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HomeMy WebLinkAboutItem 4.16 - 2717 Amendment to Wicklow Square Project Agreeme Page 1 of 2 STAFF REPORT CITY COUNCIL DATE: June 18, 2019 TO: Honorable Mayor and City Councilmembers FROM: Christopher L. Foss, City Manager SUBJECT: Amendment to Wicklow Square Project Agreements Prepared by: Jim Bergdoll, Senior Planner - Housing EXECUTIVE SUMMARY: The City Council will consider approval of amendments to the Wicklow Square Senior Housing Loan Agreement, Promissory Note, Ground Lease, and Regulatory Agreement to facilitate Eden Housing’s purchase of this property from the Limit ed Partnership that currently owns the property. Eden requests to defer two annual loan payments to the City in exchange for extending the term of the affordability restrictions for an additional 15 years. STAFF RECOMMENDATION: Adopt the Resolution Approving Amendments to Project Agreements for the Wicklow Square Senior Housing. FINANCIAL IMPACT: Under the terms of the proposed amended agreements, Eden would suspend its loan payments to the City for two years totaling approximately $108,000 ($50,000 + $58,000). The total revenue to the City will be recuperated in future years. DESCRIPTION: In 2003, the City Council selected Eden Housing to develop affordable senior housing at 7606 Amador Valley Boulevard (commonly known as Wicklow Square). The proje ct was completed in 2005, and is comprised of 54 units, with a minimum of 26 units restricted to low income seniors at an affordable rent, for a term of 55 years. Eden formed a partnership, “Dublin Senior Limited Partnership,” (the “Developer”) to own the property. The project was funded through a variety of sources including tax credit financing and a loan of $2,248,248 from the City’s Affordable Housing Fund. In 2004, the City of Dublin and the Developer entered into multiple agreements, including a Ground Lease, Affordable Housing Regulatory Agreement, Declaration of Restrictive Covenants, Loan Agreement, and a Secured Promissory Note, all dated February 1, Page 2 of 2 2004. The Note provides for Developer to make annual payments to the City from the “Surplus Cash” generated from the Project. The project is now within the year 15 option period for the Developer to purchase the property from the investor limited partner. Eden desires to exercise this option to purchase all of the interests of the limited part ner to avoid it being sold to a market-rate developer and its affordability restrictions possibly expiring after year 55. In order to afford to pay the required sale price, Eden would need to eliminate the required payments to the City from surplus cash f or two years (technically just deferring these estimated payments of approximately $108,000 until later years). Staff proposes to facilitate Eden Housing’s acquisition of the limited partner’s interest with the following two amendments to the existing a greements: 1. Allowing payments to the Developer’s Limited Partner for acquisition to be treated as Annual Operating Expenses, thereby eliminating the required surplus cash payments on the Note for two years; 2. Lengthening the term of the affordable housing restrictions on the Project from its current fifty-five (55) year term, to a term of seventy (70) years. A Resolution approving the proposed amendments is included as Attachment 1 with First Amendment to Loan Agreement, Promissory Note, Ground Lease and Regulatory Agreement included as Attachment 2. STRATEGIC PLAN INITIATIVE: None. ATTACHMENTS: 1. Resolution Approving Amendments to Project Agreements for Wicklow Square Senior Housing 2. Exhibit A to the Resolution - First Amendment to Loan Agreement, Promissory Note, Ground Lease, and Regulatory Agreement 1 of 2 RESOLUTION NO. XX - 19 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF DUBLIN * * * * * * * * * * * * * * * * * * * * * APPROVING AMENDMENTS TO PROJECT AGREEMENTS FOR WICKLOW SQUARE SENIOR HOUSING WHEREAS, the City Council has approved Agreements in 2004 by and between the City of Dublin (the “City”), and Dublin Senior Limited Partnership (Developer); and WHEREAS, Developer is an affiliate of Eden Housing Inc., and is controlled by the same board of directors; and WHEREAS, City and Developer have entered into a “Ground Lease,” dated as of February 1, 2004. Pursuant to the Ground Lease, City has leased to Developer that certain real property located at 7606 Amador Valley Boulevard in the City of Dublin, California (the “Property”); and WHEREAS, City and Developer have entered into an Affordable Housing Regulatory Agreement and Declaration of Restrictive Covenants, dated as of February 1, 2004, which provides for Developer to restrict not fewer than twenty-six (26) of the apartment units within the Project to low income senior tenants at an affordable rent, for a term of fifty-five (55) years (the “Regulatory Agreement”); and WHEREAS, City and Developer have entered into a “Loan Agreement,” dated as of February 1, 2004. Pursuant to the Loan Agreement, City has made a loan to Developer of Two Million Two Hundred Forty-Eight Thousand Two Hundred Forty-Eight Dollars ($2,248,248), for payment of a portion of the costs of construction of the Project (the “Loan”); and WHEREAS, Developer has executed a Secured Promissory Note, dated February 1, 2004, for repayment of the Loan to City (the “Note”); and WHEREAS, Developer intends to purchase all of the interests of the limited partner and the City has agreed to eliminate the required payments on the Note for two years, on the condition that the term of the affordable housing restrictions on the Project is lengthened from its current fifty-five (55) year term, to a term of seventy (70) years. NOW THEREFORE BE IT RESOLVED that the Dublin City Council does hereby approve Amendments to the Loan Agreement, Promissory Note, Ground Lease and Regulatory Agreement attached hereto as Exhibit A; and BE IT FURTHER RESOLVED that the City Manager is authorized to execute the agreements attached hereto as Exhibit A. 2 of 2 PASSED, APPROVED AND ADOPTED this 18th day of June 2019 by the following vote: AYES: NOES: ABSENT: ABSTAIN: ____________________________ Mayor ATTEST: City Clerk FIRST AMENDMENT TO LOAN AGREEMENT, PROMISSORY NOTE, GROUND LEASE AND REGULATORY AGREEMENT THIS FIRST AMENDMENT TO LOAN AGREEMENT, PROMISSORY NOTE, GROUND LEASE AND REGULATORY AGREEMENT (the “First Amendment”) is made and entered into as of June ___, 2019, by and between the CITY OF DUBLIN, a municipal corporation (the “City”), and DUBLIN SENIOR LIMITED PARTNERSHIP, a California limited partnership (the “Developer”). RECITALS A. City and Developer have entered into a “Ground Lease,” dated as of February 1, 2004. Pursuant to the Ground Lease, City has leased to Developer that certain real property located at 7606 Amador Valley Boulevard in the City of Dublin, California (the “Property”). The Ground Lease provides for Developer to construct, operate and maintain a 54-unit multifamily housing development for senior households (the “Project”) on the Property. B. City and Developer have entered into an Affordable Housing Regulatory Agreement and Declaration of Restrictive Covenants, dated as of February 1, 2004, which provides for Developer to restrict not fewer than twenty-six (26) of the apartment units within the Project to low income senior tenants at an affordable rent, for a term of fifty-five (55) years (the “Regulatory Agreement”). C. City and Developer have entered into a “Loan Agreement,” dated as of February 1, 2004. Pursuant to the Loan Agreement, City has made a loan to Developer of Two Million Two Hundred Forty-Eight Thousand Two Hundred Forty-Eight Dollars ($2,248,248), for payment of a portion of the costs of construction of the Project (the “Loan”). D. Developer has executed a Secured Promissory Note, dated February 1, 2004, for repayment of the Loan to City (the “Note”). The Note provides for Developer to make annual payments on the Note from the “Surplus Cash” generated from the Project in accordance with the terms of the Note. E. Developer now desires to purchase all of the interests of the limited partner in the Developer. In order to afford to do so, the Developer would need to eliminate the required payments on the Note for two years (without modifying the balance of the Note, however). F. City desires to facilitate Developer’s acquisition of the limited partner’s interest in the Developer, and is willing to eliminate the required payments on the Note for two years, on the condition that the term of the affordable housing restrictions on the Project is lengthened from its current fifty-five (55) year term, to a term of seventy (70) years. NOW, THEREFORE, City and Developer hereby agree to amend the Loan Agreement, Note, Ground Lease and Regulatory Agreement as follows: 1. Calculation of Surplus Cash for 2018 and 2019. Notwithstanding anything to the contrary in the Note or Loan Agreement, Annual Operating Expenses of the Project for years 2018 and 2019 shall include payments actually made by Developer to Developer’s limited partner in years 2018 and/or 2019 for acquisition of the limited partnership interests in Developer. 2. Term of Affordability in Ground Lease. The term of the affordability requirements as set forth in Section 6.3 of the Ground Lease is hereby amended to seventy (70) years commencing on the Effective Date. 3. Term of Affordability in Regulatory Agreement. Concurrently with the execution of this First Amendment, City and Developer shall execute and record in the official records of Alameda County a First Amendment to the Regulatory Agreement, in the form attached hereto as Exhibit “A.” 4. No Other Amendments. Except as amended by this First Amendment, the Loan Agreement, Promissory Note, Ground Lease and Regulatory Agreement shall continue unmodified and in full force and effect. All terms not separately defined herein shall have the meanings as defined in those documents. IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to be duly executed as of the date set forth above. CITY: CITY OF DUBLIN, a municipal corporation By: Attest: By: City Clerk DEVELOPER: DUBLIN SENIOR LIMITED PARTNERSHIP, a California limited partnership By: Dublin Senior LLC, a California limited liability company, its General Partner By: Eden Investments, Inc., a California nonprofit public benefit corporation, its sole Member By: EXHIBIT “A” RECORDED AT THE REQUEST OF AND WHEN RECORDED RETURN TO: City of Dublin 100 Civic Plaza Dublin, CA 94568 Attn: City Clerk (Space Above For Recorder’s Use) This First Amendment to Regulatory Agreement is recorded at the request of and for the benefit of the City of Dublin and is exempt from the payment of a recording fee pursuant to Government Code Sections 6103 and 27383. FIRST AMENDMENT TO REGULATORY AGREEMENT THIS FIRST AMENDMENT TO REGULATORY AGREEMENT (the “First Amendment”) is made and entered into as of _______________, 2019, by and between the CITY OF DUBLIN, a municipal corporation (the “City”), and DUBLIN SENIOR LIMITED PARTNERSHIP, a California limited partnership (the “Developer”). RECITALS A. City and Developer have entered into an Affordable Housing Regulatory Agreement and Declaration of Restrictive Covenants (“Regulatory Agreement”) with respect to the 54-unit multifamily housing development for senior households (the “Project”) located at 7606 Amador Valley Boulevard in the City of Dublin, California (the “Property”). The Regulatory Agreement provides for Developer to restrict not fewer than twenty-six (26) of the apartment units within the Project to low income tenants at an affordable rent, for a term of fifty- five (55) years (the “Regulatory Agreement”). The Regulatory Agreement was recorded in the official records of Alameda County on February 23, 2004, as Document No. 53221852. B. City and Developer have entered into a First Amendment to Loan Agreement, Promissory Note, Ground Lease and Regulatory Agreement, dated as of June __, 2019, which provides for the term of the affordable housing restrictions in the Regulatory Agreement to be extended to seventy (70) years. NOW, THEREFORE, City and Developer hereby agree to amend the Regulatory Agreement as follows: 1. Term of Affordability. The term of the affordability requirements as set forth in Section 1.2 of the Regulatory Agreement is hereby amended to seventy (70) years commencing upon the Effective Date (as defined therein). 2. No Other Amendments. Except as amended by this First Amendment, the Regulatory Agreement shall continue unmodified and in full force and effect. All terms not separately defined herein shall have the meanings as defined in those documents. IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to be duly executed as of the date set forth above. CITY: CITY OF DUBLIN, a municipal corporation By: Attest: By: City Clerk DEVELOPER: DUBLIN SENIOR LIMITED PARTNERSHIP, a California limited partnership By: Dublin Senior LLC, a California limited liability company, its General Partner By: Eden Investments, Inc., a California nonprofit public benefit corporation, its sole Member By: State of California ) ) County of ) On , before me, , Notary Public, (here insert name and title of the officer) personally appeared , who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument, and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature (seal) A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. State of California ) ) County of ) On , before me, , Notary Public, (here insert name and title of the officer) personally appeared , who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument, and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature (seal) 3223258.2 A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.