Loading...
HomeMy WebLinkAbout9/15/2004 - STAFF REPORTS DATE: SEPTEMBER 15, 2004 TO: COMMUNITY REDEVELOPMENT AGENCY & CITY COUNCIL FROM: DIRECTOR OF COMMUNITY & ECONOMIC DEVELOPMENT JOINT PUBLIC HEARING TO APPROVE AMENDED AND RESTATED DISPOSITION AND DEVELOPMENT AGREEMENT WITH VISTA SUNRISE APARTMENTS, LP, AND MBA DEVELOPMENT CORP.TO RESTRUCTURE THE AGENCY PROPERTY NOTE TO ELIMINATE NEGATIVE TAX CREDIT CONSEQUENCES TO THE PROJECT;CHANGETHE LEVEL OF PRE- DEVELOPMENT ASSISTANCE; AMEND THE PROJECT DESCRIPTION TO ALLOW FOR THE PHASING OF THE HEALTHCARE FACILITY AND THE CONSTRUCTION OF THE OFFSITE IMPROVEMENTS AT A LATER DATE; AND AMEND ITEMS IN THE REGULATORY AGREEMENT FOR THE PURPOSE OF CONFORMING THE DDA TO FEDERAL GUIDELINES FOR THE CONSTRUCTION OF THE DESERT AIDS PROJECT HIV/AIDS HOUSING PROJECT LOCATED WEST OF SUNRISE WAY SOUTH OF VISTA CHINO ROAD RECOMMENDATION: It is recommended that the City and Agency approve the Amended and Restated Disposition and Development Agreement with Vista Sunrise Apartments, LP and MBA Development Corp. to restructure the Agency Property Note to eliminate negative consequences to the project's Tax Credit basis as well as adopting a Deed of Trust to Secure the Agency Property Note;change the level of Agency pre-development assistance to the project from $75,000 to $300,000; amend the Scope of Development to require the Developer to only construct the apartment projects and the County to construct the healthcare facility, with all of the offsite improvements to be constructed at that time; and to amend the"priority rental"provisions and "ineligible tenant" provisions in the Regulatory Agreement. The DDA continues to provide $1,300,000 (One Million Three Hundred Dollars) in Agency financial assistance and the contribution of 1.23 acres of City-owned land (via the Agency) for the construction of an 85-unit low-income, special needs apartment complex serving persons with HIV/AIDS, referred to as the DAP HIV/AIDS Apartments, and the development of the Palm Springs Family Care Center,west of Sunrise Way and south of Vista Chino Road. SUMMARY: This resolution approves the Amended and Restated Disposition and Development Agreement with the developers of the Desert AIDS Project (DAP) HIV/AIDS Housing Project. The Amended and Restated DDA continues to provide total Agency assistance in the amount of$1,300,000, and contribute a 1.23 acre parcel of City-owned land (valued at $205,000) to the project. The two changes to Section C of the Regulatory Agreement were requested by the County of Riverside, which is contributing Federal HOME funds to the project. Because the County assists projects throughout its jurisdiction, including cities in Riverside County, it normally requests that local preferences for rental priority be removed; in addition, the County had concerns that the Agency's original termination provisions(for over-incomeresidents)ran afoul of the Federal regulations governing HOME funds, thereby jeopardizing the project's compliance. The Agency Property Note is being restructured to reduce the tax consequences of an "annual forgiveness" provision of the original note but to reduce the risk of the end-of-term forgiveness would have on the C " project's tax credit basis. Additionally, since the County has elected to take a more active role in the development and construction of the Family Care Center, rather than the Developer, the DDA is amended to separate it from the portion of the Vista Sunrise project that is the Developer's responsibility. Because of the effect the phasing has on the financial sharing of the offsite improvement costs, the Project Scope be amended to relieve the Partnership from the responsibility of developing the offsite improvements,though$125,000 of the $1,300,000 in Agency commitment will be retained by the Agency for the project's offsite improvements,which will be constructed when the Family Care Center is developed. BACKGROUND: Agency members are familiar with the project as proposed by Desert AIDS Project and McCormack Baron Salazar, Inc.,which was approved bythe City Council in July 2003 along with the original DDA. The project consisted of a County-run Family Care Center and 85- units of special needs housing restricted to residents with HIV/AIDS. A DDA Amendment was approved on November 19, 2003 that changed the terms of the Note somewhat to conform to the State's MHP Program and to clarify language the Deeds of Trust (adding an Agency Property Note for the land value, for example). This Amendment does not provide for any additional assistance, though it restructures the Agency Property Note and allows the Developer to draw additional pre-development funds for architecture,engineering and permitting up to a total of$300,000(they've already drawn the$75,000 allowed under the current DDA). The Agency Property Note,which was added in Amendment No. 1, is for$205,000 and was annually forgiven based on compliance. The annual forgiveness creates some tax consequences for the project,so the Developer asked for the forgiveness be given in the 55`h year. Because the Note bears 3% simple interest, however, there is a risk that the forgiven amount ($543,250) could be considered a grant and therefore reduce the project's Tax Credit basis, thereby reducing the amount of Tax Credit financing it could obtain up front. Therefore, the note is to be restructured in two ways: (1) the interest shall be reduced to zero, but (2) the annual forgiveness shall be replaced with a forgiveness of the remaining balance (rather than the entire accrued amount) in the 551h year, and (3)the note shall be a "residual receipts" note payable out of cash flow behind the MHP, the County and Agency primary notes. The changes to the Regulatory Agreement have been requested by the County of Riverside, one of the funders of the project with Federal HOME funds ($1,500,000): in Section C of the Regulatory Agreement, the Agency's Rental Priority will be amended to extend only to only those eligible tenants that are displaced by Agency activity in the project area, as required by Section 33411.3 of the Health and Safety Code (California Redevelopment Law). Changes to the termination provisions for over-income residents to conform to Federal regulations (24 CFR Part 42, Subpart C) will allow over-income (over 60% of median) to remain in the project provided their income does not exceed 140% of median. Any of the Agency's restricted units (the Agency restricts only 49% of the project) which has a tenant more than 140% of median income after the 24 month Grace Period shall be replaced with a low- or very-low income unit from the balance of the project. As a way of breaking the land negotiation stalemate between the Developer and Desert Healthcare District, which is contributing the bulk of the land, the County will lease the Healthcare District parcel and process the necessary lot line adjustments through the City. The County will then sublease the apartment site to the Developer. The Agency will Grant c (%CL -C Deed its property to the Partnership or to the non-profit General Partner (Desert AIDS). The County will then separately work on the development of the health care facility, which is the motivation of the Desert Healthcare District. The County is interested in taking more of an active role in the development of the health care facility, including perhaps bidding it as a County project, which satisfies a concern of the District. The Agency is satisfied that the land deal between the District, the Partnership, and the County has been resolved and the project can move forward. The other terms of the DDA remain the same. Concurrent with the close of financing, the Agency will Grant Deed the property to the Partneship or the General Partner. The Agency will retain reverter rights if the Developerfails to proceed or complete the project and record a Deed of Trust against the property to ensure compliance with the terms of the amended DDA. The special needs housing project has not changed and the Developer commits to building the project as proposed, including the architectural upgrades, noise buffering, quality landscaping, and other components. The project shall remain restricted to residents with HIV/AIDS; the case management services shall be provided by Desert AIDS Project. A Regulatory Agreement with the Agency will assure that the units will count towards the City's low and moderate income housing goals. The project has received nearly all of its financing, with the exception of its 4%Tax Credits; the deadline to apply for those through the state Tax Credit Allocation Committee is December 1. More pressing is the application for the construction bonds through the California Debt Limit Advisory Commission;the deadline forthe bond application is October 1. If both pieces of financing are received in this round, the project will be required to break ground in early 2005. JOHNS RAYM D Dirb,cto of Com nity & Economic Development APPROVED= - 6�r Executive Director ATTACHMENTS: 1. Resolution i 2. Amended and Restated Disposition and Development Agreement NOTICE OF JOINT PUBLIC HEARING NOTICE IS HEREBY GIVEN, that the Community Redevelopment Agency of the City of Palm Springs and the City of Palm Springs will hold a Joint Public Hearing in the City Council Chambers, located at 3200 Tahquitz Canyon Way, Palm Springs, California 92262, beginning at 7:00 p.m., Wednesday, September 15, 2004, to consider the following: Amended and Restated Disposition and Development Agreement ("DDA") between Vista Sunrise, L.P. and the Community Redevelopment Agency of the City of Palm Springs, for an 85-unit special needs affordable housing project located on the south side of Vista Chino Road near Sunrise Way Palm Springs, California 92262 The Community Redevelopment Agency of the City of Palm Springs ("Agency")proposes to amend a DDA with Vista Sunrise, L.P.forthe purpose of developing an 85-unit low-income,special needs apartment complex adjacent to the Desert AIDS Project offices and a County-run Family Medical Center on Sunrise Way. The nature of the amendments are to amend the project description to require the Partnership to construct the housing component butacknowledge thatthe responsibility for the development and construction of the healthcare facility lies with the County; amend certain provisions in the Agency's Regulatory Agreement related to Rental Priority and Termination to remove provisions that contradict the County's HOME agreement and federal regulations found in 24 CFR Part 42; amend certain terms in the Promissory Note and Deed of Trust to make the Agency's loans consistent with the terms of the State MHP note and the project's Low Income Housing Tax Credits; and, finally, amend the reimbursement schedule to increase the cap on the Agency's contribution toward predevelopment costs from $75,000 to $300,000 (this action does not increase the total contribution from the Agency, only amends the timing of payment) but then increasing the Agency cash contribution from $1,300,000 to $1,450,000 for the purpose of covering the additional cost of offsite improvements for the projects, including adding a turn lane on Vista Chino Road and relocating a traffic signal at the southwest corner of Vista Chino Road and Sunrise Way. The general partner in the project is McCormack Baron Salazar, Inc., a housing developer located in Los Angeles. The limited partner is Desert AIDS Project,which is contributing land to the project and will provide case management services for the residents of the housing development. Additionally, by separate agreement,the Desert Healthcare District and the Housing Authority of the County of Riverside shall enter lease agreement for the Project site, under which the County shall sublease the Project site to the partnership and separately undertake the development of the healthcare facility on the balance of the overall project site. All interested persons are invited to attend the Public Hearing and express opinions on the item listed above. If you challenge the nature of the proposed action in court, you may be limited to raising only those issues you or someone else raised at the Public Hearing described in this notice, or in written correspondence delivered to the City Clerk,at the address listed above,at or priorto the Public Hearing. Members of the public may view this document and all referenced documents in the Community Redevelopment Department, City Hall,and submitwritten comments to the Community Redevelopment Agency at or priorto the Community Redevelop ment Agency Meeting at or priorto the public hearing described in this notice. C �'� � � Further information, including a copy of the Amended and Restated DDA and Resolution, prepared in accordance with Health and Safety Code Section 33433, is available in the Office of the City Clerk, at the above address. PATRICIA A. SANDERS, City Clerk PUBLISHED: August 31 and September 7, 2004 �� %O � Proof of Pubiioadon in Newspaper STATE OF CALIFORNIA County of Riverside NOTICE OF JOINT PUBLIC HEARING NOTICE IS HEREBY GIVEN, that the Community Laura says:Reyes Redevelopment Agency of the City of Palm Springs and the y Y City of Palm Springs will hold a Joint Public Hearing in the City Council Chambers, located at 3200 Tahqwlz Canyon Way, 1. I am a citizen of the United States, a Palm Springs, California 92262, beginning at 7:00 p.m, Wednesday,September 15,2004,to consider the following resident of the City of Indio, County Of Amended and Restated Disposition and Development Agreement("DDA") between Vista Sunrise,L.P.and the Riverside, State of California, and over the Community Redevelopment Agency of the City of Palm age Of 18 years. Springs, for an 05-unit special needs affordable housing project located on the south side of Vista Chino Road near 2. 1 am the Office & Production Manager of Sunrise Way Palm Springs,California 92262 The Public Record, a newspaper of The Community Redevelopment Agency of the City of Palm Springs i'Agency") proposes to amend a DDA with Vista general circulation printed and published in Sunrise,L.P.for the purpose of developing an 85-unit low- the City of Palm Springs, County Of income, special needs apadmam complex adjacent to the -Dest if AIDS Project offices and-a County-run Family Medical- Riverside, State of California. Said The Center on Sunrise Way. The nature of the amendments are Public Record is a newspaper of general to amend the project description to require the Partnership to construct the housing component but acknowledge that the circulation as that term is defined in responsibility for the development and construction Bf the Government Code section 6000, its status healthcare facility lies with the County;amend certain provi- sions in the Agency's Regulatory Agreement related to as such having been established by judicial Rental Priority and Termination to remove provisions that decree of the Superior Court of the State of contradict the County's HOME agreement and federal regu- lations found in 24 CFR Part 42,amend certain terms in the California in and for the County of Riverside rimmisir Nate and Deed of Trust at make the Agency's in ProceedingNo. Indio 49271, dated March loans consistent with the terms of the State MHP note and arc the project's Low Income Housing Tax Credits, and,finally, 31, 1987, entered in Judgment Book NO. amend the reimbursement schedule to increase the cap on 129 a e 355, on March 31, 1987. the Agency's contribution toward predevelopment costs from p g $75,000 to$300,000(this action does not increase the total 3. The Public Record is a newspaper of contribution from the Agency,only amends the timing ofpay- eneral circulation ascertained and ment)but then increasing the Agency cash contribution tram g $1.300,000 to$1,450,000 for the purpose of covering the established in the City of Palm Springs in additional cost of offied Improvements for the projects, the Count of Riverside, State of California, eatingaadding a turn lane art Vista Chino Road and Chino eating including tragic signal at the southwest corner of Vista Chino Case No. RIC 358286, Filed June 8, 2001. __Road and Sundae Way. 4. The notice, of which the annexed is a true The general Partner in the Project is McCormackBangu Salazar,Inc,a housing developer located in Los Angeles. The printed copy was published in the limited partner is Desert AIDS Project, which is continuing newspaper on the following publication land to the project and will provide case management services for the residents of the housing development Additionally,by dates to wit: separate agreement, the Desert Healthcare District and the Housing Authority of the County of Riverside shall enter a lease agreement for the Project site, under which the County shall August 31, 2004 sublease the Project site to the partnership and separately September 7, 2004 undertake the development of the healthcare facility on the bal- anoe of the overall project site All interested persons are invited to attend the Public I certify under penalty of perjury that the Hearing and express opinions on the item listed above If you challenge the nature of the proposed action in court,you may above is true and correct. be limited fo raising only those issues you or someone else Dated at Palm Springs, California, this 8" raised at the Public Hearing described in this notice,ormwnt - tan correspondence delivered to the City Clerk,at the address day of September, 2004. ;an above,at or prior to the Public Hearing Members of the public may view this document and all referenced documents in the Community Redevelopment Department, City Hall, and submit written comments to the Community Redevelopment Agency at or prior to the Community Redevelopment Agency Meeting at or prior to the public hearing described in this notice Further information,including a copy of the Amended and Restated DDA and Resolution, prepared in accordance with Health and Safety Code Section A SA available in the Office of the City Clerk,at the above address. A SANDERS, ERS,City Cleric August 31,September 7,2004 4e0 yes Production Manager �6 c out RESOLUTION NO. OF THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF PALM SPRINGS, CALIFORNIA APPROVING AN AMENDED AND RESTATED DISPOSITION AND DEVELOPMENT AGREEMENT WITH VISTA SUNRISE APARTMENTS, LP AND MCCORMACK BARON SALAZAR, INC. TO EFFECTUATE THE DEVELOPMENT OF A LOW- INCOME HIV/AIDS APARTMENT COMPLEX AND FAMILY CARE FACILITY WEST OF SUNRISE WAY, SOUTH OF VISTA CHINO ROAD 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, DAP HIV/AIDS Housing Project, proposed for low-income persons with HIV/AIDS, and Family Care Center, operated by the County of Riverside, was approved on July 16, 2003 by the Palm Springs City Council; and WHEREAS, the property developers, McCormack Baron Salazar, Inc. and Vista Sunrise Apartments, LP, sought Agency financial assistance to cover a portion of the development cost; and WHEREAS, the Community Redevelopment Agency of the City of Palm Springs, at its July 16, 2003 meeting, conducted a joint public hearing and approved a Disposition and Development Agreement with McCormack Baron Salazar, Inc. and Vista Sunrise Apartments, LP; and WHEREAS, Section 33430 of the Community Redevelopment Law allows that an agency may, "for purposes of redevelopment, sell, lease, for a period not to exceed 99 years, exchange, subdivide, transfer, assign, pledge, encumber by mortgage, deed of trust, or otherwise, or otherwise dispose of any real or personal property or any interest in property;" and WHEREAS, the owners still agree to restrict, though a Regulatory Agreement approved as an attachment to the Disposition and Development Agreement, the rents on 49% of the proposed units(42)to levels affordable to families with incomes no more than 60% of Area Median Income (AMI); and WHEREAS, the property developers submitted a Low Income Housing Tax Credit (LIHTC) application to the California Tax Credit Allocation Committee for the July 24, 2003 application round and requested Agency assistance to strengthen the application, but were unsuccessful in receiving a LIHTC commitment; and WHEREAS,the property developers have applied for state Multifamily Housing Program funds for the development of the project, which required minor modifications to the Agency financing structure; and WHEREAS,the Agency approved Amendment No. 1 to the DDA on November 19,2003 changing the terms of the Note to conform to the MHP Program; and WHEREAS, the County of Riverside has requested technical changes to the Regulatory 0 f oea 11W 1 Agreement of the land transaction to facilitate the project and conform the DDA to Federal law and to separate the requirement to construct the Family Care Center for the overall project; and WHEREAS, the property developers have asked for other minor modifications to the DDA for financing and development purposes. 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. Based on foregoing reasons, this Amended and Restated Disposition and Development Agreement with Vista Sunrise Apartments, LP, and McCormack Baron Salazar, Inc. is hereby approved and incorporated herein by this reference. SECTION 6. The Executive Director,or his designee, is hereby authorized to execute on behalf of the Agency the Disposition and Development 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 2004. AYES: NOES: ABSENT: ATTEST: COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF PALM SPRINGS, CALIFORNIA By Assistant Secretary Chairman REVIEWED &APPROVED AS TO FORM C rct RESOLUTION NO. 9 / L %° OF THE CITY COUNCIL OF THE CITY OF PALM SPRINGS, CALIFORNIA,CONCURRING WITH THE COMMUNITY REDEVELOPMENT AGENCY REGARDING THE APPROVAL OF AN AMENDED AND RESTATED DISPOSITION AND DEVELOPMENT AGREEMENT WITH VISTA SUNRISE APARTMENTS, LP AND MCCORMACK BARON SALAZAR, INC. TO FACILITATE THE DEVELOPMENT OF AN 85-UNIT SPECIAL NEEDS AFFORDABLE APARTMENT PROJECT IN MERGED AREA#1 NOW THEREFORE BE IT RESOLVED by the City Council of the City of Palm Springs that it concurs with the action of the Community Redevelopment Agency regarding the approval of a Disposition and Development Agreement with Vista Sunrise Apartments, LP and McCormack Baron Salazar, Inc.to facilitate the development of an 85-unit special needs affordable apartment project in Merged Area #1. ADOPTED this day of 2004. AYES: NOES: ABSENT: ATTEST: CITY OF PALM SPRINGS, CALIFORNIA By City Clerk City Manager REVIEWED &APPROVED AS TO FORM �-