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HomeMy WebLinkAboutContract 47043-A1 67 8910 , OeeN SEC ASV _ I nj v 23 2816 IRST AMENDMENT TO CITY SECRETARY CONTRACT NO. 47043 Ls AS, on September 24, 2015, the City of Fort Worth ("City") and Reserve at uebec, LLC ("Developer") made and entered into City Secretary Contract No. 47043 (the "Contract") as authorized by M&C C-27220, adopted by the City Council on March 3, 2015, and M&C C-27399, adopted by the City Council on July 28, 2015; WHEREAS,the funding provided to Developer in the Contract was from a grant received by City from the United States Department of Housing and Urban Development through the HOME Investment Partnerships Program, Catalog of Federal Domestic Assistance No. 14.239; WHEREAS, the purpose of the Contract was to provide $3,500,000.00 in HOME funds in the form of 2 subordinate loans for a portion of the costs to develop the Reserve at Quebec Apartments, a 296-unit mixed income multifamily rental complex; WHEREAS, Developer applied for 221(d)(4) loan insured by HUD from Dougherty Mortgage LLC, a Delaware limited liability company, for a portion of the financing for the project and HUD requires subordinate loans that mature before the repayment of the HUD- insured loan to be paid out of surplus cash as defined by HUD so this change must be made to the payment terms of the City's HOME loans; WHEREAS, Waterstone Tax Credit Fund I LLC will be the Investor Member and has requested certain changes to the Contract to reflect its interest in the Developer and to protect its investment of the tax credits as equity in the project; WHEREAS, the Budget must be amended to show the final loan amounts, tax credit proceeds and developer fee; and WHEREAS, it is the mutual desire of the City and Developer to amend the Contract to meet Contract objectives. NOW, THEREFORE, City and Developer hereby agree as follows: I. Section 2. DEFINITIONS is amended by adding the following: "HUD Regulatory Agreement" means the Regulatory Agreement for Multifamily Projects executed by HUD and Developer with respect to the project as same may be supplemented, amended or modified from time to time. OFFICIAL RECORD CITY SECRETARY FT.WORTHS TX HOME DEVELOPER RENTAL CONTRACT CSC NO.47043 -Al Rev 01.19.2016 Reserve at Quebec,LLC Page 1 Section 2. DEFINITIONS is amended by deleting the original of the definitions shown below and substituting the following: "Investor" or "Investor Member" means Waterstone Tax Credit Fund I LLC, Developer's Investor Member and the entity purchasing the tax credits, and any of its successors and assigns. Loan Documents means any security instruments which Developer has executed and delivered to City including, without limitation, the City's Promissory Note and Deed of Trust, or any other similar security instruments evidencing, securing or guaranteeing City's interest in the Required Improvements constructed under this Contract and further evidencing, securing, or guaranteeing Developer's performance of the Affordability Requirements during the Affordability Period, as the same may from time to time be extended, amended, restated, supplemented or otherwise modified, and the Subordination Agreement. 11MVAH means MV Affordable Housing LLC, an Ohio limited liability company, an affiliate of MV Residential Development, LLC, and the borrower of the MVAH Loan. "MVAH Loan means the forgivable deferred payment loan of HOME Funds by City to MVAH under the terms of the MVAH Loan Documents as evidenced by a promissory note from MVAH to City and secured by a Collateral Assignment of Note and Leasehold Deed of Trust from MVAH to City. "MVAH Loan Documents means the promissory note from MVAH to City, the Loan Agreement between MVAH and Developer, the 3''d lien promissory note and leasehold deed of trust from Developer to MVAH described in the Loan Agreement, the Collateral Assignment of Note and Leasehold Deed of Trust from MVAH to City, and the MVAH Subordination Agreement. "MVAH Subordination Agreement means the Subordination Agreement among Developer's construction and permanent financing lender, MVAH and Developer outlining the relative priorities of the construction and permanent loan and MVAH's loan to Developer for the project." II. Section 3.3 Term of Loan is deleted in its entirety and replaced with the following: "3.3 Terms of Loan and MVAH Loan. 3.3.1 Loan Term. The term of the Loan shall commence on the date of the Promissory Note and terminates 20 years later so long as the terms and conditions of this Contract and the Loan Documents have been met. HOME DEVELOPER RENTAL CONTRACT CSC NO.47043 -Al Rev 01.19.2016 Reserve at Quebec,LLC Page 2 3.3.2 MVAH Loan Term. The term of the MVAH Loan commences on the date of the MVAH Loan Documents and terminates at the end of the Affordability Period so long as the terms and conditions of this Contract and the MVAH Loan Documents have been met." Section 4.1 Provide HOME Funds is deleted in its entirety and replaced with the following: "4.1 Provide HOME Funds. City shall provide up to $1,500,000.00 of HOME Funds in the form of the Loan, and up to $2,000,000.00 of HOME Funds in the form of the MVAH Loan, for up to $3,500,000.00 of total HOME Funds to be used for a portion of the costs of the development of the project, including acquisition of the Property, other soft costs, and construction costs for the Required Improvements, all under the terms and conditions of this Contract and the Loan Documents and the MVAH Loan Documents, respectively." Section 5.6 Security for City's Interest and Developer's Performance is deleted in its entirety and replaced with the following: "5.6 Security for City's Interest and Developer's Performance. (i) To secure City's interest in the Required Improvements and the performance of Developer's obligations under the Loan and this Contract, Developer shall execute the Loan Documents and record the Deed of Trust encumbering the Property at the earlier of Developer's acquisition of the Property or the closing of Developer's construction loan. No HOME Funds will be paid or reimbursed on the Loan until the Deed of Trust is recorded. (ii) To secure the performance of MVAH's obligations under the MVAH Loan, MVAH shall collaterally assign to City the Yd lien promissory note and leasehold deed of trust evidencing the loan by MVAH to Developer of $2,000,000.00 in HOME Funds (the "3rd lien loan"), and perform all other terms and obligations set forth in the MVAH Loan Documents. No HOME Funds will be paid or reimbursed on the MVAH Loan until the MVAH Loan Documents are executed, and if required, recorded. The proceeds of the 3rd lien loan by MVAH to Developer shall be used in the construction of the Required Improvements in accordance with the terms of this Contract. (iii) The City's interest in preserving the affordability of the HOME Units will be additionally secured by the Declaration of Land Use Restrictive Covenants ("LURA") established and enforced by TDHCA for the Housing Tax Credits. The TDHCA's LURA shall restrict the project and Property to certain occupancy and rent requirements for a period of 40 years." HOME DEVELOPER RENTAL CONTRACT CSC NO.47043 -Al Rev 01.19.2016 Reserve at Quebec,LLC Page 3 Section 5.6.1 Loan Terms and Conditions is amended by deleting the originals of the subsections shown below and substituting the following: "5.6.1.1 Execute and deliver the Promissory Note and Deed of Trust, any other Loan Documents required by City, and the Subordination Agreement. Execute and deliver the promissory note and leasehold deed of trust evidencing the 3rd lien loan from MVAH in accordance with the Loan Agreement with MVAH, and the MVAH Subordination Agreement. 5.6.1.2 Provide City with a Mortgagee's Policy of title insurance in the amount of the Loan, and a Mortgagee's Policy of title insurance in the amount of the 3rd lien loan from MVAH. 5.6.1.3 Pay all costs associated with closing the Loan and the 3rd lien loan from MVAH. 5.6.1.4 Provide City with an estimated settlement statement from the title company at least 3 business days before closing. 5.6.1.5 Ensure City's lien for the Loan is subordinate only to the Senior Indebtedness defined in the Subordination Agreement. City must approve in writing any secured financing for the project that is to be subordinate to the Loan. The 3rd lien loan from MVAH, which is subordinate to the Loan, is hereby approved. 5.6.1.6 The terms of the Loan and the MVAH Loan shall be as specified in Section 3.3. 5.6.1.7 Interest on the Loan shall accrue at the lesser of the Long Term Applicable Federal Rate in effect on the date of the Promissory Note, or 1% per annum. Principal and interest on the Loan shall be due and payable in equal annual installments based on a 40 year amortization schedule beginning on the earlier of (i) 30 days after the occupancy rate of the project has reached 93% for 12 consecutive months, or (ii) 24 months after the initial Certificate of Occupancy is issued for the project, and continuing annually thereafter until the Maturity Date as defined in the Promissory Note, but not in excess of 75% of Surplus Cash as defined in the HUD Regulatory Agreement. Principal and interest to the extent not paid from Surplus Cash shall accumulate from year to year until paid. The unpaid principal balance and accrued, unpaid interest will be payable in full on the Maturity Date from Surplus Cash or non-Project Assets as such terms are defined in the HUD Regulatory Agreement. Payments will be applied first to accrued interest and the remainder to reduction of the principal amount. HOME DEVELOPER RENTAL CONTRACT CSC NO.47043 -Al Rev 01.19.2016 Reserve at Quebec,LLC Page 4 5.6.1.8 The proceeds of the MVAH Loan shall be immediately loaned by MVAH to Developer for use as described in this Contract and in the MVAH Loan Documents. The $2,000,000.00 proceeds of the MVAH Loan shall thereafter be considered HOME Funds for all purposes hereunder. Repayment of the MVAH Loan shall be deferred and forgiven at the end of the Affordability Period provided that all terms of this Contract and the MVAH Loan Documents are met. 5.6.1.9 In the event of any conflict between the provisions of this Contract and any terms in the Loan Documents or the MVAH Loan Documents that are required by HUD as a condition of the 221(d)(4) mortgage loan to Developer insured by HUD (the "HUD requirements"), the terms required by HUD shall control. 5.6.1.10 To the extent allowed by the HUD requirements, refinancing by Developer, or any subordinate financing other than that approved herein or otherwise by City, shall require the review and prior written approval of City for the purpose of ensuring compliance with the underwriting and subsidy layering requirements of the HOME Regulations, which approval shall not be unreasonably withheld, conditioned or delayed. 5.6.1.11 Early repayment of the Loan or the 3rd lien loan from MVAH shall not relieve Developer of its obligations under this Contract or the HOME Regulations including but not limited to the Affordability Requirements and other HOME requirements. The Deed of Trust and the 3rd lien leasehold deed of trust shall secure both repayment of the HOME Funds and performance by Developer of its obligations under this Contract during the Affordability Period. 5.6.1.12 Failure by Developer to comply with this Section 5.6.1 will be an event of default under this Contract and the Loan Documents." III. Section 20. NOTICE is amended by adding the following: "Investor• Waterstone Tax Credit Fund I LLC c/o Affordable Housing Partners, Inc. 10250 Constellation Blvd., Suite 1270 Los Angeles, CA 90067 Attention: Michael L. Fowler HOME DEVELOPER RENTAL CONTRACT CSC NO.47043 -Al Rev 01.19.2016 Reserve at Quebec,LLC Page 5 Copy to: Kutak Rock LLP 1801 California Street, Suite 3000 Denver, CO 80202 Attention: Ellen O'Brien" IV. Exhibit "B" — Budget attached to the Contract is hereby replaced with the attached Exhibit"B" —Budget Revised 01/2016. V. This Amendment is effective as of the Effective Date of the Contract. VI. All terms and conditions of the Contract not amended herein remain unaffected and in full force and effect, are binding on the Parties and are hereby ratified by the Parties. Capitalized terms not defined herein shall have meanings assigned to them in the Contract. [SIGNATURES APPEAR ON NEXT PAGE] HOME DEVELOPER RENTAL CONTRACT CSC NO.47043 -Al Rev 01.19.2016 Reserve at Quebec,LLC Page 6 VOR OOOQ _a ° 00 ACCEPTED AND AGREED: 00" Ooo°000°° ATTEST: ORT WORTH By: rty Secret Fernando Costa, Assistant City Manager M&C: C 27220 Dated March 3, 2015 M&C: C 27399 Dated July 28, 2015 APPRO D AS TO O ND LEGALITY: Vicki S. Ganske, Senior Assistant City Attorney RESERVE AT QUEBEC,LLC By: Reserve at Quebec GP, LLC, its Managing Member By: Fort Worth Housing Finance Corporation, its Sole Member / By:�6� �Z Fernando Costa, General Manager 0,FFU CEAL RECORD CU Y SECRETARY FT'. NORTH,TX HOME DEVELOPER RENTAL CONTRACT CSC NO.47043 -Al Rev 01.19.2016 Reserve at Quebec,LLC Page 7 EXHIBIT "B" BUDGET Revised 01/2016 RESERVE AT QUEBEC,LLC SOURCES AND USES Priority Construction Loan Permanent Loan Financing Source# Funding Description of Lien Stage Amount Stage Amount Participants 1 Conventional Loan Dougherty Mortgage LLC 2 FHA 221(d)(4)Loan 1st 25,010,000*** 25,010,000 Waterstone Tax Housing Tax Credit Credit Fund I 3 Syndication Proceeds $12,564,022 $15,882,878 LLC Tarrant County Housing Finance 4 Mortgage Revenue Bonds $23,000,000 $0 Corporation Other Federal Loan or 5 Grant 6 Other State Loan or Grant Local Government Loan 2nd $1,500,000 $1,500,000 City of Fort 7 or Grant(HOME) 3rd $2,000,000 $2,000,000 Worth 8 Private Loan or Grant Cash 9 Cash Equity $100 $100 Contribution MV Residential Development LLC and Fort In-Kind Equity/Deferred Worth Housing 10 Developer Fee $1,929,129 Finance Corp. 11 Operating Reserves TOTAL SOURCES OF FUNDS $64,074,122*** $46,322,107 TOTAL USES OF FUNDS $46,322,107 ***$23,000,000 of the 221(d)(4) loan from Dougherty Mortgage LLC will be used to cash collateralize the bonds during construction. HOME Funds Budget Acquisition and/or Construction Soft Costs $1,350,000* Construction Hard Costs $2,000,000* Holdback** $150,000** TOTAL $3,500,000 *Developer will only be reimbursed for eligible expenses. The amounts are estimates and are subject to change.** City will hold back$150,000 of the HOME Funds until City verifies that HOME DEVELOPER RENTAL CONTRACT CSC NO.47043 -Al Rev 01.19.2016 Reserve at Quebec,LLC Page 8 the first HOME Unit is leased to a HOME Eligible Household as well as the other requirements in Exhibit "C" - Construction and Reimbursement Schedule. HOME DEVELOPER RENTAL CONTRACT CSC NO.47043 -Al Rev 01.19.2016 Reserve at Quebec,LLC Page 9 M&C Review Pa*ge 1 of I Official site of the City of Fort Worth,Texas CITY COUNCIL AGENDA FaRT�1 COUNCIL ACTION: Approved on 3/3/2015-Resolution No.4422-03-2015 DATE: 3/3/2015 REFERENCE C-27220 LOG NAME: 17NS RESERVEATQUEBEC NO.. CODE: C TYPE: NON- PUBLIC YES CONSENT HEARING: SUBJECT: Conduct a.Public Hearing and Adopt Resolution Supporting an Application by Reserve at Quebec, LLC to the Texas Department of Housing and Community Affairs for Non- Competitive(4%) Housing Tax Credits for the Development of the Reserve at Quebec Apartments to be Located North of Northwest Centre Drive Between Buda Lane and Quebec Streets,Authorize Change in Use and Expenditure of$3,500,000.00 in HOME Investment Partnerships Program Grant Funds to the Reserve at Quebec, LLC in the Form of a Subordinate Loan for the Reserve at Quebec Apartments,Authorize Execution of a Contract,Authorize Substantial Amendments to the City's 2007-2008, 2008-2009, 2009- 2010, 2010-2011, 2011-2012, 2012-2013, 2013-2014 and 2014-2015 Action Plans and Substitution of Funding Years (COUNCIL DISTRICT 7) RECOMMENDATION: - It is recommended that the City Council: 1. Conduct a Public Hearing to allow citizen comment on the application of Reserve at Quebec, LLC to the Texas Department of Housing and Community Affairs for 2015 Non-Competitive(4%) Housing Tax Credits for the proposed development of the Reserve at Quebec Apartments, a mixed income multi-family rental complex to be located north of Northwest Centre Drive between Buda Lane and Quebec Streets; 2. Adopt the attached resolution supporting the application by Reserve at Quebec, LLC to the Texas Department of Housing and Community Affairs for 2015 Non-Competitive (4%) Housing Tax Credits for the development of the Reserve at Quebec Apartments; 3. Authorize substantial amendments to the City's 2007-2008, 2008-2009, 2009-2010, 2010-2011, 2011-2012, 2012-2013, 2013-2014 and 2014-2015 Action Plans; 4. Authorize the City Manager or his designee to substitute funding years in order to meet United States Department of Housing and Urban Development commitment, disbursement and expenditure deadlines; 5. Authorize the change in use and expenditure of$3,500,000.00 in prior and current years HOME Investment Partnerships Program grant funds to the Reserve at Quebec, LLC in the form of a subordinate loan for the development of the Reserve at Quebec Apartments; 6. Authorize the City Manager or his designee to execute a contract with the Reserve at Quebec, LLC for the development for a five-year term beginning on the date of execution of the contract; 7. Authorize the City Manager or his designee to extend the contract for two one-year extensions if the Reserve at Quebec, LLC requests an extension and such extension is necessary for completion of the development; and 8. Authorize the City Manager, or his designee, to amend the contract if necessary to achieve project goals provided that the amendment is within the scope of the project and in compliance with City policies and applicable laws and regulations governing the use of federal grant funds. http://apps.cfwnet.org/council_packet/me review.asp?ID=20809&councildate=3/3/2015 4/16/2015 M&C Review Page 2 of 3 DISCUSSION: MV Residential Development, LLC (MV) proposes to construct the Reserve at Quebec, a mixed income multi-family rental development that will consist of up to 296 units on approximately 15 acres to be located north of Northwest Centre Drive between Buda Lane and Quebec Street. Up to 32 of the units will be set aside as permanent supportive housing for extremely low-income households, up to 16 units will be market rate and the remaining units will be available to tenants earning at or below 80 percent of Area Median Income.. The amenities proposed for the development include a clubhouse, swimming pool and walking/jogging paths. On January 6, 2015, the Board of Directors of the Fort Worth Housing Finance Corporation (HFC) approved an Agreement with MV to form the Reserve at Quebec, LLC, a Texas Limited Liability Company, and single purpose entity that will construct, own and manage the Reserve at Quebec Apartments. The HFC will form the Reserve at Quebec GP, LLC that will serve as managing member. Reserve at Quebec, LLC will submit an application to the Texas Department of Housing and Community Affairs (TDHCA) for 2015 Non-Competitive (4%) Housing Tax Credits (4%HTC) as part of the financing of the costs of the development. It is also applying to the Tarrant County Housing Finance Corporation for multi-family bonds. Public Hearing and Resolution: TDHCA requires applicants for 4% HTC to provide a resolution of"no objection"(or of support)from the governing body of the jurisdiction in which the proposed development will be sited. As part of the TDHCA requirements, the governing body must also conduct a public hearing for citizens to provide comments on the proposed development. Following the close of the public hearing, Staff recommends that the City Council approve the attached Resolution supporting the 2015 application for Non-Competitive (4%) Housing Tax Credits for the Reserve at Quebec Apartments since the development will assist the City in fulfilling its goals under its Consolidated Plan and Comprehensive Plan by supporting economic development and providing quality, accessible, affordable housing to low to moderate-income City residents as well as permanent supportive housing to very low-income residents. HOME Contract and Loan: Staff recommends a change in use and expenditure of$3,500,000.00 of the City's HOME Investment Partnerships Program (HOME)grant funds in the form of a subordinate loan to the Reserve at Quebec, LLC to be used for a portion of the acquisition and construction costs of the development. The HOME funds may be used for any HOME-eligible cost for the development as provided in the contract. Staff recommends the following contract and loan terms: 1. Contract term of five years commencing on the date of execution with two one-year extensions; 2. $1.5M of the loan funds to be repaid within 20 years of the date of the loan documents based on a 40 year amortization. Principal and interest at one percent or the Applicable Federal Rate, whichever is less, shall be paid at least annually beginning no later than conversion, as defined in the loan documents. $2M of the loan funds to be deferred and forgiven provided all HOME requirements and contract terms are met; 3. Designate HOME-assisted units according the HOME Regulations with a 20 year Affordability Period; and 4. Payment of the HOME funds and performance of the HOME requirements to be secured by a recorded deed of trust. The expenditure of HOME funds is conditioned upon the following: 1. Receipt of grant funds from the United States Department of Housing and Urban Development (HUD); 2. Satisfactory completion of an environmental review, pursuant to 24 CFR Part 58; http://apps.cfwnet.org/council_packet/mc review.asp?ID=20809&councildate=3/3/2015 4/16/2015 M&C Review Page 3 of 3 3. Authorization to use grant funds from HUD; 4. Equity, construction and permanent financing for the development acceptable to the City; 5. Award of tax credits by TDHCA; 6. Certificate of bond reservation by the Texas Bond Review Board; and 7. Closing on equity and all other financing for the development. Action Plan funding years selected may vary and be substituted based on the Principle of First In, First Out. The development will benefit low and very low-income City citizens by providing them with quality, accessible, affordable housing. A public comment period on the change in use of these HOME funds was held from January 15, 2015 to February 13, 2015. Any comments will be maintained by the Housing and Economic Development Department,.in accordance with federal regulations. The development is located in COUNCIL DISTRICT 7. FISCAL INFORMATION/CERTIFICATION: The Fiscal Year 2015 budget included appropriations of$4,798,461.51 in the Grants Fund for this purpose. As of January 29, 2015, the amount of$113,414.84 has been expended. Upon approval of this recommendation, the Financial Management Services Director certifies that funds are available within the existing appropriations for this expenditure. TO Fund/Account/Centers. FROM Fund/AccountlCenters GR76 539120 005206181550 $533.894.82 GR76 539120 005206181070 $133,894.82 GR76 539120 005206271550 $276.210.59 GR76 539120 005206181360 $400,000.00 GR76 539120 017206351550 $323.789.41 GR76 539120 005206271150 $276.210.59 GR76 539120 017206461550 $94.271.43 GR76 539120 017206351150 $323.789.41 GR76 539120 017206531550 $2,117.78 GR76 539120 017206461990 $94,271.43 GR76 539120 017206281550 $804.137.57 GR76 539120 017206531990 $2,117.78 GR76 539120 017206651550 $955,446.40 GR76 539120 017206281080 $600.000.00 GR76 539120 017206721550 $510,132.00 GR76 539120 017206281990 $204.137.57 GR76 539120 017206651980 $794.076.84 GR76 539120 017206651990 $161,369.56 GR76 539120 017206721990 $510.132.00 Submitted for City Manager's Office by: Fernando Costa(6122) Originating Department Head: Cynthia Garcia (8187) Additional Information Contact: Cynthia Garcia (8187) Chad LaRoque (2661) ATTACHMENTS Map12df Reserve At Quebec Tax Credit Resolution CL VG (4).doc http://apps.cfwnet.org/council_packet/mc review.asp?ID=20809&councildate=3/3/2015 4/16/2015 811/2015 M&C Review official site of the Gty of Fort worth,Texas CITY COUNCIL AGENDA FflRAWTH COUNCIL ACTION: Approved on 7/28/2015 DATE: 7/28/2015 REFERENCE C-27399 LOG NAME: 17NS NO.: RESERVEATQUEBECUPDATE2 CODE: C TYPE: NOW PUBLIC NO CONSENT HEARING: SUBJECT: Amend Mayor and Council Communication C-27220 for the Development of the Reserve at Quebec Apartments to Authorize Expenditure of HOME Investment Partnerships Program Grant Funds of$2,000,000.00 to MV Affordable Housing LLC, in the Form of a Subordinate Forgivable Loan, Authorize Execution of Contract, Approve Assignments of Contract and Loan Documents and Approve Waiver of Certain Related Development Fees Estimated at$204,000.00 (COUNCIL DISTRICT 7) RECOMMENDATION: It is recommended that the City Council: 1. Amend Mayor and Council Communication C-27220 for the development of the Reserve at Quebec Apartments to authorize expenditure of$2,000,000.00 of HOME Investment Partnerships Program grant funds to MV Affordable Housing LLC, in the form of a subordinate deferred forgivable loan; 2. Authorize the City Manager or his designee to execute a HOME contract for the development with MV Affordable Housing LLC,for the $2,000,000.00 forgivable loan for a five year term beginning on the date of execution of the contract; 3. Authorize the City Manager or his designee to extend the HOME contract for two one-year extensions if such extension is necessary for completion of the development; 4. Authorize the City Manager or his designee to amend the HOME contract if necessary to achieve project goals provided that the amendment is within the scope of the project and in compliance with City policies and applicable laws and regulations governing the use of federal grant funds; 5. Authorize the acceptance of an assignment to City by MV Affordable Housing LLC, of the loan documents for the $2,000,000.00 forgivable Than made by MV Affordable Housing LLC,.to Reserve at Quebec, LLC, and approve the assignment by MV Affordable Housing LLC, of the related HOME contract to Reserve at Quebec, LLC; 6. Approve the waiver of certain related development fees estimated at$204,000.00 which will count towards the City's match obligation for the HOME Investment Partnerships Program grant funds; and 7. Find that the waiver of such fees serves to carry out the public purpose of providing quality, accessible, affordable housing for low to moderate-income families and individuals in accordance with the City's Comprehensive Plan and Annual Action Plan and that adequate controls are in place through the HOME contract to carry out such public purpose. DISCUSSION: On March 3, 2015, the City Council approved the change in use and expenditure.of$3,500,000.00 of HOME Investment Partnerships Program (HOME) grant funds to the Reserve at Quebec, LLC (Reserve) for the development of the Reserve at Quebec Apartments, a proposed 296-unit mixed http://apps.cfWnet.org/council_packeYmc review.asp?ID=21129&oouncildate=7/28/2015 1/3 8/7/2015 M&C Review income multifamily development to be located between Buda Lane and Quebec Street (M&C C -27220). Of the $3,500,000.00 in HOME funds, $1,500,000.00 is to be repaid and $2,000,0.00.00 is to be a forgivable loan, provided all HOME requirements and contract terms are met. Miller-Valentine Operations; Inc., whose affiliate MV Reserve at Quebec, LLC, will be a member of Reserve, has requested that its affiliate MV Affordable Housing LLC (MVAH), be the initial borrower of the$2,000.000.00 forgivable loan instead of Reserve so that there is no risk that the loan proceeds will be subject to taxation by the Internal Revenue Service. MVAH will execute a HOME contract and a promissory note for the $2,000,000.00 in favor of the City and simultaneously loan the $2,000,000.00 to Reserve for the development. To collateralize the loan from City to MVAH, the loan documents for the $2,000,000.00 loan from MVAH to Reserve will be assigned by MVAH to the City and MVAH will assign its obligations under the related HOME contract to Reserve. All other terms for the $1,500,000.00 HOME loan to Reserve, the $2,000,000.00 forgivable HOME loan and the related HOME contracts for those funds approved under M&C C-27220 remain the same. Staff recommends amending M&C C-27220 to allow City to enter into a HOME contract for a $2,000,000.00 forgivable loan with MVAHfor the development of the Reserve at Quebec Apartments, approve the collateral assignment by MVAH to City of related loan documents and approve the assignment by MVAH of the related HOME contract to Reserve. Fee Waivers: The City is obligated to match 12.5 percent of the HOME funds drawn from its HOME Treasury Account each program year as part of its annual entitlement grant from the United States Department of Housing and Urban Development (HUD). The City's match obligation must be satisfied annually from non-federal sources used for qualified housing projects, such as donated materials, cash donations, in-kind contributions and sweat equity. In order to assist the City in meeting its match requirement for the HOME grant, Staff recommends that the City waive`fees estimated at$204,000.00 related to the development of the Reserve at Quebec Apartments that would otherwise be charged by the City including but not limited to: (a) all building permit related fees (including Plans Review, Inspections and Re-inspection Fees); (b) Plat/Replat Application Fees; (c) Board of Adjustment Application Fees; (d) Demolition Fees; (e) Structure Moving Fees; (f) Zoning Fees; (g) Street/Alley and Utility Easement Vacation Application Fees; (h) Temporary Encroachment Fees; (i) Consent/Encroachment Agreement Application Fees; (j) Urban Forestry Application Fees; (k) Sign Permit Fees; (1) Community Facilities Agreement (CFA) Application Fees; and (m) Street Closure Fees. Water and sewer impact fees are not waived and must be paid in full by Reserve, the developer. Staff recommends the waiver of the above listed fees as an appropriate tool that incentivizes and promotes private financial participation with the City in its pursuit of-the goals in the Comprehensive Plan and the Annual Action plan for creating quality, accessible, affordable housing for low to moderate- income families and individuals. By maximizing the fiscal efficiency of the financial participation by a private developer, the fee waivers will serve the public purpose of assisting the City in meeting its affordable housing goals, including in this project specifically, the City's goal of providing more permanent supportive housing units. The provisions of the HOME contract establish adequate controls to ensure that the public purpose associated with these fee waivers is carried out. The development is located in COUNCIL DISTRICT 7. FISCAL INFORMATION/CERTIFICATION: The Financial Management Services Director certifies that this action will not increase the total appropriation of City funds. TO Fund/Account/Centers FROM Fund/Account/Centers http://apps.cfwnet.org/council_packeVmc review.asp?ID=21129&counclidate=7/28/2015 213 8/7/2015 M&C Review Submitted for City Manager's Office byFernando Costa (6122) Originating Department Head: Allison Gray(8187) Additional Information Contact: Chad LaRoque (2661)Avis Chaisson (6342) ATTACHMENTS Map.pdf i hUp://apps.cfwnet.org/council—Packet/mc review.asp?ID=21129&councildate=7/28/2015 313