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HomeMy WebLinkAboutMINUTES - 11122013 - C.66RECOMMENDATION(S): APPROVE and AUTHORIZE the County Counsel, or designee, to execute a conflict waiver with Goldfarb and Lipman, allowing that firm to continue to represent the County on redevelopment dissolution matters and County-funded housing programs, while also representing Cypress Meadows Antioch LLC and Skyline Crest Enterprises LLC, on the refinancing of an assisted living facility in Antioch that was partially financed with tax-exempt private activity bonds and is subject to a regulatory agreement for the benefit of the County. FISCAL IMPACT: Successful completion of the refinancing could result in the County receiving past due fees and other amounts due under a Regulatory Agreement put in place when the assisted living facility was developed in 1998. APPROVE OTHER RECOMMENDATION OF CNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE Action of Board On: 11/12/2013 APPROVED AS RECOMMENDED OTHER Clerks Notes: VOTE OF SUPERVISORS AYE:John Gioia, District I Supervisor Candace Andersen, District II Supervisor Mary N. Piepho, District III Supervisor Karen Mitchoff, District IV Supervisor Federal D. Glover, District V Supervisor Contact: Kathleen M. Andrus, Deputy County Counsel (925) 335-1800 I hereby certify that this is a true and correct copy of an action taken and entered on the minutes of the Board of Supervisors on the date shown. ATTESTED: November 12, 2013 David Twa, County Administrator and Clerk of the Board of Supervisors By: Stephanie L. Mello, Deputy cc: Kathleen M. Andrus, Deputy County Counsel, David Twa, County Administrator, Kara Douglas, Department of Conservation and Development, Catherine Kutsuris, Director, DCD C. 66 To:Board of Supervisors From:Sharon L. Anderson, County Counsel Date:November 12, 2013 Contra Costa County Subject:APPROVE AND AUTHORIZE CONFLICT WAIVER WITH GOLFARB & LIPMAN LLP BACKGROUND: In 1998, the County issued tax-exempt private activity bonds and loaned the proceeds of the bonds to Skyline Crest Enterprises, LLC (Skyline), for use in the development of Cypress Meadows, a senior assisted living facility in Antioch. The loan was conditioned on the owner (i) causing 22 of the units to be made available exclusively to households earning up to 50% of the area median income (affordable units), and (ii) limiting the rent charged on the affordable units. At closing, a Regulatory Agreement was recorded against the property that sets forth the requirements related to the affordable units, the owner’s obligation to submit periodic reports to the County confirming compliance with the Regulatory Agreement, and the owner’s obligation to pay the County an annual fee. In 2004, Skyline repaid the loan that had been made by the County, using the proceeds of a conventional loan insured by the U.S. Department of Housing and Urban Development (HUD). At the time of the refinancing, the Regulatory Agreement was amended to restate the terms of the original Regulatory Agreement and to extend the term of the affordability requirement to 2020. At the same time, the County consented to the property being transferred from Skyline to Cypress Meadows Antioch LLC (Cypress Meadows), with Cypress Meadows assuming all of Skyline’s duties and obligations under the Regulatory Agreement. The Regulatory Agreement retained its senior lien position on the property. Skyline continues to act as the operator of the assisted living facility. Since the 2004 refinancing, the County has endeavored to confirm that Skyline and Cypress Meadows are complying with the affordability requirements of the Regulatory Agreement. Neither company has provided the County with the required compliance certificates. The County has also not received the annual payments to which it is entitled under the Regulatory Agreement. Through October 1, 2013, the County is owed $47,892 in unpaid annual fees. Cypress Meadows is currently in the process of refinancing the existing conventional HUD insured loan with a new conventional HUD insured loan at a lower rate of interest. Cypress Meadows retained Goldfarb to assist it with the refinancing. In the course of doing its due diligence, Goldfarb discovered the existence of the Regulatory Agreement and realized that a conflict of interest could exist between Cypress Meadows and the County. The County is an existing client of Goldfarb. Goldfarb represents the County on various legal issues related to redevelopment dissolution, new development financed by the County, and the preparation of legal documents for County-funded housing programs. In the absence of the informed written consent of each client, the California Rules of Professional Conduct prohibit an attorney from representing a client in one matter and at the same time representing a second client in a separate matter if the second client’s interests in the separate matter are adverse to those of the first client. (Rule 3-310(C)(3)) In this instance, Goldfarb is uniquely qualified to assist Cypress Meadows, Skyline and the County, if each party grants its consent to Goldfarb providing joint representation. Since it is anticipated that the County will be asked to subordinate the Regulatory Agreement to the new deed of trust, the refinancing cannot be completed without the County’s acquiescence. To provide the County with an incentive to consent to subordination, Cypress Meadows and Skyline may be willing to come into compliance with the Regulatory Agreement, and to assure the companies’ continuing compliance with the Regulatory Agreement. Compliance with the Regulatory Agreement will assure that the 22 units of affordable housing that are the subject of the Regulatory Agreement will be available to low income seniors in Contra Costa County. CONSEQUENCE OF NEGATIVE ACTION: If the conflict waiver is not granted, Goldfarb will not be able to represent the County, Cypress Meadows or Skyline with respect to the matter described above. CHILDREN'S IMPACT STATEMENT: Not applicable. ATTACHMENTS Conflict Waiver - Goldfarb (Cypress Meadows) 2013.pdf