shall provide City with a certificate of insurance meeting City's current insurance requirements. 16. Renresentations and Warranties of City. City hereby represents and warrants the following to G~ound Lessee, all of which shall be true as of the date hereof and as of the Closing Date: (a) City has the legal power, right and authority to enter into this Option Agreement and the instruments and documents referenced herein, and to consummate the transactions contemplated hereby. (b) To the best of City's knowledge, neither the execution of this Option Agreement nor the lease of the Site shall result in a breach of or constitute a default under any agreement, instrument or other obligation to which City is a party or by which City may be bound, or under any law, ordinance, rule, governmental regulation or any injunction, order or decree of any court or governmental body, applicable to City or to the Property. (c) To the best of City's knowledge, there is no litigation, arbitration or other action pending or threatened against City which relates to the Property or the lease of the Site or which could result in the impOsition of a lien against the Site. If City receives notiCe of any litigation, arbitration or other action prior to the Close of Escrow, City shall promptly notify Ground Lessee of the same in writing and provide Ground Lessee with a copy of such notice. 17. Representations and Warranties of Grnunct T,e~see. Ground Lessee hereby represents and warrants the following to City, all of which shall be true as of the date hereof and as of the Closing Date: (a) Ground Lessee has the legal power, right and authority to enter into this Option Agreement and the instruments and documents referenced herein, and to consummate the transactions contemplated hereby. (b) To the best of Ground Lessee's knowledge, neither the execution of this Option Agreement nor the lease of the Site shall result in a breach of or constitute a default under any agreement, instrument or other obligation to which Ground Lessee is a party or by which Ground Lessee may be bound, or under any law, ordinance, rule, governmental regulation or any injunction, order or decree of any court or governmental body, applicable to Ground Lessee. (c) Ground Lessee is a duly organized nonprofit public benefit corporation, validly existing and in good standing under the laws of the State of California. Ground Lessee has all requisite power and authority in the State of California to lease the Site, to finance, develop, own and operate the Development, and to carry on its business as now conducted. Ground Lessee has received a determination from the Internal Revenue Service that it is exempt from federal tax under Section 501(c)(3) of the Internal Revenue Code of 1986 as amended. Ground Lessee covenants that it shall engage in no activity which may cause such tax, exempt status to be jeopardized. 631410-2 5 18. Notices. Except as otherwise specified herein, all notices to be sent pursuant to this Option Agreement shall be made in writing, and sent to the parties at their respective addresses specified below or to such other address as a party may designate by written notice delivered to the other parties in accordance with this section. All such notices shall be sent by: (i) personal delivery, in which case notice is effective upon delivery; (ii) certified or registered mail, return receipt requested, in which case notice shall be deemed delivered on receipt if delivery is confirmed by a return receipt; (iii) nationally recognized overnight courier, with charges prepaid or charged to the sender's account, in which case notice is effective on delivery if delivery is confm~ned by the delivery service; (iv) facsimile transmission, in which case notice shall be deemed delivered upon transmittal, provided that (a) a duplicate copy of the notice is promptly delivered by first- class or certified mail or by overnight delivery, or (b) a transmission report is generated reflecting the accurate transmission thereof. Any notice given by facsimile shall be considered to have been received on the next business day if it is received after 5:00 p.m. recipient's time or on a nonbusiness day. City: City of Dublin 100 Civic Plaza Dublin, CA 94568 Atto: City Manager Fax No. (925) 829-9248 Ground Lessee: .Eden Housing, Inc. 409 Jackson Street Hayward, CA 94544 Attn: Executive Director Fax (510) 582-6523 19. Governing 1 ~aw; Attorneys* Fees. This Option Agreement shall be governed by the laws of the State of California. In the event either Party brings an action, proceeding or arbitration, the prevailing party shall be entitled to reasonable attorneys~ fees and costs. 20. Further Aq.qurances. The Parties shall execute, acknowledge and deliver to the other such other documents and instruments, and take such other actions, as may be reasonably necessary to accomplish the purposes of this Option Agreement. 21. parties Not Co-Venturers. Nothing in this Agreement is intended to or shall establish the Parties as parmers, co-venturers, or principal and agent with one another. 22. Action by the City. Except as may be otherwise specifically provided herein, whenever any approval, notice, direction, consent or request by the City is required or permitted under this Option Agreement, such action shall be in writing, and such action may be given, made or taken by the City Manager or by any person who shall have been designated by the City Manager, without 631410-2 6 further approval by the City Council. 23. Non-l,lability of City and City Officials: Employees and ,Agents. No member, official, employee or agent of the City shall be personally liable to Ground Lessee, or any successor in interest, in the event of any default or breach by the City, or for any amount of money which may become due to Ground Lessee or its successor or for any obligation of City under this Option Agreement. 24. No Third P~rty lqenefieiaries. There shall be no third party beneficiaries to this Option Agreement. 25. Headings; Construction. The headings of the sections and paragraphs of this Agreement have been inserted for convenience only and shall not be used to construe this Agreement. The language of this Agreement shall be construed as a whole according to its fair meaning and not strictly for or against any Party. Time is of the essence in the performance of this Agreement. 26. Severability. If any term of this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the provisions shall continue in full force and effect unless the rights and obligations of the Parties are materially altered or abridged by such invalidation, voiding or unenforceability. 27. Entire Agreement; Amendments; F, xhihits. This Option Agreement, together with the Ground Lease contains the entire agreement between the Parties with respect to the subject matter hereof, and supersedes all prior oral or written agreements between the Parties with respect thereto. Exhibits A and B attached hereto are incorporated herein by this reference. This Option Agreement may be modified only by a written instrument .signed by both Parties. 28. Counte~arts~ This Agreement may be executed in multiple counterparts, each of which shall be an original and all of which together shall constitute one and the same instrument. 29. Memorandum of Option. The Parties shall execute and record in the Official Records of Alameda County, a memorandum of this Option Agreement; provided however, the failure to record such memorandum shall have no affect on the Option granted hereby. 631410-2 IN WITNESS WHEI~OF, the pm-ties have executed this Option A~eement as of the date first written above. CITY: City of Dublin By: Its: Approved as to form: City Attorney GROUND LESSEE: Eden Housing, Inc., a California nonprofit public benefit corporation By: Linda Mandolini Executive Director · 631410-2 8 Page Number: The Southern most portion of the following parcels: LEGAL DESCRZPT~ON Reat property in the City of Dublin, Coun.ty of Alameda, State of California, described as follows: Parcel One: Commencing at the point of intersection of the Southwesterly tine of Parcel 9 with the Southeasterly iine of Amador VaItey Boulevard, as said Parcel. and Boulevard are delineated and so designated on that certain Map entitted "Parcel Map 52:1" etc., flied December 'i7, !969, in Book 61 Of Maps at Page 89 thereof, Records of Alameda County, Catiforni~a, and running thence along, said Southeasterly line Of Amador Valley Bouievard Northeasteriy on Ehe arc of a curve to " the right, tangent'at last said point to'a Course Which bears '~orth 22°53'43`"` East (the bearing.of said tangent course bei~ 'taken as North 22°53'43'' ~ast for the purpose of making this description), the radius of which, curve is 445'.D0 feet, through a central angle of 32059'11-'', a distance on said arc of 256.77 feet to a poifit thereon, tangent at test said point'to a course which bears North 55052'S4'' East; thence leaving said Southeasterly line of Amador yalley BouleVard South 36°53'11" East, t00.00 fe~t; thence Southeasterly and Easterly on the arc of a curve to the' left, tangent to last said course, the radius of which curve' is 100.00 feet, through a central angte of 47°19'36" a distance on said arc of 82_.60 feet to a point on aiine drawn paratte{ with the aforesaid Southwesterly tine of Parcel 9, tangent at Iast said point to a course which bears South 84012'47" East; thence atong said parallel tine South 20~51'45'' East, 197.33 feet; thence at right angles South 59°08'15'' West; 2_98.73 feet to an intersection thereof with said Southwesterly line of Parcel 9; thence along said.Southwesterly ]ina North 20°51'45" West, _ 229.56 feet to the point of commencement. Excepting therefrom, all oil, gas, minerals and other hydrocarbon substances in and under or that may be produced from a depth below 500 feet from the surface of said land, without, right of entry upon the surface of said land-for the purpose of mining, ddltingi exploring or extracting such oil, gas, minerals an..C.-.ether hydrocarbon substances or other use of or rights in or to any portion of the surface of said land (o a depth of 500 feet below the surface thereof, as reserved in the deed from Volk-Mc Lain Communites, Inc., to Qualified :Investments, Inc., dated 3uae 25, !967, recorded 3une 27, ~_967, Instrument No. AZ/60836, Alameda County Records. Parcel Two: A perpetual non-exclusive easement and right of way for the construction, operation, inspe~ion, maintenance and ~'epair of an underground storm drain sewer and appurtenances thereto, in, over, through, and under the following described lands: A strip of land of the uniform width of 10.00 feet, the center iine of which is particularly described as: Commencing at a point on the southeasterly line of that certain 2.000 parcel of land conveyed by · Boise Cascade Corporation to County of Alameda by deed dated December 2!, 1976, and recorded December 22,'1976, in Reel 4652 of Official Records at Image 34 thereof (76-2t6959), Records of Alameda County, California, said point being distant theron 5outh 69© 08' 15" West (the bearing of said southeasterly line being taken as South 59° 08' 15" West for the purpose of making.this description), 7.55 feet from the most easterty corner of said 2.000 acre parce{ of land, said southeasterly line being also a northwesterly line of "Parcel C, "as said parcel is delineated and so designated on that certain map entitled "Parcel Hap 2_622" etc.~ filed September. 25, :1978, in Book ~05 of Maps at pages 52 and 53 thereof Records of Alameda First American Order Number: 161104A[~ Page Number: 5 47" East, 146.71 feet', thence North 70~ 03' East, 228.71 feet', thence South 80~ 25' 12" East, 240.35 feet; thence North 57° 07' 22" East, 50.55 feet to.a point on the southwesterly tine of Amador Plaza Road, 58.00 feet in width, said point being distant afong said southwesteriy line of Amador Plaza Road, South 32° .52' 38" East, 100.33 feet from the corner common.to "Parcel A" and "Parcel B," as shown on the aforesaid Parcel Map 2522. The sidelines of.said strfp of land shall be lengthened or shortened so as to intersect with the aforesaid southeasterly line of said 2.000 acre parcel of land (76-216959) and the aforesaid southwesterly Ii.ne of Amador Plaza Road, and being portions of Parcels A, B~ and C, as said parcels are shown on the aforesaid Parcel Map 2622, as conveyed from Dublin Associates, a · California General Partnership to the County of Alameda, by Grant recorded 3anuary 26, !979, Series No. 79-017401, Atameda County Records. APN: 941 o0305-012-02 American 77t/~ DUBLIN SENIOR HOUSING SITE PLAN E~H~BjT '~ SITE PROPERTY RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: Eden Housing, Inc. 409 Jackson Street Hayward, CA 94544 Attn: Executive Director (SPACE ABOVE THIS LINE RESERVED FOR RECORDER'S USE) MEMORANDUM OF OPTION TO LEASE REAL PROPERTY This Memorandum of Option to Lease Real Property (this "Memorandum") dated as of__, 2003, is made by the City of Dublin, a municipal corporation ("City") and Eden Housing, Inc., a California nonprofit public benefit corporation ("Optionee"). Pursuant to an Option to Lease Real Property dated as of ,2003 by and between City and Optionee (the "Option Agreement"), City has granted to Optionee an option to lease, on the terms and conditions stated in the Option Agreement, a portion of that unimproved parcel of real property located on Amador Valley Boulevard in the City of Dublin, California, which is identified as Alameda County Assessor's Parcel Number 941-0305-012-02 and more particularly described in ~ A attached hereto and incorporated herein (the "Property"). This Memorandum incorporates all of the terms and provisions of the Option Agreement as though fully set forth herein. The term 'of the Option commences on the date this Memorandum is recorded in the official records of Alameda County and terminates on December 31, 2004, subject to Optionee's right to extend the term of the Option for an additional twelve months pursuant to the terms of the Option Agreement, or for such longer period as City in its discretion may approve. This Memorandum is solely for recording purposes and shall not be construed to alter, modify, amend or supplement the Option Agreement. CITY: OPTIONEE: CITY OF DUBLIN EDEN HOUSING, INC., a California nonprofit public benefit corporation By: By: Its: Linda Mandolini Executive Director Approved as to form: City Attorney ATTACHMENT 4B