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HomeMy WebLinkAboutRDA Reso 05-2011RESOLUTION NO. OS-2011 REDEVELOPMENT AGENCY, CITY OF SOiJTH SAN FRANCISCO, STATE OF CALIFORN [A A RESOLUTION APPROVING THE ACQUISITION OF PROPERTY LOCATED AT 636 EL CAMINO REAL; APPROVING THE DISPOSITION OF SUCH PROPERTY PURSUANT TO GROUND LEASES TO TWO MID- PENINSULA HOUSING CORPORATIC-N AFFILIATES; APPROVING THE REPORT REQUIREL) IN CONNECTION WITH SUCH DISPOSITION BY HEALTH AND SAFETY CODE SECTION 33433; APPROVING TH:E PROVISION OF LOANS FOR DEVELOPMENT OF 7'HE PROPERTY; APPROVING THE FORM OF THE LOAN AGREEMENTS, PROMISSORY NOTES, DEEDS OF TRUST, AFFORDABLE HOUSING REGULATORY AGREEMENTS', AND RELATED DOCUMENTS; AUTHORIZING THE REGULATORY AGREEMENTS AND DEEDS OF "CRUST TO BE SUBORDINATED TO CONSTRUCTION LENDERS; ADOPTING FINDINGS IN CONNECTION WITH THE FOREGOING TRANSACTIONS; AUTHORIZING THE EXECUTION OF AN EASEMENT A:[qD JOINT USE AGREEMENT; AND AUTHORIZING THE ]EXECUTION OF A MASTER LEASE FOR THE RETAIL/COMMERCIAL SPACE TO BE DEVELOPED ON THE PROPERTY' WHEREAS, the Redevelopment Agency of the City of South San Francisco ("Agency") is a redevelopment agency existing pursuant to the Cornmuniity Redevelopment Law, California Health and Safety Code Section 33000, et seq. (the "CRL"), and pursuant to the authority granted thereunder, has the responsibility to carry out the Redevelopment Plan (the "Redevelopment Plan") for the El Camino Corridor Redevelopment Project Area (the "Project Area"); WHEREAS, MP South City, L.P., a California limited. partnership ("MP"), an affiliate of Mid-Peninsula Housing Corporation, a California nonprofit public benefit corporation 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 executed 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 teen of seventy-five (75) years, for construction of a mixed-use residential development (the "Phase A Project") consisting ofsixty- 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 t1~e 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 Housing Corporation ("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 forty-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 cif 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, constructioi~/permanent financing in the form of residual receipts loans to MP in the amount of $4,290,373 (the "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 A 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 Note") 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" anti collectively with the Phase A Assignment Agreement, hereafter the "Assignment Agreements") 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 rriu:>t 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 t:o 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 City Council has approved the Reuse Report, has adopted the findings 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, Union Bank, N.A. (the "Bank") will provide aconstruction/ permanent loan to partially finance the Phase A Project; WHEREAS, the California Municipal Finance Authority, a joint exercise of powers agency ("CMFA") will issue tax-exempt bonds to partially finance the Phase B Project, and the Bank, acting as CMFA's agent, will provide construction/pe~manent financing for the Phase B Project; WHEREAS, the Bank has asked the Agency to subordinate certain documents executed in connection with the Agency's conveyance of the Property and financing of the Project, including the Phase A and Phase B Regulatory Agreements and the Phase A and Phase B Deeds of Trust (collectively, the "Agreements") as more particularly set forth in proposed Subordination Agreements, and has indicated that it is unwilling to provide construction and permanent financing for the Project without such subordination; WHEREAS, the Developer has indicated that it has bE;en unable to find alternate sources that would enable it to finance the Project without such subc-rdlination; WHEREAS, Health and Safety Code Section 33334.14 permits subordination of redevelopment agency affordability restrictions provided that: (i) the agency makes a finding that alternative financing is not reasonably available on economically feasible terms without subordination, and (ii) the agency obtains written commitments to protect its investment in the event of a default; WHEREAS, the proposed Subordination Agreement will provide the Agency with rights to receive notice and to cure defaults arising under the senior loan documents, and will provide the Agency with certain other protections in connection with the senior loan documents; and 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 Redevelopment Agency of the City of South San Francisco that it hereby: 1. Approves the Agency's purchase of the Property pursuant to the Option Agreement. 2. 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. 3. 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. 4. Approves the Reuse Report. 5. Approves the lease of the Property pursuant to the Ph<~se A Ground Lease and the Phase B Ground Lease. 6. Approves the provision of the Phase A Loan and the Phase B Loan pursuant to the terms and conditions set forth in the Phase A Loan Agreement and. the Phase B Loan Agreement. 7. Approves the Phase A Ground Lease, the Master Lease, the Phase A Loan Agreement, the Phase A Note, the Phase A Deed of Trust, the Phase A Regulatory Agreement, and authorizes the Agency Executive Director or his designee; to execute each such document to which the Agency is a party substantially in the forms presented to the Agency governing board and on file with the Agency Secretary, with such madifica.tions as may be approved by the Executive Director in consultation with Agency Counsel, provided such modifications do not materially or substantially increase the Agency's obligations thereunder. 8. Approves the Phase B Ground Lease, the Phase B Loan Agreement, the Phase B Note, the Phase B Deed of Trust, and the Phase B Regulatory Agreement, and authorizes the Agency Executive Director or his designee to execute each such docunent to which the Agency is a party substantially in the forms presented to the Agency governing board and on file with the Agency Secretary, with such modifications as maybe approved by the: Executive Director in consultation with Agency Counsel, provided such modifications do not materially or substantially increase the Agency's obligations thereunder. 9. Finds that without subordination of the Agreements an economically feasible alternative for financing the Project is not reasonably available and. that the proposed terms of the Subordination Agreements provide the Agency with reasonable means of protecting the Agency's investment in the Project in the event of default. 10. Authorizes the Agency Executive Director or his designee to execute Assignment Agreements and Subordination Agreements in such forms as are consistent with this Resolution and the documents hereby approved, and which are approved by the Executive Director in consultation with Agency Counsel. 11. Authorizes the Agency Executive Director or his designee to execute an REA in such form as is consistent with this Resolution and the documents hereby approved, and which is approved by the Executive Director in consultation with Ager.~cy Counsel. 12. Authorizes the Executive Director to execute such other instruments and to take such other actions consistent with this Resolution and the docurrients hereby approved as necessary to carry out the intent of this Resolution, including without limitation, the execution and recordation of a Certificate of Acceptance for the Property. I hereby certify that the foregoing Resolution was regularly introduced and adopted by the Redevelopment Agency 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: Boardmembers Mark Addiego, Pedro Gopzaler, and Karyl Matsumoto, Vice Chair Richard A. Garbarino and Chairman Kevin Mullin NOES: None ABSTAIN: None ABSENT: None ~~~ ' ATTEST: ~~ k