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HomeMy WebLinkAboutReso 19-2011RESOLUTION NO. 19-2011 CITY COUNCIL, CITY OF SOUTH SAN FRANCISCO, STATE OF CALIFORNIA A RESOLUTION APPROVING THE DISPOSITION OF PROPERTY LOCATED AT 636 EL CAMINO REAL PURSUANT TO GROUND LEASES 'TO TWO MIDPEN HOUSING CORPORATION AFFILIATF,S; APPROVING A REUSE REPORT REQUIRED BY HEALTH AND SAFETY CODE SECTION 33433 IN CONNECTION WITH THE GROUND LEASES; AND ADOPTING FINDINGS REQUIRED BY HEALTH AND SAFETY CODE SECTION 33433 WHEREAS, the Redevelopment Agency ("Agency") of the City of South San Francisco ("City") is a redevelopment agency existing pursuant to the Community Redevelopment Law, California Health and Safety Code Section 33000, et sey. (the "CRL"), and pursuant to the authority granted thereunder, has the responsibility to carry out the Redevelopment Plan (the "Redevelopment Plan") for the EI Camino Corridor Redevelopment Project Area (the "Project Area"); WHEREAS, MP South City, L.P., a California limited. partnership ("MP"), an affiliate of MidPen Housing Corporation, a California nonprofit public benefit corporation ("MidPen") owns that certain real property located in the City of South San Francisco adjacent to the Project Area at 636 El Camino Real and known as San Mateo County Assessor's Parcel No. 014-160- 040 (the "Property"); WHEREAS, MP purchased the Property using Agency financing pursuant to an Owner Participation and Loan Agreement dated as of November 19, 2008 and executed by and between the Agency and MP (the "OPA"); WHEREAS, pursuant to the OPA, the Agency provided an acquisition/predevelopment loan to MP in the amount of Four Million Nine Hundred Fifty Thousand Dollars ($4,950,000) (the "Acquisition/Predevelopment Loan") using funds from the Agency's Low and Moderate- Income Housing Set-Aside Fund ("Housing Fund") ; WHEREAS, on June 23, 2010, MP and the Agency e~s:ecuted an Option and Purchase and Sale Agreement (the "Option Agreement") pursuant to which the Agency has the right to acquire the Property provided that the Agency concurrently leases the Property back to the Developers (defined below) for development of the Project (defined below); WHEREAS, the Agency desires to exercise its option to purchase the Property in exchange for forgiveness of $4,470,000 of the outstanding Acquisition/Predevelopment Loan, which sum is equal to the original purchase price for the Property; WHEREAS, concurrently with the Agency's acquisition of the Property, the Agency proposes to ground lease a portion of the Property (the "Phase A Parcel") to MP pursuant to a ground lease (the "Phase A Ground Lease") with a term of seventy-five (75) years, for construction of a mixed-use residential development (the "Ph;~se A Project") consisting of sixty- two (62) units ofmulti-family rental housing, common areas, a subterranean parking garage, and approximately 5,700 square feet of commercial/retail space together with surface parking spaces dedicated for use by the tenants and invitees of tlhe commercial/retail space (the "RetaiUCommercial Component"), and related improvements; WHEREAS, concurrently with the execution of the Phase A Ground Lease, the Agency proposes to enter into a master lease (the "Master Lease") ,pursuant to which MP would lease the Retail/Commercial Component back to the Agency for the full. term of the Phase A Ground Lease; WHEREAS, the Agency proposes to ground lease the remainder of the Property (the "Phase B Parcel") to MP South City II, L.P., a California limited partnership, an affiliate of Mid-Peninsula ("MP II" and collectively with MP, hereafter, the "Developers") pursuant to a ground lease (the "Phase B Ground Lease") with a term of seventy-five (75) years, for construction of amulti-family development consisting of Iorty-seven (47) units of multi-family rental housing, common areas, a subterranean parking garage, and related improvements (the "Phase B Project", and collectively with the Phase A Project., hereafter, the "Project"); WHEREAS, to assist in financing the construction of the Project, the Developers have requested, and the Agency has agreed to provide, consistent with actions approved by the Agency by resolution adopted June 23, 2010, construction/permanent financing in the form of residual receipts loans to MP in the amount of $4,290,373 (thee "Phase A Loan") and to MP II in the amount of $5,698,627 (the "Phase B Loan"); WHEREAS, in connection with the Phase A Ground Lease and the Phase A Loan, MP has agreed to restrict 61 of the residential units in the Phase A. Project for occupancy by low- and moderate-income households for a period of 75 years pursuant to an Affordable Housing Regulatory Agreement and Declaration of Restrictive Covenants by and between the Agency and MP (the "Phase A Regulatory Agreement"); WHEREAS, in connection with the Phase B Ground ]Lease and the Phase B Loan, MP II has agreed to restrict 47 of the residential units in the Phase B• Project for occupancy by low- and moderate-income households for a period of 75 years pursuant to an Affordable Housing Regulatory Agreement and Declaration of Restrictive Covenants by and between the Agency and MP II (the "Phase B Regulatory Agreement"); WHEREAS, MP and Agency staff have negotiated the terms of the Master Lease, the Phase A Regulatory Agreement, the Phase A Ground Lease, a loan agreement (the "Phase A Loan Agreement"), a Secured Promissory Note (the "Phase A Note") to be executed by MP to evidence its obligation to repay the Phase A Loan, a Leasehold Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing (the "Phase A Deed of Trust") pursuant to which the Agency will be provided a security interest in the Phase ~- Project to secure repayment of the Phase A Loan and compliance with the Phase A Regulatory Agreement, and an Assignment Agreement (the "Phase A Assignment Agreement") pursuant to which the Agency will be provided a security interest in the Phase A Project plans, subject to the rights of senior lenders; WHEREAS, MP II and Agency staff have negotiated the terms of the Phase B Regulatory Agreement, the Phase B Ground Lease, a loan agreement (the "Phase B Loan Agreement"), a Secured Promissory Note (the "Phase B 1\~ote") to be executed by MP II to evidence its obligation to repay the Phase B Loan, a Leasehold Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing (the "Phase B Deed of Trust") pursuant to which the Agency will be provided a security interest in the Phase B. Project to secure repayment of the Phase B Loan and compliance with the Phase B Regulatory Agreement, and an Assignment Agreement (the "Phase B Assignment Agreement") pursuant to which the Agency will be provided a security interest in the Phase B Project plans, subject to the rights of senior lenders; WHEREAS, in connection with the lease of the Property to the Developers, the Agency and the Developers propose to execute and record an easement and joint use agreement (the "REA") pursuant to which the present and future owners of t:he Phase A Parcel and the Phase B Parcel would grant to each other certain reciprocal access, stormwater and utility easements and would accept certain restrictions upon the use of the Retail/Commercial Component consistent with the Project's residential character; WHEREAS, CRL Section 33433 provides that prior to a redevelopment agency's sale of property acquired with tax increment funds (i) the agency must prepare and make available to the public a report (the "Reuse Report") describing the terms of the sale and development of the property, (ii) the legislative body must hold a public hearing following notice, and (iii) the legislative body must approve the conveyance by a resolution adopting specified findings; WHEREAS, the Agency has caused a Reuse Report to be prepared, and the Agency and the City have caused notice to be published and have conducted public hearings in accordance with all legal requirements; WHEREAS, the Agency has approved the Reuse Report, has adopted the finding required by CRL Section 33433, and has approved the lease of the Property pursuant to the Phase A Ground Lease and the Phase B Ground Lease; WHEREAS, the Project will be of benefit to the Project Area because it will increase the supply of housing that is affordable to low- and moderate-income residents of the Project Area and the City. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of South San Francisco that it hereby: 1. Finds that the development of the Property in accordance with the Phase A and Phase B Ground Leases and the provision of the Phase A and Phase B Loans for the Project will facilitate the development of housing for low, very low- and moderate-income households, will be of benefit to the Project Area, will further the goals of the Redevelopment Plan, and will be consistent with the implementation plan adopted in connection therewith. 2. Finds that the consideration to be paid by the Developers pursuant to the Phase A and Phase B Ground Leases is not less than the fair reuse value as documented in the Reuse Report. 3. Approves the Reuse Report. 4. Approves the Agency's lease of the Property pursuant: to the Phase A Ground Lease and the Phase B Ground Lease. 5. Approves the Agency's provision of the Phase A Loari and the Phase B Loan pursuant to the terms and conditions set forth in the Phase A Loan Agreement and Phase B Loan Agreement as presented to the City Council and on file with the City Clerlk. 6. Approves the transactions described in the Phase A a.nd Phase B Loan Agreements, the Phase A and Phase B Regulatory Agreements, the Phase A and Phase B Ground Leases, and the Master Lease. 7. Authorizes the City Manager or his designee to sign all documents, to make all approvals and take all actions necessary or appropriate to carry out and implement the intent of this Resolution. I hereby certify that the foregoing Resolution was regularly introduced and adopted by the City Council of the City of South San Francisco at a regular meeting held on the 9~h day of February 2011 by the following vote: AYES: Councilmembers Mark Addie~o, Pedro Gonzalez, and Karyl Matsumoto, Vice Mayor Richard A. Garbarino and Ma~~evin Mullin NOES: None ABSTAIN: None ABSENT: None --,+ / ATTE~• City Jerk ~~