Loading...
HomeMy WebLinkAbout1995-12-05; City Council; 13427; Villa Loma Deferral Of FeesCI-’ OF CARLSBAD - AGEP’V BILL AB # /3; ‘k’? TITLE: MT& 12/05/95 VILLA LOMA PROJECT - CLARIFICATION OF DEPT. CM COUNCIL POLICY ON DEFERRAL OF FEES RECOMMENDED ACTION: ,sc;‘” .pp f w:, - Adopt Resolution No. 9534 3 allowing the deferral of payment of water connection fees to the final certificate of occupancy for the Villa Loma project. ITEM EXPLANATION: In March of 1994 the City Council directed staff to assist the Villa Loma project by allowing the project to pay various City fees and charges upon the issuance of a Certificate of Occupancy (C of 0) (see Resolution 94-90 attached to this agenda bill). Since the project is being constructed in phases, there has been some discussion around the issue of whether this deferral was intended to delay the payment of certain fees to the issuance of each individual C of 0 for each phase, or to the final C of 0 for the entire project. To date, Bridge has faithfully paid the applicable fees upon the issuance of each C of 0 for each completed phase. However, Bridge has asked that the City revisit the question of the Council’s intent in the deferral, and clarify the City’s position on this issue. A deferral of the payment of certain fees to final C of 0 would significantly help the project by allowing Bridge to 1) realize construction loan savings, and 2) take advantage of any adjustment in City water fees that may occur between now and when the fee is paid. A draft water rate study is currently being reviewed by staff, and will be ready for Council review early in 1996. The staff recommends that the Council provide clarification while keeping in mind the special nature of this project. The Villa Loma project is supported by a partnership made up of private, non-profit, and public entities. The City’s participation in the project provided the financing for land acquisition and financial support for the project in the form of loans and fee deferrals. In exchange the City has received the right to sell 184 housing credits which have been priced to recover the City’s initial investment. In addition, the City will receive a lease payment and the residual cash flow from the project. Because of this unusual participation in the bottom line cash flow of the project, the City has a special interest in the financial success of the project. The deferral of fees will allow the project to move forward in a way that minimizes the construction cost of the project, thereby reducing the demand for bank financing. This increases the net amount of cash flow from the project that will ultimately benefit the City. A possible solution to the issue of deferral of fees would be for the Council to allow the deferral of only the water fee to the final C of 0 while all other fees are paid with the issuance of each sequential C of 0. This would allow the project to gain a significant benefit from both improved cash flow demand and the potential change in water fees, while retaining some cash flow to the City during the phased construction of the project. - Page Two of Agenda Bill No. /J Yp? To facilitate this deferral, Bridge would be required to provide the City with a guarantee for payment of any fees deferred to the final C of 0. This guarantee would take the form of a letter of credit, a line of credit upon which the City could draw, or other guarantee in a form and amount acceptable to the City Manager and City Attorney. FISCAL IMPACT The deferral of water fees, as recommended by staff, has several impacts on the City’s financial position in the future. First, as a partner in the project, the City will receive an improved cash flow from the project. If Bridge is forced to borrow additional funds the repayment for this additional debt will be made from operating revenue. This will reduce the net cash flow in future years. The amount of the reduction will be proportional to the amount of additional debt required. Funds received from the project in the form of lease payments and residual cash flow will be paid to the Council’s housing fund to be used to support the goals of the housing element of the general plan. The deferral of water fees will reduce the net amount available within the water fund to support future water projects. The water connection fees are being reviewed as part of the current master rate study. The draft rate study suggests a fee structure that will fund future water Capital Improvement Program. Deferral of the payment of water fees to final C of 0 will not damage the integrity of the water system funding plan as recommended in the study. EXHIBITS 1. Resolution No q5Y3y? allowing the deferral of payment of water connection fees to the final certificate of occupancy for the Villa Loma project 2. Resolution 94-90 - A resolution adopted by Council March 22, 1994 which allowed for the deferral of fees to C of 0 1 2 3 4 5 6 7 6 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 28 27 28 - RESOLUTION NO 95-347 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD CALIFORNIA ALLOWING THE DEFERRAL OF THE PAYMENT OF WATER CONNECTION FEES TO THE TIME OF THE ISSUANCE OF THE FINAL CERTIFICATE OF OCCUPANCY FOR THE VILLA LOMA PROJECT WHEREAS, on March 22, 1994 the City Council adopted Resolution No 94-90 which, in part, allowed the deferral of City controlled fees charged to the Villa Loma project, then known as the Villas at El Camino Real, to the Certificate of Ckcupancy; and WHEREAS, because the City Council recognized the special nature of this project due to the City’s long term participation in the project through lease payments to the City and the City’s rights to residual cash flow generated by the project; and WHEREAS, the City Council wishes to clarify its position on the deferral of City Water Connection fees to be paid by the Villa Loma Project. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Carlsbad, California as follows: 1. That the Villa Loma project shall pay the water connection fees due for the project construction for all phases of the project prior to the issuance of the final Certificate of Occupancy for the final phase of the project. 2. That Bridge Housing Corporation, the project developer, shall provide the City with a guarantee in a form and amount acceptable to the City Manager and the City Attorney for the amount of water fees that will become due and payable at the time specified above, and that.such amount shall be determined based on the existing water connection fee schedule. A credit against the amount of the guarantee may be given for any amount previously paid to the City by Bridge Housing Corporation for water connection fees. 3. That the amount due from Bridge Housing Corporation for water connection fees shall be determined prior to the issuance of the final certificate of occupancy based on the then applicable water connection fee schedule. . I I ! l( 11 12 14 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 PASSED, APPROVED AND ADOPTED at a regular meeting of the City Council on the 5th day of DECEMBER -) 1995, by the following vote, to wit: AYES: Council Members Lewis, Nygaard, Finnila NOES: Council Member Hall ABSENT: Council Member Kulchin .4TTEST: KAREN R. KUNDTZ, Assistant City Clerk FACILITY FEE PLEDGE AGREEMENT This Facility Fee Pledge Agreement (this "Agreement“) is entered into as of this 31 day of January, 1996 by and among La Terraza Associates, a California Limited Partnership (the flPartnershipn), BRIDGE Housing Corporation, a California nonprofit public benefit corporation (llBRIDGEll), and the City of Carlsbad, a municipal corporation (the llCitytr) with reference to the following facts: RECITALS A. The Partnership is developing three hundred and forty four (344) units of affordable housing located in Carlsbad, California (the 'tDevelopmentlf). B. BRIDGE is the managing general partnerof the Partnership. C. The Partnership is required to pay a facility fee to the City for the right to obtain water for the Development (the "Facility Fee"). D. The Carlsbad Municipal Water District (the l'Districtll) sets the rate structure for water fees. Under the current rate structure the Facility Fee will equal Eight Hundred Thirty Thousand Four Hundred Dollars ($830,400). E. The District is currently under going a review of the rate structure for water fees. Under a proposed revised rate structure, the Facility Fee could be reduced by as much as Five Hundred Sixty Eight Thousand Dollars ($568,000). F. In recognition of the District's rate restructuring effort and the potential savings for the Development, the City has allowed the Partnership to defer payment of the Facility Fee until the Development is ready to be occupied as evidenced by the issuance of a certificate of occupancy by the City for all structures. G. The Partnership has deposited Four Hundred Twenty Seven Thousand Two Hundred Dollars ($427,200) with the City as a deposit on the future payment of the Facility Fee, which deposit is being held by the City, and shall remain with the City, until the Payment Date, as defined below, at which time the Partnership may apply this amount against any amount due to the City for payment of the Facility Fee (the "Deposit Amountt'). 1443csP50 OWW96 1 H. The balance of the Facility Fee in the amount of Four Hundred Three Thousand Two Hundred Dollars ($403,200) has been deferred until the Payment Date (the "Deferred Fee"). If a new rate structure which reduces the Facility Fee is put into place before the Deferred Fee is due, the Partnership will only be required to pay the reduced amount. I. The Development is composed of nineteen (19) residential buildings, two (2) recreational buildings, and one (1) maintenance building,all of which require a certificate of occupancy J. Because of the multiple certificates of occupancy required for the Development, it is unclear when the payment of the Facility Fee is required. K. Pursuant to the terms of this Agreement, the parties wish to clarify any ambiguity regarding the timing' for payment of the Facility Fee, including any requirement to pay the Deferred Fee. L. Pursuant to the terms of this Agreement, BRIDGE is pledging to the City that BRIDGE will insure the payment the Deferred Fee to the City in the event that the Partnership fails to pay the Deferred Fee if and when due. NOW THEREFORE, IN CONSIDERATION of the covenants in this Agreement and other good and valuable consideration the receipt of which is hereby acknowledged, the parties agree as follows: 1. TIME OF PAYMENT. Payment of the Facility Fee, including the Deferred Fee, if any, shall be due upon the issuance by the City of the final certificate of occupancy for the Development but no later than December 31, 1996 (the ttPayment Date"). The final certificate of occupancy shall be the certificate of occupancy issued by the City for a building, whether residential or recreational, in the Development after all other residential and recreational buildings in the Development have received a certificate of occupancy. 2. PAYMENT OF FACILITY FEE. The Partnership pledges to the City that the Partnership shall pay the Facility Fee by first applying the Deposit Amount to the outstanding amount of the Facility Fee and then, if necessary, paying the Deferred Fee in the maximum amount of amount of Four Hundred Three Thousand Two Hundred Dollars ($403,200) on the Payment Date. If the District has revised its rate structure for water fees resulting in a reduction in the Facility Fee, the Partnership shall be required to pay only the amount required by the District's new rate 1443cs.P50 Ol/zv% 2 structure and any unused portion of the Deposit Amount shall be promptly refunded to the Partnership by the City. In the event that the Partnership fails to make the Deferred Fee payments required by this Section 2, BRIDGE, upon ten (10) days written notice by the City, shall pay to the City the amounts due from the Partnership. 3. NOTICES. All written notices and demands of any kind which either party may be required or may desire to serve on the other in connection with this Agreement may be served in writing and by certified mail or by personal delivery with a return receipt. Any such notice or demand so served by certified mail shall be deposited in the United States mail with postage thereon fully prepaid and addressed to the party to be served as follows: The Partnership: La Terraza Associates, a California Limited Partnership 1 Hawthorne Street, Suite 400 San Francisco, CA 94105 BRIDGE: City: BRIDGE Housing Corporation 1 Hawthorne Street, Suite 400 San Francisco, CA 94105 City of Carlsbad 1200 Carlsbad Village Drive Carlsbad, CA 92008-1989 Service of any such notice or demand so made by mail shall be deemed complete on the day of actual delivery as shown by the addressee's receipt or at the expiration of the third day after the date of mailing, whichever is earlier in time. Either party to this Agreement may, from time to time, by notice in writing served upon the other as set forth above, designate a different address to which all such notices and demands are thereafter to be addressed. 4. AMENDMENT. Any amendments to this Agreement must be in writing and shall be effective only upon the execution of the amendment by all parties to this Agreement. 5. HEADINGS. The titles and headings of the various sections of this Agreement are intended solely for means of reference and are not intended to modify, explain, or place any construction on any of the provisions of this Agreement. 1443csPSO M/25/96 3 6. SEVERABILITY. If any of the provisions of this Agreement or their application to any persons or circumstances shall, to any extent, be invalid or unenforceable, neither the remainder of this Agreement, nor the application of such provisions or provision to persons or circumstances other than those as to whom or which it is held invalid or unenforceable, shall be affected thereby, and every provision to this Agreement shall be valid and enforceable to the fullest extent permitted by law. 7. ATTORNEYS' FEES. In the event of any action between the parties to this Agreement to enforce any of the provisions of this Agreement or any right of any party, the unsuccessful party to such action agrees to pay to the successful party or parties all costs and expenses, including reasonable attorneys' fees, incurred by the successful party, all of which may be included in and as part of the judgment rendered in such action. 8. ENTIRE AGREEMENT. The terms of this Agreement are intended by the parties as a final expression of their agreement with respect to the terms that are included in this Agreement and may not be contradicted by evidence of any prior or contemporaneous agreement. The parties further intend that this Agreement constitutes the complete and exclusive statement of its terms and that, absent fraud or intentional misrepresentation, no extrinsic evidence whatsoever may be introduced in any judicial proceedings, if any, involving this Agreement. No provisions of this Agreement may be amended or added to except by an agreement in writing signed by the parties to this Agreement or their respective successors in interest. 9. GOVERNING LAW. _. This Agreement shall be governed by and construed in accordance with the laws of the State of California. 10. SUCCESSORS. This Agreement shall be binding upon and inure to the benefit of the heirs, executors, administrators, successors and assigns of the parties. 1443cxPSO W/25/96 4 IN WITNESS WHEREOF, the parties have executed this Agreement on the date set forth above. Partnership: La Terraza Associates, a California Limited Partnership By: BRIDGE HOUSING Corp., its managing general partner By: Its: Mayor BRIDGE: BRIDGE Housing Corporation, a California nonprofit_public benefit corporation By: Its: By: Its: ATTEST: ALETHALXAUTENKRANZ, City Clerk (Proper notarial acknowledgment of execution of DEVELOPER-OWNER must be attached.) (President otvice-president and secretary or assistant secretary must sign for corporations. If only one officer signs, the corporation must attach a resolution certified by the secretary or assistant secretary under corporate seal empowering that officer to bind the corporation.) APPROVED AS TO FORM: RONALD R. BALL,City Attorney By: 1443cs.Pso 01/25/96 .- : CiiLIFORNIA ALL-PURPOSL. ACKNOWLEDGMENT No. 5907 , State of &AA ‘$rwtn’m I County of +?M %X4%4& On ti before me, ~oAV~% d. h , &h2/UA personally appeared &IYO\ &\aVlke LI NAME(S) OF SIGNER(S) @ personally known to me - OR - q 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 ac- knowledged 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), COMM. M Notary Public - Caiifomia or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. c: SIGNATURE OF NOTARY OPTIONAL Though the data below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent reattachment of this form. CAPACITY CLAIMED BY SIGNER cl INDIVIDUAL q CORPORATE OFFICER DESCRIPTION OF ATTACHED DOCUMENT l?ati\isnn i3.d&e. m TITL$ OR TYPE OFkOC&lENT q PARTNER(S) 0 LIMITED kl GENERAL 5 cl Al-l-ORNEY-IN-FACT NUMBER OF PAGES 0 TRUSTEE(S) 0 GUARDIAN/CONSERVATOR Cl OTHER: SIGNER IS REPRESENTING: NAME OF PERSON(S) OR ENTITY(IES) DATE OF DOCUMENT 01993 NATIONAL NOTARY ASSOCIATION - 8236 Remmet Ave., P 0. Box 7184 - Canoga Park, CA 91309-7184 SENT BY:CW?LSBAD HSG&RED ;ll-22-95 lZ:l?=t"i ; 3 ;tt 2 -- - I L ’ OF CARI ‘9 I SBAD - AGEk BILL L . ! -. fiTQ. 3/22/94 ASSISTAl WT. RED* REAL AF tECOMMENDED ACTION: ADOPT City Council Resolution No,, No. 93-297, dated October 26, 1993, 1 Villas at El Camino Real Affordable H On October 26, 1993 City Council app the Villas at El Camino Real Affordab: provide 344 housing units affordable tc presently owned by the City located or The project assistance originally includ assistance using Federal Community D acquisition, and Redevelopment Low+h other development costs, Since City Council action on the Villas other financing commitments and appn financing, an allocation of Low-Income Federal Home Loan Bank Affordable I sources of funds related to developmen developer(s), Final financial projection financial assistance in the form of ceru Although a short term deferral of all ci bc able to pay all city fees at Certificat At this time, several changes to the Cil recommended by staff based on the an1 particularly the construction lender and changes are a8 follows: 1, Provide approximately the cash in exempted/deferred fees ($2.4 Redevelopment Agency. The lo Modeme Income Housing Set-, funds. The Agency’s loan will i construction financing. Repaym the project’s operational phase 1 credits. Exhibit 2 illustrates, in Agency f’unds as a loan to the F 2. Defer payment of all other City controlled fees to Ccrtiflcate of Occupancy, This change defers approximately $ .3 million in additional fees. XJRING OF CITY FINANCIAL CE FOR THE VILLAS AT EL CAMINO :ORJMBLE HOUSING PROJECT !!5d!P- amending City Council Resolution I restructure the City’s financial assistance to the using Project, oved a program of financial assistance supporting I Housing Project (“The Villas”). The Villas will low and very low income households on 21-acres El Camino Real south of Camino Vida Roblcs. d fee exemptions and deferrals and direct cash velopment Block Grant (CDBG) for property oderate Income Housing Set-Aside Funds for the project has proceeded toward obtaining its yals, including bank construction and permanent Housing Tax Credits and funding from the nusing Program. A review of the uses and costs for the project was also completed by the indicate that the project no longer requires city n fee exemptions and long tetm fee deferrals. y-controlled fees is still necessary, the project will of Occupancy. 1’s financial assistance program are being clpated requirements of other financing sources, Tax Credit investor, These recommended quivalent of previously approved City assistance million) in the form of a loan from the Village n would be funded by Redevelopment Low- #side Funds and Redevelopment Tax Increment llow the project to pay the city fees from bank nt (with lntercstj of the loan would occur during om surplus cash and IX& of affordable housing ri flow chart, the sources, timixqt and use of eject . SENT BY:CQRLSBFID HSGZRED 211-22-95 12:18PM : 1 -3 -4 . ABU : : /$!44@ PAGE 2 8 3, Waive Park In-Lieu Fees in the surplw park dedication within the of approximately $360,000 based on existing Quadrant by the Aviara Master Plm, 4. Pennft the use of up to S500,ooO project cash flow and/or proceeds from ada of Affordable Housing Credits for rves or guaranteea ss required by other financing SOUrccB. These changes do not change the City’s ac al permanent dollar commitment to the pro]ect. However, the restructuring does commit ditional City assistance of S 4.7 million in the form of construction period fulancing and fee defe als for a period of approximately 10 months, BS well as a co&gent operadng deficit guarantee f up to $500.000. These proposed changes will nrsist the project in several ways: 1. :. They allow bank consttucdon loan avingt by reducing the bank consttuction loan amount and the time the loan is outstandin ; 2. They allow Tax Credit equity to b increased by including the expenditures for City feet = a project cost; 3, g They allow project cost savi the waiver of Park In-Lieu Fees on the basis that the Villas has met its pa through the Aviara Muter Plm. Attachai as Exhibit 3 is a letter from Aviara Associates which provides the rationale for taking this action which is support 4. The use of project cash flow or proceeds from selling Affordable Housing Credits provides for reserves or guarant to cover the contingency of pater than expected initial operating deficits. getai project operating reserve of S 500,000 is believed to be sufnclent for the ng deficit contingency, a larger rental project must be prepared to address the prob ich may arise if the market is unable to quickly absorb all of the units, notwiths ng deeply subsidized rem. The Tax Credit investor may rquirs up to $1 mlllion tional project rcscnca/guarat~tees to insure that s longer than expected lease-up clulbcacco-* The re8crve@rantee would diminish over time as the project ches and maintains a stabllized occupancy. A separate agenda bill rqueating action fr the Housing and Redevelopment Commission authorizing the Redevelopment A processed concurrently with this agenda bill requesting Council action to rest 1 assistance to the Villas at El Can&to Real Affordable Housing Project. The use of additional city/agency funds construction loti, which is subordinated to a bank loan, and the deferral of additional few ng the constwction pedod presti additional risk. However, with the track record of the de pment team and the bank construction lender’s performance guarantee requirement% St elicvcs that the risk has been mitigated to the greatest extent possible. ;# 3 . SENT BY:CFIRLSBFID HSGZRED -ill-22-95 12: 19PM : 3 -- ;+I 4 ABU +?6%+ PAGE 3 The aaioPr recommended by staff do not project ebove that which was prcviouely I Redevelopment Commission. The actions period loan to the project, deferrai of an I Occupancy and waiving of approximately rwerve/guarantw of up to $500,000 usiq The proposed rc!!MICNring of the CitylRr significantly aid the Villas chances for SUI and approvals and is, therefore, recomme i- Resolution No. W-q0 approvic 297. dated October 26. 1993, to a to the Villas at El CatAn0 R&I A 2- Flow Chart representing the SOW for 8 construction period loan for 3- Report to City Manager on waive Land Associates, dated January 6, Analyst, Don Rideout providing I project. cault in an increase in permanent 15lnding for the proved by the City Council and tha Housing and o recommend ure of S 2.4 million as a constructlon ditional S 2.3 million in City feea until Ceniflcate of 360,000 in Park In-Lieu few db well as potentially a project-generated income, evelopmcnt Agency’s financial asskst&ncc will ess, including obtaining other financing commitments led by staff. an amendment to City Council Resolution No. 93- OW for a rUItrUCNriq of the City’8 fiaancial ssirtmce brdable Housing Project. s, timing and uw of City/Redevelopment Agency finds ie Villas project. of Park In-Lieu Fees which includeg letter from Aviara 1994, and fee analyria memo from Senior Management ionale for waiving Park In-Lieu Fees for the Villas -- -- CITY COUNCIL RESOLUTION NO. 94-90 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD, CALIFORNIA APPROVING A RESTRUCTURING OF CITY FINANCIAL ASSISTANCE FOR THE VILLAS AT EL CAMINO REAL AFFORDABLE HOUSING PROJECT TO BE LOCATED WITHIN THE SOUTHWEST QUADRANT OF THE CITY. CASE NAME: “THE VILLAS” AT EL CAMINO REAL APN: 215-020-15 WHEREAS, on October 26, 1993, the City Council approved Council Resolution No. 93-297 authorizing financial assistance to support the Villas at El Camino Real Affordable Housing Project; and WHEREAS, the City of Carlsbad’s financial assistance originally included fee exemptions and deferrals and direct cash assistance using Federal Community Development Block Grant funds for property acquisition and Redevelopment Low and Moderate Income Housing Set-Aside funds for other development costs; and WHEREAS, the Villas at El Camino Real Affordable Housing Project has proceeded toward obtaining its financing commitments and approvals, including bank construction and permanent financing, an allocation of Low Income Housing Tax Credits and funding from the Federal Home Loan Bank Affordable Housing Program; and -- . . . . WHEREAS, a need has been identified to restructure the City’s financial assistance program based on the anticipated requirements of other financing sources, particularly the construction lender and Tax Credit investor. NOW, TIIEREFORE, RE IT HERERY RESOLVED by the City Council as follows: 1. That the foregoing recitations are true and correct. 2. That the City Council of the City of Carlsbad hereby approves financial assistance to the proposed affordable housing project known as “The Villas” at El Camino Real as set forth in City Council Resolution No 93-297, dated October 26, 1993, and as amended by paragraph 3 below. 3. That the City Council hereby amends Resolution No. 93-297 to restructure the financial assistance for the Villas at El Camino Real Affordable Housing Project as outlined below: a. The City shall provide the approximate cash equivalent of previously approved City assistance in exempted/deferred fees ($2.4 million) in the form of a loan from the Village Redevelopment Agency. The loan shall be funded by Redevelopment Low-Moderate Income Housing Set-Aside Funds and Redevelopment Tax Increment Funds. The loan will allow the project to pay the city fees from bank construction financing. Repayment (with interest) of the loan shall occur during the project’s operation phase from surplus cash and sale of affordable housing credits. b. The City shall defer payment of all other city-controlled fees to Certificate of Occupancy. :... C. The city shall waive Park In-Lieu Fees for the project based on existing surplus park dedication within the Southwest Quadrant by the Aviara Master Plan. d: The city shall permit the use of up to $500,000 of project cash flow and/or proceeds from sale of Affordable Housing Credits for reserves or guarantees as required by other financing sources. PASSED, APPROVED, AND ADOPTED at a regular meeting of the City Council of the City of Car&bad, California, held on the 22nd day of March, 1994, by the following vote, to wit: AYES: Council Members Lewis, Stanton, Nygaard, Finnila NO&S: None ABSENT: Council Member Kulchin ABSTAIN: None ATTEST: ALETHA L. RAUTENKRANZ, City Clerk (SEAL)