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HomeMy WebLinkAbout7/25/2007 - STAFF REPORTS - RA.2. O�pALMS, e + 41 u m w w R Hf'peMrt¢ nY w rqt lFORN,P Community Redevelopment Agency Staff Report DATE: JULY 25, 2007 LEGISLATIVE AGENDA SUBJECT: AMENDMENT NO. 2 TO IMPLEMENTATION AGREEMENT WITH VISTA SUNRISE APARTMENTS, LP, AND MBA DEVELOPMENT CORP. TO ALLOW $55,000 OF THE PUBLIC IMPROVEMENTS HOLDBACK TO BE USED TO INCREASE AND ENHANCE THE MECHANICAL SCREENING AND LANDSCAPING ALONG THE VISTA CHINO ROAD/HIGHWAY I I I FRONTAGE; AND, APPROVING A CHANGE ORDER WITH DATELAND CONSTRUCTION IN AN AMOUNT NOT TO EXCEED $90,000 FOR THE CONSTRUCTION OF THEIMPROVEMENTS FROM: David H. Ready, Executive Director BY: Community & Economic Development Department SUMMARY: This Amendment allows for the funding of landscaping and screening enhancements at the Rick Weiss Apartments along Vista Chino Road. The intent of this Amendment was to accommodate the City's desire to screen the ground floor HVAC units and add additional landscaping to the Vista Chino frontage. Staff, the architect and the Developer have worked for the past several months to find a solution to these issues. In the beginning, staff and the Developer believed that screening of the HVAC units, in combination with increased landscaping, would be a satisfactory fix. The architect designed a fence and redesigned the landscaping several times to accommodate various stakeholders" requests. This latest design incorporates the Agency Board's input and fulfills its desire for aesthetic screening of the HVAC units as well as additional landscaping in the project, and improves the quality of the development for the residents. It does not, however, provide any security enhancements to the project, which are being addressed by the Developer on the interior of the project. The mesh screen has been replaced by a 4' high masonry wall along the sidewalk, constructed with the same block as the block wall already installed for the project signage. The location of the wall will vary in curvilinear intervals of 40 feet to 60 feet in length. (See attached ITEM NO. 12- i i Community Redevelopment Agency t July 18,2007 Page 2 exhibit). At the breaks between the wall sections there will be tree and bench ' pockets shaped by wrought iron fence with the same specification as the fence already installed around the pool. The fence and walls are the same materials already used in the project, and the use of the block wall closer to the street separates the entire parkway and ground floor apartment units from the public space. The grade adjacent to the sidewalk is higher than the buildings, so the wall will be perceived as higher than the actual height both by the cars and the residents and provide better screening. As for the landscape, the architect has dropped the ocotillos, which were criticized by the Agency Board. The revised proposal is to keep the sycamore trees and add Texas ebony trees (see attached) to the landscaped areas and bougainvilleas as a buffer against the building. The final design will further be developed by the landscape architect. In terms of project financing, Staff proposes to keep the Amendment to the Agreement relatively close to what was proposed on May 23 and June 20, with a few changes based on changed circumstances: • Allow the project to allocate $55,000 from the street improvement line item to a different eligible basis line item. This allows the project to add $55,000 towards tax-credit-eligible costs and thus increases the amount of tax credits and equity to the project. • Add the wall/landscaping scope of work as a change order to the existing contract awarded for the street improvements. The Agency would fund the landscaping and wall project with the Developer's $20,000 contribution and the Developer will grant the Agency access to its property to complete the project. • Amend the Implementation Agreement to reflect above. This allows the swapping of the funds, allows the project to keep the tax credit basis in the project as indicated in the finalized cost certification, and does not put the project at risk for any loss of eligible basis and tax credits. It also does not generate any other additional loan documentation and therefore does not delay the permanent closing timeframe. These issues are discussed below. RECOMMENDATION: COMMUNITY REDEVELOPMENT AGENCY RECOMMENDATION: 1. Adopt Resolution No. "A RESOLUTION OF THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF PALM SPRINGS, CALIFORNIA, APPROVING AMENDMENT NO. 2 WITH VISTA SUNRISE APARTMENTS, LP AND MBA DEVELOPMENT CORP. TO ALLOW $55,000 8600+9L Community Redevelopment Agency July 18,2007 Page 3 OF THE PUBLIC IMPROVEMENTS HOLDBACK TO BE USED TO INCREASE AND ENHANCE THE MECHANICAL SCREENING AND LANDSCAPING ALONG THE VISTA CHINO ROAD/HIGHWAY 111 FRONTAGE 2. Adopt Resolution No. "A RESOLUTION OF THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF PALM SPRINGS, CALIFORNIA, APPROVING A CHANGE ORDER WITH DATELAND CONSTRUCTION IN AN AMOUNT NOT TO EXCEED $90,000 FOR THE CONSTRUCTION OF THE IMPROVEMENTS 3. AUTHORIZE THE EXECUTIVE DIRECTOR TO EXECUTE ALL DOCUMENTS RELATED TO THE AGREEMENT STAFF ANALYSIS: This Amendment allows for the funding of landscaping and screening enhancements at the Rick Weiss Apartments along Vista Chino Road, developed by Desert AIDS Project and McCormack Baron Salazar, Inc. In completing the project the City overlooked several aesthetic elements of the project, including the screening of the at-grade air conditioning compressors and the landscaping facing Vista Chino Road. The intent of this Amendment was to accommodate the City's desire to screen the ground floor HVAC units and add additional landscaping to the Vista Chino frontage. Staff, the architect and the Developer have worked for the past several months to find a solution to these issues. In the beginning, staff and the Developer believed that screening of the HVAC units, in combination with increased landscaping, would be a satisfactory fix. The Agency discussed the item at its May 23, 2007 meeting and directed staff to discuss with Desert AIDS Project and the Developer the possibility of sharing in the cost of the improvements. The Developer has agreed to fund $20,000 of the landscaping improvements, but Desert AIDS Project, which did not participate in the project financing, was unable to contribute toward the aesthetic improvements without jeopardizing client services. The architect designed a fence and redesigned the landscaping several times to accommodate various stakeholders' requests, including the property manager, the residents, and the Agency Board. Previous proposals included additional a total of 18 sycamore (36" box) trees with 21 ocotillos added to the project in order to soften the mass of the building as viewed from the street. The shrubs around the air conditioning units were to be relocated outside of the new fence line so that they could be perceived along Vista Chino. 0&000LP 0 Community Redevelopment Agency July 18,2007 Page 4 Based on input from the Agency Board, the architect has dropped the ocotillos, and clustered the sycamore trees with Texas ebony trees (see attached) in the landscaped areas described below and added bougainvilleas as a buffer against the building. The final design will further be developed by the landscape architect. This latest screening design incorporates the Agency Board's input and fulfills its desire for aesthetic screening of the HVAC units, some barrier against nuisances at the windows, and additional landscaping in the project. The point needs to be made that these improvements do not address any security issues in the project, except to separate the property from the street via a low block wall and some aggressive landscaping against the windows. The larger security issues are being addressed by the Developer on the interior of the project. The project will not introduce new metallic mesh fencing. Because of the drainage swale along the Vista Chino, the room to locate an effective fence with appropriate footings between the top of the slope and the air conditioner was limited, anyway. The mesh screen has been replaced by a 4' high masonry wall along the sidewalk, constructed with the same block and at the same height as the block wall already installed for the project signage. The location of the wall will vary in curvilinear intervals of 40 feet to 60 feet in length. (See attached exhibit). At the breaks between the wall sections there will be tree and bench pockets shaped by wrought iron fencing with the same specification as the fence already installed around the pool, and which will feature the clusters of sycamore and Texas ebony. The architect's estimate of costs for the new project is: Architect's Cost Estimate Item Units Unit Cost Total Block Wall 360 Lf. $75.00/I.f. $27,000.00 Wrought Iron 180 Lf. $40.00/l.f. 7 200.00 Subtotal $34,200.00 GC & GR $10,260.00 Profit & Overhead $5.130.00 Subtotal $40,590.00 Contingency 15% 7 438.00 Grand $57,028.00 Total Landscape — Est. $30,000M $87,028.50 The fence and walls are the same materials already used in the project, and the use of the block wall closer to the street separates the entire parkway and ground floor 05000L� Community Redevelopment Agency July 18,2007 Page 5 apartment units from the public space. While the City has changed its policy with regard to drainage "moats," the basin in this project cannot be removed without redesigning the project's drainage. In addition, the grade adjacent to the sidewalk is higher than the buildings, so the wall will be perceived as higher than the actual height both by the cars and the residents and provide better screening. Project Financing The original Implementation Agreement and subsequent DDA Amendments dealt with the issue of the offsite improvements by reserving $125,000 of the original $1,300,000 Agency cash contribution toward the estimated $250,000 cost of the offsite improvements, to be shared with the County of Riverside as it develops its Family Care Center on the same campus. The estimated cost of the additional masonry walls and upgraded landscaping is approximately $105,000 (including design fees), of which $55,000 would be released from the $125,000 to be used for this purpose. The Developer will contribute $20,000 toward these costs. The City Council approved the plans, specifications and estimates of the offsite improvements at its May 2, 2007 meeting and awarded the off-site contract to Dateland Construction on June 20; the $55,000 to be used for screening and landscaping from Agency funds would be replaced in that offsite improvement project with Merged Project Area #1 funds. The Amendment's benefits to the project is that the project would retain the $55,000 "holdback" as tax-credit-basis eligible costs, which increases its potential equity, and not incur new debt for the additional work. Currently, as with most low income housing developments, the project currently has six soon-to-be-permanent loans. A new loan would be in seventh position. Staff had earlier proposed a new loan for the entire project cost, but new debt at this stage in the project's financing cycle is extremely problematic. While the project doesn't have the cash flow to repay another loan, encumbering the project with a new loan (even fully subordinated) would also require approval from every other lender in the project (CaIHFA, MHP, SunAmerica, County of Riverside, and the AHP lender). Lender approval for this type of request can be lengthy: approval would require the Agency loan documents to be created, distributed to all the lenders', Managing General Partner's, and Development General Partner's attorneys for review and editing by all the attorneys and then resent to the lenders for approval -- all in the span of less than 2 weeks to meet the permanent financing closing date of August 13. Moreover, encumbering a new loan on the project also would require the Limited Partnership Agreement, the County HOME Loan Agreement, and the MHP and UH00D5 Community Redevelopment Agency July 18,2007 Page 6 CaIHFA loan documents to be amended as well, with a similar set of steps noted above. Per the tax credit agreement, the project would also need to demonstrate that it can actually pay off the loan in the specified time period of 45 years. Because the project is 100% affordable special needs housing it does not have the cash flow necessary to pay off a seventh loan. An investment value appraisal from an independent accounting firm would need to be completed (at a fee), which would still have to reviewed and approved by the equity investor. Amending the Implementation Agreement would allow the project to allocate $55,000 from the street improvement line item to a different, tax-credit-basis-eligible, line item. (Off-site improvements are not eligible tax-credit basis costs, but the wall and landscaping are.) This allows the project to add $55,000 towards tax-credit-eligible costs and thus increase the amount of tax credits and equity to the project. The remaining balance of the street improvement line item in the project would be approximately $27,000. However, the entire remaining $82,000 in the street improvement line item has already been allocated to the contract with Dateland Construction awarded on June 20 for the street improvements. The project had previously spent $43,000 in the "street improvement" line item (part of the original $125,000 holdback) to receive the Caltrans permit to start the work, including engineering, design and permit costs. This Amendment also does not generate any other additional loan documentation and therefore does not delay the permanent loan closing timeframe. If the Agency decides to not move forward on the aesthetic improvements, the Developer at this point would need to remove the $55,000 previously allocated to an eligible basis line item from the tax credit basis, costing the project equity. If the Agency approved the cost items but required new debt, the project would lose the $55,000 in eligible tax credit basis, and thus a reduced tax credit award, since this will take place after the cost cut-off date for certification purposes. The cost certification required to close the permanent loan and request the tax credits from TCAC was finalized in early July. If the project added an additional source as a loan and removed $55,000 from eligible basis, the cost certification would have to be redone at an additional fee of approximately $20,000, and a minimum of one month delay to revise the cost certification from the time all the loan documents are approved, since the accountants require written verification that is in fact the case since they are certifying to TCAC all of the project's costs, sources, and uses. It would also require the project borrow money that it does not have the residual receipts cash flow to pay back and that will not even count towards eligible basis line items. 0600bt'3 Community Redevelopment Agency July 18,2007 Page 7 All these steps noted above would push back the permanent closing date from the estimated Aug 13th date due to the number of entities and legal counsel involved. This would also bring further financial costs to the project in form of extension fees, approximately $15,000, to extend the CaIHFA construction loan until permanent conversion. Besides the fee, extending the loan also requires extending the Letter of Credit from the equity investor to CaIHFA (there is a fee for this also), obtaining estoppels from all lenders on the project agreeing to this extension and executing an Loan Extension Agreement from CaIHFA which also requires attorney review and approval. Similarly, the Developer would also have to ask for a loan extension request to further delay the permanent loan closing from MHP (CaIHFA's "take out" lender). This too requires MHP staff and counsel approval and estoppels from the other lender consenting to this extension as well. FISCAL IMPACT: The approval of this action would require that the Agency contribute an additional $55,000 toward the construction of the off-site improvements. The resolution approving the off-site improvement construction contract with Dateland Construction does not include this additional amount, which would be covered through Low-Mod Housing funds. The total new cost to the Agency would be approximately $85,000, which would be the total project cost including design of $105,000, less the Deve�is c tribution of$ ,000. 7m,1*s rcr Jop,n 5. ay 6.nd, Director of Tom Wil on C( ity&conomic Development Assistant City Manager TD H. READY Executive Director Attachments: 1. Resolution 2. Amendment No. 2 to the Implementation Agreement 3. Planting Plan and Conceptual Fence Plan RESOLUTION NO. A RESOLUTION OF THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF PALM SPRINGS, CALIFORNIA, APPROVING AMENDMENT NO. 2 WITH VISTA SUNRISE APARTMENTS, LP AND MBA DEVELOPMENT CORP. TO ALLOW $55,000 OF THE PUBLIC IMPROVEMENTS HOLDBACK TO BE USED TO INCREASE AND ENHANCE THE MECHANICAL SCREENING AND LANDSCAPING ALONG THE VISTA CHINO ROAD/HIGHWAY 111 FRONTAGE WHEREAS, the Community Redevelopment Agency of the City of Palm Springs (the "Agency") has established an affordable housing setaside fund in accordance with Section 33000 et. seq. of the California Health and Safety Code; and WHEREAS, the Agency and the Developer entered into that certain Restated and Amended Disposition and Development Agreement ("RADDA") dated February 15, 2005 which provided for the construction of 85 affordable housing units pursuant to the terms of the RADDA; and WHEREAS, as the parties began the implementation of the terms of the RADDA they discovered that certain assumptions concerning financing requirements and timing of the adjacent health care facility project necessitated non-material revisions for purposes of the Agency in the form of the Promissory Notes and Deeds of Trust which have to be clarified but which do not affect the Agency's basic financial contribution to the Project or the Scope of the Project; and WHEREAS, the Agency and the Developer entered into that certain Implementation Agreement ("Original Agreement ") approved May 18, 2005, for purposes of clarifying the parties' understandings of how the RADDA will be implemented and to make certain non-material revisions to the terms of the RADDA as more particularly set forth therein; WHEREAS, in September 2005, the Parties approved the First Amendment to the Implementation Agreement to make certain additional revisions to the financing of the Project which were which did not materially affect the Agency's basic financial contribution to the Project or materially change the Scope of the Project. WHEREAS, the Agency and the Developer now desire to approve Amendment No. 2 to the Implementation Agreement in accordance with the terms and conditions set forth in this Amendment. For purposes hereof, the Amended Agreement and this Amendment are collectively referred to as the "Agreement." MOOS Community Redevelopment Agency July 18,2007 Page 9 NOW THEREFORE BE IT RESOLVED by the Community Redevelopment Agency of the City of Palm Springs, as follows: SECTION 1. The above recitals are true and correct and incorporated herein. SECTION 2. This Amendment No. 2 to the Implementation Agreement with Vista Sunrise Apartments, LP, is hereby approved and incorporated herein by this reference. SECTION 3. The Executive Director, or his designee, is hereby authorized to execute on behalf of the Agency the Amendment No. 2 to the Implementation Agreement and other documents necessary to the Agreement, and make minor changes as may be deemed necessary, in a form approved by Agency Counsel. ADOPTED this day of 2007. AYES: NOES: ABSENT: COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF PALM SPRINGS, CALIFORNIA Chairman ATTEST: James Thompson, City Clerk 060003 CERTIFICATION STATE OF CALIFORNIA ) COUNTY OF RIVERSIDE ) ss. CITY OF PALM SPRINGS ) I, JAMES THOMPSON, City Clerk of the City of Palm Springs, hereby certify that Resolution No. is a full, true and correct copy, and was duly adopted at a regular meeting of the City Council of the City of Palm Springs on by the following vote: AYES: NOES: ABSENT: ABSTAIN: 00003. E Community Redevelopment Agency July 18,2007 Page 11 RESOLUTION NO. A RESOLUTION OF THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF PALM SPRINGS, CALIFORNIA, APPROVING A CHANGE ORDER WITH DATELAND CONSTRUCTION IN AN AMOUNT NOT TO EXCEED $90,000 FOR THE CONSTRUCTION OF CERTAIN IMPROVEMENTS AT VISTA SUNRISE APARTMENTS NOW THEREFORE BE IT RESOLVED by the Community Redevelopment Agency of the City of Palm Springs, a Change Order with Dateland Construction in an amount not to exceed $90,000 for the construction of certain improvements at Vista Sunrise Apartments, is hereby approved. ADOPTED this day of , 2007. AYES: NOES: ABSENT: COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF PALM SPRINGS, CALIFORNIA Chairman ATTEST; James Thompson, City Clerk 060011 Community Redevelopment Agency July 18,2007 Page 12 CERTIFICATION STATE OF CALIFORNIA ) COUNTY OF RIVERSIDE ) ss. CITY OF PALM SPRINGS ) I, JAMES THOMPSON, City Clerk of the City of Palm Springs, hereby certify that Resolution No. _ is a full, true and correct copy, and was duly adopted at a regular meeting of the City Council of the City of Palm Springs on by the following vote_ AYES: NOES: ABSENT: ABSTAIN: oaao�� AMENDMENT NO. 2 TO IMPLEMENTATION AGREEMENT This Amendment No. 2 to Implementation Agreement ("Amendment") is made and entered into as of May 2007 by and between the Community Redevelopment Agency of the City of Palm Springs, a public body, corporate and politic ("Agency"), and Vista Sunrise Apartments, L.P., a California limited partnership ("Developer'), with reference to the following recitals of fact: RECITALS: A. WHEREAS, the Agency and the Developer have entered into that certain Restated and Amended Disposition and Development Agreement ("RADDA") dated February 15, 2005, which provides, among other things, for the construction of 80 affordable housing units pursuant to the terms of the RADDA; B. WHEREAS, the Agency and the Developer have entered into that certain Implementation Agreement ("Original Agreement ") approved May 18, 2005, for purposes of clarifying the parties' understandings of how the RADDA will be implemented and to make certain non-material revisions to the terms of the RADDA as more particularly set forth therein; C. WHEREAS, in September 2005, the Parties approved the First Amendment to the Implementation Agreement to make certain additional revisions to the financing of the Project which were which did not materially affect the Agency's basic financial contribution to the Project or materially change the Scope of the Project. D. WHEREAS, the Agency and the Developer now desire to approve Amendment No. 2 to the Implementation Agreement in accordance with the terms and conditions set forth in this Amendment. For purposes hereof, the Amended Agreement and this Amendment are collectively referred to as the "Agreement." NOW THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth and for other good and valuable considerable considerations the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: 1. Original Agreement. The Agency and the Developer acknowledge that the Original Agreement, as amended in September 2005, is in full force and effect, except as modified by this Amendment. All capitalized terms not otherwise defined herein shall have the meaning set forth in the Original Agreement. In the event of any inconsistency between the terms and conditions set forth in the Original Agreement and the terms and conditions set forth in this Amendment, the terms and conditions in this Amendment shall control. 2. Additional Project Landscaping. The Developer has agreed to develop a plan for and install several aesthetic upgrades of the project along Vista Chino Road, including the screening of the at-grade air conditioning compressors, as well as the LA/40320e9S 1 00001 i i landscaping. The additional landscaping shall include additional sycamore (36" box) trees with Texas ebony trees and bougainvillea shrubs added to the project in order to soften the mass of the building as viewed from the street. The landscape architect will help determine final location of all new tree and plants at the time of installation and will provide tree, planting and irrigation plans. 3. Screening of "At-Grade" Mechanical Equipment on Vista Chino. The air conditioner compressors will be screened from view by a 4' high masonry wall along the sidewalk, constructed with the same block and at the same height as the block wall already installed for the project signage. The location of the wall will vary in curvilinear intervals of 40 feet to 60 feet in length. At the breaks between the wall sections there will be tree and bench packets shaped by wrought iron fencing with the same specification as the fence already installed around the pool, and which will feature the clusters of sycamore and Texas ebony. Because of the drainage swale along the Vista Chino, the room to locate an effective fence with appropriate footings between the tap of the slope and the air conditioner is limited. 4. Funding of the Improvements. The Parties agree to modify the Implementation Agreement to reflect utilizing the $55,000 from the off-sites improvement line item ("holdback") towards the costs associated with the landscaping and fence. These funds would be moved from the off-sites line item into another line item in the Development budget and accessible to the Developer for the landscaping and screening costs, including City fees and design costs, to be matched by a Developer contribution of $20,000. A total of$85,000 in new Redevelopment funds will be allocated to cover the off-site improvement costs. 5. Effect on Tax Credit Basis and Project Equity. The Parties agree that the reallocation of Agency funds, to be replaced in the public works project by Redevelopment funds, would have the least impact on project equity through a potential reduction in Low Income Housing Tax Credit basis. The existing Agency funds are already subject to the Cash Contribution Note and existing Regulatory Agreement and Deed of Trust, which do not need to be modified. 6. No Other Modifications. Except as otherwise provided herein, all other terms and provisions of the Agreement shall remain in full force and effect, unmodified by this Amendment. 7. Binding Effect. The provisions of this Amendment shall be binding upon and inure to the benefit of the heirs, representatives, successors and permitted assigns of the parties hereto. 8. Counterparts. This Amendment may be executed in any number of original counterparts. Any such counterpart, when executed, shall constitute an original of this Amendment, and all such counterparts together shall constitute one and the same Amendment. For purposes of this Amendment, facsimile signatures shall be deemed to be originals. 1A 4032M5.1 05007 (o IN WITNESS WHEREOF, this Amendment has been duly executed by the parties hereto as of the day and year written above. DEVELOPER: VISTA SUNRISE APARTMENTS, L.P., a California limited partnership By: MBA Development Corp., a Missouri corporation Its: Development General Partner By: Name: Title: By: Coachella Valley AIDS Consortium, a California nonprofit public benefit corporation Its: Managing General Partner By: Name: Title: AGENCY: ATTEST: THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF PALM SPRINGS, a public body, corporate and politic By: Executive Director LA/40320595 1 000015 ACTIVE•OES[GN CORPORATION dQ Ln r^�GIRo nh P2262 CD)3234M F, nfi 112-$303 Inencc d,juoq.mm - L7 VISTA CHI NO RD. no r' -• a -_, I _ ox�wJ 4,nt:rwr' r l+ I KEs 3995.CERACTryE 6E51GN CORPORATION ItLm onrm5mre 10 NOW 1 M'r] T(760)]2]1990 f,(7E,,)122-99B imm�.mxdeslenmrp,rum �.r