HomeMy WebLinkAbout10/19/2005 - STAFF REPORTS (10) i
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C,q<lFORN�P CRA Staff Report
DATE: October 19, 2005 CONSENT CALENDAR
SUBJECT: APPROVAL OF A RESOLUTION SUPPORTING AN APPLICATION BY
LINC HOUSING CORPORATION AND TAHQUITZ COURT
APARTMENTS, L.P. A CALIFORNIA LIMITED PARTNERSHIP, TO THE
CALIFORNIA DEBT LIMITATION ALLOCATION COMMITTEE FOR
PROJECT FINANCING OF THE ACQUISITION (REFINANCING) AND
REHABILITATION OF THE 108-UNIT TAHQUITZ COURT
APARTMENTS, AND THE CONSTRUCTION OF A NEW 2,800 S.F.
COMMUNITY ROOM AT 2800, 2890, 2900 and 2990 EAST TAHQUITZ
CANYON WAY, INCLUDING AGENCY FINANCIAL PARTICIPATION
NOT TO EXCEED $2,800,000 IN GAP FINANCING OVER 10 YEARS;
AND TO DIRECT STAFF TO DRAFT AN OWNER PARTICIPATION
AGREEMENT ("OPA").
FROM: David H. Ready, City Manager
BY: Community & Economic Development Department
SUMMARY
The owners of the Tahquitz Court Apartments, Corporate Fund for Housing ("CFH"),
d.b.a., LINC Housing Corporation of Long Beach, CA ("LING Housing"), the newly
formed California limited partnership of Tahquitz Court Housing Partners, L.P. and its
managing general partner/developer, LINC Housing (collectively, the "Developer"),
intend to apply for tax-exempt bonds and California 4% Low Income Housing Tax
Credits for the refinancing, rehabilitation and construction of a new 2,800 s.f. community
room. The combination of this financing is designed to update and modernize the
apartment complex, as well as incorporate energy-efficiency improvements, at a hard
cost of approximately $50,000 per unit. This project retains and upgrades 107
affordable housing units as rent- and income-restricted units, plus one unit reserved for
the complex's management office. The project's affordability restriction would be
extended an additional 38 years (2061) beyond the remaining 18 years (2023), totaling
515 years of affordability.
In developing several financing and rehab scenarios, the Developer has identified three
rehab scenarios based on the bond/4% tax credit financing structure, with a gap
correlated to the amount of rehab done on the project. The unfunded (by the state)
gaps ranged from about $2,000,000 on the low end to over $4,000,000. Based on
discussion with the Developer, staff was willing to recommend a gap-financing structure
that would be paid out by the Agency over several years, not to exceed $2,800,000 paid
over that period of time. The project could require somewhat less assistance if the
Developer is successful in being awarded HOME funds through Riverside County, as
ITEM N0.
1
CRA Staff Report
October 19, 2005 - Page 2 of 2
Tahquitz Court Apartments
Vista Sunrise and Coyote Run did, though the County has indicated that other
geographic areas may have a higher priority at this time due to the success of our two
prior projects. The purpose of this resolution is to demonstrate to CDLAC the Agency's
commitment to providing the gap financing of the project, though the precise terms of a
deal will be included in an Owner Participation Agreement that would be brought to the
Agency for approval if the project receives its bond and 4% Tax Credit allocations.
RECOMMENDATION:
Adopt Resolution No. , "OF THE COMMUNITY REDEVELOPMENT AGENCY OF
FIE CITY OF PALM SPRINGS, CALIFORNIA APPROVING A RESOLUTION
SUPPORTING AN APPLICATION BY LINC HOUSING CORPORATION AND
TAHQUITZ COURT APARTMENTS, L.P. A CALIFORNIA LIMITED PARTNERSHIP,
TO THE CALIFORNIA DEBT LIMITATION ALLOCATION COMMITTEE FOR
PROJECT FINANCING OF THE ACQUISITION (REFINANCING) AND
REHABILITATION OF THE 108-UNIT TAHQUITZ COURT APARTMENTS, AND THE
CONSTRUCTION OF A NEW 2,800 S.F. COMMUNITY ROOM AT 2800, 2890, 2900
and 2990 EAST TAHQUITZ CANYON WAY, INCLUDING AGENCY FINANCIAL
PARTICIPATION NOT TO EXCEED $2,800,000 IN GAP FINANCING OVER 10
YEARS; AND TO DIRECT STAFF TO DRAFT AN OWNER PARTICIPATION
AGREEMENT ("OPA").
STAFF ANALYSIS:
Tahquitz Court is a 108-unit garden-style family apartment project situated on
approximately 5A acres, comprised of a campus of 10 buildings, each a two-story walk-
up of wood frame, slab-on-grade construction. The project is located on Tahquitz
Canyon Way adjacent to City Hall and is a short walking distance to personal services,
public transportation, schools and shopping. It consists of 17 one bedroom/one bath
units of approximately 700 square feet, 37 two bedroom/1.5 bath units of approximately
864 square feet, 38 two bedroom/2 bath units of approximately 1,089 square feet, and
16 three bedroom/2 bath units of approximately 1,390 square feet. The complex
features two swimming pools, two spas, central laundry facilities, and covered parking.
Individual units feature central heat and air conditioning, dishwashers, double sinks with
garbage disposals, breakfast bars, separate linen closets and private balconies or
patios.
CFH, a California 501(c)(3) non-profit public benefit corporation, acquired the property
from Redlands Federal Bank (now CitiBank) which itself acquired the property through
foreclosure in 1992. Originally constructed circa 1963, through the 1980's Tahquitz
Court had fallen into disrepair in the hands of previous owners who operated it as a
market-rate project with no subsidized or designated affordable units.
On February 3, 1993, the Housing Authority of the City of Palm Springs adopted
Inducement Resolution No. 26 expressing its intent to issue tax-exempt bond financing
for the acquisition and rehabilitation of the Tahquitz Court Apartments, formerly the San
Carlos Apartments.
CRA Staff Report
October 19, 2005- Page 3 of 3
Tahquitz Court Apartments
In August 1993, the Community Redevelopment Agency of the City of Palm Springs
approved Resolution 894 and 894A authorizing a $590,000 grant and transferring
Housing Set-Aside funds for the purpose of rehabilitation costs and bond issuance
costs.
In conjunction with CFH's acquisition of Tahquitz Court in September 1993, a
substantial rehabilitation program under Redlands' ownership was completed. CFH
was then able to reposition the property by lowering rents to attract and retain low- and
very low-income families. This project aided the City in meeting its' Regional Housing
Needs Assessment (RHNA) numbers for very low, low and moderate income housing of
325 units between 1989 and 1994. Eighteen (18) years remain of the initial 30-year
affordability condition as regulated in the August 1993 Regulatory Agreement.
While Tahquitz Court continues to serve the needs of low-to-moderate income
individuals and families in Palm Springs, there now exists an opportunity to improve the
project and thus the living standards of its residents. Using a combination of low-
income housing tax credits through the California Tax Credit Allocation Committee
(TCAC) and tax-exempt bond financing through the California Debt Limit Allocation
Committee (CDLAC). CFH, through its parent company LINC Housing, proposes to
eimbark on a $16 million refinancing and rehabilitation program designed to update and
modernize the units, as well as incorporating energy-efficiency improvements, and to
ensure affordable housing choice for the long term.
The terms of the loan, as proposed, is that the Agency would front-load $800,000 at the
close of the bond- and tax credit financing, and then pay the Developer the amount of
$200,000 over 10 years. The $200,000 would be used to retire a Series B short-term
(10 year) note sold with the Series A bonds, which would have a present value of
approximately $1,350,000. Therefore, the present value of the Agency assistance is
approximately $2,100,000. All Agency financial assistance is in the form of a note,
which would start at $800,000 and increase in amount by the annual $200,000
payment; the note provides the Agency security for the Regulatory Agreement which
contains the affordability provisions and other performance requirements. The interest
note on the Agency note would be 1% simple interest, payable from residual receipts on
the project (the Agency would be in third position behind the bonds and MHP) and for a
period of 55 years.
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FISCAL IMPACT: (Finance Director Review:,� ,,,-°""�'i`=`
The final financing structure for the project will be inc�ded in the OPA, though the
Developer has asked for a commitment of up to $2.8 million for the gap financing. The
Developer would be able to finance the Agency's commitment over the short term (up to
10 years); a proposed structure is that the Agency front-load a portion of its commitment
— an amount of $800,000 — with the remainder spread over the next ten years at
$200,000 per year. The Agency's current annual Housing set-aside funds is
approximately $1,200,000 and is growing at about $100,000 per year. Since all of the
units currently are, and would continue to be, restricted to low- and very-low income
residents, the Agency per-unit subsidy would be about $26,000.
C:RA Staff Report
October 19, 2005- Page 4 of 4
T'ahquitz Court Apartments
The Agency would reduce its commitment if the project was successful receiving HOME
funds, though not dollar-for-dolla�, since part of the desire to receive the HOME funds
would be to ma_ke up the presen value shortfall due to our proposed financing structure.
//�G�L !!
J HN . RA OND DALE E. COOK, JR.
C't ec of Community & Economic Development
evelopment Community Development Administrator
TFfbMAS J. �VI SON �
Assistant Cit anager, Develop ent
DAVID H. READY
City Manager
Attachment: General Description of Scope of Work
Site Plan
Resolution
LINC Housing Corp September 19, 2005 Request Letter
DaleC/Housing/'rahq u itzCrtApt_CRA_StaffReport_OPA.Oct05
General Description of the Overall Scope of Work
P P
Tahquitz Court is a 108-unit apartment complex located in Palm Springs. It is built on a
4.8 acre site which is relatively flat. It consists of 10 two-story buildings, 107 carport
parking spaces, two laundry rooms, two pools, a whirlpool, and landscaped areas.
A preliminary physical needs assessment reveals that the property has adequate structural
integrity. Electrical and water systems are also in good shape and will require only minor
changes. There will not be any modifications to the unit configurations, unit mix or use
of the property.
The main improvements will be to overhaul the bathrooms and kitchens. In particular
replace and or refurbish floors, tub/showers, faucets, sinks, countertops and cabinets. We
will at a minimum replace the upper sliding glass doors and windows, and would like to
replace all windows. We will insulate ceilings, replace HVAC systems, renovate the
deteriorating fagade, and to make the property more ADA and Universal Design friendly
were possible.
The rehabilitation will also add a new connnunity room and a play area for children.
HVAC systems will be resized to respond to the new insulation improvements. Material
and systems will be selected that improve the indoor air quality inside the units.
Landscape will be redesigned to include indigenous plant material, water dependent
landscaping will be replaced.
Electrical appliances, light fixtures, and water fixtures will be specified that will waste
the least aniouut of energy and natural resources as possible.
Physical Needs Assessment is currently underway and should be available in November.
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Resolution No.
OF THE COMMUNITY REDEVELOPMENT AGENCY OF
THE CITY OF PALM SPRINGS, CALIFORNIA
SUPPORTING AN APPLICATION BY LINC HOUSING
CORPORATION AND TAHQUITZ COURT APARTMENTS,
L.P. A CALIFORNIA LIMITED PARTNERSHIP, TO THE
CALIFORNIA DEBT LIMITATION ALLOCATION
COMMITTEE FOR PROJECT FINANCING OF THE
ACQUISITION (REFINANCING) AND REHABILITATION OF
THE 108-UNIT TAHQUITZ COURT APARTMENTS, AND
THE CONSTRUCTION OF A NEW 2,800 S.F. COMMUNITY
ROOM AT 2800, 2890, 2900 and 2990 EAST TAHQUITZ
CANYON WAY, INCLUDING AGENCY FINANCIAL
PARTICIPATION NOT TO EXCEED $2,800,000 IN GAP
FINANCING OVER 10 YEARS; AND TO DIRECT STAFF
TO DRAFT AN OWNER PARTICIPATION AGREEMENT
("OPA").
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 funds are earmarked for the acquisition, construction, or
rehabilitation of affordable housing to benefit the community; and
WHEREAS, the owners of Tahquitz Court Apartments, the Corporate Fund for
Housing ("CFH"), d.b.a., LINC Housing Corporation of Long Beach, CA ("LINC
Housing"), the newly formed California limited partnership of Tahquitz Court Housing
Partners, L.P. and its managing general partner/developer, LINC Housing (collectively,
the "Developer"), intend to apply for tax-exempt bonds and California 4% Low Income
Housing Tax Credits for the refinancing, rehabilitation and construction of a new 2,800
s.f. community room and have sought Agency financial assistance to cover a portion of
the development cost; and
WHEREAS, pursuant to the California Community Redevelopment Law (Health &
Safety Code § 33000 et seq.), the City of Palm Springs ("City") pursuant to a resolution
adopted July 20, 2005, approved the issuance of tax-exempt bonds on behalf of LINC
Housing Corporation ("Developer') for the acquisition and rehabilitation of the affordable
108 unit multifamily rental apartment complex to remain affordable for a period of 55
years (the "Project') located in the City of Palm Springs at 2800, 2890, 2900 and 2990
East Tahquitz Canyon Way; and
WHEREAS, the Developers will submit a Low Income Housing Tax Credit
(LIHTC) application to the California Tax Credit Allocation Committee for the December,
2005 application, and shall apply for state Multifamily Housing Program (MHP) funds for
the development of the project and HOME funds through Riverside County; and
WHEREAS, the owners still agree to continue to restrict, though a Regulatory
Agreement approved as an attachment to the OPA, the rents on 100% of the existing
units (107) to levels affordable to families with incomes no more than 60% of Area
Median Income (AM I) for a period of 55 years; and
WHEREAS, the Owner Participation Agreement between the Agency and
Developer shall be drafted after the Project has received a commitment of bonds and
tax credits, and return to the Agency for approval; it shall provide for assistance by the
Agency to the Project in the form of subordinated loans to be repaid from Project
revenues.
NOW, THEREFORE, BE IT RESOLVED, by the Community Development
Agency of the City of Palm Springs, as follows:
1. The Agency hereby approves of the Developer' Application for a 4% Low
Income Housing Tax Credit allocation through the California Tax Credit
Allocation Committee.
2. The Agency offers its approval of a Note to the Developer on behalf of the
Project, subject to the successful negotiation of an Owner Participation
Agreement, on the following terms: (i) the Agency shall provide an initial loan
of $800,000 upon the successful completion of the bond closing; (ii) the
Agency shall make loan annual advances to Developer of $200,000 per year
for 10 years for the purpose of retiring a Series B bond; (iii) the note provides
the Agency security for the Regulatory Agreement which contains the
affordability provisions and other performance requirements; the interest on
the Agency note shall be 1% simple interest, payable from residual receipts
on the project; and the note shall be for a period of 55 years.
3. Agency staff is directed to bring an Owner Participation Agreement to the
Agency containing the above terms upon a successful bond- and tax credit
allocation by the Developer.
4. The Executive Director is hereby authorized and directed, on behalf of the
Agency, to execute all documents, including applications or letters of intent or
commitment, related to the Project and the purposes of this Resolution.
5. The adoption of this Resolution shall not obligate (i) the City to provide
financing to the Developer for the acquisition or development of the Project or
to issue the Bonds for purposes of such financing; (ii) the City, Agency, or any
department thereof, or the City, or any department thereof, to approve any
application or request for, or take any other action in connection with, any
environmental, General Plan, zoning, or any other permit or other action
necessary to effectuate the Project.
6. This resolution is being adopted by the Agency for purposes of stabling
compliance with the requirements of Section 1.142-4 and Section 1.150-2 of
the United States Treasury Regulations and for the purpose of inducing the
Developer to undertake the acquisition and development of the Project.
ADOPTED this day of 2005.
AYES:
NOES:
ABSENT:
ATTEST: COMMUNITY REDEVELOPMENT AGENCY
CALIFORNIA OF THE CITY OF PALM SPRINGS,
By
Assistant Secretary Chairman
REVIEWED & APPROVED AS TO FORM
September 19, 2005
Mr. John S. Raymond
- ub
Director of Community & Economic Development II0Pilll,,Awiluc,`,uiie-00
Community & Economic Development Dept. A9W02_,,i2,
City of Palm Springs I
3200 E. Tahquitz Canyon Way Fjc inljio,, s�)1-t3_ 10
ww,% Iinchonnim�.at�
Palm Springs, CA 92263-2743
RE: Tahquitz Court - --------
st.iwiN6
OlJ:�
U(Al%'III'�IfRFti
Dear Mr. Raymond: I I iRtiiva I
I KX YNG
Thank you for meeting with LINC Housing Corporation last week
regarding our Tahquitz Court development. We truly appreciate
your support, and are very excited about the rehabilitation of this �zxz1's}«`�'``�r iclRs
apartment community and the addition of a community center. We ihrm I John.»,
look forward to working with you, the City of Palm Springs and the hw%idcm
citizens of the surrounding neighborhood to achieve our mutual k I ;, el
goals.
We have reviewed the State of California's Multifamily Housing 3 A I)1R ,,CIOKS
Program (MHP) Notice of Funding Availability (NOFA) and as we
discussed last week the City's financial support is critical to Aha Du; ,(11a!r
securing an MHP allocation. In an effort to submit a competitive 'kimc,E viw Ci lir
application and leverage MHP funding in the October 2005 round,
we would like to submit a request for loan funds to cover the °" L, m
srcro�ai,
financial gap. Specifically, we request funding for acquisition,
construction and term financing structured as follows: i) an
$800,000 loan to Tahquitz Court Housing Partners, L.P., to be I rud <i,< , . Vast t h n:r
repaid from residual cash flow over a term of 55 years at 1% R;chard\, ile ci
simple interest; and, ii) a $2,000,000 commitment to be funded
annually in 10 equal installments beginning on the one year
anniversary of the closing of the tax-exempt bond issuance, which
we anticipate will be in 2006. The proceeds of such commitment �,,� Ir,,,di; o,,
would be used to repay a third party lender who would agree to N4101licif"Imilla
loan the $2,000,000 up-front to Tahquitz Court Housing Partners,
L.P. Rohor J.Non
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In addition, for purposes of the MHP application, we request that
the: existing $354,000 balance of the Grant in Trust originally
provided by the City be re-written as a new loan to Tahquitz Court
Housing Partners, L.P., with payment deferred for 55 years. This
particular request would not require any new funds from the City,
but is merely a restatement of existing funds already disbursed,
albeit for a longer term.
We believe the most beneficial structure would be to add the existing $354,000 to the new
$800,000 request, and call it a new $1,154,000 loan, though technically only $800,000
would in fact be new.
As the MHP application is due on October 10, 2005 we would be very grateful if you would
agendize this request for approval by the City Council at its hearing scheduled for
September 28th or October 5th. Attached for your review is a scope of work reflecting a
$6.4 million rehab budget, a pro forma financial projection, and a current, independent
appraisal supporting the acquisition price of $6 million.
It is noteworthy that of the $6 million acquisition price, Corporate Fund for Housing (LINC's
affiliate) will be contributing $2.9 million of capital in the form of either subordinated debt or
a long-term land lease. The remaining $3.1 million acquisition price will be financed by a
combination of tax-exempt bonds, tax credit financing and City funds, which will be used
specifically to repay the existing $3.1 million mortgage.
Should you have any questions or need any additional information, please do not hesitate
to contact me. I can be reached in the office at 562-684-1101 or you can call Johanna
Gullick at 562-684 1102 or on her mobile at 310-503-3876.
Respectfully,
Hunter L. Johnson, President
LINC Housing Corporation
Enclosures
Cc: Dale E. Cook, Jr., Community Development Administrator
Johanna Gullick, Director of Housing Development