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HomeMy WebLinkAboutMINUTES - 06172003 - HA4 �i HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA TO: BOARD OF COMMISSIONERS FROM: Robert McEwan, Executive Director DATE: June 17,2003 SUBJECT: APPROVE AMENDED PARTNERSHIP AGREEMENT, GROUND LEASE, LOAN AND GRANT FINANCING, MANAGEMENT SERVICES AND RELATED ARRANGEMENTS TO ENABLE DEVELOPMENT OF THE FORMER LOS MEDANOS PUBLIC HOUSING SITE IN BAY POINT FOR THE NEW 180-UNIT DEANZA GARDENS APARTMENTS SPECIFIC REQUEST(S)OR RECOMMENDATION(S)&BACKGROUND AND JUSTIFICATION I. RECOMMENDATION(S): A. APPROVE, and AUTHORIZE the Executive Director, or his designee, to sign, an Amended and Restated Partnership Agreement for DeAnza Gardens, L.P., a California limited partnership (the "Partnership") substantially in the form attached hereto, and related documents, amending the original limited partnership agreement previously approved by the Board to admit investor limited partners that will provide the equity needed to develop the new 180-unit DeAnza Gardens Apartments (the "Project"). B. APPROVE, and AUTHORIZE the Executive Director, or his designee, to sign, a 75-year ground lease, substantially in the form attached hereto, of the former Los Medanos Pueblo public housing site in Bay Point to the Partnership for development of the Project. C. APPROVE a grant of $1,000,000 to DeAnza Housing Corporation, a California nonprofit public benefit corporation ("DeAnza"), and AUTHORIZE the Executive Director, or his designee, to sign, a Grant Agreement, substantially in the form attached hereto, and related documents, which will be used to repay a $1,000,000 predevelopment loan made by the Housing Authority. D. APPROVE a loan of$1,000,000 to the Partnership, and AUTHORIZE the Executive Director, or his designee, to sign, an Authority Loan Agreement, substantially in the form attached hereto, and related documents, which will be used to repay a $1,000,000 temporary loan made by the Housing Authority for predevelopment costs. E. APPROVE, and AUTHORIZE the Executive Director, or his designee, to sign, an Amended and Restated Development Agreement, substantially in the farm attached hereto, amending the original development agreement previously approved by the Board, pursuant to which the Housing Authority will provide certain development services for the Project and receive a developer fee. CONTINUED ON ATTACHMENT: XXX YES SIGNATURE: keq� RECOMMENDATION OF EXECUTIVE DIRECTOR RECOMMENDATION OF BOARD COMMITTEE APPROVE OTHER SIGNATURE(S): ACTION OF BOARD ON APPROVED AS RECOMMENDED O VOTE OF COIVIMISSIO S: I HEREBY CERTIFY THAT THIS IS A UNANIMOUS (ABSENT „ �-, TRUE AND CORRECT COPY OF AN AYES: NOES: ACTION TAKEN AND ENTERED ABSENT: ABSTAIN: ON THE MINUTES OF THE BOARD OF COMMISSIONERS ON THE DATE SHOWN. ATTESTED: �> ._, ` !=5�" JOHN SWE N, CLERK.OF TIIE I3O OF COMMISSIONERS Contact: Jay Daley, Dir. of Devel. AND C N Y NISTRATOR cc: CAO, County Counsel, housing Author. BY 11 .r ?/KUTY r P. APPROVE, and AUTHORIZE the Executive Director, or his designee, to sign, the Property Management Agreement, substantially in the form attached hereto, pursuant to which the Housing Authority will provide certain property management services for the Project and receive a management fee. G. APPROVE, and AUTHORIZE the Executive Director, or his designee, to sign, a Guaranty Agreement, substantially in the form attached hereto, pursuant to which the Housing Authority will guaranty its obligations as general partner of the Partnership. H. APPROVE the attached final plans and specifications for the Project; 1. APPROVE, and AUTHORIZE DeAnza, as the managing general partner of the Partnership, to sign, on behalf of the Partnership, a Construction Contract, substantially in the form attached hereto, and related documents, for the construction of the Project. J. APPROVE, and AUTHORIZE DeAnza, as the managing general partner of the Partnership, to sign, on behalf of the Partnership, a Construction Loan Agreement, substantially in the form attached hereto, and related documents, to obtain construction financing for the Project, and AUTHORIZE the Executive Director, or his designee, to certify all resolutions of the Housing Authority relating to the formation of the Partnership and the authorization of the financing arrangements described herein, to the extent required to obtain the Construction Loan for the Project. K. APPROVE, and AUTHORIZE DeAnza, as the managing general partner of the Partnership, to sign, on behalf of the Partnership, a Permanent Loan Agreement, substantially in the form attached hereto, and related documents, to obtain permanent financing for the Project, and AUTHORIZE the Executive Director, or his designee, to certify all resolutions of the Housing Authority relating to the formation of the Partnership and the authorization of the financing arrangements described herein, to the extent required to obtain the Permanent Loan for the Project. L. APPROVE, and AUTHORIZE DeAnza, as the managing general partner of the Partnership, to sign, on behalf of the Partnership, an Authority Loan Agreement, substantially in the form attached hereto, and related documents, to obtain additional financing for the Project. M. APPROVE, and AUTHORIZE DeAnza, as the managing general partner of the Partnership, to sign, on behalf of the Partnership, a DeAnza Loan Agreement, substantially in the form attached hereto, and related documents, to obtain additional financing for the Project. L. APPROVE, and AUTHORIZE DeAnza, as the managing general partner of the Partnership, to sign, on behalf of the Partnership, an Authority Loan Agreement, substantially in the form attached hereto, and related documents, to obtain additional financing for the Project. M. APPROVE, and AUTHORIZE DeAnza, as the managing general partner of the Partnership, to sign, on behalf of the Partnership, a DeAnza Loan Agreement, substantially in the form attached hereto, and related documents, to obtain additional financing for the Project. O. APPROVE, and AUTHORIZE DeAnza, as the managing general partner of the Partnership, to sign, on behalf of the Partnership, an Environmental Indemnity Agreement, substantially in the form attached hereto, and related documents, pursuant to which the Partnership will agree to indemnify the permanent lender against any damages suffered as a result of the presence of hazardous materials at the Project. P. On June 17, 2002, the Zoning Administrator approved the Project and the mitigated negative declaration pertaining to the Project. A Notice of Determination that the Project will not have a significant environmental effect was filed on June 28, 2002. II. FINANCIAL IMPACT: The $1 million Authority Loan and the $1 million grant will be made from Housing Authority reserves. Payments to the Housing Authority on the Authority Loan and on the grant will be made from projected residual receipts of operating income of the Project. The Housing Authority will receive developer fees of up to $1.2 million. The Housing Authority will also earn property management fees for providing management services for the Project. $28,540,000 of Project funding comes from the sale of low income housing tax credits awarded to the Partnership. III. REASONS FOR RECOMMENDATION/BACKGROUND: The Board has approved prior actions to enable the development of the Project, which will consist of 150 new affordable mixed-income apartments on the former Los Medanos Pueblo public housing site in Bay Point, including the creation and support of the community based nonprofit DeAnza Housing Corporation and the Partnership, which will develop and own the Project. The Board is now being asked to consider and approve additional documents and actions to enable the Housing Authority to proceed with the Project. The primary documents and actions for which Board approval is sought are described below. Staff also seeks the Board's approval, and authorization to execute, all related documents needed to implement the actions described herein, including the related documents listed on the attached Exhibit A. The Housing Authority and DeAnza have previously entered into a limited partnership agreement for the Partnership approved by the Board. In order to obtain additional equity needed to develop the Project, the partnership agreement must be amended to admit the investor limited partners that will provide the necessary equity. The Housing Authority and DeAnza will provide a limited guaranty of up to $1,2030,000 (the total amount of the developer fee) for construction and operation of the development in accordance with tax credit rules. The 75-year ground lease of the Housing Authority's former Los Medanos Pueblo public housing site on Alves Lane in Bay Point to the Partnership will enable development of the Project with 180 new apartments. Terms of the ground lease include affordable housing use restrictions. Ground lease payments will be made to the Housing Authority from residual receipts of the operation of the Project, as available. The grant from the Housing Authority to the DeAnza assures the economic viability of the development of the Project and DeAnza (the managing general partner of the Partnership). Further, by reducing the amount of the Housing Authority's administrative reserves, it removes these funds from possible recapture by the U.S. Department of Housing and Urban Development under anticipated future policies regarding maximum administrative reserves. The use of these funds for affordable housing development purposes is an eligible use of these funds. DeAnza will loan the proceeds of the grant to the Partnership, which will use the proceeds to repay a $1,000,000 predevelopment loan made by the Housing Authority. The Authority Loan from the Housing Authority to the Partnership will be used to repay a $1,0030,0300 temporary loan made by the Housing Authority to the Partnership for predevelopment costs. The Housing Authority and the Partnership have previously entered into a development agreement approved by the Board, pursuant to which the Housing Authority provided certain development services relating to the Project, including negotiating, on behalf of the Partnership, the Construction Contract and other contracts and agreements necessary for the construction of the Project. The Amended and Restated Development Agreement is needed to further set forth the services to be performed by the Housing Authority, including the coordination and administration of the construction of the Project, and to ensure the completion of the construction of the Project. Pursuant to the Amended and Restated Development Agreement the Housing Authority will receive a developer fee for providing such services. The Housing Authority and the Partnership have previously entered into a management services agreement approved by the Board, pursuant to which the Housing Authority will provide certain management services relating to the Project, including the day-to-day management and operation of the Project, and will receive a management fee. The Property Management Agreement is needed to increase the Housing Authority's fee for the property management of the Project. Bank of America, N.A. will make a construction loan of approximately $29,500,000 to the Partnership for the construction of the Project. The construction loan will be repaid with the permanent loan funds and equity contributions from the investor limited partners. California Community Reinvestment Corporation ("CCRC") will make a permanent loan of approximately $8,600,000 to the Partnership, which will be used to repay the construction loan. DeAnza will make a permanent loan to the Partnership in the amount of$1,000,000 to help finance the Project. In order to obtain the financing described above, DeAnza (as the managing general partner of the Partnership), will be required to execute a Construction Loan Agreement, a Permanent Loan Agreement, a DeAnza Loan Agreement, and relating financing documents. In addition, DeAnza will need to sign, on behalf of the Partnership, an Environmental Indemnity Agreement, pursuant to which the Partnership will agree to indemnify CCRC against any damages suffered as a result of the presence of hazardous materials at the Project, and the Housing Authority will be required to sign a Guaranty pursuant to which it will guaranty its obligations as general partner of the Partnership. Prior to proceeding with the construction of the Project, staff seeks the Board's approval of the submitted final plans and specifications for the construction, and authorization for DeAnza to execute the Construction Contract for the Project. Statutory support for the Housing Authority's actions is provided in the following California Health and Safety Code sections: California Health and Safety Code section 34315(e) authorizes housing authorities to lease, assign, pledge, or dispose of any real or personal property. Pursuant to this authority, the Housing Authority will lease the land to the Partnership pursuant to a ground lease and pledge the land as security for the Construction Loan and Permanent Loan. Section 34315(b) authorizes housing authorities to own, hold, and improve real or personal property. Pursuant to this authority, the Housing Authority will act as general partner of the Partnership to develop the Project. Section 34315.3 authorizes a housing authority to accept financial assistance from any private source, and expend any funds so received for the purposes of this chapter. Pursuant to this authority, the Housing Authority will accept the Construction Loan and Permanent Loan from the lenders. Section 34312(d) authorizes housing authorities to provide financing for the acquisition, construction, rehabilitation, refinancing, or development of dwelling accommodations for persons of low income. Pursuant to this authority, the Housing Authority will provide a grant to DeAnza and a loan to the Partnership for development of the Project. Section 34312(a) authorizes housing authorities to operate housing projects for persons of low income. Pursuant to this authority, the Housing Authority will act as property manager of the Project. Section 34311 authorizes housing authorities to make and execute contracts and other instruments necessary or convenient to the exercise of its powers. Pursuant to this authority, the Housing Authority will enter into the ancillary documents necessary to carry out the development, financing and operation of the Project. IV. CONSEQUENCES OF NEGATIVE ACTION: Should the Board of Commissioners elect not to approve the amended partnership agreement, ground lease, Authority Loan and grant, and the other proposed actions, the Housing Authority will not be able to continue the process toward removal of the obsolete and deteriorated Los Medanos public housing in Bay Point and development of 180 new affordable apartments to be known as DeAnza Gardens. EXHIBIT A (List of Related Documents) 1. Memorandum of Ground Lease 2. Assignment of Service Contracts and Tax Credits 1 Construction Loan Documents: Promissory Note, Deed of Trust, Subordination Agreement, Security Agreement, Assignment of Contracts, Plans and Specifications 4. Permanent Loan Documents: Promissory Note, Deed of Trust, Loan Purchase Agreement, Replacement Reserve Agreement 5. Authority Loan Documents: Promissory Note, Deed of Trust, Regulatory Agreement 6. DeAnza loan Documents: Promissory Note, Deed of Trust, Regulatory Agreement 7. Purchase Caption Agreement and Right of First Refusal Agreement 8. Memorandum of Purchase Caption g. Density Bonus and Redevelopment Inclusionary Housing Agreement